Relevant Information 1 st Semester 2000

Transcription

1 Relevant Information 1 st Semester 2000 Dear Shareholders, The Brazilian economy has performed well in this first half of The highlight goes for the resumption of growth in the industrial sector due mainly to the increase of demand in the intermediate and durable goods segments. An additional contribution came from the capital goods and export sectors. Domestic interest rates remained stable throughout the period in spite of the pressure caused by the interest hike in the United States. Inflation remained under control and the flow of foreign funds presented a significant improvement. In this context, the Brazilian steel companies increased their crude steel production by 9.7% totaling 13.6 million metric tons. In the rolled steel segment, output was of 8.8 million metric tons of which 5.4 million where flat steel (+10.2%) and 3.4 million metric tons in long products (+4.5%). This performance results mainly from the recovery of domestic sales, which grew approximately 12% in the period. PRODUCTION AND SALES At Gerdau, crude steel production reached 3.5 million metric tons in this semester. Of this total, 60.7% were produced in Brazil whereas 39.3% from the plants abroad. This volume, when compared to the same period in 1999, shows an increase of 60.6%. In Brazil, the production was of 2.1 million metric tons, 16.3% greater than last year. This is a direct result of the resumption of domestic demand and to the increase in the stake in Açominas (to 36.6% from 22.8%). At the companies abroad (Argentina, Canada, Chile, United States and Uruguay), the evolution was even greater. Production of 1.4 million metric tons increased by 290.4% that of the first semester of 1999 as a result of the consolidation of Ameristeel, which contributed with 933 thousand metric tons, and the 112.5% increase in the output at the Chilean plant Aza. Rolled products output presented an evolution of 57.4% with a total of 2.9 million metric tons. The Brazilian plants produced 1.6 million metric tons (+8.2%) and plants abroad rolled 1.3 million metric tons (+266.7%). Output (1,000 t) 1 st Semester st Semester st Sem/00 /1 st Sem/99 % Crude Steel - Brazil 2,128 1, Abroad 1, Total 3,506 2, Rolled Products - Brazil 1,638 1, Abroad 1, Total 2,941 1, Consolidated sales totaled 3.5 million metric tons this year, a 55.6% increase over last year s. Companies in Brazil (Gerdau S.A. and the stake in Açominas) shipped 2.2 million metric tons, 16.4% more than in Of this volume, 1.7 million metric tons were sold to clients in Brazil (79.7% of the total) and 438 thousand metric tons were exported. Domestic sales grew 13.3% as a reflex of the growth of the Brazilian industrial sector this year. The increase of the reselling of steel products, especially flat steel through

2 Comercial Gerdau (+71.4%) and the recovery in sales of specialty steel from Aços Finos Piratini which increased 36% this year also contributed to increase sales. Exports were 30% bigger than in 1999 and generated revenues of US$ million. The increase in shipments abroad is essentially due to the increase of Gerdau s stake in Açominas. This stake was of 22.8% in the first semester of 1999 and is 36.6% today. Abroad, due to the consolidation in full of Ameristeel and to the operation of the new plant in Chile, volumes shipped reached 1.3 million metric tons, an increase of 243.6% semester over semester. Sales of Gerdau companies in North America totaled 1.2 million metric tons against 256 thousand metric tons in the first semester of This reflects the strong presence of Gerdau in that market. The Canadian companies contribution was also significant who experienced an increase in shipments of 5.2% from January through June this year. In South America, the Gerdau Companies (except Brazil) accumulated sales of 173 thousand metric tons in the semester, 31.5% more than in This performance is partly explained by the increase in sales of the Chilean operation (+87.7%) which is operating a new unit since June RESULTS Gross revenues for the semester reached R$ 3.0 billion, an increase of 87.6% when compared to the same period last year. Of this total, R$ 1.9 billion were generated by Gerdau s business in Brazil, and R$ 1.1 billion came from operations abroad. The larger demand observed in the domestic market along with the inclusion of the consolidated numbers of the stake in Açominas (Brazil), Sipar (Argentina) and Ameristeel (USA) were responsible for the significant increase in revenues in the period. After discounting the taxes on sales, freights and discounts, the net revenue was of R$ 2.5 billion, 97.7% more than in Gross margin (gross profit compared to net revenue) was of 26.46% in the first six months of the year against 34.38% of the same period last year. This drop results from the increase in costs of sales and the consolidation of the aforementioned companies, especially Ameristeel. When comparing the two first quarters of this year, there is a small improvement due to a better control over cost of sales and the bigger sale of products with higher added value. This margin, which was 26.29% in the first quarter, is now 26.62% in the second quarter. Profit before financial expenses, taxes, equity pick up, depreciation and amortization (EBITDA) reached R$ million in the semester, an increase of 61.4%. EBITDA margin reached 20.90% in the period. As with gross margin, EBITDA margin did increase from the first quarter to the second to 21.28% up from 20.50%. Consolidated net income for the first semester this year reached R$ million, an increase of 23.3% over the same period in In consolidated terms, the net cash flow of the operating activity generated from January to June was of R$ million, equal to 7.13% of net revenue. INVESTMENTS This year Gerdau concluded several projects initiated last year. In March, the Company inaugurated the new rolling mill and wire rod equipment for specialty steel and the dust collection system at Aços Finos Piratini. In May, Gerdau Cosigua, in Rio de Janeiro, inaugurated its new rolling mill for medium sized shapes and profiles, a new water treatment and recycling system and a Mega Shredder. In June, Açominas inaugurated the following equipment: continuous caster for billets; ladle furnace; powder carbon injector; oxygen sublance and a power-generating turbine at the top of the blast furnace. Other inaugurations are scheduled at Gerdau for this year: a new melt shop at the Ameristeel, Knoxville plant, two new service centers (Armafer), a lattice girder plant and the doubling of the capacity of the Armafer in Pernambuco. The conclusion of these projects and those still under way demanded US$ million through June this year. Of this total US$ 83.5 million were used by companies in Brazil and US$ 29.9 million by units abroad.

3 INDEBTEDNESS On June 30th, the consolidated gross debt was of US$ 1.6 billion, 1.4% less than that on December After deducting financial investments accounted for at the end of the semester (US$ 296 million), net debt was US$ 1.3 billion approximately 2.3 times EBITDA for the semester annualized. Of the total gross debt, 72.7% is US dollar-based; 7.1% are in the form of debentures and 20.2% in Brazilian currency, mostly contracted with the BNDES. Of the debt linked to US dollars (US$ 1.2 billion), 57.9% was contracted by companies abroad and the balance of 42.1% by companies based in Brazil. As the indebtedness, financial investments are essentially indexed to the US dollar. Of the total invested (US$ 296 million), 71.3% is linked to the US dollar and 28.7% to the real. CAPITAL MARKETS Dividends will be paid on August 15th. This payment will be in the form of interest over capital stock, relative to the first semester of this year. At Gerdau S.A., the amount to be paid per lot of one thousand shares is of R$ for ordinary shares, and R$ for preferred shares in a total of R$ 45.1 million. At Metalúrgica Gerdau S.A., ordinary shares will get paid R$ and R$ for preferred shares, adding R$ 20 million. On April 28th, the shareholders of Metalúrgica Gerdau S.A. and of Gerdau S.A. approved the split of shares on a two for one basis. This mechanism called split aims at introducing more liquidity in the market in addition to ease the access of small investors to the stock markets. The market has already adjusted the price proportionally to the split ratio. Pursuing the full disclosure policy of the company and the relationship with the capital market, Gerdau promoted a National ABAMEC meeting, in São Paulo, on May 16th with analysts and investors in order to present its performance numbers for the first quarter of the year. The meeting was held in São Paulo and held more than 400 attendees. A relevant fact of the semester was the voting of Gerdau as the best Public Company of 1999 award by ABAMEC South Section. This award was delivered to company representatives on June 29th. The award takes into consideration the activity and the posture the company adopts in its dealings with the capital market in Brazil. This is the second consecutive year that the company is awarded this prize. In the Brazilian stock exchanges, shares issued by the Gerdau companies presented an expressive increase in liquidity. 12,559 trades were made in the semester, representing a physical volume of 13.4 billion shares traded. These deals, which represent a financial volume of R$ million, presented an increase of 132.9%, 43.3% in shares traded and 59.8% in the number of trades made. At Metalúrgica Gerdau S.A., quantities negotiated increased by 28.6% reaching 2.3 billion shares in 2,836 trades made and moved a financial volume of R$ million, that is, 101.9% more than in the first semester of At Gerdau S.A., the numbers are 11.1 billion shares traded in 9,723 trades with an increase of 46.9% and 86.5% respectively. These operations moved R$ million (+148.2%). At the NYSE, where Gerdau S.A. ADRs level II are traded, trades totaled 1.3 million in the first semester. This represents 1.3 billion preferred shares. MANAGEMENT Fluxo de Caixa Consolidado Janeiro a junho Consolidated Cash Flow January to June

4 (pela legislação societária - em milhares de reais / by corporate law - in thousands of reais) Metalúrgica Gerdau S.A. Gerdau S.A Lucro líquido do período Net income 215, , , ,811 Imposto de renda e contribuição social Income tax and social contribution 57,031 (2,434) 53,466 (1,091) Depreciações e amortizações Depreciation and amortization 161,669 75, ,588 75,096 Juros e variações monetárias não-caixa Interest and non-cash monetary variations (40,903) 115,748 (21,811) 123,168 Variação do capital de giro Working capital variarion (207,990) (63,015) (192,597) (74,186) Caixa líquido da atividade operacional Net operational cash 185, , , ,798 Aquisição / alienação de imobilizado Permanent assets purchases / disposals (175,408) (249,088) (175,060) (249,088) Aquisição de diferido Deferred charges - (359) - (359) Aquisição / alienação de investimentos Investments purchases / disposals (28,862) (45,191) (26,082) (41,025) Aplicação de caixa em investimentos Funds used for investments (204,270) (294,638) (201,142) (290,472) Financiamento do capital de giro Working capital financing (17,542) 24,053 (84,031) 20,954 Aportes de recursos de longo prazo Long term debt increase 213, , , ,438 Amortização de financiamentos de longo prazo Long term debt repayment (251,803) (149,029) (251,803) (146,773) Ações em tesouraria Shares withheld - 5,124-2,258 Pagamento de dividendos/juros e participações Dividend/Interest and statutory participation payment (64,867) (33,242) (62,498) (32,059) Caixa líquido da atividade financeira Net funds from financial activities (121,020) 20,344 (185,140) 17,818 Variação no saldo do caixa Cash balance variation (139,985) 26,029 (172,558) 22,144 Saldo de caixa / Cash balance No início do período / At the begining of the period 673, , , ,861 No final do período / At the end of the period 533, , , ,005

5 METALÚRGICA GERDAU S.A. Demonstrações contábeis resumidas / Financial statements summary (pela legislação societária - em milhares de reais / by corporate law - in thousands of reais) CONSOLIDADO CONSOLIDATED EMPRESA COMPANY BALANÇO PATRIMONIAL / BALANCE SHEET 30/06/00 31/12/99 30/06/00 31/12/99 ATIVO / ASSETS CIRCULANTE / CURRENT ASSETS 2,394,328 2,341,658 35,286 40,013 REALIZÁVEL A LONGO PRAZO / LONG-TERM RECEIVABLES 205, ,488 69,604 95,028 PERMANENTE / PERMANENT ASSETS INVESTIMENTOS / INVESTMENTS 256, ,642 1,090, ,498 IMOBILIZADO / FIXED ASSETS 3,712,823 3,659,911 2,265 2,341 TOTAL DO ATIVO PERMANENTE / TOTAL PERMANENT ASSETS 3,969,301 3,911,553 1,092, ,839 TOTAL DO ATIVO / TOTAL ASSETS 6,568,665 6,459,699 1,197,502 1,113,880 PASSIVO / LIABILITIES CIRCULANTE / CURRENT LIABILITIES 2,011,639 1,920,507 28,026 32,744 EXIGÍVEL A LONGO PRAZO / LONG-TERM LIABILITIES 2,147,786 2,276,600 78,064 84,241 RESULTADO DE EXERCÍCIOS FUTUROS / DEFERRED INCOME 26,123 52, PATRIMÔNIO LÍQUIDO / SHAREHOLDERS EQUITY CAPITAL SOCIAL / CAPITAL STOCK 520, ,280 RESERVAS/LUCROS ACUM./ CAPITAL RESERVES/RETAINED EARNINGS 571, ,615 TOTAL DO PATRIMÔNIO LÍQUIDO / TOTAL SHAREHOLDERS EQUITY 2,383,117 2,210,345 1,091, ,895 TOTAL DO PASSIVO/ TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 6,568,665 6,459,699 1,197,502 1,113,880 DEMONSTRAÇÃO DO RESULTADO Janeiro a junho / January to June STATEMENT OF INCOME RECEITA BRUTA DE VENDAS / GROSS SALES REVENUE 2,980,167 1,588, IMPOSTOS SOBRE VENDAS / TAXES ON SALES (362,267) (253,221) - - FRETES E DESCONTOS / FREIGHT AND DISCOUNT (101,019) (62,070) - - Receita líquida de vendas / Net sales revenue 2,516,881 1,273, CUSTO DAS VENDAS / COST OF SALES (1,850,847) (835,448) - - Lucro bruto / Gross profit 666, , DESPESAS COM VENDAS / SELLING EXPENSES (100,426) (61,079) - - DESPESAS FINANCEIRAS / FINANCIAL EXPENSES (207,694) (331,431) (6,477) (4,306) RECEITAS FINANCEIRAS / FINANCIAL REVENUE 73,448 76,328 7,566 2,659 DESPESAS GERAIS E ADMINISTRATIVAS GENERAL AND ADMINISTRATIVE EXPENSES (201,157) (125,681) (5,360) (3,309) RESULTADO DA EQUIV. PATRIMONIAL / EQUITY PICK-UP 3, , , ,057 - ANTES DOS EFEITOS DE IMP. DE RENDA E CONTRIB. SOCIAL BEFORE INCOME TAX AND SOCIAL CONTRIBUTION IMPACT ,252 93,012 - EFEITOS DO IMP. DE RENDA E CONTRIB. SOCIAL INCOME TAX AND SOCIAL CONTRIBUTION IMPACT - - (15,154) 11,045 OUTRAS DESPESAS/RECEITAS OPERACIONAIS OTHER OPERATING EXPENSES/REVENUE 41,086 3, Lucro operacional / Operating profit 274, , ,906 99,115 DESPESAS/RECEITAS NÃO-OPERACIONAIS NON-OPERATING EXPENSES/REVENUE 2,604 (3,933) 1,428 - PARTICIPAÇÕES ESTATUTÁRIAS / STATUTORY PARTICIPATION (4,989) (3,160) (1,278) (929) Lucro antes de impostos Profit before income tax and social contribution 272, , ,056 98,186 IR E CONTRIB. SOCIAL INCOME TAX AND SOCIAL CONTRIBUTION (57,031) 6,367 (5,535) 1,618 Lucro líquido do período / Net profit for the period 215, , ,521 99,804 Lucro por lote de mil ações / Earnings per lot of one thousand shares - R$ Valor patrimonial por lote de mil ações Equity value per lot of one thousand shares - R$ Número de ações emitidas (milhões) / Shares Outstanding (million) ,792 10,396

6 GERDAU S.A. Demonstrações contábeis resumidas / Financial statements summary (pela legislação societária - em milhares de reais / by corporate law - in thousands of reais) CONSOLIDADO EMPRESA CONSOLIDATED COMPANY BALANÇO PATRIMONIAL / BALANCE SHEET 30/06/00 31/12/99 30/06/00 31/12/99 ATIVO / ASSETS CIRCULANTE / CURRENT ASSETS 2,301,776 2,295, , ,674 REALIZÁVEL A LONGO PRAZO / LONG-TERM RECEIVABLES 172, , ,186 87,322 PERMANENTE / PERMANENT ASSETS INVESTIMENTOS / INVESTMENTS 239, ,392 1,495,130 1,273,266 IMOBILIZADO / FIXED ASSETS 3,710,199 3,657,556 1,630,745 1,621,698 TOTAL DO ATIVO PERMANENTE / TOTAL PERMANENT ASSETS 3,950,075 3,894,948 3,125,875 2,894,964 TOTAL DO ATIVO / TOTAL ASSETS 6,423,860 6,361,718 4,166,821 3,955,960 PASSIVO / LIABILITIES CIRCULANTE / CURRENT LIABILITIES 1,951,378 1,903, , ,979 EXIGÍVEL A LONGO PRAZO / LONG-TERM LIABILITIES 2,085,559 2,229,916 1,220,995 1,247,883 RESULTADO DE EXERCÍCIOS FUTUROS / DEFERRED INCOME 26,123 52, PATRIMÔNIO LÍQUIDO / SHAREHOLDERS EQUITY CAPITAL SOCIAL / CAPITAL STOCK 1,320,133 1,316,881 RESERVAS/LUCROS ACUMULADOS CAPITAL RESERVES/RETAINED EARNINGS 923, ,217 TOTAL DO PATRIMÔNIO LÍQUIDO / TOTAL SHAREHOLDERS EQUITY 2,360,800 2,175,793 2,243,844 2,063,098 TOTAL DO PASSIVO TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 6,423,860 6,361,718 4,166,821 3,955,960 DEMONSTRAÇÃO DO RESULTADO Janeiro a junho / January to June STATEMENT OF INCOME RECEITA BRUTA DE VENDAS / GROSS SALES REVENUE 2,980,167 1,588,361 1,707,101 1,235,971 IMPOSTOS SOBRE VENDAS / TAXES ON SALES (362,267) (253,221) (331,603) (231,815) FRETES E DESCONTOS / FREIGHT AND DISCOUNT (101,019) (62,070) (50,364) (43,456) Receita líquida de vendas / Net sales revenue 2,516,881 1,273,070 1,325, ,700 CUSTO DAS VENDAS / COST OF SALES (1,850,847) (835,448) (906,894) (617,550) Lucro bruto / Gross profit 666, , , ,150 DESPESAS COM VENDAS / SELLING EXPENSES (100,426) (61,079) (79,125) (50,914) DESPESAS FINANCEIRAS / FINANCIAL EXPENSES (198,084) (329,360) (103,796) (316,917) RECEITAS FINANCEIRAS / FINANCIAL REVENUE 63,370 65,618 20,945 57,953 DESPESAS GERAIS E ADMINISTRATIVAS GENERAL AND ADMINISTRATIVE EXPENSES (192,824) (119,384) (111,716) (91,811) RESULTADO DA EQUIV. PATRIMONIAL / EQUITY PICK-UP 3, ,128 97, ,847 OUTRAS DESPESAS/RECEITAS OPERACIONAIS OTHER OPERATING EXPENSES/REVENUE 32,911 3,406 3,892 4,615 Lucro operacional / Operating profit 274, , , ,923 DESPESAS/RECEITAS NÃO-OPERACIONAIS NON-OPERATING EXPENSES/REVENUE (4,259) (3,722) (5,255) (3,242) PARTICIPAÇÕES ESTATUTÁRIAS / STATUTORY PARTICIPATION (3,711) (2,231) (2,990) (2,230) Lucro antes de impostos Profit before income tax and social contribution 266, , , ,451 IMPOSTO DE RENDA E CONTRIBUIÇÃO SOCIAL INCOME TAX AND SOCIAL CONTRIBUTION (53,466) 4,813 (29,634) 19,709 Lucro líquido do período / Net profit for the period 213, , , ,160 Lucro por lote de mil ações / Earnings per lot of one thousand shares - R$ Valor patrimonial por lote de mil ações Equity value per lot of one thousand shares - R$ Número de ações emitidas (milhões) / Shares Outstanding (million) ,492 56,616