Conference Call Second Quarter 2008 Earnings Paulo Penido Pinto Marques CFO and Investor Relations Director August 14, 2008 1
Disclaimer Declarations relative to business perspectives of the Company, operating and financial results and projections, and references to the growth of the Company, constitute mere forecasts and were based on Management s expectations in relation to future performance. These expectations are highly dependent on market behavior, Brazil s economic situation, the industry and international markets, and are therefore subject to change. 2
Macro Economic Analisys The world is undergoing a new phase with sustainable growth and inflation under control Global GDP Growth - average last 4 years = 4.8% Inflation - average last 4 years = 3.9% With positive effects for the steel industry Global Steel Production Growth - China responds to 40% of global production Strong Raw materials price increases Coal / Iron Ore/ Scrap/ Other Raw materials The country outlook is similar Global GDP Growth - average last 5 years = 4.5% Inflation - average last 4 years = 5.2% 3
Global Steel Industry Steel Production 12% 1.800 10% 1.600 1.400 8% 1.200 6% 1.000 800 4% 600 2% 400 200 0% '03 '04 '05 '06 '07 '08 (e) '09 (e) '10 (e) '11 (e) 0 Source: IISI Global Production Global Chg. % China Production 4
Brazilian Steel Industry The country outlook is similar Flat Steel Demand (million tons) 14 12 10 9.2 9.9 +17.8% 11.7 +10.7% 12.9 8 6 4 2 0 2005 2006 2007 2008(e) Source: IBS - 2008 e Metal Bulletin - 2008 5
Steel Industry Steel prices follow raw materials prices Prices in US$/ton in the US (spot market) - HRC 1,250 1,174 1,000 750 722 606 562 689 500 250 350 375 336 342 402 430 342 375 342 287 358 256 259 331 443 0 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 Jun 08 Source: CRU Monitor - Steel 6
Outlook Steel Demand The outlook is for continued growth Consumption and Demand Global Apparent Steel Consumption Million Tons 800 USA, Japan & EU-15 China 600 Rest of world 400 25 20 15 10 Brazilian Demand (Flat Steel) 8.4 8.6 8.6 8.9 10.1 9.2 9.9 Million Tons 13.0 11.7 21.5 20.3 19.2 18.2 17.1 15.2 16.1 200 5 0 2000 2001 2002 2003 2004 2005 2010E 2015E 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 Source: WSD Source: IBS April 2008 7
Usiminas Accelerating New Slab Plant (Santana do Paraíso) Production capacity 5 million tons/yr Start of works 1 st Half 2009 Start up 2.5 million t/yr in 2011 2.5 million t/yr in 2012 Coke plant 2.0 million t/yr Power plant 250 MW TOTAL Investments: : US$ 5.7 billion * * Does not include investment in thermoelectric powerplant of approximately US$ 400 million 8
Usiminas Accelerating Ipatinga and Cubatão Plant Investments LINE UNIGAL II (Galvanized) VOLUME thsd tons START UP FORECAST PROJECT AMOUNT 550 1 st Half 2011 US$ 460 million Heavy Plates 500 2 nd Half 2010 US$ 500 million Hot Rolled Coils 150 1 st Half 2011 US$ 130 million Ipatinga Plant Other Technology updating, cost savings and environmental control, with highlight for Coke Plant 3 (+750kt/yr) and thermolectric powerplant (60 MW) in 2008 US$ 1.0 billion Total Investments US$ 2.1 billion LINE VOLUME thsd tons START UP FORECAST PROJECT VALUE Hot Strip Mill 2,300 / 4,800 1 st Half 2011 US$ 1.0 billion Cubatão Plant BF1 Revamping 3.5 thsd/day => 4.5 thsd/day Concluded US$ 170 million Continuous Casting Machine +350 / ano Concluded US$ 140 million Other Technology updating, cost savings and environmental control US$ 1.1 billion Total Investments US$ 2.4 billion 9
Usiminas Accelerating Mining Assets Increase on Production - million tons 30 20 Pellet Feed Sinter Feed Lump 27.7 29.2 14.0 10 5.2 5.8 8.8 9.0 10.5 13.0 0 2008 2009 2010 2011 2012 2013 2014 Aiming to add value to iron ore, Usiminas will build a PELLET PLANT Budget of US$ 750 million and start up on 2013 Source: Usiminas TOTAL investments in mining: : US$ 3.5 billion 10
Usiminas Accelerating Logistics Assets Usiminas acquired land in Sepetiba Bay where it will build a maritime terminal Price R$ 72 million Land 850 thousand m² Start of operations 2012 Shipping capacity 25 million tons of Iron Ore, in addition to other products Area will be a benchmark from the environmental point of view Amount estimated for environmental recovery - up to R$ 40 million 11
Usiminas Investment Program Estimated Capex for the Investment Program fits into the capital structure considered adequate for the company Total Investments = US$ 14.1 billion US$ million STEELMAKING MINING TOTAL 2008 1,480 960 2,440 2009 2,550 1,060 3,610 2010 4,410 480 4,890 2011 1,830 770 2,600 2012 360 200 560 TOTAL 10,630 3,470 14,100 12
Usiminas 2Q08 and 1H08 Results CONSOLIDATED RESULTS R$ million 2Q 2008 2Q 2007 1Q 2008 Chg. 2Q08/2Q07 1H 2008 1H 2007 Chg. 1H08 / 1H07 Total Sales Volume (000 t) 1.917 1.980 1.886-3% 3.803 3.916-3% Net Revenues 3.973 3.379 3.554 18% 7.526 6.715 12% Gross Profit 1.455 1.202 1.233 21% 2.688 2.347 15% Operating Result (EBIT) (a) 1.233 1.015 1.012 22% 2.256 1.979 14% Financial Result 201 61 (30) 228% 171 70 145% Net Income 861 802 646 7% 1.507 1.444 4% EBITDA (b) 1.458 1.233 1.254 18% 2.712 2.411 12% EBITDA MARGIM 36,7% 36,5% 35,3% +0,2 p.p. 36,0% 35,9% +0,1 p.p. EBITDA (R$/t) 761 623 665 22% 713 616 16% Total Assets 24.415 19.711 22.770 24% 24.415 19.711 24% Net Debt 552 (104) 677 552 (104) Stockholders' Equity 13.598 11.531 13.121 18% 13.598 11.531 18% (a) Earnings before interest, tax and participations. (b) Earnings before interest, taxes, depreciation, amortization and participations. Highlights 13
Usiminas Consolidated Sales (thsd( 72% thsd.. tont on) 2,170 1,910 1,971 2,011 2,095 1,981 2,028 1,954 1,9711,9921,936 1,980 1,980 1,886 1,917 1,829 1,768 1,770 13% 28% 27% 29% 29% 22% 30% 31% 46% 38% 31% 32% 33% 28% 24% 23% 19% 19% 72% 73% 71% 71% 78% 70% 69% 54% 62% 69% 68% 67% 72% 76% 77% 81% 81% 87% 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Domestic Market Export Market 2Q08: 1.917 MMt, down 3% from 2Q07 Domestic sales: up 10% from 2Q07 Exports: down 46% from 2Q07 Market share leadership of 50% in 2Q08. 14
Usiminas Domestic Sales and Exports Heavy Plates 27% Domestic Market Sales 2Q08 Electro- Galvanized 4% Slabs 4% Hot Rolled 32% Argentina 21% Exports 1H08 South Korea 7% Germany 6% Taiwan 5% Vietnan 5% Indonesia 2% Others 9% Processed Products 3% Cold Rolled 24% Hot Dip Galvanized 6% Chile 11% Mexico 6% Spain 14% USA 14% 15
Usiminas Financial Highlights Over the last few years, Usiminas has prepared itself for this new phase EBITDA & EBITDA Margin 31% 31% 34% 39% 36% 35% 37% 38% 35% 35% 37% EBITDA totaled R$ 1.5 billion (US$ 881 million) in 2Q08, up 18% from 2Q07 404 414 479 565 551 559 622 717 683 721 881 EBITDA margin of 37% in 2Q08 in line with 2Q07 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 EBITDA (US$ million) EBITDA Margin 16
Usiminas Financial Highlights Over the last few years, Usiminas has prepared itself for this new phase Consolidated Net Debt / EBITDA Debt profile: 0.4 0.3 0.4 0.4 0.2 0.0 0.0-0.1-0.2 0.1 0.1 17% due in short term 83% due in long term 0,9 0,7 0,7 0,8 0,4 0,1-0,1-0,1-0,2 0,4 0,3 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Debt by currency: Local: 35% Foreign: 65% CND (US$ bi) CND/EBITDA 17
2Q08 CONSOLIDATED CASH FLOW Brazilian GAAP - R$ million 1,101 14 80 487 641 1,458 3,669 18 582 99 4,523 Others Final Balance Usiminas Financial Highlights Initial B alance EBITDA New Financing Amortization of Financing Interest Working Capital Change Investments Dividends / Interest on Capital
Usiminas Stock Performance 180 USIM5 e USIM3 versus Ibovespa From (basis 100) 12/28/2007 to 06/30/2008 ADR Level I 170 160 150 140 130 120 110 100 90 80 dez-07 jan-08 fev-08 mar-08 abr-08 mai-08 jun-08 IBOVESPA USIM5 USIM3 145,4 136,8 101,8 PNA and ON shares rose 20% and 10% in 2Q08, respectively, while the Bovespa Index appreciated 7% in the same period. PNA and ON shares rose 45.4% and 36.8% in 1H08, respectively, while the Bovespa Index appreciated 1.8% in the same period. PNA shares continues among the top six traded on the Bovespa. One of the most traded shares (by volume) on Latibex. 19
Usiminas Other Highlights Approval by the Board of Directors of Intermediate Interest on Equity Capital and Dividends in the amount of R$ 528.3 million Usiminas receives awards: i Qualitas Awards - granted by Fiat i Global Supplier of the year - granted by General Motors i Wolkswagen Supply Awards - granted by Wolkswagen i Global Reporting Initiative - GRI i The best of Dinheiro 2008 - granted by Isto É Dinheiro magazine 20
Declarations contained in this presentation in relation to the busines outlook of the Comapany, operational and financial projections and references to the growth potential of the Comapany constitute mere forecasts and were based on the expectations of the Management in relation to future performance. These expectations are highly dependent on market behavior, of the economic situation in Brazil, on industry and international markets, and are, therefore, subject to changes. www.usiminas.com.br/ri ADR Level I Investor Relations: Bruno Seno Fusaro (Head of IR) Gilson Rodrigues Bentes Matheus Perdigão Rosa brunofusaro@usiminas.com.br gilson@cosipa.com.br mprosa@usiminas.com.br Tel.: +55-31-3499-8772 Tel.: +55-31-3499-8617 Tel.: +55-31-3499-8056 Fax: +55-31-3499-9357 +55-11-5070-8980 Luciana Valadares dos Santos Diogo Dias Gonçalves lsantos@usiminas.com.br dgoncalves@usiminas.com.br Tel.: +55-31-3499-8619 Tel.: +55-31-3499-8710 21