Follow us
  • Facebook
  • Twitter
  • Youtube
  • Linkedin

To obtain the file in Excel
Click Here.

Summary

Assumptions

This Valuation Guide is based on the following assumptions:

Data since 1st quarter 2008
Updating: quarterly
Accounting standard: IFRS
Volume unit: Metric Ton (1 metric ton = 1,1 short ton)
Cost accounting standard: average cost
Debt information: includes debentures

Functional currency: Brazilian real - R$ (For overseas companies, Income Statement accounts are converted based on the average exchange rate in the quarter, while Balance Sheet accounts are converted based on the exchange rate at the end of the quarter).

Business operations (BO):
Brazil: Includes all operations in Brazil (except special steel) and the Colombia metallurgical coal and coke operation
North America: Includes all North American operations, except Mexico and specialty steel
Latin America: Includes all Latin American operations, except for Brazil
Special Steel: Includes the specialty steel operations in Brazil, Spain, United States and India
Iron Ore: Includes the iron ore operations in Brazil

Notes:
1. As of 1Q12, Colombian metallurgical coal and coke operation, which was previously reported in the Latin America BO, have been consolidated into the Brazil BO. This change stems from the strategic decision to integrate this coal and coke operation with the Gerdau Açominas, due to its increasing relevance in providing metallurgical coal to this mill. For the purpose of better comparison, the historical data has been corrected since 1Q11.                     
2. As of 1Q12, with the purpose of aligning this document to financial statements presented in the American and Brazilian markets, comments have started to separate transactions occurred between the Business Operations, indicated in tables under the "Eliminations and adjustments" line, as well as the Company's corporate expenses, which were previously reported under the Brazil BO. For the purpose of better comparison, the historical data has been corrected since 1Q11.                     
3. The information contained in this guide does not include joint ventures or companies in which Gerdau has shared control, which are recognized under the equity income method: Guatemala (Corporación Centroamericana del Acero), Dominican Republic (Inca), Mexico (Corsa) and USA (Gallatin).
4.  Starting in 2014, the iron ore operation, which previously was reported under the Brazil Business Operation, started to be reported separately as a new business operation called “Iron Ore.” The change is explained by the progress made in the iron ore project over the course of 2013, which led the Company to decide to separate this operation given its importance.

Production Process (metallic charge)

Production Processes – Flowchart:

Semi-integrated (mini-mill): represents approximately 75% of the business

Integrated (blast furnace): represents approximately 25% of the business

Main inputs for the production of one tonne of steel

Note: Market references considering approximate amounts for steel plants in general, with actual amounts varying in accordance with product quality and specifications. The references don't apply directly at Gerdau's mills.

  Electric furnaces Integrated
Scrap 0.9 tonnes -
Solid pig iron 0.3 tonnes -
Iron ore - 1.6 tonnes
Coal - 0.8 tonnes
Coke - 0.6 tonnes
Power Supply 400 kWh/tonne -
Production Capacity

‘000 tonnes

CRUDE STEEL Jun-15
Total 26,000
Brazil BO 9,100
Mini-mill 4,600
Integrated mill 4,500
North America BO 9,970
Latin America BO 2,870
Special Steel BO 4,060
Brazil 1,430
EUA 1,320
Spain 1,060
India 250
ROLLED PRODUCTS Jun-15
Total 22,400
Brazil BO 5,990
North America BO 9,090
Latin America BO 2,740
Special Steel BO 4,580
Production

‘000 tonnes

 
CRUDE STEEL 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Total 4,186 4,410 4,646 4,507 4,446 4,557 4,668 4,475 4,323 4,341 4,431
Brazil BO 1,702 1,708 1,771 1,794 1,691 1,609 1,621 1,603 1,619 1,528 1,660
North America BO 1,425 1,474 1,640 1,457 1,549 1,649 1,787 1,705 1,509 1,546 1,588
Latin America BO 408 426 429 444 426 441 399 389 384 408 415
Special Steel BO 651 802 806 812 780 858 861 778 811 859 768
 
ROLLED PRODUCTS 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Total 3,447 3,682 4,078 3,922 3,848 4,153 4,115 3,925 3,832 3,823 3,784
Brazil BO 1,019 1,069 1,219 1,232 1,122 1,291 1,116 1,142 1,130 1,134 1,039
North America BO 1,329 1,385 1,541 1,430 1,501 1,547 1,697 1,603 1,445 1,466 1,526
Latin America BO 444 528 529 531 521 526 511 457 489 502 485
Special Steel BO 655 700 789 729 704 789 791 723 768 721 734
 
IRON ORE 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Iron Ore BO 1,052 1,568 1,842 1,736 1,988 2,219 1,681 1,481 2,060
Shipments

’000 tonnes

 
  2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Total 4,634 4,775 4,556 4,387 4,524 4,558 4,399 4,143 4,271
Brazil BO 1,768 1,913 1,792 1,597 1,588 1,660 1,738 1,557 1,568
Domestic 1,506 1,544 1,417 1,442 1,372 1,369 1,357 1,252 1,090
Export 262 369 375 155 216 291 381 305 477
North America BO 1,545 1,608 1,476 1,452 1,652 1,648 1,402 1,393 1,547
Latin America BO 726 720 716 681 631 647 664 634 634
Special Steel BO 766 713 711 758 749 710 677 696 700
Eliminations (171) (179) (138) (101) (96) (107) (82) (139) (177)
  2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Iron Ore BO 894 1,073 2,139 2,000 1,735 1,981 2,254 1,463 1,965
Gerdau Units 817 966 1,088 812 1,020 1,289 1,281 1,164 1,394
Third Parties 77 107 1,051 1,188 715 692 973 299 571

The historical breakdown of sales, which may vary in accordance with the specific market.

Brazil BO %
Construction 50-55
Industrial 40-45
Agribusiness 0-5
North America BO %
Infrastructure 30-35
Non-residential construction 40-45
Industrial 25-30
Other 5-10
Special Steel BO %
Automotive (light vehicle) 40
Automotive (heavy vehicle) 40
Industrial (oil, gas and energy) 20

The main Products

Brazil BO: rebar, bar, wire rod, beam, drawn product, billet, bloom, slab and structural beam.
North America BO: rebar, bar, wire rod, light and heavy structural beam.
Latin America BO: rebar, bar and drawn product.
Special Steel BO: stainless steel, round, square and flat bar, wire rod.


 
Investments
 
ACQUISITIONS* 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
US$ million
Total - - - - - - - - - - -
Brazil BO - - - - - - - - - - -
North America BO - 26 - - - - - - - - -
Latin America BO - - - 29 - - - - - - -
Special Steel BO - - - - - - - - - - -

* Includes debt of companies acquired in the period

 
CAPEX 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
R$ million
Total 683 567 678 676 677 677 479 438 673 612 648
Brazil BO 337 291 357 337 293 332 210 89 278 268 266
North America BO 113 86 93 84 107 79 63 70 97 73 82
Latin America BO 58 39 49 50 36 78 57 72 113 113 180
Special Steel BO 175 109 126 146 143 137 124 166 141 144 98
Iron Ore BO - 42 53 59 98 51 25 41 44 14 22

 

Investment Plan
Investment Plan - Main Projects Location Additional production capacity (1,000 t) Start-up
Brazil BO
Flat steel rolling mill (heavy plates) at Ouro Branco mill-MG Brazil 1,1 2016
Latin America BO
New structural profile rolling mill in Mexico (Gerdau Corsa)¹ Mexico 700 2015
New melt shop in Argentina Argentina 650 2016
Specialty Steel BO
Coke plant and power generation plant in India mill India - 2015

1 This capacity is not included in the consolidated figures since it is a jointly-controlled entity.


 

Indebtedness
 
R$ million 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
SHORT TERM 1,769 1,838 1,756 1,299 1,949 2,038 2,366 2,584
LONG TERM 14,022 14,869 15,004 15,415 16,516 17,484 20,916 19,982
GROSS DEBT  15,791 16,707 16,759 16,714 18,465 19,521 23,282 22,566
FINANCIAL INVESTMENTS 3,512 4,222 3,520 3,963 4,670 5,849 5,847 5,690
Local currency 1,920 2,142 1,995 2,011 2,305 3,466 3,430 2,966
Companies abroad 1,592 2,080 1,525 1,952 2,365 2,383 2,417 2,724
NET DEBT  12,279 12,485 13,239 12,751 13,795 13,672 17,435 16,876
GROSS DEBT BY CURRENCY
Brazilian real 2,941 3,418 3,935 3,474 4,280 3,816 4,062 4,036
U.S. dollar 12,027 12,420 11,972 12,377 13,209 14,709 17,776 17,142
Other currencies 823 869 852 863 976 996 1,444 1,388
GROSS DEBT (principal): LONG-TERM AMORTIZATION SCHEDULE
2016 439
2017 3,726
2018 1,169
2019 877
2020 2,738
2021 and after 11,033

MAIN COVENANTS

Net Debt (principal) / EBITDA < 4 times
EBITDA / Financial Expenses > 3 times

 
COST OF DEBT
Local currency 10.8%
Foreign currency 6.0% + FX
Companies abroad 5.9%
Net Investment Hedge
      Mar-15 Jun-15 Exchange
Variation
    US$ RS$ RS$ RS$
Total debt   3,899 12,508 12,097 411
R$/US$     3.2080 3.1026  
  Corresponding Line on the
Quartely Results
      Impact on the
Income Statment 
Part of the debt with
Net Investment Hedge
  2,855     -
Part of the debt without
Net Investment Hedge
Exchange variation on
Net Investment Hedge
1,044 3,349 3,239 110
Exchange variation effect
on tax
IR/CS on Net Investment
Hedge
      (110)

Obs.: To use this sheet is necessary  to consult  the informations contained in the items "Financial Results", "Financial Liability" and "Net Income" of the Quartely  Results.

Note that, in accordance with IFRS, the Company designated the bulk of its debt in foreign currency contracted by companies in Brazil as hedge for a portion of the investments in subsidiaries located abroad. As a result, only the effect from exchange variation on the portion of debt not linked to investment hedge is recognized in the financial result, with this effect neutralized by the line "Income and Social Contribution taxes on net investment hedge." 

Financial Statements
 
INCOME STATEMENT 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
R$ million
Net sales revenue 10,494 10,321 10,554 10,443 10,706 10,844 10,447 10,759
Cost of goods sold (8,960) (8,971) (9,238) (9,179) (9,430) (9,559) (9,335) (9,578)
Gross income 1,534 1,350 1,316 1,264 1,276 1,284 1,112 1,181
GROSS MARGIN 15% 13% 12% 12% 12% 12% 11% 11%
Selling, general and administrative expenses (672) (669) (707) (678) (661) (681) (660) (637)
Other operating revenue (expenses) 5 108 19 17 19 33 27 6
Losses from impairment of assets - - - - - (339) - -
Gains in joint-ventures operations           637 - -
Equity income 18 19 27 27 35 13 6 7
Income before financial income (expenses) and taxes 886 808 654 630 669 946 485 558
Net financial income (expenses) (206) (355) (101) (211) (575) (674) (898) (207)
Income before taxes 679 453 553 419 94 273 (413) 351
Provision for income tax and social contribution (37) 39 (113) (25) 168 120 680 (87)
NET INCOME IN THE PERIOD 642 492 440 394 262 393 267 264
Parent company interest 595 450 397 357 252 397 293 256
Minority interest 47 42 43 37 10 (4) (26) 9
Depreciation 528 561 542 541 555 590 604 626
EBITDA 1,413 1,370 1,196 1,170 1,224 1,238* 1,089 1,184
EBITDA MARGIN 13% 13% 11% 11% 11% 11% 10% 11%
 
BALANCE SHEET 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
ASSETS
CURRENT ASSETS 17,399 18,177 18,202 18,835 20,283 20,683 22,907 21,897
Cash, cash equivalents and financial investments 3,512 4,222 3,520 3,963 4,671 5,849 5,847 5,690
Accounts receivable 4,441 4,079 4,492 4,292 4,364 4,439 5,272 5,000
Inventories 8,197 8,500 8,689 9,006 9,312 8,867 10,190 9,532
Other 1,249 1,376 1,501 1,574 1,936 1,528 1,598 1,675
NON CURRENT ASSETS 38,809 40,038 39,352 39,059 41,189 42,359 47,936 46,882
Deferred income tax 2,165 2,056 1,973 1,912 2,334 2,567 3,552 3,607
Investments 1,497 1,590 1,554 1,515 1,331 1,394 1,668 1,561
Goodwill 10,844 11,353 10,970 10,706 11,776 12,556 14,970 14,407
Intangible 1,456 1,498 1,472 1,428 1,505 1,547 1,716 1,637
Fixed assets 20,807 21,419 21,242 21,085 21,694 22,132 23,771 23,444
Other 2,040 2,121 2,141 2,413 2,549 2,163 2,259 2,226
TOTAL ASSETS 56,208 58,473 57,554 57,894 61,472 63,042 70,843 68,779
LIABILITIES
CURRENT LIABILITIES 6,949 7,237 6,904 6,675 7,560 7,773 8,060 8,120
Suppliers 3,289 3,271 3,183 3,448 3,507 3,236 3,745 3,569
Financing 1,742 1,811 1,678 1,299 1,950 2,038 2,366 2,584
Other 1,918 2,154 2,043 1,928 2,103 2,499 1,949 1,967
NON CURRENT LIABILITIES 18,123 18,958 19,007 19,513 20,704 22,015 26,344 25,197
Financing 13,622 14,481 14,583 14,981 16,131 17,149 20,588 19,172
Deferred income tax 1,284 1,187 1,104 1,054 1,157 945 1,243 1,215
Employee benefits 1,204 942 906 881 832 1,273 1,517 1,490
Other 2,013 2,347 2,414 2,597 2,584 2,648 2,996 2,780
SHAREHOLDERS’ EQUITY 31,136 32,021 31,643 31,706 33,208 33,255 36,439 35,462
Capital stock 19,249 19,249 19,249 19,249 19,249 19,249 19,249 19,249
Reserves and other 9,954 11,090 10,712 10,747 12,192 12,952 16,064 15,104
Minority interest 1,933 1,682 1,682 1,710 1,767 1,054 1,126 1,109
TOTAL LIABILITIES 56,208 58,474 57,554 57,894 61,472 63,042 70,843 68,779
EXCHANGE RATE
Average Exchange Rate 2.29 2.27 2.37 2.23 2.27 2.54 2.87 3.07
End of Period Exchange Rate 2.23 2.34 2.26 2.20 2.45 2.66 3.21 3.10

 *Adjusted EBITDA was calculated by impairment of assets and gains in joint ventures operations. The Company's EBITDA calculated pursuant to Instruction 527 of the CVM was R$ 1,536 in 4Q14. 

Business Operations Results
 
R$ million 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Consolidated          
Net Sales 10,494 10,321 10,554 10,443 10,706 10,843 10,447 10,759
Gross Profit 1,534 1,350 1,316 1,264 1,276 1,284 1,112 1,181
EBITDA 1,413 1,370 1,196 1,170 1,224 1,238* 1,089 1,184
Depreciation 528 561 542 541 555 590 604 626
                 
Brazil BO          
Net Sales 3,967 3,747 3,655 3,446 3,560 3,634 3,266 3,199
Domestic 3,453 3,175 3,360 3,105 3,132 3,039 2,776 2,544
Export 514 572 295 341 428 595 490 655
Gross Profit 950 765 749 594 592 719 503 420
EBITDA 933 848 731 598 587 738 515 446
Depreciation 206 217 200 209 223 231 218 227
                 
North America BO          
Net Sales 3,443 3,102 3,258 3,581 3,694 3,516 3,648 4,118
Gross Profit 147 138 99 277 348 232 225 419
EBITDA 129 140 70 281 337 199 226 413
Depreciation 133 149 136 136 138 158 172 188
                 
Latin America BO          
Net Sales 1,426 1,464 1,399 1,302 1,428 1,541 1,509 1,429
Gross Profit 162 169 185 148 151 165 168 149
EBITDA 131 135 143 109 109 109 140 118
Depreciation 50 49 52 50 50 56 60 50
                 
Special Steel BO          
Net Sales 2,045 2,044 2,263 2,182 2,095 2,104 2,246 2,257
Gross Profit 222 133 161 193 174 193 210 155
EBITDA 273 205 203 230 231 254 260 215
Depreciation 133 136 142 134 132 137 144 151
                 
Iron Ore BO                
Net Sales 127 374 316 216 207 205 125 170
Gerdau Units 108 133 105 118 107 80 76 108
Third Parties 19 241 211 98 100 125 49 62
Gross Profit 55 142 119 52 8 (23) 6 42
EBITDA 49 141 121 53 10 (24) 6 44
Depreciation 5 10 12 11 12 9 10 10
                 
EXCHANGE RATE          
Average Exchange Rate 2.29 2.27 2.37 2.23 2.27 2.54 2.87 3.07

*Adjusted EBITDA was calculated by impairment of assets and gains in joint ventures operations. The Company's EBITDA calculated pursuant to Instruction 527 of the CVM was R$ 1,536 in 4Q14.  

Production Costs
 
% of production costs 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
GERDAU CONSOLIDATED
Personnel 17 18 16 16 17 18 17 17
Maintenance 7 7 6 6 8 9 8 9
Depreciation 5 5 5 5 5 5 5 5
Metallic Inputs 50 50 53 53 50 48 48 46
Energy and Reducing Agents 13 12 13 12 12 12 13 14
Specific Materials 8 8 7 8 8 8 9 9
Brazil BO
Personnel 18 19 19 19 21 23 21 22
Maintenance 6 7 7 7 7 7 7 7
Depreciation 7 7 7 7 7 8 7 7
Metallic Inputs 39 39 39 39 36 33 36 31
Energy and Reducing Agents 23 21 21 21 22 22 22 26
Specific Materials 7 7 7 7 7 7 7 7
North America BO
Personnel 16 17 14 13 14 14 14 14
Maintenance 9 9 5 7 10 12 12 13
Depreciation 3 5 4 3 3 4 4 4
Metallic Inputs 57 56 62 63 58 55 54 52
Energy and Reducing Agents 7 6 7 6 7 6 7 7
Specific Materials 8 7 8 8 8 9 9 10
Latin America BO
Personnel 11 11 10 11 13 13 13 12
Maintenance 5 5 4 6 7 6 5 4
Depreciation 3 3 3 4 3 4 4 3
Metallic Inputs 66 66 69 64 62 61 62 64
Energy and Reducing Agents 9 9 9 10 10 10 10 11
Specific Materials 6 6 5 5 5 6 6 6
Special Steel BO
Personnel 19 21 19 20 20 20 20 21
Maintenance 6 6 6 5 6 7 6 6
Depreciation 5 5 5 5 6 5 5 6
Metallic Inputs 46 45 48 49 46 46 46 43
Energy and Reducing Agents 12 12 12 11 12 12 12 13
Specific Materials 12 11 10 10 10 10 11 11
GLOSSARY
Personnel Costs with personel and consulting.      
Metallic charge Scrap, pig iron, iron ore and metallic alloys.      
Energy and Reducing Agents Coal, coke, electricity, oxygen, natural gas and fuel oil.      
Specific Materials Refractories, electrodes, rolling cylinders, rollers, guides, carburants and lime.      
Frequent Questions

Click in the question to access the document with their answers.

More details Where to find information on the Gerdau website
Quarterly Results Website Gerdau1 - Investors - Financial Information - Quarterly Results
Plant Capacity Website Gerdau1 - Investors - Financial Information - SEC Files - 2011 - Form 20F (20-F in the item 4.D - PROPERTY, PLANT AND EQUIPMENT)
Contingencies of Gerdau S.A.: ICMS credits, resulting mainly from sales of products to trading companies and tax income related to companies abroad Website Gerdau1 - Investors - Financial Information - SEC Files - 2011 - Form 20F (NOTE - PROVISIONS FOR TAX, LABOR AND CLAIMS, item II) Non accrued contingent liabilities, items A.1 and A.4

1Website Gerdau - www.gerdau.com

Disclaimer

This modeling guide is based on historic and publicly available data. It does not seek to provide any guidance (estimates or projections) of future events, except for the best estimate the Company currently has for its investment and debt amortization plan. The estimates and premises in this guide are subject to risks, uncertainties and assumptions that include, among others, the general economic, political and business conditions in Brazil and in the markets where we operate, as well as existing and future government regulations. Potential investors are cautioned that the data provided here is not a guarantee of future performance as it involves risks and uncertainties. The company does not assume, and specifically rejects, any obligation to update any estimate, which is only valid on the date it was made.

 

Last updated on