INVESTOR PRESENTATION

May 2019
outlook
 2019
GDP GROWTH (%)
2018 2019e 2020e
STABILITY OF GLOBAL ECONOMY World 3.6 3.3 3.6
ACTITIVY
USA 2.9 2.3 1.9
Brasil 1.1 2.1 2.5
China 6.6 6.3 6.1
Expectation of recovery
for Brazil
Source: World Economic Outlook Database, 2019 (FMI)
 Growth
2020e
Growth
2019e
Region / Country (in Mt 2019e
and %)

World 1,735 1.3% 1.0%

Good outlook for European Union 170.2 0.3% 1.2%
steel consumption
in NAFTA 144.5 1.1% 0.8%

2019 USA
South & Central America
Brazil
101.4
44.9
22.0
1.3%
3.6%
4.6%
0.3%
7.5%
-
Asia and Oceania 1,194.6 1.7% 0.4%
China 843.3 1.0% -1.0%

Source: World Steel Association | Instituto Aço Brasil (IABR)

demand recover
IN BRAZIL

POSITIVE INFLATION
ECONOMIC CYCLE BELOW THE
BEGINNING TARGET

INTEREST RATE
SHARPLY REDUCTION INCREASING POSITION IN THE
CONSTRUCTION RETAIL MARKET:
COMERCIAL GERDAU
AGENDA REFORM

CONTINUOUS GROWTH OF INDUSTRY

BEGINNING OF THE RECOVERY OF
CONSTRUCTION
north america increase
competitiveness
JOB GENERATION
SECTION 232

GDP GROWTH continues in 2019

US Economy remains strong

DEREGULATION
flat to low demand growth

CONSUMER CONFIDENCE
Additional opportunities to
continue to capture efficiencies
from a simpler footprint

Focused reinvestment in products

with strong market positions and
accretive value
 Rebalancing economy and steel
industry

CAPACITY CLOSURES

STEEL INDUSTRY
GDP GROWTH Consolidation

Partnership with steel-users

PRICES

China Strong price in domestic market

STEEL EXPORTS REDUCTION

 Monthly Exports (in Mt)

7 7
6,8 6,8 6,9
6,5 6,5 6,5 6,3
6,2
5,9 5,9 5,9
5,5 5,6 5,5 5,6
5,3 5,3
5,1 5
4,8 4,7
4,5

STRONG REDUCTION

China
ON EXPORTS IN

April 2017 April 2019

Source: World Steel Association
gerdau highlights
profile
ONE OF THE MAIN
SPECIAL AND LONG STEEL

118

YEARS
SUPPLIER OF THE AMERICAS

OF EXPERIENCE
OPERATION IN
FLAT STEEL
SHARES LISTED IN
LARGEST RECYCLER SP, NY, MADRID:
OF LATIN AMERICA: +120,000 SHAREHOLDERS
12 MILLION TONS
20

YEARS
PIONEER IN THE IMPLEMENTATION
OF DIGITAL INNOVATION
 North South
Brazil Special Steel
America America
GEOGRAPHIC ► Housing ► Infrastructure ► Housing ► Automotive
DIVERSIFICATION ► Infrastructure ► Non-residential ► Infrastructure ► Shipbuilding
► Industrial and ► Industrial ► Industrial and ► Energy
commercial commercial
buildings buildings
► Agriculture
► Exports

Net Sales and EBITDA per Business Division – 1Q19

34% of Net 41% of Net 8% of Net 17% of Net

Sales Sales Sales Sales
43% of 30% of 9% of 18% of
EBITDA EBITDA EBITDA EBITDA

11
*Net sales
sales and
and EBITDA in the
EBITDA in the last
last 12
12 months
months
 the Gerdau we are creating
roadmap digital innovation
❖ Economic value: more than R$ 7 billion since 2014 ❖ GE partnership
❖ New partnership in wind power market ❖ Uber for heavy truck
❖ Use of drones

new ideas culture modernization

❖ Partnership with startups and innovative ❖ Leaders as role model
companies to think different ❖ People Development
Committees
divestments R$ 1,1 bi R$ 1,3 bi R$ 0,8 bi R$ 4,2 bi
2014-15 2016 2017 2018

economic value
of more than Divestments
Sold operation in Spain Sold a mills, downstream
operations and real state
R$ 7 billion
and Chile
assets in US
Sold a mill and coal assets
in Colombia Sold hydroelectric power
plants in Brazil
JVs in Dominican
Republic and Sold the special steel
Colombia operation in India

Strategic alliances
Partnership to produce forged parts for the Wind power industry

Technical assistance agreement Juntos Somos +

 Unit 1Q19 1Q18 Δ% 4Q18 Δ%
Shipments '000 ton 2,985 3,871 -22.9% 3,167 -5.7%

Net Sales R$ million 10,026 10,389 -3.5% 10,900 -8.0%

Best 1st quarter
Cost of Goods

EBITDA
R$ million (8,757) (9,050) -3.2% (9,596) -8.7%
Sold

SG&A R$ million (368) (420) -12.4% (393) -6.4%

in 11 years
EBITDA* R$ million 1,552 1,484 4.6% 1,404 10.5%

EBITDA Margin % 15.5% 14.3% 12.9%

Net Income* R$ million 453 451 0.4% 312 45.2%

 Adjusted EBITDA and adjusted EBITDA margin
Geographic diversification R$ million and %
reduces volatility 15.7% 15.5%
14.3% 14.6%
12.9%
2,013

EBITDA
1,756
1,484 1,552
1,404

Adjusted EBITDA and adjusted EBITDA

margin 1Q18 2Q18 3Q18 4Q18 1Q19

per BD - R$ million and % EBITDA Adjusted EBITDA Margin Adjusted

North South Special
Brazil BD America BD America BD Steel BD

9.4% 17.8%
43.0% 29.8%

20.8% 21.2%
17.5% 13.2% 19.4% 18.2%
16.4% 15.6%
10.1% 12.9%
751 11.4%
647 674 5.6% 506
437 315
187 226 238
248 128 157

1Q18 4Q18 1Q19 1Q18 4Q18 1Q19 1Q18 4Q18 1Q19 1Q18 4Q18 1Q19

EBITDA (R$ million) EBITDA Margin (%) Participation of Adjusted EBITDA per BD (last 12 months)
 Evolution of Free Cash Flow R$ million

1,552

(305)
(24)
(155)

(1,234) (166)
Adjusted EBITDA CAPEX Income Tax Debt Interest, net Working Capital Free Cash Flow 1Q19
1Q19

Free Cash Flow 1Q19

2,038

405
65 86

(166)
1Q18 2Q18 3Q18 4Q18 1Q19
 Debt and Leverage Ratio - R$ billion

Indebtedness
LONGER DEBT MATURITY PROFILE
16.7
18.1 18.2
14.9 15.0
2.7x 2.7x
2.2x
Average debt cost 1.7x
1.8x

6.5% 3.2 2.9 3.5 3.3 2.5

Average debt term Mar/18 Jun/18 Sep/18 Dec/18 Mar/19

7.2 years Gross Debt Cash Net debt/EBITDA (R$)

Debt Amortization Schedule

4.6

Financial Policy:
Net Debt/EBITDA
1x – 1.5x 2.3

Average debt term 1.6

1.2 1.2 1.2
> 6 years
Maximum gross debt
R$ 12 bi 2020 2021 2022 2023 2024 2025 and after
17
 Investments
Next 3 Years (2019-2021): R$ 7.1 billion
(R$ million)
CAPACITY LOCATION VALUE (R$ ADDITIONAL START-UP DATE

2,409 2,447 INCREASE million) CAPACITY (1,000

2,219 TONNES)

684 722 Beams and North America 456 530 2021

Merchant bar
1,015
562 593 SBQ Pindamonhangaba-SP 532 400 2020
441 HRC Ouro Branco-MG 380 230 2021
1,163 1,132 SBQ Monroe-Michigan 266 160 2020
764

2019E* 2020E* 2021E*

General maintenance Ouro Branco Maintenance Technological expansion and updating 1st Quarter 2019
*Estimated Information • General maintenance: R$ 191 million
• Ouro Branco maintenance: R$ 37 million
• Expansion and technological update: R$ 77 million
 Safety

Creating value for customers

F cus Operational profitability

Free cash flow

Digital transformation
statement This presentation may contain forward-looking statements. These
forward-looking statements rely upon estimates, information or methods
that may be incorrect or inaccurate and may not actually occur. These
estimates are also subject to risks, uncertainties and assumptions,
including, among others: general economic, political and commercial
conditions in Brazil and in the markets where we operate and existing and
future government regulations. Potential investors are hereby informed
that these estimates do not constitute a guarantee of future performance
as they involve risks and uncertainties. The Company does not undertake,
and specifically denies, any obligation to update any estimate, which only
speak as of the date they are made.
.