Gerdau sales go up 44% from January to September

The consolidated sales volume reaches 15.6 million tons, a 25% increase when compared to the same period last year. Steel production grows 26%, reaching 16.4 million tons

In the first nine months of 2008, Gerdau's gross sales reached the mark of R$ 36.2 billion, a 44.1% increase over the same period last year. From January to September, Gerdau's sales of steel products went up 24.7%, totaling 15.6 million tons. To keep up with the expansion in sales, consolidated steel production reached 16.4 million tons, representing a 25.9% increase compared to the first nine months of 2007. “The good results in the first nine months of 2008 reflect the growth in worldwide demand, especially in Brazil, and the consolidation of new companies. However, the present situation of the world economy demands caution and permanent monitoring. We'll continue looking for synergies and the expansion of the efficiency and competitiveness of our operations. We are considerably solid in financial terms and have the historic flexibility to adjust ourselves to the fluctuations taking place in the markets where we do business”, said André B. Gerdau Johannpeter, Gerdau CEO. Of the total R$ 36.2 billion in gross sales, the company's Brazilian operations (except for Piratini and Villares) accounted for R$ 13.7 billion, its units in other Latin American countries for R$ 3.8 billion, the plants in Canada and the US (except Macsteel) for R$ 11.9 billion, and the specialty steel business (which includes Piratini, Villares, Macsteel and Sidenor) for R$ 6.8 billion. Gerdau's EBITDA (earnings before interest, tax, depreciation and amortization), also known as operating cash generation, reached R$ 8.6 billion, an increase of 85% over the period from January to September 2007. In the same period, the consolidated net profits were 38% higher, reaching R$ 4.6 billion. In Brazil, physical sales to the domestic market grew 33.9%, hitting 3.9 million tons of steel products. Exports from the country expanded 5.0%, going to 2.1 million tons and generating US$ 1.8 billion in revenue, which includes sales to affiliates. However, in the exportation of long steels there was a 29.5% reduction of shipments to meet the higher demand in the domestic market. From January to September, steel production in Brazil reached 6 million tons, which represents an evolution of 17.1%. In the other Latin American countries (Brazil excluded) the company sold 1.8 million tons of steel products, growing 9.4% over the first nine months of 2007. Steel production in the area also increased, growing 8.9% to 1.5 million tons. In Canada and the US, physical sales were 6.4 million tons (+29.3%). This increase is due to the consolidation of Chaparral Steel, which was incorporated by Gerdau Ameristeel – the company responsible for Gerdau's operations in Canada and the US – in the fourth quarter of 2007. Steel production volumes reached 6.6 million tons,. which means a positive variation of 38.4%. The consolidation of Macsteel as of April 2008 was the main factor responsible for the increases of the volumes of physical sales and steel production in the specialty steel business (companies in Brazil, Spain and the US). Physical sales went up 34.3% and reached 2.1 million tons and in the same period, steel production reached 2.3 million tons, 30.8% higher then in the months of January through September 2007. From January to September, investments totaled US$ 4.4 billion, of which US$ 1 billion was for the modernization and expansion of Gerdau units, and US$ 3.4 billion for acquisitions, including the new companies' debts taken on by Gerdau. Of the total of US$ 1 billion in fixed assets, US$ 601 million were allocated to operations in Brazil (except for Piratini and Villares), US$ 160 million to the units in other Latin American countries (except Brazil), US$ 113 million to manufacturing plants in Canada and the US, and US$ 155 million to the specialty steel business (Brazil, Spain and the US). The amount of US$ 3.4 billion dedicated to acquisitions was split as follows: US$ 2.6 billion for the specialty steel business expansion – purchase of Macsteel and additional Villares stock –, US$ 477 million to expand operations in Latin America (except Brazil), US$ 304 million for Canada and the US, and US$ 47 million for Brazil, whose operations have been previously detailed.
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