International Growth boosts Gerdau Group revenue

Consolidated sales revenue totaled R$ 27.5 billion, up 7.2% from 2005

International growth boosted the Gerdau Group’s consolidated sales revenue to R$ 27.5 billion, 7.2% higher than the R$ 25.6 billion recorded in 2005. In dollar terms, sales revenue was up 17.4% to US$ 12.9 billion, due to the 8.7% rise in the value of the Brazilian real against the US dollar. During the year, acquisitions totaled US$ 1 billion, representing 50% of the investments carried out. Four companies were purchased in the United States: Callaway Building Products, Fargo Iron and Metal Company, Sheffield Steel and Pacific Coast Steel and one in Peru (Siderperu), together with a 40% stake in Corporación Sidenor of Spain. Corporación Sidenor also assumed control of the Spanish steelmaker GSB Acero. “The Gerdau Group will continue to build on its strategy of being an agent of consolidation in the steel industry, seeking acquisition opportunities in a range of markets. The challenge is to boost competitiveness and scale in such a way as to ensure growth with profitability, market leadership, operation in diverse sectors of the steel industry and presence in a range of countries”, said CEO André Gerdau Johannpeter. Mr. Johannpeter took over the position of CEO on January 1, 2007, thereby marking a new phase in the corporate governance of the Gerdau Group. Increased demand in the Brazilian market also contributed to the Group’s performance. In 2006, 46.3% of total revenue was generated in Brazil, 41.3% in North America, 9.4% in South America (other than Brazil), and 3.0% in Spain. Consolidated net profit totaled R$ 3.5 billion, up 7.6% from 2005. In dollar terms, net profits were up 17.8% to US$ 1.6 billion. In 2006, physical sales of steel products were up 9.4% to 14.8 million metric tons. As a result, production of steel (slabs, blooms and billets) grew 13.9% to 15.6 million metric tons, with rolled products up 17.7% to 12.7 million metric tons. Gerdau units sales on the Brazilian market totaled 4 million metric tons (up 12.6% from 2005), mainly as a result of growth in civil construction. In order to meet domestic demand, export shipments from Brazil were reduced to 2.9 million metric tons, generating revenue of US$ 1.2 billion. In North America, sales totaled 6.7 million metric tons, up 5.0% 2005. Steel production totaled 6.8 million metric tons (up 8.1%) and rolled products totaled 6.5 million metric tons (up 5.7%). In 2006, the units in Argentina, Chile, Colombia, Peru and Uruguay sold a total of 1.5 million metric tons, representing an increase of 92.8%. As a result, steel production also increased, from 534,000 to 1.2 million metric tons. Output of rolled products was up 121.0%, to 1.4 million metric tons, due primarily to consolidation of companies purchased in the region in the last two years.
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