www.gerdau.com1

Investor Presentation | 2017

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Outlook

Gerdau Highlights

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Better outlook for steel consumption

Source: World Steel Association

Region / Country (in mt and %)

2017f 17/16

World 1,535 1.3%

European Union 158 0.5%

NAFTA 135 2.2%

USA 94 3.0%

Central & South America 41 3.5%

Brazil 19 2.8%

Asia and Oceania 1,016 1.0%

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GDP growth

Inflationbelow the target

FGTSR$ 44 billion

PPIInvestment Partnership Program

Agenda reform Ceiling on public spending

Labor Social security

Tax

Interest ratesharply reduction

Political Scenarioincreasing uncertainty

Job generation

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Tax rateFocus to reduce from 38% to 15%

Fight unfair importsRebar

Wire rod

Infrastructureadditional US$ 1.0 trillion (10y)

Deregulation

Stock market

Section 232

Job generation

Consumer confidence

GDP growth

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Source: World Steel Association

World steel capacity utilization rate improved

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Steel industry Consolidation Partnership with steel-users

GDP growthFAI 6M17: +8.6%Infrastructure 6M17: +17.3%

Steel Consumption6M17: +10.2% y-o-y

Capacity closures 2016: 60 Mt

All induction furnaces ~120 Mt 2017: 50 Mt

Steel exports reduction 5M17: -53% in long steel

PricesStrong price in domestic market

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Source: World Steel Association

In million metric tons

*January to July of 2017 annualized

China steel exports decreased significantly

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Source: Platts

Margins were updated until August, 14

In US$/tRebar margin in Chinese domestic market is in good shape

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Source: Platts

Better price in the international steel market

Prices were updated until August, 14

In US$/t

Turkey

China

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Outlook

Gerdau Highlights

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Profile

116

YE

AR

S

OF EXPERIENCE

ONE OF THE MAIN

SPECIAL STEEL

SUPPLIER OF THE WORLD

LEADING IN THE PRODUCTION OF

LONGIN THE AMERICAS

STEEL

LARGEST RECYCLER

OF LATIN AMERICA:

12 MILLION TONS

SHARES LISTED ON

ON THE SÃO PAULO

NY AND MADRID:

+ 120,000 SHAREHOLDERS

OPERATIONS IN FLAT STEEL

PIONEER IN THE IMPLEMENTATION

OF DIGITAL INNOVATION

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Player with dominant presence and broad product portfolio

Steel Units

Associated Companies

USA & Canada

Mexico

Colombia

Peru

Chile

Uruguay

Argentina

Brazil

Dominican Republic

Venezuela

India

SBQ

Rebars

Wires

Structural

shapes

Billets, blooms

& slabs

Wire rod Nails

HRC Iron Ore

Merchant bars

& light shapes

Ready-to-use

products

Heavy plates

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Geographic diversification

Brazil North America Special Steel► Housing

► Infrastructure

► Industrial and commercial buildings

► Agriculture

► Exports

► Infrastructure

► Non-residential

► Industrial

► Automotive

► Shipbuilding

► Energy

South America► Housing

► Infrastructure

► Industrial and commercial buildings

*Net sales and EBITDA in the last 12 months

32% of Net Sales

43% of EBITDA

40% of Net Sales

19% of EBITDA

12% of Net Sales

14% of EBITDA

16% of Net Sales

24% of EBITDA

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Vertically integrated operations

► Relevant level of direct

purchase and captive scrap

(50%)

► 6.3 billion tons of iron ore

resources

– Self-sufficiency at Ouro

Branco mill

► Partial level of energy self

generation

Upstream

► Low cost structure

► Mini-mills and integrated mills

key to low cost strategy

► Latest generation technology

Steel

► Reinforcing steel fabrication

facilities (Fab Shops)

► Drawn products

► Multi-product distribution

network

► Tailor-made added-value

approach (~40% of sales to civil

construction)

Downstream

Digital Innovation

Digital mill

GE partnership

Uber for heavy truck

Use of drones

Roadmap Economic value: R$ 2.8 billion since 2014

New partnership in wind power market

New Ideas Partnership with startups and

innovative companies to think different

Culture modernization Leaders as role model

People Development Committees

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The Gerdau we are creating

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Roadmap: economic value of R$ 2.8 billion

Sold operation in Spain and Guatemala

Sold a mill and coal assets in Colombia

JVs in Dominican Republic and Colombia

Sold a mill, downstream operations and real state assets in US

Technical assistance agreement

Partnership to produce forged parts for the Wind power industry

Divestments

Strategic alliances

2014-15: R$ 1.1 bi

2016: R$ 1.3 bi

1H17: R$ 0.4 bi

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EBITDA margin in 2Q17 improved compared to 2Q16 and 1Q17

Unit 2Q17 2Q16 Δ% 1Q17 Δ%

Shipments '000 ton 3,707 4,240 -13% 3,591 3%

Net Sales R$

million9,166 10,249 -11% 8,459 8%

Cost of Goods Sold R$

million(8,229) (9,165) -10% (7,805) 5%

SG&A R$

million(420) (578) -27% (439) -4%

EBITDA* R$

million1,120 1,201 -7% 853 31%

EBITDA Margin % 12.2% 11.7% 10.1%

Net Income* R$

million149 184 -19% (34)

Free Cash Flow R$

million241 827 -71% (227)

* Adjusted by extraordinary events

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Geographic diversification reduces volatility

EBITDA and EBITDA margin per BD

EBITDA (R$ million) EBITDA Margin (%) Participation of adjusted EBITDA per BD

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Strong reduction in SG&A, corresponding to 4.6% of net sales in 2Q17

SG&A

Reduction of cash conversion cycle to 77 days

R$ million and in % of Net Sales

Working CapitalR$ billions and Days

2Q17

4.6%

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Selectivity in CAPEX

CAPEX in 1H17 was R$ 432 million, focused on productivity improvement and maintenance

1H17 CAPEX by Business Division

CAPEX Disbursements (R$ billion)

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R$ 1.6 billion of FCF generation in the last twelve months

2Q17 Free Cash Flow (R$ million)

Evolution of Free Cash Flow(R$ million)

Free cash flow of R$ 241 million generated in 2Q17

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Deleveraging of R$ 1.2 billion on Net Debt y-o-y

Graph 1: EBITDA in the last 12 months

Average Debt Term: 5.5 years

R$ billion

Debt & Leverage Ratio

Average Debt Cost: 6.9%

Net debt/EBITDA stable at 3.6x, despite the unfavorable exchange variation.

R$ billion

Debt Amortization Schedule

Graph 2: 2017 Bond

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Closing Remarks

Free Cash Flow generation Deleverage

Roadmap execution

CAPEX selectivity

High productivity

Shareholder return

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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.

Thank you! www.gerdau.com/ri inform@gerdau.com.br +55 51 3323 2703