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Webcast
Third Quart er 2006 Result s
Presentation:
Paulo Penido Pint o Marques
CFO and Investor Relat ions Dir ector
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Disclaimer
2
Declarat ions relat ive t o business perspect ives of t he Company,
operat ing and f inancial result s and project ions, and references t o
t he growth of t he Company, const it ute mere forecast s and were
based on Management s expectat ions in relat ion t o futureperformance. These expectat ions are highly dependent on market
behavior, Brazil s economic sit uat ion, t he indust ry and
international market s, and are therefore subject t o change.
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CONSOLIDATED RESULTS IN 3Q06 AND 9M06
R$ mill ion 3Q 2006 3Q 2005 2Q 2006Chg.
3Q06/3Q059M 2006 9M 2005
Chg.
9M06/9M05
Total Sales Volume (000 t ) 1,971 1,769 2,028 11% 5,953 5,367 11%
Net Revenues 3,127 3,126 3,053 0% 9,138 10,072 -9%
Gross Profit 1,195 1,221 1,013 -2 3,096 4,503 -31
Operat ing Result (EBIT) a 1,022 1,098 890 -7% 2,653 4,017 -34%
Financial Result (91) (171) (78) -47% (287) (505) -43%
Net Income 715 782 704 -9% 1,763 2,594 -32%
EBITDA b 1,228 1,265 1,046 -3% 3,182 4,615 -31%
EBITDA Margin 39.3 40.5% 34.3 -1.2 p.p. 34.8 45.8% -11.0 p.p.
EBITDA (R$/t ) 623 715 516 -13% 535 860 -38%
Total Assets 18,124 17,367 18,066 4% 18,124 17,367 4%
Net Debt 1,669 2,243 1,603 -26% 1,669 2,243 -26%
Stockholders' Equity 10,166 7,994 9,451 27% 10,166 7,994 27%
(a) Earnings before i nter est , t ax and parti cipat ions.
(b) Earnings before int erest , t axes, depreciation, amort izati on and part icipati ons.
Highlights
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Sales Volume: In 3Q06, slight decrease compared to 2Q06, although 11%above y-o-y in 9M06
Net Revenue: 2%above 2Q06 due to improved avg. prices, totalingR$ 9.1 billion in the year.Net Revenues per tonne: 8%increase in total sales (Dom. & Exp. market)
EBITDA: Up 17%from 2Q06, accumulating R$ 3.2 billion in the year
EBITDA Margin: Rose to 39%from 34%in 2Q06
Net Profit : 2%higher than 2Q06, totaling R$ 1.8 billion in t he year
Maintenance of Domestic Market leadership: 52%Market Share
HIGHLIGHTS Consistent result s within it s annual planning
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Shareholders St ructure - New Control Group
5
Previ14.9%
CVRD
12.3%
Others
8.9%Votorantim11.6%
Usiminas PensionFund
10.1%
Nippon Group
24.7%
CVRD5.9%
Camargo Corra11.6%C
ontrolGroup
:63.9
%
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Reached its peak during 3Q06 in terms of demand and prices
China continues the exception: st rong demand compat ible wi th its growth.However, with lower price levels.Accounts for 34%of total global crude steel production.
Global crude steel production in 9M06: 903.4 million tonnes, 9%above9M05.
USA: Vigorous growth and measures to contain inflation.Signs of unbalance between supply and demand.
Europe: More stable environment.
6
STEEL INDUSTRY SCENARIO
Internat ional MarketInternat ional Market:
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STEEL INDUSTRY SCENARIO
Domest ic Market :Domest ic Market :
Crude steel production: totaled 22.8 million tonnes in 9M06 -decrease of 4%compared to 9M05.
Domestic flat steel demand:
3Q06/3Q05 Change: 18%growth.Highlight for civil const ruct ion/ shapes, dist ribut ion, autopart s,highway equipment and electronics segments.
9M06/9M05 Change: 3%growth.Highlight for segments that were benefited by increase inconsumption; Automotive, Electrical/ Electronic Equipment andDomestic Appliances.
7
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Total sales in 3Q06: 1.97 MMt,
3Q06/3Q05 = 11% higher and3Q06/2Q06 = 3% decrease
Domest ic sales growt h of 11% over3Q05 and 4% decr ease over 2Q06.
Expor t sales - 13% growt h over 3Q05and 1% decr ease over 2Q06.
Accumulated sales 9M06: 5.95 MMt,11% above 9M05.
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USIMINAS - CONSOLIDATED SALES
75% 74% 65% 64% 73%72% 71% 71% 78% 70% 69%
75% 74% 65%
Consoli dated Sales (000 t )
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06
Domest ic Market Export Market
72%
75% 74% 65% 64% 73%72% 71% 71% 78% 70% 69% 54% 62% 69% 68%
25% 26% 35% 36% 28% 27% 29% 29% 22%30% 31% 46% 38% 31% 32%
1,8301,939
1,822
2,119
1,910 1,9712,011
2,170
1,7681,829
1,770
1,981 1,9542,028
1,971
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SALES MIX BY PRODUCT
Slabs
13%
Hot Rolled
28%
ProcessedProducts
4%
Heavy Plates
23%
Cold Rolled
24%
Hot Dip
Galvanized
5%
Electro
galvanized
3%
Slabs
12%
Hot Rolled
25%
Hot DipGalvanized
5%
Processed
Products4%
Heavy Plates
21%
Cold Rolled
30%
Electrogalvanized
3%
3QO6 3QO5
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EXPORTS BY COUNTRY - 9M06
Spain
5%
Argentina
5%
United States21%
Thailand
6%
Colombia
3%
South Korea
3%
Canada
8%
Mexico
14%
Chile
5%
Germany
11%India
6%
Others
13%
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CONSOLIDATED EBITDA
EBITDA - totaled R$ 1.2 bi ll ion( US$ 565 mil li on) in 3Q06,accumulating R$ 3.2 billion in9M06 (US$ 1.5 billion).
EBITDA margin of 39% in 3Q06and 35% in 9M06.
EBI TDA & EBI TDA Margin
479
565
414
404
539
655
646
652
538
422
318
263
225
255
258
34%
39%
31%31%
41%
47%
50%48%49%
36%
46%
39%
31%33%
42%
1Q03
2Q03
3Q03
4Q03
1Q04
2Q04
3Q04
4Q04
1Q05
2Q05
3Q05
4Q05
1Q06
2Q06
3Q06
EBITDA (US$ mil lion) EBITDA Margin
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CONSOLIDATED NET DEBT
CND/EBITDA ratio at 0.4 x
New BNDES credit line forinvestment f inancing up toR$ 900 mil li on
Debt profile:
Short Term - 26%Long Term - 74%
Debt by curr ency:
Domestic - 24%Foreign - 76%
Consolidated Net Debt /
EBI TDA
0,
7
0,
8
0,
9
2,
4
2,
6
2,
5
2,
3
2,
2
1,
9
1,
7
1,
3
1,
0
1,
0
1,
0
0,
7
0,4 0,40, 4
2, 72, 5
2, 32, 1
1, 6
2, 6
1, 1
0, 70, 4 0,4 0,4 0, 3
1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06
CND (US$ billion) CND/ EBITDA
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13 Usiminas cash posit ion amounted R$2.0 bil li on on Sept . 29 2006
3Q06 CONSOLIDATED CASH FLOWBrazilian GAAP (Legislao Societria) - R$ million
2,000
134
313
356
41178
390412
1,228
2,042
InitialBalance
EBITD
A
NewFinancing
AmortizationandFin
ancing
Interest
Working
CapitalV
ariation
Investments
Dividend
/Interston
Capital
Others
FinalBalance
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Usiminas shareappreciation of 36%versus 21% ofIbovespa (Jan. toNov 3, 2006)
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ADRADR
LevelLevel II
9M06 - STOCK PERFORMANCE
50
70
90
110
130
150
dez/05 j an/06 fev/06 mar/06 abr/06 mai/06 jun/06 jul/06 ago/06 set/06
IBOVESPA USIM5 SID
USIM5 vs Ibovespa and Steel IndustryFrom 12/29/2005 to 09/29/2006 (basis 100)
108,9
116,9
125,8
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OUTLOOK
International market : Signs of adj ustment/ accommodat ion in 4Q06 prices. Greater
awareness to avoid inventory growth.
For 2007, forecast for reduction in US growth, compensated byChina and India.
More stable price environment forecasted for 2007.Domestic market :
Demand growth of 8%in 2006 (according to IBS)
2007: total f lat demand growing 8%, influenced by:
- maintenance of high volumes of credit ;- increase in investments in important steel consuming sectors.
15
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Guidancefor 2006:
Total sales: ~ 8.0 MMt, 10%above 2005.
Domestic Market : 67%of sales volume = 9%growth, inline with demand growth estimated by IBS.
Exports: 33%of sales = growth of approximately 12%, withgreater share of heavy plate.
USIMINAS - OUTLOOK
16
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Re-cert if icat ion of Product Quality, Environmental and Worker SafetyCert if icates at the Mil ls.
Issuance of Installation license for Coke Oven #3 by State Environmental
and Development Agency
Usipart s Investments - R$ 46 mil l ion for expansion
Usiminas System is awarded:
.Isto Magazine s 500 Best Companies Guide (Usiminas and Usiparts.Ibase Social Statement Award
.Gazeta Mercatil Award (Rio Negro)
OTHER HIGHLIGHTS
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Other informat ion:Investor Relat ions
18
www.usiminas.com.br
Bruno Seno Fusaro Luciana Valadares dos [email protected] [email protected]
Tel: 55 31 3499-8710 Tel. : 55 31 3499-8619
Matheus Perdigo Rosa Gilson Rodr igues Bentes
mpr osa@usi mi nas.com.br gil [email protected]
Tel: 55 31 3499-8056 Tel: 55 11 5070-8980 SP55 31 3499-8617 BH