2007 ANNUAL REPORT GROWING WITH PEOPLE

2007 ANNUAL REPORT GROWING WITH PEOPLE

People: source of growth for an integrated group that shows passion in everything it does PROFILE THE GERDAU GROUP A leader in the production of long steel in the Americas and a major world steel producer, the Gerdau Group has 107 years of history and participates in the process of consolidation of the global steel industry. It has 37,000 employees and operates in thirteen countries It produces long, specialty and flat steel for civil construction, industry and the agricultural sectors. Its products are used in cars, trucks, tractors, houses, bridges, highways, home appliances, machinery, and other products. It is one of the major recyclers in the world, transforming 12.8 million tons of iron scrap into steel each year. The shares of its public companies are traded on the stock exchanges of São Paulo, New York, Toronto and Madrid. 1 2 3 4 5 14 6 7 8 9 15 16 10 11 12 13 GERDAU EMPLOYEES COVER: 1. ALBERTH MAURICIO CASTEBLANCO Diaco Colombia 2. JENNIFER STEVENSON Gerdau Ameristeel USA 3. MARIO ALBERTO VARAS MOYA Gerdau AZA Chile 4. ISABEL CRISTINA L. DE OLIVEIRA Gerdau Riograndense Brazil 5. ALEJANDRO GOMEZ Sidenor Spain 6. EDUARDO GOMEZ Sidertul Mexico 7. RAMAYANAM GOVINDHA BHARATHI Kalyani Gerdau India 8. EDUARDO SINCINI Sipar Gerdau Argentina 9. DANIEL OBREGÓN Sidenor Spain 10. RODRIGO MURAKAMI Gerdau Riograndense Brazil 11. KARLA DANIELE COSTA VON BENTZEEN Gerdau Açominas Brazil 12. ANTONIO A. ABREU RABELO Gerdau Cosigua Brazil 13. TIMOTHY SMITH Chaparral Steel USA BACK COVER: 14. EDILBERTO VÁSQUEZ Diaco Colombia 15. VICTOR JAVIER PEREZ CASTREJON Sidertul Mexico 16. CAROLINA MARÍN SILVA Gerdau AZA Chile

THE GERDAU GROUP AROUND THE WORLD MISSION Gerdau is an organization focused on the steel business, seeking to satisfy customers needs and add value for shareholders, committed to the fulfillment of people and to the sustainable development of society. VISION To be a global steel company and one of the most profitable in the sector. VALUES SATISFIED customers 42 Steel mills 14 Downstream operations 87 Fabricated reinforcing steel facilities 4 Flat steel service centers 75 Retail facilities 32 Scrap collection and processing facilities 4 Iron ore extraction areas 2 Solid pig iron production facilities 2 Private port terminals TOTAL SAFETY in the workplace ENGAGED and fulfilled people QUALITY in everything we do RESPONSIBLE ENTREPRENEURSHIP INTEGRITY GROWTH and PROFITABILITY Associated companies 10 Steel mills 4 Downstream operations 3 Retail facilities Joint ventures 2 Steel mills 4 Downstream operations 1 Fabricated reinforcing steel facility Gerdau Group Headquarters

KEY INDICATORS Financial margins 2006 2007 Gross margin 26.4% 24.4% Net margin 16.5% 14.1% EBITDA margin 22.6% 20.4% Capital market 2006 2007 Metalúrgica Gerdau S.A. Dividends (R$ per share) 2.26 2.10 Dividend yield (%)* 5.2 3.0 Return on equity (%)** 30.0 25.7 Market capitalization (R$ million) 8,063 12,819 Gerdau S.A. Dividends (R$ per share) 1.35 1.26 Dividend yield (%)* 3.9 2.4 Return on equity (%)** 28.8 25.9 Market capitalization (R$ million) 23,062 33,547 Gerdau Ameristeel Corp. Dividends (US$ per share) 0.30 0.35 Dividend yield (%)* 3. 4 2.5 Return on equity (%)** 20.4 13.9 Market capitalization NYSE (US$ million) 2,727 6,156 Market capitalization Toronto (CAN$ million) 3,178 6,102 *Ratio between the dividend paid per share and share price on the last day of the year **Ratio between net profit and consolidated shareholders equity Outptut and sales 2006 2007 Steel production (thousand metric tons) 15,767 17,907 Production of rolled products (thousand metric tons) 12,803 15,160 Sales (thousand metric tons) 14,889 17,159 Employees 2006 2007 Number of employees 31,563 36,925 Number of service providers 13,298 13,687 Investments in training (R$ million) 37.0 44.6 Environmental management 2006 2007 Re-use of by-products (%) (% of total generated) 76.7 79.4 Investments (R$ million) 168.6 345.7 Exchange rate R$ US$ 2006 2.1380 1.00 2007 1.7713 1.00 Results (R$ million) 30 25 20 15 10 5 0 Value added breakdown (R$ 10.5 billion) 80 60 40 20 0 25,884 5,847 4,261 41.7 30,614 2006 2007 6,249 4,310 30.2% 4.9% 25.4% 28.7% 10.8% Social responsibility investments (R$ million) 51.6 Net sales revenues EBITDA Net profit Performance of shares in the past five years Metalúrgica Gerdau S.A. (GOAU4) Gerdau S.A. (GGBR4) Gerdau S.A. (GGB) Gerdau S.A. (XGGB) 1,547.1% 1,073.2% 1,713.1% 1,221.6% Gerdau Ameristeel Corp. (GNA)* Gerdau Ameristeel Corp. (GNA.TO) Bovespa (São Paulo) NYSE (New York) TSX (Toronto) Latibex (Madrid) 205.0% 471.3% 467.0% 54.1% 105.2% 141.6% 0 500 1,000 1,500 2,000 *Since Oct 15, 2004 Profits reinvested Interest on financing Taxes and social contributions Salaries, benefits, profit sharing and training Dividends and interest on shareholders equity 72.7 2005 2006 2007

INFORMATION AND CONTACTS GERDAU GROUP Av. Farrapos, 1811 Porto Alegre RS Brazil Tel.: +55 (51) 3323.2000 www.gerdau.com SHAREHOLDER RELATIONS Av. Farrapos, 1811 Porto Alegre RS Brazil CEP 90.220-005 acionistas gerdau.com.br Tel.: 0800.702.2001 +55 (51) 3323.2211 Fax: +55 (51) 3323.2281 Depositary Bank in Brazil Banco Itaú S.A. investfone itau.com.br Tel.: +55 (11) 5029.7780 SERVICES TO ANALYSTS AND INVESTORS Av. Farrapos, 1811 Porto Alegre RS Brazil CEP 90.220-005 inform gerdau.com.br Tel.: +55 (51) 3323.2703 Fax: +55 (51) 3323.2281 Gerdau Ameristeel Corp. 4221 W. Boy Scout Blvd. Suite 600 Tampa FL 33607 EUA Tel.: +1 (813) 286.8388 E-mail: ir gerdauameristeel.com www.gerdauameristeel.com INDEPENDENT AUDITOR Deloitte Touche Tohmatsu Depositary Bank Overseas The Bank of New York shareowners bankofny.com Tel.: +1 (610) 382.7836

CREDITS COORDINATION Gerdau Group Corporate Communications and Public Affairs WRITING AND PRODUCTION SUPERVISION Gerdau Group Corporate Communications and Public Affairs and Imagem Corporativa GRAPHIC DESIGN Ana Couto Branding & Design TRANSLATION Eriksen Translations and Scientific Linguagem PHOTOGRAPHS AND GRAPHICS Gerdau archive (pg. 88, 89, 90, 91), Gerdau Ameristeel archive (pg. 45, 85), Emmanuelle Bernard (pg. 4, 8, 18, 19, 20, 30), GH Digital/Leo Drumond (pg. 65), Leonid Streliaev (pg. 37), Mathias Cramer (pg. 12), MP Foto/Eduardo Simões (cover, back cover, highlights, pg. 43, 46, 77, 89), MP Fotos/Guto Seixas (pg. 36), MP Fotos/Ilana Bessler (cover, back cover, pg. 63, 80, 81, 82), MP Fotos/Kiko Ferrite (cover, back cover, pg. 31, 60, 61, 71, 74, 75, 87), MP Fotos/ Sanjiv Nadkarni (cover, pg. 47), Newton Verlangiere (pg. 90, 91), Paulo Arumãa (pg. 41), Produ-Video Eventos (pg. 39). PAPER AND INK Duo design 300g (cover) and Couché Matte 150g (inside pages). Produced by Cia. Suzano from cultivated trees, certified by the Forest Stewardship Council (FSC). Printed with soy-based ink PRINT RUN 5,000 copies in Brazilian Portuguese, 2,500 in English and 2,200 in Spanish We thank all of those who contributed by supplying information and images for this publication. Gerdau believes in the importance of evaluating and continuously improving all of its products and services. Because of that, we would like to hear from you concerning this 2007 Annual Report. Please rate the scope, relevance, information quality and graphic design. Your opinion is very important. Access www.gerdau.com/annualreport and fill the opinion survey or send an e-mail to gerdau concerning aspects that may be improved. gerdau.com, with suggestions

www.gerdau.com ARGENTINA www.sipargerdau.com BRAZIL www.gerdau.com.br CANADA www.gerdauameristeel.com CHILE www.gerdauaza.cl COLOMBIA www.diaco.com.co DOMINICAN REPUBLIC www.industriasnacionales.com INDIA www.kalyanigroup.com MEXICO www.sidertul.com.mx PERU www.sider.com.pe SPAIN www.sidenor.com UNITED STATES www.gerdauameristeel.com URUGUAY www.gerdaulaisa.com.uy VENEZUELA www.sizuca.com.ve