Gerdau S.A. (GGB)

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Net Profit

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Consolidated net profit for the first quarter of 2006 reached R$832.5 million, 2.7% greater than that of the same period in 2005, when it reached the mark of R$810.5 million. Net margin increased from 13.9% to 14.8%.

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The Brazilian operations had a net profit of R$557.0 million, 0.4% greater than that of the first quarter of 2005. Net profit in the North American operations was R$195.4 million compared to R$209.2 million, and in South America (excluding Brazil) R$63.1 million, 35.7% greater than that of the period of January through March 2005. In Spain, where Gerdau now consolidates Corporación Sidenor, the profit corresponding to the 40% stake in the Company was R$17.0 million for the quarter.

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Gross Revenues

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The consolidated gross revenue for the first quarter reached R$6.6 billion, 4.5% lower than that of the same period in 2005.

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The cause of this reduction was in part a result of the drop in taxes on steel products for the civil construction sector in the domestic market and the appreciation of the Brazilian currency in the period. The negative impact of the devaluation was felt in revenues generated in US dollars both from exports and operations abroad when converted into reais.

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The Brazilian operations generated revenues of R$3.3 billion, 49.2% of the consolidated revenues. Revenues at the units in North America reached R$2.6 billion, 39.6% of the total, while companies in Uruguay, Chile, Argentina and Colombia contributed with R$536.1 million, 8.1% of the consolidated figure, and the stake in the Spanish company added another R$204.8 million, 3.1% of the total.

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Revenues from operations abroad added to the revenues generated by exports from Brazil represented 59.7% of the consolidated revenue of the first quarter of 2006.

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Exports

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The improvements in the domestic demand throughout the quarter led to the adjustment of exports in order to better cater to the needs of the domestic market.

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Excluding shipments to subsidiaries, exports reached 627.1 thousand tons in the first quarter of 2006, 13.1% lower than in the first quarter of 2005.

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Adding back the exports to subsidiaries abroad, exports maintained a good rhythm in the quarter. Volumes exported reached 736.1 thousand tons, and generated revenues of US$286.6 million.

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EBITDA

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EBITDA (gross profit minus SG&A plus depreciation and amortization) in the first quarter this year reached R$1.2 billion and EBITDA margin (EBITDA divided by net revenue) was 20.8% compared to 24.3% in the first quarter of the previous year.