Good afternoon, and welcome to Gerdau's presentation of the third quarter (sic) [second quarter] of 2013 earnings. [Operator Instructions] We would like to highlight that forward-looking statements that might be made during this conference call relative to Gerdau's business prospects, its projections and operating and financial goals are mere predictions -- forecasts based on the expectations of the management regarding the future of the company. Although Gerdau believes that its comments are based on reasonable assumptions, forward-looking statements are no guarantee of what is going to happen. Here with us today, we have Mr. Andre Gerdau Johannpeter, Managing Director and CEO; and André Pires, Vice President and IR Officer. I would like to give the floor now to Mr. André Gerdau Johannpeter. You may proceed, sir. André Bier Gerdau Johannpeter: Thank you, good afternoon, everyone. Welcome to our third quarter (sic) [second quarter] of 2013 earnings conference call. We will start this presentation with an assessment of the global status of the steel market, then we'll move to Gerdau's performance in the second quarter of the year and talk about the outlook for the regions where the company operates. After that, André Pires will give you details on the financial performance of Gerdau. And at the end, we will be available to answer questions you might have. It is important to highlight that in our presentation we will be assessing the performance of the second quarter of 2013 vis-a-vis the same period of last year. However, in the case of Gerdau's balance sheet, we will also analyze the figures as they relate to the first quarter of 2013, showing our performance in the period. Let us a start with the industrial view in global steel production, which reached 401.1 million tonnes in the second quarter of 2013, up 1.8%, compared…

[Operator Instructions] Our first question comes from Mr. Marcos Assumpção, Itaú BBA. Marcos Assumpção - Itaú Corretora de Valores S.A., Research Division: My first question has to do with the net sales revenue per tonne. Could you talk about the price of rebar. And what is your price expectation looking at the second half of the year? My second question has to do with the volume of the domestic market. The volume grew 6% quarter-on-quarter. And you mentioned that you redirected the sales of semi-finished goods in Brazil. Could you talk about how much the volume has grown x semi-finished goods? André Pires de Oliveira Dias: This is André Pires. As for the premium for rebar compared to imported, it is about 13%. We don't envision any change in this level of premium price in the second half, nothing significant. As for the mix, you're correct. There was a growth in the sales of semi-finished products in the domestic market. That phenomena had happened already in the first quarter and continued in the second quarter, a growth of 6.2%. If we exclude this volume, in other words, x semi-finished goods, growth would be around 2%, for traditional rolled products. Marcos Assumpção - Itaú Corretora de Valores S.A., Research Division: And my follow-up question, André. With the sales -- regarding the sales of semi-finished goods in Brazil, do you expect it to continue to be high? Are you selling to other players, other local players? André Pires de Oliveira Dias: Well, it is hard to say. It is a market opportunity that we enjoyed in the first and second quarters. The international market remains with relatively pressurized prices, but improved a bit in the end of the second quarter. The trend is that, if there's a demand, we will continue to supply the domestic market.

Our next question comes from Ivano Westin from Crédit Suisse. Ivano Westin - Crédit Suisse AG, Research Division: I want to ask about the North American unit. You had a recovery in the sales volume, but the EBITDA margin remains at around 5%. You, André Gerdau, mentioned the rally of the residential construction and nonresidential construction in the region. What is your expectation for the second half of the year for 2014? Could we expect a normalized margin for the North American unit? My first question. My second question goes to André Pires regarding working capital. You reported a 6% reduction. Could you comment on the expectations for the second half of the year and 2014? André Bier Gerdau Johannpeter: This is André. Well, about North America, the first half of the year was somewhat slower than what we expected in terms of volume. There was a significant pressure by imported products. So even if we increase our volume a bit, there was a pressure from the imports putting pressure on our prices and margins down. This has been a challenge in North America, and with an excessive supply the world, the U.S. is the traditional importer and their imports have grown for some structural and merchant products in this quarter -- in the first 6 months actually. Well, what will you expect, according to the KPIs published, beginning with residential construction, which have been picking up again. And normally the next cycle is the nonresidential construction and that is our main consumer market. So we envision that for next year. And the year following that, we should see a substantial rebound in the nonresidential construction segment. The industrial sector is another important industry to us. They remain with positive KPIs, growing. And again, that has to do with the…

[Operator Instructions] Our next question comes from Mr. Carlos de Alba of Morgan Stanley.

I would like to understand the strong performance that we saw in the Latin American division, which is the one that has been a struggle in the most, I will say, in the recent quarters, is sustainable. I mean, it's the only business unit that increased shipments year-on-year and quarter-on-quarter. And also the only one that increased EBITDA margin year-on-year and quarter-on-quarter. So if this is the beginning of a turnaround, it will be very encouraging. And I would like to understand how sustainable this is? André Bier Gerdau Johannpeter: So just repeating Carlos' question. His question is about the performance of our unit in Latin America, which improved both in terms of delivery and also sales and also margin. So he wants to know if this recovery is consistent or is expected to continue in the future. André Pires de Oliveira Dias: Carlos, thank you for your question. So this stems from our efforts in these countries. It's worth mentioning that basically all Latin American countries had better performance, both in delivery and also in EBITDA generation more specifically. This stems from higher growth, how should I put it, in the economies of these countries, but the major focus is on Peru, where we improved results, and also Argentina and Chile, to some extent. And we feel this recovery is consistent and also stems from our efforts to reduce cost and improve efficiency in our operations.

Excellent, and then just coming to the iron ore business. Can you comment about when do you expect to make the decision to pursue the second phase of your expansion? And I think a key element of that expansion is the availability of a port which -- you have an option to develop your own, but it will take a few years for you to do so. And right now, there may be an opportunity to do a negotiation with MMX and get access to their Sudeste port. Could you comment about the planning for the decision of your expansion? And also your views on potentially doing something with MMX? André Bier Gerdau Johannpeter: André, speaking. So Carlos wants to know about ports. Our projects in the port terminal in Rio. So what is the schedule, the expectation of the expansion project or process? And if we are interested or if we are considering the port option MMX, from company MMX. Well, in our project, we keep on working on engineering to define the project as a whole. We also maintain the license [indiscernible] for, but we don't have any dates provisioned but the idea is to have the project ready so we can make decisions as to where we'll be building the terminal or not. As to MMX, there are no negotiations. We are involved in a process. But as logistic clients, we've been following up to see whether this will be sold or not. So we use the existing port options in Brazil to our exports. And we have already 150,000 tonnes for iron ore exports, and we expect to have 700,000 using the existing alternative MMX port. It is not completed yet. It is not in operation. So that's why we are still following up to see when the investment will be over. And when the operation will be valid because one of the alternatives of existing ports in Brazil that we are assessing, we have also our own terminal project and then we'll see how and when to invest. So this is what we think about port logistics in our mining business.

[Operator Instructions] Next question from Renato Antunes from Brasil Plural.

First of all, about long steel products operation in Brazil. Could you comment on the demand scenario and how do we envisage demand when it comes to these long steel products. Based on June figures, I would like to know if there has been any changes compared to what you have in July, and also how you see the second half of the year? That's my first question. The second question, well, what about specialty steels in Brazil? Can you talk about the market in the second half of the year, please? So what about -- because we had the heavy vehicle production. That was very strong in the first half of the year. Do you think you can maintain the same pace in the second half of the year? André Bier Gerdau Johannpeter: Thank you, Renato, André speaking. About long steel products, what we saw in the first half of the year, was a relatively stable market compared to the same period of the previous year. Some lines with slight growth, others with lesser growth, but nothing so significant. The outlook for the second half of the year is to have an uptick, so we do expect to see increased consumption by the end of the year. Early this year, we consider 3% to 4% steel consumption growth. And because in the first half of the year, we did not have this result, we expect to have a recovery for the second half of the year. But that's for long steel products. As to specialty product, as you put it well, the first half of the year was very positive, with an important reaction particularly for trucks. And we expect to keep on growing, but not as strongly in the second half of the year. So that's about what we see in the market. And based on some signs, we had record production, sales record, so we don't expect to have it repeated. So these are unfeathered data, maybe there will be growth, but not as strongly as we had in the first half of the year.

Our next question comes from Thiago Lofiego from Merrill Lynch.

I have 2 questions. If you could talk about prices in the domestic market, please confirm the figure that André mentioned, I think 13% compared to imported goods. Do you see a potential for price increase in the domestic market? Are you saying that this price would be sustainable? What level do you think is sustainable? André Pires de Oliveira Dias: Thiago, this is André Pires. Thank you for the question. As for the premium price in the domestic market compared to imported goods. As I mentioned, before, it is around 13%. We believe that this should be fluctuating between 10% and 15%. That is a relatively comfortable level. It's hard to say regarding what we expect looking forward. It really depends on whether the FX depreciation in Brazil can sustain, however, if the real will rebound, it's too early to say. And then also it depends on the international price. It also depends on the international market. So I would say, it's too early to say where this is going, but the premium today is at a comfortable level and should remain, as I said before, between 10% and 15% in the coming months.

Our next question comes from Mr. Leonardo Correa, HSBC.

My first question has to do with the margin trend. If I look at the Brazil EBITDA margin, the level is quite strong, close to 20%. I would like to understand from you, can we expect a level above that, 22%, 23% for 2014? Considering that we're going to have high production of iron ore? And are we going to see the coiled hot-rolled rolling mill operating? And my second question has to do with CapEx in 2013, 2014. If we look at the number for the first half, you're talking about BRL 2.5 billion for the year. For 2014, can we work with something close to BRL 8 billion for the 5-year period? Can we work with that? These are my 2 questions. André Pires de Oliveira Dias: This is André Pires. Thank you for the questions. As for the margins, you're correct. In 2014, we will have some transformational projects, that will be coming on more definitely; the BQ, rolling and also the mining part with higher volumes, then it should contribute with better margins. As you know, we don't like to give a guidance. If it's 20%, 22%, 23%, it's hard to say. But we believe that around 20% of EBITDA margin for Brazil, which is what we achieved in the second quarter, would be a good number to work with looking forward. Particularly, considering the BQ mining that should give us an upside rather than a downside. I'll give the floor to André to talk about the CapEx. André Bier Gerdau Johannpeter: As for the CapEx, we have a number of BRL 1.2 billion in the first 6 months of the year. And we should close the year with about BRL 2.1 billion or BRL 2.2 billion, something around that. When I talked about BRL 1.6 billion per year looking forward, it's very difficult to define. When we announce an BRL 8.5 billion for a 5-year period, that is an estimate. That needs to be readjusted every year. So it's hard to say that we are going to have a BRL 1.6 billion invested every year looking forward because there's a level of depreciation, there's a minimum CapEx, which is a 50 CapEx that has to invested in infrastructure. And then we have to invest in expansions or more strategic projects that need to be implemented. So it's very difficult to give you specific figure for every year.

It is clear. But if I might add in CapEx, perhaps you could give the information about the plates? Anything expected for that, for heavy plates? What are you expecting? André Bier Gerdau Johannpeter: Well, the project is expected for the second half of 2015, that is the schedule. We are really focused on starting the operation of the coiled hot-rolled sheets rolling mill this coming week, and we continue with the civil construction for the heavy plates project. That is the schedule that we are working with. The equipment has been purchased. So now it depends on how faster we'll be able to do the civil construction, then the building, and then all the assembly part.

[Operator Instructions] Our next question from Mr. Carlos de Alba of Morgan Stanley.

I just want to know. I mean, clearly, you are doing a good job managing the working capital and your CapEx should continue to come down. So what are you planning on doing with the extra free cash flow that you will generate? If everything goes well, the free cash flow yield is going to improve significantly going forward. So would you return this money to shareholders via dividends? Would you plan on just repaying debt? Or perhaps you'll start another cycle of M&A activity that in the past the company used to expand outside Brazil? André Pires de Oliveira Dias: Thank you, Carlos. So just repeating your question. Your question regards -- well, if we take into account this reduction in working capital, and also the slightly lower CapEx vis-à-vis last year, we are giving more cash flow. So you want to know the company's purpose? If it's ready to work on distribution in terms of dividend payout or to lower indebtedness or perhaps your expectation to improve the M&A activity? Basically, our main goal is and will continue to be working with lower leverage levels, compared to what we currently have. Obviously, our focus is to maintain the investment grade. This is key to the company. And this additional free cash flow generation has the purpose to lower net indebtedness and consequently, lower our level of net debt over EBITDA ratio. It's important to say, and I mentioned this in my talk, that we lowered this from 3.2x to 3.1x this quarter, despite the impact this quarter of foreign exchange variation that would naturally lead this figure close to 4 rather than 3. I also mentioned that we had amortizations of short-term debt close to $1 billion. So clearly, the major goal of the company when it comes to free cash flow is the reduction of our net indebtedness level.

Our next question is from Renato Antunes from Brasil Plural.

Just a brief question, about the figures of the second quarter. When we consider the cash flow statement, we have about BRL 400 million, if I'm not mistaken, in the line of noncontrolling shareholders, now when we look at the balance sheet, well, I would just like to have a better understanding, if you could explain what had an impact on the cash flow of this quarter? André Pires de Oliveira Dias: Renato, André Pires speaking. It goes as follows: This has to do with our funds management for pension. So actually when we migrated -- by the way, this is kind of technical, but anyway, when you decided to migrate our Gerdau [indiscernible] pension plan from defined benefits to contributions because we had a very high surplus, part of the funds or contingency reserves were earmarked for future contributions to offset future contributions of the company. In other words, this is company's capital and this is only used to offset future contributions. So we can work for our pension funds for over 20 years. And these funds were, in this migration process to some extent, invested together with other funds that were ensuring our employees' retirement plan. So we broke them down these funds, and included it with our cash management. Because according to IFRS, our cash consolidates all investments, including investments that come from minority shareholders while this is part of the account. Basically, it was a treasury decision in order to allocate these resources, together with our cash. Because it is really the company cash. The only thing is that it's used for contribution purposes and not for other purposes that are not these contribution offsetting. So it is company's capital, but separate for cash that is not part of the daily operations of the company. So that's about it. And if you want any further detail of that, we can talk later.

We are closing now the Q&A session. I would like to turn the floor over to Mr. André Gerdau Johannpeter and André Pires for the final remarks. André Pires de Oliveira Dias: This is André Pires. Just to close, I would like to thank you for all your question and for your interest in our company. To sum up, in this quarter, we were very focused on a continued improvement of our balance sheet. This has been one of our main goals. And we will continue with this objective. And this is my final message to you, my take home message. I'll give the floor now to André Gerdau Johannpeter. André Bier Gerdau Johannpeter: Likewise, thank you for participating, for your questions, and I would like to invite you to our next earnings conference call on October 31. Please join us then, and thank you very much. Have a good day.

Gerdau's conference call is coming to an end. We would like to thank all of you for attending. Have a good afternoon.