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Net income of R$340 million and EBITDA of R$948 million

São Paulo, Brazil, May 10, 2006

Companhia Siderúrgica Nacional (CSN) (BOVESPA: CSNA3) (NYSE: SID) announces its results for the first quarter of 2006 (1Q06), in accordance with Brazilian accounting principles and denominated in Reais. The comments presented herein refer to consolidated results and comparisons refer to the first quarter of 2005 (1Q05), unless otherwise stated. On March 31, 2006, the Real/Dollar exchange rate was R$ 2.1724.

 

Executive Summary

• Net income of R$340 million. Despite the accident in Blast Furnace #3, net income remained flat compared to the previous quarter.
• Accumulated net revenue of R$ 2.0 billion, lower than the revenue reported in the quarter before and in the first three months of 2005, due to the drop in sales volume.
• EBITDA of R$ 948 million, already accounting for 30-days deductible in insurance for profit loss. Discounting the provision for profit loss, margin would be 40%, still one of the highest of the sector.
• EBITDA margin for CSN has been over 40% since third quarter of 2002.
• Average prices 7% over the prior quarter. The 13% increase in export prices during the quarter reflected the upward trend in the international markets.
• Lower sales volume as a consequence of loss in the output levels due to the accident in Blast Furnace #3.
• Coated products accounted for 58% of the total sales in the quarter.
• The Company increased its share of the distribution (23% to 28%) and home appliane markets (from 30% to 33).
• Gross debt remained flat over the previous quarter (R$ 8,790 million).
• Net financial expenses dropped by 74%, due to gains from treasury transactions.
• Dividend payments totaled R$ 937 million in February.
• Recent Developments: acquisition of Prada, outright control of Lusosider, additional dividend payments of R$387 million, re-election of the Board of Directors, issuance of R$600 million non-convertible debentures.

Consolidated Highlights		1Q05		4Q05		1Q06
Crude Steel Production (thousand t)		1,167		1,355		540
Sales Volume (thousand t)		1,197		1,350		997
Domestic Market		897		598		604
Exports		300		752		393
Net Revenue per unit (R$/t)		2,133		1,581		1,688
Financial Data (RS MM)		0		0		0
Net Revenue		2,862		2,408		1,953
Gross Income		1,383		1,065		736
EBITDA		1,407		1,053		787
Adjusted EBITDA		1,407		1,053		948
Net Income		717		352		340
Net Debt (R$ MM)		3,511		4,699		5,010

Consolidated Highlights		1Q06 X 1Q05		1Q06 X 4Q05
		(Ch.%)		(Ch.%)
Crude Steel Production (thousand t)		-53.7%		-60.1%
Sales Volume (thousand t)		-16.6%		-26.1%
Domestic Market		-32.6%		1.1%
Exports		31.1%		-47.7%
Net Revenue per unit (R$/t)		-20.9%		6.8%
Financial Data (RS MM)
Net Revenue		-31.8%		-18.9%
Gross Income		-46.8%		-30.9%
EBITDA		-44.0%		-25.2%
Adjusted EBITDA		-32.6%		-10.0%
Net Income		-52.5%		-3.4%
Net Debt (R$ MM)		42.7%		6.6%

Bovespa: CSNA3 R$ 66.65/share		Investor Relations Team
NYSE: SID US$ 31.42/ADR (1 ADR = 1 share)		Marcos Leite Ferreira – 55-11-3049-7588 (marcos.ferreira@csn.com.br)
Total shares = 272,067,946		Geraldo Colonhezi – 55-11-3049-7593 (geraldo.colonhezi@csn.com.br)
Market Cap: R$ 18.5 billion / US$ 8.5 billion		José Eduardo Szuster – 55-11-3049-7526 (jose.szuster@csn.com.br)
Prices on 3/31/2006		Renata Kater – 55-11-3049-7592 (renata.kater@csn.com.br)
		www.csn.com.br

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Economic and Sector Outlook

     The pace of the upturn in international steel prices that began in 2005 continued throughout the first quarter of 2006. In the North American and European markets, the increase in apparent consumption due to the replenishing of inventories, combined with the slowdown in supply growth, which dashed expectations of higher imports, were the key drivers in the price increases. In the Chinese market, the upward price trajectory had been in place since the end of 2005, due to the reduction in output rates by the local steel mills and increased exports of Chinese steel products.

     In Brazil, first-quarter demand for flat steel decreased by 13.3% year-on-year, mainly due to the respective 27.5% and 17.6% drops in the construction and home appliance sectors. The tin plate and distribution sectors also fell by 21.9% and 15.6%, respectively, when compared to the first quarter of the previous year.

     Running counter to the market as a whole, the auto sector performed well in the first three months. According to Anfavea (the auto-makers’ association), vehicle sales in the quarter totaled 418,000, 12.4% up year-on-year.

Output

     As a result of the January 22 accident occurred in Blast Furnace #3, responsible for 70% of the Company’s pig iron production capacity, the volume of crude steel and rolled products produced in the first quarter fell by 41% and 64% quarter-over-quarter, respectively.

     The Company purchased 1,021 thousand tonnes of slabs, only 108,000 tonnes of which were delivered in the quarter, due to the time needed for negotiation, production and shipment to Volta Redonda. In addition, the steel production process was adjusted to permit higher scrap input in order to maximize output while only Blast Furnace #2 is operational.

Output		1Q05		4Q05		1Q06		Accumulated
(in thousand tonnes)								2005		2006
Presidente Vargas Mill (UPV)
Crude Steel		1,167		1,355		540		1,167		540
Rolled Products*		1,134		1,256		751		1,134		751
CSN Paraná*		55		60		77		55		77
GalvaSud*		77		89		57		77		57

*Products delivered for sale

2

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Sales

     Although the Company reduced its inventories of finished and semi-finished products between December and March, sales volume was jeopardized by the accident in Blast Furnace #3.

     The Company ratified the commintment to supplying the domestic market, which present better margins, keeping the delivery of finished products through the use of existing inventory and purchases in the market, aiming at reducing the effects of the accident in Blast Furnance #3 on clients. Domestic market sales remained flat compared to the previous quarter, but exports were reduced. Coated products accounted for almost 70% of foreign shipments, versus 50% for domestic sales. Also, coated products accounted for 58% of the total sales.

     In comparison with the fourth quarter of 2005, the Company’s increased its share of the distribution (23% to 28%) and home appliance markets (from 30% to 33%), while its slice of the construction and auto markets fell from 47% to 36% and 15% to 13%, respectively.

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Prices

     Despite the 7% appreciation of Real against dollar, average prices rose by 7% over the previous quarter, led by hot and cold-rolled exports. The healthy international prices were due to strong demand by final consumers, the buildup of distributors’ inventories, and a shortfall in supply, especially in the American market where various blast furnace repairs led to delays in the production schedule. In Brazil, prices are expected to go up in the second and third quarters thanks to prospects of an improved economic climate, with lower interest rates and incentives for the construction and agricultural sectors, among other factors. In this context, the Company has already announced a 5% average price hike as of June.

Net Revenues

     Although the average price was higher this quarter, this was not enough to offset the slide in sales volume, which was particularly sharp in the export market.

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Production Costs (parent company)

    The decline in output caused by the stoppage of Blast Furnace #3 led to an across-the-board cost reduction, generating quarter-over-quarter and year-on-year savings of R$294 million (-60%) and R$242 million (-54%), respectively. On the other hand, unit production costs moved up 63% and 47% in the same comparative basis. 

    In year-on-year terms, the biggest reductions came from coke (R$168 million), coal (R$61 million), energy/fuel (R$18 million) and general manufacturing costs (R$12 million), although the downturn was partially offset by the increase in costs from slab purchases (R$78 million). In comparison with the 4Q05, the corresponding savings stood at R$62 million, R$83 million, R$28 million and R$80 million. 

    As for the main raw materials, the coal acquisition cost increased from US$134/t, in the final quarter of 2005, to US$ 138/t, reflecting a more up-market coal mix. The coke price, on the other hand, plunged from US$327/t to US$277/t as a result of the consumption of materials with lower average costs, given the big reduction in coke inventories purchased when price were exceptionally high. The average March/06 cost of the coal and coke inventories was US$ 120/t and US$ 240/t, respectively. 

Operating Expenses

     The reduction in export volume led to a R$45 million (29%) in the sales expenses. General and administrative expenses and depreciation and amortization remained in line.

     The Company provisioned R$ 176.6 million under other operating income for loss of profit in the first quarter. This provision generates a PIS/Confins charge of R$ 16.3 million, accounted in the net financial results line.

     As a result, operating expenses fell by R$230 million over the quarter before.

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EBITDA

     The Company reported an EBITDA of R$948 million in the quarter, reflecting impact of the accident in Blast Furnace #3 in the sales volume. It is worth to highlight that this result was reached even with the 30-days deductible in insurance for profit loss, i.e., losses related to the accident in the 30-days period after the initial insurance claim are not covered and thus directly impact the EBITDA.

     Additionally, if we ignore these provisions for profit loss, which value is R$160.3 million*, EBITDA records a 40% margin, still one of the highest in the sector, reiterating once more the competitiveness of the Company.
* R$176.6 million net of R$16.3 million PIS/Cofins.

EBITDA and EBITDA Margin		1Q06 x		1Q06 x
Change (consolidated)		4Q05		1Q05
EBITDA (ch. %)		-25		-44
Margin (ch. p.p.)		-3		-9
*Adjusted EBITDA (ch. %)		-10		-33

*EBITDA and EBITDA Margin accounting for the effect of provision for lost profits

Net Financial Result and Debt

     The net financial result was negative by R$107 million, a 74% decrease when compared to the previous quarter, which recorded an R$404 million expense. The considerable improvement was mainly due to gains from treasury transactions.

     Net debt increased by R$310 million, due to the R$937 million dividend pay-out in February/06, in turn raising the net debt/ EBITDA ratio from 1x to 1.2x. However, gross debt remained virtually flat. The debt had an average cost of 8.6% p.a., in Brazilian Reais, or 53% of the CDI, while the average tenor was 13 years.

*Takes into account the 12-months accumulated EBITDA.

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Income Taxes

Income taxes recorded a quarterly expense of R$220 million, versus R$4 million revenue in the previous three months. The variation was essentially due to a lower pre-tax result and a positive exchange variation on foreign investments in the 4Q05.

Net Income

     First-quarter net income dipped 3% quarter-over-quarter due to the fall in gross profit, in turn caused by the accident in Blast Furnace #3 and the provision for income tax and social contribution expenses, neither of which occurred in the previous quarter.

Capex

     Quarterly investments totaled R$248 million, including R$53 million in the Sepetiba Port expansion project, in turn part of the Casa de Pedra expansion project; R$31 million in MRS*, R$12 million in CFN* and RS$69 million in industrial maintenance.

    *corresponding to CSN’s respective 33% and 50% stakes in these companies

Working Capital

     Working capital expenditure in the quarter fell by R$146 million, chiefly due to the reduction in accounts receivable from the export market, caused by lower export volume, and the increase in the tax payable account. However, both of these positive effects were largely offset by the decrease in the suppliers line, due to reduced raw-material needs.

						In R$ MM
Account		4Q05		1Q06		Change
Assets		3,409		3,129		279
Cash equivalents		135		213		-77
Accounts receivable		1,366		1,061		305
Domestic market		879		874		5
Exports market		588		298		290
Allowance for doubtful accounts		(101)		(111)		10
Inventory		1,907		1,856		51
Liabilities		1,588		1,455		-133
Suppliers		1,262		1,031		-230
Wages and Social Contribution		85		80		-5
Tax payable		241		343		102
Working capital		(1,820)		(1,675)		146

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Capital Market

     CSN’s shares appreciated by 43% in the first three months of the year, reflecting the positive international scenario and the consolidation of the global steel sector.

     The Company’s healthy results in the fourth quarter of 2005 and expectations of healthy performance on the domestic and export markets in 2006, combined with the on-schedule investment projects, also played an important role in the share’s appreciation.

Capital Market - CSNA3/SID
		1Q05		2Q05		3Q05		4Q05		1Q06
N# of shares		286,917,045		286,917,045		272,067,946		272,067,946		272,067,946
Market Capitalization
Closing price (R$/share)		50.92		35.83		48.94		47.55		68.05
Closing price (US$/share)		24.10		16.15		23.22		21.40		31.42
Market Capitalization (R$ million)		14,610		10,279		13,314		12,936		18,514
Market Capitalization (US$ million)		5,480		4,373		5,991		5,527		8,522
Variation
CSNA3 (%)		14.4		(29.6)		36.6		(2.8)		43.1
SID (%)		23.1		(33.0)		43.8		(7.8)		46.8
Ibovespa - index		26,610		25,051		31,583		33,455		37,951
Ibovespa - variation (%)		1.6		(5.9)		26.1		5.9		13.4
Volume
Average daily (n# of shares)		893,803		1,039,721		869,511		825,845		844,315
Average daily (R$ Thousand)		52,964		48,460		39,741		37,706		50,665
Average daily (n# of ADR´s)		840,623		815,547		812,392		773,876		1,007,920
Average daily (US$ Thousand)		18,813		15,283		15,715		15,384		27,910

Source: Economática

8

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Recent Developments

• General Shareholders’ Meeting

     At the Annual and General Extraordinary Shareholders’ Meeting on April 28, the Company’s shareholders deliberated on the following:

Dividends

     Shareholders approved the payment of interest on own capital and dividends, totaling R$259 million and R$128 million, respectively, with R$ 387 million paid on May 8, 2006. Adding the amount paid in February, ratified by the Shareholders’ Meeting, the Company paid out a total of R$1,324 million as dividends and interest on own capital related to 2005 results.

Board of Directors

     The eight members of the Board of Directors were re-elected with a mandate lasting until the General Shareholders’ Meeting of 2007.

Acquisition of Prada

     Shareholders approved the capitalization of all the credits held by the Company against Companhia Metalúrgica Prada, in the amount of R$175 million, and the acquisition of all Prada’s for the token sum of R$1.00. As a result, the Company took control of Prada and its assets and liabilities, booked on 02/28/2006.

     Prada is Brazil’s largest steel packaging producer. It has been present in this market since 1936 and produces over 1 billion steel cans per year from 4 plants in São Paulo, Araçatuba, Gaspara and Uberlância, supplying the chemical and food product sectors. Prada’s market share in 2004 was 20%.

• Issuance of Debentures

     In May 2006, CSN issued R$600 million in non-convertible debentures, due in 2012 (6-year maturity), with no advanced redemptions and interest equivalent to 103.6% of the CDI (Brazilian interbank rate).

• Lusosider

     On May 9, CSN signed a share purchase agreement with Corus Group Plc for the outright acquisition of Lusosider Projectos Siderúrgicos S.A., a Portuguese company in the flat steel segment which produces pickled hot-rolled, cold-rolled, hot-dip galvanized and tin plate. Previously, CSN had shared control of Lucosider equally with Corus.

     The acquisition, for €25 million, reinforces the Company’s commitment to its global expansion strategy, increasing its international operations by acquiring finishing lines located near the largest steel markets.

     In 2005 Lusosider, located in Seixal on the outskirts of Lisbon, produced 203,000 tonnes of galvanized, 28,000 tonnes of pickled hot-rolled and cold-rolled and 71,000 tonnes of tin plate, from a workforce of 249.

     The conclusion of the transaction is subject to the approval of the Portuguese Antitrust Commission, a process which should take around 45 days.

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Outlook

     Following the slowdown in apparent domestic consumption in 2005 and the beginning of 2006, the market looks set to recover, fueled by expectations of more robust economic growth in Brazil. The IISI (International Iron & Steel Institute) believes apparent Brazilian consumption of finished steel products will move up by 9.5% this year. We ourselves expect 7% growth in domestic demand for flat steel, based on an economic scenario which includes falling interest rates and increased government spending on public work, in addition to our own internal studies.

     On the international front, beginning-of-year forecasts indicated that prices would only start coming down as of the third quarter, when supply and demand would reach equilibrium point. However, some companies, especially in Europe, have expressed the off-the-record view that prices could even go up further in the third quarter, calling into question all the estimates of a slight decrease in the inclination of the price curve.

First Quarter 2006 Earnings Release Webcasts

CSN will host a presentation to discuss its first quarter 2006 earnings as follows:

 

Portuguese Presentation (with simultaneous translation into English) May 11, 2006 – Thursday 10:00 am – Brasília 9:00 am – EST Through the links: http://www.mz-ir.com/webcast/csn/1t06/ - Portuguese http://www.mz-ir.com/webcast/csn/1t06/?e English

 

Companhia Siderúrgica Nacional, located in the State of Rio de Janeiro, Brazil, is a steel complex comprising investments in infrastructure and logistics whose operations include captive mines, an integrated steel mill, service centers, ports, and railways. With a total annual production capacity of 5.6 million tonnes of crude steel and consolidated gross revenues of R$ 12.3 billion in 2005, CSN is also the only tin-plate producer in Brazil and one of the five largest tin-plate producers worldwide.

Certain of the statements contained herein are forward-looking statements, which express or imply results, performance or events that are expected in the future. They include future results that may be implied by historical results, the statements under “Outlook”, the expected cost of net debt compared to the CDI in 2005. Actual results, performances or events may differ materially from those expressed or implied by the forward-looking statements, as a result of several factors, such as the general and economic conditions in Brazil and other countries, interest rate and exchange rate levels, protectionist measures in the US, Brazil and other countries, changes in laws and regulations and general competitive factors (on a global, regional or national basis).

There follows seven pages with tables

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INCOME STATEMENT
CONSOLIDATED - Corporate Law - In Thousand of R$

		1Q2005		4Q2005		1Q2006
Gross Revenue		3,577,631		2,842,898		2,408,857
Gross Revenue deductions		(715,362)		(435,351)		(455,910)
Net Revenus		2,862,269		2,407,547		1,952,947
Domestic Market		2,173,910		1,393,905		1,345,188
Export Market		688,359		1,013,642		607,759
Cost of Good Sold (COGS)		(1,479,577)		(1,342,773)		(1,216,783)
COGS, excluding depreciation		(1,254,079)		(1,127,865)		(983,655)
Depreciation allocated to COGS		(225,498)		(214,908)		(233,128)
Gross Profit		1,382,692		1,064,774		736,164
Gross Margin (%)		48.3%		44.2%		37.7%
Selling Expenses		(135,275)		(155,697)		(110,942)
General and andminstrative expenses		(66,230)		(70,945)		(70,884)
Depreciation allocated to SG&A		(12,039)		(13,709)		(12,752)
Other operation income (expense), net		(33,274)		(48,163)		136,255
Operating income before financial equity interests		1,135,874		776,260		677,841
Net Financial Result		(104,246)		(404,465)		(106,634)
Financial Expenses		(332,348)		(410,562)		(343,806)
Financial Income		390,212		330,325		(23,363)
Net monetary and forgain exchange variations		(162,110)		(324,228)		260,535
Equity interest in subsidiary		(19,678)		(19,978)		(10,789)
Operating Income (loss)		1,011,950		351,817		560,418
Non-operating income (expenes), Net		(840)		(3,197)		201
Income Before Income and Social Contribution Taxes		1,011,110		348,620		560,619
(Provition)/Credit for Income Tax		(215,885)		1,717		(165,028)
(Provition)/Credit for Social Contribution		(78,393)		2,018		(55,173)
Net Income (Loss)		716,832		352,355		340,418
EBITDA*		1,406,685		1,053,040		787,466
EBITDA Margin (%)		49.1%		43.7%		40.3%

* EBITDA = Gross income excluding selling, general and adminstrative expenses added to depreciation, amortization and exhaustion.

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INCOME STATEMENT
PARENT COMPANY - Corporate Law - In Thousand of R$

		1Q2005		4Q2005		1Q2006
Gross Revenue		3,140,698		2,117,249		1,872,179
Gross Revenue deductions		(658,600)		(351,022)		(367,492)
Net Revenus		2,482,098		1,766,227		1,504,687
Domestic Market		2,042,256		1,085,674		1,103,673
Export Market		439,842		680,553		401,014
Cost of Good Sold (COGS)		(1,209,555)		(1,010,211)		(1,003,240)
COGS, excluding depreciation		(1,011,833)		(825,692)		(798,130)
Depreciation allocated to COGS		(197,722)		(184,519)		(205,110)
Gross Profit		1,272,543		756,016		501,447
Gross Margin (%)		51.3%		42.8%		33.3%
Selling Expenses		(76,888)		(70,923)		(63,662)
General and andminstrative expenses		(45,310)		(50,727)		(48,350)
Depreciation allocated to SG&A		(6,607)		(5,864)		(5,769)
Other operation income (expense), net		(32,792)		(43,190)		130,065
Operating income before financial equity interests		1,110,946		585,312		513,731
Net Financial Result		(326,514)		(523,471)		(150,433)
Financial Expenses		(263,731)		(827,355)		(271,419)
Financial Income		1,389		744,655		(340,591)
Net monetary and forgain exchange variations		(64,172)		(440,771)		461,577
Equity interest in subsidiary		245,091		270,422		82,948
Operating Income (loss)		1,029,523		332,263		446,246
Non-operating income (expenes), Net		(920)		(2,275)		104
Income Before Income and Social Contribution Taxes		1,028,603		329,988		446,350
(Provition)/Credit for Income Tax		(205,986)		(112,194)		(109,125)
(Provition)/Credit for Social Contribution		(73,894)		(32,279)		(39,197)
Net Income (Loss)		748,723		185,515		298,028
EBITDA*		1,348,067		818,885		594,545
EBITDA Margin (%)		54.3%		46.4%		39.5%
Additional Information
Delibetated Dividends and Interest on Equity
Proposed Dividends and Interest on Equity		48,405		1,139,911		43,796
Number of Shares** - thousands		276,193		258,182		257,413
Earnings Loss per Share - R$		2.71		0.72		1.16

* EBITDA = Gross income excluding selling, general and adminstrative expenses added to depreciation, amortization and exhaustion.
** Excluding shares held in treasury

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BALANCE SHEET
Corporate Law - thousands of R$

		Parent Comany				Consolidated
		3/31/2006		12/31/2005		3/31/2006		12/31/2005
Current Assets		4,174,905		5,545,203		7,727,828		8,164,081
Cash		34,251		73,034		212,564		135,185
Trade Accounts Receiveble		1,595,851		1,772,853		1,060,728		1,366,047
Inventory		1,351,568		1,396,406		1,856,176		1,907,462
Marketable securities		125,387		1,422,761		3,422,568		3,709,753
Deferred Income Tax and Social Contribution		430,326		439,793		470,112		503,139
Other		637,522		440,356		705,680		542,495
Long-term Assets		1,752,491		1,686,801		1,998,745		2,063,043
Permanet Assets		17,409,649		17,313,950		14,209,717		14,220,586
Investments		5,195,432		5,098,885		253,368		270,745
PP&E		12,033,378		12,020,165		13,664,783		13,638,200
Deffered		180,839		194,900		291,566		311,641
TOTAL ASSETS		23,337,045		24,545,954		23,936,290		24,447,710
Current Liabilities		4,215,987		5,300,857		4,263,689		4,819,657
Loans and Financing		1,582,751		1,641,624		1,946,570		1,464,493
Suppliers		909,724		1,149,504		1,031,361		1,261,690
Taxes and Contributions		468,140		305,526		595,476		452,689
Dividends Payable		431,179		1,324,087		431,179		1,324,087
Other		824,193		880,116		259,103		316,698
Long-term Liabilities		12,370,746		12,709,907		12,945,059		13,149,531
Loans and Financing		6,283,323		6,873,907		6,843,268		7,334,012
Provisions for contingences		3,459,989		3,193,064		3,535,353		3,265,677
Deffered Income and Social Contributions Taxes		2,133,258		2,162,947		2,133,258		2,162,947
Other		494,176		479,989		433,180		386,895
Future Period Results		-		-		6,005		6,081
Shareholdres' Equity		6,750,312		6,535,190		6,721,537		6,472,441
Capital		1,680,947		1,680,947		1,680,947		1,680,947
Capital Reserve		-		-		-		-
Revaluation Reserve		4,460,422		4,518,054		4,460,422		4,518,054
Earnings Reserve		973,800		973,800		911,051		911,051
Treasury Stock		(676,721)		(637,611)		(676,721)		(637,611)
Earnings Reserve		311,864		-		345,838		-
Retained Earnings		23,337,045		24,545,954		23,936,290		24,447,710
TOTAL LIABILITIES AND SHAREHOLDERS´
EQUITY		23,337,045		24,545,954		23,936,290		24,447,710

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CASH FLOW STATEMENT
CONSOLIDATED - Corporate Law - thounsands of R$

		1Q2005		4Q2005		1Q2006
Cash Flow from Operating Activities		1,495,881		1,892,439		299,797
Net Income for the period		716,832		352,355		340,418
Exchange rate defferal		-		-		-
Net exchange and monetary variations		640		354,983		(462,454)
Provision for financial expenses		235,585		237,274		185,919
Depreciation, exhaustion and amortization		239,353		230,526		245,878
Equity results		19,679		19,978		10,790
Deferred income taxes and social contributions		17,905		(168,510)		10,592
Provisions		(57,340)		10,470		(133,651)
Working Capital		323,227		855,363		102,305
Accounts Receivable		(233,920)		107,822		302,637
Inventory		211,818		(4,674)		50,315
Suppliers		119,161		240,924		(207,036)
Taxes		303,980		820,599		120,314
Others		(77,812)		(309,308)		(163,925)
Cash Flow from Investment Activities		(152,373)		(255,573)		(245,279)
Investments		(161)		(260)		4,328
Fixed Assets/Deferred		(152,212)		(255,313)		(249,607)
Cash Flow from Financing Activities		978,811		(2,293,458)		(451,757)
Issuances		1,394,070		93,817		853,713
Amortizations		(238,948)		(1,719,364)		(178,989)
Interests Expenses		(131,723)		(373,898)		(151,156)
Dividends/Interest on own capital		(12)		(75)		(936,215)
Shares in treasury		(44,576)		(293,938)		(39,110)
Free Cash Flow		2,322,319		(656,592)		(397,239)

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Net Financial Result
Parent Company - Corporate Law - thousands of R$

		1Q2005		4Q2005		1Q2006
Financial Expenses		(332,348)		(350,545)		(343,806)
Loans and financing		(241,217)		(231,728)		(201,309)
Local currency		(43,236)		(38,644)		(165,239)
Foreign currency		(197,981)		(193,084)		(36,070)
Taxes		(83,304)		(104,696)		(131,417)
Other financial expenses		(7,827)		(14,121)		(11,080)
Financial Income		390,212		270,308		(23,363)
Income from cash investments		78,994		743,774		40,060
Other income		311,218		(473,466)		(63,423)
Exchange and monetary variations		(162,110)		324,228		260,535
Net monetary change		(12,341)		(16,446)		(8,397)
Net exchange change		(149,769)		(307,782)		268,932
Net Financial Result		104,246		(404,465)		(106,634)

Net Financial Result
Consolidated - Corporate Law - thousands of R$

		1Q2005		4Q2005		1Q2006
Financial Expenses		(263,731)		(271,932)		(271,419)
Loans and financing		(94,835)		(105,683)		(82,390)
Local currency		(41,393)		(38,303)		(46,641)
Foreing currency		(53,442)		(67,380)		(35,749)
Transaction with subsidiaries		(84,642)		(61,682)		(58,547)
Taxes		(77,642)		(98,398)		(126,604)
Other financial expenses		(3,612)		(6,169)		(3,878)
Financial Income		1,389		189,232		(340,591)
Income from cash investments		5,044		713,175		7,822
Other income		(3,655)		(523,943)		(348,413)
Exchange and monetary variations		(64,172)		(440,771)		461,577
Net monetary change		(7,554)		(11,759)		(9,470)
Net exchange change		(56,618)		(429,012)		471,047
Deffered exchange losses
Net Financial Result		(326,514)		(523,471)		(150,433)

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NET REVENUE PER UNIT
Consolidated - In R$/tonne

		1Q2005		4Q2005		1Q2006
DOMESTIC MARKET		2,118		1,890		1,808
Slabs		866		664		650
Hot Rolled		1,781		1,405		1,338
Cold Rolled		2,122		1,670		1,562
Galvanized		2,453		2,048		2,013
Tin Plate		2,463		2,505		2,465
EXPORT MARKET		2,180		1,335		1,503
Slabs		-		499		-
Hot Rolled		1,649		998		1,013
Cold Rolled		2,151		1,101		1,471
Galvanized		2,256		1,788		1,565
Tin Plate		2,421		1,987		1,875
TOTAL MARKET		2,133		1,581		1,688
Slabs		978		526		650
Hot Rolled		1,764		1,160		1,242
Cold Rolled		2,125		1,385		1,535
Galvanized		2,366		1,908		1,768
Tin Plate		2,452		2,272		2,258
NET REVENUE PER UNIT
Parent Company - In R$/tonne
		1Q2005		4Q2005		1Q2006
DOMESTIC MARKET		2,020		1,816		1,667
Slabs		866		664		650
Hot Rolled		1,729		1,399		1,270
Cold Rolled		1,922		1,517		1,402
Galvanized		2,386		2,016		1,811
Tin Plate		2,388		2,373		2,322
EXPORT MARKET		1,853		1,043		1,211
Slabs		1,493		678		-
Hot Rolled		1,553		822		896
Cold Rolled		1,816		1,072		1,136
Galvanized		1,959		1,377		1,363
Tin Plate		2,255		1,586		1,557
TOTAL MARKET		1,987		1,393		1,508
Slabs		1,352		676		650
Hot Rolled		1,702		1,018		1,126
Cold Rolled		1,913		1,289		1,329
Galvanized		2,282		1,790		1,634
Tin Plate		2,355		2,025		2,074

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SALES VOLME
Consolidated - Thousand of tons

		1Q2005		4Q2005		1Q2006
DOMESTIC MARKET		897		598		604
Slabs		8		16		11
Hot Rolled		362		169		192
Cold Rolled		140		87		98
Galvanized		205		177		160
Tin Plate		182		150		144
EXPORT MARKET		300		752		393
Slabs		-		81		-
Hot Rolled		55		255		81
Cold Rolled		15		87		42
Galvanized		162		207		193
Tin Plate		67		123		77
TOTAL MARKET		1,197		1,350		997
Slabs		8		96		11
Hot Rolled		417		424		272
Cold Rolled		155		173		140
Galvanized		367		383		353
Tin Plate		249		272		221
SALES VOLUME
Parent Company - Thousand of tons
		1Q2005		4Q2005		1Q2006
DOMESTIC MARKET		958		540		612
Slabs		8		16		11
Hot Rolled		361		141		182
Cold Rolled		218		103		121
Galvanized		186		138		153
Tin Plate		185		143		144
EXPORT MARKET		234		652		328
Slabs		28		81		-
Hot Rolled		66		274		113
Cold Rolled		20		109		46
Galvanized		60		75		100
Tin Plate		60		113		69
TOTAL MARKET		1,192		1,192		940
Slabs		36		96		11
Hot Rolled		427		414		295
Cold Rolled		238		212		167
Galvanized		245		213		253
Tin Plate		245		257		213

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EXCHANGE RATE
In R$/US$

		1Q2005		2Q2005		3Q2005		4Q2005		1Q2006
Average		2.6652		2.4818		2.3428		2.2509		2.1974
% change		-4.3%		-6.9%		-5.6%		-3.9%		-2.4%
End of Period		2.6662		2.3504		2.2222		2.3407		2.1724
% change		0.4%		-11.8%		-5.5%		5.3%		-7.2%

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This press release may contain forward-looking statements. These statements are statements that are not historical facts, and are based on management's current view and estimates of future economic circumstances, industry conditions, company performance and financial results. The words "anticipates", "believes", "estimates", "expects", "plans" and similar expressions, as they relate to the company, are intended to identify forward-looking statements. Statements regarding the declaration or payment of dividends, the implementation of principal operating and financing strategies and capital expenditure plans, the direction of future operations and the factors or trends affecting financial condition, liquidity or results of operations are examples of forward-looking statements. Such statements reflect the current views of management and are subject to a number of risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur. The statements are based on many assumptions and factors, including general economic and market conditions, industry conditions, and operating factors. Any changes in such assumptions or factors could cause actual results to differ materially from current expectations.

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