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2Q08 presentation

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  • 1. Presentation 2Q08
  • 2. Presentation of Results Ricardo Luis de Lima Vianna (CFO and IRO) Eduardo de Come (Financial Officer) Marcos Leite (Investor Relations)
  • 3. Looking back Clear and very well-defined objective aimed at the leadership of the Brazilian Biodiesel Market; Premises of the strategy: obligatory mixture of biodiesel into diesel starting in January 2008 and a business model of direct sale between producers of biodiesel and fuel distributors; Decision of CNPE to continue the system of auctions, making important aspects of the competitive market would be left aside; Biodiesel pick-up lower than planned in 1Q08 and collection of fines against Petrobras; Nonpayment of fines, change in the credit scenario and impact on cash flow; Volume of biodiesel lower than was expected , atypical vegetable oil market variations and negative financial results.
  • 4. Action Legal Action- The volume of biodiesel production was less than what was expected in accordance with contracts signed for delivery until June 30, 2008;- Petrobras’s default enabled us to suspend our contractual obligations;- Brasil Ecodiesel filed a legal action aiming to receive the contractual fines in relation to biodiesel contracted in February and March 2008, and also non-demandability of potential collection demands against the company. Financial Restructuring- Brasil Ecodiesel began a process of financial restructuring to guarantee compliance with the contracts currently in force, which allow the company to achieve positive results.;- Reason: high short-term indebtedness and pressure on Company’s working capital;- Negotiation with the main creditor banks to restructure the existing debt and obtain new funding to strengthen the working capital necessary for continuation of operations;- The Company restructured 82.65% of its financial debt..
  • 5. Financial Restructuring Debt Renegociation- Brasil Ecodiesel restructured 82.65% of its financial debt, in the amount of R$ 205.8 millions, being R$ 184.8 millions to be paid within 48 months, out of which 12 month grace period and 36 months of amortization and $ 21.0 million adjustment to the other conditions of the Restructuring Financial Agreement. New Funding- Brasil Ecodiesel obtained a total amount of R$ 53.3 million to guarantee the working capital necessary to comply with the contracts in force
  • 6. Prospects The prospects for the future remain promising: high oil prices, concern about climate change and increase in demand for energy; In Brasil, the CNPE ordered that the obligatory addition of biodiesel to mineral-sourced diesel oil should be increased to 3% as from July 1, 2008; Increasing the diesel volume sold. The increasing of biodiesel use has made possible reduction of importation of petroleum-sourced diesel by Brazil Brasil Ecodiesel’s average selling price in the auctions held on April 10 and 11 of this year, for supply of biodiesel in the third quarter of 2008, was 48.2% higher than at the auctions held in November 2007. On August 14th ANP held the first auction for supply biodiesel in the fourth quarter of 2008, in which we obtained the right to provide 63.5 thousand m3 of biodiesel, at the average price of R$ 2615.03 / m3, without ICMS, subject to signing the contracts. On August 15 the ANP will hold another auction for the period.
  • 7. Auctions – Contracts 2S08 3Q08 4Q08 Sales FOB Sales CIF* FOB Sales ANP Auctions ANP auction Petrobras auction – I Delivery Oct 1 to Dec 31 July 1 to Sep 30 , Delivery 2007 August 31, 2008 Average Unit average average Qty(m 3) price* Unit Qty(m 3) price** Qty(m 3) price** Iraquara (BA) 21,600 2,614.77 Iraquara (BA) 21,600 2,739, 99 Itaqui (MA) 21,600 2,614.77 Itaqui (MA) 19,800 2,739,99 Rosário do Sul (RS) 21,600 2,738,99 Rosário do Sul (RS) 14,400 2,614.27 Crateús (CE) 4,000 3,250.00 Crateús (CE) 5,900 2,618.77 Floriano (PI) 4,000 3,250.00 Total 63,500 2,615.03 Total 63,000 2,739,65 8,000 3,250.00
  • 8. Operating Performance Our gross revenue in the second quarter of 2008 is R$ 53.3 mn, of which 89.6% or R$ 47.8 mn comes from the sale of 18,918 m3 of biodiesel and the rest of our gross revenue came from sale of by-products, principally glycerin, and sunflower seeds that were exchanged for soy oil, in which the grain made available was considered as revenue. Porto Rosário Biodiesel Floriano Crateús Iraquara Itaquí Total Nacional do Sul 2Q07 6,637.8 14,145.9 12,883.8 - - - 33,667.6 Sales of B100 1Q08 2.00 16,274.49 23,700.74 11,516.23 14,521.49 20,953.45 86,968.41 3 (m ) 2Q08 1,084.4 299.3 5.842,39 470.20 6,945.49 4,276.44 18,918.31 1Q07 13,640.8 27,844.0 26,887.8 - - - 68,372.6 Billing of B100 1Q08 9.42 42,337.97 54,033.34 24,052.79 30,613.11 48,128.64 199,175.27 (R$ ‘000l) 2Q08 3,289.4 1,105.59 15,714.05 982.07 14.583,46 12.111,02 47,785.45
  • 9. Operating Performance Brasil Ecodiesel posted net revenue of R$ 45.8 million in 2Q08 with a gross loss of R$ 13.2 mn; The negative gross margin was due mainly to the increase in the prices of vegetable oils, and the low utilization of capacity. 1Q08 2Q08 Total Net revenue 167,264 45,790 213,054 COGS -180,313 -58,992 -239,305 Gross profit -13,049 -13,202 -26,251 Net loss -14,925 -82,536 -97,461 Our net result in the period, although having as its bottom line a loss of R$ 82.5 million, is significantly impacted by provisions that the Company made, for conservativeness, relating to events in previous quarters.
  • 10. Operating Performance To give a representation that is closer to the specific result for the period, we present this table of the Company’s Adjusted Ebitda and Adjusted net profit. 1Q08 2Q08 Total Ebitda (363) (65,216) (65,579) Provision for adjustment to market value of grain inventories 15,981 15,981 Provision for losses – Petrobras penalty payments 19,797 19,797 Adjusted Ebitda (363) (29,438) (29,801) 1Q08 2Q08 Total Net loss (14,934) (82,536) (97,470) Provision for adjustment to market value of grain inventories - 15,981 15,981 Provision for losses – Petrobras penalty payments - 19,797 19,797 Adjusted net profit (14,934) (46,758) (61,692) The ajusted net profit, without the provisions, was of R$ 46.7 millions.
  • 11. Operating Performance Net Revenue in the 2Q08 totaled R$ 45.8 million. The Cost of Goods Sold stood at R$58.9 million in 2Q08, R$55.0 million of which from biodiesel sales. The General and Administrative Expenses was 30.5% more than in the previous quarter, consisting primarily of a provision of R$ 1.9 mn made for labor-law and environmental contingencies, the wage increase resulting from the annual wage negotiation, and extraordinary expenses on outsourcing Tax expenses : R$1.0 million in 2Q08. Other Operating Expenses totaled R$ 36.0 mn from provisions for the penalty payments owed by Petrobras, and provisions for adjustment to market value of the grain inventory. We posted net financial expenses of R$ 12.8 mn, arising principally from payment of the charges on loans, especially short-term loans to finance working capital. We report a net loss of R$ 82.5 mn for 2Q08, mainly reflecting the high provisions for various losses, a provision for adjustments to market value, and the costs of idle capacity in our industrial plants.
  • 12. Indebtedness Debt (R$ ‘000) 1Q08 2Q08 Short term R$ 205,022 R$ 243,137 (+) Long term R$ 30,778 R$ 29,119 (=) Total debt R$ 235,800 R$ 272,256 (-) Cash and cash equivalents R$ 5,898 R$ 4,622 (=) Net debt R$ 229,902 R$ 267,634 2Q08 After Restructuring Short Term Long term Short Term Long term
  • 13. Capital MarketsECOD3 performanceECOD3 (R$ / share) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08Open 11.81 9.24 12.27 11.91 6.99 4.64Low 8.77 8.80 9.51 6.01 3.84 4.01High 12.65 14.50 15.39 12.17 7.01 6.94Average 10.95 11.57 12.86 8.67 4.99 5.65Close 9.15 12.27 11.89 6.89 4.55 4.08% in quarter -22.5% 34.0% -3.1% -42.1% -34.0% -10.3%Volume (R$ MM) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08Total 117.69 182.70 144.83 116.55 170.08 529.15Daily Average 1.93 2.95 2.30 1.98 2.83 8.53Transactions 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08Nº of share (un.) 10,750,400 15,793,000 11,265,800 13,446,300 34,075,000 93,713,500Nº of transaction (un.) 10,878 19,816 13,700 13,793 25,994 50,270
  • 14. 1/ 4/ 2 0,00 1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00 9,00 7/ 00 4 8 11 /20 /4 0 8 17 /20 /4 08 24 /20 Capital Markets /4 08 30 /20 /4 08 / 7/ 20 0 5 8 13 /20 ECOD3 performance in the 2Q08 /5 0 8 19 /20 /5 08 26 /20 /5 08ECOD3 30 /20 /5 08 / 5/ 20 0 6 8 11 /20 /6 0 8IBOV 17 /20 /6 08 23 /20 /6 08 27 /20 /6 08 /2 00 8 50.000 55.000 60.000 65.000 70.000 75.000
  • 15. Investor Relations Ricardo Luis de Lima Vianna CFO and IRO Marcos Leite Investor relations Phone: +55 21 2546-5031 Website: www.brasilecodiesel.com.br/ir
  • 16. Disclosure• This document may contain prospective statements, which are subject to risks and uncertainties, as they were based on the expectations of Company’s management and on available information. These prospects include statements concerning the Company’s current intensions or expectations for our clients; this presentation will also be available on our website www.brasilecodiesel.com.br/ir and also in the IPE system at the Brazilian Security Exchange Commission – CVM.• Forward-looking statements refer to future events which may or may not occur. Our future financial situation, operating results, market share and competitive positioning may differ substantially from those expressed or suggested by said forward-looking statements. Many factors and values that can establish these results are outside Company’s control or expectation. The reader/investor is prevented not to completely rely on the information above .• The words “believe", “can", “predict", “estimate", “continue", “anticipate", “intend", “forecast" and similar words, are intended to identify affirmations. Such estimates refer only to the date in which they were expressed, therefore Company has no obligation to update said statements.• This presentation does not consist of offering, invitation or request of subscription offer or purchase of any marketable securities. And, this statement or any other information herein, does not consist of a contract base or commitment of any kind.