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3Q07 presentation

  1. 1. Presentation of Financial and Operating Results 3Q07 November 9, 2007www.brasilecodiesel.com.br/ir
  2. 2. AgendaOverview Nelson José Cortês da Silveira (CEO)Results Presentation Ricardo Luis de Lima Vianna (CFO and IRO) Guilherme Augusto D´Avila Raposo (COO) 2
  3. 3. OverviewClear leadership within Brazilian market: – 61.8% of market share in September, 49% in 2007, until September;Conclusion of transestherification plants start-up: – Biodiesel sales on the 6 plants;Amendments to sales contracts: – New delivery schedule until December 2007; – Compensation mechanisms due to the non collection of the products;Sales model to the 1st semester of 2008 defined: – 2 auctions already scheduled to November 13 and 14, in a total of 380 ths m3; – 2 other auctions to be published, with estimated 190 ths m3; 3
  4. 4. OverviewSales: – 53,309.1 m3, up 58.3% from 2Q07;Revenues: – R$ 129.01 million, up 88.4% from 2Q07;Gross Margin: – R$ 394 thousand, or 0.4%, reverting the negative margin of the previous quarter;Net Income: – R$ 1.1 million; 4
  5. 5. Biodiesel Market - Brazil Brazilian biodiesel production in clear expansion 50,000 45,031 45,000 42,137 40,000 35,000 Volume (m3) 30,000 27,158 25,939 26,718 25,000 22,636 20,000 16,009 17,109 15,000 8,572 10,000 6,490 5,101 5,000 2,578 1,075 1,725 0 nov/06 feb/06 feb/07 jan/06 mar/06 apr/06 may/06 jul/06 aug/06 sep/06 oct/06 dec/06 jul/07 aug/07 jun/06 jan/07 mar/07 apr/07 may/07 sep/07 jun/07CMGR of 12.9% along 2007;Industrial capacity to supply the B2 in 2008. 5
  6. 6. Biodiesel Market - WorldIncreasing investments in production capacity;North-American market is expanding based on subsidies: NBB projects 40% ofgrowth in 2007;European Market faces difficulties. It is based on blend goals: high vegetableoil prices and competition with B99; Intense introduction of mandatory blends; Threat of tariff retaliation and WTO claims against exports of subsided US B99; Reduction of agriculture subsidies to energy crops in European Community; 6
  7. 7. US$/ ton 02 - Ju 700 720 740 760 780 800 820 840 860 880 900 l-0 7 09 - Ju l-0 7 16 - Ju l-0 7 23 - Ju l-0 7 30 - Ju l-0 7 7.8% in 3Q07 06 -A Soy Oil (CBOT): ug -0 7 MYR/ ton 13 -A ug 02 -0 -J ul 7 2,300 2,350 2,400 2,450 2,500 2,550 2,600 2,650 2,700 2,750 -0 20 7 -A ug 09 -0 -J 7 ul 27 -0 7 -A ug 16 -0 -J 7 ul 03 -0 -S 7 ep -0 23 - 7 Ju 10 l-0 -S 7 ep -0 30 7 -J 17 ul -S -0 7 ep -0 06 -A 7 ug 24 -0 -S 7 ep -0 13 7 Increasing vegetable oil prices: -A ug -0 7 20 -A ug -0 7 27 -A ug -0 7 03 -S ep -0 7 10 -S ep $ Pesos/ ton -0 7 02 17 -J -S ul 1,000 1,500 2,000 2,500 3,000 3,500 4,000 ep -0 -0 7 7 09 -J 24 ul -S -0 ep 16 7 -0 7 -J ul -0 23 7 -J ul -0 30 7 -J ul -0 06 7 -A ug -0 13 7 -A ug -0 20 7 -A ug -0 27 7 -A ug -0 03 7 -S ep -0 10 7 -S Palm Oil ep -0 17 7 6.9% in 3Q07 -S 61% in 3Q07 Sunflower Oil ep (Bursa Malásia): -0 24 7 -S ep -0 7 Vegetable Oil Markets7 (Bolsa de Cereales de Buenos Aires):
  8. 8. Glycerine Market Reaction of international glycerine prices: – Increasing demand due to new uses; – Reduction of European supply due to reduction of the biodiesel sector activities; 1000 60% 900 900 53% 51% 50% 50% 800 46% 44% 700 600 39% 39% 40% 575 37% 600 US$ / ton 525 500 500 31% 28% 29% 500 30% 400 360 325 22% 325 20% 300 215 220 200 14% 117 10% 85 100 0 0% 05 06 07 03 04 01 02 95 96 97 98 99 00 c- c- p- c- c- c- c- c- c- c- c- c- c- De Se De De De De De De De De De De De Crude Glycerine 80% - CIF Rotterdam % of pharmaceutical grade refined glycerineSource: Oleoline. 8
  9. 9. 3rd Quarter 2007Agriculture StructureOperating PerformanceFinancial Performance 9
  10. 10. Agriculture StructureFamily Farmers: – New goal: 80 thousand families to the 2007/2008 harvest, in 600 cities; – Cooperation contracts with 12 state federations of agriculture workers; – Cooperation agreements with the Bank of Rio Grande do Sul State and Cooperative Bank Sicredi, aiming at financing family farmers and agriculture cooperatives, Brasil Ecodiesel partners;Own Lands: – Purchase of three new farms in Bahia State, totalizing 63,349 hectares of own lands. Area - Farms Hectares Crateús - CE 3,980.3 Parambu - CE 11,584.4 Buriti - PI (*) 17,910.7 Anda Só - PI 4,282.0 Violeto - PI 3,325.2 São José - MG 2,464.0 Relevo - BA 5,011.2 Nova Brasília - BA 7,120.0 Itaúna - BA 7,671.6 Total Area 63,349.3 (*) Santa Clara Nucleus Area 10
  11. 11. Operating PerformanceBiodiesel sales increased 58.3% in 3Q07CQGR of 75% since 1Q06 Biodiesel Sales Evolution 60,000 53,309 50,000 % CQGR = 75% 40,000 33,668 30,000 27,697 20,000 13,637 8,414 10,000 5,839 1,839 0,000 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Sales (m3) 11
  12. 12. Operating PerformanceProduction record in October Monthly Biodiesel Production Evolution in 2007 (m3)35,000 30,96430,000 27,84025,00020,000 17,835 15,64015,000 12,577 11,920 12,64110,000 7,350 7,803 5,201 5,000 - Jan Feb Mar Apr May Jun Jul Aug Sep Oct 12
  13. 13. Financial PerformanceSales and Revenues – Quarterly EvolutionCost of Goods Sold 2Q07 and 3Q07Operating Expenses 2Q07 and 3Q07Cash, Cash Equivalents and Investments in the 3Q07Capital Markets and Corporate Governance 13
  14. 14. Sales, Revenues and Gross MarginGross Revenues of R$ 129.05 million, Net Revenues of R$ 99.69 million andgross margin of 0.4% in the 3Q07 Brasil Ecodiesel performance over the last quarters 140,000 30.0% 129,050 23.8% 120,000 25.0% 20.0% 100,000 17.6% 15.0% 80,000 68,502 61,130 10.0% 8.9% 9.9% 53,309 60,000 7.3% 5.0% 33,668 40,000 30,448 0.4% 0.0% 27,697 12,780 18,296 13,637 20,000 -5.0% 4,531 8,414 -6.6% 5,839 1,839 0 -10.0% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Sales (m3) Gross Revenues (R$ mil) Gross Margin 14
  15. 15. Cost of Goods SoldThe cost of goods sold was R$ 99.30 million in 3Q07, representing 99.6% ofthe net revenues in the period. Comparison COGS: 2Q07 / 3Q07 100% 76.1% 80.1% 80% 60% 40% 20% 13.2% 8.8% 4.8% 4.1% 2.9% 2.6% 1.1% 1.2% 2.2% 2.7% 0% Vegetable Oil Methanol Other Inputs Employees General Costs Depreciation 2Q07 3Q07 15
  16. 16. Expenses and Other Operating Revenues General and administrative Expenses: R$ 10.93 million in the 3Q07; Tax Expenses: R$ 2.27 million in the 3Q07; Net Financial Expenses: R$ 2.31 million in the 3Q07; 12 10.93 10 9.68 8 6 4 2.27 2.31 2 0.63 0.05 0 G&A Tax Financial 2Q07 3Q07 Other Operating Revenues: R$ 16.16 million in the period,due to the penalties over the non collection of the biodiesel fromour plants; 16
  17. 17. Cash and Investments CAPEX and other expenditures - 3Q07- R$ million R&D Reached R$ 76.08 million in the 3Q07; 2,4 Other Oil Extraction 4,3 3% Most part in working capital and inventories, 12,3 6% Transesterification 16%due to the higher operating volume of the 15,1 Working Capital &company; 20% Inventory Agriculture 39,1 2,8 51% 4% Net Indebtedness of R$ 132.09 million onSeptember 30, 2007 IndebtednessIndebtedness (em R$ thousand) 2Q07 3Q07Short Term R$ 28,302 R$ 92,416(+) Long Term R$ 40,854 R$ 45,459(=) Total Indebtedness R$ 69,156 R$ 137,875(-) Cash and Cash Equivalents R$ 23,013 R$ 5,787(=) Net Debt R$ 46,143 R$ 132,088 17
  18. 18. 2- Ju l 9.80 10.80 11.80 12.80 13.80 14.80 15.80 5- - 07 Ju 11 l- 0 -J 7 u 16 l- 0 -J 7 u 19 l- 0 -J 7 u 24 l- 0 -J 7 u 27 l- 0 -J 7 u 1- l- 0 Au 7 6- g-0 Au 7 9- g-0 A 7 14 u g- -A 07 17 ug- -A 0 7 22 ug- ECOD3 -A 0 7 27 ug- -A 0 7 30 ug- -A 0 7 u IBOV 4- g-0 S 7 10 e p- -S 07 13 ep- ECOD3 performance in the 3Q07 -S 0 7 18 ep- -S 0 7 21 ep- -S 0 7 26 ep- -S 0 7 ep -0 7 42,080 47,080 52,080 57,080 62,080 67,080 Capital Markets18
  19. 19. Capital Markets Quarterly ECOD3 performanceECOD3 (R$ / share) 1Q07 2Q07 3Q07Open 11.81 9.24 12.27Low 8.77 8.80 9.51High 12.65 14.50 15.39Average 10.95 11.57 12.86Close 9.15 12.27 11.89% in the quarter -22.5% 34.0% -3.1%Volume (R$ MM) 1Q07 2Q07 3Q07Total 117.69 182.70 144.83Daily average 1.93 2.95 2.30Transactions 1Q07 2Q07 3Q07No of shares (un.) 10,750,400 15,793,000 11,265,800No of transactions (un.) 10,878 19,816 13,700 19
  20. 20. Corporate GovernanceBoard of Directors Approval: – New Disclosure Policy; – Ethics Code;Agreement with UBS Pactual to act as market maker to ECOD3;Inclusion in the IBrX index, composed by the 100 most actively tradedshares of São Paulo Stock Exchange - Bovespa;Amendment to the Shareholders Agreement, with the reduction of the EcoGreen Solutions shares bounded to the agreement and alteration of therules to indicate members to the Board of Directors, that are now pointed byZartman Services and Nelson Silveira. 20
  21. 21. Institutional PresencePresence in several national and international seminars; Bioenergy Seminar of “Valor Econômico” newspaper; Biodiesel Congress – Buenos Aires Rio + 15 – Rio de Janeiro IPCC Outreach – Rio de Janeiro Latibex – Madrid (Novembro)Reception of diplomatic delegations from several countries and internationalentities; Benim; North-Korea; California; Malaysia; Haiti; Jica – Japan; Global Economic and Social Development Council. 21
  22. 22. Investor Relations Ricardo Luis de Lima Vianna CFO and IRO Roberto Honczar IR Manager Marcos Leite IR Analyst Phone: +55 21 2546-5031Website: www.brasilecodiesel.com.br/ir 22
  23. 23. DisclosureThis document may contain prospective statements, which are subject to risks anduncertainties, as they were based on the expectations of Company’s managementand on available information. These prospects include statements concerning theCompany’s current intensions or expectations for our clients; this presentation willalso be available on our website www.brasilecodiesel.com.br/ir and also in the IPEsystem at the Brazilian Security Exchange Commission – CVM.Forward-looking statements refer to future events which may or may not occur. Ourfuture financial situation, operating results, market share and competitive positioningmay differ substantially from those expressed or suggested by said forward-lookingstatements. Many factors and values that can establish these results are outsideCompany’s control or expectation. The reader/investor is prevented not to completelyrely on the information above .The words “believe", “can", “predict", “estimate", “continue", “anticipate", “intend",“forecast" and similar words, are intended to identify affirmations. Such estimatesrefer only to the date in which they were expressed, therefore Company has noobligation to update said statements.This presentation does not consist of offering, invitation or request of subscriptionoffer or purchase of any marketable securities. And, this statement or any otherinformation herein, does not consist of a contract base or commitment of any kind. 23

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