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4Q07 presentation

  1. 1. Presentation of Financial and Operational Results 4Q07 and 2007 March 26, 2008www.brasilecodiesel.com.br/ir
  2. 2. AgendaOverview Nelson José Côrtes da Silveira (CEO)Results Presentition Ricardo Vianna (Executive Officer and IRO) Guilherme Raposo (Executive Officer) Eduardo de Come (Financial Officer) 2
  3. 3. Economic Scenario2007 was a good year for Brazilian Economy:- Inflation remained under strict control, with the IPCA (consumer price index)recording 4.46% for the year, below the National Monetary Council’s annual target of4.5%.- The Selic (base interest rate), which had suffered cuts since September 2005,started the year at 13.25% and stabilized itself at 11,25% since September 2007.This was because of the possibility of inflationary pressure and especially with theadoption of a conservative stance to observe the impacts of international crisis on thelocal economy.- The Real appreciated by 17.2% against the dollar, closing at R$ 1.77 in 2007,versus R$ 2.14 at the end of the previous year- Brazil’s GDP recorded substantial annual growth of 5.4%, primarily fueled byagriculture, versus 3.8% in 2006 (IBGE figures). 3
  4. 4. Brazilian Biodiesel Market Sales of fuels used in diesel engines grew by 6.2%, above GDP growth. In 2006: distributors sold 2.26 million m³ of B2. In 2007, the total came to 12.96 million m3 of B2, equivalent to 259,180 m3 of B100.45.000.00040.000.00035.000.00030.000.00025.000.00020.000.00015.000.00010.000.000 5.000.000 0 2000 2001 2002 2003 2004 2005 2006 2007 Diesel Puro B2 + Bx 4
  5. 5. Brazilian Biodiesel MarketBrazilian biodiesel production in clear expansion180,000 90.0% 158,623160,000 80.0% 71.6%140,000 70.0% 115,490 57.9%120,000 60.0% 54.6% 53.3% 52.2%100,000 49.7% 50.0% 46.0% 44.3% 80,000 71,935 40.0% 56,679 60,000 30.0% 39,138 40,000 20.0% 15,167 20,000 10.0% 3,843 10,853 0 0.0% 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 National Biodiesel Production % Produced by Brasil Ecodiesel 5
  6. 6. Brazilian Biodiesel Market During 2007, 402,726 m3 of450,000 90.0% 402,726 biodiesel were produced. This was400,000 80.0% 483,6% higher than the 69,002 m3350,000 70.0% produced in 2006.300,000 60.0% 52.6%250,000 50.0% 50.4% The Brasil Ecodiesel was200,000 40.0% responsible for 52.6% of this150,000 30.0% production.100,000 69,002 20.0% 50,000 10.0% 0 0.0% 2006 2007 National Biodiesel Production % Produced by Brasil Ecodiesel 6
  7. 7. US$/ ton02 /0 2007.17 1/2 /0 0 1,000 1,200 1,400 1,600 0 200 400 600 80031 1/2 07 / 014 01/2 07 /0 001 2/2 07 /0 015 3/2 07 /0 029 3/2 07 /0 013 3/2 07 / 027 04/2 07 /0 011 4/2 07 /0 025 5/2 07 /0 011 5/2 07 /0 025 6/2 07 / 010 06/2 07 /0 024 7/2 07 /0 007 7/2 07 /0 021 8/2 07 /0 005 8/2 07 /0 019 9/2 07 /0 003 9/2 07 /1 017 0/2 07 /1 031 0/2 07 /1 014 0/2 07 /1 029 1/2 07 /1 013 1/2 07 /1 028 2/2 07 / 1 00 2/ 7 particularly towards the end, closing at US$ 1,076/t in 2007. 20 07 Palm Soybean Sunflower Rapeseed Vegetable Oil Market7 The price of soybean oil, the main biodiesel input in Brazil, rose 66.9% during the year, The price of the main vegetable oils produced worldwide continued to climb throughout
  8. 8. Operating Performance Brasil Ecodiesel produced 211,910 m3 of biodiesel in 2007, 52.6% of the national total,consolidating its outright sector lead for one more year. In the first half of 2007, only the Floriano, Iraquara and Crateús units were operational, theconstruction pace of the remaining plants having been reduced in order to align productionwith biodiesel shipment volumes. In the second half, the Porto Nacional, Rosário do Sul and Itaqui facilities started up,concluding the Company’s first expansion phase and reaching a total annual productioncapacity of 640,000 m3. The Company has also completed the implantation of a vegetable oil crushing unitattached to the Iraquara plant. The soybean crushing unit acquired by Brasil Ecodiesel in São Luiz Gonzaga to supply theRosário do Sul plant, has also been adapted for flexible use. 8
  9. 9. Operating PerformnaceEvolution of Brasil Ecodiesel’s installed biodiesel production capacity (‘000 m3) 700 640 600 500 400 000 m 3 300 282 200 100 27 0 dec/2005 dec/06 aug/2007 9
  10. 10. Operating Performace Biodiesel sales increased 42.1% in the 4Q07. CQGR of 70% since 1Q06. Evolution of Biodiesel Sales – m380,000 75,76370,00060,000 % CQGR = 70% 53,30950,00040,000 33,66830,000 27,69720,000 13,637 8,41410,000 1,839 5,839 0 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 10
  11. 11. Financial Performance Adjusted gross revenue stood at R$412.6 million in 2007, 92.6% of which (orR$381.9 million) came from the sale of 190,400 m3 of biodiesel and the remainderfrom the sale of by-products, especially glycerin, fatty acids and vegetable oils. Porto Rosário do Biodiesel Floriano Crateús Iraquara Nacional Sul Itaquí Total 2006 26,756.10 87.86 2,884.82 - - - 29,728.78 Sales (m3) 2007 31,884.15 44,974.50 61,033.93 17,759.80 17,464.75 17,317.08 190,434.22 2006 58,060.87 201.65 6,620.83 - - - 64,883.35 Revenue (R$ ‘000) 2007 64,930.95 89,882.03 123,711.63 34,941.91 34,370.97 34,073.89 381,911.38 11
  12. 12. Financial PerformanceAnnual net revenue totaled R$335.6 million in 2007.The cost of goods sold stood at R$340.4 million in 2007. 350 100.0% 2.8% 1.7% 2.5% 9.8% 4.3% 300 79.0% 250 R$ millions 200 150 100 50 - il l n ts s ts no S O io ee pu os G ha at e O oy In C bl ci et C ta pl al re er M ge Em er ep th en Ve O D G 12
  13. 13. Financial Performance General and Administrative Expenses : R$ 39,5 million in 2007. Tax Expenses : R$ 5,4 million in 2007. Other Operating Expenses : in 2007 we recorded an additional net operatingrevenue of R$17.0 million related mainly to fines to be paid by our clients for failure toremove biodiesel from our plants. Brasil Ecodiesel recorded financial expenses of R$14.8 million in 2007. This was partiallyoffset by financial revenue of R$9.7 million from cash investments and gains from hedgeoperations, resulting in a net financial expense of R$5.1 million for the period. Brasil Ecodiesel posted a net loss of R$37.7 million in 2007, primarily due to theincrease in production costs against fixed contractual sale prices throughout the year as aresult of the auctions. In addition, we established an operating and administrative structurefor the large-scale operations of six biodiesel units, which in fact were operatingsubstantially below capacity throughout the year. 13
  14. 14. Cash and Investments Details of Use of Funds (R$ ‘000) Most of cash and investments are in R&D Oil Extraction 7,6working capital and inventories, due to the 3% 40,5 13%higher operating volume of the company; Transesterification 88,3 Others Net Debt of R$ 177.662 million in 2007. 29% 19,3 6% R$ 301,5 INDEBTEDNESS millions Indebtedness (em R$ mil) 2006 2007 Agriculture 9,8 Short Term R$ 5.730 R$ 141.245 3% (+) Long Term R$ 49.764 R$ 36.715 Working Capital & (=) Total Indebtedness R$ 55.494 R$ 177.960 Inventory 136,0 (-) Cash and Cash Equivalents R$ 211.855 R$ 298 46% (=) Net Debt (R$ 156.361) R$ 177.662 14
  15. 15. Capital Markets ECOD3 performanceECOD3 (R$ / share) 1Q07 2Q07 3Q07 4Q07 2007Open 11.81 9.24 12.27 11.91 11.81Low 8.77 8.80 9.51 6.01 6.01High 12.65 14.50 15.39 12.17 15.39Average 10.95 11.57 12.86 8.67 10.96Close 9.15 12.27 11.89 6.89 6.89% in the quarter -22.5% 34.0% -3.1% -42.1% -41.6%Volume (R$ MM) 1Q07 2Q07 3Q07 4Q07 2007Total 117.69 182.70 144.83 116.55 561.77Daily Average 1.93 2.95 2.30 1.98 2.29Transactions 1Q07 2Q07 3Q07 4Q07 2007No of share (un.) 10,750,400 15,793,000 11,265,800 13,446,300 51,255,500No of transactions (un.) 10,878 19,816 13,700 13,793 58,187 15
  16. 16. Capital Markets ECOD3 performance in the 4Q0714.00 68,00012.00 66,00010.00 64,000 8.00 62,000 6.00 60,000 4.00 58,000 2.00 56,000 0.00 54,000 Nov-07 Nov-07 Nov-07 Nov-07 Nov-07 Nov-07 Oct-07 Oct-07 Oct-07 Oct-07 Oct-07 Oct-07 Oct-07 Oct-07 Dec-07 Dec-07 Dec-07 Dec-07 Dec-07 Dec-07 ECOD3 IBOV 16
  17. 17. Subsequents Events 6o and 7o ANP Auctions Petrobras AuctionCNPE established the holding of new auctions to implement thecompulsory addition of 2% biodiesel, altering biodiesel producres’beginning-of-free-market expectations vis-à-vis their negotiations To build up strategic initial stocks of 100,000 m3.with the fuel distributors. Only companies with sufficient capacity and theThe intention to impose some discipline on the market was a proven ability to meet short-term demand couldlaudable one. Companies that had never produced biodiesel or participate, prices were substantially higher,whose plants were still under construction, took part in these indicating that real biodiesel sale prices in a freeauctions, creating a “virtual” supply greater than the actual one market will be based on the prices of the leadingand exerting downward pressure on prices. vegetable oils.Brasil Ecodiesel sold 161,000 m3 (42,4% of total). FOB Sales CIF Sales* Unit Volume (m3) Average Price** Volume (m3) Average Price** Iraquara (BA) 41,000 1,837.56 10,000 2,255.00 Itaqui (MA) 43,000 1,875.80 7,900 2,297.41 Porto Nacional (TO) 35,000 1,837.97 Rosário do Sul (RS) 42,000 1,840.17 Crateús (CE) 18,000 2,306.94 Total 161,000 1,848.54 35,900 2,290.38 17
  18. 18. Subsequents EventsB3 compulsory from July 1, 2008: On March 14, 2008, the CNPE decreed the mandatory adoption of B3 as of July 1, 2008. O MME – Ministry of Mines and Energy, established specific rules for the holding of new auctions tosupply the B3 market between July 1 and September 30, 2008. Two auctions will be held in April 2008, the first involving 264,000 m3 and limited to producers holging the“Social Fuel Seall”, and the second involving 66,000 m3 for any authorized producer. Based in these auctions volumes, we estimate that the B3 market will generate a total mandatorydemand of 1,320,000 m3 of biodiesel per year. Petrobras indicated that should hold another auction in April for recovery the strategic stocks.The Federal Government has new indications that the compulsory addition of B5 should be broughtforward to 2010. 18
  19. 19. Investor Relations Ricardo Luis de Lima Vianna CFO and IRO Marcos Leite Investor relations Phone: +55 21 2546-5031Website: www.brasilecodiesel.com.br/ir 19
  20. 20. 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. 20

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