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Earnings Presentation Eduardo de Come (CFO and IRO) Marcos Leite (IR Manager)
Period Highlights Capitalization announcement of up to R$104 million, including R$52 million in debt conversion. Temporary suspension of legal proceedings with Petrobras. Reduction of 13% in General and Administrative Expenses compared to 1Q08. Rescission of Assignment of Usage Rights Agreement with Enguia. Continuation of debt restructuring, with debt of R$ 13 million extended to 18 months. Sales of 18,400 m3 - less than expected, due to restrictions on working capital and problems with biodiesel shipments. Net Revenues of R$42.6 million and Gross Income of R$3.6 million, with a margin of 8.5%.
Period Highlights Constant renegotiations with banks which finance working capital: Requirement of additional guarantees by the banks; Dificulties to finance the raw material part of the financial cicle; Efforts to change capital structure: Debt Convertion; Fresh money; Management of working capital limitations effect: Indebtedness linked to the acounts receivables volume; Barrier to expand sales and invoicing; Low use of margins generated by the business.
Operational Performance Sales volumes16% lower than in 4Q08 and 74.7% below 1Q08. Limitations on working capital did not allow the Company to achieve the desired levels of production - levels which have proven possible in previous periods, when the Company was able to demonstrate its full industrial operating capacity. Porto Rosário do Biodiesel Floriano Crateús Iraquara Itaquí Total Nacional Sul 1Q08 2 16,274.49 23,700.74 11,516.23 14.521,49 20,953.46 86,968.41 Sales of B100 4Q08 - 2,217.58 4,547.42 500.90 7.609,97 5,213.12 20,088.99 (m3) 1Q09 3,683.14 6,917.90 0.00 6,649.70 1.117,20 0.00 18,367.95 Revenues of 1Q08 9.42 42,337.97 54,033.34 24,052.79 30.613,11 48,128.64 199,175.27 B100 4Q08 - 6,599.26 13,533.22 1,487.20 22,716.20 15,564.09 59,899.97 (R$ ‘000) 1Q09 10,072.97 18,819,95 0.00 18,090.58 3,386.51 0.00 50,370.01
Operational Performance Gross Revenue was R$52.2 million in 1Q09, of which 97%, or R$50.3 million, derived from the sale of 18,400 m3 of biodiesel. 250,000 200,000 Others 150,000 Resídue Glycerin 100,000 Castor Sunflower 50,000 Biodiesel B100 0 1Q08 2Q08 3Q08 4Q08 1Q09
Operational Performance In 1Q09, Net Revenue of R$42.6 million and Gross Income of R$3.6 million. Positive Gross Margin for the third consecutive quarter, showing that the operating conditions can generate positive results, which would be even higher if sales volumes were closer to those obtained at the auctions. 1Q08 1Q09 Adjusted Net Revenue* 161,500 42,620 COGS (180,313) (38,978) Gross Profit (18,813) 3,642 Net Loss (20,765) (27,416)
Operational Performance Revenue Deductions totaled R$9.6 million in 1Q09, equivalent to 22.4% of gross revenue. For comparative purposes, the 1Q08 information is presented on an adjusted basis to reflect the alterations arising from the adoption of Technical Pronouncement 07 issued by the Accounting Standards Committee (CPC), and the adjustments to Law 11638 on that date. 3% 3% Cost of Goods Sold of R$38.9 million in 1% 1Q09. Vegetable oil is still the main 14% Vegetable Oil production cost item and, together with Other inputs Workforce - methanol, accounts for 93% of the cost of General Expenses biodiesel sold, keeping the same 79% Depreciation breakdown of costs observed in 2008..
Operational Performance General and Administrative Expenses were R$9.1 million in 1Q09. Reduction of 13% of General and Administrative Expenses in relation to 1Q08 and 16% in relation to 4Q08. Management is still trying to optimize processes and costs, which can generate even greater reductions in General and Administrative Expenses. 16.000 14.000 12.000 10.000 8.712 8.000 5.884 6.599 4.726 5.260 6.000 4.000 2.000 4.625 5.003 4.277 4.491 3.893 0 1T08 2T08 3T08 4T08 1T09 Personnel Expenses Administrative Expenses
Operational Performance The Net Financial Result in 1Q09 was an expense of R$12.8 million, chiefly due to loan charges. Reduction from the previous quarter due to exchange rate variation results for US$ loan, as well as low volumes of working capital financing. The Net Result in the period was mainly impacted the high financial expenses and lower-than- expected sales volumes. Adjusted EBITDA losses of R$5.9 million in 1Q09. Despite being negative, shows the evolution in the Company`s cash loss. 1Q08 1Q09 Net Income (Loss) (20,765) (27.416) Depreciation and Amortization 4,649 5.227 Financial Result 9,921 12.829 Fines – Petrobrás (12,218) Provisions 3.416 Adjusted EBITDA (18,413) (5.944)
Indebtedness Indebtedness (R$ ‘000) 1Q09 2008 Short Term 120,106 102,967 Net Debt of R$290.6 million in 1Q09, (+) Long Term 177,991 188,493 keeping the same level of previous (=) Total Indebtedness 298,097 291,460 quarter. (-) Cash and Equivalent 7,416 1,049 (=) Net Debt 290,681 290,411The increase in short-term debt was due to the installments of the debt rescheduled in August 2008,which will begin maturing as of September, with payments to continue through September 2012, withan accompanying reduction in long-term debt. Continuation of Financial Reestructuring, negotiating with creditors better cost and termconditions to pay the debt. Extension for 18 months of R$13 million of its short-term debt and reduction of approximatelyR$52 million in indebtedness in the 2Q09 balance sheet, with the conversion of debt with creditorsNelson Silveira, Spet Participações and Eco Green Solutions into company shares.
Investor Relations Eduardo de Come CFO and IRO Marcos Leite IR Manager Tel: +55 (21) 2546-5031 Website: www.brasilecodiesel.com.br/ri
Disclaimer• The estimates and forward-looking statements contained in this presentation are based in large part on current expectations and estimates of future events and trends that affect or could potentially affect the business, financial situation, operational results and prospects of BRASIL ECODIESEL. These estimates and statements are subject to various risks, uncertainties and assumptions and are based on the information currently available to BRASIL ECODIESEL. This presentation is also available on the website www.brasilecodiesel.com.br/ri.• These estimates involve risks and uncertainties and do not constitute a guarantee of future performance, since actual results or developments may differ substantially form the assumptions described in the estimates and forward-looking statements. In view of the risks and uncertainties involved, the estimates and forward-looking statements in this presentation may not occur and the future results and performance of BRASIL ECODIESEL may differ substantially from those envisaged by the estimates of BRASIL ECODIESEL. Given these uncertainties, investors should not base any investment decision on these estimates and forward-looking statements.• The words “believe”, "can”, “could”, “estimate”, “continue”, “anticipate”, “plan”, “expect” and similar expressions seek to identify estimates. These estimates refer only to the date on which they were expressed, and BRASIL ECODIESEL is not responsible for updating or revising any of these estimates in light of the occurrence of new information, future events or any other factors.• This presentation does not constitute an offer, invitation or solicitation to subscribe to or acquire any securities, and this presentation or any information contained herein does not constitute the basis of an agreement or commitment of any kind.