Earnings release 4 q08 presentation

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  • 1. 4Q08 and 2008 Presentation
  • 2. Earnings Presentation José Carlos Aguilera (CEO and IRO) Eduardo de Come (CFO) Marcos Leite (IR Manager)
  • 3. Period Highlights The need to restructure was driven by certain important factors that impacted the financial situation in the first half of 2008: Change in the government’s strategy regarding the free market; Atypical auction held in November 2007, with a high price discount; Unprecedented volatility in price of soybean oil; Restructuring in progress since June 2008: Reduction in fixed costs, including positions in upper management; Expansion in the base of vegetable oil suppliers; Restructuring of oilseed sourcing structure and investments; Restructuring of more than 80% of debt existing on August 14, obtaining 48 months for settlement and a 12-month grace period;
  • 4. Period Highlights Second half of 2008: 2.800 70% New auction strategies: lower 2.600 60% 2.400 61% 59% volumes, higher prices; 2.200 46% 46% 49% 50% Launch of B3 blend, increasing 2.000 40% 1.800 market volume; 1.600 26% 30% Drop in vegetable oil costs; 1.400 20% jul-08 ago-08 set-08 out-08 nov-08 dez-08 Positive gross margins; Cotação CBOT (R$/ton) B100 (R$/m³) Margem (B100/OV) 304,0 330,0 264,0 264,0 46,4% 26,3% 23,9% 26,5% 17,8% 76,0 66,0 12,7% 45,0 9,8% 14/2/2007 13/11/2007 14/11/2007 10/4/2008 14/8/2008 15/8/2008 24/11/2008 Total Leiloado (mil/m3) Participação da BrasilEcodiesel no Total
  • 5. Period Highlights However: Suspension of auction results by the ANP in 4Q08 and obtaining of preliminary injunction; Working capital limitations and bureaucratic hurdles for release of working capital due to contract under injunction; Lower-than-expected shipments and withdrawals.
  • 6. Financial Statements Additional points for comment: Creation of provisions for adjustments in inventories; Changes in the method for accounting tax credits; Adjustments from the adoption of Law 11,638 (Value Added Statement, deferred); Reclassification of expenses with Research & Development from deferred charges to net income; 6
  • 7. Operational Performance Gross Revenue was R$65.1 million in 4Q08, of which 92.4%, or R$ 60.1 million, derived from the sale of 20,090 m3 of biodiesel. In 2008, Gross Revenue reached R$ 427.1 million, of which 94.8%, or R$ 405.0 million came from the sale of 155.050 m3 of biodiesel and the remainder from the sale of stocks of castor, sunflower and by-products. Porto Rosário do Biodiesel Floriano Crateús Iraquara Itaquí Total Nacional Sul 2007 31,884.15 44,974.50 61,033.93 17,759.80 17,464.75 17,317.08 190,434.22 4T08 - 2,217.58 4,547.42 500.90 7,609.97 5,213.12 20,088.99 B100 sales (m3) 2008 4,681.31 22,307.39 39,388.87 12,487.34 37,796.02 38,386.88 155,047.81 2007 64,930.95 89,887.69 124,163,.5 34,941.91 34,370.97 34,073.89 382,368.57 4T08 - 6,599.26 13,533.22 1,487.20 22,716.20 15,564.09 59,899.97 B100 revenue (R$ thousand) 2008 16,675.45 63,047.02 99,829.33 26,522.07 95,346.42 100,653.83 402,074.12
  • 8. Operational Performance In 4Q08, Adjusted Net Revenue of R$55.1 million and Gross Income of R$1.2 million. In 2008, Adjusted Net Revenue of R$351 million and Gross Loss of R$30 million. Positive Gross Margin in the second half of 2008 demonstrates that the new operating conditions can generate positive results, which would be even higher if sales volumes were closer to those obtained at the auctions. Working capital limitations restrict cash generation. 1Q08 2Q08 3Q08 4Q08 Total Adjusted Net Revenue* 161,716 44,772 89,428 55,065 350,981 COGS (180,313) (58,992) (87,856) (53,833) (380,994) Gross Income (18,598) (14,220) 1,572 1,232 (30,013) Net Loss (20,482) (83,555) (28,735) (64,328) (197,100)
  • 9. Operational Performance Revenue Deductions totaled R$16.4 million in 4Q08, equivalent to 25.2% of gross revenue. This amount does not consider deductions relative only to 4Q08, since following the issue of Technical Pronouncement CPC 07, we changed the method for accounting tax credits and recognized the credits calculated in other quarters. After distributing credits over the year, deductions related exclusively to 4Q08 totaled R$10.0 million, while in fiscal year 2008, deductions totaled R$76.2 million. Cost of Goods Sold of R$53.8 million in 1.6% 2.9% 2.4% 4Q08 and R$381 million in 2008. Vegetable oil B100 Oil Consumed is still the main production cost item and, 12.1% Raw Material - together with methanol, accounts for 93% of Labor the cost of biodiesel sold. 81.0% GGF Depreciation
  • 10. Operational Performance General and Administrative Expenses were R$11.09 million in 4Q08. Non-recurring expenses occurred in the period are composed of provisions for labor claims, freight for biodiesel sales and legal and financial restructuring expenses. In 2008, General and Administrative Expenses totaled R$44.3 million.15,00013,00011,000 9,000 8.712 5.884 6.599 7,000 4.726 5,000 3,000 4.625 5.003 4.277 4.491 1,000-1,000 1Q08 2Q08 3Q08 4Q08 Personnel Expenses Administrative Expenses
  • 11. Operational Performance The Net Financial Result in 4Q08 was an expense of R$20.5 million, chiefly due to loan charges. The Net Result in the period was mainly impacted the high financial expenses and lower-than- expected sales volumes, which were insufficient to overcome the operational expenses, despite the positive margin contribution registered in the period. In addition, Adjustment to Market Value of Stocks and Bad Debt Provisions also impacted the result. Adjusted EBITDA losses of R$10.5 million in 4Q08 and R$65.8 million in 2008. 1Q08 2Q08 3Q08 4Q08 Total Net income (loss) in the year (20,482) (83,555) (28,735) (64,328) (197,100) Depreciation and Amortization 4,649 4,490 4,699 4,484 18,322 Financial Result 9,922 12,831 16,347 20,502 59,602 Fines – Petrobrás (12,218) -12,218 Provisions 37,687 (893) 28,792 65,586 Adjusted EBITDA (18,129) (28,547) (8,582) (10,550) (65,808)
  • 12. IndebtednessEndividamento (em R$ Mil) 2007 2008 Short term 141,245 102,967 Net Debt went from R$171 million in 2007 (+) Long Term 36,715 188,493 to R$290.4 million in 2008. (=) Total Indebtedness 177,960 291,460 (-) Cash Equivalents 6,808 1,049 (=) Net Debt 171,152 290,411 120.000 102.967 100.000 80.000 72.156 69.107 The financial restructuring concluded on 60.000 August 14 lengthened maturities, with the 47.187 40.000 majority of debt due amortized over 36 months 20.000 with a 12-month grace period. 43 - 2009 2010 2011 2012 2013
  • 13. Investor Relations José Carlos Aguilera CEO and IRO Eduardo de Come CFO Marcos Leite IR Manager Tel: +55 (21) 2546-5031 Website: www.brasilecodiesel.com.br/ri
  • 14. 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.