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Tereos apresentacao 3_t13_eng

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  • 1. Tereos Internacional Third Quarter 2012/13 Results São Paulo – February 15th, 2013
  • 2. 1. Market Update 2. Quarter Highlights 3. Operating Segment Review 4. Cash Flow and Debt Position 5. Top Priorities 6. Outlook 1 2 3 4 5 6
  • 3. Brazilian Sugarcane Production (MT) 0 100 200 300 400 500 600 700  2011/12: first drop in sugarcane production in 10 years (-10%)  2012/13: production recovery (+5%) Source: UNICA and Company’s Estimates -10%  Drop followed by stabilization of raw sugar prices around 18-20 USD cts/lb  The prospect of another global sugar surplus in 2012/13 (between 6-7Mt) is keeping a lid on prices at the moment World Raw Sugar Prices (USD cts/lb) Source: BLOOMBERG +5% Sugar: Stabilization of World Prices Between 18-20 USD cts/lb1 3 Weather impact in Brazil 10 15 20 25 30 35 40
  • 4. Y-o-Y: +31% Y-o-Y: +38% 100 120 140 160 180 200 220 240 260 280 300 Wheat Corn Source: MATIF European Cereal Prices (€/t) Starch: Cereal Prices Down From Peak, But Still at High Historical Levels 4 1  High price volatility to remain a main characteristic of cereal market  Although slightly down from peak in December 2012, prices are sustained by challenging weather in main producing countries (UK, France, Black Sea region and Argentina)  Stock-to-use ratios remain at relatively low levels (corn 13% and wheat 27%)  Demand for EU starch and derivatives in the food sector remains resilient
  • 5. Source : Cepea Esalq Source : Bloomberg Brazilian Ethanol Market  Brazil surpassed the US as the world’s largest ethanol exporter, as high cereal prices impacted North American production  Increases in gasoline prices at the refinery level by 6.6% and the ethanol blend mandate from 20% to 25% should bring support for ethanol consumption European and US Ethanol Market  European ethanol consumption in the quarter declined, as demand in the winter is tradionally lower  In US, ethanol prices followed corn pricing, which had dropped 16% since early August  Longer term prospect for European ethanol market constrained by willingness of EU to cap 1st generation ethanol at 5% of blend (7% for France) Ethanol Prices – SP State (R$/liter) Ethanol: Prices Dropped in Europe and US, while stable in Brazil Ethanol Prices - FOB Rotterdam & CBOT 5 1 0,50 1,00 1,50 2,00 2,50 3,00 Hydrous Anhydrous 1 1,5 2 2,5 3 3,5 350 400 450 500 550 600 650 700 750 800 €/m3 FOB Rotterdam T2 Ethanol CBOT USD/Gal.
  • 6. 1,820 1,965 (17) +45 +138 (21) Q3 2011/12 Brazil Indian Ocean Starch Europe Ethanol Europe Q3 2012/13 1,820 1,965 +124 +33 (18) +6 Q3 2011/12 Currency Volume Price & Mix Others Q3 2012/13 Q3 2012/13 – Revenues Record Net Revenues Driven by Higher Volumes in the Starch & Sweeteners and Sugarcane Segments 6 Net Revenues (R$ MM)  Group revenues supported by good industrial and commercial performance in sugarcane and starch & sweeteners segments but:  Mixed pricing situation Y-o-Y: higher European ethanol & alcohol and isoglucose prices but lower Brazilian sugar and ethanol prices  Ethanol volumes in Europe decreased significantly due to the impact of the difficult start of gluten production on the overall operations of Tereos BENP  Positive perimeter and currency effect 2
  • 7. 271 +34 +19 (4) (38) +2 284 Q3 2011/12 Brazil Indian Ocean Starch Europe Ethanol Europe Holding Q3 2012/13 Q3 2012/13 - Adjusted EBITDA Positive Impact from Sugarcane Divisions Offsetting Higher Grain Costs and Significant Drop on the Alcohol & Ethanol Segment’s Contribution 7  Adjusted EBITDA increased year-on-year thanks to higher volumes in the sugarcane businesses, positive Y-o-Y price effect in certain products (European ethanol & alcohol, isoglucose) and positive mix effect in Reunion Island…  … more than offsetting lower prices (Y-o-Y) in the Brazilian sugar & ethanol business, increase in cereal purchase price and significant drop on the alcohol & ethanol segment’s contribution due to low utilization rates at Tereos BENP Margin 14.5% Adjusted EBITDA (R$ MM) Margin 14.9% 2
  • 8. 90 86 50 182 11843 57 30 Q3 11/12 Q4 11/12 Q1 12/13 Q2 12/13 Q3 12/13 91 151 115 99 143 40 40 Q3 11/12 Q4 11/12 Q1 12/13 Q2 12/13 Q3 12/13 375 249 251 401 380 Q3 11/12 Q4 11/12 Q1 12/13 Q2 12/13 Q3 12/13 2.6 4.7 8.1 5.4 Q3 11/12 Q4 11/12 Q1 12/13 Q2 12/13 Q3 12/13 Ethanol Sales (‘000 m³) Energy Sales (‘000 MWh)Sugarcane Crushing (MM t) Sugar Sales (‘000 t) 8  Crushing  Recovery in sugarcane volume: 18.2 million tonnes processed (+12%)  5.4 million tonnes in Q3 12/13 (+107.7% Y-o-Y)  Yields improved from 70 t/ha to 84 t/ha this crop but lower TRS (135 kg/ton vs. 138 kg/ton last year)  55 thousand hectares planted in 2012/13 (25% expansion and 75% renewal)  Flexibility of industrial set-up allows shift to more profitable sugar production:  Sugar: 1.5 million tonnes 64% of mix vs. 62% last year  Ethanol: 529,000 m³ 36% of mix  Progress in cogeneration  Own quarterly volumes up 31% Y-o-Y, with portion of volumes sold at higher spot prices  On track to deliver a 50% growth in own cogeneration sales in 2013/14 crop +1.3% YoY +57.5% YoY +31.1% YoY Sugarcane Brazil – Production & Sales Higher Crushing on Better Yields and Extended Crop Season (Ended Mid-December) +107.7% YoY Own Sales Trading Own Sales Trading 3
  • 9. 593 577 (50) +6 (21) +64 (15) Q3 2011/12 Price & Mix Volume Price & Mix Volume Others * Q3 2012/13 Sugarcane Brazil – Q3 Financials Higher Volumes Compensating Lower Sugar and Ethanol Prices * includes Cogeneration, Agricultural Products, Hedging and Ethanol Resales Key Figures In R$ Million Q3 2012/13 Q3 2011/12 Change Revenues 577 593 -3% Gross Profit 87 118 -26% Gross Margin 15.1% 19.9% EBITDA 153 129 +19% EBITDA Margin 26.5% 21.7% Adjusted EBITDA 146 112 +30% Adjusted EBITDA Margin 25.3% 18.9%  Adjusted EBITDA: R$146 million • EBITDA improvement in Q3 thanks to lower cash COGS linked to extended crop period and higher electricity sales • Improvement of 640 bps on adjusted EBITDA margin to 25.3% • Adjusted EBITDA Margin1 including tilling as depreciation: 34.6%  Sugar: 64.0% of total net revenues • Volumes increased +1.5% to 380,000 tonnes • Prices down -8.0% Y-o-Y at 971.5 R$/tonne  Ethanol: 26.6% of total net revenues • Own Volume sold increased +10% to 143,000 m3 • Prices down -14.1% Y-o-Y at 1,074.2 R$/m3  Cogeneration: own energy revenues amounted R$20.3 million (+102.0%) 9 (1) Tereos Internacional allocates tilling expenses as cost. If tilling expenses were allocated as investment, Adjusted EBITDA would have reached R$199.4 million. Net Revenues (R$ MM) Sugar Ethanol 3
  • 10. +0.2% YoY Sugarcane Africa/Indian Ocean – Production and Q3 Financials Another Quarter of Good Performance 10 Sugarcane Crushing (’000 t) Sugar sales (‘000 t)  Sugarcane crushing • Larger crop in Mozambique (YTD: 730k tonnes, +4.5% y-o-y) although yields impacted by weather conditions (drought) and irrigation issues • In Reunion Island, slightly lower YTD crushing due to drought, but higher sugar production on improved TRS  Revenues +19% Y-o-Y • Higher sugar prices for both divisions and increase in volumes in Mozambique  Adjusted EBITDA • 29% increase in Adjusted EBITDA, despite higher labor costs in Mozambique and sugarcane costs in Reunion Island -3.4% YoY Revenue Breakdown by Product Key Figures In R$ Million Q3 2012/13 Q3 2011/12 Change Revenues 281 236 +19% Gross Profit 100 55 +83% Gross Margin 35.7% 23.3% EBITDA 84 69 +23% EBITDA Margin 30.0% 29.1% Adjusted EBITDA 85 66 +29% Adjusted EBITDA Margin 30.3% 28.1% 1,173 43 116 1,267 1,176 Q3 11/12 Q4 11/12 Q1 12/13 Q2 12/13 Q3 12/13 89 77 67 76 86 Q3 11/12 Q4 11/12 Q1 12/13 Q2 12/13 Q3 12/13 Sugar Reunion 35% Sugar Mozambique 21% Trading and others 44% 3
  • 11. 204 210 217 237 215 66 62 60 66 52 Q3 11/12 Q4 11/12 Q1 12/13 Q2 12/13 Q3 12/13 267270 272 277 303 109 134 110 109 72 62 61 70 51 58 Q3 11/12 Q4 11/12 Q1 12/13 Q2 12/13 Q3 12/13 130 171 194 180 159 Cereal Segment - Production and Sales Higher Volumes in Starch But Tereos BENP Gluten Start-up Impacting Alcohol & Ethanol Production  Grinding in Q3: -3.6% Y-o-Y • Starch & Sweeteners: +5.1% Resilient conditions in starch & sweeteners in Europe Positive perimeter effect with Haussimont acquisition • Alcohol & Ethanol: -24.0% Collateral production disruptions due to technical difficulties for the start-up of the gluten line at Tereos BENP (working below installed capacity) 11 Cereal Grinding (‘000 t) Starch & Sweeteners Sales (‘000 t) -3.6% YoY +5.1% YoY Co-products Sales (‘000 t) -1.1% YoY Alcohol & Ethanol Sales (‘000 m3) -24.0% YoY Starch & Sweeteners Ethanol & Alcohol Own Sales Trading Starch & Sweeteners Ethanol & Alcohol 678 710 723 744 698 220 214 209 224 168 Q3 11/12 Q4 11/12 Q1 12/13 Q2 12/13 Q3 12/13866898 924 932 968924 932 968 392 433 450 444 412 Q3 11/12 Q4 11/12 Q1 12/13 Q2 12/13 Q3 12/13 3
  • 12. Starch & Sweeteners – Q3 Financials Revenues Improvement on Good Sales Volumes, Helped as Well By Higher Perimeter Key Figures In R$ Million Q3 2012/13 Q3 2011/12 Change Revenues 843 705 +20% Gross Profit 141 122 +16% Gross Margin 16.8% 17.2% EBITDA 50 57 -11% EBITDA Margin 6.0% 8.0% Adjusted EBITDA 52 56 -7% Adjusted EBITDA Margin 6.2% 8.0% 12 Net Revenues (R$ MM) +19.6%  Revenues: R$843 million, up 19.6% • Organic sales volumes growth (+1.8%) and positive perimeter effect (Haussimont +3.2%) • Other revenues impacted by higher energy sales and services rendered  Adjusted EBITDA: R$52 million, down R$4 million • Positive impact of increased volumes and isoglucose prices did not offset higher raw material and energy costs 705 843 +71 +37 (3) +33 Q3 2011/12 Currency Volume Price & Mix Others Q3 2012/13 3
  • 13. 286 265 +29 (74) +27 (3) Q3 2011/12 Currency Volume Price & Mix Others Q3 2012/13 Alcohol & Ethanol Europe – Q3 Financials Tereos BENP Collateral Disruption Led to a Strong Drop in Volumes and Profitability  Revenues: R$265 million, down 8% • Decrease in volumes (-23.8%) mainly due collateral production disruptions on production • Higher ethanol prices (+9.0% Y-o-Y) and better average prices for co-products due to gluten introduction  Adjusted EBITDA: R$3 million, down 94% • Significant increase of raw material prices purchased at market prices • Higher unitary energy costs y-o-y 13 Net Revenues (R$ MM) Q3 Revenue Breakdown by Product Key Figures In R$ Million Q3 2012/13 Q3 2011/12 Change Revenues 265 286 -8% Gross Profit 13 64 -79% Gross Margin 5.0% 22.2% EBITDA 3 40 -94% EBITDA Margin 1.0% 14.0% Adjusted EBITDA 3 40 -94% Adjusted EBITDA Margin 1.0% 14.1% Alcohol & Ethanol own sales 51% Ethanol traded 37% Co-products and other 12% 3
  • 14. 14 Q3 Cash Flow Reconciliation Ongoing Strategic Investments in Key Segments and Seasonal Working Capital (1) Net debt as of September 30th 2012 restated to include capital increase of R$212 million from PBio into Guarani Cash Flow In R$ Million Q3 2012/13(1) Adjusted EBITDA 284 Working capital variance (133) Other operating (including income tax paid) (35) Operating Cash Flow (116) Financial interests (63) Dividends paid and received - Capex (247) Increase in capital - Others 29 Free Cash Flow (164) Forex impact (43) Acquisition & Perimeter impact - Net Debt Variation (207)  CAPEX Brazil: R$102 million Mainly allocated for (i) planting program; (ii) cogen equipment and (iii) maintenance costs with the beginning of the intercrop period Cereals: R$109 million Mainly allocated for (i) starch project in Brazil; (ii) capacity expansion in the starch & sweeteners segment and (iii) Tereos BENP product diversification (gluten / dextrose)  Working capital Seasonal cash requirements mostly related to the crop’s peak in the sugarcane division in Q3 (increasing stocks) 4
  • 15. Debt Increase Mostly Due to Seasonal Working Capital, Ongoing Investments and Currency Effect  Net Debt/Adjusted EBITDA: 4.0x, stable sequentially considering 3.8x in Sep., 2012(1) 15 Debt In R$ Million December 31, 2012 March 31, 2012 Change Current 2,257 1,291 967 Non-current 2,196 2,384 -188 Amortized cost (20) (25) 5 Total Gross Debt 4,453 3,650 783 In € 1,812 1,402 412 In USD 1,793 1,652 140 In R$ 783 557 226 Other currencies 65 64 - Cash and Cash Equivalent (678) (624) -54 Total Net Debt 3,755 3,026 729 Related Parties Net Debt 35 17 18 Total Net Debt + Related Parties 3,790 3,043 747 4 Currency Variation December 31, 2012 March 31, 2012 Change USD/R$ 2.0462 1.8218 +12.3% € / R$ 2.6949 2.4295 +10.9% (1) Net debt as of September 30th 2012 restated to include capital increase of R$212 million from PBio into Guarani
  • 16. BRAZIL  Continue efforts on agricultural mechanization, factories automation and improvement of processes  Expand electricity sales (1200 Gwh in 2015)  Strengthen positioning with Petrobras AFRICA/INDIAN OCEAN  Exploit the agricultural potential of Mozambique  Confirm the key role of sugarcane in the Reunion Island and valorize the Group’s competencies  In Brazil: optimize cost competitiveness to better cope with macroeconomic dynamics  Take part in the development of a growing market Top Priorities: Sugarcane 16 5
  • 17.  Adapt to higher price levels and volatility for cereals  Expand presence into growing markets (Brazil/China)  Adapt product mix and industrial base to higher price levels and volatility for cereals  Adjust production of gluten and share of ethanol at Lillebone (Reconversion of the plant to food industry)  Develop sales of starch & sweeteners in growing markets Top Priorities: Cereals 17 5
  • 18.  Sugarcane  Brazil: improving outlook for sugarcane and cogeneration • Recovery of 10% in sugarcane production in 2013/14 crop (crushing above 20 million tonnes) • Current cogeneration investments to double energy sales level in 2013/14 • Anhydrous blending returns to 25% as of May 1st 2013 should absorb a significant proportion of additional sugarcane production of 2013/14 crop • Higher gasoline prices at refinery (+6.6% as of January 31st) to also support ethanol consumption  Indian Ocean: positive commercial dynamics to continue  Cereals  Europe: diversification to cope with higher cereal prices • Further prices increases passed onto customers in December negotiation round • Volumes at Tereos BENP should not reach normalized levels in this fiscal year • Cereal prices expected to remain high and volatile  Emerging Markets: greenfield projects underway • Brazil: Syral-Halotek corn-based starch production to start in H1 2013/14 • China: land work progressing at Dongguan site 18 Outlook6
  • 19. 19 Investor Relations Phone: +55 (11) 3544-4900 ir@tereosinternacional.com