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Acucar Guarani Q2 09/10 Earnings Presentation

Acucar Guarani Q2 09/10 Earnings Presentation



Acucar Guarani Q2 09/10 earnings presentation

Acucar Guarani Q2 09/10 earnings presentation



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    Acucar Guarani Q2 09/10 Earnings Presentation Acucar Guarani Q2 09/10 Earnings Presentation Presentation Transcript

    • Q2 09/10 Results November 17th, 2009
    • Disclaimer This presentation contains forward-looking statements related to the prospects of our business and estimates for operating and financial results. Those related to growth prospects of Açúcar Guarani S.A. are merely projections and, as such, based exclusively on the expectations of the management concerning the future of the business. Such forward-looking statements depend substantially on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian and international economies and the industry and are therefore subject to change without prior notice.
    • Q2 09/10 Sugar Market Overview Guarani’s Sugar Average Prices (R$/ton)1 World sugar prices at their highest level in 28 years 800 700 Sugar prices supported by the decrease in production by major 600 producers, such as India and the EU, as well as heavy rainfalls in Brazil, 500 reducing expected production 400 Q1 07/08 Q2 07/08 Q3 07/08 Q4 07/08 Q1 08/09 Q2 08/09 Q3 08/09 Q4 08/09 Q1 09/10 Q2 09/10 Higher Brazilian exports supporting domestic prices 3
    • Q2 09/10 Ethanol Market Overview Increase of 22.4% in volume of Guarani’s Ethanol Average Prices hydrous ethanol sold in the domestic (R$/m³) market compared to Q2 08/09, 800 sustained by the growth in the flex fuel vehicles fleet and expected 2.6 750 million car sales in 2009 in Brazil 700 650 Positive trend in domestic ethanol prices due to expected tight supply 600 (affected by rains) & balanced demand (strong car sales) at the end of the 550 Q1 07/08 Q2 07/08 Q3 07/08 Q4 07/08 Q1 08/09 Q2 08/09 Q3 08/09 Q4 08/09 Q1 09/10 Q2 09/10 Brazilian crop Exports lower than last year due to a recovery in domestic market prices. US remains the main Brazilian destination, followed by the European Union, India and Japan. 4
    • Decrease of Sugarcane Crushed in Q2 09/10 Sugarcane Crushed (MM t) Sugarcane Crushed (MM t) H1 09/10 Q2 09/10 10.2 10.0 6.0 5.4 7.6 7.1 4.8 4.4 2.6 2.9 1.2 1.1 H1 08/09 H1 09/10 Q2 08/09 Q2 09/10 Own 3rd Party Own 3rd Party Decrease in total volume crushed (-9.4%) in Q2, impacted by rainfalls. Volume down 1.7% on a half year basis 2009/10 crushing target revised to 14.5 million tons, due to negative impact of weather in Brazil (rainfalls) and Mozambique (drought): • Brazil: 14.1 million tons • Mozambique: 0.4 million tons (expected 0.6 million tons) Agricultural yield in Brazil has increased by 12.9%, while sugar content in sugarcane has declined by 7.3% to 134 kg TRS/ton of sugarcane 5
    • H1 09/10: Increased Refined Sugar Production and Slight Decrease in Ethanol Production Sugar Production (’000 t) Ethanol Production (’000 m³) H1 09/10 H1 09/10 818 339 332 83 706 46 459 334 282 250 276 326 57 82 H1 08/09 H1 09/10 H1 08/09 H1 09/10 Refined Crystal VHP Anhydrous Hydrous Increase in refined sugar production (+18.1% in H1 09/10 and stable in the second quarter, in line with value-added strategy) to benefit from the white premium (average 90.7 US$/ton during first half 09/10) Quarter-on-quarter, sugar production decreased by 19.0% and ethanol production by 13.8% due to poor weather conditions Mix through September of 57% sugar and 43% ethanol to benefit from higher margins 6
    • Strong Increase in Net Revenue Driven by Higher Sugar Prices in Q2 09/10 Net Revenue (R$ MM) Net Revenue (R$ MM) H1 09/10 Q2 09/10 607 373 36 490 53 292 162 32 96 51 179 99 392 242 260 161 H1 08/09 H1 09/10 Q2 08/09 Q2 09/10 Sugar Ethanol Others Sugar Ethanol Others 27.7% growth in net revenue in Q2 09/10, Guarani’s Net Revenue breakdown in H1 driven mainly by Sugar (+49.8% in Q2 09/10): 09/10: • 42.1% increase in average sugar prices in Reais to 749.1 R$/ton • Sugar: 64.6% • 5.4% increase in sugar sales • Ethanol: 26.6% Ethanol revenue down 2.7% due to lower • Energy: 1.5% prices (-2.0%) • Other products: 7.3% 7
    • Improvement in Adjusted EBITDA: +49.9% in H1 09/10 to R$114.8 Million, +9.8% in Q2 09/10 Adjusted EBITDA (R$ MM) Adjusted EBITDA (R$ MM) H1 09/10 Q2 09/10 160 21,0% 100 25,0% 140 18.9% 19,0% 20.2% 23,0% 15.6% 80 21,0% 120 17,0% 17.4% 19,0% 100 15,0% 17,0% 60 15,0% 80 13,0% 13,0% 60 11,0% 40 11,0% 114.8 64.9 9,0% 40 76.6 9,0% 59.1 7,0% 20 5,0% 20 7,0% 3,0% 0 5,0% 0 1,0% H1 08/09 H1 09/10 Q2 08/09 Q2 09/10 Adjusted EBITDA Adjusted EBITDA Margin Adjusted EBITDA Adjusted EBITDA Margin Rise in Adjusted EBITDA mainly due to higher sugar prices Adjusted EBITDA margin of 18.9% versus 15.6% in H1 08/09 with Adjusted EBITDA measured by TRS sold of R$118.2/ton, an increase of 49.7% half-on-half Q2 09/10 Adjusted EBITDA margin at 17.4% affected by: • Temporary effect of hedging with futures (R$9.7 million), ethanol exports of 44,800 m³ at a lower average price than on the domestic market and quarterly effect of CONSECANA adjustment on agricultural costs (R$18.7 million) • Higher costs of goods sold related to the lower sugar content on the raw material and increased agricultural costs 8
    • Net Profit of R$13.8 million in H1 09/10 (close to breakeven in Q2 09/10) Driven by Increased Sugar Prices and Positive Forex impact Net Profit (R$ MM) Net Profit (R$ MM) H1 09/10 Q2 09/10 13.8 (0.5) (128.4) (101.8) H1 08/09 H1 09/10 Q2 08/09 Q2 09/10 Q2 09/10: Net Loss of R$0.5 million after a R$101.8 loss last year H1 09/10: Net Profit of R$13.8 million, compared with a net loss of R$128.4 million in H1 08/09, with a 2.3% net margin on sales Net profit positively affected by: a) Strong price recovery for sugar (+45.5%) and b) Net non-cash FOREX effect of R$105.8 million on H1 09/10; but negatively impacted by: a) The hedging effect related to prices of R$50.8 million on H1 09/10; and b) Increased costs due to lower sugar content and CONSECANA cost adjustment H1 09/10 Net profit of Brazilian operations of R$42.3 million, while operations outside of Brazil posted a net loss of R$28.5 million due to depreciation of local currency 9
    • Stable Net Debt and Indebtedness Ratios Net Debt per Currency1 Net Debt per Term1 Non- BRL Current 30% 50% Foreign Currency Current 70% 50% (1) Includes R$101.4 million related to SHL in Mozambique (1) Excludes intercompany loans and cash & cash equivalent Net debt at R$1.1 billion, virtually stable over the previous quarter, due to higher stocks and accounts receivable, but with positive effect of real appreciation on debt denominated in foreign currency (USD) Short-term debt net of cash and cash-equivalents totaled R$328.5 million, representing 50% of total Net Debt, excluding intercompany loans with Tereos Net Debt/Adjusted EBTIDA ratio at 4.0x in September, 2009, stable compared to June, 09. Excluding intercompany loans, Net Debt/Adjusted EBITDA ratio stood at 2.5x 10
    • CAPEX: Focus on Sugar Production Increase, Cost Reduction and Efficiency Programs Selective industrial and agricultural CAPEX to: Eliminate bottlenecks and further develop marginal capacity to lower fixed costs at São José and Tanabi plants Increase sugarcane crushing capacity at São José plant (from 2.6 to 3.2 million tons) and launch a sugar factory at Tanabi plant (110,000 ton/year) Sugarcane planting to produce the necessary raw material in coming crops to benefit from high sugar prices 11
    • Sugar Market Outlook: Worldwide Supply & Demand Deficit Ensure Sharp Increase of Sugar Prices Raw Sugar Prices (NY 11) World Sugar Balance cents US$/lb cents R$/lb Inventories Production Consumption Production/Consumption (MM ton) 28 50 60 180 Q109 Q209 Q309 Q409 Q110 Q210 45 Inventories (MM ton) 24 40 160 cents US$/lb cents R$/lb 50 20 35 30 140 16 25 40 12 20 120 8 15 01-Jan-09 09 01-Jul-08 08 01-Jul-09 09 01-Apr-08 08 01-Apr-09 09 01-Oct-08 08 01-Oct-09 09 30 100 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10E Source: ICE Source: LMC A deficit in global sugar supply is expected for the 2009/10 crop, the second consecutive year of reduced production levels, mainly due to India’s low production (delayed monsoons) Analysts expects this positive trend to continue for at least the next 12 to 18 months, with the expectation of a reversion from deficit to a slight surplus in the world’s sugar balance onwards Driven by positive fundamentals, sugar prices stood at their highest level in 28 years Brazil, the largest beneficiary of the world sugar deficit in the 2009/10 crop, has been impacted by rains in the Center-south region from July to September 2009 Global demand not affected by worldwide crisis 12
    • Ethanol Market Outlook: Recovery in Ethanol Prices Driven by Tight Supply Domestic Market The growth of the flex-fuel fleet, which represented more than 40% of Brazil’s light vehicles fleet at the end Vehicles Sales per Fuel of September 2009, is still boosting domestic ethanol Type (Brazil) consumption Ethanol + Flex-Fuel Gas + Diesel Forecast of reduced ethanol supply during the inter- 300 crop, points to strengthened domestic prices at the 250 beginning of the 2010/11 crop, favoring producers with 200 '000 units fuel storage 150 International Market 100 50 Better prices and margins for US producers due to 0 lower corn production. Enhanced prospects for EU and Jun-01 Jun-06 Jul-03 Aug-05 Jul-08 Jan-01 Feb-03 Jan-06 Feb-08 Nov-01 Sep-02 Dec-03 May-04 Nov-06 Sep-07 Dec-08 May-09 Apr-02 Oct-04 Apr-07 Mar-05 Japan (new governmental target for renewable energy of 20% by 2030) Source: Anfavea According to the EPA (Environmental Protection Agency) ethanol from sugarcane is the only fuel that would allow to meet US RFS-2 requirements with 44% less greenhouse gas emissions compared to gasoline 13
    • Outlook: Guarani Solidly Positioned to Seize Opportunities and Benefit from the Positive Market Outlook Rains in Brazil and drought in Asia enhancing positive outlook for sugar prices for the second half of 2009/10 Positive prices outlook for ethanol as of second half of 09/10 due to strong demand Continued focus on balance sheet strengthening Pipeline of attractive expansion projects: Sugar in the short term and Ethanol and Cogeneration in the Mid/Long term Strong commitment and support from Tereos, Guarani’s controlling shareholder, to seize opportunities: Guarani is a strategic asset for Tereos 14
    • Thank You Jacyr S. Costa Filho CEO Reynaldo F. Benitez CFO and Investor Relations Officer phone: +55 (11) 3544-4900 Alexandre L. Menezio e-mail: ri@aguarani.com.br Investor Relations Manager website: www.acucarguarani.com.br/ir Felipe F. Mendes Investor Relations Analyst Renato N. Zanetti Neto Investor Relations Analyst