Acucar Guarani Q3 09/10 Earnings Presentation
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Acucar Guarani Q2 09/10 earnings presentation

Acucar Guarani Q2 09/10 earnings presentation

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Acucar Guarani Q3 09/10 Earnings Presentation Presentation Transcript

  • 1. Q3 09/10 Results February 12th, 2010
  • 2. 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.
  • 3. Key Financial Highlights Strong overall performance, impacted by drop in Mozambique Record 9M Net Revenues: +14.3% (+1.3% quarter-on-quarter) on higher sugar and ethanol prices Adjusted EBITDA: +8.2% (YTD basis) to R$208.3 million Brazilian operation with a 23.8% Adjusted EBITDA margin in 9M and 30.1% in Q3 09/10 Net profit of R$15.7 million R$ 80.3 million Net Profit in Brazilian operations R$ 64.6 million loss in Mozambique (lower production and currency depreciation) Net debt at R$1.1 billion: decrease of 12.8% compared to the same period last year Positive outlook Domestic prices Higher sugar production Increase of cogeneration Higher own sugarcane 3
  • 4. Key Financial Highlights Strong overall performance, impacted by drop in Mozambique Q3 YTD YTD Brazil1 R$ Million 09/10 08/09 09/10 08/09 09/10 08/09 Revenues 363.8 359.1 970.7 849.2 928.9 802.4 Adjusted EBITDA 93.5 116.0 208.3 192.5 220.7 174.4 EBITDA Margin 25.7% 32.3% 21.5% 22.7% 23.8% 21.7% Net Income 1.8 (113.0) 15.7 (241.4) 80.3 (240.1) Net Margin 0.5% -31.5% 1.6% -28.4% 8.6% -29.9% CAPEX 44.3 37.1 109.3 183.2 87.5 177.4 Net Debt 1,101.5 1,263.0 1,101.5 1,263.0 935.1 1,124.5 Note: (1) ex-Mozambican operations 4
  • 5. Key Business Highlights – Q3 09/10 Sugar Market Overview Strong world prices and growth in Brazilian exports World sugar prices at their highest levels in 28 years Strong sugar prices, supported by forecasts of a continued imbalance between world supply and demand and by reduced inventory levels poor crop in India and eastern Africa (Mozambique) rains in Brazil, with reduced sugar content on sugarcane Domestic prices higher than international prices due to lower than expected Brazilian production of white/refined sugar Increase in Brazilian exports, with India as main destination Guarani’s Sugar Prices (R$/ton) 1000 800 600 400 Q1 07/08 Q2 07/08 Q3 07/08 Q4 07/08 Q1 08/09 Q2 08/09 Q3 08/09 Q4 08/09 Q1 09/10 Q2 09/10 Q3 09/10 Note: Actual average price net of taxes 5
  • 6. Key Business Highlights – Q3 09/10 Ethanol Market Overview Higher prices and strong domestic demand during the year Significant appreciation of ethanol prices due to lower product output Continued growth in domestic consumption, supported mainly by the growth of the flex fuel fleet and strong car sales Limited impact of the 20% reduced blending (300,000 m³) Price increases in all other major markets, such as US and European Union Guarani’s Ethanol Prices (R$/m³) 1000 800 600 400 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 Q3 09/10 Note: Actual average price net of taxes 6
  • 7. Sugarcane Crushing Heavy rains in Brazil and drought in Mozambique Sugarcane crushing reduced by 2.2% in 9M 09/10, mainly due to: Drought in Mozambique, resulting in 0.2 million tons less sugarcane crushed Heavy rains in Brazil resulting in 0.1 million tons less sugarcane crushed Current production of TRS reduced by 11.0% compared to 9M 08/09, mainly due to a decrease of 6.6% in the sugar content measured in TRS, although yields have increased by 14.8% to 93 ton/ha Sugarcane from 3rd parties represented 72.5% of the total crushing in 9M 09/10 Sugarcane processing to resume on March, 2010 on three of Guarani industrial plants Sugarcane Crushed (MM t) Sugarcane Crushed (MM t) 9M 09/10 Q3 09/10 14.4 4.2 4.1 14.1 2.7 10.3 10.2 3.1 4.1 1.5 3.9 1.0 9M 08/09 9M 09/10 Q3 08/09 Q3 09/10 Own 3rd Party Own 3rd Party 7
  • 8. Sugar and Ethanol Production Impact of poor sugar content on sugarcane due to rainfalls Sugar production fell by 15.2% in 9M 09/10 impacted by lower sugar content (TRS) in the sugarcane, while ethanol reduced by 4.8% Priority on crystal and refined sugar due to higher margins. Refining operations to continue during the inter-crop Mix with 56% sugar and 44% ethanol Increase of own sugarcane for next crop Sugar Production (’000 t) Ethanol Production (’000 m³) 9M 09/10 9M 09/10 1,154 496 472 149 979 71 512 385 355 453 493 455 111 117 9M 08/09 9M 09/10 9M 08/09 9M 09/10 Ref ined Crystal VHP Anhydrous Hydrous 8
  • 9. Net Revenues Record YoY net revenues driven by higher prices Net revenues rose 14.3% to R$970.7 million in 9M 09/10 and 1.3% to R$363.8 million in Q3 09/10 Sugar revenues rose by 10.2% in Q3 09/10 with a 35.2% price increase and a 18.5% volume decrease Ethanol revenues increased by 17.7% in Q3 09/10 with a 21.0% price increase to R$916.3/m³ Focus on domestic market to benefit from higher prices: Sugar: 64.7% domestic market and 35.3% export Ethanol: 95.1% domestic market and 4.9% export Net Revenues (R$ MM) Net Revenues (R$ MM) 9M 09/10 Q3 09/10 971 849 67 73 359 364 271 14 22 272 93 110 632 504 245 240 9M 08/09 9M 09/10 Q3 08/09 Q3 09/10 Sugar Ethanol Others Sugar Ethanol Others 9
  • 10. Adjusted EBITDA Impacted by higher prices in Brazil and lower operations in Mozambique Adjusted EBITDA: R$93.5 million and 25.7% Adjusted EBITDA margin in Q3 09/10 vs. 32.3% in Q3 08/09: In Brazil: Positive impact of higher prices and reduced costs of own sugarcane, offset by increased third party sugarcane costs based on CONSECANA and lower sugar content. Adjusted EBITDA Margin of 30.1% In Mozambique: -R$9.8 million Adjusted EBITDA, affected by reduced volume of crushed sugarcane In Q3 09/10, negative hedging effect of R$15.0 million vs. a positive R$12.9 million in Q3 08/09, due to higher sugar prices YTD basis: R$208.3 million Adjusted EBITDA and 21.5% margin For Brazilian operations alone, Adjusted EBITDA of R$220.7 million and 23.8% Adjusted EBITDA margin Adjusted EBITDA (R$ MM) 9M 09/10 280,0 22.7% 25,0% 21.5% 23,0% 230,0 21,0% 19,0% 180,0 18.2 17,0% 15,0% 130,0 13,0% 220.7 11,0% 80,0 174.3 9,0% 7,0% 30,0 5,0% 3,0% -20,0 1,0% (12.4) 9M 08/09 9M 09/10 Brasil Moçambique Margem EBITDA Ajustado 10
  • 11. Net Results Return to net profit despite loss in Mozambique YTD net profit of R$15.7 million vs. net loss of R$241.4 million in 9M 08/09, including R$80.3 million profit in Brazil Offset by: Net loss in Mozambique of R$64.6 million caused by reduction in production and non-cash currency depreciation Net Profit (R$ MM) Q3 and 9M 09/10 41.7 80.3 (39.9) (64.6) R$1.8 million Consolidated R$15.7 Net million Profit Q3 09/10 9M 09/10 Mozambique Brazil 11
  • 12. Net Debt At R$ 1.1 billion Net debt of R$1.1 billion as of December, 2009 representing 2.4% increase over previous quarter due to: Higher working capital reflecting Guarani’s normal business cycle to increase inventories Net debt/Adjusted EBITDA ratio stood at 4.5x on December, 2009 vs. 4.0x on September, 2009 due to seasonality of the business Short-term debt represented 55.4% of total net debt (excluding intercompany loans) Debt in foreign currencies totaled R$758.4 million, equivalent to 68.9% of total net debt Effective average interest rate in Q3 09/10 of 7.7% Net Debt per Currency Net Debt per Term BRL Non- 31% Current 45% Foreign Current Currency 55% 69% Note: Includes debt related to SHL in Mozambique Note: Excludes intercompany loans. Net of cash & cash equivalents 12
  • 13. CAPEX Increased sugarcane crushing and sugar production capacity … to take advantage of higher sugar prices: Increase of Tanabi’s crushing capacity from 1.4 million tons during this crop to 1.7 million tons for next crop and a new sugar factory to allow the plant to produce 100,000 tons of sugar São José plant to increase capacity to 3.2 million tons of sugarcane crushed with a 50,000 tons increase in sugar production. Expected growth in energy sold to the grid Increase of mechanical harvesting and planting capacity as well as to improve field yields Increase of plantation area in Mozambique and irrigation to ensure sugarcane availability Cogeneration in Andrade plant 13
  • 14. Mozambique Investing to increase yields Total renovation of sugarcane fields by 2011/12 (15,900 ha) Extension of irrigation to a further 5,000 ha (total of 10,000 ha in 2012) 1,500 ha in 2010 1,600 ha in 2011 1,900 ha in 2012 Refinancing of debts in 2010 to restructure current financing in South African Rand 14
  • 15. Sugar Market Outlook Prices supported by decrease in production and lower yields Global demand may exceed production by 6 million tons in this world crop Historically high prices to remain at least for 18 to 24 months Future sugar prices to be adjusted according to weather at the start of the Brazilian crop and the next Indian crop starting in October, 2010 Good prospects for white sugar prices with the expectation of a significant deficit both for refined and crystal sugars Raw Sugar Prices (NY 11) World Sugar Balance cents US$/lb cents R$/lb Inventories Production Consumption Production/Consumption (MM ton) 28 Q109 Q209 Q309 Q409 Q110 Q210 Q310 50 60 180 45 24 Inventories (MM ton) 40 160 cents US$/lb cents R$/lb 50 20 35 16 30 140 25 40 12 20 120 8 15 01-Jan-09 01-Jan-10 01-Jul-08 01-Jul-09 01-Apr-08 01-Apr-09 01-Oct-08 01-Oct-09 30 100 98/99 99/00 00/01 01/02 02/03 03/04 04/05 05/06 06/07 07/08 08/09 09/10E Source: ICE Source: LMC 15
  • 16. Ethanol Market Outlook Strong consumption and prices expected for Q4 09/10 and next crop Domestic market: Ethanol prices supported by lower stocks than in previous crop Strong flex fuel vehicle sales – currently 85% of all vehicle sold – will be a key driver for ethanol consumption growth International market: Higher prices in US and EU suggest a possible window for Brazilian exports from the beginning of next crop Although world production has increased, supply will struggle to meet demand because of record sugar prices that favour sugar production Hydrous and Anhydrous Ethanol Vehicles Sales per Fuel Type Prices (SP State) (Brazil) Hydrous Anhydrous 1,25 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Ethanol + Flex-Fuel Gas + Diesel 1,15 350 Q109 Q209 Q309 Q409 Q110 Q210 Q310 1,05 300 R$/liter 0,95 250 '000 units 0,85 200 0,75 150 0,65 100 0,55 50 01-Jan-09 01-Jan-10 01-Jul-08 01-Jul-09 01-Apr-08 01-Apr-09 01-Oct-08 01-Oct-09 0 Jul-08 Jul-09 Jan-09 Apr-08 Oct-08 Apr-09 Oct-09 Source: Esalq Source: Anfavea 16
  • 17. Outlook Guarani well positioned to seize market opportunities… … and benefit from the positive market scenario: Positive scenario for sugar prices for the 2010/11 crop due to higher demand than supply Positive scenario for ethanol prices in Q4 09/10 due to lower supply and strong demand in Brazil. Prices for next crop expected to be more stable, with more sugarcane derived to sugar production Increased volumes of own sugarcane Support from controlling shareholder Tereos for growth strategy 17
  • 18. Thank You! Jacyr S. Costa Filho CEO Reynaldo F. Benitez CFO and Investor Relations Officer Alexandre L. Menezio phone: +55 (11) 3544-4900 Investor Relations Manager Felipe F. Mendes e-mail: ri@aguarani.com.br Investor Relations Analyst website: www.acucarguarani.com.br/ir Renato N. Zanetti Neto Investor Relations Analyst