1Q08 - Presentation of Results

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1Q08 - Presentation of Results

  1. 1. 1Q08 Results May 8, 2008 1
  2. 2. Agenda • 1Q08 Operational and Administrative Highlights • 1Q08 Results • 2008 Outlook 2
  3. 3. Operational and Administrative Highlights  Launch and operational startup of Kami 9:  Opening ceremony on March 18;  Production of samples started in March for subsequent sale in April;  World-class quality, in line with top international products;  Samples of medical disposables were well received by clients. 3
  4. 4. Operational and Administrative Highlights Isofilme Operations:  Investments in debottlenecking of plant (rotary slitting blades, new calender roll, slitting automation and roll packaging) in final phase;  Plant ready to ramp up to full capacity by April;  Indicators of operating and financial performance in line with pre-acquisition projections. 4
  5. 5. Operational and Administrative Highlights  Operation - Pipes and Fittings Division:  Manufacturing and sale of large-diameter Pipes to the ethanol industry;  Improvements in productivity indices.  Other:  Early redemption in January of Isofilme’s Eurobond for US$9.2 million;  Repurchase of 2.4 million shares (76% of limit) at a total cost of R$18.4 million;  Sale of remaining properties and machinery of the Packaging Division in January (R$9.6 million). 5
  6. 6. Agenda •Operational and Administrative Highlights • 1Q08 Results •2008 Outlook 6
  7. 7. Sales Volume Sales Volume (thousand tonnes) Total Total 22.2 21.4 Total 18.5 1.1  Growth of 23.9% versus 1Q07, mainly in the 0.7 Nonwovens division (23.8%); 0.3 5.6 0.4 5.7  Contraction of 2.7% versus 4Q07 due to 5.6 seasonal factors, especially in the durables segment; 15.5  1Q08 and 4Q07 figures include Isofilme sales. 15.1 12.2 1Q07 4Q07 1Q08 Nonwoven Pipes and Fittings Packaging Others 7
  8. 8. Gross Revenue Gross Revenue (R$ thousand)  Increase of 10.3% versus 1Q07, and slight contraction of 1.4% against 4Q07; 136.3 134.4  Export revenue up 5.5% year on year 121.9 and 3.6% quarter on quarter, despite 42.6 44.1 the scenario marked by the strong local- 41.8 currency appreciation;  Domestic gross revenue grew by 12.7% year on year and contracted by 93.8 3.7% quarter on quarter, due to 90.3 80.1 seasonal factors in the Nonwovens market. 1Q07 4Q07 1Q08 Domestic Market Export Market 8
  9. 9. EBITDA and EBITDA Margin EBITDA (R$ million) and EBITDA Margin (%) 30.9 3.5 27.6  EBITDA up 10.2% year on year to R$26.3 million, with EBITDA margin of 22.8%; 1.3  Compared with 4Q07, EBITDA fell by 4.0%, as a result of lower Nonwovens sales volume (seasonal factors); 23.9 27.4 26.3  EBITDA adjusted for operating hedge* grows by 15.5% year on year to R$27.6 million (margin of 23.9%); 26.8% 23.9%  Compared with 4Q07, Adjusted EBITDA down 10.7%, due to lower gains from hedge operations. 22.9% 23.6% 22.7% 1Q07 4Q07 1Q08 Adjusted EBITDA Operational Hedge * Result of foreign-currency hedge operations to lock in exchange rate for Adjusted EBITDA Margin % Adjusted EBITDA Margin (Hedge) % export receivables. 9
  10. 10. Net Income and Net Margin Net Income (R$ million) and Net Margin (%)  Net Income totals R$9.8 million, with 9.7 9.8 net margin of 8.5%, in line with the net margin in 1Q07; 7.2  Net income up 36% versus 4Q07, when net income was R$7.2 million and net margin 8.6%. 9.3% 8.6% 8.5% 1Q07 4Q07 1Q08 Net Margin 10
  11. 11. Nonwovens Division Net Revenue (R$ million)  Volume of 15,100 tonnes, up 23.9% on 1Q07, with 92.7 domestic volume rising 30.6% (mainly Isofilme) and 88.4 export volumes growing 11.8%; 79.2  Against 4Q07, volume down 2.7%, impacted by seasonal factors in the durable products segment. 1Q07 4Q07 1Q08 Volume (‘000 tonnes) 15.5  Net Revenue of R$88.4 million, growing by 11.7% year on 15.1 year and contracting by 4.7% quarter on quarter (seasonal factors); 12.2  Results achieved despite the scenario of strong appreciation in the Brazilian real, which had a negative impact on export revenue. 1Q07 4Q07 1Q08 11
  12. 12. Nonwovens Division Unitary Variable Costs (R$ - raw materials, commissions and freight) 4.02  Decrease of 4.6% in relation to 1Q07, as a result of 3.76 higher sales volume (partially due to the Isofilme 3.70 acquisition) without the incorporation of additional fixed costs;  Decline of 1.6% versus 4Q07. Fixed Costs (R$ million) 9.8 9.3 1Q07 4Q07 1Q08 7.9  Decline of 6.5% year on year. Indexation of raw material contracts to U.S. dollar partially mitigated the 0.65 upward pressure on resin prices in the international and 0.63 0.62 domestic markets;  Increase of 1.6% quarter on quarter, due to upward pressure in international market that was not fully offset 1Q07 4Q07 1Q08 by local-currency appreciation. Unitary Fixed Costs 12
  13. 13. Nonwovens Division Adjusted EBITDA (Hedge) (R$ million)  EBITDA of R$22.5 million, with margin of 25.4%, growing 0.7% year on year; 29.0 EBITDA down 11.7% against 4Q07, due to the contraction in 23.7 22.3 domestic sales (seasonal factors). EBITDA (R$ million) and EBITDA Margin (%) 31.3% 28.2% 26.8% 25.5 22.3 22.5 1Q07 4Q07 1Q08 Ajusted EBITDA Margin (Hedge) % 28.2% 27.5% 25.4% EBITDA adjusted for Operating Hedge* of R$23.7 million (margin of 26.8%), increase of 6.3% in relation to 1T07. 1Q07 4Q07 1Q08 EBITDA Margin% 13 * Result of foreign-currency hedge operations to lock in exchange rate for export receivables.
  14. 14. Pipes and Fittings Division Net Revenue (R$ million) 23.4 Volume of 5,700 tonnes in the quarter, up 0.9% versus 22.5 both 1Q07 and 4Q07. 21.7 Volume (‘000 tonnes) 1Q07 4Q07 1Q08 5.6 5.6 5.7  Net revenue in the quarter of R$23.4 million, growing by 7.8% year on year and 3.8% quarter on quarter;  Revenue growth driven by better prices (adjustment of product mix), with pass-through of higher resin prices in 4Q07, and higher sales volume. 1Q07 4Q07 1Q08 14
  15. 15. Pipes and Fittings Division Unitary Variable Costs  Increase of 21.7% versus 1Q07, due to the wage (R$ - raw materials, commissions and freight) increase negotiated with the Unions, implemented in November 2007 and the new sales and operational 3.06 structure to support the strategy for the Pipes and 2.95 2.88 Fittings Division;  Down by 11.1% versus 4Q07. Fixed Costs and Unitary Fixed Costs (R$ million) 3.6 3.2 1Q07 4Q07 1Q08 2.6  Decrease of 2.4% year on year and 5.9% quarter on quarter;  PVC resin prices returned to previous levels following 0.64 0.57 solution of the temporary shortage in 4Q07. 0.46 1Q07 4Q07 1Q08 Unitary Fixed Costs 15
  16. 16. Pipes and Fittings Division EBITDA (R$ million) and EBITDA Margin(%) 3.9  EBITDA of R$ 3.9 million, with margin of 16.5%, growing by 50.0% versus 1Q07 and 116.7% versus 4Q07. 2.6 1.8 16.5% 11.8% 7.9% 1Q07 4Q07 1Q08 EBITDA Margin% 16
  17. 17. Agenda • 1Q08 Operational and Administrative Highlights • 1Q08 Results • 2008 Outlook 17
  18. 18. 2008 Outlook  Additional Nonwovens Sales Volumes:  Operations ramped up to full capacity by 2Q08:  Additional 1,000 tons/month from Kami 9;  Additional 200 tons/month from Kami 10 (Isofilme). Pipes and Fittings Division:  1Q08 performance to be maintained throughout the year;  Strategic alternatives currently being analyzed. 18
  19. 19. 2008 Outlook  Development of new products:  Medical Disposables:  Initial samples sent exceeded clients’ specifications;  Pilot production lots to be sent by end of 2Q08 with start of effective sales in 3Q08.  Hygiene Disposables (Specialties):  Acquisition of new equipment already begun, with delivery and installation expected over the course of 3Q08 and sales starting in 4Q08. 19
  20. 20. 2008 Outlook  Improvements in operational and administrative efficiency:  Implementation of SAP in production processes in June 2008;  New structure in the Purchasings area. 20
  21. 21. IR Contact Tel: +55 (41) 3381-7600 Fax: +55 (41) 3283-5909 São José dos Pinhais – PR www.providencia.com.br/ir The words “believe”, “anticipate”, “expect”, “estimate”, “will”, “plan”, “may”, “intend”, “foresee”, “project” and other similar expressions indicate forward-looking statements. These forward-looking statements involve uncertainties, risks and assumptions, since they include information related to our potential or assumed future operating results, business strategy, financing plans, competitive position in the market, industry environment, potential growth opportunities and the effects of future regulations and competition. In addition, forward-looking statements refer only to the date on which they were made and should not be taken as a guarantee of future performance. Providência is under no obligation to update this presentation with new information and/or future events . 21

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