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3Q07 Presentation 3Q07 Presentation Presentation Transcript

  • 3Q07 Results November 14, 2007
  • Highlights Sales volume increased 7.9% in the 3Q07 compared to the 2Q07; Gross Revenue was R$ 124.6 million, a 5.6% growth over the 2Q07; Net Revenue was R$ 113.3 million, 5.3% higher than in the 2Q07 (R$ 107.6 million); COGS per unit declined by 2.1% compared to the 2Q07; Adjusted EBITDA reached R$ 27.7 million in the quarter, an increase of 5.6% compared to the 2Q07. EBITDA margin was 24.5%, practically the same as in the previous quarter. Consolidated EBITDA (with Isofilme) reached R$ 28.5 million; Adjusted Net Income stood at R$ 12.2 million, reversing the loss posted in the 2Q07; IPO concluded in July, raising a net amount of R$ 451 million; Acquisition of Isofilme concluded; Closure of operations in the flexible packaging division.
  • Sales Volume Sales Volume (tonnes thd) 13.1 The Company recovers sales volumes in 12.7 12.6 12.1 its core businesses. 4% growth in the nonwovens segment. 6.9 14% growth in the PVC segment, 5.6 5.7 5.0 including the recovery relating to the 2Q07, when there was unscheduled maintenance. 0.7 0.4 0.6 0.5 0.4 Packaging segment showed slight 0.2 0.2 decrease in volume reflecting the 3Q06 1Q07 2Q07 3Q07 slowdown on account of the closing down Nonwoven Tubes and Connections Packaging Others of its activities.
  • Gross Revenue Gross Revenue(R$ million) 5.6% revenue growth between the 2Q07 and the 140.0 3Q07. 121.6 118.0 124.6 41.5 In the external market, revenues grew 6.9%, 41.8 36.9 39.5 mainly due to the increase in sales volume, 98.5 because prices fell due to the strengthening of the 79.8 81.1 85.1 Brazilian Real against the dollar. 3Q06 1Q07 2Q07 3Q07 In the internal market, gross profit increased 4.9% Foreign Market Domestic Market also due to the growth in sales volume, especially in the tubes and connections segment.
  • Cost of Goods Sold (COGS) Cost of Goods Sold (R$ million) 88.2 The unit cost of goods sold declined 2.1% in 83.7 81.9 comparison with the previous quarter. 79.1 Stronger Real compensated for the pressure on resin prices. 3Q06 1Q07 2Q07 3Q07
  • Operating (Expenses) Revenues Selling expenses: 18.2% increase over the Operating (Expenses) Revenues (R$ million) previous quarter, mainly due to the increase in 17.1 15.9 18.7 36.3 freight on account of higher sales volume and provision for doubtful accounts. 6.0 6.5 7.7 6.0 7.5 Administrative expenses: excluding the 7.5 non-recurring expenses of the 3Q07 (IPO 6.3 expense of R$20.1 million) and of the 2Q07 8.1 8.1 6.3 28.5 12.8 (acquisition process of R$ 2.6 million), 7.8 administrative expenses declined 17.6% in 4.7 4.7 7.8 5.8 2.0 comparison with the 2Q07. (1.6) (1.6) (5.7) (2.5) (5.6) (5.7) Depreciation and Amortization: increase is due 3Q06 1Q07 2Q07 3Q07 to reversal (credit) in the goodwill amortization in Sales Expenses Administrative Expenses the 2Q07 because of the change in the Depreciation and Amortization  Other Operating Revenues amortization period from 5 to 10 years. Other operating expenses/revenues: result of Isofilme according to the equity method was R$ 4 million..
  • EBITDA and EBITDA Margin Adjusted EBITDA (R$ million) and EBITDA Margin (%) Adjusted EBITDA was R$27.7 million, with growth of 5.6% in relation to the 2Q07. 32.1 Including Isofilme, adjusted EBITDA reached 26.3 27.7 R$ 28.5 million 23.9 25.4% EBITDA margin remained stable at 24.5%, 24.4% 24.5% reflecting the fall in selling prices in Reais. 21.7% We estimate our EBITDA “loss” in the 3Q07 at R$ 2.7 million, due to the impact of the weakening Dollar on prices in the external and internal markets. 3Q06 1Q07 2Q07 3Q07 Adjusted EBITDA Margin Non recurring expenses which influenced EBITDA in 3Q07: IPO expenses: R$ 20.1 million Inventory adjustment: R$ 2.7 million Acquisition of Isofilme and discontinuity of transporter and flexible packaging division: R$ 2.9 million
  • Net Income and Net Margin Adjusted Net Income (R$ million) and Net Margin (%) Adjusted Net income in the 3Q07 was 21.9 R$ 12.2 million, reversing the negative result of the 2Q07. Net margin was 10.8% 12.2 17.4% This positive result reflects the improvements in the operations and 10.8% Company’s new cash position after the IPO. 2.4 -3.8 2.3% -3.6% 3Q06 1Q07 2Q07 3Q07 Net Margin Adjusted
  • Consolidated Debt Composition of Net Debt (R$ million) 09/30/07 06/30/07 Total Debt Short-Term 283.2 499.6 Long-Term 109.7 30.7 Total 392.3 530.3 Cash and Commercial Markeable Securities 210.5 57.8 Net Debt 182.4 472.5 Net Debt / EBITDA (1) 1.6X 4.5X (1) Adjusted EBITDA in the quarter + EBITDA of Isofilme, annualized.
  • Debt (cont.) Providencia intends to continue its strategy of profile extension and debt cost reduction. Next stages: 1) Elimination of Isofilme’s short-term debt of approximately R$ 25 million, through capital injection; 2) Redemption of Eurobond in the value of $10 million issued by Isofilme at a cost of US$ + 9% per year; 3) Conclusion of redemption of the promissory notes (approximately R$ 250 million) used to finance the Company acquisition; 4) The funds required for these operations and to rebuild Company’s cash position will be raised through a debenture issue and/or long-term bank loan.
  • Operational Highlights 1) KAMI 9 Project • Construction concluded and machinery deployed within schedule; • Operations start in January 2008; • Investments within the budget. 2) Nonwovens – Laminates • Sales as per plans. Full production capacity in the 4Q07. 3) Nonwovens – Medical Disposables • Product planning and development already started; • Executive with vast experience in the segment hired; • Sales expected to commence in the 1H08. 4) ISOFILME • Acquisition completed; • Sales, controllership and finance departments already integrated; • Investment s to streamline operations in order to attain full production capacity will be concluded by year-end.
  • Operational Highlights (Cont.) 5) Flexible Packaging Segment • Operations closed on September 30; • Sale of equipment and installation should be concluded by year-end. 6) SAP Project • Project officially started in August; • Conclusion by the end of 1Q08. 7) PVC Tubes and Connections Division • Recruitment of a General Manager with vast experience in this segment; • New connection molds received according to schedule in order to increase capacity; • Schedule for installation of extruder for large diameters is on as planned, will start operating in the 4Q07.
  • IR Contact Rubens Sardenberg IR Officer Tel.: 55 (41) 3381-7600 Fax: 55 (41) 3283-5909 São José dos Pinhais – PR rubens@providencia.com.br www.providencia.com.br/ri The words “believe”, “anticipate”, “expect”, “estimate”, “will”, “plan”, “may”, “intend”, “foresee”, “project”, and other similar expressions, are intended to indicate forward-looking statements. Such forward-looking statements involve uncertainties, risks and assumptions, since they include information related to our possible or presumed 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 .