4Q08 Earnings Release


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4Q08 Earnings Release

  1. 1.  QUARTERLY MARKET BULLETIN / FOURTH QUARTER OF 2008 AND FISCAL YEAR 2008 Rio de Janeiro, March 30, 2009 - Brasil Ecodiesel Indústria e Comércio de Biocombustíveis e Óleos Vegetais S.A. (“Brasil Ecodiesel” or “Company”) (Bovespa: ECOD3), a pioneer in the production of biodiesel in Brazil, announces its results for the fourth quarter of 2008 (4Q08) and fiscal year 2008 and informs shareholders on the Company’s performance. The financial statements are prepared in accordance with Brazilian Corporation Law and presented on a consolidated basis in accordance with Brazilian accounting practices. The information for 4Q08 is presented on an adjusted basis to reflect the reality of the quarter due to the adjustments arising from the adoption of Technical Pronouncement 07 issued by the Accounting Standards Committee (CPC), which is explained in the section "Deductions" of this release. CONTACTS CONFERENCE CALL English José Carlos Aguilera Tuesday, March 31, 2009 CEO and IRO 12:00 p.m. (EST time) 13:00 p.m. (BSB time) Eduardo de Come CFO Connection Number: +1 (973) 935-8893 Marcos Leite Replay: +1 (706) 645-9291 IR MANAGER Code: 85387643  www.brasilecodiesel.com.br/ri Portuguese Tuesday, March 31, 2009 E-mail: ri@brasilecodiesel.com.br 10:00 a.m. (EST time) 11:00 a.m. (BSB time) Telefone: +55 (21) 2546-5031 Telefone: +55 (11) 2188-0188 Replay: +55 (11) 2188-0188 Access Code: Brasil Ecodiesel Managements Comments The year 2008 was marked by difficulties and challenges that required a massive effort from our Company and its employees, shareholders, suppliers, clients and creditors in order to continue the operations of Brasil Ecodiesel, effectively overcoming the many challenges and obstacles that emerged throughout the year. Nevertheless, the year represented an opportunity to change the path of our organization and to rethink Brasil Ecodiesels positioning in the national biodiesel market. In this context, we initiated a restructuring process that is still ongoing, which led to reductions in fixed costs, as well as the expansion of our base of vegetable oil suppliers, our most important and costly raw material, and the restructuring of the oilseed sourcing framework and investments. We believe that these measures, among the many others taken, will strengthen the Companys position as one of the most important biodiesel suppliers in the Brazilian market. The environment in the year was particularly challenging for economies and companies worldwide because of the financial crisis that emerged, which reached proportions much greater than imagined, impacting the real economy at various levels. For Brasil Ecodiesel, the year was marked by several important events, some of which we believe are important to highlight clearly and transparently:
  2. 2.  1. The sudden change (October 2007) in the governments strategy regarding the liberalizationof the market, which was originally expected in January 2008 and maintained the methodology ofauctions regulated by the National Petroleum Agency (ANP) for biodiesel purchases, had asubstantial impact on the Companys operations. The geographic distribution of our plants, asdefined in our strategic plan, would allow us to play an important role in the biodiesel market inBrazils Northeast and North regions, given our proximity to the secondary and primary bases of thevarious distributors of oil distillates in these regions. However, this important advantage was offsetby the current auction methodology.2. In general, the cancellation of the free market also generated a significant environment ofuncertainty in the industry that culminated in the atypical and predatory auction held in November2007, for which the volumes sold were delivered in the first half of 2008. Clearly, biodieselproducers, including Brasil Ecodiesel, sought in this auction to defend their shares in the market,with prices at 2006 levels, incompatible with market conditions observed at the time. The strategylater proved mistaken.3. The final ingredient, which was exogenous to all of the Companys activities, occurredprecisely during the period of deliveries in the first half of 2008. Unprecedented volatility incommodity prices impacted practically all markets. The price of soybean oil, the main raw materialin biodiesel production in Brazil, doubled between November 2007 and March 2008.Despite this extremely adverse scenario, with fixed prices at the point of sale and variable prices atthe point of purchase, the Company fulfilled all of its commitments made at the auction inNovember 2007, and also charged and received the fine related to January 2008 owed byPetrobras for its failure to not take delivery of biodiesel from our production units. Unfortunately, wedid not enjoy the same success in charging the fines related to the months of February and March2008, even though they were based on the same cause and effect relationship as the fine forJanuary. In view of our inability to finance biodiesel deliveries by sacrificing the Companys cashflow, we filed a lawsuit that is currently in the civil courts of Rio de Janeiro state. The lawsuitquestions our other contractual obligations in the first half of 2008, given that Petrobras already wasdelinquent with us for its failure to pay the fines described above. With this lawsuit we interruptedthe losses that were being generated. The lawsuit is proceeding through the typical judicial processand our legal advisors believe that the chances of a favorable ruling are positive.Another fundamental factor in the continuity of our operations in 2008 was the restructuring of theCompanys financial debt. This process, which was concluded on August 14, 2008, enabled us tostrengthen our financial position by reorganizing the structure of our debt, lengthening to 48 months(including a 12-month grace period) more than 80% of our debt maturing in the short term. Thenegotiations were very successful, given the severe period of the financial crisis. Here is itespecially important to note the support we received from the pool of banks that assisted us, whichon the same occasion made available a line to finance part of our working capital. This was the firststep in our financial restructuring, which is still in progress and seeks a form of capitalization thatassures all our working capital needs.With the deficit-causing contracts behind us and the change in our debt profile, Brasil Ecodieselwas able to begin the process to modify its organizational structure, optimizing processes and
  3. 3.  cutting expenses in the corporate area. The cutbacks in upper-level management, which includedthe elimination of various positions on the executive board, the closure of various support offices inthe agricultural area, as well as other actions in the administrative areas, generated a reduction ofapproximately 20% in expenses compared to our results in the second and first halves of 2008, aswell as more agile management.In addition, over the course of the year we sought to improve the relationship between prices andsales volume, which resulted in better cash flow and margins in relation to the first half of 2008.After registering lower production volumes since the second quarter through the start of Augustbecause of financial restrictions, the Companys plants began to operate with higher volumes as ofAugust 15, demonstrating the effective production capacity off Brasil Ecodiesel, which is Brazilslargest. Note that production capacity has been significantly underused due to the lack of workingcapital for operations on a large scale, and could be better allocated provided we obtain therequired funding.A good month of September, contracts with more attractive prices for the fourth quarter and fallingvegetable oil prices indicated that a new reality was forming. However, on September 22, just daysbefore the supply of volumes for delivery in the fourth quarter were due to begin, the ANP canceledthe auction results for a portion of the biodiesel volumes sold by Brasil Ecodiesel. The ANPsdecision surprised the Company, given that we were not informed of this possibility and that wewere not given the right to an ample defense. Therefore, on October 1, we obtained a preliminaryinjunction suspending the ANPs decision and providing us with the opportunity to fulfill thecontracts. Unfortunately, this situation had an adverse impact on the pace of shipments, since theinjunction was granted only when the contract was already expected to be in force and at a timewhen the scheduled receipts of shipments by distributors was occurring and a new auction for themin the same volumes had already been held. Moreover, the contract under the effects of theinjunction increased the bureaucracy related to the release of funds for working capital by banks,which limited sales volume in the fourth quarter to 20,089 m3.In the second half of the year, despite the lower-than-expected shipment volumes, we were able toregister positive gross margins, which was unprecedented and demonstrated that our operationscould generate value, provided they were advancing at the expected scale and with the appropriatestructure. The scale of the operations were impacted in the second quarter of 2008 by theextremely negative margins of contracts, in the third quarter by the limited working capital (prior tothe conclusion of the financial restructuring) and in the fourth quarter by the suspension of contractsby the ANP, the lower-than-expected shipments and the working capital restrictions. Nevertheless,the Company sold 155,047 m3 in the year. This level of volume, although 18.6% lower than in 2007,is significant in the Brazilian market, and generated net revenue of R$351.0 million, 7.0% more thanin 2007, supported by the better sales prices.Part of the improvement observed in the second half of the year was also due to the higherbiodiesel consumption in the Brazilian market. The adoption as of July 1 of a mandatory B3 blendfor all of the diesel consumed in Brazil improved the supply-demand balance in the biodiesel marketand supported more appropriate pricing for sales in the auctions in 2008.
  4. 4.  In addition, following the ANP ruling that distributors can acquire biodiesel directly from theproducers provided volumes exceed the amounts contracted in the auctions, some of the salesmade by Company were directly to fuel distributors. Although these sales represent only a smallpercentage of the domestic biodiesel market and are isolated, they indicate a trend towardsliberalization of the market, i.e. that the auction system will gradually be replaced by directnegotiations. The Company believes that a market in which biodiesel sales are no longer regulatedby auctions is the best way to develop an industry, allowing players to seek the best ways to createefficiency and obtain efficiencies and returns for shareholders. This situation, combined with theintroduction of higher biodiesel blends already in 2009 (4% as of July, as already mentioned byvarious government sources, and B5 likely in 2010), should provide an additional boost to theindustry.From the standpoint of raw materials, 2008 presented very distinct situations in different periods. Atthe start of the year, soybean oil prices registered sharp increases, peaking at 70.4 cents/lb in earlyMarch. After the deterioration in the financial crisis, prices initiated a downward trend, returning tothe levels of mid-2006. This forced the closing of speculative positions, showing that most of theprevious rise in oil prices bore no relation to actual supply and demand fundamentals, debunkingthe view of critics who claimed that biofuels were driving food prices higher.From the standpoint of agricultural strategy, the investments made to develop castor oil productionbased on small-scale farming in Brazil’s semi-arid region did not produce the expected results fornot only the Company, but also for the Brazilian market in general. In addition to the low productivityin regions where the crop was developed, in early 2008, the ANP changed the technicalspecifications of Brazilian biodiesel, which in practice restricted as of the second quarter the use ofcastor oil as a raw material for biodiesel production. Given the need to review its raw materialsourcing strategy for biodiesel production, the Company began to restructure the agricultural area,especially in the area of small-scale family farming, focusing its operations on regions that haveproven more promising in turns of productivity and logistics in relation to our industrial units, andconcentrating investments in the oil seeds that prove best suited to each region. The main goal is tocut costs while increasing effective output, diversifying our raw material sources, which arecurrently concentrated in soybean. The research with jatropha curcas at our farms continues, butthe effective results in terms of achieving large-scale production will still take some time, which isnatural in the agricultural development process.Despite the current market conditions, we remain focused on the same objective set since the startof our operations, which are very different from those prevailing when we developed our initialstrategic plan. We are working to overcome the turbulence currently faced by the Company and thecountry, and reaffirm the important role of Brasil Ecodiesel in the Brazilian biodiesel market, whiledelivering satisfactory results to our shareholders. To achieve this, we depend on and are gratefulfor the dedication of our more than 1,300 employees, suppliers, creditors and clients as well as thesupport of the communities where we operate. Board of Executive Officers
  5. 5.  Comments on Consolidated PerformanceThe 2008 financial statements of Brasil Ecodiesel were executed in accordance with certain criteria,which changed over the course of fiscal year 2008. These points must be well understood toimprove the understanding of the results presented herein. These criteria led to changes in thefinancial results and in the equity position, and involved the following items: Creation of provisions for adjusting stocks; Changes in the method for accounting tax credits (CPC Technical Pronouncement 07); Adjustments for Law 11,638 (Value Added Statement, Deferred Assets); Reclassification of expenses with Research & Development from deferred charges to Income Statements;In fiscal year 2008, Brasil Ecodiesel shipped 155,047 m3 of biodiesel, 18.6% less than in 2007, withthe shipment of 20,090 m3 in 4Q08. Despite the lower volume, revenue in 2008 from the sale ofbiodiesel was 5.2% higher than in 2007, supported by the higher sales prices (R$/m³ of biodiesel)practiced by the Company. Porto Rosário do Biodiesel Floriano Crateús Iraquara Itaquí Total Nacional Sul 2007 31,884.15 44,974.50 61,033.93 17,759.80 17,464.75 17,317.08 190,434.22 Sales of 4T08 - 2,217.58 4,547.42 500.90 7,609.97 5,213.12 20,088.99 B100 (m3) 2008 4,681.31 22,307.39 39,388.87 12,487.34 37,796.02 38,386.88 155,047.81 2007 64,930.95 89,887.9 124,163.15 34,941.91 34,370.97 34,073.89 382,368.57 Revenues of 4T08 - 6,599.26 13,533.22 1,487.20 22,716.20 15,564.09 59,899.97 B100 (R$ mil) 2008 16,675.45 63,047.02 99,829.33 26,522.07 95,346.42 100,653.83 402,074.12As a result, as shown in the table below, in 4Q08, Brasil Ecodiesel recorded net revenue of R$55.1million and gross income of R$1.2 million, demonstrating that the new operating conditionseffectively enable the company to generate positive results. Results would have been even higherwere it not for the difficulties involved in effectively billing the volumes sold at auction, given theworking capital limitations in the period. As pointed out before, this result was adjusted to distributeover the year the higher volume of deductions in 4Q08, with the recognition in the period ofdeduction volumes from prior quarters because of the new rules for accounting tax benefitsdetermined by Technical Pronouncement CPC 07. Accordingly, the results for the third quarter of2008, adjusted for the effects of this new rule, are presented below.
  6. 6.   1Q08 2Q08 3Q08 4Q08 Total Adjusted Net Revenues* 161,716 44,772 89,428 55,065 350,981 COGS (180,313) (58,992) (87,856) (53,833) (380,994) Gross Profit (18,598) (14,220) 1,572 1,232 (30,013) Net Income (20,482) (83,555) (28,735) (64,328) (197,100) *Quarterly results adjusted in relation to previously stated figures due to the change in the method for accounting tax benefits following the adoption of CPC07 Technical Pronouncement 07. For details, see the item "Deductions".Our net result in 4Q08 was primarily impacted by the financial result, due to the Companys debtlevel, as well as the lower-than-expected sales volume, which was insufficient to cover operatingexpenses despite the positive margin contribution in the period. The provisions made over thecourse of 2008 also substantially impacted our net income. To portray more accurately the specificresult of periods, the following table shows our adjusted EBITDA. 1Q08 2Q08 3Q08 4Q08 Total Net Income (loss) (20,482) (83,555) (28,735) (64,328) (197,100) Depreciation and Amortization 4,649 4,490 4,699 4,484 18,322 Financial Result 9,922 12,831 16,347 20,502 59.602 Fines – Petrobras (12,218) (12,218) Provisions 37,687 (893) 28,792 65,586 Adjusted EBITDA (18,129) (28,547) (8,582) (10,550) (65,808) * EBITDA adjusted for the provisions for the Petrobras fine and the market value of inventories, which did not generate a cash effect in the period. Gross Revenue Gross revenue in 4Q08 was R$65.1 million, of which 92.4% or R$60.1 million derived fromthe sale of 20,089 m3 of biodiesel. In addition, given the market conditions and aiming to strengthenits cash position, the Company sold a portion of its castor stocks, generating revenue of R$4.0million (6.1% of gross revenue). The rest of our gross revenue came from the sale of sub-products,principally glycerin and fatty acids. In 2008, gross revenue was R$427.1 million, of which 94.8% or R$405.0 million came fromthe sale of 155,047 m3 of biodiesel, and the remainder from the sale of stocks of castor, sunflowerand sub-products.
  7. 7.   Gross Revenues (R$ ‘000) 250.000 200.000 Other 150.000 Resíduos Gliceryn 100.000 Castor Sunflower 50.000 Biodiesel B100 0 1Q08 2Q08 3Q08 4Q08 Deductions Total deductions from our revenue in 4Q08 was R$16.4 million, equivalent to 25.2% of grossrevenue. However, this amount does not consider only deductions relative to the period of 4Q08,since, following the issue of the Technical Pronouncement CPC07 on February 25, 2009, whichaddresses the accounting of tax subsidies, we had to change the method for accounting tax benefitsto which we are entitled and recognize the benefits calculated in other quarters. With thispronouncement, these benefits may only be recognized after the fulfillment of any associatedconditions, which in the case of our plants Crateús, Rosário do Sul and Iraquara refer to thepayment of deferred portions of ICMS tax, which will only occur in the coming years, when we willrecognize tax benefits in our results.After distributing benefits over the year and already including the effects from CPC 07, deductionsrelated exclusively to 4Q08 totaled R$10.0 million, of which R$7.5 million was ICMS tax, R$3.3million was Cofins tax and R$0.7 million was PIS tax. In the period, deductions would have beeneven higher, but for the use of R$2.0 million in ICMS tax credits.In 2008, deductions were R$76.2 million. The Company recognized a total of R$49.1 million in ICMStax, R$28.6 million in Cofins tax and R$6.2 million in PIS tax. From this total R$11.1 million in ICMStax credits were deducted. Net Revenues Adjusted Net Revenue (adjusted for the changes in the procedures for accountingdeductions) was R$55.1 million in 4Q08. In 2008, net revenue was R$351.0 million, growing by7.0% in relation to net revenue in 2007 (which was restated due to the tax benefits), driven primarilyby the higher sales prices. Cost of Goods Sold In 4Q08, COGS totaled R$53.8 million.
  8. 8.   Vegetable oil is still the main production cost item and, together with methanol, accounts for93.1% of the cost of biodiesel sold, which is composed by the items shown below. COGS of B100 2.4% 1.6% 2.9% 12.1% Vegetable Oil Other inputs Workforce General Expenses 81.0% Depreciation In 2008, COGS was R$381.0 million. As a percentage of adjusted net revenue, COGS improved from 98.2% in 3Q08 to 97.8% in4Q08, effectively boosting gross income by R$1.2 million. In 2008, COGS was equivalent to 108.6% of net revenue, generating a gross loss of R$30.0million. Operating Expenses General and Administrative G&A expenses are made up of general administration, including salaries and benefits to ouremployees, expenses from outsourced services, travel, telecommunications, rent, provisions forcontingencies and other items. In 4Q08, the Company advanced its process to cut G&A expenses.In the quarter, we incurred some non-recurring expenses such as provisions for labor claims, freightfor biodiesel sales and expenses with legal and court fees and with the financial restructuring. General and Administrative Expenses (R$ ‘000) 8,712 5,884 6,599 4,726 4,625 5,003 4,277 4,491 1Q08 2Q08 3Q08 4Q08 Personnel  Expenses Administrative Expenses
  9. 9.   To better illustrate the effects of the actions taken by the Company to cut administrativeexpenses, we restated in the chart below the General and Administrative Expenses excluding theeffects of non-recurring expenses. Non-recurring expenses are basically composed of provisions forlabor claims, freight for biodiesel sales and expenses with outsourcing (legal expenses). 13,716  11,089  10,509  9,003  11,682  10,296  9,093  8,630  1Q08 2Q08 3Q08 4Q08 Adjusted Expenses Expenses Operational revenue (expenses) In 4Q08, we posted R$34.5 million in Other Operational Expenses. We registered R$0.7million in revenue, which was related to the contract assigning the right to use our industrialcapacity. This is accounted in non-current assets and is written down proportionately over the 15years during which the contract is in force. On the other hand, we posted R$35.3 million in expensesrelated to the provisions for inventory adjustments to market value, bad debt provisions and thecosts of idle capacity at our industrial plants.   To accurately reflect the composition of the Companys costs, until 3Q08 expenses with idlecapacity at plants without auction sales (due to ANP penalties or the Company’s strategy in view ofits limited working capital resources) were recognized as non-operational expenses on our incomestatement. In 4Q08, to better reflect the scope of items included as non-operational expenses, incompliance with Law 11,638, the Company reclassified this line’s balance to Other OperatingExpenses/Revenue. Financial Result In 4Q08, net financial expenses were R$20.5 million, chiefly due to charges related to loans.The net result was composed of financial expenses of R$20.8 million and financial income of R$0.3million. The impact of foreign exchange variation on a financing agreement in U.S. dollar accountedfor R$4.5 million of our financial expenses. The Company did not hold derivative instruments in the period nor does it contract financialinstruments for speculative purposes.
  10. 10.   Net Income In 4Q08, the Company recorded a net loss of R$64.3 million, mainly due to the high financialexpenses, the creation of provisions (for bad debt and the adjustment to market value of stocks) andlow sales volumes. In 2008, the net loss was R$197.1 million. Indebtedness The Company’s net debt stood at R$171.1 million at the close of 2007 and was highlyconcentrated in short-term loans taken out to meet working capital needs. The pressure from short-term debt, which increased over the first six months of the year, led the Company to negotiate withbank creditors a debt restructuring agreement to lengthen maturities. With the financial restructuringconcluded on August 14, and already considering the inflow of new funds obtained in thenegotiation, on December 31, 2008, net debt stood at R$290.4 million, including the R$20.8 millionloan contracted with the controlling shareholder. The debt profile has lengthened in relation to the previous year, with the majority maturing asof September 2009, in other words, with a 12-month grace period and amortization over 36 months,as of the date of the financial restructuring. Indebtedness( R$ thsl) 2007 2008 Short Term 141,245 102,967 (+) Long Term 36,715 188.493 (=) Total Indebtedness 177,960 291,460 (-) Cash and Equivalent 6,808 1,049 (=) Net Debt 171,152 290,411 Debt Maturity 102,967  72,156 69,107 47,187 43 2009 2010 2011 2012 2013
  11. 11.   Attachment I – Income Statement Consolidated Income Statement (in thousands of Reais) 3Q07 3Q08(1) 4Q08(1) 2007(2) 2008 Gross Sales 129,050 104,272 65,082 419,664 427,151 Tax and Returns (29,356) (14,845) (10,015) (91,759) (76,169) Net Sales 99,694 89,427 55,067 327,905 350,982 Cost of Goods Sold (99,300) (87,856) (53,834) (340,409) (380,995) Gross Profit 394 1,571 1,233 (12,504) (30,013) Operating Incomes (Expenses) General and Administrative (10,931) (9,004) (11,090) (40,132) (44,318) Taxes (2,267) (637) 637 (5,445) (2,668) Other Operating 16,215 (4,320) (34,727) 17,207 (60,623) 3,017 (13,961) (45,179) (28,370) (107,609) Operating Results before Financial Results 3,411 (12,390) (43,947) (40,874) (137,622) Financial Results Financial Revenues 2,018 525 443 9,697 1,781 Financial Expensas (4,336) (16,872) (16,316) (14,801) (56,765) Exchange Rate Effect (4,506) (2) (4,494) (2,318) (16,347) (20,379) (5,106) (59,478) Results before Income and Social 1,093 (28,737) (64,326) Contribution Taxes (45,980) (197,100) IR e CSLL (1) - (4) Results Before Minority Participation 1,092 (28,737) (64,326) (45,984) (197,100) Minority Participation - 1 (2) 3 Net Income (loss) 1,092 (28,736) (64,328) (45,981) (197,100)(1) Adjusted due to CPC 07, which changed metodology of accounting tax benefits.(2) Restated due to CPC 07 and changes of Law 11,638.              
  12. 12.   Attachment II – Balance Sheet   BALANCE SHEET OF DECEMBER,31, 2007 AND 2008 CONSOLIDATEDASSETS 2008 2007(1) LIABILITIES AND SHAREHOLDER 2008 2007(1) EQUITYCURRENT CURRENT LIABILITIESCash and cash equivalents 1,049 298 Loans and financing 82,191 141,245Trade accounts receivable 28,490 13,304 Local suppliers 16,487 27,835Inventories 80,212 194,076 Advances of customers 14,376 14,233Advances to suppliers 8,760 8,791 Mutual Agreement with shareholder 20,776 -Recoverable taxes 11,476 25,737 Assignment of Use Rights 2,728 - Accrued payroll, vacation and relatedOther receivables 207 150 7,466 4,789 taxesPrepaid expenses 192 449 Taxes payable 5,809 2,671Total Current Assets 130,386 242,805 Other payable 320 10 Total Current Liabilities 150,153 190,783NON-CURRENT NON-CURRENTLong Term Assets: Long Term Liabilities: Cash Investments - 6,510 Loans and financing 188,493 36,715 Trade accounts receivable 11,454 18,658 ICMS (state VAT) - Tax Incentive 4,762 3,258 Long Term Crops 11,583 - Contingency provision 1,485 337 Recoverable taxes 20,451 553 Deferred Revenues of tax benefits 15,090 4,470 Judicial deposits 214 489 Assignment of Use Rights 35,237 40,693 Secure deposits 104 97 Total non current liabilities 245,067 85,473 Other Credits 181 188Investments: MINORITY INTEREST 12 12 Property, plant and equipment 250,892 247,642 Intangible assets 1,288 1,282 SHAREHOLDERS EQUITY Deferred charges 73,017 59,482 Capital 388,957 388,957Total non-current assets 369,184 334,901 Capital reserve 15 15 Accumulated deficit (284,634) (87,534) Total shareholders equity 104,338 301,438 TOTAL LIABILITIES AND SHAREHOLDERS EQUITYTOTAL ASSETS 499,570 577,706 499,570 577.706 (1) Restated due to CPC 07 and changes of Law 11,638.    
  13. 13.   INVESTOR RELATIONS CONTACTSCEO and IRO: José Carlos AguileraIR Manager: Marcos LeiteE-mail: ri@brasilecodiesel.com.brSite: www.brasilecodiesel.com.br/irPhone: (00XX21) 2546-5031About Brasil Ecodiesel: Brasil Ecodiesel was founded in 2003, and its stock is listed on the NovoMercado trading segment of the São Paulo Stock Exchange (Bovespa). Leader in the production ofbiodiesel in Brazil, it operates with an innovative business model for the sourcing of raw materials,seeking to guarantee supplies at competitive and stable prices, and to diversify raw material sourcesby establishing new agricultural production chains in Brazil.It is investing in Brazils favorable natural conditions in order to become an important global producerof a renewable fuel which substantially reduces emissions of pollutant gases. Brasil Ecodieselcurrently maintains six operational units with an installed annual biodiesel production capacity of640,000 m3.This release contains forward-looking statements subject to risks and uncertainties. Such forward-looking statements are basedon the management’s beliefs and assumptions and information currently available to the Company. Forward-looking statementsinclude information on our intentions, beliefs or current expectations, as well as on those of the Company’s Board of Directors andBoard of Executive Officers. The reservations as to forward-looking statements and information also include information onpossible or presumed operating results, as well as any statements preceded, followed or including words such as “believe”, “may”,“will”, “continue”, “expect”, “intend”, “plan”, “estimate” or similar expressions. Forward-looking statements are not guarantees ofperformance; they involve risks, uncertainties and assumptions because they refer to future events and, therefore, depend oncircumstances that may or may not occur. Future results and value to shareholders may differ materially from those expressed orsuggested by said forward-looking statements. Many of the factors which will determine these results and figures are beyondBrasil Ecodiesel’s ability to control or predict.