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20131113 tereos internacional_presentation_eng_final

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20131113 tereos internacional_presentation_eng_final

  1. 1. Tereos Internacional Second Quarter 2013/14 Results São Paulo – November 14th, 2013
  2. 2. Q2 2013/14 Highlights Operational   Guarani:   Sharp increase in cogeneration sales (+48.9% on a YTD basis)   Strong yields thanks to past investments and favorable climate (+14.4% on a YTD basis), on stable TRS Guarani 2016 efficiency improvement plan amplified Syral Europe:   Performance 2015 program launched to improve efficiency and enhance financial performance Syral Brazil:  Corn starch sales from Palmital facility progressing, and glucose commercial production to begin at the end of Q3 13/14. Strategic   Syral China: Formal approvals from Chinese authorities for Tieling joint-venture granted and acquisition of a 49% stake completed on 8th November, 2013 Finance    2 Guarani: R$225.1 million capital injection from Petrobras to reach 39.6% stake in Guarani completed in October Guarani: Refinancing of USD 190 million of Guarani export notes. Duration extended for 5 years, with grace period of 3 years, at lower rates
  3. 3. Market Highlights 600 US$/MT US$ Cents/lb. 21 20 550 19 500 18 17 450 16 400 Jan-13 Apr-13 LIFFE#5 Jul-13 Oct-13 15 NY#11 €/MT 270 230 210  The weakening of BRL against the USD supported Brazilian producers’ remuneration Starch:  Expectation of a bumper corn crop in the US on the back of strong yields. Prices stood on average at 188 €/t in the quarter and wheat corn spread continues at historical highs 190 170 150 Jan-13 Apr-13 Corn MATIF Jul-13 Oct-13 Wheat MATIF R$/m³ €/m³ Ethanol: 700 1400 650 1200 600 1000 550 800 Jan-13 Apr-13 Brazil ESALQ 3  Raw sugar prices reached 17.5 cents/lb at the end of Q2 13/14 (+4.7% since 1st of July) due to strong demand, weather concerns in C/S of Brazil and reversion of funds’ position from net short to net long  Wheat prices evolved in a range of 182 to 199 €/t in the quarter, for November 2013 and March 2014 future contracts 250 1600 Sugar: Source: Bloomberg Jul-13 Oct-13 Europe Rotterdam 500  During the quarter, ethanol prices in Brazil have been falling steadily on the back of higher production level vs. last year (-2.9% and -4.0% for hydrous and anhydrous, respectively)  FOB Rotterdam prices have dropped significantly (-7.7% since 1st July) to c.590 €/m3 at the end of the quarter, on the back of a rebound in supply from US encouraged by declining corn prices
  4. 4. Q2 2013/14 – Revenues Better Volumes for Sugarcane Division and Price and Mix for Starch and Sweeteners Net Revenues (R$ MM) +17.8% 1,873 525 2,207 591 1,112 283 246 Q2 2012/13 Q2 2013/14 2,207 1,873 Ethanol Europe Q2 2012/13 Revenue growth supported by:  +15 (19) Africa/Indian Ocean Starch Europe +253 +87 258 215 851 Brazil Volume Price & Mix Currency Others Q2 2013/14 At Constant Currency: +3.9%  Improved overall sugar volumes and energy sales in Brazil  Higher volumes, prices and positive mix effect in the starch and sweeteners segment  Positive Forex impact on the back of weakening Real vs. Euro (-13.7% on average Y-o-Y) But partially offset by:    4 Lower world sugar prices impacting Brazilian sales and lower ethanol prices in Europe Lower ethanol volumes (plant conversion, Lillebonne maintenance stoppage, lower beet ethanol trading activity)
  5. 5. Q2 2013/14 - Adjusted EBITDA Improvement on Better Efficiency Levels at Sugarcane Operations Adjusted EBITDA (R$ MM) 289 151 +18.4% 342 Brazil 189 69 81 51 21 -3 Q2 2012/13 49 27 -3 Q2 2013/14 +38 Starch Europe +6 (1) (2) Africa/Indian Ocean 342 289 Ethanol Europe Holding Q2 2012/13 Brazil Margin 15.4%  +11 Africa/Indian Ocean Starch Europe Ethanol Europe Holding Margin 15.5% Adjusted EBITDA improved year-on-year as a consequence of:  Cost dilution in Brazil due to higher volumes, together with positive effect of rising energy volumes & prices  Higher gross profit in the quarter in Africa/Indian Ocean  Improved margins for the Alcohol/Ethanol Europe segment, on lower cereal input price  5 Q2 2013/14 However, starch & sweeteners margins remain under pressure in the current environment, despite beginning of benefits from lower cereal input costs
  6. 6. Sugarcane Brazil – Production & Sales Harvesting at Good Pace to Reach c. 20 Million Tonnes(1) of Crushing Sugarcane Crushing (MM t) Sugar Sales (‘000 t) Ethanol Sales (‘000 m³) Energy Sales (‘000 MWh) +3.9% YoY +21.2% YoY -3.3% YoY +44.0 YoY 84  89 179 Own Sales 255 Q2 13/14 Q2 12/13 92 Q2 12/13 Q2 13/14 470 Q2 13/14 388 Q2 12/13 7,7 Q2 13/14 7,4 Q2 12/13 57 Trading Crushing    Higher crushing in H1: 13.4 million tonnes (+15.1% vs. H1 12/13) Strong agricultural yields (expected improvement in FY yield to c.90 t/ha vs. 84 t/ha in 2012/13) and stable TRS levels at 134.6 kg/ton Improvement in production   Mix: 65% sugar, 35% ethanol  Sugar:   Overall production (expressed in TRS) up 17.0% to 1.8 Mt Ethanol: 377 Km³ +17.8% YoY +15.5% YoY Progress on cogeneration  6 1.1 Mt YTD energy sales (including trading) up 48.9% to 486 GWh, on better prices (+6.7% to R$144/MWh) (1) Considered full consolidation basis and excluding the JV contribution of Vertente at c. 18.5 million tonnes
  7. 7. Sugarcane Brazil – Financials Higher Sugar Volumes Lowering Unitary Costs Led to an Improvement in EBITDA Net Revenues (R$ MM) (30) 591 525 Sugar Q2 2012/13  Price & Mix Volume Volume 591 525 +13% 121 119 +2% 20.5% 22.7% 37 51 6.3% 9.7% 189 151 31.9% 28.7% EBIT EBIT Margin Ethanol Price & Mix 2012/13 Gross Profit (3) 2013/14 Revenues +16 Q2 Gross Margin +2 Q2 In R$ Million +82 Key Figures Adjusted EBITDA Others Q2 2013/14 Sugar: 70% of total net revenues Adjusted EBITDA Margin  Change -27% +25% Adjusted EBITDA: R$189 million     Volumes increased +21.2% to 470 Kt Average selling price: -6.5% Y-o-Y at 934 R$/tonne Higher profit from increased sugar and energy volumes  Adjusted EBITDA Margin1 for Q2 13/14 including tilling as depreciation: 37.9% Ethanol: 17% of total net revenues    7 Volume sold down -3.3% to 89 Km3 Average price up 2.1% Y-o-Y at 1,098 R$/m3 Cogeneration (ex-trading): R$38.3 million vs. R$8.7 million in Q2 12/13 Note: Figures for Brazil now exclude JVs (1) Tereos Internacional allocates tilling expenses as cost. If tilling expenses were allocated as investment, Adjusted EBITDA for Q2 13/14 would have reached R$224 million.
  8. 8. Sugarcane Africa/Indian Ocean – Production and Financials Steady Performance in the quarter 1.249 76 2012/13 258 215 +20% 66 39 +70% Gross Margin 1.267 2013/14 Revenues -0.4% YoY -1.4% YoY Q2 In R$ Million Sugar sales (‘000 t) Q2 Gross Profit Sugarcane Crushing (’000 t) Key Figures 25.6% 18.1% 30 24 11.8% 11.1% 81 69 31.3% 32.4% EBIT 75 EBIT Margin Revenue Breakdown by Product Q2 13/14 Q2 12/13 Q2 13/14 Q2 12/13 Adjusted EBITDA Adjusted EBITDA Margin  Change +28% +17% Sugarcane crushing   Trading and others 25% Sugar Indian Ocean 56% Indian Ocean: 960 Kt (+1.7%), although recent drought should lower full year crushing to c.1.7 Mt Africa: lower crushing (-10.2%) on deteriorated yields, but production volume only slightly down this quarter  Revenues: +20% Y-o-Y  Higher volumes, mostly trading in the Indian Ocean, and higher prices in Mozambique, and positive currency effect  Adjusted EBITDA: +17% Y-o-Y  Positive contribution from both segments Sugar Africa 19% 8
  9. 9. Cereal Segment - Production and Sales Growth in volumes in starch & sweeteners, counterbalanced by lower ethanol volumes -17.5% YoY -0.3% YoY 818 Q2 13/14 Q2 12/13 838 444 455 139 115 310 309 Q2 13/14 +2.5% YoY Q2 12/13 -2.4% YoY Q2 13/14 Co-products Sales (‘000 t) Q2 12/13 Alcohol & Ethanol Sales (‘000 m3) Q2 13/14 Starch & Sweeteners Sales (‘000 t) Q2 12/13 Cereal Grinding (‘000 t)  Grinding in Q2 13/14: -2.4% drop mostly due to the impact of a maintenance in Nesle and Lillebonne plants  Starch & Sweeteners sales: +2.5%  Alcohol & Ethanol sales: -17.5% 9 Growth in most of the product categories, but reduced volumes of regular sweeteners Factory diversification (impact of gluten and dextrose complementary lines) and maintenance carried out in Q2 reduced volumes at Lillebonne, coupled with lower ethanol trading sales from Tereos
  10. 10. Starch & Sweeteners – Financials Higher Revenues on Improved Volumes and Prices, and a Positive Currency Effect Net Revenues (R$ MM) Key Figures +65 In R$ Million +7 +26 Q2 2013/14 2012/13 1,112 851 +31% Gross Profit +164 Q2 174 141 +24% Gross Margin 15.7% 16.5% 6 22 0.5% 2.5% 49 51 4.4% 6.0% Revenues 1,112 851 EBIT EBIT Margin Adjusted EBITDA Q2 2012/13  Volume Price & Mix Currency Others Q2 2013/14 Adjusted EBITDA Margin Change -74% -4% Revenues: R$1,112 million, up 31%   Start of positive perimeter effect of dextrose sales in Europe, and ramp-up of Syral Halotek sales in Brazil   Overall better volumes (+7.6% in Europe) particularly for gluten, specialties and functional sweeteners. However, revenue growth hampered by softness in certain segments (notably sweeteners) due to economic conditions. Higher prices y-o-y. Positive Forex translation effect on the back of sharp drop of Real vs. Euro (-13.7% Y-o-Y) Adjusted EBITDA: R$49 million, down 4% Y-o-Y  10 Profitability remained under pressure in the quarter, despite beginning of benefits from lower cereal input prices, as economic condition hampered our ability to rebuild margins and fully benefit from recent investments (Saragosse, Lillebonne, Marckolsheim)
  11. 11. Alcohol & Ethanol Europe – Financials Adjusted EBITDA margin Improvement on Lower Wheat Prices Net Revenues (R$ MM) (72) 283 2013/14 2012/13 246 283 -13% Gross Profit 28 29 -3% Gross Margin (23) Q2 Revenues +3 Q2 In R$ Million +55 Key Figures 11.3% 10.1% 17 11 7.0% 3.7% 27 21 10.9% 7.3% EBIT 246 EBIT Margin Adjusted EBITDA Q2 2012/13 Volume Price & Mix Currency Others Q2 2013/14 Revenue Breakdown by Product Adjusted EBITDA Margin  Change 64% 29% Revenues: R$246 million, down 13%  11 Ethanol own sales 56% Note: Figures for Alcohol & Ethanol segment now exclude JVs  Lower trading activity for Tereos Group  Ethanol traded 36% Own volumes affected by factory diversification and maintenance carried out in Q2  Co-products and other 8% Drop in FOB Rotterdam prices (-14.7% on average Y-o-Y) Adjusted EBITDA: R$27 million, up both Y-o-Y  Benefit from lower input prices, in particular as major portion of wheat purchased at conventional prices this quarter
  12. 12. Cash Flow Reconciliation Cash Flow In R$ Million Adjusted EBITDA Working capital variance H1 13/14  Working Capital Mostly due to higher seasonal inventories and currency impact on inventories  CAPEX (-25.3% Y-o-Y) 551 (577) Others (72) Operating Cash Flow (98) Financial interests (94) Dividends paid and received (41) Capex (431) Others Brazil: 54% of total (+9% Y-o-Y):  Capacity & cogen expansion program  78% of the expansion-program completed 22 Free Cash Flow (642) Forex impact Cereals: 34% of total (-52% Y-o-Y):  Mostly related to starch project in Brazil (408) Others Net Debt Variation 12 1 (1,051)  Currency Effect on Debt Devaluation of the Real against Euro and USD, (-13.5% Y-o-Y as at 30th September)
  13. 13. Debt Increase of Net Debt Mostly on Higher Seasonal Working Capital and Currency Debt In R$ Million Pro Forma March 31st, Sep 30th,2013 2013 (Restated) ∆ Current 2,174 1,829 345 Non-current 2,574 2,399 175 (23) (26) 4,725 4,202 In € 1,827 1,596 231 In USD 1,657 1,688 (31) In R$ 1,213 882 331 51 62 (11) Cash and Cash Equivalent (702)1 (893) 191 Total Net Debt 4,023 3,309 714 125 12 113 4,148 3,321 827 Amortized cost Total Gross Debt Other currencies Related Parties Net Debt Total Net Debt + Related Parties 3 523   Guarani: R$225.1 million capital injection from Petrobras to reach 39.6% stake in Guarani completed in October  13 Net Debt/Adjusted EBITDA: 4.5x vs. 4.4x on March 31st, 2013 Guarani: Refinancing of USD 190 million of Guarani export notes. Duration extended for 5 years, with grace period of 2 years, at lower rates (1) Cash and cash equivalent of September 30th 2013 restated to include capital increase of R$225 million from PBio into Guarani.
  14. 14. Outlook  Sugarcane  Brazil  Guarani confirms target of c.18.5 million tonnes of sugarcane crushing (excluding the JV contribution of Vertente and equivalent to c.20 million tonnes on a full consolidation basis)  Higher production to continue diluting fixed costs, despite challenging sugar prices.  Guarani 2016 program to enhance efficiency and profitability has been stepped up  Africa/Indian Ocean  Exceptionally dry weather in the Reunion Island and lower yields in Mozambique expected to lead to decrease in volumes of sugarcane crushed in the segment (total combined of c.2.1 Mt)  Cereals  Europe  Cereal prices expected to remain below last year’s peak levels in the 3rd quarter.  Focus remains on performance improvement plan.  Brazil  Production of corn starch progressively ramping up. Sales of glucose expected to start towards the end of Q3 13/14  China   14 Engineering and equipment purchases mostly done at Dongguan, while civil works is underway Following the Tieling joint-venture formation, product diversification and productivity improvement plan to be completed and progressively implemented over the next 18 months
  15. 15. IR Contact Marcus Thieme Investor Relations Officer Felipe Mendes Investor Relations Manager Phone: +55 (11) 3544 4900 Email: ir@tereosinternacional.com www.tereosinternacional.com

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