Tereos Internacional
Third Quarter 2013/14 Results

São Paulo – February 14th, 2014
Q3 2013/14 Highlights


Operational


Guarani:



Increased ethanol production in the quarter on better margins (40% o...
Market Highlights

Sugar:

580

US$/MT 21

550

19

520

18

490

17

460

16

430

15

20

400

 Raw sugar prices rallie...
Q3 2013/14 – Revenues
Positive Effect of BRL Devaluation and Improvement in Lillebonne Volumes
Net Revenues (R$ MM)
1,903
...
Net Revenues Evolution by Product
December 2013 – 3 Months

December 2012 – 3 Months

Others (incl.
Energy)
13%

Sugar
27%...
Q3 2013/14 - Adjusted EBITDA
Increased Contribution of All Businesses, Except for Africa
Adjusted EBITDA (R$ MM)
264

+5.8...
Sugarcane Brazil – Production & Sales
Record Sugarcane Crushing at 19.7 million tonnes
Sugarcane Crushing (MM t)

Sugar Sa...
Sugarcane Brazil – Financials
Improved EBITDA Despite Lower Volumes and Prices
Net Revenues (R$ MM)
Key Figures

(32)

557...
Sugarcane Africa/Indian Ocean – Production and Financials
Climate Conditions Impacted Crushing Volumes
Key Figures

Q3

20...
Cereal Segment - Production and Sales
Higher Grinding on Recovery of Lillebonne Production and Palmital Ramp-up

Cereal Gr...
Starch & Sweeteners – Financials
Positive Volume and Currency Effect Led to Higher Revenues and EBITDA
Net Revenues (R$ MM...
Alcohol & Ethanol Europe – Financials
Lower Wheat Prices and Better Industrial Performance at Lillebonne
Net Revenues (R$ ...
Q3 2013/14 - Capital Expenditures
Near completion of CAPEX Programs Leading to Lower Investments Y-o-Y
CAPEX (R$ MM)

CAPE...
Cash Flow Reconciliation & Debt Composition

Cash Flow

Debt

9M 13/14

In R$ Million
Adjusted EBITDA

Dec 31st, 2013

In ...
Outlook
 Sugarcane
 Brazil


Multi-year investment program in Brazil nearing completion to reduce investments level nex...
IR Contact
Marcus Thieme
Investor Relations Officer

Felipe Mendes
Investor Relations Manager

Phone: +55 (11) 3544 4900
E...
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20140214 tereos internacional_presentation_en

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20140214 tereos internacional_presentation_en

  1. 1. Tereos Internacional Third Quarter 2013/14 Results São Paulo – February 14th, 2014
  2. 2. Q3 2013/14 Highlights  Operational  Guarani:   Increased ethanol production in the quarter on better margins (40% of TRS vs. 36% last year)  Cogeneration sales continue to perform well on a YTD basis (+48% over 9M 12/13)  First benefits of Guarani 2016 efficency program   Record crushing this crop of 19.7 million tonnes (full consolidation) driven by strong yields (92 t/ha or +11% above the average in the State of São Paulo) on slightly lower TRS (-1%) Cruz Alta and Severinia mills were granted the Bonsucro certification, which allows them to be in accordance with the European Directive for biofuels and renewable energy Africa/Indian Ocean:   Climate conditions impacted crushing volumes but solid perfomance from Indian Ocean operations Cereals Europe:   A&E margin improving versus last year and S&S contribution increasing sequentially   Higher grinding in the quarter compared to last year due to continuous improvement of Lillebonne operational performance Cost and efficiency improvement programme “Performance 2015” progressing Cereals Brazil:   Improved starch sales volumes while glucose sales ramping up; customers’ certification process ongoing Strategic  2 Cereals Asia: Acquisition of 50% of Redwood Indonesia establishing presence in Indonesia, Asia’s third largest market for sweeteners. Closing pending regulatory approvals
  3. 3. Market Highlights Sugar: 580 US$/MT 21 550 19 520 18 490 17 460 16 430 15 20 400  Raw sugar prices rallied above 20.0 USD cents/lb in October, before dropping to 16.4 USD cents/lb at the end of December mainly due to higher production worldwide and comfortable stock-to-use ratios in major importing countries. Prices currently hovering around 16 USD cents/lb. 14 Jan-13 Apr-13 Jul-13 LIFFE#5  BRL/USD devaluation during the quarter (-7%) helped to offset the drop of raw sugar prices for Brazilian producers Oct-13 NY#11 €/MT Starch: 270  Mar, 2014 wheat future prices appreciated around 7% from Oct 1st to Dec 31st 250 230 210 190  The drop in wheat prices since beginning of January has lowered significantly the wheat to corn spread 170 150 Jan-13 Apr-13 Jul-13 Corn MATIF Oct-13 Wheat MATIF Ethanol: 1900 R$/m³ €/m³ 700 1700 650 1500 600 1300 550 1100 500 900 450  In Brazil, ethanol prices benefited from the 4% increase in gasoline prices at the refinery. Both hydrous and anhydrous prices were on average 9% and 7% higher quarter-on-quarter 700 400 Jan-13 3 Apr-13 Jul-13 Brazil ESALQ Source: Bloomberg Oct-13 Europe Rotterdam  In Europe, FOB Rotterdam prices continued to erode, declining during the quarter from €543/m3 to €492/m3, on weaker seasonal demand and ample stocks in Europe
  4. 4. Q3 2013/14 – Revenues Positive Effect of BRL Devaluation and Improvement in Lillebonne Volumes Net Revenues (R$ MM) 1,903 +5.9% 2,015 +217 557 540 250 281 847 1,014 (35) (46) (25) Brazil Africa / Indian Ocean Starch Europe 2,015 1,903 Ethanol Europe 219 Q3 2012/13  210 Q3 2013/14 Q3 2012/13 Currency Volume Price & Mix Others Revenue was positively impacted by:   Better performance of Lillebonne on higher volumes of ethanol and gluten   Higher ethanol prices and improved energy sales volumes in Brazil Positive currency impact of the weaker Real vs. Euro (-17% Y-o-Y) But partially offset by:   Slightly lower volumes of sweeteeners combined with overall lower prices  4 Lower sugar volumes & prices in Brazil and reduced crop volumes in Africa/Indian Ocean Lower ethanol trading volumes for Tereos Group (end of trading activities) Q3 2013/14
  5. 5. Net Revenues Evolution by Product December 2013 – 3 Months December 2012 – 3 Months Others (incl. Energy) 13% Sugar 27% Alcohol & Ethanol 17% Co-products 13% Others (incl. Energy) 13% Sugar 22% Alcohol & Ethanol 18% Starch & Sweeteners 30% Co-products 17% Starch & Sweeteners 30%  Well-diversified portfolio with relatively stable breakdown compared to Q3 12/13  Reduction in sugar volumes & prices in Brazil led to reduced share of sugar in total revenues  Co-products increased their share year-on-year on a combination of higher prices and volumes for gluten 5
  6. 6. Q3 2013/14 - Adjusted EBITDA Increased Contribution of All Businesses, Except for Africa Adjusted EBITDA (R$ MM) 264 +5.8% 279 Brazil 138 85 Africa / Indian Ocean Starch Europe 60 54  Q3 2013/14 +2 +4 (25) 279 264 Holding 23 Q3 2012/13 -2 51 -8 Ethanol Europe +31 +4 142 Q3 2012/13 Brazil Margin 13.9% Africa / Indian Ocean Starch Europe Ethanol Europe Holding Q3 2013/14 Margin 13.9% Adjusted EBITDA improved year-on-year as a consequence of:   Recovery in profitability at A&E Europe segment on higher volumes and lower input prices, despite reduced ethanol prices  Starch & sweeteners profitability benefiting from lower cereal input costs; however fixed cost increase, due to recent investments, not fully covered yet by higher volumes due to weak economic environment  6 Improvement in profitability at Guarani, despite slightly lower sales (volume & prices) thanks notably to first benefits from Guarani 2016 (both at agricultural and industrial level) Africa/Indian Ocean operations impacted by adverse climate conditions although Indian Ocean business continued to deliver a solid performance  Positive FX conversion effect linked to Real depreciation vs. the Euro year-on-year
  7. 7. Sugarcane Brazil – Production & Sales Record Sugarcane Crushing at 19.7 million tonnes Sugarcane Crushing (MM t) Sugar Sales (‘000 t) Ethanol Sales (‘000 m³) Energy Sales (‘000 MWh) 0.0% YoY -8.7% YoY -2.5% YoY +44.2 YoY 70 29 4,9 367 335 135 132  Q3 12/13 Q3 13/14 Q3 12/13 Q3 13/14 Q3 12/13 Q3 13/14 Q3 12/13 116 Own Sales 139 Q3 13/14 4,9 Trading Crushing   Better-than-expected agricultural yields at 92 t/ha vs. 84 t/ha in 2012/13   Higher crushing in 2013/14: 19.7 million tonnes or +8% y-o-y (full consolidation) and 18.3 million tonnes or +11% y-o-y (equity consolidation) Mechanical harvesting at 93% for own sugarcane Improvement in production   Sugar:  7 Mix: 63% sugar, 37% ethanol vs. 64% / 36% last year   Overall production up 10% to 2.5 Mt (expressed in TRS) Ethanol: 535 Km³ 1.5 Mt +9% YoY +13% YoY Progress on cogeneration  YTD energy sales (including trading) up 48% to 695 GWh
  8. 8. Sugarcane Brazil – Financials Improved EBITDA Despite Lower Volumes and Prices Net Revenues (R$ MM) Key Figures (32) 557 540 Sugar 540 557 -3% Gross Profit (4) 2012/13 92 84 +9% Gross Margin (12) 2013/14 Revenues +10 Q3 In R$ Million +21 Q3 17.0% 15.1% 24 6 4.4% 1.1% 142 138 26.2% 24.8% EBIT EBIT Margin Ethanol Adjusted EBITDA Adjusted EBITDA Margin Q3 2012/13 Price & Mix Volume Price & Mix Volume  Sugar: 55% of total net revenues Average selling price: -4% Y-o-Y at 956 R$/t (ex-hedging), partly on negative mix effect Ethanol: 30% of total net revenues  Volume sold down -3% to 132 Km3  8 +3%  Stable volume crushed Y-o-Y, but production down 5% (expressed in TRS) on lower sugar content  Adjusted EBITDA: R$142 million Volumes reduced -9% to 335 Kt   +282% Others Q3 2013/14   Change Average price up 15% Y-o-Y at 1,232 R$/m3 Cogeneration (ex-trading): R$20.1 million vs. R$18.1 million in Q3 12/13  Improvement in profitability thanks notably to first benefits from Guarani 2016  Adjusted EBITDA Margin1 for Q3 13/14 including tilling as depreciation: 34% (1) Tereos Internacional allocates tilling expenses as cost. If tilling expenses were allocated as investment, Adjusted EBITDA for Q3 13/14 would have reached R$183 million.
  9. 9. Sugarcane Africa/Indian Ocean – Production and Financials Climate Conditions Impacted Crushing Volumes Key Figures Q3 2013/14 2012/13 Revenues 250 281 -11% Gross Profit 58 100 -42% Gross Margin Sugar sales (‘000 t) Q3 In R$ Million Sugarcane Crushing (’000 t) 23.2% 35.7% 22 49 8.8% 17.4% 60 85 24.0% 30.3% -23.3% YoY -27.8% YoY 1,176 86 849 66 EBIT Q3 13/14 Q3 12/13 13/14 Q3 12/13 EBIT Margin Q3 Change Adjusted EBITDA Adjusted EBITDA Margin Revenue Breakdown by Product  -55% -30% Sugarcane crushing   Trading and others 25% Indian Ocean: total crushing at 1.7 Mt (-6% vs. LY), impacted by the severe drought in Q3 13/14 Africa: sharp reduction in crushing (-35%) this crop on irrigation problems  Sugar production: down 12% this crop at 249 kt  Revenues: -11% Y-o-Y  Lower crops in Indian Ocean and Africa impacting revenues  Sugar Indian Ocean 56% Adjusted EBITDA: -30% Y-o-Y  Solid performance in Indian Ocean, more than offset by the impact of reduced crop volumes in Africa Sugar Africa 19% 9
  10. 10. Cereal Segment - Production and Sales Higher Grinding on Recovery of Lillebonne Production and Palmital Ramp-up Cereal Grinding (‘000 t) Starch & Sweeteners Sales (‘000 t) Alcohol & Ethanol Sales (‘000 m3) Co-products Sales (‘000 t) +9.3% YoY -1.9% YoY -3.7% YoY +5.4% YoY 811 412 276 404 Own Sales 79 Q3 13/14 Q3 12/13 Q3 13/14 Q3 12/13 Q3 13/14 Q3 12/13 50 +58.0% YoY 291 Q3 13/14 742 Q3 12/13 25 58 Trading  Grinding in Q3 13/14: +9% mostly driven by better performance at Lillebonne and ramp-up of Palmital corn factory  Starch & Sweeteners sales: -2%  Alcohol & Ethanol sales: -4% 10 Reduction in sales of functional sweeteners and specialties, but some growth in starch thanks to prior year investment at Marckolsheim Significant recovery in own volume sold thanks to improved performance at Lillebonne. Lower ethanol trading sales for Tereos Group (end of trading activity)
  11. 11. Starch & Sweeteners – Financials Positive Volume and Currency Effect Led to Higher Revenues and EBITDA Net Revenues (R$ MM) Key Figures Q3 In R$ Million 2013/14 2012/13 1,014 847 +20% Gross Profit 160 139 +16% Gross Margin +140 Q3 15.8% 16.4% 3 10 0.3% 1.2% 54 51 5.4% 6.0% Change +8 Revenues +47 (28) 1,014 847 EBIT EBIT Margin Adjusted EBITDA Q3 2012/13Volume Price & MixCurrency Others Q3 2013/14  Adjusted EBITDA Margin -71% +7% Revenues: R$1,014 million, up 20%   Higher starch and co-products sales, particularly gluten, more than compensated for lower sweeteners volumes and led to a positive +6% volume effect   Positive effect of Real devaluation vs. Euro (-17% on average Y-o-Y) Prices for S&S reflected the decrease of cereal and sugar prices (isoglucose); gluten prices were up year-on-year Adjusted EBITDA: R$54 million, up 7% Y-o-Y  11 Improvement year-on-year due to currency effect, although EBITDA increased sequentially, thanks to lower input prices, but yet to fully benefit from recent investments in Europe and Brazil
  12. 12. Alcohol & Ethanol Europe – Financials Lower Wheat Prices and Better Industrial Performance at Lillebonne Net Revenues (R$ MM) Key Figures (32) 210 219 -4% 22 -2 -979% Gross Margin 219 2012/13 Gross Profit (7) 2013/14 Revenues (7) Q3 In R$ Million +38 Q3 10.3% -1.1% 10 -19 4.8% -8.5% 23 -8 10.9% 3.7% EBIT 210 EBIT Margin Adjusted EBITDA Q3 2012/13 Volume Price & Mix Currency Others Adjusted EBITDA Margin Q3 2013/14 Revenue Breakdown by Product  Change -154% -380% Revenues: R$210 million, down 4%   Ethanol traded 24% Lower volumes traded on behalf of Tereos and lower FOB Rotterdam prices Adjusted EBITDA: R$23 million, up Y-o-Y  Ethanol own sales 69% 12 Better industrial performance led to higher ethanol volumes  Co-products and other 7% Benefit from lower wheat prices and fixed cost dilution on better capacity utilization
  13. 13. Q3 2013/14 - Capital Expenditures Near completion of CAPEX Programs Leading to Lower Investments Y-o-Y CAPEX (R$ MM) CAPEX (R$ MM) Starch Europe 20% Ethanol Europe 2% +34 +1 (58) Africa / Indian Ocean 8% 203 Brazil: R$119 million • Mostly related to maintenance, including replanting, and the cogeneration and capacity expansion of Guarani’s factories •  80% of the expansion program completed Africa/Indian Ocean: R$15 million • 13 170 Brazil 70% Q3 2012/13  (10) Primarily maintenance and plantation in Mozambique  Africa / Indian Ocean Starch Europe Ethanol Europe Q3 2013/14 Starch & Sweeteners: R$34 million •  Brazil Finalization of 1st phase of investments in Brazil corn starch facility Alcohol & Ethanol Europe: R$3 million • Factory maintenance at Lillebonne and DVO
  14. 14. Cash Flow Reconciliation & Debt Composition Cash Flow Debt 9M 13/14 In R$ Million Adjusted EBITDA Dec 31st, 2013 In R$ Million 830 March 31st, 2013 (Restated) ∆ Others (84) Operating Cash Flow Financial interests Dividends paid and received 10 (151) 3 Capex 103 Non-current 2,968 2,399 569 (27) (26) (1) 4,873 4,202 671 In € 1,889 1,596 293 In USD 1,918 1,688 230 1,047 882 165 46 62 (16) Cash and Cash Equivalent (585) (892) 308 4,288 3,310 979 229 13 217 4,519 3,322 Amortized cost Total Gross Debt (590) Others 1,829 In R$ (736) 1,932 Total Net Debt Working capital variance Current 135 Other currencies Free Cash Flow (593) Forex impact (603) Others (1) Net Debt Variation (1,197) Related Parties Net Debt Total Net Debt + Related Parties   Currency Effect on Debt: Devaluation of the Real against Euro and USD  14 Working Capital: Peak level of inventories due to intercrop sales commitments in Brazil Net Debt/Adjusted EBITDA: 4.9x vs. 4.2x on March 31st, 2013 1,197
  15. 15. Outlook  Sugarcane  Brazil  Multi-year investment program in Brazil nearing completion to reduce investments level next year  First benefits of Guarani 2016 efficiency program  Impact of dry weather effect since December in Brazil on sugarcane crop volumes next year is being monitored closely. Guarani should benefit from 1 million tonnes of standing cane and the excess cane sold to other mills during the 2013/14 crop  Africa/Indian Ocean  Drought in the Reunion Island should lead to slight decrease in volumes next crop, while sugarcane crushing in Mozambique should start to recover  Cereals  Europe  Continuous benefit of lower cereal prices with better utilization rates at Lillebonne to dilute fixed costs  Focus on “Performance 2015” plan to improve margins  Brazil  Ramping up of corn processing and glucose sales  Asia   15 Dongguan construction and Tieling diversification plan in China Closing of the acquisition of Redwood Indonesia
  16. 16. 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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