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Confcall earnings release presentation 2 q 1112

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Confcall earnings release presentation 2 q 1112

  1. 1. Tereos Internacional Second Quarter 2011/12 Results São Paulo - November 16th, 2011
  2. 2. Quarter and Half Highlights Q2 2011/12 Financial Results Operating Segment Review Outlook and Summary
  3. 3. Quarter and Half Highlights
  4. 4. * Adjusted EBITDA/EBIT: EBITDA/EBIT excluding items from discontinued operations, accounting effect of adjustments in the fair value of the financial instruments and of the biological assets  Strong revenues: R$1.6 billion… • Year-on-Year: + 8.7% at constant currency  …due to: • increased year-on-year prices across all key products categories • higher volumes sold for the EU ethanol segment and Indian Ocean sugarcane segment  Record EBITDA: R$282 MM • EBITDA margin of 17.1% 370 bps improvement from Q1  Adjusted EBITDA*: R$264 MM • -7.5% Year-over-Year +28.2% Quarter-on-Quarter Q2 2011/12 - Financial Highlights Strong quarter revenues and EBITDA demonstrating benefits of Company’s complementary portfolio 4
  5. 5. * Adjusted EBITDA/EBIT: EBITDA/EBIT excluding items from discontinued operations, accounting effect of adjustments in the fair value of the financial instruments and of the biological assets  H1 11/12 revenues: R$3.2 billion, up 24.9% at constant currency • Year-on-year increase in prices across all key products categories • +21.6% for Brazil and +25.6% for Starch Europe, at constant currency  Adjusted EBITDA*: R$470.8 MM, up 21.4% at constant currency • Adjusted EBITDA margin of 14.5% • EBITDA: R$497.1 MM, up 45.3% at constant currency  Net financial expenses: R$87.8 MM, down 17.4% at constant currency • Loss on foreign exchange: R$6.2 million  Consolidated net result: R$65.6 MM, an increase of R$148.6 MM at constant currency H1 2011/12 - Financial Highlights Higher prices boosting revenues and EBITDA 5
  6. 6. Q2 2011/12 - Market Fundamentals  Sugar: Shortfall in Brazil supports prices • UNICA’s new estimate for 2011/12 Center-south crop: 489 MM tons (-14.1% vs. the 1st estimate) • Bumper crop expected in Thailand, EU and Russia  Starch: Cereal prices down driven by higher production estimates • Average corn and wheat prices down 14% from Q1 to Q2 • USDA estimates an improvement in world wheat balance • Wheat prices remained cheaper than corn during the quarter (average 5 EUR/ton)  Ethanol: Tight balance across main markets maintaining high prices • Brazil: limited supply still supporting higher prices • Europe: ethanol supply lags behind blending target 6
  7. 7. Sugarcane: • Guarani revised its original forecast from 18.5 MM tons to 16.2 MM tons (12.4% reduction), in line with UNICA’s forecast revision • On time completion of R$800 million announced investment plan: start-up of ethanol distillery in São José plant and conclusion of annual planting program Cereal: • Selby plant and BENP project on route and expected to come on stream in the first half of 2012 calendar year • MoU with Wilmar to process 300,000 tons of wheat in China in the first phase of the project 7 Q2 2011/12 - Highlights
  8. 8. Q2 2011/12 Financial Results
  9. 9. Q2 2011/12 - Revenues Revenues increase driven by higher prices and better product mix in starch segment 1,648 + 10.0% 1,498 In R$ MM  Sugarcane • Revenues: R$ 698 mm -7% vs. Q2 2010/11 at constant currency • Brazil: -18% as reported -31% volume effect and +34% price effect (ex-hedge) • Indian Ocean: +46% at constant currency Mainly driven by volume & price increases in Mozambique  Cereal • Revenues: R$ 949 mm +24% vs. Q2 2010/11 at constant currency • Starch Europe: + 32% at constant currency Mainly driven by 24% increase in selling prices & mix • Ethanol Europe: -5% at constant currency Mainly due to -15% effect of trading volume 9 Q2 2010/11 Currency Volume Price & Mix Others Q2 2011/12 1,648 1,498 +16 -162 +26+270
  10. 10. In R$ MM Adjusted EBITDA EBITDA 226 282 Q2 2011/12 - Adjusted EBITDA and EBITDA Impact of lower volumes in Brazil partly offset by higher prices in all segments + 24.4% 10 285 264 - 7.5%  Sugarcane • Brazil: -42% as reported Mainly due to fixed costs diluted on lower volumes • Indian Ocean: +50% at constant currency Positive effect of higher prices and volumes  Cereal • Starch: +31% at constant currency Mainly driven by higher selling prices • Ethanol: 3x higher at constant currency Boosted by own sales (slightly affected by lower trading activities)  Adjustments • Sugarcane: - R$ 5 million Fair value of biological assets and financial instruments • Cereals: - R$ 12 million Fair value of financial instruments In R$ MM
  11. 11. Cash Flow In R$ Million H1 2011/12 Adjusted EBITDA 471 Working capital variance (513) Other operating (including income tax paid) (24) Operating Cash Flow (66) Financial interests (56) Dividends paid and received (51) Capex (398) Financial investments (50) Free Cash Flow (621) Forex impact (300) Acquisition & Perimeter impact (14) Total net debt (935)  Increase in working capital due to higher stocks in Brazil, reflecting the seasonality of the quarter (vs. 31/03/11)  Capex & Acquisitions • Brazil: R$234 million • Cereals: R$139 million • Indian Ocean: R$48 million  R$ 300 million Forex impact on total net debt versus March 2011 11 Cash Flow reflecting the rise in Working Capital and CAPEX
  12. 12.  Net Debt / Adjusted EBITDA: 3.3x in line with 3.4x at Sept 30, 2010 (12 months Adjusted EBITDA = R$ 935.4 million)  Main reasons for the Net Debt increase: (i) Non-cash Forex impact; (ii) Investments; and (iii) Working capital needs Debt In R$ Million September 30, 2011 March 31, 2011 September 30, 2010 Change Y-o-Y Current 1,435 1,684 1,667 -13.9% Non-current 2,138 1,134 1,236 73.0% Amortized cost (25) (15) (16) 56.2% Total Gross Debt 3,547 2,803 2,887 22.9% In € 1,575 1,364 1,388 13.5% In USD 1,671 763 757 120.7% In R$ 258 637 703 -63.3% Other currencies 69 54 55 25.4% Cash and cash Equivalent (429) (633) (440) -2.5% Total Net Debt 3,119 2,170 2,447 27.5% Related Parties Net Debt (35) (21) (31) 9.7% Total Net Debt + Related Parties 3,084 2,149 2,416 27.6% 12 Total Net Debt R$668 million increase vs September 30, 2010 Gross Debt Breakdown by currency Euro 44% US Dollar 47% Real 7% Others 2% US$ denominated debt related to sugar export contracts Debt related to cereal functional currency
  13. 13. Operating Segment Review
  14. 14. Sugarcane Brazil - Indian Ocean
  15. 15. Sugarcane Brazil - Production and Sales Ethanol Sales (‘000 m³) Energy Sales (‘000 MWh)Sugarcane Crushing (MM t) Sugar Sales (‘000 t) 15  Sugarcane crushing: 7.8 million tons - 11% vs. Q2 2010/11  Sugar production: 694,000 tons - 9% vs. Q2 2010/11 • Mix: 63% sugar and 37% ethanol  Ethanol production: 252,000 m³ - 26% vs. Q2 2010/11 • Anhydrous: 38% of total ethanol vs. 33% in Q2 2010/11  Cogeneration: 105,500 MWh - 7% vs. Q2 2010/11 8,8 4,0 5,8 7,8 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12 179 164 165 140 99 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12 113 81 51 84 106 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12 Adverse climatic conditions (drought in 2010 and frost in 2011 winter) and heavy flowering affected sugarcane yields and sugar content (TRS) TRS : 146 kg of sugar /ton of sugarcane for Q2 2011/12 vs.156 kg/ton for Q2 2010/11 488 424 233 305 374 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12
  16. 16. Sugar Ethanol 502 613 Sugarcane Brazil – Q2 Financials Higher prices for sugar and ethanol partly offset lower volumes * includes Cogeneration, Agricultural Products and Hedging Key Figures In R$ Million Q2 2011/12 Q2 2010/11 Change Reported Revenues 502 613 -18.1% Gross Profit 40 158 -74.4% Gross Margin 8.1% 25.9% EBITDA 115 139 -17.3% EBITDA Margin 23.0% 22.7% Adjusted EBITDA 109 188 -42.0% Adjusted EBITDA Margin 21.8% 30.7% Capex 95 40 +138.7%  Gross Profit: R$40 million • Impact of fair value of biological assets: - R$2.1 million vs. - R$21.4 million in Q2 2010/11  Adjusted EBITDA: R$109 million • Fair value of financial instruments: - R$8.0 million vs. + R$24.7 million in Q2 2010/11  Adjusted EBITDA Margin1 including tilling depreciation would be 32.0%  Sugar: 68% of total revenue • Sales volume: - 23% vs. Q2 2010/11 • Price (R$/ton): + 27% vs. Q2 2010/11 before hedging effect  Ethanol: 23% of total revenue • Sales volume: - 45% vs. Q2 2010/11 • Price (R$/m³): + 41% vs. Q2 2010/11  Capex: R$95 million • Plantation: R$23 million • Expansion and cogeneration: R$52 million • Current investments: R$20 million In R$ MM Revenues 16 + 84 - 94 + 34 - 66 - 69 (1) Tereos Internacional allocates tilling expenses as cost. If tilling expenses were allocated as investment, Adjusted EBITDA would have reached R$ 160 million.
  17. 17. Mozambique  Sugarcane crushing: 315,000 tons • Record quarter crushing • Quarter agricultural yields reached 77 ton/ha vs 51 ton/ha in Q2 10/11 as a result of irrigation and planting program  Revenues: R$32 million • 2.2x higher vs. Q2 2010/11  Adjusted EBITDA: + R$14 million • Up R$4 million vs. Q2 2010/11  Capex: R$4.7 million • -R$1 million vs. Q2 2010/11 La Réunion  Sugarcane crushing: 989 000 tons  Revenues: R$164 million • + R$48 million vs. Q2 2010/11  Adjusted EBITDA: R$44.8 million • vs. R$29.1 million in Q2 2010/11  Capex: R$10.8 million • - R$30 million vs. Q2 2010/11 Sugarcane Indian Ocean – Production – Q2 Financials Better results and improved operations Key Figures In R$ Million Q2 2011/12 Q2 2010/11 Revenues 197 131 Gross Profit 46 (52) Gross Margin 23.6% (39.6)% EBITDA 58 25 EBITDA Margin 29.7% 19.1% Adjusted EBITDA 59 39 Adjusted EBITDA Margin 30.0% 29.9% Capex 15 47 La Réunion Sugarcane Crushing (’000 t) Mozambique Sugarcane Crushing (‘000 t) 17 1.003 874 989 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12 230 289 17 65 315 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12
  18. 18. Cereal Starch Europe - Ethanol Europe
  19. 19. Starch Europe - Production and Sales Higher cereal grinding and improved sales volumes of ethanol & alcohol and co-products Co-products Sales (‘000 t)Cereal Grinding (‘000 t) Starch & Sweeteners Sales (‘000 t) Ethanol & Alcohol Sales (‘000 m3)  Cereal grinding: 720,000 tons + 2.6% vs. Q2 2010/11 More wheat ground: different mix of products Lesser impact in starch and sweeteners volumes and higher impact in co-products  Sales Volumes • Starch and Sweeteners: + stable vs. Q2 2010/11 • Alcohol & Ethanol: + 4.3% vs. Q2 2010/11 • Co-products (ex-BENP volumes): + 1.9% vs. Q2 2010/11 19 702 696 696 739 720 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12 424 398 409 440 424 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12 46 42 44 43 48 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12 257 253 258 262 262 39 61 68 59 Q2 10/11 Q3 10/11 Q4 10/11 Q1 11/12 Q2 11/12 SYRAL BENP/DVO
  20. 20. Starch Europe – Q2 Financials Solid results driven by higher volumes and prices Revenues* In R$ MM 767 591 Starch and Sweeteners 61.2% Alcohol and Ethanol 10.7% Co-products and others 28.1% Key Figures In R$ Million Q2 2011/12 Q2 2010/11 Change Reported Change Constant Currency Revenues* 767 591 +29.8% +27.4% Gross Profit* 150 128 +17.2% +14.5% Gross Margin* 19.6% 21.7% EBITDA 87 61 +42.6% +39.8% EBITDA Margin 10.9% 10.3% Adjusted EBITDA 76 56 +34.1% +31.3% Adjusted EBITDA Margin 9.5% 9.5% Capex 38 18 +111.7%  Revenues: +27.4% at constant currency • +24.5% in prices and mix. Cereal prices increases mostly passed through to customers • +3.4% in volumes  Gross Profit: R$150 million  Adjusted EBITDA: R$76 million, up R$21 million +11 +20 +145 * Excludes the R$ 27.5 million financial impact of the sales of co- products produced by Tereos BENP and sold by Tereos Syral20
  21. 21. Ethanol Europe – Q2 Financials Higher sales volumes of own ethanol while lower trading sales Key Figures In R$ Million Q2 2011/12 Q2 2010/11 Change Reported Change Constant Currency Revenues** 182 160 +13.7% +11.7% Gross Profit** 34 7 +5x +5x Gross Margin** 18.7% 4.2% EBITDA 22 7 +3x +3x EBITDA Margin 14.4% 4.3% Adjusted EBITDA 22 7 +3x +3x Adjusted EBITDA Margin 14.2% 4.3% Capex 27 7 +4x +4x  Ethanol sales*: 105,800 m³ • Slightly lower than Q2 2010/11. Increase in production practically offsetting a decrease in trading activities  Revenues**: R$182 million, +11.7% at constant currency • FX impact: +1.9% • Volumes increase (ex-trading): +29.4% • Prices fall: -2.5%  Improved gross margin and stable EBITDA margin as compared to Q1 2011/12  Higher production figures, on the back of better utilization ratios  Capex: R$27 million • Mainly for gluten project at BENP * Includes sales of ethanol produced by Tereos Revenues** In R$ MM 182 160 21 +3 +47 -24 ** Includes the R$ 27.5 million financial impact of the sales of co- products produced by Tereos BENP and sold by Tereos Syral -4
  22. 22. Outlook and Summary
  23. 23. Sugarcane: focusing on operations, investing in production  Brazil: implementation of R$ 800 MM investment program on production expansion (sugarcane renewal and new planting, industrial capacities) and cogeneration (bringing stable income) • Capex financed by BNDES loan of R$ 800 MM obtained in March 2011  Africa: irrigation and planting program under final phase of implementation and potential expansion capacity being explored Cereals: capitalizing on starch production knowledge by entering into growing economies  EU: conversion of BENP Lillebonne into starch facility launched and Selby’s activities to come on stream in the H1 2012  Brazil: Completion of starch transaction in Brazil (Syral-Halotek)  China: MoU with Wilmar to develop a starch project in China 23 Tereos Internacional - Conclusion
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