3. Operational and
Administrative Highlights
Sell of the Pipes and Fittings division - Provinil:
Focus in the nonwovens: our core business, presenting margins of 23.6% versus
9.6% of the Pipes and Fittings Division;
Share Purchase Agreement signed with Aliaxis on September 18, 2008;
R$82 million, equivalent to 7.5x the Ebitda generated in the last 12 months;
Deal expected to be closed during the 4Q08.
3
4. Operational and
Administrative Highlights
Debentures issued on December/2007:
Rating annual review;
Rating maintained at a brA level, despite the world crisis;
Síntese Analítica released by Standard & Poor’s on October 28,2008.
4
5. Operational and
Administrative Highlights
Specialty hygienic and medical:
2,084
1,923
Investments in progress in laminated
1,671
and printed hygienic disposable
production lines, at full capacity at the
1Q09.
19%
Laminated and printed will account for 17% 16%
up to 18% of our production capacity.
3Q07 2Q08 3Q08
We started on 3Q08 the sales of high
Volume PMU
performance medical disposables, made
at KAMI9, reaching 145 tons in the
quarter.
Volume, in tons, of laminated, printed
and medical disposables
Price premium of specialties versus
commodity disposables 5
6. Operational and
Administrative Highlights
Others:
Conclusion of the Share Buyback Program, totaling 3.1 million shares, in August/
2008. The total cost was R$ 22.3 million, and the average price was R$ 7.09/share;
Implementation (go live) of SAP system on July 1st, 2008.
6
8. Sales Volume
Sales Volume
(thousand tons)
Increase of 28.8% in relation to
0.5 0.8
the 3Q07 mainly due to the
0.6 5.7 5.9
0.5 nonwovens division that growth
28.5% in the same comparison
5.7
because of Isofilme volume that
started from the 3Q07, and begin of
KAMI9 operations last April;
17.9 17.7
13.8
In relation to the previous quarter
there was a 200 tons decrease in
nonwovens due to shipment delays
caused by SAP go live.
3Q07 2Q08 3Q08
Others Packaging Pipes and Fittings Nonwovens
In thousand tons
8
9. Gross Revenues
Gross Revenue
Increase of 16.6% in relation to
153.0
the 3Q07, and of 2.7% comparing
149.1
to the 2Q08;
131.3
45.5 48.7
In the export market our
39.5 revenues increased 23.5% in
relation to the 3Q07 and 7.1% in
relation to the 2Q08, even with the
appreciation of the real against the
103.6 104.3 dollar;
91.8
In the domestic market our
gross revenues increased 13.6%
in relation to the 3Q07 and 0.7%
3Q07 2Q08 3Q08
comparing to the 2Q08, also due
Domestic Market Export Market
to shipment delays caused by SAP
In thousand Reais go live.
9
10. EBITDA (R$ million) and EBITDA Margin (%)
Adjusted Ebitda (R$ million) and
Ebitda Margin (Hedge) (%)
0.5 Adjusted EBITDA reached R$ 26.4
1.1
million (20.1% margin), 7.7% less than
in the 3Q07;
0.7
30.9
EBITDA adjusted by operational
28.6 hedge* totaled R$ 27.1 million (20.7%
26.4
margin), 8.8% bellow the same period
26.5%
in 2007;
24.6%
25.5%
24.2% In relation to the 2Q08 there was a
20.7% decrease of 14.6% due to smaller
volumes because of the SAP go live
20.1%
and because of the increase in raw
3Q07 2Q08 3Q08 material prices.
Operational Hedge Adjusted Ebitda
Adjusted Ebitda Margin % Adjusted Ebitda Margin (Hedge) %
Operational hedge*: The result of exchange-rate lock forward contracts
on accounts receivables from the export market.
10
11. Net Result (R$ million) and Net Margin (%)
Net Income (R$ million) and
Net Income Margin (%)
13.8
Our net result was negative
in R$ 2.2 million with negative
net margin of 1.7% due to a
10.8% negative financial result of R$
16.4 millions, mainly due to
-2.2% -1.7%
variations in the exchange
rates regarding our debt of R$
20.4 millions, without cash
(2.2)
effect.
(2.5)
3Q07 2Q08 3Q08
Net Margin
11
12. Nonwovens Division
Volume Volume reached 17,700 tons, 28.5%
(thousand tonnes) above the 3Q07. In the domestic market
17.9 17.7 the increase was 42.9% (mainly Isofilme)
comparing to the 3Q07, and in the export
13.8 market it was at around 30.8% due to
KAMI9;
Comparing to the 2Q08 there was a
decrease of 1.1%.
3Q07 2Q08 3Q08 Net Revenue
(R$ million)
103.7 104.9
85.5
Net revenues of R$ 104.9 millions, 22.7%
above the 3Q07 and 1.2% above the 2Q08
The increase in the 3Q08 in relation to the
2Q08 was due to a 2.3% increase in the
average price of sales.
3Q07 2Q08 3Q08
12
13. Nonwovens Division
Fixed Costs
(R$ million) Unitary fixed cost 22.7% lower than in
10.1 the 3Q07;
In relation to the 2Q08 there was a
decrease of 10.5% due to efficiency and
scale gains.
9.1
9.0
0.66 0.57 0.51
Unitary Variable Costs
(R$ - raw material, comissions and shipping)
3Q07 2Q08 3Q08 4.06
3.82
Unitary Fixed Costs
3.66
There was an increase of 6.4% in relation to
the 3Q07, and of 10.9% in relation to the 2Q08
due to the increase in raw-material prices.
13
3Q07 2Q08 3Q08
14. Nonwovens Division
Ebitda of R$ 24.0 millions, with 22.9% margin, Ebita (R$ million)
and Ebitda Margin
0.4% above the 3Q07;
27.9
In relation to the 2Q08 there was a decrease 23.9 24.0
of 14.0% due to the increase in variable costs.
28.0%
Ajusted Ebitda (Hedge) 26.9%
22.9%
(R$ million)
28.4
3Q07 2Q08 3Q08
Ebitda Margin%
25.0
24.8
Ebitda adjusted by operational hedge*
29.2% 27.4% 23.6%
was R$ 24.8 millions (23.6% margin),
0.8% bellow the 3Q07.
3Q07 2Q08 3Q08
Ajusted Ebitda Margin (Hedge) %
14
Operational hedge*: The result of exchange-rate lock forward contracts on accounts receivable from the export market.
15. Pipes and Fittings Division
Volume
(thousand tonnes)
The volume was 5,900 tons in the 3Q08,
3.5% higher than in the 2Q08 and in the
5.7 5.7 5.9 3Q07.
Net Revenue
(R$ million)
24.3
22.8
3Q07 2Q08 3Q08 21.8
Net revenues of R$ 24.3 millions, an
increase of 11.3% in relation to the 3Q07
and of 6.6% in relation to the 2Q08.
In relation to the 2Q08 the unitary
average price was 3.0% higher. 3Q07 2Q08 3Q08
15
16. Pipes and Fittings Division
Fixed Costs and Unitary Costs
Decrease in fixed costs of 12.0% in relation
(R$ million) to the 3Q07;
3.2
Comparing to the 2Q08 there was a 17.3%
3.0 decrease.
2.7
0.52 0.55
0.46 Unitary Variable Costs
(R$ - raw material, comissions and shipping)
3.24
3Q07 2Q08 3Q08
2.92
2.66
Unitary Fixed Costs
Increase of 21.7% in relation to the
3Q07 and of 11.0% in relation to the
2Q08;
There was a price increase in raw- 3Q07 2Q08 3Q08
materials in relation to the 2Q08.
16
17. Pipes and Fittings Division
Ebitda (R$ million) and
Ebitda Margin (%)
3.6 EBITDA of R$ 2.3 millions,
2.9 with a 9.6% margin, a decrease
2.3
of 35.9% in relation to the 3Q07
and of 21.2% in relation to the
16.6% 2Q08.
12.9%
9.6%
3Q07 2Q08 3Q08
Ebitda Margin %
17
18. Debt
Consolidated Net Debt
(R$ Million) 06/30/08 09/30/08
Total Debt
Short term 6.7 18.0
Long term 377.7 441.6
Total 384.4 459.6
175.5 170.6
Cash and equivalents
208.9 289.0
Net debt
19. Debt
The increase in the net debt was mainly due to financings and loans at an amount of R$
48.0 millions, and to interests and restatements.
In the quarter we accounted for R$43.9 million in financial expenses, 96% without cash
outlay.
Currency variation represented R$20.4 million in our financial result, due to the 20% impact
on our debt from the depreciation of the real against the dollar.
On September 30, 2008 we had two interest swap agreements, due to loans and financing,
one CDI vs. US$ totaling US$20 million maturing in December 2012 and another fixed rate
Libor vs. Libor totaling US$50,000 maturing in June 2013, as well as US$22,000 in currency
hedge operations. As a result, third-quarter net income was a negative R$2.2 million.
21. Outlook
Increase in the production capacity of specialty hygienic disposables,
from 700 tons/month in the 3Q08 to 1,200 tons/month when the
investments are concluded and operational in the first quarter 2009;
Development and expansion of the production of high performance
medical disposable, with higher added-value, to reach 300 tons/month in
2009;
Focus in the operations through stabilizing SAP;
Drawback verde e amarelo to acquire raw-material in products for
export.
21
22. CFO: Eduardo Feldmann Costa
IR Manager: Gabriela Las Casas
Phone: +55 (41) 3381-7600
Fax: +55 (41) 3283-5909
São José dos Pinhais – PR - Brazil
www.providencia.com.br/ir
The words “believe”, “anticipate”, “expect”, “estimate”, “will”, “plan”, “may”, “intend”, “foresee”, “project” and other similar expressions indicate
forward-looking statements. These forward-looking statements involve uncertainties, risks and assumptions, since they include information related
to our potential or assumed 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 22
presentation with new information and/or future events .