Eucatex S.a. Industria E Comercio · BMFBOVESPA:EUCA3
Eucatex S.a. Industria E Comercio — Q3 2009 Earnings Presentation
35 slides from Eucatex S.a. Industria E Comercio's earnings presentation, Nov 12, 2009
Slide 1: 3Q09 Conference Call
3Q09 Conference Call November 12, 2009
Slide 2: Disclaimer
Disclaimer This presentation includes forward‐looking statements that are subject to risks and uncertainties and are based on the beliefs and assumptions of the management of Eucatex S.A. Indústria e Comércio and on information currently available to the Company. Forward‐looking statements are not g
Slide 3: 3Q09 Highlights
3Q09 Highlights » Judicial Reorganization Concluded • On Nov. 6, 2009, Judge Renata Cristina Rosa da Costa e Silva of the 3rd Court of the Judicial District of Salto approved the conclusion of the JUDICIAL REORGANIZATION PROCESS OF EUCATEX S.A. IND. E COM., given the company's fulfillment of the obl
Slide 4: 3Q09 Highlights
3Q09 Highlights » Financial Results • Gross Revenue was R$ 209.8 million in 3Q09, down 9.0% on R$ 230.5 million in 3Q08. In 9M09, gross revenue was R$ 600.1 million, down 7.5% on R$ 649.1 million in 9M08. • Gross Margin was R$ 51.7 million in 3Q09, or 30.7%, versus R$ 55.5 million, or 29.7%, in 3Q08
Slide 5: Revenue Breakdown
Revenue Breakdown » Highlights The Laminate Flooring and Paint segments accounted for 12% and 24% of overall gross revenue in 3Q09, respectively, versus 9% and 18% in 3Q08. Gross Revenue Breakdown - 3Q09 Gross Revenue Breakdown - 3Q08 4% 11% Hardboard 24% 31% MDP 34% Laminate Flooring 18% Paint 12
Slide 6: Retail Sector vs. Manufacturing Sector
Retail Sector vs. Manufacturing Sector 160 150 However, the crisis had less of 140 an impact on 130 retail sales than 120 on industrial production. 110 100 90 jul/07 jul/08 jul/09 jul/04 jul/05 jul/06 jan/07 jan/08 jan/09 jan/04 jan/05 jan/06 Industry Commerce Source: seasonally adjusted IBGE data f
Slide 7: Outlook – Labor Market
Outlook – Labor Market Real Lace Employment Wage Mass In 2010, we expect recovery in both 2006 4.4% 1.9% 6.4% real income and 2007 3.5% 2.6% 6.2% employment 2008 3.9% 3.4% 7.4% 2009* 2.1% 0.9% 3.1% 2010* 3.4% 1.9% 5.4% Unemployment Rate Sales of non-durable 14% goods, which follow real income levels
Slide 8: Outlook – Credit
Outlook – Credit Credit recovery Credit is one of the especially benefits sales main transmission of durable and semi- channels of this crisis durable goods New credit to households (R$ billion): 35% Proj. 80 30% 70 25% 60 Outstanding 20% Credit to 15% 50 Individuals: 10% 40 5% 30 2008: 17.2% 0% 200
Slide 9: Outlook – Consumer Confidence
Outlook – Consumer Confidence Consumer confidence index for São Paulo Metro Area fell between Oct 2008 and May 2009, reflecting the economic crisis. Since June, however, consumer confidence has picked up significantly and should remain at high levels in the coming months. 160 150 140 130 Histori
Slide 10: My Home, My Life Program
My Home, My Life Program • Investment of more than R$ 34 billion. • Incentives for construction of 1 million homes for households earning up to 10 minimum wages. • Subsidized credit lines with terms up to 25 years. • Majority of homes to be delivered by year-end 2011. 10
Slide 11: Board Unit
Board Unit » Eucatex Group’s first and largest plant Location: Salto, São Paulo Area: Land – 540,000 m² / Installations – 153,000 m² Gross Revenue: 9M09 – R$ 189.8 million (16% from exports to over 25 countries) 3Q09 – R$ 64.6 million (13% from exports to over 25 countries) Number of Emplo
Slide 12: Hardboard
Hardboard HardboardTotal -3 % -9 % 100 100 97 Market 91 9M08 -15 % 9M09 Volume ROL Unit. Installed Capacity Used Market Share (Domestic Market) 90% 9M08 48% 9M08 9M09 86% 9M09 46% Source: ABIPA 12
Slide 13: MDP and Flooring Unit
MDP and Flooring Unit Only LatAm plant that can laminate MDP during the production process Location: Botucatu, São Paulo Area: Land 372,000 m² / Installations 62,000 m² Gross Revenue: 9M09 – R$ 252.7 million 3Q09 – R$ 85.7 million Number of Employees: 390 Main products and annual installed
Slide 14: Wood Sales Mix
Wood Sales Mix » Eucatex sales mix has a higher share of coated products than peers. In 3Q09, EUCATEX Wood Panels Rate coated products (higher value added) accounted for 94% of MDP shipments. Raw Coated 98% 94% 24% 3Q08 3Q09 Market - 3Q09 Source: ABIPA 14
Slide 15: MDP Panels
MDP Panels MDP -7 % -3 % 100 Market 100 97 9M08 -13 % 9M09 93 Volume ROL Unit. Installed Capacity Used Market Share 88% 9M08 13% 9M08 9M09 14% 9M09 89% Source: ABIPA 15
Slide 16: Domestic demand for MDP+MDF+HB
Domestic demand for MDP+MDF+HB MDF+MDP+HB Domestic demand (Fiber Board) and Total 6.000 MDP 5.000 MDF 4.000 Volume m3 (000) HB 3.000 Apparent Consumption 2.000 1.000 CAGR % a.a. 2004-2009 2009 0 MDF - 25% - 7% MDP - 7% - ( 7%) 2002 2003 2004 2005 2006 2007 2008 HB - 3% - (10%) Total - 13% - ( 1%) So
Slide 17: Installed Capacity vs. MDP+MDF+HB Demand
Installed Capacity vs. MDP+MDF+HB Demand Installed Capacity vs MDF+MDP+HB Domestic demand (Fiber Board) 9.000 100% MDP 8.000 90% 87% 86% MDF 81% 83% 7.000 80% 80% 75% 74% 75% HB 73% 70% 70% 70% 6.000 Volume m3 (000) MDP+MDF+HB 60% 5.000 Apparent 50% Consumption 4.000 MI Absorption 40% 3.000 30% 2.00
Slide 18: Laminate Flooring
Laminate Flooring Laminate Flooring +6 % +3 % Market 6% 106 103 9M08 100 9M09 100 Volume ROL Unit. Installed Capacity Used Market Share 9M08 66% 31% 9M08 9M09 69% 9M09 31% Source: ABIPLAR 18
Slide 19: Paint and Varnish Unit
Paint and Varnish Unit Inaugurated in 1994, this is one of the most modern plants of its kind in LatAm, with last-generation equipment and high-tech laboratory Location: Salto, São Paulo Area: Land 960,000 m² / Installations: 36,000 m² Gross Revenue: 9M09 – R$ 149.0 million 3Q09 – R$ 57.1 mi
Slide 20: Paint and Varnish
Paint and Varnish Paint and Varnish +7 % +7% 107 107 100 9M08 Market 100 -0.5% 9M09 Volume ROL Unit. Source: ABRAFATI 20
Slide 21: Paints
Paints Installed Capacity Used Market Share 39% 9M08 7% 9M08 9M09 7% 9M09 42% With strong growth in the past four years, the Paint Unit has been consolidating its market position and is one of Brazil’s five largest paint manufacturers and one of the only paint plants with a nationwide presence. Grow
Slide 22: Anamaco Awards
Anamaco Awards In July, the Paint and Varnish Unit won three categories in the 2009 Anamaco Awards sponsored by the National Association of Construction Material Retailers (Anamaco): • Product Quality • Logistics • Service Excellence The medals won were in the Spray category in the segments “Paint P
Slide 23: Sustainability
Sustainability » Forests • Eucatex owns 62 eucalyptus farms with a combined total of 44,000 hectares • Salto Average Radius – 122 km • Botucatu Average Radius – 50 km • Forests Planted in 2007 – 5,400 ha* • Forests Planted in 2008 – 4,500 ha* • Forests Planted in 3Q09 – 557.4 ha* • Forests with ISO
Slide 24: Sustainability
Sustainability » Wood Recycling Project • Low-cost generation of thermal energy, increasing efficiency of the company’s forests. • Average Radius of Byproduct Collection – 120 km • Volume Processed in 2008 – 120,000 tons • Volume Processed in 3Q09 – 25,000 tons • Annual volume corresponds to 750 hec
Slide 25: Installment Payment Plan – Tax Liabilities
Installment Payment Plan – Tax Liabilities • Recent change in jurisprudence in higher courts reconsiders previous positions in favor of tax credits on exempt goods and IPI tax credits. • In view of this clear change in interpretation, the legislative and executive branches proposed a new law and exe
Slide 26: Financial Highlights
Financial Highlights Highlights 3Q09 (R$ MM) 3Q09 3Q08 Var. (%) 9M09 9M08 Var. (%) Net Revenue 168,3 187,1 -10,1% 482,7 525,9 -8,2% Cost of Good Sold (116,5) (131,7) -11,5% (320,0) (357,4) -10,5% Gross Income 51,7 55,5 -6,7% 162,7 168,4 -3,4% Gross Margin (%) 30,7% 29,6% 1,1 p.p. 33,7% 32,0% 1,7 p.p
Slide 27: Debt
Debt Debt (R$ MM) 9M09 9M08 Var. (%) Short Term Debt 53,3 38,7 37,7% Long Term Debt 43,4 75,3 -42,4% Gross Debt 96,6 114,0 -15,3% Cash and Cash Equivalents 2,5 4,4 -43,5% Net Debt 94,1 109,6 -14,1% % Short Term Debt 55% 34% 21,2 p.p. Net Debt/ EBITDA 0,9 1,0 -10,7% Net Debt vs Ebtida Debt Profile 0,
Slide 28: Capex
Capex Investments - R$ Million 2,009 New T-HDF/MDF Line 76.9 New impregnator 6.6 Lacquer 4.4 Forests 20.0 Refiners 2.0 Others 6.6 Total 116.5 Others Refiners 5% 2% New T-HDF/MDF Line 2008 72.0 Forests 17% Lacquer 4% New T- New HDF/MDF impregnator Line 6% 66% 28
Slide 29: New T-HDF/MDF Line
© New T-HDF/MDF Line eucatex » Operational startup expected by mid-2010. T-HDF: Similar to MDF, but has superior density and quality. New T-HDF/MDF Line Installed Capacity Growth 110 million m2/year Installed Capacity Growth 275 thousand m3/ year EBITDA 50 % Additional Gross Revenue RS250 million Ma
Slide 30: New T-HDF/MDF Line – Comparative Analysis of Players
New T-HDF/MDF Line – Comparative Analysis of Players Fiber Board Thick MDF Thin T-HDF/MDF MDP Laminated Players Raw Painted Raw Low Pressure Raw Low Pressure Raw Finish foil Low Pressure Flooring Eucatex Duratex Berneck Arauco Masisa Fibraplac Sudati Guararapes Future Buildings MDF (15mm) MDP (15mm)
Slide 31: Corporate Governance
Corporate Governance BOARD OF DIRECTORS Chairman OTÁVIO MALUF Vice-Chairman FLÁVIO MALUF Member Member Member Member ANTONIO DELFIM NETTO JOSÉ LYRIO MORZA CAMARGO HEITOR AQUINO MARCELO FARIA PARODI FERREIRA FISCAL COUNCIL Member Member Member ENÉIAS DE ASSIS ROSA SIMONE CARRERA ADILSON MARQUES LARAN
Slide 32: Capital Market
Capital Market Closing Price. (R$) 10,00 » EUCA4 on Sep/30/09: R$ 3.39 9,00 8,00 7,00 6,00 5,00 4,00 3,00 2,00 1,00 - EUCA4 IBOV base 100 Market Cap vs Ebitda Market Value x Book Value per Share Masisa Masisa Eucatex Arauco Arauco Duratex Duratex Arauco Duratex Masisa Eucatex Eucatex - 0,5 1,0 1,5 2
Slide 33: Agro Mineral Unit
Agro Mineral Unit In late October, Eucatex signed a Sale Agreement for this unit. The buyer is currently in the due diligence process. Soil Substrates and Conditioners Location: Paulínia, São Paulo Gross Operating Revenue: 2008 – R$ 18.2 million 9M09 – R$ 9.4 million 33
Slide 34: Closing Remarks
Closing Remarks » New T-HDF/MDF line – Leadership in production costs (lower use of resins), with competitive advantages over peers (which focus on thick boards). New revenue with virtually no increase in fixed expenses; » Export Distribution – Traditional exporter of hardboards, with own structure
Slide 35: Investor Relations Contacts
Investor Relations Contacts José Antonio G. de Carvalho Executive VP and IRO Sergio Henrique Ribeiro Controller Waneska Bandeira Investor Relations +55 (11) 3049-2473 ri@eucatex.com.br www.eucatex.com.br/ri 35
Eucatex S.A. Indústria e Comércio — Q3 2009 Earnings Presentation on 6ix