15ª conferência latina citigroup

THE LARGEST BRAZILIAN BIODIESEL COMPANY

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Biodiesel aspectsBiodieselBiodiesel aspectsaspects

• Biodiesel can be produced from any vegetable oil such as soy, sunflower, rapeseed, palm or castor plant, as well as from animal fat:

– Simple and well known production technology

• Renewable and alternative fuel:

– Perfect substitute to mineral diesel fuel - no need to adapt diesel engines

– Positive energy balance on production

– Up to 78% reduction on carbon emissions

– Reduction of sulfur emissions

– Less risk to environment due to its biodegradability

– Potential to support social and human development on rural areas

The best potential biofuel to replace fossil fuels

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Global Market trendsGlobal Market trendsGlobal Market trends

The Biodiesel market offers high growth potential, and access to vegetable oil will be a key factor of success.

• Strong increase in production and demand for biofuels due to environmental issues

• Exports to European Union increase significantly due to setting of compulsory targets on future biofuels consumption

• Vegetable oils traded in market maintain high prices due to increase in demand

Global Biodiesel Production 2002-2010 (‘000 MT)

CAGR = 39,7%

Source: Oleoline

4.3206.480

10.000

1.065

2.200

800

30

1.000

3.800

400

5

1.000

-2.0004.0006.0008.000

10.00012.00014.00016.00018.000

2002 2006 2007 2010

Europe USA Rest of the World

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Brazilian market trendsBrazilian market trendsBrazilian market trends

• Brazilian Biodiesel Law: Definition of minimum blending targets of biodiesel into mineral diesel

(1) Source: National Agency for Petroleum, Natural Gas and Biofuels – ANP.(2) * Considering B5 anticipation announced by President Lula on Davos.

2005 - 2007 2010 on*2008 - 2009

Mandatory 5% Minimum Blend

Blend of up to2%

Mandatory 2% Minimum Blend

• Brazilian biodiesel market will increase significantly due to large diesel consumers adoption of higher blends (B20 or B30)

• São Paulo urban transport company starting to use a B20 blend

• Municipality of Belo Horizonte antecipated to March 2007 the mandatory use of B2 on urban transportation

• Several other companies are testing higher blends – steel, mining, energy generation, railroads, road and urban transportation

68,5

2400

840

0

500

1.000

1.500

2.000

2.500

3.000

2006 2008/2009 2010

thou

sand

m3

5

Storage Facilities for Vegetable Oil and Grains: 32

Biodiesel Plants: 07

Oil Extraction Units: 05

Brasil Ecodiesel OverviewBrasilBrasil EcodieselEcodiesel OverviewOverview

• Major biodiesel producer in Brazil

• Only producer with a nationwide presence

• Presence on 19 states, with approximately 1,400 employees

• Innovative and diversified strategy on the origination of raw materials – Network of 42,000 farmers integrating its activities

• Adherence to the highest international environmental practices

• 3 in operation• 3 in construction• 1 in planning

• 1 in operation• 4 in construction

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Clear Leadership in Brazilian MarketClear Leadership in Brazilian MarketClear Leadership in Brazilian Market

Source: National Agency for Petroleum, Natural Gas and Biofuels – ANP.

Clear leadership in the Brazilian market, in terms of installed capacity, biodiesel effectively produced and contracts signed.

27

282

800

0

100

200

300

400

500

600

700

800

900

2005 2006 2007E

thou

sand

m3

Installed Capacity (ths m3)

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SOYBEANSOYBEAN

•• 18 18 -- 20% Oil in the 20% Oil in the seedseed

•• ~440 kg of oil / ha~440 kg of oil / ha

•• Global Commodity Global Commodity

•• Technologically Technologically DevelopedDeveloped

•• Non perennialNon perennial

•• EdibleEdible

•• Intensive in BrazilIntensive in Brazil

SUNFLOWERSUNFLOWER



•• Domestic Domestic CommodityCommodity

•• Technologically Technologically DevelopedDeveloped


•• EdibleEdible

•• Incipient in BrazilIncipient in Brazil

CASTORCASTOR



•• Narrow global Narrow global market market

•• Low technological Low technological developmentdevelopment


•• Non EdibleNon Edible

•• Restricted to BrazilRestricted to Brazil

JATROPHAJATROPHA

•• 30 30 -- 39% oil in the 39% oil in the seedseed


•• Inexistent marketInexistent market

•• Low technological Low technological developmentdevelopment

•• PerennialPerennial

•• Non EdibleNon Edible

•• Incipient in BrazilIncipient in Brazil

Comparison between some feedstocks used for biodiesel production

Brasil Ecodiesel strategyBrasilBrasil EcodieselEcodiesel strategystrategy

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Brasil Ecodiesel StrategyBrasil Ecodiesel Brasil Ecodiesel StrategyStrategy

FOCUS ON NON EDIBLE AND HIGH OIL YIELD CROPS:• Better Relation Between Oil and Meal/Cake• Availability of Land• Labor Intensive – Positive Social and Human Development Impact

Soy and palm oil prices have risen sharply in 2006 due to the expectation of increase in demand that biofuels will cause

Marginal UseMarginal Use Production ExpansionProduction ExpansionOil Meal Oil Cake Oil Cake

SOYA

SUNFLOWER CASTOR JATROPHA CURCAS

1,0

4,04,0

1,01,0 1,01,0 1,01,0 1,01,0 1,01,01,51,5

Oil Meal

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Complementarity

JatrophaJatropha CurcasCurcas

FamilyFamily farmersfarmersandand OwnOwn landland

CastorCastor

FamilyFamily farmersfarmers

SunflowerSunflower

IntensiveIntensivefarmersfarmers

Soy OilSoy Oil

Oil industriesOil industries

Strategy: Vegetable oils mixStrategy: Vegetable oils mixStrategy: Vegetable oils mix

Diversified sourcing of vegetable oils mitigates risks and benefits from Brazilian agricultural potential.

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ContractContract Raw Material / ToolsRaw Material / Tools TrainingTraining

Technical AssistanceTechnical AssistanceCollect and HullCollect and Hull

PaymentsPayments

TransportationTransportation

StorageStorage TransportationTransportation

Integrated Operating ProcessIntegrated Operating Process

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TransesterificationTransesterificationStorage TanksStorage Tanks

CertificationCertification BiodieselBiodiesel DeliveryDelivery

Quality ControlQuality Control

ShipmentShipment

Integrated Operating ProcessIntegrated Operating Process

StorageStorage Oil ExtractionOil Extraction StorageStorage

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Vegetable oils mix and sourcingVegetable oils mix and sourcingVegetable oils mix and sourcing

• Brasil Ecodiesel aims to reduce Soy Oil usage.

Feed

stoc

k So

urci

ng

70%

20%

18%

45%

12%30%

5%

2007 2010

20%20%

20%20%

25%25%

35%35%

Own Land

Intensive farmers

Family farmers

OIL MARKET

SUNFLOWER

CASTOR

JATROPHA

Oil Market

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Communitarian Production Nucleus Integration Network for Family Farmers

• Focus on new crops intensive in labor is part of Brasil Ecodiesel’sstrategy:

– Assured supply – Loyalty programs with feedstock suppliers

– Institutional solidity – Relationship with rural area organizations

– Tax Incentives

• Santa Clara Nucleus, established in 2003

• ~ 100,000 by the end of 2007

Human and Social DevelopmentHuman and Social Development

7676

76 Regional Offices76 Regional Officescovering covering

1,200 Municipalities1,200 Municipalities

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Highlights after IPOHighlights after IPOHighlights after IPO

Source: National Agency for Petroleum, Natural Gas and Biofuels – ANP.(1) volume assured by the Company in the biodiesel auctions, less the volume already delivered on 2006.

Positive:

• Start of operations of Crateús and Iraquara plants

• Acquisition of two crushing facilities

• Final phase of construction of 3 new plants

• Announcement of B5 anticipation to 2010

• Capex reduction due to optimization on production capacity and land acquisitions

Negative:

• Ethanol demand in USA increased demand for corn

• Higher corn prices displaced land from soy to corn production

• In Brazil, plantation of corn caused insufficient sourcing of sunflower, resulting in major soy oil dependency in 2007

• Delays on delivery due to off-takers´ logistic difficulties

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January – December 2006

Financial HighlightsFinancial HighlightsFinancial Highlights

1.839

5.8394.531

12.78013.637

8.414

30.448

18.296

8,9%

17,6%

23,8%

9,9%

0,0

5.000,0

10.000,0

15.000,0

20.000,0

25.000,0

30.000,0

35.000,0

1Q06 2Q06 3Q06 4Q060,0%

5,0%

10,0%

15,0%

20,0%

25,0%

Sales (m3) Gross Revenues (R$ ths) Gross Margin

• Key Financial Figures

(In R$ ’000)

Biodiesel Sales and revenues:

-71,9%(38,086)Net Loss

-0,1%(41)Income Taxes

0,2%86Non- Operational Result

-6,5%(3,444)Financial Result

-53,7%(28,419)IPO Expenses

-27,5%(14,575)Operational Expenses

15,7%8,307Gross Profit

-84,3%(44,640)COGS

100,0%52,947Net Revenues

-24,8%(13,108)Taxes

124,8%66,055Total Gross Revenues

2006 Net Loss caused by:

- IPO expenses

- Lower than expected sales

- Increase in feedstock costs

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Brasil Ecodiesel at the end of 2007BrasilBrasil EcodieselEcodiesel at the end of 2007at the end of 2007

300,000 hectares 300,000 hectares withwith

Agricultural Agricultural partnerspartners

Other 50,000 Other 50,000 hectareshectares

of own landof own land

20,000 20,000 own land own land

hectares w/ hectares w/ JathophaJathopha

5 crushing5 crushingfacilitiesfacilities

CapexCapex of of US$ 90 millionUS$ 90 million

7 7 biodieselbiodieselfacilitiesfacilities

800.000 m800.000 m33 ofofBiodieselBiodiesel capacitycapacity

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Leadership in the

Brazilian Market

Integrated Operating Process

Strong Export

Potential

Innovative Feedstock

Supply Model

Human and Social

Development

Production Flexibility

Decentralized Operating Structure

Investment RationaleInvestment Rationale

Well Defined Growth Strategy

THE LARGEST BRAZILIAN BIODIESEL COMPANY

15ª conferência latina citigroup

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