20140214 tereos internacional_presentation_en

Tereos InternacionalThird Quarter 2013/14 Results

São Paulo – February 14th, 2014

Q3 2013/14 Highlights

2

Operational

Guarani:

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%)

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

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:

Higher grinding in the quarter compared to last year due to continuous improvement of Lillebonne operational performance

A&E margin improving versus last year and S&S contribution increasing sequentially

Cost and efficiency improvement programme “Performance 2015” progressing

Cereals Brazil:

Improved starch sales volumes while glucose sales ramping up; customers’ certification process ongoing

Strategic

Cereals Asia: Acquisition of 50% of Redwood Indonesia establishing presence in Indonesia, Asia’s third largest market for sweeteners. Closing pending regulatory approvals

Sugar:

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.

BRL/USD devaluation during the quarter (-7%) helped to offset the drop of raw sugar prices for Brazilian producers

Starch:

Mar, 2014 wheat future prices appreciated around 7% from Oct 1st to Dec 31st

The drop in wheat prices since beginning of January has lowered significantly the wheat to corn spread

Ethanol:

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

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

3 Source: Bloomberg

Market Highlights

Jan-13 Apr-13 Jul-13 Oct-13

400

430

460

490

520

550

580

14

15

16

17

18

19

20

21

LIFFE#5 NY#11

US$/MT


150

170

190

210

230

250

270

Corn MATIF Wheat MATIF

€/MT


700

900

1100

1300

1500

1700

1900

400

450

500

550

600

650

700

Brazil ESALQ Europe Rotterdam

R$/m³ €/m³

Q32012/13

Currency Volume Price & Mix Others Q32013/14

1,903 2,015

+217

(35) (46) (25)

Q3 2012/13 Q3 2013/14

219 210

847 1,014

281250

557540

Starch Europe

Ethanol Europe

Holding

Series1

1,9032,015

Q3 2013/14 – RevenuesPositive Effect of BRL Devaluation and Improvement in Lillebonne Volumes

4

Net Revenues (R$ MM)

+5.9% +5.9%

Revenue was positively impacted by:

Higher ethanol prices and improved energy sales volumes in Brazil

Better performance of Lillebonne on higher volumes of ethanol and gluten

Positive currency impact of the weaker Real vs. Euro (-17% Y-o-Y)

But partially offset by:

Lower sugar volumes & prices in Brazil and reduced crop volumes in Africa/Indian Ocean

Slightly lower volumes of sweeteeners combined with overall lower prices

Lower ethanol trading volumes for Tereos Group (end of trading activities)

Net Revenues Evolution by Product

5

December 2012 – 3 Months

Sugar27%

Starch & Sweet-eners30%

Co-products

13%

Alcohol & Ethanol

17%

Others (incl.

Energy)13%

Sugar22%

Starch & Sweet-eners30%

Co-products

17%

Alcohol & Ethanol

18%

Others (incl.

Energy)14%

December 2013 – 3 Months

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

Q32012/13

Brazil Africa / Indian Ocean

StarchEurope

EthanolEurope

Holding Q32013/14

264

+4

(25)

+4+31 +2

279

Q3 2012/13 Q3 2013/14

-2-8 2351

54

85 60

138 142Brazil

Africa / Indian Ocean

Starch Europe

Ethanol Europe

Holding

264279

Q3 2013/14 - Adjusted EBITDAIncreased Contribution of All Businesses, Except for Africa

6

Adjusted EBITDA improved year-on-year as a consequence of:

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)

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

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

Adjusted EBITDA (R$ MM)

Margin 13.9%Margin 13.9%

+5.8%+5.8%

Ethanol Sales (‘000 m³)Sugarcane Crushing (MM t) Sugar Sales (‘000 t)

7

-8.7% YoY -2.5% YoY

Sugarcane Brazil – Production & SalesRecord Sugarcane Crushing at 19.7 million tonnes

Energy Sales (‘000 MWh)

+44.2 YoY

Crushing

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)

Better-than-expected agricultural yields at 92 t/ha vs. 84 t/ha in 2012/13

Mechanical harvesting at 93% for own sugarcane

Improvement in production

Overall production up 10% to 2.5 Mt (expressed in TRS)

Mix: 63% sugar, 37% ethanol vs. 64% / 36% last year

Sugar: 1.5 Mt +9% YoY

Ethanol: 535 Km³ +13% YoY

Progress on cogeneration

YTD energy sales (including trading) up 48% to 695 GWh

0.0% YoY

Q3

12/

13

Q3

13/

14

4,9 4,9

Q3

12/

13

Q3

13/

14

367 335

Q3

12/

13

Q3

13/

14

135 132

Q3

12/

13

Q3

13/

14

116 139

29

70

Own Sales Trading

Q3 2012/13

Price & Mix

Volume Price & Mix

Volume Others Q3 2013/14

556.8 540.4

(12)(32)

+21

(4)

+10

Sugarcane Brazil – FinancialsImproved EBITDA Despite Lower Volumes and Prices

Key Figures

In R$ Million

Q3

2013/14

Q3

2012/13 Change

Revenues 540 557 -3%

Gross Profit 92 84 +9%

Gross Margin 17.0% 15.1%

EBIT 24 6 +282%

EBIT Margin 4.4% 1.1%

Adjusted EBITDA 142 138 +3%

Adjusted EBITDA Margin 26.2% 24.8%

8

(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.


-3.0%

Sugar Ethanol

Sugar: 55% of total net revenues

Volumes reduced -9% to 335 Kt

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

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

Stable volume crushed Y-o-Y, but production down 5% (expressed in TRS) on lower sugar content

Adjusted EBITDA: R$142 million

Improvement in profitability thanks notably to first benefits from Guarani 2016

Adjusted EBITDA Margin1 for Q3 13/14 including tilling as depreciation: 34%

-27.8% YoY

Sugarcane Africa/Indian Ocean – Production and Financials Climate Conditions Impacted Crushing Volumes

9

Sugarcane Crushing (’000 t) Sugar sales (‘000 t)

-23.3% YoY

Key Figures

In R$ Million

Q3

2013/14

Q3

2012/13 Change

Revenues 250 281 -11%

Gross Profit 58 100 -42%


EBIT 22 49 -55%


Adjusted EBITDA 60 85 -30%


Revenue Breakdown by Product Sugarcane crushing

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

Adjusted EBITDA: -30% Y-o-Y Solid performance in Indian Ocean, more than

offset by the impact of reduced crop volumes in Africa

Sugar In-dian Ocean

56%

Sugar Africa 19%

Trading and others

25%

Q3

12/

13

Q3

13/

14

1,176

849

Q3

12/

13

Q3

13/

14

86

66

Cereal Segment - Production and SalesHigher Grinding on Recovery of Lillebonne Production and Palmital Ramp-up

10

Cereal Grinding (‘000 t)

Starch & Sweeteners Sales (‘000 t)

+9.3% YoY -1.9% YoY

Co-products Sales (‘000 t)

+5.4% YoY

Alcohol & Ethanol Sales (‘000 m3)

-3.7% YoY

Grinding in Q3 13/14: +9% mostly driven by better performance at Lillebonne and ramp-up of Palmital corn factory

Starch & Sweeteners sales: -2% Reduction in sales of functional sweeteners and specialties, but some growth in starch thanks to prior year investment at Marckolsheim

Alcohol & Ethanol sales: -4% Significant recovery in own volume sold thanks to improved performance at Lillebonne. Lower ethanol trading sales for Tereos Group (end of trading activity)

Q3

1...

Q3

1...

742 811

Q3

12/1

3

Q3

13/1

4

412 404

Q3

12/1

3

Q3

13/1

4

5079

5825

Own Sales Trading

+58.0% YoY

Q3

12/1

3

Q3

13/1

4

276 291

Q3 2012/13

Volume Price & Mix

Cur-rency

Others Q3 2013/14

846.91,014

+47

(28)

+140 +8

Starch & Sweeteners – FinancialsPositive Volume and Currency Effect Led to Higher Revenues and EBITDA

11


+19.7%

Revenues: R$1,014 million, up 20%

Positive effect of Real devaluation vs. Euro (-17% on average Y-o-Y)

Higher starch and co-products sales, particularly gluten, more than compensated for lower sweeteners volumes and led to a positive +6% volume effect

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

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

Key Figures

In R$ Million

Q3

2013/14

Q3

2012/13 Change

Revenues 1,014 847 +20%

Gross Profit 160 139 +16%


EBIT 3 10 -71%


Adjusted EBITDA 54 51 +7%


Q32012/13

Volume Price & Mix Currency Others Q3 2013/14

219 210.1

(32) (7)

+38

(7)

Alcohol & Ethanol Europe – FinancialsLower Wheat Prices and Better Industrial Performance at Lillebonne

Revenues: R$210 million, down 4%

Better industrial performance led to higher ethanol volumes

Lower volumes traded on behalf of Tereos and lower FOB Rotterdam prices

Adjusted EBITDA: R$23 million, up Y-o-Y

Benefit from lower wheat prices and fixed cost dilution on better capacity utilization

12


Revenue Breakdown by Product

Key Figures

In R$ Million

Q3

2013/14

Q3

2012/13 Change

Revenues 210 219 -4%

Gross Profit 22 -2 -979%

Gross Margin 10.3% -1.1%

EBIT 10 -19 -154%

EBIT Margin 4.8% -8.5%

Adjusted EBITDA 23 -8 -380%


- 4.0%

Ethanol own sales

69%

Ethanol traded 24%

Co-products

and other 7%

Q3 2012/13 Brazil Africa / In-dian Ocean

Starch Eu-rope

Ethanol Eu-rope

Q3 2013/14

203170

+34 +1

(58)(10)

Q3 2013/14 - Capital ExpendituresNear completion of CAPEX Programs Leading to Lower Investments Y-o-Y

13

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

• Primarily maintenance and plantation in Mozambique

Starch & Sweeteners: R$34 million

• Finalization of 1st phase of investments in Brazil corn starch facility

Alcohol & Ethanol Europe: R$3 million

• Factory maintenance at Lillebonne and DVO

-16.2%

CAPEX (R$ MM)CAPEX (R$ MM)

Brazil70%

Africa / Indian Ocean

8%

Starch Europe

20%

Ethanol Europe

2%

14

Cash Flow Reconciliation & Debt Composition

Working Capital: Peak level of inventories due to intercrop sales commitments in Brazil

Currency Effect on Debt: Devaluation of the Real against Euro and USD

Net Debt/Adjusted EBITDA: 4.9x vs. 4.2x on March 31st, 2013

Cash FlowIn R$ Million

9M 13/14

Adjusted EBITDA 830

Working capital variance (736)

Others (84)

Operating Cash Flow 10

Financial interests (151)

Dividends paid and received 3

Capex (590)

Others 135

Free Cash Flow (593)

Forex impact (603)

Others (1)

Net Debt Variation (1,197)

DebtIn R$ Million

Dec 31st, 2013March 31st,

2013 (Restated)∆

Current 1,932 1,829 103

Non-current 2,968 2,399 569

Amortized cost (27) (26) (1)

Total Gross Debt 4,873 4,202 671

In € 1,889 1,596 293

In USD 1,918 1,688 230

In R$ 1,047 882 165

Other currencies 46 62 (16)

Cash and Cash Equivalent (585) (892) 308

Total Net Debt 4,288 3,310 979

Related Parties Net Debt 229 13 217

Total Net Debt + Related Parties 4,519 3,322 1,197

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

Dongguan construction and Tieling diversification plan in China

Closing of the acquisition of Redwood Indonesia15

Outlook

IR Contact

Marcus ThiemeInvestor Relations Officer

Felipe MendesInvestor Relations Manager

Phone: +55 (11) 3544 4900Email: [email protected] www.tereosinternacional.com

20140214 tereos internacional_presentation_en

Investor Relations

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