Duratex - 3rd Quarter 2004
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3rd Quarter of 2004
November/2004
www.duratex.com.br
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Strategic Management and Outstanding Performance
Strategic positioning and advantages given the favorable moment
CAPEX with accelerated return
Technology, product innovation and recognized brand names
Presence in new markets
Financial strength focused in creating value
Commitment with better Corporate Governance practices
1
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Strategic Management and Outstanding Performance
Strategic positioning and advantages given the favorable moment
CAPEX with accelerated return
Technology, product innovation and recognized brand names
Presence in new markets
Financial strength focused in creating value
Commitment with better Corporate Governance practices
2
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Business Segments
Wood
HardboardParticle BoardMDF/HDF/SDFLaminate FlooringCeiling and Wall Paneling
Metal FittingsVitreous ChinaAccessories
3
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Competitive Advantages
Wood
Strong Brand Names - Deca and Hydra
Market Leadership, with predominance in
higher end products
Active Policy in Developing new Products
Continued Merchandizing Activity
Leadership – Market Share
Scale
Diversified Product Line
Self-sufficiency in Wood Supply
Ecologic and environmental aspects
- ISO 14.001 and Green Label
4
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Net Revenues Breakdown
Net Revenues (Jan – Sep / 2004)
Vitreous China10%
Hardboard 26%
Particle Board 14%
Inter D+ 1%Laminate Flooring 7%
Metal Fittings 22%
MDF/HDF/SDF 20%
Wood Division 68%
Deca Division 32%5
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Countrywide Presence
Distribution Channel
Wood Deca
Retail24%
Furniture Makers
58%
Technical Sales 6%
Other6%
Wholesale 14%
Civil Construction 7%
Home Centers18%
Other 2%B2B + Telemktgs 3%
Civil Construction6% Retail
56%
6
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Strategic Management and Outstanding Performance
Strategic positioning and advantages given the favorable moment
CAPEX with accelerated return
Technology, product innovation and recognized brand names
Presence in new markets
Financial strength focused in creating value
Commitment with better Corporate Governance practices
7
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Competitive and Opportunistic CAPEX
Highlights 2000 - 2004
New MDF / HDF/ SDF lineParticle BoardNew Low Pressure Coating LineCut-to-Size SawAutomate Production Processes
(Deca)Expansion of Vitreous China Unit –
Two new kilnsAcquisition of Timberland
MDF/HDF/SDF Unit - Botucatu/SPAutomated Assembling Line –Metal Fittings
New kiln – production capacity of 960 thousand pieces/year
Cut-to-Size Saw
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Capital Expeditures Plan
CAPEX & EBITDA (R$ M)
86,8
172,8
303,0
139,4138,965,474,1
321,0
224,6210,4187,5199,4
158,0
114,3
1998 1999 2000 2001 2002 2003 9m04 *
CAPEX * EBITDA annualizedEBITDA9
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Growth Potential
Industrial Capacity & Occupancy Rate
Jan Jan –– Sep/2004Sep/2004September/2004
360.000 m3/year360.000 m3/year 97,297,2%%88,0%Hardboard
500.000 m3/year500.000 m3/year
76,1%
85,5%
71,9% 83,1%83,1%Particle Board
80,9%80,9%71,5%640.000 m3/year640.000 m3/year MDF/HDF/SDF
14.400 K pieces/year14.400 K
pieces/year 81,1%81,1%Metal Fittings
3.240 K pieces/year3.240 K
pieces/year83,4%83,4%
10
Vitreous China
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Strategic Management and Outstanding Performance
Strategic positioning and advantages given the favorable moment
Investments with accelerated return
Technology, product innovations and recognized brand names
Presence in new markets
Financial strength focused in creating value
Commitment with better Corporate Governance practices
11
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Innovative Products
Release of New Products
2000 8 4 16 17 52001 33 18 14 15 302002 16 24 41 53 322003 14 14 64 21 12Jan-Sep/04 6 4 13 43 36Total 77 64 148 149 115
Hardboard Particle BoardMDF/HDF/SDF
Durafloor/Durawall Metal FittingsVitreous
China
Technological Innovations that allows the development of more value added products
12
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Release of New Products - Deca
WashbasinBasin
Spin LineQuadratta Line
Link Line - Suspended
Chromotherapy Showers Lavatory – Slim Line
13
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Release of New Products - Wood
Durafloor – StudioDurafloor – Pro
Durafloor – Home
Kitchen – MDF Panels Durawall – Sample
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Strategic Management and Outstanding Performance
Strategic positioning and advantages given the favorable moment
Investments with accelerated return
Technology, product innovations and recognized brand names
Presence in new markets
Financial strength focused in creating value
Commitment with better Corporate Governance practices
15
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Flexibility to New Markets
Exports (US$M)
29,7
41,8
33,631,2
+ 24,4 %
9m01 9m02 9m03 9m04
16
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Highlights (Jan – Sep / 2004)
Exports
DECA 9%
WOOD91% Metal Fittings
3%VitreousChina
6%
MDF/HDF/SDF22%
Hardboard60%
Laminate Flooring3%
INTER D+6%
Export Markets
United States 44%
Europe 21%
Asia / Middle East 18%
South / Central America 13%
Others 4%17
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Structured Projects
Furniture - Vitreous China
9 months Sales (in US$)
2004: 2.422 k
2003: 443 k
Clients: Holland, Mexico, South
Africa and Middle East
Showroom (Jundiaí/SP)
Area: 2.000 m²
Product Line: 400 items
9 months Sales (in US$)
2004: 2.486 k
2003: 1.326 k
Fairs: Bolivia, England, Portugal,
Mexico, New Zealand and U.S.
Beginning of shipments to the U.S.
Development of 30 products
+ 446% + 87 %
18
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Strategic Management and Outstanding Performance
Strategic positioning and advantages given the favorable moment
Investments with accelerated return
Technology, product innovations and recognized brand names
Presence in new markets
Financial strength focused in creating value
Commitment with better Corporate Governance practices
19
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Consolidated Income Statement (Jan - Sep)
2004 2003 HA%NET REVENUES 883,4 710,4 24%COGS (488,9) (409,8)Depreciation/Amortization/Depletion (52,8) (41,6)GROSS PROFIT 341,7 259,0 32%% Gross Margin 38,7% 36,5%
OPERATING PROFIT BEFORE FINANC RESULT 184,4 115,6 60%Financial Result (40,8) (46,8)OPERATING PROFIT 143,6 68,8 109%NET INCOME 92,7 41,6 123%% Net Margin 10,5% 5,9%
(R$ Million)
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Performance (Jan - Sep)
(R$ Million)Net Revenues Gross Profit
883,4
710,4
2003 2004
+ 24,3% + 31,9%
+ 123,1%
2003 2004
159,5
240,8
341,7
259,0
2003 2004
+ 50,9% EBITDA
92,7
41,6
2003 2004 21
Net Income
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Quarterly Performance (R$ Million)
3Q04 2Q04 1Q04 4Q03 3Q03
Shipments
Wood (in 1.000 m³) 280,0 271,7 241,2 252,9 259,3
Deca (in million items) 3,7 3,4 3,3 3,5 3,4
Net Revenues 331,4 301,6 250,3 279,2 264,4
COGS 189,6 185,6 166,5 178,2 165,6
Gross Profit 141,9 116,0 83,8 101,0 98,8
Gross Margin 42,8% 38,5% 33,5% 36,2% 37,4%
Operating Result 80,3 68,2 35,9 50,3 47,3
EBITDA 99,4 87,7 53,7 65,2 61,3
EBITDA Margin 30,0% 29,1% 21,5% 23,4% 23,2%
Net Income 43,6 37,8 11,3 22,5 13,4
ROE (annualized) 18,7% 16,8% 5,0% 9,9% 5,9% 22
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Net Revenues Gross Profit
EBITDA Net Income
+ 43,6%
331,4
264,4
2003 2004
+ 25,4%
Third Quarter Performance
(R$ Million)
+ 225,4
%
2003 2004
61,3
99,4
141,9
98,8
2003 2004
+ 62,2%
43,6
13,4
2003 2004 23
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10,59,810,413,314,513,6
2001 2002 2003 9m02 9m03 9m04
793,9
652,6651,5
905,6
881,2
823,6
2001 2002 2003 9m02 9m03 9m04
Shipments
In 1.000 m³
In million items
Wood
24
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Increasing Revenues
Net Revenues (R$ Million)
883,4710,4
618,7
989,6866,9785,3
2001 2002 2003 9m02 9m03 9m04
CAGR: 12,3%
+ 24,3%
25
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EBITDA (R$ Million)
Evolution in Operating Cash Generation
240,8
159,5149,9
224,7210,4187,5
2001 2002 2003 9m02 9m03 9m04
+ 50,9
%CAGR: 9,5%
26
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Performance per Division
EBITDA (R$M) & Margin (%)
Wood
43,9
83,773,6
36,348,1
36,4%34,9%
22,2%25,4%24,7%
3Q03 4Q03 1Q04 2Q04 3Q04
17,5 16,7 17,414,1 15,7
15,4%15,4%
19,9%18,9%20,1%
3Q03 4Q03 1Q04 2Q04 3Q04
27
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Expressive Improvement in Returns
Equity (R$ Million) & ROE (%)
993,5936,6905,1864,1849,7
614,412,6%
6,8%7,9%6,0%
7,9%
1,6%
1999 2000 2001 2002 2003 9m04 *
Equity (R$ M) ROE (%) * ROE Annualized
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Total Debt & Amortization Schedule (as of Sep / 2004)
Amortization Schedule
44,8
410,0
157,991,8
138,6
68,3
224,4
Debt 2004 2005 2006 2007 2008 & Beyond
Domestic Currency
ForeignCurrency
TOTAL DEBT 567,9
Net Debt / Equity 40,1%Net Debt / EBITDA * 1,25
* EBITDA Annualized
Cash R$ 164,9 MNet Debt R$ 402,9M
29
(R$ Million)
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Strategic Management and Outstanding Performance
Strategic positioning and advantages given the favorable moment
Investments with accelerated return
Technology, product innovations and recognized brand names
Presence in new markets
Financial strength focused in creating value
Commitment with better Corporate Governance practices
30
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Statutory Changes and Extraordinary Dividend
Extinction of the Beneficiary Parts (BPs), with an outcome better than market
expectations
Increase of the mandatory dividend from 25% to 30% of the Adjusted Net Income
Termination the priority dividend on capital
Distribution of an extraordinary dividend of R$ 1,30 / thousand shares
Conditions for the Company to join BOVESPA´s Level I of differentiated practices of Corporate Governance
31
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Extinction of the Beneficiary Parts
Present Value R$ 160 million
R$ 143 million
R$ 200 million
R$ 130 million
R$ 185 million
Gradual Phase Out Scheme % of Net Income Distributed to BP holders
2004 7,5%2005 5,0%2006 2,5%2007 0,0%
32
Year
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Increasing Dividends (R$M)
Average Pay-Out from 1995 to 2003: 38,6%
15,1
25,724,623,621,515,115,014,7
11,28,7
15,3
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Extraordinary
Dividend
Dividend
1st Semester
Dividend
2nd Semester
33
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Commitment with Capital Market
Corporate Governance Extinction of the Beneficiary Parts (BPs)
80% Tag-Along Rights to the Preferred Stockholders
Transparency and Communication:
Annual Report of 2003 – Top 20 Listed
Quarterly Results Presentation - Conference Call and Broadcast via Internet
Institutional Website – 104.000 accesses, 45% more than during 2003
Quarterly Release – “Fact Sheet”
APIMEC Annual Presentation – 18th Consecutive Presentation
Periodic Road-Shows
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Improvement in Stock’s Liquidy
Preferred Stock Performance
During the first nine months of the year, Duratex preferred shares have reported an
appreciation of 44%, representing a turnover of 3,6 billion shares worth R$ 301 million.
Avg. daily Number of Trades and Avg. daily Financial Volume
257 19 16
2.979
3971.087 1.311
2002 2003 2004 - beforeRelevant Fact
2004 - afterRel. Fact until Sep/30
Avg. daily Financial Volume(R$ 1.000)
Avg. daily Number of Trades
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Improvement in Stock’s Liquidy
Duratex Preferred Share X Stock Indexes – 100 BASE – 12/30/2003
75
100
125
150
dec/03jan/04
feb/04mar/04
apr/04may/04
jun/04jul/04
aug/04sep/04
12 %
4,5 %
44 %
16 %
Relevant Fact17/Aug/04
DURA4 – R$ 96,00
DURATEX IBOVESPA IBX FGV 100 36
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3rd Quarter of 2004
November/2004
www.duratex.com.br
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Additional Information
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Duratex S.A.
Free Float
Number of Shares: 11.782.716.987
Common: 37%
Preferred: 63% (80% Tag-Along Rights)
Market Cap. in Nov/10: US$ 552,1 M
Pension Funds22,7%
Others24,4%
Itaúsa24,4%
ForeignInvestors
28,4% Treasury0,1%
Preferred Shareholders´Structure – Oct/04
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Performance (Jan – Sep / 2004)
Financial Performance per Division (R$ M)
(R$M) VA% (R$M) VA% (R$M) VA%
Net Revenues 603,5 100% 279,9 100% 883,4 100%
COGS (318,9) 53% (170,0) 61% (488,9) 55%
Depr/Amort/Depl. (38,8) 6% (14,0) 5% (52,8) 6%
Gross Profit 245,8 41% 95,9 34% 341,7 39%
EBITDA 9m2004 193,6 32% 47,2 17% 240,8 27%
EBITDA 9m2003 118,9 25% 40,6 17% 159,5 22%
Wood Division Deca Division Consolidated
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GOGS Breakdown
Performance (Jan – Sep / 2004)
Wood Deca
Work Force37%
Electric Power 4%
Depreciation 8%
Raw Materials48%
Fuel 3%Depreciation 7%
Work Force15%
Wood17%
Raw Materials49%
Fuel 5%
Electric Power 7%
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2004 2003
NET INCOME 92,7 41,6
Depreciation/Amortization/Depletion 56,4 43,9
Interest and FX Variation 28,3 27,6
Provisions 16,6 16,5
SUB-TOTAL 194,0 129,6
Investments in Working Capital (80,4) (56,8)
OPERATING CASH FLOW 113,6 72,8
Consolidated Operating Cash-Flow Statement (R$ M)
Performance (Jan – Sep)
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3rd Quarter of 2004
November/2004
www.duratex.com.br