Earnings Release 2Q10 · Earnings Release 2Q10 July 28, 2010. Important Note This release contains...

Earnings Release 2Q10

July 28, 2010

Important Note

This release contains forward-looking statements subject to risks and

uncertainties. Such forward-looking statements are based on the

management’s beliefs and assumptions on information currently available to

the Company. The reservations as to forward-looking statements also apply to

information on possible or presumed operating results, as well as any

statements preceded, followed or including words such as

A TRADITION OF INNOVATION

“believes”, “may”, “will”, “expects”, “intends”, “plans”, “estimates” or similar

expressions. Forward-looking statements are not performance guarantees;

they involve risks, uncertainties and assumptions because they refer to future

events and, therefore, depend on circumstances which may or may not occur.

Future results may differ materially from those expressed or suggested by

forward-looking statements. Many of the factors which will determine these

results and figures are beyond Romi’s control or prediction capacity.

2

Highlights

• In 2Q10 new orders grow 81.3% as compared to 2Q09 and reach R$ 2 08

million. In relation to 1Q10 growth was 31.5%;

• Net operating revenue reaches R$ 167.6 million in 2Q10, an in crease of

61.1% over 2Q09 and of 15.5% over 1Q10;

• Orders backlog remains steady, to the tune of R$ 225.4 millio n in 2Q10,


with growth of 7.7% over 1Q10 and 133.4% in relation to 2Q09;

• EBITDA stands at R$ 23.7 million in 2Q10, with margin of 14.1% and

growth of 27.7% over 1Q10;

• Strong growth in revenue from Plastic Processing Machines;

• Romi reaches the mark of 150,000 machines produced in its

manufacturing units.

3

Product Line

Machine ToolsMachine Tools Plastic Processing MachinesPlastic Processing Machines CastingCasting

10 N

et S

ales R$ 199.0 MM R$ 82.6 MM R$ 31.2 MM


26%

10%

26%

10%

26%

10%

1H10

4

64% 64% 64%

Economic Indicators

GDP GDP –– Industrial GDP Industrial GDP –– Gross Fixed Capital Gross Fixed Capital FormationFormation


10,0

15,0

20,0

25,0

30,0

Source: IBGE (QxQ)

5

-20,0

-15,0

-10,0

-5,0

0,0

5,0

GDP Indl GDP Investments

08-I 08-II 08-III 08-IV 09-I 09-II 09-III 09-IV 10-I

Industry Confidence Indicator

ICEI ICEI –– Industry Confidence IndicatorIndustry Confidence Indicator


60.3 58.1 58.2

68.7 66.0

63,4 60

70

Source: CNI

6

47.4

40

50

jan/07 apr/07 jul/07 oct/07 jan/08 apr/08 jul/08 oct/08 jan/09 apr/09 jul/09 oct/09 jan/10 apr/10 jun/10 jul/10

Capacity Utilization - Brazilian Industry

Capacity Utilization of some industrial sectors Capacity Utilization of some industrial sectors


Plastic and Rubber Goods

Basic Metal Parts

Automotive

90

95

100

Source: Fiesp

7

Metal Goods – excl.Machinery

Machinery and Equipment

70

75

80

85

08-1 08-2 08-3 08-4 08-5 08-6 08-7 08-8 08-9 08-1008-1108-12 09-1 09-2 09-3 09-4 09-5 09-6 09-7 09-8 09-9 09-1009-1109-12 10-1 10-2 10-3 10-4 10-5

Machine Tools – Sales main sectors

Job Shops

Autom

otive

Capital

Goods

Technical

Schools

Tooling

Agricultural

Equipm

ent

Oil &

Gas

Others

CNC Lathes – Flat Bed

Heavy CNC Lathes

Machining Center


Machining Center

CNC Lathes Combination

CNC Lathes Slant

Conventional Lathes

MF Net Rev. 1H10 21% 10% 15% 10% 6% 4% 6% 28%

MF Net Rev. 2009 16% 12% 13% 3% 9% 5% 10% 32%

Moderate LowHigh

8

Plastic Machines and Castings – Sales main sectors

SECTORROL %

1H10 2009

Packaging 28% 26%

SECTORROL %

1H10 2009

Automotive (Trucks) 70% 58%

Plastic MachinesPlastic Machines CastingsCastings


Packaging 28% 26%

Job Shops 13% 13%

Automotive 25% 17%

Home Appliances 12% 3%

Home Utilities 4% 11%

Others 18% 30%

Automotive (Trucks) 70% 58%

Electricity Generation

4% 23%

Agriculture 17% 14%

Automotive (Cars) 3% 1%

Capital Goods 6% 4%

9

Order EntryA TRADITION OF INNOVATION

Order Entry (R$ thousands) 1Q10 2Q10 % Chg. 2Q09 2Q10 % C hg.Machine Tools 94,084 132,784 41.1 73,964 132,784 79.5Plastic Machines 42,138 53,187 26.2 31,441 53,187 69.2Rough and Machined Cast Iron Parts 21,968 22,065 0.4 9,332 22,065 136.4Total 158,190 208,036 31.5 114,737 208,036 81.3

10

Order Entry (R$ thousands) 1H09 1H10 % Chg.Machine Tools 108,004 226,868 110.1Plastic Machines 46,600 95,325 104.6Rough and Machined Cast Iron Parts 12,953 44,033 239.9Total 167,557 366,226 118.6

Continuous Growth and Profitability

Net Revenues (R$ MM)Net Revenues (R$ MM) EBITDA and EBITDA Margin (R$ MM)EBITDA and EBITDA Margin (R$ MM)


85.3 92.7 110.6

133.7 122.3

29.1

19.1% 18.2%20.1%

21.2%

17.6%

6,1%380.6 435.3 483.5549.9 587.8

412.8

65.175.3

65.4

82.1108.3

62.6

548.9

445.7510.6

696.1632.0

475.4

11

7.2 8.9

22.9

18.6

23.7 7.0% 7.3%

13.2% 12.8% 14.1%

2Q09 3Q09 4Q09 1Q10 2Q10

90.4109.2

154.9 134.0

15.0

13.7

12.8

18.7

11.2

2Q09 3Q09 4Q09 1Q10 2Q10

Exports Domestic

122.0

104.1

173.6

145.1

167.6

152.6

2004 2005 2006 2007 2008 20092004 2005 2006 2007 2008 2009

Foreign Markets

Foreign Markets Foreign Markets –– 22QQ1010 Foreign Markets Foreign Markets –– US$ MM US$ MM –– 22QQ10 10


6.8

8.422.2%

North America30.9%

Europe

Latin America

8.9%

Africa, Asia & Oceania

0.0%

12

Foreign Markets Foreign Markets –– 1H101H10 Foreign Markets Foreign Markets –– US$ MM US$ MM –– 1H101H10

2Q09 2Q10

14.4 14.6

1H09 1H10

1.5%

Europe60.2%

North America33.1%

Europe59.2%

Latin America

7.0%

Africa, Asia & Oceania

0.7%

Cost Structure Cost Structure –– Consolidated Consolidated –– 1H091H09

Cost of Goods Sold

26%

10%

8%

15%

Domestic Material and Components

Domestic Materials and Components FX related

Metals

Imported Materials and Components


Material59%

Labor31%

Depreciation4%

Other Expenses

6%

Cost Structure Cost Structure –– Consolidated Consolidated –– 1H101H10

27%

13%

10%

17%

Domestic Material and Components

Domestic Materials and Components FX related

Metals

Imported Materials and Components

13

Material67%

Labor24%

Depreciation4%

Other Expenses

5%

Consolidated MarginsA TRADITION OF INNOVATION

R$ MM 2Q10 1Q10 2Q09 QoQ YoY 1H10 1H09 YoY

Gross Profit 59.6 52.2 31.2 14.2% 90.9% 111.8 56.5 97.8%

Gross Margin 35.6% 36.0% 30.0% -0.4 p.p. 5.6 p.p. 35.7% 31.4% 4.3 p.p.

14

EBITDA 23.7 18.6 7.2 27.5% 227.3% 42.3 -2.7 1,675.2%

EBITDA Margin 14.1% 12.8% 7.0% 1.3 p.p. 7.1 p.p. 13.5% -1.5% 15.0 p.p.

Net Income 15.2 10.6 0.5 43.6% 2,914.5% 25.8 -7.3 451.6%

Net Margin 9.1% 7.3% 0.5% 1.8 p.p. 8.6 p.p. 8.2% -4.1% 12.3 p.p.

Business UnitsNet Revenue and Sales Volume



Machine Tools

R$ mm 96.1 102.9 64.6 -6.6% 48.8% 199.0 114.9 73.2%

Units Sold 538 526 319 2.3% 68.7% 1,064 565 88.3%

15

Plastic Machines

R$ mm 53.7 28.9 28.9 85.8% 85.8% 82.6 44.3 86.5%

Units Sold 119 83 61 43.4% 95.1% 201 86 133.7%

Rough and Machined Cast

R$ mm 17.8 13.4 10.6 32.8% 67.9% 31.2 20.6 51.5%

Tons Sold 3,016 2,423 1,952 24.5% 54.5% 5,449 3,778 44.2%

Business Units MarginsA TRADITION OF INNOVATION


Machine Tools

Gross Margin 42.7% 41.2% 33.7% 1.5 p.p. 9.0 p.p. 41.9% 37.6% 4.3 p.p.

EBIT Margin 16.8% 16.1% 10.3% 0.7 p.p. 6.5 p.p. 16.4% 1.3% 15.1 p.p.

Plastic

16

Plastic Machines

Gross Margin 34.4% 31.6% 36.2% 2.8 p.p. -1.8 p.p. 33.4% 37.3% -3.9 p.p.

EBIT Margin 6.2% -5.6% -3.8% 11.8 p.p. 10.0 p.p. 2.1% -15.0% 17.1 p.p.

Rough and Machined Cast

Gross Margin 0.6% 5.4% -9.5% -4.8 p.p. 10.1 p.p. 2.7% -15.4% 18.1 p.p.

EBIT Margin -9.8% -7.6% -25.8% -2.2 p.p. 16.0 p.p. -8.9% -32.7% 23.8 p.p.

Cash Position

Loans as of 06/30/2010: 240.8

The maturities of financing recorded as follow:

Year Amount 2010 23.22011 11.8

Amount Bank Certificate of Deposit (CDB) 3 7.8Financial Investments with debentures 19.0Time Deposit - Abroad 167.2Banks 10.9Total 234.9

Cash and Cash Equivalent Cash and Cash Equivalent –– R$ MMR$ MM Loans Loans –– R$ MMR$ MM


2011 11.82012 108.02013 31.42014 23.5After 2014 42.9Total 240.8

Net Debt = 5.9

17

Capital MarketsA TRADITION OF INNOVATION

15.000.000

20.000.000

25.000.000

120

140

160

180hare Performance (ROMI3) vs. Bovespa Index (Basis: 100) - R$/Share

Period: June/2008 - June/2010

IBOVESPA: -6%

Source: BM&F Bovespa

18

-

5.000.000

10.000.000

0

20

40

60

80

100

Jun-

08

Aug

-08

Sep

-08

Nov

-08

Dec

-08

Feb

-09

Mar

-09

May

-09

Jun-

09

Jul-0

9

Sep

-09

Oct

-09

Dec

-09

Jan-

10

Mar

-10

Apr

-10

Jun-

10

ROMI3: -32%

• Novo Mercado – Joining the Novo Mercado in March 2007positioned Romi in Bovespa’s highest level of CorporateGovernance

• Tag along - 100%

• Board of Directors – One year term, 8 members, being 4indicated by shareholders and 4 independent

• Diffuse Capital - New shares issued and sold in the April PublicOffering increasing the free float to 52.6%.

• Brazilian Institute of Corporate Governance (IBGC) Award –Best evolution on Corporate Governance – 2007

• Full IFRS report – One of the first Companies to reporting onInternational Financial Reporting Standards since 12/31/2007.

• CPC s - early adoption – One of the first Companies to early

Ownership StructureOwnership Structure

Fenix (1) Romi / ChitiFamilies

FundaçãoRomi

Free Float

36.3% 9.2% 1.9% 52.6%

Corporate GovernanceA TRADITION OF INNOVATION

• CPC´s - early adoption – One of the first Companies to earlyadopting the statements issued by the Comitê dePronunciamentos Contábeis - CPC.

• ISE – Corporate Sustainability Index – benchmark in the Brazilianmarket for socially and environmentally responsible investments.Romi Joined this Index in December 2009.

(1) Chiti, Romi families.

84%

19


Indicators 2010Previous – Oct/2009

2010Revised – July/2010

Net Operating Revenue Growth

20% to 30% 35% to 40%

EBITDA Margin - 2010 6% to 12% 14% to 17%

Guidance 2010 - Revised

20

CAPEX R$ 45Million R$ 45Million

AssumptionsMaintenance of the actual economic environmentand exchange rate stability.

Livaldo Aguiar dos Santos

CEO – Chief Executive Officer

55 19 3455-9588

[email protected]

www.romi.com

Luiz Cassiano R. Rosolen

Investor Relations Officer

55 19 3455-9004

[email protected]

www.romi.com

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