Tereos apresentacao 1_q14_eng

Tereos Internacional First Quarter 2013/14 Results

São Paulo – August 15th, 2013

Major Reporting Changes

2

Beginning on April 1st, 2013, Tereos Internacional’s financial statements and results presentation will be adjusted for the following practices and, for comparability purposes, prior year results will be presented on a pro-forma basis, applying the new practices retrospectively.

Accounting

Adoption of IFRS 11 (Joint Arrangements): all joint ventures are no longer consolidated proportionally in Tereos Internacional’s balance sheet, income statement and cash flow statement. JVs are now consolidated under the equity method and the impact on the income statement will be limited to the share of profit in associates line.

Operational

Intersegment elimination: Segmental information, in the appendix to the accounts, is now presented on a stand-alone basis (ie. including intra-group sales) as well as on a contributive basis (ie. only external sales). Revenues presented in this document and in the external communication remain on a contributive basis.

Change of segmental classification due to Lillebonne’s diversification: given the beginning of the dextrose line at Lillebonne and considering that this plant’s profile is moving towards the production of food-related applications, all operational (e.g. volumes grinded) and financial figures (excluding alcohol & ethanol sales volumes) are now accounted for under the Starch & Sweeteners segment. Therefore, cereals grinded (and related co-products) in the Alcohol & Ethanol division are only made up of the DVO plant volumes.

R$ Million

Q1 13/14 Q1 12/13

Equity Method Proportional

Consolidation Equity Method

Proportional

Consolidation

Revenue 1,908 1,960 1,622 1,678

Adjusted EBITDA 210 224 134 156

Adj. EBITDA Margin 11.0% 11.4% 8.3% 9.3%

EBIT 47 55 (19) (13)

EBIT Margin 2.5% 2.8% -1.2% -0.8%

Net Debt 4,050 4,219 3,335 3,428

Net Debt including

Related Parties

4,101 4,306 3,592 3,702

List of JVs

Sedalcol France, Sedalcol UK, Sedalcol EU, Sedamyl, Sedamyl Services, Uniglad, Magnolia, Dongguang and Vertente

3

Equity Accounting vs. Proportional Consolidation Method

(Reported vs. Pro-forma)

Q1 2013/14 Highlights

4

Operational

Guarani: Progress in co-generation (Cruz Alta/São José) and capacity expansion (Vertente/Mandu). 2013/14 planting program with c. 30,000 hectares already achieved

Syral Europe:

Lillebonne volumes progressively increasing (capacity utilization: over 80% in Q1 13/14 and over 90% in July)

Progressive dextrose production ramp-up at Lillebonne

Syral Brazil:

Satisfactory start of commercial production at Palmital corn-based starch facility

Strategic

Syral China: Most government approvals of Tieling acquisition obtained

Finance

Dividends: R$37.8 million distributed on June 25th, R$0.0462 per share and a dividend yield of 1.4% (as of March 31, 2013)

Governance

Fiscal Board: Reelection of the current members of fiscal board was approved at AGM

Guarani’s new CEO: Alberto Pedrosa was appointed as Guarani’s CEO replacing Jacyr Costa, who was previously appointed member of Guarani’s Board of Directors, and member of the Executive Committee of Tereos, representing the group’s sugarcane division

Sugar:

Sugar prices remained under pressure as a consequence of a

fourth consecutive world surplus (5.1 million tonnes, LMC) and

a promising crop in Center-South of Brazil (590 million tonnes,

as per UNICA’s last estimates)

Raw sugar prices declined (-6.7%) in the quarter, from 17.7 to

16.4 USD cents/lb. Nevertheless, as of July prices started to

rebound

Starch:

Markets remain bearish for cereal prices due to high productivity

prospects in USA and the start of the harvest period in Europe

Starch volumes are trending up even though prices are under

pressure (especially industrial starches) with new capacity coming

on stream in Europe

Ethanol:

In Brazil, prices remained stable Y-o-Y, despite an increase in

production, due to competitive parity (vs. gasoline) in the quarter.

April/2013 to July/2013 ethanol sales volumes in the Center-

South of Brazil improved 28% Y-o-Y to 8.5 billion m3 due to

higher anhydrous blend (25% as of May 1st).

Rotterdam prices improved substantially Y-o-Y (+7.9%)

but remained largely stable sequentially 5 Source: Bloomberg

Market Highlights

300

400

500

600

700

800

Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13

NY#11 LIFFE #5

US$/MT

170

190

210

230

250

270


Corn Matif Wheat Matif

€/MT

400

500

600

700

800

700

1000

1300

1600

1900


Brazil ESALQ Europe Rotterdam

R$/m³ €/m³

Q1 2013/14 – Revenues Materially Up on Higher Volumes in Brazil and Higher Prices in Europe

6

Net Revenues (R$ MM)

+17.6%

Revenue growth supported by:

Higher sales volumes for the entire sugarcane segment and starch & sweeteners

Higher prices for starch & sweeteners products and ethanol (Brazil and Europe)

But partially offset by:

Lower sugar prices in Brazil

Reduced ethanol volumes in Europe, although capacity utilization at BENP Lillebonne is progressively improving sequentially

279 240

800 1.016

152 191 392

461

Q12012/13

Q12013/14

Brazil

IndianOcean /Africa

StarchEurope

EthanolEurope

1,622

1,908

1622 1908

+110 +47 +91 +38

Q12012/13

Volume Price & Mix Currency Others Q12013/14

134

+87 +11

(12) (8) (1)

210

Q12012/13

Brazil IndianOcean /Africa

StarchEurope

EthanolEurope

Holding Q12013/14

-2 -3 15 9

67 51

16 27

38

125

Q12012/13

Q12013/14

Brazil

IndianOcean /Africa

StarchEurope

EthanolEurope

134

210

Q1 2013/14 - Adjusted EBITDA Adjusted EBITDA Recovery on Weak Q1 12/13 Thanks to Sugarcane

7

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

Significant recovery in volumes in Brazil and related cost dilution, together with positive accounting effect due to late start of the crop

Positive contribution of higher trading activity and favorable sugar sales timing in Indian Ocean/Africa

Adjusted EBITDA for the cereal division improving sequentially

But partially offset by:

Delayed impact of hedging position on cereal costs

Higher energy and input costs in European Alcohol & Ethanol segment on lower volumes

Adjusted EBITDA (R$ MM)

Margin 11.0% Margin 8.3%

+56.7%

107 134

Q1

12/1

3

Q1

13/1

4

Own Sales Trading

4,2 5,7

Q1

12/1

3

Q1

13/1

4

240 303

Q1

12/1

3

Q1

13/1

4

48

137 43

10

Q1

12/1

3

Q1

13/1

4

Own Sales Trading

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

8

+26.2% YoY +25.2% YoY

Sugarcane Brazil – Production & Sales Harvesting Favored by Renewal/Expansion Programs on Higher Number of Crushing Days

Energy Sales (‘000 MWh)

+61.8 YoY

Crushing

Recovery in sugarcane volume: 5.7 million tonnes processed (+34.9%) on higher crushing days (59 days vs. 44 days in Q1 12/13)

Yields improving from 88 tonnes/ha to 95 tonnes/ha in Q1 13/14 (+8.0%) with higher sugar content (+4.0%)

Improvement in production

Overall production (expressed in TRS) up 44% to 719,000 tonnes

Mix: 63% sugar, 37% ethanol

Sugar: 436,000 tonnes +51.9% YoY

Ethanol: 155,000 m³ +32.6% YoY

Progress on cogeneration

Volumes (including trading) up 61.8% to 147 GWh, on slightly lower prices year-on-year

+34.9% YoY

392 461

(47)

+65 +11 +31 +10

Q12012/13

Price &Mix

Volume Price &Mix

Volume Others Q12013/14

Sugarcane Brazil – Financials Improvement in Adjusted EBITDA Favored by Higher Production Volumes

Key Figures

In R$ Million

Q1

2013/14

Q1

2012/13 Change

Revenues 461 392 18%

Gross Profit 93 -6 18x

Gross Margin 20.2% -1.6%

EBIT 18 (68) -127%

EBIT Margin 4.0% -17.5%

Adjusted EBITDA 125 38 227%

Adjusted EBITDA Margin 27.2% 9.8%

CAPEX 122 147 -17%

9

(1) Tereos Internacional allocates tilling expenses as

cost. If tilling expenses were allocated as investment,

Adjusted EBITDA for Q1 13/14 would have reached

R$153.0 million.


Sugar Ethanol

Sugar: 57% of total net revenues

Volumes increased +26.2% to 303,000 tonnes

Average selling price & mix -15.2% Y-o-Y at

870.9 R$/tonne

Ethanol: 36% of total net revenues

Volume sold up +25.2% to 134,000 m3

Prices up 7.3% Y-o-Y at 1,221.4 R$/m3

Cogeneration (ex-trading): R$20.3 million vs.

R$7.2 million in Q1 12/13

Adjusted EBITDA: R$125 million

Increase driven by higher volumes,

positive effect of dilution of fixed costs and

a positive accounting effect of COGS

partially related to the delayed start of the

crop

Adjusted EBITDA Margin1 for Q1 13/14

including tilling as depreciation: 33.2%

Note: Figures for Brazil now exclude JVs

67 77

Q1

12

/13

Q1

13

/14

117 90

Q1

12

/13

Q1

13

/14

-22.7% YoY

Sugarcane Indian Ocean/Africa – Production and Financials Overall Segment Improvement

10

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

+16.3% YoY

Key Figures

In R$ Million

Q1

2013/14

Q1

2012/13 Change

Revenues 191 152 26%

Gross Profit 41 35 17%

Gross Margin 21.6% 23.1%

EBIT 16 11 55%

EBIT Margin 8.6% 7.0%

Adjusted EBITDA 27 16 67%


CAPEX 37 37 - Revenue Breakdown by Product

Sugarcane crushing

Indian Ocean: no production in this quarter

Africa: c. 90,000 tonnes crushed (-22.7% Y-o-Y) due to lower yields but production volume only slightly down

Revenues: +26% Y-o-Y

Revenues improvement in both operations on higher volumes tied to positive timing effect in Indian Ocean and better prices in Africa

Adjusted EBITDA: +67% Y-o-Y

Positive contribution of Indian Ocean

Sugar Indian Ocean 61%

Sugar Africa 7%

Trading and others 32%

305 320

Q1

12/1

3

Q1

12/1

3

159 125

Q1

12

/13

Q1

13

/14

450 462

Q1

12/1

3

Q1

12/1

3

Cereal Segment - Production and Sales Slightly Higher Sales Volumes, Except for Ethanol

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Cereal Grinding (‘000 t)

Starch & Sweeteners Sales (‘000 t)

+2.9% YoY +2.6% YoY

Co-products Sales (‘000 t)

+6.2% YoY

Alcohol & Ethanol Sales (‘000 m3)

-21.3% YoY

Grinding in Q1 13/14: +2.9% Y-o-Y, on additional capacity in Palmital factory in Brazil and Marckolsheim in Europe. Sequentially, Lillebonne factory is improving capacity utilization to over 80% in Q1 13/14

Starch & Sweeteners sales: +2.6% Volumes growth in most product categories, notably functional sweeteners, starches and co-products

Alcohol & Ethanol sales: -21.3% Lower ethanol sales due to factory diversification (liquid dextrose production start-up) and Lillebonne gluten ramp-up

808 831

Q1

12/1

3

Q1

12/1

3

Starch & Sweeteners – Financials Positive Volume and Price Effect, but Profitability Still Impacted by High Cereal Input Prices

12


Revenues: R$1,016 million, up 27%

Better mix and prices in all product categories (+9.7% Y-o-Y, of which +5.6% in Starch & Sweeteners), reflecting partially increase in grain prices

Growth in volumes (+7.9%) due to higher sales of functional sweeteners, starches and co-products (impact from recent investments notably Lillebonne and Marckolsheim)

Adjusted EBITDA: R$51 million, down 25% Y-o-Y, but up sequentially (+36.7%)

Delayed effect of hedging positions on cereals impacted profitability, although improved sequentially

Increase in energy prices and consumption

Key Figures

In R$ Million

Q1

2013/14

Q1

2012/13 Change

Revenues 1,016 801 27%

Gross Profit 164 171 -4%

Gross Margin 16.1% 21.3%

EBIT 15 37 -59%

EBIT Margin 1.5% 4.6%

Adjusted EBITDA 51 67 -25%


CAPEX 77 75 2.7%

801

1,016

+63 +77

+60 +15

Q12012/13

Volume Price & Mix Currency Others Q12013/14

Alcohol & Ethanol Europe – Financials Reduced Volumes Y-o-Y on Factory Diversification and Lower Capacity Utilization

Revenues: R$240 million, down 14%

Positive price impact in the segment: +4.3%

Lower ethanol volumes Y-o-Y due to Lillebonne diversification, but continued progress sequentially

Adjusted EBITDA: R$9 million, down 36% Y-o-Y, but up sequentially (+R$9 million)

Higher energy and input costs

13


Revenue Breakdown by Product

Key Figures

In R$ Million

Q1

2013/14

Q1

2012/13 Change

Revenues 240 279 -14%

Gross Profit 11 21 -47%

Gross Margin 4.6 % 7.5%

EBIT (0) 4 -111%

EBIT Margin -0.2% 1.4%

Adjusted EBITDA 9 15 -36%


CAPEX 1 73 -99%

Ethanol own sales 50%

Ethanol traded 43%

Co-products and other

7%

Note: Figures for Alcohol & Ethanol segment now exclude JVs

279 240

(77)

+12 +21 +5

1T2012/13

Volume Preço &Mix

Moeda Outros 1T2013/14

14

Cash Flow Reconciliation

Cash Flow

In R$ Million Q1 13/14

Adjusted EBITDA 210

Working capital variance (357)

Others (28)

Operating Cash Flow (175)

Financial interests (41)

Dividends paid and received (1)

Capex (239)

Others (16)

Free Cash Flow (473)

Forex impact (313)

Others 6

Net Debt Variation (779)

Working Capital

Partially related to higher seasonal inventories,

currency impact on receivables and inventories, as

well as payables cycle

CAPEX (-28.4% Y-o-Y)

Brazil: 51% of consolidated CAPEX (-16.6% Y-o-Y):

Expansion/renewal planting program

Capacity / cogen expansion program

Higher intercrop maintenance

75% of the investment program completed

Cereals: 32% of consolidated CAPEX (-47.3% Y-o-Y):

Mostly related to starch project in Brazil

Currency Effect on Debt

Devaluation of the Real against Euro (-10.7%) and

USD (-9.4%)

Debt Working Capital and Currency Effect Impacted Net Debt

Net Debt/Adjusted EBITDA: 4.7x vs. 4.4x on March 31st, 2013

15

Debt

In R$ Million

June 30th,

2013

March 31th,

2013 (Restated) ∆

Current 2,064 1,829 775

Non-current 2,595 2,399 196

Amortized cost (26) (26) -

Total Gross Debt 4,633 4,202 431

In € 1,828 1,596 232

In USD 1,832 1,688 144

In R$ 921 882 39

Other currencies 78 62 16

Cash and Cash Equivalent (583) (893) 310

Total Net Debt 4,050 3,309 741

Related Parties Net Debt 51 12 39

Total Net Debt + Related Parties 4,101 3,321 779

Cereals

Moving forward with expansion projects:

China: Engineering and equipment purchases mostly done at Dongguan, while civil works are

underway. Most approvals from the Chinese authorities now received for Tieling acquisition

Brazil: production of corn-based glucose at Palmital expected for Q2 13/14

Positive impact of lower wheat purchase price to be felt progressively in Q2 13/14

Benefit of diversification projects in Europe (Saragossa and Lillebonne) to come through progressively

in the year.

Sugarcane

Renewal/expansion program of previous years has reduced average age of sugarcane to 3.3 years

No impact of frosts experienced in Center-South region of Brazil and crushing estimates maintained

at c. 18.5 million tonnes (adjusted for JVs, and equivalent to c. 20 million tonnes on a full

consolidation basis)

Full benefit of higher industrial utilization rates to dilute fixed costs, despite lower sugar prices

Positive contribution of higher cogeneration (expected to double Y-o-Y) and PIS/COFINS tax cut

Guarani 2015/16 program led by recently appointed new CEO

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Outlook

IR Contact Marcus Thieme Investor Relations Officer

Felipe Mendes Investor Relations Manager

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

Tereos apresentacao 1_q14_eng

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