Tereos InternacionalThird Quarter 2010/11 Results
São Paulo - February 15, 2011
Highlights
Q3 2010/11 Financial Results
Operating Segment Review
Outlook and Summary
Q3 Financial Highlights: Record net income and strong growth in revenues
Strong growth in revenues and operational results
Record net result of R$ 143 million
� Revenue : R$1.59 billion
• Year-on-Year: + 31.3% + 47.7% at constant currency
3
* Adjusted EBITDA : EBITDA excluding non recurring items from discontinued operations, accounting effect of the adjustment in the fair value of the biological assets and financial instruments
� Adjusted EBITDA*: R$260 MM
• Year-on-Year: + 28.2% + 34.7% at constant currency
� Net Result: R$143 MM vs. R$14 MM in Q3 2009/10
� Sugarcane: Significant growth fueled by capacity investments, acquisitions and strong market conditions
� Cereal: Initial contribution from new contracts and strong demand benefits revenues
Sugarcane
� Strong market fundamentals
• Brazilian Center South: crushing and sugar production below estimates due to dry weather
• Sugar prices back to levels seen during Q4 2009/10 on concerns over reduced availability
• Rising ethanol prices: + 21.5% for hydrous in Q3
• Reduced supply due to high sugar prices and strong domestic demand
� Investment Agreement with Petrobras Biocombustível: completion of second step
Q3 Highlights: Strong market fundamentals for Sugar, Challenging environment for Cereals
4
• Petrobras now shareholder of Guarani at 26.5%
Cereal
� Challenging market environment, due to the increase in cereal prices
• Wheat: prices increased in December on concerns over poor weather conditions in certain producing countries combined with lower US corn crop forecasts
• Starch & sweeteners: improving market conditions in Europe. Positive Q3 demand mitigated traditional seasonal slowdown
• Ethanol: rising prices driven by tighter supply-demand balance
� Studying R$ 230 MM investment to establish Brazilian starch operation
Q3 2010/11 Financial Results
1,212
1,591
(135)
+ 349
+ 165
612 593
63 231
344
624Brazil
Indian Ocean
Starch Europe
Ethanol Europe
Total Holdings
In R$ MM
1,591
+ 31.3%
1,212
Revenues driven by positive contribution from sugarcaneQ3
Q3 2009/10 Currency Volume Price & Mix Q3 2010/11
193 143
Q3 2009/10 Q3 2010/11
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� Sugarcane
• Brazil: growth driven by a 50.1% increase in sales volumes and a price increase of 10.2%
• La Réunion: contribution of GQF acquisition
� Cereal
• Starch Europe: + 14.4% at constant exchange rate. Prices up 5.7% driven by application of first contracts negotiated after cereal prices increase. Negative currency effect of R$94.2 million
• Ethanol Europe: - 12.8% at constant exchange rate. Volumes down due to 3-week maintenance stoppage at the Lillebonne plant. Negative currency effect of R$28.8 million
7867
45
76
85
8349
44
112151 Brazil
Indian Ocean
Starch Europe
Ethanol Europe
Total Holdings
Ajusted EBITDA and EBITDA: Solid rise driven by SugarcaneQ3
In R$ MM
+ 28.2%
202
260
Adjusted EBITDA EBITDAIn R$ MM
+ 22.5%
173
212
319 12
Q3 2009/10 Q3 2010/11
319 12
49
-12Q3 2009/10 Q3 2010/11
� Sugarcane
• Higher volumes and margins in Brazil
• Improved operational results in Mozambique and first contribution of the Groupe Quartier Français in La Réunion
• Fair value of financial instruments negative R$58 million following surge in world sugar prices
• Fair value of biological assets negative R$7 million
� Cereal
• Starch: margins reflect higher cereal and energy prices after surge in world cereal prices
• Ethanol: margins impacted by lower volumes and higher energy costs
• Fair value of financial instruments positive R$18 million following surge in cereal and energy prices
7
260
212
156
131
167
143
-48
71
-25
35
-24
From Adjusted EBITDA to Net IncomeQ3 2010/11
In R$ MM
Perimeter and other adjustments in Brazil: +R$44 million
Fair value of biological assets: -R$7 MM
Fair value of financial instruments: -R$40 MM
Accounting impact of the difference between the price paid for Quartier Français and its equity value
-127
-25
Adjusted EBITDA
Adjustments EBITDA Depreciation &
Amortization
Acquisition Impact
Operating Income
Net Financial Expenses
Net Income Before Tax
Income Tax Net Income Minority Interest
Net Income Group Share
8
Cash Flow reflecting the rise in Working Capital
Cash Flow
In R$ MillionQ3 2010/11
Adjusted EBITDA 260
Working capital variance (298)
Other operating (1 )
Operating Cash Flow (39)
Financial interests net of dividends paid and received (35)
Capex net of proceeds from the disposal of assets (140)
� Total net debt increase:R$153 million vs. September 30, 2010
� Working capital variance:
• R$181 million in Brazil
• R$70 million in La Réunion
9
Capex (145)
Proceeds from the disposal of assets 5
Cash Flow before acquisition and capital increase (213)
Acquisition & Perimeter impact 30
Capital increase 0
Free Cash Flow (183)
Forex impact 30
Total net debt (153)
• R$70 million in La Réunion
• R$51 million for Cereal segment
Real31%
Others2%
Debt – Stable Net Debt/ Adjusted EBITDA from last quarter, despite seasonal increase in working capital
Gross DebtBreakdown by currency
Debt
In R$ MillionDec 31, 2010 Sep 30, 2010 Change
Current 1,645 1,667 - 1.3%
Non-current 1,268 1,236 + 2.6%
Amortized cost (15) (16) - 6.2%
Total Gross Debt 2,914 2,903 + 0.4%
In € 1,365 1,388 - 1.7%
In USD 573 757 - 24.3%
In R$ 909 703 + 29.3%
Euro47%
US Dollar20%
10
� Net Debt: R$2,570 million + 6.4% vs. September 2010
� Net Debt/ Adjusted EBITDA: stable at 3.4x
In R$ 909 703 + 29.3%
Other currencies 66 55 + 20.0%
Cash and cash Equivalent (299) (440) - 48.0%
Total Net Debt 2,599 2,447 + 6.2%
Related Parties Net Debt (29) (31) - 6.4%
Total Net Debt + Related Parties 2,570 2,416 + 6.4%
Operating Segment Review
SugarcaneSugarcane
Brazil - Indian Ocean
Sugarcane – Sharply increased sugar and ethanol sales due to commercial strategy of maximized sales in the intercrop seasonProduction and Sales
Ethanol Sales (‘000 m³) Energy Sales (‘000 MWh)Sugarcane Crushing (MM t) Sugar Sales (‘000 t)
3,90,4
5,9
8,8
4,0
Q3
09/1
0
Q4
09/1
0
Q1
10/1
1
Q2
10/1
1
Q3
10/1
1
267 238 213
488424
Q3
09/1
0
Q4
09/1
0
Q1
10/1
1
Q2
10/1
1
Q3
10/1
1
120 12099
179164
Q3
09/1
0
Q4
09/1
0
Q1
10/1
1
Q2
10/1
1
Q3
10/1
1
32 742
113
81
Q3
09/1
0
Q4
09/1
0
Q1
10/1
1
Q2
10/1
1
Q3
10/1
1
13
� Q3 Sugarcane crushing: 4.0 million tons (+ 2.7% year-on-year)
� Stable product mix despite recent acquisitions: 57% sugar and 43% ethanol
• Increased sugar production capacity in São José and Cruz Alta and start up of Tanabi’s sugar factory
� 2010/11 crop year outlook:
• Crop year 2010/11: 19.7 million tons, + 43% year-on-year
• Third-party sugarcane: 65%
• Product Mix : 58% sugar and 42% ethanol
• Sugar production: 1,556 thousand tons, + 65% | Ethanol production: 692 000 m³, + 47%
• Cogeneration: 235.4 GWh, +112.5% (April to December)
Sugarcane Brazil – Strong rise in revenues and Adjusted EBITDAFinancials
Key Figures
In R$ Million
Q3
2010/11
Q3
2009/10
Change
Reported
Revenues 624 344 + 81.7%
Gross Profit 163 61 + 166.5%
Gross Margin 26.1% 17.8%
EBITDA 85 76 + 12.4%
EBITDA Margin 13.6% 22.0%
Adjusted EBITDA 151 112 + 35.0%
Adjusted EBITDA Margin 24.2% 32.6%
EBIT 17 30 - 41.0%
EBIT Margin 2.8% 8.6%
Adjusted EBIT 84 66 + 26.8%
Adjusted EBIT Margin 13.4% 19.2%
In R$ MM
Revenues
344
624
+19
+150 +12+45
+54
*
14 * includes Cogeneration, Agricultural Products and Hedging
Adjusted EBIT Margin 13.4% 19.2%
Capex 58 14 + 314.3%
� Gross Margin: increased from R$61 million to R$163 million
• Effect of the adjustment in sugarcane prices of R$49 million, correlated to the increase in sales prices
� Capex:
• Cogeneration
• Q3 2010/11: R$58 million
� Sugar: 63.8% of total revenue
• Sales volume: + 58.7% vs. Q3 2009/10
• Price (R$/ton): + 13.6% vs. Q3 2009/10
• White sugar mix down to 78%
� Ethanol: 26.8% of total revenue
• Sales volume: + 37.4% vs. Q3 2009/10
• Price (R$/m³): + 11.0%
• Anhydrous: 40.8% of total ethanol produced vs. 25.0% in Q3 2009/10
Sugar EthanolQ3 2009/10 Price&Mix Volume Price&Mix Volume Others Q3 2010/11*
Sugarcane Indian Ocean – Strong resultsProduction and Financials
Key Figures
In R$ Million
Q3
2010/11
Q3
2009/10
Revenues 230 63
Gross Profit 78 (26)
Gross Margin 34.0% -41.3%
EBITDA 45 -
EBITDA Margin 19.5% -
Adjusted EBITDA 44 (11)
Adjusted EBITDA Margin 19.1% -18.5%
Capex 11 1
La Réunion
Sugarcane Crushing (’000 t)
Mozambique
Sugarcane Crushing (‘000 t)
547
989874
Q3
09/1
0
Q4
09/1
0
Q1
10/1
1
Q2
10/1
1
Q3
10/1
1
175
0,0 0,0
230289
Q3
09/1
0
Q4
09/1
0
Q1
10/1
1
Q2
10/1
1
Q3
10/1
1
Mozambique
� Crop year terminated on December 5
� Sugarcane crushing was of 536,000 tons and sugar production was 21% higher at 46,000 tons of sugar
� Solid revenue growth: + 60.5% at constant exchange rate
� Adjusted EBITDA: R$ 13 million, after excluding the fair value on biological effect of the sugarcane assets in R$ 1 million
� Capex:
• Expansion of irrigation and sugarcane fields renovation
• Q3 2010/11: R$1 million
La Réunion
� Crop year terminated on December 12 at Bois Rouge and on December 15 at Le Gol
� Sugarcane crushing was of 1.9 million tons and production more than doubled, at 207,000 tons of sugar
� Revenues: + R$163 million vs. Q3 2009/10
� Adjusted EBITDA: R$ 31,2 million
� Capex:
• Investments to improve sugar quality and added-value products
• Q3 2010/11: R$10 million
15
CerealCereal
Starch Europe - Ethanol Europe
Starch Europe - Increase in grinding, higher sales of co-productsProduction and Sales
Co-products Sales (‘000 t)Cereal Grinding (‘000 t) Starch & Sweeteners Sales (‘000 t) Ethanol & Alcohol Sales (‘000 m3)
638673 693 702 696
Q3
09/1
0
Q4
09/1
0
Q1
10/1
1
Q2
10/1
1
Q3
10/1
1392
413437
424398
Q3
09/1
0
Q4
09/1
0
Q1
10/1
1
Q2
10/1
1
Q3
10/1
1
236 236 239
257253
Q3
09/1
0
Q4
09/1
0
Q1
10/1
1
Q2
10/1
1
Q3
10/1
1
4245 45 46
42
Q3
09/1
0
Q4
09/1
0
Q1
10/1
1
Q2
10/1
1
Q3
10/1
1
17
� Cereal grinding: 696,000 tons (+ 9.1% year-on-year)
• Market demand partially offsetting seasonality
� Sales
• Starch and Sweeteners: 90.4% +1.4% vs. Q3 2009/10
• Alcohol & Ethanol: 9.6% - 1.1% vs. Q3 2009/10
• Co-products + 7.2% vs. Q3 2009/10
612593
(94)
+14+61
Key Figures
In R$ Million
Q3
2010/11
Q3
2009/10
ChangeReported
ChangeConstant Currency
Revenues 593 612 - 3.2% + 14.4%
Gross Profit 134 177 - 24.5% - 7.8%
Gross Margin 22.6% 29.0%
EBITDA 67 78 - 14.3% - 0.4%
EBITDA Margin 11.3% 12.8%
Adjusted EBITDA 49 83 - 40.5% - 30.7%
Adjusted EBITDA Margin 8.3% 13.5%
EBIT 39 45 - 13.0% + 0.5%
EBIT Margin 6.5% 7.3%
Adjusted EBIT 21 49 - 57.3% - 50.5%
Adjusted EBIT Margin 3.5% 8.0%
Starch Europe – Profitability impacted by currency and higher raw material costsFinancials
Revenues In R$ MM
Starch and Sweetners
58%
Alcohol and
Ethanol10%
Co-products
26%
Others6%
Q3 2009/10 Currency Volume Price & Mix Q3 2010/11
Adjusted EBIT Margin 3.5% 8.0%
Capex 45 (8) n/a
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� Revenues: + 14.4% at constant currency: + 7.6% in prices and + 6.8% in volumes
� Gross Profit reflecting increased cost of cereal purchased and energy
• Gross margins expected to improve in fiscal Q4 as new sales contracts reflect higher costs
� Adjusted EBITDA: R$49 million
� Capex:
• Equipment purchases for the Selby grain alcohol plant (start-up in 2012)• Q3 2010/11: R$45 million
193
143(29)
(39)
+18
Ethanol Europe: Revenues impacted by currency and temporary closure of LillebonneFinancials
Key Figures
In R$ Million
Q3
2010/11
Q3
2009/10
ChangeReported
ChangeConstant Currency
Revenues 143 193 - 25.8% - 12.8%
Gross Profit 3 24 - 86.3% - 83.9%
Gross Margin 2.3% 12.5%
EBITDA 12 19 - 40.2% - 29.7%
EBITDA Margin 8.1% 10.0%
Adjusted EBITDA 12 19 - 40.2% - 29.7%
Adjusted EBITDA Margin 8.1% 10.0%
Capex 4 14 - 71.4%
Revenues In R$ MM
Q3 2009/10 Currency Volume Price & Mix Q3 2010/11
19
� Ethanol production: 53,000 m³
� Ethanol sales*: 104,000 m³
• - 14.7 % vs. Q3 2009/10
• Maintenance shutdown at Lillebonne (3 weeks)
� Revenues: - 12.8% at constant currency
• Price increases offset by lower volumes
� EBITDA: R$12 million
• Lower production
• Higher energy costs
� Capex:
• Gluten extraction: start-up in 2012. First diversification of Lillebonne’s production mix
• Q3 2010/11: R$4 million
* Includes sales of ethanol produced by Tereos
Outlook and Summary
� The starch market in Brazil represents 1.8 million tons and is growing strongly
� Our project: a plant based in corn, to produce starch, glucose syrup and derivatives
� Key points of Tereos Internacional:
• Guarani’s customers base in Brazil
Tereos Internacional Investment on the Starch Sector in Brazil
21
• Guarani’s customers base in Brazil
• Guarani’s distribution network in Brazil
• Guarani’s industrial platform
• The diversified and innovative Syral’s product portfolio
• Close relations between Syral and food & nonfood multinationals, built via R&D in Europe
� Good performance in Q3, with net income of R$143 million and Adjusted EBITDA of R$260 million
• Excellent results for sugarcane activities in all regions
• And despite a still difficult environment for the cereal segment
� Positive outlook based on solid fundamentals for sweeteners and ethanol
• Global stocks remain low for sugar and ethanol
• Improvement in commercial conditions in the European starch and sweeteners market, with the signing of contracts for Q4
Tereos Internacional – Conclusion
22
sweeteners market, with the signing of contracts for Q4
� Tereos Internacional well positioned in a favorable environment
• Tereos Indian Ocean to continue consolidation process of Quartier Français, in La Réunion
• Guarani will benefit from its strong sugar position and its partnership with Petrobras Biocombustível
• Tereos International will capitalize on the experience of Syral to enter a market with strong growth: the starch in Brazil
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