1 q 0910 conference call presentation
TRANSCRIPT
Q1 09/10 ResultsAugust 18th, 2009
2
Disclaimer
This presentation contains forward-looking statements related to the prospects of ourbusiness and estimates for operating and financial results. Those related to growthprospects of Açúcar Guarani S.A. are merely projections and, as such, based exclusively onthe expectations of the management concerning the future of the business. Such forward-looking statements depend substantially on changes in market conditions, governmentregulations, competitive pressures, the performance of the Brazilian and internationaleconomies and the industry and are therefore subject to change without prior notice.
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Q4
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Q1
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Growth in sugar prices as aconsequence of the decrease inproduction by major producers, suchas India and EU
Sugar prices closing the quarter at thehighest level in three years, both inUS$ and in R$ terms
Increase in sugar prices alsosupported by the increased netposition of index-funds, speculativefunds and the trading sector
Q1 09/10 Sugar Market Overview
Guarani’s Sugar Average Prices (R$/ton)
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Q1
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Q4
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Increase of 25% in volume ofhydrous ethanol sold in the domesticmarket (Brazilian Center-south),compared to Q1 08/09, sustained bythe increased flex fuel vehicle fleet
Q1 09/10 ethanol prices were lower incomparison to the previous year due tohigh offer caused by cashrequirements of Brazilian producers
Exports slightly lower: 1 billion litres(-9.4% compared to Q1 08/09) due toreduction in US imports, but withincrease in deliveries to Japan, Indiaand South Korea
Q1 09/10 Ethanol Market Overview
Guarani’s Ethanol Average Prices (R$/m³)
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9.5% Increase in Volume of Sugarcane Crushed in Q1 09/10
Sugarcane Crushed (MM t)Increase due to own sugar cane crushed
• Strategy to increase plantation lastyear allowed additional supply ofown sugarcane
• Third party sugarcane strategy timelydue to credit crisis
2009/10 Crushing target at 14.8 milliontons
• Brazil: 14.2 million tons
• Mozambique: 0.6 million tons
1.4 1.8
2.72.7
Q1 08/09 Q1 09/10
Own 3rd Party
4.54.1
96146
14590
37 33
Q1 08/09 Q1 09/10
Refined Crystal VHP
278 269
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Strong Increase in Refined Sugar Production and Solid Ethanol Production
Sugar Production (‘000 t)
Ethanol Production (‘000 m³)
Increased refined sugar production to address industrial markets and benefit fromwhite premium
Ethanol production increase in Q1 due to weather conditions that favoredsugarcane allocation to ethanol
Mix to shift towards sugar to benefit from high prices during the crop
22 29
107122
Q1 08/09 Q1 09/10
Anhydrous Hydrous
151129
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Net Revenue (R$ MM)
Growth in net revenue driven mainly by:
• Increase in average sugar prices in Reais(+50.8%), reaching 703.3 R$/ton
• Increase in sugar sales by 1.7%
• Concentration of sugar sales in thedomestic market (67.7%)
Ethanol revenue down by 18.6%
Guarani’s Net Revenue breakdown was:
Sugar: 64.3%
Ethanol: 28.1%
Energy: 1.7%
Other products: 5.9%
18.1% Increase in Net Revenue Driven by Higher Sugar Prices in Q1 09/10
98151
81
661918
Q1 08/09 Q1 09/10
Sugar Ethanol Others
198234
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Adjusted EBITDA (R$ MM)
Sharp increase in Adjusted EBITDA due to highersugar prices and controlled costs and G&Aexpenses
Adjusted EBITDA Margin of 21.3% versus 8.8% inQ1 08/09
Adjusted EBITDA measured by ton of TRS sold ofR$122.5 in Q1 09/10 (+194.5%)
Sharp Rise in Adjusted EBITDA:R$49.9 Million, +185.1% over Q1 08/09
Adjusted EBITDA Margin1
(1) 2007/08 figures have been reclassified and changed due to law 11638/07, as compared to figures previously disclosed.
17.549.9
8.8%
21.3%
5,0%7,0%9,0%11,0%13,0%15,0%17,0%19,0%21,0%23,0%
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Q1 08/09 Q1 09/10Adjusted EBITDA Adjusted EBITDA Margin
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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
07/08 08/09 09/10
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Net Profit (R$ MM)Net Profit: R$ 14.3 million in Q1 09/10, compared
with a net loss of R$26.6 million in the same period ofthe prior year
Net profit impacted mainly by:
• Strong price recovery for sugar (+50.8%)
• Net non-cash FOREX effect of R$86.0 million
Net Profit of R$14.3 million Driven by Strong Prices and Positive FOREX Impact
(27)
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Q1 08/09 Q1 09/10
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Net debt at R$ 1.1 billion, up 6.4% over theprevious quarter, due to working capitalrequirements
Short-term debt net of cash and cash-equivalentstotaled R$ 233.5 million, representing 37% of totalNet Debt, excluding intercompany loans
The increase in Guarani’s net debt is mainly due toincreased finished products inventories
Net Debt/Adjusted EBTIDA ratio at 4.1x in June,2009 versus 4.3x in March, 09. Excludingintercompany loans, Net Debt/Adjusted EBITDAratio stood at 2.4x
Net Debt per Term1
Net Debt per Currency1
(1) Excludes intercompany loans and cash & cash equivalent
(1) Includes R$112.1 million related to SHL in Mozambique
Net Debt Up but Improved Indebtedness Ratios
Foreign Currency
61%
BRL39%
Current37%
Non-Current
63%
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CAPEX: Focus on Sugarcane Plantation, Cost Reduction and Efficiency Programs
CAPEX (R$ MM)1
Continued selectivity on CAPEX: R$52 million inQ1 09/10 compared to R$91 million in Q1 08/09
Focus on plantation CAPEX (R$30 million) toensure adequate raw material availability andproductivity for next crop
Selective industrial CAPEX (R$22 million) toeliminate bottlenecks and further develop marginalcapacity to lower fixed costs at São José and Tanabiplants
CAPEX approved to allow sugar production inTanabi as from next crop
1) CAPEX does not consider maintenance.
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22
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30
Q1 08/09 Q1 09/10PPE Planting
91
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Prod
uctio
n/C
onsu
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(MM
ton)
Inve
ntor
ies
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ton)
Inventories Production Consumption
Source: LMC
1518212427303336
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01-A
pr-0
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cent
s R$
/lb
cent
s US
$/lb
cents US$/lb cents R$/lbQ209 Q110Q109 Q309 Q409
Source: ICE
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Global sugar deficit expected to continuesupporting sugar prices
Brazilian position favoured by lower output ofmajor producers such as India, China and EU
Weather driving crop yields in India (droughtcaused by weak Monsoons) and in Brazil (heavyrains during winter)
Strong growth in global demand, unaffected bycrisis
Raw Sugar Prices (NY 11)
World Sugar Balance
Sugar Market Outlook: Positive Trend in 08/09 and 09/10 World Crops
050
100150200250300350
Apr
-08
Jul-0
8
Oct
-08
Jan-
09
Apr
-09
'000
uni
ts
Ethanol + Flex-Fuel Gas + Diesel
Q209 Q110Q109 Q309 Q409
Source: Anfavea
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Ethanol Market Outlook: Consumption Growth Supported by Higher Sales of Flex-Fuel Vehicles
Vehicles Sales per Fuel Type (Brazil)
Domestic Market
Sustained demand from strong sales of flex fuelvehicles
Increased hydrous ethanol consumption due tothe competitive price parity to gasoline at the pump
Prices expected to recover beginning in Q2 09/10
International Market
Increased ethanol prices in the US market due tostronger corn, gasoline and oil prices
Increased exports to Asia and stable sales to theEuropean market
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Outlook: Guarani Solidly Positioned to SeizeOpportunities and Benefit from a Market Upturn
Sugarcane crushed expected to reach 14.8 million tons in 2009/10 crop versus 14.4million tons in previous crop
Production mix geared towards sugar to allow Guarani to take advantage of the upturn insugar prices
Increased demand for ethanol due to attractive ratio between ethanol and gasolineprices at the pump. Positive price outlook as of second half of 09/10
Plants to take advantage of increased volumes and lower fixed costs per ton produced
Disciplined CAPEX allocation in order to ensure expected sugarcane availability andprofit from rapid pay-back programs
Continued focus on balance sheet strengthening
Positive non-cash effect in P&L of Brazilian Real appreciation vis-à-vis the US Dollar
Strong commitment and support from Tereos, Guarani’s controlling shareholder, toseize opportunities
Thank You!
Reynaldo F. BenitezCFO and Investor Relations Officer
Alexandre L. MenezioInvestor Relations Manager
Felipe F. MendesInvestor Relations Analyst
Renato N. Zanetti NetoInvestor Relations Analyst
Leonardo T. GoesInvestor Relations Assistant
phone: +55 (11) 3544-4900
e-mail: [email protected]
website:www.acucarguarani.com.br/ir