20110215 ti conf_call_presentation_q3_engl

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

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* 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

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• 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

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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%

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� 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

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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

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• 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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