Tereos Internacional Second Quarter 2013/14 Results São Paulo – November 14 th , 2013
May 29, 2015
Tereos Internacional Second Quarter 2013/14 Results
São Paulo – November 14th, 2013
Q2 2013/14 Highlights
2
Operational Guarani:
Strong yields thanks to past investments and favorable climate (+14.4% on a YTD basis), on stable TRS
Sharp increase in cogeneration sales (+48.9% on a YTD basis) Guarani 2016 efficiency improvement plan amplified
Syral Europe: Performance 2015 program launched to improve efficiency and enhance financial performance
Syral Brazil: Corn starch sales from Palmital facility progressing, and glucose commercial production to
begin at the end of Q3 13/14.
Strategic Syral China: Formal approvals from Chinese authorities for Tieling joint-venture granted and
acquisition of a 49% stake completed on 8th November, 2013
Finance Guarani: R$225.1 million capital injection from Petrobras to reach 39.6% stake in Guarani
completed in October Guarani: Refinancing of USD 190 million of Guarani export notes. Duration extended for 5 years,
with grace period of 3 years, at lower rates
Sugar:
Raw sugar prices reached 17.5 cents/lb at the end of Q2 13/14 (+4.7% since 1st of July) due to strong demand, weather concerns in C/S of Brazil and reversion of funds’ position from net short to net long
The weakening of BRL against the USD supported Brazilian producers’ remuneration
Starch:
Wheat prices evolved in a range of 182 to 199 €/t in the quarter, for November 2013 and March 2014 future contracts
Expectation of a bumper corn crop in the US on the back of strong yields. Prices stood on average at 188 €/t in the quarter and wheat corn spread continues at historical highs
Ethanol:
During the quarter, ethanol prices in Brazil have been falling steadily on the back of higher production level vs. last year (-2.9% and -4.0% for hydrous and anhydrous, respectively)
FOB Rotterdam prices have dropped significantly (-7.7% since 1st July) to c.590 €/m3 at the end of the quarter, on the back of a rebound in supply from US encouraged by declining corn prices
3 Source: Bloomberg
Market Highlights
15
16
17
18
19
20
21
400
450
500
550
600
Jan-13 Apr-13 Jul-13 Oct-13
LIFFE#5 NY#11
US$/MT US$ Cents/lb.
150
170
190
210
230
250
270
Jan-13 Apr-13 Jul-13 Oct-13
Corn MATIF Wheat MATIF
€/MT
500
550
600
650
700
800
1000
1200
1400
1600
Jan-13 Apr-13 Jul-13 Oct-13
Brazil ESALQ Europe Rotterdam
R$/m³ €/m³
1,873 2,207
+87
(19)
+253 +15
Q2 2012/13
Volume Price & Mix Currency Others Q2 2013/14
283 246
851 1,112
215 258
525
591
Q2 2012/13
Q2 2013/14
Brazil
Africa/Indian Ocean
Starch Europe
Ethanol Europe
1,873
2,207
Q2 2013/14 – Revenues Better Volumes for Sugarcane Division and Price and Mix for Starch and Sweeteners
4
Net Revenues (R$ MM)
+17.8%
Revenue growth supported by:
Improved overall sugar volumes and energy sales in Brazil
Higher volumes, prices and positive mix effect in the starch and sweeteners segment
Positive Forex impact on the back of weakening Real vs. Euro (-13.7% on average Y-o-Y)
But partially offset by:
Lower world sugar prices impacting Brazilian sales and lower ethanol prices in Europe
Lower ethanol volumes (plant conversion, Lillebonne maintenance stoppage, lower beet ethanol trading activity)
At Constant Currency: +3.9%
289
+38 +11
(2)
+6
(1)
342
Q2 2012/13
Brazil Africa/Indian Ocean
Starch Europe
Ethanol Europe
Holding Q2 2013/14
-3 -3 21 27 51 49
69 81
151 189
Q2 2012/13
Q2 2013/14
Brazil
Africa/Indian Ocean
Starch Europe
Ethanol Europe
Holding
289
342
Q2 2013/14 - Adjusted EBITDA Improvement on Better Efficiency Levels at Sugarcane Operations
5
Adjusted EBITDA improved year-on-year as a consequence of:
Cost dilution in Brazil due to higher volumes, together with positive effect of rising energy volumes & prices
Higher gross profit in the quarter in Africa/Indian Ocean
Improved margins for the Alcohol/Ethanol Europe segment, on lower cereal input price
However, starch & sweeteners margins remain under pressure in the current environment, despite beginning of benefits from lower cereal input costs
Adjusted EBITDA (R$ MM)
Margin 15.5% Margin 15.4%
+18.4%
Ethanol Sales (‘000 m³) Sugarcane Crushing (MM t) Sugar Sales (‘000 t)
6
+21.2% YoY -3.3% YoY
Sugarcane Brazil – Production & Sales Harvesting at Good Pace to Reach c. 20 Million Tonnes(1) of Crushing
Energy Sales (‘000 MWh)
+44.0 YoY
Crushing
Higher crushing in H1: 13.4 million tonnes (+15.1% vs. H1 12/13)
Strong agricultural yields (expected improvement in FY yield to c.90 t/ha vs. 84 t/ha in 2012/13) and stable TRS levels at 134.6 kg/ton
Improvement in production
Overall production (expressed in TRS) up 17.0% to 1.8 Mt
Mix: 65% sugar, 35% ethanol
Sugar: 1.1 Mt +17.8% YoY
Ethanol: 377 Km³ +15.5% YoY
Progress on cogeneration
YTD energy sales (including trading) up 48.9% to 486 GWh, on better prices (+6.7% to R$144/MWh)
+3.9% YoY
7,4 7,7
Q2
12/
13
Q2
13/
14
388 470
Q2
12/
13
Q2
13/
14
92 89
Q2
12/
13
Q2
13/
14
179 255
57
84
Q2
12/
13
Q2
13/
14
Own Sales Trading
(1) Considered full consolidation basis and excluding the JV contribution of Vertente at c. 18.5 million tonnes
525 591
(30)
+82 +2 (3)
+16
Q2 2012/13
Price & Mix
Volume Price & Mix
Volume Others Q2 2013/14
Sugarcane Brazil – Financials Higher Sugar Volumes Lowering Unitary Costs Led to an Improvement in EBITDA
Key Figures In R$ Million
Q2 2013/14
Q2 2012/13
Change
Revenues 591 525 +13%
Gross Profit 121 119 +2%
Gross Margin 20.5% 22.7%
EBIT 37 51 -27%
EBIT Margin 6.3% 9.7%
Adjusted EBITDA 189 151 +25%
Adjusted EBITDA Margin 31.9% 28.7%
7
(1) Tereos Internacional allocates tilling expenses as cost. If tilling expenses were allocated as investment, Adjusted EBITDA for Q2 13/14 would have reached R$224 million.
Net Revenues (R$ MM)
Sugar Ethanol
Sugar: 70% of total net revenues Volumes increased +21.2% to 470 Kt Average selling price: -6.5% Y-o-Y at 934
R$/tonne
Ethanol: 17% of total net revenues Volume sold down -3.3% to 89 Km3
Average price up 2.1% Y-o-Y at 1,098 R$/m3
Cogeneration (ex-trading): R$38.3 million vs. R$8.7 million in Q2 12/13
Adjusted EBITDA: R$189 million Higher profit from increased sugar and
energy volumes Adjusted EBITDA Margin1 for Q2 13/14
including tilling as depreciation: 37.9%
Note: Figures for Brazil now exclude JVs
-1.4% YoY
Sugarcane Africa/Indian Ocean – Production and Financials Steady Performance in the quarter
8
Sugarcane Crushing (’000 t) Sugar sales (‘000 t)
-0.4% YoY
Key Figures In R$ Million
Q2 2013/14
Q2 2012/13
Change
Revenues 258 215 +20%
Gross Profit 66 39 +70%
Gross Margin 25.6% 18.1%
EBIT 30 24 +28%
EBIT Margin 11.8% 11.1%
Adjusted EBITDA 81 69 +17%
Adjusted EBITDA Margin 31.3% 32.4%
Revenue Breakdown by Product Sugarcane crushing Indian Ocean: 960 Kt (+1.7%), although recent
drought should lower full year crushing to c.1.7 Mt
Africa: lower crushing (-10.2%) on deteriorated yields, but production volume only slightly down this quarter
Revenues: +20% Y-o-Y Higher volumes, mostly trading in the Indian
Ocean, and higher prices in Mozambique, and positive currency effect
Adjusted EBITDA: +17% Y-o-Y Positive contribution from both segments
1.267 1.249
Q2
12/
13
Q2
13/
14
Sugar Indian Ocean 56%
Sugar Africa 19%
Trading and others 25%
76 75
Q2
12/
13
Q2
13/
14
Cereal Segment - Production and Sales Growth in volumes in starch & sweeteners, counterbalanced by lower ethanol volumes
9
Cereal Grinding (‘000 t)
Starch & Sweeteners Sales (‘000 t)
-2.4% YoY +2.5% YoY
Co-products Sales (‘000 t)
-0.3% YoY
Alcohol & Ethanol Sales (‘000 m3)
-17.5% YoY
Grinding in Q2 13/14: -2.4% drop mostly due to the impact of a maintenance in Nesle and Lillebonne plants
Starch & Sweeteners sales: +2.5% Growth in most of the product categories, but reduced volumes of regular sweeteners
Alcohol & Ethanol sales: -17.5% Factory diversification (impact of gluten and dextrose complementary lines) and maintenance carried out in Q2 reduced volumes at Lillebonne, coupled with lower ethanol trading sales from Tereos
838 818
Q2
12/1
3
Q2
13/
14
444 455
Q2
12/1
3
Q2
13/
14
139 115
Q2
12
/13
Q2
13
/14
310 309
Q2
12/1
3
Q2
13/
14
851 1,112
+65 +26
+164 +7
Q2 2012/13
Volume Price & Mix Currency Others Q2 2013/14
Starch & Sweeteners – Financials Higher Revenues on Improved Volumes and Prices, and a Positive Currency Effect
10
Net Revenues (R$ MM)
Revenues: R$1,112 million, up 31% Overall better volumes (+7.6% in Europe) particularly for gluten, specialties and functional
sweeteners. However, revenue growth hampered by softness in certain segments (notably sweeteners) due to economic conditions. Higher prices y-o-y.
Start of positive perimeter effect of dextrose sales in Europe, and ramp-up of Syral Halotek sales in Brazil
Positive Forex translation effect on the back of sharp drop of Real vs. Euro (-13.7% Y-o-Y)
Adjusted EBITDA: R$49 million, down 4% Y-o-Y Profitability remained under pressure in the quarter, despite beginning of benefits from lower cereal
input prices, as economic condition hampered our ability to rebuild margins and fully benefit from recent investments (Saragosse, Lillebonne, Marckolsheim)
Key Figures In R$ Million
Q2 2013/14
Q2 2012/13
Change
Revenues 1,112 851 +31%
Gross Profit 174 141 +24%
Gross Margin 15.7% 16.5%
EBIT 6 22 -74%
EBIT Margin 0.5% 2.5%
Adjusted EBITDA 49 51 -4%
Adjusted EBITDA Margin 4.4% 6.0%
283 246
(72) (23)
+55 +3
Q2 2012/13
Volume Price & Mix Currency Others Q2 2013/14
Alcohol & Ethanol Europe – Financials Adjusted EBITDA margin Improvement on Lower Wheat Prices
Revenues: R$246 million, down 13% Own volumes affected by factory diversification
and maintenance carried out in Q2 Lower trading activity for Tereos Group Drop in FOB Rotterdam prices (-14.7% on average
Y-o-Y) Adjusted EBITDA: R$27 million, up both Y-o-Y Benefit from lower input prices, in particular as
major portion of wheat purchased at conventional prices this quarter
11
Net Revenues (R$ MM)
Revenue Breakdown by Product
Key Figures In R$ Million
Q2 2013/14
Q2 2012/13
Change
Revenues 246 283 -13%
Gross Profit 28 29 -3%
Gross Margin 11.3% 10.1%
EBIT 17 11 64%
EBIT Margin 7.0% 3.7%
Adjusted EBITDA 27 21 29%
Adjusted EBITDA Margin 10.9% 7.3%
Ethanol own sales 56%
Ethanol traded 36%
Co-products and other
8%
Note: Figures for Alcohol & Ethanol segment now exclude JVs
12
Cash Flow Reconciliation
Working Capital Mostly due to higher seasonal inventories and
currency impact on inventories
CAPEX (-25.3% Y-o-Y)
Brazil: 54% of total (+9% Y-o-Y):
Capacity & cogen expansion program 78% of the expansion-program completed
Cereals: 34% of total (-52% Y-o-Y): Mostly related to starch project in Brazil
Currency Effect on Debt Devaluation of the Real against Euro and USD, (-13.5% Y-o-Y as at 30th September)
Cash Flow In R$ Million
H1 13/14
Adjusted EBITDA 551
Working capital variance (577)
Others (72)
Operating Cash Flow (98)
Financial interests (94)
Dividends paid and received (41)
Capex (431)
Others 22
Free Cash Flow (642)
Forex impact (408)
Others 1
Net Debt Variation (1,051)
Debt Increase of Net Debt Mostly on Higher Seasonal Working Capital and Currency
Net Debt/Adjusted EBITDA: 4.5x vs. 4.4x on March 31st, 2013 Guarani: R$225.1 million capital injection from Petrobras to reach 39.6% stake in Guarani completed
in October Guarani: Refinancing of USD 190 million of Guarani export notes. Duration extended for 5 years, with
grace period of 2 years, at lower rates
13
Debt In R$ Million
Pro Forma
Sep 30th,2013
March 31st,
2013 (Restated) ∆
Current 2,174 1,829 345 Non-current 2,574 2,399 175 Amortized cost (23) (26) 3
Total Gross Debt 4,725 4,202 523 In € 1,827 1,596 231
In USD 1,657 1,688 (31)
In R$ 1,213 882 331
Other currencies 51 62 (11)
Cash and Cash Equivalent (702)1 (893) 191
Total Net Debt 4,023 3,309 714 Related Parties Net Debt 125 12 113
Total Net Debt + Related Parties 4,148 3,321 827
(1) Cash and cash equivalent of September 30th 2013 restated to include capital increase of R$225 million from PBio into Guarani.
Sugarcane
Brazil Guarani confirms target of c.18.5 million tonnes of sugarcane crushing (excluding the JV
contribution of Vertente and equivalent to c.20 million tonnes on a full consolidation basis) Higher production to continue diluting fixed costs, despite challenging sugar prices. Guarani 2016 program to enhance efficiency and profitability has been stepped up
Africa/Indian Ocean Exceptionally dry weather in the Reunion Island and lower yields in Mozambique expected to
lead to decrease in volumes of sugarcane crushed in the segment (total combined of c.2.1 Mt)
Cereals
Europe Cereal prices expected to remain below last year’s peak levels in the 3rd quarter. Focus remains on performance improvement plan.
Brazil Production of corn starch progressively ramping up. Sales of glucose expected to start towards
the end of Q3 13/14
China Engineering and equipment purchases mostly done at Dongguan, while civil works is underway Following the Tieling joint-venture formation, product diversification and productivity
improvement plan to be completed and progressively implemented over the next 18 months 14
Outlook
IR Contact Marcus Thieme Investor Relations Officer Felipe Mendes Investor Relations Manager Phone: +55 (11) 3544 4900 Email: [email protected] www.tereosinternacional.com