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Presentation - 3rd Quarter 2007
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1
Disclosure of Results2007
08.Nov.2007
www.duratex.com.br
2
Capital Markets
Business Segments
Housing Sector
Panel Making Sector
Capital Expenditures Plan
Performance
Competitive Advantages
3
Others30%
Foreign Inv.53%
Itaúsa8%
Pension Funds
9%
PN
Others22%
Foreign Inv.31%
Itaúsa42%
Pension Funds
5%ON + PN
Capital Markets
Shareholding Structure:Shareholding Structure:Total outstanding shares: 129,7M
• PN: 76,1M,• ON: 53,6M.
Shareholder structure (as of Sep / 2007):
4
Corporate GovernanceCorporate Governance
> News:> News:
Distribution of an extraordinary dividend (R$50 million);
Creation of a Securities Trading Committee;
Adoption of a Securities Trading Policy;
Adhesion to the ABRASCA Manual;
Creation of the Environment, Social and Cultural Sustainability
Committee;
Establishment of an Environment Policy;
Establishment of a Code of Ethics and Conduct.
Capital Markets
5
Capital Markets
15,3
52,6
50,0
155,2
76,9
46,358,1
25,7
2003 2004 2005 2006 2007
42,8 52,6
+ 102
%
*
Accrual Dividends Accrual Dividends (R$ million)(R$ million)
> Pay> Pay--out ratio:out ratio:**
Extraordinary Dividend First semester annualized
Accrual dividend / Interest on Capital* * Net Income 2007e: 9 months annualized
40,0% 46,5% 33,8% 34,0% 48,2%
6
Corporate GovernanceCorporate Governance
> Ongoing actions:> Ongoing actions:
80% Tag- Along rights to the PN stockholders;
30% differentiated Dividend Policy;
Bovespa Corporate Governance Level I;
Election of an independent Board member.
Capital Markets
7
Increased stock liquidity;Daily average trading volume:
• in 2006: R$ 7,6 million,• in 2007: R$ 25,9 million (jan to oct / 2007).
Included in important stock indexes: and
Capital Markets
0,00
10,00
20,00
30,00
40,00
50,00
60,00
70,00
dez-05 fev-06 abr-06 jun-06 ago-06 out-06 dez-06 fev-07 abr-07 jun-07 ago-07 out-0705.000
10.00015.000
20.00025.000
30.00035.000
40.000
+ 240%
Stock appreciation during the period: +292%(dec / 2005 - Oct / 2007)
Stock Performance:Stock Performance:
Quotation (R$) Traded volume (15 day moving average in R$M)dec-05 feb-06 apr-06 jun-06 aug-06 oct-06 dec-06 feb-07 apr-07 jun-07 aug-07 oct-07
8
Duratex coverage:• until Sep / 2006: 5 institutions:
> Itaú, Credit Suisse, Santander, UBS Pactual and Socopa.• in Sep / 2007: 11 institutions:
> The before mentioned plus: Merrill Lynch, Deutsche Bank,Unibanco, Fator, Brascan and Link Corretora.
Capital Markets
Duratex Coverage::
9
Capital Markets
Business Segments
Housing Sector
Panel Making Sector
Capital Expenditures Plan
Performance
Competitive Advantages
10
Metal FittingsVitreous ChinaAccessories
Business Segments
DECA DIVISIONDECA DIVISION
Leadership within the Metals segment having a Leadership within the Metals segment having a prominent position in Vitreous China.prominent position in Vitreous China.
Possesses the broader product line attending the Possesses the broader product line attending the different market segments.different market segments.
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HardboardMDPMDF/HDF/SDFLaminate Flooring
Leadership within the Brazilian Leadership within the Brazilian panel making industry having the panel making industry having the
most diverse product line.most diverse product line.
WOOD DIVISIONWOOD DIVISION
Business Segments
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Timberland total area: 110.000 ha;Self-sufficiency in wood supply;ISO14.001 and FSC certified;Genetic improvement:
• replication of the most productive trees;Strengthening of the corporative image along with a possible economic gain:
• development of a project to quantify the amount of CO2 extracted from the environment,
• joining the CCX (Chicago Climate Exchange) project in progress.
Business Segments
13
Business Segments
DurafloraDuraflora (100% Duratex)(100% Duratex)
Average distance between the timberland and plants:• Duratex = 55 Km,• Competitors = 140 Km.
Average freight cost per m3:• Duratex = US$ 4,80,• Competitors = US$ 9,50,• Pulp and Paper = US$ 13,30.
Average timberland productivity (in m³ / ha / year):• Duratex = 42• Competitors = 38• Chile = 20• USA = 12• Europe = 5
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V i t r e o u s
C h i n a
1 1 %
M D F2 8 %
M D P1 3 %
H a r d b o a r d
2 0 %
M e t a l
F i t t i n g s
2 2 %
L a m i n a t e
F l o o r i n g
6 %
19%
35%
46%
Segments Attended
Business Segments
Revenues Breakdown (2007):
Housing(direct)
Housing(indirect)
Others
R$1,2 billion
15
Home Center
18%
Wholesale9%
Others2%
Retail55%
Technical Sales
4%
Retail27%
Others4%
Furniture Industry
58%
91%
3%
6%
77%
9%
14%
Revenues within the Domestic MktRevenues within the Domestic Mkt..(Jan(Jan--Sep/2007)Sep/2007)
DECA
WOOD
Business Segments
Housing16%
Housing7%
16
Capital Markets
Business Segments
Housing Sector
Panel Making Sector
Capital Expenditures Plan
Performance
Competitive Advantages
17
Housing
Segregation of the building under construction’s assets from the constructors’ balance sheet;Deed of trust;Easining of the credit access andincrease of it:
• FGTS to real estate up to R$350 K.
Improvement of the legal framework
+ Launchings
+ Credit
+ Term
Macro Scenario:
About 20 IPO’s since 2005: Primary issuing worth approximately R$ 13,0 billion.
Companies from the sector positioned to grow
18
2,1%
5,7%
1,3%4,5%
-2,6% -2,5%
-8,6%
7,9%11,25%
13,25%
18,50%
17,25%17,50%
22,00%19,00%
15,75%
2000 2001 2002 2003 2004 2005 2006 2007*
5,46,7 7,2
1991 2000 2005 Source: Fundação João Pinheiro
Interest rate and Civil Construction GDP
Housing deficit (in millions of residencies)
Housing
Macro Scenario:
SELIC rate
C. Constr. GDP
* 2007 estimated:• SELIC: mkt. consensus• C. Constr. GDP: IPEA
19
BRAZIL
Housing
Total Real Estate Financing / GDP:
20
Source: ABECIP
2,2 3,0 4,6
9,5
15,0
2003 2004 2005 2006 2007
22.550 24.915 25.689 28.600
10,9 bi9,8 bi7,8 bi
6,8 bi
2004 2005 2006may/06 to
apr/07
Release of new units
Housing financing via savings account (in R$ billion)
Housing
Launchings
VGV
Macro Scenario:
Source: EMBRAESPSão Paulo city
2112 months 5 months 3 months
Housing
Average Construction Cycle
Project Incorporation
Sale Flagstone erection
Hydraulic and Electric
infrastructureThick finishing
Keys handover
Accessories/Furniture/
Remodeling Finishing
(Ceramicware and Metals)
22
Housing
C (economic)
Description:• Constructor: MRV• Value: R$ 66.558• Area: 42 m2• Total # of units: 296• Deca Products: R$579,00
Description:• Constructor: Ecolife• Value: R$ 198.200• Area: 78 m2• Total # of units: 198• Deca Products: R$1.655,00
Description:• Constructor: Tecnisa• Value: R$ 449.049• Area: 130 m2• Total # units: 52• Deca Products: R$7.936,00
Description:• Constructor: Cyrela • Value: R$ 3.242.400• Area: 607 m2• Total # of units: 48• Deca Products: R$41.822,00
Diversified Product Mix> Type of real estate:> Type of real estate:
B A AA (premium)
23
Greater growth potentialStrategy to grow the product lines aimed to this market segment;• example: Max Line released on August, 2007;• complete line for bathrooms,kitchen and laundry;• revenues of the Max Line surpassed the commercial area initial
expectative in more than 5 times.
Economic Segment:
Housing
24
Capital Markets
Business Segments
Housing Sector
Panel Making Sector
Capital Expenditures Plan
Performance
Competitive Advantages
25
Industry:• 14,9 thousand companies in Brazil,• characteristics: small and medium sized family owned companies,• regional range,• absorbs about 60% of the fabricated panels;Main furniture centers (7):• Bento Gonçalves (RS),• São Bento do Sul (SC),• Arapongas (PR),• Grande São Paulo (SP),• Noroeste do Estado de SP (SP),• Ubá (MG),• Linhares (ES).
Panel Making Segment
Brazilian Scenario Brazilian Scenario (Furniture Makers)(Furniture Makers)
MG
SP
PR
SC
RS
Furniture centers
ES
DF
26
811 924
1.3261.641
1.871 1.846 2.0052.215 2.271
2.772
3.3603.680
2.027
389
3.546
0
1.000
2.000
3.000
4.000
2000 2001 2002 2003 2004 2005 2006 2007* 2008 2009 2010 2011
* 2007: annualized ** MDF growth between 2000 and 2007e = 27% pyGDP growth between 2000 and 2007e = 3,2%pyMDF / GDP = 8,4 xMDF estimated demand between 2007 and 2011 = 3,75 x GDP (4%) =15% py
Supply Demand
Source: ABIPA / SECEX / DURATEX
Estimated 15%py** growth rate
CAGR + 27%
Panel Making Segment
MDF: Domestic Market DemandMDF: Domestic Market Demand(in (in ‘‘000 m000 m33))
27
Capital Markets
Business Segments
Housing Sector
Panel Making Sector
Capital Expenditures Plan
Performance
Competitive Advantages
28
MDF: 800.000 m3 capacitygrowth over existing capacity: + 125%;
Low Pressure Coating Line: 8.500.000 m2 / year capacitygrowth over existing capacity: + 35%;;
Land: 18.500 hectares in the region.
Wood Division: R$630 million Wood Division: R$630 million ((AgudosAgudos / SP)/ SP)
DecaDeca Division: R$200 million Division: R$200 million ((SãoSão Paulo andPaulo and JundiaJundiaíí/SP)/SP)
Metal Fittings: + 400.000 items / month,growth over existing capacity: + 33%;;
Vitreous China: + 140.000 items / month, growth over existing capacity: + 44%.
CAPEX
Plan for the 2007 – 2009 Period:
Corporative: ERP system worth R$12,7 millionCorporative: ERP system worth R$12,7 million
Software supplier: SAP,Hardware: IBM Risk,Implementation consultancy: CPM Braxis.
29
Capital Markets
Business Segments
Housing Sector
Panel Making Sector
Capital Expenditures Plan
Performance
Competitive Advantages
30
Nominal industrial capacity and utilization rate
85%
99%
97%
83%
96%Vitreous China
Metal Fittings
MDF/HDF/SDF
MDP
Hardboard
3.800 K items/year3.800 K
items/year
500.000 m3/year500.000 m3/year
360.000 m3/year360.000 m3/year
14.400 K items/year14.400 K
items/year
640.000 m3/year640.000 m3/year
JAN JAN –– SEP / 2007SEP / 2007
Performance
31
Net Income Net Income (R$ million)(R$ million)
Net Revenues Net Revenues (R$ million)(R$ million)
161241
2006 2007
1.2111.078
2006 2007
333414
30,8% 34,2%
2006 2007
(January (January -- September)September)
1.3421.545
18,3%22,5%
2006 2007
Performance
EBITDA EBITDA (R$ million)(R$ million) & Margin & Margin (%)(%)
Equity Equity (R$ million)(R$ million) & ROE & ROE (%)(%)
+12%
+24%
+50%
32
332,6
113,4
(18,9)(31,8)
414,219,0
EBITDAsep/06
Revenues(volume)
Revenues (price/mix)
VariableCost
FixedExpense
EBITDAsep/07
EBITDA formation EBITDA formation (in R$ million)(in R$ million)
Performance
33
Performance
Quarterly AnalysisQuarterly Analysis (in R$(in R$ millionmillion))
3Q2007 2Q2007 3Q2006 Y-o-Y Q-o-QShipped Volumes
Wood (in m3) 330.488 343.030 333.326 -0,9% -3,7%Deca (in '000 items) 4.014 3.859 3.654 9,9% 4,0%
Net Revenues 429,0 425,2 399,8 7,3% 0,9%Wood 285,2 281,1 270,6 5,4% 1,5%Deca 143,8 144,1 129,2 11,3% -0,2%
Gross Margin 43,5% 46,0% 45,4%
EBITDA 145,8 147,6 130,8 11,5% -1,2%
EBITDA Margin 34,0% 34,7% 32,7%
Net Income 89,2 77,6 70,2 27,1% 14,9%
ROE (annualized quarter) 25,2% 22,9% 22,6%
34
8970
3344
2004 2005 2006 2007
3 3 2 3 1 8
4 0 0 4 2 92004 2005 2006 2007
1 0 2 8 6
1 3 1 1 4 6
30,7% 27,0%32,7% 34,0%
2004 2005 2006 2007
1.545
994 1.035
1.34218,8%
13,4%22,6% 25,2%
2004 2005 2006 2007
33rdrd QuartersQuarters
Performance
Net Income Net Income (R$ million)(R$ million)
Net Revenues Net Revenues (R$ million)(R$ million) EBITDA EBITDA (R$ million)(R$ million) & Margin & Margin (%)(%)
Equity Equity (R$ million)(R$ million) & ROE & ROE (%)(%)
35
137226
307
2005 2006 2007*
1.2711.489 1.621
2005 2006 2007*
540363
458
28,5% 30,7% 33,3%
2005 2006 2007*
1.051
1.3961.54513,4%
18,5% 20,9%
2005 2006 2007
Annual Annual (*2007: Sep / 2006 (*2007: Sep / 2006 -- Sep / 2007)Sep / 2007)
CAGR: +13%
CAGR: +22%
CAGR: +50%
Performance
Net Income Net Income (R$ million)(R$ million)
Net Revenues Net Revenues (R$ million)(R$ million) EBITDA EBITDA (R$ million)(R$ million) & Margin & Margin (%)(%)
Equity Equity (R$ million)(R$ million) & ROE & ROE (%)(%)
36
8 5 5 9
1 0 4 1 1 037,0%
28,0%
38,5% 38,4%
2004 2005 2006 20072 5 6 2 6 7
3 5 4 4 1 0
35,3%37,8%
31,6%31,6%
2004 2005 2006 2007*
Wood
Annual (*2007: Sep / 2006 - Sep / 2007)3rd Quarters
EBITDA EBITDA (R$(R$ millionmillion)) and Marginand Margin (%)(%)
Performance
37
3 62 72 61 7
16,8%20,7%
25,3%24,6%
2004 2005 2006 2007
9 6
1 0 4
1 3 2
6 5
17,1% 21,4% 24,6%23,3%
2004 2005 2006 2007*
*LTM (sep/06 - sep/07)
EBITDA EBITDA (in R$(in R$ millionmillion)) and Marginand Margin (%)(%)
Performance
Annual (*2007: Sep / 2006 - Sep / 2007)3rd Quarters
38
Capital Markets
Business Segments
Housing Sector
Panel Making Sector
Capital Expenditures Plan
Performance
Competitive Advantages
39
Competitive Advantages
Management
Market compound Competitive positioning
Low cost producer +
broad product line fit to the different market segments;leadership within premium markets;partnership with clients;countrywide presence;broad technical assistance network.
proximity to the consuming markets;leading brands;capital structure fit to grow:
• net debt = R$13,9 million;positive track record;access to capital markets.
low turnover;committed with Company growth (variable compensation);Corporate Governanceimprovement.
economies of scale;coating lines (better selling mix);self sufficient in wood supply;timberland at the shortest average logging distance.
Business Sustainability with Creation of Value
40
Disclosure of Results2007
08.Nov.2007
www.duratex.com.br
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