20131113 tereos internacional_presentation_eng_final

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


Corn MATIF Wheat MATIF

€/MT

500

550

600

650

700

800

1000

1200

1400

1600


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.


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


Q2 2013/14

Q2 2012/13

Change

Revenues 258 215 +20%



EBIT 30 24 +28%


Adjusted EBITDA 81 69 +17%


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


Starch & Sweeteners – Financials Higher Revenues on Improved Volumes and Prices, and a Positive Currency Effect

10


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)


Q2 2013/14

Q2 2012/13

Change

Revenues 1,112 851 +31%



EBIT 6 22 -74%


Adjusted EBITDA 49 51 -4%


283 246

(72) (23)

+55 +3

Q2 2012/13


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


Revenue Breakdown by Product


Q2 2013/14

Q2 2012/13

Change

Revenues 246 283 -13%

Gross Profit 28 29 -3%


EBIT 17 11 64%


Adjusted EBITDA 27 21 29%


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

Business

20131113 tereos internacional_presentation_eng_final