2Q08 Results Presentation

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2Q08 Results August 14, 2008

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Agenda

• 2Q08 Operational and Administrative Highlights

• 2Q08 Results

• Outlook

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Operational and

Administrative Highlights

Operational startup of Kami 9:

Sales beginning on April;

World-class quality, in line with top international products;

Full capacity of 1,250 tons/ month reached on June;

Main products are ultrathin special hygienic disposables and medical disposables.

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Isofilme Operations:

End of investments and

improvements at Isofilme

production process;

Full capacity of 800

tons/month reached on

June/2008;

On the 2nd Quarter 2008 it

increased 2,300 tons of

hygienic disposables to the

domestic market.

Operational and


EBITDA Margins higher than the

consolidated KAMI margins due to

fiscal incentives in Minas Gerais State

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Operational and


Specialties in Hygienic Disposables:

Laminated nonwovens production line at full capacity in the 2Q08;

Projects to expand the production capacity of specialties in hygienic disposables

in progress, with 2008 total capital expenditures estimated at R$23 million and

startup operations on 4Q08.

Domestic Market

Volume in tons of

laminated/

printed hygienic

disposables

Overpice of

printed hygienic

disposable

versus standard

Exports

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Operation - Pipes and Fittings Division:

Start-up sales of large-diameter Pipes to the industrial segment with installed

capacity of 5,000 tons/year.

Operational and


Other:

Repurchase of 2.9 million shares (92% of authorized) since the beginning of the

program until July 28, 2008, at a total cost of R$22.1 million;

Implementation (go live) of SAP system on July 1st, 2008.

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Agenda

• Operational and Administrative Highlights

• 2Q08 Results

• Outlook

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Increase of 31.3% over 2Q07,

more significant in the Nonwovens

Division that increased 42.4% in the

same period, due to the expansion

in the volume added by Isofilme,

acquired in August 2007, and at

KAMI9, construction of which began

in 2007 and operations in April 2008;

Increase of 12.5% in relation to

1Q08, having the Nonwovens

Division increased 18.8% in the

same period.

Sales Volume

In thousands of tonnes

Total: 18.4

Total: 21.4

Total: 24.1

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Gross Revenue


2Q07 and 10.9% compared with

1Q08:

Sales on the external market

increased 23.2% over 2Q07 and

3.2% in relation to 1Q08, even in a

scenario of significant appreciation

in the real’s value against the

dollar.

Sales on the domestic market

increased 26.8% over 2Q07 and

14.7% compared with 1Q08, due

to the operation of Line 9 and

Isofilme, reaching full capacity.

In million of Reais

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EBITDA (R$ million) and EBITDA Margin (%)

Adjusted EBITDA reached R$ 30.9

million (with margin of 24.2%), 17.5%

over 2Q07;


1Q08;

EBITDA Adjusted by the hedge

operation* totaled R$ 31.4 million (with

margin of 24.6%), 19.3% over 2Q07;

In relation to 1Q08, the increase

was of 13.7%, mainly due to the

increase in sold volumes.

Operational hedge*: The result ofexchange-rate lock forward contracts on

accounts receivable from the exportmarket.

27.6

31.4

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Net Revenue (R$ million) and Net Margin (%)

Net Revenue of R$ 13.8

million with net margin of

10.8%, reverting the loss

registered in 2Q07 due to the

financial expenses on account

of the promissory notes and

the exchange gains/losses

from the export market;

Increase of 40.6% over

1Q08, registering a profit of R$

9.8 million and a margin of

8.5%.

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Net income totaled R$ 103.7 million in

2Q08, up 34.4% in relation to 2Q07 and up

17.3% in relation to 1Q08;

These results are principally due to the

increase in sales and to the full capacity of

Isofilme and Kami9 (reached on June 08)

Volume reached 17.9 thousand tonnes,

up 42.4% when compared with 2Q07.

The domestic market registered a growth

of 15.5% (mainly Isofilme) and the

External Market registered a 33.7%

increase due to Kami 9;

Compared to 1Q08, the increment was

of 18.8%;

Nonwovens Division

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Nonwovens Division

Unitary Fixed Cost in line with 2Q07;

In relation to 1Q08 there was a drop of

8.1% due to the efficiency gains and

increased scale.

Drop of 0.3% compared with 2Q07, thanks to the

efficiency gains and increased scale, despite the

increase in petrochemical resin prices. Indexation of

the raw material supply contracts to the dollar also

contributed to at least partially compensating for the

upward pressure of resins on the external and domestic

markets.

In relation to 1Q08, there was a reduction of 2.7%, on

account of the fall in exports, which have a greater

logistics cost.

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Adjusted Ebitda through Operational

Hedge* was of R$28.4 million (Margin of

27.4%), 19.5% increase compared with

2Q07.

EBITDA of R$ 27.9 million, with a margin of

26.9%, 17.5% increase over 2Q07.

Growth was 24.3% compared with 1Q08, due

to the increase of the domestic sales. .

Nonwovens Division

Operational hedge*: The result of exchange-rate lock forward contracts on accounts receivable from the export market.

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Revenue of R$ 22.8 million, with a

17.6% growth when compared to 2Q07

and a 2.3% reduction when compared to

1Q08, due to the product mix change that

drove to a decrease in price (reduction of

approximately 3% over the average

price).

2Q08 volume was of 5.7 thousand tonnes

in line with 1Q08 and 14.2% over 2Q07.

Pipes and Fittings Division

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Growth of 7.8% in relation to 2Q07 due to a

new sales and operational structure in line with

the strategy of the Pipes and Fittings Division

Compared to 1Q08 there was a drop of

3.5%.

0.3% increase in comparison with

2Q07 and 1.4% increase when compared

to 1Q08.

PVC’s resin prices presented a slight

increase when compared with those of

1Q08


2Q07 1Q08 2Q08

2.5

3.2 3.2

0.51

0.57 0.55

Unitary Fixed Costs

2Q07 1Q08 2Q08

Fixed Costs and Unitary Fixed Costs(R$ million)

Variable Costs(R$ million)

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EBITDA of R$ 2.9 million,

with a margin of 12.9%, na

increase of 27.6% over 2Q07

and a reduction of 23.6% over

1Q08.

Return to the historical

margins due to the resin price

stabilization and to the product

mix.


2Q07 1Q08 2Q08

2.3

2.9

3.9

11.9%16.5%

12.9%

EBITDA Margin%

Ebitda (R$ million) and

Ebitda Margin (%)

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Agenda

• 2Q08 Operational and Administrative Highlights

• 2Q08 Results

• Outlook

Internationalization of the Company

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Strategic Aspects:

• Become a Global Player by using the technological potential and the

Company’s knowhow in disposable hygienic and medical products.

• Participate in the global product development by locating next to the

leader manufacturers of disposable diapers.

• Take advantage on the high disposable adult diapers market growth

(7%per year) in the US.

Operational Aspects:

• Optimize logistical costs through the substitution of a local operation

in the US for the volume exported from Brazil to the NAFTA.

•Allow the Brazilian operation to redirect its sales volume to the South

American market in order to keep up with the demand growth for this

region in the next 3 years.

Providência USA, Inc.

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Location:

• South East USA (in final stage of definition)

CAPEX:

• Production Equipment:

• KAMI 11: US$ 46.5 million (sep/08 to jun/09)

• KAMI 12: US$ 51.5 million (dec/08 to jul/10)

• Buildings/Installations/Utilities/Contingencies: US$ 22 million

(sep/08 to jul/10)

Estimated Return on Investment:

• IRR between 17 and 21%

• ROIC between 20% and 24%

2006 2007 2008*

62.986

75.732

66.133

Volume Perspectives

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In tonnes

Brazilian Nonwovens Market

*PerspectiveSources: Company’s Estimates

ABIQUIM

ABINT

+5%

+15% The increase in the

Brazilian Nonwovens

Market tends to absorb the

whole volume currently

exported by the Company

to the USA. Providência

currently exports 12,000

tonnes to the USA, that will

be sold in the domestic

market.

Nonwovens installed capacity 2008 2009 2010

Providência Brazil 73,000 80,000 80,000

Providência United States - 18,000 40,000

Total 73,000 98,000 120,000

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CFO: Eduardo Feldmann CostaIR Manager: Gabriela Las CasasPhone: +55 (41) 3381-7600 Fax: +55 (41) 3283-5909São José dos Pinhais – PR - Brazilwww.providencia.com.br/ir

The words “believe”, “anticipate”, “expect”, “estimate”, “will”, “plan”, “may”, “intend”, “foresee”, “project” and other similar expressions indicate

forward-looking statements. These forward-looking statements involve uncertainties, risks and assumptions, since they include information related

to our potential or assumed future operating results, business strategy, financing plans, competitive position in the market, industry environment,

potential growth opportunities and the effects of future regulations and competition. In addition, forward-looking statements refer only to the date

on which they were made and should not be taken as a guarantee of future performance. Providência is under no obligation to update this

presentation with new information and/or future events .

http://www.providencia.com.br/ir

Business

2Q08 Results Presentation