Upload
others
View
0
Download
0
Embed Size (px)
Citation preview
Page 1 of 24
UNIPAR - Results for the Second Quarter of 2007
Rio de Janeiro, August 14, 2007 – UNIPAR - União de Indústrias Petroquímicas S.A. - (BOVESPA: UNIP3, UNIP5 and UNIP6), one of the leading Brazilian petrochemical groups, with consolidated gross revenues of R$ 3.6 billion in 2006, announces today its results for the second quarter and first half of 2007 (2Q07 and 1H07, respectively). Unless otherwise stated, all financial and operating data discussed in this announcement are presented pursuant to the Brazilian Corporate Law and all comparisons are with the first quarter of 2007 (1Q07) and the first half of 2006 (1H06).
Highlights
UNIPAR posted a 1H07 net income of R$ 82.3 million, a hefty 152% up on the 1H06, due to the improved operating performance of the Company’s businesses, especially in the ethylene-polyethylene chain, in which Petroquímica União, Polietilenos União and Rio Polímeros operate.
The enhanced operating performance was underlined by the 49% growth in consolidated EBITDA [1], which reached R$ 207.5 million in the 1H07.
Net income totaled R$ 41.1 million in the 2Q07, virtually identical to the previous quarter.
In the 2Q07, UNIPAR made significant progress in consolidating its position as the main investor in the São Paulo Petrochemical Complex:
► On 05.25.07 the Company acquired 3,500,000 common shares of PQU, belonging to SEP Empreendimentos Produtivos S.A., comprising 7% of PQU’s voting capital and 3.49% of its total capital;
► On 06.25.07 the Company firmed and irrevocable commitment to acquire Dow Brasil’s stake in PQU, corresponding to 6,500,000 common shares and 6,500,000 preferred shares (13% of voting capital and 12.97% of total capital), which are part of PQU’s controlling block;
► On the same date UNIPAR acquired of 277,372 common shares and 227,372 preferred shares held by Dow Nordeste in PQU. These shares account for 0.55% of PQU’s voting and total capital and are not part of the controlling block;
► In addition, on 06.25.07 Polietilenos União, acquired Dow Brasil’s 140,000 t p.a. LDPE plant, located in the city of Cubatão.
The total value of these acquisitions was R$ 246 million. The shares owned by SEP and Dow Brasil were submitted to the other members of the controlling group of shareholders to exercise their right of first refusal, in accordance with PQU’s Shareholder Agreement.
However, it is worth noting that even if these rights are fully exercised, UNIPAR has already granted the majority stake in PQU’s voting shares, with a minimum interest of 53%.
IR Contacts
Vitor Mallmann Vice-President and IR Officer [email protected]
Sergio Santos IR Manager [email protected]
Phone: + 55 21 2128-5700 www.unipar.ind.br
Shareholders’ Contact
Bradesco Branch Network
Upcoming Events
Conference Call
Portuguese – August 17, 2007 Time: 14:00 pm (Brazil) Phone: + 55 11 2101-4848 Code: UNIPAR Webcast: www.unipar.ind.br
Investors’ Meeting
São Paulo – August 15, 2007 Time: 8:30 am Breakfast 9:00 am Presentation Place: Hotel Intercontinental Address: Alameda Santos, 1.123 RSVP Ivonete Mendes / Natália Farias [email protected] or + 55 11 3186-3777
[1] EBITDA = Operating Income + Financial Expenses – Financial Revenues + Devaluation and Amortization + Goodwill Amortization – Statutory Participation
Page 2 of 24
2Q07 Results
With the acquisition of the Cubatão’s plant by Polietilenos União – a wholly-owned UNIPAR subsidiary, the production capacity of this subsidiary reached 270,000 t p.a., as of 08.01.07. As of the 3Q08, with the conclusion of Capuava’s ongoing expansion project, Polietilenos União will have a capacity of around 500,000 t p.a.
On 08.11.07, UNIPAR and PETROBRAS released the following notice to the market:
“Petróleo Brasileiro S.A. - PETROBRAS and UNIPAR - União de Indústrias Petroquímicas S.A. hereby announce that they have started negotiations on the constitution of Companhia Petroquímica do Sudeste (hereinafter “CPS”). CPS will aggregate PETROBRAS and UNIPAR assets for basic petrochemicals and thermoplastic resins in the Southeast of Brazil in order to achieve global production scale and a greater competitiveness, both key issues in this sector.
In the evaluation of the assets that will make up CPS, identical assumptions, criteria and principals will be applied, always recognizing and respecting the rights of UNIPAR, PETROBRAS and the other signatories of the Shareholders’ Agreements of Petroflex and RioPolímeros, including, in the latter case, Petroquisa, in order to acquire the shares of said companies, as a result of the acquisition, by PETROBRAS, of the controlling shares in Suzano Petroquímica S.A..
UNIPAR will be the controlling shareholder of CPS, retaining the majority of the company’s voting capital, while PETROBRAS will have an important role as a CPS shareholder. Thus PETROBRAS and UNIPAR will enter into a Shareholders’ Agreement, which will ensure that CPS will be supported by professional management, in line with the best corporate governance practices adopted by large nationally-owned publicly-held companies.
PETROBRAS and UNIPAR will make their best efforts to entering into an Investment Agreement within not more than 90 days of this date, establishing the conditions for the constitution of CPS.”
Page 3 of 24
2Q07 Results
Petrochemical Scenario
International Scenario
• 2Q07
Brent crude prices began the 2Q07 at around US$ 68/bbl and remained more or less stable until mid-May before moving up and closing at around US$ 70.5/bbl. The average 2Q07 price of US$ 68.7/bbl, was 16% higher than the US$ 59/bbl recorded in the previous quarter
Naphtha prices (ARA, European market) averaged US$ 663/t in the 2Q07, 21% higher than the previous quarter, lifting the naphtha/Brent price ratio to 9.6, from 9.3 in the 1Q07.
US natural gas prices (Mont Belvieu), which had hovered around US$ 6.5/MM BTU since the 2Q06, reached US$ 7.5 MM BTU in the 2Q07, 12% up on the previous three months (US$ 6.7/MM BTU), pushed by oil prices and isolated demand swings in the fuel segment.
As for the natural gas derivatives widely used as inputs in the US petrochemical industry, average 2Q07 ethane and propane prices moved up strongly over the 1Q07, outpacing the upturn in natural gas prices. Ethane prices climbed by 23%, to US$ 538/t (72.3 US cents/gal), while those of propane rose by 17% to US$ 590/t.
The changes in the average quarterly price of ethane and propane showed a greater adherence to the variation in naphtha prices than to that of natural gas. The ethane/natural gas price ratio stood at 9.6 in the 2Q07, versus 8.8 in the previous quarter.
Most US basic petrochemical prices recorded an increase over the 1Q07: ethylene (US$ 984/t) and benzene (US$ 1,182/t) moved up 12% and propylene (US$ 1,133/t) 15%. Nevertheless, these variations were less than those of input prices, indicating that US cracker margins were squeezed in the 2Q07.
It is worth noting that the 2Q07 propylene/ethylene price ratio increased from 1.12 to 1.15, while the benzene/ethylene price ratio remained flat at 1.20.
European basic petrochemical prices in the 2Q07 also moved up over the previous three months. Ethylene (US$ 1,200/t) and propylene (US$ 1,146/t) climbed by 7%, while benzene (US$ 1,148/t) increased by a bigger 13%.
The 2Q07 propylene/ethylene price ratio remained stable at 0.96, while the benzene/ethylene ratio widened from 0.91 to 0.96.
Like their US counterparts, European crackers experienced narrower margins, since the increase in basic petrochemical prices was insufficient to offset the higher naphtha costs.
In the thermoplastics segment, taking low density polyethylene (LDPE) as a reference, 2Q07 prices in the US averaged around US$ 1,381/t, around 7% up on the 1Q07, but lower than the 12% increase in the price of ethylene. Consequently the average 2Q07 margin narrowed by 3% to US$ 397/t. Local demand recovered, but not enough to cause a significant reduction in resin stocks, prompting producers to look to exports as a means of unloading their production surplus.
In Europe, higher demand led to an 8% rise in the average 2Q07 LDPE price, which reached US$ 1,671/t, with a consequent 11% increase in the ethylene margin to US$ 471/t, the highest quarterly figure since the 4Q05.
Page 4 of 24
2Q07 Results
• 1H07
Brent crude averaged US$ 63.9/bbl, 4% down on the US$ 66.5/bbl recorded in the 1H06. On the other hand, the naphtha price grew by 11% to an average of US$ 606/t. As a result, the naphtha/Brent price ratio reached 9.5, a significant increase over the 8.2 recorded in the 1H06.
In the US market, natural gas averaged US$ 7.1/MM BTU in the 1H07, 7% down year-on-year. As with naphtha, average ethane (US$ 488/t) and propane (US$ 548/t) prices climbed by 5% and 6%, respectively, over the 1H06. As a result, the ethane/natural gas price moved up to 9.2 from 8.5 in the 1H06.
In the US basic petrochemical market, the 1H07 low point was the 13% year-on-year decline in ethylene prices to US$ 933/t, chiefly due to the polyethylene stocks formed at the end of 2006, which remained high throughout 2007. On the other hand, average benzene prices jumped by 31% to US$ 1,119/t, while those of propylene remained flat at US$ 1,058/t.
In Europe, buoyant petrochemical demand ensured a healthier performance, with average ethylene, propylene and benzene prices moving up a respective 14%, 12% and 30% to US$ 1,160/t, US$ 1,110/t and US$ 1,082/t, respectively.
While the naphtha-based European crackers saw their margins widen over the 1H06 due to the across-the-board increase in average basic petrochemical prices, those of their ethane-and-propane-based US counterparts suffered a decline, chiefly due to the drop in average ethylene prices.
In the thermoplastics segment, once again taking LDPE as a reference, the US and European markets also diverged significantly. While US prices dropped 14% year-on-year on average to US$ 1,337/t, European tags climbed by 12% to US$ 1,608/t, and while US margins were squeezed down by 16% to US$ 404/t, European ones widened by 5% to US$ 448/t.
It is important to point out that LDPE margins in both regions were above US$ 400/t, marking the 1H07 as a high point in the petrochemical margin cycle.
Page 5 of 24
2Q07 Results
LDPE Prices US$ / t
1,624
1,400
1,293
1,3811,492
1,606
1,358
1,5221,601
1,5441,671
1,544
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
USA Europe
LDPE Margin US$ / t
496 467
397411412
507
424
471
384
454436414
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
USA Europe
Ethylene Prices US$ / t
1,109
1,025984
882
9881,117
1,1201,2001,1601,147
1,086
944
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
USA Europe
Naphtha/Brent Ratio
8.2 8.2
9.69.3
8.58.9
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Benzene PricesUS$ / t
1,111 1,057
903
1,089
1,182
803
1,049 1,017
1,148
894
773
1,010
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
USA Europe
Brent Oil and Naphtha Europe
70.5 60.1 59.0 68.762.6 70.4
578 624508 550
663515
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Brent (US$/bbl) Naphtha Europe (US$/t)
Natural Gas and Ethane - US Gulf Coast
8.4 6.7 6.5 6.5 6.7 7.5
67.7 75.6 61.7 59.0 72.357.0
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
NG (US$/MM BTU) Ethane (US$c /gal)
Ethane/ Natural Gas Ratio- US Gulf
6.8
10.111.6
9.58.8
9.6
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Propane Prices US$ / t
1,128
965 9841,133
1,095992
9441,036 1,058
1,125 1,1461,074
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07USA Europe
Page 6 of 24
2Q07 Results
Domestic Scenario
• 2Q07
ABIQUIM’s 2Q07 average chemical sector domestic sales volume index moved up 5% over the previous quarter, but the price index remained flat, despite the 6% drop in the average R$/US$ exchange rate, from 2.1078, in the 1Q07, to 1.9818.
According to Coplast (ABIQUIM’s Plastics Commission), domestic thermoplastics sales volume grew by 8% over the 1Q07, while export volume remained virtually unchanged. Thus domestic sales accounted for 75% of the total in the 2Q07, versus 73% in the 1Q07.
Domestic polyethylene sales volume in the 2Q07 moved up 6% over the previous three months, while export volume dipped by around 2%. Domestic sales also slightly increased their share of total sales from 63%, in the 1Q07, to 65%.
Polyethylene installed capacity use stood at 87% in the 2Q07, very close to the previous quarter’s level.
• 1H07
ABIQUIM’s domestic sales volume index grew by 3% over the 1H06 and the domestic price index increased by 7% despite the 7% devaluation of the dollar against the Real.
Total thermoplastics sales volume moved up 9% year-on-year – 4% for domestic sales and 27% for exports – while domestic sales’ share of the total dropped from 78%, in the 1H06, to 74%, primarily due to the polyethylenes, given that Riopol’s operational start-up in the 2Q06 generated a domestic surplus, leading to a rise in exports.
Domestic polyethylene sales volume edged up by 3% over the 1H06, while exports jumped by almost 30% as a result of Riopol’s start-up, as mentioned above. Domestic sales accounted for 64% of total PE sales, less than the 69% recorded in the 1H07 due to higher exports.
Polyethylene installed capacity use stood at 88% in the 1H07, higher than the 1H06 average of 84%.
Domestic Sales IndexChemical Industry - ABIQUIM (1Q06=100)
100 102
110
101 102106
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Current Price IndexChemical Industry - ABIQUIM (1Q06=100)
100 98
106 108 107 107
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Polyethylene Market Coplast ABIQUIM
136
196 191
251218 213
363387 403
335375
398
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Exports ('000/Tonnes) Domestic Sales ('000/Tonnes)
Thermoplastic Market Coplast ABIQUIM
852 884934
797867
936
215280 272
353 314 313
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Exports ('000/Tonnes) Domestic Sales ('000/Tonnes)
Page 7 of 24
2Q07 Results
Consolidated Results
Net Revenues from Sales and Services:
Net revenues totaled R$ 1,349 million in the 1H07, 24% above the 1H06 figure of R$ 1,090 million, due to the 10% increase in sales volume and the 14% rise in the average sales price, in turn chiefly due to the start-up of Riopol in April/06.
Cost of Goods Sold and Services Rendered:
COGS stood at R$ 1,051 million in the 1H07, around 18% higher than the R$ 888 million recorded in the 1H06, thanks to the 8% increase in the unit sales price and the 10% upturn in sales volume.
Gross Profit:
Reflecting net revenue growth, gross profit climbed 47% over the R$ 202 million recorded in the 1H06 to R$ 297.9 million. Gross profit per unit stood at R$ 347 per tonne of product sold, 40% higher than the 1H06 figure, while the gross margin widened from 18.5% to 22.1%.
The ethylene-polyethylene companies – PQU, Polietilenos União and Riopol – contributed most to the margin recovery.
Net Operating Expenses:
Net operating expenses (excluding financial revenues and expenses) totaled R$ 134.3 million, R$ 37 million up year-on-year. The improvement was basically due to the R$ 19.4 million increase in selling expenses (since Riopol only began operations in the 2Q06), and the 1Q06 booking of R$ 16.7 million in non recurring operating revenues by the parent company from the favorable judicial verdict in the lawsuit related to PIS/Cofins taxes on financial revenues.
Consolidated Net Revenues - 1H07
WHOLLY OWNED SUBSIDIAIRES
42%
POLIBUTENOS1%
PETROFLEX5%
RIO POLÍMEROS18%
CARBOCLORO10%
PQU24%
Consolidated Net RevenuesR$ MM
494
596
741 713643
706
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Consolidated Sales VolumesThousand Tons
351 388 411 390 398 412
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Unit Gross ProfitR$ / Tons
267226
272
386343 352
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Page 8 of 24
2Q07 Results
EBITDA [1] [2]:
The gross margin gain relative to the previous year was the main contributor to the 49% increase in EBITDA, which totaled R$ 207.5 million in the 1H07, accompanied by an EBITDA margin of 15.4%, versus 12.8% in 1H06.
Net Financial Result:
Net financial expenses totaled R$ 17.2 million, well down on the R$ 42 million registered in the 1H06, primarily due to the devaluation of the dollar against the Real, which had a favorable impact on companies with foreign-currency debt, especially Riopol, whose installations were financed with foreign funding.
Consolidated Net Income:
UNIPAR posted a 1H07 net income of R$ 82.3 million, a massive 152% up year-on-year, thanks to the improved period operating performance, especially in the ethylene-polyethylene chain.
It should be noted that in the 1H06, UNIPAR’s result was impacted by the initiation of Riopol’s operational learning curve following its 2Q06 start-up. In addition, the polyethylene market at that time was characterized by exceptionally compressed margins and fierce competition among producers who took pre-emptive measures to maintain their shares in the light of Riopol’s market entry.
• 2Q07 vs. 1Q07
Sales volume in the 2Q07 increased by 3% over the previous quarter. The unit gross margin also widened by 3% to R$ 352/t, thanks to the 6% rise in the average sales price, generating a gross profit of R$ 153.4 million, 6% up on the 1Q07.
The gross margin growth absorbed the higher operating expenses (non-financial) – mainly selling expenses – generating modest EBITDA growth of 2% to R$ 104.6 million.
2Q07 net income of R$ 41.1 million was very close to the 1Q07 figure of R$ 41.2 million.
[1] EBITDA = Operating Income + Financial Expenses – Financial Revenues + Devaluation and Amortization + Goodwill Amortization – Statutory Participation. [2]
The sales volume, unit price/margin and EBITDA figures have not been audited by the independent auditors.
Net income for the 1H07 totaled R$ 82.3 million, a massive 152% up year-on-year, driven by the improved performance of the ethylene-polyethylene chain.
Consolidated EBITDAR$ MM
8257 70
114 103 105
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Net IncomeR$ MM
32.7
-0.1
14.7
43.2 41.2 41.1
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07
Page 9 of 24
2Q07 Results
Capital Expenditures
In the 2Q07, in addition to proceeding with its business expansion program in the state of São Paulo, UNIPAR increased its stake in Petroquímica União, and acquired Dow Brasil’s LDPE plant in Cubatão through Polietilenos União.
Jointly, these investments marked a significant step forward in implementing UNIPAR’s strategy of augmenting its petrochemical competitiveness in São Paulo and the Southeast by growing in size and increasing the integration between the first and second generation plants.
Acquisition of Stake in PQU
On May 25, 2007, UNIPAR acquired 3,500,000 PQU common shares from SEP Empreendimentos Produtivos S.A., corresponding to 7% of the company’s voting capital and 3.49% of its total capital.
On June 25, 2007, UNIPAR entered into a firm and irrevocable agreement with Dow Brasil to acquire the latter’s stake in PQU, corresponding to 6,500,000 common shares and 6,500,000 preferred shares (13% of voting capital and 12.97% of total capital), which are part of PQU’s controlling block.
As part of the same agreement, UNIPAR acquired 277,372 common shares and 227,372 preferential shares held by Dow Nordeste in PQU. These shares account for 0.55% of PQU’s voting and total capital and are not part of the controlling block.
The value of these acquisitions will total R$ 180.5 million, considering the hypothesis of UNIPAR carrying out the whole acquisition.
In accordance with the PQU Shareholders Agreement, the other members of the controlling block have the right of first refusal over the shares previously owned by SEP and Dow Brasil.
The deadline for the exercise of right of refusal for the Dow Brasil shares is August 25, 2007, when the shares will be transferred to UNIPAR. At any rate, UNIPAR will hold at least 55% of PQU’s voting capital.
Acquisition of the Cubatão LDPE Plant
On June 25, 2007, Polietilenos União, a wholly-owned subsidiary of UNIPAR, acquired Dow Brasil’s 140,000 t p.a. LDPE plant in Cubatão.
On August 1, 2007, Polietilenos União assumed full operational control of the Cubatão plant, raising its total polyethylene capacity to 270,000 t p.a., including the Capuava facility.
As of the 3Q08, with the conclusion of the Capuava plant’s ongoing expansion project, Polietilenos União will reach a capacity of around 500,000 t p.a., producing all the types of polyethylene required by the market: low density, high density and linear.
The acquisition of the Cubatão plant absorbed investments of R$ 65.5 million.
In addition to proceeding with its business expansion program, UNIPAR increased its stake in Petroquímica União, and acquired Dow Brasil’s LDPE plant in Cubatão through Polietilenos União.
Page 10 of 24
2Q07 Results
Expansion Program
Investments in expansion projects currently under way in UNIPAR companies total around R$ 2 billion. The current status of each of these projects is summarized below.
• Petroquímica União
The project to boost ethylene capacity from the current 500,000 to 700,000 t p.a. is still in progress and was 38% complete at the close of June/07.
The basic engineering project has been concluded, as has 75% of the detailing. Supply activities are under way and construction/assembly has begun.
The conclusion of the project is planned for the 3Q08, with total investments of close to R$ 1.2 billion, 70% of which financed.
• Polietilenos União
At the close of June/07, the installation of a new 230,000 t p.a. HDPE/LLDPE unit in Capuava was 73% complete. Basic engineering and detailing have been concluded and supply, construction and electromechanical assembly are moving ahead on schedule.
Start-up is scheduled for the 3Q08, in line with PQU’s expansion timeline. The project will absorb total investments of R$ 491 million, 50% of which through long-term financing from the BNDES.
Expenditure to date reached R$ 254 million and the committed amount came to R$ 409 million, 83% of the total.
• Carbocloro
Carbocloro’s chloralkali capacity expansion project is also on schedule, having reached 48% completion.
The project, which will add chlorine and soda capacity of 100,000 t p.a. and 112,000 t p.a., respectively, is scheduled to begin operations in the 2Q08 and involves investments of R$ 275 million, 50% of which in long-term financing.
Expenditure through June 2007 amounted to R$ 77 million, and the committed amount came to R$ 206 million, corresponding to 75% of the total investment.
• União Terminais
The project to expand the Santos terminal’s bulk liquid storage capacity by 20% got under way in December/06. Total estimated investments amount to R$30 million and will be 70% financed by the BNDES. The scheduled implantation period is 12 months.
At the close of June 2007, the project was 26% complete, with expenditure to date of R$ 9 million.
• Divisão Química
In the 2Q07, Divisão Química began expanding its cumene capacity from the current 210,000 t p.a. to 310,000 t p.a. The project also aims to replace the current SPA catalyst with zeolite catalyst technology, which offers advantages in terms of production costs and reduced environmental impact.
Estimated investments total R$ 93 million and the implementation schedule envisages operational start-up in the 2Q09. In June 2007, the BNDES was
Page 11 of 24
2Q07 Results
analyzing financing covering 70% of the total. In the same month, the US-based UOP was hired as the technology licensor and basic engineering contractor. Engineering activities have already begun.
Expenditure through June 2007 totaled R$ 131,000, mostly related to diverse studies and expenses associated with the selection/contracting of the licensor.
Indebtedness
Consolidated Debt CompositionIn R$ MM 2Q07 1Q07 Var. % 2Q06 Var. %Short-term Debt 199.5 186.4 7.1% 162.5 22.8%Long-term Debt 1,441.1 1,110.5 29.8% 907.9 58.7%Total Debt 1,640.6 1,296.8 26.5% 1,070.4 53.3%Cash and Equivalents 189.6 203.9 -7.1% 163.3 16.1%Net debt 1,451.1 1,092.9 32.8% 907.1 60.0%EBITDA1 391.4 343.9 13.8% 276.6 41.5%Net Debt/ EBITDA 3.7 3.2 3.31 - EBITDA LTM (Last Twelve Months) The net debt/EBITDA ratio increased from 3.2, at the end of the 1Q07, to 3.7 at the close of the 2Q07, chiefly due to higher debt generated by loans taken out for the acquisition of additional stakes in PQU from SEP and Dow and by Polietilenos União for the polyethylene plant in Cubatão.
Note that the contribution of these acquisitions to the EBITDA of UNIPAR refers only to the additional interest of 3.2% in the total capital of PQU and only to the month of June.
At the close of the second quarter, the foreign-currency portion of UNIPAR’s consolidated debt was R$ 389.5 million, equivalent to 24% of its gross debt.
Operating Performance
Capacity Using Average Rate
1H07 1H06 Var Divisão Química 102.1% 104.9% -2.7 p.p.Polietilenos União 102.1% 101.3% 0.9 p.p.União Terminais 116.5% 121.7% -5.2 p.p.Unipar Comercial(1) - - -Petroquímica União 92.4% 93.1% -0.7 p.p.Carbocloro 97.8% 97.2% 0.6 p.p.Petroflex 74.0% 80.0% -6.0 p.p.
Polibutenos 104.6% 101.0% 3.5 p.p.Rio Polímeros 80.0% 74.3% 5.7 p.p.
(1) Not applicable Subsidiaries
Divisão Química
Net Revenues: Net revenues totaled R$ 271.8 million in the 1H07, 7% up year-on-year, reflecting the 9% rise in the average sales price, given that sales volume fell by 2%.
Gross Margin: The gross profit of R$ 19.6 million was a hefty 45% down on the 1H06, since the increase in raw material costs more than offset net revenue growth.
86%
100%
100%
89%
71%
61%
99%
98%
60%
98%
98%
66%
48%
64%
93%
100%
100%
87%
DivisãoQuímica
Poliet ilenosUnião
UniãoTerminais
UniparComercial
PQU
Carbocloro
Petrof lex
Polibutenos
RioPolímeros
1H07 1H06
% Sales Domestic M arket
Page 12 of 24
2Q07 Results
The gross margin stood at 7.2% of net revenues, versus 14% in the 1H06, jeopardized by the reduced contribution margin for cumene (Divisão Química’s main product) in the US market, exacerbated by the exchange rate.
EBITDA: 1H07 EBITDA reflected the narrower gross margin, reaching R$13 million, 53% down year-on-year. Consequently, the EBITDA margin fell from 10.8% to 4.8%.
Net Income: Divisão Química’s 1H07 net income, assessed as an independent company, totaled R$ 9.7 million, roughly half the 1H06 figure (R$ 20.9 million), once again mainly due to the compression of the gross margin.
• 2Q07 vs. 1Q07
Net income in the 2Q07 stood at R$ 1.4 million, a significant decline over the previous quarter’s R$ 8.2 million, pulled down by the reduced margin in the naphtha-cumene production chain, chiefly due to the increase in the 2Q07 naphtha price. Gross profit fell by R$ 5.3 million and the gross margin narrowed from 9.0% to 5.4%.
União Terminais
Net Revenues: 1H07 net revenues stood at R$ 30.1 million, 7% down year-on-year, primarily due to the 5% reduction in billed volume and the 2% decline in the average billing price, in turn caused by the 7% period drop in the R$/US$ exchange rate, given that around 60% of União Terminais’ sales are tied to the US dollar.
EBITDA: Mostly thanks to the revenue slide, 1H07 EBITDA fell 21% year-on-year to R$ 15.3 million, bringing the EBITDA margin down from 60%, in the 1H06, to 50.7%.
Net Income: União Terminais posted a 1H07 net income of R$ 8.7 million, R$ 3.2 million down on the 1H06, mainly due to the drop in net revenues caused by the reduction in billed volume.
• 2Q07 vs. 1Q07
2Q07 net income moved up 9% over the previous quarter to R$ 4.5 million. The period operating performance also improved, with an 18% recovery in billed volume, which offset the 8% average price slide. EBITDA totaled R$ 8 million, up by 9%.
Unipar Comercial
Net Revenues: Net revenues came to R$ 122.8 million in the 1H07, 11% up on the 1H06, due to the 11% increase in the average sales price, given that sales volume remained virtually unchanged.
Gross Margin: Gross profit totaled R$ 17.5 million, 11% up year-on-year, reflecting better quality sales, leading to the increase in the average sales prices. The gross margin stood at 14.2%, similar to the 1H06 level.
EBITDA: Period EBITDA totaled R$ 7.9 million, 25% up on the 1H06.
Page 13 of 24
2Q07 Results
Net Income: Unipar Comercial declared a 1H07 net income of R$ 2.7 million, higher than the R$ 1.9 million posted in the 1H06, primarily due to the increase in net revenues and the average sales price, especially in the thermoplastics segment, which was strongly impacted by reduced margins and prices in the 1H06.
• 2Q07 vs. 1Q07
Net income in the 2Q07 totaled R$ 1.3 million, in line with the previous quarter. Sales volume fell by 4%, offset by the higher average sales price which outpaced the rise in costs, generating EBITDA of R$ 4 million, also close to the 1Q07 figure.
Polietilenos União
Net Revenues: Net revenues totaled R$ 196.5 million in the 1H07, 10% up year-on-year.
The operating highlights included the 8% rise in domestic sales volume and the 15% increase in the domestic market price. Total sales moved up by 8%.
Gross Margin: The improved sales performance, especially in Brazil, pushed gross profit up by 64% from R$ 18.9 million, in the 1H06, to R$ 30.9 million, accompanied by a gross margin of 15.7% of net revenues, up by 10.6%.
EBITDA: The improved gross margin was reflected in 1H07 EBITDA, which jumped by 153% year-on-year (or around R$ 11 million) to R$ 17.8 million in the 1H07, corresponding to a margin of 9.1%.
Net Income: Polietilenos União recorded a 1H07 net income of R$ 11.3 million, after the reversal of goodwill amortization, a massive 158% up on the R$ 4.4 million posted in the 1H06 thanks to the improved operating performance.
• 2Q07 vs. 1Q07
Total sales in the 2Q07 moved up 3% over the quarter before, led by the 6% increase in domestic volume. The average sales price also climbed by 3%, although this was offset by the 5% increase in average selling expenses. Overall, therefore, the operating performance suffered, exemplified by the reduction in EBITDA, from R$ 9.9 million in the 1Q07 to R$ 8 million.
Consequently, 2Q07 net income fell from R$ 6.9 million, in the 1Q07, to R$ 4.4 million. Controlled Companies
Petroquímica União
Net Revenues: Net revenues reached R$ 1,577 million in the 1H07, 15% above the 1H06 figure, thanks to the 4% upturn in total sales volume and the 11% increase in average prices.
Gross Margin: Gross profit totaled R$ 224 million, significantly higher than the R$ 96.4 million registered in the 1H06, reflecting the growth in net revenues,
Page 14 of 24
2Q07 Results
given that selling expenses only moved up 6% to R$ 1,275 million. The gross margin also improved substantially, widening from 7.0%, in the 1H06, to 14.2%.
In unit terms, gross profit stood at R$ 229/t of naphtha consumed, a massive increase over the R$ 99/t recorded in the 1H06.
EBITDA: The operating performance, measured by EBITDA, reflected the period margin gain, jumping by 149% from R$ 81.3 million, in the 1H06, to R$ 202.2 million. Consequently, the EBITDA margin widened from 5.9% to 12.8%.
Net Income: PQU posted a 1H07 net income of R$ 115.3 million, a vast improvement over the R$ 28.4 million recorded in the 1H06, due to the higher gross margin.
• 2Q07 vs. 1Q07
Sales volume and the average sales price in the 2Q07 increased by 8% and 4%, respectively, over the previous three months, pushing net revenues up by 12% to R$ 833 million, sufficient to absorb the 11% period upturn in selling expenses to R$ 713 million. Consequently, gross profit of R$ 120.6 million moved up by R$ 17 million, or 17%, over the 1Q07.
This margin gain was the main factor behind the increase in PQU’s net income, which grew from R$ 50.4 million, in the 1Q07, to R$ 64.9 million.
Carbocloro
Net Revenues: 1H07 net revenues came to R$ 279.3 million, 11% down year-on-year, jeopardized by the 11% drop in the average price, since sales volume moved up by 5%.
The international price of caustic soda – used as a price-setting reference for the domestic market – fell by 15% year-on-year in the 1H07. Soda is Carbocloro’s main product, responsible for close to 50% of its sales. Thus the international price slide, along with the devaluation of the dollar, contributed decisively to the decline in the company’s average sales price.
Gross Margin: Gross profit totaled R$ 90.9 million, 15% below the 1H06, mostly due to the drop in the average sales price. Consequently, the gross margin narrowed from 35.8% in the 1H06 to 32.5%.
EBITDA: Due to the reduced gross margin, 1H07 EBITDA fell 21% year-on-year, from R$ 102.4 million to R$ 80.9 million, while the EBITDA margin narrowed from 34.2% to 29%.
Net Income: Carbocloro recorded 1H07 net income of R$ 53 million, 17% down on the R$ 63.5 million reported in the 1H06, due to the margin reduction triggered by the drop in the average sales price.
• 2Q07 vs. 1Q07
Net income in the 2Q07 totaled R$ 26 million, similar to the previous quarter’s total of R$ 26.9 million. Operating performance followed a similar pattern, as evidenced by comparing the EBITDA figures for the two periods: R$ 40 million in the 2Q07, versus R$ 41 million in the 1Q07.
Page 15 of 24
2Q07 Results
Rio Polímeros
As Rio Polímeros only started up in April 2006, the following analysis compares the company's performance in the 2Q07 and 1Q07 only.
Net Revenues: Riopol recorded 2Q07 net revenues of R$ 359.9 million, 7% down on the previous quarter due to the 9% reduction in sales volume, given that the average sales price only edged up by 2%.
Net revenues in the 1H07 totaled R$ 727 million.
The 2Q07 polyethylene highlight was the 10% quarter-over-quarter increase in domestic sales. Exports plunged by around 30%, leading to an 8% decline in total sales to 105,800 t. In terms of mix, domestic market sales accounted for 66% of the period total, an improvement over the 55% recorded in the 1Q07.
In year-to-date terms, total polyethylene sales (domestic plus exports) came to 220,900 t, 60% in Brazil and 40% abroad.
In the 2Q07, Riopol commenced the production and sale of metallocenes.
In terms of production, the capacity utilization of the pyrolysis unit in the 1H07 was 81%, as a result of the instability in the supply of raw materials, which led the PE unit to register capacity utilization of 80%.
Gross Margin: Gross profit for the 2Q07 totaled R$ 76.7 million, representing a modest 3% increase over the previous three months, due to the rise in the average sales price, favored by the improved import/export sales mix and the maintenance of unit costs.
The 2Q07 gross margin came to 21.3% of net revenues, versus 19.2% in the 1Q07. First-half gross profit totaled R$ 151.1 million, accompanied by a gross margin of 20.2%.
EBITDA: EBITDA stood at R$ 63.4 million in the 2Q07, corresponding to a margin of 17.6%, down on the 19.1% registered in the previous quarter, impacted by the higher selling expenses due, among other factors, to the payment of royalties to the licensor of the PE technology. Year-to-date EBITDA totaled R$ 137.3 million, equivalent to 18.4% of net revenues.
Net Income: Thanks to the impact of the dollar devaluation on the company’s debt, which led to a gain of R$ 26.4 million in the financial result compared to the previous quarter, Riopol recorded a 2Q07 net income of R$ 33.5 million, well above the 1Q07 figure of R$ 21.2 million.
Net income for the 1H07 totaled R$ 54.7 million.
Page 16 of 24
2Q07 Results
The quarterly evolution of the company’s main financials is shown in the following graphs:
Net RevenuesR$ MM
284344 330
387 360
2Q06 3Q06 4Q06 1Q07 2Q07
Gross ProfitR$ MM
(12)
27
6374 77
2Q06 3Q06 4Q06 1Q07 2Q07
EBITDAR$ MM
23
5774
63
(21)
2Q06 3Q06 4Q06 1Q07 2Q07
Net IncomeR$ MM
21 34(33)(58)
(2)
2Q06 3Q06 4Q06 1Q07 2Q07
According to the Material Fact published by Riopol on June 30, the company signed an agreement with the consortium responsible for building its industrial complex (“EPC Contractor”), putting an end to the negotiations over damages arising from the delay in Riopol’s operational start-up. The effect of this agreement on Riopol’s results will be booked in August as non-operating revenues in the amount of R$ 142 million.
Petroflex
Net Revenues: Net revenues totaled R$ 712.4 million in the 1H07, 13% up on the same period in 2006 due to the 4% upturn in sales volume and the 9% increase in the average sales price.
It is worth underlining the 16% increase in domestic sales volume, mostly fueled by the healthy performance of the auto industry, whose sales moved up 26% year-on-year. This more than offset the 17% drop in exports, helping total sales to surpass their 1H06 levels. Domestic sales accounted for 71% of the 1H07 total, well above the 63% in the first six months of 2006.
This increased share of domestic sales also helped push up the average price between the two periods.
Gross Margin: Thanks to the growth in net revenues, which offset the increase in selling expenses, the 1H07 gross profit came to R$ 105 million, 56% up on the 1H06. The unit gross margin averaged R$ 616/t, a substantial 50% above the R$ 410/t registered in the same period in 2006.
The 1H07 gross margin came to 14.7% of net revenues, versus 10.7% in the 1H06.
EBITDA: As a result of the wider gross margin, EBITDA totaled R$ 80.6 million in the 1H07, practically double the R$ 39.2 million recorded in the 1H06, accompanied by an EBITDA margin of 11.3%, also significantly higher than the 1H06 mark of 6.2%.
Net Income: Petroflex posted a 1H07 net income of R$ 36.8 million, significantly higher than the 1H06 figure of R$ 6 million.
Page 17 of 24
2Q07 Results
• 2Q07 vs. 1Q07
Net income in the 2Q07 jumped by 102% over the previous three months, reaching R$ 24.6 million.
Sales volume increased 7% year-on-year. Although the average sales price dipped by 3%, the average unit cost fell by 5% (thanks to the decline in the average cost of butadiene and styrene, the principal inputs), leading to an 11% increase in the unit gross margin and pushing up 2Q07 gross profit by 18% to R$ 57 million.
The R$ 6.3 million reduction in operating expenses also contributed to the improved result. This decrease was due to the non-recurring reversal of provisions for Petros’ actuarial liabilities in the amount of R$ 6.1 million and the R$ 2.6 million reduction in net financial expenses, thanks to the appreciation of the Real against the dollar.
Polibutenos
Net Revenues: Net revenues in the 1H07 came to R$ 27.3 million, 21% up year-on-year due to the 12% upturn in the average price and the 7% increase in sales volume.
Domestic sales volume did exceptionally well, moving up by 37%, offsetting the 19% decline in exports. Domestic sales accounted for 61% of the 1H07 total, higher than the 48% ratio in the 1H06. This more favorable sales profile contributed to the rise in the average price mentioned above.
Gross Margin: Gross profit totaled R$ 8.9 million, R$ 2.8 million (or 45%) up on the 1H06, thanks to the increase in net revenues. The gross margin stood at 32.8%, versus 27.3% in the 1Q06.
EBITDA: Thanks to the margin gain, EBITDA increased by R$ 2.9 million year-on-year to R$ 7.5 million. The EBITDA margin stood at 27.4%, versus 20.1% in the 1H06.
Net Income: Polibutenos posted a 1H07 net income of R$ 4 million, higher than the R$ 2.1 million recorded in the 1H06 thanks to the wider gross margin.
• 2Q07 vs. 1Q07
Net income in the 2Q07 came to R$ 2.2 million, versus R$ 1.8 million in the 1Q07.
Despite the 7% decline in the unit gross margin due to the increase in the cost of isobutene – the company’s main input, whose price is tied to that of naphtha – sales volume climbed by 17%, pushing gross profit up by 9% to R$ 4.7 million, contributing to the improved result.
Consolidated Track Record
UNIPAR 2003 2004 2005 2006 1H07Gross Margin (%) 22.4 24.8 22.1 19.1 22.1EBITDA Margin (%) 15.4 18.2 15.2 12.7 15.4Net Debt/EBITDA 2.6 1.7 2.2 3.2 3.7Current Prices (R$/ton) 1,131 1,526 1,636 1,609 1,628 Sales Volumes (th tons) 1,325 1,387 1,374 1,540 810
Page 18 of 24
2Q07 Results
About UNIPAR
UNIPAR stands out among Brazil’s main petrochemical groups. Founded 35 years ago, it produces, sells and stores chemicals, basic intermediate petrochemicals and thermoplastic resins through its subsidiaries. The Group’s capital structure is shown below:
37.2% 50.0%
33.3%10.1% 100%
33.3%
100%100%
100%
% - SubsidiariesLegenda
% - Controlled Companies
51.0% *
* minimum after the exercise of the right of first refusal of the Dow Brasil shares
Caption
Following Riopol’s conclusion, UNIPAR will be focusing its investments on expanding the capacity of its businesses in the state of São Paulo, particularly the ongoing expansions in Petroquímica União, Polietilenos União, Carbocloro and Divisão Química which involve capital expenditures of around R$ 2 billion, in addition to the more recent movements related to the increase in its interest in PQU and the acquisition of the PE unit at Cubatão by Polietilenos União, incurring an additional disbursement of R$ 246 million.
The projects are in line with the Company’s strategy of consolidating its position as a major petrochemical player in Mercosul, as well as increasing its share in the Southeast region in the supply of petrochemicals to the region, with greater integration between the 1st and 2nd generations.
Page 19 of 24
2Q07 Results
The production capacities of companies controlled/consolidated by UNIPAR as of June 30, 2007, are shown below:
Company Product / Service Capacity Divisão Química Cumene 210 thousand t/a
Olefins 27 thousand t/a Isoparaffins 26 thousand t/a Polietilenos União LDPE/EVA 120 thousand t/a União Terminais Storage of 180 thousand m³ Bulk Liquids Santos 103 thousand m³ Rio de Janeiro 17 thousand m³ Paranaguá* 60 thousand m³ Unipar Comercial Distribution of Chemical & Petrochemical Products
N.A. (**)
Petroquímica União Ethylene 500 thousand t/a Propylene 250 thousand t/a Benzene 200 thousand t/a Solvents 180 thousand t/a Gasoline A 170 thousand t/a Butadiene 80 thousand t/a Carbocloro Chlorine 255 thousand t/a Caustic Soda 283 thousand t/a EDC 140 thousand t/a HCl 275 thousand t/a Hypochlorite 275 thousand t/a Petroflex Elastomers 411 thousand t/a Polibutenos Polyisobutenes 16 thousand t/a Rio Polímeros LLDPE / HDPE 520 thousand t/a Propylene 75 thousand t/a
(*) União Vopak is a wholly-owned company (**) It does not apply in terms of installed capacity / may be substituted by 70 thousand tonnes sales in the period
This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results, and those related to growth prospects of UNIPAR. These are merely projections and, as such, are based exclusively on the expectations of UNIPAR’s management concerning the future of the business. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian and international economies and the industry, among other factors and risks disclosed in UNIPAR’S disclosure documents and are, therefore, subject to change without prior notice.
Page 20 of 24
2Q07 Results
ANNEX I – Controlled Companies Summary
(in R$ '000) 1H07 1H06 Var %
Gross Revenue 375,157 351,004 6.9%Net Revenue 271,792 254,364 6.9%Gross Profit 19,615 35,639 -45.0%Operating Profit 9,635 20,837 -53.8%Net Profit 9,668 20,885 -53.7%EBITDA 12,998 27,523 -52.8%Plant, Property and Equipment 51,853 48,519 6.9%Total Liabilities (-) Current Assets 58,903 55,607 5.9%Unipar's Stake 100.00% 100.00% -
(1) Considered as an independent company
Gross Revenue 34,377 37,085 -7.3%Net Revenue 30,138 32,569 -7.5%Gross Profit 16,690 20,553 -18.8%Operating Profit 9,143 12,308 -25.7%Net Profit 8,672 11,898 -27.1%EBITDA 15,278 19,415 -21.3%Plant, Property and Equipment 78,913 70,719 11.6%Total Liabilities (-) Current Assets 86,479 81,619 6.0%Unipar's Stake 100.00% 100.00% -
Gross Revenue 167,460 151,274 10.7%Net Revenue 122,771 110,624 11.0%Gross Profit 17,524 15,734 11.4%Operating Profit 3,584 2,416 48.3%Net Profit 2,713 1,939 39.9%EBITDA 7,916 6,311 25.4%Plant, Property and Equipment 17,047 18,043 -5.5%Total Liabilities (-) Current Assets 18,215 18,588 -2.0%Unipar's Stake 100.00% 100.00% -
Gross Revenue 267,628 236,886 13.0%Net Revenue 196,514 179,224 9.6%Gross Profit 30,928 18,902 63.6%Operating Profit 5,044 (5,392) -193.5%Net Profit 11,288 4,369 158.4%EBITDA 17,832 7,052 152.9%Plant, Property and Equipment 355,812 88,356 302.7%Total Liabilities (-) Current Assets 499,131 227,557 119.3%Unipar's Stake 100.00% 100.00% -
(2) Considering the reversion of goodwill amortization
Gross Revenue 2,188,415 1,948,172 12.3%Net Revenue 1,576,835 1,371,661 15.0%Gross Profit 224,018 96,360 132.5%Operating Profit 166,504 37,426 344.9%Net Profit 115,293 28,351 306.7%EBITDA 202,230 81,300 148.7%Plant, Property and Equipment 1,344,668 1,046,052 28.5%Total Liabilities (-) Current Assets 1,398,628 1,086,457 28.7%Unipar's Stake 41.27% 37.18% -
Gross Revenue 372,077 399,798 -6.9%Net Revenue 279,339 298,870 -6.5%Gross Profit 90,886 106,933 -15.0%Operating Profit 73,506 88,038 -16.5%Net Profit 53,020 63,503 -16.5%EBITDA 80,939 102,367 -20.9%Plant, Property and Equipment 263,823 175,235 50.6%Total Liabilities (-) Current Assets 305,395 220,455 38.5%Unipar's Stake 50.00% 50.00% -
Gross Revenue 879,006 766,017 14.8%Net Revenue 712,397 631,294 12.8%Gross Profit 104,984 67,497 55.5%Operating Profit 55,491 7,656 624.8%Net Profit 36,789 6,048 508.3%EBITDA 80,557 39,239 105.3%Plant, Property and Equipment 524,240 435,115 20.5%Total Liabilities (-) Current Assets 580,826 470,647 23.4%Unipar's Stake 10.06% 10.06% -
Gross Revenue 33,744 27,140 24.3%Net Revenue 27,284 22,631 20.6%Gross Profit 8,935 6,183 44.5%Operating Profit 5,990 2,997 99.9%Net Profit 4,009 2,084 92.4%EBITDA 7,488 4,548 64.6%Plant, Property and Equipment 4,415 5,408 -18.4%Total Liabilities (-) Current Assets 8,826 7,584 16.4%Unipar's Stake 33.33% 33.33% -
Gross Revenue 922,734 354,715 160.1%Net Revenue 747,021 284,035 163.0%Gross Profit 151,135 (11,568) -1406.5%Operating Profit 83,837 (85,081) -198.5%Net Profit 54,713 (57,592) -195.0%EBITDA 137,319 (20,647) -765.1%Plant, Property and Equipment 2,280,122 2,446,472 -6.8%Total Liabilities (-) Current Assets 3,133,270 3,329,029 -5.9%Unipar's Stake 33.33% 33.33% -
Div
isão
Qu
ímic
a (1
)U
niã
oTer
min
ais
Un
ipar
Com
erci
alP
olie
tile
nos
Un
ião (
2)R
io P
olím
eros
Pet
roqu
ímic
a U
niã
oC
arb
oclo
roP
etro
flex
Pol
ibu
ten
os
Page 21 of 24
2Q07 Results
ANNEX II – Consolidated Income Statement Income Statement (in R$ '000)
2Q07 2Q06 1H07 1H06
Sales and Services Gross Revenues 1,009,159 853,431 1,935,162 1,592,932
Domestic Market 916,005 779,373 1,750,657 1,472,334
Exports 93,154 74,058 184,505 120,598
Deduction from Gross Revenues (302,912) (257,249) (586,120) (503,020)
Net Revenues 706,247 596,182 1,349,042 1,089,912
Cost of Goods Sold (COGS) (552,765) (497,576) (1,051,165) (887,952)
Gross Profit 153,482 98,606 297,877 201,960
Operating Revenues (Expenses) (77,302) (92,552) (151,526) (138,804)
Selling Expenses (34,399) (27,148) (63,700) (44,261)
G&A Expenses (32,879) (34,086) (63,151) (60,901)
Management Fees (3,808) (5,144) (7,842) (8,167)
G&A Expenses (29,071) (28,942) (55,309) (52,734)
Other Operating Revenues 780 1,562 969 16,689
Financial Results (6,487) (28,698) (17,191) (42,013)
Financial Revenues 5,248 45,406 11,071 55,441
Financial Expenses (11,735) (74,104) (28,262) (97,454)
Other Operating Expenses (4,317) (4,182) (8,453) (8,318)
Interest in Controlled Companies - - - -
Goodwill amortization (4,317) (4,182) (8,453) (8,318)
Equity Income - - - -
Operating Profit 76,180 6,054 146,351 63,156
Non-operating Results 585 (76) 566 (2,095)
Income Before Tax 76,765 5,978 146,917 61,061
Income tax and Social Contribution Provision (27,643) (12,117) (52,103) (30,818)
Deferred Income taxes (1,179) 9,654 768 9,912
Interest in profit (6,834) (3,581) (13,307) (7,474)
Net Income (loss) 41,109 (66) 82,275 32,681
Income (loss) per share
2Q07 2Q06 1H07 1H06
Numbers of Shares - Excluding Treasury (in '000) 759,544 632,953 759,544 632,953
EPS (R$) 0.05 (0.00) 0.11 0.05
Consolidated
Consolidated
Page 22 of 24
2Q07 Results
ANNEX III – Parent Company Income Statement Income Statement (in R$ '000)
2Q07 2Q06 1H07 1H06
Sales and Services Gross Revenues 187,369 173,505 378,294 351,004
Domestic Market 187,027 171,160 373,868 348,659
Exports 342 2,345 4,426 2,345
Deduction from Gross Revenues (54,396) (47,388) (106,502) (96,640)
Net Revenues 132,973 126,117 271,792 254,364
Cost of Goods Sold (COGS) (125,828) (108,348) (252,177) (218,725)
Gross Profit 7,145 17,769 19,615 35,639
Operating Revenues (Expenses) 36,521 (14,414) 67,094 9,211
Selling Expenses (1,288) (1,326) (2,746) (2,677)
G&A Expenses (10,502) (10,207) (20,968) (19,325)
Management Fees (1,693) (1,473) (3,293) (2,311)
G&A Expenses (8,809) (8,734) (17,675) (17,014)
Other Operating Revenues (316) 430 570 17,179
Financial Results (11,507) (9,205) (17,832) (17,849)
Financial Revenues 1,910 3,566 3,861 7,129
Financial Expenses (13,417) (12,771) (21,693) (24,978)
Other Operating Expenses (132) 15 (85) 15
Interest in Controlled Companies - - - -
Goodwill amortization (135) - (135) -
Dividends from other corporate interests 3 15 50 15
Equity Income 60,266 5,879 108,155 31,868
Operating Profit 43,666 3,355 86,709 44,850
Non-operating Results (120) (219) (300) (1,528)
Income Before Tax 43,546 3,136 86,409 43,322
Income tax and Social Contribution Provision 1,328 (1,590) - (5,882)
Deferred Income taxes (1,873) (415) (159) (1,726)
Interest in profit (1,892) (1,197) (3,975) (3,033)
Net Income (loss) 41,109 (66) 82,275 32,681
Income (loss) per share2Q07 2Q06 1H07 1H06
Numbers of Shares - Excluding Treasury (in '000) 759,544 632,953 759,544 632,953
EPS (R$) 0.05 (0.00) 0.11 0.05
Parent Company
Parent Company
Page 23 of 24
2Q07 Results
ANNEX IV – Balance Sheet Balance Sheet ('000 Reais)
Assets 2Q07 1Q07 2Q06 2Q07 1Q07 2Q06Total Assets 1,736,286 1,447,557 1,385,383 3,311,547 2,925,017 2,661,276 Current Assets 215,354 183,227 200,064 805,575 787,157 711,802 Cash and cash equivalents 115,112 70,612 95,393 189,550 203,946 163,323
Account receivable 1,266 20,473 957 226,022 254,032 224,139
Credit with controlled, afilliate and subsdiaries 40,733 46,716 37,585 41,618 35,565 29,867
Inventory 30,457 17,665 36,171 192,687 174,914 198,997
Recoverable Taxes 21,079 19,934 21,537 76,767 64,525 57,818
Deferred income taxes and social contribution - 1,714 724 13,718 16,209 8,804
Prepaid expenses 5,516 5,311 6,263 20,464 15,557 19,895
Securities - - - 21,263 152 -
Others 1,191 802 1,434 23,486 22,257 8,959
Long-term Assets 143,718 34,247 69,335 358,170 238,029 209,345 Related parties 8,351 8,226 47,309 - - -
Inventory maintainance 1,317 1,274 1,311 12,586 12,652 10,142
Account receivable - - - 145 145 -
Recoverable taxes 382 365 393 169,525 160,046 140,548
Deferred income taxes and social contribution 13,767 13,926 12,380 48,258 46,392 37,694
To be disposed of assets 4,737 4,737 4,737 4,764 4,764 4,764
Judicial deposits 5,644 5,583 1,628 7,943 7,831 10,899
Compulsory loans - - 1,441 584 526 1,967
Prepaid expenses - - - 4,445 5,159 2,580
Advance for future stock purchase 109,384 - - 109,384 - -
Others account receivable 136 136 136 536 514 751
Fixed Assets 1,377,214 1,230,083 1,115,984 2,147,802 1,899,831 1,740,129 Investments 1,319,196 1,172,491 1,061,447 16,727 665 1,003
Investment in controlled companies 1,303,158 1,172,491 1,061,447 - - -
Investment in controlled companies - goodwill 16,038 - - 16,038 - -
Other investments - - - 689 665 1,003
Plant, property and equipment 57,641 57,204 54,537 1,868,983 1,630,145 1,443,454
Deferred 377 388 - 262,092 269,021 295,672
Liabilities 2Q07 1Q07 2Q06 2Q07 1Q07 2Q06Total Liabilities 1,736,286 1,447,557 1,385,383 3,311,547 2,925,017 2,661,276
Current Liabilities 64,825 72,995 65,865 464,757 453,263 456,895 Suppliers 2,701 2,808 2,237 121,468 88,112 155,676
Short-term loans & financing 12,938 11,682 12,625 193,250 183,088 154,794
Debentures 5,495 - 6,800 6,295 3,277 7,698
Taxes payable 1,310 4,509 21,849 34,201 39,225 43,510
Related parties debt 27,318 26,551 6,960 22,530 54,767 15,662
Interest on equity 3,587 13,432 3,111 3,587 13,432 3,111
Dividends payable 1,261 2,731 1,207 1,261 2,731 1,207
Profit sharing 4,034 3,633 3,319 13,497 8,646 7,220
Income taxes payable - 887 408 17,327 9,975 11,916
Provisions 2,652 1,849 3,934 24,324 21,191 6,054
Sales for future delivery - - 432 - - -
Securitization Fund - Redeemable Quotes - - - 9,485 10,069 -
Others 3,529 4,913 2,983 17,532 18,750 50,047
Long-term Liabilities 459,773 203,983 214,673 1,635,102 1,301,175 1,099,536
Suppliers - - - 40,756 40,858 39,936
Long-term loans & financing 277,170 21,380 32,070 1,183,090 858,597 656,059
Debentures 180,000 180,000 180,000 258,007 251,866 251,866
Provision for contingencies 2,603 2,603 2,603 22,729 21,469 26,581
Taxes Payable - - - 122,316 120,096 116,236
Others - - - 8,204 8,289 8,858
Shareholders' Equity 1,211,688 1,170,579 1,104,845 1,211,688 1,170,579 1,104,845
Paid-in 759,544 632,953 632,953 759,544 632,953 632,953
Net income reserves 369,869 496,460 439,211 369,869 496,460 439,211
Retained earnings (losses) 82,275 41,166 32,681 82,275 41,166 32,681
Parent Company Consolidated
Page 24 of 24
2Q07 Results
ANNEX V – Statement of Cash Flow Statement of Cash Flows (in R$ '000)
1H07 1H06 1H07 1H06Cash and cash equivalentes, beginning of the period 88,853 116,768 215,591 231,178
Cash flows from operating activities
Net income in the period 82,275 32,681 82,275 32,681 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities
17,405 55,395 87,486 60,829
Depreciation and Amortization 2,068 1,592 48,765 33,237
Monetary variation and unpaid accrued interest (435) (1,526) (53,090) (10,828)Stake in controled companies (Net from dividends and interest on own capital received amounting to R$ 9,090 in 2007 and R$ 1,275 in 2006)
(66,797) 19,231 - -
Deferred income tax 159 1,726 (768) (9,912)
Goodwill amortization 135 - 8,453 8,318
Provision for contingencies - - 1,734 6,926
Others - 1,691 117 407
Decrease (increase) in assets 456 33,981 (10,966) (69,249)
Accounts receivable 367 52,159 13,184 6,198
Controlled and affiliated companies 1,716 (3,465) (4,092) 520
Inventories (6,564) (5,784) 8,261 (23,839)
Recoverable taxes 4,568 (7,953) (20,555) (40,758)
Other assets 369 (976) (7,764) (11,370)
Increase (decrease) in liabillities 2,112 (48,729) (39,253) (12,798)
Suppliers (585) (2,345) (15,374) 14,138
Controlled and affiliated companies 9,542 (36,018) (25,892) (17,921)
Taxes, fees and contributions (4,723) (4,565) (1,573) (16,385)
Other liabillities (2,122) (5,801) 3,586 7,370
Net working capital variation 2,568 (14,748) (50,219) (82,047) Net Cash provided by operating activities 19,973 40,647 37,267 (21,218)
Net cash used in investing activities (226,924) (5,711) (462,064) (71,858)
Securities - - (206) -
Advance for stock purchase (109,384) - (109,384) -
Interest variation in controlled company - - (17,867) -
Investments (114,707) (2,683) (16,174) -
Plant, Property and Equipment (2,833) (3,028) (314,692) (59,178)
Deferred - - (3,741) (12,680)
Net cash provided by financing activities 233,210 (56,311) 398,756 25,221
Proceeds from Loans and Debentures 256,155 - 540,710 124,492
Loans payments (5,829) (25,289) (124,838) (68,249)
Dividends and interest on own capital (17,116) (31,022) (17,116) (31,022)
Increase (decrease) in cash & cash equivalents 26,259 (21,375) (26,041) (67,855)
Cash and cash equivalentes, end of the period 115,112 95,393 189,550 163,323
Parent Company Consolidated