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August / 2008 1 st Half Results 2008 www.duratex.com.br

Duratex - 1st Half 2008

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Page 1: Duratex - 1st Half 2008

1

August / 2008

1st Half Results 2008

www.duratex.com.br

Page 2: Duratex - 1st Half 2008

2

Metal FittingsVitreous ChinaAccessories

DECA DIVISIONDECA DIVISION

Leadership within the Metals segment having a

prominent position in Vitreous China.

Possesses the industry’s broader product line

attending the different market segments.

Business Segments

Page 3: Duratex - 1st Half 2008

3

Deca is the unique brand that has business on entire regions;

Capacities:

Metals:

current: 15,6 M items / year;

new: 18,0 M items / year ;

= + 15%

Vitreous China:

current: 4,0 M items / year,

new: 7,2 M items / year:

= + 80%

Competitive Advantages

Economies of scale,

Logistics,

Products for all

Consuming segments.

Deca’s competitive environment

Sta. Aliança

North

Southeast

South

Business Segments

Page 4: Duratex - 1st Half 2008

4

Leadership within the Brazilian Leadership within the Brazilian

panel making industry having the panel making industry having the

most diversified product linemost diversified product line

HardboardMDPMDF/HDF/SDFLaminate Flooring

WOOD DIVISIONWOOD DIVISION

0

Business Segments

Page 5: Duratex - 1st Half 2008

5

8 competitors;

Predominantly located at south and southeast regions;

Close from the main furniture makers:

More than 14 thousand companies;

Main locations:

Bento Gonçalves (RS),

São Bento do Sul (SC),

Arapongas (PR),

Grande São Paulo (SP),

Votuporanga (SP)

Mirassol (SP)

Ubá (MG)

Linhares (ES)

Wood Division’s competitive environment

SP

PR

SC

RS

ES

MG

Business Segments

Page 6: Duratex - 1st Half 2008

6

100% of the timberland holdings under Duratex S.A;

Total timberland area: 120.000 ha;

Market value: R$ 1.320 M (US$ 825 M);

Book value (jun/08): R$ 491 M (US$ 307 M).

Self-sufficiency in wood supply:

Cost efficiencies;

Strategic access to raw material

Process integration reducing business volatility / risk.

ISO14.001 and FSC certified;

Member of the CCX (Chicago Climate Exchange).

TIMBERLAND VERTICALY INTEGRATEDTIMBERLAND VERTICALY INTEGRATED

Business Segments

Page 7: Duratex - 1st Half 2008

7

32%

46%

22% Housing(indirectly)

Housing(directly)

Others

Business SegmentsMarkets served

Construction

Housing deficit: 7,9 M units;

Availability of long-term credit;

Extension of maturity terms for funding;

Income improvement;

Companies within the sector capitalized.

Furniture Industry

Good prospect given the construction

good momentum;

Availability of short-term credit;

Improvement of income;

% of consolidated revenue

Page 8: Duratex - 1st Half 2008

8

Business Segments

Sources: BACEN e ABECIP

2008 Forecast Siduscon - SP

jun/08

Real Estate Financing via Savings Account Funding (R$ M )

6 months 12 months 6 months

Project

Incorporatio

n

SalesFlagstone erectio

n

Hydraulic and Electrical

Thick fin

ishing

Keys handover

Accesso

ries,

Furniture and

Remodeling

Light Finishing

Average construction cycle:

36.355 35.768 28.905 36.48053.827 61.121

113.873

195.900220.000

1,9 1,9 1,8 2,2 3,04,9

9,3

18,3

25,0

2000 2001 2002 2003 2004 2005 2006 2007 2008*

Unidades

R$ Bilhões

Units

R$ Billion

Page 9: Duratex - 1st Half 2008

9

C (economy)

Description:•Constructor: MRV•Area: 42 m2

•Value: R$ 1.584 / m2•Total units: 296• Products

Deca: R$171.384

Description•Constructor: Ecolife•Area: 78 m2

•Valor: R$ 2.540 / m2•Total units: 198• Products Deca: R$327.690

Description:•Constructor: Tecnisa•Area: 130 m2

•Valor: R$ 3.450 / m2•Total Units: 52•Products Deca: R$412.672 Description:

• Constructor Cyrela • Area: 607 m2

• Valor: R$ 5.340 / m2• Total units: 48• Products Deca: R$2.007.456

B A AA (premium)

Types of apartments:

Business SegmentsAvailability of products for the most diverse segments

Page 10: Duratex - 1st Half 2008

10

Agudos / SP

Capital Expenditures - CAPEXExpansion - Agudos / SP

MDF project;

Low pressure coating line;

Resin plant: verticalization of the resin production process.

Page 11: Duratex - 1st Half 2008

11

MDF project

Estimated start-up: april/2009;

Press: 77 meters long and 800.000 m3/year capacity:

(will be the largest Brazilian MDF line and one of the world’s biggest);

Equipment arrival : August 1st 2008

CAPEX

Page 12: Duratex - 1st Half 2008

12

Low pressure coating line

Start-up within the schedule;

Enriching the sales mix better unitary net revenue.

CAPEX

Page 13: Duratex - 1st Half 2008

13

Expansion of MDP on Itapetininga / SP

CAPEX

Capacity: 1.000.000 m3/year;

Total estimated investment R$ 1,0 billion;

Start-up scheduled for September 2010 ;

Resin plant: verticalization of the process for MDP

Page 14: Duratex - 1st Half 2008

14

5.0955.495

6.450

7.310

8.1108.745

9.1709.470

9.985

4.3413.626

4.571 4.646 4.920

11.332

10.118

9.034

8.066

7.202

6.0925.741

5.1264.577

4.007 3.492 3.530

2.927 2.511

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

>Expansions considered - ramp-up m3:(100% of competitors + 75% capacity of Duratex)

> Average GDP (2002 and 2007): CAGR de 3,60%; > Average GDP 2008 onwards: CAGR 4%;> Growth of demand on GDP: 3,61x; > Demand estimated growth: 3x PIB.

. DURATEX 1.340.000 . Isdra 500.000

. Berneck 1.140.000 . Eucatex 330.000

. Satipel 850.000 . Sudati 90.000

. Masisa 550.000 . Guararapes 90.000

TOTAL: 4.890.000

CAGR= +13%CAGR= +13%

CAGR= +12%CAGR= +12%

Supply

Estimated demand (CAGR 12% aa)

Real demand

CAPEX

Industry positioned to capture market opportunities

Page 15: Duratex - 1st Half 2008

15

Expansion in Metal Fittings: Jundiaí / SP

Capacity increase: 400.000 items / month; or +33%

Completion of expansions: 2nd half 2009

Capacities:

(million of items/month)

1,51,4

1,3

2008 2009 2010

Already avalaible

2nd half

CAPEX

Page 16: Duratex - 1st Half 2008

16

Jundiaí: already produces DECA products since may 2008;

Queimados/RJ: estimated start-up in December 2008.

Expansion in Vitreous China: Acquisition of Ideal Standard

JUNDIAÍ (SP)

Capacity: 80 K items/month

Total area : 137 K m²

QUEIMADOS (RJ)

Capacity: 70 K items/month

Tota areal: 60 K m²

CAPEX

Page 17: Duratex - 1st Half 2008

17

CABO DE SANTO AGOSTINO (NE)

Capacity: 120 K items / month

Total areal: 120 K m²

Deca Incorporated it on August 1st, 2008.

Expansion in Vitreous China : Acquisition of Cerâmica Monte Carlo

CAPEX

Page 18: Duratex - 1st Half 2008

18

Total debt 773,5

Cash and equivalents 654,9

Net debt 118,6

Equity 1.625,5

Net debt/ Equity 7,3%

Net debt / EBITDA 0,20

R$ M 1HY08

639,3

141,6

281,7

120,6

229,6134,2

Debt 1S08 2008 2009 2010 2011

Foreign Currency

Domestic Currency

773,5

30%70% STLT

Debt and Amortization Schedule (in R$ million)

CAPEX

Capital structure appropriate for the Capex time

Page 19: Duratex - 1st Half 2008

19

98%

86%

93%

98%

80%

Vitreous China

Metal Fittings

MDF/HDF/SDF

MDP

Hardboard

4.000 K items/year

*

4.000 K items/year

*

500.000 m3/year500.000 m3/year

360.000 m3/year360.000 m3/year

15.600 K items/year15.600 K

items/year

640.000 m3/year640.000 m3/year

PerformanceNominal capacity and utilization rate during the 1st half:

* 2nd half 2008 will comprise the following extra capacities:80.000 items/month from Ideal Jundiaí,

120.000 items/month from Cerâmica Monte Carlo.

Page 20: Duratex - 1st Half 2008

20

PerformanceHightlights 1st half non-recurring events (in R$ million)

Recovery of COFINS on financial revenues (8,7) (15,4) (24,0)

Revision of labor and civil provisions and reversal ofprovision of PIS / COFINS on payment of commissions 0,4 1,1 1,6

Adequacy cost for the commencement of operation of Ideal Standard do Brasil

3,5 - 3,5

SAP and agregated systems expenses 0,5 0,9 1,4

90,4 180,1 270,4RECURRENT EBITDA

94,6 193,4 288,0EBITDA

Consolidated

Page 21: Duratex - 1st Half 2008

21

1º semester 2007 2008 Var (%) 2007 2008 Var (%)

Shipments 6.820 7.893 15,7% 612.984 622.022 1,5%

Net Revenue 257,8 314,7 22,1% 523,9 577,9 10,3%

Gross Profit 106,6 130,8 22,7% 251,4 230,7 -8,2%Gross Margin 41,4% 41,6% 48,0% 39,9%

EBITDA 68,6 94,6 37,9% 199,6 193,4 -3,1%

EBITDA Margin 26,6% 30,1% 38,1% 33,5%

Non-recurrent - 4,2 - 13,3

recurrent EBITDA 68,6 90,4 31,7% 199,6 180,1 -9,8% recurrent EBITDA margin 26,6% 29,2% 38,1% 31,2%

Wood

PerformanceHightlights 1st half( R$ million, except for shipments)

*

* Recurrent Margin after adjustments in EBITDA and Net Revenues

Page 22: Duratex - 1st Half 2008

22

952,5

1.467,11.623,9

1.012,9

1.294,5

19%

14%11%

15%

23%

1H04 1H05 1H06 1H07 1H08

152,4152,3

90,672,7

49,1

1H04 1H05 1H06 1H07 1H08

144,3191,7 201,7

268,2 270,4

26%31% 30% 34% 30%

1H04 1H05 1H06 1H07 1H08

892,6

551,9622,4

678,7

781,736%

43% 42% 41%46%

1H04 1H05 1H06 1H07 1H08

1st Half performance - RecurringNet Rev.(R$ M) & Gross margin (%) EBITDA (R$ M) & Margin (%)

Net Income (R$ M) Equity (R$ M) & ROE (%)

Page 23: Duratex - 1st Half 2008

23

1.467,21.578,7 1.623,9

1.535,81.545,2

18%20%20%21%23%

2Q07 3Q07 4Q07 1Q08 2Q08

73,778,877,4

89,2

77,6

2Q07 3Q07 4Q07 1Q08 2Q08

147,6 145,8 144,1127,9

142,5

35% 34% 31% 30% 31%

2Q07 3Q07 4Q07 1Q08 2Q08

464,3

425,2 429,0

459,8

428,3

46% 45% 43% 41%40%

2Q07 3Q07 4Q07 1Q08 2Q08

Performance of recent quarters - RecurringNet Rev.(R$ M) & Gross margin (%) EBITDA (R$ M) & Margin (%)

Net Income (R$ M) Equity (R$ M) & ROE (%)

Page 24: Duratex - 1st Half 2008

24

50,551,5

68,6

90,4

26%23%

27%29%

1H05 1H06 1H07 1H08

1st Half Quarters

Performance

EBITDA recurring ( R$ M) & Margin ( %)

47,3

36,3 41,6

43,1 43,1

26% 25% 26%29% 28%

2Q07 3Q07 4Q07 1Q08 2Q08

Page 25: Duratex - 1st Half 2008

25

151,2140,2

199,6180,1

33% 33%38%

31%

1H05 1H06 1H07 1H08

Wood

1st Half Quarters

EBITDA recurring ( R$ M) & Margin ( %)

Performance

95,3

109,5106,0 101,0

84,8

38% 38%34%

30%32%

2T07 3Q07 4Q07 1Q08 2Q08

Page 26: Duratex - 1st Half 2008

26

112,3662,9 654,9

220,7

-65,6

-74

-201,4

( * ) Adjusted Income = Net Income + Depreciation + Financial Result + Provisions and Asset Write Downs

PerformanceCash Flow (in R$ million)

CAPEXOpening balance

Working-Capital FinancingAdjusted income *

Ending Balance

Dividends and other holdings

Page 27: Duratex - 1st Half 2008

27

0

150

300

450

600

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

*

2009

2010

2011

2012

0

40

80

120

160

EBITDA (R$M)Normal Dividends

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

*20

0920

1020

1120

12

EPS (R$)

1st MDF in Brazil

Laminated flooring

MDP Expansion

MDF Expansion

MDF ExpansionResin PlantLaminated flooring

MDP ExpansionResin plant

Creating Value

Acquisitions Deca

CAGR: +18%

2,57

0,25

560,4

CAGR: +18%

70,3

* EBITDA of the last 12 months and annualised dividend

Acquisition of land and planting of timberlands and expansion Deca

CAGR: +21%

R$50 million in extraordinary dividends

R$15,3 million in extraordinary dividends

104,0

6,9

Page 28: Duratex - 1st Half 2008

28

0,00

10,00

20,00

30,00

40,00

50,00

60,00

70,0029

-dez

-05

10-f

ev-0

6

27-m

ar-0

6

10-m

ai-0

6

21-j

un

-06

1-ag

o-0

6

12-s

et-0

6

24-o

ut-

06

7-d

ez-0

6

22-j

an-0

7

7-m

ar-0

7

18-a

br-

07

30-m

ai-0

7

12-j

ul-

07

22-a

go

-07

3-o

ut-

07

16-n

ov-

07

3-ja

n-0

8

18-f

ev-0

8

31-m

ar-0

8

13-m

ai-0

8

24-j

un

-08

5-ag

o-0

8

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

40.000

45.000

Member of and indexes

Valuation in dollar terms : . Duratex = + 183%. Ibovespa = + 151%

Average price (R$)

Traded volume(moving average 15 days - R$ (*000)

Creating ValueShare Performance (Dec / 2005 - Aug/ 2008)

Page 29: Duratex - 1st Half 2008

29

173 339550

748

1.990

3.1722.770

2002 2003 2004 2005 2006 2007 2008*

. Issuance of shares R$ 609 M

. Increases in stock 1x1

. Inclusion of Duratex in Index Ibovespa e IBrX50

. Extraordinary dividend (R$50M)

+1.500% during the period

. Adhesion to Bovespa Level 1

. Stock inplit 200 / 1

. 80% Tag-Along rights

Creating ValueEvolution of the market value (in US$ million)

. Extinction of PBs

. Extraordinary dividend

. 30% minimum pay-out

* As of 30.June.2008 .

Page 30: Duratex - 1st Half 2008

30

Capital Markets

Shareholder Structure::Total number of outstanding shares: 129,7M

• PN: 76,1M,• ON: 53,6M.

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

60%

mar

/07

apr

ma

y

jun jul

aug

sep

oct

nov

dec

jan/

08 feb

mar ap

r

ma

y

jun

Foreing investors

Other Local Investors

Local Pension FundsItaúsa (Controller)

80% Tag-along rights

Participation of major group of shareholders on PN stock:

44%

36%

11%

8%

. 1% of Treasury stock as of June 2008

Page 31: Duratex - 1st Half 2008

31

Corporate Governance

Adoption of an Internal Regiment to regulate the Board’s activities;

Ratification of the new Code of Ethics and Conduct, which is under the

disclosure process;

Adoption of a series of internal Policies aimed for supporting ongoing

procedures:

Reception and Treatment of Complaints Policy;

Corporate Governance Policy

Corporate Policy for Punishing and Avoiding Unlawful Acts;

Supply of Goods and Services Policy.

Board meeting on Jun/2008

Page 32: Duratex - 1st Half 2008

32

Institution Analyst E-mail

Beatriz Battelli [email protected]

Luis Vallarino [email protected]

Marcelo Telles [email protected]

Josh Milberg [email protected]

Jacqueline Lison [email protected]

Renata Faber [email protected]

Leonardo Cavarges [email protected]

Marcos Assumpção [email protected]

Marcello Milman [email protected]

Daniel Dol [email protected]

Edmo Chagas [email protected]

Andre Luiz Rocha [email protected]

Duratex coverage

Creating Value

Page 33: Duratex - 1st Half 2008

33

Disclaimer

The information contained herein was prepared by Duratex

S.A. (the “Company”) and does not constitute an offering

material, to subscribe for or purchase any of the Company’s

securities. This material brings general information about the

Company as of this date. No representation or warranty,

express or implied, is made concerning, and no reliance

should be placed on, the accuracy, fairness or completeness

of the information presented herein.

The Company can give no assurance that expectations

disclosed in this presentation will be confirmed.

August 12, 2008

Page 34: Duratex - 1st Half 2008

34

August / 2008

1st Half Results 2008

www.duratex.com.br