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1 Results Presentation | 4Q10
| Date post: | 22-Jun-2015 |
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1
Results Presentation | 4Q10
2
“Forward looking statements included in this presentation regarding the
Company’s business, operating and financial results and Company’s growth
are only predictions and were based on management's expectations
regarding future performance. These expectations are highly dependent on
market conditions, Brazilian economic scenario, industry performance and
international markets, and are therefore subject to change”
Disclaimer
3
Corporate Profile
4
The largest and most diversified industry in the roofcovering segment in Brazil
5
Supply Chain
6
Other Segments
7
1) Anápolis/GO; 2) Colombo/PR; 3) Goiânia/GO; 4) Rio de Janeiro/RJ; 5) Simões Filho/BA; 6) Porto Alegre/RS e 7) São Paulo/SP.
Plants Location – Fiber cement
Commercial Branches
8
Plants Location – Concrete tiles
9
Timeline
Eternit’s most important accomplishments since its foundation in 1940
10
SAMA - Overview
11
Global Market – Chrysotile Ore
Global Consumption (MM of Ton)
2010
2.2
2008
2.4
2007
2.4
2006
2.3
2005
2.3
2004
2.1
2009
2.1
Canada 6%
Russia – 48%
Kazakhstan – 10%
China – 22%
Brazil 14%
12
Competitive Advantages
13
Sales of Chrysotile Ore (thous. tons)
Domestic Market Foreign Market
42
36
4Q09
78
37
43
4Q10
80
2006 2007 2008 2009
144 132172 179
155
8790
101125
136
2005
231 222
273304
291
143
163
2010
306
CAGR (2004/2010) = 3%
3%
161
88
2004
249
23%
14
Eternit - Overview
15
Products and solutions for civil construction
Water tanks and filters
Roof coverings
Bathroom chinaware fixtures
Components for constructions systems
16
Residential Market Industrial and Commercial Market
Total Market Market Evolution (MM m2)
Metallic10%
Ceramics36%
Fiber cement48%
Others3%
Fiber cement42%
Metallic35%
Others11%
Ceramics12%
Concrete4%
Ceramics45%
Fiber cement51%
Concrete3%
Covering market – Brazil (2010)
425459
2005 2006 2007
8%5%
2008
505
10%
2009
495
-2%
406
2010
534
8%
17
Structure of the Industrial Park in 2010
Installed Capacity : Approx. 2,820,000 tons/year
Capacity utilization - around 86%
Consumption : Approx. 2,434,000 tons/year
Companies: 11
Plants: 19
Selling Points : 39,000
Installed Capacity: 1,000,000 tons/year
Capacity utilization - around 83%
Consumption: 827,000 tons/year
Market-share: 31%
Plants: 5
Selling Points: over 14,000
BrazilianFiber CementMarket
ETERNIT
18
Competitive Advantages
Products and Solutions for Civil Construction
19
Sales of Fiber Cement* (thous. tons)
* Includes components for constructions systems
2006 2007 2008 2009 4Q0920052004
431
523578
620
725 731
4Q10
195232
19%
2010
827
CAGR (2004/2010) = 11%
92%
20
Tégula - Overview
21
Main Products – Roof coverings
22
Full Roofing Solution
23
Installed capacity: Approx. 22 million m²/ year
Capacity utilization - around 70%
Consumption: Approx. 15.4 million m²/year
Companies: around 130
Installed Capacity : 7.2 million m²/year
Capacity utilization - around 74%
Consumption : 5.3 million m²/year
Market-share: 35%
Plants: 5
Brazilianconcrete roofingmarket
TÉGULA
Structure of the Industrial Park in 2010
24
Products and Solutions for Civil Construction
Competitive Advantages
25
Concrete Tiles
*Tégula was acquired on February 11 2010. The amount of 587 thousand m2 refers to Eternit.
3Q102Q101Q10*
1,3001,454
1,435
4Q10 3Q102Q101Q10*
60%
70%80% 80%
4Q10
Sales (thousand m²) Capacity Utilization
1,064
587
477
35%
26
Main IFRS Adjustments that Impacted the Eternit's Balance Sheet
27
IFRS Adoption
CVM Instruction No. 457, mandates the submission of Financial Statements of Corporations Traded on international standards - IFRS from the year ended 2010.
Eternit anticipates the implementation of IFRS as early as 2007 and their impact on financial statements in 2010 are irrelevant.
28
Main IFRS Adjustments in Net Income
182---Interest on Fixed Assets Financing
51,921
23
8,279
35
(104)
43,688
2007
102,08573,11981,133Values in IFRS
(105)(104)(96)Additional Depreciation
---Reversal of Deferred Asset
---Reversal of Goodwill
(26)3628Deferred Income Tax
201020092008
IFRS Adjustments
102,03473,18781,201Values in BRGAAP
The main change in GAAP is the reversal of goodwill on acquisition of subsidiary SAMA face the future profitability of this asset.
29
1,4221,4221,4221,422Complementary CMB - Fixed
16,55816,55816,55816,558Goodwill – Reversal of Goodwill Amortization – SAMA Minerações
182---Interest on Fixed Assets Financing
250,402
59
97
(133)
(207)
232,583
2007
412,476390,792265,698Values in IFRS
(507)(402)(303)Additional Depreciation
(133)(133)(133)Reversal of Deferred Asset
979797Reversal of Amortization of Deferred Assets
125148117Deferred Income Tax
201020092008
IFRS Adjustments
394,732373,102247,940Values in BRGAAP
Main IFRS Adjustments in Equity
30
Operating and Financial Aspects
31
Domestic Market Foreign Market
Consolidated Net Revenue (R$ million)
255 262 276 307424 453
97 87 7995
120130
2006 2007 2008 2009 4Q0920052004
352 349 355402
544583
4Q10
129
28
157
184
27
211
34%648
111
2010
759CAGR (2004/2010) = 14%
116%
32(*) Others: metallic roofing tiles, polyethylene water tanks, bathroom chinaware fixtures and water pipe filters
2004 2008
2010 4Q10
Chrysotile Ore43.1%
Components for constructions
systems1.7%
Fiber cement55.2%
34.5%
Others (*)0.1%
3.3%
Fiber cement62.1%
29.1%
Others (*)3.4%
Fiber cement55.8%
2.8%
8.9% 27.4%
Others (*)3.4%
Fiber cement56.9%
3.2%
9.1%
Consolidated Net Revenue Breakdown
Chrysotile Ore
Components for constructions
systems
Components for constructions
systems
Chrysotile Ore
Concrete tiles and Accessories
Concrete tiles and Accessories
Components for constructions
systems
Chrysotile Ore
33
COGS Breakdown – 4Q10
Fiber Cement Chrysotile Ore
Concrete Tiles1 - Cement (46%), Chrysotile Ore (43%) and others (11%) 2 – Fuel, explosives, packaging, among others
3 - Cement (52%), sand (33%) and others (15%)
Raw material¹64%
Workforce11%
Depreciation3%
Others Costs19%
Energy3%
Raw material²30%
Depreciation4%
Energy7%
Others Costs14%Workforce
45%
Raw material³50%
Energy4%
Others Costs22%
Workforce17%
Depreciation7%
34
EBITDA (in R$ million)
2006 2007 2008 2009 4Q0920052004 4Q102010
81 7869 73
133123
144
CAGR (2004/2010) = 10%
3034
13%
78%
35
Net Income (in R$ million)
2006 2007 2008 200920052004
33 3438
44
8173
4Q09
17
4Q10
29
2010
102CAGR (2004/2010) = 21%
68%
209%
36
Margins
Gross Margin
Net Margin
EBITDA Margin
2006 2007 2008 2009 201020052004
23% 22%20%
25%21%
19%
41% 40%
45%42% 43%
9% 10% 11% 11%15% 13% 13%
18%
44%44%
4Q09 4Q10
19%16%
41%38%
11%14%
37
Tégula
R$ 13,987 thousandR$ 7,962 thousandNet Income
R$ 8,023 thousandR$ 1,281 thousandEBITDA
29%15%Gross Margin
02/11 a 12/31*
21%
12%
R$ 19,832 thousand
R$ 67,863 thousand
4,776,492
4Q10
R$ 19,133 thousandNet Operating Revenue
Operating and Financial Aspects
Net Margin
EBITDA Margin
Gross Profit
Sales - Tiles (in m2) 1,434,887
R$ 2,927 thousand
7%
42%
* The net margin was positively affected due to the constitution of the deferred tax of R$ 10.3 million
38
CAPEX (in R$ million)
Investments
Tégula Acquisition Capacity Increase – Eternit
Capacity Increase – SAMA
Molds and New Business
CAGR (2004/2010) = 24%
3229
93
258%
28
4
34
2617 13
25 3021
27
7 11
48
9
34
7
28
9
2
3
2004 2005 2006 2007 2008 2009 2010 4Q09 4Q10
14
9
65
13
86%
Capacity Increase – Tégula
39
New Production Lines of Finished Products
Colombo - PR January/2009
Goiânia - GO April/2008
Simões Filho - BA October/2010
40
Construction of the New Synthetic Marble Production
External Area Production Line Resin Silo
41
35 km15 km
Natural Gas Line
Cement
Land Acquisition for “Multi-Products” Plant
42
Corporate Governance and Capital Markets
43
Board of Directors
Committee for Auditing, Financial Control and Treasury
CEO (*)
Internal AuditingInternal Controls
Investor Relations Officer (*)
Committee for Socio-Environmental Responsibility
Human Resources Committee
Legal Committee Committee for Strategic Planning
Administrative-Financial Officer
Comercial Officer
Industrial Officer
Human Resources
Officer
Development and New Business Officer
Mining Officer
(*) Accumulates functions
Governance Structure
44
www.assembleianaweb.com.br
www.eternit.com.br/ri
“Assembleia na web” (Shareholders' Meeting via WEB)
45
Another step in good corporate governance practices;
The system allows electronic proxy voting by digital certificate;
More than half of Eternit’ shareholders reside outside the state of Sao Paulo;
CVM (Securities and Exchange Commission of Brazil) and IBGC (Brazilian Corporate Governance Institute) recommend that companies encourage the participation of shareholders at meetings;
Partners:
“Assembleia na web” (Shareholders' Meeting via WEB)
46
Awards in Governance
The Eternit ’s quality is also present in Corporate Governance
47
Shareholding Structure Feb/11 Feb/08
Geração L. Par. F. I. A. 19.51% 6.89%
Luiz Barsi Filho 12.99% 5.47%
Victor Adler 6.70% 5.46%
Management 1.81% 1.13%
Other Board Members 0.04% 0.02%
Treasury Stock 0.03% 0.28%
58.1% 32.0%
7.6%2.3%
Individual InvestorsCorporationsInvestors AbroadClubs, Funds and Foundations
Board Members MemberSince
Sérgio Alexandre Melleiro (*) 1993
Guilherme Affonso Ferreira (*) 2003
Lírio Albino Parisotto (*) 2004
Mário Fleck (*) 2005
Victor Adler (*) 2005
Élio A. Martins 2007
Luiz Barsi Filho (*) 2008
(*) Independent Board Member
FREE-FLOAT 76.63%
Ownership Structure – Feb/11
48
Number of Shareholders
2006 2007 2008 2009
2,482
7,3177,726
6,615
2010
(*) Until February 2011
5,910
1,302
20052004
1,638
2011(*)
6,165
49
Average Traded Volume (R$ thousand)
(*) Until February 2011
2006 2007 2008 2009
1,297
2,900
1,108
3,708
2010
975716604
2004 2005 2011(*)
897
50
Shareholder Remuneration
Net Income Dividends and Interest on own capital
2007 2008 2009
4440
65
81 73
Net Income X Shareholders Remuneration (R$ million)
2010
55
72
102
2004 2005 2006
20
38443433 30
2011*
(*) Until March 2011
27
51
Dividend Yield
(*) Until March 2011
2007 2008 2009
8.6%
12.8%
15.1%
2010
9.3%
2004 2005 2006
13.2%
17.1%16.2%
2011*
2.5%
52
Eternit’s Shares Performance (Dec/06 - Feb/11)
Between 12/30/2006 a 02/28/2011, Eternit”s shares appreciated 63.8% and IBOVESPA appreciated 51.5%.In the same period, including the payment of dividends and interest on own capital, Eternit’sshares appreciated 173.4%.
67,383
R$ 11.08
50
80
110
140
170
200
dec-06
mar-07
jun-07
sep-07
dec-07
mar-08
jun-08
sep-08
dec-08
mar-09
jun-09
sep-09
dec-09
mar-10
jun-10
sep-10
dec-10
ETER3
IBOVESPA
feb-11
53
Outlook
54
Economic Figures
Minimum Wage (R$) Workforce (R$ million)
300380 415
465510 545
2005 2006 2007 2008 2009 2010 2011Source: BACEN
CAGR: 10.5%
350
303,028 321,163 338,501365,331 377,361
404,751
2005 2006 2007 2008 2009 UDM 2010*
CAGR: 5.96%
Source: IBGE * 2010 UDM from dec/09 to nov/10
Food Basic Basket SP x Minimum Wage (purchasing power)
151.0 180.0 200.0 240.0 260.0 300.0350.0 380.0 415.0
465.0510.0 545.0
119.5 128.6
239.5 228.2 265.2
158.7 164.8 172.2 183.4 182.1 214.6
79.2%71.4%
79.4%
68.7% 66.2%61.1%
52.0%56.5% 57.7%
49.1% 52.0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Minimum Wage (R$) Food Basic Basket in SP (R$) %Source: IBGE and DIEESE
55
Credit Availability Unemployment Rate – BrazilGovernment, Industry, Housing, Rural, Commerce, Credit
Individuals (R$ billlion)1,703.81,677.61,613.8
1,528.91,451.91,410.3
1,227.3
936.0
dec/07 dec/08 dec/09 mar/10 jun/10 sep/10 nov/10 dec/10
8.6% 8.4%7.4%
6.8% 6.8%
5.3%
dec/05 dec/06 dec/07 dec/08 dec/09 dec/10
Growth of the Brazilian SavingsSource: BACEN Source: IBGE
233.0 238.0 240.0 245.0254.0 257.0 258.0 260.0 262.0 265.0 270.0
277.0 280,015.0%16.0% 16.0%
17.0% 18.0%19.0% 19.0% 20.0% 20.0% 20.0% 20.0% 20.0%
19.0%
aug/09 sep/09 oct/09 nov/09 dec/09 jan/10 feb/10 mar/10 apr/10 may/10 jun/10 jul/10 aug/10
R$ billlion (%) Chg YoYSource: BACEN
Economic Figures
56
Housing Deficit – million of units
New Methodology Old Methodology
6.6 6.3 5.8
7.8 7.97.3
7.9
2004 2005 2006 2007 2008
57
GDP and Gross Revenue Comparison (%)
(E) - Estimate - Source: BACEN. Gross revenue growth has been consolidated as of January to December 2010 vs. the same period of 2009The Company does not inform guidance of future revenue.
5.0 5.4
13.2
8.2 5.1
34.9
-6.3
-0.2
5.3
11.6 7.5
33.3
2007 2008 2009 2010
GDP Construction GDP Brazil Eternit - Gross Revenues
2011(E)
6.64.5
58
Structured Expansion and Diversification Program
INITIATIVES
- Launches of new products
- Debut into chinaware bathroom fixtures
- Increase in SAMA’s production capacity
- Investment in machinery for new products on its plants
- Investment in new product lines of fiber cement
- Inorganic growth – Acquisitions
- Inclusion of metallic roofing on its portfolio
- Creation of the Development and New Businesses Area
Consolidate Eternit as a supplier of products and solutions to the civil construction industry
OBJECTIVE
59
Launches - 2011
Bairro Nova Odebrecht – Angra dos Reis/ RJ
For further information on the 2011 launches, access:www.eternit.com.br
60
Chrysotile – The Brazilian Ore
61
Chrysotile – The Brazilian Ore
The use of Chrysotile Ore in Brazil is regulated by the Federal Law 9.055/95, by Decree 2.350/97 and by regulatory standards for occupational health and safety. It is also provided in the Convention 162 of the International Labor Organization (OIT).
Serpentinite rock with Chrysotile Ore fibers
White Ore
Bends and silky fibers without tip
Biopersistence*: 2.5 days
*Biopersistence: Time that a inhaled particle remains in the lungs before being eliminated by the body’s defense mechanisms. To cause lung damage, the fiber must have penetration and durability capacities in the alveoli.
High Concentration of Magnesium:3MgOSiO2H2O
62
Brazil concludes important research about chrysotile ore risks
Project Asbesto Ambiental“Ambiental Exposition to Asbesto: Evaluation of Risk and Effects in Health”
Process CNPq n. 420001/2006-9
The results of the research were announced on November 25 2010 and demonstrates that:
Among the householders surveyed, no clinical, respiratory functional and high resolution tomographic alterations were found that could be attributed to atmospheric asbestos fiber inhalation.
In the occupational assessment, no new alterations were identified or progression in pleural and interstitial deterioration of individuals in the sample Group exposed after 1980 and who underwent High Resolution Computed Tomography scans in the two studies.
The full version of this research can be found in www.sectec.go.gov.br.
63
Corporate and Environmental Management
64
Corporate Management
Launch ................... November 2004
Purpose .................
Contribute to society’s better understanding of the mining and processing of Chrysotile Ore and the manufacture of fiber cement products in a sustainable manner.
Location ........... Five production plants of Eternit and the SAMA mining company
Visitors ............... More than 42,000 as of December 2010
Target ................... All society
Open Doors Program
65
Environment Focused Management
Quelônios Project - Animal Conservation Area
The only breeding program of Amazon turtles in Brazil and Reintegration of Wild Animal Nature in partnership with IBAMA
Zero Reject Monitoring Air Quality Water Reuse Reforestation Work
Seedling Nursery
66
Social Actions
67
Information
Élio A. [email protected]
Rodrigo Lopes da Luz
Phone: (55-11) 3813-6034 or (55-11) 3038-3818
IR ConsultantMarcelo M. Fonseca
Phone: (55-11) 3045-1080
Bárbara M. Tanure Gonçalves
This material was produced using FSC certified paper (Forest Stewardship Council), which is a guarantee that the raw materialcomes from a forest managed in an environmentally responsible, socially and economically viable.
or www.blogdaeternit.com.brwww.eternit.com.br/ri
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ETERNIT S.A.
