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1
August / 2008
1st Half Results 2008
www.duratex.com.br
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
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
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
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
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
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
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
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$2.007.456
B A AA (premium)
Types of apartments:
Business SegmentsAvailability of products for the most diverse segments
10
Agudos / SP
Capital Expenditures - CAPEXExpansion - Agudos / SP
MDF project;
Low pressure coating line;
Resin plant: verticalization of the resin production process.
11
MDF project
Estimated start-up: april/2009;
Press: 77 meters long and 800.000 m3/year capacity:
(will be the largest Brazilian MDF line and one of the world’s biggest);
Equipment arrival : August 1st 2008
CAPEX
12
Low pressure coating line
Start-up within the schedule;
Enriching the sales mix better unitary net revenue.
CAPEX
13
Expansion of MDP on Itapetininga / SP
CAPEX
Capacity: 1.000.000 m3/year;
Total estimated investment R$ 1,0 billion;
Start-up scheduled for September 2010 ;
Resin plant: verticalization of the process for MDP
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
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
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
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
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
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.
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
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
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 (%)
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 (%)
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
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
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
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$15,3 million in extraordinary dividends
104,0
6,9
28
0,00
10,00
20,00
30,00
40,00
50,00
60,00
70,0029
-dez
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10-f
ev-0
6
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-06
1-ag
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24-o
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06
7-d
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6
22-j
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7
7-m
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7
18-a
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07
30-m
ai-0
7
12-j
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07
22-a
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-07
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31-m
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13-m
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24-j
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-08
5-ag
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8
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
40.000
45.000
Member of and indexes
Valuation in dollar terms : . Duratex = + 183%. Ibovespa = + 151%
Average price (R$)
Traded volume(moving average 15 days - R$ (*000)
Creating ValueShare Performance (Dec / 2005 - Aug/ 2008)
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 .
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
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
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
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
34
August / 2008
1st Half Results 2008
www.duratex.com.br