2. 1. Market Update
2. Quarter Highlights
3. Operating Segment Review
4. Cash Flow and Debt Position
5. Top Priorities
6. Outlook
1
2
3
4
5
6
3. Brazilian Sugarcane Production (MT)
0
100
200
300
400
500
600
700
2011/12: first drop in sugarcane
production in 10 years (-10%)
2012/13: production recovery (+5%)
Source: UNICA and Company’s Estimates
-10%
Drop followed by stabilization of raw sugar
prices around 18-20 USD cts/lb
The prospect of another global sugar surplus in
2012/13 (between 6-7Mt) is keeping a lid on
prices at the moment
World Raw Sugar Prices (USD cts/lb)
Source: BLOOMBERG
+5%
Sugar: Stabilization of World Prices Between 18-20 USD cts/lb1
3
Weather impact in
Brazil
10
15
20
25
30
35
40
4. Y-o-Y: +31%
Y-o-Y: +38%
100
120
140
160
180
200
220
240
260
280
300
Wheat Corn
Source: MATIF
European Cereal Prices (€/t)
Starch: Cereal Prices Down From Peak, But Still at High Historical
Levels
4
1
High price volatility to remain a main characteristic of cereal market
Although slightly down from peak in December 2012, prices are sustained by challenging
weather in main producing countries (UK, France, Black Sea region and Argentina)
Stock-to-use ratios remain at relatively low levels (corn 13% and wheat 27%)
Demand for EU starch and derivatives in the food sector remains resilient
5. Source : Cepea Esalq Source : Bloomberg
Brazilian Ethanol Market
Brazil surpassed the US as the world’s largest ethanol
exporter, as high cereal prices impacted North American
production
Increases in gasoline prices at the refinery level by
6.6% and the ethanol blend mandate from 20% to 25%
should bring support for ethanol consumption
European and US Ethanol Market
European ethanol consumption in the quarter declined,
as demand in the winter is tradionally lower
In US, ethanol prices followed corn pricing, which had
dropped 16% since early August
Longer term prospect for European ethanol market
constrained by willingness of EU to cap 1st generation
ethanol at 5% of blend (7% for France)
Ethanol Prices – SP State (R$/liter)
Ethanol: Prices Dropped in Europe and US, while stable in Brazil
Ethanol Prices - FOB Rotterdam & CBOT
5
1
0,50
1,00
1,50
2,00
2,50
3,00
Hydrous Anhydrous
1
1,5
2
2,5
3
3,5
350
400
450
500
550
600
650
700
750
800
€/m3
FOB Rotterdam T2 Ethanol CBOT
USD/Gal.
6. 1,820 1,965
(17)
+45
+138
(21)
Q3
2011/12
Brazil Indian
Ocean
Starch
Europe
Ethanol
Europe
Q3
2012/13
1,820 1,965
+124 +33
(18)
+6
Q3
2011/12
Currency Volume Price & Mix Others Q3
2012/13
Q3 2012/13 – Revenues
Record Net Revenues Driven by Higher Volumes in the Starch & Sweeteners and Sugarcane
Segments
6
Net Revenues (R$ MM)
Group revenues supported by good industrial and commercial performance in sugarcane and
starch & sweeteners segments but:
Mixed pricing situation Y-o-Y: higher European ethanol & alcohol and isoglucose prices
but lower Brazilian sugar and ethanol prices
Ethanol volumes in Europe decreased significantly due to the impact of the difficult start
of gluten production on the overall operations of Tereos BENP
Positive perimeter and currency effect
2
7. 271
+34
+19
(4)
(38)
+2
284
Q3
2011/12
Brazil Indian
Ocean
Starch
Europe
Ethanol
Europe
Holding Q3
2012/13
Q3 2012/13 - Adjusted EBITDA
Positive Impact from Sugarcane Divisions Offsetting Higher Grain Costs and Significant Drop
on the Alcohol & Ethanol Segment’s Contribution
7
Adjusted EBITDA increased year-on-year thanks to higher volumes in the sugarcane
businesses, positive Y-o-Y price effect in certain products (European ethanol & alcohol,
isoglucose) and positive mix effect in Reunion Island…
… more than offsetting lower prices (Y-o-Y) in the Brazilian sugar & ethanol business,
increase in cereal purchase price and significant drop on the alcohol & ethanol
segment’s contribution due to low utilization rates at Tereos BENP
Margin 14.5%
Adjusted EBITDA (R$ MM)
Margin 14.9%
2
8. 90 86
50
182
11843
57
30
Q3
11/12
Q4
11/12
Q1
12/13
Q2
12/13
Q3
12/13
91
151
115 99
143
40
40
Q3
11/12
Q4
11/12
Q1
12/13
Q2
12/13
Q3
12/13
375
249 251
401 380
Q3
11/12
Q4
11/12
Q1
12/13
Q2
12/13
Q3
12/13
2.6
4.7
8.1
5.4
Q3
11/12
Q4
11/12
Q1
12/13
Q2
12/13
Q3
12/13
Ethanol Sales (‘000 m³) Energy Sales (‘000 MWh)Sugarcane Crushing (MM t) Sugar Sales (‘000 t)
8
Crushing
Recovery in sugarcane volume: 18.2 million tonnes processed (+12%)
5.4 million tonnes in Q3 12/13 (+107.7% Y-o-Y)
Yields improved from 70 t/ha to 84 t/ha this crop but lower TRS (135 kg/ton vs. 138 kg/ton last year)
55 thousand hectares planted in 2012/13 (25% expansion and 75% renewal)
Flexibility of industrial set-up allows shift to more profitable sugar production:
Sugar: 1.5 million tonnes 64% of mix vs. 62% last year
Ethanol: 529,000 m³ 36% of mix
Progress in cogeneration
Own quarterly volumes up 31% Y-o-Y, with portion of volumes sold at higher spot prices
On track to deliver a 50% growth in own cogeneration sales in 2013/14 crop
+1.3% YoY +57.5% YoY +31.1% YoY
Sugarcane Brazil – Production & Sales
Higher Crushing on Better Yields and Extended Crop Season (Ended Mid-December)
+107.7% YoY
Own Sales Trading Own Sales Trading
3
9. 593 577
(50)
+6
(21)
+64
(15)
Q3
2011/12
Price &
Mix
Volume Price &
Mix
Volume Others * Q3
2012/13
Sugarcane Brazil – Q3 Financials
Higher Volumes Compensating Lower Sugar and Ethanol Prices
* includes Cogeneration, Agricultural Products, Hedging and Ethanol Resales
Key Figures
In R$ Million
Q3
2012/13
Q3
2011/12
Change
Revenues 577 593 -3%
Gross Profit 87 118 -26%
Gross Margin 15.1% 19.9%
EBITDA 153 129 +19%
EBITDA Margin 26.5% 21.7%
Adjusted EBITDA 146 112 +30%
Adjusted EBITDA Margin 25.3% 18.9%
Adjusted EBITDA: R$146 million
• EBITDA improvement in Q3 thanks to lower cash
COGS linked to extended crop period and higher
electricity sales
• Improvement of 640 bps on adjusted EBITDA
margin to 25.3%
• Adjusted EBITDA Margin1 including tilling as
depreciation: 34.6%
Sugar: 64.0% of total net revenues
• Volumes increased +1.5% to 380,000 tonnes
• Prices down -8.0% Y-o-Y at 971.5 R$/tonne
Ethanol: 26.6% of total net revenues
• Own Volume sold increased +10% to 143,000 m3
• Prices down -14.1% Y-o-Y at 1,074.2 R$/m3
Cogeneration: own energy revenues amounted
R$20.3 million (+102.0%)
9
(1) Tereos Internacional allocates tilling expenses as
cost. If tilling expenses were allocated as investment,
Adjusted EBITDA would have reached R$199.4 million.
Net Revenues (R$ MM)
Sugar Ethanol
3
10. +0.2% YoY
Sugarcane Africa/Indian Ocean – Production and Q3 Financials
Another Quarter of Good Performance
10
Sugarcane Crushing (’000 t) Sugar sales (‘000 t)
Sugarcane crushing
• Larger crop in Mozambique (YTD: 730k tonnes, +4.5% y-o-y)
although yields impacted by weather conditions (drought)
and irrigation issues
• In Reunion Island, slightly lower YTD crushing due to
drought, but higher sugar production on improved TRS
Revenues +19% Y-o-Y
• Higher sugar prices for both divisions and increase in
volumes in Mozambique
Adjusted EBITDA
• 29% increase in Adjusted EBITDA, despite higher labor costs
in Mozambique and sugarcane costs in Reunion Island
-3.4% YoY
Revenue Breakdown by Product
Key Figures
In R$ Million
Q3
2012/13
Q3
2011/12
Change
Revenues 281 236 +19%
Gross Profit 100 55 +83%
Gross Margin 35.7% 23.3%
EBITDA 84 69 +23%
EBITDA Margin 30.0% 29.1%
Adjusted EBITDA 85 66 +29%
Adjusted EBITDA Margin 30.3% 28.1%
1,173
43 116
1,267
1,176
Q3
11/12
Q4
11/12
Q1
12/13
Q2
12/13
Q3
12/13
89
77 67
76 86
Q3
11/12
Q4
11/12
Q1
12/13
Q2
12/13
Q3
12/13
Sugar
Reunion
35%
Sugar
Mozambique
21%
Trading and
others 44%
3
12. Starch & Sweeteners – Q3 Financials
Revenues Improvement on Good Sales Volumes, Helped as Well By Higher Perimeter
Key Figures
In R$ Million
Q3
2012/13
Q3
2011/12
Change
Revenues 843 705 +20%
Gross Profit 141 122 +16%
Gross Margin 16.8% 17.2%
EBITDA 50 57 -11%
EBITDA Margin 6.0% 8.0%
Adjusted EBITDA 52 56 -7%
Adjusted EBITDA Margin 6.2% 8.0%
12
Net Revenues (R$ MM)
+19.6%
Revenues: R$843 million, up 19.6%
• Organic sales volumes growth (+1.8%) and positive perimeter effect (Haussimont
+3.2%)
• Other revenues impacted by higher energy sales and services rendered
Adjusted EBITDA: R$52 million, down R$4 million
• Positive impact of increased volumes and isoglucose prices did not offset higher raw
material and energy costs
705 843
+71
+37
(3)
+33
Q3
2011/12
Currency Volume Price & Mix Others Q3
2012/13
3
13. 286 265
+29
(74)
+27
(3)
Q3
2011/12
Currency Volume Price & Mix Others Q3
2012/13
Alcohol & Ethanol Europe – Q3 Financials
Tereos BENP Collateral Disruption Led to a Strong Drop in Volumes and Profitability
Revenues: R$265 million, down 8%
• Decrease in volumes (-23.8%) mainly due collateral
production disruptions on production
• Higher ethanol prices (+9.0% Y-o-Y) and better
average prices for co-products due to gluten
introduction
Adjusted EBITDA: R$3 million, down 94%
• Significant increase of raw material prices purchased
at market prices
• Higher unitary energy costs y-o-y
13
Net Revenues (R$ MM)
Q3 Revenue Breakdown by Product
Key Figures
In R$ Million
Q3
2012/13
Q3
2011/12
Change
Revenues 265 286 -8%
Gross Profit 13 64 -79%
Gross Margin 5.0% 22.2%
EBITDA 3 40 -94%
EBITDA Margin 1.0% 14.0%
Adjusted EBITDA 3 40 -94%
Adjusted EBITDA Margin 1.0% 14.1%
Alcohol &
Ethanol own
sales 51%
Ethanol
traded 37%
Co-products
and other
12%
3
14. 14
Q3 Cash Flow Reconciliation
Ongoing Strategic Investments in Key Segments and Seasonal Working Capital
(1) Net debt as of September 30th 2012 restated to include capital increase of R$212 million from PBio into Guarani
Cash Flow
In R$ Million
Q3 2012/13(1)
Adjusted EBITDA 284
Working capital variance (133)
Other operating (including income tax paid) (35)
Operating Cash Flow (116)
Financial interests (63)
Dividends paid and received -
Capex (247)
Increase in capital -
Others 29
Free Cash Flow (164)
Forex impact (43)
Acquisition & Perimeter impact -
Net Debt Variation (207)
CAPEX
Brazil: R$102 million
Mainly allocated for (i) planting program; (ii) cogen equipment
and (iii) maintenance costs with the beginning of the intercrop
period
Cereals: R$109 million
Mainly allocated for (i) starch project in Brazil; (ii) capacity
expansion in the starch & sweeteners segment and (iii) Tereos
BENP product diversification (gluten / dextrose)
Working capital
Seasonal cash requirements mostly related to the crop’s
peak in the sugarcane division in Q3 (increasing stocks)
4
15. Debt
Increase Mostly Due to Seasonal Working Capital, Ongoing Investments and Currency Effect
Net Debt/Adjusted EBITDA: 4.0x, stable sequentially considering 3.8x in Sep., 2012(1)
15
Debt
In R$ Million
December 31, 2012 March 31, 2012 Change
Current 2,257 1,291 967
Non-current 2,196 2,384 -188
Amortized cost (20) (25) 5
Total Gross Debt 4,453 3,650 783
In € 1,812 1,402 412
In USD 1,793 1,652 140
In R$ 783 557 226
Other currencies 65 64 -
Cash and Cash Equivalent (678) (624) -54
Total Net Debt 3,755 3,026 729
Related Parties Net Debt 35 17 18
Total Net Debt + Related Parties 3,790 3,043 747
4
Currency Variation
December 31, 2012 March 31, 2012 Change
USD/R$ 2.0462 1.8218 +12.3%
€ / R$ 2.6949 2.4295 +10.9%
(1) Net debt as of September 30th 2012 restated to include capital increase of R$212 million from PBio into Guarani
16. BRAZIL
Continue efforts on agricultural mechanization, factories automation and improvement of
processes
Expand electricity sales (1200 Gwh in 2015)
Strengthen positioning with Petrobras
AFRICA/INDIAN OCEAN
Exploit the agricultural potential of Mozambique
Confirm the key role of sugarcane in the Reunion Island and valorize the Group’s competencies
In Brazil: optimize cost competitiveness to better cope with macroeconomic dynamics
Take part in the development of a growing market
Top Priorities: Sugarcane
16
5
17. Adapt to higher price levels and volatility for cereals
Expand presence into growing markets (Brazil/China)
Adapt product mix and industrial base to higher price levels and volatility for cereals
Adjust production of gluten and share of ethanol at Lillebone (Reconversion of the
plant to food industry)
Develop sales of starch & sweeteners in growing markets
Top Priorities: Cereals
17
5
18. Sugarcane
Brazil: improving outlook for sugarcane and cogeneration
• Recovery of 10% in sugarcane production in 2013/14 crop (crushing above 20 million tonnes)
• Current cogeneration investments to double energy sales level in 2013/14
• Anhydrous blending returns to 25% as of May 1st 2013 should absorb a significant proportion of
additional sugarcane production of 2013/14 crop
• Higher gasoline prices at refinery (+6.6% as of January 31st) to also support ethanol
consumption
Indian Ocean: positive commercial dynamics to continue
Cereals
Europe: diversification to cope with higher cereal prices
• Further prices increases passed onto customers in December negotiation round
• Volumes at Tereos BENP should not reach normalized levels in this fiscal year
• Cereal prices expected to remain high and volatile
Emerging Markets: greenfield projects underway
• Brazil: Syral-Halotek corn-based starch production to start in H1 2013/14
• China: land work progressing at Dongguan site
18
Outlook6
