Acucar Guarani Q2 09/10 earnings presentation

1. Q2 09/10 Results
November 17th, 2009

2. Disclaimer
This presentation contains forward-looking statements related to the prospects of our business and
estimates for operating and financial results. Those related to growth prospects of Açúcar Guarani
S.A. are merely projections and, as such, based exclusively on the expectations of the 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 and are therefore subject to change without
prior notice.

3. Q2 09/10 Sugar Market Overview
Guarani’s Sugar Average Prices
(R$/ton)1
World sugar prices at their highest
level in 28 years 800
700
Sugar prices supported by the
decrease in production by major 600
producers, such as India and the EU,
as well as heavy rainfalls in Brazil,
500
reducing expected production
400
Q1 07/08
Q2 07/08
Q3 07/08
Q4 07/08
Q1 08/09
Q2 08/09
Q3 08/09
Q4 08/09
Q1 09/10
Q2 09/10
Higher Brazilian exports supporting
domestic prices
3

4. Q2 09/10 Ethanol Market Overview
Increase of 22.4% in volume of Guarani’s Ethanol Average Prices
hydrous ethanol sold in the domestic (R$/m³)
market compared to Q2 08/09, 800
sustained by the growth in the flex
fuel vehicles fleet and expected 2.6 750
million car sales in 2009 in Brazil
700
650
Positive trend in domestic ethanol
prices due to expected tight supply 600
(affected by rains) & balanced demand
(strong car sales) at the end of the 550
Q1 07/08
Q2 07/08
Q3 07/08
Q4 07/08
Q1 08/09
Q2 08/09
Q3 08/09
Q4 08/09
Q1 09/10
Q2 09/10
Brazilian crop
Exports lower than last year due to
a recovery in domestic market prices.
US remains the main Brazilian
destination, followed by the European
Union, India and Japan.
4

5. Decrease of Sugarcane Crushed in Q2 09/10
Sugarcane Crushed (MM t) Sugarcane Crushed (MM t)
H1 09/10 Q2 09/10
10.2 10.0 6.0
5.4
7.6 7.1 4.8
4.4
2.6 2.9 1.2 1.1
H1 08/09 H1 09/10 Q2 08/09 Q2 09/10
Own 3rd Party Own 3rd Party
Decrease in total volume crushed (-9.4%) in Q2, impacted by rainfalls. Volume down
1.7% on a half year basis
2009/10 crushing target revised to 14.5 million tons, due to negative impact of weather
in Brazil (rainfalls) and Mozambique (drought):
• Brazil: 14.1 million tons
• Mozambique: 0.4 million tons (expected 0.6 million tons)
Agricultural yield in Brazil has increased by 12.9%, while sugar content in
sugarcane has declined by 7.3% to 134 kg TRS/ton of sugarcane
5

6. H1 09/10: Increased Refined Sugar Production and
Slight Decrease in Ethanol Production
Sugar Production (’000 t) Ethanol Production (’000 m³)
H1 09/10 H1 09/10
818
339 332
83 706
46
459 334
282 250
276 326
57 82
H1 08/09 H1 09/10 H1 08/09 H1 09/10
Refined Crystal VHP Anhydrous Hydrous
Increase in refined sugar production (+18.1% in H1 09/10 and stable in the second
quarter, in line with value-added strategy) to benefit from the white premium (average 90.7
US$/ton during first half 09/10)
Quarter-on-quarter, sugar production decreased by 19.0% and ethanol production by
13.8% due to poor weather conditions
Mix through September of 57% sugar and 43% ethanol to benefit from higher margins
6

7. Strong Increase in Net Revenue Driven by Higher
Sugar Prices in Q2 09/10
Net Revenue (R$ MM) Net Revenue (R$ MM)
H1 09/10 Q2 09/10
607 373
36
490 53 292
162 32 96
51
179 99
392 242
260 161
H1 08/09 H1 09/10 Q2 08/09 Q2 09/10
Sugar Ethanol Others Sugar Ethanol Others
27.7% growth in net revenue in Q2 09/10, Guarani’s Net Revenue breakdown in H1
driven mainly by Sugar (+49.8% in Q2 09/10): 09/10:
• 42.1% increase in average sugar prices in
Reais to 749.1 R$/ton • Sugar: 64.6%
• 5.4% increase in sugar sales • Ethanol: 26.6%
Ethanol revenue down 2.7% due to lower • Energy: 1.5%
prices (-2.0%)
• Other products: 7.3%
7

8. Improvement in Adjusted EBITDA: +49.9% in H1 09/10
to R$114.8 Million, +9.8% in Q2 09/10
Adjusted EBITDA (R$ MM) Adjusted EBITDA (R$ MM)
H1 09/10 Q2 09/10
160 21,0% 100 25,0%
140
18.9% 19,0% 20.2% 23,0%
15.6% 80 21,0%
120 17,0% 17.4% 19,0%
100 15,0% 17,0%
60 15,0%
80 13,0% 13,0%
60 11,0% 40 11,0%
114.8 64.9 9,0%
40 76.6 9,0% 59.1 7,0%
20 5,0%
20 7,0% 3,0%
0 5,0% 0 1,0%
H1 08/09 H1 09/10 Q2 08/09 Q2 09/10
Adjusted EBITDA Adjusted EBITDA Margin Adjusted EBITDA Adjusted EBITDA Margin
Rise in Adjusted EBITDA mainly due to higher sugar prices
Adjusted EBITDA margin of 18.9% versus 15.6% in H1 08/09 with Adjusted EBITDA measured by TRS sold
of R$118.2/ton, an increase of 49.7% half-on-half
Q2 09/10 Adjusted EBITDA margin at 17.4% affected by:
• Temporary effect of hedging with futures (R$9.7 million), ethanol exports of 44,800 m³ at a lower average price than
on the domestic market and quarterly effect of CONSECANA adjustment on agricultural costs (R$18.7 million)
• Higher costs of goods sold related to the lower sugar content on the raw material and increased agricultural costs
8

9. Net Profit of R$13.8 million in H1 09/10 (close to
breakeven in Q2 09/10) Driven by Increased Sugar
Prices and Positive Forex impact
Net Profit (R$ MM) Net Profit (R$ MM)
H1 09/10 Q2 09/10
13.8
(0.5)
(128.4) (101.8)
H1 08/09 H1 09/10 Q2 08/09 Q2 09/10
Q2 09/10: Net Loss of R$0.5 million after a R$101.8 loss last year
H1 09/10: Net Profit of R$13.8 million, compared with a net loss of R$128.4 million in H1 08/09, with a 2.3% net margin on
sales
Net profit positively affected by: a) Strong price recovery for sugar (+45.5%) and b) Net non-cash FOREX effect of R$105.8
million on H1 09/10; but negatively impacted by: a) The hedging effect related to prices of R$50.8 million on H1 09/10; and b)
Increased costs due to lower sugar content and CONSECANA cost adjustment
H1 09/10 Net profit of Brazilian operations of R$42.3 million, while operations outside of Brazil posted a net loss of
R$28.5 million due to depreciation of local currency
9

10. Stable Net Debt and Indebtedness Ratios
Net Debt per Currency1 Net Debt per Term1
Non-
BRL Current
30% 50%
Foreign
Currency Current
70% 50%
(1) Includes R$101.4 million related to SHL in Mozambique (1) Excludes intercompany loans and cash & cash equivalent
Net debt at R$1.1 billion, virtually stable over the previous quarter, due to higher stocks and accounts
receivable, but with positive effect of real appreciation on debt denominated in foreign currency (USD)
Short-term debt net of cash and cash-equivalents totaled R$328.5 million, representing 50% of total Net
Debt, excluding intercompany loans with Tereos
Net Debt/Adjusted EBTIDA ratio at 4.0x in September, 2009, stable compared to June, 09. Excluding
intercompany loans, Net Debt/Adjusted EBITDA ratio stood at 2.5x
10

11. CAPEX: Focus on Sugar Production Increase, Cost
Reduction and Efficiency Programs
Selective industrial and agricultural CAPEX to:
Eliminate bottlenecks and further develop marginal capacity to lower fixed costs at São
José and Tanabi plants
Increase sugarcane crushing capacity at São José plant (from 2.6 to 3.2 million tons) and
launch a sugar factory at Tanabi plant (110,000 ton/year)
Sugarcane planting to produce the necessary raw material in coming crops to benefit from
high sugar prices
11

12. Sugar Market Outlook: Worldwide Supply & Demand
Deficit Ensure Sharp Increase of Sugar Prices
Raw Sugar Prices (NY 11) World Sugar Balance
cents US$/lb cents R$/lb Inventories Production Consumption
Production/Consumption (MM ton)
28 50 60 180
Q109 Q209 Q309 Q409 Q110 Q210
45
Inventories (MM ton)
24
40 160
cents US$/lb
cents R$/lb
50
20 35
30 140
16
25
40
12
20 120
8 15
01-Jan-09
09
01-Jul-08
08
01-Jul-09
09
01-Apr-08
08
01-Apr-09
09
01-Oct-08
08
01-Oct-09
09
30 100
98/99
99/00
00/01
01/02
02/03
03/04
04/05
05/06
06/07
07/08
08/09
09/10E
Source: ICE Source: LMC
A deficit in global sugar supply is expected for the 2009/10 crop, the second consecutive year of reduced
production levels, mainly due to India’s low production (delayed monsoons)
Analysts expects this positive trend to continue for at least the next 12 to 18 months, with the
expectation of a reversion from deficit to a slight surplus in the world’s sugar balance onwards
Driven by positive fundamentals, sugar prices stood at their highest level in 28 years
Brazil, the largest beneficiary of the world sugar deficit in the 2009/10 crop, has been impacted by rains in
the Center-south region from July to September 2009
Global demand not affected by worldwide crisis
12

13. Ethanol Market Outlook: Recovery in Ethanol Prices
Driven by Tight Supply
Domestic Market
The growth of the flex-fuel fleet, which represented
more than 40% of Brazil’s light vehicles fleet at the end Vehicles Sales per Fuel
of September 2009, is still boosting domestic ethanol Type (Brazil)
consumption
Ethanol + Flex-Fuel Gas + Diesel
Forecast of reduced ethanol supply during the inter- 300
crop, points to strengthened domestic prices at the 250
beginning of the 2010/11 crop, favoring producers with
200
'000 units
fuel storage
150
International Market 100
50
Better prices and margins for US producers due to 0
lower corn production. Enhanced prospects for EU and
Jun-01
Jun-06
Jul-03
Aug-05
Jul-08
Jan-01
Feb-03
Jan-06
Feb-08
Nov-01
Sep-02
Dec-03
May-04
Nov-06
Sep-07
Dec-08
May-09
Apr-02
Oct-04
Apr-07
Mar-05
Japan (new governmental target for renewable energy of
20% by 2030)
Source: Anfavea
According to the EPA (Environmental Protection
Agency) ethanol from sugarcane is the only fuel that
would allow to meet US RFS-2 requirements with 44%
less greenhouse gas emissions compared to gasoline
13

14. Outlook: Guarani Solidly Positioned to Seize
Opportunities and Benefit from the Positive Market
Outlook
Rains in Brazil and drought in Asia enhancing positive outlook for sugar prices for the second
half of 2009/10
Positive prices outlook for ethanol as of second half of 09/10 due to strong demand
Continued focus on balance sheet strengthening
Pipeline of attractive expansion projects: Sugar in the short term and Ethanol and
Cogeneration in the Mid/Long term
Strong commitment and support from Tereos, Guarani’s controlling shareholder, to seize
opportunities: Guarani is a strategic asset for Tereos
14

15. Thank You
Jacyr S. Costa Filho
CEO
Reynaldo F. Benitez
CFO and Investor Relations Officer
phone: +55 (11) 3544-4900
Alexandre L. Menezio e-mail: ri@aguarani.com.br
Investor Relations Manager
website: www.acucarguarani.com.br/ir
Felipe F. Mendes
Investor Relations Analyst
Renato N. Zanetti Neto
Investor Relations Analyst