The document summarizes a conference call about a company's 3Q12 earnings results. It provides highlights on sales volumes, revenue, margins, investments, and business segments. Revenue grew 7.9% year-over-year to R$230 million, with gross margin increasing to 43%. EBITDA grew 6.9% to R$45.3 million. The company has diversified its portfolio beyond traditional fiber cement and plans to invest in a new bathroom products plant. It also discusses the Brazilian economy, chrysotile mining, and an upcoming Supreme Court ruling on asbestos.
2. Disclaimer
“Forward looking statements included in this presentation regarding the
Company’s business, operating and financial results and Company’s growth
are only predictions and were based on management's expectations
regarding future performance. These expectations are highly dependent on
market conditions, Brazilian economic scenario, industry performance and
international markets, and are therefore subject to change.”
22
3. Highlights of 3Q12 (when compared to 3Q11)
• Sales Volume:
Chrysotile mineral: growth of 6.1%
Fiber cement: retraction of 12.8%
Concrete tiles: retraction of 2.7%
• Net Consolidated Revenue amounted to R$ 230 million, a 7.9% growth
• Gross Margin of 43%, increase of 2 p.p.
• EBTIDA was R$ 45.3 million, a 6.9% growth and margin of 20%
• Net Income reached R$ 27.1 million, slightly reduction of 0.8%
• Investments reached R$ 23.5 million, evolution of 53.5%
• Start of the chrysotile mineral judgment by the Federal Supreme Court
3
4. Eternit Group
The largest and most diversified roof coverings industry in Brazil – 9M12
Manufacture of fiber cement and Manufacture of
commercialization of bathroom concrete tiles and
Activity chinaware, metallic fittings and Chrysotile Mining commercialization
components for construction systems of sanitary ware
Industrial Units 4 1 1 6
Leader in fiber cement – Leader in
The world's 3rd
32% of Market Share concrete tiles –
largest – 15% of
Market Share 35% of Market
Market Share
5th largest of Brazil in sanitary ware Share
300 thousand
Capacity 1 million tons / fiber cement 10 million m²
tons
Capacity Used Fiber cement - 80% 100% 60%
44
5. Traditional Product – Chrysotile Mineral
Main use of the crhysotile mineral:
99% of the world production of
chrysotile is used for fiber cement
products.
Serpentinite rock with Chrysotile Ore fibers
5
19. Covering market – Brazil - 2011
Residential Market Industrial and Commercial Market
Concrete Other
4% 11% Fiber cement
38%
Fiber cement
Ceramics 51% Metallic
Ceramics
45% 40% 11%
Total Market Market Evolution (MM m2)
8% 5%
10% -2%
Concrete 5%
8%
Metallic Other 534
561
4% 505 495
12% 2% 459
406 425
Ceramics Fiber cement
35% 47%
Source: Estimation of the Production Chain of Fiber Cement
2005 2006 2007 2008 2009 2010 2011
19
19
20. Sales of Fiber Cement* (thous. tons)
8.4% - 11.9%
12.9% - 12.8%
* Includes components for construction systems
20
21. Concrete Tiles (thous. square meters)
15.0% -1.6%
9.2% -2.7%
*Tégula was acquired on February 11 2010. The amount of 477 thousand m2 doesn’t refer to Eternit.
21
24. Net Revenue Breakdown
2007 9M12
Concrete tiles
Fiber
Fiber cement and
cement;
59.3% 50.2% Accessories
10.0%
New New
Others (*);
Business Business
5.7%
5.7%
17.8%
Chrysotile Bathroom
Mineral; Chrysotile Chinaware
35.0% Mineral 5.3%
32.0%
Others (**);
2.5%
(*) Others: metallic roofing tiles, polyethylene water tanks and components for construction systems.
(**) Others: metallic roofing tiles, polyethylene water tanks, lavatory seats and metallic bathroom fittings, water pipe
filters, synthetic marble and components for construction systems.
24
25. COGS Breakdown – 3Q12
Fiber Cement Chrysotile Mineral
Energy Energy; 8%
Others costs
3%
9%
Others Materials
Depreciation
costs; (**)
Raw 7%
22% 32%
Depreciation; material (*)
4% 60% Workforce
44%
Workforce;
11%
(*) - Cement (45%), Chrysotile Ore (41%) and other (14%) (**) – Fuel, explosives, packaging, among other
Concrete Tiles
Energy
4%
Others
costs Raw material
22% (***)
48%
Depreciation
11%
Workforce
(***) - Cement (56%), sand (29%) and other (15%)
15%
25
25
30. Capital Expenditures (in R$ million)
* Forecast
Investiments Capacity Increase – Eternit Capacity Increase – Tégula Equipments and Trucks - SAMA
New Businesses Tégula Acquisition Administrative Bathroom Chinaware Plant - CSC
30
30
31. Location of Multiproduct Plant - Ceará State
Cimenteira
Linha Gás Natural
35 km
15 km
Land of 400 000 m²
31
31
32. Multi-Product Unit in the Ceará State - Bathroom Chinaware Plant
Joint-Venture: Companhia Sulamericana de Cerâmica S. A.
Share of 60% Share of 40%
Knowledge of the local market Knowledge of manufacturing and
Strong distribution network products technology
Efficient logistics Low cost production
Brand strength Expertise in new product
development
Investment Resources Expertise in new market
Knowledge in Brazil development
Investments: R$ 97 million
Capacity: 1,500,000 pieces per year
Status of the building: initiated
End building: December 2013
Forecast of Gross Revenue at full capacity: approximately R$ 127 million
Straight Workforce: 330 employees
32
32
34. Ownership Structure – Oct/12
Shareholding Structure
Geração L. Par. F. I. A. 15.25%
Luiz Barsi Filho 13.53%
Victor Adler + VIC DTVM 8.50%
Management 1.54%
Treasurystock 0.03%
Member
Board of Directors
Since
Sergio Alexandre Melleiro (*) 1993
Lírio Albino Parisotto (*) 2004
Individual Investors Élio A. Martins 2007
Luiz Barsi Filho 2008
Corporations
Marcelo Munhoz Auricchio 2011
Investors Abroad Luis Terepins (*) 2011
Clubs. Funds and Foundations Benedito Carlos Dias da Silva (*) 2012
(*) Independent member
Member
Advisory Board
Since
FREE-FLOAT 76.10%
Guilherme Affonso Ferreira 2011
Mário Fleck 2011
Victor Adler 2012
34
34
35. Liquidity
Average Traded Volume
Number of shareholders (R$ thousand)
(*) Until October 2012
35
35
36. Policy of Remuneration - Net Income X Distributed Earnings
In R$ million
Pay Out 76 % 79 % 74% 64%
Net Income Dividends and Interest on own capital (*) Until September 2012
36
36
37. Policy of Remuneration - Dividend Yield
(*) Unitl September 2012
Eternit – Yield(*) Savings (*) CDB (*)
Source: Eternit e BACEN
37
37
38. Eternit’s Shares Performance (Dec/06 – Oct/12)
Between 12/28/2006 to 10/31/2012, Eternit’s shares appreciated 38.6% and IBOVESPA
appreciated 28.3%.
In the same period, including the payment of dividends and interest on own capital, Eternit’s
shares appreciated 145.6%.
R$ 8.40
57,068
38
38
41. Economic Figures
Credit Availability Unemployment Rate - Brazil
Government, Industry, Housing, Rural, Commerce, Credit
Individuals (R$ billlion)
Source: BACEN
*jun/12 to aug/12 - foreseen
Food Basic Basket SP x Minimum Wage (purchasing power)
Source: IBGE and DIEESE
Minimum Wage (R$) Food Basic Basket in SP (R$) %
41
41
42. Reduction in the interest rates for the finance of construction
materials
In September, Banco do Brasil (BB) in partnership with the National
Construction Material Traders Association (ANAMACO), announced a
new line of credit at reduced interest rates to stimulate sales of
construction materials to individuals. Consumers can sign up to this credit
line directly through stores selling construction materials, the store owner
enjoying a cash sale and the consumer effecting repayment over a period of
up to 54 months.
ANAMACO also informed that the Caixa Econômica Federal (CEF – Federal
Savings Bank) is also optimizing its business on the credit front. In
addition to streamlining transactions using the Construcard (line of
finance for the acquisition of construction materials),
the bank is also expected to revisit its Caixa Fácil
operations still in this year with more accessible interest
rates facilitating the financing of construction materials.
Along similar lines, Banco Bradesco is offering the
João-de-Barro program - increasingly popular among
account holders as a very competitive product in terms of
rates and ease of accessing credit.
42
42
43. Economic Figures – GDP vs. Gross Consolidated Revenue of Eternit
(E) Estimated
Source: BACEN. The growth in Eternit´s gross consolidated revenue compares the accumulated period from January to September
2012 against the same accumulated period for 2011, inflation adjusted for the IGP-M.
43
43
45. 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).
White Ore
Bends and silky fibers without tip
High Concentration of Magnesium:3MgOSiO2H2O
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.
Serpentinite rock with Chrysotile Ore fibers
45
45
46. 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.
46
46
47. Result of the decision of the STF on the use of asbestos in Brazil
The Federal Supreme Court (STF) began on October 31st, 2012 its ruling on the merit
of the Direct Actions of Unconstitutionality (ADI) 3357 in the light of state Law
11.643/2001 enacted by the state of Rio Grande do Sul, and ADI 3937 in the context of state
Law 12,684 of July 26th, 2007 of the state of São Paulo.
Judge Ayres Britto began the judgment ruling in favor of the constitutionality of the state laws
while Judge Marco Aurélio’s vote was for the unconstitutionality of the same state laws. Following
the conclusion of Judge Marco Aurélio’s ruling, the presiding judge adjourned the work of the
court.
We would point out that this judgment is fruit of exhaustive debates with Brazilian society
through public hearings held by the STF on August 24th and 31st, 2012 led by Judge
Marco Aurélio together with the judges Rosa Weber and Ricardo Lewandowski.
For this reason, the STF is expected to set a new date for the final ruling on the merit
mentioned in the ADIs as a whole.
47
47
48. Recognitions – 3Q12
Eternit : “Highlights of Civil
Eternit and SAMA: elected Eternit: elected “The 150 Best
Engineering Award” in
among “150 Best in PGPs Resources
category building materials –
Companies for You to Management Practices” and
fiber cement roofing tile –
Work for” by Você S/A and “Highlight in the Quality of
elected by the Minas Gerais
Exame magazines Life Dimension”, by Gestão e
Institute of Engineering (IMEC)
RH magazine
Prize SESI for Quality in
Work (PSQT) 2012: Eternit : “ANAMACO
The units São Paulo, Rio 2012 Award” elected
de Janeiro, Simões Filho, in the fiber cement
Precon Goiás e Goiânia roofing tiles category
were awarded by as well as honorable
Industry Social Service mention in the large
(SESI) in different clients category of
categories the bathroom
chinaware segment
48
49. Eternit – An option for investment
ETNTY
Governance
ADR - Level I
Growth
Vision of
Brand with
Future Brand
Dividends
Watch the Eternit’s Institutional
movie through this QR Code.
Case of
Success
49
49
50. Information
Élio A. Martins Paula Dell Agnolo Barhum
elio.martins@eternit.com.br paula.barhum@eternit.com.br
Rodrigo Lopes da Luz Frederico Gomes Amaral
rodrigo.luz@eternit.com.br frederico.amaral@eternit.com.br
Phone: (55-11) 3038-3818 www.eternit.com.br/ir
(55-11) 3194-3881 www.blogdaeternit.com.br
(55-11) 3194-3872 @Eternit_RI
Dr. Fernandes Coelho Street, 85 – 8th floor Este material foi produzido com
papeis certificados FSC (Forest
Stewardship Council), que é uma
Pinheiros – São Paulo / SP garantia de que a matéria-prima
advém de uma floresta manejada de
forma ecologicamente correta,
05423-040
socialmente e economicamente
viável.
50
50
