The document reports on the financial results of Tereos Internacional for the fourth quarter and full year of 2010/11. Key highlights include 24.2% revenue growth and 16.7% adjusted EBITDA growth for Q4, driven by double-digit increases in both cereal and sugarcane operations. For the full year, revenues grew 13.5% and adjusted EBITDA grew 10.3%, with sugarcane revenues increasing 60.2% due to higher volumes and prices. Net debt decreased 16.3% from the previous year. The company also announced several expansion projects and investments totaling over $1 billion for its sugarcane operations in Brazil.
2. Highlights
Q4 and FY 2010/11 Financial Results
Operating Segment Review
Outlook and Summary
3. 3
* Adjusted EBITDA: EBITDA excluding items from discontinued operations, accounting effect of adjustments in the fair value of the financial instruments
(including one-off accounting results for the trading derivatives booked in other operating item) and of the biological assets
Revenues : R$1.5 billion
• Year-over-Year: + 24.2% + 25.8% at constant currency
Adjusted EBITDA*: R$205 MM
• Year-over-Year: + 16.7% + 18.3% at constant currency
Net Profit before Taxes: R$139 MM
• 3.4x year-over-year
Cereal: positive impact of higher starch and ethanol prices resulting from negotiations of
new contracts and higher ethanol volumes at the Lillebonne plant
Sugarcane: benefit from organic growth driven by capacity investments, acquisitions and
high sugar and ethanol prices
Q4 2010/11 - Financial Highlights
Strong revenue and operating performance
4. Q4 2010/11 - Market Fundamentals
4
Sugar: strong fundamentals still in place
Low inventory levels
Reduced supplies from Brazil, China and Australia
Sugar prices: peaked in early February 2011
• Prices down to 21/22 cents
Starch: continued strong demand for starch and derivative products in Europe
All starch product categories positively affected; high demand from paper, chemical and
food industries
Contract terms modified to enable producers to adjust selling prices
Wheat and corn prices still high
Ethanol: favorable environment
Brazil: maximized allocation of sugarcane to sugar production versus ethanol and strong
demand despite increase in prices Sharp rise in prices and tight inventories
New regulation being discussed: expected to improve credit availability for storage and
production expansion
5. March 2010 – DVO’s is accredited for its cereal premium alcohol
April 2010 – Partnership with Petrobras Biocombustivel with a capital increase of R$1.6 billion
May 2010 – Mandu’s acquisition (3,5 million tons): R$345 million
May 2010 – Inauguration of Tanabi sugar factory
May 2010 – Inauguration of Andrade cogeneration facility (joint venture with GDF Suez)
June 2010 – Refinancing of €450 million for the Tereos EU
August 2010 – Conclusion of an ethanol commercialization agreement with BR for 2.2 million
m3 over 4 years
August 2010 – Launch of the Selby distillery project in the UK for the premium alcohols sector
November 2010 – Launch of the gluten project in BENP Lillebonne
5
Main Events 2010/11
Sugarcane and Starch
6. February – Announcement of the Brazilian starch project of R$230 MM
March 2011 – Guarani: US$560 million debt refinancing
March 2011 – R$764 million new BNDES financing
March 2011 – Launch of R$767 million investment plan in expansion of crushing capacity and
cogeneration
6
Main Events 2010/11
Sugarcane and Starch
7. 7
SUGARCANE BRAZIL
March 2011 - Announcement of a R$767 million investment plan for Guarani
• Expansion of crushing capacity and cogeneration
• Petrobras equity contribution :
- R$195 million for the first phase already approved
- Stake in Guarani capital risen to 31.4%
BNDES long term funding support: a R$764 million financial package
• Maturity: 11 years
• Attractive rates
Guarani debt refinancing: debt structure lengthened and simplified through new
syndicated loan
• US$560 million
Q4 2010/11 – Quarter Highlights
8. 8
Full Year 2010/11 - Financial Highlights
Revenues : R$5.7 billion
• Year-over-Year: + 13.5% + 26.0% at constant currency
Adjusted EBITDA*: R$850 MM
• Year-over-Year: + 10.3% + 20.1% at constant currency
Net Profit before Taxes: R$225 MM
• Group interest in net profit after tax: R$188 million
Cereal: Surge in raw material and energy prices, partially offset by new contracts
negotiations since 2H 2010/11
Sugarcane: Significant growth fueled by capacity investments, acquisitions and strong
market conditions
* Adjusted EBITDA: EBITDA excluding items from discontinued operations, accounting effect of adjustments in the fair value of the financial instruments
(including one-off accounting results for the trading derivatives booked in other operating item) and of the biological assets
•Dividend: R$44.6 MM
10. 176 213
560
751
97
124390
431
Q4 2009/10 Q4 2010/11
Brazil
Indian Ocean
Starch Europe
Ethanol Europe
Total Holding
Q4 2009/10 Currency Volume Price & Mix Q4 2010/11
Q4 2010/11 - Revenues
Double-digit Growth in Both Cereal and Sugarcane
Sugarcane
• Revenues: R$555 MM + 14.1% vs Q4 2009/10 + 15.7% at constant currency
• Brazil: + 10.4% as reported
Ethanol sales: + 37.2% in volume (+ 8.2% price increase)
Cereal
• Revenues: R$964 MM + 30.9% vs Q4 2009/10 + 32.3% at constant currency
• Starch Europe: + 34.7% at constant exchange rate
Price increase: + 26.9% vs. Q4 2009/10
• Ethanol Europe: + 24.5% at constant exchange rate
Price increase: + 12.6% vs. Q4 2009/10
1,519
+ 24.2%
1,223
1,519
1,223
10
In R$ MM
- 15
+ 102
+ 209
11. 752 678
2 701 2 512
239 540
1 319
1 956
FY 2009/10 FY 2010/11
Brazil
Indian Ocean
Starch Europe
Ethanol Europe
Total Holding
Full Year 2010/11 - Revenues
Sugarcane Operations Benefit from Strong Volume and Price Gains
5,688
+ 13.5%
5,011
2
11
Sugarcane
• Revenues: R$2.5 billion + 60.2% vs FY 2009/10 + 63.9% at constant currency
• Brazil: + 48.3% as reported Sugar sales: + 32.8% in volume Ethanol sales: + 26.4% in volume
• Indian Ocean: + 165.1% at constant exchange rate. Growth resulting from GQF acquisition in La Réunion
Cereal
• Revenues: R$3.2 billion - 7.6% vs FY 2009/10 + 6.6% at constant currency
• Starch Europe: + 7.3% at constant exchange rate
• Ethanol Europe: + 4.1% at constant exchange rate
In R$ MM
- 496
+ 681
+ 493
12. 24 26
78 72
8 37
96
132
Q4 2009/10 Q4 2010/11-5
In R$ MM
Adjusted EBITDA EBITDA
In R$ MM
206
263
-5
Q4 2010/11 - Adjusted EBITDA and EBITDA
Price increases for Starch and Ethanol in Europe, and Ethanol in Brazil
+ 27.2%
12
176
205
+ 16.7%
Sugarcane
• Brazil: strong ethanol sales volumes and prices
• Indian Ocean: contribution of GQF acquisition
• Positive impact of biological assets and financial instruments: R$74 million
Cereal
• Starch: new sales contracts pass through higher raw material costs to selling prices
• Ethanol: increase in volumes and prices
• Negative impact of financial instruments: R$16.2 million
13. 81 51
391
289
24
108
305 381
FY 2009/10 FY 2010/11
-14
In R$ MM
Adjusted EBITDA EBITDA
In R$ MM
802
816
Full Year 2010/11 - Adjusted EBITDA and EBITDA
Increased Sugarcane Production Capacity and Higher Sugar and Ethanol Prices
Sugarcane
• Favorable market conditions and greater production capacity in Brazil, La Réunion and Mozambique
Cereal
• Starch: impact of higher costs of purchased cereal and energy throughout the year
• Ethanol: negative effect of barley experiments and maintenance shutdown at Lillebonne
+ 1.8%
-14
13
771
850
+ 10.3%
14. Adjusted
EBITDA
Adjustements EBITDA Depreciation &
Amortization
Acquisition
Impact
Operating
Income
Net Financial
Expenses
Net Income
Before Tax
IncomeTax Net Income Minority
Interest
Net Income
Group Share
14
Q4 2010/11 - From Adjusted EBITDA to Net Income
Fair value of biological assets: + R$53 MM
Fair value of financial instruments: + R$5 MM
In R$ MM
205
+ 58 263
- 92
+ 1 172
139
- 32
- 33
106
- 25
81
15. Adjusted
EBITDA
Adjustements EBITDA Depreciation
&
Amortization
Acquisition
Impact
Operating
Income
Net Financial
Expenses
Net Income
Before Tax
IncomeTax Net Income Shares of
Profit in
Associates
Minority
Interest
Net Income
Group Share
15
Full Year 2010/11 - From Adjusted EBITDA to Net Income
Fair value of biological assets: + R$40 MM
Fair value of financial instruments: - R$71 MM
Non recurring: - R$3 MM
In R$ MM
850
- 34
816
- 508
+ 73 380
221
- 159
- 29
192
- 8
188
Accounting impact of the difference
between the price paid for Quartier
Français and its equity value
+ 4
16. Full Year 2010/11 - Net Result
16
Net Result: 431
Net Result: 196
In R$ MM
FY 2010/11: Negative impact of income tax compared to positive impact in 2009/10
17. Debt
Total Net Debt: R$143 Million Decrease vs March 31, 2010
Net Debt: R$2,150 million - 16.3% vs. December 2010
Net Debt / Adjusted EBITDA: 2.5x vs. 3x at March 31, 2010
Gross Debt
Breakdown by currency
Debt
In R$ Million
March 31, 2011 March 31, 2010 Change
Current 1,684 1,170 43.9%
Non-current 1,134 1,111 2.1%
Amortized cost (15) (5) -
Total Gross Debt 2,803 2,276 23.2%
In € 1,364 1,295 5.3%
In USD 763 269 183.6%
In R$ 637 620 2.7%
Other currencies 54 97 - 44.3%
Cash and cash Equivalent (633) (501) 26.3%
Total Net Debt 2,170 1,775 22.3%
Related Parties Net Debt (20) 518 - 103.9%
Total Net Debt + Related Parties 2,150 2,293 - 6.2%
17
Euro
48%
US Dollar
27%
Real
23%
Others
2%
31. 31
Tereos Internacional - Conclusion
Solid results in Q4 for both our major activities: sugarcane and cereal operations
FY 2010/11
• Adjusted EBITDA increased to R$850 million + 10 % vs 2009/10
• Sugarcane: strong results across all geographies
• Cereal: significant swing in profitability in Q4 as new contracts reflected
higher raw materials costs
Favorable market dynamics
• Sugar and Ethanol: low worldwide inventory levels
• Starch: strong market demand