TEREOS - Conferência Morgan Stanley - Londres

1. London – November 11th 2014
Morgan Stanley Latin America Mid-Cap Conference

2. /
Disclaimer
This document was prepared by Tereos Internacional for the sole purpose of this presentation. Information contained in this document has not been independently verified. No representation or warranty, express or implied, is made as to, and no reliance should be placed upon, the fairness, accuracy, completeness or correctness of the information or opinions contained in this document and Tereos Internacional and its subsidiaries (together, “Tereos Internacional”) as well as their directors, advisors, employees and representatives accept no responsibility in this respect.
This presentation contains information about Tereos Internacional's markets, including its competitive positions. Unless otherwise specified, this information is based on estimates prepared by the group and is purely indicative. These estimates are based on information obtained from customers, suppliers, business organizations and other market participants. Tereos Internacional considers that these estimates are reasonable as of the date of this presentation; however, the completeness and accuracy of the data underlying the estimates is not guaranteed and the group can offer no assurance that it has applied the same market definitions as its competitors.
This document contains certain statements that are forward-looking. These statements refer in particular to Tereos Internacional management’s business strategies, its expansion and growth of operations, forecasts, future events, trends or objectives which are naturally subject to risks and contingencies that may lead to actual results materially differing from those explicitly or implicitly included in these statements and generally all statements preceded by, followed by or that include the words “believe”, “expect”, “project”, “anticipate”, “seek”, “estimate” or similar expressions. Such forward-looking statements are not guarantees of future performance. Tereos Internacional as well as its directors, advisors, employees and representatives, expressly disclaim any liability whatsoever for such forward-looking statements.
Information relating to such risks and contingencies are included in the documents filed by Tereos Internacional with the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários, or the “CVM”). Tereos Internacional does not undertake to update or revise the forward-looking statements that may be presented in this document to reflect new information, future events or for any other reason and any opinion expressed in this presentation is subject to change without notice.
A detailed description of the business and financial position of Tereos Internacional as well as of the risk factors related to Tereos Internacional is included in the registration document (Formulario de Referencia) filed with the CVM which may be obtained on the website of Tereos Internacional (www.tereosinternacional.com). Tereos Internacional’s latest annual, semi-annual and quarterly financial statements are also available on this website.
This document does not constitute an offer or invitation to sell or purchase, or a solicitation of any offer to purchase or subscribe for, any rights or shares of Tereos Internacional. Neither this document, nor any part of it, shall form the basis of, or be relied upon in connection with, any contract or commitment whatsoever.
Morgan Stanley | LatAm Mid Cap Conference 2

3. Profile
Overview
Development
Positioning
Corporate Structure

4. /
Sugar
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Morgan Stanley | LatAm Mid Cap Conference 4
Tereos Internacional at a glance
✔ Leader producer of sweeteners and bioenergy
✔ Diversified raw material processor with light asset model (low capital employed)
✔ B-to-B company delivering mainly food ingredients (more than 50% of revenues)
✔ Global footprint with presence in fast growing regions (11 countries divided into 4 continents)
✔ Long-standing commitment and support of our controlling shareholder

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Sugar
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Tereos Group’s development
Morgan Stanley | LatAm Mid Cap Conference 5
FRANCE
EUROPE
BRAZIL
AFRICA
INDIAN OCEAN
ASIA
1950
BEET
2012
POTATOES & MANIOC
1996
CEREAL
2000
SUGARCANE
Tereos Internacional Scope

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Sugar
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Morgan Stanley | LatAm Mid Cap Conference 6
Our key figures
/
INDUSTRIAL
SITES
23
STARCH & DERIVATIVES PRODUCER IN EUROPE
3rd largest
SUGAR PRODUCER IN BRAZIL
3rd largest
IN REVENUES
bn R$
IN EBITDA
962
mn R$

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Sugar
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Our sites around the world
Morgan Stanley | LatAm Mid Cap Conference 7
Europe
France
Belgium
Spain
Italy
United Kingdom
Latin America
Brazil
Indian Ocean
Reunion Island
Mozambique
Tanzania
Asia
China
Indonesia (2014)
23 industrial sites in 11 countries
Sugarcane
Cereals/Tubers

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Sugar
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Simplified shareholder structure Morgan Stanley | LatAm Mid Cap Conference 8
Beet
12.000 beet producers
Tereos
Listed Company
Tereos Internacional
Sugarcane
Cereal
Others
69.6%
29.3%
1.1%

9. Cereal Division
Assets
Starch operating flow
Customers
Pass-through business
Starch market

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Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Cereal processing
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No. 3 in Europe for starch products
4.2 Mt of raw materials processed
wheat, corn, potatoes and manioc
2 Mt of starch products
12 facilities
France, Belgium, Italy, Spain,
UK, Brazil and China
wheat, corn, potatoes and manioc
500,000 cu.m
of alcohol & ethanol
Note: Production figures reflect 2013/14 annual figures on a full consolidation basis

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Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Producing starch & sweeteners
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Starch
milk
Operating flow
•Wheat
•Corn
•Potato
•Manioc
Raw material
•Co-products
•Native starch
•Modified starch
•Hydrolysates
•Glucoses
•Fuel Ethanol
Basic products
•Proteins (Gluten)
•Dextrose
•Maltodextrin
•Polyols
•Premium Alcohol
Specialties

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Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Our starch & sweeteners customers
Morgan Stanley | LatAm Mid Cap Conference 12
•
Major exposure to food & beverage markets
•
Increasing demand for wheat protein worldwide
9%
Paper Industry
13%
Animal Nutrition
17%
Green Chemistry
61%
Food, Beverage & Health Care
International and diversified customers
•Delivering to 1,500 customers in 2,500 factories
•Diversified portfolio with more than 100 applications
•Long-term relationship with industrial customers
•R&D supporting leadership in starch products
Exposure to resilient end markets

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Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Starch market
Morgan Stanley | LatAm Mid Cap Conference 13
Source: Bloomberg
Wheat
100120140160180200220240260280300
Cereal prices in Europe
(€/ton)
Corn
Pass-through business on a volatile cereal market, but positive momentum for producers due to softness in cereal prices
Europe
China and Indonesia
Brazil

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Our activités
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Notre stratégie
de development
Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Appendix
Cereal Division
Starch market
Morgan Stanley | LatAm Mid Cap Conference 14
Global consumption of starch products
(million tons)
Strong potential for growth in Asia and South America
Per capita starch consumption (kg, starch and syrup)
Source: LMC International 2011 - * Excluding isoglucoses
Source: LMC International 2011
•
Growth in emerging countries
Europe
China and Indonesia
Brazil

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Cooperative
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Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Starch market
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•
High availability of raw material in Brazil
-
7.6% CAGR in corn production since 2000
•
Third largest corn producer (behind only the USA and China)
•
Largest corn exporter in 2012
-
1/3 of all production exported
Brazilian Corn Supply & Demand (million tons)
Source: CONAB
Europe
China and Indonesia
Brazil

16. Sugarcane Division
Assets in Africa/Indian Ocean
Assets in Brazil
Business model
Market

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Notre stratégie
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Cooperative
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Our Financials
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Profile Cereal Appendix
Division
Sugarcane processing in Africa/Indian Ocean
17
3.2 million
tons of sugarcane
4 facilities
Reunion Island (2), Mozambique, Tanzania1
350,000
tons of sugar
1 R&D center:
eRcane
Africa/Indian Ocean
Morgan Stanley | LatAm Mid Cap Conference
Note: Tereos Internacional holds a minority stake (30%) in Tanganyika mill in Tanzania. The above- mentioned volumes reflect full production of the mill.

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Notre stratégie
de development
Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Sugarcane processing in Brazil
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Brazil
Sao Paulo State
Paraná State
No. 3 for sugar production in Brazil
20 million
tons processed
7 facilities
in Sao Paulo State
1.6 million
tons of sugar
600 cu.m
of ethanol
750 GWh
of energy
Note: Production figures reflect 2013/14 annual figures on a full consolidation basis
22.5 million
tons of capacity

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Notre stratégie
de development
Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Our business model in Brazil
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In Brazil
Sao Paulo State
Paraná State
Paranaguá Port
Santos Port
Vertente
Mandu
Sao José
Tanabi
Cruz Alta
Severínia
Andrade
Duque de Caxias
Sao Paulo
Palmital
Tereos Syral
Guarani facility
Distribution center
Road transport
Rail transport
State border
Focus on B-to-B
•
Production of high added value sugars
•
2/3 of TRS sold in the domestic market to global clients
Asset light model
•
No owned land (2/3 third party sugarcane and 1/3 of leasing)
•
Low risk, high ROA sugarcane supply model (more than 1,200 suppliers)
Premium location
•
Close to main domestic markets and ports
•
Single cluster located in Brazil’s most competitive region (São Paulo)
Morgan Stanley | LatAm Mid Cap Conference

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Notre stratégie
de development
Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Historical production
Sugarcane crushing
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Energy sales
c. 19-20 Mt
+6%
1,000 GWh
+41%
CAGR
CAGR
Note: Production figures reflect 2013/14 annual figures on a full consolidation basis
Sufficient to supply electricity for a city of almost 500 thousand habitants
Crushing boosted by 2 years of agricultural yields 15% higher than C/S average

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Notre stratégie
de development
Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Evolution of mechanical harvesting
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Percentage of mechanical harvesting – Own sugarcane
(%)
Almost 120 harvesters purchased over the last 8 years, which reduced rural workers doubling the productivity of field labour.

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Notre stratégie
de development
Cooperative
group
Sugarcane
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Our Financials
and Priorities
Profile Cereal Appendix
Division
Global sugar market
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22
In USD in BRL
World raw sugar prices
Market remained in a downtrend…
•Raw sugar prices rallied close to 20 USD cents/lb in Oct 2013, before dropping to 13.5 USD cents/lb in September 2014 (the lowest level since 2010) …continuing to search for a price to uncover the demand from destinations
• Main drivers: higher production worldwide and comfortable stocks in major importing countries More recently, prices have rebounded slightly
•Expected drop in Brazilian CS crop (~10%) starts to weight on prices coupled with sugar imports picking up in China
Source: Bloomberg
10121416182022253035404550Jan-13Apr-13Jul-13Oct-13Jan-14Apr-14Jul-14 In USDIn BRL
Sugar
Ethanol
Energy

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Notre stratégie
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Cooperative
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Our Financials
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Profile Cereal Appendix
Division
Global sugar market
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Sugar
Ethanol
•
In 2013, the sugar market experienced another comfortable supply/demand balance
-
4th consecutive world surplus helped stock-to- use ratio to recover to a 10-year high
•
Dry weather in C/S Brazil during 1S favored crushing but should strongly impact yields for the rest of the crop
•
2014/15 world crop is still a question mark, but, as per LMC estimates, could result in a 2.4 Mt deficit, which would still keep stock ratio at high levels
World sugar surplus/(deficit) (million tons – raw sugar equivalent)
Surplus/(Deficit)
Stock-to-use ratio
Source: LMC International
Energy
Est.

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Notre stratégie
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Cooperative
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Our Financials
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Profile Cereal Appendix
Division
Domestic ethanol market
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Source: CEPEA, CMA, UDOP, Kingsman
Sugar & ethanol equivalent prices
(USD cents/lb – NY FOB)
Sugar
Ethanol
Energy
Ethanol is paying better than sugar (NY11) since the beginning of the season
Sugar Exports
Hydrous Domestic
Anhydrous Domestic

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Notre stratégie
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Cooperative
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Our Financials
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Profile Cereal Appendix
Division
Domestic ethanol market
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Positive developments expected for the
sugarcane industry
•Ethanol Blend Increase?
-Increase the anhydrous ethanol blend in gasoline to 27.5% from current 25%
•CIDE Tax on Gasoline?
-Could trigger a rise in pump prices by 5-10%, favoring ethanol over gasoline
Sugar
Ethanol
Energy

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Notre stratégie
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Profile Cereal Appendix
Division
Domestic energy market
Power Matrix – 2004
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83%
Hydro
5%
Others
4%
Biomass
5%
Natural Gas
3%
Oil Derivatives
Power Matrix – 2013
Source: EPE
Source: EPE
69%
Hydro
8%
Others
12%
Natural Gas
4%
Oil Derivatives
Note: Others include nuclear, coal and wind power
7%
Biomass
Sugar
Ethanol
Energy

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Notre stratégie
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Cooperative
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Sugarcane
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Our Financials
and Priorities
Profile Cereal Appendix
Division
Domestic energy market
Morgan Stanley | LatAm Mid Cap Conference 27
Source: UNICA
Energy production from sugarcane bagasse
(‘000 GWh)
Strong potential for new investments pending on segregated power auctions
Sugar
Ethanol
Energy

28. Our Financials and Priorities
Results
Efficiency Programs
Strenghts

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Our activités
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Notre stratégie
de development
Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Revenues breakdown
March 2013 – 12 Months
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March 2014 – 12 Months
32%
Starch & Sweeteners
12%
Others (incl. energy)
18%
Alcohol & Ethanol
22%
Sugar
16%
Co-products
31%
Starch & Sweeteners
13%
Others (incl. energy)
20%
Alcohol & Ethanol
24%
Sugar
12%
Co-products

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Cooperative
group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Our results
Revenues
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EBITDA
R$8,339 M
+7%
R$962 M
+7%
CAGR
CAGR
Note: (1) Figures are in accordance with IFRS 11 (JV contribution)

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Profile Cereal Appendix
Division
Our results
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631115411118854182902010/112011/122012/13(1)2013/14(1)H1 13/14(1)H1 14/15(1)
Capital Expenditures
(R$ million)
Almost R$4 billion spent on CAPEX over the last 4 years, with continuous downward trend moving forward as multi-year programs near completion
Note: (1) Figures are in accordance with IFRS 11 (JV contribution)
CAPEX

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Our results
Morgan Stanley | LatAm Mid Cap Conference 32
Note: All figures are in accordance with IFRS 11 (JV contribution)
Key Performance Indicators
In R$ Million
2013/14
2012/13
Δ
H1 14/15
H1 13/14
Δ
Net Revenues
8,339
7,402
+12.7%
3,792
4,116
-7.9%
Adjusted EBITDA
962
786
+22.3%
446
551
-19.1%
Margin
11.5%
10.6%
-
11.8%
13.4%
-
Net Debt
3,566
3,322
+7.34%
4,144
4,148
-0.1%
Net Debt/Adjusted EBITDA
3.7x
4.2x
-
4.8x
4.5x
-
CAPEX
885
1,111
-20.3%
290
418
+30.6%

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Profile Cereal Appendix
Division

Operational

Sugarcane Brazil:

H1 crushing volumes up +5% YoY. Tonnes of ATR/ha at Guarani 26% above average of C/S region, thanks to improvements in agricultural performance

Own energy sales up 35% YoY to 344 GWh in Q2 14/15, due to start of cogeneration in Tanabi and the ramp-up of Mandu and São José mills

Inventories up on last year (+7% in sugar and +34% in ethanol, in volume)

Efforts continue on “Guarani 2016” program

Sugarcane Indian Ocean/Africa: Lower volumes on delayed shipments in Indian Ocean, and slower progress on crushing in Mozambique due to rainfall

Cereal Europe: Improved profitability thanks to “Performance 2015” benefits on track, despite continuously soft demand in Europe

Cereal Brazil: Ramp-up progressing satisfactorily, with corn grinding up 32% sequentially. Plant reached nominal capacity level in August

Cereal Asia: Improvements on corn grinding and stability of production at Tieling. Performance improvements at Redwood
Highlights for H1 14/15 results
Morgan Stanley | LatAm Mid Cap Co3n3ference

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Profile Cereal Appendix
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
Financial

Guarani: R$240.2 million capital injection from Petrobras completed in October, 2014 as planned. Tereos Internacional’s stake in Guarani now at 57.1%

Indonesia: Results of Redwood fully consolidated from this quarter

Strategy

Tereos Group: creation of Tereos Commodities, entity responsible for the trading activity and distribution of white sugar in Europe
Highlights for H1 14/15 results
Morgan Stanley | LatAm Mid Cap Conference 34

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Division

Sugarcane

Brazil:

H2 sales volume to benefit from higher starting inventory (sugar +26kt and ethanol + 71km3 vs. September 2013)

Progress in co-generation, to reach over 1,000 GWh sales also boosted by efforts to optimize own energy consumption

Reintegra tax credit (3% of exports revenues) and a possible increase in the ethanol blending ratio (from 25% to 27.5%) could be positive developments to support the S&E industry

Africa/Indian Ocean:

Indian Ocean crop volumes expected to be in line with last year despite drier than usual weather

Yields in Africa to be better YoY as a result of improved agricultural performance and favorable rain

Impact of lower European sugar prices to be more pronounced in H2
Outlook for 2014/15 results
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Profile Cereal Appendix
Division

Cereals:

Europe:

Benefits of “Performance 2015” to continue

Despite lower cereal prices, soft demand for starch and lower isoglucose prices (following European sugar prices) somewhat hinder potential for margin restoration

Gradual phasing out of raw material conventional price mechanism and current lower ethanol prices to limit improvements in Alcohol & Ethanol segment’s profits in H2

International:

Brazil: Focus on stability of plant performance at full capacity, and customer portfolio optimization

Asia: In China, Dongguan facility to start production in H1 2015 (500,000 tonnes/year wheat grinding capacity). In Indonesia, capacity expansion and product diversification plan for Redwood being developed
Outlook for 2014/15 results
Morgan Stanley | LatAm Mid Cap Conference 36

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Profile Cereal Appendix
Division
Guarani2016 Sugarcane
Morgan Stanley | LatAm Mid Cap Conference 37
Continue strengthening our competitiveness and leadership in Brazil
Strategy

Vision, mission and 5-year strategic planning
Detailed mix of products and future operational strategy
Technical Performance

Agriculture

Industry

Purchasing

Logistics

CAPEX

Comercial
Organization & Health

Organizational health

Performance management

New organizational structure
Guarani2016
Cargo
Program Management

PMO/coordination of several work fronts and measurement of effectiveness

64 initiatives detected in different areas

Communication activities

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Profile Cereal Appendix
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Performance 2015 Cereals
Morgan Stanley | LatAm Mid Cap Conference 38
Performance 2015
Adjustment of sales approach
A revised grain purchase process in place
Cost reduction in supply-chain and purchasing
Operational improvements in plants
A new ManCo Dashboard has been implemented
Exclusive P15 project management office

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Profile Cereal Appendix
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Morgan Stanley | LatAm Mid Cap Conference 39
Our strengths
GROWTH
EXPOSURE AND
SINERGIES
AMONGST BUs
BALANCED
BUSINESS
MODEL
SOLID
COMMERCIAL
POSITION
LONG TERM VISION OF OUR
SHAREHOLDERS

40. IR Contact Marcus Thieme Investor Relations Officer Felipe Mendes Investor Relations Manager
Phone: +55 (11) 3544 4900 Email: ir@tereosinternacional.com www.tereosinternacional.com

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Profile Cereal Appendix
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Our shareholder structure
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Others
Guarani
Petrobras
Petrobras
Biocombustível
29.3%
56.4%
1.1%
57.1%
Tereos EU
100.0%
42.9%
Tereos
Participations
Tereos
Agro-Industrie(1)
99.0%
92.9%
Tereos Syral
Tereos
Ocean Indien
100.0%
89.9%
Sugarcane assets
Cereal assets
Syral do Brasil
99.0%
Syral Halotek
68.0%
Tereos Asia
Investment
100.0%
Yihai Kerry
Syral
49.0%
Wilmar
51.0%
13.2%
Partners
(1)
consider 3.8% owned by Tereos do Brasil
Redwood
FKS Group
50.0%
50.0%

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Our activités
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group
Sugarcane
Division
Our Financials
and Priorities
Profile Cereal Appendix
Division
Cereal-based starch process
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