Fact Sheet 2Q14 MARKET CAPITALIZATION (JUNE, ) CLOSING SHARE PRICE ON JUNE, QUANTITY OF SHARES AS AT THE END OF JUNE TREASURY STOCK

Transcription

1 Fact Sheet 2Q14 MARKET CAPITALIZATION (JUNE, ) R$5,980.9 million CLOSING SHARE PRICE ON JUNE, R$9.02 QUANTITY OF SHARES AS AT THE END OF JUNE 665,565,438 TREASURY STOCK 2,485,759 FREE FLOAT 40% DURATEX INVESTOR RELATIONS: Director: Flavio Marassi Donatelli Manager: Álvaro Penteado de Castro Conference call/webcast: July 30, 2014, Wednesday Portuguese: Time: 9.00 a.m. (Brazilian central time; 8.00 a.m. NYT) English: Time: a.m. (Brazilian central time; 9.30 a.m. NYT) Supporting material: For connection: Participants in Brazil: +55 (11) or +55 (11) Participants in the USA: Toll free: (in English only) Access code: Duratex Webconference: CORPORATE GOVERNANCE address for matters relating to corporate governance, for the attention of top management: duratex.com.br Shares listed on the BM&FBovespa Novo Mercado Only common shares in circulation, in other words, each share carries the right to one vote at General Shareholders Meetings 100 % tag-along rights for the shares Three independent members on the Board of Directors Advisory Committees to the Board of Directors: Staff, Nomination and Governance; Sustainability; Auditing and Risk Management; Trading and Disclosure; and Evaluation of Transactions with Related Parties Dividend policy with a minimum distribution of 30 % of adjusted net earnings Policy in force for the Disclosure of Material Events and Facts and Trading in Securities The Company has adhered to the Abrasca Code for Selfregulation and Good Practices for Listed Companies The Company s shares are included in the Dow Jones Emerging Markets Index (DJSWI), version 2013/2014, and the Bovespa Corporate Sustainability Index (ISE), version 2014 Stockbrokers that cover the Company: Ativa, Banco Fator Corretora, Brasil Plural, BTG Pactual, Citibank, Coinvalores, Credit Suisse, Goldman Sachs, HSBC, JP Morgan, Lopes Filho, Merrill Lynch, Morgan Stanley, Santander and Votorantim

2 Consolidated Financial Summary HIGHLIGHTS (in R$ 000) 2Q14 1Q14 2Q13 1HY14 1HY13 Volume shipped Deca ( 000 items) 6,658 7,075 7,366 13,733 13,919 Volume shipped Wood (m 3 ) 646, , ,153 1,279,618 1,260,466 Consolidated net revenue 957, , ,001 1,887,183 1,836,863 Gross profit 298, , , , ,699 Gross margin 31.2 % 34.1 % 36.8 % 32.6 % 38.1 % Ebitda according to CVM No. 527/12 (1) 274, , , , ,018 Ebitda Margin CVM No. 527/ % 37.3 % 34.6 % 32.9 % 37.1 % Adjustments for non-cash events (67,141) (60,903) (36,039) (128,044) (80,970) Non-recurring events (3) - (45,514) 3,798 (45,514) (15,901) Recurring adjusted Ebitda (2) 207, , , , ,147 Recurring adjusted Ebitda margin 21.7% 25.8% 31.3% 23.7% 31.9% Net income 58, , , , ,653 Recurring net income 58, , , , ,373 Recurring net margin 6.1 % 14.1 % 13.8 % 10.1 % 15.1 % (1) Ebitda (Earnings Before Interest, Taxes, Depreciation and Amortization): measure of operational performance in accordance with CVM Instruction No. 527/12. For a complete reconciliation of this indicator, please refer to page 9 and 10 of this report. (2) Events of an extraordinary nature, namely: 1Q14: results from the sale of 5,600 hectares given as part of the payment for the acquisition of the forests of Caxuana S.A. (Material Note dated March 13); 1Q13: (+) R$42,318k referring to the reversion of surplus reserves in the company s closed defined benefit pension plan Fundação Itaúsa Industrial, (-) R$20,362k referring to accounting write-offs associated with the discontinuation of the Argentinian operation and (-) R$2,257k referring to other adjustments; 2Q13: (-) R$3,798 k referring to accounting write-offs in the Argentinian operation. (3) Ebitda adjusted for non-cash events due to variation in the fair value of biological assets and combination of businesses, in addition to extraordinary events and the effect of discontinuation of the operation in Argentina, Deca Piazza. 2

3 INDICATORS (in R$ 000) 2Q14 1Q14 2Q13 1HY14 1HY13 Current ratio (4) Net debt (5) 1,874,599 1,857,313 1,480,529 1,874,599 1,480,529 Net debt/ebitda LTM (6) Average net equity 4,506,722 4,437,330 4,181,320 4,459,483 4,128,748 ROE (7) 5.2 % 14.5 % 12.5 % 9.9 % 13.5 % Recurring ROE 5.2 % 11.8 % 12.9 % 8.5 % 13.4 % SHARES 2Q14 1Q14 2Q13 1HY14 1HY13 Basic net earning per share (R$) (8) Closing share price (R$) Net equity per share (R$) Shares held in treasury (shares) Market value (R$1,000) (4) Current ratio: current assets divided by current liabilities. Indicates the amount available in R$ to cover each R$ of short-term obligations. (5) Net debt: total financial debt (-) cash balance held. (6) Financial leverage calculated on recurring Ebitda over the last 12 months, adjusted by events of a purely accounting and non-cash nature. (7) ROE (Return on Equity): measure of performance obtained by taking net earnings over the period, annualized, and dividing it by average net equity. (8) Net earnings per share is calculated by dividing the profit attributable to the Company s shareholders, by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares held in treasury. Note that for periods prior to April 2014 an adjustment has been made to this indicator to reflect the 10 % stock dividend distributed in that month. Scenario and Market Performance expectations for 2014, at the end of 2013, were more positive than reality. The weak economy pace, due to the low level of investment, the reduction in the rate of growth in consumer credit, the increase in interest rates and inflation and the large number of holidays all had an impact on consumption, right from the beginning of the period, which forced retailers to adjust their inventory levels. This took place even before the World Cup, largely due to expectations of reduced store turnover levels during the championship, which in fact turned out to be the case. We expect there to be a pickup in sales in the second half of the year, although doubt remains as to the strength of such a trend, given that there are no indications that there will be any changes in the macro-economic scenario over the short term. Brazilian Central Bank s Focus Report, of December 27, 2013, portrayed a very different scenario to 2014 than that most recently published on July 18. In general the inflation forecast, as measured by the IPCA index, increased from 5.98 % to 6.44 % (practically at the ceiling of the band), with industrial production having previously been expected to grow by 2.23 %, now expected to decline by 1.15 %. Meanwhile the SELIC rate target was increased from % to %, which had the final result of cutting GDP growth expectations by more than half, from 2.00 % to 0.97 %. 3

4 This economic performance had a sharp impact on our operational markets. In the wood segment, there was a 4.2 % drop in panel shipment volume, in the domestic market, according to figures obtained from ABIPA (Brazilian Panel Industry Association). For the year-to-date, shipments were down 3.7 %. This scenario interfered with the business environment, particularly in the mass-produced furniture segment, with MDP panels being the most affected. For the year-to-date, compared to the same period a year earlier, there was a retraction in shipment volumes for this type of panel, of approximately 11.1 %. Additionally, the construction materials industry suffered from a weak performance during the period. The ABRAMAT indicator, which measures sales performance in this industry, in the domestic market, showed a drop of 4.6 % in the first half of the year, in the wake of a less favourable business environment. Strategic Management With respect to strategic moves by the Company in the quarter, of particular note was the investment of R$94.9 million, which can be broken down as follows:: i) Support for existing operations R$51.6 million ii) A new lamination production line at the Uberaba plant, in Minas Gerais R$4.9 million iii) The purchase of harvesting equipment for the forestry division R$5.3 million among others Investment for the year-to-date amounted to R$366.8 million. This figure includes the acquisition of an additional stake in Tablemac (R$151.7 million) and the forests of Caxuana (R$58.8 million), already commented on at the time of publishing the results for the 1 st quarter of It should be pointed out that, despite this unfavourable economic period, the Company has positioned itself to capture the benefits of a more demand-orientated market. It has industrial assets that are strategically located, close to the main consumer centres, with a high degree of verticalization, providing it with significant competitive differentials. Additionally, investments made have focused on supporting the Company s operations over the long term, independently of short-term setbacks. On March 31, 2014, the Company announced an investment in two new panel plants, to be made in the state of Minas Gerais, for a total of R$1.3 billion. The company s management is monitoring the behaviour of the economy, so as to make adjustments to the original capex schedule, over which it has total control at the moment. 4

5 Consolidated Financial Highlights (IFRS) NET REVENUE Net revenue totalled R$957.6 million in the quarter. Of this, R$65.6 million refers to Duratex s stake in its Colombian subsidiary, Tablemac. Disregarding revenue from Tablemac, there was a drop in sales compared to the same period a year earlier due to a reduction in sales volume and the fact that market conditions did not allow for any price increases, with a number of discounts being granted on certain product lines in more competitive segments. On a positive note, export sales were up 12.7 % in the second quarter, YoY, being up 14.6 % for the year-to-date. R$ Consolidated 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Net revenue 957, , % 972,001 (1.5 %) 1,887,183 1,836, % Domestic market 846, , % 931,202 (9.1 %) 1,686,768 1,755,542 (3.9 %) Foreign market 111,577 88, % 40, % 200,415 81, % R$ ex Tablemac 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Net revenue 891, , % 972,001 (8.2 %) 1,779,947 1,836,863 (3.1 %) Domestic market 846, , % 931,202 (9.1 %) 1,686,768 1,755,542 (3.9 %) Foreign market 45,975 47,204 (2.6 %) 40, % 93,179 81, % NET REVENUE BY OPERATIONAL AREA (IN % 2Q14) Deca Madeira COST OF GOODS SOLD (COGS) The cost of goods sold, net of depreciation, amortization and depletion, and the net variation in the fair value of biological assets, in other words the cash cost, amounted to R$588.3 million in the quarter, and R$1,133.1 million for the first half, representing a year-on-year increase of 14.6 % and 17.4 % respectively. This increase is partly explained by the consolidation of Tablemac s results, which added R$41.1 million and R$66.1 million to this line, respectively. If we were to disregard these figures, because Tablemac was not part of the Company s consolidated results in 2013, the figures would show a respective increase of 6.6 % and 10.6 %. This difference can be explained by the operational start-up of new plants at Itapetininga and Queimados, with their associated costs, without a corresponding increase in sales; the consumption of inputs acquired in the first quarter at a still unfavourable exchange rate and dollar price; in addition to inflationary pressure on costs denominated in reais, principally in terms of labour, as a result of annual collective wage increases. Furthermore, as a result of the reduced level of economic activity, some downsizing was carried out to the workforce, which resulted between provisions and payments approximately R$7.7 million. These events contributed to explaining the drop in consolidated gross profit seen, with a consequent reduction in gross margin from 36.8 % in the second quarter of 2013 and 38.1 % in the first quarter of that year, to 31.2 % and 32.6 %, respectively, for the first quarter and first half of this year. 5

6 It should also be pointed out that margins at the beginning of 2013 were supported by adjustments made to the pricing base right at the beginning of the year, without a corresponding increase in costs, which from then on began to erode margin, due to the absence of further price increases. Tablemac s gross margin, in the quarter, amounted to 32.3 %, and 33.3 % in the first half, so being higher than the margins in the Brazilian operation, thus supporting the strategic decision, taken at the beginning of this year, to increase the equity stake in that company. R$ Consolidated 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Cash COGS (588,308) (544,827) 8.0% (513,249) 14.6% (1,133,135) (965,126) 17.4% Variation in fair value of biological assets (1) 68,150 55, % 33, % 123,757 76, % Depletion tranche of biological assets (49,181) (39,336) 25.0 % (58,572) (16.0 %) (88,517) (103,978) (14.9 %) Depreciation, amortization and depletion (89,945) (84,425) 6.5 % (75,775) 18.7 % (174,370) (144,963) 20.3 % Gross profit 298, ,607 (5.8%) 358,068 (16.7%) 614, ,699 (12.1%) Gross margin 31.2% 34.1% % % 38.1% - (1) The increase in the variation in the fair value of biological assets, in the quarter, is associated with the mark-to-market of the forests acquired in Caxuana, the reason for the Material Event notice published on March 13, For the year-to-date, this effect is magnified by the increase in wood prices, and its consequent effect on the revaluation of existing stock. R$ ex Tablemac 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Cash COGS (547,172) (519,851) 5.3% (513,249) 6.6% (1,067,023) (965,126) 10.6% Variation in fair value of biological assets 68,150 55, % 33, % 123,757 76, % Depletion tranche of biological assets (49,181) (39,336) 25.0 % (58,572) (16.0 %) (88,517) (103,978) (14.9 %) Depreciation, amortization and depletion (86,458) (82,143) 5.3 % (75,775) 14.1 % (168,601) (144,963) 16.3 % Gross profit 277, ,073 (8.3%) 358,068 (22.6%) 579, ,699 (17.2%) Gross margin 31.1% 34.0% % % 38.1% - 6

7 NET REVENUE (IN R$ MILLION) EXCLUDING TABLEMAC CASH COST (IN R$ MILLION) AND GROSS MARGIN (IN %) EXCLUDING TABLEMAC Cash cost Gross margin , , Q13 3Q13 4Q13 1Q14 2Q14 2Q13 3Q13 4Q13 1Q14 2Q14 COST OF GOODS GOLD (IN % 2Q14) Wood division Deca division *Includes depletion of amount invested allocated to the cost of wood. Other materials Wood * Resina Labour Paper Depreciation and amortization Electricity Fuel Other materials Labour Metals Depreciation and amortization Fuel Electricity 7

8 SALES EXPENSES Sales expenses totalled R$128.4 million in the quarter and R$246.9 million for the first half. These figures reflect respective increases compared to the first quarter and first half of last year, of 11.3 % and 15.3 %. The consolidation of Tablemac s results added R$10.9 million and R$17.0 million, respectively, to this line. If we were to disregard this consolidation, the respective increases would have been lower, of 1.8 % and 7.4 %. The rise in the export volume of the Wood Division, principally, and a higher proportion of international freight costs as a consequence, also contributed to increasing overall sales expenses. Additionally, a number of promotional and advertising initiatives consumed a further R$2.8 million, while there was a rise in local freight prices of around 7 % all of which explain the increases observed in this account. As demand increases dilution of this type of expenses can be expected. R$ Consolidated 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Sales expenses (128,423) (118,476) 8.4 % (115,425) 11.3 % (246,899) (214,071) 15.3 % Percentage of net revenue 13.4 % 12.7 % % % 11.7 % - R$ ex Tablemac 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Sales expenses (117,475) (112,398) 4.5 % (115,425) 1.8 % (229,873) (214,071) 7.4 % Percentage of net revenue 13.2 % 12.7 % % % 11.7 % - SALES EXPENSES (IN R$ MILLION) AND PERCENTAGE IN RELATION TO NET REVENUE EXCLUDING TABLEMAC Sales expenses percentage in relation to net revenue ADMINISTRATIVE AND GENERAL EXPENSES General and administrative expenses totalled R$35.0 million in the quarter and R$66.8 million for the year-to-date, with R$2.2 million and R$3.7 million, respectively, referring to Tablemac. If we were to disregard this effect, there would have been a retraction of 2.3 % and 1.6 % in these expenses, compared to the first quarter and first half of Q13 3Q13 4Q13 1Q14 2Q14 8

9 R$ Consolidated 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % General and administrative expenses (34,997) (31,831) 9.9 % (33,538) 4.4 % (66,828) (64,217) 4.1 % Percentage of net revenue 3.7 % 3.4 % % % 3.5 % - R$ ex Tablemac 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % General and administrative expenses (32,751) (30,410) 7.7 % (33,538) (2.3 %) (63,161) (64,217) (1.6 %) Percentage of net revenue 3.7 % 3.4 % % % 3.5 % - EBITDA The table below shows a reconciliation of Ebitda, in accordance with the system set out by Instruction No. 527/12. Based on this result, and as a way of better portraying the Company s operational cash generation, two adjustments have been made: the stripping out of events of an accounting and non-cash nature from Ebitda, and disregarding events of an extraordinary nature. In this way, and in keeping with the best practices, below we show the calculation of the indicator which best reflects the Company s cash generation. Reconciliation Ebitda (R$ 000) Consolidated 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Net income 58, ,233 (63.6%) 130,736 (55.2%) 219, ,653 (21.4%) Income tax and social contribution 22,534 11, % 35,419 (36.4 %) 34,501 84,119 (59.0 %) Net financial result 44,735 40, % 24, % 85,202 49, % EBIT 125, ,667 (41.1 %) 190,518 (33.9 %) 339, ,773 (17.7 %) Depreciation, amortization and depletion 99,593 93, % 87, % 193, , % Depletion tranche of biological assets 49,181 39, % 58,572 (16.0 %) 88, ,978 (14.9 %) Ebitda according to CVM No. 527/12 274, ,463 (20.7%) 336,477 (18.4%) 621, ,018 (8.9%) Ebitda margin CVM No. 527/ % 37.3 % % % 37.1 % - Change in fair value of biological assets (68,150) (55,607) 22.6 % (33,663) % (123,757) (76,903) 60.9 % Employee benefit 1,316 (2,440) - (1,445) - (1,124) (4,094) - Others (307) (2,856) - (931) - (3,163) 27 - Extraordinary events (1) 0 (45,514) - 3,798 - (45,514) (15,901) - Recurring adjusted Ebitda 207, ,046 (13.6%) 304,236 (31.8%) 447, ,147 (23.5%) Recurring adjusted Ebitda margin 21.7% 25.8% % % 31.9% - (1) Events of an extraordinary nature, namely: 1Q14: result of the sale of 5,600 hectares given as part of the payment for the acquisition of the forests of Caxuana S.A. (Material Note dated March 13); 1Q13: (+) R$42,318k referring to a reversion of surplus reserves in the defined-benefit closed pension scheme of Fundação Itaúsa Industrial, (-) R$20,362k referring to accounting write-offs related to the discontinuation of the Argentinian operation and (-) R$2,257k referring to other adjustments; 2Q13: (-) R$3,798k referring to accounting write-offs of the Argentinian operation. 9

10 Reconciliation Ebitda (R$ 000) ex Tablemac 2º tri/14 1º tri/14 % 2º tri/13 % 1º Sem/14 1º Sem/13 % Net income 53, ,570 (65.9%) 130,736 (59.2%) 209, ,653 (24.9%) Income tax and social contribution 21,850 10, % 35,419 (38.3 %) 32,402 84,119 (61.5 %) Net financial result 42,255 39, % 24, % 81,743 49, % EBIT 117, ,610 (43.2 %) 190,518 (38.3 %) 324, ,773 (21.5 % ) Depreciation, amortization and depletion 96,106 91, % 87, % 187, , % Depletion tranche of biological assets 49,181 39, % 58,572 (16.0 %) 88, ,978 (14.9 %) Ebitda according to CVM No. 527/12 262, ,124 (22.1%) 336,477 (21.9%) 599, ,018 (12.0%) Ebitda margin CVM No. 527/ % 38.0 % % % 37.1 % - Change in fair value of biological assets (68,150) (55,607) 22.6 % (33,663) % (123,757) (76,903) 60.9 % Employee benefit 1,316 (2,440) - (1,445) - (1,124) (4,094) - Others (307) (2,856) - (931) - (3,163) 27 - Extraordinary events (1) - (45,514) - 3,798 - (45,514) (15,901) - Recurring adjusted Ebitda 195, ,707 (15.2%) 304,236 (35.7%) 426, ,147 (27.1%) Recurring adjusted Ebitda margin 21.9% 26.0% % % 31.9% - Consolidated Ebitda, in accordance with the methodology defined by CVM Instruction No. 527/12, totalled R$274.7 million, with Ebitda margin of 28.7 %, in the quarter, and R$621.1 billion, with Ebitda margin of 32.9 %, for the first half of the year. Disregarding events of an accounting and non-cash nature, as well as non-recurring items, the adjusted result came to R$207.5 million, equivalent to an annual retraction of 31.8 %, with Ebitda margin of 21.7 % (21.9 % disregarding the effect of Tablemac). For the first half, this result amounted to R$447.6 million, a YoY drop of 23.5 %, and Ebitda margin of 23.7 %. ORIGIN OF RECURRING ADJUSTED EBITDA (IN % 2Q14) The effect of the events already commented, under the analysis of net revenue and the cost of goods sold (COGS), also contributed to pressure Ebitda for the period. The comparative increase in cash cost, in the second quarter compared to the immediately preceding period, and the same period in 2013, amounted to R$43.5 million and R$75.1 million, respectively. Comparing the year-to-date in 2014 with the same period in 2013, this increase amounted to R$168.0 million. Wood division Deca division 10

11 NET EARNINGS Recurring net earnings for the quarter amounted to R$58.6 million, down 56.4 % compared to the same period a year earlier. Net earnings for the first half amounted to R$189.8 million, down 31.6 % YoY. The events previously referred to had a strong impact on this result, in addition to the increased cost of the Company s debt. Furthermore, compared to the immediately preceding period, when there was also a sharp drop in profit seen, it should be pointed out that the result for the first quarter benefited from a reduction in the Income tax rate, which had a positive effect on the result of R$40.0 million, due to the declaration of extraordinary interest-on-equity referring to performance in 2013, but distributed in the first quarter of R$ Consolidated 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Net earnings 58, ,233 (63.6 %) 130,736 (55.2 %) 219, ,653 (21.4 %) Discontinued operations (1) ,798 (100.0 %) - 24,160 - Extraordinary events (2) - (30,039) (30,039) (26,440) - Recurring net earning 58, ,194 (55.3%) 134,534 (56.4%) 189, ,373 (31.6%) ROE 5.2 % 14.5 % % % 13.5 % - Recurrent ROE 5.2 % 11.8 % % % 13.4 % - (1) Of particular note was the effect of discontinued operations (Deca Piazza, Argentina) on the result. (2) Net effect of events already previously mentioned, as a result of discussion on Ebitda reconciliation, which affected the result R$ ex-tablemac 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Net earnings 53, ,570 (65.9 %) 130,736 (59.2 %) 209, ,653 (24.9 %) Discontinued operations (1) ,798 (100.0 %) - 24,160 - Extraordinary events (2) - (30,039) (30,039) (26,440) - Recurring net earning 53, ,531 (57.8%) 134,534 (60.3%) 179, ,373 (35.1%) ROE 4.8 % 14.2 % % % 13.5 % - Recurrent ROE 4.7 % 11.5 % % % 13.4 % - VALUE ADDED Value added in the quarter totalled R$461.5 million (R$1,018.3 million for the year-to-date). Of this figure, R$141.9 million, equivalent to 11.5 % of revenues obtained and 30.8 % of total value added, was paid out in the form of federal, state and municipal taxes and contributions. DISTRIBUTION OF VALUE ADDED (IN % 2Q14) Remuneration for labour Remuneration to shareholders Remuneration to government Financing remuneration 11

12 DIVIDEND/INTEREST-ON-EQUITY Shareholders are statutorily guaranteed a minimum obligatory dividend worth 30 % of adjusted net earnings. A provision was made for dividends on the gross amount of R$72.7 million, in the form of interest-on-equity, to be distributed starting August 15, 2014, based on shareholding position as at July 30, In this way, total gross unit remuneration, for those shareholders holding shares on July 30, 2014, will be R$0.1097, equivalent to a net remuneration of approximately R$ per share. INDEBTEDNESS Gross consolidated debt, at the end of June 2014, totalled R$2,709.2 million, equivalent to a net debt of R$1,874.6 million, almost unchanged compared to debt for the immediately preceding quarter of R$1,857.3 million. This level of net debt is equivalent to 1.76x of recurring adjusted Ebitda over the last 12 months and 41.6 % of net equity at the end of June, which, despite the slight increase compared to the immediately preceding period, as a result of a lower rate of Ebitda growth, can be considered low. With respect to net debt, at the end of 2013, there was an increase of R$420.6 million directly related to investments realised in 2014 (R$366.8 million), in addition to the consolidation of Tablemac, which added R$55.5 million to the overall figure. During the quarter R$194.1 million in new debt was taken out, while R$217.8 million was paid down, having the respective figures for the year-to-date being R$600.7 million and R$413.6 million. As a consequence, net financial expenses increased from (-) R$24.4 million, in the second quarter of 2013, to (-) R$44.7 million in the period and from (-) R$49.0 million to (-) R$85.2 million for the year-to-date, as a result of the increase in debt and higher interest rates charged on it. Consolidated (in R$ 000) 06/30/14 03/31/14 Var R$ 12/31/13 Var R$ 06/30/13 Var R$ Short-Term debt 538, ,927 (126,712) 716,373 (178,158) 641,184 (102,969) Long-Term debt 2,170,971 2,065, ,475 1,734, ,503 1,674, ,194 Total debt 2,709,186 2,730,423 (21,237) 2,450, ,345 2,315, ,225 Cash and equivalent 834, ,110 (38,523) 996,843 (162,256) 835,432 (845) Net debt 1,874,599 1,857,313 17,286 1,453, ,601 1,480, ,070 Net debt/recurring adjusted Ebitda LTM Net debt/equity (in %) 41.6% 41.2% % % - 12

13 FINANCIAL REVENUES AND EXPENSES R$ 000 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Financial revenue 29,746 26, % 30,978 (4.0 %) 55,766 49, % Financial expenses (74,481) (66,487) 12.0 % (55,341) 34.6 % (140,968) (98,587) 43.0 % Net financial result (44,735) (40,467) 10.5% (24,363) 83.6% (85,202) (49,001) 73.9% DEBT PAYDOWN SCHEDULE (IN R$ MILLION) GROSS DEBT AT THE END OF JUNE 2014 (IN R$ MILLION) , Long-Term Short-Term and after ORIGIN OF DEBT (%) National currency Foreign currency* Colombia *100 % swapped into R$. 13

14 Operations WOOD DIVISION Highlights 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % SHIPMENTS (in m 3 ) Standard 359, ,049 (2.3 %) 361,190 (0.4 %) 727, ,710 (0.4 %) Coated 286, , % 285, % 551, , % Total 646, , % 647,153 (0.2%) 1,279,618 1,260, % FINANCIAL HIGHLIGHTS (R$ 000) Net revenue 619, , % 620,507 (0.1%) 1,203,948 1,174, % Domestic market 515, , % 586,630 (12.1 %) 1,019,517 1,109,172 (8.1 %) Export market 104,079 80, % 33, % 184,431 65, % Net unit revenue (in R$ per m 3 shipped) % % % Unit cash cost (1) (in R$ per m 3 shipped) (595.55) (538.92) 10.5% (482.82) 23.3% (567.51) (468.97) 21.0% Gross profit 181, ,097 (5.0%) 221,587 (18.1%) 372, ,833 (15.3%) Gross margin 29.3% 32.7% % % 37.4% - Sales expenses (71,679) (66,917) 7.1 % (63,134) 13.5 % (138,596) (116,947) 18.5 % General and administrative expenses (16,754) (16,490) 1.6 % (17,173) (2.4 %) (33,244) (32,912) 1.0 % Operating profit before financial results 87, ,455 (44.4 %) 131,096 (33.6 %) 243, ,486 (15.3 %) Depreciation, amortization and depletion 79,698 74, % 68, % 154, , % Depletion tranche of biological assets 49,181 39, % 58,572 (16.0 %) 88, ,978 (14.9 %) Ebitda according to CVM No. 527/12 (1) 215, ,172 (20.1%) 258,380 (16.4%) 486, ,714 (6.8%) Ebitda margin according to CVM No. 527/ % 46.3% % % 44.4% - Variation in fair value of biological assets (68,150) (55,607) 22.6 % (33,663) % (123,757) (76,903) 60.9 % Employee benefits 1,732 (765) - (280) (1,306) - Others (307) (2,856) - (931) - (3,163) 27 - Extraordinary event (2) - (45,514) (45,514) (15,803) - Recurring adjusted Ebitda 149, ,430 (9.8%) 223,506 (33.2%) 314, ,729 (26.4%) Recurring adjusted Ebitda margin 24.1% 28.3% % % 36.4% - (1) Refers to Ebitda, in accordance with CVM Instruction No. 527/12 methodology. Based on this result, and as a way of better portraying the Company s operational cash generation, two adjustments have been made: the stripping out of events of a purely accounting and non-cash nature from Ebitda and the disregarding of events of an extraordinary nature. Thus, and in alignment with the best practices, there follows the calculation of the indicator which best reflects the Company s cash generation. (2) Extraordinary events, namely: 1Q14: referring to profit from real-estate sale on 5,600 hectares of land given as part of the payment for the acquisition of the forests of Caxuana S.A.; 1Q13: (+) R$18,060k referring to the devolution of the excess in the closed defined benefit pension plan of Fundação Itaúsa and (-) R$2,257k referring to other adjustments. 14

15 From the 1 st quarter of 2014, the result of Colombian subsidiary Tablemac began to be consolidated into Duratex s financial statements. Being a foreign subsidiary, and pursuant to CVM Deliberation No. 698 of December, , CPC 36(R3), which in its items B92 and B93, deals with the consolidation of financial statements with different dates, information on this subsidiary will have a time-lag of one month compared to the usual form reported in Brazil. As the operation took place at the end of January, only two months of Tablemac s operations were consolidated in the accounts, being respectively January and February of the 1st quarter, seeing that December was still being booked under the equity income result method. In the second quarter, the months of March to May are consolidated. In the consolidation above, Tablemac is contributing with: volume shipped from March to May: 53,559 m 3 ; net revenue: R$65.6 million; gross profit: R$21.2 million and gross margin of 32.4 %; Ebitda of R$11.9 million with Ebitda margin of 18.2 % and net earnings of R$5.2 million. The operational performance of the Wood Division was significantly affected by the absence of a pickup in economic activity, normally seen in the second quarter, compared to the preceding period. We attribute this low rhythm of economic activity to preventative de-stocking which took place in the mass retail furniture segment, ahead of the large number of holidays over the World Cup. As a result of this move, shipment levels forced an adjustment made in production plans, with a view to controlling inventory levels. As this reality unfolded, a number of adjustments were made to labour levels, resulting in the need for additional provisions. In this environment, shipment levels remained practically stable quarter-on-quarter, at 592.4k m 3 compared to 599.7k m 3 in the first quarter, disregarding the contribution from the Colombian operation. Consolidated volume amounted to 646.1k m 3 compared to 633.6k m 3 in the previous quarter. Shipment mix quality, however, contributed to an increase of 4.1 % in unit net revenue, which was offset by an average discount of 5 % given on sales prices, particularly from June onwards. As a result of the quarterly increase of 2.0 % in shipment volume, and a rise of 4.1 % in unit net revenue, there was a quarterly increase of 6.2 % in net revenue, which amounted to R$619.9 million in the quarter, coming to an accumulated total of R$1,203.9 million for the first half, up 2.5 % compared to the same period in The level of volume shipped associated with inefficiencies in terms of scale required adjustments made in the pricing base. This factor, linked to the consumption of inputs at a comparatively unfavourable cost, collective wage agreements and the increase in freight costs and sales expenses to support the launch of new products, all explained the erosion in margins seen in the period. Thus gross margin came to 29.3 % in the quarter, and 31.0 % for the first half, below the margins seen in the first quarter of 2014 and the first half of 2013, of 32.7 % and 37.4 %, respectively. At this line, the operational result, as measured by recurring adjusted Ebitda, also experienced a retraction. Ebitda for the quarter amounted to R$149.2 million, with Ebitda margin of 24.1 %, 9.8 % down on the previous quarter when Ebitda amounted to R$165.4 million, with Ebitda margin of 28.3 %. Accumulated Ebitda for the first half amounted to R$314.6 million, with Ebitda margin of 26.1 %. 15

16 For the second half, a more favourable business environment is expected due to the low level of inventory in the supply chain and expectations for increased focus on the part of retailers on the sale of furniture. This perception is based on the fact that margin levels of furniture are good at the point of sale, and also bearing in mind that the reduction in IPI tax has been extended to the end of the year. In the period 26 new product lines and designs were launched, involving 148 items. Of particular note were 22 new panel designs, including the Cristallo Line, a line of MDF panels with high gloss coatings which proved a total success. Another important launch was in the skirting board segment, with the Maxx Line, different in that it is water resistant, being made of polystyrene. The associated launch publicity process included participation at major trade fairs and events, the most important of which being Expo Transamerica 12 th edition of Revestir and Fimma. In addition to participation at these major events, which are real shop windows for Duratex s products, two significant events were held to strengthen relationships with important opinion makers. One of these was the commemoration of Joiners Day, with the participation of 17,000 professional joiners. While the other involved the sponsorship of the Movesul 2014, trade fair, held in the town of Bento Gonçalves (RS). This is one of the largest furniture trade fairs in Latin America, hosting almost 300 exhibitors presenting a large variety of furniture in a segmented manner. This trade fair received 36,000 visitors, including Brazilian store owners and importers from around the world. Visitors were registered from 27 Brazilian states and more than 40 countries. WOOD SALES BREAKDOWN (IN % 2Q14 ) Furniture industry Resales Building segment Others 16

17 DECA DIVISON Due to the discontinuation of the operations of Deca Piazza, in Argentina, and the consequent application of CPC 31 (IFRS), the figures for 2013, shown below, are presented net of the results from the Argentinian operation, which have been consolidated under the heading Discontinued operations. HIGHLIGHTS 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % PRODUCT SHIPPED (IN 000 ITEMS) Basic products 2,201 2,545 (13.5 %) 2,436 (9.6 %) 4,746 4, % Finishing products 4,457 4,530 (1.6 %) 4,930 (9.6 %) 8,987 9,283 (3.2 %) Total 6,658 7,075 (5.9%) 7,366 (9.6%) 13,733 13,919 (1.3%) FINANCIAL HIGHLIGHTS (R$1.000) Net revenue 337, ,576 (2.3%) 351,494 (3.9%) 683, , % Domestic market 330, ,090 (2.1 %) 344,572 (4.2 %) 667, , % Export market 7,498 8,486 (11.6 %) 6, % 15,984 15, % Net unit revenue (in R$ per item shipped) % % % Unit cash cost (in R$ per item shipped) (30.57) (28.75) 6.3% (27.26) 12.2% (29.63) (26.87) 10.3% Gross Profit 116, ,510 (7.0%) 136,481 (14.5%) 242, ,866 (6.8%) Gross Margin 34.6% 36.3% % % 39.2% - Sales expenses (56,744) (51,559) 10.1% (52,291) 8.5% (108,303) (97,124) 11.5% General and administrative expenses (18,243) (15,341) 18.9 % (16,365) 11.5 % (33,584) (31,305) 7.3 % Operating profit before financial results 38,827 57,212 (32.1%) 63,220 (38.6%) 96, ,447 (35.7%) Depreciation and amortization 19,895 19, % 18, % 38,974 35, % Discontinued operations (3,798) (100.0 %) - (24,160) (1) Ebitda according to CVM 527/12 (1) 58,722 76,291 (23.0 %) 78,097 (24.8 %) 135, ,304 (15.8 %) Ebitda margin according to CVM 527/ % 22.1 % % % 24.2 % - Employee benefits (416) (1,675) (75.2 %) (1,165) (64.3 %) (2,091) (2,788) (25.0 %) Discontinued operations , ,160 - Extraordinary event (2) (24,258) - Recurring adjusted Ebitda 58,306 74,616 (21.9%) 80,730 (27.8%) 132, ,418 (15.6%) Recurring adjusted Ebitda margin 17.3% 21.6% % % 23.8% - (1) Includes discontinued operations (Deca Piazza, Argentina). (2) 2013: (+) R$24,258k referring to the devolution of the excess in the private defined-benefit closed pension fund for employees of Duratex. Results in the Deca Division in this quarter were characterized by a weak performance in the retail sale of finishing products for the construction industry, as a consequence of the current scenario of economic uncertainty and insecurity, in addition to the World Cup which had a negative impact on store sales. Another factor contributing to these results was the weak performance seen in the sales of real estate in the period, which affected the remodelling segment. Direct sales to builders also suffered as a result of the low number of property development launches in 2012, bearing in mind that sales of the Division s products take place with an average time-lag of two years from the start of construction works on a new property development launch. 17

18 As a consequence of this scenario, net revenue amounted to R$337.7 million in the quarter, with gross margin of 34.6 %. For the year-to-date, revenue amounted to R$683.2 million, with gross margin of 35.5 %. At the operational level, adjusted and recurring Ebitda amounted to R$58.3 million in the quarter, with Ebitda margin of 17.3 %. For the first half, Ebitda totalled R$132.9 million, with Ebitda margin of 19.5 %. As with the Wood Division, expectations are more positive for the performance of this division during the second half of the year, in the event of a pickup in the economy, particularly in the building finishing materials retail segment. portant, seeing that they are conferred as a result of research carried out by the Anamaco University Research Institute, with 1,715 construction material resales agents throughout the country. Another important award was Téchne de Inovação Tecnológica na Construção Civil (Téchne innovation technology in construction), at which the Decalux received acclaim as an innovative product. Lastly, we draw attention to the 20 th FIESP Awards for Environmental Merit, for the project which involves the management of residues in the Deca s vitreous chinaware and metal bathroom fittings plants. DECA SALES BREAKDOWN (IN % 2Q14) Deca is continuing its policy of constantly innovating its product portfolio. 30 new lines were launched in the quarter, including vitreous chinaware items and metal bathroom fittings. Of particular note was D. Coat technology, which uses metal vapour in a vacuum process for the creation of exclusive and resistant designs, which should contribute to enriching the overall sales mix. Among the awards received by the Deca Division, of particular note were the Anamaco 2014 Awards for product of the year, with a prize received for the Hydra Dual Color line, an innovative flushing system, which operates with a double action valve, permitting water savings of up to 60 %. These awards are im Resales/Home center Construction firms Wholesalers Others Capital Markets and Corporate Governance As at the end of the second quarter 2014, Duratex had a market capitalization equivalent to R$5,980.9 million, based on a share closing price of R$9.02. In the second quarter of there were 331,600 trades recorded in the shares of Duratex, on the BM&FBovespa s spot market, with a total of 59.2 million shares changing hands, representing a total turnover of R$1,189.5 million, or an average daily trading volume of R$19.7 million. This liquidity level ensured the presence of the Company s shares on the Bovespa Index (Ibovespa), which consists of approximately 60 shares, for which the main entry criteria involve aspects of share liquidity. Duratex s shares are listed on the Novo Mercado section of BM&FBovespa, which brings together companies with the highest standards of corporate governance. The Company also has a differentiated dividend policy, with the distribution of 30 % of adjusted net earnings to shareholders, while also adhering to the Abrasca Code for Self-Regulation and Good Practices for Listed Companies. 18

19 It should be noted that in 2013 Duratex was selected, for the second year running, to be part of the Dow Jones Sustainability Emerging Markets Index (DJSI), one of the most rigorous testing indices that evaluates the economic and socio-environmental performance of listed companies. The Company was classified in the industrial materials group, under the Paper & Forestry Products segment. In all, 81 companies were selected for this index, of which only 17 are Brazilian. Additionally, the shares of Duratex remained included in the new 2013/2014 version of the BM&FBovespa Corporate Sustainability Index (ISE), which came into force on January 6, 2014 and runs to January 2, Duratex s shares have featured in this index since its 2008/2009 edition. The Company is one of 51 listed companies in this segment which evaluates application of sustainability concepts to business management. SHAREHOLDING STRUCTURE AS AT THE END OF JUNE 2014 (IN %) Itaúsa and families Foreign investors Ligna and family Others Treasury Pension funds Social and Environmental Responsibility At the end of the period, the Company had 12,264 employees, who received a total remuneration of R$103.6 million in the quarter, and R$202.8 million for the first half of the year. The increase in the number of employees, compared to 2013, is a consequence of the consolidation of Tablemac s operations in Colombia, which added a total of 590 employees in the first quarter of 2014, and 587 in the second quarter. As a consequence, when comparing the second quarters in both years, there was a headcount reduction of 157 employees, reflecting these more challenging times in the market. in R$ 000) 2Q14 1Q14 % 2Q13 % 1HY14 1HY13 % Employees (quantity) 12,264 12,356 (0.7%) 11, % 12,264 11, % Remuneration 103,611 99, % 95, % 202, , % Obligatory legal charges 54,457 53, % 54, % 108, , % Differentiated benefits 22,819 22, % 19, % 44,872 40, % 19

20 In the first half of the year, the Company invested a total of R$15.9 million in environmental measures, of particular note being the treatment of effluent, the collection of residues, the maintenance of forestry areas and the environment. This figure corresponds to an increase of 10.1 % compared to investment of this nature in the same period in A significant market recognition received in the period was the 1 st prize at the 20 th Edition of the Environmental Awards held by the Industrial Federation of the State of São Paulo (FIESP), for its residue management project at the Deca Units. The project involves various initiatives aimed at reusing residues from the vitreous chinaware and metal bathroom fittings plants located in the state of São Paulo (state capital and Jundiaí). In the socio-cultural sphere, Duratex continues to invest in various projects with the objective of establishing a closer relationship with communities near its industrial and forestry units. In this regard, of particular note are the following cultural projects: Turnê Nova Alvorada (ProAc) in the towns of São Miguel Arcanjo (SP), Lençóis Paulista (SP), Botucatu (SP), Agudos (SP), Itapetininga (SP), Areiópolis (SP) and Itatinga (SP); Cineco; Ecoteca a Biblioteca Ecológica (Ecological Library and Eco- Tech) (Rouanet Law) in João Pessoa (PB); and Teatro na Praça (theatre in the town square) (ProAc), shown in Jacareí (SP) and produced together with the public authorities for presentation in the subsequent months, in São Miguel Arcanjo (SP), Itapetininga (SP), Buri (SP), Lençóis Paulista (SP), Piratininga (SP) and Itatinga (SP). Social counterpart initiatives associated with BNDES loans involved joint action with local authorities in the towns of Cabo de Santo Agostinho (PE), João Pessoa (PA) and Queimados (RJ) for the building of two gymnasiums with one bicycle rack in each one. For the Biblioteca Comunitária Ler é Preciso (Needto-Read Community Library) project joint initiatives were carried out with the local governments in the towns of Itapetininga (SP) and Queimados (RJ), who have already signed a partnership and community mobilisation agreement, as set out in the construction stage agreement. In all, ongoing projects with a social and cultural nature have a total budget of R$2.6 million. Acknowledgements We are deeply grateful for all the support received from our shareholders, the dedication and commitment of our employees, the partnerships we have with our suppliers and the confidence placed in us by our clients and consumers. THE MANAGEMENT 20

21 Financial Statements Consolidated assets (in R$ 000) 06/30/14 AV% 03/31/14 AV% 12/31/13 AV% 06/30/13 AV% Current 2,629, % 2,612, % 2,588, % 2,317, % Cash and equivalents 834, % 873, % 996, % 835, % Client accounts receivable 905, % 948, % 873, % 819, % Accounts receivable from related parties 43, % 0.0 % 39, % 51, % Inventory 661, % 659, % 546, % 465, % Ammounts receivable 44, % 32, % 42, % 45, % Recoverable taxes and contributions 129, % 83, % 80, % 79, % Other assets 11, % 15, % 6, % 19, % Assets of discontinued operations % % 2, % % Non-Current 5,976, % 5,971, % 5,589, % 5,580, % Linked deposits 38, % 37, % 28, % 26, % Amounts receivable 59, % 65, % 62, % 79, % Pensin plans credit 109, % 110, % 107, % 96, % Recoverable taxes and contributions Deferred income tax and social contribution Investments in subsidiaries and affiliates 42, % 45, % 50, % 68, % 75, % 77, % 61, % 88, % % % 121, % 172, % Other investments 2, % 1, % % % Fixed assets 3,744, % 3,739, % 3,456, % 3,364, % Biological assets 1,329, % 1,310, % 1,125, % 1,094, % Intangible assets 574, % 582, % 573, % 590, % Total Assets 8,606, % 8,584, % 8,178, % 7,898, % 21

22 Consolidated Liabilities (in R$ 000) 06/30/14 AV% 03/31/14 AV% 12/31/13 AV% 06/30/13 AV% Current 1,104, % 1,178, % 1,305, % 1,247, % Loans and financing 535, % 663, % 710, % 638, % Charge of debentures 2, % 1, % 6, % 2, % Suppliers 148, % 184, % 180, % 169, % Staff obligations 136, % 116, % 138, % 126, % Accounts payable 137, % 120, % 110, % 107, % Taxes and contributions 70, % 90, % 79, % 106, % Dividends and equityon-intereset payable 73, % % 78, % 95, % Liabilities of discontinued operations % % 1, % % Non-Current 2,998, % 2,896, % 2,508, % 2,448, % Loans and financing 2,057, % 1,954, % 1,625, % 1,568, % Charge of debentures 113, % 111, % 108, % 106, % Contingency provisions 130, % 127, % 123, % 127, % Deferred Income tax and social contribution 558, % 554, % 505, % 492, % Other accounts payable 138, % 148, % 144, % 153, % Shareholders Equity 4,503, % 4,509, % 4,365, % 4,202, % Equity 1,875, % 1,705, % 1,705, % 1,705, % Cost of share issued (7,823) (0.1 %) (7,823) (0.1 %) (7,823) (0.1 %) (7,823) (0.1 %) Capital reserves 327, % 325, % 323, % 319, % Re-evaluation reserves 72, % 73, % 74, % 79, % Profit reserves 1,779, % 1,964, % 1,860, % 1,693, % Adjusts in equity valuation 417, % 412, % 427, % 424, % Shares held in treasury (27,931) (0.3 %) (27,899) (0.3 %) (18,344) (0.2 %) (15,653) (0.2 %) Participation of noncontrolling shareholders 67, % 64, % % 3, % Total liabilities and shareholders equity 8,606, % 8,584, % 8,178, % 7,898, % 22