Fertilizantes Heringer S.A.

Transcription

1 Fertilizantes Heringer S.A. Company Overview And Year to Sept 2007 Results Argentina, Chile and New York Non-deal Roadshow Presentation Nov & Dec, 2007 Dalton Carlos Heringer - CEO and Board of Directors Member Jaime Rebelo - CFO and IRO

2 Disclaimer This presentation may include forward-looking statements about future events or results in accordance with Brazilian and international regulations governing stock markets. Such statements are based on assumptions and analyses made by the Company based on its experience, the economic climate, on market conditions and expected future events, many of which are beyond the Company s control. Important factors that can lead to significant differences between actual results and these forward-looking statements include the Company's business strategy, economic conditions in Brazil and abroad, technology, financial strategy, developments in the fertilizer industry, financial market conditions, uncertainty regarding the results of the Company s future operations, plans, objectives, expectations, intentions, and other factors described in the item "Risk Factors" of the IPO Prospectus filed with the Brazilian Securities and Exchange Commission (CVM). As a result of these factors, the Company s actual results may differ substantially from those expressed or implied in the forward-looking statements. 2

3 Heringer Presenters Presenters Background Dalton Carlos Heringer CEO and Board Member Dalton Heringer joined Heringer in 1986 and has been the Company s CEO since 2004 He is also a director of Associação dos Misturadores de Adubo do Brasil (AMA) and of Sindicato da Indústria de Adubos e Corretivos Agrícolas do Estado de São Paulo (SIACESP) Jaime Rebelo joined Heringer in September 2006 Jaime Rebelo CFO and Investor Relations Previously he worked at TIM Mobile Operator as Financial & Adm Shared Service Director for about 3 years and at Motorola for ten years, in several positions including the Company s CFO and at Dupont for more than eleven years 3

4 Company Ownership Structure after IPO(Apr 12, 2007) Pre-Offering Post-Offering 1 BSSF % Juliana Rezende 4.0% Almir Miranda 2.9% Dalton Dias Heringer 68.2% 42.3% Dalton Dias Heringer, 51.4% Dalton Carlos Heringer 4.2% Juliana Rezende, 3.0% Dalton Carlos Heringer, 3.2% Total shares: 36.6 million Total shares: 48.6 million Note 1 BSSF is wholly owned by AIG Capital Partners Note 1 Including greenshoe exercise 4

5 Leading Fertilizer Blender and Distributor Company in Brazil The third largest player in Brazil, with 11.7% market share in 2006, R$1.426 mm in net revenues and R$58.6 million in EBITDA Unique Business Model Nationwide Reach through Superior Facilities Location Founded in 1968, Heringer blends, distributes and sells NPK formulas, mixed nutrients and processed fertilizer products 15 strategically located mixing facilities (incl. Ourinhos/SP & Porto Alegre in Rio Grande do Sul in Nov/Dec 07) Proven track record Differentiated network and footprint Diversified client base Rosário do Catete Camaçari Rondonópolis Catalão Bom Jesus de Goiás Uberaba Manhuaçu Bebedouro Viana Rio Brilhante Paulínia Três Corações Ourinhos Paranaguá Porto Alegre Legend Owned Mixing Facilities Leased Mixing Facilities Tolling Mixing Facility New mixing facilities under construction Coverage area Headquarter 5

6 NPK Production Chain at a Glance The Brazilian fertilizer industry operates in three major sub-segments ore mining and natural gas extraction production of basic and intermediate fertilizers production and distribution of NPK mixtures Fertilizers Production Chain Major Players Mining & Basic/Intermediate Fertilizer Producers SSP NPK Mixtures Producers Petrobrás CVRD Ultrafértil 1 Fosfértil 1 Copebras Bunge Heringer 2 Bunge Mosaic Fosfértil 1 Galvani Yara Copebras Cibrafértil Heringer Bunge Mosaic Fertipar Yara Other Note: 1 Both Fosfértil and Ultrafértil are jointly controlled by Bunge and Mosaic 2 After completing its backward integration plan (expected by 2 nd half of 2008) 6

7 Market where Heringer is inserted.

8 Important Producer and Exporter Brazil ranks among the top producers/exporters of agricultural products Brazil as % of Worldwide Production (2006) Brazil as % of Worldwide Export Sales (2006) 1 st 60% 1 st 82% 1 st 32% 1 st 2 nd 30% 25% 1 st 19% 2 nd 3 rd 16% 15% 4 th 5 th 2 st 1 st 1 nd 40% 39% 35% 1 st 1 st 28% 28% 6% 4% 5 th 5 th 4% 3% Orange juice Coffee Hardwood Pulp Soybean Sugar Poultry Beef Cotton Corn Orange Juice Soybean Poultry Sugar Coffee Beef Cotton Corn Source: USDA/AGE/MAPA and has one of the lowest cost of production worldwide 8

9 Significant Untapped Farmland Brazil has over 327 million hectares of potential unused farmland compared to an estimated 81 million hectares of total unused farmland in the US Total Potential Farmland (mm hectares) % 30% % 70% 40% 60% 34% 66% % 70% 76 30% 70% 71 41% 59% Source: Revista Exame August 2005 Currently Used Farmland Unused Farmland 9

10 Brazil: The Frontier of World s Agriculture Frontiers Brazil is the fourth largest fertilizer market, growing above global average Largest Fertilizer Markets Current Fertilizer Application Rate (kg/ha) mm tons % 3% 1% 9% 10% 8% 6% 4% 2% 0% -2% -4% CAGR ( ) China India US Brasil CAGR% Source: IFA/ANDA -6% Source: IFA, as of 2005 Production growing faster than planted area due to technological improvements and increase in fertilizer application rate 10

11 Impressive Growth Profile Organic growth at approximately 3.0x the industry s CAGR from 1995 to 2006 (mm tons) CAGR: 18% % Heringer s market share 11.7% (mm tons) CAGR: 6% % Top six players market share 76.0% Source: ANDA and Company s estimates Heringer Brazilian NPK Market 11

12 in a Competitive Landscape Heringer s differentiated sales network and focus in the retail segment were the key factors which enabled the Company to increase its market share from approximately 4% in 1995 to 12% in 2006 Main Players in the Brazilian NPK Market Others 30% Serrana 11% Manah 10% Bunge 32% Others 20% Bunge 27% Heringer 4% Copas 6% Fertiza 4% Solorrico Fertibras 7% 3% Mosaic 11% Trevo 14% IAP 7% Yara 17% Takenaka 4% ADM 4% Mosaic 11% Fertipar Group 12% Heringer 12% Yara 14% Source: Company s estimates 12

13 Balanced Sales Mix Heringer s crop diversity minimizes the volatility associated with local weather and specific crop conditions, such as price cyclicality and diseases Sales Mix by Crop Others 27% Soybean 31% Forest 7% Others 14% Soybean 18% Forest 2% Citrus 4% Corn 14% Citrus 2% Coffee 8% Sugar cane 12% Corn 18% Coffee 22% Sugar cane 21% 13

14 Also focused on Direct Sales to Farmers Heringer s broad distribution network allows the Company to access all size farmers all over Brazil focusing on Retail Distribution Network Sales by Segment 2006 (27K active customers) 87.5% 1,500 Farmers 56% 800 Coops 6% Beginning 2005 End 2006 Wholesale 7% Sugar 5% Reforest 6% Companies 19% a key driver for its superior profitability 14

15 Increase Footprint in Specialty Products Heringer invests in technology, presenting the market with several successful initiatives over the years in order to meet client s demand Achievements Product Mix (% of Gross Sales) New Launchings Heringer launches four products in Micro Total innovative production process: micronutrients are applied to all fertilizer grains, substantially increasing effectiveness micronutrients 10% 90% 18% 82% Commodity Specialty developing products differentiated from commoditized ones offering to our clients best nutrient options and capturing higher margins 15

16 Leading Market Position and Well-Known Brand Heringer markets its products under a single brand name (Fertilizantes Heringer) which is one of the most recognized brand names in the industry Heringer s s Market Share Fertilizer Consumption by Region North 5.4% Northeast 11% North 2% Southeast 32% Northeast 10.3% Midwest 8.5% Southeast 23.5% Midwest 27% South 2.6% South 28% Heringer sells its products in 24 states, which accounted for approximately 90% of Brazil s overall fertilizer consumption in

17 Case Studies: Entering & Expanding in New Regions Heringer has had a successful track record in expanding the States of Bahia and Minas Gerais Expanding Bahia Expanding Minas Gerais Additional CAGR: 55% deliveries from Rosario do CAGR: 16% Catete (SE) Opening of the Uberaba plant 24.8% Deliveries from Viana plant (ES) Start up of Camaçari plant (BA) 7.4% 10.1% 10.6% 10.1% 13.8% Deliveries Deliveries from from Manhaçu Manhuaçu unit plant Opening of the Três Corações plant 15.6% 18.4% 18.1% 17.4% 16.2% 20.4% 21.9% 10.0% 8.2% 3.6% 5.6% 1.0% Heringer s Market share 17

18 Heringer s Operations

19 Extensive Logistics for Supply and Nationwide Coverage Heringer s distribution facilities are strategically located close to target markets The Company benefits from an extensive supply logistics in its production units importing raw materials through five ports in the Brazilian coast Ports Most production units are served by railroads and/or roads, making possible to supply through intermodal transportation 15 facilities are strategically located close to main fertilizer consumer centers, reducing delivery timing and logistics costs Legend Ports used by Heringer Heringer current units Heringer units starting in 2007 Units with railway direct link Units with partial railway access also enabling the Company to save on transportation costs, sales taxes and to reduce transportation risks 19

20 Secure Supply of Raw Materials Heringer is seen as an important client for domestic and international suppliers and is the third largest purchaser of fertilizers in Brazil Main Sources of Imported Raw Materials Heringer Raw Materials Purchases Urea Potassium chloride MAP Ammonium sulfate TSP Ammonium nitrate SSP Venezuela, Russia and Argentina Canada, Israel, Germany and Russia Morocco, US and Russia Germany, Russia and US Morocco, Egypt, Bulgaria and Tunisia Russia and Bulgaria US, Israel, Egypt and Bulgaria ('000 tons) Total Imported Potassium chloride % SSP 395 0% Urea % Ammonium sulfate % MAP % Reactive phosphate % TSP % Ammonium nitrate % Others 50 11% Average 54% Brazilian Average 58% The Company has developed long-standing relationships with major suppliers resulting in excellent purchase terms, and reliability of supply 20

21 Growth: Improving Footprint From 2007 to 2010, Heringer expects to invest approximately R$ 170 million to expand capacity from 2,977 tons 1 to 6,780 tons 1 Midwest Region Total Capex: : R$48 mm Northeast Region Total Capex: : R$23 mm Before After Before After % of Total Mkt Market Share 8.5% na % of Total Mkt Market Share 10.3% na 27% Facilities Capacity ,083 11% Facilities Capacity ,034 South Region Total Capex: : R$37 mm Southeast Region Total Capex: : R$64 mm Before After Before After % of Total Mkt Market Share 2.6% na % of Total Mkt Market Share 23.5% na 28% Facilities Capacity ,362 32% Facilities Capacity 1 6 1, ,301 Note: 1 Production capacity adjusted by seasonality in 000 tons 21

22 Growth: Backward Integration Plan The SSP plant will enable Heringer to become part of the group of integrated players in Brazil The Project Construction of an SSP (Single Super Phosphate) plant at Heringer s Paranaguá site with a total production capacity of (1): Sulfuric acid: 180,000 tons/year SSP powder: 330,000 tons/year SSP granules: 160,000 tons/year Expected investment of approximately R$ 100 million (in 2007 & 2008) Significant part of the equipments needed have already been acquired and all necessary licenses and permits are in place Benefits Significant gain in synergies by producing intermediate fertilizers and NPK mixtures at the same operational unit Decrease dependence on others suppliers to obtain raw materials that should result in margin improvements Improve distribution logistics in the Midwest region Higher EBITDA margins Operations to begin in the second half of 2008 joining its main competitors and partially eliminating its dependence on SSP suppliers (1) Production Capacity expanded from the one announced at the IPO time frame 22

23 Other Highlights

24 What Happened in 2005.All these factors COMBINED at same time it made 2005 a no good year for the Fertilizer Industry Results were impacted by a significant erosion of the grain growers economics due to: 3.50 Exchange Rate (R$ / US$) Magnitude of the Real appreciation decline in grain prices severe drought in the South of Brazil reduction in the total grain production volume of 4.4% (from 119.1million tons in 04/03 harvest to million tons in 04/05 harvest) Jan-04 May-04 Oct-04 Feb-05 Jul-05 Dec Apr-06 Sep Dec-06 Source: Economática Soybean Prices (R$ / 60 kg bag) Fertilizer Inventory End Balance (mm tons) % % 2.9-5% (33)% Jan-04 May-04 Oct-04 Mar-05 Aug-05 Dec-05 Soybean Source: CEPEA Source: SIACESP 24

25 and Favorable Scenario for the Upcoming Years Global Grain Inventories and Consumption Positive Momentum Grain inventories (million tons) Grain inventories Inventories / demand Days Global Outlook Positive outlook for commodity prices Bio energy becoming the base for global energy Increasing alternative energy needs Population growth with limited arable land Food Security Source: USDA and Street Research Grain Prices and Demand Adjusted Inventories Brazilian Outlook Technology improvement Expected increase in grower s income level Strong Grain Prices Grain price index Source: USDA and Street Research 25

26 Heringer, An Unique Opportunity in the Agribusiness Sector Balanced sales mix considering both client and crop segmentation Significant growth opportunities Established retail player focused on specialized products Secure supply of raw materials Leading market position and well known brand Extensive logistics and nationwide coverage 26

27 Fertilizantes Heringer S.A Months Results Argentina, Chile and New York Non-deal Roadshow Nov and Dec, 2007 Dalton Carlos Heringer - CEO and Board of Directors Member Jaime Rebelo - CFO and IRO

28 Year to September 2007 Results 9 Months Highlights Financial Results Outlook for the end of 2007 Planting for 2008 and the coming years... 28

29 9M07 Highlights 83% growth in gross revenue. Gross revenue from sales was R$1,472 million during the period, 83% up on the R$ 806 million recorded in the 9M06. Growth in sales volume. From January through September 2007, the volume of fertilizers delivered rose 55%, from 1,408K tonnes in the first 9 months of 2006 to 2,179K tonnes for the same period in % growth in gross profit. Gross profit was R$ million in the period, representing a 10.3% margin of the 9M07 net revenue, compared to R$ 71.8 million and 9.1%, respectively in the 9M See the FX variation impact on operating margins section--- 29

30 9M07 Highlights 445% growth in EBITDA. EBITDA reached R$ 48.0 million in the 9M07, a 445.5% growth compared to R$ 8.8 million recorded in the 9M06. EBITDA margin improved from 1.1% to 3.3% in the period. --- See the FX variation impact on operating margins section % growth in the Net Income. Net Income in the 9M07 was R$ 48.4 million, 952% up on the R$ 4.6 million in the same period last year. The margin rose from 0.6% to 3.4% or BP. 30

31 9M07 Highlights Selling, General and Administrative Expenses. Selling, general and administrative expenses as percentage of net revenue, declined by 240 basis points in the 9M07, from 11.3% in 9M06 to 8.9% in the 9M07. New branding facilities and mixing units expansions: In May new branding facilities went operational: the unit at Rio Brilhante in Mato Grosso do Sul state and the unit at Bom Jesus de Goiás in Goiás state. In the 3Q07 the expansions of the Três Corações and Manhuaçu units, both in the state of Minas Gerais, were concluded. SSP Plant project. Beginning of the SSP Plant construction in Paranaguá taking Heringer into the intermediate fertilizer production chain in the second half of

32 9M07 Highlights Specialty Products. The sales volume of specialty products accounted for 22% of the total sales volume in the 9M07, against 20% in the 9M06. Launch of new specialty products: : Heringer s first foliage application fertilizer. It is an easy-to-apply mixed mineral fertilizer, with excellent absorption of micro nutrients, essential for coffee plantation, besides being highly soluble and compatible with the leading pesticides. FH NitroMais Launch of the FH NitroMais line, which boosts usage of urea, which is necessary in all crops 32

33 9M07 Highlights Growth in client base. Our client base rose 15% year-on-year, mainly in the Midwest and Southeast regions strength our base for sustainable growth in the coming years. Growth in Market Share. Our market share grew from 10.7% in the 9M06 to 12.5% or 180 BP higher in the first 9 months of 2007 taking us toward the expected 13% by the end of the year. 33

34 Sales Mix per Crop Sales per Crop thousand tonnes 9M Σ=1, % 20% 18% 8% 20% 11% 9M Σ= 2, % 19% 21% 7% 15% 14% Increase in corn and soybean crops well over the average. Soybean, corn, coffee and sugarcane accounted for about 80% of the volume increase in the year-on-year. 34

35 Growth in Client Base Growth in the Number of Clients + 15% Σ 17, Σ 20, months South (+73%) Continuous growth in client base due to the expansion of the company s areas of operation Southeast (+5%) North and (+45%) Northeast strength of our client base for sustainable growth in the coming years Midwest (+92%) 9M M

36 Growth in Market Share Market Share 11.7% 13.2% 12.6% 12.7% 11.8% 12.3% 12.5% 10.7% 9.2% YEAR 1st Quarter 2nd Quarter 3rd Quarter 9 Months

37 Appropriate Performance of the Seasonalized Annual Capacity Production Capacity in thousand tonnes ,977 3,360 3, Q07 2Q07 3Q07 9M 07 4Q Units 13 Units 15 Units Absorption of the capacity of Bebedouro (1) Rio Brilhante and Bom Jesus de Goiás Expansion at Manhuaçú and Três Corações New units: In Ourinhos and Rio Grande do Sul (1) Seasonlized capacity considers the period the unit operated during the year, for the purpose of calculating the capacity. Henceunits units that started operations in the middle of 2006 witnessed an increase in the 1st quarter of

38 Year to September 2007 Results 9 Months Highlights Financial Results Outlook for the end of 2007 Planting for 2008 and the coming years... 38

39 Gross Revenue and Sales Volume Gross Revenue from Sales (R$ million) -20% + 11% +83% Average sales price rose 17% in the 9M07 1,645 1,308 1,454 1,472 compared to the 9M Pushed by the significant raw material prices increase. Volume of Fertilizers ( 000( Tonnes) -10% +23% + 55% 2,202 1,993 2,461 2,179 1, M06 9M07 39

40 Volume of Specialty Products Σ 1, Σ 2, , % + 76% New Specialty Products: FH Café foliage application fertilizer FH Nitromais - boosts usage of urea Specialty Products: grew above the other company s products average Mainly on the following products: 1, % - FH Micro Total 9M06 9M07 Conventional Specialty - FH Used in cultivation of vegetables and other short-cycle crops 80% 78% 20% 22% % of delivered Volume - Natural Reactive Phosphate FNR - Economically viable alternative compared to phosphate fertilizers (SSP and MAP) 40

41 Seasonality: In Sales Volume Market 2004 to 2006 (1) Heringer 2007 (3) 69% 63% 31% 35% 34% 37% 31% 32% 15% 16% 18% 19% 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Market 2007 (2) 61% The change in seasonality in 2007 occurs due to 2 mainly factors: 39% - Earlier soybean purchases 19% 20% 33% 28% - Stronger and improved technology applied to winter 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter crops. 9.4 million tonnes 14.9 million tonnes Σ 24.3 million tonnes (1) Source: ANDA Average of last 3 years (2004, 2005 and 2006) (3) Source: Heringer s Estimates (2) Source: Heringer / Market 41

42 Gross Profit(GP) and Gross Margin(GM) Gross Profit (R$ million) + 121% + 106% Highly influenced by the basic fertilizers cost s raise in the international market -67% FX effect distorting/twisting margins: Positive net FX variation was R$ 60.2 million in the 9M07 and R$ 24.1 million in the 9M06. n/a 13.4% FX (1) Gross Margin (% NR) 5.4% 10.7% 9.1% 10.3% +120 BP Were this FX effect booked in its accounts of origin (inventories/ COGS) as per IFRS, it would transfer part (1) of the FX impact from the Financial Gain group to COGS, altering positively the Gross and EBITDA margins (See further details on charts 45&46). If FX(1) is added up to 9M07 GP would be 169,3M and 72,6M for 9M06 or a GM of 11.7% and 9.2% respectively. As of the 4th quarter, the company will be reclassifying this effect on a pro-forma basis to properly demonstrate its effective gross and ebitda margins M06 9M07 42

43 SG&A Expenses Selling Expenses (R$ MM) Administrative Expenses (R$ MM) + 52% Freight and Commissions varied in proportionally to + 24% Revenue Administrative expenses increased essentially due to the expansion of our areas of operation As % of Net Revenue As % of Net Revenue Other administrative 7.5% 8.3% 6.9% -140 BP and fixed selling expenses diluted in the higher 9M07 revenue 2.2% 3.0% 2.0% -100 BP M06 9M M06 9M07 43

44 EBITDA and EBITDA margin EBITDA (R$ million) +274% +445% FX effect distorting/twisting margins: Positive net FX variation was R$ 60.2 million in the 9M07 and R$ 24.1 million in the 9M06. n/a 6.5% % (33.5) -2.6% 58.6 EBITDA Margin (% Net Revenue) 4.1% % % M06 9M07 (1) (1) FX (2) +220 BP Were this FX effect booked in its accounts of origin (inventories/ COGS) as per IFRS, it would transfer part (2) of the FX impact from the Financial Gain group to COGS, altering positively the Gross and EBITDA margins (See further details on charts 45&46). If FX(2) is added up to 9M07 EBITDA would be 69,4M and 9,6M for 9M06 or an EBITDA Margin of 4.8% and 1.2% respectively. As of the 4th quarter, the company will be reclassifying this effect on a proforma basis to properly demonstrate its effective gross and ebitda margins. (1) Adjusted EBITDA and EBITDA margin excluding R$ 11.1 million as expenses relating to the Company s IPO 44

45 Foreign Exchange (FX) variation impact on operating margins FX variation over Inventories (between the acquisition FX to COGS FX): is booked in the Financial Income group (BRGAAP). Under the IFRS, this FX Variation is reclassified to COGS reflecting the right cost of the inventories sold. Revenue: Sales price is adjusted based on the current Dollar rate. FX Rate from Jan/06 to Sep/07 Accounting Gross Margin Adjusted for the Sales Price in US$ Revenue Stocks Imp. / Costs Booked by the acquisition FX (FX variation is adjusted only in the Financial Income or Expenses group) See page 7 of the Earnings Release for further details. 45

46 Financial Income and Expenses Year-to-Sept/07 FX variation is 150% higher than in Σ 31.5 Σ 16.9 Σ 4.6 Σ 1.5 Σ 15.7 Σ Σ (9.0) 21.6 Σ (6.4) (9.5) (8.5) (9.8) (8.0) (27.3) (11.5) % 15.1 (43.8) (23.8) 1Q06 1Q07 2Q06 2Q07 3Q06 3Q07 9M06 9M07 46

47 Net Income and Net Margin 63.5 Net Income (R$ million) +213% 45.5 (1) +952% % 4.6 (40.3) Net Margin (% Net Revenue) 4.0% 3.2% (1) 3.4% +280 BP 0.6% -3.1% M06 9M07 (1) Net Income and Net Margin excluding R$ 7.3 million (R$ 11.1 million net of Income Tax and Social Contribution) as expenses relating to the Company s IPO 47

48 Balance Sheet From 73 to 55 days - Credit Policy - Producer Higher Income From 88 to 89 days (Net of clients advances in the amount of R$ 127 million) - purchase for the 4th quarter Assets Dec-06 Sep-07 Clients Advances - essentially soybean Liabilities and stockholders equity Dec-06 Sep-07 Current Assets Current liabilities Cash and Banks 177, ,658 Suppliers 381, ,216 Accounts Receivable 251, ,897 Loans and financing 125, ,542 Inventories 159, ,132 Advances received from customers 42, ,107 Other current assets 96, ,226 Other current liabilities 30,568 63, ,617 1,178, , ,526 Non-current assets Long term liabilities Receivables 7,784 3,031 Deferred taxes 11,245 7,552 Loans and financing 3,356 5,711 Judicial deposits 10,050 10,544 Provisons for contingencies 3,904 4,124 Assets destined to sell 13,697 12,817 Taxes payable ,776 33,944 7,269 9,840 Permanent assets Stockholders' equity Capital 223, ,781 Property and equipment 84, ,941 Legal reserve - 9,873 Deferred charges/investment 139 3,108 Accumulated profit (loss) - 32,886 84, , , ,540 Total assets 811,273 1,368,906 Total liabilities and stockholders' equity 811,273 1,368,906 Purchases - New units and expansions - SSP project FINIMP (Raw Material) - Import Financing Facility Capitalization - Net R$ 203 million from IPO in the Q02 48

49 Cash Flow In thousand Reais Net Income in the Period (+) Non cash flow impact expenses (income) (+) Assets (increase) reduction Inventories and Receivables (+) Liabilities (reduction) increase Payables and others 9M06 4,644 (7,312) (62,138) 23,550 9M07 41,120 9,663 (447,855) 324,347 ( = ) Net cash generated in operating activities (41,256) (72,725) (+) Fixed asset acquisition (new units and expansions) (+) Receivables from fixed asset selling (+) Others ( = ) Net cash used in investing activities (7,812) 1,173 - (6,639) (77,596) 185 (200) (77,611) (+) Loans and financing (+) Paid-in Capital (IPO) (+) Others ( = ) Net cash provided (used) by financing activities Cash at the End of Period 127,523 (15,966) - 203,163-4, , ,946 79,628 41,610 49

50 Working Capital Continuous Improvement 1st Quarter Accounts Receivable Days Inventories Days (1) Accounts Payable Days Days of Working Capital 1Q07 1Q06 Change (23) (19) 2nd Quarter Accounts Receivable Days Inventories Days (1) Accounts Payable Days Days of Working Capital 2Q07 2Q06 Change (38) (17) (5) (50) 3rd Quarter Accounts Receivable Days Inventories Days (1) Accounts Payable Days Days of Working Capital 3Q07 3Q06 Change (13) (3) (12) (4) (1) Inventories Days net of Advances received from customers 50

51 Year to September 2007 Results 9 Months Highlights Financial Results Outlook for the end of 2007 Planting for 2008 and the coming years... 51

52 Outlook for the end of 2007 Market Outlook for 2007: 24.3 million tonnes. Volume per Crop (million tonnes) Volume per Region (million tonnes) Σ Σ Σ Σ 24.3 Σ Cotton +10.0% Coffee 0.0% Sugarcane +3.0% Others +15.9% Σ Σ Σ North 0.0% Northeast +13.0% South +13.8% Corn +31.4% Soybean +19.7% Midwest +30.4% Southeast +8.8% E E 9 months 4th Qtr Total 17.4 M 6.9 M +16% 2006: 13.1 M = +33% 2006: 7.8 M = -11% 2.2 M 1.0 M 2006: 1.4 M = +57% 2006: 1.0 M = +0% Sep/07 +30% 52

53 Outlook for the end of 2007 Ourinhos Company s owned mixing facility as well as the leased mixing unit in the city of Porto Alegre in Rio Grande do Sul start-up. Implementation of the SSP project in progress in Paranaguá. Increase of the Heringer s Sales Volume estimated at the beginning of the year from 3.0 million to 3.2 million, 30% higher than in We now forecast the market to be around 24.3 million tonnes by the end of 2007 from 23 million tonnes estimated at the beginning of the year, about 16% higher over last year of 20.9M 53

54 Year to September 2007 Results 9 Months Highlights Financial Results Outlook for the end of 2007 Planting for 2008 and the coming years... 54

55 PLANTING for 2008 and the coming years... Business scenario continues to be positive: Bioenergy Greater need of alternative energy sources Population and Income Growth Lowest levels of grain in stock over the last 30 years Positive scenario for agricultural commodities prices 55

56 PLANTING for 2008 and the coming years... with an adequate improvement in the Seasonalized Annual Capacity, supporting the growth in demand. through the continuous improvement of our financial fundamentals, specially on Working Capital management. continuously differentiate ourselves from our competitors by offering an increasingly variety of Specialty Products serving our clients with best nutrient options. by increasing our Client Base, thanks to the company s expansion of its areas of operation, allowing a sustainable growth. and through a Market Share growth with adequate profitability control. 56

57 AND JUST AS A REMINDER: THE LOWER THE FERTILIZER APPLICATION THE LOWER THE HARVEST!!! (Fertilizers not sprayed over this row) 57

58 THANK YOU! 58