4Q 08 EARNINGS PRESENTATION. March 5, 2008

Transcription

1 4Q 08 EARNINGS PRESENTATION March 5,

2 Disclaimer This presentation may contain projections or other forward-looking statements related to Masisa that involve risks and uncertainties. Readers are cautioned that these statements are only projections and may differ materially from actual future results or events. There is no assurance that the expected events, trends or results will effectively occur. These declarations are made on the basis of numerous assumptions and factors, including general economic and market conditions, industry conditions and operating factors. Any change to these assumptions or factors could cause the present results of Masisa and Masisa s planned actions to differ substantially from the present expectations. All forward-looking statements are based on information available to Masisa on the date of its posting and Masisa assumes no obligation to update such statements unless otherwise required by applicable law. 1

3 Contents Important Events 4Q 08 Results Comparison 4Q 08 Versus 4Q 07 Performance Improvements 4Q 08 Versus 4Q 07 Financial Overview and Financial strengthening plan Important Events 4Q 08 2

4 Important Events 4Q 08 Update on financial strengthening plan: Bond issuance, various long term bank loans, Bolivares denominated debt reduction and equity increase (approved by an extraordinary shareholder s meeting). Core business focus: US$ 70,250,000 sale of non-strategic assets in Rio Negrinho, Brazil. Annual sales by US$1,053 million (+9.1%) on Quarterly sales dropped (-11%) on fourth quarter This is manly explained by: 1. Local currency devaluations (decrease in sales by US$ 24.2 million). 2. Slowdown of the regional wood board demand by the end of 4Q 08. Steady annual EBITDA on US$176 million (-0.3%). 3

5 Important Events 4Q 08 Proactive initiatives: 1. Plant closures, shift reductions and sale of non-strategic assets. 2. Organizational restructuring and simplification of administrative and management structure. 3. Personnel reduction: 1200 employees in 2008 (24%). Working capital at same levels in comparison with 2007, excluding an account receivable related to the sale of Rio Negrinho s assets. This represents a significant improvement in relation with the 2007 working capital / sales ratio from 26.5% to 24.3%. Construction of MDP plant in Montenegro, Brazil on schedule. Start of operations by mid 2009 and full capacity by the end of ,000 m 3 annual installed capacity, with a melamine line of 300,000 m 3 per year. Production focused on the Brazilian market. 4

6 Contents Important Events 4Q 08 Results Comparison 4Q 08 Versus 4Q 07 Performance Improvements 4Q 08 Versus 4Q 07 Financial Overview and Financial strengthening plan Important Events 4Q 08 5

7 Results Comparison 4Q 08 versus 4Q 07 Income Statement 4Q08 4Q07 % US$MM US$MM Sales % Operating Costs (less) % Gross Margin % Gross Margin 17.1% 26.9% S G & A % SG&A / Sales -13.6% -15.3% Operating Income % Operating Margin 3.6% 11.6% Exchange Differences Financial Result Others non- Operating Non - Operating Result Taxes Minority Interests Negative Goodwill Amortization Net Income for the period % EBITDA % EBITDA Margin 11.6% 18.4% 4Q08 sales decreased US$ 28.4 million (-11%) compared to 4Q07, mainly due to the effect of the devaluation of local currencies (lower sales by approx.us$24.2 million) and also because of the slowdown of the wood board market in the region by the end of 4Q08. Other reasons: lack of OSB sales due to the sale of the OSB facility in May 2008 and lower sales of MDF and Finger-Joint mouldings. Gross margin decreased due to the net effect of the devaluation of local currencies affecting domestic sales which are mainly denominated in local currencies. 45% of operating costs are denominated in U.S. dollars and the remaining in local currencies. The high level of raw material costs (Resins, Wood, Energy) also impacted the gross margin. SG&A / Sales ratio improves in comparison to Masisa is executing saving plans, which will continue to reduce expenses in Non-operating income improvement is mainly explained by higher other non-operating earnings of US$52.9 million, which mostly arose from the outcome of Bolivares denominated debt reduction operations that generated earnings by US$67.2 million for Masisa. This was in part offset by higher unfavorable exchange rate differences of US$15.2 million (-182.3%) that increased from -US$8.4 million in the fourth quarter of 2007 to -US$23.6 million in the fourth quarter of 2008, by higher financial expenses that rose US$6.9 million (+152.7%) due to the effects of higher debt in comparison with 2007 and also due to higher interest rates, that prevailed since October. Net income increased, due to better non-operating earnings and lower deferred taxes due to a positive effect on income taxes related to the devaluation of the Real, which impacted dollar denominated debt in Brazil This was partially offset due to minority interest on the debt reduction operations in Bolívares. 6

8 Contents Important Events 4Q 08 Results Comparison 4Q 08 Versus 4Q 07 Performance Improvements 4Q 08 Versus 4Q 07 Financial Overview and Financial strengthening plan Important Events 4Q 08 7

9 Performance Consistent growth on sales, mainly driven by the MDF and PB business. More than US$ 1,000 million in sales during Stable cash flow generation (EBITDA). Consolidated Sales (US$ Millions) EBITDA (1) (US$ Millions) Net Income (US$ Millions) % , % % (1):EBITDA = Operating Income + Depreciation + Amortization + Depletion. 8

10 Performance Better use of our assets. Sales / Total Assets Operating Working Capital (1) / Sales 44% 46% 26.5% 24,3%* * Excludes account receivable related to the sale of Rio Negrinho s assets Accounts Receivable Turnover Inventory Turnover 6.9x 7.7x * 3.6x 3.4x (1):Oper. Working Capital = (Current Assets Cash and Cash Equivalents) (Current Liabilities + Short Term Financial Debt) (Standing Timber)

11 Contents Important Events 4Q 08 Results Comparison 4Q 08 Versus 4Q 07 Performance Improvements 4Q 08 Versus 4Q 07 Financial Overview and Financial strengthening plan Important Events 4Q 08 10

12 Financial strengthening plan OBJECTIVES Total debt reduction and minimization of short term debt Extension of debt maturities Strengthening of shareholder s equity base More flexibility and strong financial profile Basis of financial strengthening plan: 1. Approximately US$100 million equity increase. The controlling shareholder is committed to subscribe its prorata share 2. US$67 million Bolivares denominated debt reduction 3. US$100 to US$150 million long term bank loans - refinancing ACHIEVEMENTS as of Feb-09 on Sep-08 Reduction of net debt by approx. 11% as of Feb-09, 100% debt structured in the long term since Feb-09 Maturities in 2009 amounting to only US$52 million and US$66 million 2010 Leverage reduction from 0.74 to Cash / Short term debt improves from 0.1 to 0.68 Approved by an extraordinary shareholder s meeting held on December 16, Will take place on March - April 2009 Completed in November 2008 Progress Status: US$103 million Syndicated bank loan - Completed in December 2008 US$30 million bank term loan Completed in February 2009 US$35 million Committed credit line in documentation process 4. UF 3,500,000 (approx. US$ 120 million) local bond issue - refinancing 5. US$45 million (approx R$ 103 million) 8-year BNDES credit facility to finance the new MDP wood board plant in Montenegro, Brazil 6. Sale of non-strategic assets located in Rio Negrinho, Brazil for US$70 million 11 US$100 million 21-year bond issuance on January 7, 2009 Closed in February 2009; disbursements between February and May First disbursement in February US$ 17 million Awarded of the tender offering in December and received payment in January Funds used to repay of short term debt

13 Financial strengthening plan Masisa s consolidated debt maturity profile Sep-08 (US$ 686 million) Cash and cash equivalents: US$ 31 million Masisa s consolidated debt maturity profile Feb-09 (US$ 626 million) Cash and cash equivalents: US$ 36 million EBITDA TTM Sep EBITDA years and more and beyond TTM: Trailing twelve months Dollar Real UF Does not include US$ 100 million equity increase that will take place on March-April and 2010 maturities consist only of long term debt maturities Bolivares Source: Masisa Only capital portion considered (interests excluded) 12

14 Evolution of financial indicators Total Liabilities / Equity (2) Cash / Short Term Liabilities 0.69x 0.72x 0.68x * 0.68x * 0.17x 0.22x 2007 Dec 08 Feb Dec 08 Feb-09 By the end of March, the Company forecasts a cash balance of approximately US$ 116 million, which represents 1,45 times 2009 debt maturities and interest expense from March through December. Net debt (1) / EBITDA EBITDA / Net interest expenses 3.57x 3.44x 3.66x 5.77x 5.99x 4.46x Source: Masisa (1) Debt Cash (Cash and equivalents + Time Deposits + Marketable Securities) (2) (Current Liabilities Cash and equivalents) / (Equity + Minoritary Interest). * Pro forma as of February

15 Contents Important Events 4Q 08 Results Comparison 4Q 08 Versus 4Q 07 Performance Improvements 4Q 08 Versus 4Q 07 Financial Overview and Financial strengthening plan Important Events 4Q 08 14

16 Industrial Wood Boards 1. Lower sales volume (MDF -7.2% y PB -28.6%), which were offset in part by price increases (MDF +9.9% and PB +9.3%), mainly due to: Devaluation of currencies in most countries where the Company operates. Slowdown of the board market due to the economic global crisis. 2. Costs: Devaluations partially offset cost increases of the main raw materials: resins (37%), wood (22%) and energy (9%). Approximately 45% of the operating costs are expressed in U.S. dollars and the remaining costs are expressed in local currencies. Retail, migration of Placacentros stores from a license scheme to a franchise model according to the Company s plan, empowering the Placacentros network strategic role: 73% of Placacentros network is under franchise scheme, exceeding the annual target of 71%. Placacentros network as of December 31, 2008: 336 stores. 40% of wood board sales are coated and melamine wood boards. (Brazil 70%). 32% of domestic wood board sales in the region through Placacentro network. Solid Wood 1. Sawn lumber sales increased US$4.5 million (+24.8%) on 4Q07, explained by a 35.8 volume increase % increase in sales of solid wood doors in comparison with 4Q MDF mouldings sales were down 5.7% due to a drop in prices in U.S.A. Finger-Joint mouldings plunged 44.7% mainly because of the sales volume plummeting in the U.S. market. 15

17 Operational strengthening plan Capex reduction and focalization from US$175 million in 2008 to US$90 million during 2009: Completion of MDP wood board plant in Montenegro, Brazil Execution of forestry growth programs Restructuring and expenses reduction: Execution of SG&A saving s plan; approx. US$20 million expense reduction during 2009 Organizational restructuring and simplification of administrative and management structure Shifts reductions and plant closures due to low profitability in order to save costs and maintain inventories levels Reduction of consulting and outsourcing services Personnel layoffs: 1200 employees (Approx. 24%) Other initiatives: Core Business Focus, divestitures and closures of non-strategic assets OSB plant sale in May 2008 closure of FJ line in Chile (october 2008). sale of sawmills and forestry assets located in Rio Negrinho, Brazil in December 2008 Changes in product mix, focusing on products with a higher margin such as sawn lumber. Capex Evolution (US$ millions) E Source: Masisa 16

18 Forestry 1. Forestry business unit generates stable cash flows, with no direct relation with the economic cycles. 2. During 4Q08, Masisa sold non-strategic assets in Brazil related to the solid wood business. This transaction included 13,511 hectares of land and 7,140 hectares of planted forest. 3. In million of cubic meters were harvested, slightly over 2007 harvested volume. (+0.3%) EBITDA 2008 was US$53.2 millions, 11% higher than 2007 EBITDA when reached US$48.1 millions 5. Total 2008 Capex: US$41 million. 6. Acquisition of plantable lands for the development of Greenfield projects during 2008: 2,300 hectares. 7. New plantations and reforestation: 14,857 hectares. 8. US$47.6 million of Capex for hectares in Greenfield projects, with third parties or developed by Masisa. EBITDA US$ millions % Source: Masisa 17

19 Operational and Financial strengthening plan Update on financial strengthening plan: % of debt structured in the long term, with maturities in 2009 amounting to US$52.1 million (long term debt maturities). 2. By March 2009 the company will have reduced its net financial debt by approximately 20% compared with September Projected cash balance for 2009: US$116 million 1.45 times 2009 maturities and interest expenses forecasted for Main raw materials (resins, energy, wood and fright services) expected to fall during Proactive initiatives: 1. Shifts reductions and plant closures due to low profitability in order to save costs and maintain inventories levels 2. SG&A expenses reduction. 3. Strict investment control. 4. Working capital reduction. 18

20 For further information, please log on to our web site: Or contact our Investor Relations team: 19

21 20