Earnings Conference. 4th Quarter/2017

Transcription

1 Earnings Conference 4th Quarter/2017

2 Consolidated Results and Highlights In millions of BRL More favorable economic environment: improvement in demand and stable price environment Gains in biological assets: adequation of the cost of capital in measuring biological assets Duratex Management system: structured iniatives resulted in savings of BRL 76 million in 2017, in addition to the initial plan Subsequent Events: sale of non-strategic assets Focus on S u s t a i n a b l e R e s u l t s Net Revenue Recurring EBITDA Net Profit Q Gross Margin 33.5% 25.8% 28.7% 4Q EBITDA Margin 25.8% 20.8% 21.1% 19.0% 17.4% 4Q

3 Free Cash Flow and Debt In millions of BRL Reaping benefits of the S&OP: reduction in inventory levels in both divisions Investments focused on sustaining: investments totaled BRL 366 million in 2017, below initial forecast Deleveraging on course: gradual decrease in the financial leverage indicator Subsequent Events: expect to significantly reduce indebtedness with the demobilization of exceeding assets Focus on S u s t a i n a b l e R e s u l t s ,175 3,457 4Q16 59 (366) (381) (262) (70) (157) (193) (11) 1,074 2,100 1,416 2,041 (48) (46) (15) (26) EBITDA Working Capital CAPEX Taxes Others Financial Flow Free Cash Flow Gross Debt Cash Net Debt Gross Debt Cash Net Debt Net Debt/EBITDA 2.8x Net Debt/EBITDA 2.9x 3

4 Working Capital and Investments In millions of BRL Focus on S u s t a i n a b l e R e s u l t s Improvement in cash conversion cycle 2017 Reduction in inventory during the 2H17 Longer payment deadlines Days Sale Outstanding Days Inventory Outstanding Days Payable Outstanding Cash Conversion Cycle Opportunities for improvement in Investments in sustaining in 2017 below initial forecast (BRL 420 mn) Rationalization of investments with focus on sustaining of operations Despite idle capacity, we remain committed to the maintenance of our long term operations Forest OPEX Maintenance CAPEX

5 Focus on S u s t a i n a b l e R e s u l t s Wood Division Expansion of Operations: increase in sales and market share back to normal standards Price increases as a leverage of results : increase in panels in Jan/18 Reduction of inventory and service level: capture of gains in new S&OP model Biological Asset: smaller cost of capital, recognition of gains in BRL In millions of BRL Volume ( 000 m³) Total MDF Total MDP Brazilian Panel Market Source: IBÁ in millions of m³ ,399 2, Q Net Revenue 2,515 2, Capacity Utilization MDF 64% MDP 59% Wood 61% Recurring EBITDA Idle Capacity Exports Domestic Market 4Q Q Gross Margin EBITDA Margin 37.2% 24.6% 27.8% 24.9% 22.7% 25.3% 20.0% 19.4% 5

6 Focus on S u s t a i n a b l e R e s u l t s Deca Division In millions of BRL Growth in a challenging market : construction still at low levels, focus on retail Incorporation of Ceusa: transaction approved by CADE, results consolidated into Improvement in returns: better volumes and Duratex Management System as main leverages ABRAMAT Index Source: ABRAMAT Volume ( 000 items) 26,053 24,590 6,224 5,944 Capacity Utilization Metals 65% Ceramics 52% Deca 61% 1.1% 1.5% 4Q Net Revenue Recurring EBITDA -5.9% -4.0% -12.5%-11.5% e ,475 1, Revenue for the construction materials industry in the domestic market vs previous year 4Q Gross Margin 27.4% 28.2% 30.2% 27.6% 4Q16 EBITDA Margin % 12.4% 17.5% 13.4% 6

7 MarCo. Época Negócios Award 2nd place in Construction Materials Merco Antonio Joaquim as one of the 100 Most Influent Leaders of Brasil Época Negócios 360 Award 1st place in Construction and Decoration Materials As Melhores do Agronegócio 1º plase in Sustainability Pró-Ética Recognition for the 3rd consecutive year Abrasca Award Honorable Mention in Socio-environmental Aspects Duratex in the SPOT LIGHT Recognized by various STAKEHOLDERS As Melhores da Dinheiro 1st place in Construction Materials ISE Duratex is part of the Index for the 10th consecutive year Prêmio Valor Inovação 1st place in Construction and Decoration Materials Troféu Transparência Recognition for the 2nd consecutive year Great Place to Work Seal for good working environment Institutional Investor Best IR Professional, 3rd Best CFO and 3rd Best IR team Guia Exame de Sustentabilidade Model company of the sector for the 3rd time 7

8 Development of the Strategy Growth Cycle Demand boom 2x capacity in both business divisions Geographical and product diversification Consolidation of Corporate Governance Increase in market share Jeito de Ser e de Fazer Strategic review of Duratex personnel Culture is rejuvenated and adapted to new challenges High performance teams Active and engaged leadership Returns and Cash Generation Focus on generation of value Revision of asset base Exchange of lines of Thin Fiber Wood Sale of exceeding land Company is more asset light and with less financial debt Booming Economy Economic Crisis Rebound of Economic Activity 2007 to Management Excelency (SGD) A New Duratex 2018 Definition of an internal agenda Duratex Management System as main tool Definition of gaps / priorities, goal oriented management and discipline EVA as performance metric Value Proposition is revisited Duratex 2025 and Avenues for Growth Client in the center of the strategy Digital Transformation Welcome: Ceusa and Viva Decora 8

9 Subsequent Events Sale of Installations and Equipment Dedicated to the Production of Thin Fiber Wood (Hardboard) Strategic Rationale Evolution of the Brazilian wood panel market Production technology from the 50 s Expectation of resuming activities in the Itapetininga unit in April / 2018 Focus on rationalizing the use of assets Operation Details Swap of Installation and Equipments for a production farm The remaining lines of thick and thin fiber wood (MDF and HDF) production will continue to be operated by Duratex Transaction subject to approval by CADE Lines will conitnue to be operated regularly by Duratex until approval is obtained 9

10 Subsequent Events Sale of Land and Forests Strategic Rationale Evolution of forest management technology Duratex expertise in forest plantation Exceeding land and forests Focus on rationalizing the use of assets Operation Details Aquisition of land and forests in the amount of BRL 308 million Exclusive option to purchase an additional lot of land and forests, in the value of BRL 749 million, to be excercised until 07/02/2018 The amount received from this operation will be used towards Duratex s deleveraging, with the reduction of net debt and financial expenses Transaction subject to approval by CADE 10

11 Message from the Administration A leaner, more productive Duratex, with better returns for shareholders Duratex Management System, Cultural Transformation, Sustainability Strategy, Digital and Innovation as strategic foundation Closer relationship to clients, initiatives to stimulate demand and a focus on a mix of products with higher added value Value Proposition, Duratex 2025 and Avenues for Growth directing the capital allocation Integration of new business, our brands as leverages for growth, and caputring synergies Efficient cash management, deleveraging, and the constant search for returns above the costs of capital 11

12 Disclaimer and Glossary The information herein has been prepared by Duratex S.A. and does not represent any form of prospectus regarding the purchase or subscription to the company s shares or securities. This material contains general information relating to Duratex and the markets the company operates in. No representation or guarantee, expressed or implied, is made herein, and no reliance should be placed on the accuracy, justification or completeness of the information provided. Duratex does not offer any assurances or guarantees regarding the fulfilment of expectations described. February, ) Recurring EBITDA: EBITDA adjusted for events not arising from the fluctuation in the fair value of biological assets, a combination of extraordinary business and events 2) Recurring EBITDA UDM: Sum of Recurring EBITDA from the previous 12 months 12

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