INSTITUTIONAL PRESENTATION

Transcription

1 INSTITUTIONAL PRESENTATION

2 DISCLAIMER This presentation contains estimates and forward-looking statements regarding our strategy and opportunities for future growth. Such information is mainly based on our current expectations and estimates or projections of future events and trends, which affect or may affect our business and results of operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to several risks and uncertainties and are made in light of information currently available to us. Our estimates and forward-looking statements may be influenced by the following factors, among others: (1) general economic, political, demographic and business conditions in Brazil and particularly in the geographic markets we serve; (2) inflation, depreciation and devaluation of the real; (3) competitive developments in the ethanol and sugar industries; (4) our ability to implement our capital expenditure plan, including our ability to arrange financing when required and on reasonable terms; (5) our ability to compete and conduct our businesses in the future; (6) changes in customer demand; (7) changes in our businesses; (8) government interventions resulting in changes in the economy, taxes, rates or regulatory environment; and (9) other factors that may affect our financial condition, liquidity and results of our operations. The words believe, may, will, estimate, continue, anticipate, intend, expect and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements speak only as of the date they were made and we undertake no obligation to update or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forwardlooking statements involve risks and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these estimates and forward-looking statements. In light of the risks and uncertainties described above the estimates and forward-looking statements discussed in this presentation might not occur and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to the factors mentioned above. Because of these uncertainties you should not make any investment decision based on these estimates and forward-looking statements. 1

3 Agenda Business Model Market and Competitiveness Turnaround Strategy Financial Performance Closing Remarks 2

4 Straightforward Business Model Agribusiness heavy haul Dominant on core export channels Booming agricultural market UNSERVED AGRIBUSINESS DEMAND STRATEGIC ASSET LOCATION High entry barriers EXECUTION Operational excellence COST REDUCTION CAPACITY INCREASE Debottlenecking Reliability Scalable operations Process redesign Efficiency gains 3

5 Heavy Haul Focused on Agricultural Commodities Rumo is the largest independent railroad service provider in Brazil ~ 80% of Rumo s volume is agribusiness Rondonópolis Corumbá RUMO VOLUME BREAKDOWN 2016 Industrial 4% Container 4% Fuels 11% Other 2% Sugar 13% RUMO CONCESSIONS 80% Grains 66% Source: Rumo Cruz Alta Maringá Londrina Rio Grande Santos Paranaguá São Francisco NETWORK EXTENSION CONCESSION MATURITY VOLUMES 2016 (RTK MM) % VOLUME NORTH 735 km ,071 58% PAULISTA 2,037 km ,528 11% SOUTH 7,210 km ,873 29% WEST 1,952 km % TOTAL 11,934 km 40, % 4

6 Overview 1 RAIL NETWORK Concessions North Network 2 Paulista Network 4 South Network 3 West Network ROLLING MATERIAL 1,000 locomotives TERMINALS¹ Port Terminals Static Capacity: 1.3 mln tons Elevation Capacity: 29 mln tons Santos Paranaguá São Francisco 25,000 railcars Inland Terminals Static Capacity: 900 k tons Rio Grande (1) Terminals in which Rumo and ALL hold equity interest or maintain operations 5

7 Shareholders Structure Members of Shareholders Agreement = 32.29% Família Arduini 28.47% 67.72% 3.82% South Operation North Operation Containers Operation Source: Rumo Note: Rumo s business units not representing individual companies 6

8 Agenda Business Model Market and Competitiveness Turnaround Strategy Financial Performance Closing Remarks 7

9 Brazil is the Largest Market for Agricultural Expansion BIGGEST RESERVE OF ARABLE LAND (mm/ha) ¹ Brazil Planted area increased 58% in the last 20 years, but Brazil is still the country with the largest arable land potential Brazil has a lot of room to increase its grain production and gain share in the global trade US Russia India China EU Brazil is #1 in arable land UK Land in use Available land TOP AGRIBUSINESS PRODUCERS ² Soybean Country Production Exports Brazil 2 nd 1 st USA 1 st 2 nd Argentina 3 rd 3 rd China 4 th - India 5 th - Corn Sugar Country Production Exports USA 1 st 1 st China 2 nd - Brazil 3 rd 3 rd EU 4 th - Argentina 5 th 2 nd Country Production Exports Brazil 1 st 1 st India 2 nd 3 rd EU 3 rd 5 th China 4 th - Thailand 5 th 2 nd LARGEST RESERVE OF ARABLE LAND¹ 5% 34% 19% RUMO Operations 27% 15% (1) Source: Food and Agricultural Organization (FAO) (1) Source: Brazilian Statistics Bureau (IBGE) and CONAB. (2) Source: The U.S. Department of Agriculture (USDA) 8

10 Rumo Dominance in Core Export Channels Santos and South Ports concentrate: BRAZILIAN MAIN PORTS BY PRODUCT (2016) SOYBEAN (mm ton) SUGAR (mm ton) 70% of Brazil s soybean and corn exports % of Brazil s sugar exports Santos Rio Grande Paranaguá S. Francisco São Luís 11.3 CORN (mm ton) Santos Paranaguá Maceió Recife Recife (Suape) FERTILIZERS (mm ton) 9.7 Imported Cargo 77% of Brazil s fertilizers imports Santos Paranaguá Vitória S. Francisco Rio Grande Paranaguá Santos S. Francisco Vitória Source: Rumo, MDIC, and CONAB. RUMO PRESENCE OTHER PORTS 9

11 EBITDA Expansion Main Driver Grain production growth translate in higher exports SOYBEAN PRODUCTION (million tons) CAGR 8.3% Soybean Production Growth +6.4 million tons yearly average SOYBEAN EXPORTS (million tons) CAGR 9.7% GRAINS (mm ton) Rondonópolis (MT) to Santos (SP) Route CAGR 51 CORN PRODUCTION (million tons) % Corn Production Growth +4.8 million tons yearly average CAGR CORN EXPORTS (million tons) 15.9% Rumo s Additional Volume +1.0 million ton Rumo s Additional EBITDA +R$ 100 million driving Rumo s EBITDA expansion 10

12 Understanding Competition: Trucks More than 60% of total transportation in Brazil is made by trucks, in spite of poor conditions of important roads. Railway DISTANCE COMPETITIVENESS (Km) Bulk Truck (28 tons of cargo) POSITIVE EXTERNALITIES Bulk Railcar (90 tons of cargo) Truck Competition 1.5 million trucks 5,500 trains > 1,600 Capacity needed to serve Mato Grosso grain exports LIFETIME (years) DIESEL PRICE EXPOSURE 30 1 % diesel price increase + R$ 10 million EBITDA 10 Truck Railway Diesel represents almost 60% of total cost 11

13 Tapping Unserved Demand Room to gain market share in the largest grain producing state. MT REGION GRAIN TRANSPORTED VOLUME 2016 EXPORTED VOLUME RUMO VOLUME % TOTAL RUMO MKT SHARE MATO GROSSO (2) CENTRAL 14,694 8,400 63% 57% (3) SOUTHEAST 5,362 4,313 32% 80% TOTAL 32,409 13, % 41% Pricing Rondonopolis (R$/ton) Rail Santos Source: IMEA and Rumo PRICE COMPETITIVENESS Road Santos Rodo Ferro Road South Pricing Sorriso (R$/ton) Rail Santos Road Waterway Santos North Rodo Ferro Hidro Diamantino Rondonópolis Sinop Sorriso Lucas do Rio Verde Nova Mutum Itiquira Primavera do Leste Alto Araguaia 12

14 COST (R$ /RTK) Competitiveness: Widening Rumo s Area of Influence CAPACITY INCREASE DRIVING COST REDUCTION AND BOOSTING COMPETITIVENESS MATO GROSSO STATE CAPACITY (BLN RTK) E 2018E 2019E 2020E 2021E 2022E 2023E Rondonópolis Notes : Using 2016/2017 budget with 100% capacity utilization. 13

15 Agenda Business Model Market and Competitiveness Turnaround Strategy Financial Performance Closing Remarks 14

16 Commercial Approach NEW COMMERCIAL APPROACH Narrowing the relationship with the base of clients Increase of the guaranteed volume up to 100% of capacity Long term contracts up to 3 years STRONG CLIENT BASE GRAINS FUELS Take or Pay clauses Reduction of volume tolerance (from 15% to 10%) Increase in take or pay fee (from 25% to 44% of freight tariff) PULP & PAPER SUGAR INDUSTRIALS 15

17 CAPEX (R$ BLN) It s all about execution Business Plan considers R$ 8.5 billion worth of investments, targeting 70 bln RTK capacity in six years. % OF COMPLETION AS OF 2Q NEW LOCOMOTIVES (82%) NEW RAILCARS (64%) RAIL LINES REVAMP (44%) TECHNOLOGY INITIATIVES (23%) FERTILIZERS PROJECT (27%) NEW RAIL YARDS (31%) SANTOS PORT ACCESS (23%) CAPACITY (BLN RTK) E 2018E 2019E 2020E 16

18 Process Redesigned in Two Years It is not only about investments. Since merger, there has been major process changes. Zero Accident Program SAFETY FOCUS Compensation linked to accident targets reduction MANAGEMENT INITIATIVES New culture, new behavior Transformação Project Restore processual approach TECHNOLOGY INITIATIVES OCC real time information Chave na mão project Train driver scale optimizer HR INITIATIVES 1,046 FTE reduction Productivity focus Steep increase of training hours 17

19 Already Yielding Important Results. OPERATING RATIO (%) DIESEL CONSUMPTION (Liters/ 000 GTK) 77% 82% 76%¹ 75% A 2016A 2017E Rumo 2016 Budget 2015A 2016A 2017E RONDONÓPOLIS-SANTOS CYCLE (days) ¹ 9.1 MAINTENANCE COSTS (R$/ 000 RTK) A 2016A 2017E Note 1: Recurring Capex + Maintenance Costs Rumo 2016 Budget 2015A 2016A 2017E 18

20 Agenda Business Model Market and Competitiveness Turnaround Strategy Financial Performance Closing Remarks 19

21 Operational Performance Transported Volume (mln RTK) and Average Yield (R$/000 RTK) Port Loading Volume (mln ton) and Tariff (R$/ton) , % 40, % Agricultural Products Industrial Products Average Yield Tariff 20

22 Consolidated Financial Performance Net Revenue (R$ mln) % EBITDA (R$ mln) and EBITDA Margin (%) 39,9% 40,5% % EBITDA Margin Capex (R$ mln) EBITDA Recurring Capex (R$ mln) 1,951 1, % Expansion Recurring Note: Consolidated pro-forma figures for 2016 as per the Company s Releases

23 Indebtedness DEBT & LEVERAGE (R$ bln) 4,3x 12,0 11,3 9,4 9,5 2Q17 4,0x 3Q17 Gross Debt Net Debt Net Debt / EBITDA 4,0x 2,0x 3Q17 DEBT PROFILE 21% 12% BNDES (FINAME) BNDES (FINEM) 20% Debentures 21% Senior Notes Other Debts 26% DEBT SCHEDULE AMORTIZATION (R$ bln) 2,9 14% 4% CDI 0,6 1,9 1,3 1,7 1,3 1,0 0,6 20% 62% TJLP FIXED RATE OTHER 4T Note: Consolidated pro-forma figures for 2016 as per the Company s Releases 22

24 Successful Financial Initiatives Access to funding alternatives supporting investment plan Capital Increase Debt Refinancing Inaugural Bond Capital Increase BNDES Credit BRL 2.6 BLN BRL 2.9 BLN USD 750 M BRL 2.6 BLN BRL 3.5 BLN Strengthen Balance Sheet Liability Management Tapping International Capital Markets Accelerate deleveraging process Access to new credit lines 23

25 Long Term Guidance VOLUMES (RTK bln) 51 D 53 CAGR: +11% 69 D 71 EBITDA (R$ bln) 2.6 D 2.8 CAGR: +19% 4.4 D E CAPEX (R$ bln) 2020E 2017E 2020E 2.0 D D D D % 64% 52% 30% 37% 36% 48% 70% 2017E 2018E 2019E 2020E Recurring Expansion Note 1: EBITDA and CAPEX curves above mentioned are expressed in nominal terms and have as a reference the IGP-M index with the following figures: % p.y., % p.y., % p.y. and % p.y.. Any deviations from these figures do not represents major impact in the company s result. Disclaimer: Information for 2017 about businesses and projections of operating and financial results are merely estimates and as such are mainly based on the management's beliefs and assumptions, and do not constitute a promise of performance. These estimates are subject to diverse risks and uncertainties and are made using information currently available, which takes into consideration the existence of the usual financing lines for this type of business. As such, these estimates substantially depend on market conditions, performance of the Brazilian economy, the business sectors in which the Company operates and international markets, and hence are subject to change without prior notice. Due to these uncertainties, investors must not take any investment decision solely based on these estimates and forward-looking statements. Any change in the perception or above-mentioned factors may result in actual results differing from the projections made and disclosed.

26 Agenda Business Model Market and Competitiveness Turnaround Strategy Financial Performance Closing Remarks 25

27 Investment Highlights High entry barriers Large unserved agribusiness demand Most competitive logistics option for the region Large cost reduction opportunities with capacity increase Opportunity to gain market share and leverage Rumo s position 26