Institutional Presentation

Transcription

1 Institutional Presentation October 2016 Caixa para descrição.

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 forward-looking 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. 2/26

3 Agenda 1 Rumo Overview 2 Strong Business Case 3 Turnaround Strategy in Place 4 Financial and Operational Update 5 Closing Remarks 3/26

4 Timeline 2008 Rumo creation 2009 Rumo & ALL agreement 2010 Rumo private placement by TPG and Gávea 2014 Rumo & ALL merger proposal 2015 Rumo ALL merger conclusion 1999 ALL creation 2004 ALL IPO 2008 Rondonópolis project 2013 Conclusion of Rondonópolis project 2016 Rumo s capital increase Privatization of Brazilian Railway System 4/ Acquisition of Brasil Ferrovias 2010 ALL adheres to Novo Mercado

5 Business Model Logics Nonreplicable Footprint Soybean Sugar cane Corn Rumo is the largest independent railroad operator in Brazil Covers the 3 main exporting corridors of agricultural commodities Santos Paranaguá São Francisco Rio Grande GDP Growth: (Accumulated %) 21,9% 17,0% 10,2% 8,6% 9,1% Mato Grosso Mato Grosso do Sul Paraná Brazil Agribusiness GDP Source: Rumo Note: (1) in volume 5/26

6 Rumo at a glance Huge Asset Base RAILWAY NETWORK ROLLING MATERIAL TERMINALS¹ 12,000 km of Railway Lines Locomotives and Railcars Inland and Port Terminals 1,000 locomotives Port Terminals Static Capacity: 1.3 mln tons Elevation Capacity: 29 mln tons Terminal 16 (SP) Terminal 19 (SP) Termag (SP) TGG (SP) Terminal XXXIX (SP) Paranaguá (PR) Santos Paranaguá São Francisco Rio Grande 25,000 railcars Inland Terminals Static Capacity: 900 k tons Rondonópolis (MT) Alto Araguaia (MT) Alto Taquari (MT) Chapadão Sul (MS) Fernandópolis (SP) Votuporanga (SP) Barretos (SP) Jaú (SP) Itirapina (SP) Sumaré (SP) Rhall (SP) Pradópolis (SP) Note 1: Terminals in which Rumo and ALL hold equity interest or maintain operations 6/26

7 Shareholders Structure 72.25% Members of Shareholders Agreement Others Free Float 28.29% 3.65% 8.00% 5.90% 54.16% North Operation South Operation Containers Operation Source: Rumo 09/30/2016 Note: Rumo s business units not representing individual companies 7/26

8 Agenda 1 Rumo Overview 2 Strong Business Case 3 Turnaround Strategy in Place 4 Financial and Operational Update 5 Closing Remarks 9/26

9 Strong Business Case Nonreplicable Business Model Huge entry barriers Low demand risk from agribusiness Most competitive logistics option for the region Large cost reduction opportunities with capacity increase Successful conclusion of capital increase and debt rescheduling transactions 10/26

10 Huge Entry Barriers Asset Base 70% Of the exported grains uses the South and Santos ports 90% Of the sugar is exported through the Santos and Paranaguá ports Network 4 concessions to explore with exclusivity the rail transportation in the region Extension Concession Maturity Volumes (RTK mm) Net Revenues (R$ mm) North 754 km Paulista 1,989 km North Op. 2,743 km n/a 29,760 2,781 Santos Paranaguá São Francisco South 7,265 km West 1,945 km South Op. 9,210 km n/a 15,149 1,146 The largest bulk port terminal in South America Huge scale leverage Source: Rumo Note: (1) in volume Rio Grande Nonreplicable cost structure 11/26

11 Low demand risk from agribusiness Unserved demand and a growing market assure large growth potential Key Markets Brazil Grain Production 000 tons Mato Grosso Grain Production 000 tons Paraná and Mato Grosso do Sul Grain Production 000 tons +107% +129% +112% Santos Paranaguá São Francisco Rio Grande Rumo s Market Shares Brazil Grain Production Brazil Grain Exports Grain Exports Through Santos and South Ports share 83 Domestic Consumption ~181mm tons 98 Exports Other Ports 28 ~98mm tons 70 Santos and South ports Other players 45 ~70mm tons 25 Rumo s Share ~25 mm tons 12/26 Source: Rumo; MDIC; CONAB for 2015

12 Corn Soybean Low demand risk from agribusiness (cont d) 80% of Rumo s demand is grounded on the Brazilian agricultural exports, which keep on growing regardless of macro conditions Grains Sugar Fertilizer (Soybean and Corn) (Sugar) (Brazilian imports) (in million tons) (in million tons) (in million tons) 51,0 9.1% 56,0 57,4 73,0 8.8% 81,5 80,1 84,7 31,9 36,4 38,4 2.0% 36,2 38,6 37,8 35,9 11,0 15,3 11.4% 19,9 19,5 21,6 24,0 21,1 57,2 68,7 75,3 66,4 81,5 86,1 96,2 08/09 09/10 10/11 11/12 12/13 13/14 14/15 Soy Corn 08/09 09/10 10/11 11/12 12/13 13/14 14/15 08/09 09/10 10/11 11/12 12/13 13/14 14/15 Main ports for Soybean and Corn Exports Main ports for Sugar Exports Main ports for Fertilizer Imports (in million tons) Ports where Rumo Operates (in million tons) Ports where Rumo Operates (in million tons) Ports where Rumo Operates 12,7 8,2 7,5 4,9 3,2 18 9,7 Santos Rio Grande Paranaguá S. Francisco São Luis 8, ,5 2,1 1,2 4,1 1,5 0,4 0,2 2,4 0,6 1,5 Santos Paranaguá Vitória S. Francisco Rio Grande Santos Paranaguá Maceió Recife Recife (Suape) Santos Paranaguá Vitória São Francisco Source: 2016 Agrianual Report; Informa Economics FNP; SECEX; USDA; CONAB; Central Bank of Brazil 13/26 Legend Agricultural Total

13 Mato Grosso market highlight Currently our most important volume is located in central region of Mato Grosso... Grain Transported Volume 2015 Mato Grosso Miritituba (PA) MT REGION EXPORTED VOLUME RUMO VOLUME % TOTAL RUMO MKT SHARE (1) NORTE % 0% (2) CENTRAL 15,694 8,906 60% 57% (3) SUDESTE 6,467 5,610 38% 87% (4) OESTE % 5% (5) NORDESTE % 0% TOTAL 37,700 14, % 40% Price Competitiveness Pricing Rondonópolis (R$/ton) Rail Santos Road Santos Road South Road Rail Pricing Sorriso (R$/ton) Rail Santos Road Santos Waterway North Road Rail Waterway Diamantino Sinop Sorriso Lucas do Rio Verde Nova Mutum Itiquira Primavera do Leste Rondonópolis Alto Araguaia Santos (SP)... which is our cargos attraction limit due to price competitiveness. Source: IMEA 14/26

14 Large Cost Reduction Opportunities With Capacity Increase Most competitive logistics option for the region Example: Rondonópolis to Santos Port PRE MERGER TRAIN CURRENT TRAIN STATE OF THE ART TRAIN 73 railcars 80 railcars 120 railcars ~2.0x Volume per train trip (tons) 5,375 6,400 10,800 # Trips per year ~2.9x Volume per train per year (tons) 172, , ,714 Cost per ton (R$/ton) (R$ 82) (R$ 73) (R$ 56) Margin per Year R$ 13.5 mm R$ 19.5 mm ~3.8x R$ 51.4 mm Source: Rumo creating further competitiveness against trucks 15/26

15 Successful conclusion of capital increase and debt rescheduling transactions Funding will be used to enhance Rumo s balance sheet and support its long term investment plan Capital Increase Debt Refinancing BNDES Credit Reinforce company s capital structure Reschedule debt maturity of next 3-years Access to new credit lines Post Money Capital Structure 1 Debt Amortization Schedule 1 BNDES Funding ~R$ 3.5 billion 3 Net Debt / EBITDA R$ mm 5.1x 3.8x Net Debt 4Q Follow-on Net Debt Post Follow-on 962 Δ1H x Net Debt 2Q16 P P P Financial liabilities refinanced by 5 major banks R$2.9 billion in short term debt replaced by medium term debt 3 years of grace period amortization, from 2019 to 2023 Previous Amortization Schedule (R$ bn) Current Amortization Schedule (R$ bn) 2,0 2,9 2,8 0,9 0,8 0,4 0,3 0,2 0,4 0,9 1,8 1,4 1,2 1,6 1,2 1,0 0,6 0,2 P R$ 1.5 billion Direct risk exposure from BNDES P R$ 2.0 billion Indirect funding from BNDES (bank guarantees) P Funding for 2016, 2017 and 2018 Framed; 1,00 Framing; 2,50 BNDES Direct Risk; 1,50 Bank Guarantee; 2,00 BNDES Direct Risk; 0,75 0,75 Bank Guarantee; 0,50 1,50 BNDES Approval BNDES Risk Disbursement Source: Rumo Note: (1) As of June 30 st, 2016 (2) Cash and Derivatives includes restricted cash from bank debts in the amount of R$ 81.6 million (3) Subject to certain conditions 16/26 Support to Rumo s Growth Strategy

16 Solid Regulatory Framework Railroad Port 4 railroad concessions North Network (ending 2079) Paulista Network (ending 2028) South Network (ending 2027) West Network (ending 2026) Paulista Network concession renewal process in advanced discussions. Renewal for additional 30 years (until 2058) 2 terminals concessions at Santos Port Terminal 16 (ending 2036) Terminal 19 (ending 2036) Rumo also operates as associated company in other 3 terminals in the Port of Santos Terminal XXXIX (ending 2025) TGG (ending 2027) Termag (ending 2027) 17/26

17 Agenda 1 Rumo Overview 2 Strong Business Case 3 Turnaround Strategy in Place 4 Financial and Operational Update 5 Closing Remarks 18/26

18 Higher Contracted Volume New Contract Terms Main Initiatives New commercial approach and solid client portfolio The new commercial approach, combined with a strong portfolio of clients, ensure revenues and predictable cash flows New Commercial Approach Narrowing the relationship with the current base of clients Increase of the guaranteed volume Monthly follow-up of the contracts Strong and Diversified Client Base Grains Industrial Sugar Fuel Strategy of long-term agreements of up to 3 years Strong take-or-pay clauses for Rumo Reduction in the average tolerance of volume from 15% to 10% Increase in the average fine, from 25% to 44% over the contractual yield Pulp & Paper Client Base Profile (2015) Increase in Rumo s contracted volume with the new commercial approach +10 p.p. 80% 90% Sugar 9,2% Other 3,0% Industrial 5,1% Container 4,8% Fuels 9,9% Grains 67,9% Source: Rumo; 2016 Agrianual Report; Informa Economics FNP; SECEX; USDA; CONAB; UNICA Note: (1) Includes highways 19/26

19 First turnaround-year achievements Less than a year after the merger the turnaround is already yielding results Operational Figures Transported Volume (RTK¹ mln) Net Revenues (R$ mm) Financial Figures 42,958 5% 44,910 4,217 14% 4, Loading Volume at Santos Port (tons mm) 5% 11,682 11, EBITDA and EBITDA Margin (R$ mm) 40% 35% 1,493 28% 1, Average Unitary Freight (R$/ 000 RTK) EBITDA Recurring CAPEX (R$ mm) 75 11% % 1, Source: Rumo Note: (1) RTK Revenue Ton Kilometer 20/26

20 Agenda 1 Rumo Overview 2 Strong Business Case 3 Turnaround Strategy in Place 4 Financial and Operational Update 5 Closing Remarks 21/26

21 Consolidated Results Operations 6M16 Transported Volume (mm RTK) Transported Volume Breakdown 20, % 20,910 4,551 3,647 15,734 17,263 Other 3,5% Industrial 6,7% Container 5,5% Sugar 8,3% 6M15 Grains 65,8% 6M15 Agricultural products 6M16 Industrial products Fuels 10,3% Loading Volume (MM tons) and Yield (R$/ton) % 6,368 4, M15 6M Other 1,3% Industrial 3,4% Container 4,3% Fuels 9,7% Sugar 8,6% 6M16 Grains 72,6% Loading volume Yield Source: Rumo 22/26

22 Financial Update 6M16 Net Revenue (R$ mm) Gross Profit (R$ mm) and Gross Margin (%) 2,190 6M15 +17% 2,562 6M % 722 6M15 +9% 30.6% 783 6M16 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% EBITDA (R$ mm) and EBITDA Margin (%) EBITDA Recurring CAPEX (R$ mm) ,0% % % 40.5% 40,0% 30,0% 20,0% % ,0% M15 6M16 0,0% 6M15 6M16 Source: Rumo Note 1: Combined figures for /26

23 Total Indebtness TOTAL INDEBTNESS (AMOUNTS IN R$ MM) 2Q16 Commercial Banks 198 NCE 697 BNDES Debentures Total Bank Debt 8.169,6 Certificate of Real Estate Receivables 242 Leases 1.650,9 Total Gross Broad Debt ,6 Cash and Cash Equivalents and Securities¹ (1.864) Net Derivatives Instruments 20 Net Broad Debt 8.218,4 EBITDA LTM Leverage (Net Broad Debt/EBITDA LTM) 3,99 ¹ Includes restricted cash from bank debts in the amount of R$ 81.6 million Debt by Creditor Debt by Cost Debt Schedule Amortization (R$ million) Debt Maturity 0,9 1,8 1,4 1,2 1,6 1,2 1,0 0,6 0, Source: Rumo Note 1: Combined figures for /26

24 Agenda 1 Rumo Overview 2 Strong Business Case 3 Turnaround Strategy in Place 4 Financial and Operational Update 5 Closing Remarks 25/26

25 Investment Highlights Rumo has all the elements to support its business model and leverage its market position Presence in the most important grain producing regions in Brazil Low demand risk from agribusiness Client base focused in exports: natural hedge against domestic volatility Favorable trends for the agribusiness in Brazil: expected increase in the produced volume Natural regional leader supported by large barriers to entry The only player in the region with the concessions to operate the railway network Ongoing cost reduction initiatives Current turnaround process aimed to reduce costs, increase efficiency and unlock capacity Opportunity to gain market share and leverage Rumo s position Capturing the volume from highway by increasing the capacity offer at competitive prices Maximize the load factor of the system Source: Rumo 26/26