4Q10 and 2010 Results. March 11 th, PDF Free Download

4Q10 and 2010 Results March 11 th, 2011 1

Agenda Period Highlights Brazilian fertilizer market Heringer s Sales and Breakdown by Crop Specialty Products Client Base and Market Share Mixing Units and Production Capacity Financial Results Income Statements Working Capital Days Financial Highlights Cash Flow Ownership Breakdown FHER3 Stock Performance 2011 Outlook International Raw Material Prices Seasonality Agricultural Commodities Prices Barter ratio of agricultural products versus fertilizers Grain production, planted area and Brazilian fertilizer market 2

(inthousands of metric tons) (inthousands of metric tons) Brazilian Fertilizer Market Deliveries Quarter 2010 + 21.3% - 0.1% + 9.4% + 54.2% 4,197 6,472 7,848 22,429 22,400 24,516 4Q08 4Q09 4Q10 2008 2009 2010 Significant growth in delivery volume in the year, driven by the increase in agriculture commodity prices combined with the good barter ratio in the period Source: Anda 3

(inthousands of metric tons) (inthousands of metric tons) Brazilian Fertilizer Market Local Production Quarter 2010 + 40.3% + 9.3% - 5.7% + 11.6% 1,588 2,228 2,436 8,878 8,373 9,340 4Q08 4Q09 4Q10 2008 2009 2010 Higher local production driven by growing demand Source: Anda 4

(inthousands of metric tons) (inthousands of metric tons) Brazilian Fertilizer Market Imports Quarter 2010 + 46.5% - 28.4% + 38.6% + 89.7% 3,121 4,571 15,387 11,021 15,270 1,646 4Q08 4Q09 4Q10 2008 2009 2010 Increase in imports due to demand Source: Anda 5

(in millions of metric tons) Brazilian Fertilizer Market Inventories Inventories well balanced during 2010, for an adequate inventory/use ratio 28.8% 11.0% + 91.3% 17.9% + 46.6% 15.4% - 46.2% - 0.6% 14.1% 6.45 2.30 4.40 3.47 3.45 2006 2007 2008 2009 2010 Inventories/ Usage Source: Anda 6

(inthousands of metric tons) (inthousands of metric tons) Heringer s Sales and Breakdown by Crop The diversification of sales across crops continued in the period Strong growth in 2010 well above market Good barter ratio (fertilizers vs. agricultural products) in 2010 Quarter 2010 + 81.3% Σ 774 138 27 212 52 261 84 + 10.5% Σ 1,550 Σ 1,403 208 271 303 260 342 330 95 73 294 248 221 309-23.2% + 16.5% + 3.7% + 29.7% + 18.4% + 39.8% + 15.3% Σ 4,535 + 23.3% Σ 3,933 834 Σ 3,190 837 762 633 665 760 577 768 265 517 243 200 1,017 682 837 539 628 898-0.3% + 14.6% - 1.0% + 32.8% + 23.3% + 43.0% 4Q08 4Q09 Market 4Q10 + 21.3% 2008 2009 Market 2010 + 9.4% Soybean Corn Coffee Reforest Others Sugarcane Soybean Corn Coffee Reforest Others Sugarcane 7

(in thousands of metric tons) Specialty Products Strong growth in Specialty Products share of overall sales in 4Q10 and 2010 Specialty products help boost margins and improve customer loyalty with their high quality and efficiency One of the largest portfolios of specialty products on the market (31 products) Share of Specialty Products Specialty Products Line Conventional Especialty Σ 4,535 + 15.3% Σ 3,933 1,044 1,321 + 26.5% Σ 1,550 Σ 1,403 340 468 1,063 1,082 + 10.5% + 37.6% + 1.8% 2,889 3,214 + 11.2% 4Q09 4Q10 2009 2010 Sales Volume 4Q09 4Q10 2009 2010 76% 70% 73% 71% 24% 30% 27% 29% 8

Client Base and Market Share Continued growth in Market Share Solid client base Number of Clients - 2010 Market Share 34,997 45,190 44,958 14.2% 17.5% 18.5% 2008 2009 2010 2008 2009 2010 Source: Anda / Heringer 9

Mixing Units and Production Capacity 19 units located in the main consumer markets, installed mixing capacity of 5.7 million tons 1 Sulfuric Acid and Single Super Phosphate (SSP) Unit NORTH NORTHEAST Total deliveries per country region - 2010 Rosário do Catete Camaçari 28.6% 27.6% 29.7% 1.9% 12.2% MIDWEST Rondonópolis Anápolis Rio Verde Catalão Uberaba Iguatama Três Corações Manhuaçu Dourados Bebedouro Ourinhos Paulínia São João do Manhuaçu Viana SOUTHEAST North Northwest Midwest Southeast South Legend Mixing Units SSP Unit Porto Alegre Rio Grande Paranaguá SOUTH 10

Income Statement 4Q10 and 2010 (R$ thousand) 4Q10 % NR 4Q09 % NR % 10/09 2010 % NR 2009 % NR Gross Revenue 1.355.521 994.549 3.586.174 3.260.988 Net Revenue 1.335.718 100,0% 972.812 100,0% 37,3% 3.521.473 100,0% 3.192.314 100,0% 10,3% COGS (1.049.023) -78,5% (911.313) -93,7% 15,1% (3.056.218) -86,8% (2.951.569) -92,5% 3,5% Gross Profit 286.695 21,5% 61.499 6,3% 366,2% 465.255 13,2% 240.745 7,5% 93,3% SG&A (102.923) -7,7% (88.585) -9,1% 16,2% (318.587) -9,0% (264.458) -8,3% 20,5% EBITDA 200.317 15,0% (44.153) -4,5% 212.331 6,0% 6.861 0,2% Adjusted EBITDA (12.249) * -1,3% 38.765 * 1,2% Net Fin. Income / (Exp.) (23.092) -1,7% (12.058) -1,2% (81.203) -2,3% 111.965 3,5% Net Income 113.524 8,5% (35.200) -3,6% 61.805 1,8% 61.670 1,9% % 10/09 *Values adjusted to the impact of REFIS Note: The values of 2009 have been adjusted to IFRS Strong margin recovery (gross/ebitda/net) in 4Q10 over 4Q09 Important improvement in Gross/EBITDA margins in 2010 over 2009 12

Income Statement (Distribution and Production) 2010/2009 Fertilizer Distribution SSP and Sulfuric Acid Production 2010 % NR 2009 % NR 2010 % NR 2009 % NR Gross Revenue 3,550,262 3,160,679 35,912 100,309 Net Revenue 3,485,561 100.0% 3,092,005 100.0% 35,912 100.0% 100,309 100.0% COGS (2,996,707) -86.0% (2,807,180) -90.8% (59,511) -165.7% (144,001) -143.6% Gross Profit 488,854 14.0% 284,825 9.2% (23,599) -65.7% (43,692) -43.6% SG&A (318,587) -9.1% (264,458) -8.6% - 0.0% - 0.0% EBITDA 221,676 6.4% 36,141 1.2% (9,345) -26.0% (29,280) -29.2% Adjusted EBITDA 221,676 6.4% 68,045 * 2.2% (9,345) -26.0% (29,280) -29.2% *Values adjusted to the impact of REFIS Note: The values of 2009 have been adjusted to IFRS Costs at the SSP and sulfuric acid production unit in Paranaguá were affected by the temporary downtime 13

(R$ thousand) EBITDA Growth 212,331 83,266 90,113 38,765 2007 2008 2009 2010 EBITDA in 2010 was the highest in Heringer's history 14

Working Capital Days Working capital days reflect seasonality Comparisons with same quarters are more appropriate Accounts Receivable Days Inventories Days Accounts Payable Days 217 198 202 106 150 164 111 107 135 134 115 173 120 89 60 44 43 34 35 39 55 49 67 39 48 30 31 33 49 61 41 43 48 33 32 26 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Working Capital Days 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10-2 -5-22 -59-113 -92-55 -58-83 -98-39 -31 15

Key Indicators and Multiples 2007 2008 2009 2010 Sales Performance Deliveries volume (MM Tons) 3.3 3.2 3.9 4.5 % volume growth 32.6% -2.1% 23.2% 15.3% Net Revenue (R$ Thousand) 2,260,839 3,524,559 3,192,314 3,521,473 Market share 13.3% 14.2% 17.5% 18.5% Net Worth 492,827 286,247 347,917 409,722 % of change -41.9% 21.5% 17.8% Indebtedness (IFRS) Net Debt (R$ Thousand) 216,208 454,985 476,723 607,358 Indebtedness / EBITDA 2.60 5.05 12.30 2.86 Indebtedness / Shareholders' Equity 0.44 1.59 1.37 1.48 Indebtedness / Net Revenue 9.6% 12.9% 14.9% 17.2% Indebtedness (adjusted) Net Debt (R$ Thousand) 172,593 403,789 420,569 536,226 Indebtedness / EBITDA 2.07 4.48 10.85 2.53 Indebtedness / Net Revenue 7.6% 11.5% 13.2% 15.2% Indexes EBITDA 83,266 90,113 38,765 212,331 EBITDA Margin 3.7% 2.6% 1.2% 6.0% Net Debt (R$ Thousand) 216,208 454,985 476,723 607,358 Shares Closing Price 19.65 3.56 10.81 9.27 Number of Shares (Thousand) 48,566 48,810 48,471 48,471 Market Value (R$ Thousand) 954,322 173,764 523,972 449,326 Enterprise Value 1,170,530 628,748 1,000,695 1,056,684 EV/EBITDA 14.06 6.98 25.81 4.98 Earnings per share 1.60-5.19 1.23 1.27 Price Earnings (P/E) 12.31-0.69 8.81 7.27 Improvement in key indicators and multiples 16

Cash Flow (R$ thousand) 4Q10 2010 Income before Taxes and Social Contribution 167,490 88,386 Non cash flow impact expenses (revenues) 10,878 52,118 Assets reduction / (increase) 143,709 (158,082) Liabilities Increase / (reduction) (244,704) (132,110) Operating Activities cash flow 77,373 (149,688) Investing Activities cash flow (17,014) (76,723) Financing Activities cash flow 8,687 249,425 Cash Generated (Used) 69,046 23,014 Net Increase (Decrease) In Cash Initial Cash 107,008 153,040 Ending Cash 176,054 176,054 Net Increase (decrease) in Cash 69,046 23,014 Transactions not involving cash Purchase of fixed assets using ICMS credits 760 14,327 Adequate working capital management Execution of investment plan 17

Adoption of IFRS/CPCs and Associated Impacts 1. Costs attributed (revision of value of fixed assets) Revision of fair market value, with impacts on Fixed Assets and Shareholders' Equity Revision of the useful life of assets Revision of depreciation based on adjusted values and new useful life 2. Information by segment Breakdown of income statement by SSP and Sulfuric Acid production and fertilizer distribution Net sales by region in Brazil Fixed Assets by region in Brazil 3. Reclassifications on the Financial Statements Rural vendor and credit operations to current liability with increase in net debt Increase in accounts receivable due to reclassification of rural vendor and credit operations Deferred taxes to non-current assets Note: We suggest a thorough reading of the explanatory notes 18

Heringer Ownership Breakdown FHER3 is one of the 100 most liquid stocks on the BOVESPA and components of the INDX, IGC, SMLL and ITAG stock indexes At the end of 2010, the free-float registered 75 foreign investors and 3,130 Brazilian investors Ownership Breakdown and Free-Float Foreign and Brazilian Investors on Free-Float 120% % Brazilian % Foreign No. Foreign No. Brazilian 4,500 100% 4,000 3,500 Controlling Group 67.8% Free-Float 32.2% 80% 60% 49% 46% 51% 58% 58% 3,000 2,500 2,000 40% 1,500 20% 51% 54% 49% 42% 42% 1,000 500 0% dec/09 mar/10 jun/10 sep/10 dec/10 0 19

Stock Performance in 2010 Average daily trading volume of R$ 1,311,078 Average daily trades of 202 Loss of 14.2% in 2010 x 1.0% high in IBOVESPA 11.74 11.62 11.24 9.33 6.15 7.68 7.70 7.61 6.92 7.90 8.15 9.27 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 20

1Q11 and 2011 Outlook Sector stocks should continue to adjust over the course of 2011 Average prices for fertilizer raw materials higher than in 4Q10 Seasonality expected in 2010 is 39% in 1 st half and 61% in the 2 nd half of 2011 Brazilian fertilizer market expected to grow by 6.0% to 26.0 million metric tons in 2011 Positive scenario for agriculture commodities in 2011: profitability of rural producers Grain output projected to grow in the 2010/11 season 22

International Raw Material Prices Average prices for fertilizer raw materials higher than in 4Q10 Despite the recent increase, barter ratios still remain at favorable levels 1400 MAP/DAP-CFR TSP - CFR KCL in Bulk - CFR Urea in Bulk - CFR Ammonium Nitrate - CFR Ammonium Sulphate - CFR 1200 1000 800 600 400 200 0 Oct/06 Jan/07 Apr/07 Jul/07 Oct/07 Jan/08 Apr/08 Jul/08 Oct/08 Jan/09 Apr/09 Jul/09 Oct/09 Jan/10 Apr/10 Jul/10 Oct/10 Jan/11 Source: Heringer - Prices in US Dollar CFR* = cost and freight 23

Brazilian Fertilizer Market - Seasonality 38% 51% 37% 35% 39% 62% 49% 63% 65% 61% 2007 2008 2009 2010 2011E 1 st Half 2 nd Half Source: Anda / Heringer 24

(in million tons) Brazilian Fertilizer Market Evolution and Expectations for 2011 Expected growth of 6% in 2011 10.8 12.2 13.8 14.6 13.6 16.3 17.0 19.1 22.8 22.8 20.2 21.0 24.6 22.4 22.4 24.5 26.0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011E Source: Anda / Heringer 25

Agricultural Commodities - Prices Soybean R$/bag (60kg/Paraná) Corn R$/bag (60kg/São Paulo) 60 55 50 47.62 45 40 35 30 25 50.58 44.62 50.31 42.83 34.14 35.59 42.56 49.28 35 30 25 20 15 27.81 23.67 20.61 20.56 31.68 25.10 20 10 Sugarcane R$/bag (50kg/São Paulo) Arabica Coffee R$/bag (60kg/Brazil) 90 80 70 60 50 48.40 55.50 72.49 63.78 71.67 75.17 550 500 450 400 388.99 495.98 40 30 20 10 27.45 31.12 41.42 40.41 350 300 283.87 250 261.58 262.48 261.33 289.46 328.46 0 200 Source and Projection : Agroconsult / R$/bag = Bag Prices 26

Agricultural Commodities International prices: recent evolution Soybean US$/bushel Corn US$/bushel Sugar US$/pound Coffee US$/pound Source: CME Group 27

Barter Ratio of Agricultural Products versus Fertilizers Soybean Paraná (bag/60kg) Corn Paraná (bag/60kg) 40.7 107.2 35.5 87.2 23.2 18.1 16.5 19.3 22.0 19.2 19.2 52.6 46.6 46.6 55.3 56.4 53.2 44.7 Sugarcane São Paulo (tons) Coffee (Brazil) 76.2 79.3 Sugarcane SP (t) 6.6 7.6 Coffee Robusta (bag 60kg) Coffee Arabica (bag 60kg) 52.8 33.0 39.0 26.8 25.2 24.1 26.0 26.3 5.4 6.5 6.0 4.6 4.9 5.1 3.7 3.6 4.0 4.2 4.1 4.5 3.9 2.5 2.4 2.4 1.7 Source: Agroconsult 28

Grain Production and Planted Area Expected growth of 2.2% in planted area in the 2010/2011 marketing year * Expected growth of 3.7% in Brazilian grain production for the 2010/11 marketing year * 143,884 135,756 148,745 154,270 47,526 47,927 47,423 48,478 2007/2008 2008/2009 2009/2010 2010/2011* Grain Production (1000 t) Planted Area (1000 ha) Source: Agroconsult/ * Agroconsult's Projection and Company's Estimate 29

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, 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 by the forward-looking statements. On December 28, 2007, Federal Law 11,638 was enacted, as amended by Executive Order 449 dated December 4, 2008, which modified and introduced new provisions to Brazilian Corporation Law. The Law and Executive Order sought to update Brazilian Corporation Law to enable convergence of the accounting standards adopted in Brazil with the international accounting standards issued by the International Accounting Standards Board (IASB). Their application of said law and executive order is mandatory for financial statements for fiscal years starting on or after January 1, 2008. As of December 31, 2009, the Company will disclose a note reconciling the differences between the financial statements prepared in accordance with BRGAAP and IFRS, and as of 2010, the company will prepare its financial statements fully in accordance with international standards, as required by the regulations of the Novo Mercado Special Corporate Governance Segment. The Company, pursuant to CVM Resolution 603/09, as amended by CVM Rule 626/10, opted to present its quarterly information during fiscal year 2010 in accordance with the accounting standards effective through December 31, 2009. The following rules are only those that could have a more relevant impact on the Company s financial statements. In accordance with CVM Resolution 603/09, the figures reported in these quarterly information statements, including those used for comparison purposes, must be reported again for comparison purposes at least in the financial statements for the fiscal year ending December 31, 2010. 30

Wilson Rio Mardonado Vinicius Alves de Lima Rodrigo Alexandre Salvador Investor Relations Phone: +55 19 3322-2294 ri@heringer.com.br 31

4Q10 and 2010 Results. March 11 th, 2011