4Q 07 EARNINGS PRESENTATION February 21, 2008 0
FORWARD LOOKING STATEMENTS 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
Contents Important Events 4Q 07. Results Comparison 2007 versus 2006 Results Comparison 4Q 07 versus 4Q 06. Non Recurrent Events 4Q 07. Performance (4Q 07 versus 4Q 06). Business Outlook. 2
Important Events 4Q 07 Wood Boards 1. Strong demand continues in all Latin American markets, as evidenced in a 26.5% and 12.8% growth in 4Q 07 sales of MDF and PB when compared against 4Q 06 sales, respectively. Ability to transfer cost increases into prices continues in 2007 (i.e. gross margin increases from 24.2% in 4Q 06 up to 26.9% in 4Q 07). Annual MDF and PB sales increase 24.4% and 10.7% respectively. 2. New MDF plant in Cabrero, Chile started commercial production of boards in October. During the period 20,633 m 3 were produced. Operating at full capacity in 2008. 3. Masisa and Louisiana-Pacific, executed a binding agreement for Masisa to sell to LP 75% its OSB plant located in Ponta Grossa, Brazil: The price for the 100% of the fixed assets is approximately US$75,000,000 Proceeds will mainly be used to reduce indebtedness Decision to sell its OSB assets is aligned with its intention of focusing on its core business, which is PB and MDF wood boards for furniture in Latin America. 4. On January Masisa and Brascan Brazil Ltda., executed a share purchase and sale agreement, whereby Masisa indirectly acquired, 37% of the shareholding of Tafisa Brazil S.A: Tafisa Brazil s industrial plants in the state of Paraná, have a capacity of 380,000 m3 of MDF, 260,000 m3 of MDP and 300,000 m3 of melamine boards. The price was US$70,000,000 The ultimate controller of Tafisa is Sonae Indústria, SGPS, S.A., a Portuguese publicly-traded corporation and one of the world wood boards production leaders. Masisa and Sonae have committed to work in the implementation of the combination of the businesses of Tafisa Brazil and of Masisa do Brazil Ltda. with the objective of positioning the combined entity as a leading company in the Brazilian market. 3
Important Events 4Q 07 Retail 1. Continue migration of Placacentros from brand license contracts to franchise level agreements (process initiated in Dec 06) - As scheduled. Number of Placacentros migrated during 4Q 07: 52.Total Placacentros migrated: 165. 51% of the network is already franchised During 4Q 07, open the first 2 Placacentros under a franchised / agency agreement in Colombia Total # of Placacentros as of 31, 2007: 324. The network was optimized with 33 new openings and 9 closures. 2. Application of Placacentros Franchise Operating Manual: Argentina and Chile: 100% completion of first phase ( Train the Trainers ) Brazil in an advanced stage of first phase. 3. Placacentros Extranet: operating normally in Argentina, Chile, Mexico, Peru and Venezuela. 4. Procurement Units (PU): Internet sales platform: Operating in Brazil, Chile, Ecuador, Mexico, Peru and Colombia. Platform to be replicated in upcoming PU s. Start of operations in Colombia Total sales during 4Q 07: US$ 1.0MM vs. US$ 0.3MM in 1Q 07. Total sales during 2007: US$ 2.8MM 5. Placacentros sales penetration over domestic market wood board sales: 31.5% as of Dec. 31, 2007, 32.7% during 2007. 4
Important Events 4Q 07 Solid Wood 1. Cost optimization process. Charleston MDF moulding line in Chile. In a consolidation stage and studying the market. Reduction of MDF and FJ moulding production, adjustments to productive factors. Cost efficiency initiatives (electricity, small investments to improve product mix) 2. Slowdown in the U.S. housing sector continues. Thus affecting MDF and finger-joint mouldings exports. Solid wood doors evidenced an adequate performance during the quarter. 3. Rise in costs of exports of green sawn lumber to Mexico, as a result all green sawn lumber exports replaced by dry lumber exports. 4. Market diversification process. Consolidation of shipments to Vietnam. 5
Important Events 4Q 07 Forestry 1. Good end year for the Forestry Business Unit: Ebitda: US$48 million. Sales Volume: US$108 million ( 2,8MM m 3 ) 2. Acquisition of land during 2007: Argentina: 21.920 has. (Part of these has. will be under a shared property scheme) Brazil: 12.776 has. Chile: 1.741 has. 6
Results Comparison 2007 vs. 2006 Sales growth mainly driven by higher prices on MDF and PB, coupled with the recovery of OSB sales, that more than offset the lower performance in our solid wood business. Successful commercial efforts, coupled with strong demand for wood boards for furniture in Latin America allows the Company to transfer cost increases into prices, thus improving margins. 2007 SG&A s include higher commercialization expenses due to increased sales and: (i) higher level of provisions due to a change and application of a new uncollectible accounts provisions policy (+US$0.9 million) and higher sundry provisions (+US$1.5 million) ; (ii) sawn lumber shipment rerouting expenses (+US$3.3 million); (iii) increase in salaries by US$ 2.8 million, and; (iv) auditing and consulting expenses by US$ 1.1 million. Lower non operating results mainly due to: (i) lower financial income by US$4.4 million; (ii) one severance payment by US$3.3 million; (iii) US$1.9 million Charleston MDF plant shutdown; (iv) US$2.1 million from a fire that affected 1.171 has. In Chile, and; (iv) US$2.3 million from severances paid to Proforca and sawmill repair costs in Venezuela. Net income increases by a 39.3% 7
Results Comparison 4Q 07 vs. 4Q 06 Sales growth mainly driven by higher prices on MDF and PB, coupled with the recovery of OSB sales, that more than offset the lower performance in our solid wood business. Successful commercial efforts, coupled with strong demand for wood boards for furniture in Latin America allows the Company to transfer cost increases into prices, thus improving margins. 4Q 07 SG&A s include higher commercialization expenses due to increased sales and: (i) higher level of provisions due to a change and application of a new uncollectible accounts provisions policy (+US$0.7 million) and higher sundry provisions (+US$1.5 million), and ; (ii) sawn lumber shipment re-routing expenses (+US$1.3 million). The SG&A/Sales ratio improves from 16.1% to 15.3%. Lower non-operating results mainly due to negative foreign exchange differences, that increase by US$ 6.9 million and due to lower financial incomes that decrease by US$3.8 million.. EBITDA increases by 35.2% due to successful commercial efforts. 8
Non-recurrent items 4Q 07 Non-recurring items (US$'000) 2006 2007 4Q'06 4Q'07 Operating Exploitation costs -8,089-6,321-4,859-1,973 SG&A -1,745-4,501-745 -2,601 Total Operating -9,834-10,822-5,604-4,574 Non-operating Non-operating 1,754-8,543 1,754-2,872 TOTAL -8,080-19,365-3,850-7,446 Product devolution (quality problems): -US$0.175 Million Chep quality client complaints: - US$1.339 Million Legal fees: -US$0.513 Million Winter cold-frosts deductibles: -US$0.350 Million Extraordinary recovery insurance from forest fire (Jan 07): +US1.0 Millon Fixed asset differences provisions: -US$0.250 Million Severance payment provision (Cabrero and Valdivia) : -US$3.348 Million Resolution on tax loss from foreign agencies: + US$7.332 Million 9
Performance Consistent growth on Sales. Mainly driven by MDF and PB businesses. Successful commercial efforts in increasing prices. Attractive growth potential in the region. Consolidated Sales (US$mm) 1,000 900 800 700 600 500 400 300 200 100 0 651 2004 CAGR: 14.1% 966 887 743 2005 2006 2007 10
Performance Adequate operational cash flow generation (EBITDA), despite cost pressures. Quarterly EBITDA (US$mm) 50 45 40 35 35.4 39.0 7.8% 43.5 46.2 47.8 30 25 20 15 10 5 0 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07 11
Performance 15 10 5 0 Quarterly Net Income (US$mm) 40% 14,6 10,4 4Q 06 4Q 07 Net Income increased 4Q 06 vs. 4Q 07 (+40.2%). ROE and ROA increased during the last 12 months. ROE (1) ROA (1) 4 3 2,49% 30% 3,23% 2 1,46% 27% 1,86% 2 1 1 0 2006 2007 0 2006 2007 12
Performance Adequate use of our assets, while decreasing needs of working capital to sales. Sales / Total Assets Operating Working Capital / Sales 44.0% 43.7% 32.3% 31.1% 2006 2007 Accounts Receivable Turnover 2006 Inventory Turnover 2007 6.9x 6.9x 3.5x 3.6x 2006 2007 2006 2007 13
Performance Continuous growth while maintaining a sound financial profile. EBITDA / Interest Expenses Financial Debt / EBITDA 4.4x 5.2x 3.9x 3.7x 2006 2007 2006 2007 14
Business Outlook Wood Boards 1. Strong demand for MDF and PB continues in all Latin American countries Pricing conditions remain strong. 2. Execute growth strategy in Brazil and the announced transactions: OSB Plant sale Focus in core business. New MDP Plant, construction as planned ( in US$ and timing) Masisa / Tafisa Merger 3. New MDF plant in Cabrero reaches full capacity levels of production. 4. New melamine line in Mapal enter production by 2H 08. 5. Costs: resins and wood costs expected to increase. Strong increase in energy. 6. Overall, margins should improve slightly when compared to those of 4Q 07. Proven ability to transfer cost increases into prices. 15
Business Outlook Retail 1. Placacentros migration from brand license contracts to franchise level agreements. 100% of network migrated: 2009. By 2008, 79% of the Placacentros migrated. 2008 Plan: 348 Placacentros 275 franquised (includes 20 franquised/agency Placacentros 1Q 08: 9 migrations + 4 openings 13 new franquised Placacentros (includes 2 franquised/agency) 2. Procurement Units, strengthening the operations in the region: Venezuela: starts operations in 1Q 08. 3. During 2007, 10,517 Carpentes were trained in the Business Model One Stop shopping, Carpenters small furniture makers. Chile signs a cooperation agreement with DUOC. 4. Application of Placacentros Franchise Operating Manual: 1Q 08: Finishing in Brazil and starting in Peru and Ecuador. Target: 155 Placacentros to be trained within 24 months (Training process takes 4-5 months) 5. Strengthen the Extranet as THE communicatin channel between Masisa and the Placacentros: Acces to SAP, Inventories, Promotions, Management reports, on-line operations manual. Implementation of the Extranet in Ecuador and Colombia 6. Development and implementation of the Welcome Clients! program, integral system of quality surveillance post-implementation of Operating Manual: Assure: Design, Security, Cleaning levels, Structure, Aspect. Product mix and fixtures mix, price surveillance Objective: Feedback Continuous improvement plan 16
Business Outlook 1. Optimize cost structure. Solid Wood Consolidation of moulding operations in Cabrero, Chile, using existing capacity currently located elsewhere In a consolidation stage and studying the market conditions in order to install productive lines. Restructuring of prodcutive factors focus on operating efficiency aligned with market vision. 2. Mouldings: U.S. market for mouldings does not exhibit signs of recovery in the short term (at least until 2H 09), but doesn t show sings of worsening. Stable outlook for 2008. Finger-joint mouldings being the most affected due to high correlation with house startings. Prices expected to remain stable. MDF mouldings should exhibit stable pricing conditions with respect to 4Q 07. Focus on profitability of exports, probably sacrificing volume. MDF not sold as mouldings to be commercialized as boards in Latin America. 3. Solid wood doors, stable outlook 4. Sawn lumber: stable market outlook. Pricing increases expected, reflecting costs increases (phitosanitary requirements and logistics). Focus in increase market diversification (U.K., north of Africa and China). Focus towards markets which pay a premium price for FSC certified sawn lumber (U.K.). Good perspectives of Middle East countries. 17
Business Outlook Forestry 1. Development of greenfield projects (securing long term fiber supply), to support industrial growth strategy: Brazil: 3 year plan to aquire 40,000 has. under a shared property scheme, but with exclusive acces to the fiber. Harvest target for 2008: 3 million m 3 18