conference call 3 q12
TRANSCRIPT
Conference Call – Earning Results 3Q12 – 11/08/2012
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“Forward looking statements included in this presentation regarding the
Company’s business, operating and financial results and Company’s growth
are only predictions and were based on management's expectations
regarding future performance. These expectations are highly dependent on
market conditions, Brazilian economic scenario, industry performance and
international markets, and are therefore subject to change.”
Disclaimer
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• Sales Volume:
Chrysotile mineral: growth of 6.1%
Fiber cement: retraction of 12.8%
Concrete tiles: retraction of 2.7%
• Net Consolidated Revenue amounted to R$ 230 million, a 7.9% growth
• Gross Margin of 43%, increase of 2 p.p.
• EBTIDA was R$ 45.3 million, a 6.9% growth and margin of 20%
• Net Income reached R$ 27.1 million, slightly reduction of 0.8%
• Investments reached R$ 23.5 million, evolution of 53.5%
• Start of the chrysotile mineral judgment by the Federal Supreme Court
Highlights of 3Q12 (when compared to 3Q11)
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Eternit Group
Activity
Manufacture of fiber cement and commercialization of bathroom chinaware, metallic fittings and
components for construction systems
Chrysotile Mining
Manufacture of concrete tiles and commercialization of sanitary ware
Industrial Units 4 1 1 6
Market Share
Leader in fiber cement – 32% of Market Share
The world's 3rd largest – 15% of
Market Share
Leader in concrete tiles –35% of Market
Share 5th largest of Brazil in sanitary ware
Capacity 1 million tons / fiber cement 300 thousand
tons 10 million m²
Capacity Used Fiber cement - 80% 100% 60%
The largest and most diversified roof coverings industry in Brazil – 9M12
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Main use of the crhysotile mineral:
99% of the world production of
chrysotile is used for fiber cement
products.
Traditional Product – Chrysotile Mineral
Serpentinite rock with Chrysotile Ore fibers
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Traditional Product– Fiber Cement Tiles
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Diversified Portfolio – Metallic Fittings
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Diversified Portfolio - Components for constructions systems
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Diversified Portfolio – Water tanks and filters
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Diversified Portfolio – Bathroom chinaware and lavatory seats
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Diversified Portfolio – Metal Fittings
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Diversified Portfolio – Synthetic Marble
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Diversified Portfolio – Concrete Tiles
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Diversified Portfolio – Full Roofing Solutions
SAMA – Overview
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Global Market – Chrysotile Mineral - 2011
Global Consumption (MM of Ton)
Canada 4%
Russia – 50%
Kazakhstan – 11%
China – 20%
Brazil 15%
2011
2.2
2008
2.4
2007
2.4
2006
2.3
2005
2.3
2004
2.1
2009
2.1
2010
2.2
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Sales of Chrysotile Mineral (thous. tons)
6.1% -14.6%
1.5% -3.8%
3Q12 x 3Q11
• Domestic Market – reduction of 5.5%
• Foreign Market – increase of 20.8%
9M12 x 9M11
• Domestic Market – reduction of 8.5%
• Foreign Market – increase of 14.4%
Domestic Market Foreign Market
Eternit and Tégula – Overview
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Residential Market Industrial and Commercial Market
Total Market Market Evolution (MM m2)
Metallic
12%
Ceramics 35%
Fiber cement 47%
Other
2%
Fiber cement 38%
Metallic 40%
Other 11%
Ceramics 11%
Concrete
4%
Ceramics
45%
Fiber cement
51%
Concrete
4%
Covering market – Brazil - 2011
2005 2006 2007 2008 2009 2010 2011
406 425459
505 495534
561
8% 5%
10% -2% 8%
Source: Estimation of the Production Chain of Fiber Cement
5%
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Sales of Fiber Cement* (thous. tons)
* Includes components for construction systems
- 11.9% 8.4%
- 12.8% 12.9%
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Concrete Tiles (thous. square meters)
*Tégula was acquired on February 11 2010. The amount of 477 thousand m2 doesn’t refer to Eternit.
15.0%
9.2% -2.7%
-1.6%
Economic and Financial Performance
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Consolidated Net Revenue (R$ million)
6.6% 7.9%
9.5% 8.5%
Domestic Market Foreign Market
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Net Revenue Breakdown
(**) Others: metallic roofing tiles, polyethylene water tanks, lavatory seats and metallic bathroom fittings, water pipe filters, synthetic marble and components for construction systems.
2007 9M12
(*) Others: metallic roofing tiles, polyethylene water tanks and components for construction systems.
Chrysotile Mineral; 35.0%
Fiber cement; 59.3%
Others (*); 5.7%
New Business
5.7%
Chrysotile Mineral 32.0%
Fiber cement 50.2%
Concrete tiles and
Accessories 10.0%
Bathroom Chinaware
5.3%
Others (**); 2.5%
NewBusiness 17.8%
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COGS Breakdown – 3Q12
(*) - Cement (45%), Chrysotile Ore (41%) and other (14%)
(***) - Cement (56%), sand (29%) and other (15%)
(**) – Fuel, explosives, packaging, among other
Fiber Cement Chrysotile Mineral
Concrete Tiles
Raw material (*)
60%
Workforce; 11%
Depreciation; 4%
Others costs; 22%
Energy3%
Materials (**)32%
Workforce 44%
Depreciation 7%
Others costs 9%
Energy; 8%
Raw material (***)48%
Workforce15%
Depreciation11%
Others costs22%
Energy4%
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EBITDA (in R$ million)
10.4% 6.9%
- 9.1% 30.4%
9M10 9M11 9M12 3Q10 3Q11 3Q12
110.3100.3
130.7
38.3 42.3 45.3
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Net Income (in R$ million)
- 11.0% 29.1%
6.9% - 0.8%
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Margins
Net Margin EBITDA Margin Gross Margin
45%
39%
44% 45%
41%43%
20%
17%
20% 19% 20% 20%
13%11%
13% 13% 13% 12%
9M10 9M11 9M12 3Q10 3Q11 3Q12
Capital Expenditures
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Capital Expenditures (in R$ million)
Equipments and Trucks - SAMA Capacity Increase – Tégula Investiments
Tégula Acquisition
Capacity Increase – Eternit
New Businesses Administrative Bathroom Chinaware Plant - CSC
* Forecast
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Location of Multiproduct Plant - Ceará State
Land of 400 000 m²
35 km
15 km
Linha Gás Natural
Cimenteira
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Share of 40%
Knowledge of manufacturing and products technology
Low cost production
Expertise in new product development
Expertise in new market development
Share of 60%
Knowledge of the local market
Strong distribution network
Efficient logistics
Brand strength
Investment Resources
Knowledge in Brazil
Investments: R$ 97 million
Capacity: 1,500,000 pieces per year
Status of the building: initiated
End building: December 2013
Forecast of Gross Revenue at full capacity: approximately R$ 127 million
Straight Workforce: 330 employees
Multi-Product Unit in the Ceará State - Bathroom Chinaware Plant
Joint-Venture: Companhia Sulamericana de Cerâmica S. A.
Capital Markets
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Clubs. Funds and Foundations
Ownership Structure – Oct/12
Shareholding Structure
Geração L. Par. F. I. A. 15.25%
Luiz Barsi Filho 13.53%
Victor Adler + VIC DTVM 8.50%
Management 1.54%
Treasurystock 0.03%
FREE-FLOAT 76.10%
Individual Investors
Corporations
Investors Abroad
Advisory Board Member Since
Guilherme Affonso Ferreira 2011
Mário Fleck 2011
Victor Adler 2012
Board of Directors Member Since
Sergio Alexandre Melleiro (*) 1993
Lírio Albino Parisotto (*) 2004
Élio A. Martins 2007
Luiz Barsi Filho 2008
Marcelo Munhoz Auricchio 2011
Luis Terepins (*) 2011
Benedito Carlos Dias da Silva (*) 2012
(*) Independent member
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(*) Until October 2012
Liquidity
Number of shareholders Average Traded Volume
(R$ thousand)
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Policy of Remuneration - Net Income X Distributed Earnings
In R$ million
76 % 79 % 74% Pay Out 64%
Net Income Dividends and Interest on own capital (*) Until September 2012
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Policy of Remuneration - Dividend Yield
(*) Unitl September 2012
Source: Eternit e BACEN Savings (*) Eternit – Yield(*) CDB (*)
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Eternit’s Shares Performance (Dec/06 – Oct/12)
Between 12/28/2006 to 10/31/2012, Eternit’s shares appreciated 38.6% and IBOVESPA
appreciated 28.3%.
In the same period, including the payment of dividends and interest on own capital, Eternit’s
shares appreciated 145.6%.
57,068
R$ 8.40
Outlook
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Favorable Moment for Civil Construction
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So
urc
e:
BA
CE
N
Credit Availability Unemployment Rate - Brazil Government, Industry, Housing, Rural, Commerce, Credit
Individuals (R$ billlion)
Economic Figures
*jun/12 to aug/12 - foreseen
Food Basic Basket SP x Minimum Wage (purchasing power)
% Minimum Wage (R$) Food Basic Basket in SP (R$)
So
urc
e:
IBG
E a
nd
DIE
ES
E
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Reduction in the interest rates for the finance of construction materials
In September, Banco do Brasil (BB) in partnership with the National
Construction Material Traders Association (ANAMACO), announced a
new line of credit at reduced interest rates to stimulate sales of
construction materials to individuals. Consumers can sign up to this credit
line directly through stores selling construction materials, the store owner
enjoying a cash sale and the consumer effecting repayment over a period of
up to 54 months.
ANAMACO also informed that the Caixa Econômica Federal (CEF – Federal
Savings Bank) is also optimizing its business on the credit front. In
addition to streamlining transactions using the Construcard (line of
finance for the acquisition of construction materials),
the bank is also expected to revisit its Caixa Fácil
operations still in this year with more accessible interest
rates facilitating the financing of construction materials.
Along similar lines, Banco Bradesco is offering the
João-de-Barro program - increasingly popular among
account holders as a very competitive product in terms of
rates and ease of accessing credit.
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Economic Figures – GDP vs. Gross Consolidated Revenue of Eternit
(E) Estimated
Source: BACEN. The growth in Eternit´s gross consolidated revenue compares the accumulated period from January to September 2012 against the same accumulated period for 2011, inflation adjusted for the IGP-M.
Chrysotile – The Brazilian Mineral
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Chrysotile – The Brazilian Ore
The use of Chrysotile ore in Brazil is regulated by the Federal Law 9,055/95, by Decree 2,350/97 and by regulatory standards for occupational health and safety. It is also provided in the Convention 162 of the International Labor Organization (OIT).
Serpentinite rock with Chrysotile Ore fibers
White Ore
Bends and silky fibers without tip
Biopersistence*: 2.5 days
*Biopersistence: Time that a inhaled particle remains in the lungs before being eliminated by the body’s defense mechanisms. To cause lung damage, the fiber must have penetration and durability capacities in the alveoli.
High Concentration of Magnesium:3MgOSiO2H2O
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Brazil concludes important research about chrysotile ore risks
Project Asbesto Ambiental “Ambiental Exposition to Asbesto: Evaluation of Risk and Effects in Health”
Process CNPq n. 420001/2006-9 The results of the research were announced on November 25 2010 and demonstrates that: Among the householders surveyed, no clinical, respiratory functional and high resolution tomographic alterations were found that could be attributed to atmospheric asbestos fiber inhalation. In the occupational assessment, no new alterations were identified or progression in pleural and interstitial deterioration of individuals in the sample Group exposed after 1980 and who underwent High Resolution Computed Tomography scans in the two studies. The full version of this research can be found in www.sectec.go.gov.br.
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Result of the decision of the STF on the use of asbestos in Brazil
The Federal Supreme Court (STF) began on October 31st, 2012 its ruling on the merit of the Direct Actions of Unconstitutionality (ADI) 3357 in the light of state Law 11.643/2001 enacted by the state of Rio Grande do Sul, and ADI 3937 in the context of state Law 12,684 of July 26th, 2007 of the state of São Paulo. Judge Ayres Britto began the judgment ruling in favor of the constitutionality of the state laws while Judge Marco Aurélio’s vote was for the unconstitutionality of the same state laws. Following the conclusion of Judge Marco Aurélio’s ruling, the presiding judge adjourned the work of the court. We would point out that this judgment is fruit of exhaustive debates with Brazilian society through public hearings held by the STF on August 24th and 31st, 2012 led by Judge Marco Aurélio together with the judges Rosa Weber and Ricardo Lewandowski. For this reason, the STF is expected to set a new date for the final ruling on the merit mentioned in the ADIs as a whole.
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Recognitions – 3Q12
Eternit and SAMA: elected
among “150 Best
Companies for You to
Work for” by Você S/A and
Exame magazines
Prize SESI for Quality in
Work (PSQT) 2012:
The units São Paulo, Rio
de Janeiro, Simões Filho,
Precon Goiás e Goiânia
were awarded by
Industry Social Service
(SESI) in different
categories
Eternit : “Highlights of Civil
Engineering Award” in
category building materials –
fiber cement roofing tile –
elected by the Minas Gerais
Institute of Engineering (IMEC)
Eternit : “ANAMACO
2012 Award” elected
in the fiber cement
roofing tiles category
as well as honorable
mention in the large
clients category of
the bathroom
chinaware segment
Eternit: elected “The 150 Best
in PGPs Resources
Management Practices” and
“Highlight in the Quality of
Life Dimension”, by Gestão e
RH magazine
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Eternit – An option for investment
ADR - Level I
ETNTY
Governance
Growth with
Dividends
Vision of Future
Case of Success
Brand
Brand
Watch the Eternit’s Institutional movie through this QR Code.
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Information
Este material foi produzido com
papeis certificados FSC (Forest
Stewardship Council), que é uma
garantia de que a matéria-prima
advém de uma floresta manejada de
forma ecologicamente correta,
socialmente e economicamente
viável.
www.blogdaeternit.com.br
www.eternit.com.br/ir
Élio A. Martins
Paula Dell Agnolo Barhum
Frederico Gomes Amaral
Rodrigo Lopes da Luz
Phone: (55-11) 3038-3818
(55-11) 3194-3881
(55-11) 3194-3872 @Eternit_RI
Dr. Fernandes Coelho Street, 85 – 8th floor
Pinheiros – São Paulo / SP
05423-040
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Eternit starts a new cycle
Welcome to the next
70 years