duratex - 3rd quarter 2005
DESCRIPTION
Presentation - 3rd Quarter 2005TRANSCRIPT
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www.duratex.com.brNovember / 2005
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Contents
Introduction
Highlights
Competitive vantages and competitors
Market positioning
Operating improvement
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Preferred Shareholders’ Structure
Duratex S.A. (Sep/2005)
Total Outstanding Shares: 59 million
Common 37%
Preferred 63%
Market Capitalization: R$ 1.531,7 M
Itaúsa24%
Pension Funds19%
Foreign Investors29%
Others28%
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Capital Markets and Corporate Governance
3/1/
2000
23/2
/200
0
17/4
/200
0
8/6/
2000
31/7
/200
0
20/9
/200
0
28/1
1/20
00
22/1
/200
1
16/3
/200
1
9/5/
2001
29/6
/200
1
21/8
/200
1
11/1
0/20
01
5/12
/200
1
31/1
/200
2
26/3
/200
2
17/5
/200
2
10/7
/200
2
29/8
/200
2
18/1
0/20
02
10/1
2/20
02
4/2/
2003
28/3
/200
3
22/5
/200
3
15/7
/200
3
3/9/
2003
23/1
0/20
03
12/1
2/20
03
6/2/
2004
31/3
/200
4
24/5
/200
4
15/7
/200
4
3/9/
2004
27/1
0/20
04
20/1
2/20
04
15/2
/200
5
7/4/
2005
31/5
/200
5
20/7
/200
5
9/9/
2005
1/11
/200
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Preço Volume
2000 2001 2002 2003 2004 2005
. Establishment of the IR Area;. Issuing of R$ 191M in new stock;. Release of the Company’s website.
. Platinum Award from ABAMEC.
. 80% Tag-Along rights for the PN stock.
. Quarterly release of the results via conference call.
25,35
11,40
. Termination of the Beneficiary Parts;. Establishment of a 30% minimum dividend;. Extraordinary dividend;. 2nd. Place on ABRASCA’s 5th Award for the best Annual Report.
. Adhesion to Bovespa’s Level I of Differentiated Practices of Corporate Governance;. Stock split in reverse.
Stock Price Traded Volume
52 weeks highest price: R$26,00 in 03/10/200552 weeks lowest price: R$18,00 in 11/07/2005Average daily volume: R$1,1 million
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Business Areas
WoodHardboard
Particle Board
MDF / HDF / SDF
Laminate Flooring
Wall and Ceiling panels
Metal Fittings
Vitreous China
Accessories
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Selling Mix
Net Revenues Breakdown Distribution Channel
VitreousChina10%
Laminate Flooring
6%
MDF / HDF / SDF22%
Particle Board16%
Hardboard24%
Metal Fittings22%
Civil Construction48%
Others20%
Furniture Makers32%
• Deca;• Skin door;• Laminate flooring;• Wall paneling;• Divisories.
• Packaging;• Automotive;• Retail.
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Contents
Introduction
Highlights
Competitive vantages and competitors
Positioning
Operating improvement
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Environment and Performance
Maintenance of the restrictive monetary policy with high interest rates and a strong Real that valued against the Dollar by 16% between Jan and Sep / 05
Climatic events
Reduction of the export income in Reais;Reduction of shipments:
Wood: - 4%;Deca: - 10%;Plant stoppage.
Flooding in Deca;Windstorm at one timberland area;Katrina hurricane.
Increase revenues;Cost reductions at Deca;Ongoing measures in both Deca and Wood;Improvement of both gross and EBITDA margins;Improvement of ROE and ROIC;New products; Improvement on cash generation and working capital management.
Deepening of actions targeting performance improvements
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Nine Months Performance (in R$M)
January to September
2005 2004 2003SHIPMENTSWood (in 1.000 m3) 765,1 793,0 652,6Deca (in 1.000 items) 9.435 10.444 9.829
2005 2004 2003NET REVENUES 940,3 883,4 710,4COGS 543,6 541,7 451,4GROSS INCOME 396,7 341,7 259,0% Gross Margin 42% 39% 36%OPERATING RESULT 210,2 184,4 115,6EBITDA 269,9 240,8 159,5% EBITDA Margin 29% 27% 22%NET INCOME 105,8 92,7 41,6ROE 14% 13% 6%
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Performance per Division (in R$M)
January to September / 2005
R$ M AV% R$ M AV% R$ M AV%Net Revenues 636,2 100% 304,1 100% 940,3 100%COGS (319,9) 50% (164,1) 54% (484,0) 51%Depreciation (43,7) 7% (15,9) 5% (59,6) 6%Gross Income 272,6 43% 124,1 41% 396,7 42%
EBITDA 9m05 195,6 31% 74,3 24% 269,9 29%EBITDA 9m04 193,6 32% 47,2 17% 240,8 27%EBITDA 9m03 118,9 25% 40,6 17% 159,5 22%
Wood Division Deca Division Consolidated
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Quarterly Performance (in R$M)
3Q05 2Q05 1Q05 3Q04ShipmentsWood (in 1,000 m³) 254,5 262,5 248,1 280,0Deca (in 1,000 items) 3.376 2.855 3.204 3.740
3Q05 2Q05 1Q05 3Q04Net Revenues 317,8 316,1 306,3 331,4COGS 190,4 179,5 173,6 189,6GROSS INCOME 127,4 136,6 132,7 141,9% Gross Margin 40,1% 43,2% 43,3% 42,8%OPERATING RESULT 62,4 75,7 72,1 80,3EBITDA 82,4 96,4 91,1 99,4% EBITDA Margin 25,9% 30,5% 29,7% 30,0%NET INCOME 33,1 32,6 40,1 43,6ROE (annualized) 13,4% 13,5% 16,9% 18,7%
(in R$ M)
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Return on Invested Capital (ROIC)
12,3%
10,2%9,0%
2003 2004 2005
* Setembro, 2005 annualized
*
+3,3 p.p.
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Performance (January to September)
923,7 993,5 1.035,4
41,6
92,7
105,86,0%
12,6%13,8%
2003 2004 2005
PL Lucro Líquido ROE anualizado
(in R$M)
Equity Net Income Annualized ROE
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Operating Cash Generation (in R$ M)
273,3
113,7
184,1
143,8159,3
2002 2003 2004 9m04 9m05
+ 140%CAGR:+7,5%
Operating Cash Generation = Net Income + Non Cash Expenses +/- Investment in Working Capital
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Accrual Dividends (in R$ M)
24,8
15,1
58,1
25,724,6
2002 2003 2004 9m04 9m05
+ 64,2%
CAGR:+53,7%
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EBITDA (R$M) & Margin (%)
118,9193,6 195,6
26%31%32%
2003 2004 2005
Wood
Gain of scale with the start-up of a new MDF / HDF / SDF plant in Botucatu (SP);Installation of new coating lines;Cost reduction as the result of the verticalization of processes;Price recovery.
January to September
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40,6 47,274,3
17% 17%24%
2003 2004 2005
Cost and operating expenses savings;Automation of important productive processes;Adjustment of the product portfolio;Price recovery.
EBITDA (R$M) & Margin (%)
January to September
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EBITDA (R$M) & Margin (%)
83,757,0 64,4 74,0
57,2
36,4%
28,0%31,5% 33,6%
27,1%
3Q04 4Q04 1Q05 2Q05 3Q05
15,7 13,626,7 22,4 25,2
23,6%23,4%26,3%
13,5%15,4%
3Q04 4Q04 1Q05 2Q05 3Q05
Madeira
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Contents
Introduction
Highlights
Competitive vantages and competitors
Positioning
Operating result
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Competitive Advantage - Location
Wood Division plants
90.000 ha of timberland
Deca Division plants
São Leopoldo (V. China)
São Paulo (Metal Fittings)Jundiaí (Hardboard, Metal Fittings and V. China)Itapetininga (Particle Board)Botucatu (MDF/HDF/SDF and Hardboard)Agudos (MDF and Laminate Flooring)
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Competitive Advantages
Timberland self-sufficiency;
Production scale;
Leadership Market Share;
Broad product line;
Own coating lines (painting, FF e LP);
Ability to customize products (finishing and dimension);
Environment awareness ISO 14.001 and “Green Label”.
Wood
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Competitive Advantage - Timberland
High degree of mechanizationCost Reductions
90 thousand hectaresSelf-sufficiency
FSC – Forest Stewardship Council
ISO 14.001
Environment sustainability
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Panel Making Players
SDF Laminate Flooring
Wall Paneling
Plain Painted Plain LP FF Plain LP FF
Duratex
Berneck
Eucatex
Isdra
Masisa
Arauco
Satipel
Tafisa
Hardboard Particle Board MDF/HDF
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Competitive Advantage
Well known brands Deca e Hydra;
Reference in design and quality;
Market leadership with a stronger presence in higher end segments of
luxury and super-luxury products lifestyle;
Active policy of developing new products;
Countrywide presence;
Marketing;
Well regarded technical assistance network.
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Competitive Advantage – Release of New Products
Squared Showerhead
Chromotherapy showerhead Stick Line
Sink L107
lavatory
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Metal Fittings and Vitreous China Market
Metal Fittings:
Deca’s estimated market share: 38%
Main players:
Docol;
Fabrimar.
Vitreous China:
Deca’s estimated market share: 18%
Main players:
Roca;
Icasa;
Ideal Standard;
Hervy.
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Contents
Introduction
Highlights
Competitive advantages and competitors
Positioning
Operating improvement
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47,241,8
57,5
46,541,5
2002 2003 2004 9m04 9m05
+ 12,9%CAGR:+17,7%
Exports (in US$ M)
Average increase by 13% in hardboard prices;Increase of vitreous china exports by 39%, to 240 thousand items.
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Hardboard71% MDF/HDF/
SDF14%
Wood91%
Deca9%
Flooring 2%
Vitreous China
7%Metal
Fittings2%
InterD+ 4%
United States 52%Europe 19%Asia and Middle East 7%South / Central Americas 14%Other 8%
Main Markets:
Exports
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544,6
52,8
242,2
114,4
50,8
146,3
61,8
Total Debt 2005 2006 2007 2008 2009 &Beyond
Debt and Amortization Schedule(in R$M)
ForeignCurrency
DomesticCurrency
Cash R$ 218,3 M Net Debt R$ 388,2 M
Net Debt / Equity 37,5%Net Debt / EBITDA* 1,08* EBITDA Annualized
606,5 Amortization ScheduleAmortization Schedule
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Nominal Capacity & Occupancy Rate
68%
94%
70%
72%
69%
Vitreous China
Metal Fittings
MDF/HDF/SDF
Particle Board
Hardboard
4.200 K ** items/year
4.200 K ** items/year
500.000 m3/year500.000 m3/year
360.000 m3/year360.000 m3/year
14.400 K items/year14.400 K
items/year
JAN JAN –– SEP / 2005SEP / 2005
640.000 m3/year640.000 m3/year
* over the operating capacity of 3.800 K items / year** nominal capacity of the existent kilns
*
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165181
190 199 200194
185188 186 185
200 210220
217220 225
268306
349 357311
340
223
25%24%
26%
27% 27%26%
23%
24%24%
23%
25%24% 24%
23% 23% 23%
22%
24%
26% 26%
28% 28%
27%
EBITDA 12 months (in R$M) EBITDA Margin (%)
Strategic Positioning
2000 2002 2003 2004 20052001
. New ParticleBoard line in (Itapetininga, SP).
. Expansion of vitreous china capacity(Jundiaí, SP).
. New coatingline(Itapetininga, SP);. Aquisition of 4.400 ha of timberland.
. New line of panels(Botucatu, SP);. Unification of the vitreous china production(Jundiaí, SP);. Aquisition of 6.400 ha of timberland.
. New Low Pressure coating line(Botucatu, SP);. Aquisition of 4.100 ha of timberland.
. Improvementsin the paintingline(Botucatu,SP);. Aquisition of complementary equipment for the Botucatu, SP plant.
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Contents
Introduction
Highlights
Competitive vantages and competitors
Positioning
Operating Improvement
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Internal Committees
Corporative Intelligence
Risks and Ethics
Corporate Governance
Talent Management
Operating Excellence
Commercial Excellence
Objective: spread the best practices among all industries belonging to the Itaúsa Group as to promote the capture of synergies allowing more value build-up.
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Ongoing Actions
WoodIntroduction of a computing management system for freight and
revision of the shipment logistics that should generate annual cost
savings of R$ 6M;
Launching of the Eco Panel in 2006, that should promote cost
savings of about 15%;
Introduction of mesures aiming:
increase the painting line speed by 60%;
economies related to the receiving process of resins.
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Ongoing Actions
Effective cost and expense reduction:
industrial: R$ 6M / year;
commercial: R$ 9M / year;
personnel: 147
Further cost reductions to be implemented:
reviewing of processes: R$ 5M / year.
Vitreous China export contract (OEM):
sales increase: US$ 10M per year until 2007.
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Average Interest Rate (SELIC)
1,95%
5,70%
-8,60%
-2,50%-2,60%
2,10%
14,5%
18,0%19,4%
16,4%
23,1%19,5%
17,6%17,5%
2000 2001 2002 2003 2004 Sep/05 Dec/05 2006
GDP Civil Construction Average Interest Rate
* Estimated interest rate by the end of the years 2005 and 2006: estimates from Itaú and Santander research team.
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Civil Construction – Success Cases *
SPAIN
CHILE
MEXICO
INTEREST RATES REAL ESTATE FINANCING
Reduction of Interest Rates: 1990 to 2001: from 15% to 5% pyNow: 2,40%py
Reduction of Interest Rates:2001 to 2004: from 12% to 7% pyNow: 7% py
Extension of terms and introduction of finance incentives
Real Estate Financing:Terms from 3 to 12 years at an approximate interest rate of 6,9% to 10,0% py.
Mortgage lending:Dec / 1997: US$ 7,2 bn;May / 2005: US$ 13,7 bn.
Real Estate Financing:Terms from 15 to 30 years at an approximate interest rate of 13% py.Since 2002, the financing volume grows on average by 30% py.
* Source: CSFB LATAM Banks, Housing & Construction Report de 26/Aug/2005, Bloomberg and Infonavit Website at www.infonavit.gob.mx
REAL ESTATE
Average growth of the mortgage lending by 21,6% between the years of 1991 e 2001
Number of new homes grew from 3,3 M to 4.1 M between 1992 and 2002.
Infonavit’s number of financing contracts:1998: 108 thousand;2004: 306 thousand;Up to Sep 2005: 248 th. (goal for the year: 375 th.)
Reduction of Interest Rates: 1998 to 2002: from 30% to 8,2% pyNow: 8,90%py
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Civil Construction Positive Scenario
15,7%
2,1% 0,1%
Chile Mexico Brasil
Mortgage Lending as a % of 2004 GDP *(only private financing)
* Source: CSFB LATAM Banks, Housing & Construction Report de 26/Aug/2005
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Take Aways
Strong competitive advantages;
Leadership in the performing areas;
Committed with cost cutting actions;
Improvement in corporate governance practices.
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Important
This presentation material was based on the available results and DURATEX does not compromise itself in updating it after this date. DURATEX is not to be held responsible for individuals’ investing decisions in the Company’s securities based in this present material. Expressions and terms that address future expectations and projections are subject to a high degree of uncertainty; thus, DURATEX is not responsible for its effective accomplishment.
11/08/2005
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www.duratex.com.br08 / November / 2005