net sales revenue of r$ 1,222.8 million and net income of ... · results for the second quarter of...
TRANSCRIPT
1
São Paulo, August 13, 2009 – Fertilizantes Heringer (Bovespa: FHER3) announces today its
results for the second quarter of 2009.
2Q09 HIGHLIGHTS
Net sales revenue of R$ 1,222.8 million and net income
of R$ 64.9 million in 1H09
� Net sales revenue of R$ 582.3 million in 2Q09 and R$ 1,222.8 million in 1H09;
� Gross income of R$ 20.1 million in 2Q09 and R$ 63.3 million in 1H09;
� EBITDA of (R$ 16.1 million) in 2Q09 and (R$ 4.6 million) in 1H09;
� Net income of R$ 60.1 million in 2Q09 and R$ 64.9 million in 1H09;
� Market share increases from 12.3% in 2Q08 to 14.6% in 2Q09 and from 13.1%
in 1H08 to 15.4% in 1H09;
� Client base expands by 21.9% in 2Q09 and 13.9% in 1H09;
� Fertilizer delivery volumes down 15.7% in 2Q09 and 13.4% in 1H09;
� Specialty products sales volume increases 12.9% in 2Q09 and 9.7% in 1H09,
representing 31% of total volume in 2Q09 and 26% in 1H09.
Portuguese
12 pm BR (11 am U.S. ET)
Phone: +55 (11) 2188-0188
Code: Fertilizantes Heringer
English
12 pm BR (11 am U.S. ET)
Phone: +1 (646) 843-6054
Code: Fertilizantes Heringer
Investor Relations
Phone: +55 (19) 3322-2292
Investor Relations Website:
www.heringer.com.br/ir
2Q09 Conference Call - August 14, 2009
2
Brazilian Fertilizer Market - Deliveries
Brazilian fertilizer market contracted by 28.9% in 2Q09 when compared to 2Q08, with 4.3
million metric tons delivered in the period, compared with 6.1 million in the same quarter a
year ago.
In 1H09, this market contracted by 26.5% on the same six-month period of 2008. However, the
Company's deliveries contracted less than the market, by 13.4%.
In 2007, deliveries totaled 24.6 million metric tons, with seasonality resulting in 38% in the first
half of the year and 62% in the second half, in line with the seasonality expected for 2009. In a
comparison of 1H09 with 1H07, deliveries declined by 10%, from 9.39 million metric tons to
8.45 million metric tons. In the same comparison period, Heringer’s deliveries increased by
9.1%.
Source: Anda
Quarter Half Year
2Q06 2Q07 2Q08 2Q09
2,617
4,7916,057
4,305
(in
th
ou
san
d o
f m
etr
ic t
on
s)
+83.1%
-28.9%+26.4%
1H06 1H07 1H08 1H09
5,802
9,39211,500
8,455
-26.5%
(in
tho
usa
nd
of
me
tric
to
ns)
+61.9%
+22.4%
3
Brazilian Fertilizer Market – Local Production
In 2Q09, Brazilian production fell by 15.6% when compared to 2Q08, from 2.4 million metric
tons in 2Q08 to 2.0 million metric tons in 2Q09.
In 1H09, Brazilian fertilizer output decreased by 21.2%, from 4.7 million metric tons in 1H08 to
3.7 million metric tons in 1H09.
The decrease in the production in the Brazilian fertilizer market was due to the higher level of
ending inventories at the close of 2008, which sought to adjust market supply to the level of
demand.
Source: Anda
Quarter Half Year
2Q06 2Q07 2Q08 2Q09
2,139 2,360 2,480 2,093
(in
th
ou
san
d o
f m
etr
ic t
on
s)
+10.3% -15.6%+5.1%
1H06 1H07 1H08 1H09
4,003 4,486 4,7093,712
+12.1% -21.2%+5.0%
(in
th
ou
san
d o
f m
etr
ic t
on
s)
4
Brazilian Fertilizer Market – Imports
Imports by Brazilian fertilizer market declined by 42.9% in the 2Q09, from 4.4 million metric
tons in 2Q08 to 2.5 million metric tons in 2Q09.
In the 1H09, Brazilian fertilizer imports fell 61.1%, from 8.6 million metric tons in 1H08 to 3.3
million metric tons in 1H09.
The decrease in the imports in the Brazilian fertilizer market was the reflection of the high
level of fertilizer inventories in the country at the close of 2008. From August 2008, Brazilian
agribusiness companies felt the effects of the global crisis, which generated strong impacts on
the industry's main variables, such as: agricultural commodities, international fertilizer raw
material prices, foreign barter rates and credit conditions. Projections for 2008 called for
delivery volumes above the 24.6 million metric tons registered in 2007. However, the 2008
closed with total deliveries of 22.4 million metric tons. The high ending inventories in 2008
pressured industry margins in the 1H09.
Source: Anda
Quarter Half Year
2Q06 2Q07 2Q08 2Q09
2,302
4,170 4,476
2,557
+81.1%-42.9%
(in
th
ou
san
d o
f m
etr
ic t
on
s)
+7.3%
1H06 1H07 1H08 1H09
4,036
7,6288,639
3,359
+89.0%-61.1%
+13.3%
(in
tho
usa
nd
of
me
tric
to
ns)
5
Brazilian Fertilizer Market – Inventories
During the 1H09, adjustments in inventory levels were observed, impacted by both the lower
domestic production as well as the reduction in imports. On December 31, 2008, inventories
stood at 6.4 million metric tons, falling to 5.1 million metric tons on June 30, 2009. Even when
compared with inventories on June 30, 2008, which stood at 6.2 million metric tons, the
decline was of 17.7%.
Source: Anda
0
1
2
3
4
5
6
7
8
9
10
4,4
6,2 6,45,1
(in
mil
lio
no
f m
etr
ic t
on
s)
DEC/07 JUN/08 DEC/08 JUN/09
-17.7%
6
Heringer’s Sales and Distribution by Crop
In 2Q09, Heringer’s delivery volume was 627.4 thousand metric tons, down 15.7% from 744.4
thousand metric tons in 2Q08. In 1H09, delivery volume was 1,300 thousand metric tons, a
13.4% decrease from 1,501 thousand metric tons in 1H08.
Since 2008 was completely atypical in terms of the historical seasonality of sales, with an
intense trend of anticipating sales in the first half of the year, a comparison between 2009 and
2007 is more appropriate. Therefore, the Company’s deliveries increased by 3.1% in 2Q09 in
relation to 2Q07, and by 9.1% in 1H09 compared with 1H07.
Note also the continuous decline in fertilizer consumption for sugarcane in the first six months
of 2007 and 2009, given the slower pace of expansion into new sugarcane planted area.
However, for the second half of 2009, we expect a recovery in fertilizer consumption, in view
of the better outlook for the industry.
The contraction in fertilizer consumption for reforestation observed in 1H09 was driven by the
global economic crisis. It is expected the fertilizer consumption to return to historical levels
due to the better prospects for the sector.
A highlight is for the continuous expansion in Heringer’s share of sales for other crops, which
increased from 262.3 thousand metric tons in 1H07 to 346.8 thousand metric tons in 2008 and
353.7 thousand metric tons in 2009. This diversity helps to mitigate the volatility associated
with crop prices.
Heringer’s national footprint also helps to mitigate any problems associated with weather,
pests and disease that can affect certain regions.
Soybean Corn Coffee Reforest Others Sugarcane
Quarter Half Year
Market
-26.5%
Market
-28.9%
2Q07 2Q08 2Q09
196,3 160,8 146,2
113,2 172,6 162,3
55,560,2
36,838,8
38,048,3
49,6105,6
61,4
155,0
207,2
172,4
+22.4% -15.7%
Σ 627
Σ 744
Σ 608
(in
th
ou
san
d o
f m
etr
ic t
on
s)
50
250
450
650
850
1050
1250
1450
1H07 1H08 1H09
344,3 292,5 223,5
262,3 346,8353,7
92,7114,4
77,4
161,8195,1
210,8
163,4
287,6236,2
167,3
264,6
198,0
Σ 1,501
Σ 1,300Σ 1,192
+25.4%-13.4%
(in
th
ou
san
d o
f m
etr
ic t
on
s)
7
Client Base and Market Share
The Company registered strong growth in its customer base, which surpassed 38.7 thousand of
clients in the last 12 months.
In 2Q09, the number of clients increased 21.9%, from 6.5 thousand in 2Q08 to 7.9 thousand in
2Q09. In 1H09, the number of clients grew by 13.9%, from 16.9 thousand in 1H08 to 19.2
thousand in 1H09.
The Company held market share of 14.6% in 2Q09 and 15.4% in 1H09.
The strengthening of the client base is an important factor for supporting the Company’s
sustainable growth in the coming years.
Number of Clients - Quarter Number of Clients – Half Year
Market Share
0
2,000
4,000
6,000
8,000
10,000
12,000
2Q07 2Q08 2Q09
5,0556,548
7,981
21.9%
29.5%
0
5,000
10,000
15,000
20,000
25,000
30,000
1H07 1H08 1H09
13,18716,932 19,279
13.9%
28.4%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
1H07
12.7%
1H08
13.1%
1H09
15.4%
2Q07
12.7%
2Q08
12.3%
2Q09
14.6%
8
Specialty Products
Specialty products contributes importantly to the Company’s margins and also in terms of
customer loyalty.
The share of Specialty products in the sales mix increased from 23% in 2Q08 to 31% in 2Q09. In
1H09, this share increased by 5.0 percentage points, from 21% in 1H08 to 26% in 1H09.
Specialty products registered sales volume in 2Q09 of 192 thousand metric tons, increasing by
12.9% from 170 thousand metric tons in 2Q08. In 1H09, this volume was 339 thousand metric
tons, 9.7% higher than the 309 thousand metric tons in 1H08.
26%21%23%
74%79%69%77%
31%
Specialty Products Specialty Products Mix
Conventional Specialty
2Q08 2Q09 1H08 1H09
574 435
1,192961
170 192
309
339Σ 744
Σ 627-15.7%
+12.9%
-24.2%
-13.4%
+ 9.7%
-19.4 %
Σ 1,501
Σ 1,300
9
FINANCIAL RESULTS
Income Statement - 2Q09 and 1H09 (R$ million)
1H09 % NR 1H08 % NR ∆ % 09/08 1H07 % NR 2Q09 % NR 2Q08 % NR∆ %
09/08
Gross Revenue 1,250,311 1,495,680 773,697 596,347 821,491
Net Revenue 1,222,781 100.0% 1,449,988 100.0% -15.7% 756,392 100.0% 582,312 100.0% 789,361 100.0% -26.2%
COGS (1,159,477) -94.8% (1,237,300) -85.3% (653,111) -86.3% (562,180) -96.5% (657,631) -83.3%
Gross Profit 63,303 5.2% 212,688 14.7% -70.2% 103,281 13.7% 20,132 3.5% 131,730 16.7% -84.7%
SG&A (99,152) -8.1% (103,659) -7.1% -4.3% (73,312) -9.7% (50,867) -8.7% (57,184) -7.2% -11.0%
EBITDA (4,647) -0.4% 122,384 8.4% -103.8% 25,319 3.3% (16,097) -2.8% 81,862 10.4% -119.7%
Net Fin. Income/(Exp.) 123,003 10.1% 26,898 1.9% 26,847 3.5% 116,440 20.0% 30,908 3.9%
Net Income/(Loss) 64,940 5.3% 96,962 6.7% -33.0% 32,469 4.3% 60,071 10.3% 73,848 9.4% -18.7%
In 2Q09, net revenue was R$ 582.3 million, 26.2% lower than in 2Q08, due to the 11.6%
decrease in delivery volume and the 16.5% drop in the average sales price in relation to 2Q08.
In 2Q09, gross income was R$20.1 million, down 84.7% from R$131.7 million in 2Q08. Gross
margin in 2Q09 was 3.5%, below the gross margin of 16.7% in 2Q08.
SG&A expenses in 2Q09 corresponded to 8.7% of net revenue, up from 7.2% in 2Q08,
impacted primarily by lower revenue. However, the R$ 50.8 million in SG&A expenses in 2Q09
was 11% lower than the SG&A expenses in 2Q08 of R$ 57.2 million.
EBITDA in 2Q09 was (R$ 16.0 million), versus R$ 81.8 million in 2Q08.
In 2Q09, net financial income/(expenses) was R$ 116.4 million, impacted by the appreciation
in the Brazilian real against the U.S. dollar in the period. As a result, net income in 2Q09 was R$
60.1 million, equivalent to 10.3% of net revenue, though down 18.7% from the net income of
R$ 73.8 million in 2Q08.
In 1H09, net revenue was R$ 1,222.8 million, 15.7% lower than in 1H08. The decline was due
to the 10.5% decrease in delivery volume and the 5.8% drop in the average sales price in
relation to 1H08. Gross income in 1H09 was R$ 63.3 million, for gross margin of 5.2%, below
the margin of 14.7% in 1H08. SG&A expenses in 1H09 were 4.3% lower than in 1H08.
EBITDA was (R$ 4.6 million) in 1H09, compared with R$ 122.4 million in 1H08.
In 1H09, net income was R$ 64.9 million, representing net margin of 5.3%.
A clear return to historical seasonality has been observed, combined with lower international
fertilizer raw material prices and a stronger Brazilian real. The decrease in gross and EBITDA
margins was fueled by the prices practiced in this period in a market with still high levels of
supply, combined with the declines in international fertilizer raw material prices.
10
Although net income in 1H09 was lower than in 1H08, it was much higher than in 1H07, a
period in which seasonality was very similar to this year.
11
Working Capital
Heringer’s working capital reflects the seasonality of its business. Therefore, comparisons
between same quarters of the year provide a clearer understanding of working capital.
The Company maintains a strict credit policy aimed at keeping accounts receivable days at low
levels, thereby reducing default risk. Accounts receivable days stood at 39 days in 2Q09, in line
with the 34 days registered in 2Q08.
Inventory days stood at 67 days in 2Q09, down substantially from 110 days in 2Q08.
Accounts payable days closed 2Q09 at 198 days, up from 147 days in 2Q08, but lower than the
214 days in 1Q09. Heringer believes it is well positioned to continue its financing operations
for the acquisition of fertilizer raw materials.
Working Capital Days
-12 -2 -18 -26 -22 2 1 10 0 -3 -21 -59 -110 -92
77
90
52
35
54
52
39 3444
34 35 34
4939
39
92
63
19
51
76
60 59 60
110 106
4355
67
128
184
133
80
127 126
98
83
104
147
162
135
214
198
1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09
Accounts Receivable Days Inventories Days Accounts Payable Days
12
Cash Flow (R$ million)
2Q09 1H09
NET INCOME 60,071 64,940
Non cash flow impact expenses (revenues) 57,530 1,534
Assets reduction (increase) (5,944) 109,278
Liabilities increase (reduction) (157,214) (216,080)
Operational Activities cash flow (45,557) (40,328)
Investing Activities cash flow (21,140) (23,273)
Financing Activities cash flow (1,251) 9,992
Net Increase (Decrease) In Cash (67,948) (53,609)
Net Increase (Decrease) In Cash
Initial Cash 265,149 250,810
Ending Cash 197,201 197,201
Net Increase (Decrease) In Cash (67,948) (53,609)
The Company’s cash generation was negative R$ 53.6 million. Cash at the start of the period
(December 31, 2008) was R$ 250.8 million and cash at the end of the period (June 30, 2009)
was R$197.2 million. Below are the main components of cash generation that led to the R$
53.6 million amount:
A) Expenses (revenues) that did not affect cash in the net amount of R$ 1.5 million, composed
basically of the depreciation incurred in the period, deferred income tax and social
contribution tax, reversal of the inventory adjustment provision in December of 2008 and
other amounts.
B) Reduction in assets in the net amount of R$ 109.3 million, due to the reduction in accounts
receivable of R$ 85.8 million, net inventory movements of R$ 26.8 million and other amounts.
C) Reduction in liabilities in the net amount of R$ 216.1 million. This amount resulted from the
increase in the local suppliers account of R$ 139.2 million, net reduction in accounts payable to
international suppliers and Finimp operations with banks of R$ 406.7 million, since in the
period we carried out new import and Finimp operations of R$ 501 million and paid a total of
R$ 907 million, including foreign barter variation, and the increase in advances to clients of R$
51.5 million.
D) Capital expenditure in the net amount of R$ 23.3 million.
E) Net flow from financing operations of R$ 10 million.
The Company believes that its current cash position is adequate for its cash requirements.
13
FINANCIAL RESULTS - SUBSIDIARY
Lógica Transportes S.A., a wholly owned subsidiary of Fertilizantes Heringer S.A., launched its
transport operations in January 2009, and registered the following results in 1H09:
In thousand of
Reais
Gross services revenue 3,345
Taxes and other services deductions (480)
Net Services revenue 2,865
Cost of services rendered (2,724)
Gross profit 141
Operational expenses (282)
Selling expenses (120)
General and Administrative expenses (155)
Financial expenses, net (7)
Operating loss (141)
Deferred Income tax and social contribution 48
Net loss (93)
14
Heringer Ownership Breakdown
Heringer figures among the 100 most liquid stocks on the Bovespa and is a component of the
stock indexes IBRX, INDX, IGC, SMLL and ITAG.
Foreign investors held 67.0% of the free-float in June 2008, with this figure declining to 48.0%
in June 2009, with the share of Brazilian investors in the free-float increasing from 33.0% in
June 2008 to 52.0% in June 2009.
During the 2Q09, the controlling group of shareholders increased its interest in the Company's
capital from 62.0% to 67.6%.
Ownership Breakdown and Free-Float Foreign and Brazilian in the Free-Float
Controlling
Group
67.6%
Free-Float
32.4%
67%
55%
49%43%
47% 44%48%
33%
45%
51%
57%53%
59%
52%
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
0%
10%
20%
30%
40%
50%
60%
70%
80%
jun-08 aug-08 oct-08 dec-08 feb-09 apr-09 jun-09
% Foreign % Brazilian
No. Foreign No. Brazilian
15
FHER3
As of July 31, 2009, the Company’s stock (FHER3) had registered a year-to-date gain of 186%.
Average daily trading volume was R$ 1,885,654 and the average daily number of trades was
326.
In 2008, the impacts from the global crisis led to strong net outflows by foreign investors to
cover positions outside of Brazil, exerting strong pressure on the Company’s stock price.
The excellent recovery in the Company's stock in 2009 was due to, among other factors, the
return of international investors to Brazilian stock markets, especially to small caps stocks like
that of the Company, strengthening the local economy and improving the prospects for the
country's agribusiness industry in 2009.
9.03
7.40
3.05
4.76
3.39
5.35
4.25
2.75 3.51
5.01
6.96
6.72
10.21 9.40
(in
bra
zili
an
re
ais
)
� MARKET CAP OF
R$ 494.9 MILLION
� MARKET CAP OF
R$ 170.1 MILLION
OCT/08 DEC/08 FEB/09 APR/09 JUN/09 JUL/09
16
2009 Outlook
Raw Material Prices
In June 2009, fertilizer raw material prices were significantly lower than in June 2008. The
current level of prices bodes well for the agribusiness industry in 2009, since it generates a
better barter ratio for fertilizers versus agricultural products. Lower raw material prices also
encourage the general market to increase its use of technology, seeking higher yields per
hectare and consequently higher revenues. As of June 2009, the volatility in raw material
prices should tend to decrease in relation to previous months.
Prices in USD. Source: The Market Magazine
0
200
400
600
800
1000
1200
1400
Oct-06 Dec-06 Feb-07 Apr-07 Jun-07 Aug-07 Oct-07 Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 Jun-09
MAP/DAP - CFR TSP-CFR KCL in Bulk - CFR
Urea in Bulk - CFR Ammonium Nitrate - FOB Ammonium Sulphate - CFR
17
Agricultural products barter ratio versus fertilizers
The barter ratio of the main Brazilian crops that is important for fertilizer consumption,
presented significant improvement. In October 2008, to acquire one metric ton of fertilizers,
47.2 bags of soybean were required, however in July 2009 this number stood at 21.8 bags.
For corn, the barter ratio reached 102.2 bags per metric ton of fertilizers in October 2008.
However, in July 2009, this number had fallen to 52.4 bags.
In October 2008, 53.5 metric tons of sugarcane were required for one metric ton of fertilizer,
with this figure falling to 28.1 metric tons in July 2009.
The barter ratio of Arabica coffee in October 2008 was 6.3 bags per metric ton of fertilizer,
versus 3.6 bags in July 2009.
Source and Projetion: Agroconsult / * PR = Parana / SP = Sao Paulo / BR = Brazil
17.618.9
33.8
20.5
PROJECTION
29.333.0
50.6 49.2 PROJECTION
Soybean R$/bag (60kg/PR*) Corn R$/bag (60kg/SP*)
Sugarcane R$/bag (50kg/SP*) Coffee Arabica R$/bag (60kg/BR*)
PROJECTION
47.8
23.6
36.7
48.4
PROJECTION
291.5
238.6
283.8
246.7
Source: Agroconsult
23.219.2
47.2
21.8
64.1
43.6
102.2
52.4
Soybean PR (bag/60kg) Corn PR (bag/60kg)
Sugarcane SP (t) Coffee R$/bag (BR)
27.0
14.8
53.5
28.1
Coffee Arabica (bag/60kg)
Cof fee Robusta(bag/60kg)
4.8
2.6
6.6
4.4
3.3 3.6
6.3
4.1
18
Agricultural crop Financing for the 2009/10 marketing year
Through the Ministry of Agriculture, in May 2009, Brazil's federal government announced
funding of R$ 92.5 billion for commercial agriculture, 42% more than the previous harvest. For
grains, trading houses should increase slightly their share of financing in the 2009/10
marketing year. And lastly, the use of own funds by producers should tend to remain at high
levels. For soybean, an increase in own resources was observed between the 2007/08
marketing year and the 2009/10 marketing year, in line with estimates.
SOYBEAN - 2008/09* Marketing Year SOYBEAN - 2009/10* Marketing Year
* Agroconsult Estimate
SOYBEAN - 2007/08* Marketing Year
Own Capital
18%
Seeds
2%
Banks
31%
Trading
32%
Agrochemical
12%
Fertilizers
5%Own Capital
39% Seeds
2%
Banks
27%Trading
17%
Agrochemical
12%
Fertilizers
3% Own Capital
35%
Seeds
2%
Banks
30%Trading
19%
Agrochemical
12%
Fertilizers
2%
19
Fundamentals of Agricultural Commodity Demand
World grain stocks are at low levels, with consumption in line with output. Per-capita income
in emerging countries has risen significantly in recent years, which, combined with world
population growth, has been generating inertial demand for food.
Grain Production and Consumption in the World Grain Stock-to-Use Ratio in the World (%)
1,500
1,600
1,700
1,800
1,900
2,000
2,100
2,200
2,300
Mil
lio
n t
on
s
Output Consumption
5%
10%
15%
20%
25%
30%
35% 115 inventory days
76 inventory days
Source: USDA/ Agroconsult
20
Planted Area and Brazilian Fertilizer Market
The planted area in the 2009/10 marketing year is estimated to expand by 0.5%. The
Company’s estimate for the Brazilian fertilizer market in 2009 is 23 million metric tons, which
would represent a 2.5% increase in relation to 2008.
Grain Production Planted Area Brazilian Fertilizer Market
Source: CONAB ; IBGE ; IEA-SP; SEAB-PR; EMATER-RS; Agroconsult / * Agroconsult Projection / Company’s Estimate
131,427143,859
133,371
146,757
46,051 47,376 47,656 47,908
2007/2008 2008/2009* 2009/2010*(in
tho
usa
nd
of
ton
ne
s a
nd
of
he
cta
res)
2006/2007
20,982
24,609
22,429
23,000
21
APPENDIX I – BALANCE SHEET
Fertilizantes Heringer S.A.(In thousand of Reais)
ASSETS Jun-09 Mar-09 Dec-08 LIABILITIES & SHAREHOLDERS' EQUITY Jun-09 Mar-09 Dec-08
Current Assets Current Liabilities
Cash and Banks 24,308 21,087 21,672 Suppliers: 731,598 748,095 846,650
Financial Investments 172,893 244,061 229,138 Local 242,030 152,903 50,848
Accounts Receivable 255,445 356,268 352,375 Foreign 489,568 595,192 795,802
Inventories 560,517 455,609 533,887 Loans and Financing 504,780 692,333 644,823
Taxes Recoverable 197,325 200,038 186,726 Salaries and social charges 11,934 9,181 8,482
Deferred Taxes 29,119 40,051 40,254 Taxes payable 2,154 891 2,443
Related Parties 126 3 0 Deferred taxes 8,069 6,305 2,118
Other Current Assets 50,883 64,421 52,445 Advances received from customers 141,373 88,799 64,779
1,290,616 1,381,538 1,416,497 Interest on shareholders' equity 0 0 626
Other current liabilities 49,261 50,121 72,638
1,449,169 1,595,725 1,642,559
Non-current assets Long term liabilities
Accounts Receivable 411 411 426 Loans and financing 7,955 8,922 9,775
Permanent Assets Accounts Receivable 0 0 0 Provision for contingencies 2,016 2,068 1,976
Taxes Recoverable 3,071 4,203 4,381 Taxes payable 10 10 16
Deferred Taxes 97,877 103,148 102,340 Unearned Investment subsidy 0 0 0
Judicial Deposits 8,711 8,632 8,616 9,981 11,000 11,767
Properties held for sale 14,006 14,585 13,330
Other Credits 1,706 1,803 2,856 Shareholders' Equity
Long Term Assets 125,782 132,781 131,949 Capital 448,746 448,746 448,746
Capital Reserves 14,110 7,999 0
Investments 433 498 526 Net Income 64,941 4,869 0
Property, plant and equipment 338,904 329,652 338,679 Equity appraisal adjustment 0 0 0
Intangible 5,613 4,382 3,934 Retained Earnings -225,599 -219,487 -211,488
470,732 467,314 475,088 302,198 242,127 237,258
Total ASSETS 1,761,348 1,848,852 1,891,585 Total LIABILITIES & SHAREHOLDERS' EQUITY 1,761,348 1,848,852 1,891,585
22
APPENDIX II – 2Q09 INCOME STATEMENT
Fertilizantes Heringer S.A.
(In thousand of Reais) 2Q08 %NR 2Q09 %NR 2Q09 x 2Q08
Sales Gross revenue 821,491 596,347 -27.4%
Taxes and other deductions (32,130) (14,035) -56.3%
Sales Net revenue 789,361 100.0% 582,312 100.0% -26.2%
Cost of goods sold (657,631) -83.3% (562,180) -96.5% -14.5%
Gross profit 131,730 16.7% 20,132 3.5% -84.7%
Operational (expenses) revenues (53,582) -6.8% (45,956) -7.9% -14.2%
Selling expenses (39,720) -5.0% (38,132) -6.5% -4.0%
General and Administrative expenses (10,606) -1.3% (12,735) -2.2% 20.1%
Employees Profit sharing (6,859) -0.9% 0 0.0% -100.0%
Other operational (expenses) revenues, net 3,602 0.5% 4,911 0.8% 36.3%
Operating profit (loss) before financial results 78,148 9.9% (25,824) -4.4% -133.0%
Financial (expenses) Income 30,908 3.9% 116,440 20.0% 276.7%
Financial Income 84,826 10.7% 198,672 34.1% 134.2%
Financial expenses (53,918) -6.8% (82,232) -14.1% 52.5%
Operating profit (loss) 109,056 13.8% 90,616 15.6% -16.9%
Income tax and social contribution (35,208) -4.5% (30,545) -5.2% -13.2%
For the period (41,158) -5.2% (12,578) -2.2% -69.4%
Deferred 5,950 0.8% (17,967) -3.1% -402.0%
Net income (loss) 73,848 9.4% 60,071 10.3% -18.7%
EBITDA 81,862 10.4% (16,097) -2.8% -119.7%
Income (loss) before financial results and taxes 78,148 9.9% (25,824) -4.4% -133.0%
Depreciation and Amortization 3,713 0.5% 9,727 1.7% 162.0%
23
APPENDIX III – 1H09 INCOME STATEMENT
Fertilizantes Heringer S.A.
(In thousand of Reais) 1H08 %NR 1H09 %NR 1H09 x 1H08
Sales Gross revenue 1,495,680 1,250,311 -16.4%
Taxes and other deductions (45,692) (27,531) -39.7%
Sales Net revenue 1,449,988 100.0% 1,222,781 100.0% -15.7%
Cost of goods sold (1,237,300) -85.3% (1,159,477) -94.8% -6.3%
Gross profit 212,688 14.7% 63,303 5.2% -70.2%
Operational (expenses) revenues (97,356) -6.7% (87,240) -7.1% -10.4%
Selling expenses (75,129) -5.2% (75,123) -6.1% 0.0%
General and Administrative expenses (20,080) -1.4% (24,028) -2.0% 19.7%
Employees Profit sharing (8,449) -0.6% 0 0.0% -100.0%
Other operational (expenses) revenues, net 6,303 0.4% 11,912 1.0% 89.0%
Operating profit (loss) before financial results 115,332 8.0% (23,936) -2.0% -120.8%
Financial (expenses) Income 26,898 1.9% 123,003 10.1% 357.3%
Financial Income 133,331 9.2% 242,719 19.8% 82.0%
Financial expenses (106,433) -7.3% (119,716) -9.8% 12.5%
Operating profit (loss) 142,229 9.8% 99,067 8.1% -30.3%
Income tax and social contribution (45,268) -3.1% (34,126) -2.8% -24.6%
For the period (52,110) -3.6% (12,578) -1.0% -75.9%
Deferred 6,842 0.5% (21,549) -1.8% -414.9%
Net income (loss) 96,962 6.7% 64,940 5.3% -33.0%
EBITDA 122,384 8.4% (4,647) -0.4% -103.8%
Income (loss) before financial results and taxes 115,332 8.0% (23,936) -2.0% -120.8%
Depreciation and Amortization 7,053 0.5% 19,289 1.6% 173.5%
24
2Q09 EARNINGS CONFERENCE CALLS
Conference Call in Portuguese
August 14, 2009 at 12 p.m. Brazil (11 a.m. U.S. ET)
Phone: +55 (11) 2188-0188
Code: Fertilizantes Heringer
Replay for one week: +55 (11) 2188-0188
Conference Call in English
August 14, 2009 at 12 p.m. Brazil (11 a.m. U.S. ET)
Phone: +1 (646) 843-6054
Code: Fertilizantes Heringer
Replay for one week: +1 (646) 843-6054
EBITDA (earnings before interest, tax, depreciation and amortization) is presented as additional information, given our belief that
it is an important indicator of our operating performance, as well as useful for comparing our performance with that of other
companies in the sector. However, no single figure must be considered a substitute for net income calculated in accordance with
Brazilian Corporate Law (BR GAAP) or even as a measure of the Company's profitability. Moreover, our calculations may not be
comparable with similar measures adopted by other companies.
We issue statements about future events that are subject to risks and uncertainties. These forward-looking statements are based
on the beliefs and assumptions of the Company's management and information to which the Company currently has access.
Statements about future events include information about our current plans, beliefs or expectations, as well as those of the
Company's Board of Directors and Executive Officers.
Forward-looking statements include statements and information concerning potential or presumed operating results, as well as
statements that are preceded by, followed by or include such words as “believe”, “can”, “will”, “continue”, “expect”, “predict”,
“intend”, ''plan’, “estimate” or similar expressions.
Forward-looking statements are not guarantees of performance. Since they refer to future events, they involve risks, uncertainties
and assumptions and are therefore dependent on circumstances that may or may not occur. Future results and the creation of
value for our shareholders may differ substantially from those expressed or suggested by said statements. Many factors that may
determine these results and values are beyond Heringer’s control or ability to predict.