presentation 2 q10
TRANSCRIPT
Results Presentation | 2Q10
Conference Call – 11/08/10
2
Disclaimer
“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”
Corporate Profile
4
Supply Chain
5
Other Segments
61) Anápolis/GO; 2) Colombo/PR; 3) Goiânia/GO; 4) Rio de Janeiro/RJ; 5) Simões Filho/BA; 6) Porto Alegre/RS and 7) São Paulo/SP.
Commercial Branches
Plants Location – Fiber cement
7
Plants Location – Concrete tiles
8
Timeline
Eternit’s most important accomplishments since its foundation in 1940
SAMA - Overview
10
Global Market – Chrysotile Asbestos
* SAMA MINERAÇÃO (Minaçu/GO): Third largest in the world and first with ISO 14.001
14%Brazil*
Zimbabwe
Canada
Kazakhstan
China
Russia
Major World Producers – 2009
45%
22%
10%
8%
1%
Global Consumption (MM of Ton)
2004
2005
2006
2007
2008
2009 2.1
2.4
2.4
2.3
2.1
2.3
11
Competitive Advantages
12
Sales of Chrysotile Asbestos (thous. tons)
Domestic Market Foreign Market
291.0
42.2 38.3 33.4 41.5 33.2 34.1
31.930.9 36.6
36.237.2 40.4
74.169.2 70.0 77.7 70.4 74.5
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
+ 7.6%- 11.1%+ 30.9%2Q10 / 2Q09
+ 1.1%- 16.5%+ 23.6%1H10 / 1H09
TotalForeign MarketDomestic MarketChanges
Eternit - Overview
14
Products and solutions for civil construction
Water tanks and filters
Roof coverings
Components for constructions systems
Bathroom chinaware fixtures
15
Covering market – Brazil (2009)
425459
2005 2006 2007
8%5%
2008
505
10%
2009
495
-2%
406
Residential Market Industrial and Commercial Market
Total Market Market Evolution (MM m2)
Ceramics35%
Metallic9%
Fiber cement49%
Others4%
Concrete3%
Fiber cement39%
Metallic35%
Ceramics14%
Others12%
Others2% Ceramics
43%Fiber cement
52%
Concrete3%
16
ETERNIT
Installed capacity: Approx. 2,820,000 tons / year
Capacity utilization - around 86%
Consumption: Approx. 2,434,000 tons / year
Companies: 11
Plants: 19
Selling points: 35,000
Installed Capacity: 850,000 tons/year
Capacity utilization - around 86%
Consumption: 731,000 tons/year
Market-share: 30%
Plants: 5
Selling Points: 12,000
Structure of the Industrial Park in 2009
Brazilian Fiber Cement Market
Brazilian Fiber Cement Market
17
Products and Solutions for Civil Construction
Competitive Advantages
18
+ 13,0%2Q10/2Q09+ 18.7%1H10/1H09
TotalChanges
* Includes components for constructions systems
Sales of Fiber Cement* (thous. tons)
730.6
167,2 160.8
207.2195.4
207.8
181.7
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
19
Tégula - Overview
20
Tégula Acquisition
• Largest Brazilian company in the concrete roofing business
• Portfolio with more than 33 product lines
• Resale of solar heating equipment
• Market share exceeding 35% in the Brazilian concrete roofing business
• Number of Employees: more than 400
• Installed Capacity: 7.2 million square meters
• Capacity Utilization in 2Q10: around 70% (60% in 1Q10)
• Value of acquisition: R$ 39.2 million
• Acquired in 02/11/2010
21
Main Products – Roof coverings
22
Full Roofing Solution
Operating and Financial Aspects
24
Domestic Market Foreign Market
(**) Others: metallic roofing tiles, polyethylene water tanks, bathroom chinaware fixtures and water pipe filters
Consolidated Net Revenue* Net Revenue Breakdown
(*) in R$ million
Consolidated Net Revenue – 2Q10
33%
101.7 100.4121.8 127.9
143.5 150.6
43.1 33.5 25.1 28.5 27.2 27.0
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
144.8 133.9
146.9156.4
170.7177.6
30.5%
54.1%
10.7%
2.3%
Fiber cement roof coverings
Components for constructions
systems
Concrete tiles and Accessories
Chrysotile Asbestos
Others (**)2.4%
25
Fiber Cement Chrysotile Asbestos
Concrete Tiles
COGS Breakdown – 2Q10
1 - Cement (46%), Chrysotile Asbestos (44%) and others (10%) 2 – Fuel, explosives, packaging, among others
3 - Cement (54%), sand (33%) and others (13%)
Raw material¹65%
Others19%
Energy3%
10%Workforce
Others20%
Energy5%
Raw Material³51%
Workforce16%
Depreciation8%
Materials²32%
Others13%
Energy7%
Workforce44%
Depreciation4%
Depreciation3%
26
EBITDA and Net Income (in R$ million)
EBITDA Net Income
21.3%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
35.729.9 27.8 30.1
35.7 21.617.3 17.0 17.2
23.2 24.3
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
40.4%
36.3
27
Margins
Gross Margin EBITDA Margin
Net Margin
25%22%
19% 19%21% 20%
15%
13%12% 11%
14%14%
1Q09 2Q09 3Q09 4Q09 1Q10 2Q10
45%43%
40%41%
45% 46%
28
Tégula – 2Q10
* As from February 11 2010, Tégula’s results were consolidated with those of Eternit as a whole
02/11 a 06/30*
R$ 2,354 thousand
R$ 3,993 thousand
R$ 9,371 thousand
R$ 27,797 thousand
1,887,439
2Q10
R$ 19,004 thousandNet Operating Revenue
Operating and Financial Aspects
Net Income
EBITDA
Gross Income
Sales - Tiles (in m2) 1,299,973
R$ 6,527 thousand
R$ 3,024 thousand
R$ 1,736 thousand
29
CAPEX
CAPEX (R$ million) CAPEX Breakdown (2Q10)*
* Does not include Tégula acquisition
1H09 1H10
1521
34
4
Capacity Increase - ETERNITTégula AcquisitionInvestments
Technology3%
Maintainance27%
OccupationalSafety and Health
2%
Quality andDevelopment
7%
Capacity/ Productivity
57%
Administrative4%
59
30
New production lines of finished products
At Goiânia / GO – Launched in April 2008.
At Colombo / PR – Launched in January 2009.
Capital Markets
32
Eternit’s Shares Performance (Dec/06 - Jul/10)
Between 12/28/2006 and 07/30/2010, Eternit”s shares appreciated 26.7% and IBOVESPA appreciated 51.8%.
In the same period, including the payment of dividends and interest on own capital, Eternit’s shares appreciated 107.0%.
R$ 8.57
67,515
50
80
110
140
170
200
dez-06 jun-07 dez-07 jun-08 dez-08 jun-09 dez-09 jul-10
ETER3
IBOVESPA
33
Liquidity
Shareholders
(*) Until July 2010
2006 2007 2008 2009
2,482
7,3177,726
6,615
2010(*)
6,063
1,302
20052004
1,638
34
Liquidity
Average Traded Volume (R$ thousand)
(*) Until July 2010
2006 2007 2008 2009
1,297
2,900
1,108
3,708
2010(*)
1,019716
604
2004 2005
35
Ownership Structure – Jul/10
Individual Investors (5,787 shareholders)
Corporations (86 shareholders)Investors Abroad (51 shareholders)Clubs. Funds and Foundations (139 shareholders)
58%4%
33%
5%
6.18%-Fundo de Participação Social – FPS
5.93%-Bahema Participações S. A.
Jul/10
69.95%
0.28%
0.81%
5.24%
4.72%
6.89%
Jul/07
59.91%Free-Float
0.03%Treasury stock
1.42%Management
Shareholding Structure
12.53%Luiz Barsi Filho
6.70%Victor Adler
19.41%Geração L. Par. Fund. Invest. em Ações
36
Shareholder Remuneration (2004 - Aug/10)
Net Income Dividends and Interest on own capital
Net Income X Shareholders Remuneration (R$ million)
2007 2008 2009
4440
65
81 73
2010
55 5447
2004 2005 2006
20
38443433 30
37
Dividend Yield
Shareholder Remuneration (2004 - Aug/10)
2007 2008 2009
8.6%
12.8%
15.1%
2010
6.9%
2004 2005 2006
13.2%
17.1%16.2%
Outlook
39
Structured Expansion and Diversification Program
INITIATIVES
- Launches of new products
- Debut into chinaware bathroom fixtures
- Increase in SAMA’s production capacity
- Investment in machinery for new products on its plants
- Investment in new product lines of fiber cement
- Inorganic growth – Acquisitions
- Inclusion of metallic roofing on its portfolio
- Creation of the Development and New Businesses Area
Consolidate Eternit as a supplier of products and solutions to the civil construction industry
OBJECTIVE
40
Installed CapacitySales
Sales of fiber cement (thousand tons)
Structured Expansion and Diversification Program
431.3
522.5578.3 620.3
2004 2005 2006 2007 2008 2009
CAGR (2004/2009) = 11%
725.3 731.2
650.0 650.0 650.0 650.0730.0
850.0
41
Structured Expansion and Diversification Program
2004 2005 2006 2007 2008 2009
CAGR (2004/2009) = 3%
Sales of Chrysotile Asbestos (Thousand tons)
270.0 270.0 270.0 270.0248.8 231.3 221.6
272.6295.0
300.0303.8 290.1
Installed CapacitySales
42
Launches
Chinaware bathroom fixtures
Components for construction systems and
filters for water pipes
Colored fiber cement roofing tiles
Corporate and Environmental Management
44
Corporate Management
Launch ................... November 2004
Purpose .................
Contribute to society’s better understanding of the mining and processing of Chrysotile Asbestos and the manufacture of fiber cement products in a sustainable manner.
Location ................ Five production plants of Eternit and the SAMA mining company
Visitors ................. More than 39,000 as of July 2010
Target .................... All society
Open Doors Program
45
Raw material sector
Chrysotile Asbestos sector
46
Latin America's largest with more than 17 thousand filter sleeves
Filtration System Air
47
Environment Focused Management
Quelônios Project - Animal Conservation AreaThe only breeding program of Amazon turtles in Brazil and
Reintegration of Wild Animal Nature in partnership with IBAMA
Zero Reject Monitoring Air Quality
Water Reuse Reforestation Work
Seedling Nursery
48
About 80% of the 4,500 hectares of the Cana Brava Mountains are maintained as Forest Reserve by SAMA.
Environment Focused Management
Monitored area
49
Terra Mirim Project
Eternit has partnered with the NGO Terra Mirim to promote the training of young people of Simões Filhoand region to act as guides that will be inserted in a project of an ecological track to be implemented soon in the environmental reserve of this unit.The size of the area is 810 thousand square meters
Aerial view of the Environmental Reserve of Simões Filho (BA) Plant
Social Actions - External Public
50
Social Actions - External Public
Brincar pra Valer Project! – It aims to show the children of a sub-prefecture of São Paulo, that their dreams can come true through thematic workshops and recycling.
Lar Escola São Francisco - Eternit contributes to LESF in order to rehabilitate children and adults with special needs in order to their physical recover, their educational and social integration
Publication and distribution of books in Braille and audio books - In partnership with the DorinaNowill Foundation, Eternit distributed in the vicinity of their units, more than 6 million copies in order to facilitate access to the blind.
51
GRAAC - Eternit is a partner sponsor of GRAACC and helps to guarantee children and adolescents with cancer, in the most advanced scientific standard, the right to access all the chances of cure with quality of life.
Social Actions - External Public
Sambaíba Project – SAMA develops this project to a give young people a career through craft workshops with the reuse of waste rock extracted from the mine.
Sociedade dos Queimados - Eternit contributes to society of burning in order to promote the social reintegration of victims of fire burns, especially those from low-income segment, providing a better quality of life.
52
Minaçu - GO Goiânia - GO
Rio de Janeiro - RJ Simões Filho - BA Colombo - PR
Anápolis - GO
Recreational Clubs - Workforce
53
Events
54
Shareholders' Meeting via WEB
55
Shareholders' Meeting via WEB
Another step in good corporate governance practices;
The system allows electronic proxy voting by digital certificate;
More than half of Eternit’ shareholders reside outside the state of Sao Paulo;
CVM (Securities and Exchange Commission of Brazil) and IBGC (Brazilian Corporate Governance Institute) recommend that companies encourage the participation of shareholders at meetings;
The first 1,000 registered shareholders will have free digital certificates for the first year;
Partners:
56
BLOG
57
BLOG
Communication channel for all who wants to know about Eternit;
It aims to enable interaction between the company and its public in a transparent manner;
Another communication channel with stakeholders;
The blog is divided into four sections:
Chrysotile Asbestos
Civil Construction
Capital Markets
Environmental Responsibility
58
American Depositary Receipt - ADR
On February 24 2010, the Board of Directors approved to initiate the accession process to the American Depositary Receipts Program - Level 1 ADRs.
Sponsor: Eternit;
Depositary Bank: The Bank of New York;
Custodian Bank: Banco Bradesco;
Ratio between Eternit’ shares and ADR: One ADR for one common share.
Ticker: ETNTY
59
IR Global Rankings elected for the second consecutive year the Program on Corporate Governance of Eternit as the best in Latin America. on April 9, 2010.
IR Magazine elected Eternit among the five bestcompanies in Investor Relations for Individual Investors.
The 17th Ranking of Industry Concept and Imageelected Eternit the 1st in fiber cement segmentand 2nd in polyethylene water tanks.
Awards – 2Q10
Chrysotile – The Brazilian Asbestos
61
Chrysotile – The Brazilian Asbestos
White Asbestos
Bends and silky fibers without tip
High Concentration of Magnesium:3MgOSiO2H2O
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.
The use of Chrysotile Asbestos 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 asbestos fibers
62
Information
Gilberto [email protected]
Élio A. [email protected]
www.eternit.com.br/ir
Rodrigo Lopes da Luz
Investor Relations
Phone: (55-11) 3813-6034
Bárbara M. Tanure Gonçalves
IR ConsultantMarcelo Fonseca
Phone: (55-11) 3897-6857
This material was produced using FSC certified paper (Forest Stewardship Council), which is a guarantee that the raw materialcomes from a forest managed in an environmentally responsible, socially and economically viable.