Credit Suisse Latam Commodities CEO/CFO Conference

Credit Suisse Latam Commodities
CEO/CFO Conference
São Paulo, March 23, 2015
Disclaimer
This presentation and any materials distributed in connection with it may include certain forwardlooking numbers, results, statements, beliefs or opinions, including those with respect to the
Company’s business, financial condition and results of operations. These forward-looking numbers,
results, statements, beliefs or opinions and information or data of similar meaning, reflect beliefs and
expectations and involve risk and uncertainty because they relate to events and depend on
circumstances that will occur in the future. No representation is made that any of these statements or
forecasts will come to pass or that any forecast results will be achieved. There are a number of factors
that could cause actual results and developments to differ materially from those expressed or implied
by these statements and forecasts. Past performance of the Company cannot be relied on as a
guide to future performance.
No statement in this presentation is intended to be a profit forecast. As a result, you are cautioned not
to place any undue reliance on such forward-looking statements, numbers, results, statements, beliefs
or opinions.
2
AGENDA
Overview
Business
Strategy
Operating &
Financial
Performance
Final Remarks
3
AGENDA
Overview
Business
Strategy
Operating &
Financial
Performance
Final Remarks
4
Biosev at a glance
The World's Second Largest Sugarcane Processor
 Our products: Sugar,
Ethanol and Energy
 Net Revenue of R$4.3
billion and Adjusted
EBITDA of R$ 1.1 billion
on 13/14 crop year
36.4
Million Tons
of Crushing Capacity
per Year
340
Thousand
Hectares of
Managed Land
1,346
GWh of Electric
Energy Export
Capacity
 R$8.5 billion in Assets
(9M15)
5
Agro industrial Clusters as the entrepreneurial end of the
Business
Biosev has differentiated scale at company, cluster and mill levels
CLUSTERS
AND– MILLS
– Crushing
Clusters
and Mills
Crushing
CapacityCapacity
(MM t/year)
RIBEIRÃO PRETO:
1
Vale do Rosário
2
Santa Elisa
3
UMB
4
Continental
MATO GROSSO DO SUL:
5 Rio Brilhante
6
Passa Tempo
7
Maracaju
LEME – LAGOA DA PRATA:
8
Lagoa da Prata
9
Leme
NORTHEAST:
10 Estivas
11 Giasa
18.0
6.5
10
6.1
Cluster
Northeast
11
2.8
2.6
10.1
5.0
3.3
Cluster Mato
Grosso do Sul
8
9
1.8
5.3
Cluster Leme
Lagoa da Prata
12
4
2 3
1
3.2
2.1
3.0
1.8
1.2
7
13
5
6
Cluster Ribeirão
Preto
Administrative Units
12
Adm. Center Sertãozinho
13
Headquarter
6
High Standards of Corporate Governance
Highly qualified Board members…
Biosev Board
Chairman of the Board – Claude Ehlinger
Interim CEO and CFO of the Louis Dreyfus Commodities (LDC) Group
Vice-Chairman of the Board - Adrien Tardy
Head of Corporate Finance and Strategy of the LDC Group
Ciro Echesortu
Strategy Director of the LDC Group
4 Louis Dreyfus
Commodities
representatives
André Roth
Global Director of Oil seeds platform of LDC Group
Antonio Delfim Netto
Former Minister of Economy and Agriculture, as well as former Ambassador of Brazil in France
Philippe Delleur
President of the Strategic Committee of Alstom in Brazil and SVP for Latin America
Ricardo Barbosa Leonardos
Member of the Board of Tecnisa S.A.
4 independent
members
Ian Clive Barnard
Partner of Capital Generation Partners
Cristiano Biagi
CEO of Sorocaba Refrescos S.A.
1 member
7
High Standards of Corporate Governance
…combined with experienced and seasoned management team
Biosev Management
CEO - Rui Chammas
Former VP of Basic Petrochemicals Unit at Braskem and held
several senior positions at Rhodia
CFO - Paulo Prignolato
Former CFO at Votorantim Metais and held several corporate
positions within Grupo Votorantim
Director of Strategic Planning - Patrick Treuer
Former Investment Banking MD at Credit Suisse and held
various positions in London and Zurich
Director of Agriculture – Ricardo Lopes
Former COO at Bunge Sugar and Energy and held several
positions in relevant players of the sector
Director of Human Resources - Maria Paula Curto
Held several positions in Telefonica, Fibria and Arthur
Andersen
Chief Operating Officer – Eduardo Neves
Held several positions in Nexen / Canexus and Monsanto
Director of Investor Relations - Luiz Valverde
Former IRO of Braskem and Springs Global and held several
positions in industrial companies
Chief Commercial Officer - Enrico Biancheri
Former Head of the Sugar Platform at LDC Brazil
Director of Treasury- Carlos Gradim
Former CFO at Votorantim Siderurgia and held several senior
positions in the banking industry
Chief Legal Officer - Daniel Pitta
Former Legal Manager at LDC Brazil
Director of Financial Planning & Controllership - Manoel
Moura
Held several executive positions in relevant players of the
sector
8
Sugar Global Market
Improved outlook as a result of tighter global supply-demand balance
GLOBAL SUPPLY AND DEMAND BALANCE* (MM t.)
Demand

Supply
185
180
178
176
178
181
188 187
191 191
producer and exporter
195 194
182

177
172
172
168
162 164
163
10/11
11/12
12/13
Demand is expected to grow
~2% p.a., equivalent to 4
13/14
14/15e
15/16e
16/17e
17/18e
18/19e
million tons annually, in line
19/20e
*Northern Hemisphere crop year
Source: Biosev
with historical levels
Production/Consumption Balance (MM t.)
Thousands
Brazil is the world’s largest
11.7
Stock-to-use ratio
9.0
41.9%
30.8%
2.6
44.0%
44.5%
41.3%
36.1%
37.7%
36.7%
35.8%

Stock-to-use ratio will decline
as a result of future sugar
5.5
2.6
(1.0)
(3.7)
10/11
38.9%
11/12
12/13
13/14
14/15e
15/16e
(0.6)
(0.5)
18/19e
19/20e
profitability increase
(2.8)
16/17e
17/18e
deficits, favoring sugar
Source: Biosev
9
Ethanol: Recent developments favor ethanol consumption and
pricing

BRAZILIAN FLEET (million)
20.2
21.5
23.1
10%
9%
7%
77%
25.0
56%
13%
21%
30%
38%
06/07
07/08
08/09
09/10
Flex fuel
Source: UNICA
45%
50%
35%
40%
51%
57%
62%
10/11
11/12
12/13
13/14
MM m³ of gasoline equivalent
4.9
25.1
27.7
6.8
7.6
2.5
0.8
2.8
4.3
30.0
32.4
31.8
31.8
10.1
10.5
11.8
13.9
14/15e
2.1
11.5
11.7
13.5
11/12
12/13
13/14
Source: Biosev
Hydrous
Anhydrous

5.8
7.6
31.8
31.8
31.8
12.5
13.0
13.6
14.2
14.3
11.7
11.6
11.2
10.1
15/16e
16/17e
17/18e
18/19e
19/20e
Gasoline
– Ethanol remains as the main alternative
to fill this gap
Ethanol
BRAZIL FUEL PRODUCTION AND CONSUMPTION (million m³)
4.5
– Maximization of sugar production
coupled with stagnant gasoline
refining capacity, create a gap
between domestic fuel production and
consumption
3%
3%
45%
Gasoline
– Flex fuel vehicles continues to expand
its share in the Brazilian fleet
33.5
31.4
4%
5%
6%
63%
70%
29.2
27.1
Market:
Recent developments:
– Reintroduction of CIDE/PIS/COFINS tax
on gasoline
– Increased blend of anhydrous ethanol
in gasoline from 25% to 27%
– New fuel policy in the state of Minas
Gerais from March ‘15 onwards
Fuels deficit (gasoline/ethanol)
10
AGENDA
Overview
Business
Strategy
Operating &
Financial
Performance
Final Remarks
11
Commercial
Market intelligence is a competitive advantage
Market
Intelligence
Logistics
Energy
Business
12
Biosev: Higher sugar prices due to differentiated
market intelligence
48
2012/13
2013/14
2014/15
46
44
Hedge – Volumes & Prices at
12/31/2014
14/15
15/16
Volume (‘000 tons)
1,308
574
Avg. price (cUS$/lb)
19.04
17.40
US$ million
355
222
Avg. price(R$/US$)
2.39
2.66
Avg. price (cR$/lb)
45.51
46.28
45.51cR$/lb
44.56cR$/lb
43.13cR$/lb
Sugar
(#NY11)
42
40
38
FX
(US$)
36
34
32
Sugar
Biosev Hedge – Price
VHP (#NY11) cR$/lb

Commercial strategy prioritizes optimization of the sugar mix by (i) increasing the share of
higher-value added products, (ii) selling products at the best timing, and (iii) allocating
products in the most profitable markets

Robust risk policy, combined with access to LDC market intelligence platform, guarantee
stable prices in a low sugar prices scenario globally
13
Ethanol: increased share of neutral and industrial ethanol in the
sales mix supports higher average price
Revenue by Ethanol Type (%) – 9M15
Sales Volume ('000 m³) and Average Sales Price (R$/m³)
2012/13
1,393
1,446
1,380
9.8%
1,223
50.3%
1,360
1,326
297
333
582
562
586
9M13
9M14
9M15
151
39.9%
Hydrous
Anhydrous
Neutral and Industrial
Volume Domestic
Vol - Exports
Prices - Exports
Prices Domestic

9M15 lower volumes result from carry strategy

The reintroduction of CIDE (R$0,22/l) restores conditions for an improvement in business
profitability

Increased blend of anhydrous ethanol in gasoline from 25% to 27% favors anhydrous demand
14
Logistics is a competitive advantage
Storage capacity and efficient distribution support our commercial
strategy
Export flexibility for VHP
Efficient Distribution
TEAG - Sugar Terminal of Guarujá (Port of Santos)
Sugar Distribution Channels

JV (50%-50%) Biosev
and Cargill

Capacity of
receiving 12,000
tonnes a day
(3.2MM tonnes p.a.)
from trucks and
railroad


110,000 tonnes of
static storage
capacity
Average turnover of
29x capacity p.a.
Storage capacity as an advantage
Sugar and Ethanol Storage Capacity
Railway: ALL – Southeast Network
BR 163 / BR 376 Highway
PB 030 / BR 230 Highway
Railway: VLI
% Storage capacity / yearly production
1,723
MS
3
6
7
1
2
3
4
5
6
7
8
4
SP
8
Santa Elisa
Leme
Continental
MB
Vale do Rosário
Maracaju
Passa Tempo
Rio Brilhante
1,150
5
1
PR
829
754
2
Port of Santos
72%
44%
Port of Paranaguá
Sugar ('000
tonnes)
Total
Production
Ethanol ('000 m³)
Storage
Capacity
15
Energy: Cogen Adds Competitiveness to Our
Business Portfolio
Increased productivity combined with processes improvements enables production and sales growth
BIOSEV HAS SIGNIFICANTLY GROWN ITS ENERGY SALES CAPACITY
Merge with
Santelisa Vale
(SP)
Greenfield Rio
Brilhante (MS) and
Phase I - Lagoa da
Prata (MG)
Phase II - Lagoa Brownfield Passa
Tempo (MS)+19%
da Prata (MG)
+17%
+92%

1346
assets and is well positioned to
1134
973
+138%
+104%
125
213
+10%
+73%
+9%
seize market opportunities
532
487
442
255
200 8
Source: ANEEL
507
Biosev invested in cogeneration
200 9
201 0
Installed Capacity (MW)
201 2
201 4
Sales Potential (GWh)

High growth potential:
–
ENERGY EXPORTS AND PRODUCTIVITY EVOLUTION *
Increase in crushing
volume
38.3
MS
27.9
Biosev
22.7
24.2
20.7
21.0
571
619
712
FY12
FY13
FY14
Cogen fo Sale (GWh)
Cogen/Crushing (kWh/ton)
–
Increase in the use of
27.7
internal and outsourced
843
biomass
23.7
9M15
Cogen/Crushing (kWh/ton) - MS
* Does not consider outsourced biomass
Source: Biosev
16
Operations
Agronomic Development coupled with focus on operational
excellence accelerates productivity gains
Agronomic
Development
Partnership with
Suppliers
Operational
Excellence
17
Agronomic Development
Biosev’s agronomic development strategy is grounded on the best
techniques and practices
Agronomic knowledge
Nurseries, cane varieties, soil management and environment
Remote Sensing
Spatial reference, satellite images, biomass content and pests control
Agricultural Automation
On-going implementation of planting and harvesting automation process: autopilot
Precision Agriculture
New Automation frontier with enhanced knowledge of soil and cultural treatments
Standardization and Logistics
Maximizing mechanization efficiency and optimizing routes from sugarcane fields to the mills
Innovation
New solutions, new varieties, and monitoring of the industry best practices
18
Objective is to assure loyalty of suppliers thus broadening the
management of the production chain
Guarantee sugarcane supply to attend Biosev’s current and future needs,
with quality and competitiveness
Benefits for partners:

Transfer of technology

Improved conditions to purchase fertilizers and agrochemicals

Planting financing

Cattle feed supply

Development of other cultures during the intercrop
19
Operational Excellence
Management focused on establishing processes designed to maximize
quality and efficiency
Discipline and selectivity
Benchmarking
Planting and Treatment
Working capital
Maintenance
Supply chain
Automation
Synergies
Reliability
ASSETS UTILIZATION
Utilization Rate
TRS
TCH
MANAGEMENT SYSTEM AND PEOPLE
20
AGENDA
Overview
Business
Strategy
Operating &
Financial
Performance
Final Remarks
21
Increased Productivity and Efficiency to Leverage Operating Results
Agricultural Productivity ¹ (TCH - tons of cane/ha)
Crushing (million tons) & Utilization Rate (%)
27.5
79%
74%
69%
7.3%
29.5
1.6%
30.0
29.1
12.4
12.0
10.2
11.0
17.3
18.5
17.6
17.1
12/13
13/14
9M14
11/12
Own Cane
3rd party cane
3.0%
-7.7%
-0,1%
-6.6%
26.8
10.7
69.0
71.1
71.0
72.2
11/12
12/13
13/14
9M14
67.5
16.1
9M15
9M15
Utilization rate
Production Mix (%) & TRS Product (‘000 tons)
TRS Cane ² ³ (Kg of TRS/ton of cane)
0.2%
3.3%
-6.1%
132.7
133.0
124.9
124.9
3,636
3,860
6.2%
3,767
3,643
-2.4%
60%
61%
40%
39%
11/12
12/13
-4.9%
3,465
51%
52%
50%
49%
48%
50%
13/14
9M14
9M15
128.9
11/12
12/13
13/14
9M14
9M15
¹ TCH Heavily impacted by severe drought in 14/15 crop year
² Total Recoverable Sugar.
³ TRS Heavily impacted by a frost in Mato Grosso do Sul occurred in June/2013.
Ethanol
Sugar
22
Ribeirão Preto: a High Performance Cluster, impacted by a severe
drought in the 14/15 crop year
Agricultural Productivity ¹ ( TCH - tons of cane/ha)
Crushing (million tons) & Utilization Rate (%)
87%
84%
64%
13.8
16.4
18.8%
3.7%
8.5
7.2
17.0
17.0
9.7
9.7
6.6
11/12
12/13
Own Cane
7.3
7.3
13/14
9M14
3rd party cane
7.9
9M15
Utilization rate
11/12
4.2%
11/12
12/13
129.9
13/14
13/14
9M14
9M15
Production Mix (%) & TRS Product (‘000 tons)
-3.1%
134.0
83.3
72.0
12/13
1,853
135.7
83.3
78.1
6.7
TRS Cane ² (Kg of TRS/ton of cane)
-1.3%
-13.5%
14.6
70.0
7.9
6.7%
11.6%
-14.5%
129.9
9M14
¹ TCH Heavily impacted by severe drought in 14/15 crop year
² Total Recoverable Sugar.
135.3
9M15
17.3%
2,174
2.2%
-11.0%
2,222
2,222
1,977
61%
54%
54%
54%
60%
40%
39%
11/12
12/13
46%
46%
46%
13/14
9M14
9M15
Ethanol
Sugar
23
P&L impacted by carry strategy and severe drought
Selected financial items (R$ million)
9M15
(a)
9M14
(b)
Var.
(a)/(b)
Net revenue
3,054
3,415
-10.6%
COGS (Cash)
(1,852)
(2,126)
-12.9%
Gross Profit (Cash)
1,202
1,289
-6.7%
Gross Margin
39.4%
37.7%
1.7 p.p.
SG&A (Cash)
(390)
(431)
-9.4%
827
879
-5.9%
Adjusted EBITDA Margin
27.1%
25.7%
1.4 p.p.
D&A / Change in Fair Value - Bio Assets
(493)
(715)
-31.0%
Adjusted EBITDA
Financial Result, Net
(603)
(520)
15.9%
EBT
(285)
(376)
-24.2%
8
(73)
-
(277)
(449)
-38.3%
Income Tax and Social Contribution
Net income (loss)

Concentration of sales in
4Q15 due to carry strategy

Lower SG&A expenses results
from more streamlined
corporate and administrative
structure

Financial result affected by
the impact of the 17% FX
variation, in the amount of R$
255 millions

Positive impact from the
accrual of deferred tax
assets and temporary
differences recorded in the
line IR/CSLL
24
CAPEX: Financial Discipline
CAPEX
R$ million
9M15
9M14
Expansion
8.1
35.6
Operations
708.6
645.6
Industrial
25.3
35.1
Agricultural
25.0
22.5
Planting
206.9
195.2
Treatment
237.5
238.4
Intercrop maintenance
(Agr/Ind)
184.2
121.7
Other
29.5
32.7
716.7
681.2
TOTAL

Expansion Capex
reduction is in line
with company´s
Business Plan

Higher intercrop
maintenance
expenditure due
to fewer crushing
days in the
2014/15 crop year
25
Debt management: short-term debt decreases by R$129 million
Debt - R$ million
Dec, 2014
Sep, 2014
Chg. (%)
Short Term
1,748
1,877
-6.9%
Long Term
3,738
3,579
4.4%
Gross Debt
5,486
5,456
0.5%
Cash and Investments
(190)
(530)
-64.1%
Net Debt
5,296
4,926
7.5%
Readily Marketable Inventories
(RMI)
(822)
(847)
-2.9%
Adjusted Net Debt
4,474
4,080
9.7%
Adjusted Net Debt to Adjusted
EBITDA
4.1x
4.0x
-
Debt by Index (%)
0.6%
3.3%
LIBOR
21.4%
Fixed
CDI
53.0%
TJLP
Other
21.7%
USD = 71.2%

Indebtedness and financial leverage impacted mainly by the FX effect on Dollar denominated
debt, in the amount of R$ 355 million (3Q15)

Financial leverage, strongly impacted by carry strategy, will be reduced by the end of this crop
year, as inventory levels are reduced

In January 2015, Biosev raised US$318 million through a prepayment facility due in April 2018.
Interest rate will be equivalent to Libor + 4.75% p.a. and part of the proceeds will be drawn down
by the end of the this crop year
26
AGENDA
Overview
Business
Strategy
Operating &
Financial
Performance
Final Remarks
27
Private Capital Increase: IFC as a new shareholder
 The transaction was a private capital increase of 12,817,750 shares in the
amount of R$ 128,177,500. The investor is the International Finance Corporation
(“IFC”), a member of the World Bank Group;
 IFC subscribed almost all the entire capital increase amount (99.99%)
 With the conclusion of this transaction, IFC’s share in Biosev’s capital achieved
5.84%;
 As a result of this capital increase, Biosev’s free-float increased from 23.35% to
27.75%.
28
Biosev in Summary:







COMPETITIVE ASSET PLATFORM: LARGE SCALE AND MARKET INTELLIGENCE
AGRONOMIC DEVELOPMENT GROUNDED ON THE BEST MARKET PRACTICES
OPERATING LEVERAGE FROM INCREASED PRODUCTIVITY AND EFFICIENCY
WELL POSITIONED FOR THE RECOVERY IN THE SUGAR AND ETHANOL CYCLES
COGENERATION ASSETS FULLY OPERATIONAL TO SUPPLY ENERGY
VALUE CREATION ASSOCIATED WITH FINANCIAL DELEVERAGING
HIGH CORPORATE GOVERNANCE STANDARDS
COMMITMENT TO CREATE VALUE FOR ALL SHAREHOLDERS
29
WWW.BIOSEV.COM/IR