AGRIBUSINESS OVERVIEW

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2 AGRIBUSINESS OVERVIEW 2

3 1960/ / / / / / / / / / / / / / / / / /2012 GLOBAL GRAIN PRODUCTION AND CONSUMPTION Production 1000 MT Consumption 1000 MT Production and consumption in constant growth Source: Agroconsult/USDA 3

4 GLOBAL GRAIN INVENTORIES AND INVENTORY/USE RATIO 40% % 30% 25% 20% 15% 10% 5% 0% Closing Inventories 1000 MT % Inventory/Use Drop in the inventory/use ratio since the late 80s Source: Agroconsult/USDA 4

5 OCDE PROJECTED FOOD PRODUCTION THROUGH 2020 According to the OECD, global food production must increase by 20% in order to meet the growing demand by Brazil is the country with the highest production growth, which is expected to be 40% during the period. (OCDE, ) 5 Undernourished population map (% of total population) 4% 26% 10 / 15% 10 / 15% 26% % of production growth 40% 17%

6 BRAZILIAN AGRIBUSINESS - OVERVIEW 1. Natural resources land and water available 2. Technology - growing improvement in productivity 3. More capitalized agriculture with more access to credit 4. Rural entrepreneurship and human resources 6

7 BRAZIL TOTAL AND CULTIVABLE AREA Estimated Area - (Million per HA) % Total Area % Cultivable Area Amazon forest % Legal reserve % Cities, lakes, rivers and flooded areas % Other % Reforestation 5 0.6% Subtotal % Pasture Cultivated area - annual and perennial % 8.5% 50.6% 21.2% Area available for agriculture % 28.2% Subtotal (cultivable area) % 100.0% Total Brazil % Brazil has approximately 14% of the world s fresh water Planted area consumes only 21.2% of the cultivable area for annual and perennial crops Sources: IBGE, CONAB, MAPA, FGV 7

8 SUSTAINABILITY AND FERTILIZERS IN BRAZIL *PLANTED AREA/HA (CAGR 2%) *AGRI-VEGETABLE PRODUCTION (CAGR 5%) FERTILIZERS (CAGR 7%) CAGR (1969 to 2011) of planted area was 2%, while CAGR of agri-vegetable production was 5% CAGR of fertilizer consumption was 7%, contributing to a significant gain in agricultural productivity and environmental preservation *Planted area in hectares of soybean, bean (grain), paddy rice, wheat (grain), herbaceous cotton (seed), sorghum (grain), oat (grain), barley (grain), triticale (grain), sunflower (grain), rye (grain). *Agri-vegetable prod. of soybean, corn, bean (grain), paddy rice, wheat (grain), herbaceous cotton(seed), sorghum (grain), oat (grain), barley (grain), triticale (grain), sunflower (grain), rye (grain) crops. Source: Agroconsult 8

9 GRAIN PRODUCTION AND PLANTED AREA - BRAZIL / / / / /2013* Productivity per ha Production Planted Area (1000 ha) Fertilizers Grain production is expected to increase 3.9% in the 2011/2012 harvest and 2% in planted area indicating productivity growth per hectare Source: CONAB / Agroconsult/ *Agroconsult s projections and Heringer s estimate Grains: Corn, Soybean, Rice, Bean, Sorghum, Castor Bean, Cotton, Sunflower, Barley, Rye, Oat, Peanut, Wheat and Triticale Fertilizers: 2012 Estimate 9

10 SOYBEAN FINANCING EVIDENCES OF CAPITALIZATION OF PRODUCERS 2007/2008 Cost of Harvest 2010/2011 Cost of Harvest Banks 29% Own capital 19% Banks 38% Own capital 27% Chemical products 15% Fertilizers 4% Seeds 2% Trading Houses 31% Chemical products 13% Fertilizers 3% Seeds 3% Trading Houses 16% Decrease in share of trading houses due to excellent results by producers Source: Agroconsult 10

11 BRAZIL: IMPORTANT AGRIBUSINESS PLAYER Brazil s % share of 2011/12 Global Production Brazil s % share of 2011/12 Global Exports 1 st 57% 1 st 81% 1 st 37% 2 nd 27% 1 st 21% 5 th 4 th 1 st 28% 1 st 1 st 40% 42% 3 rd 4 th 8% 7% 10% 11% Orange Juice Coffee beans (bags) Soybean - Grain Sugar Cotton Corn Orange Juice Coffee beans (bags) Soybean - Grain Sugar Cotton Corn Brazil is one of the world s largest producers/exporters of agricultural products and has one of the lowest production costs Source: USDA/ Agroconsult in tons 11

12 BRAZILIAN AGRIBUSINESS - CHALLENGES Solutions or alternatives to major global problems related to agricultural subsidies, sanitary and tariff barriers, excess of protectionism, import quotas, etc. Structural improvement of current logistics through increased investments in storage, highways, railways and ports Reduction in bureaucracy and government requirements Improvement in the current policies on minimum prices and agricultural insurance, making them comprehensive and effective 12

13 In million tons CORN PRODUCTION IN THE U.S % /09 09/10 10/11 11/12 12/13 USDA/Jun 12/13 USDA/Aug Drop of 102 million tons in the 2012/13 harvest due to drought Source: USDA 13

14 million tons SOYBEAN PRODUCTION IN THE U.S /09 09/10 10/11 11/12 12/13 USDA/Jun % 73 12/13 USDA/Aug Drop of 14 million tons in the 2012/13 harvest due to drought Source: USDA 14

15 cents/bushel COMMODITY PRICES SOYBEAN/CORN Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Aug/12 Corn/SP Soybean/PR Growth of 42% in soybean and 33% in corn in 2012 Source: Agroconsult/Esalq 15

16 cents/bushel REFLECTION OF PRICES IN BRAZIL SOYBEAN/CORN 90,00 80,00 70,00 60,00 50,00 40,00 30,00 20,00 10,00-80,90 76,33 65,05 61,08 57,51 52,23 46,80 47,16 31,10 33,49 28,36 28,89 28,80 25,88 24,89 24,16 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Corn/SP Soybean/PR Increase of 79% in soybean prices and 19% in corn prices in 2012 due to the increase in agricultural commodity prices and depreciation of the Brazilian real Source: Agroconsult/Esalq 16

17 FERTILIZERS Global market Brazilian market 17

18 GLOBAL NITROGEN MARKET (millions of tons of nutrients) Nitrogen Total demand Fertilizers Other Capacity % Capacity 81% 80% 77% Total demand estimated to grow 1.4% p.a. in Installed capacity utilization expectation to decline in Source: IFA, May

19 GLOBAL PHOSPHORUS MARKET (millions of tons of nutrients P 2 O 5 ) P 2 O Total demand Fertilizers Other Capacity % Capacity 81% 78% 75% Total demand estimated to grow 1.7% p.a. in Installed capacity utilization expectation to decline in Source: IFA, May

20 GLOBAL POTASSIUM MARKET (million tons of nutrients) Potassium Total demand Fertilizers Other Capacity % Capacity 70% 66% 61% Total demand estimated to grow 3.7% p.a. in Installed capacity utilization expectation to decline in Source: IFA, May

21 AMMONIA, ROCK PHOSPHATE AND POTASSIUM CHLORIDE PRODUCING COUNTRIES Ammonia (Nitrogen) Rock Phosphate Potassium Chloride PRODUCERS SHARE PRODUCERS SHARE PRODUCERS SHARE China 31.0% China 37.9% Canada 29.9% Russia 8.5% Morocco 14.1% Russia 19.3% India 8.2% U.S. 13.9% Belarus 16.5% U.S. 6.5% Russia 6.0% Germany 9.3% Trinidad and Tobago 3.9% Tunisia 4.5% Israel 8.0% Indonesia 3.6% Jordan 3.6% China 7.4% Canada 2.8% Brazil 3.1% Jordan 3.8% Egypt 2.7% Syria 2.1% Chile 2.7% Ukraine 2.7% Egypt 1.9% U.S. 1.9% Pakistan 2.2% Israel 1.7% Brazil 1.2% Other 27.9% Other 11.2% Other 0.0% Producing countries share has remained stable over the years Source: ANDA 21

22 GLOBAL MARKETS AND CAGR OF THE LARGEST MARKETS mm tons CAGR Fertilizer Consumer Markets (1) CAGR of the Largest Markets 2011 Volume 2011 Market Share % CAGR 50,9 28.6% 16.5% 27.9% 49,8 3.2% 50,9 29,4 11.7% 20,8 6,5% 2.9% 2.4% 1.8% 1.7% 27,0 4.6% 29,4 12,0 0.6% 20,8 18,6 6.7% 11,7 11,7 5,1 4,3 3,1 3,0 3,2 China India USA Brazil Brazil is the world s fourth largest fertilizer market growing above the global average Note: (1) In consumption of nutrients /Source: IFA/ANDA 22

23 FERTILIZER PRODUCTION CHAIN IN BRAZIL Producers of Basic and Intermediate Fertilizers Mineral and Natural Gas Extraction NPK Mixture Producers Natural Gas (N) Rock Phosphate (P) Potassium (K) Urea / Nitrate/ Sulfate MAP / DAP TSP SSP Potassium Chloride Mixers and Distributors (NPK) Petrobras Vale Fert. Copebras Galvani Vale Fert. Vale Fert. Petrobras Proquigel Copebras Vale Fert. Copebras Vale Fert. Yara Vale Fert. Copebras Galvani Heringer Yara Timac Bunge Cibrafertil Fospar Vale Fert. Heringer Bunge Mosaic Yara Fertipar ADM Other( companies) Segmentation of production and distribution chains In 2011 Brazil imported 70% of the fertilizers consumed Source: ANDA 23

24 (mm tons) MARKET GROWTH BRAZIL AND HERINGER Market CAGR (1) 6.2% Heringer CAGR (1) 17.0% Brazilian Market Heringer ,9 Heringer s CAGR from 1995 to 2011 was 2.74 times higher than market CAGR Source: Anda /Heringer/ In product consumption (1) CAGR

25 BRAZILIAN MARKET BREAKDOWN OF DELIVERIES BY REGION North 1.9% Northeast 12.2% Midwest 29.7% North 1.3% Northeast 12.7% Midwest 30.4% South 27.6% Southeast 28.6% South 26.6% Southeast 29.0% Breakdown of deliveries by region has not changed significantly Source: ANDA 25

26 BRAZILIAN FERTILIZER MARKET DELIVERIES BY CROP Soybean 34% Sugarcane 14% Soybean 34% Sugarcane 15% Corn 16% Coffee 6% Reforest. 3% Other 27% Corn 18% Coffee 7% Reforest. 3% Other 23% Breakdown of deliveries by crop has not changed significantly Source: ANDA 26

27 COMPANY OVERVIEW 27

28 MIXING UNITS AND PRODUCTION CAPACITY Rosário do Catete Camaçari 20 mixing units located in the major consumer markets, with installed mixing capacity of approximately 6 million tons Rondonópolis Dourados Anápolis Rio Verde Catalão Patos de Minas Uberaba Manhuaçu Bebedouro Iguatama Viana Ourinhos Três São João do Corações Manhuaçu Paulínia Paranaguá 1 sulfuric acid and Super Simple Phosphate (SSP) unit Porto Alegre Rio Grande Legend Unidades Mixing units Misturadoras Unidade SSP Unit de SSP 28

29 In thousands of tons DELIVERED VOLUME BY CROPS Soybean Corn Coffee Reforestation Sugarcane Other Crops Σ 3, ,0 664,5 767,6 199,6 627,7 837,0 Σ 4,535.8 (P) (P) 834,0 18% 21% 17% 19% 5% 16% 22% 762,0 760,4 265,2 897,3 1, % 17% 6% 20% 22% Σ 4, ,3 879,0 900,9 309,6 959,7 1099,2 (P) 14 % 18% 19% 6% 20% 23% (P) share per crop Sales by crop remained diversified during in the period Continuous growth 29

30 In thousand of tons DELIVERED VOLUME BY CROPS Σ 1,806.2 Σ 1,928.4 % growth Σ 1, ,8 319, Soybean 256,0 301,1 352, Corn Coffee Reforestation Sugarcane Other Crops 290,9 186,0 109,3 333,0 464,4 282,5 140,3 343,9 478,6 227,8 145,4 374,0 508, H10 1H11 1H12 Worth highlighting is the growth in corn crop due to the increase in the area during the winter crop and strong advanced delivery of soybean 30

31 SPECIALTY PRODUCTS In thousands of tons Conventional Specialty H11 1H SHARE OF SPECIALTY PRODUCTS Conventional Specialty S11 1S12 27% 29% 35% 38% 39% 73% 71% 65% 62% 61% Significant share of specialty products in total sales helping to improve customer loyalty and margins 31

32 SPECIALTY PRODUCTS 32

33 CLIENT BASE AND MARKET SHARE Number of Clients Market Share - 0.5% % ,5% 18,5% 17,2% Number of Clients % - 1.9% Market Share ,0% 16,3% 16,4% 1H10 1H11 1H12 1H10 1H11 1H12 Solid client base and significant market share 33

34 SALES BY SEGMENT Individual Producer 44% Individual Producer 43% Resale 6% Resale 6% Corporate Producer 42% Cooperatives 8% Corporate Producer 45% Cooperatives 6% Corporate/Individual Producer = 86% of the volume Corporate/Individual Producer = 88% of the volume Focus on retail and direct sale to rural producer 34

35 INITIATIVES Development of new technologies Launch of new products Continuation of partnerships with universities, foundations, and research centers among others Continuous efforts to build closer relations with clients and suppliers Disclosure of the first sustainability report in

36 OUTLOOK 36

37 BARTER RATIO OF AGRICULTURAL PRODUCTS VS. FERTILIZERS 50,00 40,00 30,00 20,00 10,00 0,00 22,06 Soja Paraná (sc*/60kg) 46,92 23,96 18,99 23,11 20,04 15,60 140,00 120,00 100,00 80,00 60,00 40,00 20,00 0,00 Milho Paraná (sc*/60kg) 115,54 71,42 60,73 62,35 58,58 70,08 64,19 54,32 45,06 48,67 Cana São Paulo (ton) Café Brasil (sc*/60kg) 100,00 80,00 60,00 40,00 20,00 0,00 34,37 19,97 40,97 79,72 45,54 16,87 26,34 26,45 10,00 8,00 6,00 4,00 2,00 0,00 Café Robusta 7,69 5,15 3,33 6,60 2,63 2,60 Café Arábica 3,91 3,26 3,90 3,87 2,21 2,02 2,65 2,83 Barter ratio of agricultural products to fertilizers should remain highly favorable for rural producers Credit conditions for agriculture should also remain favorable Source: Agroconsult 37

38 BRAZILIAN FERTILIZER MARKET AND SEASONALITY 35% 39% 40% 1st Half 65% 61% 60% 2nd Half E Estimated growth of 4.1% in 2012 with a delivery volume of 29.5 million Seasonality of 40% in 1H and 60% in 2H Source: Anda /Heringer /2012E Estimate 38

39 INTERNATIONAL RAW MATERIAL PRICES Urea Potassium Chloride MAP/DAP 700,00 650,00 600,00 550,00 500,00 450,00 400,00 350,00 300,00 250,00 200,00 Jun/11 Jul/11 Aug/11 Sept/11 Oct/11 Nov/11 Dec/11 Jan/12 Feb/12 Mar/12 Apr/12 May/12 Jun/12 Jul/12 Since April raw material prices have been increasing slightly but are expected to stabilize in the three chains (NPK) Source: Siacesp /FOB Brazil Price in USD 39

40 FINANCIAL HIGHLIGTHS Continuous improvement in ratios and leverage Adequate working capital management Attractive valuation - sell side 40

41 FINANCIAL HIGHLIGHTS (R$ MM) Net Revenue EBITDA and EBITDA Margin ,209 1,2% 39 6,0% 7,5% ,0% 3,3% ,4% H11 1H SS* H11 1H SS* NI and Net Margin Net Debt/EBITDA 1,9% 1,8% 1,4% 0,6% ,5% 1,6% x x 1.7x 1.8x H11 1H SS* SS* *Note: 2012 SS average of sell side forecasts 41

42 WORKING CAPITAL DAYS Accounts Receivable Days Inventory Days Accounts Payable Days - adjusted by FINIMP Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 WORKING CAPITAL DAYS Increase in inventory days (volume and average price in reais) due to the demand expected in 2H12 Increase in accounts payable days due to increase in inventories Accounts receivable days in line with the same periods in previous years 42

43 FINANCIAL INDICATORS AND MULTIPLES LIQUIDITY Current Ratio INDEBTEDNESS Net Debt/EBITDA YIELD ROE (NI/SE) EBITDA/SE 15.73% 16.69% % 31.48% 17.10% 1.44% 15.22% 51.82% 13.49% 74.43% MULTIPLES Net Debt (R$ thousand) 216, , , , ,374 Closing Price of Shares (R$) Number of Shares 48,566 48,810 48,471 48,471 48,471 Market Cap (R$ thousand) 954, , , , ,028 Enterprise Value (R$ thousand) 1,170, ,748 1,000,694 1,056,685 1,151,402 EV/EBITDA Earnings per Share (R$) Return on Investment (Price/Earnings) Significant improvement over the past few years 43

44 ATTRACTIVE VALUATION Market Cap Cash EBITDA Low multiples in consideration of the company s performance 44

45 OWNERSHIP BREAKDOWN Base date as of 08/20/12 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul Average daily volume of de R$ Yield of +44.1% vs. +4.5% of IBOVESPA Yield of 88% in the past 12 months Ownership Breakdown and Free Float FHER3 FHER3 Performance - PERFORMANCE vs.ibovespa 14,10 15,99 Free Float 32,2% Controlling Group 9,27 10,00 9,45 8,50 10,42 11,45 12,47 67,8% FHER3 Ibovespa

46 FREE FLOAT BREAKDOWN 80% 70% 60% 50% 40% 30% 20% 10% 57% 24% 19% 38% 40% 22% 51% 41% 9% 58% 28% 14% 60% 47% 39% 28% 14% 12% 0% Brazilian Funds Foreign Funds Individuals Migration from Brazilian funds to foreign funds 46

47 ANALYST COVERAGE Analysts Recommendations Price Target Last Revision of Price Target Bank of America Merril Lynch Isabella Simonato/ Fernando Ferreira / Buy R$ /09/2012 Itaú BBA Giovana Araújo/ Antonio Barreto antonio.barreto@itaubba.com Outperfom R$ /09/2012 Morgan Stanley Javier M. Olcoz/ Wesley Brooks Wesley.Brooks@morganstanley.com Overweight R$ /09/2012 Deutsche Bank Alessandro Baldoni/ Gustavo Gregori gustavo.gregori@db.com Buy R$ /09/2012 Banco do Brasil Henrique Koch/ Thiago Gramari thiago.gramari@bb.com.br Outperform R$ /10/

48 FOOD SECURITY Population and income growth, improvement in diet, increase in demand for food... Need for adequate use of fertilizers 48

49 IR CONTACTS Ingrid Gentina Palmeiro Laís Cristina de Sá Bortolozzo Wilson Rio Mardonado INVESTOR RELATIONS Phone: