Institutional Presentation. May 2017

Transcription

1 Institutional Presentation May 2017

2 Market

3 Grains and Fibers Worldwide Historical soft commodity price trends and the rationale behind our own future tendency Grain Prices (US$/bu) Growing demand for grains due to global population growth (9 billion in 2050) Higher demand for animal protein Asia to remain the main destination for agribusiness exports Planted area and yields will increase at rates below food demand growth In the short term: Huge production Strong demand from China Possible American protectionism may favor Brazilian exports 3Market 2,5 2 1,5 1 0,5 0 Cotton Price (US$/lb) Price pressure on cotton vs. synthetic fiber Decline in cotton planted area worldwide Global stocks tending to fall In the short term: Stable demand and low-quality Chinese stocks Strong demand from other Asian countries due to climate problems in these regions Higher premiums for better products (of between 100 and 1,000 additional points) Every 100 points (0.1 /lb) represents an 8% margin gain (US$33 per ha) (1) Source: CBOT and ICE

4 Brazil continues to feed the world 4Market Production (1000t) and planted área (1000ha) Agribusiness in Brazilian GDP (2015) 21% 32% 68% Cattle Raising Agribusiness Agribusiness Brasil GDP Projected Production, Planted Area and yield of Soybean in Brazil Production Planted Area Yield Source: FAO Grain Outlook; FIESP Outlook de Grãos Brasill; FNP Relatório de Terras Agribusiness accounts for an extremely important share of Brazil s GDP and trade balance Agribusiness exports reached record levels in 2015: 163 million tons 2013 Exports 2014 expected to increase by 42.7 million tons (41%) by 2024 Estimated upturn of 5.3 million ha in Brazilian planted area by 2025, with production expected to climb by 33.7 million tons Area expansion on new frontiers will be necessary, especially through the conversion of pasture into agricultural area (e.g. N and NE of Mato Grosso, SE of Pará, Rondônia) These new frontiers will be have to be enabled by logistics costs or grain prices

5 Market Brazil s relevance in the world food supply Export Ranking (%) Production Ranking (%) RURAL PROPERTIES Relevance in the world food supply Brazil s land occupation SOYBEAN CORN COTTON #2 (31%) #1 (42%) #3 (8%) #2 (19%) #4 (6%) #4 (8%) 39% 61% NATIVE VEGETATION 5 12% OUTHERS Source: Embrapa, IBGE, CNA, MMA, FUNAI, DNIT, ANA, MPOG.

6 Brazil s logistics constraints challenge High dependence on expensive road transportation is currently a cost disadvantage of Brasil vs. other commodities producers Transportation matrix over the world Brazil higher freight cost vs. the US 6Market Russia China EUA Austrália Canadá Brasil 25% 37% 43% 43% 46% 81% 58% 32% 50% 53% 43% 8% 25% 13% 17% 11% 11% 0% 20% 40% 60% 80% 100% Ferrovia Estrada Hidrovia e outros Source Ministry of transportation, Research reports 4% Barge US$ 20/ton Nova Orleans Sorriso Truck US$ 90/ton Santos US$ 31/ton Total Cost Brasil: US$ 113/ton EUA: US$ 51/ton US$ 23/ton Source Aprosoja However, extensive public and private investment package announced in 2012 may reduce this gap and increase sector margins in near future

7 New logistics hub Rota 1 Rota 2 Rota 3 Rota 4 Rota 5 Portos AM Porto Velho RO Itacoatiara BR 163 Lucas do Rio Verde Santarém Santana Miritituba Nova Mutum PA AP BR 158 MT Vila do Conde TO MA Itaqui PI BA Grain Export Forecast by the North (Million of tons) / / / / / / / / Market Company Transhipment Initial Capacity Estimated Port Station (mm/ton) Capacity Bunge/Amaggi Miritituba Vila do Conde 3,0 4,0 Cargill Porto Velho/Miritituba Santarém 3,0 5,0 ADM - Barcarena 2,0 6,0 Hidrovias do Brasil (1) Miritituba Vila do Conde 3,0 6,0 Cianport (2) Miritituba Santana 0,5 3,0 Hermasa (Amaggi) Porto Velho Itacoatiara 4,7 5,0 (1) Patria Investimentos and Promon (2) Joint Venture between Fiagril and Agrosoja Tegram (3) Porto de Itaqui 5,0 10,0 (3) NovaAgri, CHS Brasil, Glencore, CGG Trading and Consorcio Crescimento (Louis Dreyfus and Amaggi Exportação) Source: Jornal Valor (jan/13 and jan/14)

8 8Market Brazil s Midwest will provide producers with the best opportunities Topography and Climate Infrastructure Opportunity MT Sunlight + Flat topography with altitude Rainfall Melhora Logística (Corredor Norte) More efficient planting - 2 crops per year + High yields + Low production volatility Scale AM Porto Itacoatiara Velho Rota 1 Rota 2 Rota 3 Rota 4 Rota 5 Portos RO BR 163 Lucas do Rio Verde Santarém Santana Miritituba Nova Mutum PA AP BR 158 MT Vila do Conde 2020/21 harvest estimate: shipment of 37 million tons (35% of total Brazilian output) via the North Distance traveled cut by 1,000 km Freight costs expected to fall by 30%, most of which not yet captured by producers TO MA Itaqui Freight currently accounts for 30% of soybean prices and 50% of corn prices PI BA Source: Estudy Pro Logística - APROSOJA

9 Market Mato Grosso has the lowest yield volatility due to climate changes MT: Consolidated areas with rare crop failures TS CA RB SJ GP RC SP MM Agricultural Frontier: fast growing area. Weather history is short, but has been showing a high risk region Annual Rainfall(mm) 9 RS: Instability weather area. Strong and frequent crop failures PRODUCTIVE RISK Very low Low Moderate High Very High

10 The Company

11 The Company History = Entry of new CEO, Arlindo Moura, an executive with extensive experience of the sector > Beginning of operational turnaround Conclusion of Operational Turnaround Process > focusing on Mato Grosso Conclusion of Debt Reestructuring > aligning financial flows with the Company s operational cash generation 11

12 The Company Three years of extensive work in the pursuit of excellence To become Brazil s leading agricultural production and land development company by 2020 Operational Excellence CEO with proven expertise in the sector 33% increase in planting, managing and harvesting capacity Reduction in the average age of machinery from 10.8 years in 2012 to 9.5 years n 2015 Improved soil quality, reducing the risk of poor harvests More efficient use of static storage capacity (112%) Greater selectivity in the use of leased areas (return of 67,000 leased hectares) Maior seletividade na utilização de áreas arrendadas (devolução de 67 mil ha arrendados) Efficient Organizational Culture Creation of a leaner organizational culture (25% improvement in the hectares/employee ratio) 56% reduction in the number of managers (from 32 to 14) Reduction of R$31 million in SG&A over 3 years Training and improving the skills of workers and managers Corporate Governance and Controls Strategic Financial, Personnel and Audit & Risk Management Committees with at least one independent member Code of Conduct with independent Ethics Channel Big 4 audits for more than 5 years Mapping of processes and monitoring of performance indicators by the management team 12

13 The Company A successful operational turnaround 60,0 100% of lands corrected Improvement of indicators, ex: SOYBEAN (bgs/ha) 49,8 46,3 51,9 49,0 54,4 52,9 51,4 47,5 54, Chg. 1. Planting Capacity (effective days) % 2. Harvesting Capacity (effective days) % 12/13 13/14 14/15 15/16 16/17E MT - CONAB Terra Santa MT 121,0 118,7 Processes and controls improvement (financial, operational, efficiency / quality design) CORN 2nd Crop (bgs/ha) 103,0 96,0 101,0 101,5 106,9 91,6 94,6 66,7 12/13 13/14 14/15 15/16 16/17E MT - CONAB Terra Santa MT Quarterly financial data audited by KPMG (PWC in the previous 5 years) 239,0 263,3 234,3 275,8 274,1 234,6 266,4 264,9 244,2 Positive reflection on yields: COTTON 2nd Crop (@/ha) 199,1 12/13 13/14 14/15 15/16 16/17E 13 MT - CONAB (consolidated) Terra Santa MT

14 The Company 2016/17 Crop Plan 14 Location Units Planting area by units and product 2nd Crop 1st Crop % Land Units Alternative Total Soybean Corn Cotton Corn Sunflower Use Corn Ribeiro do Céu % 73% Terra Santa % 81% São José % 67% Guapirama % 71% Mãe Margarida % 60% Parecis % 58% 719 Sete Placas % 75% 169 Cachoeira % 85% 348 Total % 71% Warehouse static capacity vs. production per unit Warehouses Estatic Capacity PROD. SOYBEAN PROD. CORN (ton) ton. atend. ton. atend. Ribeiro Céu % % Terra Santa % % São José % % Deciolândia % % Parecis % % M. Margarida % % Sete Placas % % Total % % Cotton gin and Production Capacity / Processing Crop 2016 Cotton Gins Production capacity machines Soil Prep. Correction Plan SF 15/16 Production Period Ribeiro Céu Busa 200 S /800 fd dia fardos 135 dias (T 17/nov) Guapirama Piratininga 120 S/450 fd dia fardos 108 dias (T 21/oct) Deciolândia Lummus 170 S/ 550 fd dia fardos 112 dias (T 25/oct) Total pack. / day pack. 4 a 4,5 months

15 The Company Production Units strategically located in Mato Grosso PU CACHOEIRA PU PARECIS PU SÃO JOSÉ PU SETE PLACAS Municipality: Campo Novo dos Parecis Total Area: 5,257 Leased Area: 5,257 Physical Area (1): 5,192 Municipality: Campo Novo dos Parecis Total Area: 8.920,00 Own Area: 0 Leased Area: 8.920,00 Physical Area (1): 8.809,00 Municipality: Campo Novo dos Parecis Other Assets: 1 Warehouse (Company Owned) and 1 Warehouse (Leased) Total Area: 27,428 Company Owned Area: 17,133 Leased Area: 10,295 Physical Area (1): 19,382 Municipality: Diamantino Other Assets: 1 Warehouses (Leased) Total Area: 8,130 Company Owned Area: 3,164 Leased Area: 4,966 Physical Area (1): 6,192 PU TERRA SANTA PU GUAPIRAMA PU MÃE MARGARIDA PU RIBEIRO DO CÉU 15 Municipality: Tabapora Other Assets: Warehouse (Company Owned) and Cotton Gin (Leased) Total Area: 29,305 Company Owned Area: 14,642 Leased Area: 2,750 Physical Area (1): 17,323 Municipality: Diamantino Other Assets: Cotton Gin (Company Owned) Total Area: 16,212 Leased Area: 16,212 Physical Area (1): 15,963 Municipality: Santa Rita do Trivelato Other Assets: Warehouse (Company Owned) Total Area: 22,042 Company Owned Area: 17,277 Leased Area: 7,765 Physical Area (1): 13,675 Municipality: Nova Mutum Other Assets: Warehouse (Company Owned) and Cotton Gin (Company Owned) Total Area: 30,673 Company Owned Area: 12,551 Leased Area: 18,122 Physical Area (1): 26,266 (1) area available for cultivation, considering just one harvest Unit of Measurement: Hectares

16 Harvest Timeline Soybean Crop MT 1st Crop Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Corn MT 1st Crop MT 2nd Crop MT Alternative 16The Company 2016/17 Crop Cotton Planting MT 2nd Crop Harvest Soybean Status (2016/17 Crop) Planting ha 100% Harvest ha 100% Cultivation Harvest Planting Status 2nd Crop (2016/17 Crop) ha 100% SOYBEAN CORN COTTON ha 100% *Mar. 15, 2017

17 The Company 2016/17 Crop Comercialization Status PRODUCT PRODUCTION SELLS % TO FIX % FIXED % Comp* SOLD PRICE SOYBEAN 16/ ton 0 ton 0% ton 100% 100% $ 18,00 /sc CORN 16/ ton ton 8% ton 72% 80% $ 5,41 /sc COTTON 16/ ton 0 ton 0% ton 81% 81% $ 0,7404 /lb SEED 16/ ton 0% ton 83% 83% R$ 492 /ton *Apr. 28, 2017 Soybean Clients Corn Clientes Cotton Exports DREYFUS 1% SOLAE 1% CARGILL 8% GLENCORE 1% COFCO 1% CARGILL 4% CERV. PETROPOLIS 1% FIAGRILL 9% BUNGE 47% AMAGGI 26% BUNGE 40% OTHERS 28% INDONESIA 27% AMAGGI 16% ADM 17% AGROP. MARGARIDA 29% CHINA 11% VIETNA 16% MALASIA 18% 17

18 1Q17 Financial Data

19 Financial Data 1Q16 x 1Q17 Gross Profit (R$ millions) 75,4 Income before Tax and Social Contribution (R$ millions) 46,7 32,5 12,3 1Q16 1Q17 1Q16 1Q17 Net Income (R$ millions) Adjusted EBITDA (R$ millions) 62,3 43,5 33,1 2,9 19 1Q16 1Q17 1Q16 1Q17

20 Financial Structure Debt (R$ thousand) Debt Breakdown 1Q17 4Q16 Indebtedness of the previous quarter 756,6 733,6 ( + ) Borrowings in the Quarter 18,1 90,0 (- ) Depreciation non Quarter (35,2) (85,3) ( + / - ) Exchange rate and interest (5,9) 18,3 (- ) Transaction costs Running (4,3) (5,4) Debt at the end of the Quarter 729,3 751,2 Evolution of Net Debt (R$ and US$) R$ R$ R$ R$ R$ USD USD USD USD USD Q16(Ptax R$ 3,5589) 2Q16(Ptax R$ 3,2098) 3Q16(Ptax R$ 3,2462) 4Q16(Ptax R$ 3,2591) 1Q17(Ptax R$ 3,1684)

21 Short and Long Term 12% 21Debt Restructuring Amortization 84% 88% 16% 1Q17 1Q16 Short Term Long Term Current Flow Amortization after the restructuring Total Debt

22 Corporate Governance

23 Corporate Governance Best Practices Major Shareholders Bonsucex Laplace 27,0% (1) Investimentos 23,0% Gávea Investimentos 15,0% EWZ Invest LCC 11,9% Sul América Investimentos 6,2% Outros 16,9% Fiscal Council Edmundo Macedo S. Marcos Peters Vanessa C. Lopes Marcel Cecchi Board of Directors Silvio Tini President Renato Carvalho Carlos Fernandes Christophe Akli Independent Alexandre Figliolino Independent Mateus Bandeira Independent Vacant position Committees Strategic Financial Committee Personnel Committee 23 Julio Toledo Piza Rafael Reali Esposito Renato Carvalho do N. Lucia Helena Videira Carlos Augusto Reis de A.F. João José Oliveira de Araújo

24 Corporate Governance Best Practices Executive Officers Arlindo Moura CEO Alexander Estermann Vice-President Cristiano Soares CFO and IRO Marcio Ferreira COO Sandro Costa CCO 24

25 Risk Policy

26 Risk Management Objective and Structure Objective Structure Board Of Director Set sales as we incur costs Ensure the sustainability of the Company CEO Financial Committee Reduce volatility of results due to price changes Risk Management Protect Company s cash Risk Committee Controller CFO COO CCO Risk Manager 26

27 Limits to the 2016/17 crop Soybean example Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec ,0% 90,0% 80,0% 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% % sold Production Certainty Direct Costs Total Costs 27

28 Limits to the 2016/17 crop Cotton example Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec ,0% 90,0% 80,0% 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% % sold Production Certainty Direct Costs Total Costs 28

29 IR - contacts Arlindo de Azevedo Moura CEO Cristiano Soares Rodrigues CFO & IRO Maria Luisa Almeida Investor Relations Manager Tatiana D Alessandro Zaghini Horta Investor Relations Analyst ri@tsagro.com