Bank of America Merrill Lynch Global Healthcare Conference 2011

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1 Bank of America Merrill Lynch Global Healthcare Conference 2011 September,

2 Disclaimer - Forward Looking Statements The material that follows is a presentation of general background information about Cremer as of the date of the presentation. It is information in summary form and does not purport to be complete. It is not intended to be relied upon as advice to potential investors. No representation or warranty, express or implied, is made concerning, and no reliance should be placed on, the accuracy, fairness, or completeness of the information presented herein. This presentation contains statements that are forward-looking within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of Such forward-looking statements are only predictions and are not guarantees of future performance. Investors are cautioned that any such forward-looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the operations and business environments of Cremer and its subsidiaries that may cause the actual results of the companies to be materially different from any future results expressed or implied in such forwardlooking statements. Although Cremer believes that the expectations and assumptions reflected in the forward-looking statements are reasonable based on information currently available to Cremer s management, Cremer cannot guarantee future results or events. Cremer expressly disclaims a duty to update any of the forward-looking statement. This presentation does not constitute an offer, or invitation, or solicitation of an offer, to subscribe for or purchase any securities. Neither this presentation nor anything contained herein shall form the basis of any contract or commitment whatsoever 2

3 Cremer Leading supplier of consumable healthcare products in Brazil (1) Highlights Breakdown of Net Revenue Founded in 1935 Healthcare product supplier First aid, surgery, wound treatment and hygiene for professional and domestic use Other Healthcare 3% Industrial 13% Traditional brand with solid reputation Leadership in a fragmented market Dental 8% LTM 2Q MM Hospital 55% Integrated business model with direct sales capability Retail 22% National presence and logistic footprint (9 DC s) Large and diversified customer base in hospital, retail and dental segments 4 business segments Breakdown of Operating Performace (2) Industrial 17% Hospital: ~8K clients among hospitals, distributors, clinics and labs Retail: ~17K clients among drugstores, baby shops, supermarkets and distributors Dental: ~23K clients among dentists and dental clinics Industrial: non core; serving industrial clients in the automotive, shoe manufactures and white goods manufactures Dental 1% Other Healthcare 2% Retail 29% LTM 2Q11 58 MM Hospital 52% (1) In terms of market capitalization, revenues and clients (2) Operating Performance (OP) is EBITDA minus some extraordinary non-operating effects such as stock option plan and extraordinary provisions. 3

4 Product Portfolio Hospital Retail Textile Platform Textile Platform Gauze Lap Sponges Crepe Bandages Plaster Cast Cotton Ear Swaps Gauze Crepe Bandages Cloth Diapers Plaster Cast Cotton Ear Swabs Latex Platform Adhesives Platform Examination Gloves Cirurgical Gloves Adhesive Bandages Patches Microporous Tapes Plastic Platform Latex Platform Needles Syringes IV Sets Probes Collectors Patches Examination Gloves Adhesives Platform Adhesive Bandages Microporous Tapes 4

5 Integrated Business Model We are a vertically integrated player acting in manufacturing, sales, and supply of healthcare consumable products in Brazil Manufacturing Sales Supply Chain Leading manufacturer of surgical textiles and adhesives Solid reputation for quality and reliability In-house research and development capability Plastics Plant - SP Plastics Plant - SC Integrated database with high technology Business Intelligence Teared pricing capabilities / yield management Cross-selling Low customer acquisition cost Low cost sales channel State-of-the-art call center ~10,000 calls/day Over 1,200 orders/day National field sales force Unique national footprint with 9 distribution centers Differentiated service Reliable and cost-efficient ~91% OTIF (On Time, In Full) 56,000 (approximately) clients served in 2010 Adhesives Plant - SC Textile Plant - SC Distribution centers (9) Manufacturing units (4) 5

6 Hospital Business Unit Highlights Represents 55% of Cremer s revenue and 52% of performance Net Revenue Financials (R$ MM) Operating Performance ~8K clients served in 2010: Hospitals (private and government owned, distributors, labs and clinics) Sales force of 14 people on the field and 37 + call center operators 20% of the sales are to government owned clients and 80% are to private clients 65% of the sales are to final clients (direct) and 35% are to distributors (indirect) H09 1H10 1H % 12% 12% 1H09 1H10 1H11 Portfolio 1 Key Initiatives Latex Platform 30% Textile Platform 43% Plastics Products Platform 17% Others 10% Acquisitions and Partnerships Capture of synergies from business integrations Revenue increase through cross-selling Brand and Relationship Increase client relationship based on technical sales Stronger presence of sales force in the field Innovation and Portfolio Management Development and launch of new products 1) Based on 1H11 numbers 6

7 Retail Business Unit Highlights Represents 22% of Cremer s revenue and 29% of performance Net Revenue Financials (R$ MM) Operating Performance ~17k clients served in 2010: Drugstores, Supermarkets, Baby Shops, Distributors 44.0 Sales force of 14 people on the field and 28 + call center operators 42% of the sales are to final clients (direct) and 58% are to distributors (indirect) % 21% 19% 1H09 1H10 1H11 1H09 1H10 1H11 Portfolio 1 Key Initiatives Textile Platform 58% Adhesives Platform 27% Latex Platform 13% Others 2% Increase Presence Go-to-Market strategy review (appropriate use of distributors, client segmentation, sales force adjustment, etc.) Brand / trade marketing initiatives Leverage of Topz s client base and channel penetration Portfolio Relevance Portfolio enhancement through acquisitions Development and launch of new products 1) Based on 1H11 numbers 7

8 Dental Business Unit Highlights Represents 8% of Cremer s revenue and 1% of Cremer s operating performance Net Revenue Financials (R$MM) Operating Performance Started in 2005 One of the largest dental distributors in Brazil 8% ~23k clients served in 2010 among dentist and dental clinics % % 1H09 1H10 1H11 1H09 1H10 1H11 Resins 7% Portfolio 1 Anesthesics 7% Business Unit Growth Key Initiatives Increase client base and reduce churn Textile Platform 15% Latex Platform 33% Others 38% Build strategic partnerships with clients associations and suppliers Increase web sales ( Gain relevance besides latex platform Profitability Enhancement Pricing strategy and portfolio review 1) Based on 1H11 numbers 8 Sales cost improvement

9 Strategic Guideline Vision: Reference in products that facilitate and improve healthcare in the areas of first aid, surgery, treatment and hygiene for professional and domestic use HR & Infrastructure Internal Processes Market Shareholders Value Employees Promoting pride in working for Cremer Brand and Relationship Operational Excellence Hospital and other health service providers Value Creation Sustainable Profitable Growth Innovation and Portfolio Management ROIC Values and Culture Regulatory Retail Cash Flow Generation Infrastructure Competitive Intelligence Built to Last 9

10 Additional Value Creation Opportunities Mid and Long-Term Go-to-market Focus on key accounts Closer relationship with distributors Cross Selling Short and Mid-Term Improve mix and market share of existing products Product Innovation New healthcare product lines ; Entrance into new segments Operations optimization Manufacturing upgrade Logistics optimization Market Consolidation Organic M&A Operational Excellence Continue manufacturing and supply chain optimization Product extension New items for existing product lines 10

11 Fragmented Market Cremer 2Q11 LTM Revenues was R$ 392MM, ~8% of Market Share We estimate the market to be R$ 5.0 bn Suppliers: niche competitors in each product category Distributors: regional, family owned Clients: largest chains have few stores compared to the number of players Suppliers 500+ Distribution 1,500+ Clients / Consumer Distributor 1 Distributor 2 Distributor 3 Hospitals ~6,500 Regional Clients Regional Clients Drugstores ~55,000 Dentists 100,

12 Category Management (1/3) We have specific and detailed plans for each product category Category Segment % Net Rev. 2Q10 x 2Q11 Market Share Market (R$ MM) Profitability Critical Success Factors Textile Platform 39.9% 23.6% 21% 707 Gauze 38% 145 Lap Sponges 31% 180 Cotton 35% 65 Crepe Bandages 39% 63 Diapers 29% 125 Plaster Cast 36% 27 Other textiles N/A N/A Ear Swabs 2% Increase products competitiveness - Lower the production cost - Profitability maintenance - Production x Outsourcing - Accelerate growth in retail - Gain productivity - Review the technology and production process - Recover market share - Market share defense - Innovation / Packaging - Recover profitability - Export Issue - Niche Markets - Product Innovation - Gaining relevance - Expand capacity Latex Platform 23.0% 3.8% 20% 500 Gloves 20% Profitability recovery - Avoid price war Hospitalar Retail * Net Revenue from healthcare products Dental Other Healthcare 12

13 Category Management (2/3) We have specific and detailed plans for each product category Category Segment % Net Rev. 2Q10 x 2Q11 Market Share Market (R$ MM) Profitability Critical Success Factors Adhesives Platform 11.4% 11.3% 4% 296 Adhesive Bandages Microporous Tape Other Hospital Adhesives 55% 74 22% 77 Patches 3% 145 N/A N/A - Market share defense - Margins maintenance - Accelerate growth - Profitability maintenance - Gaining relevance - Innovation - Gaining relevance - Innovation Plastics Platform 10.3% 186.8% 15% 497 Needles and Syringes 2% 222 IV Sets 10% 140 Collectors and Probes Women's Health 25% Supply guarantee - Gaining relevance - Gaining relevance - Ensure profitability - Gaining relevance - Ensure profitability 0% 35 - Develop platform Hospitalar Retail * Net Revenue from healthcare products Dental Other Healthcare 13

14 Category Management (3/3) We have specific and detailed plans for each product category Category Segment % Net Rev. 2Q10 x 2Q11 Market Share Market (R$ MM) Profitability Critical Success Factors Chemicals Platform 0.2% -80.7% 0% 600 Infusion and Cleaning Solutions 0% Gaining relevance - Profitability recovery Nonwovens Platform 0.0% % 0% 2,806 Medical Scrubs 0% 106 Disposable Diapers 0% 2,700 - Develop platform - Change in the culture of consumption - Revise strategy - Brand issue (Mabesa) Others 4.3% -30.3% 0% 0 Other Third Party N/A N/A Beauty and Hygiene N/A N/A - Continue the rationalization process - Focus on dental - Operate with own brand - Develop platform Hospitalar Dental Retail * Net Revenue from healthcare products Other Healthcare 14

15 Rational to introduce new products We are constantly pursuing new partnerships and acquisitions to increase our portfolio and to create value to shareholders Pros Cons Hospital and Retail demand for disposables and consumables products for healthcare Cremer s current portfolio Other Products In-house development Partnership OEM / Import 1. Don t depend on third parties 2. Capture the chain s entire value 1. Little capital employed 2. Imediate start 3. Develop partneship with a tradicional player 1. Less capital employed compared to in-house development 2. Develop Cremer s brand 1. Cremer doesn t have the know-how 2. Implementation period 3. Brings another player to the market 4. Higher capital employed 1. Don t capture te entire value 2. Challenge to find the partner 1. Implementation period 2. Product quality 3. Brings another player to the market M&A 1. Imediate start 2. Capture the chain s entire value 3. No new competition 1. Integration risks 2. Challenge to find the target 15

16 Embramed Strategic Partnership (Sep/10) Strengthens our plastic platform Highlights Product portfolio Largest 1 manufacturer of IV sets and probes in Brazil Gross Revenue of ~R$ 76 MM in 09 Traditional brand (20+ years in the market) Deal Manufacturing facilities Preferred commercialization agreement to have special conditions: R$ 5 MM (3-year amortization, Tax deductable) Call and put options 1.7 MM shares or the equivalent payment in cash (~R$ 30 MM) Cremer has an american option and Embramed has an european option (march/14) 16

17 Targa Strategic Partnership (Jan/11) Strengthens our latex platform Highlights Product portfolio Owner of Lemgruber brand One of the largest importers/manufactures of examination gloves in Brazil Biggest manufacturer of Cirurgical Gloves in Brazil Deal Manufacturing facilities Buy under special conditions and Import directly Use the trademark "Cremer R$ 20 MM (7-year amortization, Tax deductable) Option of shares subscription Subscription warrant of at least 20% and not more than 40% of Targa s equity 5x LTM EBITDA 17

18 P. Simon Acquisition (Apr/11) Strengthens our plastic platform Highlights Product portfolio Manufacturing and commercialization company of medical hospital products collectors, flasks, drains, extenders and irrigators Leadership in a niche market (~30% market share) Regional presence (80% of sales in SP); Present in major hospitals such as Einstein and Sírio Libanes Greater synergy and complementarity with Embramed Net Revenues of ~R$ 22 MM in 2010 Deal Manufacturing facilities Purchase of 100% of the capital of P. Simon R$ 25 MM in three tranches : 1. R$ 15.2 MM at the closing date 2. R$ 5 MM 12 months after the closing date and 3. R$ 5 MM 24 months after the closing date The tranches (2) and (3) may be reduced depending on the future revenue for the years 2011 and

19 Topz Main Assets Acquisition (Aug/11) Strengthens our disposable textile and personal hygiene platforms Highlights Product portfolio Company of Cosmetics and Personal Hygiene Products Strong presence on food channel (supermarkets) Gross Revenue of ~R$ 70 MM 2Q11 LTM Deal Acquisition of main operational assets of Topz as the brands Salveloz, Salveped and others. Total payment of ~R$ 73 MM 19

20 2Q11 Results (R$ MM) Net Revenues EBITDA Net Income Q10 2Q11 2Q10 2Q11 2Q10 2Q11 Working Capital 1 Cash Cycle (days) ROIC % 17.4% % 18.3% 2Q10 2Q11 2Q10 2Q11 1. Working Capital = Receivables Suppliers + Inventory (% of 1H11 Annualized Net Revenues) 2. Annualized 20 2Q10 2Q11

21 Contacts Rafael Salvador Grisolia Chief Financial and Investor Relations Officer acionistas@cremer.com.br 21