Apimec rj
- 1. Meeting APIMEC-RIO | 4Q11
- 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.” 2
- 3. Eternit Group The largest and most diversified roof coverings industry in Brazil Manufacture of fiber cement and Manufacture of commercialization of bathroom concrete tiles and Activity chinaware and metallic fittings and Chrysotile Mining commercialization components for construction systems of sanitary ware Industrial Units 4 1 1 6 Leader in fiber cement – Leader in The world's 3rd 32% of Market Share concrete tiles – largest – 15% of Market Share 35% of Market Market Share 5th largest of Brazil in sanitary wares Share 300 thousand Capacity 1 million tons 8 million m² tons Capacity Used Around 85% 100% Around 70% (2011) 3
- 4. Plants Location – Fiber cement and Crhysotile Mining Commercial Branches 1) Anápolis/GO; 2) Colombo/PR; 3) Goiânia/GO; 4) Rio de Janeiro/RJ; 5) Simões Filho/BA; 6) São Paulo/SP. 4
- 5. Showroom Location Come visit us Rebouças Avenue, 2175 – São Paulo / SP 5
- 6. Plants Location – Concrete tiles 6
- 7. Supply Chain of Fiber Cement 7
- 8. Diversified Portfolio – Fiber Cement Tiles 8
- 9. Diversified Portfolio – Metallic Fittings 9
- 10. Diversified Portfolio - Components for constructions systems 10
- 11. Diversified Portfolio – Water tanks and filters 11
- 12. Diversified Portfolio – Bathroom chinaware and lavatory seats 12
- 13. Diversified Portfolio – Bathroom Metal Fittings 13
- 14. Diversified Portfolio – Synthetic Marble 14
- 15. Diversified Portfolio – Concrete Tiles 15
- 16. Diversified Portfolio – Full Roofing Solutions 16
- 17. SAMA - Overview
- 18. Global Market – Chrysotile Mineral Canada 4% Russia – 50% Kazakhstan – 11% China – 20% Brazil 15% Global Consumption (MM of Ton) 2004 2005 2006 2007 2008 2009 2010 2011 2.1 2.3 2.3 2.4 2.4 2.1 2.2 2.2 18
- 19. Sales of Chrysotile Mineral (thous. tons) 5.2% -3.0% 306 291 297 136 163 163 2.8% -1.5% 78 80 79 155 143 134 36 39 43 42 37 40 2009 2010 2011 4Q09 4Q10 4Q11 Domestic Market Foreign Market 19
- 20. Eternit and Tégula - Overview
- 21. Covering market – Brazil (2011) Residential Market Industrial and Commercial Market Concrete Others 4% 11% Ceramics 45% Fiber cement Metallic Fiber cement Ceramics 51% 40% 11% 38% Total Market Market Evolution (MM m2) Metallic Concrete 10% -2% 8% 5% 4% Others 5% 8% 12% 2% 534 561 505 495 459 406 425 Ceramics Fiber cement 35% 47% 2005 2006 2007 2008 2009 2010 2011 21
- 22. Structure of the Industrial Park in 2011 Brazilian Fiber Cement ETERNIT Market Installed Capacity (tons / Approximately 2,820,000 1,000,000 year) Capacity utilization Around 86% Around 85% Consumption (ton / year) 2,434,000 859,300 Companies 11 32% Market Share Plants 19 5 Selling Points 39,000 15,000 22
- 23. Structure of the Industrial Park in 2011 Brazilian concrete roofing market TÉGULA Installed Capacity Approximately 24.0 million 8.0 million (m² / year) Capacity utilization Around 70% Around 70% Consumption (m² / year) 16.9 million 5.9 million Companies 35% Market Share 130 Plants 6 23
- 24. Sales of Fiber Cement (thous. tons) 3.9% 13.1% 859 827 731 19.0% -7.5% 195 232 215 2009 2010 2011 4Q09 4Q10 4Q11 24
- 25. Concrete Tiles (thous. square meters) 13.5% 5,961 5,253 4,776 9.6% 1,435 1,573 477 2010* 2011 4Q10 4Q11 *Tégula was acquired on February 11 2010. The amount of 477 thousand m2 doesn’t refer to Eternit. 25
- 26. Economic and Financial Performance
- 27. Consolidated Net Revenue (R$ million) 8.1% 30.2% 820 759 583 720 4.4% 648 34.2% 453 211 220 157 184 187 129 130 111 100 28 27 33 2009 2010 2011 4Q09 4Q10 4Q11 Domestic Market Foreign Market 27
- 28. Net Revenue Breakdown (R$ million) 2007 2011 Fiber cement Fiber cement 55.4% 59.3% Chrysotile Chrysotile Mineral Mineral 26.2% 35.0% New New Business Business 18.4% 5.7% Components Construction 2.6% Systems Components Construction 3.2% Systems Concrete tiles and 10.9% Accessories 2.5% Others(*) 3.7% Bathroom Chinaware 1.2% Others(*) (*) Others: metallic roofing tiles, polyethylene water tanks, lavatory seats, water pipe filters and synthetic marble. 28
- 29. COGS Breakdown – 4Q11 Fiber Cement Chrysotile Mineral Energy Energy 3% 8% Other Costs 9% Raw Other Costs Depreciation 20% material2 5% Depreciation 27% Raw material1 4% 62% Workforce 51% Workforce 11% 1 - Cement (46%), Chrysotile Ore (43%) and others (11%) 2 – Fuel, explosives, packaging, among others Concrete Tiles Energy 5% Other Costs 21% Raw material3 Workforce 50% 17% Depreciation 7% 3 - Cement (53%), sand (31%) and others (16%) 29
- 30. EBITDA (in R$ million) 17.1% -2.9% 144 140 123 13.0% 17.0% 40 30 34 2009 2010 2011 4Q09 4Q10 4Q11 30
- 31. Net Income (in R$ million) -4.7% 39.3% 102 97 73 10.3% 68.6% 32 29 17 2009 2010 2011 4T09 4T10 4T11 31
- 32. Margins 42% 43% 41% 41% 39% 38% 21% 19% 19% 18% 17% 16% 14% 15% 13% 13% 12% 11% 2009 2010 2011 4Q09 4Q10 4Q11 Gross Margin EBITDA Margin Net Margin 32
- 34. Capital Expenditures (in R$ million) 93 14 14 11 34 34 46 5 2 29 6 13 1 8 2 13 12 27 7 21 24 2 5 7 11 4 3 2009 2010 2011 4Q09 4Q10 4Q11 Investiments Synthetic Marble Capacity Increase – Tégula Acquisition Tégula Molds and New Business Capacity Increase – Eternit Land acquisition – Ceará State Administrative 34
- 35. Development unit of Synthetic Marble Synthetic Marble Resin Silo Production Line Products 35
- 36. Location of Multiproduct Plant - Ceará State Cimenteira Linha Gás Natural 35 km 15 km Land of 400 000 m² 36
- 37. Artistic vision and Lay-out Bathroom Chinaware Plant 37
- 38. Multi-Product Unit in the Ceará State - Bathroom Chinaware Plant Joint-Venture: Companhia Sulamericana de Cerâmica S. A. Share of 60% Share of 40% Knowledge of the local market Knowledge of manufacturing and Strong distribution network products technology Efficient logistics Low cost production Brand strength Expertise in new product development Investment Resources Expertise in new market Knowledge in Brazil development Investments: R$ 97 million Capacity: 1,500,000 pieces per year Begin building: First half of 2012 End building: 18 months Forecast of Gross Revenue at full capacity: approximately R$ 127 million Straight Workforce: 330 employees 38
- 39. Capital Markets
- 40. Ownership Structure – Mar/12 Shareholding Structure Mar/12 27,30% Geração L. Par. F. I. A. 16.40% Luiz Barsi Filho 13.46% Victor Adler + VIC DTVM 8.50% Management 1.54% Other Board of Directors 0.08% 7,90% 62,46% 2,34% Treasurystock 0.03% Member Board of Directors Since Sérgio Alexandre Melleiro (*) 1993 Lírio Albino Parisotto (*) 2004 Individual Investors Victor Adler (*) 2005 Corporations Élio A. Martins 2007 Investors Abroad Luiz Barsi Filho (*) 2008 Clubs. Funds and Foundations Marcelo Munhoz Auricchio (*) 2011 Luis Terepins (*) 2011 (*) Independent member Member FREE-FLOAT 76.39% Consultive Council Since Guilherme Affonso Ferreira 2011 Mário Fleck 2011 40
- 41. Ownership Structure Number of shareholders Average Traded Volume (R$ thousand) 7,064 6,615 6,633 5,910 1,108 1,074 975 794 2009 2010 2011 2012(*) 2009 2010 2011 2012* (*) Until March 2012 41
- 42. Policy of Remuneration Net Income X Distributed Dividend Yield Earnings (R$ million) Pay Out 76 % 79 % 74% 102.1 97.2 15.1% 80.5 73.1 71.6 9.3% 55.3 7.5% 2.2% 2009 2010 2011 2009 2010 2011 2012(*) Net Income Dividends and Interest on own capital (*) Until March 2012 42
- 43. Eternit’s Shares Performance (Dec/06 – Mar/12) Between 12/28/2006 to 3/31/2012, Eternit’s shares appreciated 52.5% and IBOVESPA appreciated 45.1%. In the same period, including the payment of dividends and interest on own capital, Eternit’s shares appreciated 148.3%. 220 ETER3 200 IBOVESPA 180 160 R$ 9.24 140 64.510 120 100 80 60 40 43
- 44. New Investor Relations website In line with technological tendencies, on February, Eternit launched its new Investor Relations website. The new version will provide to shareholders, investors and research analysts an easier access and better navigability to information on the Company. Access: www.eternit.com.br/ir 44
- 45. Outlook
- 46. Favorable Moment for Civil Construction 46
- 47. Economic Figures Minimum Wage (R$) Workforce (R$ million) CAGR: 11.0% CAGR: 5.96% 622 404,751 365,331 377,361 321,163 338,501 545 510 303,028 465 415 380 350 300 2005 2006 2007 2008 2009 2010 2011 2012 2005 2006 2007 2008 2009 UDM 2010* Source: BACEN Source: IBGE * 2010 UDM from dec/09 to nov/10 Food Basic Basket SP x Minimum Wage (purchasing power) 79.1% 79.4% 71.4% 68.7% 66.2% 61.1% 56.5% 57.7% 52.0% 49.1% 52.0% 50.9% 45.9% 545 622 465 510 350 380 415 240 165 260 300 240 228 265 277 286 151 120 180 129 200 159 172 183 182 215 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Jan‐12 Source: IBGE and DIEESE Minimum Wage (R$) Food Basic Basket in SP (R$) % 47
- 48. Economic Figures Credit Availability Unemployment Rate - Brazil Government, Industry, Housing, Rural, Commerce, Credit Individuals (R$ billlion) 10.9% 9.6% 8.3% 8.4% 1,934 1,984 7.4% 1,806 1,857 6.8% 6.8% 1,679 1,715 1,754 1,548 1,614 1,410 5.3% 4.7% 1,227 936 Dec/03 Dec/04 Dec/05 Dec/06 Dec/07 Dec/08 Dec/09 Dec/10 Dec/11 Source: BACEN Source: IBGE Growth of the Brazilian Savings 18.2% 17.4% 17.1% 17.3% 16.6% 15.7% 14.7% 14.0% 13.9% 13.5% 12.9% 11.6% 10.2% 300 301 303 305 306 307 310 316 319 323 326 328 331 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 Source: BACEN R$ billlion (%) Chg YoY 48
- 49. Residences – Perception of Demand
- 50. Residences – Perception of Demand Requiring some type of home maintenance or expansion 77% Permanent Households in Brazil 44.5 million residences Permanent Households – 57.8 million Housing Deficit – 5,5 million • The FGV study shows that between 2010 and 2022, the number of homes will grow in Brazil by an average of 1.9 million/year; Source: ANAMACO (National Association of Construction Material Traders) / Study by the João Pinheiro Foundation, official statistics body for the state of Minas Gerais, is a public institution under the State Planning and Management Department / Abecip (Brazilian Association of Real Estate and Savings Entities) – 2nd Abecip Seminar – Real Estate Panorama: Opportunities and Challenges. 50
- 51. Housing Deficit by Family Income by Minimum Wages (in thousands of units) Regional Up to Three to Five to More than Geographic Region Housing Three Five Ten Ten Deficit North 492 43 17 3 555 Northeast 1,861 55 23 8 1,947 Southeast 1,791 178 65 12 2,046 South 484 66 26 4 581 Midwest 375 22 14 6 417 Total Approximate 5,003 364 146 33 5,546 Housing Deficit In 2008, the estimated housing deficit was 5.5 million units, the majority concentrated in the C and D classes. Source: Study by the João Pinheiro Foundation, official statistics body for the state of Minas Gerais, is a public institution under the State Planning and Management Department . 51
- 52. Indicators Brazilian GDP x Civil Construction GDP x Eternit Gross Consolidated Revenue Home Mortgage Credit as % of GDP 37.1 106 78 18.3 16.8 11.6 48 8.6 8.2 7.5 5.05.4 5.1 4.8 34 3.62.7 3.5 30 18 -0.2 13 11 4.7 -6.3 2007 2008 2009 2010 2011 2012(E) Netherland USA Germany South Malaysia Chile Mexico China Brazil Africa GDP Construction (%) GDP Brazil (%) Eternit (E) Estimate Source: BACEN. Growth in Eternit’s consolidated gross revenue was deflated by Source: ABECIP, BACEN and FEBRABAN (Brazilian Banks Federation). the IGP-M. • In Brazil, home mortgage credit reached 4.7% of GDP in 2011 and should reach 11% in 2014. Source: Abecip (Brazilian Association of Real Estate and Savings Entities) – 2nd Abecip Seminar – Real Estate Panorama: Opportunities and Challenges. 52
- 53. Residences – Management Model New Residential Edifices Expansion and maintenance of Residential Units (thousands of units) (thousands of units) 70 110 260 670 900 2,600 3,100 2,100 74% 88% 93% 95% 96% 96% 99% 99% 26% 12% 5% 4% 7% 4% 1% 1% A B C D/E A B C D/E Construction via Builder Self- Managed Construction Construction via Builder Self- Managed Construction Source: ANAMACO (National Association of Construction Material Traders ) – Sample survey by ANAMACO – Data for sector 2010 53
- 54. Consumer Profile Where do they make their purchases? With home maintenance – who decides the purchase? 0.3% 0.2% 0.4% Self-management 34% Bricklayer/Works 42.5% Foreman/Engineer 56.4% 61.0% 65% Builder/ Contractor 1% 52.7% 41.4% With building – who decides the purchase? 37.1% 4,5% 2,0% 1,5% Self-management 27% AB C DE Home Center Specialized Store Bricklayer/Works Builder/ Foreman/Engineer Contractor Neighborhood Store Hyper-/Supermarkets 71% 2% Source: ANAMACO (National Association of Construction Material Traders) – Sample survey by ANAMACO/Latin Panel on the Conditions of the Homes - 2007 54
- 55. Consumer Profile Responsible for the Choice of Brand 34% 34% Professional (bricklayer or engineer) 32% Store salesperson 40% 36% 24% Decision by the interested party himself or a member 38% 39% of the family 23% AB C DE Source: ANAMACO (National Association of Construction Material Traders) – Sample survey by ANAMACO/Latin Panel on the Conditions of the Homes - 2007 55
- 56. Chrysotile – The Brazilian Mineral
- 57. Chrysotile – The Brazilian Ore The use of Chrysotile ore 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). White Ore 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. Serpentinite rock with Chrysotile Ore fibers 57
- 58. Brazil concludes important research about chrysotile ore risks Project Asbesto Ambiental “Ambiental Exposition to Asbesto: Evaluation of Risk and Effects in Health” Process CNPq n. 420001/2006-9 The results of the research were announced on November 25 2010 and demonstrates that: Among the householders surveyed, no clinical, respiratory functional and high resolution tomographic alterations were found that could be attributed to atmospheric asbestos fiber inhalation. In the occupational assessment, no new alterations were identified or progression in pleural and interstitial deterioration of individuals in the sample Group exposed after 1980 and who underwent High Resolution Computed Tomography scans in the two studies. The full version of this research can be found in www.sectec.go.gov.br. 58
- 59. Material Fact Clarifications From the Brazilian Eternit Group The Brazilian Eternit Group, in view of recent news regarding the trial held at the Court of Justice in Turin, Italy, in which two ex-board members of Eternit Italy were held responsible for deaths resulting from the use of asbestos in its plants, wishes to publicly clarify that: Eternit S.A. is a locally-owned, publicly traded company listed in the New Market, which is the highest level of Corporate Governance at the Sao Paulo State Stock, Commodities and Futures Exchange (BM&FBOVESPA), and bears no relation to Eternit in other countries, including Italy. The ownership and use of the trademark are exercised in distinct manners by different companies in several countries. In Brazil Eternit employs chrysotile asbestos as a reinforcement fiber in the manufacturing of asbestos-cement roofing sheets and tiles using modern production techniques. The Italian company employed various types of asbestos, especially the amphibole variety, in several applications and without protection for the workers. The activity in Brazil is regulated by Federal Law 9.055/95, Decree 2.350/97 and Regulatory Norms issued by the Ministry of Labor and Employment. These regulate the extraction, industrialization, sale and transportation of chrysotile asbestos and products which contain it, providing the Brazilian population with durable, high quality and excellent cost-benefit products; in this manner contributing to reduce the Brazilian housing deficit. Market competition in the cement-asbestos segment, between Eternit S.A. and a French group that also is active in Brazil in the manufacturing and use of synthetic fibers, has led some Brazilian states, especially where the plants are located, to approve anti- asbestos legislation. It is worth mentioning that the validity of these laws awaits a merit decision on the part of the Supreme Federal Court. The extraction and processing of chrysotile asbestos by controlled entity SAMA and the use of the mineral in Eternit's plants are subject to strict security standards that surpass legal requirements. With the improvement in production techniques and the perfection of work safety mechanisms, no accounts of disease related to the use of chrysotile asbestos have been reported among company employees who joined the group since the 1980's. A three-way agreement signed and in place since 1989, between the companies in the chain of production, workers and labor union entities and registered at the Ministry of Labor and Employment, has been instrumental and decisive in consolidating this achievement. The use of asbestos-cement, water tank and roofing tile products containing chrysotile asbestos does not present risks to the population's health. There are no reports in Brazil of a single case of a resident who developed any disease as a result of inhabiting one of the more than 25 million residences covered by cement-asbestos roofing tiles containing asbestos. This fact is corroborated by a nationwide survey conducted by a renowned medical team linked to the main Brazilian universities, the project and final report for which were approved by the National Council for Scientific and Technological Development - CNPq, and which is available at the site http://www.sectec.go.gov.br/portal. The Eternit Group operates under full transparency and maintains an "Open Doors Program" that has already received more than 50 thousand visitors to its plants and which grants access to any person who wishes to know more about the safe processes employed in mining and producing products that contain chrysotile asbestos. 59
- 60. Corporate and Environmental Management
- 61. Corporate Management Open Doors Program Launch ................... November 2004 Contribute to society’s better understanding of the mining and processing of Chrysotile Ore and Purpose ................. the manufacture of fiber cement products in a sustainable manner. Five production plants of Eternit and the SAMA Location ........... mining company Visitors ............... 51,196 until March 2012 Target ................... All society 61
- 62. Environment Focused Management Zero Reject Monitoring Air Quality Water Reuse Reforestation Work Quelônios Project - Animal Conservation Area Seedling Nursery The only breeding program of Amazon turtles in Brazil and Reintegration of Wild Animal Nature in partnership with IBAMA 62
- 63. Social Actions 63
- 64. Eternit – An option for investment ETNTY Governance ADR - Level I Case of Diversification Success Brand Dividends Growth 64
- 65. Information Élio A. Martins Paula Dell Agnolo Barhum elio.martins@eternit.com.br paula.barhum@eternit.com.br Rodrigo Lopes da Luz Frederico Gomes Amaral rodrigo.luz@eternit.com.br frederico.amaral@eternit.com.br Phone: (55-11) 3038-3818 www.eternit.com.br/ir (55-11) 3194-3881 www.blogdaeternit.com.br (55-11) 3194-3872 @Eternit_RI Dr. Fernandes Coelho Street, 85 – 8th floor Este material foi produzido com papeis certificados FSC (Forest Stewardship Council), que é uma Pinheiros – São Paulo / SP garantia de que a matéria-prima advém de uma floresta manejada de forma ecologicamente correta, 05423-040 socialmente e economicamente viável. 65
- 66. Eternit starts a new cycle Welcome to the next 70 years 66