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Conference Call – Earnings Results – 4Q11 and 2011 | 03/13/2012
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
Highlights – 4Q11 vs. 4Q10
 Eternit's performance was superior to the results of the sector:
Eternit 15.7% - Civil Construction GDP 3.6% - GDP 2.7%;
 Sales of concrete tiles posted an increase of 9.6%, principally due to the unveiling of
the new São José do Rio Preto plant, reaching 1.6 million square meters in 4Q11;
 Fiber cement volume declined 7.5% and reached 214.8 thousand tons in 4Q11;
 Evolution in margins in 4Q11 – Gross Margin 41% (+3 p.p.), EBITDA 18% (+2 p.p.)
and Net Margin 15% (+1 p.p.);
 Consolidated net revenue record of R$ 220.0 million with growth of 4.4%;
 Consolidated EBITDA amounted to R$ 39.8 million, 17% more than in the same period
in 2010;
 Net Income of R$ 32.1 million, 10.5% more than reported in 4Q10; and
 Inauguration of its multi-products showroom, in Sao Paulo to expose its diversified
portfolio.
3
Eternit Group
The largest and most diversified roof coverings industry in Brazil
Activity
Industrial Units
Manufacture of fiber cement and
commercialization of bathroom
chinaware and metallic fittings and
components for construction systems
4
1
Leader in fiber cement – 32%
Market Share
Chrysotile Mining
Manufacture of
concrete tiles and
commercialization
of sanitary ware
1
6
The world's 3rd
largest – 15%
Leader in
concrete tiles –
35%
5th largest of Brazil in sanitary wares
Capacity
1 million tons
300 thousand
tons
8 million m²
Capacity Used
(2011)
At About 85%
100%
At about 70%
4
Operational Performance – Sales Volume
Sales of Chrysotile Mineral (thous. tons)
-3.0%
5.2%
291
136
306
163
297
163
2.8%
78
155
2009
143
2010
134
2011
Domestic Market
-1.5%
80
79
36
43
39
42
37
40
4Q09
4Q10
4Q11
Foreign Market
6
Sales of Fiber Cement (thous. tons)
3.9%
13.1%
827
859
731
-7.5%
19.0%
195
2009
2010
2011
4Q09
232
4Q10
215
4Q11
7
Concrete Tiles (thous. square meters)
13.5%
5,961
5,253
9.6%
4,776
1,435
1,573
477
2010*
2011
4Q10
4Q11
*Tégula was acquired on February 11 2010. The amount of 587 thousand m2 refers to Eternit.
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Economic and Financial Performance
Consolidated Net Revenue (R$ million)
8.1%
30.2%
820
759
583
648
720
4.4%
34.2%
453
211
220
157
130
2009
111
2010
100
2011
Domestic Market
184
187
28
27
33
4Q09
4Q10
4Q11
129
Foreign Market
10
Mineral
Crisotila
36.2%
Net Revenue Breakdown
4Q10
4Q09
4Q11
Fiber cement
56.9%
Fiber cement
59.0%
Fiber cement
54.0%
Chrysotile
Mineral
27.5%
Chrysotile
Mineral
27.4%
Chrysotile
Mineral
36.2%
New
Business
15.7%
New
Business
4.8%
3.2%
Fibrocimento
Components Construction
56.9%
Systems
2.7%
0.2%
Novos Negócios
Bathroom Chinaware
18,5%
1.9%
Others(*)
Mineral
Crisotila
27.4%
New
Business
18.5%
Components Construction
Systems
2.3%
Fibrocimento
54.0%
9.1%
Concrete tiles and
Accessories Novos Negócios
10.9%
Components Construction
Systems
Concrete tiles and
Accessories
18,5%
1.9%
1.5%
Bathroom Chinaware
Others(*)
Mineral
Crisotila
27.5%
4.7%
Bathroom Chinaware
0.6%
Others(*)
(*) Others: metallic roofing tiles, polyethylene water tanks, lavatory seats, water pipe filters and synthetic marble.
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COGS Breakdown – 4Q11
Fiber Cement
Chrysotile Mineral
Energy
3%
Other Costs
9%
Depreciation
5%
Other Costs
20%
Depreciation
4%
Raw material1
62%
Energy
8%
Raw
material2
27%
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%
Depreciation
7%
Workforce
17%
Raw material3
50%
3 - Cement (53%), sand (31%) and others (16%)
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EBITDA (in R$ million)
-2.9%
17.1%
144
140
123
17.0%
13.0%
30
2009
2010
2011
4Q09
34
4Q10
40
4Q11
13
Net Income (in R$ million)
-4.7%
39.3%
102
97
73
10.3%
68.6%
29
32
17
2009
2010
2011
4Q09
4Q10
4Q11
14
Margins
42%
43%
39%
21%
19%
17%
41%
38%
19%
16%
13%
13%
12%
11%
2009
2010
2011
4Q09
Gross Margin
41%
EBITDA Margin
18%
14%
15%
4Q10
4Q11
Net Margin
15
Capital Expenditures
Capital Expenditures (in R$ million)
93
14
14
11
34
34
5
2
29
6
1
8
27
21
2009
46
2010
13
2
13
7
24
2011
7
2
11
4Q09
4Q10
12
5
4
3
4Q11
Investiments
Synthetic Marble
Capacity Increase – Tégula
Acquisition Tégula
Molds and New Business
Capacity Increase – Eternit
Land acquisition – Ceará State
Administrative
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Development unit of Synthetic Marble
External Area
Production Line
Resin Silo
18
Acquisition of Land for Multiproduct Plant - Ceará State
Cimenteira
Linha Gás Natural
35 km
15 km
Land of 400 000 m²
19
Expected occupation of the area – Multi-Product Plant
FIBERCEMENT
EXPANSION
PATIO
BATHROOM
CHINAWARE
CONCRETE/
OTHERS
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Multi-Product Unit in the Ceará State - Bathroom Chinaware Plant
Joint-Venture: Companhia Sulamericana de Cerâmica S. A.
Share of 60%
Knowledge of the local market
Strong distribution network
Efficient logistics
Brand strength
Investment Resources
Knowledge in Brazil
Share of 40%
Knowledge of manufacturing and
products technology
Low cost production
Expertise in new product
development
Expertise in new market
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
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Artistic vision and Lay-out Bathroom Chinaware Plant
22
Capital Markets
Ownership Structure – Feb/12
Shareholding Structure
26.02%
7.45%
62.42%
4.11%
Geração L. Par. F. I. A.
17.52%
Luiz Barsi Filho
13.46%
Victor Adler + VIC DTVM
8.50%
Management
1.55%
Other Board of Directors
0.07%
Treasurystock
0.03%
Board of Directors
Individual Investors
Corporations
Investors Abroad
Clubs. Funds and Foundations
Feb/12
Sérgio Alexandre Melleiro (*)
Lírio Albino Parisotto (*)
Victor Adler (*)
Élio A. Martins
Luiz Barsi Filho (*)
Marcelo Munhoz Auricchio (*)
Luis Terepins (*)
Member
Since
1993
2004
2005
2007
2008
2011
2011
(*) Independent member
FREE-FLOAT
76.51%
Consultive Council
Guilherme Affonso Ferreira
Mário Fleck
Member
Since
2011
2011
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Ownership Structure
Average Traded Volume
Number of shareholders
6,615
6,633
(R$ thousand)
7,064
1,108
5,910
1,074
975
794
2009
2010
2011
2012(*)
2009
2010
2011
2012*
(*) Until February 2012
25
Shareholder Remuneration
Dividend Yield
Net Income X Shareholders
Remuneration (R$ million)
102.1
97.2
80.5
73.1
15.1%
71.6
9.3%
55.3
7.5%
2.2%
2009
Net Income
2010
2011
2009
2010
2011
2012(*)
Dividends and Interest on own capital
(*) Until March 2012
26
Eternit’s Shares Performance (Dec/06 – Feb/12)
Between 12/28/2006 to 2/29/2012, Eternit’s shares appreciated 53.0% and IBOVESPA appreciated
50.2%.
In the same period, including the payment of dividends and interest on own capital, Eternit’s shares
appreciated 148.8%.
220
ETER3
200
IBOVESPA
180
160
140
R$ 9.26
66,809
120
100
80
60
40
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News
Opening of Showroom
Come Visit Us
Av. Reboucas, 2175 – São Paulo / SP
29
Release Bathroom Metal Fittings
Metallic Fittings
Showers
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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
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Outlook
Favorable Moment for Civil Construction
33
Economic Figures
Minimum Wage (R$)
Workforce (R$ million)
CAGR: 5.96%
CAGR: 11.0%
300
2005
2006
2007
2008
2009
545
510
465
415
380
350
622
2010
2011
2012
Source: BACEN
303,028
321,163
338,501
2005
2006
2007
Source: IBGE
365,331
2008
377,361
2009
404,751
UDM 2010*
* 2010 UDM from dec/09 to nov/10
Food Basic Basket SP x Minimum Wage (purchasing power)
79.1%
71.4%
79.4%
68.7%
151 120
180 129
200 159
240 165
2000
2001
2002
2003
Source: IBGE and DIEESE
66.2%
260
172
2004
Minimum Wage (R$)
61.1%
300
52.0%
2005
182
2006
57.7%
240
215
2007
49.1%
228
2008
Food Basic Basket in SP (R$)
52.0%
2009
50.9%
265
2010
45.9%
622
545
510
465
415
380
350
183
56.5%
277
2011
286
Jan-12
%
34
Economic Figures
Credit Availability
Unemployment Rate - Brazil
Government, Industry, Housing, Rural, Commerce, Credit
Individuals (R$ billlion)
10.9%
9.6%
1,548
1,410
1,227
1,614
1,679
1,715
1,806
1,754
1,857
8.3%
1,934 1,984
8.4%
7.4%
6.8%
6.8%
5.3%
4.7%
936
Dec/03 Dec/04 Dec/05 Dec/06 Dec/07 Dec/08 Dec/09 Dec/10 Dec/11
Source: BACEN
18.2%
300
dec/10
Source: BACEN
Source: IBGE
Growth of the Brazilian Savings
17.4%
17.1%
17.3%
301
303
305
jan/11
feb/11
mar/11
16.6%
306
15.7%
307
apr/11
may/11
R$ billlion
14.7%
310
14.0%
316
jun/11
jul/11
(%) Chg YoY
13.9%
13.5%
12.9%
11.6%
10.2%
319
323
326
328
331
aug/11
sep/11
oct/11
nov/11
dec/11
35
Housing Deficit - million units
Need
Some kind of
renovation or
expansion
77%
Permanent Homes in Brazil
44 million homes
Housing Deficit
Total – 5.8 million
Source: ANAMACO
Permanent Homes
Total – 57.3 million
36
Chrysotile – The Brazilian Mineral
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
38
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.
39
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 antiasbestos 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.
40
Information
Élio A. Martins
Paula Dell Agnolo Barhum
[email protected]
[email protected]
Rodrigo Lopes da Luz
Frederico Gomes Amaral
[email protected]
[email protected]
Phone:
(55-11) 3038-3818
www.eternit.com.br/ir
(55-11) 3194-3881
www.blogdaeternit.com.br
(55-11) 3194-3872
Rua Dr. Fernandes Coelho, 85 – 8th floor
Pinheiros – São Paulo / SP
05423-040
@Eternit_RI
Este material foi produzido com
papeis certificados FSC (Forest
Stewardship Council), que é uma
garantia de que a matéria-prima
advém de uma floresta manejada de
forma
ecologicamente
correta,
socialmente
e
economicamente
viável.
41
Eternit starts a new cycle
Welcome
to the next
70 years
42