3. Duratex S.A. (Sep/2005)
Total Outstanding Shares: 59 million
Common 37%
Preferred 63%
Market Capitalization: R$ 1.531,7 M
Preferred Shareholders’ Structure
Foreign Investors
29%
Pension Funds
19%
Others
Itaúsa 28%
24%
3
4. Capital Markets and Corporate Governance
52 weeks highest price: R$26,00 in 03/10/2005
52 weeks lowest price: R$18,00 in 11/07/2005
Average daily volume: R$1,1 million
. Quarterly
. Termination of 25,35
the Beneficiary
. . Platinum release of the
Parts;
Establishment Award from . 80% Tag- results via
. Establishment
of the IR Area; ABAMEC. Along rights conference call.
of a 30%
. Issuing of for the PN
minimum
R$ 191M in stock.
dividend;
new stock;
. Extraordinary
. Release of
dividend;
the
. 2nd. Place on
Company’s
ABRASCA’s 5th . Adhesion to
website.
Award for the Bovespa’s Level I
best Annual of Differentiated
Report. Practices of
Corporate
Governance;
11,40 . Stock split in
reverse.
3/1/2000
23/2/2000
17/4/2000
8/6/2000
31/7/2000
20/9/2000
28/11/2000
22/1/2001
16/3/2001
9/5/2001
29/6/2001
21/8/2001
11/10/2001
5/12/2001
31/1/2002
26/3/2002
17/5/2002
10/7/2002
29/8/2002
18/10/2002
10/12/2002
4/2/2003
28/3/2003
22/5/2003
15/7/2003
3/9/2003
23/10/2003
12/12/2003
6/2/2004
31/3/2004
24/5/2004
15/7/2004
3/9/2004
27/10/2004
20/12/2004
15/2/2005
7/4/2005
31/5/2005
20/7/2005
9/9/2005
1/11/2005
2000 2001 2002 2003 2004 2005
Stock Price
Preço Volume Traded Volume
4
5. Business Areas
Wood
Hardboard
Particle Board
MDF / HDF / SDF
Laminate Flooring
Wall and Ceiling panels
Metal Fittings
Vitreous China
Accessories
5
8. Environment and Performance
Maintenance of the Reduction of the export income in Reais;
restrictive monetary policy Reduction of shipments:
with high interest rates and Wood: - 4%;
Deca: - 10%;
a strong Real that valued
Plant stoppage.
against the Dollar by 16%
between Jan and Sep / 05
Deepening of actions Increase revenues;
targeting performance Cost reductions at Deca;
Ongoing measures in both Deca and Wood;
improvements
Improvement of both gross and EBITDA margins;
Improvement of ROE and ROIC;
New products;
Improvement on cash generation and working
capital management.
Climatic events Flooding in Deca;
Windstorm at one timberland area;
Katrina hurricane.
8
9. Nine Months Performance (in R$M)
January to September
2005 2004 2003
SHIPMENTS
3
Wood (in 1.000 m ) 765,1 793,0 652,6
Deca (in 1.000 items) 9.435 10.444 9.829
2005 2004 2003
NET REVENUES 940,3 883,4 710,4
COGS 543,6 541,7 451,4
GROSS INCOME 396,7 341,7 259,0
% Gross Margin 42% 39% 36%
OPERATING RESULT 210,2 184,4 115,6
EBITDA 269,9 240,8 159,5
% EBITDA Margin 29% 27% 22%
NET INCOME 105,8 92,7 41,6
ROE 14% 13% 6%
9
10. Performance per Division (in R$M)
January to September / 2005
Wood Division Deca Division Consolidated
R$ M AV% R$ M AV% R$ M AV%
Net Revenues 636,2 100% 304,1 100% 940,3 100%
COGS (319,9) 50% (164,1) 54% (484,0) 51%
Depreciation (43,7) 7% (15,9) 5% (59,6) 6%
Gross Income 272,6 43% 124,1 41% 396,7 42%
EBITDA 9m05 195,6 31% 74,3 24% 269,9 29%
EBITDA 9m04 193,6 32% 47,2 17% 240,8 27%
EBITDA 9m03 118,9 25% 40,6 17% 159,5 22%
10
11. Quarterly Performance (in R$M)
3Q05 2Q05 1Q05 3Q04
Shipments
Wood (in 1,000 m³) 254,5 262,5 248,1 280,0
Deca (in 1,000 items) 3.376 2.855 3.204 3.740
(in R$ M)
3Q05 2Q05 1Q05 3Q04
Net Revenues 317,8 316,1 306,3 331,4
COGS 190,4 179,5 173,6 189,6
GROSS INCOME 127,4 136,6 132,7 141,9
% Gross Margin 40,1% 43,2% 43,3% 42,8%
OPERATING RESULT 62,4 75,7 72,1 80,3
EBITDA 82,4 96,4 91,1 99,4
% EBITDA Margin 25,9% 30,5% 29,7% 30,0%
NET INCOME 33,1 32,6 40,1 43,6
ROE (annualized) 13,4% 13,5% 16,9% 18,7%
11
12. Return on Invested Capital (ROIC)
p.p.
+3,3 12,3%
10,2%
9,0%
2003 2004 2005 *
12 * Setembro, 2005 annualized
13. Performance (January to September)
(in R$M)
993,5 12,6% 1.035,4 13,8%
923,7
105,8
6,0%
92,7
41,6
2003 2004 2005
PL Equity L u c r o LNet Income
íqu ido RO E Annualized ROE
an u alizado
13
14. Operating Cash Generation (in R$ M)
,5% 273,3
C A GR:+7 %
140
+
184,1
159,3
143,8
113,7
2002 2003 2004 9m04 9m05
Operating Cash Generation = Net Income + Non Cash Expenses +/- Investment in Working Capital
14
15. Accrual Dividends (in R$ M)
7%
R: +53,
CA G 58,1
%
6 4,2
+
24,6 25,7 24,8
15,1
2002 2003 2004 9m04 9m05
15
16. EBITDA (R$M) & Margin (%)
Wood
Gain of scale with the start-up of a
new MDF / HDF / SDF plant in
Botucatu (SP);
Installation of new coating lines;
Cost reduction as the result of the
verticalization of processes;
Price recovery. 32% 31%
26%
193,6 195,6
118,9
2003 2004 2005
16 January to September
17. EBITDA (R$M) & Margin (%)
Cost and operating expenses
savings;
Automation of important
productive processes;
Adjustment of the product
portfolio;
Price recovery.
24%
17% 17%
74,3
40,6 47,2
2003 2004 2005
17 January to September
19. Contents
Introduction
Highlights
Competitive vantages and competitors
Positioning
Operating result
19
20. Competitive Advantage - Location
Agudos (MDF and Laminate Flooring)
Botucatu (MDF/HDF/SDF and Hardboard)
Itapetininga (Particle Board)
Jundiaí (Hardboard, Metal Fittings and V. China)
São Paulo (Metal Fittings)
São Leopoldo (V. China)
Wood Division plants
90.000 ha of timberland
Deca Division plants
20
21. Competitive Advantages
Wood
Timberland self-sufficiency;
Production scale;
Leadership Market Share;
Broad product line;
Own coating lines (painting, FF e LP);
Ability to customize products (finishing and dimension);
Environment awareness ISO 14.001 and “Green Label”.
21
22. Competitive Advantage - Timberland
90 thousand hectares
Self-sufficiency
High degree of mechanization
Cost Reductions
FSC – Forest
Stewardship Council
ISO 14.001
22
Environment sustainability
24. Competitive Advantage
Well known brands Deca e Hydra;
Reference in design and quality;
Market leadership with a stronger presence in higher end segments of
luxury and super-luxury products lifestyle;
Active policy of developing new products;
Countrywide presence;
Marketing;
Well regarded technical assistance network.
24
25. Competitive Advantage – Release of New Products
Squared Showerhead
Chromotherapy showerhead Stick Line
lavatory
Sink L107
25
26. Metal Fittings and Vitreous China Market
Metal Fittings:
Deca’s estimated market share: 38%
Main players:
Docol;
Fabrimar.
Vitreous China:
Deca’s estimated market share: 18%
Main players:
Roca;
Icasa;
Ideal Standard;
Hervy.
26
28. Exports (in US$ M)
Average increase by 13% in hardboard
prices;
,7%
:+17 Increase of vitreous china exports by
CAGR 39%, to 240 thousand items.
57,5
,9%
+ 12
46,5 47,2
41,5 41,8
2002 2003 2004 9m04 9m05
28
29. Exports
Wood Hardboard
91% 71% MDF/HDF/
SDF
14%
Flooring 2%
Deca InterD+ 4%
9% Vitreous
Metal China
Fittings 7%
Main Markets: 2%
United States 52%
Europe 19%
Asia and Middle East 7%
South / Central Americas 14%
Other 8%
29
30. Debt and Amortization Schedule
(in R$M)
606,5 Amortization Schedule
Foreign 50,8
Currency
61,8
114,4
242,2
Domestic 544,6
Currency
52,8
146,3
Total Debt 2005 2006 2007 2008 2009 &
Beyond
Cash R$ 218,3 M Net Debt / Equity 37,5%
Net Debt R$ 388,2 M Net Debt / EBITDA* 1,08
* EBITDA Annualized
30
31. Nominal Capacity & Occupancy Rate
JAN – SEP / 2005
360.000 m3/year
Hardboard 94% 360.000 m3/year
Particle Board 72% 500.000 m3/year
500.000 m3/year
MDF/HDF/SDF 69% 640.000 m3/year
640.000 m3/year
14.400 KK
Metal Fittings 68% 14.400
items/year
items/year
* 4.200 KK**
Vitreous China 70% 4.200 **
items/year
items/year
* over the operating capacity of 3.800 K items / year
31 ** nominal capacity of the existent kilns
32. Strategic Positioning
28% 28%
27% 27% 27%
26% 26%
26% 26%
24% 25% 25%
24% 24% 24% 24% 24% 349 357
311
340
306
23% 23% 23% 23% 23% 268
22%
220 220 225
200 210 217
190 199 194 188 186 185
200
181 185 . New line of 223
165 panels . Improvements
(Botucatu, SP); in the painting
. New coating . Unification of . New Low line
line the vitreous Pressure (Botucatu,SP);
. New Particle . Expansion of (Itapetininga, china coating line . Aquisition of
Board line in vitreous china SP); production (Botucatu, SP); complementary
(Itapetininga, capacity . Aquisition of (Jundiaí, SP); . Aquisition of equipment for
SP). (Jundiaí, SP). 4.400 ha of . Aquisition of 4.100 ha of the Botucatu, SP
timberland. 6.400 ha of timberland. plant.
timberland.
2000 2001 2002 2003 2004 2005
EBITDA 12 months (in R$M) EBITDA Margin (%)
32
34. Internal Committees
Corporative Intelligence
Risks and Ethics Objective: spread the best
practices among all
Corporate Governance industries belonging to the
Itaúsa Group as to promote
Talent Management the capture of synergies
Operating Excellence
allowing more value build-
up.
Commercial Excellence
34
35. Ongoing Actions
Wood
Introduction of a computing management system for freight and
revision of the shipment logistics that should generate annual cost
savings of R$ 6M;
Launching of the Eco Panel in 2006, that should promote cost
savings of about 15%;
Introduction of mesures aiming:
increase the painting line speed by 60%;
economies related to the receiving process of resins.
35
36. Ongoing Actions
Effective cost and expense reduction:
industrial: R$ 6M / year;
commercial: R$ 9M / year;
personnel: 147
Further cost reductions to be implemented:
reviewing of processes: R$ 5M / year.
Vitreous China export contract (OEM):
sales increase: US$ 10M per year until 2007.
36
37. Average Interest Rate (SELIC)
23,1%
19,5%
19,4%
17,5% 17,6% 18,0%
16,4%
14,5%
5,70%
2,10% 1,95%
2000 2001 2002 2003 2004 Sep/05 Dec/05 2006
-2,60% -2,50%
-8,60%
GDP Civil Construction Average Interest Rate
* Estimated interest rate by the end of the years 2005 and
37 2006: estimates from Itaú and Santander research team.
38. Civil Construction – Success Cases *
INTEREST RATES REAL ESTATE FINANCING REAL ESTATE
Reduction of Extension of terms and Average growth of the
SPAIN
Interest Rates: introduction of finance mortgage lending by
1990 to 2001: incentives 21,6% between the years
from 15% to 5% py of 1991 e 2001
Now: 2,40%py
MEXICO Real Estate Financing: Infonavit’s number of
Reduction of
Terms from 15 to 30 years at an financing contracts:
Interest Rates:
approximate interest rate of 13% 1998: 108 thousand;
1998 to 2002:
py. 2004: 306 thousand;
from 30% to 8,2% py
Since 2002, the financing Up to Sep 2005: 248 th.
Now: 8,90%py
volume grows on average by (goal for the year: 375 th.)
30% py.
CHILE Reduction of Real Estate Financing: Number of new homes
Interest Rates: Terms from 3 to 12 years at an grew from 3,3 M to 4.1 M
2001 to 2004: approximate interest rate of between 1992 and 2002.
from 12% to 7% py 6,9% to 10,0% py.
Now: 7% py
Mortgage lending:
Dec / 1997: US$ 7,2 bn; * Source: CSFB LATAM Banks, Housing
May / 2005: US$ 13,7 bn. & Construction Report de 26/Aug/2005,
Bloomberg and Infonavit Website at
38 www.infonavit.gob.mx
39. Civil Construction Positive Scenario
Mortgage Lending as a % of 2004 GDP *
(only private financing)
15,7%
2,1% 0,1%
Chile Mexico Brasil
* Source: CSFB LATAM Banks,
39 Housing & Construction Report
de 26/Aug/2005
40. Take Aways
Strong competitive advantages;
Leadership in the performing areas;
Committed with cost cutting actions;
Improvement in corporate governance practices.
40
41. Important
This presentation material was based on the
available results and DURATEX does not
compromise itself in updating it after this date.
DURATEX is not to be held responsible for
individuals’ investing decisions in the Company’s
securities based in this present material.
Expressions and terms that address future
expectations and projections are subject to a high
degree of uncertainty; thus, DURATEX is not
responsible for its effective accomplishment.
41 11/08/2005