3. HIGHLIGHTS
In April 2010, the Company obtained R$ 13 million refund of tax claims of IPI
concerning the financial year 2008 and complement of the refund of the claim
concerning the financial year 2006;
Disbursement of R$ 16.5 million of the Recovery Zone Facility Bond, created by the
U.S. Federal Government, to finance “shovel-ready” investment projects. This loan is
destined to the construction of the Company’s first overseas plant in North Carolina,
USA, with maturity of 20 years;
During 2Q10, COGS was impacted by approximately 14% price increase of our main
raw-material, polypropylene. This increase, totaling approximately 35% in 1st half of
2010, was mainly due to temporary supply restrictions of its feedstock, propylene, and
the delayed start-ups of new petrochemical plants in Asia. We emphasize that this
negative effect was partially offset by savings in labor, maintenance, energy and other
cost items.
3
5. SALES VOLUME
(in thousands of tons)
tons)
20,0
18,7
1,3
16,4 0,9
1,0
Growth of 21.7% in volume of
nonwovens compared with 2Q09 and
17,8 18,7
15,4 5.3% in relation to 1Q10.
2Q09 1Q10 2Q10
Nonwovens Others
5
6. NET REVENUE
NONWOVENS DIVISION (in millions of Reais)
Compared with 2Q09, we recorded an
increase of R$ 21.9 million, equivalent to
23.6%, and 13.2% when compared with
1Q10;
114,8
101,5
92,9
The principal factors explaining the
increase in net revenues are: higher sales
volume, price readjustment and the
2Q09 1Q10 2Q10
currency translation effect.
6
7. COGS
NONWOVENS DIVISION
The increase in absolute terms of 38.9%
compared with 2Q09 and 14.1% with 1Q10,
is largely due to greater sales volume and an
76,4
67,0 increase in polypropylene prices;
55,0
The increase in unit COGS reflects prices
R$ 3,82 of our principal raw material
R$ 3,58
R$ 3,36
(polypropylene), which rose about 35%
during the 1st half of 2010. However, the
2Q09 1Q10 2Q10 other components of COGS (direct labor
COGS (R$ thousand) Unitary COGS (R$) costs, maintenance, electricity and other
inputs), contributed to ensuring that the
effects were minimized.
7
8. EBITDA (R$ millions)
and EBITDA Margin (%)
27,1 Nonwovens EBITDA closed 2Q10 ,
24,9
22,8 with an increase of 9.2% or R$ 2.1
29,2%
million in relation to 1Q10 and a
reduction of 0.8 p.p. in the EBITDA
22,4% 21,7%
margin.
In comparison with 2Q09, there
2Q09 1Q10 2Q10
was a reduction of R$ 2.2 million and
7.5 p.p. in the EBITDA margin.
Ebitda Ebitda Margin (%)
8
9. NET INCOME (R$ millions)
(R$
AND NET MARGIN (%)
14,9 The increase in net income in 2Q10
x 1Q10 is due to the increase in sales
volume, passing on of costs to prices
7,2
and lower financial expenses.
15,7% 4,5
6,2%
4,3% Compared with 2Q09, the principal
2Q09 1Q10 2Q10 differences are due to non-recurring
Net Earnings Net Margin (%) expenses and the currency translation
effect which benefited the net
financial result.
9
10. CASH AND CASH EQUIVALENTS
(in millions of Reais)
The Company’s cash position fell 14.4% or
R$ 38.1 million, compared with 1Q10,
268,3 264,0 principally due to payment of principal and
225,8
semi-annual interest on debt, in addition to
dividends.
2Q09 1Q10 2Q10
10
11. NET DEBT
(in millions of Reais)
The Company’s Net Debt increased 5.9%,
or R$ 10.7 million compared with 2Q09,
mainly due to the drawdown of resources
under the Recovery Zone Facility Bond
181,8 192,5 program of R$ 16.5 million for financing civil
170,5
construction work in the USA;
2Q09 1Q10 2Q10 67% of the debt is denominated in Reais
and 33% currency-based.
11
12. DEBT/
CASH
Consolidated Net Debt
Var 2Q10 / Var 1Q10 /
R$ (MM) 06/30/2009
2Q09 1Q09
Total Debt
Short Term 56.9 126.7 122.7%
Long Term 393.1 291.6 -25.8%
Total 450.0 418.4 -7.0%
Cash 268.3 225.8 -15.8%
Net Debt 181.7 192.5 6.0%
Net Debt / Adjusted EBITDA 1.5 2.2 0.5
Shareholders' Equity 497.0 506.6 1.9%
12
14. OUTLOOK
High expectation of full capacity utilization during 2nd half of 2010, as strongly
indicated by 3Q10 customer purchase orders already booked;
The end of this quarter already signaled stabilization of polypropylene prices, which
we expect will contribute to the improvement of our margins in 3Q10;
The plant in North Carolina, our Company’s main investment project this year, is
progressing according to schedule and budget. The first of a total of 5 shipments took
place in July and equipment assembly is due to begin by mid-August;
Providência USA shall provide approximately 10 thousand tonnes/year of
nonwovens to North American customers currently supplied from Brazil. Furthermore,
the Company is establishing supply agreements of an estimated additional amount of 5
thousand tonnes/year, upon the start-up of the subsidiary’s operations.
14
15. CEO: Hermínio V. S. de Freitas
CFO: Eduardo Feldmann Costa
IR : Gizele Rigoni
Tel: +55 (41) 3381-8673
Fax: +55 (41) 3283-5909
São José dos Pinhais – PR
www.providencia.com.br/ri
www.twitter.com/providencia_ri
The words “believe”, “anticipate”, “expect”, “estimate”, “will”, “plan”, “may”, “intend”, “foresee”, “project” and other similar expressions indicate forward-looking
statements. These forward-looking statements involve uncertainties, risks and assumptions, since they include information related to our potential or assumed future
operating results, business strategy, financing plans, competitive position in the market, industry environment, potential growth opportunities and the effects of future
regulations and competition. In addition, forward-looking statements refer only to the date on which they were made and should not be taken as a guarantee of future
performance. Providência is under no obligation to update this presentation with new information and/or future events .
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