Post on 12-Jul-2015
APIMEC 2014 CURITIBA
COMPANHIA PROVIDÊNCIA INDÚSTRIA E COMÉRCIO
Curitiba, November 25, 2014
Agenda
The Company
Sector
Highlights
3Q14 Results
Sale of the Company’s control
Mission
To create a world:
Safer Cleaner Healthier
Shareholders’ Composition
PRVI3 – 80 Million shares
Companhia Providência (PRVI3) is listed on the Novo Mercado segment at BM&F Bovespa, thehighest Corporate Governance standards. Among the main practices are:
Corporate governance structure
General Shareholders` Meeting
Fiscal Council
Board of Directors
Board of Executive Officers
Independent extern auditors
Organizational chart
CEOCEO
CFO/ IR
Finance
Controller
Commercial Office
Sales
Customer Service
Operations, Engineering and Technology Office
Operations
Maintenance
USA
Administrativeand
Human Resources Quality Assurance
Controller
I.R.
I.T.
Legal
Customer Service
ProductDevelopment
Purchasing
Maintenance
Engineering
Logistics
Quality Processes
and
Manufacture
Total: 887
675
13181
Employees in September, 2014
São Jose dos Pinhais Pouso Alegre United States
76%
15%9%
Corporate structure
Companhia Providência Indústria e Comércio
Providencia USA Inc.
1963 | 1970 | 1980 | 1990 | 2000 | 2007 | 2008 | 2011 | 2012 | 2013 | 20141963 | 1970 | 1980 | 1990 | 2000 | 2007 | 2008 | 2011 | 2012 | 2013 | 2014
Founded in 1963, became a pioneer in the manufacture of plastics in the South of Brazil;
Started the production of nonwovens;
IPO and acquisition of Isofilme, a nonwovens company located in Pouso Alegre (MG);
Focus on nonwovens: Sale of the division of pipes and fittings;
Start up of the first overseas factory in Statesville, North Carolina - USA;
Sale of Control to PGI Brazil and merger of Isofilme into Companhia Providência.
Statesville – NCStatesville – NCStatesville – NC
Plants
Installed Capacity: 40 thousand ton/year - 2 Production Lines
Area:16.3 thousand m2 of built area on
land of 174 thousand m2
Pouso Alegre – MGInstalled Capacity : 30 thousand ton/year – 2 Production Lines
Area:
São José dos Pinhais – PR
Area:25 thousand m² of built area on
land of 210 thousand m²
Installed Capacity : 70 thousand ton/year – 9 Production Lines
Area:72 thousand m² m² of built area on
land of 189 thousand m²
Most recent expansion
KAMI 13: Second line in Statesville. Doubled the capacity in the USA.Capacity: 20 thousand ton/year of nonwovensInvestment: USD 63 millionAdditional Employees: 40Inaugurated in March, 2013.
KAMI12: : Second line in Pouso Alegre/MG Capacity: 20 thousand ton/year of nonwovensInvestment: USD 60 millionAdditional Employees: 40
São José dos Pinhais – PR
Additional Employees: 40Inaugurated in June, 2012.
In thousands of tons of nonwovens
Agenda
Sector
The Company
Highlights
3Q14 Results
Sale of the Company’s control
Uses
NonwovensNonwovens Main usesMain uses Main CustomersMain Customers
�Hygienic�Baby diapers
� Incontinence
Largest manufacturer of nonwovens in Latin America �Durable
�Medical
� Incontinence
�sanitary pads
�Furniture and mattresses
�agricultural roofing
�Packaging
�Surgical disposable
�Medical disposable aprons
Active base of around
1,000 customers
B2B focus on consumer industries
Durable
Sales volume 2013Sales volume 2013
Hygienic
GrossGrossRevenueRevenue
20%
Gross Gross RevenueRevenue
Medical
RevenueRevenue
75%
5%
Nonwoven Market – Projected demand (in thousand tons)
NaftaNafta (Mexico and USA) consumption (Mexico and USA) consumption growth: 3% per year.growth: 3% per year.
300
400
500
600
700
2010 2011 2012 2013
567 584 602 620
South and Central America (except Brazil) South and Central America (except Brazil) Consumption growth: 8% per year.Consumption growth: 8% per year.
40
60
80
100
120
2010 2011 2012 2013
83 90 97 105
BrazilBrazilConsumption growth: 8% per year.Consumption growth: 8% per year.
40
60
80
100
120
2010 2011 2012 2013
79 87 96 106
Source: Providência + Reports John Starr
Consumption
Hygienic Market (retail / sales unit mm)B
aby
Dia
per
sB
aby
Dia
per
sSa
nit
ary
pad
sSa
nit
ary
pad
s
Change 2012 x 2013
Change 2012 x 2013
USA 1%
Brazil 5%
USA -1%
-
5.000
10.000
15.000
20.000
25.000
2008 2009 2010 2011 2012 2013
6.235 7.256 8.109 9.142 9.166 9.594
20.759 20.456 20.023 19.506 19.124 19.308
Brazil
USA
20.000
25.000 21.898 21.787 22.086 22.133 21.808 21.517 Brazil
USA
San
itar
y p
ads
San
itar
y p
ads
Inco
nti
nen
ceIn
con
tin
ence
Change 2012 x 2013
Source: Euromonitor International
USA -1%
Brazil 3%
USA 5%
Brazil 12%
-
5.000
10.000
15.000
2008 2009 2010 2011 2012 2013
7.637 7.698 8.421 8.432 8.526 8.762
-
1.000
2.000
3.000
4.000
5.000
2008 2009 2010 2011 2012 2013
350 416 528 637 729 820
3.430 3.580 3.775 4.052 4.284 4.479 Brazil
USA
Market share & Diapers Market (Volume 2013 )
Market Share Latin America, Market Share Latin America, except Mexico except Mexico
Market Share Brazil Market Share Brazil
Providência29%
FitesaFiberweb
15%
PGI31% Softbond
8%
Other18%
FitesaFiberweb
22%PGI5%
Softbond4%
Other15%
Providência54%
Evolution of the penetration of baby diapers in BrazilEvolution of the penetration of baby diapers in Brazil
1995 2000 2005 2009 2010 2011 2012 2013
15%20%
35%42%
48% 52%55% 57%
29% 15%
Source : Euromonitor International
Hygienic Market in Brazil (2013 volume)
Share Share –– Baby DiapersBaby Diapers Share Share –– Sanitary padsSanitary pads
P&G30%
KC26%
Hyper16%
Other28%
P&G28%
KC24%
Johnson &
Johnson 33%
Other15%
Share Share –– IncontinenceIncontinence
KC10%
Hyper33%
Other57%
Source : Euromonitor International
Penetration of baby diapers in the World
10
15
20
25
21 19
10 8 8
5 3 3
29
20
10 7 8
5 3 3
Mill
ion
Source: Euromonitor International
-
5
China USA Brazil Japan Mexico Russia United Kingdom Germany
Effective consumption Expected Average 2014 - 2018
Hygienic Market - USA – Global (USA – 2013)
Share Share –– Baby DiapersBaby Diapers
P&G36%
Private Label20%
KC37%
Other7%
Share Share –– Sanitary pads Sanitary pads Share Share -- IncontinenceIncontinence
P&G46%
Private Label17%
KC14%
Other12%
Johnson&
Johnson11%
Private Label31%KC
56%
SCA10%
Other2%
�In 2013 there was an overall growth of 3% in the sanitary industry, about US$2.7 billion over the�In 2013 there was an overall growth of 3% in the sanitary industry, about US$2.7 billion over theprevious year, mainly due to emerging countries beyond the forecast average growth of 4% by 2018;
�The incontinence market had the strongest growth among all categories of hygienic, 6% (2012 – 2013),mainly in developed countries;
�Brazil also excelled in the incontinence market and grew by 12% (2013 x 2012). In the same period theUnited States grew by only 5%. According to the IBGE in 2012 the population over 60 years accounted
for 12%, this percentage should reach 18% by 2030;
�In Latin America there will probably happen the strongest growth prospects for wipes of6% compared to 2% at a global level. This variation is mainly due to the increase in consumption and baby wipes and make-up removal.
Fonte: Euromonitor International
Agenda
Highlights
The Company
Sector
3Q14 Results
Sale of the Company’s control
Highlights
�The third quarter saw resumption in production from machines and equipment that had beenshutdown on Ministry of Labor orders on April 1, 2014 and gradually brought back on streamby the first week in July 2014;
� During the course of the quarter, our financial performance continued to be affected by thestoppage and reallocation of production as well as a 2.8% increase in fixed costs;
� Sales Volume amounted to 29.2 thousand tons, down 7.1% compared to 3Q13 due to� Sales Volume amounted to 29.2 thousand tons, down 7.1% compared to 3Q13 due toinefficiencies associated with the resumption of operations with certain machines andequipment at the São José dos Pinhais plant after the lines were shut down on the orders of theMinistry of Labor during 2Q14;
� The Company posted Net Revenues of R$ 202.6 million, 4.0% less than in 3Q13, thisalso reflecting the impact of lower output from manufacturing operations;
� Cost of goods sold were higher by R$4.4 million due to start-upcosts and higher maintenance expense during the quarter.
Agenda
The Company
Sector
Highlights
3Q14 Results
Sale of the Company’s control
7.4 5.2
88.9 81.2
YTD Sales Volume
Sales Volume Sales Volume (in millions of tons)(in millions of tons)
During the quarter, the Company posted a year-on-year reduction in total sales volume of 7.1%. Sales volume of nonwovens posted a fall of 7.3% compared with 3Q13.
2.2 2.1
31.4
22.6
29.2
Sales Volume / Quarter
YTD13 YTD14
81.5 76.0
7.4 5.2
Others Nonwovens
3Q13 2Q14 3Q14
29.2 21.3
27.1
2.2
1.3 2.1
22.6
Nonwovens Others
In relation to the 2Q14 the nonwovens volume increased 5.8 thousand tons– 27.1% - a result of the sales recover after the machines shutdown duringthe 2Q14.
577.2
Net Revenue YTDNet Revenue / Quarter
R$ 6.35
R$ 7.11
R$ 6.72
R$ 7.21
R$ 6.94
Net Net RevenueRevenue (in (in millionsmillions ofof Reais)Reais)
The Company reported total net revenue of R$ 202.6 million in 3Q14, a decrease of 4.0% whencompared with 3Q13 reflecting the impact of lower output from manufacturing operations.
YTD13 YTD14
564.8
Net Revenue
3Q13 2Q14 3Q14
211.1
162.9
202.6
Net Revenue Unitary Net RevenueUnitary Net Revenue
� Increased export sales volume in 3Q14 caused a reduction in unitarysales net revenue by 3.7% against 2Q14;
� Unitary net revenues are up by 12% YTD 14 x 13.
COGS YTD
R$ 4.66 R$ 5.62
COGS / Quarter
R$ 4.99
R$ 5.97
R$ 5.53
COGS COGS -- CostCost ofof GoodsGoods SoldSold (in (in millionsmillions ofof Reais)Reais)
� Cost of Goods Sold (COGS) amounted to R$ 161.3 million in 3Q14, 2.8% higher whencompared to the R$ 156.9 million reported in 3Q13;
� Unitary COGS are 7.4% lower than 2Q14, as consequence of an increased sales volume of 5.8thousand tons.
YTD13 YTD14
413.9
456.8
COGS Unitary COGS (R$)
3Q13 2Q14 3Q14
156.9
135.0
161.3
COGS Unitary COGS (R$)
98.0
EBITDA YTD
40.1
EBITDA / Quarter
16.9%
5.5%
EBITDA EBITDA (in million of (in million of ReaisReais) and) and EBITDA MarginEBITDA Margin(%) (%)
EBITDA in 3Q14 amounted to R$ 15.8 million, a reduction of 60.6% when compared to the R$40.1 million registered in 3Q13. For the same item in 2Q14 there was an increase of R$ 8.6million.
.19.0%
4.4%7.8%
YTD13 YTD14
51.9
EBITDA
3Q13 2Q14 3Q14
7.2 15.8
EBITDA Ebitda Margin (%)EBITDA Margin (%)
3Q14 EBITDA was still impacted by production inefficiencies post-NR12 andby certain costs recognized during the quarter that are not expected tocontinue.
10.0
Net Income (Loss) / Quarter
4.7%
-27.9%
-3.9%
Net Loss Net Loss ((in millions of Reaisin millions of Reais) ) and and Net Margin Net Margin (%)(%)
The Company reported a net loss of R$ 7.9 million, principally due to the lower comparativeoutput and sales volumes, combined with the higher costs.
3Q13 2Q14 3Q14
10.0
(45.4)
(7.9)
Net income Net Margin (%)
Net Net DebtDebt (in million of (in million of ReaisReais))
� Total Debt increased 6.2% in 3Q14 when compared with 3Q13 mainly due to the valuation of USDollar against Real, of 9.9% in the period.
In R$ (MM) 3Q13 2Q14 3Q14 Ch. 3Q14 / 3Q13
Short Term 51,4 114,6 141,6 175,2%
Long Term 523,6 449,2 469,0 -10,4%
Total 575,0 563,8 610,5 6,2%
Cash and liquid hedge instruments 80,7 41,1 29,5 -63,5%
Net Debt 494,3 522,7 581,1 17,6%
Shareholders' Equity 662,1 619,2 610,2 -7,8%
Net Debt / Adjusted EBITDA 3,86 4,72 5,95 54,1%
Consolidated Net Debt
Dollar against Real, of 9.9% in the period.
� Net Debt increased by 17.6% compared with 3Q13, largely due to a reduction in cash and cashequivalents during the last two quarters. The increase was caused by lower operating performanceand incremental CAPEX mainly in 2Q14.
8%
92%
Local currency Foreign currency
Net Debt %
Market Market ValueValue RatiosRatios
The book value of the Company shares increased9.2% compared to 2T14 and 3.5% over the sameperiod last year.
3Q13 2Q14 3Q14
0.96 0.97
1.06
Share Price / Book Value per share
PRVI3 Book Value / Quarter
3.5%
3.4%
PRVI3
IBOVESPA
Change 3Q14 / 3Q13
Share Price / Book Value per share3.4%IBOVESPA
R$ 7.92 R$ 7.89R$ 8.05
R$ 7.51
R$ 8.20
R$ 7
R$ 8
R$ 9
Sep-13 Dec-13 Mar-14 Jun-14 Sep-14
Share Value - IBOVESPA
Market Cap Peers Market Cap Peers –– Nonwovens in 10/01/2014 Nonwovens in 10/01/2014 (in US$)(in US$)
267.717.932
260.080.861
279.065.493
250
300
350
400
Mill
ion
260.080.861
200
250
Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14
Providência Avgol Pégas
Environmental responsibilityEnvironmental responsibility
Providência holds 19 000 m2, including thepermanent preservation, with somespecies of native vegetation;
The Company has 4 extruders typemachines for recycling part of thenonwoven chips generated during themanufacturing process;
Waste, recovered materials and leftovers arereferred for treatment only in companiesduly licensed by the responsibleenvironmental agency.
Preservation of green areas and Preservation of green areas and protection of riversprotection of rivers
Internal recycling program of materialsInternal recycling program of materials Waste management programWaste management program
Woods – Unit São José dos Pinhais/PR
Environmental responsibilityEnvironmental responsibility
Providência monitors the power consumption and actsto reduce it. Employees are instructed on the importanceof avoiding waste;
All water used for heating and cooling equipment is againstored in tanks, and then reused for the same purpose.
Commission to analysis the energy consumptionCommission to analysis the energy consumption Water Water -- Monitoring consumer and closed circuitMonitoring consumer and closed circuit
Awards and acknowledgementsAwards and acknowledgements
We were one of the highlights of the 2013 Brazilian Transnationality Rankingdeveloped by Fundação Dom Cabral. We are among the 10+ in the revenues
76th position in the ranking prepared by Revista Amanhã, which defines the bestcompanies in southern Brazil in 2014, climbed seven places from the previous year.Also 32nd position among the best companies of Paraná, which was 37th in 2013. Westand out among the 50 largest net Equity and Gross Revenue, occupying the 27th
and 43rd positions respectively;
Cia Providência is the 89th among the top Brazilian 250companies, and among the 10 companies highlighted inSouthern Brazil, according to Época Negócios 360º ranking.
developed by Fundação Dom Cabral. We are among the 10+ in the revenuesbellow R$ 1 billion category, at the 8th position. In the overall ranking, we are in23rd place with an index of 0.143 points of transnationality;
Agenda
The Company
Sector
Highlights
3Q14 Results
Sale of the Company’s control
Status Status –– Sale of the Company’s control to PGISale of the Company’s control to PGI
� On July 14, 2014 there was an Extraordinary General Meeting where the followingresolutions were taken:
� The exit of the Company from Novo Mercado of BM&FBOVESPA was approved bymajority of the present shareholders;
� Also approved by majority of eligible voting shareholders representing theoutstanding shares, the selection of BANCO J. SAFRA S.A., as the financial institutionoutstanding shares, the selection of BANCO J. SAFRA S.A., as the financial institutionresponsible for the drafting of the appraisal report on the economic valuation of theCompany’s stock, for the purposes of the Delisting Tender Offer and the Tender Offerfor the Exit of the Company from Novo Mercado;
� On November 7, 2014 the draft of the Tender Offer Notice and the adjusted
appraisal report were published at Itaú BBA and Company website.
CEO/CFO: Hermínio Vicente Smania de Freitas
IR : Gabriela Las CasasDanielle Cabrini
Tel: +55 (41) 3381-8673Fax: +55 (41) 3381-7656São José dos Pinhais – PR
ContactsContacts
São José dos Pinhais – PRwww.providencia.com.br/riwww.twitter.com/providencia_ri
The words “believe”, “anticipate”, “expect”, “estimate”, “will”, “plan”, “may”, “intend”, “foresee”, “project” and other similarexpressions 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 andcompetition. In addition, forward-looking statements refer only to the date on which they were made and should not be taken as aguarantee of future performance. Providência is under no obligation to update this presentation with new information and/orfuture events.
Apimec South of Brazil Meeting