1. Art and Diseño

 3Q14 Results
Results’ Conference Call
Monday, October 27 2014
9:00 a.m. Mexico City CST
Tel: (55) 4624 0133
Dial in Code: 00424338
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 1 Highlights
3
Independent Proteak Valuation
4
MDF Project
4
Results and Key Indicators
5
Balance Sheet Analysis
7
Cash Flow Analysis
8
Environmental and Social Development
8
Proteak Informs
9
Financial Statements
10
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 2 Highlights
•
414 Capital conducted an independent valuation of Proteak, situating the value of its OPCs
(Ordinary Participation Certificates or CPOs in Spanish) between MXP 25.30 and 29.40 as
of June 2014.
•
Proteak decided to increase by 40% the production capacity of the MDF plant currently
under construction in Huimanguillo, Tabasco.
•
Production of the first board is still expected in the second semester of 2015.
•
Despite adverse climate conditions in the region, 100% of the Teak hectares and 80% of
the Eucalyptus hectares planned for 2014 have been planted or prepared for planting.
•
During the quarter, Proteak achieved the highest Teak export prices to Asian markets of its
entire history, with a positive effect on sales margins.
•
The annual FSC® Chain of Custody audit was successfully completed for Proteak
subsidiaries.
•
Proteak was nominated and awarded Corporate Social Responsibility (CSR) Company of
the Year by The European LATAM Awards.
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 3 Independent Proteak Valuation
In August 2014, the independent valuation performed by 414 Capital, was published. This
valuation places the fair market value of Proteak’s OPCs between MXP 25.30 and MXP 29.40 as
of June.
The valuation was performed based on discounted cash flows, considering the company’s Teak
business as well as the development of the MDF plant in Huimanguillo, Tabasco.
The valuation report is currently published on Proteak’s website:
http://proteak.com/index.php/en/investors/financial-information/quarterly-reports.
MDF Project
On August 13, Proteak announced a 40% increase in the production capacity of the MDF plant
currently under construction in Huimanguillo, Tabasco with an investment of over USD 200 million.
The plant’s initial annual production was contemplated at 200,000 m3. However, after reviewing
Proteak’s solid competitive advantages to enter this highly deficient market in Mexico, it decided,
together with machinery supplier Dieffenbacher, to make the necessary adjustments to the plant in
order to increase its capacity to 280,000 m3.
During the quarter, the construction of the MDF plant continued in line with the Project’s schedule.
The first stage of grade works was completed and pile installation started, prioritizing those areas
where foundations will begin.
The Energy Regulatory Commission (Comisión Reguladora de Energía, CRE) granted Proteak the
co-generation permit and the company continued signing all the contracts necessary for the
Project’s on-time, on-budget development.
Important progress was made in the preparation and planting of the Eucalyptus plantations that will
supply the MDF plant. During the quarter, 574 has were planted, 258 has were prepared for
planting and preparation was started in an additional 741 has. As of quarter-end, total hectares
planted with Eucalyptus amounted to 7,828.
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 4 Results and Key Indicators
SUMMARY OF RESULTS AND KEY INDICATORS
I.
Income Statement Analysis
Quarterly results were positive in both, Teak and Eucalytus operations.
Total quarterly sales reached MXP 32.9MM, for a total of MXP 126.4MM for the year, 18% higher
than the same period a year ago.
In the case of Teak, Proteak continued emphasizing its price optimization strategy, prioritizing it over
volume, with a positive effect in net income; thus, despite a decrease in sales volume, the company
achieved a higher sales margin. The ban on export of round logs from Burma has been highly
effective by sea; nevertheless, by land and through illegal channels, large quantities of wood have
been introduced to China. We estimate that this effect will last for close to a year. Nevertheless,
Proteak managed to obtain unprecedented sales prices for its exports to Asia, achieving a gross
margin of 16.5%. Quarterly Teak sales totaled MXP 26.8MM.
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 5 Regarding Eucalyptus, Proteak continued implementing a strategy where it sells wood only from
plantations that are too far away to supply the MDF plant. Quarterly Eucalyptus sales totaled MXP
6.1MM.
Income from revaluations resulting from wood growth added up to MXP 21.7MM for the quarter.
Moreover, quarterly cost of sales registered a significant improvement as a percentage of the latter,
in comparison with the same quarter last year. This resulted in a gross profit of MXP 31.3MM, 22%
higher than the same quarter of 2013.
Total Sales FY14 vs FY13
Sales by Quarter
('000.000 MXP)
('000.000 MXP)
140
60 120
18%
100
40 80
60
20 40
20
YTD13
Teak Sales
YTD14
Euc. Sales
-­‐ 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14
Administrative expenses, including those related to the operation of FOMEX and the MDF Project,
were in line with the company’s annual plan, with an 11% nominal increase vs. the same quarter of
last year.
The positive results of Proteak’s sales strategy, combined with the efficiency in logistic costs and the
stable performance of general expenses, resulted in an operating income of MXP 6.1MM, 45%
higher than the one registered in 3Q13.
Financial statements show the effect of foreign currency conversion derived from company
operations in Colombia, Costa Rica and Mexico. Net income for the first nine months of the year
includes a negative effect of MXP (15.1MM); total capital, however, includes a direct positive effect
of MXP 23.1MM. Both effects combined result in an accumulated comprehensive income of MXP
21.4MM.
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 6 E ffe c t in Ne t Inc om e
C ountry
E ffe c t in C om pre he nsive Inc om e
Inc om e (L os s ) A c c um ulate d
C ountry
Inc om e (L os s ) A c c um ulate d
Cos ta Ric a
(8,968)
Cos ta Ric a
5,158
Colombia
(6,184)
Colombia
8,329
2,107
US A
-­‐
US A
Mex ic o
-­‐
Mex ic o
Total
(15,152)
Total
7,466
23,060
MXP '000
II.
Balance Sheet Analysis
Compared to year-end 2013, total assets grew 8%, mainly reflecting the revaluation of biological
assets.
So far this year, the provision for the revaluation of biological assets amounts to MXP 63.9MM
reaching a 977.7MM balance, without considering inventory.
The value of Proteak’s plantations is mainly modified by four factors: (i) capitalized forestry
expenses, (ii) exchange rate, (iii) revaluations representing the growth of the biological assets, and
(iv) outflows from wood’s cost of sales.
So far this year, the following has been registered: (i) MXP 68.3MM in capitalized forestry
expenses, destined for the maintenance of existing plantations to improve their expected return by
promoting higher growth rates, as well as the plantation of 1,200 Teak hectares and 2,000
Eucalyptus hectares in 2014, (ii) MXP 2MM from revaluation of the US dollar, (iii) MXP 63.9MM for
revaluation derived from the previously discussed growth, and (iv) MXP 67.9MM, which represent
the wood’s cost sales. During the year, harvested wood amounts to 72.3Mm3 (thinnings and
harvest).
Long-Term assets kept for sale are mainly non-strategic land that will be sold in the medium term.
These assets are located in Costa Rica and are worth MXP 102.8MM.
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 7 Evolution of Total Assets
Debt/Equity Ratio
‘000,000
100%
3
80%
151%
2
60%
40%
1
20%
0%
2011
2012
2013
Equity
Liabilities
2014
2009
2010
2011
2012
2013
2014
Two items stand out within total assets: investments and pre-payments for the MDF Plant for a
total of MXP 223MM and investments in land for MXP 19MM. Fixed Assets are mainly composed
by 17,224 hectares of land, two nurseries, machinery and agricultural, forestry and transportation
equipment, and other forestry assets.
Other receivables include mainly taxes that are in a refund process.
Long-Term Debt includes a net credit from Financiera Rural, which totals MXP 182MM, including
interest, and the loan from the IFC, that amounts to MXP 67MM.
The Company´s total capital as of quarter-end amounts to MXP 2,119MM, with a solid debt-toequity ratio of 1:4.7.
III.
Cash Flow Analysis
The quarter’s cash flow evolved as projected, with a net operating cash flow of MXP 15MM.
Among investments, it is worth highlighting the purchase of land for MXP 4MM and the investment
in civil works for the MDF Plant for a total of MXP 61 MM.
Positive cash flow transactions reflect the company’s continuing collection improvements for a third
consecutive quarter, which amounted to MXP 58MM, and income from subsidies for MXP 6MM,
representing 80% of the expected total for the year.
The ending cash position for the quarter totaled MXP 165MM.
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 8 Environmental and Social Development
FSC® Certification
During the quarter, annual FSC® Chain of Custody audits were successfully completed for
Comefor and Proteak Renewable Forestry.
Social Development
Thanks to its contribution to social development in the rural sector, Proteak was nominated and
awarded Corporate Social Responsibility (CSR) Company of The Year by The European
LATAM Awards.
As part of its continued efforts towards fostering social development, Proteak continued
applying socio-economic surveys among representatives of ejidos and small communities
neighboring plantations in different regions of Mexico in order to prepare an ad hoc Program.
Proteak Informs
•
Independent Analyst
As part of the independent analyst program, follow-up of Proteak’s OPC is
performed by:
Ernesto Gustavo O´Farrill Santoscoy
[email protected]
Tel: (55) 5531 0042
Bahía de todos los santos #26
Col. Verónica Anzures
Delegación Miguel Hidalgo
C.P. 11590, México, D.F.
•
Investor Relations Agency
Alejandro Ramírez Arcia
[email protected]
Tel: +52 (55) 5256 – 5705
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 9 Financial Statements
The following chart presents a summarized quarterly and semi-annual Income Statement in MXP
‘000, and a comparison with the same periods of 2013. For gross profit, operating profit and net
income, the table shows the percentage of net sales (incl. revaluations) they represent.
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 10 The following table presents the consolidated balance sheet as of the third quarter of 2014 in MXP
‘000, and its comparison with the year-end figures.
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 11 Mexico City, October 24, 2014. Today, Proteak Uno, S.A.B. de C.V. (BMV: TEAK) has presented
its financial results for 3Q14. This information has been prepared according to Financial
Reporting Standards (NIF) and is presented in nominal terms.
Paseo de la Reforma 725 Col. Lomas de Chapultepec, Miguel Hidalgo, CP. 11000, Distrito Federal, México. 12