3. Operational and
Administrative Highlights
Operational startup of Kami 9:
Sales beginning on April;
World-class quality, in line with top international products;
Full capacity of 1,250 tons/ month reached on June;
Main products are ultrathin special hygienic disposables and medical disposables.
3
4. Operational and
Administrative Highlights
Isofilme Operations: EBITDA Margins higher than the
consolidated KAMI margins due to
End of investments and fiscal incentives in Minas Gerais State
improvements at Isofilme
production process;
Full capacity of 800
tons/month reached on
June/2008;
On the 2nd Quarter 2008 it
increased 2,300 tons of
hygienic disposables to the
domestic market.
4
5. Operational and
Administrative Highlights
Specialties in Hygienic Disposables:
Laminated nonwovens production line at full capacity in the 2Q08;
Projects to expand the production capacity of specialties in hygienic disposables
in progress, with 2008 total capital expenditures estimated at R$23 million and
startup operations on 4Q08.
Domestic Market Exports
Volume in tons of
laminated/
printed hygienic
disposables
Overpice of
printed hygienic
disposable
versus standard
5
6. Operational and
Administrative Highlights
Other:
Repurchase of 2.9 million shares (92% of authorized) since the beginning of the
program until July 28, 2008, at a total cost of R$22.1 million;
Implementation (go live) of SAP system on July 1st, 2008.
Operation - Pipes and Fittings Division:
Start-up sales of large-diameter Pipes to the industrial segment with installed
capacity of 5,000 tons/year.
6
8. Sales Volume
Increase of 31.3% over 2Q07,
Total: 24.1 more significant in the Nonwovens
Total: 21.4 Division that increased 42.4% in the
Total: 18.4 same period, due to the expansion
in the volume added by Isofilme,
acquired in August 2007, and at
KAMI9, construction of which began
in 2007 and operations in April 2008;
Increase of 12.5% in relation to
1Q08, having the Nonwovens
Division increased 18.8% in the
same period.
In thousands of tonnes
8
9. Gross Revenue
Increase of 25.7% in relation to
2Q07 and 10.9% compared with
1Q08:
Sales on the external market
increased 23.2% over 2Q07 and
3.2% in relation to 1Q08, even in a
scenario of significant appreciation
in the real’s value against the
dollar.
Sales on the domestic market
increased 26.8% over 2Q07 and
14.7% compared with 1Q08, due
to the operation of Line 9 and
Isofilme, reaching full capacity.
In million of Reais
9
10. EBITDA (R$ million) and EBITDA Margin (%)
Adjusted EBITDA reached R$ 30.9
million (with margin of 24.2%), 17.5%
31.4 over 2Q07;
Increase of 17.3% in relation to
27.6 1Q08;
EBITDA Adjusted by the hedge
operation* totaled R$ 31.4 million (with
margin of 24.6%), 19.3% over 2Q07;
In relation to 1Q08, the increase
was of 13.7%, mainly due to the
increase in sold volumes.
Operational hedge*: The result ofexchange-rate lock forward contracts on
accounts receivable from the exportmarket.
10
11. Net Revenue (R$ million) and Net Margin (%)
Net Revenue of R$ 13.8
million with net margin of
10.8%, reverting the loss
registered in 2Q07 due to the
financial expenses on account
of the promissory notes and
the exchange gains/losses
from the export market;
Increase of 40.6% over
1Q08, registering a profit of R$
9.8 million and a margin of
8.5%.
11
12. Nonwovens Division
Volume reached 17.9 thousand tonnes,
up 42.4% when compared with 2Q07.
The domestic market registered a growth
of 15.5% (mainly Isofilme) and the
External Market registered a 33.7%
increase due to Kami 9;
Compared to 1Q08, the increment was
of 18.8%;
Net income totaled R$ 103.7 million in
2Q08, up 34.4% in relation to 2Q07 and up
17.3% in relation to 1Q08;
These results are principally due to the
increase in sales and to the full capacity of
Isofilme and Kami9 (reached on June 08)
12
13. Nonwovens Division
Unitary Fixed Cost in line with 2Q07;
In relation to 1Q08 there was a drop of
8.1% due to the efficiency gains and
increased scale.
Drop of 0.3% compared with 2Q07, thanks to the
efficiency gains and increased scale, despite the
increase in petrochemical resin prices. Indexation of
the raw material supply contracts to the dollar also
contributed to at least partially compensating for the
upward pressure of resins on the external and domestic
markets.
In relation to 1Q08, there was a reduction of 2.7%, on
account of the fall in exports, which have a greater
13
logistics cost.
14. Nonwovens Division
EBITDA of R$ 27.9 million, with a margin of
26.9%, 17.5% increase over 2Q07.
Growth was 24.3% compared with 1Q08, due
to the increase of the domestic sales. .
Adjusted Ebitda through Operational
Hedge* was of R$28.4 million (Margin of
27.4%), 19.5% increase compared with
2Q07.
14
Operational hedge*: The result of exchange-rate lock forward contracts on accounts receivable from the export market.
15. Pipes and Fittings Division
2Q08 volume was of 5.7 thousand tonnes
in line with 1Q08 and 14.2% over 2Q07.
Revenue of R$ 22.8 million, with a
17.6% growth when compared to 2Q07
and a 2.3% reduction when compared to
1Q08, due to the product mix change that
drove to a decrease in price (reduction of
approximately 3% over the average
price).
15
16. Pipes and Fittings Division
Growth of 7.8% in relation to 2Q07 due to a
new sales and operational structure in line with
the strategy of the Pipes and Fittings Division
Compared to 1Q08 there was a drop of
Variable Costs 3.5%.
(R$ million)
Fixed Costs and Unitary Fixed Costs
(R$ million)
3.2 3.2
0.3% increase in comparison with 2.5
2Q07 and 1.4% increase when compared
2Q07 1Q08.
to 1Q08 2Q08
0.57 0.55
PVC’s resin prices presented a slight 2Q07
0.51 1Q08 2Q08
increase when compared with those of
1Q08 Unitary Fixed Costs
16
17. Pipes and Fittings Division
Ebitda (R$ million) and
Ebitda Margin (%) EBITDA of R$ 2.9 million,
with a margin of 12.9%, na
increase of 27.6% over 2Q07
and a reduction of 23.6% over
1Q08.
3.9
2.9 Return to the historical
2.3 margins due to the resin price
16.5% stabilization and to the product
11.9% 12.9%
mix.
2Q07 1Q08 2Q08
EBITDA Margin%
17
19. Internationalization of the Company
Strategic Aspects:
• Become a Global Player by using the technological potential and the
Company’s knowhow in disposable hygienic and medical products.
• Participate in the global product development by locating next to the
leader manufacturers of disposable diapers.
• Take advantage on the high disposable adult diapers market growth
(7%per year) in the US.
Operational Aspects:
• Optimize logistical costs through the substitution of a local operation
in the US for the volume exported from Brazil to the NAFTA.
•Allow the Brazilian operation to redirect its sales volume to the South
American market in order to keep up with the demand growth for this
region in the next 3 years.
19
20. Providência USA, Inc.
Location:
• South East USA (in final stage of definition)
CAPEX:
• Production Equipment:
• KAMI 11: US$ 46.5 million (sep/08 to jun/09)
• KAMI 12: US$ 51.5 million (dec/08 to jul/10)
• Buildings/Installations/Utilities/Contingencies: US$ 22 million
(sep/08 to jul/10)
Estimated Return on Investment:
• IRR between 17 and 21%
• ROIC between 20% and 24%
20
21. Volume Perspectives
In tonnes
Nonwovens installed capacity 2008 2009 2010
Providência Brazil 73,000 80,000 80,000
Providência United States - 18,000 40,000
Total 73,000 98,000 120,000
Brazilian Nonwovens Market
75.732
66.133
62.986
+15% The increase in the
+5% Brazilian Nonwovens
Market tends to absorb the
whole volume currently
exported by the Company
to the USA. Providência
2006 2007 2008* currently exports 12,000
tonnes to the USA, that will
be sold in the domestic
Sources: Company’s Estimates *Perspective market.
ABIQUIM
21
ABINT
22. CFO: Eduardo Feldmann Costa
IR Manager: Gabriela Las Casas
Phone: +55 (41) 3381-7600
Fax: +55 (41) 3283-5909
São José dos Pinhais – PR - Brazil
www.providencia.com.br/ir
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 22
presentation with new information and/or future events .
