World and Brazilian Fertilizer Market MARCH Company Overview

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2 World and Brazilian Fertilizer Market MARCH 2012 Company Overview

3 GLOBAL FERTILIZER CONSUMPTION BY NUTRIENT TOTAL N P2O % 29% 24% K2O % 17% World 47% Brazil Estimated growth of 2.4% in 2012 Annual estimated average growth of 3.6% from 2010 to 2012 Source: IFA, June 2011 (e) estimate 3

4 GLOBAL PRODUCTION CAPACITY OF FERTILIZERS millions of tons by nutrient - NPK 85% % of Utilized Capacity 81% 76% Production recovery after 2009 by increasing utilized capacity Source: IFA Note 1 The total volume contemplates industrial use fertilizers 4

5 GLOBAL FERTILIZER PRODUCERS BY REGION AMMONIA (NITROGEN) ASIA EUROPE & OTHERS AMERICAS 14.8% 17.6% 65.0% AFRICA 2.6% Source : ANDA / IFA 5

6 GLOBAL FERTILIZER PRODUCERS BY REGION PHOSPHATE ROCK ASIA AMERICAS AFRICA EUROPE & OTHERS 2.6% 21.5% 21.0% 54.9% Source: ANDA / IFA 6

7 GLOBAL FERTILIZER PRODUCERS BY REGION POTASSIUM CHLORIDE ASIA 42.2% AMERICAS 31.1% EUROPE 26.7% Source : ANDA / IFA 7

8 INVESTMENTS IN RAW MATERIAL PRODUCTION WORLD RESERVES Available Limited Limited INVESTMENTS IN NEW CAPACITIES US$ 1,4 billion per 1 million tons of ammonia 3 years US$ 1,6 billion per 1 million tons of P2O5(i) 3-4 years US$ 1,6 billion per 1 million tons of KCL(ii) 5-7 years PRODUCING COUNTRIES ~ 75 countries (ammonia basis) 1 st China; 2nd Russia; 3rd India; 4th USA ~ 100 countries (P205 basis) 1st China; 2nd USA; 3rd Morocco; 4th Russia 12 countries (KCL basis) 1st Canada; 2nd Russia; 3rd Belarus; 4th Germany MARKET CHARACTERISTICS Regional Global Players Global few global players BRAZILIAN POSITION 1% of World s Production 3% of World s Consumption 4% of World s Production 9% of World s Consumption 1% of World s Production 14% of World s Consumption ANNOUNCED INVESTMENTS China, Qatar, Saudi Arabia, Egypt, Brazil and Iran China, Brazil, Maroccos, Saudi Arabia and Peru Canada, Brazil, Maroccos, Saudi Arabia and Peru (i) Includes phosphates rock, sulfuric acid and MAP/DAP (ii) Conventional Mining Source: IFA / ANDA / Potash Corp / BMO april/2009 8

9 mm tons GLOBAL MARKETS AND CARG OF LARGEST MARKETS 2010 mm tons CAGR Global Largest Fertilizer Markets (1) CAGR of Largest Markets 29.8% Market Share % % CAGR 3,5% 16.3% 11.8% 5.9% 2.9% 2.2% 1.8% 1.7% 4,6% 0,4% 6,2% Brazil is the world s 4 th largest market and is growing above the global average Note:(1) In nutrient consumption / source: IFA/ANDA 9

10 (mm tons) EVOLUTION OF BRAZILIAN INDUSTRY AND HERINGER Industry CAGR 6.2% Heringer CAGR 17.0% Brazilian Market Heringer Heringer s Market Share 17.2% in 2011 Source: Anda / Heringer CAGR

11 SUSTAINABILITY AND FERTILIZERS IN BRAZIL 2,000 1,800 1,600 1,400 1,200 *PLANTED AREA/HA (CAGR 2%) *AGRI PRODUCTION (CAGR 5%) FERTILIZERS (CAGR 7%) Planted area CAGR (1969 to 2011) of 2%, vs. agricultural production CAGR of 5% 1, Fertilizer consumption CAGR of 7% shows the important gain in agricultural productivity and contribution of this input to environmental preservation *Planted area in hectares of soybean, corn, beans (grain), paddy rice, wheat (grain), herbaceous cotton, oats (grain), barley (grains), triticale (grain), sunflower (grain), rye (grain). Agricultural production of following crops: soybean, corn, beans (grain), paddy rice, wheat (grain), herbaceous (seed), sorghum (grain), oats (grain), triticale (grain), sunflower (grain), rye (grain) Source: Agroconsult 11

12 BRAZIL TOTAL AND ARABLE LAND TERRITORIAL DISTRIBUITION (MILLION PER HA) %TOTAL LAND %ARABLE LAND Arable Land BRAZIL Cultivated Area (annual and permanent) Grain Soybean Corn Bean Rice Cotton Sugarcane Coffe Orange Planted Forest Pasture Available Area >> arable land (cultivated + pasture) % 38.8% 8.5% 5.9% 2.8% 1.6% 0.5% 0.3% 0.2% 1.1% 0.3% 0.1% 0.8% 20.2% 10.1% % 21.9% 15.1% 7.3% 4.2% 1.2% 0.9% 0.4% 2.8% 0.7% 0.3% 2.0% 52.1% 26.0% Brazilian grain production uses only 21.9% of arable land Brazil has 14.0% of fresh water of the world Fontes: FGV 12

13 BRAZILIAN FERTILIZER PRODUCTION CHAIN Basic and Intermediate Fertilizer Producers Mineral Extraction Natural Gas NPK Mixture Producers Natural Gas (N) Phosphate Rock (P) Potassium (K) Urea / Nitrate/ Sulfate MAP / DAP TSP SSP Potassium Chloride Mixers and Distributors (NPK) Petrobras Vale Fert. Copebras Galvani Vale Fert. Vale Fert. Petrobras Proquigel Copebras Vale Fert. Copebras Vale Fert. Yara Vale Fert. Copebras Galvani Heringer Yara Timac Bunge Cibrafertil Fospar Vale Fert. Heringer Bunge Mosaic Yara Fertipar ADM Others ( compan.) Clear segmentation of the production and distribution on Brazilian market In 2011 Brazil imported 70% of the fertilizer it consumed 13

14 BRAZIL S AGRICULTURAL CALENDAR 35% 65% CROPS JAN FEB MAR APR MAY JUN JUL AUG SEPT OCT NOV DEC Planting SOYBEAN Harvest Sugarcane Planting 18-Month System Planting/Coverage SUGARCANE Northeast Harvest Center South Harvest Northeast Harvest Planting/Coverage Planting/Coverage COFFEE Harvest Winter Crop Planting Planting CORN Harvest Winter Crop Harvest COTTON Harvest Planting Production cycle of the five crops with the highest fertilizer consumption in Brazil Historic sazonality 35% in 1H and 65% in 2H 14

15 BRAZIL: IMPORTANTE AGRIBUSINESS PLAYER Brazil as a % of Global Production 2010/11 Brazil as a % of Global Exports 2010/11 1º 1º 1º 2º 1º 1º 2º 1º 4º 3º 5º 3º Brazil is one of the largest producers/exporters of agricultural products and has one of the lowest production costs in the world Sources: USDA/ Agroconsult in metric tons 15

16 FERTILIZER DELIVERIES BY CROP Brazilian Market Heringer Soybean 34% Sugarcane 15% Soybean 14% Sugarcane 20% Corn 18% Corn 18% Coffe 7% Reflorest. 3% Others 23% Coffee 19% Reflorest. 6% Others 23% Heringer offers solutions for many different crops, minimizing the volatility associated with local climates and other specific conditions, such as price cyclicality, pests and disease. Source: LSPA IBGE/CEPE AGRO e ANDA 16

17 SALES BY SEGMENT Sales by segment Number of Clients Individuals 45% 50,229 Resale 6% cooperatives 6% 45,190 44,959 Companies 43% Individuals/Companies = 88% of volume Focus on the segment is important for increasing profitability and mitigating risks More than 50,000 clients in 2011 a retail Company 17

18 MIXING UNITS AND PRODUCTION CAPACITY 19 units located in the main consumer market, with installed mixing capacity around 6 million metric tons 1 Sulfuric acid and single super phosphate (SSP) Unit Brazilian Market Distribution South 27.60% North 1.90% Northeast 12.20% Rondonópolis Anápolis Rio Verde Catalão Uberaba Bebedouro Ourinhos Dourados Paulínia Manhuaçu Iguatama Três Corações Rosário do Catete Camaçari São João do Manhuaçu Viana Southeast 28.60% Middle East 29.70% Porto Alegre Paranaguá Rio Grande Legenda Unidades Mixing Units Misturadoras Unidade SSP Unit de SSP 18

19 FINANCIAL HIGHLIGHTS Volume (million metric tons) Net Revenue (R$ thousand) 1,435,969 2,260,839 3,524,559 3,192,314 3,521,473 4,704,010 EBITDA (R$ thousand) 58,606 83,266 90,113 38, , ,491 EBITDA Margin 4.1% 3.7% 2.6% 1.2% 6.0% 7.5% EBITDA in 2011 was the highest in Heringer s history 19