the future…

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AGENDA
• HIGHLIGHTS
• MAIN EVENTS
• ENVIRONMENT
• STRATEGY
• A YEAR OF SOLID GROWTH
CONSOLIDATED ANALYSIS / GEOGRAPHIC ANALYSIS
• THE FUTURE…
2
2005
HIGHLIGHTS
• TURNOVER GREW BY 4% TO 1,465 MILLION EUROS.
• EBITDA OF 208 MILLION EUROS.
• NET RESULTS WERE UP 67% TO 36 MILLION EUROS.
• RETURN ON CAPITAL INCREASED FROM 5% TO 7.5%.
EXCLUDING GESCARTÃO
3
2005
MAIN
EVENTS
4
2005
MAIN EVENTS
55 million Eur
bond issue
Board of Directors’ approval
of the Sonae Indústria
Merger-Demerger and
Merger project
23 million Eur payment
of Tafisa 98 bonds
ABRIL
MARÇO
Bond issue totalling
250 million Eur
Payment of a 160 million
Eur debt to Sonae SGPS
40 million Eur anticipated
payment on the syndicated
loan in Canada
5
NOVEMBRO
JUNHO
MAIO
Conclusion of
the Sonae Indústria
Merger-Demerger
and Merger project
SETEMBRO
DEZEMBRO
100 million Eur tranche/
down payment of the
syndicated loan
International
Management
Meeting
Joint-venture agreement with
Tarkett AG, for the manufacture
and trade of laminate Flooring
2005
ENVIRONMENT
EUROPEAN WOOD-BASED PANEL INDUSTRY SLOWED
• THE
DOWN BOTH IN DEMAND AND PRODUCTION, COMPARED
TO 2004.
THE SLOWDOWN, SONAE INDÚSTRIA KEPT A
• DESPITE
SIMILAR SALES VOLUME TO 2004 (6.8 MILLION M3 SOLD)
WITH HIGHER AVERAGE PRICES.
• INCREASE IN OIL PRICES IMPACTED THE MARKET.
INDÚSTRIA’S EFFICIENCY PRODUCTION INCREASED
• SONAE
TO 90% IN 2005, COMPARED TO 89% IN 2004.
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2005
ENVIRONMENT
• INDUSTRIAL CONSOLIDATION.
• MAIN TRANSACTIONS:
(SPAIN) ACQUIRED JOMAR AND WEYERHAEUSER’S
• FINSA
FRENCH ASSETS;
• PFLEIDERER (GERMANY) ACQUIRED KUNZ (GERMANY);
ANNOUNCED AVAILABILITY TO SELL
• WEYERHAEUSER
NORTH-AMERICAN PB AND MDF INDUSTRIAL PLANTS.
GREATER COMPETITIVE STABILITY WAS FELT BOTH
• HOWEVER,
IN PRICES AND PRODUCTION.
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2005 STRATEGY
STRATEGIC FOCUS
1. A MULTIREGIONAL WOOD-BASED
PANEL PRODUCER;
2. ORIENTED TOWARDS INNOVATION
AND CONTINUOUS IMPROVEMENT
OF OPERATIONAL PERFORMANCE;
3. WITH THE AMBITION TO GROW
MAINTAINING A STRONG BALANCE
SHEET.
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STRATEGIC GUIDELINES
1. A MULTIREGIONAL WOOD-BASED
PANEL PRODUCER
• WITH OWN CORPORATE GOVERNANCE RULES
OF DIRECTORS WITH 11 MEMBERS, 6 OF WHICH
• BOARD
NON-EXECUTIVE;
• EXECUTIVE COMMITTEE WITH 5 EXECUTIVES;
INDEPENDENT COMMITTEES:
• WITH
AUDIT AND FINANCE; ENVIRONMENT AND SOCIAL RESPONSABILITY;
NOMINATION AND REMUNERATION.
• WITH ENVIRONMENTAL AND PEOPLE SAFETY CONCERNS
BY COUNTRIES/REGIONS (FOCUSING ON INDUSTRIAL,
• ORGANISED
MARKETING AND SALES ACTIVITIES) REPORTING DIRECTLY TO A
MEMBER OF THE EXECUTIVE COMMITTEE AND SUPPORTED BY A
CORPORATE CENTER, A SHARED SERVICES CENTRE AND AN
EXPORT DEPARTMENT.
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STRATEGIC GUIDELINES
2. ORIENTED TOWARDS INNOVATION AND CONTINUOUS
IMPROVEMENT OF OPERATIONAL PERFORMANCE
ON EFFICIENCY AND IMPROVING PROFITABILITY TO OBTAIN
• FOCUS
SUSTAINED VALUE CREATION FOR SHAREHOLDERS
•
SALES AND MARKETING
PRIORITY ON PRICE AND MARGIN OVER MARKET SHARE
• MANUFACTURING AND SUPPLY CHAIN
CONTINUOUS COST REDUCTION PROGRAM AND SHARING/INCORPORATING
BEST PRACTICES;
INCREASE PRODUCTIVITY AND CONTROL BY LEVERAGING ON IT INVESTMENTS.
• BACK OFFICE
CONTINUE IMPROVING THE EFFICIENCY OF ADMINISTRATIVE PROCESSES
AND INFORMATION QUALITY;
SIMPLIFY STRUCTURE BY REDUCING THE NUMBER OF COMPANIES.
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STRATEGIC GUIDELINES
3. WITH THE AMBITION TO GROW MAINTAINING
A STRONG BALANCE SHEET
• STRENGTH OF THE BALANCE SHEET
ADEQUATE DEBT MATURITY AND FLEXIBILITY;
ADEQUATE LEVEL OF CAPITAL.
• OPTIMIZATION OF CAPITAL EMPLOYED
DISPOSAL OF NON-RELATED ASSETS TO THE OPERATIONAL ACTIVITIES;
TOTAL WORKING CAPITAL MANAGEMENT.
• IMPROVE CASH-FLOW GENERATION
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STRATEGIC GUIDELINES
SUMMARY
AN ORGANISATION FOCUSED ON OPERATIONS UNDER
STRENGTHENED GOVERNANCE...
BASED ON MARKETING AND SALES PRINCIPLES THAT GIVE PRIORITY
TO MARGIN, CUSTOMER, PRODUCT AND MARKET MIX MANAGEMENT;
ORIENTED TOWARDS INNOVATION, ECO-EFFICIENCY, PEOPLE SAFETY
AND CONTINUOUS IMPROVEMENT OF INDUSTRIAL AND SUPPLY CHAIN
PROCESSES.
... WILL ALLOW US
TO DELIVER AN ADEQUATE AND SUSTAINABLE LEVELS OF
PROFITABILITY TO THE SHAREHOLDERS;
TO ACHIEVE A HIGH LEVEL OF CONFIDENCE FROM ALL
STAKEHOLDERS.
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2005
A YEAR
OF SOLID
GROWTH
CONSOLIDATED ANALYSIS
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2005 - A YEAR OF SOLID GROWTH
CONSOLIDATED
14
2005 - A YEAR OF SOLID GROWTH
CONSOLIDATED
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2005 - A YEAR OF SOLID GROWTH
CONSOLIDATED
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2005 - A YEAR OF SOLID GROWTH
CONSOLIDATED
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2005 - A YEAR OF SOLID GROWTH
CONSOLIDATED
PROFIT AND LOSS
STATEMENT IAS/IFRS
(MILLION EUROS)
2004
2004(a)
2005
TURNOVER
1,492
100%
1,404
100%
1,465
100%
GROSS MARGIN
802
54%
746
51%
768
52%
OTHER COSTS - TOTAL
451
32%
452
32%
489
33%
EBITDA
239
16%
206
15%
208
14%
OPERATING PROFIT
131
9%
106
8%
108
7%
FINANCIAL PROFIT
-71
-5%
-71
-5%
-44
-3%
PROFIT BEFORE TAXES
61
4%
36
3%
64
4%
NET PROFIT
43
3%
22
2%
36
2%
(a) EXCLUDING GESCARTÃO
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2005 - A YEAR OF SOLID GROWTH
CONSOLIDATED
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2005 - A YEAR OF SOLID GROWTH
CONSOLIDATED
BALANCE SHEET (MILLION EUROS)
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2004
2005
NON-CURRENT ASSETS
1,265
1,242
CURRENT ASSETS
517
561
TOTAL ASSETS
1,782
1,803
SHAREHOLDERS’ FUNDS
470
530
MLT INTEREST BEARING DEBT
687
667
ST INTEREST BEARING DEBT
119
85
SUPPLIERS
175
183
OTHERS LIABILITIES
331
338
TOTAL LIABILITIES
1,312
1,273
TOTAL LIABILITIES + SHAREHOLDERS’ FUNDS
1,782
1,803
2005 - A YEAR OF SOLID GROWTH
CONSOLIDATED
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2005
A YEAR
OF SOLID
GROWTH
GEOGRAPHIC ANALYSIS
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2005 - A YEAR OF SOLID GROWTH
IBERIAN PENINSULA
EXCLUDING GESCARTÃO
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2005 - A YEAR OF SOLID GROWTH
IBERIAN PENINSULA
• CONSTRUCTION SECTOR CONTINUED TO GROW IN SPAIN
AND DECREASED IN PORTUGAL.
• FURNITURE INDUSTRY PERFORMED WELL IN PORTUGAL,
WHEREAS IN SPAIN WAS NEGATIVELY INFLUENCED BY
IMPORTS FROM ASIAN COUNTRIES AND REDUCTION OF
EXPORTS.
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2005 - A YEAR OF SOLID GROWTH
CENTRAL EUROPE
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2005 - A YEAR OF SOLID GROWTH
CENTRAL EUROPE
• DEMAND SLOWED DOWN.
• GLUNZ SALES VOLUME WAS MARGINALLY POSITIVE,
BACKED ON HIGHER VOLUME OF EXPORT, MAINLY FROM
GERMANY.
• TURNOVER IN LINE WITH 2004, BUT EBITDA MARGIN FELL
TO 5%, AGAINST 9% IN 2004.
• IN NOVEMBER, SONAE INDÚSTRIA REACHED AN AGREEMENT
WITH TARKETT TO MANUFACTURE AND SELL FLOORING.
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2005 - A YEAR OF SOLID GROWTH
REST OF THE WORD
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2005 - A YEAR OF SOLID GROWTH
REST OF THE WORD
• NORTH-AMERICAN MARKET REMAINED STRONG, HOUSING
KEPT GROWING, DESPITE THE APPRECIATION OF CAD OVER
THE USD.
• THE BRAZILIAN MARKET PRESENTED A DECREASE IN
PARTICLEBOARD VOLUMES AND A MARGINAL GROWTH
IN MDF.
THE SLOWDOWN IN THE FURNITURE INDUSTRY WAS DUE TO:
DECREASE OF DOMESTIC DEMAND AND EXPORTS;
FALL IN EXPORTS DUE TO APPRECIATION OF THE REAL;
COMPETITION FROM ALTERNATIVE FLOORING PRODUCTS.
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2005 - A YEAR OF SOLID GROWTH
REST OF THE WORD
• SOUTH-AFRICAN MARKET POSTED A STRONG GROWTH.
• SALES VOLUMES GREW ON AVERAGE 2%.
• TURNOVER GREW 16% TO 368 MILLION EUROS AND
EBITDA MARGIN INCREASED 24% TO 82 MILLION EUROS
(22% MARGIN).
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THE
FUTURE…
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31
2006
THE FUTURE…
A STRATEGY SUPPORTED ON THREE
MAIN GUIDELINES...
• PROTECT SHARE AND PROFITABILITY IN IBERIA.
MARKET POSITION AND IMPROVE
• STRENGTHEN
PROFITABILITY IN CENTRAL EUROPE.
SHARE AND PROFITABILITY IN MORE
• MAINTAIN
PROFITABLE MARKETS.
32
2006
THE FUTURE…
STRENGTHEN MARKET POSITION AND
IMPROVE PROFITABILITY IN CENTRAL
EUROPE
WITH THE ACQUISITION OF HORNITEX,
SONAE INDÚSTRIA AIMS:
TO STRENGTHEN ITS POSITION IN CENTRAL
EUROPE AND GUARANTEE A COMPETITIVE
ADVANTAGE;
TO LEAD IN TERMS OF THE PRODUCTION
CAPACITY IN GERMANY;
TO STRENGTHEN ITS COMPETITIVE RANKING
IN MELAMINE-SURFACED AND VALUE-ADDED
PRODUCTS;
THE PLANTS LOCATION OF BOTH COMPANIES
ARE COMPLEMENTARY.
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2006
THE FUTURE…
MAINTAIN SHARE AND PROFITABILITY
IN MORE PROFITABLE MARKETS
CANADA
INCREASE MELAMINE SURFACING PRODUCTION CAPACITY
INVESTMENT OF 12 MILLION CAD WHICH WILL INCREASE CAPACITY BY 50%.
START-UP: SUMMER 2006
SOUTH AFRICA
INCREASE CHIPBOARD PRODUCTION CAPACITY
AN INVESTMENT OF 45 MILLION EUROS IN A NEW CONTINUOUS PRESS AT
THE WHITE RIVER PLANT.
START-UP: IN THE MIDDLE OF 2007
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2006
THE FUTURE…
WILL PROCEED WITH THE ADOPTED STRATEGY AND
• WE
ANTICIPATE A MARGINAL GROWTH IN SALES VOLUMES IN
MARKETS, SUCH AS: SOUTH AFRICA AND NORTH AMERICA.
RELEVANT CHANGES IN PRODUCTION CAPACITY ARE
• NO
EXPECTED, THEREFORE THE MARKET ENVIRONMENT WILL
CONTINUE POSITIVE.
• MAIN CONCERN WILL BE THE RISK OF HIGHER OIL PRICES.
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