sheet 3q16 - amazon web services...3q16 fact sheet duratex fact sheet 3q16 2 consolidated financial...

CORPORATE GOVERNANCE

Email for addressing matters related to Corporate Governance to senior management: [email protected]

Shares listed on the Novo Mercado of BM&FBOVESPA Only ordinary shares are in circulation, that is, each share confers the right to one vote at the General Shareholder Meetings

100% Tag Along rights for the shares 3 independent members on the Senior Board of Directors Advisory Committees to the Board: People, Nomination and Governance; Sustainability; Auditing and Risk Management; Trading and Disclosure; and Evaluation of Transactions with Related Parties

Dividend policy requiring a minimum distribution of 30% of adjusted net earnings

Policy in force for the disclosure of Material Events and Facts in the Trading of Securities

Compliance with the Abrasca Code for Self-regulation and Good Practices in Publicly Traded Companies

Brokers that cover the company: BTG Pactual, Citibank, Credit Suisse, HSBC, JP Morgan, Merrill Lynch, Morgan Stanley, Nau Securities, Santander, Votorantim and Safra

Duratex Investor RelationsDirector/President: Antonio Joaquim de OliveiraManager: Guilherme Setubal Souza e [email protected]

Teleconference/Webcast:Monday, October 31, 2016Portuguese: time: 5 p.m. (Brasília time; 3 p.m. NYT)

Tuesday, November 01, 2016English: time: 11 a.m. (Brasília time; 9 a.m. NYT)

Support materials: www.duratex.com.br/ri

To connect: Participants in Brazil: +55 11 3193-1001 or +55 11 2820-4001Participants in the USA: toll free: +1 888 700-0802 (English only)Access code: DuratexWebconferene: www.duratex.com.br/ri

MARKET CAP (09/30/2016)BRL5,928m

CLOSING SHARE PRICE ON 09/30/2016BRL8.60

NUMBER OF SHARES IN ISSUE AT THE END OF SEPTEMBER691,784,501

TREASURY SHARES2,485,759

FREE FLOAT40%

For those unable to accompany the conference calls live, full audio playback will be available via the Company's website (www.duratex.com.br) or via telephone +55 11 3193-1012 or +55 11 2820-4012 for both Portuguese and English versions, the access codes being, Portuguese: 3189715# and English: 4750069#.

3Q16

FACT SHEET

2Duratex Fact Sheet 3Q16

Consolidated Financial Results

(BRL ‘000) 3Q16 2Q16 % 3Q15 % Jan-Sep/16 Jan-Sep/15 %

HIGHLIGHTSVolume shipped Deca (‘000 items) 6,646 6,579 1.0% 6,981 -4.8% 18,646 19,738 -5.5%

Volume shipped Wood (m3) 580,365 613,301 -5.4% 629,304 -7.8% 1,794,650 1,902,476 -5.7%

Consolidated net revenue 967,090 1,012,606 -4.5% 1,041,653 -7.2% 2,881,095 3,008,205 -4.2%

Gross profit 269,176 274,423 -1.9% 300,359 -10.4% 743,845 859,046 -13.4%

Gross margin 27,8% 27,1% 28,8% 25,8% 28,6%

Ebitda according to CVM Nº 527/12(1) 254,894 210,449 21.1% 241,080 5.7% 611,890 742,501 -17.6%

Ebitda Margin CVM Nº 527/12 26,4% 20,8% 23,1% 21,2% 24,7%

Adjustments for non-cash events (37,999) (38,792) -2.0% (24,123) 57.5% (117,049) (100,922) 16.0%

Non-recurring events (30,987) - 9,822 (30,987) 9,822 0.0%

Recurring adjusted Ebitda(2) 185,908 171,657 8.3% 226,779 -18.0% 463,854 651,401 -28.8%

Recurring adjusted Ebitda margin 19,2% 17,0% 21,8% 16,1% 21,7%

Net income 29,855 723 4,029.3% 30,512 -2.2% 1,022 137,388 -99.3%

Recurring net income 9,404 723 1,200.6% 38,771 -75.7% (19,429) 145,647 -113.3%

Recurring net margin 1,0% 0,1% 3,7% -0,7% 4,8%

INDICATORSCurrent ratio(3) 1,68 2,26 -25.5% 2,49 -32.5% 1,68 2,49 -32.5%

Net debt(4) 2,127,495 2,073,614 2.6% 1,941,284 9.6% 2,127,495 1,941,284 9.6%

Net debt/Ebitda LTM(5) 3,28 3,00 9.2% 2,11 55.3% 3,28 2,11 55.3%

Average net equity 4,565,346 4,530,622 0.8% 4,723,011 -3.3% 4,562,137 4,682,871 -2.6%

ROE(6) 2,6% 0,1% 2,6% 0,0% 3,9%

Recurring ROE 0,8% 0,1% 3,3% -0,6% 4,1%

SHARESBasic net earning per share (BRL)(7) 0,0484 0,0007 6814.3% 0,0423 14.4% (0,0022) 0,1988 -101.1%

Closing share price (BRL) 8,60 8,50 1.2% 5,88 46.3% 8,60 5,88 46.3%

Net equity per share (BRL) 6,63 6,62 0.2% 7,18 -7.6% 6,63 7,18 -7.6%

Shares held in treasury (shares) 2,485,759 2,485,759 0.0% 2,485,759 0.0% 2,485,759 2,485,759 0.0%

Market Value (BRL1,000) 5,927,969 5,859,039 1.2% 3,898,909 52.0% 5,927,969 3,898,909 52.0%

Since 01/07/2015 we have consolidated the results from Corona

(1) Ebitda (Earnings Before Interest, Tax, Depreciation and Amortization): Measure of operational performance in accordance with CVM Instruction 527/12.

(2) Ebitda adjusted for non-cash events arising from variation in the fair value of biological assets and combination of businesses, in addition to extraordinary events.

(3) Current liquidity: current assets divided by current liabilities. Indicates the amount available in BRL to cover each BRL of short-term obligations.(4) Net indebtedness: total financial debt (–) cash balance.(5) Financial leverage calculated on the rolling Ebitda over the last 12 months, adjusted for events of a purely accounting and non-cash nature.(6) ROE (Return on Equity): measure of performance obtained by taking the annualized net earnings over the period, annualized, and dividing by

average net equity.(7) Net earnings per share is calculated by dividing the earnings attributable to the Company’s shareholders by the average weighted number of

ordinary shares issued during the period, excluding the ordinary shares held by the treasury.


Market & Business Scenario

Strategic Management & Investments

The macroeconomic scenario has started to show signs of recovery with a reduction in inflationary pressures and improvement in the confidence indicators. This scenario has enabled the monetary authorities to review interest rates, preparing the ground for a more favorable business climate, albeit in the face of ongoing headwinds such as elevated unemployment rates, a drop in income levels and difficulty in obtaining credit. These factors continue to impact the level of demand, which has remained stable but at reduced levels.

The forecasts provided in the Central Bank’s Focus Report, issued on October 21, 2016, indicate a more favorable scenario for the domestic economy. Control over inflation, with it reverting to its target, together with a projected reduction in base interest rates should positively impact Duratex’s performance over the coming quarters. In addition, after several years in which economic activity has fallen, the market is starting to glimpse some growth, in the order of 1.23% of GDP for 2017. The consumer confidence index, measured by IBRE FGV, has shown month on month

Investment in the quarter totaled BRL122.3m, reaching BRL377.3m for the year to date. This figure included approximately BRL93m related to the purchase of shares from minority shareholders in Colombia, and the consequent delisting of Tablemac.

Duratex’s remaining investments focused on productivity gains and operations, being divided between supporting manufacturing activities and reforesting. In maintaining its asset base, the Company invested approximately BRL284.3m in the first nine months of the year, with BRL140.1m spent on reforesting, with a view to restocking its manufacturing facilities with wood panels in the future, and BRL144.3m on manufacturing operations.

improvement since May, reaching its highest point of the year in September, at 80.6 points.

In the market for wood panels, the data provided by IBA (Brazilian tree industry) suggest that consumption of panels, the sum of sales to both the internal and external markets, has shrunk by 3.5% compared to the previous quarter. This fall was concentrated in the domestic market, which shrunk approximately 5.4%, partially compensated for by the increase in volume destined for export, which was in the order of 8.4%. Demand for MDP was the main driver for this result, with a drop in volumes of around 9.5%

The ABRAMAT index, which tracks revenues for the construction materials sector of the domestic market, showed an aggregate fall of 11.8% for the first nine months of the year compared with the same period last year. The employment level for the construction materials sector fell by 9.7% year to date compared to the same period in 2015. The expectation for ABRAMAT is that the construction materials sector will close out the year 2016 with a real fall in revenue of around 10%.

One of our strategic focuses is on the Duratex Management System (SGD) which encompasses all of the cost saving initiatives, efficiency gains and process improvements. Prime among these is a new method for managing fixed costs and expenses, through a Zero-Based Budgeting program, a review of the Company’s logistics model, renegotiation of the payment terms and cost of inputs, and a rigid control of the indicators for raw-material consumption. These actions have already had a positive impact on the organization’s results, through reducing costs and expenses, as has been demonstrated over the last few months.

We would also like to mention Project Integra, which is focused on modernizing the systems for tracking production and managing inventory, and Project Enter, which is going to transform Duratex’s sales platform, contributing to an improved service level and enhancing client relations.


Consolidated Financial Highlights (IFRS)NET INCOMENet Income totaled BRL967m in the quarter, with BRL94m stemming from the Colombian subsidiary, Tablemac. This income represented a fall of 4.5% in relation to Q2, and of 4.2% year to date versus the same period last year.

(BRL ‘000) Consolidated 3Q16 2Q16 % 3Q15 % Jan-Sep/16 Jan-Sep/15 %

Net revenue 967,090 1,012,606 -4.5% 1,041,653 -7.2% 2,881,095 3,008,205 -4.2%

Domestic market 795,314 802,306 -0.9% 876,415 -9.3% 2,317,709 2,578,506 -10.1%

Foreign market 171,776 210,300 -18.3% 165,238 4.0% 563,386 429,699 31.1%

Tablemac 94,856 116,724 -18.7% 93,793 1.1% 317,129 249,645 27.0%

Exports from Brazil 76,920 93,576 -17.8% 71,445 7.7% 246,257 180,054 36.8%

Year-to-date, international sales are the standout performance, with expansion of 27% by Tablemac compared to the same period in 2015, and of 37% in exports, which has contributed to a greater dilution of fixed costs and expenses. Income originating externally totaled 17.8% of Duratex’s total net income for the quarter and 19.5% year-to-date, with 9.8% originating from the Colombian operation and 8.0% from exports generated in Brazil.

COST OF GOODS SOLDThe cash cost, that is the cost of goods sold net of depreciation, amortization and the net variation in the fair value of biological assets, closed out the quarter at BRL605.2m, representing a fall of 7.5% in relation to the previous quarter and 4.6% compared to the 3rd quarter of 2015, which will be broken down in the fact sheet.

This result reflects the cost cutting initiatives arising from the Duratex Management System and the reduction in the cost of imported materials which boosted the results for the quarter. Thus, Duratex’s consolidated gross margin increased by 73 bps, even with a lower dilution of fixed costs.

Net income by area of operation (in % in 3Q16)

DECAMADEIRA

To sustain Duratex’s strategy and safeguard its long-term operations, the Company is reviewing its organizational culture in partnership with an external consultancy. Duratex’s new “Way of Acting and Being” is being developed in a collaborative manner encompassing everyone from the executive board to the factory floor, and should make Duratex a more responsive Company, prepared for the challenges it faces in the markets in which it operates.

32.5

64.8



Cash COGS (605,192) (653,957) -7.5% (634,127) -4.6% (1,880,711) (1,835,832) 2.4%

Variation in fair value of biological assets 38,403 40,427 -5.0% 26,575 44.5% 114,838 103,378 11.1%

Depletion tranche of biological assets (28,219) (23,022) 22.6% (34,408) -18.0% (77,701) (116,375) -33.2%

Depreciation, amortization and depletion (102,906) (101,631) 1.3% (99,334) 3.6% (293,676) (300,330) -2.2%

Gross profit 269,176 274,423 -1.9% 300,359 -10.4% 743,845 859,046 -13.4%

Gross margin 27,8% 27,1% - 28,8% - 25,8% 28,6% -

(BRL ‘000) Tablemac 3Q16 2Q16 % 3Q15 % Jan-Sep/16 Jan-Sep/15 %

Cash COGS (56,317) (69,416) -18.9% (53,044) 6.2% (186,456) (147,196) 26.7%

Variation in fair value of biological assets 110 20 450.0% 1,206 0.0% (72) 1,624 0.0%

Depletion tranche of biological assets 0 0 0 0.0% 0 0 0.0%

Depreciation, amortization and depletion (4,161) (5,697) -27.0% (4,141) 0.5% (14,156) (11,977) 18.2%

Gross profit 34,488 41,631 -17.2% 37,814 -8.8% 116,445 92,096 26.4%

Gross margin 36,4% 35,7% - 40,3% 36,7% 36,9% -

Cost of Goods Sold – Wood Division (in % in 3Q16)

Other materials

ResinPaper

Electricity

Wood*

Depreciation & Amortization

Labor

Fuel

Cost of Goods Sold – Deca Division (in % in 3Q16)

Other materials

Metals

Labor

Fuel

Electricity

Depreciation & Amortization

Net Income – ex Tablemac (in BRL million)

Cash Cost Gross Margin

Cash Cost (in BRL million) and Gross Margin (in %) – ex Tablemac

29.0

26.6 26.6

23.9

20.1

26.026.9

* Includes exhaustion of the value invested in the cost of wood.

872.2895.9795.9855.8

947.9881.5

929.2

3Q162Q161Q164Q153Q152Q151Q15

548.9584.5560.8549.5

591.5534.5

573.1

3Q162Q161Q164Q153Q152Q151Q15

24,0

10,0

14,014,0

16,0

11,0

9,0

2,0

30,0

4,0

43,0

8,0

11,0

4,0


SALES EXPENSESSales expenses totaled BRL150.4 m in the quarter. This amount represents a reduction of 1.5% compared to the previous quarter, and 2.2% in relation to the same period in 2015. This result stems from lower sales volumes in the domestic market, in exports and also in Tablemac this quarter, which reduced the cost of freight.


Sales expenses (150,441) (152,714) -1.5% (153,869) -2.2% (437,359) (431,303) 1.4%

PERCENTAGE OF NET REVENUE 15,6% 15,1% - 14,8% - 15,2% 14,3% -


General and administrative expenses (33,739) (34,854) -3.2% (40,339) -16.4% (107,234) (111,450) -3.8%

Percentage of net revenue 3.5% 3.4% - 3.9% - 3.7% 3.7% -

SALES & GENERAL ADMIN EXPENSESSales and General Admin Expenses totaled BRL33.7m for the quarter, of which BRL2.8m relates to the Colombian subsidiary, Tablemac. This result was 3.2% lower than the previous quarter and significantly less than the same period last year, at 16.4%.

Even with the accumulated inflation for the period, the result for the first nine months of 2016 is around 3.8% lower than for the same period in 2015, in nominal terms. This reduction reflects the cost cutting initiatives implemented since 2014 and the Zero-Based Budgeting program developed by the Company. This reinforces the Company’s commitment to an internal agenda focused on better management of costs and expenses.Sales Expenses

Net Income

Sales Expenses (in BRL million) and % Related to Net Income – ex Tablemac

13.6

14.615.0

16.0

15.3 15.4

15.9

138.3138.3121.8

137.0141.8128.2126.1

3Q162Q161Q164Q153Q152Q151Q15


EBITDA The table below shows a reconciliation of Ebitda, in line with the system set out in CVM Instruction No. 527/12. Based on this result, and as a way of better expressing the Company's operational cash generation, two adjustments have been made: the exclusion of events of a purely accounting and non-cash nature from Ebitda, and the disregarding of extraordinary events. Thus, in keeping with best practices, the following table shows the calculation of the indicator which best reflects the Company's cash generation.

Ebitda reconciliation – Consolidated (BRL ‘000)

3Q16 2Q16 % 3Q15 % Jan-Sep/16 Jan-Sep/15 %

Net income 29,855 723 4029.3% 30,512 -2.2% 1,022 137,388 -99.3%

Income tax and social contribution 11,520 (3,820) -401.6% 6,741 70.9% (10,296) (3,722) 176.6%

Net financial result 72,640 79,165 -8.2% 56,789 27.9% 220,471 161,615 36.4%

EBIT 114,015 76,068 49.9% 94,042 21.2% 211,197 295,281 -28.5%

Depreciation, amortization and depletion

112,660 111,359 1.2% 112,630 0.0% 322,992 330,845 -2.4%

Depletion tranche of biological assets 28,219 23,022 22.6% 34,408 -18.0% 77,701 116,375 -33.2%

Ebitda according to CVM No. 527/12 254,894 210,449 21.1% 241,080 5.7% 611,890 742,501 -17.6%

Ebitda margin CVM No. 527/12 26.4% 20.8% - 23.1% - 21.2% 24.7% -

Change in fair value of biological assets (38,403) (40,427) -5.0% (26,575) 44.5% (114,838) (103,378) 11.1%

Employee benefit 404 1,635 -75.3% 2,452 -83.5% (2,211) 2,456 -190.0%

Others 0 0 0.0% 0 0.0% 0 0 0.0%

Extraordinary events (1) -30,987 0 0.0% 9,822 -30,987 9,822 0.0%

Recurring adjusted Ebitda 185,908 171,657 8.3% 226,779 -18.0% 463,854 651,401 -28.8%

Recurring adjusted Ebitda margin 19.2% 17.0% - 21.8% - 16.1% 21.7% -

The adjusted and recurring Ebitda totaled BRL185.9m for the quarter, the equivalent to an increase of 8.3% versus the previous quarter. The price increase initiatives introduced during the first semester, associated with a rigid program of cost and expenses control, are improving the generation of working capital for Duratex.

Origin of Adjusted Recurring Ebitda (in % in 3Q16)

27.6

72.4

Deca DivisionWood Division


NET EARNINGSDuratex’s net earnings have been increasing following a very difficult first quarter, which continues to impact the results for the year to date. The year to date figure of BRL1m was influenced by a gradual improvement in operations and a more favorable pricing scenario, as well as by one-off events.


Net earnings 29,855 723 4,029.3% 30,512 -2.2% 1,022 137,388 -99.3%

Extraordinary events (20,451) - - 8,259 - (20,451) 8,259 -

Recurring net earning 9,404 723 1,200.6% 38,771 -75.7% (19,429) 145,647 -113.3%

ROE 2.6% 0.1% - 2.6% - 0.0% 3.9% -

Recurrent ROE 0.8% 0.1% - 3.3% - -0.6% 4.1% -

(BRL ‘000) ex-Tablemac 3Q16 2Q16 % 3Q15 % Jan-Sep/16 Jan-Sep/15 %

Net earnings 17,109 (14,193) -220.5% 17,513 -2.3% (39,211) 108,101 -136.3%

Extraordinary events (20,451) - - 8,259 - (20,451) 8,259 -

Recurring net earning (3,342) -14,193 -76.5% 25,772 -113.0% (59,662) 116,360 -151.3%

ROE 1.5% -1.3% - 1.5% - -1.7% 4.7% -

Recurrent ROE -0.3% -1.3% - 2.2% - -2.7% 5.1% -

(1) Net effect of events mentioned above in reconciling the Ebitda, which affected the results.

VALUE ADDEDThe value added in the quarter totaled BRL440.3m. Of this figure, BRL115.9m, equivalent to 26.3% of the total value added, was paid to the federal, state and municipal governments in the form of taxes and contributions.

Distribution of Value Added (in % in 3Q16)

Workers remuneration

Government remunerationFinancing

Shareholder remuneration

Among these events of note is the sale of land in the state of São Paulo which contributed BRL30.8m to gross revenues. These assets were surplus to requirements in terms of the Company’s need for wood in both the short and long term. The farms sold are situated far from the factories and are well suited for other agricultural activities.

INDEBTEDNESSGross consolidated debt at the end of the third quarter 2016 totaled BRL3,380.5m, equivalent to a net debt of BRL2,127.5m, which represented an increase of approximately BRL53.9m in relation to the previous quarter. The ratio of net debt to Ebitda increased to 3.28, essentially on the back of the level of Ebitda, which is much lower than the potential of the Company, as a consequence of the macroeconomic background.

In keeping with the material fact announced on September 23, 2016, Duratex has declared the premature termination of the “First Private Issue of Debentures Convertible into Shares”, to the value of BRL144.8m, as discussed at the General Debenture-holders Meeting held on the same date. At a subsequent event, announced as a material fact on October 1, 2016, Duratex Florestal carried out the premature redemption of Agribusiness Receivables Certificates (CRAs) on October 3, 2016, totaling BRL675.3m, with no alteration to the net indebtedness of the Company.

39,2

27,8

26,3

6,8


The net financial results showed an improvement in relation to the previous quarter due to the increase in financing income, with a negative value of BRL72.6m. Year to date, however, the net financial performance has deteriorated in the face of greater interest payments related to the net debt, keeping in mind that interest rates at the beginning of 2015 were 11.75%.

BRL '000 3Q16 2Q16 Var BRL 4Q15 Var BRL 3Q15 Var BRL

Short-Term debt 1,307,592 819,797 487,795 497,377 810,215 517,989 789,603

Long-Term debt 2,072,897 2,625,998 (553,101) 2,326,912 (254,015) 2,384,947 (312,050)

Total debt 3,380,489 3,445,795 (65,306) 2,824,289 556,200 2,902,936 477,553

Cash and equivalent 1,252,994 1,372,181 (119,187) 910,721 342,273 961,652 291,342

Net debt 2,127,495 2,073,614 53,881 1,913,568 213,927 1,941,284 186,211

Net debt/ Recurring adjusted Ebitda TTM 3.28 3.00 - 2.29 - 2.11 -

Net debt/Equity (in %) 46.5% 46.1% - 41.5% - 41.4% -

FINANCIAL REVENUES AND EXPENSES

BRL 000 3Q16 2Q16 % 3Q15 % Jan - Sep/16 Jan - Sep/15 %

Financial revenues 49,897 42,959 16.2% 69,957 -28.7% 119,290 170,120 -29.9%

Financial expenses (122,537) (122,124) 0.3% (126,746) -3.3% (339,761) (331,735) 2.4%

Net financial result (72,640) (79,165) -8.2% (56,789) 27.9% (220,471) (161,615) 36.4%

2016 2017 2018 2019 2020 and beyond

565.7

708.7639.8

548.2

918.2

Amortization timeline (BRL million)

Gross Indebtedness at the end of September 2016 (BRL million )

2,07

2.9

1,30

7.6

Long termShort term

Origin of Debt (%)

National CurrencyForeign Currency: (100% hedge for BRL)

70.4

29.6


OperationsWood Division

Highlights 3Q16 2Q16 % 3Q15 % Jan-Sep/16

Jan- Sep/15 %

SHIPMENTS (IN M3)STANDARD 328,581 342,283 -4.0% 330,501 -0.6% 1,007,926 1,012,714 -0.5%

COATED 251,784 271,018 -7.1% 298,803 -15.7% 786,724 889,762 -11.6%

TOTAL 580,365 613,301 -5.4% 629,304 -7.8% 1,794,650 1,902,476 -5.7%

FINANCIAL HIGHLIGHTS (BRL '000)Net revenue 626,713 667,341 -6.1% 678,999 -7.7% 1,902,537 1,973,507 -3.6%

Domestic market 467,807 475,096 -1.5% 527,469 -11.3% 1,381,110 1,577,440 -12.4%

Export market 158,906 192,245 -17.3% 151,530 4.9% 521,427 396,067 31.7%

Net unit revenue (BRL/m3 shipped) 1079.86 1088.11 -0.8% 1078.97 0.1% 1060.12 1037.34 2.2%

Unit cash cost (BRL/m3 shipped) (658.29) (701.36) -6.1% (648.52) 1.5% (691.67) (629.34) 9.9%

Gross profit 175,823 176,725 -0.5% 185,683 -5.3% 475,445 525,075 -9.5%

Gross margin 28.1% 26.5% - 27.3% - 25.0% 26.6% -

Sales expenses -90,482 -94,306 -4.1% -91,956 -1.6% -269,891 -261,323 3.3%

General and administrative expenses -18,352 -19,804 -7.3% -22,601 -18.8% -59,033 -61,770 -4.4%

Operating profit before financial results 94,314 55,620 69.6% 65,847 43.2% 158,717 182,393 -13.0%

Depreciation, amortization and depletion 85,653 85,070 0.7% 84,077 1.9% 243,578 258,127 -5.6%

Depletion tranche of biological assets 28,219 23,022 22.6% 34,408 -18.0% 77,701 116,375 -33.2%

Ebitda according to CVM No. 527/12(1) 208,186 163,712 27.2% 184,332 12.9% 479,996 556,895 -13.8%

Ebitda margin according to CVM No. 527/12 33.2% 24.5% - 27.1% - 25.2% 28.2% -

Variation in fair value of biological assets -38,403 -40,427 -5.0% -26,575 44.5% -114,838 -103,378 11.1%

Employee benefits -983 419 - -535 0.0% -2,049 488 -

Extraordinary event(2) (34,123) - - 3,350 - (34,123) 3,350 -



(1) Refers to Ebitda, in accordance with the system set out in CVM instruction No. 527/12. Based on this result, and as a way of better expressing the Company's operational cash generation, two adjustments have been made: the stripping out of events of an accounting and non-cash nature from Ebitda and the disregarding of extraordinary items. Thus, in line with best practice, the calculation of the indicator which best reflects the Company's cash generation is shown.

(2) Extraordinary events, named: 3Q16: sale of land (-) BRL 30,814 thousands; pension fund excess return (-) BRL 3,309 thousands. 3Q15: non-recurring labor indemnifications (+) BRL 3,350 thousands.

The Wood Division showed a fall in volumes of approximately 5.4% compared to the previous quarter, arising from the general cooling in the economy. A deterioration in the mix of products sold led to a slight fall in unit revenues for panels, in the order of 0.8%.

In the quarter, there was an increase in the Ebitda margin of around 295 bps, influenced by a considerable improvement in costs. The unit cash cost fell 6.1% compared to the previous quarter, reflecting Duratex’s cost cutting and efficiency improvement programs, and the reduction in the cost of imported materials.

The sale of land, mentioned above, made a positive contribution of BRL30.8m to the results of the wood Division in the third quarter.

Wood – sales segmentation (in % in 3Q16)

Furniture Industry

Civil ConstructionResale

Other

39,5

18

37,7

4,8


Deca Division

DESTAQUES 3Q16 2Q16 % 3Q15 % Jan- Sep/16

Jan- Sep/15 %

SHIPMENTS (IN M3)Basic products 2,028 1,654 22.6% 2,288 -11.4% 5,501 6,867 -19.9%

Finishing products* 4,618 4,925 -6.2% 4,693 -1.6% 13,145 12,871 2.1%

TOTAL* 6,646 6,579 1.0% 6,981 -4.8% 18,646 19,738 -5.5%

FINANCIAL HIGHLIGHTS (BRL '000)NET REVENUE 340,377 345,265 -1.4% 362,654 -6.1% 978,558 1,034,698 -5.4%

DOMESTIC MARKET 327,507 327,210 0.1% 348,946 -6.1% 936,599 1,001,066 -6.4%

EXPORT MARKET 12,870 18,055 -28.7% 13,708 -6.1% 41,959 33,632 24.8%

Net unit revenue (BRL per item shipped) 51.22 52.48 -2.4% 51.95 -1.4% 52.48 52.42 0.1%

Unit cash cost (BRL per item shipped) (33.58) (34.02) -1.3% (32.38) 3.7% (34.29) (32.35) 6.0%

Gross profit 93,353 97,698 -4.4% 114,676 -18.6% 268,400 333,971 -19.6%

Gross margin 27.4% 28.3% - 31.6% - 27.4% 32.3% -

Sales expenses -59,959 -58,408 2.7% -61,913 -3.2% -167,468 -169,980 -1.5%

General and administrative expenses -15,387 -15,050 2.2% -17,738 -13.3% -48,201 -49,680 -3.0%

Operating profit before financial results 19,701 20,448 -3.7% 28,195 -30.1% 52,480 112,888 -53.5%

Depreciation and amortization 27,007 26,289 2.7% 28,553 -5.4% 79,414 72,718 9.2%

Ebitda according to CVM No. 527/12(1) 46,708 46,737 -0.1% 56,748 -17.7% 131,894 185,606 -28.9%

Ebitda margin according to CVM No. 527/12 13.7% 13.5% - 15.6% - 13.5% 17.9% -

Employee benefits 1,387 1,216 14.1% 2,987 -53.6% -162 1,968 -108.2%

Extraordinary event(2) 3,136 - - 6,472 - 3,136 6,472 -



(1) Ebitda (Earnings Before Interest, Taxes, Depreciation and Amortization): measure of operational performance as set out in CVM Instruction No. 527/12.(2) Extraordinary events, named: 3Q16: non-recurring labor indemnifications (+) BRL 7,759 thousands; pension fund excess return (-) BRL 4,443 thousands.

3Q15: non-recurring labor indemnifications (+) BRL 6,472 thousands.

* Of this total, 977 thousand pieces relate to Corona in Q216 and 233 thousand pieces in Q116 as Corona was only incorporated into the Duratex operation in July 2015.

In the third quarter, the Deca Division showed an improvement in Ebitda and in margin. Deca’s sales improved compared to the previous quarter, mainly influenced by higher volumes of basic products. As a consequence of these higher sales of basic products, there was a reduction in net unit revenue. In line with Company policy, the cost-cutting and efficiency programs contributed to the reduction of the unit cash cost, one of the stand out aspects of the quarter.

Deca showed signs of improvement in its operations. At the beginning of the quarter, an adjustment was made to capacity to bring the offer in line with the demand levels of the market and to re-establish the margins. The costs of indemnifications referring to this adjustment were recorded as extraordinary events, and therefore are not part of the recurring result for the quarter.

Once again the Deca Division outperformed the ABRAMAT index. Although the indicator signaled an 11.8% reduction in revenue for the sector, the division

showed a reduction of 5.4% to date in comparison with the previous year. This result, despite such a challenging scenario, reinforces consumer recognition of the brand plus the efforts made to grow the client base and improve service level.

Deca – sales segmentations (in % in 3Q16)

Resales/Home CenterConstruction companiesDistributorOther

64,0

24,0

3,09,0


Capital Markets and Corporate GovernanceAt the end of the third quarter of 2016, Duratex had a Market value of BRL5,928m, based on a closing price per share of BRL8.60.

During the quarter, there were 310.700 trades in the shares of Duratex on the BM&FBOVESPA spot market, representing a trading volume equivalent to BRL942.6m, an average daily trading volume of BRL14.5m.

Duratex's shares are listed on the Novo Mercado section of BM&FBOVESPA, which brings together companies with the highest standards of corporate governance. The Company also has a differentiated dividend policy, with the distribution of 30% of adjusted net earnings to shareholders, while also adhering to the Abrasca Code for Self-Regulation and Good Practices for Listed Companies.

Shareholding structure as at the end of September 2016 (in %)

Itaúsa and families

Ligna and families

Pension FundsTreasury

Foreign Investors

Other Local Investors

Social and Environmental Responsibility

At the end of the period, the Company had a total of 11,476 employees, who received total remuneration of BRL103.5 million, representing a reduction of 3.5% compared to the previous quarter and of 4.7% compared to the same period of last year. For the year to date, Duratex spent 0.2% on employee remuneration than in the same period of last year, demonstrating the commitment to the Zero-Base Budget program and the adjustments to capacity made during the period.

(BRL ‘000) 3Q16 2Q16 % 3Q15 % Jan- Sep/16

Jan- Sep/15 %

Employees (quantity) 11,476 11,702 -1.9% 12,228 -6.1% 11,476 12,228 -6.1%

Remuneration 103,514 107,278 -3.5% 108,590 -4.7% 314,046 314,710 -0.2%

Obligatory legal charges 56,479 57,340 -1.5% 56,228 0.4% 168,980 157,579 7.2%

Differentiated benefits 27,140 25,441 6.7% 26,984 0.6% 77,699 75,161 3.4%

During the previous quarter, a commitment was made towards greater transparency with our environmental effort. The results relating to water, waste, total energy, electricity and residues from January to September, 2016 are presented below. For

greenhouse gas emissions, the report is produced annually. Tracking of environmental indicators has been carried out since 2004 and is part of the SGA (Environmental Management System – www.duratex.com.br/sustentabilidade/ meio-ambiente/sistema-de-

40,0

20,0

27,6

10,3

0,4

1,7


gestao-ambiental) of the Company, which holds ISO 14001 certification (www. duratex.com.br/sustentabilidade/compromisso/ certificacoes). This practice is fundamental to ensuring the evaluation and continuous improvement of all our processes and products.

Water consumption*

Wood panels

Wood panels

Wood panels

Wood panels

Wood panels

Jan-Sep 2015

Jan-Sep 2015

Jan-Sep 2015

Jan-Sep 2015

Jan-Sep 2015

Jan-Sep 2016

Jan-Sep 2016

Jan-Sep 2016

Jan-Sep 2016

Jan-Sep 2016

Forest

Forest

Forest

Forest

Forest

Metals

Metals

Metals

Metals

Metals

Sanitay ware

Sanitay ware

Sanitay ware

Sanitay ware

Sanitay ware

0 0

3500000

3000000

2000000

1000000

20000001800000160000014000002500000

1200000

15000001000000

500000200000400000600000800000

Wastewater disposal*

3,245,8831,730,089

303,562

3,779

248,041 123,81499,949 99,363

3,207,8131,714,924

341,9273,450

225,010 103,82297420 77,530

Total energy* Eletric energy*

0

6000000

8000000

7000000

4000000

1000000

2000000

3000000

7,255,917

224,774 894,444178,619

6,422,795

11%

0.9%1.2%

12%

8.7%16%

5%

22%2.5%

11%

16%9.3%

198,593 796,686169,460

0

2500000

500000

1000000

1500000

20000001,962,275

2,923 148,921129,618

1,380,668

2,848 146,079121,429

* The environmental performance for Hydra and Head Office are not included in the graph above, as they are not significant in the totals (0.5% of total water consumption, 1% of waste disposal, 0.1% of total energy consumption, 0.3% of electricity consumption and 3.6% of total landfill waste).

Industrial solid waste in landfill areas*

0

1400

1000

1200

800

200

400

600

11,424

16

12,013

371

7,678

0

9,280

251

AcknowledgementsWe are grateful for all the support received from our shareholders, the dedication and commitment of our employees, the partnerships we have with our suppliers and the confidence placed in us by our clients and consumers.

The Management

29% 2.6% 6% 1.9%

33% 99% 32% 22%

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Financial Statements

CONSOLIDATED ASSETS (BRL '000) 09/30/16 AV% 06/30/16 AV% 09/30/15 AV%

CURRENT 3,062,571 33.1% 3,207,218 34.2% 2,885,508 31.3%

Cash and equivalents 1,252,994 13.6% 1,372,181 14.6% 961,652 10.4%

Clients accounts receivable 808,413 8.7% 794,046 8.5% 922,018 10.0%

Accounts receivable from related parties 20,435 0.2% 48,672 0.5% 47,541 0.5%

Inventory 844,644 9.1% 826,438 8.8% 778,422 8.4%

Ammounts receivable 37,674 0.4% 22,141 0.2% 32,033 0.3%

Recoverable taxes and contributions 84,590 0.9% 127,124 1.4% 127,072 1.4%

Other assets 13,821 0.1% 16,616 0.2% 16,770 0.2%

NON-CURRENT 6,183,817 66.9% 6,166,459 65.8% 6,346,969 68.7%

Linked deposits 50,367 0.5% 45,657 0.5% 39,755 0.4%

Amounts receivable 68,545 0.7% 53,668 0.6% 35,194 0.4%

Pension plans credit 99,577 1.1% 99,981 1.1% 111,617 1.2%

Recoverable taxes and contributions 19,377 0.2% 21,032 0.2% 25,653 0.3%

Deffered income tax and contributions 241,973 2.6% 242,248 2.6% 341,830 3.7%

Other investments 921 0.0% 921 0.0% 921 0.0%

Fixed assets 3,626,048 39.2% 3,651,890 39.0% 3,796,658 41.1%

Biological assets 1,538,899 16.6% 1,508,121 16.1% 1,428,191 15.5%

Intangible assets 538,110 5.8% 542,941 5.8% 567,150 6.1%

TOTAL ASSETS 9,246,388 100.0% 9,373,677 100.0% 9,232,477 100.0%


CONSOLIDATED LIABILITIES (BRL '000) 09/30/16 AV% 06/30/16 AV% 09/30/15 AV%

CURRENT 1,822,631 19.7% 1,421,274 15.2% 1,158,048 12.5%

Loans and financing 1,307,592 14.1% 680,598 7.3% 512,824 5.6%

Charge of debentures - 0.0% 139,199 1.5% 5,165 0.1%

Suppliers 186,301 2.0% 251,963 2.7% 169,716 1.8%

Staff obligations 134,259 1.5% 119,578 1.3% 163,446 1.8%

Accounts payable 135,630 1.5% 146,590 1.6% 238,843 2.6%

Taxes and contribution 58,258 0.6% 82,665 0.9% 67,471 0.7%

Dividends and equity-on-interest payable 591 0.0% 681 0.0% 583 0.0%

NON-CURRENT 2,852,928 30.9% 3,392,541 36.2% 3,315,876 35.9%

Loans and financing 2,072,897 22.4% 2,625,998 28.0% 2,259,365 24.5%

Charge of debentures - 0.0% - 0.0% 125,582 1.4%

Contigency provisions 107,317 1.2% 100,811 1.1% 95,820 1.0%

Deffered income tax and social contribution 490,093 5.3% 488,765 5.2% 755,714 8.2%

Other accounts payable 167,249 1.8% 161,983 1.7% 67,224 0.7%

Taxes and contribution 15,372 0.2% 14,984 0.2% 12,171 0.1%

SHAREHOLDERS'S EQUITY 4,570,829 49.4% 4,559,862 48.6% 4,758,553 51.5%

Equity 1,970,189 21.3% 1,970,189 21.0% 1,875,800 20.3%

Cost of share issued (7,823) -0.1% (7,823) -0.1% (7,823) -0.1%

Capital reserves 340,931 3.7% 340,033 3.6% 335,759 3.6%

Re-evaluation reserves 63,571 0.7% 64,399 0.7% 66,840 0.7%

Profit reserves 1,812,038 19.6% 1,789,221 19.1% 1,954,222 21.2%

Adjusts in equity valuation 418,519 4.5% 410,906 4.4% 476,434 5.2%

Shares held in treasury (27,931) -0.3% (27,931) -0.3% (27,931) -0.3%

Participation of non-controlling shareholders 1,335 0.0% 20,868 0.2% 85,252 0.9%

TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY 9,246,388 100.0% 9,373,677 100.0% 9,232,477 100.0%


CONSOLIDATED PRO-FIT AND LOSS STATE-MENT (BRL '000)

3Q16 2Q16VAR. (%)3Q16 X

2Q163Q15

VAR. (%)3Q16 X

2Q16

Jan- Sep 16

Jan- Sep 15

VAR. (%)9m16 X

9m15

NET SALES REVENUE 967,090 1,012,606 -4.5% 1,041,653 -7.2% 2,881,095 3,008,205 -4.2%

Domestic market 795,314 802,306 -0.87% 876,415 -9.3% 2,317,709 2,578,506 -10.1%

Export market 171,776 210,300 -18.3% 165,238 4.0% 563,386 429,699 31.1%

Biological asset 38,403 40,427 -5.0% 26,575 44.5% 114,838 103,378 11.1%

Cost of goods sold (605,192) (653,957) -7.5% (634,127) -4.6% (1,880,711) (1,835,832) 2.4%

Depreciation/ amortization/depletion

(102,906) (101,631) 1.3% (99,334) 3.6% (293,676) (300,330) -2.2%

Depletion of biological assets (28,219) (23,022) 22.6% (34,408) -18.0% (77,701) (116,375) -33.2%

GROSS PROFIT 269,176 274,423 -1.9% 300,359 -10.4% 743,845 859,046 -13.4%

Sales expenses (150,441) (152,714) -1.5% (153,869) -2.2% (437,359) (431,303) 1.4%

General and administrative expenses

(33,739) (34,854) -3.2% (40,339) -16.4% (107,234) (111,450) -3.8%

Management fees (3,476) (3,564) -2.5% (3,366) 3.3% (10,616) (10,870) -2.3%

Other operating results, net 32,495 (7,223) -549.9% (8,743) -471.7% 22,561 (10,142) -322.5%

OPERATING PROFIT BEFORE FINANCIAL RESULTS 114,015 76,068 49.9% 94,042 21.2% 211,197 295,281 -28.5%

Financial revenues 49,897 42,959 16.2% 69,957 -28.7% 119,290 170,120 -29.9%

Financial expenses (122,537) (122,124) 0.3% (126,746) -3.3% (339,761) (331,735) 2.4%

PROFIT BEFORE INCOME TAX AND SOCIAL CONTRIBUTION 41,375 (3,097) -1436.0% 37,253 11.1% (9,274) 133,666 -106.9%

Income tax and contribution - current

(10,922) (38,284) -71.5% (6,618) 65.0% (61,800) (28,655) 115.7%

Income tax and contribution - deffered

(598) 42,104 -101.4% (123) 386.2% 72,096 32,377 122.7%

NET INCOME FOR THE PERIOD 29,855 723 -102.4% 30,512 -2.2% 1,022 137,388 -99.3%


CASH FLOW CONSOLIDATED 3Q16 2Q16VAR.

3T16 x 2T16

3Q15VAR.

3T16 x 3T15

Jan-Sep/16

Jan-Sep/15

VAR.1S16 x

1S15

Profit before income tax and social contribution 41,375 (3,097) 44,472 37,253 4,122 (9,274) 133,666 (142,940)

Items with no cash effect:Depreciation/amortization/depletion 140,889 134,391 6,498 147,079 (6,190) 400,722 447,261 (46,539)

Variation in fair value of biological assets (38,403) (40,427) 2,024 (26,575) (11,828) (114,838) (103,378) (11,460)

Interest, exchange rate and monetary variations, net

112,440 114,508 (2,068) 90,091 22,349 310,415 263,086 47,329

Provisions, asset write-offs 21,915 12,661 9,254 (17,781) 39,696 55,896 (20,340) 76,236

Investment in working capital (129,466) 51,775 (181,241) (26,580) (102,886) (120,240) (122,166) 1,926

(Increase) reduction in assets

Clients receivable accounts (27,444) (5,663) (21,781) (37,464) 10,020 (23,840) (34,547) 10,707

Inventories (16,468) (16,982) 514 (21,228) 4,760 (51,179) (103,566) 52,387

Other assets 12,303 (14,084) 26,387 24,718 (12,415) 15,553 47,778 (32,225)

(Increase) reduction in liabilities - -

Suppliers (66,564) 83,058 (149,622) 10,324 (76,888) (16,276) (8,246) (8,030)

Staff obligations 14,589 15,812 (1,223) 7,431 7,158 25,628 4,538 21,090

Accounts payable (6,841) (3,241) (3,600) 9,043 (15,884) 2,003 21,922 (19,919)

Taxes and contribution (33,035) (2,522) (30,513) (7,805) (25,230) (47,986) (24,315) (23,671)

Other liabilities (6,006) (4,603) (1,403) (11,599) 5,593 (24,143) (25,730) 1,587

Cash from operations 148,750 269,811 (121,061) 203,487 (54,737) 522,681 598,129 (75,448)

Income tax and contribution paid (2,318) (6,156) 3,838 (3,494) 1,176 (11,447) (11,026) (421)

Interest paid (134,047) (34,837) (99,210) (94,885) (39,162) (256,729) (158,346) (98,383)

Cash generated from operational activies 12,385 228,818 (216,433) 105,108 (92,723) 254,505 428,757 (174,252)

Investment activities Investiments in fixed assets (43,349) (50,217) 6,868 (46,694) 3,345 (135,372) (191,463) 56,091

Investiments in intangible assets (3,172) (3,800) 628 (1,869) (1,303) (8,895) (5,465) (3,430)

Investiments in biological assets (49,424) (48,848) (576) (64,996) 15,572 (140,098) (155,839) 15,741

Acquisition of subsidiary (26,309) - (26,309) (714) (25,595) (92,907) (714) (92,193)

Capital integration in invested - - - 8,400 (8,400) - - -

Cash used in investment activities (122,254) (102,865) (19,389) (105,873) (16,381) (377,272) (353,481) (23,791)

Financing activities Tickets funding 254,088 709,259 (455,171) 363,252 (109,164) 1,105,463 486,833 618,630

Tickets debentures (144,774) - (144,774) - (144,774) (152,611) (7,168) (145,443)

Financing amortization (119,838) (224,305) 104,467 (332,741) 212,903 (397,000) (544,664) 147,664

Dividends and interest-on-equity - (2,521) 2,521 (34,134) 34,134 (105,508) (134,069) 28,561

Shares held in treasury and others - - - - - - - -

Capital raise due to shares subscription - 20,640 (20,640) - 20,640 20,640

Cash (used) in financing activities (10,524) 503,073 (513,597) (3,623) (6,901) 470,984 (199,068) 670,052

Exchange rate variation on cash and equi-valents 1,206 (4,385) 5,591 2,861 (1,655) (5,944) 4,355 (10,299)

Increase (reduction) in cash in the period (119,187) 624,641 (743,828) (1,527) (117,660) 342,273 (119,437) 461,710

Initial balance 1,372,181 747,540 624,641 963,179 409,002 910,721 1,081,089 (170,368)

Closing Balance 1,252,994 1,372,181 (119,187) 961,652 291,342 1,252,994 961,652 291,342

sheet 3q16 - amazon web services...3q16 fact sheet duratex fact sheet 3q16 2 consolidated financial...

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