Company Presentation 3rd Quarter 2016 Duratex at a Glance We are - PowerPoint PPT Presentation

Company Presentation 3rd Quarter 2016

Duratex at a Glance We are the largest producer of wood panels , kitchen and bathroom fittings from the South Hemisphere Competitive Advantages High quality Vertical Forestry Self sufficient Geographical Top of mind Corporate facilities, Integration productivity with low timber location brands governance forestry and costs and strong intangible financial assets fundamentals 2

Shareholder Structure and Corporate Governance Member of BM&FBOVESPA Novo Mercado Free Float 100% tag along 69.0% Foreign Investors 25.8% Other Local Investors Dividend Policy: minimum of 30% of Adjusted Net Income 4.2% Pension Funds 1.0% Treasury Joined Abrasca’s Public Companies Self Regulation and Good Practices Code 4 Itausa representatives Committees Personnel, Governance and Nomination Board 2 Ligna representatives Sustainability 3 independent members Audit and Risk Management Members do not take up executive positions in the Disclosure and Negotiation Company Evaluation of Transactions with Related Party (only 3 independent members)

History  1992: Acquired  1970: Start of  Completion  2004: Expansion by Ligna activities in of investment of Uberaba Unit  1997: Expansion Taquari, RS cycle started  2007: IPO of Uberaba Unit  1975: Start of in 2011  Novo Mercado  1998: activities in  Definition of  2008: New MDF Acquisition of Uberaba, MG a strategic plant in Uberaba 51.000ha of growth plan  Expansion of forest Taquari until 2017 2000- 2010- Anos Anos Anos Anos 2015 2016 2009 2013 2014 50 e 60 90 70 80 2008 2012  Acquisitions:  Deslisting of  Start up of  Acquisition  1981:  New plants  1995:  1972:  Association - Cax uana Tablemac resin plant of Ducha Acquisition of Acquisition of (CAPEX): Incorporation with Satipel - Additional Ar gentina Piazza  Beginning of Corona Louças Sul in • MDF Botucatu par ticipation in of Deca creating the Her manos, which the investment São • MDP Itapet. Tablemac largest was r enamed  1951: Duratex Leopoldo, RS • MDF2 Agudos cycle: Deca and - Closing of producer of Deca Piazza founded, as a Wood Jundiai II Unit (discontinued in wood panel in  1984:  Dur atex 2020 publicly traded  Closing of  Acquisitions: 2013) the Southern str ategic company Acquisition Jundiai • Land in SP Hemisphere planning of • Elizabeth  1997: First MDF  Acquisitions:  1954: Start of  Novo  Joint Venture Itapetininga (Medium Density • Tablemac • Ideal Standard hardboard with Usina Caete Mercado Fiber board) unit Unit, SP • Thermosystem • CMC production in in Nor theast in Br azil, Agudos • Mipel Jundiai, SP  1988: Acquisition of Agudos Unit, SP 4

Wood Division – Geographic Location Operations in Colombia - Tablemac UBERABA (MG) MDP and MDF YARUMAL MDP BARBOSA AGUDOS (SP) MDP 2 lines of MDF, flooring and resin plant (DRI) MANIZALES MDF BOTUCATU(SP) MDF and Hardboard ITAPETININGA (SP) 5 TAQUARI (RS) MDP and MDF MDP

Wood Division – Products and Distribution Channels Main Products MDP MDF Hardboard Flooring Main Distribution Channels Exports Furniture Manufactures Retailers Home Builders 6

Deca Division – Geographic Location CABO DE STO AGOSTINHO (PE) Sanitary Ware JOÃO PESSOA (PB) Sanitary Ware ARACAJU (SE) Electronic Showers JUNDIAÍ (SP) Metal Fittings and Sanitary Ware QUEIMADOS (RJ) Sanitary Ware JACAREI (SP) Bronze Industrial Valves SÃO PAULO (SP) Metal Fittings TUBARÃO (SC) 7 Electronic Showers and SÃO LEOPOLDO (RS) Sanitary Ware Solar Heating Systems

Deca Division – Products and Distribution Channels Main Products Sanitary Ware Metal Fittings Accessories Electronic Showers Main Distribution Channels Home Centers Retailers Home Builders Exports 8

Sustainability Strategy New businesses WE ANTECIPATE FUTURE NEEDS models SUSTAINED IN LASTING VALUES Pillars Goods and Service Building new business with sustainability Processes Innovating with sustainable solutions People We seek new business models Extending the positive which create value for our We aim to be a benchmark in stakeholders regarding the environmental impact supplying competitive and Aspirations environmental, social and Developing people and throughout the chain sustainable goods and solutions economic challenges creating a value network that combine design, We continually improve our technology, high quality and inoovation operations, targeting We promote the development environmental equilibrium in the of our employees, customers, chain consumers and local communities • Ecoefficiency • Sustainable raw materials and • Working Conditions and • Climate Change solutions Topics Employee Development • Sustainable Forest • Customers and Consumers Management Engagement • Local community relations • Sustainable Supply Chain and development 9

Strategic Projects SUPPLIER DURATEX CUSTOMER Integra Logistic CULTURE SGD ENTER PROJECT OBZ 10

Strategic Projects – Cost Management and Efficiency - Cutting variable costs and increasing revenues Efficiency in consumption and purchasing prices • • Increase in active customers with price / mix management - Cutting fixed costs and expenses • Redefining headcount • Matrix management of fixed expenses - Culture of management by objectives 11

Strategic Projects – Cost Management and Efficiency 2013 3Q16 Cumulative Inflation 25% General and + 5,5% Administrative Expenses Wood Division Deca Division Fixed Manufacturing Fixed Manufacturing + 6,0% + 3,5% Costs Costs Fixed Commercial Fixed Commercial - 10,0% + 3,1% Costs Costs 12

Strategic Projects – Cost Management and Efficiency - Modernization of manufacturing record - Management of the availability of manufacturing units - Inventory management of all products - Cutting freight cost - Service level improvement - Sales model restructuring B2B and B2C - Optimization of back office processes 13 - Performance management of the sales staff

Strategic Projects – Culture - Reinforcement of the Duratex culture Board and senior management highly commited to the program • - “ Way of Being and Doing ” – Renewal of our processes and practices • People • Meritocracy • Openness to change and dialogue • Speed to response to market demands 14

Financial Results 3 rd Quarter 2016

Highlights Ebitda Improvement of Ebitda Margin in both Divisions Margin Deca Division has outperformed the industry average Deca Despite less fixed cost dillution, the Wood Division Wood has significantly reduced costs Division Reduction in general and administrative expenses G&A 16

Consolidated Financial Figures (BRL million) 3Q16 2Q16 % 3Q15 % % 9M16 9M15 Net Revenue 967.1 1,012.6 -4.5% 1,041.7 2,881.1 3,008.2 -7% -4.2% Wood Division Brasil 531.9 550.6 585.2 1,585.4 1,723.9 -3.4% -9% -8.0% T ablemac 94.9 116.7 93.8 317.1 249.6 -18.7% 1% 27.0% Deca Division 340.4 345.3 362.7 978.6 1,034.7 -1.4% -6% -5.4% Gross Margin 27.8% 27.1% 28.8% 25.8% 28.6% % Foreign Market over Total Net Net Revenues Breakdown in the 3 rd Quarter Revenues - (Jan - Sep) 17

Financial Highlights Consolidated (BRL million) 3Q16 2Q16 Var % 3Q15 Var % 9M16 9M15 Var % Deca Volume (in '000 items) 1.0% -4.8% -5.5% 6,646 6,579 6,981 18,646 19,738 3 ) Wood Division Volume (in m -5.4% -7.8% 1,794,650 1,902,476 -5.7% 580,365 613,301 629,304 Recurring EBITDA 185.9 171.7 226.8 463.9 651.4 8.3% -18.0% -28.8% Recurring EBITDA Margin 19.2% 17.0% 21.8% 16.1% 21.7% - - - 4,029.3% -2.2% -99.3% Net Profit 28,895 723 30,512 1,022 137,388 1,200.6% -75.7% -113.3% Recurring Net Profit 9.4 0.7 38.8 -19.4 145.6 - - - Recurring ROE 0.8% 0.1% 3.3% -0.6% 4.1% Brazil (BRL million) 3TQ6 2Q16 Var % 3Q15 Var % 9M16 9M15 Var % Deca Volume (in '000 items) 1.0% -4.8% -5.5% 6,646 6,579 6,981 18,646 19,738 3 ) Wood Division Volume (in m -5.0% -9.2% 1,579,436 1,716,416 -8.0% 509,842 536,592 561,292 Recurring EBITDA 162.2 142.3 200.5 380.6 590.9 14.0% -19% -35.6% Recurring EBITDA Margin 18.6% 15.9% 21.1% 14.8% 21.4% - - - -76.5% -113.0% -151.3% Recurring Net Profit -3.3 -14.2 25.8 -59.7 116.4 - Recurring ROE -0.3% -0.3% -0.3% -0.3% -0.3% Colombia (BRL million) 3Q16 2Q16 Var % 3Q15 Var % 9M16 9M15 Var % 3 ) Wood Division Volume (in m -8.1% 3.7% 15.7% 70,523 76,709 68,012 215,214 186,060 EBITDA 23.8 29.4 26.3 83.3 60.5 -19.2% -9.8% 37.8% EBITDA Margiin 25.0% 25.2% - 28.1% - 26.3% 24.2% - -14.5% -1.9% 37.4% Recurring Net Profit 12.7 14.9 13.0 40.2 29.3 18

Brazilian Wood Panel Market 3 in ‘000 m MDF Market MDP Market Annual Effective Capacity: 5,170 Annual Effective Capacity: 4,230 -14,9% -8,9% -8,0% +0,5% -11,0% +2,3% -0,7% -12,5% 19 Source: IBÁ

Wood Division – Operational Performance Shipments (in ‘000 m³) Installed Capacity and Occupancy Rate in the Quarter -7.8% ANNUAL EFFECTIVE OCCUPANCY RATE OCCUPANCY RATE CAPACITY -5.4% (in '000 M³) With Itapetininga(%) Ex Itapetininga(%) -5.7% MDF 2,100 68% 89% MDP 1,870 54% 70% Hardboard 195 89% 89% TOTAL 4,165 63% 80% 20