C&F Sales & Marketing Brazil Analyst Review September 2014

Transcription

1 C&F Sales & Marketing Brazil Analyst Review September 2014

2 Safe Harbor Statement & Disclosures This presentation includes forward-looking comments subject to important risks and uncertainties. It may also contain financial measures that are not in conformance with accounting principles generally accepted in the United States of America (GAAP). Refer to Deere s reports filed on Forms 8-K (current), 10-Q (quarterly), and 10-K (annual) for information on factors that could cause actual results to differ materially from information in this presentation and for information reconciling financial measures to GAAP. Guidance noted in the following slides was effective as of the company s most recent earnings release and conference call (13 August 2014). Nothing in this presentation should be construed as reaffirming or disaffirming such guidance. This presentation is not an offer to sell or a solicitation of offers to buy any of Deere s securities. 2 C&F Sales & Marketing Brazil l September 2014

3 Brazil Market Entry If you are going to participate in any industry in Brazil AGRICULTURE INFRASTRUCTURE FORESTRY

4 Agenda Brazil Current Environment Brazil Opportunity C&F Objective Strategy How We Are Doing So Far Fit Within JD C&F, Americas 4 C&F Sales & Marketing Brazil l September 2014

5 Brazil Environment 9% GDP Growth 3.0 FX Rate: BRL vs. $U.S. 7% 5% 3% % 1.5-1% % Unemployment Rate 16% Short-Term Interest Rate 8% 6% 4% 12% 8% 2% 4% 0% 0% Source: Global Insight August C&F Sales & Marketing Brazil l September 2014

6 Brazil Environment Soybean Exports Chinese Imports x Brazilian Exports 60, ,000 50,000 40,000 80,000 60,000 30,000 20,000 10,000 40,000 20, United States Argentina Brazil Chinese Import Brazilian Exports Source: Global Insight August C&F Sales & Marketing Brazil l September 2014

7 Brazil Opportunity 7 C&F Sales & Marketing Brazil l September 2014

8 Brazil Opportunity 8 C&F Sales & Marketing Brazil l September 2014

9 Brazil Opportunity (Growth Drivers) Monthly household income growth (less inflation), BRL Growth Drivers Strong Growth of Internal Consumption Agroindustry Productivity Electricity Consumption (latest 10 years) + 55% Residential + 30% Industrial + 10% Population Economic Stability International Reserves % 2,189 2, % Source: IBGE - Brazilian Institute of Geography and Statistics September 2014 Harvest, Millions of Tons Grain Harvest Source: Ministry of Agriculture of Brazil Growth Drivers 9 C&F Sales & Marketing Brazil l September 2014

10 Brazil Opportunity (Construction) Concessions as a way to promote infrastructure development Highways - Auctions just concluded for 5 highways (total will be 9) Km Airports - Auctions concluded for 5 of the largest airports in Brazil Ports - Concessions start in 2014 Railroads - Concessions start in Km Source: National Terrestrial Transportation Agency January 2014 Kilometers x 1000 USA China India Russia Brazil Roads Paved Roads Railways Source: ABDER Brazilian Association of State Road Departments June C&F Sales & Marketing Brazil l September 2014

11 Brazil Opportunity (Construction) Energy as a way to promote the development of the North of Brazil Investments in energy generation will amount 32.7 billion USD in 4 years 10 Hydropower Plants will be auctioned in the next 3 years 20,000 Km of transmission lines in 4 years ~ 10 billion USD Hydroelectric Dams Region Capacity (MW) Bid Conclusion Jari North Colider Center West Belo Monte North Teles Pires Center West Baixo Iguaçu South Sinop Center West São Manoel North São Luiz do Tapajós North Àgua Limpa Center West Jatobá North Tabajara Center West Bem Querer North Itapiranga South Salto Augusto North São Simão North Marabá North Torixoréu Center West Source: MME - Brazilian Ministry of Mines and Energy December C&F Sales & Marketing Brazil l September 2014

12 Brazil Opportunity (Construction) PAC 3 to focus on urban mobility (to be launched in Sep/2014) Mobility Pac launched in 2013, 470 projects, 50 Billion BRL São Paulo subway system compared to other cities City Opening Extension, km Xangai Seul São Paulo Beijing New Delhi Mexico City Source: BBC Brasil January Subway Cost, MM USD per km Source: CBTU Urban Trains Brazilian Company August VLT (Light Vehicle over Tracks) 15 BRT 12 C&F Sales & Marketing Brazil l September 2014

13 Brazil Environment - Risk Factors Risk Factors Labor Cost and Availability Political Instabilities 14% 13% 12% 11% 10% Unemployment at historical low levels: large contractors face great difficulty in hiring construction workers 9% 8% % % 5% 5% Risk Drivers 4% jan feb mar apr may jun jul aug sep oct nov dec C&F Sales & Marketing Brazil l September 2014

14 Brazil Forestry Opportunity M m³ Projected wood consumption from planted forests 183 = +17% Eucalyptus Pine Others Source: Poyry silviconsult 14 C&F Sales & Marketing Brazil l September 2014

15 2018 C&F Brazil Strategic Ambition Be a TOP 3 Construction Equipment Solution Provider by Ambition 2018 Ambition Top 3 TOP 3 TODAY 15 C&F Sales & Marketing Brazil l September 2014

16 Brazil Product Line - 59 Models CONSTRUCTION 24 MODELS 6 models 2 models 8 models 1 model 7 models FORESTRY 13 MODELS 2 models 3 models 2 models 1 model 3 models 2 models HITACHI MINING 17 MODELS WARATAH 5 MODELS 6 models 5 models 6 models 16 C&F Sales & Marketing Brazil l September 2014

17 Competitive Landscape John Deere Cat Case New Holland JCB Volvo Komatsu Hyundai Construction Full Full Full Full Partial Full Partial Partial Mining Full Full N N N N Full N Forestry Full Partial N N N N Partial N CWP No Full Full Full Partial Full N N Dealers Selling Points 18 (26) Factories in Brazil Product Families Locally Manufactured Reman in Country N Y N N N Y Y N Exports N Y Y Y Y Y Y Y Strengths Quality Products A&T Brand Banco JD In country infrastructure Alternative to large contractors Brand Reputation After-Sales Broad Line CAT Financial Technology Leader Competitive Prices Well accepted designs (W20E) Strong in Governmental Bids Competitive Prices Governmental Bids Truck Reputation SDLG Growth Fuel Consumption Product Reputation Broad Line Competitive Prices Automotive Reputation Source: Yengst 2013 & Competitive Websites 17 C&F Sales & Marketing Brazil l September 2014

18 Brazil Distributor Channel

19 Brazil Channel Strategy Current: 18 facilities End of 2014: 26 facilities 19 C&F Sales & Marketing Brazil l September 2014

20 On-highway Volvo Truck Dealer John Deere Ag Dealer Total Revenues $0.7 Billion USD 5,300 Employees 3 facilities 20 C&F Sales & Marketing Brazil l September 2014

21 On-highway VW Truck Dealer John Deere Ag Dealer Previous Hyundai CE Dealer Total Revenues $0.6 Billion USD 2,850 Employees 6 facilities 21 C&F Sales & Marketing Brazil l September 2014

22 Previous CE Terex Dealer Shareholder Equity $0.3 Billion 170 Employees 3 facilities 22 C&F Sales & Marketing Brazil l September 2014

23 On-highway Scania Truck Dealer, Center West Total Revenues $0.2 Billion USD 285 Employees 1 facility 23 C&F Sales & Marketing Brazil l September 2014

24 Previous CE Hyundai Dealer Wirtgen & Metso Dealer Total Revenues $20 Million USD 95 Employees 5 facilities 24 C&F Sales & Marketing Brazil l September 2014

25 The Americas C&F Dealer Channel Brazil 5 Dealer Owners 18 Locations 8 Locations Underway 25 C&F Sales & Marketing Brazil l September 2014

26 The Americas C&F Dealer Channel Brazil 5 Dealer Owners 18 Locations 8 Locations Underway Latin America 23 Dealer Owners 103 Locations 26 C&F Sales & Marketing Brazil l September 2014

27 The Americas C&F Dealer Channel Brazil 5 Dealer Owners 18 Locations 8 Locations Underway Latin America 23 Dealer Owners 103 Locations U.S. and Canada 41 Dealer Owners 426 Locations 27 C&F Sales & Marketing Brazil l September 2014

28 Closing Thoughts Great opportunities in Brazil John Deere in optimal position C&F complement to JD Brasil Brazil great complement to JD Americas 28 C&F Sales & Marketing Brazil l September 2014

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