Ultrapar Participações S.A. Itau BBA 6 th Annual LatAm CEO Conference May 2011
ULTRAPAR > May 2011 1 > Forward looking statements
Statements contained herein, which are not historical facts, relating to the projected capital structure,
capital expenditures forecasts, potential growth of business, expected attraction and retention of talented
professionals, improved corporate governance, value creation and longevity of Ultrapar, among others, are
forward-looking statements. The words “believe,” “anticipate,” “expect,” “estimate,” “will,” “plan,” “may,”
“shall,” “intend,” “foresee,” “project,” and other variations, as well as similar words, are intended to identify
forward-looking statements. Forward-looking statements involve a number of risk and uncertainties,
including, but not limited to, changes in the general economic and business conditions, competition,
changes in regulations and the other risks and uncertainties described in our annual report on Form 20-F
for the year ended December 31 st , 2009. These forward-looking statements speak as of the date they were
made or as of the date hereof, and Ultrapar undertakes no obligation to update the forward-looking
statements contained herein.
ULTRAPAR > May 2011 2 > Contents
Ultrapar and the new corporate governance structure...... p.04
Ultrapar’s businesses
Ultragaz...... p.14
Ipiranga...... p.19
Oxiteno...... p.25
Ultracargo...... p.29
Final remarks………………………………………...... p.33
ULTRAPAR > May 2011 3 > Ultrapar at a glance
Ownership and corporate structure 4 Key financials Ultra S.A. Others Free float Net revenues: R$ 43,354 million
66% com. 34% com. 0% com. EBITDA: R$ 1,864 million 0% pref. 0% pref. 100% pref. 24% tot. 12% tot. 64% tot. Net earnings: R$ 837 million Market cap: R$ 15 billion
Sound financial position Investment grade by Moody’s and S&P Prudent financial management
— 1.4x net debt / EBITDA 100% 100% 100% 100%
Superior corporate governance standards
Alignment of interests
— 100% tag along rights for all shareholders
— Key executives with significant stake in the company
— Professional management with variable compensation linked to EVA ® growth targets Largest producer Largest LPG 2nd largest fuel Largest provider of of ethylene oxide distributor distributor storage for liquid derivatives in Transparency and disclosure standards in Brazil in Brazil bulk in Brazil Latin America — NYSE listed with ADR level III
17% 62% 15% 6% — Full compliance with Sarbanes Oxley requirements
% of EBITDA
Financial information for March 2011 LTM ULTRAPAR > May 2011 4 > Ultrapar – Track record of strong earnings and value creation growth since the IPO
EBITDA Net earnings R$ million R$ million CAGR = 21% CAGR = 27% 1,776 765
173 44 1998 2010 1998 2010
Return on equity Dividends declared R$ million 429
Extraordinary dividends 15% 279 241 238 10% 212 164 157 144
65 72 49 23
1998 2010 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Proven performance in different scenarios of the economy, interest rates, inflation, exchange rates, oil prices, etc.
ULTRAPAR > May 2011 5 > Ultrapar – Shareholders’ returns
Strong performance of the shares since the IPO Investment of R$ 1,000 in October 1999 (Oct/99 – Apr 1st/11)
Currently equivalent to… 22% pa Ultrapar (with dividends reinvested) Ultrapar (with dividends R$ 10 thousand reinvested) 17% pa Ibovespa R$ 6 thousand Ibovespa 15% pa CDI (money market interest rate)
pa Inflation (IPCA) R$ 5 thousand CDI (money market interest 7% rate)
Average daily trading volume R$ million 32.9 MSCI 26.5 27.0
11.8
5.5 3.7 4.6 1.0 0.8 1.2 1.6
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
ULTRAPAR > May 2011 6 > Ultrapar – R$ 9 billion invested since the IPO, with strong returns
Organic investments Acquisitions
Ipiranga (2007) R$ 2.4 billion Expansion of service station network and Texaco (2009) R$ 1.4 billion logistics infrastructure DNP (2010) R$ 85 million
Geographical expansion to reach nationwide coverage Shell Gás (2003) R$ 171 million Strengthen leadership in small bulk LPG UltraSystem
Oxiteno Mexico (2003) US$ 18 million Production capacity expansion, focused on specialty chemicals Oxiteno Andina (2007) US$ 8 million
União Terminais (2008) R$ 519 million Expansion in the storage capacity Puma (2009) R$ 44 million
Larger operating scale Strengthening of competitive advantages
ULTRAPAR > May 2011 7 > Ultrapar – Fundamentals of the successful track record in value creation
Leadership position in its markets, with long term competitive advantages
Resilient businesses leveraged on the economic growth Strategy Solid financial position
Potential to take advantage of strategic opportunities – investments and acquisitions Flexibility to pay substantial dividends
Culture and corporate governance oriented to value creation Alignment of interests between management and shareholders Delegation and accountability High standards of controls and transparency
Discipline in capital allocation Management Investment in projects thoroughly analyzed, aimed at value creation Planning and execution as key success drivers
Management structures adapted to the characteristics of each business division, with financial and IT functions centralized Agile decision making process Gains of scale and effective controls
ULTRAPAR > May 2011 8 > Ultrapar – The role of corporate governance in the company development until the 90’s
Foundation and establishment of Ultragaz by Ernesto Igel
30’s to 60’s Growth of the LPG distribution business
Expansion to several businesses
70’s Beginning of the implementation of professional management in the company
Structuring of Pery Igel’s succession – beginning of Paulo G. A. Cunha’s tenor as CEO
First stock ownership program, turning key executives into shareholders, with a 20 year vesting 80’s period
Restructuring process – focus on businesses in which the company has competitive advantages
Stock ownership granted to a second group of executives
90’s Shared control between executives and the founding family
Transformation of a privately held company into a listed company
ULTRAPAR > May 2011 9 > Ultrapar – Governance and capital markets as key elements to build a solid company (1999–2010)
First Brazilian company to carry on simultaneous IPOs in BM&FBOVESPA and the NYSE 1999 ADR level III – highest standards of transparency and disclosure
2000 First Brazilian company to grant 100% tag along rights to all shareholders
Variable compensation linked to EVA ® performance Representative of preferred shareholders in the Board of Directors 2002 Corporate restructuring and delisting of Oxiteno – Ultrapar becomes owner of 100% of all its businesses
2003 Stock ownership granted to a new generation of executives
Code of ethics formalized 2004 Dividends for common and preferred shares equalized
2005 Follow on offering to increase liquidity of the company's shares
Separation of the role of CEO and Chairman of the Board of Directors 2007 Sarbanes Oxley certification
2008 Ultrapar becomes part of the main market indexes
2011 New corporate governance structure
ULTRAPAR > May 2011 10 > Ultrapar – Rationale of the new step in corporate governance
Deepen alignment of interests and professional management
Increased investment capacity
Enduring company's growth
ULTRAPAR > May 2011 11 > Ultrapar – Key elements of the new corporate governance structure
Conversion of every preferred share into one common share
One share = one vote
All shareholders with same economic and political rights
Ultrapar will no longer have a defined controlling group
Current shareholder structure Shareholder structure after the conversion
Monteiro Others Aranha 2% Ultra S.A. 11% 24%
Others 40% Parth¹ 21% Aberdeen Common 9% Common 100% 36% Preferred Genesis Parth¹ 64% Ultra S.A. 66% 3% 9% Previ Monteiro 6% Dodge & Cox Aranha 4% 5% Ownership position Feb/2011 ¹Parth Investment Co., Ultra DI and heirs
ULTRAPAR > May 2011 12 > Ultrapar – Key elements of the new corporate governance structure
A single class of shares
Strengthening of the corporate governance bodies
Board of Directors with at least 30% of independent members
Creation of the compensation committee, with two independent members
Creation of the audit committee, with two independent members who are not directors
Mandatory tender offer in the event of relevant acquisition (20% of the capital stock)
No poison pills, voting limitations, unequal treatment provisions or entrenched provisions
Migration to the Novo Mercado segment of BM&FBOVESPA
Governance standards exceeds the requirements of the Novo Mercado
All shareholders become partners with identical rights to actively participate in the decisions of the shareholders’ meetings
ULTRAPAR > May 2011 13 > Ultragaz
ULTRAPAR > May 2011 14 > Ultragaz – Fundamentals
Brazilian markets structure / dynamics Bottled Bulk
Resilient demand – essential good Commercial and industrial clients Low per capita consumption Low use for household heating Growth linked to GDP Barrier to natural gas
Scale and low distribution costs are major competitive advantages
Ultragaz – Unique distribution network
Ultragaz – competitive advantages
Bottled Exclusive network: ~4,000 dealers (cylinders) Independent Strong brand awareness Supplier 69%* dealers and direct Efficient distribution channels distribution Proximity to clients Oil refineries (Petrobras) Bulk First mover advantage Direct distribution: residential buildings, 31%* Leader in small bulk delivery services, commercial and industrial segments Client loyalty
* Percentage of volume sold in 2010 ULTRAPAR > May 2011 15 > Ultragaz – Drivers of volume growth
LPG market – bottled segment million ton
~50% increase Global financial in the LPG price crisis Bottled LPG 4.8 4.6 4.8 4.8 4.9 4.9 4.9 5.0 5.0
Essential good
2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: Sindigás
Bulk LPG consumption in Brazil
Brazilian GDP (CAGR) 4.4% Bulk LPG volume (CAGR) 4.4% 119 1.0x GDP growth Bulk LPG 119 Growth leveraged on the economy
2006 2007 2008 2009 2010
Bulk LPG volume GDP Accumulated growth rate (100 = 2006)
ULTRAPAR > May 2011 16 > Ultragaz – Recent initiatives and outlook
Initiatives for differentiation and earnings growth Ultragaz – volume and EBITDA
4 Resellers training program
Focus on client: improve standards of service quality
Strengthening of each reseller’s management focus on 1,601 1,589 1,608 profitability and return on investment
Recognition and awards to the best resellers 307 281
211 4 Management of sales channels
Evolution and innovation to meet new consumer habits 2008 2009 2010
Greater convenience and logistics efficiency: value added
— Disk gás, online orders, electronic transactions through mobile Volume (000 ton) EBITDA (R$ million) phones, “vale gás” , payment with credit card, etc.
4 Campaign to strengthen the brand – “Ultragaz Specialist”
ULTRAPAR > May 2011 17 > Ultragaz – 1Q11 performance
Volume EBITDA
000 ton R$ million
+3% +2%
371 381 73 114 122 71 69
257 260
1Q10 1Q11 1Q10 4Q10 1Q11
Bottled Bulk
Volume EBITDA
Bulk +7% Stronger performance of the bulk segment
Estimated GDP growth of 4%
Investments made to capture new clients
ULTRAPAR > May 2011 18 > Ipiranga
ULTRAPAR > May 2011 19 > Ipiranga – Fundamentals and strategy
Ipiranga – Robust distribution network
Resellers End consumers
Service station’s Supplier Distributor Service stations clients (5,719)
Oil refineries Large consumers nd Ethanol mills 2 largest Convenience distributor in Brazil stores and lubes Specialized franchises resellers (1,756)
March/11 data
Near term strategy and priorities Maximize benefits from market growth
Reinforce positioning of differentiated products and services, aimed at higher margins
Expand in higher growth regions (Midwest, Northeast and North) through conversion of unbranded service
stations, new service stations and acquisitions of regional distributors
Reduce grey market in the sales of ethanol
ULTRAPAR > May 2011 20 > Ipiranga – Maximize benefits from volume growth
Continuing growth of the Brazilian light vehicle fleet Low car penetration million vehicles % of population +8% +8% 29.7 27.5 Fuel for light vehicle 25.5
Essential product 50% 34% 25% 21% Low car penetration 14%
Dec/08 Dec/09 Dec/10 1 Brazil Argentina Mexico South Poland Korea
Source: Anfavea 1 2010 fleet estimated based on the number of cars licensed in the year
Diesel consumption in Brazil
Brazilian GDP (CAGR) 3.2% 140 Diesel consumption Diesel volume (CAGR) 3.4% 138 1.1x GDP growth Growth leveraged on the economy
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Diesel volume GDP Accumulated growth rate (100 = 2000)
ULTRAPAR > May 2011 21 > Ipiranga – Expand in higher growth regions and strengthen differentiation strategy
Expansion strategy to the Midwest, Northeast and North Ipiranga’s business model
1,038 stores 2nd largest retailer network in Regional growth above national average points of sale Ipiranga’s market share lower than that 55 bakeries – increased convenience Midwest/Northeast/North in the South and the Southeast Private label products 11%
Organic expansion
New service stations and conversion of 26% unbranded service stations
Acquisitions of regional distributors
Source: ANP (diesel, gasoline and ethanol) 718 franchises, of which 61 are Jet Oil Motos (for motorcycles) DNP (Nov/10) – First acquisition in the region
Acquisition value: R$ 85 million
EBITDA 2009: R$ 17 million
Volume in 2009: 260 thousand m3 (diesel, gasoline and ethanol) More than 5.5 million individuals registered
Number of service stations: 110 Credit cards: ~6 million cards issued Market share in the North region: 4%
ULTRAPAR > May 2011 22 > Ipiranga 2010 performance
Volume EBITDA and EBITDA margin ex non recurring items
000 m3 +17% +24%
20,150 1,113
17,214 899 11,032 9,277
55 52 7,485 8,653
2009 2010 2009 2010 Otto cycle Diesel Others R$ million R$/m 3 Volume EBITDA 4 Gasoline, ethanol and NGV – light vehicle fleet 4 Significant growth in EBITDA expansion Higher sales volume Implementation of Texaco’s synergies plan 4 Diesel – higher level of economic activity Improved sales mix
4 Texaco’s consolidation from 2Q09 onwards Outlook 4 Continued growth of the fleet and the economy 4 Expansion to Midwest, Northeast and North of Brazil 4 Strengthening of Ipiranga’s business model
Broaden product and service range ULTRAPAR > May 2011 23 > Ipiranga – 1Q11 performance
Volume Volume EBITDA EBITDA margin ex non recurring
000 m³ R$ million R$/m³ +7% +10% 286 260 4,898 4,597 Non 58 recurring 57 2,488 2,587 +26%
228
1,999 2,210
1Q10 1Q11 1Q10 1Q11 1Q10 1Q11 % growth over EBITDA ex non recurring Otto cycle¹ Diesel Others % growth over reported EBITDA Volume EBITDA
Otto cycle +11% Higher sales volume 8% estimated growth of the Brazilian light vehicle fleet Improved sales mix Investments for the network expansion, focusing on the North, Northeast and Mid West regions of Increased share of gasoline in the volume sold Brazil
Diesel +4%
Growth of the Brazilian economy
¹ Gasoline, ethanol e NGV ULTRAPAR > May 2011 24 > Oxiteno
ULTRAPAR > May 2011 25 > Oxiteno – Conclusion of the strong investment cycle
Competitive advantages Oxiteno – Sales of specialty chemicals
Sole producer of ethylene oxide in Brazil and Brazilian GDP (CAGR) 3.2% 276 oleochemicals in Latin America Specialty chemicals volume (CAGR) 10.7% 3.3x GDP growth Largest producer of specialty chemicals in Latin America
Production capacity ahead of domestic demand
State of the art technology in ethylene oxide and 138 derivatives
Large and growing share of chemicals produced from 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 renewable materials Volume of specialty chemicals (domestic market) GDP Accumulated growth rate (100 = 2000 )
Maximize the benefits from the recent expansion in Internationalization production capacity
Focus on fast growing segments: Access to a broader market
Cosmetics and detergents: increasing demand due to Access to competitive materials higher disposable income Strengthen the leading position in Latin America Agricultural chemicals: Brazil as an agricultural powerhouse Cross fertilization
Coatings: growth linked to real estate and automotive Exchange of products and processes technology sectors Client relationship Oil & gas: pre salt
ULTRAPAR > May 2011 26 > Oxiteno – 2010 performance
Volume EBITDA
000 ton R$ million +8% +41% 684 241 634 29% 32% 171
71% 68% 200 135
2009 2010 2009 2010 Domestic sales Sales outside Brazil R$ million US$/ton
Volume EBITDA – strong growth in 2010 2010 – Specialty chemicals in Brazil +11% Higher sales volume
Higher level of economic activity Recovery in margins
Expansion of the production capacity ... despite the 12% stronger Real
Outlook
Expansion cycle to be concluded in 2011 – increased production capacity available
ULTRAPAR > May 2011 27 > Oxiteno – 1Q11 performance
Volume EBITDA EBITDA margin
000 ton R$ million US$/ton +96% Product mix 286
74 164 156 200 7% 4%
38 129 93% 96%
1Q10 1Q11 1Q10 1Q11 1Q10 1Q11 2010 Specialties Commodities
Volume EBITDA
Unplanned stoppages at the Camaçari Recovery in margins during the last 12 months petrochemical complex Improved sales mix in 1Q11 Power outage in the Northeast region
...partially offset by ...despite a 5% decrease in sales volume and a Growth in the cosmetics and detergents segment 7% stronger Real Increased volumes sold by Oxiteno Mexico and Oxiteno Andina
ULTRAPAR > May 2011 28 > Ultracargo
ULTRAPAR > May 2011 29 > Ultracargo – Strategy focused on growing storage for liquid bulk market Market Ultracargo
4 Complex environmental and regulatory aspects Leading and differentiated position in the sector 4 Experience in the sector is a major advantage Strategic location of assets in the main ports of the 4 Market recognizes differentiation – greater value country added
4 Resilient business Largest operating scale in the market
In a strong economy, handling of products grows Specialization in bulk that requires special handling In an unstable macroeconomic environment, the storage grows Investment opportunities in the existing terminals 4 Storage capacity for liquid bulk in Brazil greater profitability
Brazilian GDP (CAGR) 4.4% 133 Storage capacity (CAGR) 7.4% 30 thousand m³ in Suape (2011) 1.7x GDP growth 46 thousand m³ in Santos (2012) 119 22 thousand m³ in Aratu (2012)
Available area for expansion in several terminals
2006 2007 2008 2009 2010 Market demand for new terminals Storage capacity (mil m 3) GDP Accumulated growth rate (100 = 2006)
ULTRAPAR > May 2011 30 > Ultracargo – 2010 performance
Average storage EBITDA
000 m³ R$ million +20% +7% 552
461 111 104
38% 31%
2009 2010 2009 2010 EBITDA EBITDA margin
Volume EBITDA: +7% vs. 2009 4 Strong growth of average storage 4 Higher average storage in the terminals 4 Consolidation of the terminal acquired in Suape in ... despite the sale of the in house logistics, solid bulk Dec/2009 storage, and road transportation businesses in Jul/10 4 New level of EBITDA margins Higher volume of operations in the terminals in Santos and Aratu Focus on storage for liquid bulk
... partially offset by the reduction in ethanol handling Outlook
4 Capacity expansion, as a result of expansions underway
4 Growing demand for logistics infrastructure 8% growth in liquid bulk terminals segment in the last 5 years
ULTRAPAR > May 2011 31 > Ultracargo – 1Q11 performance
Average storage EBITDA
3 000 m 6%
535 534 30 28
46% 37%
1Q10 1Q11 1Q10 1Q11
EBITDA EBITDA margin
Volume EBITDA
4 Handling of ethanol in Santos – shortage of this 4 Effect of the sale of the in house logistics, solid
product for export bulk storage and road transportation businesses
4 Effects of the Camaçari petrochemical complex 4 New level of EBITDA margin stoppages on the Aratu terminal Focus on storage for liquid bulk 4 ...offset by increased effective storage in
other segments
ULTRAPAR > May 2011 32 > Final remarks
ULTRAPAR > May 2011 33 > Ultrapar – Consolidated investments
Organic investments budget (R$ million) 2011 investments
4 Ipiranga
Expansion and renewal of its fuel distribution and 1,044 franchises network and facilities Accelerate growth in Midwest, Northeast and North 146 regions of Brazil
153 4 Ultragaz
171 UltraSystem (small bulk) – new opportunities arising from the higher level of economic activity and new clients
Expansion and modernization of filling plants
Renewal of LPG bottles and tanks 548 4 Oxiteno
Conclusion of the capacity expansions, mainly in the ethylene oxide unit at Camaçari 2011 – R$ 87 million for expansions
4 Ultracargo Ipiranga Ultragaz Oxiteno Ultracargo Expansion of its terminals in Santos, Suape and Aratu – Additional 98 thousand cubic meters capacity – equivalent to 15% of Ultracargo’s capacity
ULTRAPAR > May 2011 34 > Ultrapar – Growth and value creation path for the next years
Businesses with unique characteristics
Leading positions, with competitive advantages
Resilient businesses, leveraged on the economic growth
Clear and defined strategies
Solid track record in execution
Investment and value creation opportunities in all businesses
New corporate governance structure allows…
Increased alignment of interests
Decisive step towards professional management
Increased investment capacity – potential for more ambitious projects
ULTRAPAR > May 2011 35 > Ultrapar Participações S.A. Investor relations 55 11 3177 7014 [email protected] www.ultra.com.br
ULTRAPAR > May 2011 36 >