Ultrapar Participaes S.A. June 2017 Considerations Forward-looking - - PowerPoint PPT Presentation

Ultrapar Participações S.A.

June 2017

 Forward-looking statements



This document may include “forward-looking statements” within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “anticipate,” “believe,” “expect,” “estimate,” “plan,” “outlook,” “project” and other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. Investors are cautioned that such forward-looking statements with respect to revenues, earnings, performance, strategies, prospects and other aspects of the business of Ultrapar Participações S.A. (“Ultrapar”) are based on current expectations that are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those indicated by such forward-looking statements. Ultrapar is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise. For this reason, readers should not place undue emphasis on these forward-looking statements.

 Standards and criteria adopted in preparing the information



The financial information presented in this document has been prepared according to International Financial Reporting Standards (IFRS). The financial information of Ultrapar corresponds to the company’s consolidated information. The financial information of Ipiranga, Oxiteno, Ultragaz, Ultracargo and Extrafarma is reported without elimination of intercompany transactions. Therefore, the sum of such information may not correspond to the consolidated financial information of Ultrapar. In addition, the financial and operational information presented in this document is subject to rounding off and, consequently, the total amounts presented in the tables and charts may differ from the direct sum of the amounts that precede them.



EBITDA — Earnings Before Interest, Taxes, Depreciation and Amortization, and EBIT— Earnings Before Interest and Taxes, are presented in accordance with CVM Instruction No. 527, issued by CVM on October 4, 2012.

Considerations

Ultrapar and strategy of its businesses...........................................................................p.07 Financial performance.......................................................................................................p.14

Agenda

Priorities and recent strategic initiatives........................................................................p.21

 2nd largest fuel distributor in Brazil  7,648 service stations  Largest convenience store network in Brazil  Leader in specialty chemicals derived from ethylene oxide in Latin America  12 production facilities in 5 countries  The largest LPG distributor in Brazil  Network of 6 thousand independent resellers  11 million households attended  52 thousand customers in the bulk segment  The largest provider of storage for liquid bulk in Brazil  6 terminals located in the main Brazilian ports  629 thousand m³ of storage capacity  Sixth largest drugstore chain in Brazil  321 stores in 10 different states  2 distribution centers  Leadership in NO and NE regions

Ultrapar is the 4th largest Brazilian group in terms of revenues¹ 15 thousand employees Market capitalization of R$ 40 billion

¹ Source: Valor 1000 September 2016 edition

Ultrapar – Multi-business company

Differentiation through innovation Resilient businesses Synergies among the businesses Markets under consolidation and formalization process Leveraged on the Brazilian economic growth

Ultrapar – Our investments and results were leveraged by the attributes

• f our businesses

Corporate governance designed to sustainable value creation

Ultrapar – Corporate governance

• First Brazilian

company to be listed at B3 and NYSE simultaneously

• First Brazilian

company to grant 100% tag along rights to all shareholders

• Compensation

linked to economic value added

• Corporate

restructuring

• Stock ownership

program to executives of the new generation

• Separated roles
• f CEO and

Chairman of the Board of Directors

• New corporate

governance structure after joining the Novo Mercado

• Ultrapar

becomes a corporation

• Issuance of new

common shares as a result of the Extrafarma’s Merger

1999 2000 2002 2003 2007 2011 2014 1984/94

• Company’s first

and second stock ownership program

Ultrapar Corporate Governance Corporate Governance designed to value creation

Track record of prospecting, analyzing and executing  Continuous process  Engagement of the Company Alignment of interests

Delegation and accountability Agile decision- making processes

High standards of controls and transparency Streamlined management structure Long-term financial soundness Strong investment capacity  Capital  People  Processes

Ultrapar and strategy of its businesses

Ipiranga – Constant investments in the service station network and logistics infrastructure

Investments to capture the market growth potential, focused on N/MW/NE regions… ...and on the expansion of the logistics infrastructure ...resulted in the company’s growth

 83 logistics facilities* across Brazil

% of unbranded service stations vs. Ipiranga’s Car penetration by country (as a % of population)

14,000 (34%) service stations in Brazil, 27% of total sales volume

Source: Sindicom’s 2016 Annual Report and ANFAVEA’s 2017 Annual Report

Future inorganic growth: Ale and JV with Chevron in lubricants EBITDA and EBITDA margin Growth in the number of service stations and sales mix Investment in the network and logistics infrastructure

1 2 3 4

CAGR margin 16% CAGR EBITDA 17% CAGR 15% CAGR # stations 4%

* 54 owned terminals and pools

 R$ 650 million CAPEX for expansion and construction

• f terminals since 2011

# stations Sales volume in the reseller segment EBITDA (R$ M) EBITDA margin (R$/m³) Ipiranga Unbranded service stations

13% 23% 41% 29% N/MW/NE S/SE 20% 83% 63% 59% 29% 32% Brazil US Japan United Kingdom Mexico Argentina

591 1,214 2011 1T17 LTM 6,086 7,648 70% 75% 2011 1T17 LTM

1,330 3,073 61 133 2011 1T17 LTM

19% 30% 60% 75% 81% 88% 90% 95%

26 37 5 12 3 7 7 4 Brazil Chile Canada Argentina US United Kingdom Uruguay Australia Stores/Service station Thousand people/store

 Relationship with resellers and final customers

 Clube do Milhão  Clube VIP  Km de Vantagens, loyalty program

 Marketing campaigns

 “Ask at the Ipiranga’s service station”  Marketing plan

 Novelties

 “Abastece Aí” app  DT Clean premium gasoline

 2,181stores  696 bakeries  380 Beer Cave  4 DCs in operation

Brazil’s largest loyalty program

 ~24 million members

JV with Itaú

 1 million tags

 1,356 franchises  247 Jet Oil Motos

Reduced environmental impacts and costs

 1,193 stations

am/pm is the largest convenience store network in Brazil present in 29%

• f Ipiranga’s service stations

Source: Sindicom’s 2016 Annual Report

Ipiranga – Differentiation in convenience and services

As of Mar/17 ¹Source: Valor Econômico, January, 18, 2016 (CVA Solutions consultants)

Diversification of products and services at Ipiranga service stations, with constant innovation Convenience stores penetration Strongest brand in the fuel market¹

Incentive programs

29%

 Differentiation in technology and innovation  ~ 90 new products launched in the last 3 years  4 R&D centers  Strong production capacity expansion cycle made between 2007 and 2011  Focus on higher value-added products

 Sole producer of ethylene oxide in Brazil and oleo- chemicals in Latin America, with production capacity ahead of domestic demand  Deep knowledge of surfactants technology  Scale comparable to the largest players in the world

 3rd largest ethoxylation company in the world  Camaçari unit: one of the world’s largest producer of ethylene

• xide

Leadership position Strategy

Wide presence in several segments of the economy

Sales Mix

Specialties Glycols

Investments in the U.S.

 Diversification of feedstock base  More competitive costs  Access to the world’s largest ethoxylates market  Beginning of pre-marketing sales  After ramp up: 10-15% of Oxiteno’s EBITDA

Oxiteno – Investments in innovation and international expansion to strengthen the company

80% 20%

1Q17

Expanding scale, geographical coverage and capillarity Focus on services differentiation, boosted by Ultra partnerships 79 years of tradition and commitment to the market

Pioneer in the Brazilian LPG market Excellence in services provided Close relationship with costumers Bottled Bulk

 Digital intelligence in new clients prospecting  Ultrapronto: 1/3 of time reduction in the installation process

 ~1,000 new installations in the last twelve months

 Diversification: solutions for different uses of LPG

 Synergies among Ultra’s businesses: car wash at Ipiranga service stations  Asphalt producers  Loyalty program: KMV  Integrated store: Ultragaz and Extrafarma (CE)  Vouchers sold in pharmacies  Supermarkets as a sales channel of LGP bottled  ~800 thousand vouchers sold per year  App for the costumer  162 thousand downloads  Sales team training program  6.1 thousand registered salespersons

Ultragaz – Differentiation through commercial initiatives

5.8 thousand resellers

Geographical footprint Volume

> 52 thousand customers in the bulk segment

Filling plants Satellite plants, affiliates and similar Geographical reach of Ultragaz network

UltraTop Ultragaz Connect E-Vale Ultra synergies

815 1,202 428 565

1,242 1,768

1999 1Q17 LTM Bottled Bulk

The largest provider

• f storage for liquid

bulk in Brazil

 Storage capacity of 629 thousand m³  Handling of liquid bulk ~5.2 million ton in 2016  Presence in the main Brazilian ports

Port of Santos

 The largest handling port in Latin America  Approximately 30% of Brazilian exports and imports

Positioning in strategic locations Competitive advantages

Operational excellence

 Flexibility  Agility  Quality

Strategic Focus

 Increase scale  Expand geographical coverage

Port of Aratu

 Approximately 30% of all cargo handled in maritime modal in Bahia  Serves the petrochemical Camaçari complex

Port of Itaqui

 Third largest Brazilian port in handling of liquid bulk, with approximately 15% share

1 2 3

Ultracargo – Strengthen port operations of bulk terminals

Itaqui Suape Paranaguá Santos Rio de Janeiro Aratu

37% of chemicals/corrosives 52% of fuels

Source: Brazilian Ministery of Foreign Trade and ABTL

Area of influence

Network expansion in a market with high growth potential Initiatives to raise stores quality standards

Launch of the new brand and new stores model  Customer receptiveness  Cost reduction  Partnership opportunities with the industry Category management

Nail Polish OTC¹ 105 12 58 3 83 3 8 18 23 8

Number of stores as of Mar/17 (321 stores)

High market growth – Revenues

(2016 vs. 2015)

Aging population

in millions of people > 60 years old

Expansion in North and Northeast regions

Source: IBGE ¹ Over the Counter Medicines

Extrafarma – Initiatives in retail pharmacy management and accelerated stores opening

3.5%

• 3.1%
• 4.0%

8.5% Overall retail Clothing Books/newspapers/ magazines Retail pharmacy 20 24 29 35 42 2010 2015 2020 2025 2030

Financial performance

EBITDA ... with continuous investments in the network

Ipiranga – 1Q17 performance

“Ask at the Ipiranga service station”

 Lower sales volume  Strategy

• f

differentiation and innovation in services and convenience in the network  Increased shares of gasoline and resellers segment in the sales mix  Opportunities in fuel costs

# Service stations Penetration of am/pm stores

Network expansion and strengthening - LTM

Effects of the current economic condition still impacting volumes...

• 1%

R$ million

Otto cycle

000 m³

Diesel

Gasoline Ethanol NGV 3,004 2,718

1Q16 1Q17

7,241 7,648

27% 29%

Mar/16 Mar/17

 407 new service stations (85 QoQ)  261 new am/pm stores (15 QoQ)  168 bakeries (12 QoQ)  140 beer caves (5 QoQ)

712 705 1Q16 1Q17 2,145 2,223 636 463 2,846 2,753 1Q16 1Q17

• 27%

+4%

• 3%
• 10%

D Total volume - YoY

• 8%
• 10%
• 14%
• 6%

2Q16 3Q16 4Q16 1Q17

Investments in

• penings
• f

new service station Overall economic weakness Worsening unemployment rates Smoother reduction than previous quarters

Oxiteno – 1Q17 performance

Brazil International Markets

Stronger Real against the US Dollar and higher costs of certain raw materials

Specialties Glycols

81% 80% 19% 20% 182 196 1Q16 1Q17 98 103 49 55 147 157 1Q16 1Q17

+13% +5%

35 38 1Q16 1Q17

+10%  Brazil: highlight in oil, coatings and automotive fluids segments  International markets: increase in total exports to the USA for pre- marketing  Glycols: better conditions on prices and product demand

Exchange rate (R$/US$ average) Raw materials prices (US$/ton)

Third consecutive quarter of growth in domestic sales volume

000 ton

Total volume

+8% +7%

Specialties Glycols

3.20 3.10 3.13 4.05 3.97 3.70 Jan Feb Mar 2017 2016

1,105 1,631 926 1,086

1Q16 1Q17 PKO Ethylene

+48% +17% 62 49

198 112 1Q16 1Q17

EBITDA (R$ million)

• 44%

Reported EBITDA Non recurring

Stronger Real (R$ 0.77/US$) Increase of raw materials’ prices Higher sales volume Pre-operating expenses USA Reversion of the R$ 49 million provision related to the exclusion

• f the ICMS from the PIS and

Cofins base

EBITDA Volume

Bottled Bulk

Ultragaz – 1Q17 performance

277 282 130 132 407 414 1Q16 1Q17 109 120 1Q16 1Q17

+2% +2% +2%

R$ million 000 ton

+11%

Volume

 Bulk: new costumers added in the industrial and residential condominium segments  Bottled: investments in new resellers

EBITDA

 Initiatives to capture new customers and resellers  Strategy of differentiation and innovation  Increase in sales volume

Volume

 Increased fuels handling in the ports of Suape and Aratu  89% of capacity utilization

000 m³

Effective storage

(Monthly average)

Ultracargo – 1Q17 performance

EBITDA Volume

Non recurring Reported EBITDA R$ million

EBITDA

 Growth in average storage  Higher average tariff in all terminals  Increase in personnel expenses  Non recurring related to the fire in Santos:

1Q16: decommissioning expenses compensated by receipt of insurance advances 1Q17: commissioning expenses

25 22 7 (16 ) 33 37

1Q16 1Q17 658 695 1Q16 1Q17

+6%

4 (11 ) 5 15 1Q16 1Q17

Extrafarma – 1Q17 performance

Number of stores Gross revenues & SSS EBITDA

Gross revenues

372 476 5% 24%

1Q16 1Q17

SSS Gross revenues

+28%

R$ million R$ million

+23%

Mature stores 2 to 3 years Up to 1 year

EBITDA

Revenues growth Initiatives to improve management standards in the retail pharmacy Increased share of new stores in maturing phase R$ 11 million in non-recurring expenses from the transfer

• f the distribution center and indemnities

36% growth in revenues from retail segment  Increased number of stores: (+60 YoY / +6 QoQ)  76 openings  16 closures  SSS: +24% Decrease in sales from wholesale segment  Transfer of distribution center from Belém to Benevides

Non recurring Reported EBITDA

63% 55% 19% 20% 18% 25%

261 321

Mar/16 Mar/17

38% 45%

Debt Breakdown(1) (%) – 1Q17 Debt Amortization Profile(R$mm) – 1Q17

Ultrapar – Solid liquidity profile

(1) Does not include swap losses (2) Calculated as EBITDA - CAPEX - Change in Working Capital. Working capital includes short-term and long-term accounts receivable, inventories and suppliers

Duration: 4 years Avg cost of debt: 93.5% of CDI

4,753 2,944 2,388 1,590 878 515 2,722 Cash and Equivalents Short term 1 to 2 years 2 to 3 years 3 to 4 years 4 to 5 years > 5 years

61% 5% 35% 39%

Local currency Foreing currency Without hedge With hedge

Net Debt (R$ mm) and Net Debt/ EBITDA (x) - LTM Operational Cash Flow - LTM (R$mm) (2)

4,959 4,984 5,659 4,928 5,902 5,506 5,838 5,715 6,286 1.4x 1.4x 1.5x 1.2x 1.5x 1.3x 1.4x 1.4x 1.5x 1T15 2T15 3T15 4T15 1T16 2T16 3T16 4T16 1T17 Dívida Líquida Dívida Líquida/ EBITDA 1,597 1,415 1,253 1,640 1,819 2,306 2,557 1,979 1,858 1T15 2T15 3T15 4T15 1T16 2T16 3T16 4T16 1T17 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 Net Debt Net Debt/ EBITDA

Priorities and recent strategic initiatives

Ultrapar – Priorities and outlook

Investments in expansion to boost earnings and profitability growth

Extrafarma

 Retail pharmacy management: roll out of the new store model for the network  Faster stores opening pace

Ultracargo

 Resuming activities in the Santos terminal  Focus on modernization of safety, reliability and integrity systems  Expansion to strengthen position as port operator

Ultragaz

 Focus on differentiation initiatives, creating new niche markets and sales channels

Oxiteno

 Aspire leadership in surfactants in the Americas  International expansion – construction of the new alkoxylation plant in Pasadena, Texas (USA)

Ipiranga

 Expansion of service stations, am/pm and Jet Oil networks  Expansion of the logistics infrastructure  Focus on differentiation through diversification and innovation in products and services

Strategic initiatives

 CADE’s authorization to create a joint venture with Chevron in the lubricants’ segment  Focus on the approval of ALESAT and Liquigás acquisitions by CADE

23

Liquigás figures (2016)

5 thousand resellers Volume sold: 1,601 thousand tons EBITDA of R$ 320 million 25 million LPG bottles

Financial Operational

Liquigás – Overview

23 bottling facilities Market share  Bulk: 21%  Bottled: 20%

000 tons 1,251 1,263 1,255 1,218 410 405 398 383 22.7% 22.5% 22.6% 21.7%

2013 2014 2015 2016 Bottled Others Market share (%)

2.899 2.978 3.296 3.589 113 148 214 320 3,9% 5,0% 6,5% 8,9%

2013 2014 2015 2016 Net income EBITDA EBITDA margin (%)

R$ million

Accretive acquisition, generating benefits and value for the company

24

Enterprise Value: R$ 2.8 billion

 After-synergy multiple below 5x EV/EBITDA

Gross debt as of Dec/16: R$ 45 million

STRUCTURE RATIONALE

Improve efficiency and competitiveness, producing benefits to consumers, resellers and to the society

 Efficiency gains in logistics, in administrative management and in operating practices, resulting in better services

Strengthen the company and the relationship with resellers through Ultra’s investment capacity

ULTRAPAR 25

Recently announced strategic initiatives

4th largest fuel distributor in Brazil  Volume sold: 4.3 million m³  2k service stations, 13% of which with convenience stores  EBITDA of R$ 275 million in 2015 and R$ 340 million in 2016 Enterprise value: R$ 2,168 million Complementary operations, especially in the Northeast region

ALE’s network acquisition 2 to 3 years Synergies 2017 CADE’s approval After CADE Integration Joint venture with Chevron in lubricants Lubricants operations in Brazil Non cash transaction 2nd largest lubricants company in Brazil 23% market share Sharing of best practices Optimization and increased capillarity of the sales channels More diversified product portfolio 204 thousand m³ 56% of the JV capital 145 thousand m³ 44% of the JV capital

New company

Market share 2016 ALE Ipiranga ALE + Ipiranga North/Northeast/Midwest 4% 13% 16% Midwest 2% 15% 17% Northeast 5% 9% 14% North 2% 18% 20% South/Southeast 3% 21% 24% Southeast 4% 20% 24% South 1% 25% 26% Total 3% 18% 22%

Ultrapar Participações S.A. Investor Relations  55 11 3177-7014 invest@ultra.com.br ri.ultra.com.br