Presentation BR Distribuidora - (Sept. 2019)
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Presentation
BR Distribuidora
(Sept. 2019)
Disclaimer
IMPORTANT: Before continuing, you must read the following terms and conditions and by accessing the
presentation, you agree to be bound by them. The following terms and conditions apply to (i) the presentation that
follows, (ii) the oral presentation of the information to be made by Petrobras Distribuidora S.A. (the “Company”) or
any person acting on behalf of the Company, and (iii) any question-and-answer session that follows the oral
presentation (collectively, the “Information”).
The presentation that follows has been prepared by or at the direction of the Company and comprises general
background information about the Company as of the date stated on the presentation. The Information contains
statements and information that are forward-looking. Although the Company believes that the expectations and
assumptions reflected in the forward-looking statements and information are reasonable and have been based on
data currently available, the forward-looking statements and information are only predictions and are based upon
or derive from information provided by third-party consultants or other sources.
In addition, this presentation contains some financial indicators that are not recognized by BR GAAP or IFRS.
These indicators do not have standardized meanings and may not be comparable to indicators with a similar
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disclaim any obligation or undertaking to disseminate any updates or revisions to the Information, including any
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Information that may result from any change in the Company’s expectations, any change in events, conditions or
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to a specific source are estimates of the Company.
2
Follow-on momentum
NEW NEW
SHAREHOLDER PRIVATE FOCUS ON
STRUCTURE CONDITION EXECUTION
NEW IMPROVED VALUE
MANAGEMENT CORPORATE CREATION
TEAM GOVERNANCE OPPORTUNITY
3
New management team
Executive team appointed by the CEO has a complementary industry knowledge and experience, sharing the
same strategic vision for the business
Vast executive career
Number of years Experience in BR in other companies
of experience and Petrobras in the sector
Rafael Grisolia Mr. Grisolia worked at the financial department of Esso and
at Cosan Combustíveis e Lubrificantes. He also held the
CEO
+30 position of CFO at Cremer, Inbrands, Petrobras and BRD.
He is a production engineer and holds an MBA from
Coppead/UFRJ
André Natal Mr. Natal held executive and financial positions in the Oil
and Gas sector in Petrobras, Credit Suisse and
CFO and Investor
Relations +17 Opportunity. He holds a Master's and MBA in Finance from
Coppead/UFRJ, and Extensions at Downstream - The
Oxford-Princeton Program
Marcelo Bragança Mr. Bragança holds a post-graduate degree in
Maintenance Engineering and an MBA in Business
COO
+21 Logistics. He has been in BRD since 1998 and has held
other executive positions at the company, including COO
and Retail Executive Officer
Flavio Dantas Mr. Dantas has developed a great part of his professional
career in Ipiranga. After serving as Senior Advisor for the
Retail Executive
Officer +30 Oil & Gas industry at Accenture Brasil, he held the position
of Executive Director of FIRJAN between 2017 and 2019
Marcelo Cruz Mr. Cruz has developed his career in the Brazilian Energy
Sector, initially at ONS1 and in the last 13 years at
B2B Executive
Officer +17 Petrobras, where he held various leadership positions in
the Gas and Power area. Mr. Cruz graduated in Electrical
Engineering and holds an Executive MBA from Dom Cabral
Foundation and a Post-MBA at Kellogg School of Mgmt.
Source: Company
(1) Brazilian Interconected Power System Operator
4
New shareholder structure
No longer a state-owned company, with potential to double its current float, allowing access to new funds with
previous investment restrictions
Shareholder structure pre and post follow-on Potential increase in liquidity
Float (US$mm)
x.x% Increase in float 87% 117%
Structure increase increase
pre offering
$4.643
$3.993
28.75% 71.25%
Free float
$2.136
Structure
post offering
53.75%1 - 62.50%2 37.50%2 – 46.25%1 Pre offering Base Offering Base Offering + GS +
HI
Free float ADTV (US$mm)3 24 46 53
Source: Company filings and Factset Research as of July 1st, 2019 (BRDT share price of US$6.38, considering FX rate of 3.84 R$/US$ as of July 1 st,
2019)
(1) Considering base offering only (25% of BR Distribuidora’s total capital)
(2) Considering greenshoe of 15% of base offering and hot issue of 20% of base offering
5 (3) Assuming same 1.1% ADTV/Float (%) as current
New Board composition
Board representation will be based on shareholder ownership – no more reserved seats
Pre Follow-on Post Follow-on1
Reserved seats as per bylaws According to shareholders’ vote
R Board composition: 10 members R Board composition:
9 members (odd number,
R Elected by Petrobras: 5 members 50% independent)
R Elected by Petrobras:
3 members1
Members
elected Members
by Float: elected
30% by Float:
67%(3)
Other Other Other Employees
shareholders shareholders shareholders
In case of an even number quorum and a tie vote, the president has
the right to the vote of quality
Upon conclusion of the Follow-On a Shareholder Meeting2 will be requested within 40 days by Petrobras to name the
new Board composition reflecting the new structure
(1) Assuming a structure of “multiple voting”, maximum dilution of Petrobras in the offering, and 100% of shareholders’ presence in the meeting
(2) Extraordinary General Meeting of shareholders
6 (3) 6 out of 9 Board members
New bylaws
Bylaws amendment approved in June 2019 enables faster decision making process and more friendly to
shareholders
New Board composition and responsibilities Additional corporate governance improvements
Odd number of board members, of Public tender offer if single
which 50% independent shareholder reaches >50%
Board with complementary
experiences, in line with Novo
Mercado requirements
Creation of Corporate Governance
and Related Parties Committee
Additional responsibilities assigned
to the Board including approval of
equity / debt issuances, dividends
Qualified Board quorum required for Compliance with the Novo Mercado
major decisions Regulation
7Value creation pillars stemming from privatization
BR Distribuidora is currently governed by rules regulating state owned companies and privatization could yield
upside in operating efficiency and intellectual capital
Shareholder Alignment / Business Focus / Process Agility
Currently State-owned Privately-owned
Must comply with Law 13.303 (SOE Law) Law 13.303 no longer applicable
10-step bidding process Streamlined bidding process
Bidding 4-6 months to conclude Enhanced quality and better price
Process Must be open to any supplier Focus on high quality suppliers
Limited ability to negotiate prices Stronger negotiating power
Public-tender hiring Free hiring process
Gov. approved mgmt. compensation Performance based compensation
Human High and fixed compensation “Owner” mindset
Resources
Workforce adjustment complexity Workforce adjustment flexibility
Oversight by TCU1 Industry best practices
10-step sale/M&A process Agile and flexible processes
Asset sale
12 -14 months to conclude No oversight by TCU
and M&A
(1) TCU: Federal Accountability Office
8Value creation opportunity
1 Attractive fuel distribution market
2 #1 fuel distribution company in Brazil
3 Large infrastructure base
Highly diversified company in the
4
sector
5 Top of mind brand
6 Strong upside potential
9Value creation opportunity (cont’d)
1 Attractive fuel distribution 2 #1 fuel distribution company 3 Large infrastructure base
market in Brazil
One of the largest fuel markets with high Leader in terms of sales volume and National reach, with widespread geographic
dependency on highway transportation number of branded stations footprint
Motorization Rate (Light Vehicle Fleet)1 Sales volume (mm m3) (2018)
• 95 bases, 13 lubricant warehouses
806 1.8x
657 1.6x • 99 aircraft filling stations at airports
607
6th 42
• Largest tank capacity, 1.7 million m3
325 328 361 26
24
165 • Positioned in +1,500 client’s sites
36
Number of distribution bases
Brazil transportation matrix for goods 95
and supplies (2018) 69
Number of stations (2018) 68Value creation opportunity (cont’d)
4 Highly diversified company 5 6
Top of mind brand Strong upside potential
in the sector
Diversification of businesses, providing higher Well positioned to continue benefiting from
World class, top-of-mind brands
% of 2018 revenues stability opportunities
Market share 1Q’19 Benchmarking: EBITDA/m3 2018 (R$/m³)
Retail Stations
58,9% #1
74.2% 40.8%
22.9%
107
Major customers
87
#1
25.8%
37.3%
Top of mind brand in the fuel segment 62
Aviation % of Mentions on Folha Top of Mind Research 2018
#1
#1
9,8%
24% Continuously #1 in the last 16 years
x.x% Increase in BRDT EBITDA assuming each benchmark EBITDA/m3
51.6%
13%
11%
Energy, chemicals and asphalt Opportunity to narrow gap in
gross margin and SG&A vs.
5,5% peers
N/A
Only listed pure-play fuel distribution company in Brazil
Source: Company filings, ANP and Folha Top of Mind.
11Focus on execution – initiatives
Financial services
10 & Loyalty program
8 Convenience
Stores
9 Lubricants
Portfolio
7 Management
Marketing &
6 Relationship
5 People
# Core
Cost
4 management
# Additional
opportunities
3 Logistics
2 Sourcing
1 Pricing
12How BR Distribuidora expects to execute its value creation agenda
BR Distribuidora plans to take a holistic approach including an experienced senior management to work towards
its execution plan, seeking value from the privatization
Fully-engaged senior Solid mapping of value- Centralized management
management creation initiatives of the process
Full management team directly Identified 10 key initiatives to Dedicated PMO to conduct:
involved in the process drive the execution Weekly tracking of tasks
Monitoring of objectives
Senior management team Focus on strengthening BR’s
targeting relevant part of their moats on its core business Creation of mitigation plans
time into the value agenda Follow-ups on milestones
Exploring some additional value
completion
Support from management in opportunities
removing potential roadblocks Support from specialized
consulting firms for specific
topics
131 Pricing initiatives
Initiatives
Pricing orientation × Cost plus based Competition on micro markets
Locus of control × Decentralized Centralized
Margin behavior × High volatility Higher consistency
Pricing method × One-to-one negotiation Data driven
Client
× No segmentation Based on client profile
segmentation
Premium fuels × No incentives Incentives
Price positioning × Less objective rules Precise execution
142 Sourcing initiatives
Reinforce
Trading Business Infrastructure Gains of Scale Gains of Scope
Infrastructure ready Largest distribution Broaden products
for international trade player portfolio
Sourcing
diversification
Potential creation of
an Ethanol Trading Logistic
Arbitrage
Business Optimization
Arbitrage benefits from market Explore opportunities in the
opportunities transportation matrix (highway,
Improve efficiency in the railway, waterway, cabotage)
negotiation of ethanol
15 Source: Company.3 Logistics initiatives
&
New Transportation
Contracting Model Reduction of carriers pool Productivity gains
Optimization of service providers Reduce costs and improve quality
New model aiming
to reduce costs
New Storage
Infrastructure Impact on BR
Operational gains
Management Model Distribuidora’s results
Benefit from new structure Costs optimization and
efficiency operational efficiency
Partnership model in
logistics and operations
16 Source: Company.4 Cost management initiatives
BR Distribuidora aims to reduce its SG&A
Logistics & Key objectives:
Operations More centralized
procurement /
contract
Engineering & Company
management
Maintenance Restructuring
Leverage on
technology to
accelerate
processes and
Actuarial Corporate Real
reduce
Expenses Estate
inefficiencies
Optimize existing
assets (incl. real
Information estate)
Sale of Assets Effective transition
Technology
of pension and
health insurance
costs
Procurement
Focus to reduce SG&A1 by reassessing its negotiation conditions with current suppliers through a base zero budget methodology
Source: Company
17 (1) Considers savings on SG&A excluding freight, people and depreciation5 People initiatives
Main Objectives Key Measures
Shareholder alignment
1 Benefit package optimization
Convergence of costs to market
Meritocratic compensation
2
benchmarks
Strengthening variable
3
Cost optimization compensation
4 Reorganization of workforce
Talent retention
5 Redesign of hiring process
Productivity gains
18 Source: Company.6 Marketing & relationship initiatives
Strong brands in the industry leading to long-term marketing
New Marketing Actions
leadership
Strong, top-of-mind brands1 BR network strategy actions include:
Fuel Retail
Non Fuel Retail Programs
Products $$ Pricing: pricing strategy aiming to increase
customer retention
Network Planning: optimized retailers network
planning
Training Program
Service Level Improvement: improved retailers
service experience
Agility in Business Processes: foster the CRM
Integrated Marketing Plan (“IMP”) platform to expedite commercial process
BR provides its retailers several marketing and training
activities aiming to enhance customer experience and
retention
Partnerships, Marketing and Incentive Actions
Main initiatives include:
– Loyalty programs (Premmia)
– Incentive programs (Desafio Petrobras)
– Sales promotions and marketing campaigns Business Advisor: commercial team acting as
retailers’ advisors
– Training programs (Capacidade Máxima)
Source: Folha Top of Mind.
19 (1) Most of the brands are used by the Company under a brand agreement with Petróleo Brasileiro S.A. – Petrobras7 Portfolio management initiatives
Capital allocation focusing on core activities increasing the expansion of businesses with greater profitability
potential
Assets and Opportunities
ESGas NG distribution concession in the state of Espirito Santo
UTE Muricy
II / Pecém II
2 diesel thermoelectric plants with 286 MW capacity (143 MW each)
Large portfolio
of assets
Manufacturing and marketing of asphaltic emulsions and derivatives
Improving
portfolio
management Logistics and marketing services of CNG across national territory
Opportunities in energy and trading
New venture
opportunities
Opportunities in specialty products
208 Convenience stores initiatives
BR Mania benefits from BR Distribuidora’s over 7.6 thousand retail gas stations and nationwide presence, with
significant room to expand its penetration
BR Mania and C-Stores Industry Highlights
Revenues and # of stores Market Share by # of C-Stores, 2018 (%)
Revenues # of Stores 8,0 16,7%
(R$ bn) ('000) 7,7 7,9 BR
7,2 7,4
C-Store
6,9 7,0 Ipiranga
market in 6,1 6,8 7,2 7,4 7,5
5,7 5,7 5,8 6,1 39,4%
Brazil 4,9
4,1 Raízen
3,2 3,5
31,1%
Outras e Sem Bandeira
Others
12,8%
09 10 11 12 13 14 15 16 17 18
C-Stores Penetration in Gas Stations, 2018 (%)
Presence in +1,250 stores 34,5%
+82 mm transactions per year
BR Mania 17,5%
Annual sales of +R$ 1.1 bn
highlights
R$ 50 mm royalties and fees
Low penetration in network
BR Ipiranga
Commercial Logistics and
Continued growth Intelligence Distribution
Improved sales strategy Foster efficiencies
Partnership
potential
Know How Purchase
Foster experience Increase its bargain
exchange power with suppliers
21 Source: Nielsen, Somos Plural and Company9 Lubricants initiatives
BR Distribuidora is amongst the market leaders of lubricants in Brazil with its strong brand Lubrax, having
significant potential for future growth
Growth Opportunitites for the Lubricants Segment
A B C D
Lubricant Lubrax is one Cross-selling Focus on integration Recent investments
of the well known brands in opportunities due to of all lubes sales channels on Lubrax factory:
Brazil: commercial synergies: (retail and B2B) into one
division:
“Branding “Where we “Capacity
potential” sell fuel, “Focus,
agility and Increase”
we sell
lubes” control”
Marketshare of Lubricants in Brazil, Q1 2019 (%)¹ BR Distribuidora Lubricants Factory Capacity (m³/month)
Iconic²
Others 18% 42.000
29%
27.000
20%
Petronas
8%
Shell Cosan
9% Current Capacity
Original Capacity Future Capacity 3
Current
16%
Source: ANP and Company
(1) Per volume January – April
(2) JV comprised by Ipiranga and Chevron since January 2018
22 (3) Expected capacity following Duque de Caxias plant expansion in 202210 Financial services & loyalty program initiatives
BR Distribuidora retail ecosystem encompasses more than 800
million transactions/year and ~R$200bn in transactions
Digital Accounts & Wallets technology and new Central Bank
regulation open a myriad of opportunities to provide financial
services
~R$200bn ~8,000
Ecosystem Points of sale
+2mi +13mm
Tickets per day Loyalty card
members
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