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Presentation 2Q08

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Page 1: 2Q08 presentation

Presentation 2Q08

Page 2: 2Q08 presentation

Presentation of Results

Ricardo Luis de Lima Vianna (CFO and IRO)

Eduardo de Come (Financial Officer)

Marcos Leite (Investor Relations)

Page 3: 2Q08 presentation

Clear and very well-defined objective aimed at the leadership of the Brazilian Biodiesel

Market;

Premises of the strategy: obligatory mixture of biodiesel into diesel starting in January

2008 and a business model of direct sale between producers of biodiesel and fuel

distributors;

Decision of CNPE to continue the system of auctions, making important aspects of the

competitive market would be left aside;

Biodiesel pick-up lower than planned in 1Q08 and collection of fines against Petrobras;

Nonpayment of fines, change in the credit scenario and impact on cash flow;

Volume of biodiesel lower than was expected , atypical vegetable oil market variations and

negative financial results.

Looking back

Page 4: 2Q08 presentation

Legal Action

- The volume of biodiesel production was less than what was expected in accordance with

contracts signed for delivery until June 30, 2008;

- Petrobras’s default enabled us to suspend our contractual obligations;

- Brasil Ecodiesel filed a legal action aiming to receive the contractual fines in relation to

biodiesel contracted in February and March 2008, and also non-demandability of potential

collection demands against the company.

Financial Restructuring

- Brasil Ecodiesel began a process of financial restructuring to guarantee compliance with

the contracts currently in force, which allow the company to achieve positive results.;

- Reason: high short-term indebtedness and pressure on Company’s working capital;

- Negotiation with the main creditor banks to restructure the existing debt and obtain new

funding to strengthen the working capital necessary for continuation of operations;

- The Company restructured 82.65% of its financial debt..

Action

Page 5: 2Q08 presentation

Financial Restructuring

Debt Renegociation

- Brasil Ecodiesel restructured 82.65% of its financial debt, in the amount of R$ 205.8

millions, being R$ 184.8 millions to be paid within 48 months, out of which 12 month

grace period and 36 months of amortization and $ 21.0 million adjustment to the other

conditions of the Restructuring Financial Agreement.

New Funding

- Brasil Ecodiesel obtained a total amount of R$ 53.3 million to guarantee the working

capital necessary to comply with the contracts in force

Page 6: 2Q08 presentation

Prospects

The prospects for the future remain promising: high oil prices, concern about climate

change and increase in demand for energy;

In Brasil, the CNPE ordered that the obligatory addition of biodiesel to mineral-sourced

diesel oil should be increased to 3% as from July 1, 2008;

Increasing the diesel volume sold. The increasing of biodiesel use has made possible

reduction of importation of petroleum-sourced diesel by Brazil

Brasil Ecodiesel’s average selling price in the auctions held on April 10 and 11 of this

year, for supply of biodiesel in the third quarter of 2008, was 48.2% higher than at the

auctions held in November 2007.

On August 14th ANP held the first auction for supply biodiesel in the fourth quarter of

2008, in which we obtained the right to provide 63.5 thousand m3 of biodiesel, at the

average price of R$ 2615.03 / m3, without ICMS, subject to signing the contracts. On

August 15 the ANP will hold another auction for the period.

Page 7: 2Q08 presentation

Auctions – Contracts 2S08

3Q08 4Q08

Sales FOB Sales CIF*

ANP auction Petrobras auction – I

Delivery July 1 to Sep 30 ,

2007 August 31, 2008

Unit Qty(m3)

average price** Qty(m3)

average price**

Iraquara (BA) 21,600 2,739, 99

Itaqui (MA) 19,800 2,739,99

Rosário do Sul (RS) 21,600 2,738,99

Crateús (CE) 4,000 3,250.00

Floriano (PI) 4,000 3,250.00

Total 63,000 2,739,65 8,000 3,250.00

FOB Sales ANP Auctions

Delivery Oct 1 to Dec 31

Unit Qty(m3)

Average price*

Iraquara (BA) 21,600 2,614.77

Itaqui (MA) 21,600 2,614.77

Rosário do Sul (RS) 14,400 2,614.27

Crateús (CE) 5,900 2,618.77

Total 63,500 2,615.03

Page 8: 2Q08 presentation

Operating Performance

Our gross revenue in the second quarter of 2008 is R$ 53.3 mn, of which 89.6% or R$

47.8 mn comes from the sale of 18,918 m3 of biodiesel and the rest of our gross revenue

came from sale of by-products, principally glycerin, and sunflower seeds that were

exchanged for soy oil, in which the grain made available was considered as revenue.

Biodiesel Floriano Crateús Iraquara Porto

Nacional Rosário do Sul

Itaquí Total

2Q07 6,637.8 14,145.9 12,883.8 - - - 33,667.6

1Q08 2.00 16,274.49 23,700.74 11,516.23 14,521.49 20,953.45 86,968.41

Sales of B100 (m

3)

2Q08 1,084.4 299.3 5.842,39 470.20 6,945.49 4,276.44 18,918.31

1Q07 13,640.8 27,844.0 26,887.8 - - - 68,372.6

1Q08 9.42 42,337.97 54,033.34 24,052.79 30,613.11 48,128.64 199,175.27

Billing of B100

(R$ ‘000l) 2Q08 3,289.4 1,105.59 15,714.05 982.07 14.583,46 12.111,02 47,785.45

Page 9: 2Q08 presentation

Operating Performance

Brasil Ecodiesel posted net revenue of R$ 45.8 million in 2Q08 with a gross loss of R$

13.2 mn;

The negative gross margin was due mainly to the increase in the prices of vegetable oils,

and the low utilization of capacity.

Our net result in the period, although having as its bottom line a loss of R$ 82.5 million, is

significantly impacted by provisions that the Company made, for conservativeness,

relating to events in previous quarters.

1Q08 2Q08 Total

Net revenue 167,264 45,790 213,054

COGS -180,313 -58,992 -239,305

Gross profit -13,049 -13,202 -26,251

Net loss -14,925 -82,536 -97,461

Page 10: 2Q08 presentation

Operating Performance

To give a representation that is closer to the specific result for the period, we present this

table of the Company’s Adjusted Ebitda and Adjusted net profit.

The ajusted net profit, without the provisions, was of R$ 46.7 millions.

1Q08 2Q08 Total

Ebitda (363) (65,216) (65,579)

Provision for adjustment to market value of grain inventories 15,981 15,981

Provision for losses – Petrobras penalty payments 19,797 19,797

Adjusted Ebitda (363) (29,438) (29,801)

1Q08 2Q08 Total

Net loss (14,934) (82,536) (97,470)

Provision for adjustment to market value of grain inventories - 15,981 15,981

Provision for losses – Petrobras penalty payments - 19,797 19,797

Adjusted net profit (14,934) (46,758) (61,692)

Page 11: 2Q08 presentation

Operating Performance

Net Revenue in the 2Q08 totaled R$ 45.8 million.

The Cost of Goods Sold stood at R$58.9 million in 2Q08, R$55.0 million of which from

biodiesel sales.

The General and Administrative Expenses was 30.5% more than in the previous

quarter, consisting primarily of a provision of R$ 1.9 mn made for labor-law and

environmental contingencies, the wage increase resulting from the annual wage

negotiation, and extraordinary expenses on outsourcing

Tax expenses : R$1.0 million in 2Q08.

Other Operating Expenses totaled R$ 36.0 mn from provisions for the penalty payments

owed by Petrobras, and provisions for adjustment to market value of the grain inventory.

We posted net financial expenses of R$ 12.8 mn, arising principally from payment of the

charges on loans, especially short-term loans to finance working capital.

We report a net loss of R$ 82.5 mn for 2Q08, mainly reflecting the high provisions for

various losses, a provision for adjustments to market value, and the costs of idle capacity

in our industrial plants.

Page 12: 2Q08 presentation

Indebtedness

Debt (R$ ‘000) 1Q08 2Q08

Short term R$ 205,022 R$ 243,137

(+) Long term R$ 30,778 R$ 29,119

(=) Total debt R$ 235,800 R$ 272,256

(-) Cash and cash equivalents R$ 5,898 R$ 4,622

(=) Net debt R$ 229,902 R$ 267,634

2Q08

Short Term Long term

After Restructuring

Short Term Long term

Page 13: 2Q08 presentation

Capital Markets

ECOD3 performance

ECOD3 (R$ / share) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08

Open 11.81 9.24 12.27 11.91 6.99 4.64

Low 8.77 8.80 9.51 6.01 3.84 4.01

High 12.65 14.50 15.39 12.17 7.01 6.94

Average 10.95 11.57 12.86 8.67 4.99 5.65

Close 9.15 12.27 11.89 6.89 4.55 4.08

% in quarter -22.5% 34.0% -3.1% -42.1% -34.0% -10.3%

Volume (R$ MM) 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08

Total 117.69 182.70 144.83 116.55 170.08 529.15

Daily Average 1.93 2.95 2.30 1.98 2.83 8.53

Transactions 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08

Nº of share (un.) 10,750,400 15,793,000 11,265,800 13,446,300 34,075,000 93,713,500

Nº of transaction (un.) 10,878 19,816 13,700 13,793 25,994 50,270

Page 14: 2Q08 presentation

Capital Markets

ECOD3 performance in the 2Q08

0,00

1,00

2,00

3,00

4,00

5,00

6,00

7,00

8,00

9,00

1/4/

2008

7/4/

2008

11/4/2

008

17/4/2

008

24/4/2

008

30/4/2

008

7/5/

2008

13/5/2

008

19/5/2

008

26/5/2

008

30/5/2

008

5/6/

2008

11/6/2

008

17/6/2

008

23/6/2

008

27/6/2

008

50.000

55.000

60.000

65.000

70.000

75.000

ECOD3 IBOV

Page 15: 2Q08 presentation

Investor Relations

Ricardo Luis de Lima Vianna

CFO and IRO

Marcos Leite

Investor relations

Phone: +55 21 2546-5031

Website: www.brasilecodiesel.com.br/ir

Page 16: 2Q08 presentation

Disclosure

• This document may contain prospective statements, which are subject to risks and uncertainties, as they were based on the expectations of Company’s management and on available information. These prospects include statements concerning the Company’s current intensions or expectations for our clients; this presentation will also be available on our website www.brasilecodiesel.com.br/ir and also in the IPE system at the Brazilian Security Exchange Commission – CVM.

• Forward-looking statements refer to future events which may or may not occur. Our future financial situation, operating results, market share and competitive positioning may differ substantially from those expressed or suggested by said forward-looking statements. Many factors and values that can establish these results are outside Company’s control or expectation. The reader/investor is prevented not to completely rely on the information above .

• The words “believe", “can", “predict", “estimate", “continue", “anticipate", “intend", “forecast" and similar words, are intended to identify affirmations. Such estimates refer only to the date in which they were expressed, therefore Company has no obligation to update said statements.

• This presentation does not consist of offering, invitation or request of subscription offer or purchase of any marketable securities. And, this statement or any other information herein, does not consist of a contract base or commitment of any kind.