The Votorantim Group is known as one of the most solid Brazilian corporate organizations, with financial management that is both consistent and modern. In 2004, the financial corporate senior management of Votorantim Industrial (VID) – which comprises the Group’s industrial areas – initiated an integrated financial management process, coordinating the obtainment of loans, money market investments, management of financial risks and tax planning of the Group.

Votorantim has intensified the relationship with investors. In May 2005, it held the first presentation of annual results to investors. In June of the same year, it commenced the quarterly presentation of audited results, supplementing the annual consolidated result – already published on a regular basis.

This is a process in development, whose efforts are already starting to generate results, such as raising market awareness and the inclusion of Votorantim Participações (VPAR) – an operational holding for the group – in the Investment Grade, category, by the Standard & Poor's international risk classification agency. In July of 2006, VPAR also had its foreign currency long term IDRs (Issuer Default Rating) increased to investment grade by the Fitch Ratings risk agency. VPAR’s Foreign Currency IDR changed from 'BB+', with a positive forecast, to a 'BBB-', with a stable forecast.

Financial consolidation brought about significant gains on account of greater synergy and cost cutting, as well as improvements in the management of the Group’s fiscal commitments. But the benefits are more tangible in the enhancement of Votorantim’s financial solidity. In 2005, this condition could be gauged in at least four major operations:

· Issue of US$ 400 million worth of bonuses in the United States and European markets for a period of 15 years, in June 2005;

·  Standby Facility of US$ 300 million – this is a line of credit abroad for any need. Term of the line of 3 years and 2 years for payment in the case of withdrawal. November 2005;

· Obtainment of US$ 400 million from CAF (Corporación Andina de Fomento) for investments in the Group’s industrial operations, including Votorantim Cimentos (Cement) in the Northeast region. December 2005;

· Implementation of a new exchange hedge system that will significantly reduce the volatility relating to the exchange exposure of the Group.

Nowadays the signs of financial health of the Group can be measured with indicators such as the average debt period, which was extended from the threshold of two years, in December 2003, to five years in December 2005; and the net debt over EBITDA ratio, which is currently 0.8, indicating that the cash generation is sufficient to pay off the entire net debt in less than a year.

Consolidated annual financial statements 2004

Annual Report 

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