Message from the Management | 2022

Votorantim delivered another strong performance in 2022, executing well against a challenging macro environment dominated by geopolitical tensions, high inflation and its impact in consumer confidence, higher cost of capital on the back of higher interest rates globally, an elevated level of political uncertainty and heightened volatility in the financial markets.

As these events unfold, it is clear that Votorantim’s role – an engaged investor built on strong values of integrity, collaboration and courage, with a long-term orientation and disciplined capital allocation strategy – is more vital than ever. Our financial strength, and the resiliency of our portfolio of businesses, mean that we are well positioned to capitalize on opportunities for sustainable value creation in the years ahead.

Our performance in 2022 is due in large part to the incredible work of our over 40,000 people in Brazil and the 19 countries where we operate, supported by our solid governance structure, from our Shareholders to the Votorantim S.A. Board and the Boards of each of our invested companies.

Anchored in our values and the Votorantim DNA, we continue to drive a multi-year portfolio transformation strategy which focuses on diversification from an industry and geographic perspective, while enhancing the competitiveness and resiliency of our core assets.


Our financial performance in a nutshell

Votorantim earned R$5.5 billion in net income during 2022. Our consolidated net revenue grew 8% in 2022 and reached R$52.9 billion, while our EBITDA was R$ 10.5 billion.

Our consolidated balance sheet remains strong, with low leverage and substantial liquidity. We maintained our discipline in capital allocation, prudently managing our capital structure while advancing with investments for growth and paying dividends.

We had our long-term ratings reaffirmed by Moody’s, Fitch and S&P in 2022, maintaining our position as one of the few Brazilian companies (and the only non-listed company) with investment grade ratings by the three main rating agencies.


Continued progress in our portfolio transformation strategy

We continue to advance in our portfolio transformation strategy, aligned with our long-term investment objectives, with significant achievements during 2022 both in terms of initiatives at the companies as well as at the portfolio level. Key examples include:

  • We successfully concluded the consolidation of energy assets held by Votorantim and CPP Investments in Brazil resulting in the creation of one of the largest renewable platforms in the country – Auren Energia, with over 3.1 GW of hydro/wind capacity in operation. Auren is listed on the Novo Mercado segment of B3, and is geared to growth with a robust pipeline of 1.9 GW that companies hydro, wind and solar projects, as well as hybrid solutions.
  • Votorantim Cimentos continues to advance on its internationalization initiatives, which contribute significantly to our portfolio strategy. The company concluded the acquisition of Heidelberg Materials’ assets in the South of Spain, consolidating a very competitive cluster in the Iberian peninsula.
  • With the CBA IPO in 2021 and follow-on offering in 2022, we now have both our metal companies – CBA and Nexa – listed and publicly-traded respectively at B3 and NYSE, as we partner with the capital markets to drive their transformation and growth initiatives. In 2022 we saw such initiatives play out, with CBA advancing on recycling with the Alux acquisition and Nexa moving its flagship polymetallic project Aripuanã into the ramp-up phase.
  • Banco BV continues to diversify its portfolio of business, with important progress on digital banking and new areas such as solar financing, where the bank is a market leader. BV also entered into a strategic partnership with Bradesco for wealth and asset management, creating an independent platform on top of its existing business. Lastly, BV entered into a strategic partnership with Méliuz to further enhance its role in the integration of financial services and e-commerce.
  • Citrosuco created Evera, a new platform for natural ingredients on the back of its leading orange juice business.
  • We closed the R$1.2 billion acquisition of an additional stake in CCR, Brazil’s premier infrastructure platform. Our ownership is now at 10.3%, we have nominated two board members and will work alongside our partners in the control group and the management team to advance the company’s long-term strategy.
  • We also entered into a strategic partnership with Singapore-based Temasek to explore new investment opportunities in various sectors of the Brazilian economy, through a new US$700 million growth capital fund and the creation of 23S Capital.
  • We concluded the sale of our steel business in Colombia and initiated proceedings to divest from our minority ownership in Brazil. We remain present in the steel sector through our highly competitive Acerbrag business in Argentina.


Further opportunities emerging

We are very excited with recent developments in our portfolio and new initiatives that can pave the way for further investments in the future. The new 23S Capital platform will have a mandate focused on themes associated with secular growth trends in Brazil and globally, with an emphasis on new business models and technologies across various sectors. This strategy will position 23S Capital as a long-term partner to companies and entrepreneurs in Brazil and should provide additional co-investment opportunities for Votorantim. The company already announced its first investment in Brazil.

Our real estate platformAltre – is fully operational for investments in Brazil and the US, and we recently created an asset management arm that will help accelerate our capital deployment while also allowing capital to be recycled into new opportunities in the future.

We and our portfolio companies are also advancing on initiatives linked to the energy transition and decarbonization. Votorantim Cimentos, CBA, Nexa, BV, Citrosuco and CCR have made public their ESG targets and we are confident this journey will also bring new investment opportunities. We have two significant levers to take us forward in this journey, through Instituto Votorantim and Reservas Votorantim, allowing us to merge social and environmental considerations for greater impact. In fact, in 2022 Reservas Votorantim and CBA announced the issuance of Latin America’s first certified carbon credits from the Cerrado biome at the environmental reserve Legado Verdes do Cerrado, and Reservas Votorantim is also developing a new methodology for socio-environmental services at its flagship Legado das Águas Atlantic forest reserve.

To further accelerate our participation in the energy transition, we just announced the creation of Floen, a new joint venture with CPP Investments. Floen aims to leverage strategic partnerships to support the scale-up of innovative technologies and business models that are accelerating the pace of the energy transition towards low carbon energy, in Brazil and globally. Floen was built on top of the core competences of Votorantim and CPP Investments in the broad energy space and should also create additional investment opportunities for us.

Lastly, we remain mobilized and focused on creating new investment opportunities internationally directly through our investment team at Votorantim, both in the public markets as well as through private co-investments.


Looking ahead

As we look ahead to 2023 and beyond, we and our management teams will remain focused on the short-term challenges and on seeding the portfolio for the long run. We remain on track to deliver on our long-term investment objectives and will maintain our disciplined capital allocation strategy in the context of macroeconomic uncertainty. Our portfolio diversification approach remains key to our consolidated performance, and we look forward to advancing on new initiatives both in Brazil as well as internationally.

With 105 years of history, we take pride in our past and our recent achievements and feel confident that with the Votorantim values – integrity, collaboration and courage – we will continue our journey of generating sustainable returns to our shareholders and creating a positive social and environmental impact through our business endeavors.

We thank our Shareholders for their inspiration and unwavering support in this entrepreneurial journey. We thank all our business partners – shareholders at our invested companies, clients and suppliers, service providers, the communities where we operate – who joined us in the journey and contribute to our results. And we are most grateful to our people for their leadership and courage to, even under complex circumstances, thrive once again.


João H. Schmidt

CEO, Votorantim S.A.