Message from the Management

Throughout its century-long journey, Votorantim has faced complex economic and geopolitical scenarios, both locally and globally, and 2023 was no different. We maintained our strategy focused on portfolio resilience, navigating uncertainties, that are continuously incorporated into our business strategy.

In this scenario of permanent volatility, we reaffirmed our commitment as engaged investors, with a long-term vision and discipline in capital allocation, maintaining our investment strategy with initiatives for the gradual and secure transformation of our portfolio and consolidating our belief in a future of opportunities.

Our financial highlights

In 2023, we achieved a consolidated net revenue of R$ 48.5 billion, adjusted EBITDA of R$ 9.6 billion, and net income of R$ 1.8 billion.  The consolidated result was impacted by a combination of a cycle of low prices for metallic commodities with robust results from international cement operations, following successful acquisitions in North America and Spain over the past two years, adding value to portfolio diversification.

Our companies demonstrated efficiency in cost management and focus on operational improvements. Our portfolio remains resilient, with strong balance sheet and liquidity, and we continue to advance our objectives in line with the fundamental policies governing our strategy.

This consistency was reaffirmed by our long-term ratings on an international scale. S&P Global Ratings upgraded our credit rating from “BBB-” to “BBB”, Fitch Ratings revised the outlook of the “BBB-” rating from stable to positive, and Moody’s reaffirmed our “Baa3” rating with a stable outlook. We remain positioned among the few Brazilian companies (and the only non-listed one) with investment grade by the three major credit rating agencies in the world.

Constant transformation of our business portfolio

In 2023, we consolidated the movements of recent years, maintaining a firm focus on our capital allocation strategy, while continuing to open new avenues of opportunity for additional investments in the future. These actions have been implemented gradually and safely, resulting in significant successes.

This was the first full year of operation for Auren following the consolidation of energy assets in partnership with CPP Investments, the first full year as members of the controlling block of CCR, and the first full year of investments by 23S Capital. These are examples of maturing initiatives with excellent prospects for results, which are aligned with our strategy of combining capital preservation with long-term growth.

Additionally, we acquired a 5.6% stake in Hypera, one of the largest pharmaceutical companies in Brazil. This investment marks Votorantim’s entry into the healthcare sector, continuing our strategy of industry diversification.

We also observed important movements and achievements in portfolio companies throughout the year:

  • Votorantim Cimentos continues to capture synergies derived from recent international M&A transactions, contributing to increased cash generation in hard currency;
  • Auren distributed R$ 3.0 billion in dividends, with R$ 1.1 billion to Votorantim;
  • Altre made substantial progress in its internationalization strategy, formed important strategic partnerships, and made its first investment in the United States;
  • BV closed the eleventh consecutive year as a leader in used vehicle financing and the fourth consecutive year as a leader in vehicle-secured loans (EVG) and solar panel financing;
  • Citrosuco achieved historic results due to better orange juice prices and accelerated its revenue diversification thesis through Evera, a company focused on natural ingredients;
  • 23S Capital completed two investments in its first year of operations. The first in the largest independent consortium administrator in Brazil, and the second in the largest player in Brazil’s online education market.

As an engaged investor and guided by our governance principles and DNA, we own our role in influencing our portfolio companies in their agendas related to environmental, social and governance practices.

Our companies demonstrated significant advancements in their sustainability strategies and commitments. Nexa announced a US$ 320 million revolving credit line linked to carbon emission reduction indicators, Citrosuco continued its ESG financing agenda with US$ 350 million in new lines linked to commitments such as advancing the representation of women and Black people in leadership positions, and Votorantim Cimentos signed a US$ 150 million financing with the International Finance Corporation (IFC) to modernize its operations with the aim of increasing thermal substitution and reducing carbon emissions.

Reservas Votorantim introduced to the market an unprecedented methodology for carbon credits resulting from forest conservation– the PSA Carbonflor – which will contribute to the advancement and consolidation of the market for environmental services in the Atlantic Forest biome. The Votorantim Institute expanded its role as a business partner in generating socio- environmental value for our portfolio companies, and launched the Climate Action project with the goal of improving resiliency and mitigating climate risks in the cities where we operate.

Clear guidelines driving our portfolio initiatives

Our operating framework is supported by three fundamental policies that drive our capital allocation and investment strategy. The Investment Policy directs investment decisions to achieve shareholder objectives, balancing long- term capital preservation and growth while measuring, monitoring and managing potential risks. The Dividend Policy sets out rules for dividend payments to shareholders. The Financial Policy establishes the financial risk appetite, safeguarding cash flow against adverse market events, and providing guidelines for liquidity management and debt.

The Financial Policy emphasizes the need to maintain credit metrics consistent with investment- grade ratings, especially when implementing the Investment and Dividend Policies. Together, these guidelines provide the necessary solidity for decision-making, aligned with shareholder objectives and appropriate risk parameters.

Courage to build the future

Amidst the macroeconomic and geopolitical complexities of 2024, our companies remain focused on operational efficiency and continuous cost control to address short-term challenges. Simultaneously, we are actively exploring new long-term investment opportunities in Brazil and abroad, with a keen eye on innovation and talent management.

We are grateful to our shareholders and our Board of Directors for their support throughout this transformation journey. We also deeply appreciate the dedication and commitment of our more than 61,000 employees across 22 countries, who strive to achieve the best results while upholding our values of integrity, collaboration, and courage every day.

Our commitment to ethics and transparency guides our relationships with all stakeholders. We remain steadfast in our focus on diversifying and expanding our portfolio, creating value for shareholders, business partners, our people and the communities in which we operate.


João H. Schmidt

CEO, Votorantim S.A.