Government proposes reducing tax rate on fuel to zero

States would be compensated, according to plan; measure would be in place by December

06/07/2022

Jair Bolsonaro — Foto: Antonio Molina/Fotoarena/Agência O Globo

Jair Bolsonaro — Foto: Antonio Molina/Fotoarena/Agência O Globo

In another effort to try and lower inflation and reduce fuel prices — less than four months before the election — President Jair Bolsonaro proposed Monday to reimburse states if governors agree to reduce to zero sales tax ICMS on diesel and LPG (cooking gas).

In addition, the federal government has committed itself to cut to zero social taxes PIS and Cofins and the federal tax Cide levied on gasoline and ethanol. The package is a compensation for Congress to pass the bill that curbs state taxes on fuel, energy and telecommunications to 17%.

The tax breaks and compensation will be proposed through a constitutional amendment proposal (PEC) to be issued by the federal government, with defined financial and time limits. According to sources within the economic team, the total cost will be around R$40 billion.

Of this total, R$25 billion — concerning the transfer to state governments for the loss of revenue from the ICMS tax on diesel oil and cooking gas — will be kept outside the spending cap. The remainder – around R$15 billion – derive from the total exemption of PIS/Cofins and Cide on gasoline and ethanol. Those federal taxes have already been reduced to zero, previously, for diesel and LPG.

As for the duration of the measure, the PEC will say that the measures will be in force between July 1st and December 31st, 2022. Nevertheless, the government is confident that the increased revenues from oil royalties and dividends from Petrobras will contain impacts on the primary result. Economy Minister Paulo Guedes said the effort will be “fiscally responsible.”

“It is an extraordinary transfer of funds. It has a defined time, until December 31, and a defined value, it will be clear that this is fiscally responsible,” he pondered. Mr. Guedes also explained that there are extraordinary revenues not yet released in the budget, and that this transfer to the entities will be limited to these revenues. “In the same way that there must be a spending cap, there must be a tax cap,” he said.

Mr. Guedes called for a joint effort on behalf of a reduction in fuel prices that protects the population. “If the economy became strong again and tax collection is increasing, we are behaving in a way to transfer this to the population. Everyone has to collaborate. States and municipalities are all in the black, a situation they have never been in before,” he said. “We are renewing our commitment to protect the population with the cooperation of federal entities, Senate and Chamber.”

The announcement of the package was made by the president in the presence of government ministers and the speaker of the Chamber of Deputies, Arthur Lira (Progressive Party, PP, of Alagoas), and Senate President Rodrigo Pacheco (Social Democratic Party, PSD, of Minas Gerais), who also endorsed the measure.

In practice, the package is a way for the Executive branch to pressure governors to accept an agreement on the issue. This is because allies of the president have shown concern about high inflation, which tends to impact the approval of the president during the election campaign.

With this proposal, President Bolsonaro admitted expecting an “agreement” in the Senate for the approval of the so-called complementary bill (PLP) 18/21, already passed by the Chamber of Deputies and making its way in the Senate, which establishes a cap for the collection of ICMS for items considered essential, such as fuel, electricity, telecommunications and public transport.

“The government has decided to move forward with the reduction of the tax burden for Brazilians — on diesel and cooking gas, if the governors understand that it is possible to reduce ICMS to zero, we will reimburse them for what they fail to collect. As for gasoline and ethanol, the federal government is willing to reduce PIS/Cofins and Cide to zero,” Mr. Bolsonaro said.

Mr. Lira also admitted that the negotiation is primarily aimed at solving the problem of inflation, which worries Mr. Bolsonaro’s allies. “We are concerned about reducing the impacts of inflation, the crisis caused by pandemic and war. The Chamber is sensitive to the government’s effort,” said Mr. Lira before sending a message to senators. “We hope that the Senate has sensibility in the approval of PLP 18 [which limits ICMS to 17%]. After that, we will deal with the PEC on the reimbursement of the states,” he said.

The Senate president said he expects a consensual solution and through dialogue to reduce the ICMS on fuels, but reiterated the existence of the states’ concerns and did not talk about a date to vote on the bill that imposes a 17% ceiling on gasoline and diesel oil, among other items.

According to him, the government’s initiative highlights the concern of the branches of government with the prices of fuel and food. “It is a very serious problem,” he said. Mr. Pacheco recalled that the state governments took to the Senate several amendments to the PLP 18: “Within the dialogue, which is very broad in the Senate, we will seek consensus on all interests, also listening to the states. We welcome the demands of the federal government and will take them to the senators for analysis,” the Senate president added.

São Paulo’s Treasury Secretary Felipe Salto defined the announcement as “a bad joke.” “The states don’t have any guarantee,” he said. Mr. Salto questions the source of funds for such compensation. “The only revenue cited does not exist: the Eletrobras concession. How will they reimburse [states] with the cap there?” he said.

Another criticism from the state secretary is that first the bill that establishes the ceiling on the collection of ICMS on fuels would be approved, and then a PEC would be sent to the states to account for the reimbursement.

“The losses from PLP 18 will come and the PEC will be delayed. Even if approved, nothing guarantees the reimbursement, according to the announcement,” he said. According to him, the measure would generate losses of R$14.4 billion by locking the rates at 17% — 18% in the case of São Paulo.

(Anaïs Fernandes contributed to this story.)

Source: Valor International

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Inflation, supplies are L’Oréal’s priorities

Company has double-digit growth in Brazil and gains market share with consumers loyal to the brands

06/06/2022

Alexis Perakis-Valat — Foto: Leo Pinheiro/Valor

Alexis Perakis-Valat — Foto: Leo Pinheiro/Valor

Brazil was the first country that Alexis Perakis-Valat, global CEO of L’Oréal’s division for the general public, visited when he took over the position five years ago. Last week, Mr. Perakis-Valat returned to Rio de Janeiro and São Paulo. Even though sales have resumed to pre-Covid-19 levels, the scenario is different from before 2020. Global inflation and supply issues are of concern. He says the business in Brazil has had double-digit growth and it is gaining market share in an environment of consumers loyal to the brands.

The large public division includes Niely (a national company incorporated into the French group in 2014), Colorama, which focuses on nails, and Maybelline, of makeup. The products are found in retail channels, such as supermarkets, pharmacies, and cash-and-carry. In 2021, the area was responsible for 37.9% of L’Oréal’s global sales, behind only the luxury segment, which accounted for 38.2%, the company says. Considering the result as a whole, sales in Latin America grew 20.6% last year. The company does not reveal the figures for Brazil.

“In the medium and long term, we are extremely confident in the future of our division, both globally and Brazil. The market has a lot of potentials to develop. Brazilian women are looking for more transparency, performance, and sustainability. And, as in the rest of the world, the digital [channel] has accelerated the knowledge of consumers,” said the executive, in an interview with Valor. L’Oréal has less than 10% of the local market share, but the country is the fourth-largest beauty market in the world.

The executive says that L’Oréal’s main objective is to “develop markets”. A current example are the serums — cosmetics for the face that have a light texture and fast absorption. There is still a low percentage of Brazilian women who use this kind of product, says the executive. “Our work in our division is to spread the serum. Explain why to use it and how to use it. This develops the market because it is an additional gesture. And when we develop the market, it grows, and we want to gain market share.”

The current environment increases the complexity of the business. Inflation, a legacy of the large injection of liquidity by governments in Covid’s peak, is new in many countries where the multinational operates. There is not yet a long history to analyze the consumption behavior in those places, but Mr. Valat says that in the beauty market people are inclined to pay a little more as long as the offer is better. In Brazil, although the subject is not new, inflation is currently eroding the income of the local population.

In the mass market, the final prices are fixed by the retailers. However, the multinational has tools to trace price scenarios because of customers’ behavior. The goal is that the values suggested to retailers can be absorbed by the consumer public.

According to Mr. Valat, the beauty company has dealt very well with the issue of global supply chain problems, but this issue requires more effort than before the pandemic began. “We spend a lot of time on this. The situation is complicated, but it is evolving every day. I hope the scenario will get better, but it is challenging,” he says.

Current efforts involve more intense monitoring of raw materials and greater flexibility of the company in the search for supply alternatives and diversification of supply sources. The goal is to reduce dependence on just one part of the world.

Another focus of increasing attention worldwide is ESG practices. Diversity, gender equity and inclusion, and causes such as tackling sexual harassment on the street are among the company’s focal points. And L’Oréal aims to be an industry leader on issues related to sustainability. There are, for example, initiatives to reduce water use in factories.

In addition, alongside companies like Unilever and Natura, the company is developing an industry-wide environmental impact assessment and a sustainable scoring system for cosmetic products. “Consumer demand for more sustainable products is growing. Younger generations are leading this movement. We see concerns about impacts in Brazil as well.”

Source: Valor International

https://valorinternational.globo.com/
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Amazon can be recovered, generate income, experts say

They suggest the use of agroforestry occupation to generate economic activity in degraded areas

06/06/2022

Beto Verissimo and Juliano Assunção — Foto: Leo Pinheiro/Valor

Beto Verissimo and Juliano Assunção — Foto: Leo Pinheiro/Valor

The historical process of occupation of the Amazon has created enormous forest loss, but the stock of deforested areas can be recovered and used for the production of items that generate development and income, agronomist Beto Veríssimo and economist Juliano Assunção say. They are the coordinators of the Amazônia 2030 project, which seeks to make a diagnosis of the region’s problems and point out solutions, encouraging the formulation of state policies for the Amazon.

In a live-streamed interview with Valor on Friday, Mr. Veríssimo said that over the last 40 years 83 million hectares have been deforested in the region, which is equivalent to the area of Minas Gerais and São Paulo states. Of this total, only 10% is used in agronomic terms, mainly soybeans. Another 60% are underused areas, generally with low productivity cattle raising, while 30% are abandoned spots.

“There is a myth that it is necessary to deforest to develop. The analyses are absolutely conclusive that it is not necessary. Too much has already been deforested,” added Mr. Veríssimo, who is also a senior researcher and cofounder of the Institute for Man and the Environment of the Amazon (Imazon). “So there’s a long job of making good use of the areas that have already been opened up.”

Mr. Assunção said there is no need to cut down the forest to increase agriculture. “If you look at FAO [Food and Agriculture Organization of the United Nations] data, food production since the early 1960s has been growing at a very constant rate. But if we look at what is happening in terms of area, in the last 20 years, it hasn’t increased,” said the associate professor at the Catholic University of Rio de Janeiro (PUC-Rio) and executive director of the Climate Policy Initiative (CPI) Brazil.

He explained that the Amazon territory was allegedly occupied to “integrate” the country, which made sense in the past, but the goal was not to extract value from the forest. “If this brought us a deforestation of 20% of the Amazon, which is something dramatic from the environmental point of view, today we have in our hands, when we look ahead, a stock of area that no country has to expand its agricultural production,” he said.

Mr. Veríssimo affirmed that reforestation can be used to promote the paper and pulp industry: “The expansion of this sector has to take place in the Amazon, but not over the forest. The specialist points out the important role of agroforestry systems, which combine the preservation of the standing forest and the cultivation of species to generate income, such as cocoa and açaí.

According to Mr. Assunção, the sector of products compatible with the Amazon ecosystem has more than 60 quality items for export, but they account for only 0.17% of the world market share. The Brazilian Amazon represents one-third of the world’s tropical forests.

Both specialists also emphasized that it is necessary to have a land title regularization policy for the region, provided it does not promote flexibility for the illegal advance on preserved areas, which, according to them, has been happening in recent years.

Mr. Veríssimo said that the Amazon is experiencing “a perfect storm of problems”, which include, deforestation, youth unemployment, poverty, and violence. While the region covers 59% of the country, it produces only 8% of the GDP.

For Mr. Assunção, there is a “paradox” in the region, which, with a population of 28 million people, is going through a demographic moment that is expected to be favorable. “The working-age population is growing in comparison with the population of dependents, a process that is likely to come to an end around 2030,” he said.

However, those people have few opportunities. “The labor market is very fragile, mostly with informal labor contracts, and the private sector has difficulty in dynamically establishing itself,” he said. Among young people between the ages of 18 and 25, 42% are outside the labor market.

Source: Valor International

https://valorinternational.globo.com/
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Unipar to invest R$130m in new plant in Bahia

New plant with capacity to produce 10,000 tonnes of chlorine a year will be built at the Petrochemical Complex of Camaçari

06/06/2022

Mauricio Russomanno — Foto: Silvia Zamboni/Valor

Mauricio Russomanno — Foto: Silvia Zamboni/Valor

Unipar, the largest producer of chlorine and caustic soda and one of the main PVC manufacturers in South America, will invest R$130 million in a new plant, in Bahia. This raises to R$230 million the disbursements unveiled since the end of last year by the company to expand capacity.

The new plant, with a capacity to produce 10,000 tonnes of chlorine a year, will be built at the Petrochemical Complex of Camaçari (Bahia) and is expected to start operating in the first half of 2024. It will meet the growing demand for hydrochloric acid, sodium hypochlorite and caustic soda driven by the new basic sanitation legal framework.

“We believe in the sanitation framework as one growth driver for the market. There have already been several approvals [of projects] and auctions, and there will be more,” CEO Mauricio Russomanno told Valor.

In chlorine, the company’s installed capacity will jump to 715,000 from 680,000 tonnes/year with two expansions – in Santo André (Greater São Paulo), with an investment of R$100 million, the production of chlorine, caustic soda and hydrochloric acid will be increased by 15% as from the second half of 2023.

With the new injections, the company starts to shape a new growth cycle supported by the perspective of increasing demand for chlorine and its products driven by the new legal framework for basic sanitation in Brazil. The plant in Bahia is the first greenfield project within the company’s geographic expansion strategy, whose last major leap was taken at the end of 2016, with the purchase of the PVC plants of the Solvay group (Indupa) in Brazil and Argentina.

The company had already signaled the intention to have a plant in the Northeast region, in the wake of the high investments necessary for the region to reach the levels of universal access to water and sewage services by 2033 foreseen in the framework.

Bahia is the first step in the region, Mr. Russomanno said. “We are looking at Pernambuco and the north of the region, at states such as Rio Grande do Norte and Maranhão,” he said.

The construction of new plants and potential acquisitions, possibly branching into adjacent businesses, are on the company’s radar.

As Valor reported, Unipar studied the purchase of the chloralkali plant of Compass Minerals in Igarassu, Pernambuco, formerly Produquímica, in the first half of last year, but the deal fell apart. Compass Minerals ended up selling the plant, in addition to the chemical units for water treatment in Marechal Deodoro (Alagoas) and Suzano (São Paulo), to Cape Participações for R$236 million. These units will be operated by Chlorum Solutions.

According to Mr. Russomanno, Unipar may seek financing to execute the project in Bahia, but it has enough funds on hand to build the new plant. At the end of March, the company had more cash and cash equivalents than gross debt, with a positive balance (net cash) of R$432.9 million.

Source: Valor International

https://valorinternational.globo.com/
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Sinqia has R$200m for growth plans

Strategy now is to invest in front office solutions

06/06/2022

Even after spending R$420 million on the purchase of NewCon in December and R$79.5 million on Lote45 in January, Sinqia continues to seek new acquisition opportunities to expand the range of software services it offers to financial firms. The focus now, however, is on repositioning the business toward front-office solutions, directly linked to the user interface.

“We want to move out of the kitchen and go to the restaurant window,” said Luciano Camargo, co-founder of Sinqia, who will step down as chief operating officer and take over as chairman. “We will focus more on services such as onboarding, digital signature and digital billing, which are directly related to the financial firm’s relationship with the customer.”

According to the company’s executives, there is still R$200 million in cash for new acquisitions, which will probably be made in the second half of the year. The first half, according to CEO Bernardo Gomes, was the moment to consolidate recent acquisitions, integrating new operations and focusing on increasing revenues.

“This first semester was very much about digesting the acquisitions we made, about understanding how the market looks. We have cash to make another round [of acquisitions] in the second half and continue at this pace. If the moment calls for it, we may also consider making an acquisition in the future,” he added.

Mr. Camargo points out that Sinqia is currently in talks with 200 companies that may potentially be bought. “When we see market trends, we speed up or slow down the conversation with this or that company. It is not a guarantee that it will always work, but it has worked so far.”

To make this strategic repositioning towards front office, the company hired Ricardo Pacheco, a former executive at Itaú, who intends to bring the experience of those who were on the other side of the counter to help Sinqia understand the main needs of banks in a much more competitive environment and in which offering a good digital experience has become a basic necessity for the sustainability of the business.

“We are still scratching the surface, taking advantage of opportunities within the verticals we already work in. The next step is to integrate those solutions. Now it is about generating more value than each company separately,” he said.

Sinqia currently has four main verticals of service: banking, consórcio (buyer’s club), funds and pension plans. Some of its best-known solutions are related to enabling operations, automation of operational processes, accounting controls and interconnection with settlement institutions.

Mr. Gomes comments that there are three main reasons that lead them to make an acquisition. The first is to enter segments in which Sinqia does not yet operate. The second is to gain market share in segments in which it already operates. And the third is to seek companies that offer solutions capable of “horizontalizing” the business that the company already has, integrating the different existing solutions.

“If I take the pipeline of companies we are in contact with, 30% are new segments, 30% mean gaining market share in the segments we already have, and 40% are horizontal opportunities,” he said, revealing that the next acquisition has greater chances of being in this third group.

Besides the integration of solutions, one concern of the executives is to keep their attention focused on fashionable technologies to avoid being left behind in the future. Mr. Pacheco, for example, says he has experience with technologies such as artificial intelligence and blockchain, which are on Sinqia’s radar to expand its portfolio of solutions. In the case of artificial intelligence, the first move in that direction was made by buying Simply in March 2021.

“It does facial recognition and onboarding to ensure that people signing up are who they say they are, keeping all profile data so to reduce risk of fraud. All of this today is already done with artificial intelligence. I hope that in the future we can help the client not only with a report about what has already happened, but also about what is going to happen,” he said.

Regarding blockchain, on the other hand, the company does not have specific advanced initiatives yet, but the executives emphasize that they are monitoring startups working with the technology to prospect opportunities. Sinqia has a Corporate Venture Capital (CVC) program called Torq, in which it looks for startups with business models that complement its products to invest in.

In the first quarter, Sinqia reported net revenue of R$138.9 million, up 103.5% year over year. It was a record number for the company, which means R$555.4 million in annualized values. The adjusted EBITDA advanced 191.7% to R$36.2 million. Net income was R$9.7 million, a 12.4 times expansion in the annual comparison.

Mr. Gomes recalled that in 2013 the company, formerly called Senior Solution, held an IPO with revenues of R$40 million, which seemed very low for a company that wanted to be traded on B3. “Today we have almost R$600 million in annualized revenue with EBITDA of R$144.9 million,” he said.

For the next two years, the cofounder and CEO predicts that the company could double in size. “What we are talking about is to be capable of doubling again in two years in terms of revenue, just as we did in the past, when we increased threefold our size from 2019 to 2021.” Mr. Camargo believes that the 10% market share that Sinqia has today guarantees a “giant” potential for expansion from now on.

Sinqia’s average compound annual growth since 2015 has been around 30% per year.

Source: Valor International

https://valorinternational.globo.com/
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ArcelorMittal expands capacity to serve automotive market, industry

Investment in Brazil totals R$7.8bn after new injection

06/02/2022

ArcelorMittal’s Sabará unit — Foto: Divulgação/ArcelorMittal/Nitro Histórias Visuais

ArcelorMittal’s Sabará unit — Foto: Divulgação/ArcelorMittal/Nitro Histórias Visuais

ArcelorMittal, the steelmaker focused on the automotive and industrial sectors, will expand investments in Brazil by R$144 million, totaling R$7.8 billion. The company has been unveiling new capital injections since early last year.

The new investment unveiled Tuesday will target a production unit in Sabará, in the metropolitan region of Belo Horizonte. This plant started operating in 1917, giving rise to Companhia Siderúrgica Belgo-Mineira. The unit was acquired in the 1990s by the then Arcelor.

According to ArcelorMittal’s statement on Wednesday, the R$144 million investment is aimed at increasing the plant’s production capacity by 35%. The company seeks to offer “high value-added solutions for the automotive and industrial sectors.”

The funds will be used mainly for the acquisition of two new pieces of automated equipment for wire drawing. The company targets the market segment of springs, shock absorbers, screws, fasteners and other industrial products.

“The investment strengthens our position in the Brazilian market and increases the company’s competitiveness in the automotive and industrial sectors. Nine of the 10 best-selling vehicles in Brazil use steel produced at the Sabará unit,” said Jefferson De Paula, CEO of ArcelorMittal Brasil and Aços Longos e Mineração LATAM.

The new products, in the case of the automotive sector, will be used both for entry-level cars and SUVs, the company said.

Mr. De Paula stressed that the increase in the mix of products and solutions will follow the growth of the automotive, tooling and railroad markets, expanding the company’s businesses in this market. Production will be primarily geared to the domestic market. The investment is expected to be concluded by 2024.

The Brazilian subsidiary says that, with the new investment, capital injections in Brazil total R$7.8 billion. Of this total, R$4.5 billion are earmarked to expand Minas Gerais operations.

In Santa Catarina, the company will inject funds to expand the cold and galvanized steel rolling mill. The company is also investing to modernize and improve its portfolio and capacity in the steelmaker in Barra Mansa, Rio de Janeiro.

ArcelorMittal is the largest steel producer in Brazil and makes long and flat steel. Next comes Gerdau, its biggest competitor in long steel for construction and industry. Other competitors are Mexico’s Simec, AVB and Sinobrás (in long steel), Usiminas and CSN (in flat-rolled steel) and Ternium and CSP (in the slab market).

Source: https://valorinternational.globo.com/

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Petrobras hires Bradesco BBI to sell fertilizer plant

State-owned oil company highlights recently launched National Fertilizer Plan, growth of agricultural sector as attractions

06/02/2022

Petrobras's fertilizer plant in Três Lagoas — Foto: Divulgação

Petrobras’s fertilizer plant in Três Lagoas — Foto: Divulgação

Petrobras hired Bradesco BBI as the exclusive financial advisor to sell nitrogen fertilizer unit UFN-3, in Três Lagoas, Mato Grosso do Sul.

In February, the then-minister of Agriculture, Tereza Cristina, announced the sale of the plant to the Russian group Acron for an undisclosed amount. But the deal was canceled due to a lack of governmental approvals, as informed by Petrobras in April.

Among the terms of the deal disclosed Tuesday by Petrobras is the “mandatory and non-negotiable” commitment that the UFN-3 construction works be completed by the buyer.

The document highlights the recently launched National Fertilizer Plan and the growth of the agricultural sector as attractions for the unit. The plant has a projected capacity of 3,600 tonnes of urea and 2,200 tonnes of ammonia a day, with a consumption of 2.2 million cubic meters/day of natural gas.

“The urea production capacity would represent nearly 20% of Brazil’s apparent consumption of urea in 2020,” Petrobras said. Last week, Mato Grosso do Sul Governor Reinaldo Azambuja told TV show Globo Rural that three companies are interested in buying the fertilizer plant, without revealing names. One is said to be Unigel, which already operates in the Northeast region.

Petrobras will also offer a contract to supply natural gas for fertilizer production at the plant as part of the deal, but the item will be optional. UFN-3 is located near the Gasbol gas pipeline, with an interconnection of nearly 4 kilometers already completed.

Petrobras seeks a buyer with equity greater than $300 million or net revenues equal to or greater than $750 million. If it is a financial player, the interested buyer must have assets under management above $300 million. A joint offer may also be accepted, in the form of a consortium of interested buyers.

The construction works began in September 2011 but were halted in December 2014. Construction is 81% complete.

Source: https://valorinternational.globo.com/

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Softys takes over Carta Fabril, becomes leader in Brazilian market

R$1.14bn acquisition was unveiled in October and concluded after approval by antitrust regulator CADE

02/06/2022

Softys, a subsidiary of Chilean group CMPC, took over Carta Fabril, owner of the brands Cotton and Coquetel, on Wednesday and overtook Santher, becoming the leader in the Brazilian market of toilet paper, with a market share close to 30%.

The R$1.14 billion acquisition was announced in October and concluded after approval by antitrust regulator CADE, 15 days ago.

With the deal, the third acquisition by the Chilean group in the tissue paper sector in the country since 2009, Softys Brasil now has 4,000 employees and a production capacity of 370,000 tonnes per year of tissue paper and almost 6 billion units of personal care products in five plants.

Carta Fabril operates two plants, in Goiás and Rio de Janeiro, with a production capacity of 100,000 tonnes per year. The unit in Rio, according to the chief executive of Softys Brazil, Luis Delfim, is today the most modern among the 23 factories of the Chilean group. “This asset was one reason why we decided to make the purchase offer,” he told Valor.

Gonzalo Darraidou — Foto: Silvia Zamboni/Valor

Gonzalo Darraidou — Foto: Silvia Zamboni/Valor

According to the chief executive of Softys, Gonzalo Darraidou, another factor taken into consideration was the possibility of expansion in the two Carta Fabril factories. The projects are already underway and will require about $30 million in investments.

“The idea is to maintain certain [Carta Fabril] brands and enhance Softys brands,” he added, referring to the portfolio analysis that is underway. It is already certain, however, that the Cotton brand of toilet paper will be maintained, given its strength in the Rio de Janeiro market.

According to Mr. Darraidou, efforts are now focused on integrating operations and capturing the relevant synergies that have already been identified. Therefore, today, Softys says it is not evaluating new acquisitions. Despite that, the company has been named as one of the potential buyers of Kimberly-Clark assets to be put up for sale in Latin America.

Softys owns the brands Elite, Kitchen, Sublime, Babysec, and Ladysoft, among others. With the acquisition, plus investments in expansion, it will increase its diaper production capacity to 2.5 billion units per year, similar to that of leaders Procter & Gamble (P&G) and Kimberly-Clark in Brazil.

Source: https://valorinternational.globo.com/

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Spic buys control of Canadian’s farms in bet on solar power

Companies will invest more than R$2 billion in two projects with total capacity of 738 MWp

06/02/2022

Adriana Waltrick — Foto: Silvia Zamboni/Valor

Adriana Waltrick — Foto: Silvia Zamboni/Valor

The Chinese interest in the Brazilian power industry is confirmed with yet another acquisition by Spic Brasil, a subsidiary of the state-owned State Power Investment Corporation of China (Spic), this time in the solar segment. The company bought controlling stakes of 70% in two greenfield solar projects from Canadian Solar and will invest more than R$2 billion. The acquisition is subject to approval by the antitrust regulator CADE.

The plants have a generating capacity of 738 megawatts of power. The largest project, Marangatu, is located in Brasileira (Piauí) and will have an installed capacity of 446 MW. The smaller one, Panati-Sitiá, in Jaguaretama (Ceará), will have 292 MWp of installed capacity.

The plants will be able to generate electricity equivalent to the annual consumption of more than 900,000 homes. Spic operates in thermal, hydro, and wind generation, and this is the company’s first foray into the solar segment in Brazil. Worldwide, the group has extensive experience in the sector. For Canadian, the sale is expected to monetize 2.3 GW of power in scaled solar projects in Brazil.

CEO Adriana Waltrick told Valor that the company intends to be among the three main private-sector players in power generation, with about 10 GW installed by 2025 and growth in renewable sources.

If everything goes right, operations are expected to begin by the end of 2023, increasing net operating revenue by 12% and jumping to almost 4 GW of capacity from the current 3.1 GW, in addition to 1.7 GW of wind and solar in the pipeline.

“Brazil has a great potential in solar and wind. However, we have several goals in Brazil and worldwide to reduce fossil fuels. As a group, we have several goals to neutralize our carbon footprint by 2030,” Ms. Waltrick said.

Of the amount invested, Spic intends to fund 60% with project finance and 40% with equity, split between Spic (70%) and Canadian Solar (30%). The executive understands the current situation of high-interest rate and capital cost increase but considers that this is a long-term investment in a temporary context.

“All the funding is being contracted. We expect to close the deal in the next 90 days, so all funding and equity structures will be advanced”, Ms. Waltrick said.

The strategic partnership between the companies marks Spic’s entry into the solar segment and will lead to a joint venture in the future, the executive said. She knows that at the current moment the production chains of the solar segment are under pressure due to intermittent operations in Asian factories, lockdown measures in China, and the escalating cost of international freight, which can make capital expenditures oscillate.

“The economic situation is challenging in all global logistics and supply chains, and for the power industry as well. But we have brought one of the world’s largest solar implementers, and we are the world’s largest solar operators.”

Because these are centralized generation plants, that is, large, she believes that scale makes the difference in the acquisition of equipment. The choice of technology has not been defined but is in the final phase.

The bet of the Chinese on this asset shows that even in adverse issues, the electric sector is still the crown jewel. Since the purchase of Pacific Hydro, controlled by the government of China, it owns the wind farms Millennium and Vale dos Ventos (Paraíba). In 2017 it bought the São Simão plant for R$7.18 billion. And in 2020 it bought a slice of the thermoelectric projects GNA I and GNA II, in addition to participation in future expansion projects GNA III and GNA IV.

There are many assets in the market for sale — such as hydroelectric plants of EDP, Ibitu, and Rio Energy, among others — and Ms. Waltrick does not deny that she is mulling over new mergers or acquisitions. However, she does not reveal what she is considering. “We are ambitious. We want to look at the sector very carefully.”

Source: https://valorinternational.globo.com/

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Employment picks up again as pandemic pressure eases

Unemployment rate falls to 10.5% in April, to 11.3m people

06/01/2022

The labor market continued to surprise analysts in April. Even though the projections foresee a worsening in the second half of the year, in line with the deceleration of the wider economy, the better-than-expected numbers have already led some to place a positive bias towards unemployment at the end of the year.

According to data from the Continuous National Household Sample Survey (Pnad Contínua), it fell to 10.5% in April from 11.1% in the quarter ending in March, reported the Brazilian Institute of Geography and Statistics (IBGE). Thus, 11.349 million Brazilians are still unemployed in the country.

The result was below the projections compiled by Valor Data, which ranged from 10.7% to 11.2%, with a median of 11.9%.

Compared to the previous quarter, the number of unemployed fell by 5.8% to 11.349 million. This is the lowest level since early 2016. The employed population advanced 1.1%, to 96.5 million people, the highest since records began, in 2012.

Adriana Beringuy, coordinator of IBGE’s Household Sample Survey, pointed out that the growth of the employed population has been spreading among the different economic activities and remained high in the first months of the year, contradicting the expected seasonality.

In her assessment, this shows that the economy is somewhat closer to normality, with less effect of the pandemic. “Information technology activities provided the necessary infrastructure for the economy in this more virtual environment. Now, especially in the second half, other activities have signs in the occupation, such as services,” she said.

Despite the improvement, the occupation level (the proportion of employed people within the working-age population) is still at 55.8%, a far cry from the levels of 57% in 2015 and 58% in 2014.

Caio Napoleão, an economist at MCM Consultores, highlights the fact that the unemployment rate fell despite a rapid recovery in the labor market participation rate. “This drop in the unemployment rate had been occurring very much at the expense of a labor force that remained stable, as well as a participation rate that had been stuck near 62% since the third quarter of last year, seasonally adjusted, one point below the pre-pandemic level,” he said. “Only there was a sharp correction last month, the participation rate came back to 62.7%. Even so, the employed population grew to the point of more than compensating for this,” he points out.

According to Mr. Napoleão, one factor that may have helped the participation rate jump in the month was the return to in-person classes, which led mothers who previously ended up staying at home to care for their children to the labor market. “That is a strong hypothesis, because the participation rate was more lagging for women than men,” he notes.

For Tiago Barreira, an economist at iDados, the market improvement still has some room to grow, given that the labor force has not yet resumed its pre-Covid crisis levels. Still, this trend is expected to lose some strength, given that the participation rate is already close to that seen at the pre-pandemic level – 62.4% currently, compared to 63.7% at the end of 2019.

Mr. Barreira also recalls that the participation rate may stabilize above the levels seen before the pandemic, since, because of issues such as the Social Security reform, which encouraged people to stay longer in the labor market, the participation rate may be on a structural upward trend.

In Santander’s calculations, the monthly unemployment rate fell to 9.4% in April, seasonally adjusted. This is the first time the indicator falls below double-digit levels since December 2015. And, despite predicting a slowdown in job generation in the second half, because of issues such as the monetary tightening conducted by the Central Bank, the April result puts a positive bias to the bank’s projection for the Brazilian labor market. At the moment, the average rate for 2022 is at 12.7%, but already under revision.

The same happens with MCM’s estimate, currently at 10.2%. “These are numbers that still can change, given that recent data signal something better,” Mr. Napoleão said.

On the other end, Tendências understands that the improvement observed in the last few months is “fruit of a return to normality,” and not a change in market dynamics. In a report to clients, economist Lucas Assis considered that the rise in interest rates, as well as domestic political uncertainties and the global slowdown expected in the second half of the year should reverse the current trend, causing the unemployment rate to reach 10.8% by December.

Source: https://valorinternational.globo.com/economy

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