Unemployment rate falls to 8.3% in October quarter

Rate is the lowest for a quarter ending in October since 2014, IBGE says

12/01/2022

Result was below the July quarter, of 9.1% — Foto: Marcelo Camargo/ABr

Result was below the July quarter, of 9.1% — Foto: Marcelo Camargo/ABr

The unemployment rate in Brazil was 8.3% in the October quarter. The result was below the previous quarter, which ended in July (9.1%), and also below the result of the same period in 2021 (12.1%), the National Household Sample Survey (Pnad) Continuous released on Wednesday by the statistics agency IBGE shows. It is the lowest result for a quarter ending in October since 2014 (6.7%).

The result was below the median expectations of 24 consultants and financial institutions consulted by Valor, which pointed to a rate of 8.5% in the quarter ending in October 2022. The figure was also below the floor of the projections, which ranged from 8.4% to 8.7%. In the September quarter, the rate was 8.7%.

The number of workers without a formal contract in the private sector reached a new record: 13.4 million people, with an increase of 2.3% compared to the immediately preceding quarter and 11.8% compared to the same quarter of 2021 (1.4 million more workers).

According to the coordinator of Work and Income of IBGE, Adriana Beringuy, the drop in the unemployment rate is the result of the combination of the continued downward trend observed since mid-2021 and seasonal factors, since the labor market typically improves at the end of the year.

The trajectory of market recovery started in July 2021, recalls Ms. Beringuy, is linked to the progress of the vaccination against Covid-19, and also to the resumption of face-to-face activities, such as services.

The election may also have helped the labor market in the period, according to her, because there was an increase in the number of workers in segments such as other services and information, communication and financial, real estate, professional and administrative activities, which may include people involved in the electoral campaign.

“People who work in electoral campaigns can appear in the other services segment (within associative services, if hired by parties to distribute flyers and propaganda, for example) and also in the information and communication segment — if outsourced,” she said.

Ms. Beringuy clarified that although it is not possible to specifically measure the number of workers in these groups who are involved in election-related activities, it is clear that there has been an increase in the number of people employed in those segments.

The number of workers employed in information, communication, financial, real estate, professional and administrative activities grew 2.8% in the October quarter, compared with the immediately preceding quarter (324,000 more people). The number of people employed in other services, on the other hand, advanced by 4.5% (232,000 people). In the labor market average, the increase was lower, at 1%.

In the three months through October, the country had 9 million unemployed — people aged 14 or more who looked for a job but could not find one. The number indicates a contraction of 8.7% compared with the previous quarter, which ended in July (860,000 fewer people), and a drop of 30.1% compared with the same period in 2021 (3.9 million fewer people). It is the lowest number of unemployed people since the quarter ended in July 2015.

Between August and October, the employed population (employees, employers, civil servants) rose to 99.7 million people, a new record since records began, in 2012. This represents an increase of 1% compared to the period between May and July (1 million more people employed). Compared to the same quarter in 2021, it rose 6.1% (5.7 million people).

The labor force — that is, people aged 14 and older who are employed or looking for a job — was 108.7 million in the October moving quarter, a statistically stable level compared with the previous moving quarter ended in July and up 1.7% compared with the same period last year (1.8 million more people).

*By Lucianne Carneiro — Rio Janeiro

Source: Valor International

https://valorinternational.globo.com/
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EU anti-deforestation law to impact JBS, Marfrig and Minerva

Brazilian meatpackers are unlikely to comply with the requirements of new legislation, an analysis by think tank Chain Reaction Research shows

12/01/2022

Brazilian meatpackers JBS, Marfrig and Minerva are unlikely to meet the requirements of the law that the European Union is expected to pass next week to block imports of commodities linked to deforestation (legal and illegal) occurred after December 2020.

According to an analysis by the think tank Chain Reaction Research (CRR), the law will impact the operating profits of these companies, which also risk paying fines for environmental damages in their chains.

CRR drew estimates with data from alerts of deforestation from the Real Time Deforestation Detection System (DETER), of the National Institute for Space Research (INPE), and not the annual data from the Measurement of Deforestation by Remote Sensing (PRODES), which are typically used by NGOs and companies – INPE only released PRODES data for the Amazon rainforest for the last year.

It also used data from INCRA, and not from the Rural Environmental Registry (CAR), which is commonly used by NGOs and prosecutors.

CRR estimated that the suppliers of the three companies deforested 81,000 hectares after the cut-off date of the European law, including 72,600 hectares within the restriction of the rule. The difference would correspond to deforestation in Cerrado areas which, as the draft legislation stands today, would not be blocked.

In the case of JBS, CRR estimates that 50,000 hectares have been deforested between December 31, 2020 and July 2022 in the supplying farms. In Marfrig’s chain, deforestation is estimated at 18,000 hectares. In Minerva’s chain, it is estimated at 12,000 hectares.

CRR also estimated the damage to earnings reports, since the companies will not be able to export to the EU the meat from cattle from these areas. The impact on overall EBITDA would total 1.8% (JBS), 2.7% (Marfrig), and 5.3% (Minerva).

JBS would lose 0.6% of its EBITDA with these fines, while Marfrig would lose 0.7%, and Minerva, 2.4%. Fines may reach 4% of sales to the EU member state.

JBS criticized the CRR report and the EU law. The company said it is in talks with the EU to “discuss the best strategies” to “ensure the sustainability of the chain,” and that it believes that it could reach that “only with collaboration and technical and financial support to producers, instead of an exclusive focus on blocking.”

For JBS, the CRR “is based on a mistaken methodology” by not using the CAR, as recommended by Imaflora, and by using INCRA databases, which are “not adequate for the analysis in question.” It also said that the CRR “is not transparent” by not “specifying the offending farms, preventing the company from analyzing, clarifying, and acting accordingly.”

JBS said it already monitors direct suppliers and is implementing a tool to extend control to indirect suppliers until 2025.

For its part, Marfrig sent a 17-page letter to CRR in which it detailed the actions of the Marfrig Verde + program to monitor its entire chain until 2025 in the Amazon and until 2030 in the Cerrado. The deadlines are beyond the cut-off date of the EU law. So far, the company already monitors all direct suppliers in the Amazon and Cerrado, 71% of indirect suppliers in the Amazon and 70% in the Cerrado.

Marfrig said that it monitors fires in the Amazon and that when there is overlap with farms, an alert makes it reassess purchases until the situation is clarified.

The company also said that its chain in Mato Grosso, where most of its cattle come from, will be audited in 2023. But its risk map shows Pará as the focus of the greatest risks.

Minerva sent to Valor a four-page document saying that “it is able to meet the most demanding markets and clients” and that its “suppliers operate under the most diverse protocols of quality, health and sustainability from different countries.”

The company affirmed that its goal is to monitor its entire chain in South America until 2030 and that it already monitors all direct suppliers in Brazil and Paraguay. In Colombia, monitoring is at 80%, and in Argentina, at 90%. The company said it provides them with an application, Visipec, to monitor indirect suppliers. And stressed that it was one of the best evaluated in the sector in the last audit of direct suppliers in the state by prosecutors in Pará, referring to 2020.

Marfrig and Minerva declined to comment on the CRR report specifically. None of the three companies cited in CRR’s analysis commented on the impacts that the approval of the law in the EU will have on their businesses.

*By Camila Souza Ramos — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Klabin plans to invest up to $3.2bn as of 2024

Priority is expansion of fluff pulp, a market in which the company is already among the fourth largest in the world

12/01/2022

Cristiano Teixeira — Foto: Silvia Zamboni

Cristiano Teixeira — Foto: Silvia Zamboni

The largest producer and exporter of packaging paper in Brazil and leader in the paper packaging market, Klabin has chosen Santa Catarina State for its next cycle of growth. The investment will start with fluff pulp, used in the production of menstrual pads and disposable diapers, but will also cover paper and packaging.

With three growth projects underway – in Paraná, São Paulo, and Ceará – the company is designing a future expansion round in the state where it already has industrial operations. The plan is to install between 1 million and 1.2 million tonnes per year of additional capacity of different products, such as fluff pulp, sack kraft, and kraft liner, in the Otacilio Costa and Correia Pinto plants, in the next few years.

Klabin does not yet disclose investment forecasts for this new cycle. However, based on similar projects and considering recent inflation which has further affected machinery and equipment costs, market sources heard by Valor estimate that a package with these features are expected to demand investments of $3 billion to $3.3 billion.

Klabin’s management had already indicated its intention to expand the production of fluff pulp. With the Puma I project, in Ortigueira (Paraná state), the company has become the fourth largest in the world in this segment, whose production is concentrated mainly in North America.

“We did not present a proposal about the fluff to the Board of Directors, but we are carrying out studies and we foresee fluff and long fiber as the main products in which the company is likely to invest in the future,” said CEO Cristiano Teixeira at the opening of Klabin Day, on Wednesday.

According to the executive, the risk of global recession has led the company to postpone the discussions about the new growth cycle, so a formal project may be submitted for approval by the board only at the end of next year or the beginning of 2024. Initially, the project was expected to be submitted for approval in the first half of 2023, but the global context has changed. If approved, the investment would start to be executed in 2024, and operate after 24 months.

In the pulp sector, the big bet in the short and medium term is on fluff. According to Alexandre Nicolini, head of Klabin’s pulp business, this type of pulp currently represents 10% of the global market, and specialized consulting firms project an expansion of 3.5% per year until 2040.

Just as it did in the Puma II project, which is in the construction phase of the second paper machine, the MP 28, the plan is to also to execute the new expansion cycle in stages.

According to the initial design, the new fluff pulp line would have priority and an installed capacity of 500,000 to 600,000 tonnes per year, together with a sack kraft machine of 200,000 to 250,000 tonnes per year. The kraft liner investment would come in the second phase.

The forest base to cope with the expansion is estimated at 100,000 to 120,000 hectares and Klabin has begun to prepare it. In Santa Catarina, the planting has begun on an additional 35,000 hectares for the project.

The company plans to invest R$5.4 billion in 2023, of which R$2.2 billion in maintenance and R$1.1 billion in special projects, including Figueira and Horizonte plants, said Marcos Ivo, the company’s financial and investor relations director.

The Puma II project, the largest investment in the company’s history, is expected to receive another R$2.1 billion over the next year. Puma II’s second paper machine, the MP 28, focused on paper boards, will go into operation in the second quarter of next year.

“The modernization or substitution of the Monte Alegre plant boiler is still under study, and we have two alternatives that indicate a lower investment than expected. The forecast is to conclude the studies and submit them to the board of directors for approval during the first half of the year,” said Mr. Teixeira.

If the project is approved, the disbursements planned for 2023 will refer to preparatory works and are already included in the total investment announced for the year.

According to the executive, the company’s sales volume in the next five years will benefit from the new capacities that have already started to operate, increasing the share of corrugated cardboard packaging and paper in the revenues.

“Historically and structurally, the Ebitda of packaging is more resilient and stable, especially in corrugated paper and paper board,” said the executive, adding that, for 2023, the vision for the average price of board in the international market implies at least a double-digit increase.

Given the new projects, the return on invested capital (ROIC) should continue to advance in the coming years, added Mr. Ivo. Between 2016 and 2022, this indicator was 14% on average, compared to 9% in previous years. From 2023 on, the forecast is for an average ROIC above that 14%.

“Looking ahead, we are confident in indicating that the ROIC will be higher as the projects since Puma I mature,” said the executive.

*By Stella Fontes — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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