Analysis: Central Bank’s survey calls into question inflation scenario

Monetary authority is excessively optimistic compared with projections of private-sector analysts

07/08/2022

Central Bank's building in Brasília — Foto: Jorge William/Agência O Globo

Central Bank’s building in Brasília — Foto: Jorge William/Agência O Globo

A survey carried out by the Central Bank with economic analysts before the last policy meeting, in June, and released Thursday morning puts at stake the inflation scenario outlined by the monetary authority, which is excessively optimistic compared with the projections of private-sector analysts.

In the June meeting, the Central Bank’s Monetary Policy Committee (Copom) projected a 4% inflation rate for 2023, the year that until then was the main target for monetary tightening. But the survey carried out days before the meeting shows that few market analysts think this is possible.

The median inflation projection for 2023 collected in the survey with 99 segments of the financial market, was 4.7%, as already unveiled by the Copom in its minutes. But now the survey reveals how the view of analysts is distributed around this median.

The first quartile of projections, that is, the group of most optimistic analysts, pointed to an inflation rate of 4.33%. In other words, less than a quarter of the analysts thought it was possible for inflation to stay below 4.33%. The highest quartile pointed to inflation of 5.1%.

In the June meeting, the Copom concluded that the balance of risks surrounding to inflation was symmetrical. That is, the upside risks to inflation, in relation to what was projected, were balanced with the downside risks.

This is a very different view from that expressed by financial market analysts: 76% identified predominant upside risks in their inflation projections for 2023, while 19% considered the risks balanced.

The divergence between the Central Bank’s and the financial market’s inflation projections, as well as the distinct views on the balance of risks, have repercussions on the credibility of the monetary policy strategy outlined by the Copom.

In practice, Copom is stating, based on its projections, that it will be possible to reach the inflation targets in 2023 without many additional hikes in the key interest rate, which in June was raised to 13.25% per year from 12.75% per year. The policymakers indicated a new hike for August, to 13.5% or 13.75%, and the maintenance of higher interest rates for longer.

The market’s consensus scenario for the economic slack is also more conservative than the Copom’s. The committee projects economic growth this year of 1.7%, higher than the 1.5% then expected in the median of market projections. Even so, the Copom thinks that economic slack will be higher at the end of this year, at 1.8%, compared with 1.5% expected by the market. The greater the slack, technically measured by the output gap, the greater the disinflationary force.

Since the slack estimated by the Central Bank and the market are very similar for the first quarter of this year, at 1.1% and 1%, respectively, the Copom is possibly estimating a higher potential GDP than the market – that is, the Central Bank would have a slightly more optimistic view than the market about how much the economy could grow without pressuring inflation.

Historically, the inflation scenario outlined by the Central Bank was not very different from that estimated by the financial market, but in the last year this divergence has widened. The monetary authority has been systematically projecting lower inflation than the market.

Normally, the inflation projected by the Central Bank diverges less than 0.3 percentage points from that of the market, for the relevant horizon of monetary policy. Last March, this divergence rose to 0.6 points and, as of May, to 0.7 points.

*By Alex Ribeiro — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Nexa starts zinc operation in Mato Grosso

Project received $625m investment, can produce 120,000 tonnes per year

07/08/2022

Nexa, a mining company of zinc and other metals controlled by Votorantim, started this week the operations of a new mine, Aripuanã, in the namesake city, in Mato Grosso. This is one of the largest zinc projects in installation in the world and received investments of $625 million.

In a statement, the company said full production is planned for the second quarter of 2023. Nominal capacity is 120,000 tonnes of zinc equivalent per year, from the processing of 2.2 million tonnes of raw ore.

The new mine is expected to reach commercial production by the fourth quarter of 2022. It is expected to produce between 14,000 and 23,000 tonnes of zinc, 1,600 to 2,300 tonnes of copper, 5,000 to 7,700 tonnes of lead, and 300 to 500 ounces of silver this year. The volumes are subject to the inherent risks of a mine start-up.

The Aripuanã project consists of three main mineralized zones in the region, with an estimated average annual production of 70,000 tonnes of zinc, 24,000 tonnes of lead, 4,000 tonnes of copper, 1,800 ounces of silver and 14,500 ounces of gold. The lifespan of the mine is expected to be 11 years, considering currently estimated mineral reserves.

“Aripuanã is Nexa’s largest investment project in Brazil, which contributes to the social and economic development of the region,” Nexa’s CEO Ignacio Rosado said in the note. “It is also one of the few zinc projects in the world and we are confident that it will be a low-cost mine with a long operating life.”

According to the executive, this is the third major mine in Nexa’s asset portfolio, which strengthens its unique position to meet the growing demand for zinc worldwide. Mr. Rosado took over as CEO of Nexa on January 1st, 2022.

The venture – with underground extraction – is one of the most sustainable mineral projects in the country, says Nexa. According to the company, it has almost 100% water recirculation and the use of dry stacking and cemented paste filling for tailings.

Nexa, which was previously Votorantim Mineração and currently has more than 60% of its capital in the hands of group, has been operating for more than 60 years in the mining and metallurgy segments. The company has operations in Brazil and Peru, headquarters in São Paulo and an office in Luxembourg. Since 2017, its shares have been traded on the New York Stock Exchange. Nexa reported net revenues of $2.6 billion in 2021.

*By Ivo Ribeiro — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Aena studies airport auctions with caution

Higher interest rates, inflation and pandemic aftermath have impact, but group maintains interest in Brazil

07/08/2022

Maurici Lucena — Foto: Ana Paula Paiva/Valor

Maurici Lucena — Foto: Ana Paula Paiva/Valor

Aena, the Spanish airport operator, is still interested in investing in Brazil and is studying to compete in the seventh round of concessions, scheduled for August, said the group’s CEO, Maurici Lucena.

Despite confidence in the country’s growth, market conditions today are more difficult than in 2019, when the company made its first move in Brazil by winning a block of six airports in the Northeast region.

Besides the pandemic aftermath, the scenario of higher interest rates and inflation will impact the pricing of assets, said the executive, in conversation with Valor.

“We are looking with great interest at the seventh round. There are attractive assets. Today we live in a more complex moment than in the past. Monetary and financial conditions have hardened and will harden even more. This evidently affects the valuation of assets and the financing capacity of airport managers. But it is a cyclical aspect, within a 30-year contract,” he said.

Mr. Lucena is on his first visit to the country since Aena took over the six airports in the Northeast, won at an auction in 2019. The operation of the Recife airport, the main one in the block, officially began in March 2020 – exactly the month in which the pandemic arrived most intensely in Brazil.

“We had bad luck at this beginning, which was absolutely unpredictable. The reasonable thing is that this effect will be diluted throughout the 30 years of the concession,” the executive says. Despite still suffering from the impacts of the pandemic, the assets operated by the company in Brazil had a recovery in 2021 above the national average and above the recovery seen in European countries.

By October 2023, Aena’s prospect is to conclude investments of R$1.4 billion in the six airports in the Northeast region. By 2027, this figure is expected to reach R$2.2 billion – without considering maintenance expenses.

Mr. Lucena points out that the investment in Brazil is the first international move the Spanish group executed alone. “In other cases, in the UK, in Colombia, in Mexico, we always went with other partners. Here we entered alone. This shows how much we like Brazil. And we did it [the entry into the country in 2019] with the idea of being just the first step in Brazil. It’s not a sure thing that we will get new assets. Everything will depend on the conditions, but that was our idea,” he said.

Aena is controlled by the Spanish government, which owns 51% of the company’s shares. The remaining 49% are traded on the stock exchange. Altogether, the group operates 46 airports in Spain, including Madrid and Barcelona, and has a stake in 23 international airports (including the six in Brazil).

In the first quarter of this year, the group as a whole carried 43.4 million passengers, a 281.6% advance over 2021 and a 71.9% recovery from the pre-pandemic, 2019 level. For the quarter, Aena reported an Ebitda of €72.6 million, compared to a negative Ebitda of €121.5 million in the same period in 2021. However, the group still posted a net loss of €96.4 million in the quarter.

Mr. Lucena avoids giving details about the group’s plans for the upcoming auctions. Regarding the seventh round, for example, he prefers not to inform which of the three blocks offered is on the radar. In the market, the perception is that Aena has a strong interest in the lot that includes Congonhas (São Paulo), considered the star of the competition and that it may also bid for a block of two airports in the North of the country, where there could be synergies with the current portfolio.

Besides the seventh round of auctions, Mr. Lucena signals that the group will study all the next opportunities that are coming up: the new auction of Viracopos, in Campinas (São Paulo state), of São Gonçalo do Amarante, in Natal (Rio Grande do Norte), and the last round of concessions (which will include Santos Dumont and Galeão, in Rio de Janeiro). “All of them are interesting. When the time is right, after the seventh round, we will look at them case by case,” he says.

*By Taís Hirata — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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High commodity prices have limited effect on trade balance

Contrary to expectations, Brazil’s terms of trade fall even with rising prices abroad

07/08/2022

The expected boost that the rise in commodity prices would give to the Brazilian trade balance in 2022 did not materialize, nor does it show signs that it may happen throughout the rest of the year. Although the prices of products exported by Brazil have grown steadily, the movement happened along with a jump in proportion in the prices of products the country imports.

As a result, the terms of trade, or the ratio between the prices of goods sold abroad and those bought from abroad, fell 9.1% in the first five months of this year compared to the same period last year. Compared to the most recent peak, in June 2021, there was a drop of 13.5%.

In the first months of the year, the combination of a still favorable environment abroad and the war between Russia and Ukraine led the government and investors to adopt an optimistic attitude in relation to Brazilian external accounts, particularly in relation to the trade balance. This optimism rested not exactly on an advance in the volume of products sold, or a depreciation of the exchange rate, but mainly on the improvement of the terms of trade, a scenario similar to that experienced during the commodities boom of 2010.

“A few months ago, the discourse of the government and of most of the market was that there would be a big explosion in the terms of trade, combined with a greater growth in export volumes than in imports. Putting the two together, we would have a gigantic balance. It is visible that the picture today has changed a lot, but many still have a rather benign view,” says Livio Ribeiro, partner at BRCG and associate researcher at the Fundação Getulio Vargas’s Brazilian Institute of Economics (Ibre-FGV).

In June, the trade balance recorded a surplus of $8.8 billion, down 15.4% compared to the same month in 2021. In the year to date, the balance is at $34.5 billion, down 8.2% over the same period last year, reported the Secretariat of Foreign Trade (Secex).

After the data, the Ministry of Economy cut its projection for the trade surplus to $81.5 billion from $111.6 billion. The opposite movement was made by the Central Bank, which raised the balance for 2022 to $86 billion from $83 billion in its latest Quarterly Inflation Report (RTI), released last week.

Paula Magalhaes — Foto: Claudio Belli/Valor

Paula Magalhaes — Foto: Claudio Belli/Valor

One characteristic that differentiates the current commodities boom from other recent moments is precisely the behavior of the price of imports, says Paula Magalhães, chief economist at AC Pastore. “It never happened that import prices went up like that, in general they are more stable. So people always had in mind that moments of rising commodity prices necessarily meant an improvement in the terms of trade,” she says.

According to calculations from the Foundation of Foreign Trade Study Center (Funcex), the price of goods exported by Brazil grew 21.3% in May, compared to the same period in 2021. The price of imported goods, on the other hand, advanced 34.9% in the period.

Looking ahead, the outlook is not good either. First because the surprise activity in Brazil – which may still be boosted by further fiscal stimulus – also means a greater appetite for imports than previously expected. Secondly, because the turnaround in monetary policy by major central banks is likely to put a brake on the global economy.

“Due to the acceleration of import prices, the sharp deterioration in the terms of trade, the [upward] revision of the national economic activity scenario and [downward] revision of the global one, we project a trade surplus in 2022 of $62 billion,” says Funcex’s economist Daiane Santos.

*By Marcelo Osakabe — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Pandemic leads to surge in concealment of assets cases

Lawsuits seek to reach hidden assets of partners of indebted companies

07/08/2022

The pandemic has generated a record volume of lawsuits against indebted companies for concealment of assets. A survey by the Martinelli Advogados law firm shows that, in the Court of Justice of São Paulo (TJSP), 6,731 trials were handed down last year dealing with redirection of collections to partners or third parties, after allegation of fraud. The volume represents a 33% growth compared to 2019 and is double that recorded in the previous year.

This situation, according to experts, occurs mainly in times of crisis. With the increase in defaults, companies in difficulty decide to take irregular measures in an attempt to shield their assets from possible collections. Creditors are then forced to scrutinize the lives of companies and their partners to try and locate assets.

Columbano Feijó — Foto: Divulgação/Omar Paixão

Columbano Feijó — Foto: Divulgação/Omar Paixão

Since the economic crisis of 2008, companies with debts began to adopt more frequently practices to protect their assets, according to lawyer Columbano Feijó, a partner at Falcon, Gail, Feijó e Sluiuzas Advogados. “The pandemic caused this practice to increase again, since some activities were paralyzed, defaults increased exponentially, and many companies in difficulty took irregular measures,” he said.

Today, more than 6.1 million companies are delinquent, according to a survey by Serasa Experian, in May. Of the total, 52.7% are in the service sector. Next come commerce (38.1%), industry (7.9%) and the primary sector (0.9%).

The largest portion of businesses in the red is in São Paulo and are small in size. The delinquency among entrepreneurs, says the chief economist of Serasa Experian, Luiz Rabi, is still likely to continue as long as the economy remains unstable.

According to economist and lawyer Alessandro Azzoni, many companies have closed their doors or are in debt and cannot honor their liabilities. Mainly, he adds, bars and restaurants, which suffered a lot with the sanitary restrictions. “Nobody expected this situation to last for more than two years. And many that were already in debt became insolvent,” he said.

Those companies have now been the target of lawsuits. And when creditors are unable to locate the assets of these debtors, they resort to a provision that allows them to reach third-party assets and hold a partner or administrator responsible for the debt, in case of fraud.

These are cases in which debtors try to hide their assets through irregular asset shielding, many times using straw men. However, getting a favorable decision, in these cases, is not simple, according to Mr. Azzoni. “It’s necessary to prove that there was fraud, that during the execution the company sold its assets or transferred them to third parties in order not to pay its debt,” he said.

According to lawyer Luís Cascaldi, with Martinelli Advogados, who coordinated the research on the Court of Justice site, the higher number of cases reflects the economic crisis generated by the pandemic. These numbers may still be under-reported, because many are kept under the secrecy of justice, so that other creditors do not know about the search and locate the assets first.

To assist in the search for assets, he says that the law firm has used partnerships and adopted technology tools to make dossiers to creditors, of what could be asked for in these cases and if there are chances of recovering those amounts. In these cases, social media have been important, according to Mr. Cascaldi. “In one of the cases we found out that the debtor owned a horse farm, which was in the name of a third party, through a posted photo,” he said.

The possibility of reaching third-party assets in case of fraud is foreseen in article 50 of the Civil Code. The way this procedure should be conducted by the judge is also provided for in articles 133 to 137 of the Code of Civil Procedure (CPC).

When it comes to large economic groups, the actions of concealment of assets become more sophisticated, according to Mr. Feijó, such as the creation of companies with the sole purpose of emptying and hiding assets. In one of the cases in which he acts for a large construction company, he tries to recover more than R$3 million owed by an engineering company for unpaid labor lawsuits, which the construction company had to pay because it was co-responsible.

In the lawsuit, the lawyer says that he has obtained evidence that the debtor acted as a provider of labor services for building construction and is part of a fraudulent group, which includes the creation of more than 20 companies, with the purpose of emptying and hiding assets. He has already obtained an injunction in the São Paulo State Court of Justice to seize the amounts in the companies’ bank accounts until there is a ruling in the arbitration court.

*By Adriana Aguiar — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Analysis: Central Bank have not intervened in exchange rate since May

This offers glimpse of monetary authority’s view over factors that pressure rate

07/07/2022

Policymakers have yet to unveil their view about recent currency swings — Foto: Pexels

Policymakers have yet to unveil their view about recent currency swings — Foto: Pexels

Despite the substantial increase in the foreign exchange rate, the Brazilian Central Bank has refrained from intervening in the market by selling hard currency from its reserves since early May. Brokers told Valor that this is the right strategy, since the recent pressure is linked to global factors and a move to reprice fiscal risks.

The exchange rate has been up 14.2% since May 31, when it closed at R$4.72 to the dollar. The rate closed at R$5.39 to the dollar on Tuesday.

The rate moved without the Central Bank making any extraordinary offering of dollars in the spot or futures markets, besides the typical rollover of maturing currency swap contracts.

Some brokers believe that the Central Bank’s failure to intervene in the market offers a glimpse of the monetary authority’s view over the factors that pressure the foreign exchange rate: this view must adjust to a fiscal risk seen as higher after the federal government and Congress maneuvered to pass measures allowing vote-getting spending and the U.S. Federal Reserve raised interest rates, which impacts the global economy.

According to the official narrative, the Central Bank intervenes in the exchange rate when the market is dysfunctional – for example when there is low liquidity and problems in price formation. But, if history is any guide, the monetary authority intervenes as well to cushion currency volatility – in other words, to minimize currency swings not justified by the fundamentals.

The policymakers have yet to unveil their view about recent currency swings. However, many market players will see it as a natural move if the Central Bank acknowledges that the exchange rate will be impacted by the worsening of the fiscal risk. In addition, the real is now losing ground against the dollar as other currencies did, like the euro, which reached its weakest level in two decades.

If this really is the Central Bank’s view, there will mean a substantial change in relation to what the monetary authority had been saying since three months ago, when more upbeat perspectives for the real prevailed. In early April, when the exchange rate was testing the floor of R$4.6 to the dollar, Central Bank President Roberto Campos Neto even said that the market’s inflation expectations were not fully reflecting the stronger real.

One year ago, the Central Bank’s Monetary Policy Committee (Copom) hopes that a potentially stronger real would help it disinflate the economy. The monetary authority unveiled, in a section of the inflation report for June 2021, that it saw chances of commodity prices falling in reais. Since then, the information is seen as a positive factor in the balance of risks for inflation.

In early April, many economic analysts said that the exchange rate was unlikely to decline in the second half of the year because of the monetary tightening in the United States and the risks linked to the presidential election, to be held in October in Brazil. Later in the same month, the risks of a stronger deceleration in China weighed on the real as well.

When the real was gaining ground, some analysts questioned at some point if the Central Bank should intervene and buy dollars to slow down an appreciation that many people considered temporary. Mr. Campos Neto signed then the opposite, that the Central Bank was ready to act if monetary tightening in the United States caused dysfunctionality in the markets.

The exchange rate is now nearly 10% higher than the level of R$4.9 to the dollar used by the Copom in the inflation projection models in its last policy meeting, in June. But, as far as monetary policy is concerned, the data set, including the likely impact of recent declining prices of commodities in inflation, is what matters.

But some economic analysts have argued that the decline in commodity prices reaches inflation through other channels. One is heightened fiscal risk since a good part of the federal government’s populist fiscal measures is propped up by higher revenues brought by high prices of commodities.

*By Alex Ribeiro — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Demand for professionals drives up salaries in agribusiness

Payment for positions in purchase and supply of fertilizers increased up to 60% amid the Russia-Ukraine war

07/07/2022

The war between Russia and Ukraine has boosted the demand of Brazilian agribusiness companies for professionals who work in the supply area. Under the fear of lack of inputs, the remuneration of those who work directly in the purchase and supply of fertilizers, for example, increased up to 60% in some regions of the country, according to a survey by Fesa Group, a company of executive recruitment and selection.

The movement is already helping to reverse the drop in hiring that occurred at the beginning of the Covid-19 pandemic. The most recent data show an increase in the demand for professionals for this type of position. Companies that operate in the Central-West and North regions are the ones that most seek these professionals for job positions. They are family groups, chemical, fertilizer, and input industries, and distributors, for example.

The demand for professionals for the positions of purchasing or supply manager and coordinator, the strongest, according to the survey, doubled compared to last year. The salaries also went up, between 30% and 40%, on average.

“When it is a position in a remote region or a country town, the increase can reach up to 60%,” says Anderson Schemberg, partner at Fesa, which operates in Minas Gerais, the Central-West and North of Brazil. According to him, there is an expansion in the agricultural regions of Matopiba (bordering the states of Maranhão, Tocantins, Piauí, and Bahia) and in areas of states like Pará, Acre, and Amapá.

Agribusiness companies have also increased their search for specialists, market intelligence coordinators, and professionals in the commercial area. “It is important to remember that these are leadership, managerial, and executive positions. With this analysis, we can assume that operational positions in these areas are also in greater demand,” he added.

Mr. Schemberg believes demand will remain strong at least until 2023. “From the second half of 2021 on there was a boom in demand for professionals in the market to reorganize staff. And there is a lack of specialized labor, from specialized mechanics to personnel for management positions,” he observed.

At Amaggi, the largest domestic capital company in the grain trading and processing segment, the growth of the sector, even with the pandemic, kept the pace of job openings high, unlike what happened in other segments of the economy. From 2020 to May this year, the company hired 1,700 people for permanent positions and more than 4,000 for temporary contracts in practically all units and areas of activity.

Nereu Bavaresco, Amaggi’s chief people officer, said that the challenges have grown since the beginning of the crisis, whether because of restrictions on the circulation of people, the “blackout” in the availability of qualified professionals, or the new requirements for different occupations.

Fesa Group points to the lack of professionals who speak English as one of the gaps in the selection processes. “These are positions that demand a global interface, so the language is a necessity,” explains Anderson Schemberg.

The lack of training led Amaggi to invest in its own initiatives to develop people to fill positions that already exist and also vacancies still to be opened. One of these initiatives is the Amaggi University, which, besides the benefits, salaries, and growth opportunities it has offered, is one more differential of the company to attract professionals to the segment.

“Average pay has risen approximately 15% during this period, and companies are realizing that their fixed labor cost has grown quickly. This is one of the reasons the industry has been investing heavily in state-of-the-art technology. Companies want to reduce their fixed costs and become more competitive, or in some cases, they are simply investing to survive in the global market,” says Mr. Bavaresco.

The salary is one of the attractions for positions in the Central-West and North regions, often occupied by people from the Southeast and South regions. “These professionals have been attracted by the good remuneration and the possibility of improving their quality of life and reducing their expenses,” said Mr. Schemberg. Fesa is currently working on 168 executive selection projects. Of these, 25, or 14% of the total, are vacancies for positions with more demand. “When compared with the same period last year, when we had 19 positions, the growth is 31.5%,” he says.

For multinational company Syngenta, the complexity of the labor market is also an opportunity to create a more collaborative environment with pay equity between men and women. In the recruitment for the different positions in the corporate area, such as human resources, information technology, finance, and communication, the company gives much importance to the background and practical experience. For business positions, such as the commercial, production, sustainability, research, and development sectors, the focus is on more targeted academic training. Agronomists, chemists, biologists, and engineers are among the professionals the company most seeks for these positions.

In 2019, Syngenta made a partnership in Brazil with a leading human resources consultancy specializing in finding the right professional for strategic or highly complex positions. “It is not simple to bring diversity from the market to management roles, for example, but we are focused on the evolution of this,” said the company in a statement.

*By Rafael Walendorff — Brasília

Source: Valor International

https://valorinternational.globo.com/
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Stellantis puts procurement team into action

One of the goals is to develop hybrid cars and develop local sourcing of parts

07/07/2022

Antonio Filosa — Foto: Alexandre Campbell / Valor

Antonio Filosa — Foto: Alexandre Campbell / Valor

Stellantis’s procurement team in Brazil has had a lot of work lately. The automaker corporation that unites Fiat, Chrysler, Peugeot and Citroën needs to advance in negotiations with suppliers to meet two priorities defined by the company’s CEO in Latin America, Antonio Filosa. One part of the conversation involves development projects for the production of hybrid cars in Brazil. The other seeks to increase the local sourcing of parts, especially electronic components, to reduce dependence on foreign countries, especially in Asia.

Mr. Filosa, one of the greatest advocates of Brazil using its knowledge of ethanol to produce hybrid cars, does not reveal dates. But he said that the process of developing new versions of the so-called powertrain of the brand’s cars will begin in Betim (Minas Gerais state), where the company currently has an important production center for combustion engines.

According to Mr. Filosa, Stellantis has engineering and product development teams around the world that are currently working to find solutions to reach the company’s goal of reducing CO2 emissions by 50% by 2030. The Brazilian team was assigned the mission of developing the ethanol hybrid. “We are the only ones in the world capable of developing this technology,” he says.

Stellantis’s position clashes with that of General Motors, which, according to Santiago Chamorro, CEO for South America, in an interview with Valor this week, said he intends to offer in the Brazilian market only 100% electric cars, which depend on charging at charge points. The hybrid, on the other hand, has two engines – a combustion one that helps charge the other, electric – and, therefore, dispenses the batteries charging in electric power sources.

“We will offer the customer whatever he wants, including 100% electric cars. But we will have, locally, the electrification with ethanol, a clean solution since the sugar cane plantation. This is Brazil’s chance to electrify its vehicles without damaging the industry,” Mr. Filosa said. For now, all 100% electric cars are imported.

Stellantis’ goal is to reach 2030 with electric cars in 100% of sales in Europe, 50% in the United States, and 20% in Brazil.

For Mr. Filosa, ethanol “is a very Brazilian answer,” on the transportation side, to the decarbonization process. The rest, he says, is possible through reforestation. “These are simple solutions. We already have ethanol for cars and reforesting a country where it rains a lot is easy. Here is not Dubai,” he affirms.

Stellantis’s second move in negotiations with suppliers has two more fronts. In one of them, it seeks to reduce dependence on imported parts. In recent times, the automotive industry has had to face supply problems due to several factors, ranging from the strong recovery in global demand that followed the peak of the pandemic, to the war in Ukraine, followed later by the lockdowns in China.

Without naming, Mr. Filosa says that a new Asian supplier has already started to manufacture in Manaus components for the navigation and entertainment system of the cars produced by the automaker in the country.

Along the same lines as the expansion of domestic production, Stellantis’s management seeks to attract more suppliers to its plants, especially the one in Goiana, Pernambuco, which currently has 30 suppliers in the surrounding area. By 2025, the company that a year and a half ago became a super-automaker, with the global merger of several brands, has become the leader of the Brazilian market, with 33.6% of sales of cars and light commercial vehicles in the first half of the year. In Brazil alone, the company has three industrial complexes and an engine plant.

“Brazil needs to industrialize more and more to guarantee work and income. If today 65% of the market is in the Southeast and South regions, it is not because consumers in the North and Northeast don’t want or don’t need cars. It is because of the lack of income,” the executive said. For him, industrial decentralization also helps to improve the country’s social indicators, such as education and security.

About the restrictions on the foreign exchange market in Argentina, where Stellantis has two vehicle plants, Mr. Filosa, who was once Fiat’s CEO in Argentina, says the company is analyzing the situation “to understand the impacts.” “We don’t expect, of course, that there will be zero impact,” he says.

Regarding the Brazilian market, the executive says that the pressure of inflation and the high-interest rates worry. But this, he highlights, does not show up in sales yet because the lack of components is a major problem. “For now, the crisis is of supply.” Therefore, for him, the market this year tends not to present growth compared to 2021.

*By Marli Olmos — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Maersk, MSC battle port operators in court

Terminal operators accuse shipping giants of abusive practices

07/07/2022

The conflict came to the fore in recent months, with the auction of a large container terminal at the Port of Santos — Foto: Ana Paula Paiva/Valor

The conflict came to the fore in recent months, with the auction of a large container terminal at the Port of Santos — Foto: Ana Paula Paiva/Valor

The dispute between Brazilian port operators and global shipping giants Maersk and MSC is expected to escalate in the coming weeks. Groups in the sector are preparing a lawsuit that questions the operation of these groups in port terminals in the country.

The companies see abusive practices by shipowners, which could allow them to take over Brazil’s container market. The shipowners push back, saying that there is no evidence of anticompetitive behavior, and that it makes no sense to penalize the companies for being leaders and wanting to invest in their own businesses.

The conflict came to the fore in recent months, with the auction of a large container terminal at the Port of Santos, the STS 10. Companies in the industry want to prevent Maersk and MSC from participating in the bidding. However, the dispute is already beyond this particular project.

The Brazilian Association of Port Terminals (ABTP), which brings together 72 companies, is preparing a lawsuit to question the companies’ actions. “We want to denounce the closing of the market underway because of the dominance of those economic groups,” said Jesualdo Silva, the association’s head.

The association — which has been approaching Brazil’s antitrust regulator CADE, the public spending watchdog TCU and the National Water Transportation Agency (Antaq) — is still analyzing in which sphere it will start the offensive, which may happen in the second half of July.

Maersk and MSC are the two largest container shipping companies in the world. With this, they run a large part of the ships that carry out imports and exports. In addition, they also operate port terminals, which receive the cargo from the vessels, through their subsidiaries — Maersk’s APM Terminals and MSC’s TIL.

Today, APM has two terminals in Santa Catarina (Itajaí and Itapoá) and one in Ceará (Pecém), while TIL operates in Santa Catarina (Navegantes) and Rio de Janeiro (Multi Rio). The two companies are also partners in Santos, in Brasil Terminal Portuário.

ABTP says that the shipping companies, when choosing where to dock the ships, give priority to their terminals to the detriment of other independent ones. “The groups force the cargo to go to their terminals, through anticompetitive and abusive practices, such as the omission or reduction of calls at other ports, or by offering discounts on freight for those who use their terminals,” Mr. Silva said.

The companies push back. In a note, Maersk said that the choice of terminals considers “the combination between competitive prices and operational efficiency.” The company added that in the Port of Santos, for instance, most of the group’s cargoes are handled by an independent operator, not by its own terminal.

Patrício Junior, chief investment officer at MSC’s TIL, denies that shipping groups benefit from their own assets and says that there is intense competition in the market, including between Maersk and MSC. In addition, he says that the shipping companies have partnerships with other shipowners, which would not allow the prioritization of APM and TIL terminals.

A source in the market, who spoke on condition of anonymity, says that the accusation is not based on facts, and says that today, in Santos, there are more stopover cancellations in the TIL and APM terminals than in the independent ones.

ABTP is also targeting port projects being planned (concessions and Private Use Terminals). In this sense, another projected likely to be the target of criticism by the association is the terminal that Maersk intends to build in Suape, Pernambuco. The company has already made an offer to Estaleiro Atlântico Sul (EAS) to buy a plot of land in the port.

The shipping companies also stressed the importance of investments in ports to reduce logistics costs in Brazil. “Those who question us today are the same ones who, 10 years ago, said that BTP [APM-TIL terminal in Santos] would destroy the market, which has not proven to be true. They [the critics] don’t want new terminals so to keep the control of capacity,” said Mr. Júnior, with TIL.

He also says that if today Maersk and MSC have a great weight in the shipping market it is because, in the past years – when shipowners endured a heavy crisis and had to live with tight margins – the groups believed that the market would improve and made investments to grow. “Only those who believed in the business survived. Now, companies cannot be penalized for investing in their own core business. Companies cannot be punished for being good at what they do and having a leading position,” Mr. Júnior said.

In a statement, Maersk advocated the need to expand capacity in Santos and said that “the current capacity does not allow the port to reach its full potential.” In addition, the company said that the expansion will allow the arrival of larger ships in Brazil, which will reduce logistics costs.

In recent weeks, the CADE has already made its first statements on the matter. In an investigation underway at the agency, triggered by the discussions around the STS 10 auction, the technical team rejected a preventive measure requesting a ban on Maersk and MSC from bidding for the terminal. The antitrust watchdog denied it saying that it is not its competence to impose restrictions before the bidding.

However, the agency’s report pointed out that the victory of one of the groups would present competition risks, with potentially “substantial market concentration, of approximately 80-90%” in Santos.

For the industry, CADE’s position in the technical note was a sign that the questionings may prosper in the agency. In the view of Mr. Júnior, with TIL, the denial of the preventive measure was positive. He said that companies cannot be judged by an expectation of behavior that has not materialized in practice.

Antaq said that CADE’s note “will bring greater technical support to the agency’s conclusions as to the need or otherwise for clauses in the call for tender and in the contract ruling out commercial practices or arrangements harmful to competition.” At this moment, the agency is analyzing the contributions received in the auction’s public consultation. In relation to the questionings beyond Santos, the agency says that verticalization is a global trend in the sector, and that its competitive impacts will be analyzed by the agency based on concrete cases.

*By Taís Hirata — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Edenred joins POS terminal market in Brazil

French company owns Ticket, one pioneer in replacing paper meal vouchers with cards in the country

07/06/2022

Cristiane Nogueira and Emmanuel Guinet — Foto: Divulgação

Cristiane Nogueira and Emmanuel Guinet — Foto: Divulgação

French company Edenred knows well the Brazilian card market and its users. It owns Ticket, one pioneer in replacing paper meal vouchers with cards, which has been operating in the country since the 1970s, and in other corporate benefits developed in the meantime. But, until now, their cards were used through third-party point-of-sale terminals. Now Punto wants to change this.

A year ago, the company started a card-acquiring pilot in Brazil, which is of considerable size – there are 6,000 stores using the POS terminal, which is now, officially, an Edenred business.

“For some years, the group has been thinking about complementary businesses to what it already has to improve our ecosystem of products and services with sellers,” Emmanuel Guinet, general manager of Punto Latam, told Pipeline, Valor’s business website. “We bought a company in Mexico years ago, but it took time to show the relevance of being acquirers and issuers.”

In Mexico, the POS terminals are in all the gas stations that take Edenred’s fuel cards. In Brazil, the proposal is similar. Punto wants to be the POS terminal for 500,000 businesses that take its cards in the country, including restaurants, markets, workshops and gas stations. The terminal also takes Visa, Master and Elo cards.

Edenred has picked Cristiane Nogueira to run the business as the general director of Punto Brasil. The executive was previously chief product officer at SafraPay and chief business and commercial officer at Getnet. In a market that became known for “the POS terminal war” due to the pressure to undercut rivals, Edenred defined one thing: Punto will not compete based on the final price.

“We are not joining the card-acquiring market to wage a price war, but with the proposal to be the best offer for a single terminal and an option for shopkeepers,” Ms. Nogueira said. According to Mr. Guinet, Punto wants to be competitive, but it does not mean that it will be the cheapest one. The company declined to unveil its fees.

In a difficult moment for card acquirers like Stone and PagSeguro, the executive argues that the market is still growing. Last year, card transactions increased 33% in Brazil and totaled R$2.65 trillion, according to the Brazilian Association of Credit Card Companies (Abecs). In the first quarter, the increase was 36%.

In the pilot project, the company tested its technology and how practical the POS terminal was, with adjustments according to customer demand – such as a larger screen and key tones. “We invested in technology, in the connectivity of the terminal, to have a fast system that does not cause queues in the stores. It runs on Android, which enables the use of several other solutions like Pix, QR code, wallet,” Mr. Nogueira said, citing the possibility of payments in cryptocurrencies in the future. Pix is Central Bank’s instant-payment system launched in late 2020.

Factoring of receivables for businesses started with the pilot project, with credit lines with financial partners. Edenred operates in 45 countries, but card acquiring services are only in Mexico and Brazil for now. Here, it also operates the Ticket Log, Repom and Edenred Pay brands.

*By Maria Luíza Filgueiras — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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