Glassware manufacturer holds less than 1% market share in the U.S.
03/11/2024
“Copo americano,” or “American glass cup” is one of the company’s hallmark products in Brazil — Foto: Divulgação
A leader in the Brazilian glass household utensils market, the century-old company Nadir—formerly known as Nadir Figueiredo, which dropped its founder’s surname two years ago—is aiming to boost its exports to the United States following the expansion of its plant in Colombia.
As a potential candidate for an IPO on B3 and currently under the ownership of the private equity fund HIG, the owner of the Duralex and Marinex brands and the maker of Brazil’s traditional copo americano (“American glass cup”) holds less than 1% market share in the U.S. However, it is optimistic about increasing that to 3% by 2025 through adjustments to meet customer preferences.
In Brazil, one of the company’s hallmark products, the “American glass cup”—which, despite its moniker, is Brazilian and was launched in 1947 by Nadir Figueiredo designed for the tropical climate with a 190 ml capacity, crafted to keep beer chilled—is not expected to be the main export to the U.S. “Americans prefer larger glasses since everything is served in bigger portions there,” stated CEO Patrício Figueiredo, a descendant of the founding family, who is no longer a shareholder following the sale to HIG.
A key strategy for expanding in the U.S. market is leveraging its operations in Colombia. By acquiring Colombian Cristar in 2021, a glassware company previously part of the American O-I Glass group, Nadir has taken advantage of tax benefits for exports to North America through bilateral treaties. “In Brazil, the export tariff to the American market is 28%, but it’s zero from Colombia,” Mr. Figueiredo explained.
Colombia represented 22% of Nadir’s revenue last year, with approximately 70% of its Colombian production now destined for international markets. The country’s geographical advantage of access to the Pacific Ocean and the Caribbean Sea is also beneficial. “We have added two more production lines at the Colombian facility, which should boost the furnace’s capacity by 17%.”
Exports constitute 25% of Nadir’s sales, a figure expected to rise given the U.S.’s consumption potential. The company’s revenue reached R$2 billion last year, marking a 2% increase from the previous year. Nadir caters to both end consumers and the B2B market, being one of the top producers of curd cups, for instance.
In Brazil, the focus for 2024 is on enhancing online sales, which currently account for 0.5% of total sales, especially after the launch of its own e-commerce platform in January for direct consumer sales. “We previously had an e-commerce operation through a marketplace with partners, but we’ve now chosen to bring the operation in-house,” Mr. Figueiredo said.
The company, celebrating its 112th anniversary this year, had previously gone public but delisted in 2020. In 2021, Nadir filed for an IPO but withdrew due to deteriorating market conditions. Now, it is among the firms considering a return to the stock exchange after a two-year hiatus with no new listings on B3.
Investments aim generation expansion and transmission auctions; most of the funds will be in the Northeast region
03/11/2024
Amount corresponds to investment in large generation plants, of which 34% are related to renewable sources, such as wind and solar — Foto: Pixabay
After attracting $35 billion (R$ 175 billion) in already contracted investments for decarbonization in 2023, Brazil is preparing for a new cycle of multi-billion-dollar investments between this year and 2026. The electricity industry will require around R$225 billion in new investments to enable the expansion of generation and transmission networks to deliver power to all regions of the country.
The study was carried out by energy research company Empresa de Pesquisa Energética (EPE), linked to the Ministry of Mines and Energy, which mapped the main investments announced and planned to meet Brazil’s electricity needs.
To enable the expansion of generation in the Ten-Year Energy Expansion Plan (PDE) reference scenario, until the year 2031, R$192 billion should be raised by the end of 2026.
The amount corresponds to investment in large generation plants, of which 34% are related to renewable sources, such as wind and solar, currently the drivers of the Brazilian electricity sector growth. The capital expenditure should be made, primarily, in the free energy market, a segment in which consumers can choose a supplier and sign agreements according to source, term, or price.
The other 66% encompasses technologies such as the mandatory implementation of natural gas thermal plants with mandatory power generation 70% of the time, on average (which does not allow flexibility), according to Law 14,182, which authorized the privatization of Eletrobras.
Additionally, they include other plants with the ability to adapt to energy demand, which plays a key role in meeting demand at peak times, designed to support the use of intermittent sources such as wind and solar. This support aims to ensure the continuous supply of energy from renewable sources, meeting electricity demand at any time of the day or night.
In this context, electricity transmission infrastructure plays a pivotal role in increasing the flow margin of renewable generation to consumer centers, improving regional service in the states, and improving reliability and continuity in energy supply to the different regions of the country. In 2023 alone, Brazil contracted R$37.5 billion in projects through two auctions.
For future projects, EPE has pointed to works to be authorized in auctions expected to result in R$32 billion in investments by 2026 for the construction of 9,000 kilometers, in addition to substations. Most of this total, equivalent to R$23 billion (or 72%), is planned to be allocated in bids scheduled for March and September 2024.
The Northeast region accounts for almost half of the planned investments, reaching R$ 15 billion, 49% of the total. The allocation of such funds aims to expand the capacity to transport surplus energy and improvements in the Southeast region, the country’s largest consumer center.
The study was coordinated by Thiago Prado, president of EPE, jointly with Renata Carvalho, advisor for EPE’s Electric Energy Studies Department. According to them, the plan outlines guidelines for public policies aiming to explore integration in the system expansion as demand grows.
“Given the expected auctions for contracting transmission networks, the maturing of the capacity market that adds energy security and the adoption of new technologies, as well as the continued expansion of renewable energies and the growing interest in hydrogen, Brazil continues to be a reference in renewables and new projects in the world,” Mr. Prado said.
“The integration of power generation and transmission planning is a key element for the renewability of the Brazilian electrical mix, providing safety and reliability, at the lowest cost for consumers,” Ms. Carvalho added.
On the other hand, Luiz Barroso, CEO of PSR consultancy, notes that the thermal electric plants included in the Eletrobras privatization law are considered riders—provisions added to a bill having little connection with the subject matter—that could be costly to Brazilians.
“The amount of investment is substantial, which shows Brazil is a great country to receive direct capital flow,” he said. “On the consumer side, every investment increases the electricity bill, and investments that are not economically proven from a planning perspective will end up increasing the cost of energy for consumers.”
Companies are already preparing to get projects off the ground. The most recent announcement was made by energy company Casa dos Ventos, with more than R$12 billion to be allocated by the end of 2026 to support its business expansion cycle. The company’s plans also include approving the first solar projects, which should total around 1 gigawatt of installed capacity.
Chinese money is expected to flow to Brazil from state-owned companies, especially State Grid, which won 80% of the last transmission auction. The agreement is expected to be signed in April, with investments exceeding R$18 billion.
Brazilian state-owned Petrobras is looking for ready-made renewable energy projects to “buy time” in the energy transition. The oil giant is currently studying 45 memorandums of understanding. The company recently signed a partnership with equipment manufacturer WEG for the development of the wind production chain in Brazil.
Alexandre Silveira, minister of Mines and Energy, said that in March 2024 the department will carry out another mega-auction, which, added to the competitions held in 2023, should total more than R$60 billion in the expansion of the transmission network. According to the ministry’s calculations, each real injected into this infrastructure should result in R$3 in investments in renewable generation, especially in the Northeast.
“We will bring more dynamism to the investment environment in the coming years. Brazil is one of the most attractive markets to invest in the energy transition, given the quality of its energy resources, and also thanks to its regulatory stability and legal security,” Mr. Silveira said.
The financial viability of projects brings uncertainties, as it is a capital-intensive industry. Therefore, development banks should play a pivotal role. Luciana Costa, director of Infrastructure and Climate Change at the Brazilian Development Bank (BNDES), emphasizes that the bank is the main global supporter of renewable energy projects, with expertise in the sector, being committed to support initiatives. In this context, the bank’s main funding route will remain focused on renewable energy for the free energy market.
“The transmission sector is mature, proven, and capable of obtaining funding on its own at competitive costs. However, Brazil is a volatile country and sees the capital market constantly opening and closing. Therefore, the bank is preparing to provide funding. In 2023, BNDES approved R$20 billion in operations encompassing energy transmission, distribution, and generation, including gas thermal plants. The exception is coal projects,” she said.
Another issue is that many institutions require projects to have long-term agreements as a guarantee, while the BNDES does not include such a condition. The bank has adopted capital market instruments, helping to attract private investment, and chooses to co-finance projects to share risks. “At times when the market is closed, as we saw in the first half of 2023, we enter and make a large funding with our own funds,” Ms. Costa adds.
According to James Ellis, the head of research for Latin America at BloombergNEF, Brazil accounted for 82% of total new investments in clean energy in Latin America in 2023, attracting $25.4 billion. This combination of investments is focused on renewable energy and electrical network infrastructure (transmission and distribution). Thanks to the substantial volume of investments, the country has an extensive pipeline of renewable projects backed until 2030.
China accounted for 49% of shipments, Ibá industry association’s study reveals
03/11/2024
Paulo Hartung — Foto: Gladstone Campos/Divulgação
The largest pulp exporter in the world, Brazil continues to post record highs in the planted forest sector. Last year, the country exported 18 million tonnes, considering all types of raw material, with almost half, or 49%, shipped to China. It was the largest purchase of Brazilian pulp ever made by the Chinese, both in volume and revenue.
In volume, Brazilian pulp shipments to China reached 8.9 million tonnes last year, generating $3.8 billion in foreign exchange. Of the total amount of fiber exported by Brazil, another 24% was shipped to Europe—which once was the largest market for the Brazilian product—and 14% to North America. The data was released by the Brazilian Tree Industry (Ibá), the association representing the planted tree production chain, in a bulletin with statistics for both the fourth quarter and consolidated year 2023.
According to Ibá, Brazilian pulp exports have doubled in the last 10 years and the sector currently accounts for the fifth item in the agribusiness export balance. “We have the challenge of maintaining and opening new markets. In addition, coordinating a new cycle of productivity growth for our planted trees,” said Paulo Hartung, Ibá’s executive president.
Brazil is expected to continue posting record highs in the industry in the coming years, in the wake of a robust portfolio of expansion projects not only in the pulp market but also in paper, wood panels, and forest planting. In the second half of the year, the sector had an investment portfolio of R$61.9 billion until 2028, of which R$22.2 billion was related to Suzano’s Cerrado project.
With 2.55 million tonnes of installed capacity, the company’s new plant, located in Ribas do Rio Pardo, Mato Grosso do Sul, will enter into operation by the end of June. The Cerrado project is expected to produce 900,000 tonnes this year, with sales of 700,000 tonnes. The volume will be exported, mainly to China.
Chilean company Arauco is also investing in the sector in Brazil. Its first pulp plant in Brazil, in the city of Inocência, Mato Grosso do Sul, will receive R$15 billion in investments and could produce 2.5 million tonnes per year. The start of operations is expected for the first quarter of 2028, with a second stage of the project expected in the future.
Another Chilean company, CMPC, has just concluded an allocation of R$2.75 billion in the Guaíba plant, in the Porto Alegre Metropolitan Region, marking the second-largest private-sector investment ever in the state of Rio Grande do Sul. The BioCMPC project is aimed at updating the plant, expanding its production capacity, and making it more sustainable. In addition to the 18% expansion in pulp production capacity, or an additional 350,000 tonnes from 2024 onwards, the project will result in reducing costs and cutting greenhouse gas emissions.
In 2023, according to Ibá, Brazilian pulp production reached 24.3 million tonnes, slightly below the volume produced in the previous year. The drop was due to adverse market conditions, especially in the first half of the year, when international prices for eucalyptus pulp reached record lows.
In this scenario, Suzano, the largest pulp producer in the world, announced in June it would reduce its production volume by 4% relative to its production capacity—10.9 million tonnes of pulp by the end of 2022.
From January to September, the Brazilian fiber production totaled 18.1 million tonnes, down 2.8% year-over-year. Exports were 13.7 million tonnes, 3.6% lower, with apparent national consumption stable at 4.5 million tonnes.
Government signals of extra dividends and spending pressures challenge domestic sentiment
11/03/2024
Fernando Siqueira — Foto: Celso Doni/Valor
The calm that has prevailed in domestic markets in recent months has given way to a deterioration in risk perceptions.
The absence of extraordinary dividends from Petrobras, President Lula’s request for more credit from state-owned banks, and his desire to discuss an increase in the spending limit weighed on Brazilian assets last week. The sum of these factors increased investors’ mistrust of the government’s future handling of economic policy.
There was already some uncertainty in the air before Petrobras’s balance sheet was released on Thursday. However, this was contained as Brazilian assets underperformed their peers. On Friday, however, the deteriorating risk sentiment spoke louder. The blow to Petrobras shares, which fell around 10%, dragged Brazil’s benchmark stock index down—the Ibovespa fell 0.99% that day and 1.36% in the week, to 127,071 points. The foreign exchange rate gained 0.97% in the session to R$4.9816 per dollar due to capital outflows.
“The market is already used to this kind of talk from the government, but this time it came in the form of an attitude,” said Cesar Mikail, variable income manager at Western Asset, referring to the announcement that Petrobras will not pay extraordinary dividends for now. “And after the event, you always put something in the price for the company. Now the market can increase the asset’s discount rate, which is reflected in share prices.”
Concerns go beyond the Petrobras effect, however, as agents look at the macro context. President Lula’s comments signaling an increase in spending and the deterioration in the president’s rating measured by an IPEC survey have fueled the climate of uncertainty in the market. The perception of increased fiscal risk caused long-term interest rates to rise on Thursday and Friday, contrary to what happened abroad. The rate on DI contracts maturing in January 2027 rose to 9.97% from 9.905%, and that for January 2029 rose to 10.435% from 10.34% at the close of trading.
“There were doubts about whether the government would respect market laws or be more profligate; whether it would interfere in state-owned companies or not. So far, it had been less bad than expected,” said Daniel Delabio, partner and manager at Exploritas, citing respect for the Central Bank’s autonomy and the maintenance of the inflation target at 3% per year. “Now that the government seems to be getting closer to the [fiscal] target, Lula is taking the position that he wants to change it so he can spend more. If you look at this and the Petrobras decision, it creates an environment of risk aversion.”
Economist Yara Cordeiro of Novus Capital agrees. She highlights the fiscal impact of Petrobras’s decision, as a significant portion of the state-owned company’s dividends would go to the government. “The budget doesn’t provide for extraordinary dividends, but even so, everyone was counting on it being something that could help. In addition, there are doubts about the funds that were expected via CARF,” said the economist in a podcast, referring to the reinstallation of the casting vote, which tends to favor the government in the Tax Appeals Administration Council (CARF).
“We had expectations, at least on the government side, that there would be no resistance from Petrobras to reach an agreement with CARF. The amount expected to be paid to the government was quite significant, possibly reaching R$30 billion … With this setback suffered by the minority shareholders in the decision on dividends, the agreement now seems more distant and may face more resistance within the board of directors,” he said. “Not to mention that it was perceived as an attempt by the government to interfere in the company.”
Fernando Siqueira, head of research at Guide Investimentos, recalled that the issue has been discussed since the 2022 election cycle. “But [Finance Minister Fernando] Haddad managed to avoid it. Now we are seeing signs of a more negative path, and this should be on the radar of investors, especially local ones, who are looking at the political issue with a magnifying glass and are starting to fear what might happen.”
For Luiz Fernando Araujo, managing director of Finacap, recent events show that the risk of investing in state-owned companies has increased. “It has even increased for some privatized companies. We saw, for example, how the government tried to influence the choice of Vale’s CEO.”
Por Augusto Decker, Arthur Cagliari, Victor Rezende — São Paulo
Surging interest rates combined with a decline in agricultural commodity prices have prompted an increasing number of sector companies to seek renegotiations with creditors
03/08/2024
Douglas Bassi — Foto: Fernando Martinho/Valor
Agribusiness, heavily leveraged, has emerged as a key player in the country’s debt restructuring processes, with numerous producers facing the dual challenges of high costs and price pressures on certain commodities. With the yellow light on, ways to alleviate the problem are being studied, including capital market mechanisms. The imminent need for cash by the companies most burdened by the cost of debt is already drawing the attention of funds specializing in alternative investments, the “special sits,” which are already analyzing opportunities in the area.
The challenging outlook contrasts with the country’s sector’s progress last year. The Gross Domestic Product (GDP) of agriculture grew by 15.1% and was the main driver of the 2.9% expansion of Brazil’s GDP.
A study by Virtus, a company specializing in corporate restructuring, reveals the situation. Using only companies listed on the stock exchange, the snapshot shows a drop in cash generation and an increase in the level of indebtedness, sounding alarm bells.
The earnings before interest, taxes, depreciation, and amortization (EBITDA) margin, an important profitability indicator that shows the ratio between a company’s cash generation and its net revenue, decreased from an average of 14.4% at the end of 2021 to 7.4% last year. Leverage, which represents the extent to which a company’s debt exceeds its annual cash generation, however, moved in the opposite direction, with an increase of 87%, to 3.1 times in the same period, according to the survey conducted at Valor’s request.
Of the companies analyzed in the study, 60% now have leverage above three times, which is generally one of the metrics observed for breaching covenants (financial obligations determined in a contract).
Douglas Bassi, a partner at Virtus, highlights that the price of commodities is a key factor in the financial health of agribusiness. Faced with the current scenario, Virtus has seen an increase in inquiries from producers who are experiencing financial difficulties. “The trend continues,” he noted.
The situation for non-listed companies is even more challenging. “Listed companies have easier access to capital, currently at an average cost of CDI plus 2%. But across the sector as a whole, the spread is much wider,” he explained. According to sources consulted by Valor, many rural producers have become indebted in recent years, investing the funds in expanding their land holdings during a period of high commodity prices. A significant number utilized Fiagro, investment funds that focus on the agricultural sector. However, a portion of these producers are now struggling to meet their payment obligations under their contracts.
The rising number of requests for court-supervised reorganization in agriculture underscores the issue. Data from Serasa Experian released on Thursday (7) shows that last year, requests for court-supervised reorganization from rural producers surged by 535%. Experts consulted by Valor indicate that the situation is deteriorating.
Consequently, some Fiagros have had to notify their shareholders of the non-payment. Galapagos Capital, for instance, had to report on the court-supervised reorganization of Grupo Elisa, owned by the Mitre family, involving an Agribusiness Receivables Certificate (CRA). The asset manager informed shareholders that it was “collaborating with the other creditors of the CRA to protect the fund’s interests.”
Elisa Agro stated that “court-supervised reorganization was deemed the best course of action in light of the macroeconomic challenges that have affected the company’s operations in recent years.”
“The company is confident that, in collaboration with its advisors and creditors, it will formulate a viable restructuring plan that aligns financial obligations with cash flow, ensuring the sustainable continuation of operations and the preservation of thousands of jobs,” it announced.
Another example is the Vectis Datagro Crédito do Agronegócio fund, which has declared it will call for the early maturity of Brasil Bio Fuels’ CRAs, as the latter sought judicial protection against debt collection. Brasil Bio Fuels explained that its application was for an emergency injunction “aimed at securing a 60-day window to negotiate a mutually agreeable resolution with its principal creditors.”
Mr. Bassi from Virtus recalled that many Fiagros were initiated during a period of lower interest rates and higher commodity prices in Brazil, a scenario that has since shifted on both accounts. According to January data from ANBIMA, there are now 98 active Fiagros, with net assets totaling R$36.4 billion—up from nine funds in August 2021.
In some instances of court-supervised reorganization in Mato Grosso, for example, trial court judges have rejected land as collateral for loans, supporting the argument that the asset is indispensable. This issue is being closely monitored by asset managers, who have started to anticipate problems.
Roberto Zarour, a partner at Lefosse’s Restructuring & Insolvency practice, notes that the agribusiness sector’s demand for judicial recoveries and restructurings has increased this year, marked by significant cases, indicating a strong trend. “The Selic rate is decreasing, yet it remains quite high. That has affected the more vulnerable companies, particularly those with bank debt in the capital markets,” he noted. He also highlights that many of these renegotiations have occurred outside the judicial realm.
In the financial market, various structures are under consideration to both capitalize and prolong the maturities of these producers. One method being discussed involves utilizing Fiagro itself to consolidate current debts and repackage them with different terms, extending the duration. Another approach, considered by special sits, involves leasing land; the fund purchases the land and establishes a long-term lease with the producer.
Rodrigo Aguiar, from Íntegra, a firm specializing in corporate restructuring, describes the most critical situations among soybean and corn producers who incurred debt for investments and were subsequently walloped by increasing interest rates and declining commodity prices. Ethanol producers with minimal sugar exposure are also facing difficult times.
Mr. Aguiar mentions that many creditors, initially lenient during the pandemic, are showing patience. Another challenge, according to him, involves negotiations with capital market creditors, who, as dispersed debt holders, are less familiar with the agricultural sector’s volatility. “Many producers were caught at an inopportune moment, at the height of their investments, before seeing the outcomes of these investments,” he explained.
Identifying opportunities in the market, ARC Capital is exploring lending to agribusiness under the Debtor-in-Possession (DIP) modality, within a court-supervised reorganization framework, shares partner Sérgio Firmeza Machado. “We’re examining some cases involving producers of soybeans, cotton, corn, and ethanol,” he said.
Company announces ordinary dividends of R$14.2bn, posts net earnings of R$124.6bn for 2023
03/08/2024
Jean Paul Prates — Foto: Leo Pinheiro/Valor
State-owned company Petrobras confirmed on Thursday night (7) what investors have been fearing and said it will not pay extraordinary dividends for the fourth quarter of 2023. The company announced the distribution of ordinary dividends of R$14.2 billion, following the calculation of 45% of free cash flow. The dividends correspond to R$1.09894844 per preferred and common share and will be paid in two installments, in May and June. If the proposal is approved at the shareholders’ meeting scheduled for April 25, the total dividends to be paid by the company for the year 2023 will be R$72.4 billion, considering the advances made over the past year.
The market’s reaction to the oil giant’s decision not to pay extraordinary dividends should be a point of attention on Friday (8). On Thursday (7), the news that there would be no additional dividends made the company’s shares fall by around 10% in post-market trading at the New York Stock Exchange.
Last week, the company’s shares fell following statements by CEO Jean Paul Prates indicating that investments in energy transition would require the company to be conservative in paying dividends.
Valor found that Petrobras’s management board proposed the payment of extraordinary dividends, half of which would be allocated to capital reserve and the other half to shareholders. However, the proposal was not approved by the board of directors in a meeting that lasted into the night. The reason, according to people familiar with the matter, was concerns that the company would run short on cash to execute the 2024-2028+ strategic plan, which focuses on projects related to energy transition.
“The approval of the dividend is compatible with the company’s financial sustainability and is in line with its commitment to generating value for society and shareholders, as well as the best practices of the global oil and natural gas industry,” Petrobras informed in a note.
The meeting’s agenda also included the approval of the company’s results, with net earnings of R$124.60 billion in 2023, 33.8% less than in 2022. Net revenue fell 20.2% last year compared to 2022, to R$511.99 billion, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) fell 23% in annual comparison, to R$262.23 billion.
In the fourth quarter, net earnings were R$31.04 billion, below the average of six firms surveyed by Valor, which pointed to a R$34.1 billion bottom line for the period. Net revenue in the three months ended in December fell 15.3%, compared to the same period last year, to R$134.26 billion, above the average estimated by analysts, of R$128 billion. Adjusted EBITDA was R$66.85 billion, 8.5% down year-on-year and below analysts’ estimates of R$70.2 billion.
The meeting revealed the split in the board and the isolation of the CEO, who also has a seat on the board. Of the 11 board members, the five directors linked to Mines and Energy Minister Alexandre Silveira plus Rosângela Buzanelli, representing employees, voted against the payment of extraordinary dividends. Mr. Prates abstained and the four minority members voted in favor of the additional payment.
The capital reserve was approved in October to ensure funds for the payment of dividends, interest on equity (and their respective advances), buybacks, absorption of losses, and incorporation into the shareholder’s capital. The company’s executive board and the government have been defending lower dividends to back renewable energy projects.
“We recognize that energy transition will occur gradually and, therefore, we will continue to invest in oil and gas exploration and production, the segment generating the highest returns … We will also generate value with a fair and responsible transition, diversifying our operations into profitable low-carbon businesses and always prioritizing partnerships,” Mr. Prates said in a message attached to the financial report.
*Por Fábio Couto, Kariny Leal, Rafael Rosas — Rio de Janeiro
Social Communication Minister Paulo Pimenta spoke about Genial/Quaest poll; 35% rated government positively and 34% negatively
03/07/2024
President Lula — Foto: Cristiano Mariz/Agência O Globo
Social Communication Minister Paulo Pimenta acknowledged on Wednesday that President Lula’s drop in popularity in the Genial/Quaest poll released on Wednesday (6) is related to his comments on the war in Gaza.
Weeks ago, President Lula compared the situation of the Palestinian people to the Holocaust, as the mass murder of Jews by the Nazis in World War II became known.
Despite this, Mr. Pimenta downplayed the results of the poll, stating that they were “not surprising” to the Lula administration and that the polls had not yet “reflected” any alleged change in Brazilian society’s perception of the massacre against the Palestinians. “We are not going to stop denouncing this issue [the war in Gaza]. We’re not going to change our opinion of Israel because of a cyclical issue. The poll was conducted on February 24, and since then the scenario has changed. I understand that the poll reflects an analysis of our position [on the Israel issue], but over time there has been a greater understanding of President Lula’s comments,” he argued.
The opinion poll released today shows that President Lula begins the second year of his term with a positive evaluation of his government at 35% and a negative one at 34%. Of those interviewed by the institute, 28% consider the administration as average, and 3% did not respond. However, in December 2023, 36% had a positive evaluation of the Lula administration, and 29% had a negative one. Another 32% stated that the administration was average.
Among respondents, evangelicals have the most negative perception of the Lula administration: 48% rate the government as negative and 22% as positive. Among Catholics, 42% view the government positively and 28% negatively.
For a while, it looked like carmakers were about to give up production in the country
03/07/2024
Stellantis’s unit in Goiana: carmaker announced an investment of R$30 billion in Brazil over the next five years — Foto: Divulgação
For a while, it seemed as if carmakers were on the verge of abandoning production in Brazil. At least, that’s what some facts indicated at the beginning of the decade.
The most striking was that of Ford, which decided to close all its factories in the country between 2020 and 2021. Then Mercedes-Benz also closed the car factory it had built in the state of São Paulo, arguing that the facility could not accommodate the most modern lines of cars of a new era, that of electrification.
Also in 2020, Audi decided to stop production at its partner Volkswagen’s plant in Paraná to assess the conditions in the country and the market. At the same time, there was speculation that General Motors would also leave the country. First, following a statement by the company’s CEO, Mary Barra, who implied that the operation would not be maintained if it continued to make losses.
Other automakers limited themselves to one-time investments. Renault, for example, announced a smaller program that would run for a year until it had a clearer idea of what would happen to the market after the pandemic.
COVID-19 was partly to blame for the slump in the industry. So was the semiconductor crisis, which shut down entire factories for many days over several months in 2021, 2022, and part of 2023.
Still, it was striking to see the automotive industry announcing major investments in electric car factories in developed countries while little progress was being made here.
Some said, among those who risk analyzing the sector, that the huge park of vehicle and auto parts manufacturers in Brazil was doomed to become scrap metal.
But suddenly this scenario changed completely. It began with the Chinese brands. BYD and Great Wall Motor decided to enter the country. GWM bought Mercedes’s plant and BYD took over Ford’s former plant in Bahia. At the same time, Audi decided to take back its space and resume production in Paraná.
From the end of 2023, new cycles began to emerge for incumbent companies. Renault’s Brazilian operations were incorporated into the company’s global plan.
The coming and going of the top executives of the sector began in Brasília. The global heads of these companies decided to come to the country to personally deliver the news to the Brazilian government.
Since November, several high-ranking executives have visited the presidential palace, including Makoto Uchida, CEO of Nissan, Shilpan Amin, head of GM’s international division, and most recently, Carlos Tavares, CEO of Stellantis, who was in Brasília on Wednesday.
The announcement of an investment of R$30 billion in Brazil over the next five years is not only a decisive step by Stellantis to maintain its leadership in Latin America, an important region for its activity. It also confirms that Brazil will not disappear from the map of the automotive industry—at least not before the next decade.
“I’ll see you in 2030,” Mr. Tavares said in an interview on Wednesday (6). In that time, Brazil will have everything it needs to remain among the world’s top 10 vehicle producers. It was eighth in 2022. The 2023 ranking has not yet been announced.
The country’s economic environment weighed heavily on the assessments of these companies, which tend to make long-term investments. Executives also appreciated the government’s tax incentives in programs that reward innovation and emissions reductions, such as the recently launched Mover.
In the case of large companies such as Stellantis, Toyota, Volkswagen, Renault, and perhaps GM, the funds will be used to produce hybrid cars—with an electric motor and an internal combustion engine that can run on ethanol.
This solution will help put Brazil on the electrification map without causing major trauma to the current production park and without making cars unaffordable for the majority of Brazilians.
Carmaker bets on hybrid models to make electrification accessible to the middle class
03/07/2024
Carlos Tavares — Foto: Wenderson Araujo/Valor
Stellantis CEO Carlos Tavares concluded that offering only fully electric cars worldwide would make the industry lose most of its customers, who are in the middle class. Therefore, while sticking to decarbonization goals, he has been seeking alternatives to offer a more accessible electrification to that type of consumer. In Brazil, the possibility of using ethanol in hybrid cars led the automaker to decide to invest R$30 billion in the country over the next five years.
That is the largest investment program among all plans announced by automakers in recent weeks. With the Stellantis plan, the total amount announced by light vehicle manufacturers (cars and light commercial vehicles) in Brazil for the current decade reaches R$87.8 billion. Of the total, R$67.2 billion were announced less than three months ago.
The investments announced by Stellantis—a company created three years ago from the combination of Fiat, Chrysler, Peugeot, Citroën, and others—add to the plans by Volkswagen, Toyota, and CAOA Chery, which have expressed that their new investments will back the development of hybrid ethanol cars. General Motors, Renault, Nissan, and Hyundai are expected to follow suit, which Mr. Tavares described as “a smart solution.”
The executive points out that producing a fully electric car today costs between 30% and 40% more. “If we pass this cost on [to consumers], the middle class will say, ‘I can’t buy it,’” he said. “If we ignore the cost, restructuring a company that employs 260,000 people worldwide would be a social disaster,” he added.
Hence, there is a need to seek regional solutions, according to Mr. Tavares. “We have smart solutions like Brazil’s bi-fuel car,” he said. The bi-fuel technology, which allows for the use of ethanol or gasoline, combined with the electrification offered by a hybrid car, contributes to promoting decarbonization at more affordable prices.
“We are witnessing the fragmentation of the world, which is not a good solution for humanity; but that is another story,” he said. The Portuguese executive has led Stellantis from the start. Before that, as the CEO of Peugeot and Citroën, he was already one of the most respected leaders in the industry.
He points out that while Europeans are interested in EVs, Americans are still hesitant. In Brazil, there is the possibility of ethanol. How about the Africans? “How can we find a safe, clean, accessible technology for Africans without turning to biofuels that could compromise food supply?” he questions.
According to the executive, the prices of electric cars could be on par with combustion models from 2026 or 2027. However, he fears that a regionalization of the world could compromise the necessary scale for that to happen.
Mr. Tavares cites what happened recently in Europe, when some governments, including Germany, eliminated subsidies of up to €7,000 for consumers who exchanged their cars for a fully electric model. “The middle class gave up.”
“The consumers’ message was: we can have electric cars, but we need subsidies. Without subsidies there is no volume, without volume, there is no scale, and without scale, we cannot reduce prices. And without volume, there will be no environmental impact. It’s a jammed machine.” The executive notes that countries are indebted and facing high interest rates, and no one wants to hear about tax increases.
But what is the point of offering a hybrid model that runs on ethanol if consumers prefer gasoline? Mr. Tavares says Stellantis already offers cars that run exclusively on ethanol. “But we are just one of the players to make it work.” He suggests greater government participation to promote the biofuel.
Argentina will also receive investments from Stellantis. The amount to be invested in Argentina was not expected to be revealed in the press conference held by the executives on Wednesday (6) in Brasília, shortly after the meeting with the government. However, given the journalists’ insistence in discovering the level of interest the company has in keeping the activities’ pace in the neighboring country, Emanuele Cappellano, CEO of Stellantis Latin America, said Argentina will soon receive investments amounting to R$2 billion.
According to Mr. Cappellano, by 2030, the renewal of products and launch of new cars under Stellantis brands in Brazil will total 40 models. Of this total, 20% will be fully electric cars.
Mr. Tavares came to Brazil to announce the new investment to the government in person. Both during the meeting with President Lula and Vice President Geraldo Alckmin, and later, in the interview with journalists, the executive praised the Mover program, which offers federal tax incentives to the automotive industry in exchange for the commitment to carrying out research, innovation, and reducing emissions.
“It is a very smart program and one of the strengths of the country, which has carried out structural reforms and programs for the industry,” he said.
“Latin America is, for us, a stable region today,” Mr. Tavares said when commenting on the reasons that led the company to announce the robust investment. The previous cycle combining the programs of the brands under Stellantis in Brazil totaled R$16 billion for the 2018-2025 period.
The reporter’s travel costs were covered by Stellantis.
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