Integrated Report 2014 Summary Version 2 VOTORANTIM CIMENTOS List of Contents

Integrated Report 2014 Summary version 2 VOTORANTIM CIMENTOS List of Contents

Business Model 2 Management Letter 8 Performance Highlights for 2014 11

Who we are 12 Market Context 18 Business Overview 19 Economic and Financial Performance 36 Future Trends and Prospects 37 report production 38 CrEdits 39 Financial capital Intellectual and manufactured capital OUR VISION MATERIALITY Human capital Social and relationship capital Natural capital Our head-office is in Brazil and we have operations in 13 countries in the Americas, Europe, Asia and Africa. We speak many languages, Alternative sources of electrical Occupational health energy and fuel oils and safety with many accents but we are united in a single voice, a single team, with a common objective: to be a construction materials company 1 Ethics, transparency and integrity that is committed to customer success through excellence. 2 3 CO2 emissions

13 Air emissions (particulate OUR VISION Supply chain 12 Matter, NO , SO ) Extremely high Extremely management X X 4 Anti-corruption practices, Customer Empowered Best in Class Sustainable cartels and anti- competitive behavior Focus People Operations Practices Regulatory 5 6 7 Level of risks • We drive our decisions • We value and recognize • We constantly monitor • Safety first! importance 8 Economic performance: based on customer needs leaders who lead through our performance and of economic, economic value generated • We are trustworthy and distributed others – creating strong, are obsessed with environmental Community 9 • We develop innovative and ethical in our actions and social relations products & solutions diverse and engaged teams continuous improvement according to law and impacts Contribution to local development in partnership with our • We want people who have • We make decisions regulations 15 customers the autonomy to take action quickly and intelligently, • We promote eco- 10 Water consumption • We have all areas of and use the Integrated in a disciplined and efficiency through the use 14 Management System (IMS) to consistent manner Management and re-use the company focused on of innovative products, Customer 16 17 11 leverage performance of construction waste and improving customer service • We maximize practices and solutions satisfaction reverse logistics for used cement bags • We work together to productivity in all areas • We foster local dialogue Preservation of Government Energy develop creative solutions and relationships with biodiversity relations efficiency and make things happen communities to perpetuate High the Votorantim legacy High Level of importance for the decisions Extremely high and/or perceptions of stakeholders BUSINESS PILLARS RESEARCH MODEL AND PLANT INDUSTRIAL SALES AND CONSTRUCTION MINING INPUTS PROCESS LOGISTICS

RESOURCES Investment Equipment Investment Equipment, labor, mineral Investment Labor Labor deposits, water, electrical energy, Equipment Land industrial waste from other Fuel Fuel production processes, by-products Labor Electrical Energy such as ash, slag.

clay, ACTIVITIES GEOLOGICAL RESEARCH DIGGING GRINDING MILL cement STORAGE CUSTOMERS limestone PURCHASE OF concrete RESIDENTIAL RESEARCH AND DEVELOPMENT (R&D) DETONATING (calcite and materials for maintenance STORAGE SILOS MIXER aggregates TRANSPORT COMMERCIAL MARKET RESEARCH LOADING dolomite) and consumption, coal, other KILN COOLER complementary INDUSTRIAL PLANT CONSTRUCTION CRUSHING aggregates fossil fuels and chemical products (mortar, INFRASTRUCTURE lime, agricultural (sand and additives. PAVING STORING lime) gravel) AGRIBUSINESS

RESULTS

Removal of vegetation Impacts on the soil, Generation Use of waste and Noise and CO2 emissions biodiversity and communities of taxes from the industrial by-products as Noise acquisition of products alternative sources of Rehabilitation of degraded Truck traffic ENVIRONMENTAL Social and environmental education and services. energy and raw materials areas and biodiversity Archaeological and paleontological in the production process Generation of management preservation employment and incom SOCIAL Waste, CO2 emissions, Maintenance waste Rehabilitation of degraded areas other air emissions,effluents, impacts on the soil Generation of taxes from the ECONOMIC Financial compensation for sale of products and services Overloading of local infrastructure mineral exploration (CFEM) Positive impacts Generation of employment and i ncome Generation of employment and income Negative impacts Modernization of public administration

Generation of taxes related to contracting of services during construction Financial capital Intellectual and manufactured capital OUR VISION MATERIALITY Human capital Social and relationship capital Natural capital Our head-office is in Brazil and we have operations in 13 countries in the Americas, Europe, Asia and Africa. We speak many languages, Alternative sources of electrical Occupational health energy and fuel oils and safety with many accents but we are united in a single voice, a single team, with a common objective: to be a construction materials company 1 Ethics, transparency and integrity that is committed to customer success through excellence. 2 3 CO2 emissions

RESULTS

Generation of taxes related to contracting of services during construction RAW GRINDING MILL ZERO LOSS PRODUCTION AND APPLICATION PROGRAM ADDITIVES HARDENED CONCRETE

POSITIVE IMPACTS DELIVERY METHOD: BULK BAGS CONCRETING CONSTRUCTION SOFT CONCRETE CIVIL CRUSHING WASTE ALTERNATIVE ADDITIVES FUELS GRINDING ADDITIVES

FLOUR MILL AGGREGATES MINING  CLAY ROTATING KILN ELECTRICAL ENERGY Concrete floor VERTICAL SAND HOMOGENIZATION CONCRETE LIMESTONE CLAY AND CALCITIC LIMESTONE KILN Concrete and AGGREGATES TRADITIONAL CRUSHED IRON ORE FUELS concrete blocks used LIMESTONE LIMESTONE BAUXITE in paving outdoors. WATER CEMENT CRUSHING GRINDING

QUICKLIME WOOD MILL HYDRATION  Concrete blocks They are precast and

GRINDING MILL CLINKER CRUSHED used to build load- LIMESTONE MINERALS AGGREGATES bearing walls. WATER LIMESTONE FILLER LIMESTONE ADDITIVE Eucalyptus HYDRATED LIMESTONE FILLER CHEMICAL STORAGE ADDITIVES MIXER PLASTER POZZOLAN  Concrete

LIME LIME Composed of a SAND SLAG CEMENT CHEMICAL ADDITIVES mixture of cement, STORAGE ASH sand, aggregatesand MIXER water, it is the most AGGREGATES MIXER GRINDING MILL common construction DECORATTA FINISHING AGRICULTURAL LIMESTONE material. STANDARD MORTAR

CEMENT LIME PAINT HYDRATED LIME - CH III  White cement STORAGE It is a type of ADHESIVE MORTAR cement and is used in construction in general, for industrial, commercial and residential surfaces and floors.

 Aggregates  Agricultural lime  Mortar  Hydrated lime  Lime paint  Cement Materials used for making It corrects soil acidity, and It is used principally to Substance with More economically viable than It is the basic component concrete and mortar. They are is used in agriculture. lay blocks or bricks and binding power, used conventional paints, it allows of concrete and mortars. also used in the production of for surface finishing. in construction and large areas to be painted at a It is used in all types of asphalt and for street paving. production of mortars. lower cost. construction.

GLOBAL USA CANADA MOROCCO SPAIN TURKEY CHINA OUR SUSTAINABILITY COMMITMENTS FOR 2020 PRODUCT SAFETY ECO-EFFICIENCY AND INNOVATION compared to 1990 levels • To ensure the effective adoption of the • Environmental Policies: to ensure the • Air emissions: to reduce dust, NOx and Global Health and Safety Policy and the Life implementation of our Global Environmental RANGE SO2 emissions per ton of clinker to 65g, Saving Rules Policy and Green Rules 1950g and 750g / ton of clinker, respectively • To implement sustainable supply chain • Supply chain standards: to promote • Water and biodiversity: to prepare and PERU standards sustainable supply chain standards by way Cement implement water management plans for all In Peru we own a • To promote healthy working conditions of our business units units in water-stressed regions. To ensure that Concrete shareholding in a and zero harms environment for all our • Sustainable products and services: all mines have closure plans. To ensure that all limestone mine. Aggregates employees. To reach zero fatalities LTI* to promote the implementation of new units in areas of high biodiversity value prepare Rate for direct employees of less than 0.4 sustainable solutions, products, services and and implement biodiversity management plans Complementary BOLIVIA In Bolivia we own innovation – achieve a clinker/cement factor Products (mortar, of 72% lime) lime a grinding mill. ETHICS AND COMPLIANCE COMMUNITY ENGAGEMENT • Ethical Business Practices: to ensure • Non-fossil fuels: to use 30% non-fossil • To ensure the implementation of that all of our operations are carried out in fuels in our cement plants a community engagement plan in

CHILE ARGENTINA URUGUAY BRAZIL TUNISIA INDIA *Lost Time Injury **The clinker/cement factor, describes the ratio between total clinker consumption and total production of cement or cement products RAW GRINDING MILL ZERO LOSS PRODUCTION AND APPLICATION PROGRAM ADDITIVES HARDENED CONCRETE

POSITIVE IMPACTS DELIVERY METHOD: BULK BAGS CONCRETING CONSTRUCTION SOFT CONCRETE CIVIL CRUSHING WASTE ALTERNATIVE ADDITIVES FUELS GRINDING ADDITIVES

QUICKLIME WOOD MILL HYDRATION  Concrete blocks They are precast and

an ethical manner and in conformity with • CO2 emissions: to reduce our CO2 communities where we operate that have a the Votorantim´s Code of Conduct emissions per ton of cement by 25% high degree of social vulnerability RELATÓRIO INTEGRADO 2014 CHILE ARGENTINA URUGUAY BRAZIL TUNISIA INDIA *Lost Time Injury **The clinker/cement factor, describes the ratio between total clinker consumption and total production of cement or cement products Management Letter The beginning of a new journey

In 2014 Votorantim went through We successfully implemented our company with an increasingly global a period of great change and made new governance structure, in line reach. With operations in North and considerable advances. In the mid- with that for Votorantim Indus- South America, Europe, Asia and Af- dle of the changes going on in our trial as a whole. Although the new rica, we can respond to the growth production processes and business structure is more decentralized, and in cement consumption, both in activities, our management teams appropriate to conducting business emerging markets with growth around the world paid special atten- in an increasingly complex and global potential, such as Turkey, Tunisia tion to the issues which are key to market, it ensures that Votorantim’s and Bolivia, and mature economies the company’s future. “Our Vision” values and corporate identity are that are recovering, such as the and strategic drivers were widely preserved. Florida and Great Lakes regions in communicated and discussed. the United States and Canada. As a result of the new structure, we established our own Board of Direc- We ended the year with net tors. The Board will be responsible revenues of R$ 12,884 million, an In 2014, we experienced for defining and monitoring the increase of 6.1% compared to the a year of substantial company’s mission and strategy and previous year, and a net profit of positive transformation monitoring its performance in order R$ 1,141 million. We sold 37.8 million and positioned ourselves to ensure its long-term business con- metric tons of cement, 11.2 million tinuity based on adequate financial cubic meters of concrete, 28.3 mil- effectively as a company returns and sustainable practices. lion metric tons of aggregates and with an increasingly 1.8 million metric tons of mortar. global reach. This is third report that Votorantim Cimentos has published and distrib- These results were achieved by hard uted to a wide range of stakeholders work, supported by our strategic in the market and society. It provides drivers of customer focus, empow- information on our vision and strate- ered employees operational excel- gies and our activities and results. lence and sustainable practices. We implemented a new sales approach, In 2014, we carried out a significant based on customer segmentation, process of internal engagement. and improved our cost controls. Our leadership teams, in the various countries where we operate, were We are able to leverage competitive mobilized to build, together, a com- advantages that have been con- pany that will be even better for our structed over a long period of time. employees, customers and society as One of those advantages is geo- a whole. We reviewed our processes, graphical diversification. We are pres- identifying the best practices in the ent in all the Brazilian regions and in regions where we operate and trans- some of the major global markets. forming them into global policies. This strategy allows us to maximize opportunities for some regions and This was the year in which we po- reduce the negative impact of mar- sitioned ourselves, effectively, as a kets with more moderate growth.

8 VOTORANTIM CIMENTOS Management letter

To make the most of these oppor- Since 2011, Votorantim Industrial has will increase and diversify our access to tunities, the Board held in-depth been a signatory of the United Na- local and international investors. strategy discussions and, with the tions Global Compact principles. Our support of its Advisory Commit- strategic plan encompasses other We have established our goals for tees, it was decided to prioritize, voluntary commitments, such as the 2015 and the years to come. We seek for example, investments in the Cement Sustainability Initiative. to continue to generate positive re- faster-growing markets such as the sults and grow in the regions where Northeast and Center-West Regions In addition to our internal efforts to we operate even in the challenging in Brazil, Bolivia and Turkey, and disseminate this culture, we have situation that lies ahead. We will markets that were recovering, such turned our gaze on the communities continue with our current invest- as the United States. where we are present. We have ad- ment plans, and will search for new opted measures to minimize the im- opportunities to expand our global We moved ahead with our investment pacts of our activities and maintain production capacity. We will also plan, which is focused on expanding genuine and transparent relations seek to introduce innovations in our production capacity, and ended 2014 with our neighboring communities. range of products and services and with a cement capacity of 54.5 million continuously improve our sales and metric tons/year, of which 59% is Safety is our highest priority. Despite marketing approaches. located in Brazil, our principal market. great advances, we deeply regret the We will continue to invest, preparing occurrence of three fatalities among The opening of the company’s capi- the company for new growth cycles our employees and one fatality tal is still on the agenda and we are in the various markets in which we involving contract staff.I n addition, prepared to make the move, waiting operate. We have entered into an there were seven fatalities of third- only for the right moment in the agreement to construct a new cement parties in our distribution chain. We capital markets. plant in Bolivia and have approved seek to ensure that our workforce an investment to expand our units in has a safe environment in which to We will continue working towards Brazil, Turkey and the United States. do their jobs. In order to disseminate realizing our vision, paying special our Global Health and Safety Policy attention to safety and employee In everything we do, we seek to and “Rules for Life” safety program, development, to ensure that our incorporate sustainability principles we mobilized our employees to par- people are always motivated, and add value to our business and ticipate in the event “Global Safety focused, and proud to work at Vo- customers. This positioning goes Day” which from now on will be a torantim Cimentos. far beyond simple compliance with permanent fixture in the company’s the legislation. We have developed annual calendar of events. We would like to thank all our busi- a number of initiatives, seeking, for ness partners who have contributed example, new energy sources and Even though there is still room for to getting us here and would also re- the rational use of inputs, in a pro- improvement in many areas, we also iterate our invitation to go forward cess of continuous improvement to have achievements to celebrate. One together, to create a solid founda- more work more efficiently. And we of our most important achievements tion for a future which is increas- want to do even more. We always during the year was obtaining invest- ingly promising for all of us. include sustainability considerations ment grade ratings from the three in our business decisions and day- major rating agencies, Standard & Walter Dissinger to-day activities. Poor’s, Fitch Ratings and Moody’s. This CEO of Votorantim Cimentos summary version – 2014 Integrated Report 9 10 VOTORANTIM CIMENTOS Performance Highlights for 2014

Annual cement production ca- million metric tons, as from 2017; (iii) Invested R$ 67.8 million in envi- pacity at year-end was 54.5 million a grinding mill in Pecém (CE) with an ronmental projects. metric tons, 0.6 million metric tons annual capacity of 0.5 million metric higher than 2013, due to the expan- tons, as from 2017; and (iv) expansion Invested R$ 16.38 million in long- sion of the Xambioá (TO) plant. of the annual capacity of the North term social projects and initiatives American operations by 0.6 million (almost 35% more than in 2013), Net revenues for the year totaled metric tons in Charlevoix, as from which generated economic and R$ 12,884 million, an increase of 6.1% 2017. In September 2014 we signed social value for the communities in compared to 2013. agreements with Cementos Molins which we operate. (Spain) and COCECA (Bolivia) and Adjusted EBITDA was R$ 3,493 initiated the construction of a new ce- million, practically unchanged ment factory in the region of Yacuces, (-0.6%) compared to 2013. Bolivia, with an additional annual production capacity of 0.9 million metric Net profit was R$ 1,141 million, a tons, and start-up planned for 2016. reduction of 17.9% compared to 2013, due to increased financial expenses Obtained investment grade rat- (premium paid for bond repurchase ings on a global scale, from the three and higher interest rates in Brazil main rating agencies: Standard & (CDI)) and a lower operational result. Poor’s (BBB, stable outlook), Moody’s (Baa3, stable outlook) and Fitch Rat- Quality Index of Products (IQP) ings (BBB, stable outlook). increased to 95%, an increase of 3% over the previous year. Implemented our global strategic plan and established an integrated Continued to invest in new ce- financial model that will strengthen ment plants, in Edealina (GO), the investments being made in the with an annual capacity of 2 million regions, as well as a new sales ap- metric tons, and in Primavera (PA), proach in Brazil where the previous with an annual capacity of 1.2 mil- product focus has been replaced by a lion metric tons. These plants are customer focus, enabling us to give scheduled to start up operations in our total attention to the needs of the second semester of 2015. each segment and each customer.

In 2014, the Board approved the Developed our Strategic Sustain- following investments: (i) a brown- ability Plan and approved a formal field project to expand the annual document containing Our Sustain- capacity of our plant in Turkey by 1.2 ability Commitments for 2020. million metric tons, as from 2017; (ii) an integrated plant in Sobral (CE) with Expanded our Global Health and an annual production capacity of 1 Safety Policy. summary version – 2014 Integrated Report 11 Who we are

Company and Business Profile

W e are the market leader Votorantim Cimentos (VC) is a com- In addition to Brazil, we operate in cement in Brazil and pany of the Votorantim Group, one in South America, North America, the eighth largest global of the largest and most traditional Europe, Asia and Africa, through producer in terms of Brazilian business organizations. We shareholdings and partnerships. Our are an industrial company that pro- head-office is inS ão Paulo (SP). Our installed capacity. duces cement, concrete, aggregates international activities are carried out and complementary products such with the support of two holding com- as mortar and lime. Our operations panies: Votorantim Cimentos North are vertically integrated and we have America (VCNA), in the United States a diverse and wide range of products and Canada, and Votorantim Cimen- and services. tos Europe, Asia and Africa (VCEAA), in Spain, Turkey, Tunisia, Morocco, In- We are a 100% Brazilian-owned com- dia and China. In South America, we pany. We started our business activi- operate through partnerships with ties in 1933 in the city of Votorantim, in local and/or international companies the interior of the State of São Paulo, in Bolivia, Uruguay, Argentina, Chile, with the initiation of the construction and Peru. of the Santa Helena cement plant. We are the market leader in cement At year-end 2014 we had 15,779 in Brazil and the eighth largest global employees, including interns and producer in terms of installed capac- apprentices. ity, according to data published in the Global Cement Report 2013, and excluding Chinese companies.

12 VOTORANTIM CIMENTOS Who we are

Our History

2013-2017 2012 Expansion plan currently underway in Brazil, Bolivia, Exchanged assets Turkey and the United States. with Cimpor, In Brazil, the goal is to add 5.3 expanding the 2007 2009 million metric tons to our annual company’s Expanded in South installed cement production operations to include America with the capacity by the end of 2017. Spain, Morocco, acquisition of Tunisia, Turkey, India shareholdings in cement and China. companies in Chile, Uruguay and Argentina. 2010-2011 Acquired a 21.21% shareholding in Cimpor (Cimentos de Portugal). 2001 2005 Installed cement production capacity Acquired the Charlevoix reached 22 million metric tons/year. and Dixon plants. Initiated international operations with the acquisition of St. Marys 2002-2005 Cement Inc. which has cement plants Expanded operations in Canada and the United States. in Brazil with the acquisition of minority shareholdings and the 1977 diversification of the Established a product mix. leadership position in the Brazilian market. 1933 Initiated the construction of Votorantim Cimentos’ 1938 first operating unit, the Votorantim Cimentos Santa Helena cement was selected by public plant, in the city of 1936 tender to remodel a viaduct in the Votorantim (SP) - Brazil. Inaugurated center of São Paulo, the Santa called the Viaduto Helena plant. do Chá. The original metal structure was replaced by one made of reinforced concrete.

*Acquisition of a 4% shareholding in 2010 and the completion of an asset exchange with Lafarge in 2011 resulted in a total shareholding of 21.21%.

summary version – 2014 Integrated Report 13 Who we are

Global network THE DIAGRAM BELOW SHOWS OUR CEMENT PRODUCTION CAPACITY BY COUNTRY OR REGION

Great 5.2 1.8 tunisia china 5.9 Lakes

spain 3.2 3.0 Turkey

5 braZil 32.3 florida 0.8 1.2 Morocco India 1.2

peru

SÃO PAULO 0.2 3 bolivia COMPANY’S HEAD OFFICE

uruguay4 0.5 Installed capacity in Mtpy 2.26 chile2 argentina1 2.86 (million metric tons per year)

VCBR SOUTH AMERICA7 VCEAA VCNA

16 cement plants 5 cement plants 14 cement plants 4 cement plants 10 grinding mills 3 grinding mills 8 grinding mills 2 grinding mills 103 concrete centers 51 concrete centers 99 CONCRETE CENTERS 110 concrete centers 20 aggregates plants 18 aggregates plants 21 aggregates plants 44 aggregates plants 8 mortar plants 2 mortar plants 1 mortar plant 1 lime plant 1 clinker plant 45 distribution centers 4 lime plants 1 limestone mine

1 49% shareholding in Avellaneda, Argentina. 2 16.7% shareholding in Bío Bío, Chile. 3 67% shareholding in the Itacamba plant, Bolivia. 4 51% shareholding in Artigas, Uruguay. 5 Includes 100% of annual installed capacity of Suwannee, which was not consolidated in December 2013. 6 Includes 100% of annual installed capacity of Bío Bío and Avellaneda, which were not consolidated in December 2013. 7 Includes minority shareholdings.

14 VOTORANTIM CIMENTOS Who we are

Voluntary Commitments Major Honors and Awards

We are signatories of voluntary In 2014, we received the following global and national pacts and initia- major honors and awards: tives, such as:

1) United Nations Global Compact (UNGC) – The UNGC is an United Nations initiative to encourage A wARDS Focus/Category (s) Country Best and Biggest – Exame Brazil companies to respect human rights, Construction Industry support decent work, protect the Magazine environment and fight corruption. Best Companies in Brazil – Construction and Decoration Brazil Época 360º Magazine Materials 2) Cement Sustainability Initiative 1,000 Largest Companies in Largest Company for Brazil (CSI) – The CSI is an international Brazil - Valor Newspaper Construction and Decoration cement industry protocol, signed by Materials the 24 largest producers of construc- The von Martius Prize for Brazil tion materials in the world, to pro- Sustainability - German- Sustainability Brazilian Chamber of Commerce mote the adoption of best practices Sustainable Innovation Award Brazil in the cement sector. Sustainable Innovation - FINEP 3) Business Pact – “Na Mão Certa” Occupational Health and Safety Cement Industry Employer's Turkey Project – By signing this compact Performance Award Union the signatories committed to Ontario Concrete Awards Material Development and Canada combat the sexual exploitation of Innovation children and adolescents on Brazil- Structural Material Innovation ian highways. Sustainable Concrete Construction 4) SBE-VC-RBMA Technical Co- Institutional Building operation Agreement – This is a Indiana Mineral and Aggregates United partnership between Votorantim Safety Excellence Award Association – Environmental States Cimentos, the Brazilian Society for Stewardship Council Excellence in Minning Speleology (SBE), and the Atlantic National Stone Sand Gravel Environmental United Forest Biosphere Reserve (RBMA) Association Excellence Award States to develop social and environmen- Safety Excellence Award tal practices that contribute to the Illinois Association of Aggregate Rock Solid Safety Award United protection of caves and the Atlantic Producers Gold Safety Award States Forest biome. Anamaco Awards - National Brazil Leadership in the Association for Building Material construction sector Retailers (ANAMACO) 16º Edition of Awards for Brasil Excellence in the Brazilian Metals and Mining Industry Excellence and Innovation – Brazilian Mining Institute (IBRAM) summary version – 2014 Integrated Report 15 Who we are votorantim cimentos is here, there and everywhere See the “what” and the “where” of our products

16 VOTORANTIM CIMENTOS summary version – 2014 Integrated Report 17 Market Context

A diverse global Europe, Asia and Africa economic panorama Our operations in Europe, Asia and According to the Global Cement Africa recorded another year of Report, global cement consumption in consistent results, mainly due to the 2012 was 3.7 billion metric tons and the impacts of the turn-around process, market was expected to grow strongly which started in 2013. The results to reach 4.14 million metric tons in were driven by the good results of 2014. In terms of countries, China the operations of Turkey and Tunisia, stood out with a consumption of 2.16 and were partially offset by declines In 2014, the global billion metric tons in 2012, represent- in Spain, Morocco and India. economy experienced ing 58% of the global total. The United a year of important States and Brazil were the third and South America adjustments and fourth largest markets, respectively. The cement industry in Bolivia has expectations. Brazil grown significantly in recent years and, in 2014, cement consumption According to the Global Cement reached 3.4 million metric tons, an Report, Brazil was the country with increase of 8.7%. the fourth largest cement consumption in 2012. The cement consumed in The cement industry in Uruguay Brazil is primarily produced domes- has grown consistently as a result tically. In 2012 there were approxi- of the strong growth of the overall mately 82 cement manufacturers in economy. Brazil, distributed throughout the country, and with a combined annual production capacity of 82 million metric tons.

North America

The United States economy has recovered and become a strong factor in promoting global economic recovery. Its recovery was in part driven by the ample supply of energy at competitive prices. This impacted several economic sectors and led to a gradual improvement in employment, investment growth and the average level of business confidence.

18 VOTORANTIM CIMENTOS Business Overview

Management Approach ment system that consolidated, in a single platform, our processes, In 2014, we worked hard to ensure management methods and key that our processes and our culture performance indicators. were consistent with our geographic presence, seeking to generate value With this in place, we can ensure for the company in the short, me- that strategies are understood dium and long terms, in the different and deployed in all countries, at all markets in which we operate. levels from senior management to operators. This will strengthen our We mobilized our employees around capacity to generate, in an integrat- the world to develop a concept that ed manner, positive economic, so- we call “One Team, One Company”. cial and environmental outcomes. The objective is to align our strategies and our people’s efforts around The strategic value generated a single vision: To be a construction in 2014 88% materials company that is committed to We developed a corporate gov- customer success through excellence. ernance structure for our global operations and incorporated the of Votorantim In this process, we learned a lot and governance of sustainability at the Cimentos’ employees identified synergies and best practic- company’s highest decision-making are committed to our es. Based on these results, we defined level. policies to position our business strategic vision and 76% around the world. At the core of all We implemented the global believe that the vision we do are the strategic drivers that strategic plan and an integrated will be positive for the support our vision: Customer Focus; financial model, to leverage the company (Climate Empowered People; Operational Ex- investments made in the regions. Survey 2014). cellence; and Sustainable Practices. We also developed a Strategic We disseminated our strategy to our Sustainability Plan and prepared a employees in Europe, Asia, Africa, the formal document that defined Our United States, Canada, and Brazil and Sustainability Commitments for the other countries in South America. 2020. This process involved discus- We implemented a governance struc- sions among representatives from ture that will enable us to play an even all the regions where we operate. more prominent role in the interna- The plan includes goals for com- tional markets in the years to come. munity engagement, safety, ethics and compliance, eco-efficiency and At the same time, we began to innovation. develop an integrated manage- summary version – 2014 Integrated Report 19 business overview

Our goal: achieve an improvement of up to 15% in operating efficiency, including the targets for Our Sustainability Commitments for 2020.

We continued with our investment lence. Based on this information, a Employee integration through program and expanded production three-year plan for each plant will communication and training, our capacity, both in existing projects in be developed, with specific actions employees will be encouraged to Brazil and new projects, approved for and priorities, in accordance with the learn how they can contribute indi- Bolivia, Turkey and United States. characteristics of each region. vidually to achieving the company’s strategic and financial objectives. We defined our long-term guide- Integrated Management System lines, to be applied globally, related In 2014 we developed the Integrated Excellence Assessment Program to each of the strategic drivers that Management System (IMS), which is ensures efficient management comprise our vision. a set of practices, processes, meth- practices, recognizing and rewarding ods and data (KPIs) that applies to the best-performing teams for their In Brazil, we implemented a new all business units in all regions and achievements. sales approach, totally focused on countries, including manufacturing the needs of each segment and each and administrative units. It provides The IMS provides a common lan- client. guidance as to how people should guage that facilitates communica- work on a day-to-day basis to meet tion between the different levels Global Performance Program targets and solve problems in order to of the company, enabling faster In this program, we will analyze in- achieve the company’s annual budget decision-making and promoting formation on technical performance, and realize its medium and long- rapid cultural change in operations. costs, sustainability and safety, for term strategy. It also increases career opportunities the past five years, in more than 50 within the company, encouraging production facilities in: Brazil (VCBR); The IMS aims to promote a high greater internal mobility. South America and North America performance organizational culture (VCNA); and Europe, Asia and Africa and covers three elements that col- The first phase of the system will be (VCEAA). The project was developed lectively guide the company’s efforts implemented in 2015, in the cement in 2014 and will be put into practice to effectively realize its strategy and business, in VCBR, VCEAA and VCNA. in the first quarter 2015. targets: In the near future, it will be extended to the company’s other business As a result, a database will be gener- Performance Management Sys- areas (Aggregates, Concrete and ated which will enable us to carry out tem promotes operational stability Complementary Products) and func- internal and external benchmarking and the continuous improvement of tional areas. studies to identify opportunities results, and provides the necessary re- for improving operational excel- sources to enable constant progress.

20 VOTORANTIM CIMENTOS business overview

Sustainability for Us tomers; acting in an ethical, transpar- tainability and was approved by the ent manner and in accordance with Global Executive Team (GET) and the Throughout our long history, we the laws and regulations; providing a Board of Directors. have promoted the social and motivating, healthy and safe work en- environmental development of the vironment for our employees, contract At the end of the year, we formalized communities where we operate and staff and third-parties; supporting our our position in the document called have made important contributions local communities and encouraging Our Sustainability Commitments to initiatives that promote sustain- their progress. for 2020 with goals that go far ability in the cement sector. beyond legal and regulatory compli- To speed up the achievement of ance. Indeed, we want these goals For us, sustainability means achieving these goals, in 2014, we revised our to inspire us to continue to operate our growth ambitions, in the follow- Strategic Sustainability Plan with in harmony with society and to cre- ing way: taking the present and future the participation of teams of employ- ate value for the company and our needs of society into account; offering ees from all the regions. This plan stakeholders over time. eco-efficient and innovative building represents the company’s medium materials, and services, to our cus- and long-term positioning on sus-

How we intend to get there

How the strategy was We defined the global and developed regional targets at the end of last year and the performance What we achieved in 2014 1 Our Vision (strategic direction). indicators to monitor them. 2 We conducted a process to identify In 2015, these targets will be We set ourselves ambitious goals the material issues for our stakehold- cascaded down, year by year, in key areas for sustainability ers. This included collecting informa- up to 2020. in our industry, making it clear tion through specific opinion surveys For each target, an action which issues would be prioritized with customers, employees and plan has been defined. and where we wanted to be by communities and our established Sustainability targets are 2020. communication channels for rela- part of our managers’ perfor- tions with stakeholders. mance evaluation, accounting 3 S wot Analysis (strengths, weak- for between 20% and 80% of nesses, opportunities and threats). a manager’s remuneration, 4 Internal (regions) and external from the highest level to the benchmarking studies. starting level. 5 Current industry and market standards. 6 Major trends in sustainability.

summary version – 2014 Integrated Report 21 business overview

Health and Safety Our initiatives to promote health and environment and they have also been Safety is Votorantim Cimentos’ most safety are governed by the Global implemented globally. Furthermore, important value, and is placed ahead Health and Safety Policy which, we began to implement critical of everything we do. It is one of the as from 2014, began to be used to safety protocols, based on best prac- pillars of our Strategic Sustainability guide our operations globally. The tices for health and safety, in order to Plan, and has a clearly defined goal: Rules for Life are a set of norms that prevent fatalities. zero accidents. aim to ensure an accident-free work

Take care So you can take care of of yourself your loved ones and enjoy life’s precious moments

Every day we care about the most important thing: your life. Safety is in your hands, in every moment and in every gesture. Be sure you are aware of our Life Saving Rules and the Global Safety & Health Policy, and know how to follow them.

You are doing it for you and your loved ones. Safety begins with me

Global In order to disseminate the Global in which he highlighted the manag- Health Policy and Safety and Rules ers’ responsibilities for health and Safety Day for Life, we mobilized our employees safety. The message was relayed to participate in Global Safety Day, to our 25 thousand employees and on June 27th 2014. This will now be a contractors worldwide, through permanent fixture in the company’s videos that emphasized the role of annual calendar of events. In this each person in the promotion of first edition of GlobalS afety Day safety and the elimination of acci- the activities began with a message dents, as well as participating in the from the president to all managers, events in each location.

22 VOTORANTIM CIMENTOS business overview

Our Code of Conduct provides guidelines for our business activities and our relations with stakeholders.

Ethics and Compliance combating corruption and comply- stakeholders. Users may ask ques- We revised our new Global Compli- ing with fair competition laws at all tions or report complaints regard- ance Program in 2014. The program levels and geographical regions of ing alleged violations of the Code of was developed based on Votoran- the company. Making employees Conduct. Among the complaints the tim’s Code of Conduct, Values and conscious of compliance issues and most prominent relate to issues such Management Beliefs, and has the the dissemination of the respec- as harassment, discrimination, abuse following main objectives: tive policies are company priorities. of power, corruption or other forms of Therefore, in order to inform, pro- unethical behavior. Guide the company in terms of vide guidance, educate and engage compliance, and conformity with all of the company’s employees and laws and regulations and com- business partners, the Global Policy mitments undertaken in signed for Anti-Corruption and Compliance contracts and agreements. with Fair Competition was dated and divulged in 2014. Contact the Ensure conformity with the conditions required to obtain the licenses, As part of the company’s practice of Ombudsman permits and certifications neces- continuously improving its controls Brasil: 0800-8911729 sary for our operations. and reinforcing its culture, it carries United States and Canada: out regular risk assessments focused 1-866-340-6689 Ensure conformity with our com- on conformity with its anti-corrup- For countries in Europe, Asia mitment to the defense of competition and fair competition policies. and Africa: please see the phone tion and the prevention of fraud and numbers on the website at: corruption. Ombudsman https://secure.ethicspoint.com/ The Ombudsman service is available domain/media/pt/gui/27543/ Additionally, we have carried out a in Brazil and overseas, in 8 languages index.html series of training courses and initia- and can be accessed by employees, tives to disseminate the culture of customers, suppliers and other summary version – 2014 Integrated Report 23 business overview

Eco-efficiency and Innovation A benchmark for Based on contributions from special- energy efficiency in ists in the regions, we reformulated our Environmental Policy and North America Green Rules. The Green Rules are a set of 10 norms that describe the Our plant in Bowmanville, Ontario, Canada, was the behaviors expected of employees first industrial complex inN orth America to be certified in relation to environmental issues. for energy management under ISO 50001, in 2011. Since The revised version, in addition to then, the plant has continued to improve its efficiency, informing the requirements regard- achieving a reduction in consumption of 10.3 million ing compliance with laws and regula- kilowatt-hours, equivalent to savings of US $ 1 million per tions, includes norms and guidelines year, from 2012 to 2014. to promote eco-efficiency and reduce environmental impacts.

Ou r tARGETS for 2020

TARGETS FOR 2020 ACHIEVEMENTS IN 2014 We developed a new Global Environmental Policy and Ensure implementation of the Global Environmental revised the Green Rules, introducing and emphasizing the Policy and Green Rules. concept of eco-efficiency. Achieve a clinker/cement factor of 72%. We reduced the clinker/cement factor by 1.9%, down to 74.7 %. We increased the use of these fuels by 14.2% , reaching a Use 30% of non-fossil fuels in our cement plants. substitution factor of 7.6%. Reduce our CO emissions per metric ton of 2 We reduced our emissions by 15.8% compared to the base cementitious material by 25% compared to the base year (1990). year (1990).

Reduce emissions of particulate matter, NOX and We reduced emissions of particulate matter by 5.2 % (108

SO2 per ton of clinker, by 65, 1,950 and 750 grams, g/ton clinker), NOX by 12.1% (1,977 g/ton clinker) and SO2 by respectively. 28.4% (683 g/ton clinker) compared to the previous year. We completed a risk analysis study on water-stressed Implement water management plans in all business areas in Brazil and began to implement the Global Water units that are in water-stressed areas. Tool methodology in other countries. Develop Biodiversity Management Plans for 100% of We developed a Biodiversity Management Plan for the the units that overlap with areas of high biodiversity Ribeirão Grande (SP) plant. value.

24 VOTORANTIM CIMENTOS business overview

A ward-winning practice: use of pozzolan in the Porto Velho and Nobres plants

By investing, in partnership with using clinker, resulting in cement tion of artificial pozzolan reduces suppliers, to develop furnaces that has greater strength and CO2 emissions by 50%, fuel con- that activate clays by calcination, durability. sumption by 25% and water usage our plants in Porto Velho (RO) by 40%, compared to the conven- and Nobres (MT) have succeeded As a result of using this material, tional clinker production process. in producing high-performance these units decreased the use of The project was awarded the FINEP artificial pozzolan.T he material clinker by 35% by the end of 2014. Award in the category Sustainable presents advantages compared to Other benefits were: the produc- Innovation.

Energy and Water Conservation Committee

Composed of volunteers from all Committee set up teams dedicated projects related to improving the areas of the Rio Branco do Sul (PR) to the themes of education, fight- energy efficiency of industrial unit, the Committee has focused ing wastage and efficiency projects. equipment and the small hydro- its activities on promoting the electric power plant in Environmen- efficient use, and reduction of Among the initiatives under- tal Square. They were also active in wastage, of water and energy. The taken in the area during 2014 were social projects in the community.

Reduction of NOX at the Vidal Ramos plant

Inaugurated in 2011, the Vidal Ramos To achieve this, we invested in a as modifying equipment. Finally, (SC) plant has installed the first selective non-catalytic reduction we achieved decreases of 35% in vertical mill for cement grinding in system, (SNCR) which uses urea the chimney emissions and of more the company. In 2012, we initiated diluted to 40%, associated with than 50% in the consumption of an optimization project at the unit, co-processing. For two years, we urea, during 2013 and 2014. in order to substantially reduce urea conducted a series of adjustments consumption and NOx emissions. to processes and operations as well

summary version – 2014 Integrated Report 25 business overview

OUR GLOBAL ENVIRONMENTALPOLICY

Always comply with the legal requirements, standards and 1 regulations applicable to the organization and the voluntary commitments it has subscribed to.

Implement and maintain an Environmental Management System, 2 appropriate to our nature, scale and the environmental impacts of our activities, products and services, to ensure compliance with our commitments, focusing on continuous improvement and pollution prevention.

Ensure the eco-efficient and responsible use of natural resources to reduce the consumption of fossil fuels, raw materials, water, 3 energy and other inputs.

Address the challenges of climate change by developing a strategy for reducing greenhouse gas emissions. Focus on the 4 use of low-carbon, alternative fuels, and the responsible use of fuels and raw materials.

Define and implement environmental standards to assess and 5 monitor atmospheric emissions and set reduction targets.

Minimize the generation of waste. Reduce consumption, reuse 6 and recycle materials when possible and dispose of waste appropriately and responsibly.

Assess, control and reduce the environmental impacts of our 7 activities, focusing on continuous improvement and best industry practices. Invest in environmental innovation in our processes, products and services throughout the life-cycle, seeking to reduce our environmental impacts.

Develop rehabilitation and closure plans for all our active mining 8 operations, considering stakeholders’ expectations. Continuous monitoring and reporting of our biodiversity performance, focusing on conservation and increasing awareness.

Promote ethical and transparent relations with our stakeholders, 9 by providing environmental information about our operations and products on a regular basis and maintaining a process of open dialogue.

26 VOTORANTIM CIMENTOS business overview

Protect and respect the natural environment – 1 air, land and water 2 Protect Biodiversity – flora and fauna

Minimize the generation of waste – reuse, 3 recycling and responsible waste disposal

Maximize energy efficiency and reduce greenhouse gas emissions (in production, The Green Rules were 4 transportation and support operations) developed based on our Environmental Policy Continuously monitor environmental impacts principles to facilitate and develop a plan to define reduction targets the understanding and 5 dissemination of the Commit to using the highest level of pollution policy to all employees. 6 control technology whenever possible

Respect caves and cultural, geological, historical, 7 archeological and paleontological sites

Maintain a process of open dialogue. Respect 8 neighbors and stakeholders

Reduce the use of virgin raw materials whenever possible. Maximize the efficient and responsible 9 use of resources

Rehabilitate company sites – during operations With this and other environmental education and post-closure initiatives we are contributing to achieving 10 Target 1 of Strategic Goal A of the Convention on Biological Diversity. This target aims to promote awareness of the value of biodiversity and the measures that can be taken to conserve and use biodiversity in a sustainable manner.

summary version – 2014 Integrated Report 27 business overview

Water Resources Our objective is to implement the Water Management Plan, composed of six main initiatives, for all the units in water-stressed areas. The six initiatives are as follows:

1 - Measurement and monitoring: This consists of analyzing and understanding the unit’s water footprint, measuring the amount of water used in production, identifying the operational limits and locations for the withdrawal and discharge of water.

2 - Reduction in consumption: This will be achieved through a variety WATER: WE ECONOMIZE, of measures including water recycling and reuse. It will also require changes WE TRANSFORM in production processes to make them more efficient and reduce losses. Ho w Votorantim Cimentos impacts and is impacted by water resources. 3 - Protection of water resources: We seek to protect the springs and We consume electrical energy before discharging them back headwater areas that contribute to which is generated in hydro- into the water bodies. restoring groundwater levels. electric plants that need dams and reservoirs to store water in The protection of springs and 4 - Promoting best practices: order to operate. headwater areas that feed into We encourage our partners, suppli- and maintain groundwater levels ers and buyers to adopt sustainable Votorantim Cimentos’ units contributes positively to improv- measures, and respect Votorantim and their local communities use ing the quality of water bodies Cimentos’ Green Rules. water directly for operations and and the increase in flow rate. residential use respectively. The 5 - Innovation that protects the water is withdrawn from surface Our concrete centers also con- environment: sources, such as rivers, and from sume large volumes of water This consists of the development and underground sources, through since it is incorporated in the implementation of more efficient boreholes. The discharge of final product and embedded technologies for water treatment and effluents into water bodies may in the construction of houses, for reducing consumption. impair their quality. Because of buildings, and other structures. this, we regularly measure the The operations and activities in 6 - Partnerships for a better future: quality of our effluents and the construction sites also consume We enter into partnerships with mu- local water bodies and, when water and are part of, directly or nicipalities, NGOs, and the scientific necessary, we send the effluents indirectly, the company’s con- community, to provide encourage- to an effluent treatment plant struction value chain. ment and contribute to developing new technologies that stimulate water conservation and improve management systems.

28 VOTORANTIM CIMENTOS água business overview A GENTE ECONOMIZA, W aTER Consumption Cycle A GENTE TRANSFORMA.

A Votorantim Cimentos (2) utiliza prejudicando a própria VC e as 1 HYDROELECTRIC PLANT energia de centrais hidrelétricas (1) comunidades próximas. Por isso, MINE que, para a sua operação, é fundamental que haja 6 COMMUNITIES necessitam de um reservatório de a mensuração e o monitoramento 3 água. A VC e as comunidades (3) dessa água. EFFLUENT também fazem uso direto da água 5 TREATMENT nas suas operações, seja por Nossas centrais de Concreto (7) PLANT 2 VOTORANTIM captação de rios (superficial) ou também utilizam a água na CIMENTOS por captação de poços artesianos incorporação do produto final que (subterrânea). A proteção das será utilizado na construção de 4 HEADWATERS nascentes (4) e das áreas casas e prédios (8), entre outras de recarga do lençol freático estruturas, que também consomem contribuem positivamente para água em suas operações o aumento da quantidade de água e participam, direta ou disponível e para a melhoria da sua indiretamente, da cadeia de qualidade. Os lançamentos dessas construção civil da qual a VC

águas podem alterar essa faz parte. 7 CONCRETE CENTERS qualidade. Por conta disso, realizamos avaliações É um longo ciclo, onde cada um seguidamente e, quando precisa contribuir para o uso 5 necessário, encaminhamos os sustentável da água, lançamentos para uma estação implementando as seguintes INDUSTRIES AND CITIES 8 de tratamento de esgoto (ETE) (5) medidas: medição e antes de lançá-los de volta à monitoramento, redução do natureza. consumo, proteção dos recursos WATER WITHDRAWAL hídricos, incentivo de boas DISCHARGE OF EFFLUENTS Além disso, o bombeamento da práticas, inovação que contribui cava da mina (6) pode impactar com o meio ambiente e parcerias o nível da água subterrânea, por um futuro melhor.

summary version – 2014 Integrated Report 29 business overview

Rain water used to suppress particulate matter

The cement plants in Turkey have that is unique in the country’s ce- particulate matter. The initiative is a high degree of dependence on ment industry. already responsible for 28.5% of the groundwater, and this form of with- water needed for the suppression drawal requires deep boreholes. Instead of filing for authorization of particulate matter in the plants To reduce the risks to the business to use rainwater runoff a project in Yozgat, Çorum and Sivas. The from the impact of new regulations, was set up to collect and reuse consumption of groundwater was our team has developed a solution rainwater for the suppression of reduced by 21 thousand m3 per year.

Private Natural Heritage Reserve (RPPN) in the Nobres unit

In December 2014, the area should guide and regulate the area of more than 77 thousand known as the Tombador Water- use of the area. The Reserve is a hectares, the Environmental Pro- fall Nature Reserve, close to the legacy for all, but especially for tection Area of the Paraguay River Nobres (MT) plant in Brazil, was the local population. Headwaters (APA). officially designated as a Private Natural Heritage Reserve (RPPN), This preserved area of 296 hect- With this, and its initiatives for by the environmental agency of ares has been recognized to be of other protected areas, the com- the State of Mato Grosso (Brazil). high biodiversity value. It plays a pany is contributing to achieving very important role in the preser- Aichi Target 11, regarding conser- In 2015, we will initiate the vation of the Cerrado and Amazon vation áreas, of the Convention development of a management transition biomes, since it forms on Biological Diversity. plan that will establish the zoning part of an ecological corridor, of the area and the norms that together with another protected

30 VOTORANTIM CIMENTOS business overview

A quaculture project in the Aberfoyle unit

The Aberfoyle unit in Canada implemented was composed of densities in the trough. Moreover, carried out a project to prepare a rectangular basins or channels it is a closed-loop system, since mining area that had been deacti- made of concrete and equipment the organic waste from the final vated for a new use in the future. with one input and one output, process may be used for soil treat- This area, which was considered taking advantage of the structure ment and as fertilizer. to have potential for fish produc- of the mine. The flow of water is tion, needed a few improvements continuous and is maintained at to enable the large-scale produc- the desired level of water quality, tion of fish.T he technical solution which allows breeding in higher

Oranges in the mines of Cortijo Nuevo

In Spain, our plant in La Rinconada, closed down in 2035. Even so, 10 Seville, produces between 300 and hectares have already been reha- 400 thousand tons of aggregates bilitated and planted with orange per year. Today, alongside the open- trees. In addition an area is being cast mining, there are orange trees prepared to plant a further three growing. This was made possible hectares. Thus, by the time the by a land rehabilitation project that mining operations in Cortijo Nuevo runs in parallel with the mining are closed down, virtually all of the activities. area will have been restored to its original condition and replanted The mining operations began in with orange trees. 1994 and are only expected to be

summary version – 2014 Integrated Report 31 business overview

Organic farming in Peterborough

In North America, we had the chal- tion in the former mining area, in an area of 937 m2. In 2015, the lenge of developing a decommis- but also contribute to raising the area will be expanded, promoting sioning plan for a limestone mine quality of the adjacent agricultural organic agriculture and increasing owned by our aggregates plant in areas, which had not had mining productivity. Peterborough, Ontario in Canada. activities.

In partnership with local farmers, The project began in 2012 and the and with the help of consultants, first two years were dedicated to we established the goal of restoring evaluating the effectiveness of a the soil quality to a level that would variety of techniques for fertiliza- not only allow agricultural production, seed mixes and crop rotations,

Permeable concrete

Another focus of the R & D area is pacting concrete which, among to find alternatives to substitute other advantages, increases the the materials traditionally used in speed of construction and reduces construction. the noise during its application, and permeable concrete, which A number of innovations have helps improve drainage, contribut- been incorporated into our product ing to flood prevention flooding range. Two examples are self-com- and rainwater reuse.

What the community is saying

In 2014, we carried out a second (MG), Laranjeiras (SE), Muribeca Does Votorantim Cimentos con- Favorability Survey. The objec- (SE), Rio Branco do Sul (PR), tribute to the development of the tive was to calculate a Favorability Sobradinho (DF), Sobral (CE) and municipality or region? - 91% Index to measure the institutional, Xambioá (TO). Is the company socially respon- social, economic and environmen- sible? - 95% tal impacts of our plants on the More than 400 interviews were Overall Favorability Index - 85% local communities. The survey was conducted with a representative Would you like to work in the conducted in the communities sample of our stakeholders. The company? - 70% close to our plants in Cantagalo main results were as follows: (RJ), Imbituba (SC), Itaú de Minas

32 VOTORANTIM CIMENTOS business overview

Research and development Community Engagement In Brazil we have restructured the Research & Development and Quality A structured program of activities area, merging the departments that with the local communities in the had previously worked separately locations where we are present is in each business (cement, concrete, a strategic element for the future aggregates and complementary of our operations. By promoting products). the development of communities, we create value for society and our The R & D team, which reports to the business, strengthening our values Technical Directorate, works closely and our reputation. It also improves with the Sales area to develop new eco- the work atmosphere in our operat- efficient products and services aimed at ing units contributing to a higher meeting consumer demands. level of motivation and increased competitiveness. We are researching new sources of cementitious materials. We are al- In 2014, in partnership with the 35% ready producing a new type of cement Votorantim Institute, we sponsored in our Salto de Pirapora (SP) plant by 94 social projects in 31 locations in the addition of slag. In addition to Brazil, in four areas: human capital The increase in the amount providing an appropriate and creative (education, culture, sports, work, of social investment in disposal method for this waste the rights of children and adolescents); 2014, compared to the performance of the final product was institutional capital (strengthening improved. NGOs and public administration); previous year. social capital (stakeholder engage- Large projects ment, community councils); and Our research into improving the qual- economic growth (generation of ity and reactivity of our products has jobs and income and development enabled the company to be considered of local suppliers). as an excellent supplier for certain large hydro-electric plants under construc- The social investment for the year tion in Brazil. We have signed long-term of R$ 16.38 million was almost 35% contracts to supply cement for the con- higher than for 2013. This increase struction of the dams of the hydro-elec- was due to the expansion of the tric plants in the Madeira River complex social responsibility initiatives in our (Santo Antônio and Jirau), in Teles Pires, operations. Our social investment Mato Grosso, and in Belo Monte, Pará, decisions are guided by medium and in which we will supply more than 1 mil- long-term strategic goals, which lion metric tons of products. have been defined considering the social characteristics of the com- Quality Indicators munities and prioritized to help us In 2014, our Quality Index of Products to identify in which locations we will (IQP) increased to 95%, an increase of act more decisively. 3% over the previous year. The locations were prioritized accord- Our contracts contain specific ing to: representativeness, the degree product performance characteristics, to which our operations impacted with requirements that go far beyond the community and the community technical standards. impacted our operations. We have summary version – 2014 Integrated Report 33 business overview

“ There was a big change in Votorantim Cimentos’ level of customer service. In our case, we were having difficulty in producing a certain type of roofing.T he team at Votorantim Cimentos came up with a solution that added value to our product.”

Marco Daroz, Managing Director of Infibra, a manufacturer of fiber-cement corru- gated sheets and a customer of Votorantim Cimentos since 1970.

prioritized 36 of our 53 cement plants Overall, in 2014, more than 1,600 fami- palities fail to obtain federal funds for in Brazil, and for 31 of these we have de- lies in these communities benefited sanitation projects, for lack of a plan. veloped long-term plans (5 to 10 years). from the ReDes program. Training of the local workforce Some examples of projects that Public administration support Our training programs provide focused on our relations with program In 2014, we contributed to opportunities for young people in communities, which were carried strengthening public administration socially vulnerable situations to in 2014 in Brazil, are as follows: in six municipalities: Xambioá (TO), improve their level of qualifications Cantagalo (RJ), Rio Branco do Sul and access to the labor market. We ReDes (“Networks”) Program (PR), primavera (PA), Vidal Ramos offer training courses in technical This program is a partnership between (SC) and Edealina (GO). professions and also in the general Votorantim Cimentos, the Votorantim This program offers technical support preparation for entry into the labor Institute, and the National Bank for and training to municipalities for market. They are carried out with Economic and Social Development the development of projects aimed highly respected institutions such as (BNDES). The program promotes inclu- at modernizing management in tax, the National Industrial Apprenticeship sive business, and focuses on structur- administration, education and health, Service (SENAI), the Federal Center ing production chains in municipalities as well as the development/revision of of Technological Education (Cefet), with critical social indicators. the Municipal Plan for Basic Sanitation the National Rural Training Service or the Participative Master Plan. Our (SENAR) and ESPRO, which prepares We have a total of 11 ongoing projects actions followed the guidelines of Law young people to be apprentices. in the communities near our plants 10.257, (“Estatuto das Cidades”), and Another initiative is the Evolve in Xambioá (TO), Sobradinho (DF), other applicable legislation. program which provides technical Cantagalo (RJ), Laranjeiras (SE), Rio training in maintenance (mechanical, Branco do Sul (PR), Vidal Ramos (SC), The preparation of detailed plans and electrical and mining. Várzea Grande (MT) and Nobres (MT ). projects enables municipalities to raise funds to improve basic infra- Infrastructure support A good example of the program’s structure through federal government In order to stimulate social and potential is “XambiArt “, a handicraft programs. The program is present in economic development, we have business set up by 19 women in six municipalities. Due to the program contributed to the improvement of Xambioá (TO). They received technical the municipality of Cantagalo (RJ), infrastructure in the locations where training and support in management, obtained a loan of R$ 14.9 million from we operate or plan to operate. We help manufacturing and marketing for the the National Health Foundation, for meet the communities’ demands by production of bio-jewelry and handi- a project to collect and treat sewage. establishing partnerships and techni- crafts, using materials such as mud, According to the newspaper Valor cal cooperation agreements, identify- clay, coconut and straw. Econômico around 70% of munici- ing infrastructure needs and assisting

34 VOTORANTIM CIMENTOS business overview

“With the new system of customer service, we are establishing a much more mature relationship in which each side has the opportunity to explain its needs so that together we can find solutions. This proximity has enabled a substantial increase in contracts. We were able to acquire industrial materials, which we had previously produced ourselves on site, with gains in quality and process reliability.”

Yorki Estefan, Director of Engineering at Conx Construtora e Incorporadora a Votorantim Cement customer for the last 23 years.

in contacts with the relevant instances Relations with Customer Relations of government. Shareholders and Investors In 2014, we transformed the way that One example is a program in the mu- we manage our relations with cus- nicipality of Primavera, in Pará, where The establishment of an Investor tomers. One of the company’s strate- we plan to construct a new plant. Even Relations area in 2014 brought Vo- gic drivers, Customer Focus, inspired before starting to construct the plant torantim Cimentos in closer contact a significant change: the company we signed a Technical Cooperation with international investors, rating began to focus on customer needs, Agreement with the municipal agencies and lenders in Brazil. Up until and not only on its own products. government, in partnership with 2013, under the previous governance the Votorantim Institute. The agree- structure, this role was performed Customer relations and ment focuses on long-term initiatives centrally by the industrial holding satisfaction in six areas: infrastructure and basic company, Votorantim Industrial. In 2014, in addition to the new sales sanitation, education, health, social approach, we invested in developing action, training for public administra- Following the creation of the new closer relations with the profession- tion and the promotion of productive area, the objective is to improve the als working in the construction and cultural chains. company’s relations with the finan- sector. We launched a campaign cial markets, enabling the company to recognize and value the work of Engagement with stakeholders to have a constant and diversified ac- bricklayers and construction site Throughout the year, we developed cess to sources of funding in order to foremen, who have important roles engagement plans with stakeholders finance our expansion plans in Brazil in this market. We provide trained in 10 locations. We identified strategic and overseas. The main challenge for bricklayers and also demonstrate groups and material issues and es- is to continue to evolve in terms of our products and technologies to tablished action plans to improve our transparency and communication engineers and consultants. relations with our local communities. channels, with a schedule for the regular disclosure of information. Corporate Communication Community Councils and Brand Image Another important engagement For this reason, we have reinstated initiative was the establishment of the website for relations with inves- We started working on a reputation Community Councils. This serves tors and have begun to establish platform with initiatives to promote as a communication channel with a schedule for press conferences, closer relations with stakeholders the community, and aims to arrive visits to investors and participa- and to define rules for the use of the at balanced solutions in responding tions in national and international Votorantim Cimentos institutional to the demands of the various local industry events. brand, globally. stakeholder groups. summary version – 2014 Integrated Report 35 R esults of good management

In 2014, we achieved Results of good The consolidated net profit was positive and consistent management R$ 1,141 million, a decrease of 17.9% results in our global compared to 2013, due mainly to the operations. Our geographical diversification, premium paid for the repurchase wide range of products and services, of bonds (R$ 175 million), increased strict cost management, commer- Brazilian interest rates (CDI) on loans cial and operational efficiency and and financing (R$ 176 million) and adequate pricing were some of the lower operating results (R$ 80 mil- factors that enabled us to generate lion). If we excluded the effect of the good global results in 2014. premium on the bond repurchase, in the amount of R $ 175 million, and The consolidated net income was maintained the effective rate for the R$ 12,884 million, an increase of 6.1% period, net profit would have been over 2013 , due to higher cement R$ 1,256 million in 2014, an increase of prices in almost all of our regions, 10.1% compared to the previous year. and the positive effects of exchange rate movements on the consolidated results, partially offset by reduced volumes in Europe, Asia and Africa. EBITDA was R $ 3,493 million, a decrease of 0.6% compared to the previous year. This was impacted mainly by the lower performance of operations in North America and Brazil, partially offset by the operations inE urope, Asia and Africa and South America.

36 VOTORANTIM CIMENTOS Future trends and prospects

Prepared to grow water. Even in this weak demand tinue to invest for the medium and situation we anticipate that new the long terms. We seek to anticipate We know that we will have to face competitors will enter the market, trends and position the company to two more difficult years, especially impacting our business, especially in capitalize on future growth cycles. in Brazil, where a large proportion the South, Southeast and Northeast In 2015, we will review our long-term of Votorantim Cimentos’ business is regions. strategy and we intend to announce concentrated. the next steps in our global invest- Despite this, our goal is to continue ment plan. Assuming a context of low GDP to grow. We have the advantages growth, the prospects for our mar- of a broad and diverse geographical Given the likelihood of a challeng- kets are to maintain sales volumes. reach, a wide range of products and ing short-term situation, we will We expect to see cost pressures, services, a new customer service ap- strengthen our cost control and our especially for important inputs such proach and an aggressive investment focus on our four strategic driv- as electrical energy, fossil fuels and program. ers: customer focus, empowered employees, operational excellence, Several factors give us confidence and sustainable practices. One of our that we can achieve our goals. We priorities is to work hard to improve are well positioned in Brazil, in those safety, ensuring a healthy workplace regions that will continue to grow, environment, with zero accidents. especially the Northeast, North and Center-West. We will maintain the The new governance structure has pace of our investments in Brazil and had very positive impacts on the Even in the face of a overseas. company, and its effects will con- challenging economic tinue to be felt for some time. The situation, our objective The prospects are also good in company still intends to open its is to continue to grow. several countries where our Europe, capital. However the timing is con- Asia and Africa subsidiary operates. ditioned on the market conditions In addition to building a new plant in being appropriate. Turkey, we are looking at an expansion project in Morocco and a power In short, Votorantim Cimentos will generation project to supply our continue to make every effort to be operations in Tunisia. We remain on recognized by the market and society the look-out for good opportunities as a strong and durable company for acquisitions outside of Brazil. that has quality products, exemplary management and sustainable prac- As a company that takes a long-term tices, and one which aspires to create view, we have invested and will con- a better world for future generations.

summary version – 2014 Integrated Report 37 Report Production

Energy, Sustainability VC Contributors and Safety Directorate Alexandre Henrique Takano, Ale- Director Responsible xandre Levantino Amaro, Alexandre Edvaldo Araújo Rabelo Paraiso Cari, Ana Carolina Marques Correia, Ana Claudia Soares Mar- General Coordination tins Trittoni, Ana Paula de Medeiros Global Head for the Environment Carracedo, Ana Paula Santana dos Patricia Monteiro Montenegro Santos, Barbara Almeida Souza, Bru- na Bedim Batista, Bruna Elisabeth Environment Team de Moraes, Carolina Moreira Meira, Carolina Moreira Meira, Alexandre Daniel Gonçalves da Silva Fonseca, Henrique Takano, Janaina de Oliveira Delma Luiza Trevisan Barcellos, Barros, Helena Kowarick Spiritus, Dirlane Maria Albino, Dirley Antonio Guilherme Tanferri and Stefanie Maia, Eduardo Ferreira Abrahão, Palma. Eduardo Montenegro Bortoleto, Elaine Bohme Pellacani, Fabio dos Finance and Investor Santos Sant Anna, Fernanda Teves de Relations Directorate Souza, Frederico Cruvinel, Gabriela Woge, Giuliano Giordano, Guilherme Gabriela Woge, Wellington De Paula Tanferri, Helena Kowarick Spiritus, Oliveira, Daniel Gonçalves da Silva Ian Yoshio Ohta Primo, Janaina de Fonseca and Thiago José Braga Lobato. Oliveira Barros, Katia Helena Ubal de Rodrigues, Leandro Badi Taouil, P eople & Management Luiz Humberto Fernandes, Maikon Directorate Cristofer Melo, Malu Weber, María Alejandra Repetto, Maria de Fatima Global General Management Peixoto Nascimento, Mario Pinto, for Corporate Communication & Martin Vroegh, Maurilo Rodrigues Brand Management Moura, Patrícia Vilhena Duarte, Malu Weber, Bruna Gomes and Patricia Monteiro Montenegro, Paula Carolina Simonetti. Vieira Fava, Ricardo Turra, Roberto Akiau, Rogier Hans Hofman, Ruben Plaza, Sandra Regina Gregório, Silvia Maria Sotero, Silvia Regina Soares da Silva Vieira, Stefanie Palma, Thiago José Braga Lobato, Vanessa Wu Fer- nandes, Wagner Teixeira Florentino, and Wellington De Paula Oliveira. Credits

Reporting and writing Inez de Oliveira e Maria Inês Caravaggi

GRI Consulting and design Report Sustentabilidade Team: Pâmela Jabbour (project management and relations), Karina Simão (GRI consulting), Guilherme Falcão (graphic design) Flavia Ocaranza (layout) and Thais Benite (graphic production).

Editing Eduardo Dantas

Revision Assertiva Produções Editoriais

English translation Richard Wightwick

Photography Leonardo Rodrigues and Votorantim Cimentos Image Bank.

Infographic The Infographics Company – Business Model pages 2, 3, 4 and 5. Cássio Bittencourt – pages 16 and 17

Typography Fedra Sans, by Peter Biľak, 2001.

SELO FSC

Seeking to minimize the environmental impact of this publication the lamination of the cover is biodegradable.