ultra 2016 ANNUAL REPORT 2016 02 ultra Annual Report 2016 contents 03
Contents
04 08 20
Introduction ultra Management fundamentals • Introduction • Ultra • Corporate Governance • Message from Management • Highlights 2016 • Ethics and Compliance • Key Indicators • Risk Management
28 38 48 54
Strategy and Outlook People Management Management of Safety OUR Businesses • A Multi-business Vision • Valorization of Professional • Safe Environment • Ipiranga • Ultra Business Model Development • Oxiteno • Investment Plan • Ultra Culture • Ultragaz • Sustainability Model • Compensation • Ultracargo • Leadership Development • Extrafarma • Other Highlights of the Year
70 82 87
Environmental Management Financial Performance Corporate Information • Reduction of Impacts • Sales Balance • Integrated Models in Eco-efficiency • Consistent Results • Management of GHG Emissions • Capital Markets • Water • Energy • Solid Waste 04 ultra Annual Report 2016 introduction 05 Introduction
We are pleased to present the report of our activities in 2016. The report This year, we have sought to expand focuses on the importance given to institutional transparency and best the scope of the annual report by practices of communication with the Company’s stakeholders. It presents the including socio-environmental key results reported in 2016 by Ultra and its businesses – Ipiranga, Oxiteno, performance indicators Ultragaz, Ultracargo and Extrafarma –, the main projects, its economic-financial performance and information regarding the five sustainability pillars: Safety, the Environment, People, Products and Services and the Value Chain. These performance indicators. The information We believe that, to present these details themes were defined according to relating to our sustainability pillars has on our sustainability performance, is the corporate guidelines and are matched been defined by taking into account first step towards bringing these different by all the Company’s businesses. In the the level of maturity of the Company in aspects of the Company together, albeit light of market specificities, each one of mapping and monitoring this information still not in full compliance with the the businesses also maintains proprietary and its materiality to the stakeholders. All requirements inherent to the disclosure policies reflecting their own particular the companies report their performance methodologies. The underlying idea is socio-environmental activity. to Ultra on priority items. However, it to present a more complete vision with has not been possible to raise certain respect to performance and the value that With the stimulus of the main tendencies indicators for Extrafarma, especially those Ultra creates for the stakeholders. for disclosing results such as the Global relating to environmental management. Reporting Initiative (GRI) methodology The company was incorporated by and the integrated reporting principles Ultra in 2013 and work is underway to of the International Integrated Reporting standardize this information in alignment Initiative (IIRC), we have sought to with what is already monitored by the expand the scope of the annual report other businesses. by including the socio-environmental
Five sustainability pillars:
Where to find
The socio-environmental information is highlighted according to the respective icons throughout the Safety Environment People Products and Value publication. Services Chain 06 ultra Annual Report 2016 Message from Management 07 Message from Management
Our management model
In one more year with a challenging macro-economic scenario in Brazil, Ultra was able to demonstrate the consistency of its management and the resilience of “In spite of market downturns and its businesses. As with any other company for which the principal market is Brazil, we political uncertainties, to pursue suffered the effects of a difficult economy, especially in those businesses most our strategic plan and invest in our closely linked to the country’s economic performance. Nevertheless, we proceeded employees is a hallmark of Ultra” with the implementation of our plans and actions based on our vision 2022.
The implementation of our investment strategy continued rigorously on course, our business model and aligned to the more effectively in the key North despite a year of deep recession with strategy of each one of our businesses American surfactants market. Further a significant decline in GDP, household as well as that of Ultra. Overall, during to executing projects with a view to incomes and decreasing levels of the year, we concluded an aggressive future growth, there was also progress employment. On the contrary, we investment plan of approximately R$ 1.9 in activities relating to innovation with expanded our corporate strategy for billion, 36% greater than 2015. the addition of 66 new solutions to our developing leaders and teams and for portfolio. Despite a 2% increase in sales strengthening our organizational culture. Strategy at Ipiranga was focused on the volume in 2016, the company’s net In 2016, Ultracargo enjoyed the benefits as gradually in other regions of Brazil. By opening of service stations, strengthening revenue was 9% lower, mainly due to the of robust fuel handling operations at year-end 2016, we had opened 71 new Even in the face of market downturns our reseller partners and enlarging the average depreciation of the US Dollar the port terminals. This market growth, stores, making a total of 315 located and political uncertainty, to pursue our distribution infrastructure. We ended against the Real, which also depressed combined with the partial recovery of across 10 states. The company reported an strategic plan and invest in our employees the year with 7,563 Ipiranga service EBITDA by 38%. the company in the aftermath of the annual EBITDA 29% higher than recorded - always responsibly and with discipline stations, 333 more than 2015. Another Santos (São Paulo) fire in 2015, produced in 2015. in capital allocation - is one of Ultra’s core aspect of Ipiranga’s strategy and manifest Innovation and operational excellence highly positive results with net revenues characteristics. We are always alert to during the year, is differentiation through were the focus of Ultragaz during the rising 13%. EBITDA rose 7%, excluding the All the initiatives and actions that led projects opportunities that bring future innovation and convenience. In 2016, this year. The company pursued actions based Santos operations and the investments us to these results are aligned with our benefits and provide the foundations strategy translated into investments in on its strategy of growth and improving made in the recovery of the terminal management model, which guides for accelerating our businesses when 256 new am/pm franchises, 128 Jet Oil the reseller network, increasing the following the fire. us and motivates us – leaders and economic growth resumes. units, 163 bakeries, 138 beer caves, among competitive edge of its services based on employees – to make Ultra a company R$ 1.9 other initiatives for offering greater value, technological support and information We relaunched the Extrafarma brand, with a high performance team and an In 2016, we examined and implemented practicality and quality to our resellers and systems as well as the creation of new consolidating a new market positioning ethical business reference, financially new initiatives and projects, which will clients. All these initiatives led to year- commercialization channels. On the which reinforces the characteristics of healthy, strongly committed to society billion allow us to establish new growth paths, over-year growth of 2% in net revenues operational front, we invested in a trust and greater proximity in customer and the environment. This socio- both immediate and future, for our and 11% in EBITDA. new filling plant in Juazeiro (Bahia) for relationships. At store level, these environmental commitment is aligned was invested businesses. Three important transactions increasing efficiency in distribution of characteristics translated into a new with our businesses, conscious as we are were announced. In the fuels distribution At Oxiteno, the year was an advance in bottled gas and services offered to the layout and increased standards of of our corporate responsibility for the in 2016, 36% segment, we signed an agreement to internationalization through expansion population in the region. As a result, we pharmaceutical retailing management, development of the country. acquire ALESAT and in LPG distribution, in the United States. Developments at were successful in reaching net revenue providing greater convenience and an greater than in the Liquigás. We also set up a new lubricants the new Pasadena plant in Texas evolved and EBITDA 16% and 25% respectively improved shopping experience for our Paulo G. A. Cunha (Chairman of business with Chevron, one of the world’s and construction work will continue higher than 2015. customers. On the back of store renewal, the Board of Directors) and Thilo preceding year largest companies in the energy sector. throughout 2017. Once complete, the we are now accelerating our expansion Mannhardt (Chief Executive Officer) These initiatives were adopted based on new unit will allow Oxiteno to compete in the North and the Northeast as well 08 ultra Annual Report 2016 ULTRA 09
Ultra
In this chapter
• Ultra • Highlights 2016 • Key Indicators
Present in Brazil’s key economic sectors, Ultra’s businesses reported consistent results in a challenging year 10 ultra Annual Report 2016 ULTRA 11 Ultra 2% A nationwide footprint % of employees by region 7%
Ultra is a multibusiness company, a leader About to turn 80 years of existence in Central-West in the segments in which it operates 2017, Ultra has 15 thousand employees. 18% and one of the largest corporate groups Since 1999, the Company has been listed South 38% in Brazil. The company has a broad- on the São Paulo and New York stock 80 years based footprint, present in nearly all exchanges, with level III ADRs. In 2011, North Brazilian states and operations in eight Ultra signed up to the BM&FBOVESPA’s of age in 2017, Northeast other countries. Its businesses have Novo Mercado listing regulations, strong capillarity and are supported the Brazilian stock market segment Ultra has 15 Southeast by Ultra’s corporate governance and requiring highly differentiated corporate 31% financial strength, with the purpose of governance standards. thousand 9 countries guaranteeing the Company’s perenniality 4% international employees in a privileged position even under an employees and is adverse macroeconomic scenario. one of the largest
groups in Brazil A STRATEGIC PRESENCE The Company’s businesses are Through its five businesses, Ultra is present in nearly all the states of Brazil and leaders in their chosen segments in the Federal District, covering 85% of all Brazilian municipalities, in addition to eight countries.
Ipiranga, which distributes and sells fuels and lubricants, had 54 storage terminals and distribution pools and 7,563 service Argentina, Colombia, Belgium and China Ultracargo, a liquid bulk storage stations nationwide at year-end 2016. through commercial offices. company, has operations at six Brazilian ports – Itaqui (Maranhão), Suape Oxiteno, a specialties chemicals Ultragaz, the largest liquefied petroleum (Pernambuco), Aratu (Bahia), Rio de company, has six industrial units in gas (LPG) distributor in Brazil, has 18 filling Janeiro (Rio de Janeiro), Santos (São Paulo) Brazil – Mauá, Suzano and Tremembé in plants, 19 plants for product storage and and Paranaguá (Paraná). São Paulo, Triunfo in Rio Grande do Sul distribution and a network of about 5.8 and two in Camaçari (Bahia) –, three in thousand independent resellers serving Extrafarma, a retail pharmacy business, Mexico (Coatzacoalcos, Guadalajara and 11 million households in the bottled gas ended 2016 with 315 stores in 10 states, San Juan del Rio) and a further three in segment and 52 thousand industrial and the largest concentration being in the Uruguay, Venezuela and the United States. residential customers in the bulk segment. North and the Northeast regions of Brazil. The company also has a presence in
Market Share¹ (%) Ipiranga Ultracargo2 Ultragaz Extrafarma3
20.4% 27.1% 23.8% 12.2%
1. There is no public indicator for market share in the case of Oxiteno since the company has no direct competitors, which produce exactly and exclusively the same products, sharing the market as it does with several companies. Qualitatively, it can be said that Oxiteno is a leader in surfactants and specialty chemicals in Latin America, offering solutions to the segments of Agrochemicals, Personal Care, Domestic and Institutional Cleaning Materials, Oil and Gas, Performance Products and Paints and Coatings. 2. Based on handling data published by ABTL (Brazilian Association of Bulk Liquids Terminals). 3. Market share in the region where it trades. 12 ultra Annual Report 2016 ULTRA 13 Highlights in 2016
Shareholders’ equity R$ million 10% 16% 2012 6,006 annual average growth annual average growth 2013 6,547 in revenues over the of EBITDA over the past 2014 7,727 past five years five years 2015 7,974
2016 8,559 % R$6,8 13 Net debt/EBITDA annual average growth billion 2012 1.3x in net income over the invested over five years past five years in the businesses 2013 1.2x
2014 1.3x
Bond issue of 2015 1.2x us$ 2016 1.4x 750 million
Net debt R$ million
Trend in consolidated EBITDA and consolidated net income 2012 R$ million 3,084
2012 2013 2014 2015 2016 2013 3,426 EBITDA 2,411 2,918 3,158 3,953 4,217 Net income 1,027 1,229 1,251 1,513 1,571 2014 3,975
Dividends per share (R$) 2015 4,928 2012 2013 2014 2015 2016
1.17 1.37 1.42 1.60 1.67 2016 5,715 14 ultra Annual Report 2016 ULTRA 15 Financial Performance1
R$ million 2012 2013 2014 2015 2016 R$ million 2012 2013 2014 2015 2016
ULTRA ultracargo Net revenues from sales and 53,869 60,940 67,736 75,655 77,353 Average storage (‘000 m3) 614 696 715 655 672 services Net revenues from sales 294 332 346 316 355 EBITDA 2,411 2,918 3,158 3,953 4,217 and services Net income 1,027 1,229 1,251 1,513 1,571 EBITDA 143 158 167 26 171
Investments2 1,310 1,089 1,220 1,352 1,858 Investments 82 37 26 24 79
Dividends declared 627 744 779 871 907 EXTRAFARMA3
Earnings per share (R$) 1,91 2,29 2,28 2,76 2,88 Number of stores 223 254 315
Dividends paid per share (R$) 1,17 1,37 1,42 1,60 1,67 Gross revenues 1,171 1,417 1,674
IPIRANGA EBITDA 30 29 37
Sales volume (‘000 m3) 23,364 24,758 25,614 25,725 23,507 Investments 57 81 143 Net revenues from sales 46,829 53,384 58,830 65,350 66,407 CAPITAL MARKETS and services Average daily trading volume EBITDA 1,653 2,030 2,288 2,769 3,080 55,498 69,874 88,577 136,671 132,999 (R$ 000)4 Investments 942 746 815 872 1,065 Price at BM&FBOVESPA (R$/share) 46,29 55,95 51,45 60,45 68,45 Productivity (EBITDA R$/m3) 71 82 89 108 131 Price at NYSE (US$/ADR) 22.28 23.65 19.07 15.25 20.74 OXITENO
Sales volume (‘000 ton.) 761 776 780 725 738 1. The financial information presented in this document has been prepared according to InternationalF inancial Reporting Net revenues from sales and Standards (IFRS) and EBITDA’s figures were prepared in accordance with CI VM 527. Ultra’s financial information corresponds to 2,929 3,278 3,414 4,082 3,701 services the company’s consolidated information. The financial information for Ipiranga,O xiteno, Ultragaz, Ultracargo and Extrafarma is reported without elimination of intercompany transactions. Except where otherwise indicated, all figures are shown inR $ EBITDA 352 441 404 740 459 million. 2. Organic investments. Investments 115 139 114 131 288 3. In 2014, refer exclusively to the months from February to December. 4. Average daily trading volume presented considers the combined trading on the BM&FBOVESPA and the NYSE. Productivity (EBITDA US$/ton.) 235 263 240 306 178
ultragaz
Sales volume (‘000 ton.) 1,681 1,696 1,711 1,697 1,760 Net revenues from sales 3,847 3,982 4,091 4,621 5,366 and services EBITDA 246 281 306 357 447
Investments 157 151 181 220 225
Productivity (EBITDA R$/ton.) 146 165 179 210 254 16 ultra Annual Report 2016 ULTRA 17
Awards and recognitions 2016 Ultra’s activities have been recognized differentiated practices of governance and with awards, which highlight among management. The principal recognitions Key other aspects, the consistent creation obtained by Ultra and its businesses in of shareholder value combined with 2016 are as follows: Indicators
43rd Edition of Exame magazine’s Exame Sustainability Guide Biggest and Best Yearbook Ultra was elected a Company model in the Retail Economic Ultra was represented by two of its businesses, category in 2016. The publication highlighted elected the best in their sectors. Ipiranga was Ipiranga’s Health on the Highway program with Distribution of Value perfomance. In 2016, Ultra generated chosen for the sixth consecutive time as the best actions for encouraging quality of life practices for The Statement of Value Added reports value added of R$ 6.4 billion, distributed company in the Wholesale sector while Oxiteno truck drivers and those living along the highways. the value of the wealth generated by the as follows: ranked first in the Chemicals and Petrochemicals The other businesses also received mention for Company and its distributtion among sector. Ultragaz, which was placed fourth in the several initiatives. Oxiteno was selected for its water the stakeholders that contributed to its Retail sector in 2014, was third this year. management and Ultragaz for its itinerant movie- theater trucks, which brought 125 thousand people to the cinema in 22 states over four years. 10% Institutional Investor magazine Carbon Disclosure Program (CDP)
Ultra was recognized for its relationship with Ultra is recognized for its responsible environmental investors in a survey conducted in August 2016. management by CDP, an international organization Retained earnings 28% 14% In the Latin American Oil, Gas and Petrochemicals that encourages and provides a global system for segment, the Company was awarded first place companies and cities to measure, disclose, manage Shareholders in the categories of best CEO, best CFO, analysts’ and share information on the environment. Third parties meeting, IR Program and best IR site. Government Employees 23% Cannes Corporate Media & TV Awards 16th Companies Broadcast Award 25%
The Company was awarded a Silver Dolphin in the Ultra was third in the award, which is sponsored Online Media category – Corporate Films, in this, by Estado news agency jointly with Economática, the leading corporate films festival in the world. the financial information provider. Seven financial The award was for the Choices video, an initiative indicators are analyzed to select the 10 companies, of Ultra’s Ethics and Compliance program (read which during the year generated a positive return for more on page 26). their investors with superior profitability relative to the Capital markets full slate of publicly listed companies in Brazil for 2015. Daily trading volume (in R$ million) Market capitalization1 (R$ billion)
2012 55 2012 25
2013 70 2013 30 Company was one of those which generated the most positive return and 2014 89 2014 29 superior profitability according to the 2015 137 2015 34 Estado News Agency/Economática 2016 133 2016 38
1. Calculated on the basis of the closing share price on the last day of the year. 18 ultra Annual Report 2016 ULTRA 19
Safety Accident rate requiring leave of absence from work (per million hours worked)1
4.4
1.9
2.7 2014
4.0
n.d.
3.6
3.1 People Number of employees per company 3.7 Year Ipiranga Oxiteno Ultracargo Ultragaz Extrafarma Corporate Ultra 2015
2.8 2014 2,764 1,809 613 3,636 4,711 440 13,973 2015 2,864 1,806 596 3,603 5,269 459 14,597
5.5 2016 2,903 1,903 645 3,610 5,670 442 15,173
1. No trainees were counted.
4.0 Environmental Greenhouse gas GHG
1.0 Greenhouse gas emissions (scopes 1 and 2) - tCO2 e Year Ipiranga Oxiteno1 Ultracargo2 Ultragaz Corporate 1.8 Ipiranga 2014 17,295 590,947 6,107 23,901 191 2016 Oxiteno 2015 18,543 587,882 30,089 21,080 186 2.4 Ultracargo 2016 18,456 568,307 7,466 16,033 191 Ultragaz 0.1 Extrafarma 1. Amounts correspond to emissions from all Oxiteno’s industrial units with the exception of Pasadena (USA). In 2015, emissions from the units in Mexico, Venezuela and Uruguay were included, although prior to this only units in Brazil were reported. In 2016, Oxiteno and
White Martins implemented a project for the sale and purification ofCO 2 generated in the 1. Rate is calculated based on the number production of ethylene oxide. of accidents / MHs (Calculated pursuant 2. Until 2014, the indicator’s scope encompassed the Paulínia Terminal (São Paulo), deactivated to NBR 14280) of employee numbers as at in 2015. Ultracargo also posted emissions arising from the Santos fire and for this reason, December 31, 2016. amounts were significantly altered in 2015. 20 ultra Annual Report 2016 Management Fundamentals 21
Management Fundamentals
In this chapter
• Corporate Governance • Ethics and Compliance • Risk Management
Ultra has shares traded on the BM&FBOVESPA and on the NYSE and has a track record of good governance practice 22 ultra Annual Report 2016 Management Fundamentals 23
Corporate Ownership Structure – Ultrapar Participações S.A. 22% Governance Ultra S.A. Participações Aberdeen Asset Management PLC1 61% 8% Parth do Brasil Ultra’s management is driven by a Continually evolving, in 2016, Ultra Participações Ltda solid corporate governance structure, 8% able to combine the interests of both implemented a new integrated risk Treasury stock shareholders and managers to create value for clients, employees and society, management methodology Others always focused on the longevity and profitability of the business. 2%
Ultra’s businesses managers are also businesses development. In addition to Trading Policy. All these initiatives are shareholders, receiving variable the Company’s commitment to growth, integrated into an environment of internal 1 Investment funds headquartered in the United Kingdom (according to the Notice of a Relevant compensation in return for meeting employees also share a commitment to controls established over the course Shareholding Interest informed by the related funds). increasing growth targets according to businesses ethics in all its areas. of Ultra’s existence, evolving under the Economic Value Added – EVA® criteria, direct supervision of senior management, an indicator used by the Company Governance practices are continuously supported by the internal and external internally since 2001. This tool ensures evolving. In 2016, Ultra developed and audits for ensuring their integrity. that the company invests in businesses implemented a new integrated risk which are not only profitable or have a management methodology, resulting positive EBITDA but also offer returns in a new risks matrix model, redefining above the cost of capital also considering responsibilities and sharing of information. the analysis of aspects of the project’s These practices have also evolved through corporate sustainability. Ultra’s Compliance and Ethics Program, to which new corporate policies have been An owner of the business culture added such as the Competition Policy, the permeates Ultra’s entire leadership and is Conflicts of Interest Policy, the Material shared at all hierarchical levels, guiding Facts Disclosure Policy and the Securities’
Culture of good practices
Equal political and economic 67% rights for all shareholders – “one of board members are share one vote” independent
Founder-member of the Latin Component of the MSCI Global American Corporate Governance Sustainability Index Series
Roundtable Companies Circle 1 2 3
4 5 6 7
Executive Board: 1. Leocadio de Almeida Antunes Filho - 2. Thilo Mannhardt - 3. André Pires de Oliveira Dias. 4. Pedro Jorge Filho - 5. João Benjamin Parolin - 6. Ricardo Isaac Catran - 7. André Covre. 24 ultra Annual Report 2016 Management Fundamentals 25
ULTRA’S ORGANIZATION CHART MANAGEMENT
BOARD OF DIRECTORS CORPORATE CENTER OXITENO ULTRACARGO Chairman Chief Financial and Investor Chief Executive Officer Chief Executive Officer Paulo Guilherme Aguiar Cunha Relations Officer João Benjamin Parolin Ricardo Isaac Catran André Pires de Oliveira Dias Vice Chairman¹ Controller Controller Pedro Wongtschowski Information Technology Director Ana Paula Santoro Coria Cristiane Silva Leite Fredson Carlos Javurek de Oliveira Board of Directors Commercial Director Liquid Bulk Business Northeast Alexandre Gonçalves Silva* Treasury, Communications and Andréa Campos Soares and Southeast Director Carlos Tadeu da Costa Fraga* Investor Relations Director Helano Pereira Gomes Jorge Marques de Toledo Camargo* Marcello De Simone Industrial Director José Maurício Pereira Coelho* Flávio do Couto Bezerra Cavalcanti New Businesses Development Lucio de Castro Andrade Filho Controlling, Investment and M&A Director Nildemar Secches* Director Human Resources Director João Marcos Cazula Olavo Egydio Monteiro de Carvalho* Roberto Kutschat Neto Simone Torres Cavalcanti de Albuquerque**
FISCAL COUNCIL IPIRANGA EXTRAFARMA
President Chief Executive Officer ULTRAGAZ Chief Executive Officer Flavio César Maia Luz André Covre Leocadio de Almeida Antunes Filho Chief Executive Officer Pedro Jorge Filho Members Controller Controller Geraldo Toffanello2 Élcio Arsenio Mattioli Jose Manuel Alves Borges Development Director Nilson Martiniano Moreira Aurelio Antonio Mendes Ferreira Retail Director Operations Director Iara Rosso ULTRA Jeronimo José Merlo dos Santos Controller Executive Board Caroline Pepe*** Operations Director Human Resources Director Chief Executive Officer José Augusto Dutra Nogueira Janaína Alves Maia** Thilo Mannhardt Integration Director Julio Cesar Nogueira*** Lubricants Director Sales and Expansion Director Officers Miguel Lacerda de Almeida Miguel Rothmann Jarros André Covre Operations Director Plínio Laerte Braz André Pires de Oliveira Dias Corporate Market Director Commercial and Marketing João Benjamin Parolin Director Tabajara Bertelli Costa Regional Sales Directors Leocadio de Almeida Antunes Filho Rodrigo de Almeida Pizzinatto André Luiz Pedro Bregion Pedro Jorge Filho José Vianna Sampaio Neto Ricardo Isaac Catran Leandro Del Corona Risks, Compliance and Audit Director Denis Celso Marques Cuenca 1 Position as from May 2017; occupied by Lucio C. A. Corporate Director Filho until 2016 Note: On June 21, 2017, Ultra announced the succession 2 Member who took up his position from April 2017 process to replace the current Chief Executive Officer. of Human Capital * Independent board members. Frederico Curado will take over as the company’s Chief Luciana Domagala **As from February 2017 Executive Officer fromO ctober 2nd, suceeding Thilo ***As from March 2017 Mannhardt who has held the position since January 1, 2013. 26 ultra Annual Report 2016 Management Fundamentals 27
Another pillar of the Compliance Ethics and and Ethics Program is controls and monitoring, carried out by the Internal Ultra open channel Audit jointly with the internal controls Compliance areas of each of the respective business The whistle blowing channel is the responsibility of an segments. In this period , thousands outsourced company, thus guaranteeing independence in of reputational investigations were the handling of information as well as total anonymity for conducted for partners and third parties complainants. Access can be made through the site www. interacting with the businesses. Several specific controls were implemented canalabertoultra.com.br or by calling 0800-7017172. Between Ultra believes that to be a global multi- As a way of integrating the various levels of the top, together with motivational together with the already traditional 2015 and 2016, 200 calls deemed as highly pertinent were business reference also involves ethics, of governance, the Conduct Committee’s films on corporate policies. In 2015, internal controls relating to Sarbanes made through the channel. All were investigated by the values and robust corporate governance representatives meet with the Chief the Company produced the Escolhas Oxley certification - unqualified since internal audit team with reports submitted to the Conduct for consolidating a reputation that has Executive Officer, the Audit Committee (Choices) film, which introduces 2007 - and the systematic review of all developed over nearly 80 years. For and the Board of Directors, where there situations relating to corruption. The payments made by Ultra and surpassing Committee and the Audit Committee. this reason, Ultra has implemented its is an exchange of information as well video is interactive and stimulates 1.3 million monitored transactions. Compliance and Ethics Program for raising as discussions on joint initiatives to employees to choose different ways awareness and educating its 15 thousand strengthen Ultra’s controls and culture of handling a given situation and to employees on corruption issues, non- environment. discover the consequences these compliance in the businesses and on anti- decisions have for professional, personal ethical behaviors, in accordance with the Training, engagement and and family life. The film was recognized principles of the Code of Ethics and Ultra’s auditing with an award at the Cannes Corporate corporate policies. Between 2015 and 2016, the program Media & TV Awards, the world’s premier Risk has been responsible for promoting corporate film festival, in the Online The first edition of the Code of Ethics several training initiatives involving the Media – Corporate Films category, was published in 2004 and subsequently Company’s executive board and leaders. recognition that bears witness to the Management totally revised in 2014. In that same year, These initiatives include lectures from seriousness with which investments are Ultra also issued the Anti-Corruption specialists, onsite and on-line training, made in communicating our guidelines. Policy with guidance and rules based on announcements and tutorials as well as the so-called Clean Company Law 12.846, acting on guidance sent through the In 2016, Ultra produced a new film - “8 de published in 2013, together with other Canal Aberto (Open Channel), always Outubro”, the aim of which is to reinforce anti-corruption international guidelines. touching on themes and guidelines of awareness on the theme of cartels and Ultra has been developing its already The responsibility for collation and Since 2015, the corporate policies regulating the bad competitive practices. In this movie, traditional management of risks. organization of data was made that of the The program is multidisciplinary, principles of the Code of Ethics. the daughter of an executive of a major This culture is an integral part of the Audit, Compliance and Risks Department Ultra has been reinforcing mainly behavioral aspects. Its company, accused of operating a cartel management of the businesses, whether reporting directly to the Board of Directors application stimulates engagement with During the year, the program covered in collusion with competitors, tries on the Company’s various operational in meetings organized for discussion of resdesigning Ultra’s principles, conduct guidelines and such themes as ethics and conduct, to understand what led her father to fronts, in its financial management or on the theme. Risk management continues best business practices, through strong corruption and the relationship with commit such a crime. other fronts such as the management of under the responsibility of the appropriate the strucutre communication elements, different forms public sector entities, bad competitive investments, technology and the market. managers of each business. of training and controls in addition to practices, announcements of material Training and communication initiatives for raising monitoring and auditing. facts, trading of securities, among others. seek to place the spotlight on the Since 2015, Ultra has been redesigning In parallel, several guidelines are behavioral aspect by promoting its structure for collating information and constantly being reviewed and improved, information and The Company’s governance is the Integral to this effort was the production engagement, one of the principle risk consolidation, with the corresponding with formalization and guidance being responsibility of the Conduct Committee, of films with messages from the themes of the program. reorganization of the reporting given to the various managers and consolidating which reports directly to the Board of Executive Board, reinforcing the tone mechanism to senior management, this committees on the limits and risk appetite Directors and is chaired by an external and process involving interviews with Ultra’s validated by the Company’s management. risks independent executive. The committee entire leadership. Among these, the most important are is made up of representatives from the guidelines involving Financial Risks Chief Financial Officer’s, Financial Control, In this process, the internal controls and Policy, the Investments Policy, Disclosure Corporate Legal and Risks, Compliance A multidisciplinary program processes used were revalidated, the of Material Facts Policy and Securities and Audit departments, and is responsible resulting new indicators being linked in Trading Policy. for coordinating the program’s activities. reinforces behavioral aspects to the integrated risks matrix. The new This multidisciplinary and complementary and has strong elements of metrics improve the centralized debate composition enables a balanced on the risks by the various management discussion and approach to different communication, different ways of levels, offering a clearer vision to angles of the issues addressed to the governance organs. Conduct Committee. training, monitoring and auditing 28 ultra Annual Report 2016 Strategy and Outlook 29
Strategy and Outlook
In this chapter
• A Multi-business Vision • Ultra Business Model • Investment Plan • Sustainability Model
The search for synergies among operations, reinforcing Ultra’s identity 30 ultra Annual Report 2016 Strategy and Outlook 31 A multi-business vision Priorities The principal strategic objectives of each business
As part of the corporate strategic Company invests in key sectors, Ipiranga Oxiteno positioning to be a protagonist and a global multi-business reference, leveraging its characteristics of • Differentiation through • Strengthen the and Coatings with a focus on Ultra works with solid values that diversification of products and internationalization process co-creation and customized guide its strategy. This pioneering and resilience, scalability and ability to services in addition to innovation through expansion in the U.S. solutions entrepreneurial identity has been built on a structure based on financial soundness, generate differentiation • Expansion in the Central-West, • Protect leadership in Latin • Differentiation through careful planning and capacity to North and Northeast regions America innovation implement what has been planned. • Expanding the network through • Increase market share in The aspects driving the Company are translates into expansion of the sales vision of the future and creates common the branding of white flag service the specialty chemicals common to all the businesses: strong channels, greater customer convenience criteria for the development of leaders stations and the rollout of new segment and strengthening brands and scale as factors of market and the opening of new market fronts. in a multi-business context. Another service stations the company’s position in differentiation combined with innovation Ultracargo is expected to conclude important front for human resources is Agrochemicals, Personal Care and sustainability as elements of the Itaqui (Maranhão) port terminal the Ultra Leadership Program - “Essência” • Expanding convenience with new and Domestic and Institutional execution and management. Ultra, with expansion - doubling the unit’s storage based on cutting-edge leadership and services at the am/pm stores Cleaning, Oil and Gas and Paints a near 80-year track record of investing in capacity - and to continue to capture business management strategy from a key sectors, leverages its characteristics of long-term investment opportunities, multi-business perspective. (read more on resilience, scalability and differentiation to mainly due to demand for logistics page 45). create increased value. infrastructure in Brazil. During the year, Ultragaz Ultracargo Extrafarma Extrafarma strengthened its retailing A further advance comes in the form of The strategy of the Company has been platform with initiatives such as a the Ultra Integration Project for aligning • Increase its share in the bulk • Leverage opportunities through • Markets leveraged due to to establish growth priorities through new store model, designed to provide processes and systems among the market focusing on small and the presence in the main ports demographic tendencies and 2022 to strengthen its positioning. greater comfort, convenience and better businesses through a standardized ERP. medium sized businesses of Brazil through greater access of the Consequently, Ipiranga concentrates its shopping experience for customers as Oxiteno will be the first in the Company population to personal care and efforts on two pillars: expansion in the well as accelerating the opening of new to install the new ERP, to be implemented • Expand its presence on the • Expand scale beauty, as well as prescription service station network and a strategy drugstores. A total of 71 new units was by 2018. Over the next few years, the new North and Northeast of Brazil and non-prescription drugs of constant innovation in service and rolled out in 2016, double the preceding system will be available to all employees • Expand into new geographies convenience. Meanwhile at Oxiteno, year, the company making its debut in contributing to still more integrated • Promote new uses of LPG • Differentiated shopping the focus is to expand the company’s four new states over the last two years, management, albeit always taking into experience with a better internationalization with the construction namely those of Pernambuco, Paraíba, São account the peculiarities of each business. • Expand services and product mix, excellence in of the new Pasadena plant, scheduled Paulo and Tocantins. convenience together with service and cost control for completion by the end of 2017. The Ipiranga’s and Extrafarma’s unit will allow the company to compete The development of human resources is networks • Accelerating the expansion into more effectively in the North American fundamental to ensuring a broadened new markets surfactants market. During 2016, Oxiteno and multidisciplinary vision of the also launched a new operating model business and a readiness to meet the to enhance the focus on innovation. challenges of growth and succession. Ultragaz is also focusing its participation The Ultra Competencies Model has on the expansion and differentiation been designed as an integral part of the of its services through innovation. This development agenda. This sustains the 32 ultra Annual Report 2016 Strategy and Outlook 33
Ultra’s Business Model
WHY Investment Our purpose Be a multi-business global reference Plan
WHAT Be one of the leading and Be a benchmark multi-business Our guidelines consolidating players in our markets organization in profitability and reputation
Develop the businesses with a focus Be open to broaden our multi-business During 2016, Ultra invested R$ 1.9 million R$ 2.2 billion will be invested in 2017: on our clients and their customers positioning through different business net of disinvestments and repayments models in the continued pursuit of good growth opportunities through scaling up, productivity gains and the modernization Ipiranga Ultracargo Have the necessary leadership of existing operations. The Company’s readiness for our growth investment plan continues to be an R$ 1.2 billion R$ 158 million aggressive one in 2017, forecasted at R$ 2.2 billion.
HOW Acting as entrepreneurs and owners Being results oriented With confidence in a financially sound Our values of Ultra business model, Ultra announced three oxiteno Extrafarma important transactions which can be expected to pave the way for further R$ 478 million R$ 178 million Valuing simplicity and modesty Cultivating internal and external growth in its business segments: the partnership signature of agreements to acquire ALESAT’s fuel distribution business by Ipiranga and the Liquigás LGP distributor Working with the spirit of serving Being a high performance team by Ultragaz, in both cases with the Ultragaz our customers potential to reinforce Ultra’s presence and scale in these sectors. Also, in 2016, R$ 221 million Ipiranga concluded an association with Chevron Brasil, creating a new company WHICH for the production and commercialization Our pillars Single culture Multi-business leadership of lubricants, greases, additives and and modernization of activities, mainly ethoxylation unit in Texas,scheduled coolants under the Ipiranga and Chevron through renewal of distribution network for conclusion by the end of 2017. The brands. agreements, service station reforms, new unit will have an annual production Synergies between businesses units Process excellence and information systems in support of capacity of 170 thousand tons when At Ipiranga, the investment plan amounts operations. Ipiranga will also continue to fully operational. The remaining to R$ 1,116 million for maintaining the implement differentiating actions based investment budget will be dedicated to Digital intelligence Financial soundness rate of expansion and modernization on an expanded supply of products, the modernization and maintenance of of the company’s distribution network services and convenience with a view to existing units, to increase productivity, am/pm and Jet Oil franchises as well enhance the loyalty of existing customers for environmental protection and safety as new distribution centers to supply as well as increasing the consumer base. and for upgrading information systems. WHO the convenience stores. Investments Oxiteno will also pursue its strategy based Our competencies Systemic vision Focus on results also include the expansion of logistics A total investment of R$ 478 million on innovation through the development infrastructure with the construction and was approved for Oxiteno in 2017. of new products and partnerships with its expansion of storage terminals and in the This amount includes US$ 77 million clients. Customer orientation Alignment of interests maintenance, safety of the installations for construction work on the new
Multi-business mindset Autonomy with responsibility
Development of high Inspiring leadership performance teams 34 ultra Annual Report 2016 Strategy and Outlook 35
At Ultragaz, planned investments amount The resumption of suspended operations to R$ 221 million, largely concentrated at the Santos terminal and analysis of in the capture of new customers both in new business opportunities derived Sustainability the bottled and bulk segments and also from the growing demand for liquid bulk in the replacement and acquisition of LPG storage facilities in Brazil are also part of bottles. Investments will also be directed Ultracargo’s strategy for 2017. Model towards the expansion and maintenance of filling plants and to technology with At Extrafarma, investments have been focus on systems supporting operations. set at R$ 178 million, mainly in the The incessant search for differentiation opening and revitalization of stores and and management of costs and expenses in information technology. The pace of is also part of the business development new drugstore rollouts will continue to Ultra views sustainability as one of the Due to the characteristics of each one of themes defined in the Sustainability plan. grow, as well as the improvements in fundamentals of its businesses. This has their markets, the businesses work with Model. The data comprise the Company’s management standards of management been driving the Company since its individual socio-environmental, health decision-making matrix in the same way Ultracargo is to invest R$ 158 million, of in pharmaceutical retailing. foundation and is part of its vision for the and safety policies although based on as the initiatives set out in the organic which R$ 58 million will be dedicated to future. The Company sets well-defined corporate guidelines. investment plan. the expansion of the Itaqui port terminal guidelines in promoting sustainability with conclusion expected for 2018, and to such as the value placed on the culture of A series of key performance indicators, the the adjustment, and maintenance of the citizenship and ethics in business as well KPIs, were selected for annual monitoring terminal’s infrastructure. as ensuring transparency of information, to support the process of tracking and among other guidelines integral to its the choice of actions covered by the Sustainability Model.
In addition to financial soundness, Ultra’s five business segments have adopted Five pillars of sustainability and developed the concept of socio- environmental responsibility. As part of the daily routine, employees and suppliers are encouraged and trained in the practice of voluntary activities and socio- environmental responsibility. Each one of the businesses has demarcated areas for socio-environmental investments – education, health, culture, environmental Safety Environment People conservation and labor, among others.
Internally, the responsible, ethical and transparent conduct of the businesses is paramount in the different operating excellence programs, each adapted to the respective products and services of the particular business segment. Products Value The Ultra Sustainability Model is based and services chain on five pillars – Safety, Environment, People, Products and Services and Value Chain – together with 28 performance and management indicators, aligned to the corporate sustainability guidelines.
Due to the specific characteristics of their markets, each business works with their own socio- -environmental policy 36 ultra Annual Report 2016 Strategy and Outlook 37
Social Balance Sheet 2016 AMOUNT R$ ‘000 Guidelines
Calculation base December 2016
Net income (NI) 1,570,618 • To value the culture of institutions in order to enhance culture, education and social Operating profit (OP) 3,105,710 citizenship and ethics in and strengthen businesses. inclusion initiatives. business. Gross payroll (GP) 1,093,734 • To keep a state of readiness, • To adopt policies for • To safeguard the integrity of the awareness and education for maintaining excellence Internal social Amount (R$) % of GP % of NI corporate governance model, the permanent appreciation of in health, safety and indicators particularly the treatment economic, environmental and environmental standards. Food 104,700 9.6 6.7 and transparency of relevant social sustainability. information and the continued • To identify, control and mitigate Compulsory social charges 366,198 33.5 23.3 management of risks and • To support, disseminate, risks inherent to the business opportunities. promote and integrate the through risk management and Pension fund 23,535 2.2 1.5 UN Global Compact principles crisis management policies and • To maintain and improve related to Human Rights, practices in the operational, Health 115,870 10.6 7.4 financial capacity, flexibility and Labor Rights, Environmental regulatory, environmental, tax, operational excellence, so as to Protection and Combating legal and social areas. Occupational safety and 11,436 1.0 0.7 minimize the vulnerability to Corrupt Practices, in all their health economic fluctuations, seeking forms, into the organizational • To promote the management Education 1,072 0.1 0.1 growth opportunities in each culture. of greenhouse gases in order to one of its business segments. mitigate their effect on climate Training and professional 14,209 1.3 0.9 • To value employees by change. development • To orient products and services encouraging professional offerings to meet clients’ growth and quality of life, as well • To prepare periodic reports on Employee profit sharing 147,027 13.4 9.4 and consumers’ needs and as by improving the working sustainability, considering its expectations. environment and conditions. economic, environmental and Others 88,287 8.1 5.6 social dimensions. Total – Internal social 872,334 79.8 55.5 • To maintain active • To act selectively as an agent indicators representation in business of progress of neighboring associations and a transparent communities and society, External social Amount (R$) % of GP % of NI relationship with public through the dissemination of indicators
Education and Culture 3,006 0.1 0.2
Others (Donations and 39,493 1.3 2.5 indemnifications)
Total - Contributions to 42,499 1.4 2.8 society
Taxes (excluding social 1,343,684 43.3 85.6 charges)
Total - Contributions to 1,386,183 44.7 88.3 society
Environmental Amount (R$) % of GP % of NI indicators
Related to the company’s 44,219 1.4 2.8 operations
Total investments in the 44,219 1.4 2.8 environment 38 ultra Annual Report 2016 People Management 39
People Management
In this chapter
• Valorization of Professional Development • Ultra Culture • Compensation • Leadership Development • Other Highlights of the Year
To attract and maintain talent as well as to support the employees in their development and career plan are among the priorities 40 ultra Annual Report 2016 People Management 41
Sustainability pillar People Valorization of personal development
People are one of Ultra’s five pillars of The focus of people management is migrate between different areas and sustainability. The Company sees human on attracting and retaining talents as business segments. In 2016, about 1,500 capital as a key component in its growth well as supporting employees in their employees made the move between trajectory. The people management development and career plans. To fulfill areas or business units, an increase of 50% model is designed to ensure a culture this complete cycle, Ultra and its business in relation to 2015. that supports the organizational strategy, segments adopt initiatives which range develops manpower in readiness to fill from training programs for interns People management at Ultra is governed positions and reinforces meritocracy and trainees to career development by a competencies model (see the permitting the recognition and rewarding training and to planning the transition to following chart) based on an integrated of committed and premium performance retirement. The Company’s employees view of the particular level of leadership. teams and leaders. are stimulated to develop their careers The aim is to develop leaders and teams and with this in mind, encouraged to aligned to a model that will drive Ultra’s growth over the coming years.
Ultra leader competencies model
Corporate Center Systemic vision Focus on results The Ultra Corporate Center serves all the businesses and concentrates the Customer orientation Alignment of interests activities of finance, financial control, legal counsel, insurance, mergers and Multi-business mentality Autonomy with acquisitions, control of investments, planning, IT, corporate communication, responsibility Development of high investor relations and facilities & utilities. The corporate team is composed of 450 performance teams Inspiring leadership employees.
Total employees per company1 Turnover rate (%)
Year Ipiranga Oxiteno Ultracargo Ultragaz Extrafarma Corporate Ultra Year Ipiranga Oxiteno Ultracargo Ultragaz Extrafarma Corporate
2014 2,764 1,809 613 3,636 4,711 440 13,973 2014 10 11 15 13 n.d. 13
2015 2,864 1,806 596 3,603 5,269 459 14,597 2015 12 9 15 14 34 10
2016 2,903 1,903 645 3,610 5,670 442 15,173 2016 16 9 10 10 31 10
1. Interns not included. 42 ultra Annual Report 2016 People Management 43
Ultra Culture Employees receiving a performance analysis (%) Year Ipiranga Oxiteno Ultracargo1 Ultragaz Corporate
2014 100 93 12 15 100
2015 100 94 15 25 100 In 2015, the Company mapped and drawn from all businesses and prepared 2 defined its values that indicated especially for this function. The group 2016 100 94 12 35 100 convergence across all the business began to work as agents of change, being 1. The performance cycle is still not applied to all Ultragaz’s employees. The company is studying segments. The values represent the references in the teams with respect to a method of evaluating operational personnel and whether competencies are applicable or need essence of Ultra, creating a bond and a ongoing developments in the Company. adjusting as well as adapting the reporting tool to be used given that some employees do not sense of belonging to the organization. have access to a computer. In 2017, the project for strengthening the 2. The performance cycle was not applied for 100% of Ultracargo’s employees since it will be run As part of a process to disseminate this Ultra Culture will focus on new initiatives in 2017 for the operators. culture, an internal multiplier group was for disseminating the values, attitudes and set up in 2016 consisting of 70 employees behaviors, which permeate the Company.
Employees receiving a competencies analysis (%)
Year Ipiranga Oxiteno Ultracargo2 Ultragaz Extrafarma Corporate4
2014 100 95 100 15 0 100
2015 100 97 0 25 0 0
2016 100 19¹ 11 35 13 100
1. In 2016, only the leaders were evaluated. 2. In 2014, a decision was taken to run the process biannually and in 2016, only the managerial group was evaluated. 3. Due to the focus on the preparation for accelerated growth, the analysis of competencies was conducted in 2016 only, and for central managerial level positions. 4. In 2014, it was decided that the process would be a biannual one. Compensation
Compensation policies and practices The total compensation of executives The compensation policies and practices established in Ultra’s strategy converge breaks down into fixed compensation adopted for Ultra’s Management are to stimulate expansion and sustainable (base salary), benefits, short-term described under item 13 of the Reference results. In addition to contributing to incentives through participation in results Form available from the website (www. meeting corporate objectives, policies and long-term incentives with the share ultra.com.br/ri) and detailed in accordance and practices share both value creation ownership plan. The short- and long-term with the specifics of each governance and also the risks inherent to the business compensation is linked to value growth organ. The members of the Board of and the capital markets. Among the targets, which provide an alignment Directors and the Fiscal Council receive objectives are the reinforcement of the of interests between executives and fixed compensation only, corresponding capacity to attract, retain and motivate shareholders. In addition, the executive to the responsibility and complexity highly qualified executives and staff and compensation package is aligned to best of the position and in line with market to promote the alignment of interests market practices, using a meritocratic conditions. among employees, executives and other approach for individual recognition and stakeholders. standardizing management processes of the executives in Ultra’s businesses. 44 ultra Annual Report 2016 People Management 45
Knowledge Dissemination
Ultra knowledge portal - Launched in 2016, selling a product to the client as well as Leadership this is an online learning environment and focusing on innovation and development open to all employees. The main objective of products resulting in a broader market is to promote continuing professional, acceptance. A methodology for optimizing Development personal and collective development of time and increasing productivity, GTD employees involving such themes as the teaches techniques for the management Code of Ethics, the Clean Company Law and of commitments, information and Time Management. A further 11 new courses communication. are envisaged for 2017, focusing on self- development. Ultragaz Academy and the Online Academy Created to support the Company of 18 participants in the year for a nine the opportunity to receive input on the - Ultragaz’s programs with onsite and remote in developing a new benchmark in month period during which mentee business plan and to provide feedback Ipiranga Training School - Has expanded actions aimed at management and technical leadership, the objective of the Ultra receives ideas and incentives from a to store teams. Some 700 store leaders its activities with the launch of the Ipiranga employees for stimulating self-development Leadership Program - “Essência” aims to mentor colleague with experience and a attended the Convention and a further University app, available to all employees and the Company’s knowledge management. mold leaders of Ultra and its businesses. consolidated career. 800 at the Pharmacists’ Meeting. and interns, offering videoclasses and The program, which uses specific technical texts. The company also offers a Ultracargo Safety and Environmental methodology and is now in its second Ultracargo invested in upgrading All these programs bear the seal of remote learning platform in the context of its Training - Some 50 safety and environmental year, by the end of 2017, will have trained leadership skills with programs such as our Internal Management DNA and commitment to employee self-development training courses were revised in 2016 in 680 employees, among them directors, PDGG (Management Group Development are prepared to provide guidance to and continuous learning. relation to 2015, increasing activities by some managers and coordinators. Program) and PDML (Middle Leadership leadership on behaviors that are deemed 9 thousand hours, with an emphasis on skills Development Program). A total of 119 important internally as well as guidance Oxiteno DNA Portal - Launched in 2016 as an upgrading and operational training. The content of the Ultra Leadership managers took part in the programs. In in the management of the team on online teaching environment, the objective is Program (Essência) is customized addition, there was an increase of 115% developing initiatives and expected to operate as a channel for learning with the Extrafarma DNA Platform - Launched in according to the guidelines of the in courses for the exchange of technical attitudes for creating an increasingly solid ability to break down barriers and distances, 2016 with 27 courses, this remote teaching Ultra Business Model (D2022) and information between areas through and profitable company. continually promoting the professional, platform aims at promoting a continuous the corporate competencies to be the Knowledge Portal. The latter is the personal and collective development of the learning culture. It adopts a flexible developed. The Program consists of six company e-learning facility that combines employees. A total of 12 courses of general methodology that can be accessed any time, modules that cover an integrated vision videos, podcasts and other teaching interest are offered together with technical with information standardized for store of the competitive environment, value resources developed in-house and by content specific to Oxiteno’s stakeholders. In teams, with technical and behavioral courses. creation and relationship with different Harvard and Chicago universities. 2017, a further 12 courses will be included Linked to this tool is the concept of the leader stakeholders, alignment of culture, in the portfolio as well as materials aimed at multiplier whereby the store manager is strategy and organizational structure, In 2016, the 14 district managers of 680 specific production activities, thus fostering responsible for disseminating course content strategy execution focused on sustainable Extrafarma took part in the Retail a process of Knowledge Management at the to his team. This ensures that the results of results, application of best practices of Leadership Development Program for company. onsite and remote training are passed on, essential leadership and influence in Retail Leaders. The program has a 40-hour leaders will have promoting knowledge management to the high performance management teams. duration, the object being to expand VBS (Value Based Selling) and GTD retail team. The program is also an important tool for the professionals’ repertoire and capacity concluded the (Getting Things Done) - Both employed the development of the organizational for providing a more harmonious and at Oxiteno, the objective of the first is culture. productive working environment. Ultra Leadership to train professionals to add value when MORE TRAINING INITIATIVES With the launch of the Extrafarma Program Ipiranga has a New Leaderships DNA platform, store managers, sub- (Essência) by Development Program with content managers and pharmacists are able prepared in partnership with well-known to access leadership training led by the end of educational institutions both in Brazil well-known lecturers in the corporate and in other countries. In 2016, the education market. At the Extrafarma 2017 when the company implemented the Mentoring Sales Convention and at the Annual Hours of training per employee program for New Retail Managers to Pharmacists Meeting, leaders also had initiative’s two- reinforce the strategic formation of new Year Ipiranga Oxiteno Ultracargo Ultragaz Extrafarma Corporate leaders. The focus is on promoting the year period of dissemination of knowledge between the 2014 36 21 63 12 n.d. 30 more experienced executives and more activities will have recent appointees using a student-mentor 2015 38 32 45 14 4 25 approach. Consisting of workshops, been completed 2016 48 42 71 9 10 15 skills upgrades and periodic monitoring meetings, the program had an intake 46 ultra Annual Report 2016 People Management 47
Other highlights of the year
Trainees Oxiteno has run its Trainees Program in Ultra Formare trains young people Brazil annually since 1989. The initiative as Administrative and Sales Agents, is designed to attract talents that bring results and contribute to the growth thus assisting their insertion in the of the organization. In 2015 and 2016, the company extended the Program to labor market Mexico with the hiring of five trainees who spent January and February in Brazil on an orientation course. During this period, they were able to visit the headquarters of each of Ultra’s Ultra Formare Extrafarma component companies and to become The program is run in partnership with Pharmacy Degree acquainted with the business areas. the Iochpe Foundation, 2016 being its Scholarship Program 15th year. The focus is on education and The program was launched at the 2016 Since the inception of the program, 153 the inclusion of young people in the convention and offers a pharmacy degree professionals have been hired. Of these, labor market. The Ministry of Education- course to store employees that have 36% currently hold managerial posts. recognized course is for Administrative outperformed in their activities in such Retention levels have been 76% over the and Sales Agents and consists of 25 aspects as customer service, the meeting past five years. weekly classroom hours covering 14 of goals, teamwork, among others. disciplines. The course includes visits In 2016, the trainees undertook 27 to Ultra’s businesses and eight-week The launch program selected two projects in various areas of the company, internships. Since its first edition, the employees from Belém (Pará), who resulting in improvements in processes, program has been responsible for besides their excellent in-store market studies and studies for expanding graduating 258 students, of whom 40 are performance, had shared their knowledge the portfolio supporting the organization’s working at Ultra. and experience with recent hires under strategic decision-making. The projects the São Paulo expansion plan. represent 115 hours of training, Oxiteno including presentation techniques, Top Employers Brazil Six Sigma Greenbelt training, effective For the fourth consecutive year, Oxiteno communication, negotiation, ethics and received Top Employers Brazil certification, New talent self-knowledge. awarded by the Top Employers Institute, an independent organization with The focus on a multi-business culture also requires the continual The Extrafarma Retail Trainee program presence in more than a hundred proposes to develop professionals to countries. The Top Employers Institute attraction of new talents and competencies to the Company. An average assume positions of leadership and carefully analyzes companies’ HR of approximately 300 young people join Ultra every year through interns’ to contribute to the organization’s practices and policies prior to awarding accelerated expansion plan. The trainees certification. programs. They fulfill an intense development schedule, which includes are given the opportunity to learn about technical and behavioral training, job rotation and project development. the different areas of the company, so The Best Companies to Work developing a more broad-based vision For the third consecutive year, Oxiteno of managing the business. The trainee has received Você S/A Guide certification Ultra and its businesses participate in recruitment fairs of Brazilian program also involves travel to the as one of the Best Companies to work in universities and through social media as a means of disseminating its North and the Northeast regions to visit Brazil. the stores, giving participants an idea brand and continuing to attract young talent wishing to enter the job of the profile of the customers, culture market. and employees. The program began in September 2016 with the hiring of three recent graduates and has a duration of 18 months of specific training for learning and professional development. 48 ultra Annual Report 2016 Safety Management 49
Safety Management
In this chapter
• Safe environment
Revision in the management and activities of prevention and education with a behavioral focus foster a safe environment 50 ultra Annual Report 2016 Safety Management 51
Sustainability pillar Safety
standardize the management of safety Preventive measures are shared Safe measures at the units acquired more recently. For example, thanks to its with out-sourced employees proximity, the Montevideo unit was able environment to learn from the practices employed in and suppliers the Triunfo plant, establishing them as a reference for its own installations.
Likewise, Ultragaz also proceeded with its process and safety program for identifying Ultracargo expands structure In the second half of 2015, Ultracargo The challenge of promoting a safe and revising risks to its installations and Between 2015 and 2016, Ultracargo implemented its Corporate Process Safety environment at Ultra’s installations is Priority production system. In 2015, a pilot project upgraded its Occupational Health, Safety, Management System in which existing not restricted to the Company alone - was run at Capuava (São Paulo) and in Environment and Quality (SSMAQ) standards, programs and procedures were preventive measures being extended All the businesses are revising their analyses 2016, the action was also applied at the structure in order to boost the readiness revisited for evaluating process safety risk similarly to outsourced employees and of risks and practices in line with the goal Utingás de Santo André (São Paulo), of the team in light of the activities management with the aim of accident suppliers. As one of the five pillars of the set by Ultra’s senior management. Paulínia (São Paulo), Duque de Caxias (Rio demanded. A Corporate Emergency prevention. The System is responsible Sustainability Model, the fostering of a de Janeiro) and Mataripe (Bahia) units. and Process Safety Unit was included for examining practices, procedures and safety culture is priority for all businesses. The purpose is to assess the dangers in the structure for improving safety actions to identify, analyze and manage associated to possible accident scenarios aspects relating to operating processes, risks related to operations. It is based on Since 2015, the businesses have been in processes involving personal safety prevention and actions in case of four pillars – commitment to process revising their risk analysis studies and Ultracargo and risks to the environment, impact on emergencies. Additionally, the Corporate safety, an understanding of dangers and safety procedures, a goal set by the the image and financial considerations. Occupational Health, Hygiene and Safety risks, risk management and learning from Company’s senior management in the Complementary to the program, the Coordinator was set up with the mission past incidents both within and outside the Ultra Safety Program and subsequently 21 Decline Emergency Plan was reevaluated together of promoting better employee quality of company. reflected in the improved results for with the level of team preparation and life and safety as well as to support the indicators at the businesses. Throughout thousand of 30% fixed emergency system conditions at the area in SSMA management. This new 2016, particular attention was paid units. The outcome was an action plan to configuration is designed to improve the to operating safety and processes hours of training in accidents improve the technological and operating areas’ activities and is a reflection of the with Ipiranga, Oxiteno, Ultragaz and in safety with with a reduction systems and the process. lessons learnt in managing the aftermath Ultracargo establishing their individual an average of in severity and of the fire at the Santos port terminal in methodological structure for evaluating 60 hours per frequency In addition, approximately three thousand 2015. the risks of these same processes. employee/year employees at 17 filling plants took part in the Escalated Safety Program, designed Ipiranga’s safety program is based progressively to reduce workplace on three pillars: people (employees accidents. In 2016, monitoring revealed and outsourced personnel), physical 26 work-related accidents requiring leave conditions (installations) and procedures of absence from work - a 10% reduction (SIGA+). For people, the company has the identification of key dangers and an establishing mechanisms for preventing in relation to 2015. Under the program, implemented actions relating to safe evaluation of the risks at the operating them or reducing the probability of employees receive training on the safe behavior, training and improved skills, units. The standard for the Emergency their occurrence as well as creating handling of gas bottles – the main cause the focus being mainly the development Service Plan was also restructured the conditions for controlling eventual of personal accidents. of leadership. In 2016, the Attitudes of during the year in order to improve the impacts. Once the risks are identified, they Excellence in Safety were formalized - management of operational emergencies. are incorporated in the guidelines and Management and monitoring essential behavior to be observed by A system for promoting adherence of programs and are then monitored and Occupational Health, Safety and each employee in all their activities for the operating units to the standards and evaluated by the operating units. Through Environment (SSMA) is tracked using mitigating risks and avoiding accidents. national and international norms, SIGA+ Ultra Safety, in 2016 the company revisited indicators and is one of the items audited (Ipiranga Management System Applied its risk matrix, updating the previous annually by the corporate team at the 17 Annual installation safety and to Health, Safety, Environment and Social analysis of 2013. This recent evaluation filling plants. In 2016, the annual audit also environmental inspections are performed Responsibility) was reformulated in 2016 revealed that the risk potential had been included the Satellite Storage Facilities in with the focus on physical conditions. In to align it still more closely to the reality of significantly reduced over the preceding Sorocaba (São Paulo), Salvador (Bahia), São 2015, 81% of the operating units were the operating activities of the company. three years thanks to the implementation Jose do Rio Preto (São Paulo) and Palhoça inspected - rising to 100% in 2016 - the of a series of mitigating and preventive (Santa Catarina). purpose being to detect infringements Oxiteno uses the Safety Process Based measures. of safety rules and to propose solutions. on Risk Management Model (SPBR) for During the latter year, 15 risk analysis identifying process risks and dangers, Greater efforts were also taken to reports were revised with the focus on 52 ultra Annual Report 2016 Safety Management 53
New fire prevention systems were risks. During 2016, five teams were been able to achieve a 30% reduction Accident rate with time off1 introduced, increasing the standard of designated to identify risk situations at the in accidents as well as their severity and accident rate per million hours worked - employees and interns excellence at the terminals. The project Santos terminal in both operational and frequency. complies with Brazilian and North administrative areas. Year Ipiranga Oxiteno Ultracargo Ultragaz Extrafarma American technical standards of the National Fire Protection Association The SSMA Performance Recognition 2014 4.4 1.9 2.7 4.0 n.d. (NFPA). Santos Port Terminal 1 was the Program is integral to strengthening first to implement the new system and the occupational health, safety and 2015 3.6 3.1 3.7 2.8 5.5 this will be extended to the other ports environment culture. Additionally, a pilot where Ultracargo has operations. Among project is being implemented at the Aratu 2016 4.0 1.0 1.8 2.4 0.1 the additional measures resulting from (Bahia) port terminal for evaluating the the implementation of this system is operating teams’ SSMA Management 1. Rate is calculated based on the number of accidents /man-hours (calculated according to NBR 14280) with re- an enhanced capacity to anticipate Performance. Every three months, the spect to payroll numbers as of December 31, 2016. responses to contingencies through teams are evaluated on safety and monitoring and detection systems and environmental aspects. Those showing greater agility in responding through the best performance are rewarded in rapid-attack automated systems with accordance with company policy. remote commands. Redundancy systems also ensure greater reliability With the support of consultants, risk In decline Accident rate without time off1 and response capacity while the installed analysis studies on safety processes accident rate per million hours worked - employees and interns equipment permits action to be taken were also undertaken in addition to Preventive work with immediate effect as events unfold. assessing the teams’ response capacity to Year Ipiranga Oxiteno Ultracargo2 Ultragaz3 Extrafarma emergencies. This work was executed and is reflecting in Ultracargo has expanded its Safety monitored by four businesses: Ipiranga, 2014 0.2 5.3 7.2 4.0 n.d. Attitude Program to all the terminals Oxiteno, Ultragaz and Ultracargo. the improvement where it has operations. Launched 2015 0.4 6.4 5.5 2.3 0.2 in Santos in 2015, the program has a Ultracargo invested 40 thousand hours in of nearly all the behavioral focus and invests in raising training, of which 21 thousand were for 2016 0.0 5.8 10.5 3.1 0.0 awareness and education of employees employee training in safety measures - an safety indicators in safety precautions. It also provides for average of 60 hours per employee/year. 1. Rate is calculated based on the number of accidents/man-hours (calculated according to NBR 14280) with re- Focus Groups to manage high potential In light of these actions, Ultracargo has spect to payroll numbers as of December 31, 2016. 2. Increase in 2016 relates to inclusion of accidents requiring first aid. 3. Ultragaz is conducting work to refine the report on accidents not requiring leave of absence.
Projects at the terminals Number of fatalities
Year Ipiranga Oxiteno Ultracargo Ultragaz Extrafarma
2014 0 0 0 0 n.d. • Analysis of risk in activities involving maritime, highway and railway transportation 2015 1 1 0 0 0 • Qualitative risk studies (APP/HAZOP) 2016 0 0 0 0 0 • Complementary risk studies (LOPA/Vulnerability/AQR)
• Auditing of protective barriers
• Quantitative risk analysis for evaluating alternative engineering techniques for the reconstruction of Terminal 1 in Santos (São Paulo)
• Evaluation of response capacity in the event of emergencies
• Critical analysis of the firefighting system projects 54 ultra Annual Report 2016 OUR BUSINESSES 55
Our Businesses
IN THIS CHAPTER
• Ipiranga • Oxiteno • Ultragaz • Ultracargo • Extrafarma
Five businesses in five key sectors that help promote Brazil and produce a positive return for Ultra 56 ultra Annual Report 2016 IPIRANGA 57
SALES VOLUME, NET REVENUE AND EBITDA Ipiranga 2014 25,614 2015 25,725 2016 23,507
2014 58,830 With comprehensive territorial coverage of BraziL, Ipiranga has a payroll of 2,903 Good perspectives 2015 65,350 employees. The service stations, am/pm Organic growth and new convenience stores and other services 2016 66,407 are managed by resellers and franchisees. businesses pave the way for growth Infrastructure and scale are critical to the 2014 2,288 company’s ability to compete. Ipiranga Sales volume (thousand m3) operates from 54 storage terminals. These 2015 2,769 Net revenue (R$ million) are operated either on a proprietary basis or in pool’s (association with other 2016 3,080 EBITDA (R$ million) companies) throughout the country and responsible for the distribution of fuels Sustainability pillar and lubricants to the company’s 7,563 Products and services Products and Services service stations. Differentiation • Fuel distribution: 7.6 thousand service stations Ipiranga reported a total network of 7,563 Android and iOS operating systems. a greater variety in ready-to-eat meals. Its business sector - the distribution and service stations at year-end 2016, having Currently, this new model has two stores, sale of fuels and lubricants - has been • am/pm stores: the largest network of convenience stores added a further 333 in the period. The Currently, the Km de Vantagens has 24 one in São Paulo and the other in Rio de impacted by the decline in consumption in Brazil with 2,166 units in 2016, offering a differentiated company continues to see a promising million participants, making it the largest Janeiro. The other configuration is the due to the economic and political crisis in range of products and services both on the highway and future in innovation and convenience as a loyalty program in Brazil. am/pm Estação (Station) store, designed Brazil. In spite of this scenario, Ipiranga has also in the city strategy of differentiating its products and for highway service stations – offering continued to implement its strategy and services. During the year, a clean gasoline One of Ipiranga’s flagship services in the one-stop shopping in the form of a series has been able to maximize opportunities • Lubricants: a diversified line of products for automotive, additive, DT Clean, was launched, the new differentiation strategy is the am/pm of products and services for travelers. arising from its growth (read more about industrial and maritime uses product having a sustainability component store, first in the ranking of convenience Such a store prototype is located on the Ipiranga’s performance on page 84). so that as engine performance improves, stores in Brazil. This business reported Presidente Dutra Highway linking Rio de • Jet Oil: the largest network of automotive services in there is a reduction in greenhouse gas and year-over-year growth of 13% and Janeiro and São Paulo and consisting of Brazil with 1,594 units in 2016 equivalent emissions. ended 2016 with 2,166 points of sale restaurants, family restrooms, lounge, kids’ in Ipiranga’s service station network, space, among other conveniences. • Km de Vantagens: Ipiranga’s loyalty program with 24 Ipiranga also launched the cell phone thus increasing the supply of products, million participants Fill Up Here (Abastece Aí) app, which services and convenience available to the The Jet Oil network also saw growth during introduces an innovative and differentiated consumer. During the period, Ipiranga 2016, the number of units increasing from • ConectCar: an electronic toll collection and parking lot experience when the consumer fills up consolidated the implementation of 1,466 in 2015 to 1.594 in 2016, and offering system with 840 thousand tags in 2016 at the service station. The app allows the two new store configurations: for urban- specialized products and services for consumer to pay for the fuel directly by based service stations, an am/pm store motorcycles and automobiles. cellphone and on payment, have the with an expanded convenience concept option of exchanging Km de Vantagens for similar to a neighborhood minimarket In 2016, Ipiranga installed a pilot electric car benefits or obtaining a discount on the fuel and offering fresh products – such as fruit, battery recharging station in partnership purchase. This innovation is available for vegetables, meat, flowers together with with BMW.
In addition to the organic expansion names. Already approved by CADE, the of the service station network, among association strengthens the operations of growth drivers during the year was both companies in the Brazilian lubricants the acquisition of the ALESAT fuel segment through the complementary 1,191 256 128 retail network for R$ 2,168 million - the nature of the channels and products as operation still subject to approval by well as the adoption of both companies’ eco-efficient service stations new am/pm franchises Jet Oil units 2.9 the Brazilian anti-trust authority - CADE. best practices. The benefits are to be Also announced in the period was a extended to resellers, distributors and thousand joint venture with the US company consumers, all of whom will enjoy the Chevron, establishing a new company improved performance and capillarity of a work at Ipiranga for the production and sale of lubricants, network with greater logistical efficiency. greases, additives and coolants bearing Ipiranga is to have a 56% stake in the new 165 138 the Ipiranga and Chevron brand company against Chevron’s 44%. bakeries beer caves 58 ultra Annual Report 2016 IPIRANGA 59
Sustainability pillar Sustainability pillar Value Chain Value Chain
Retail School Ethical relationship The Retail School is dedicated to Other international training included strategy and inventory management Ipiranga is proud of its ethical behavior The Ipiranga Internal Volunteer Worker and knowledge are necessary for future the training of resellers, franchisees, the Authorized Lubricants Distributor and exchange experiences on the and the quality of products and services Program mobilizes volunteer employees success. authorized lubricant distributors, leading Technical Mission (ADs) through the management of the business. This course offered to consumers. Through Sindicom to give their time to schools and corporate clients, suppliers and their Leadership and Management Program. was made possible through a partnership (Brazilian Association of Fuel Distributors), institutions surrounding the company’s Overall, 241 voluntary actions were respective teams. The programs cover Run in partnership with the University of with Universidade Estácio, which the company is a member of the Legal premises. In 2016, the program held supported and realized, these involving training in products, services, sales, Pittsburgh, this initiative had the mission replicated the training sessions at different Fuel (Combustível Legal) program. This Internal Volunteer Worker Week activities 280 employees and interns, some two management, the opening of franchises of broadening leadership concepts and locations around Brazil. initiative seeks to provide answers to in Rio de Janeiro, São Paulo and Porto thousand people enjoying the benefits. and consumer service, among others. skills necessary to administer businesses society on the illegal market in fuels and Alegre. This involved more than 830 and optimize results. During five days, Another key international program is the promote the importance of an ethical and children and adolescents who enjoyed The focus of the Retail School is on service participating mission AD entrepreneurs NACS Show, the largest fair in the world regulated environment for the sector at the benefits of talks on the importance to the end consumer. In this context, the were subjected to an immersion program for the convenience and fuel distribution all levels. of studies for future careers, stimulating company offers all support necessary for from lecturers on advanced concepts segments. During the course of the show, an interest in reading from a young age Retail School attendees interacting with of strategic leadership, management of Ipiranga’s Resellers and Franchisees had and activities for developing skills for 2 thousand customers to be able to transmit the high performance teams and leadership the opportunity to attend lectures and Sustainability pillar subsequently entering the labor market. benefits and differentiations of the brand influence. Participants also made technical workshops on both businesses. Ipiranga Value Chain people benefited at the point of sale. visits to companies in the wholesale has run this program for eight years now The company also resumed the Shadow segment to understand the theoretical and in 2016, took about a thousand Social Responsibility Entrepreneur Program in partnership from the In partnership with the Disney Institute concepts in practice. people to the event. With major capillarity in Brazil and nearly with Junior Achievement. This initiative is in Orlando (USA), Ipiranga promoted three thousand employees, Ipiranga designed to arouse the entrepreneurial volunteer actions the Disney Experience program for its Important courses were also organized in The Retail School was responsible for encourages its staff to get involved with spirit in the young students, stimulating resellers. The training theme was Team Brazil, one of which was the Retail Expert training 43,525 clients in 2016. Among volunteer work. The bedrock of social their personal and professional of Ipiranga’s Leadership and Engagement with the Program for the clients of authorized them were urban and highway-based investments is always education, aligned development and providing information aim of learning the main concepts of the distributors. The classes were designed to resellers, authorized lubricant distributors with the objective of promoting inclusion, on how a company operates. During the employees Disney model of Excellence in customer trigger reflections on the importance of and teams. This training was largely onsite, local development and benefiting the “Shadow Entrepreneur” session, students service. Participating resellers were able the management of results for business but also conducted on a remote basis communities with which the company are put in contact with the routine of to go behind the scenes of the Disney development. In addition, participants (e-learning). An all-time record. relates. an entrepreneur to discover what skills complex to see how the theory of were able to broaden their knowledge business drives operational excellence. of financial concepts, procurement
Driver health
The company has run the Health on the Highway initiative since 2008, already attending more than 405 thousand people nationwide with a focus on professional drivers. The project operates on a roaming basis from Ipiranga Rodo Rede service stations. Free examinations are offered, so helping to prevent such diseases as diabetes, high blood pressure and obesity while also contributing to increasing safety on the highways.
The event is supported by municipal health departments, universities, and the federal and state highway police. 60 ultra Annual Report 2016 OXITENO 61
Sustainability pillars Products and Services, Oxiteno Value Chain Innovation for clients One of Oxiteno’s strategic pillars, Among the gains from Greenformance A further development in the process of innovation is seen as transversal to the are: the creation of solutions that reduce implementation during 2016, is the CRM business. It permeates all areas of the irritation to the skin and eyes; the system for establishing the more assertive company, extrapolating the product and adoption of clean technologies in the management of client relationships. development stage to reach the other energy matrix; substitution of polluting This tool will allow the integration of a Oxiteno is leader in the manufacturing Research and development internal processes. The company sees products such as those with a high degree large variety of strategic data to be made of surfactants and specialty chemicals in innovation as fully complementary to the of volatile organic compounds and the available from a user-friendly platform to Latin America. With a payroll of nearly two 66 new solutions were launched on characteristics of sustainability: the focus adoption of renewable raw materials. different areas of all Oxiteno’s businesses, thousand, it operates in the segments is on developing and delivering products facilitating decision-making and ensuring of Agro-chemicals; Personal Care and the market during 2016 and services that prioritize the efficient In 2016, Oxiteno intensified its Innovation the traceability of information. The tool is Domestic and Institutional Cleaning; and responsible use of natural resources Day activities. These involve internal team to be implemented in full by the end of Oil and Gas; Paints and Coatings; and for production with the least impact on visits to a specific client for verifying short- 2017. Performance Products. Oxiteno was the environment and conducive to user and medium-term plans for innovation founded in 1973 and is Ultra’s chemicals wellbeing and health. and to understand how the company can The company launched 66 new solutions and petrochemicals arm. SALES VOLUME, NET REVENUES AND EBITDA contribute to the implementation of this on the market in 2016, a reflection of its The Greenformance platform sets out a plan. Onsite contacts such as these have investments in research and development. Specialty chemical sales reported a 2014 780 series of sustainability guidelines to be resulted in the development of a series decrease of 1% in 2016, above all due to considered at the product and services of differentiated customized products. the adverse socio-economic scenario in 2015 725 stage of development. Among these is An example is concentrated formulations Brazil. The company has endeavored to 2016 738 the adoption of raw materials of green for cleaning surfaces delivered to the offset the lackluster market in specialty origin replacing synthetic materials and consumer as sachets and compounds chemicals by enhancing efficiency in the petrochemical derivatives. Focus is also used in the manufacture of bar shampoos, use of capacity and dilution of plant costs on the efficient use of energy, water and both capitalizing on the efficient use of as well as boosting sales of commodities. 2014 3,414 packaging, particularly the development water and energy and reduction in waste 2015 4,082 of concentrated and biodegradable and emissions. products. 1.9 2016 3,701 2014 404 Research Center in the United States thousand 2015 740 2016 459 With the new ethoxylation plant due for completion by the end of 2017, part of Oxiteno’s work in the team strategy for the Pasadena unit’s expansion is to invest in a research and development structure to rapidly satisfy the demand for innovation in the North American market. at Oxiteno Sales volume (thousand ton.) Based on a unique structure, the company announced an agreement at the end of 2016 with Net Revenues (R$ million) the University of Southern Mississipi to use the R&D installations on campus situated in the city EBITDA (R$ million) of Hattiesburg. The new center will give researchers access to advanced technologies and other lines of In 2016, the company’s organization by Oxiteno’s international expansion research and includes a surfactant pilot plant and space set aside for the agrochemical model was reformulated with the with the enlarged Pasadena unit in segment. regrouping of the business units and Texas to be concluded in 2017. The a new structure more suitable to unit already manufactures surfactants Other developments in R&D infrastructure include the expansion and modernization of the development. The units are currently: for agrochemicals but is to cover all company’s agro-chemicals and paints and coatings laboratories in Brazil. Three microbiology Mercosur (including units in Brazil and segments. The new ethoxylation plant laboratories have also been opened in San Juan Del Río and Montevideo with quality control Uruguay and for meeting demand will come on stream by the end of and at the Tremembé, Brazil facility, which has both quality control and R&D. Previously, these in Brazil, Chile and Argentina), MAC 2017 with a production capacity of 170 functions were conducted by outside partners. (with units in Mexico and Venezuela thousand tons/year. Finally, in early and covering the Mexican, Andean 2017, the company opened an office in The company also has a central laboratory at the Mauá unit with more than 100 R&D and Caribbean markets) and the Houston. professionals. United States (structured to serve the North American market). These changes were driven in large part 62 ultra Annual Report 2016 ULTRAGAZ 63 Ultragaz
Ultragaz is the largest liquefied petroleum gas distributor in Brazil with a payroll of New channels 3.6 thousand and reporting continued The use of applications brings growth and investments. resellers closer together besides the The business posted increased sales volume in 2016, a reflection of good use for management and training results not only from the bottled segment but also through additions to the purposes network’s reseller base and investments in the capture of new corporate and condominium bulk product clients. SALES VOLUME, NET REVENUES AND EBITDA In addition to organic growth, the company announced its acquisition of 2014 1,711 100% of the capital stock of Liquigás, an 2015 1,697 operation for which approval from CADE, the Brazilian anti-trust authority, is still 2016 1,760 pending. The acquisition will increase Ultragaz’s delivery capacity, especially for new uses of LGP, supported by the 2014 4,091 development process of new applications. 2015 4,621 Ultragaz employs 2016 5,366
2014 306 3.6 2015 357 2016 447 thousand This new system brings operational remote access to customer data, price lists on consumer profile and habits. The improvements, particularly with respect and payment conditions, among others. department will also examine scenarios in its team to logistical, fiscal and service aspects. The of supply and demand for gas and Sales volume (thousand ton.) same tool will also facilitate the tracking In 2016, Ultragaz set up a Development energy and the evaluation of competitive Net revenues (R$ million) of vehicles and real time monitoring of Department to consolidate the company’s advantages in relation to domestic deliveries - replacing operations that strategy of differentiation in the market, competitors and the overseas market EBITDA (R$ million) are currently paper based and involving investments in product and service (read more below). orders, invoices and transaction slips. The innovation as well as initiatives in system has the added advantage of giving Ultragaz’s long-term strategic plan based Sustainability pillar Products and Services
New products and services The focus on innovation and the businesses. The Ready Delivery Mobility continuous striving for operational (Mobilidade Pronto-Entrega) project The aim of the new Development excellence was fundamental to the good is directed towards the corporate, results reported for the year and is critical household and industrial market for Department is to disseminate the to the strategy for the future. In 2016, bottled gas. The aim is to improve new technologies were implemented communication between delivery truck differentiation strategy in the market to improve the performance of the drivers and the units via smartphone. 64 ultra Annual Report 2016 ULTRAGAZ 65
On the operational front, a new filling years. The company sees this as a means Revenda + In Caucaia (Ceará), where Ultragaz has Ultragaz also works incessantly at all its plant was opened in Juazeiro (Bahia) for of guaranteeing the implementation of A partnership between Sebrae (Brazilian a filling plant, the company supports a units on initiatives for propagating the increasing efficiency in the distribution its plan and standards of excellence in a Micro and Small Companies Support school of music and computer studies Dial 100 service, a number for denouncing of gas bottles and services offered to the uniform manner throughout Brazil. Service) and the Reseller Academy, in partnership with the local Lions cases of child and adolescent sexual local population. Additional investments Ultragaz has implemented Revenda + Clube. Approximately, 60 students are exploitation. The campaign is run in were also made in storage capacity at In an initiative for improving the (Resale +), a new training program to beneficiaries of these activities. partnership with Childhood Brazil, with Mataripe (Bahia), where a 120-ton storage relationship with the resellers’ network, increase the competitiveness of resellers which Ultragaz has been a partner since tank was installed. ViS10N Domiciliar (ViS1oN Home) has VIS10N in the home delivery Domiciliar business. Ultragaz Cultural is a project that dates 2009. invested in a skills and incentive-based Strategies were built and implemented back to 2000 and designed to foster and program for reseller employees known Domiciliar to support management based on disseminate culture through shows and To encourage employee involvement in Sustainability pillar as UltraTop. The salesperson is able to a productive chain model. The skills educational events. Using itinerant movie- volunteer work, an exclusive portal was Value Chain access various available training curricula invests in training upgrading process lasts 18 months and theater trucks, in 2016, the company created in 2016, the Ultragaz Volunteer through mobile and web environments includes operational diagnosis, onsite took the cinema to 17,781 adolescents Worker Portal (voluntariadoultragaz. Investing in the and as training proceeds, accumulates and incentives training and consultancies, execution of and children from public institutions and v2v.net). This organizes the social and relationship with points that can be exchanged for innovation projects, reseller awards for schools. The trucks visited 21 cities in 15 environmental actions carried out by the resellers exclusive benefits. Through this for reseller best performance and reseller interaction states as well as the Federal District. The company as well as a calendar of activities Ultragaz develops training programs for pioneering scheme, Ultragaz enhances sessions. In 2016, the program involved project is funded from Rouanet Law tax and a list of volunteers. At the end of the its resellers and sellers in the domestic and the value of the sales person - an employees 180 resellers in the Bahia, Central-West breaks and is conducted in partnership year, 249 employees had registered. corporate segments through VIS10N, the important link in the relationship with the region, Maranhão, Paraná, Pernambuco with government education and culture company’s strategic plan for the next ten end consumer. and Rio de Janeiro markets. In 2017, plans departments. Since inception, Ultragaz Ultragaz also lends its support to partner are to expand into other markets. Cultural has brought the movies to more institutions that encompass social than 154 thousand people. All movie- inclusion of children and adolescents Sustainability pillar truck carbon emissions are offset in through education. Among these Value Chain partnership with the Green Initiative NGO, institutions are, Vocation (Vocação), environmental impacts being neutralized Recriarte -CARE, Pluga Cuca and the Santo Corporate social in full. Waste produced and collected Agostinho Association (ASA). responsibility during the project is separated and Ultragaz enjoys a long tradition of donated to local recycling cooperatives. investments in the social area, both in the communities adjacent to its production In 2016, the Our School is 10 (Nossa units as well as population centers more Escola é 10) project took place in São distant from the major conurbations but Luís (Maranhão). This project trains where there is contact with resellers via educators, contributes to the preparation bottled gas deliveries. Social responsibility of educational policies and invests in projects focus on culture and education improvements to school infrastructure. 17,781 including environmental education Five schools were attended, benefiting directed to children and adolescents more than five thousand people. young people from low-income families. The company’s Sustainability and Socio-environmental Together with the resellers, trained and children took policies provide investment guidelines through the Somar Sustainability and establish the projects to be program, Ultragaz disseminates public part in Ultragaz developed and supported. Since 2011, service campaigns via its delivery trucks. Ultragaz has had a Voluntary Worker Policy During the year, more than 9 million Cultural’s initiatives for incentivizing and providing guidance people were alerted to information to its employees in the practice of social on combating the zika virus through a in 2016 and environmental work. partnership between the company and the federal government’s Health Ministry. Once more in 2016, Ultragaz gave its support to the Junior Achievement Project, which seeks to arouse the entrepreneurial spirit in young people through educational programs for public schools. Project activities took place in 13 states to the benefit of 2,371 students and with the participation of 231 volunteer workers from Ultragaz. 66 ultra Annual Report 2016 ULTRACARGO 67 Ultracargo
Sustainability pillar This was also a year when operations During the period, the company Products and services were resumed following the impacts of continued to invest in expansion. Once the fire in Santos in 2015 (read about the work is complete at the end of 2018, the Ultracargo[M11] is a liquid bulk storage safety measures adopted on page 51). Itaqui (Maranhão) port terminal’s current company with a 50-year track record, New opportunities Today, the company is an industry leader capacity of more than 55 thousand m3 strongly client-focused, and with with a 24% share of capacity at Brazilian will have been increased to 103 thousand substantial capacity to transform and The company is consolidating its independent port terminals. By the end of m3. The aim is to be ready to meet the reinvent itself in accordance with the position as a service supplier to the 2017, resumption in the Santos operations growing demand from the region as needs of the market and in the light of will ramp this up to about 28%. In 2016, well as the requirements for Ultracargo’s expectations of the sectors in which fuels market, for which handling has Ultracargo moved 20 million tons of development overall. it operates. The company’s successful product along the Brazilian coastline. trajectory is based primarily on the intensified in the past two years continuing cooperation of a team of approximately 650 employees.
In 2016, the company used its 50th anniversary to implement a brand AVERAGE STORAGE CAPACITY, NET REVENUES AND EBITDA management project for transmitting its essence, values and competitive 2014 715 advantages. The principal conclusion of the work highlights the company as a 2015 655 link in the client’s logistic and productive 2016 672 chain prompting the creation of the concept: “Ultracargo connects businesses and this connection contributes to the 2014 development of the country and its 346 port logistics development”. The work 2015 316 includes market analysis, research into services offered by the company and its 2016 355 competitors as well as qualitative and quantitative interviews. 2014 167 Average storage capacity (thousand m3) 2015 26 Net revenues (R$ million) 650 2016 171 EBITDA (R$ million) With such a profile strongly consolidated the year. In 2016, there was a growth in the country, Ultracargo performed of 24% in fuel handling operations professionals positively during the year. If on the one compared with 2014. Ultracargo was hand, the challenging economic scenario able to successfully anticipate the work at saw a reduction in the movement of opportunities in fuel handling and chemicals, on the other, the company prepare its installations for the new Ultracargo invested and consolidated its position as product. a provider of services to the fuels market, the demand for which accelerated during 68 ultra Annual Report 2016 extrafarma 69 Extrafarma
Support for local artists Sustainability pillars Products and Services, In 2016, Extrafarma supported CowParade Belém 400 years in the state capital of Pará. With Value Chain Accelerated growth exhibits of 50 sculptures of cows by local artists, in its nine years, this was the first time the event had been held in northern Brazil. In addition to the cultural angle, the initiative also has The year 2016 marked the birth of a 71 stores were opened in 2016, a social bias given that amounts raised from the auction of the artists’ work will be given to new Extrafarma. In addition to the new institutions in Belém and chosen by Extrafarma. visual identity, the sixth largest pharmacy double the preceding year chain in the country with more than 5.7 thousand employees revised its positioning in the market by establishing four major strategic initiatives. NUMBER OF STORES, GROSS REVENUES AND EBITDA The first is the differentiated shopping experience it offers customers. This follows 2014 223 a complete revamping of store processes with investments in a new, more modern 2015 254 store model, with improved illumination 2016 315 and lower gondolas making for better signaling and customer visualization of product categories. 2014 1,171 The second strategic initiative is to 2015 1,417 improve operating excellence. This involved the launch of programs 2016 1,674 promoting gains in company-wide productivity, an example of which being the construction of a new more modern 2014 30 distribution center with greater storage Number of stores capacity in the state of Pará. 2015 29 Gross revenues (R$ million) 2016 37 EBITDA (R$ million)
Accelerated expansion is the network’s page 45) to ensure that the quality of third strategic initiative. In 2016, 71 new service is maintained when set against 5.7 stores were rolled out, double 2015, a background of accelerated network the company network closing the year growth. with 315 units. Growth has also been thousand geographic, the company making its With the change in visual identity, Clube debut in other states in the North and Extrafarma was also relaunched with are employed at the Northeast such as Tocantins, Paraíba greater facilities in exchanging and/ and Pernambuco as well as increasing or options for redeeming points, thus Extrafarma, Ultra’s the concentration of the footprint where enhancing the value with which the Extrafarma already has a presence. An customers perceive the program. In largest business even greater growth rate is planned for December 2016, 8.6 million participated in the network in 2017. the program. For every R$ 1 in purchases, by employee the customer is entitled to one point - Finally, people as a competitive accumulated points which can be later numbers differential: work on reinforcing exchanged for products, discounts, for leadership and teams was undertaken Ipiranga’s Km de Vantagens or for points in (see more on this formation process on another award program. 70 ultra Annual Report 2016 EnvironmentalManagement 71
Environmental Management
In this chapter
• Reduction of Impacts • Integrated Models in Eco-efficiency • Management of GHG Emissions • Water • Energy • Solid Waste
To guarantee the environmental inputs that the businesses require without compromising the availability of these resources in the future 72 ultra Annual Report 2016 Environmental Management 73
Sustainability pillar the criteria of the United States Green selective collection of materials generated Environment Building Council (USGBC) - an entity, by the store – a function conducted which promotes sustainability in civil in partnership with waste scavenger A construction - the sustainable resellers associations – and a bicycle parking lot. use special materials and cladding as Reference Reduction of thermal insulation that emits less heat Finally, through the Resellers Management together with water-based soluble paint, Program, launched in 2016, Ultragaz resulting in gains for both health and supplies its resellers with consultancy and Increase in impacts the environment. The resellers also use advisory services for managers to upgrade LPG heating to reduce the impact of their skills in safety and environmental eco-efficient heat and light while one of the external management. Training is also given walls has a green curtain lining. Other on business management such as service stations items contributing to store cooling is accounting and sales. the platform housing the LPG bottles and sustainable Depending on the structure of each one Each one of the Company’s businesses parameters, performance of which is with a covering that avoids heating and resellers at of its businesses, Ultra runs programs is responsible for monitoring its own shown in this chapter. Worthy of note high temperatures. A photovoltaic panel for continually upgrading its industrial indicators and levels of greenhouse however is that management records is also used to generate the store’s own Ipiranga and processes and use of raw materials gas emissions, water and energy for Ipiranga, Oxiteno and Ultragaz energy. In addition, a system for reuse of and natural resources which interface consumption and generation and permit greater depth and comparability water is planned with the installation of a Ultragaz with its stakeholders, whether clients, disposal of waste. All the businesses of actions with respect to environmental hydraulic pump for harnessing rainwater consumers, suppliers or resellers. are accountable for each of these issues. for use in bathrooms. LED light bulbs are used for illumination. In the external areas, mechanically mixed concrete was used - to reduce waste - as well as recycled cement. There is also a system for the Integrated models in Management of eco-efficiency GHG emissions
Ipiranga has a consolidated team in order to multiply eco-efficient a voluntary commitment for the The Ipiranga Zero Carbon program environmental management process service station solutions. Service stations implementation of actions relative to encompasses the management of in place with the adoption of good can request this free service via the occupational health, safety and the greenhouse gas emissions at the Ipiranga Zero Carbon Program practices and projects for improving relationship website. The reseller receives environment. In other countries, the company along its entire production eco-efficiency. The company’s Eco- a customized technical report with company adheres to similar initiatives chain from fuel transportation to efficient Service Stations present the most indications of solutions for reducing the under the Responsible Care program of sale. In addition to measurement, the Fosters initiatives that minimize environmental impacts, such visible face of this project, incorporating consumption of energy and water in the International Council of Chemical program includes the reduction and as the use of renewable energy and rational consumption several measures such as the efficient order to introduce a greater degree of Associations (ICCA) and the ISO 14.001 compensation for unavoidable emissions. campaigns through the following initiatives: management of water, energy, waste and sustainability to the business. standard. In this way, Ipiranga neutralizes all its materials. By the end of 2016, there were direct and indirect emissions, including Ipiranga Cards: On using Ipiranga Cards at the Ipiranga network, 1,191 service stations of this type in Brazil. Oxiteno is committed to environmental Ultragaz currently has two sustainable those of Ipiranga Racing arising from consumers’ emissions are neutralized at no additional cost. The Eco-efficient Service Station saves conservation, both in the context of resellers. The first was inaugurated in team travel as well as emissions from energy using LED illumination and natural its industrial operations as well as the São Paulo in 2014 and already has LEED the vehicles during the Stock Car races Km de Vantagens: Ipiranga’s loyalty program allowing the light combined with dimmer sensors, life cycle of its products. The business (Leadership in Energy and Environmental themselves. The company also invests consumer to exchange accumulated points for neutralizing thermal insulation, window film, rainwater is administered based on international Design) certification, the first LPG in projects to offset the impact of the emissions. harvesting and automatic faucets, among guidelines and benchmarks for preserving distributor to have such a seal of approval clients that consume the network’s fuel. other sustainable construction solutions. the environment, as exemplified by in Brazil. The second sustainable reseller Ipiranga Service Station in the Web: On acquiring fuel credits at adherence in Brazil to the Responsible was opened in Fortaleza (Ceará) in 2016 the Ipiranga Service Station through the site, the consumer can Resellers are now able to call on an Operations Program of the Brazilian and is currently with its AQUA (High choose to include neutralization of emissions for fuels purchased. eco-efficiency consultancy placed at Chemical Industry Association (Abiquim). Environmental Quality) certification their disposal by Ipiranga’s engineering This trade association establishes pending approval. Built in line with 74 ultra Annual Report 2016 Environmental Management 75
The acquisition of carbon credits for also serves as an incentive for adoption engaged key suppliers in a GHG emissions Emissions of greenhouse gases eventual neutralization initiatives has of clean technologies and efficiency reduction scheme in partnership with the (scope 1) (tCO2e) already surpassed 300 thousand tons. The enhancement measures. CDP (Carbon Disclosure Project). Through most recent acquisition in 2016 involved this initiative, in 2016, Ultragaz committed Year Ipiranga Oxiteno Ultracargo1 Ultragaz Corporate a REDD+ (Reducing Emissions from In 2016, emissions intensity was 0.43 ton/ 43 suppliers to a progressive reduction in 2014 14,590 418,053 4,804 20,732 - Deforestati0n and Forest Degradation) CO2 equivalent per ton of commercialized emissions as from the preparation date of project for supporting conservation in the product (tCO e/t), slightly below the GHG inventories. The project is an integral 2 2015 15,282 435,878 27,307 18,216 - Amazon region with actions for avoiding amount reported for the preceding year. part of the Sustainability, Occupational deforestation and for restoring the forest Oxiteno’s goal for 2020 is a reduction of Health, Safety and Environment, Supplies 2016 16,706 406,445 5,184 14,685 - cover as well as for local community 25% in the generation of greenhouse and Engineering (Quality & Regulation development. gases compared to a baseline year and Logistics) areas. 1. The significant variation in 2015 reflects emissions due to combating the Santos fire. of 2008. Up to 2016, there was an The emissions inventory is published accumulated reduction of 11% in these As with Ipiranga, Ultragaz publishes its in the Public Emissions Registry (www. emissions. Among different initiatives inventory in the Public Emissions Registry registropublicodeemissoes.com.br) implemented and contributing to of the Brazilian GHG Protocol Program, Emissions of greenhouse gases under the auspices of the Brazilian GHG the result, of particular note was the receiving the Gold seal for providing a full (scope 2) (tCO2e) Protocol Program. The company has a partnership agreement with White inventory and submitting it to outside Year Ipiranga Oxiteno Ultracargo1 Ultragaz Corporate Gold seal, granted to organizations that Martins’ Camaçari (Bahia) unit. The CO2 verification. prepare a full emissions inventory and generated from the production of agree to submit it for outside verification. ethylene oxide is commercialized, so 2014 2,705 172,894 2,790 3,169 - In addition, the Zero Carbon Program avoiding release of emissions into the 2015 3,261 152,004 2,782 2,864 - as a whole is audited annually by an atmosphere. Since the pilot project independent outside party, thus ensuring phase, beginning in August 2016 until 2016 1,750 161,862 2,282 1,375 -- the Program’s transparency, consistency March 2017, 4.5 thousand tons of CO2 and reliability in the eyes of all company have been redeemed, with a potential for stakeholders. this volume to increase to as much as 80 thousand tons/year. Similar work has been Since 2008, Oxiteno has operated carried out for a longer period in Mauá Total direct and indirect emissions of greenhouse gases an Atmospheric Emissions Reduction (SP), with the sale of the resulting CO2 to per ton of product sold and Monitoring Program, which tracks the same commercial party. (tCO2e) emissions of CO2, local effect pollutants, particulate material, sulfur (SOx) and Ultragaz has monitored and registered Year Ipiranga Oxiteno¹ Ultracargo Ultragaz nitrogen (NOx) oxides, carbon monoxide its annual greenhouse gas inventory for all and volatile carbon compounds at the its operations since 2009, covering electric 2014 0.001 0.469 0.001 0.013 units in Brazil. From 2009, this program energy sources, resellers, air travel and 2015 0.001 0.438 0.005 0.012 was extended to Mexico and since 2015, third party vehicles. Venezuela and Uruguay. Thus, only the 2016 0.001 0.430 0.002 0.011 Pasadena unit, the expansion of which will In 2016, the company once more be concluded in 2017, is still not a party recorded a reduction in scopes 1 and 2 1. Value corresponds to total direct and indirect emissions in tons of CO2e against total produc- to the monitoring program. The initiative emissions. For the second year, Ultragaz tion (t).
Emissions of greenhouse gases (scopes 1 and 2) (tCO e) 2 Water Year Ipiranga Oxiteno1 Ultracargo2 Ultragaz Corporate
2014 17,295 590,947 6,107 23,901 191
2015 18,543 587,882 30,089 21,080 186 One of Oxiteno’s goals is to increase the utility company. A system has been installed Complex (Rio Grande do Sul) is conducting 2016 18,456 568,307 7,466 16,033 191 consumption of recycled water in 25% for pumping water from the Sewage a similar study to install a reuse system for by 2020 against the baseline year of 2008. Treatment Plant in the ABC Paulista region water from its effluent treatment plant. 1. Values refer to emissions from all Oxiteno’s industrial units except Pasadena. In 2015, the units in Mexico, Vene- At the Mauá installations for example, to the industrial complex in Mauá. In order At Camaçari (Bahia), there is a rainwater zuela and Uruguay were included and in 2016, White Martins implemented a project for the commercialization and an average of 97% of water comes from to ensure quality, the treated water also collection system for industrial cooling recycled sources thanks to the Aquapolo undergoes rigorous additional purification. processes. By the end of 2016, 16% of the purification of CO2 generated from the production of ethylene oxide. 2. Up to 2014, the scope included the Paulínia Terminal, deactivated in 2015. In 2015, emissions at Ultracargo in- project which is operated jointly by the Consequently, the companies in the target for water reuse had been met. corporate those resulting from the burning of products in the Santos fire and for this reason there was a significant Capuava Petrochemical Complex in Mauá petrochemical complex have ceased to increase in GHG emissions for that year. and Companhia de Saneamento Básico consume an average of 450 million liters of In line with its strategy of seeking new do Estado de São Paulo (Sabesp), a water water every year. The Triunfo Petrochemical uses for LPG, Ultragaz has developed 76 ultra Annual Report 2016 Environmental Management 77
equipment for automotive washing Total water consumed per ton of product sold (m³) purposes able to reduce the consumption of water in drive-thru and service station Year Ipiranga Oxiteno Ultracargo Ultragaz operations by 90% while maintaining the quality, agility and practicality of the 2014 0,01 4,07 0,01 0,13 cleaning process both of the interior and exterior of the vehicle. This solution is being 2015 0,01 4,13 0,01 0,09 introduced at Ipiranga’s service station % network, an example of the synergetic 2016 0,01 4,09 0,02 0,09 approach between two of the Company’s 25 businesses. Oxiteno’s goal Ipiranga is seeking to expand water reuse and the capture of rainwater. In addition to for increasing the Energy the Rio de Janeiro (Rio de Janeiro) building, the following units have installed systems resue of water by for rainwater collection: Campo Grande (Mato Grosso do Sul), Presidente Prudente, 2020 São José do Rio Preto and Ourinhos (São Paulo), Cascavel and Londrina (Paraná), Cruz Ipiranga installed an energy efficiency continuous monitoring of equipment Alta and Santa Maria (Rio Grande do Sul) pilot project for storage terminals in performance, preventive maintenance and Governador Valadares (Minas Gerais). Caxias do Sul (Rio Grande do Sul) with the and increased team awareness were all purpose of identifying opportunities for successful measures for reducing the reducing energy consumption and cost consumption of steam at four plants at Total water consumption (m³) and conducive for replication at the other the unit by 40 thousand tons. Panels for operations. The project is scheduled for the generation of solar energy and a small Year Ipiranga Oxiteno1 Ultracargo2 Ultragaz Corporate installation at 10 storage terminals during wind farm have been installed at Mauá 2017. (São Paulo) and responsible for partially 2014 171,960 5,378,343 82,340 223,443 20,641 supplying the unit. Illumination of the Oxiteno is endeavoring to increase plant also uses the more efficient LED 2015 157,823 5,556,609 76,779 152,887 18,014 the efficiency of its boilers for steam lighting. generation. In Camaçari (Bahia), the 2016 163,373 5,394,009 92,988 157,306 19,032 1. Values correspond to Oxiteno’s industrial units, except Pasadena. The international units were included from 2015 while prior to that year only the Brazilian units were tabulated. 2. Scope: Itaqui, Suape, Aratu, Rio de Janeiro and Santos. Total direct renewable and non-renewable energy consumption (GJ)
Sources of water in 2016 (%) Year Ipiranga Oxiteno1 Ultracargo Ultragaz Corporate
Source Ipiranga Oxiteno Ultracargo Ultragaz Corporate 2014 233,731 7,736,877 67,533 360,322 20,641
Surface water 0 0 0 0 - 2015 218,624 7,889,721 108,633 342,506 19,414 (rivers, lakes) 2016 284,976 7,956,549 85,289 333,702 19,413
Groundwater (wells) 18 2 0 33 - 1. Includes all Oxiteno’s industrial units except Pasadena. The increase in consumption in 2015 reflects the inclusion of the units in Mexico, Venezuela and Uruguay. Rainwater 2 0 0 n.d.² -
Effluent from 0 15 0 0 - another company Energy consumption (renewable and non-renewable) per ton of product sold (GJ) Supplies from the 69 82 50 63 - municipal utility Year Ipiranga Oxiteno Ultracargo Ultragaz
Other sources 10¹ 0 491 4 - 2014 0.01 6.03 0.01 0.21
1. Supplies by water tanker. 2015 0.01 6.23 0.02 0.20 2. Ultragaz captures rainwater at various units although measurements began in 2017 only. 2016 0.02 6.24 0.02 0.18 78 ultra Annual Report 2016 Environmental Management 79 Solid waste
At Ipiranga, resellers, clients and Campaign encourages Ipiranga’s Ipiranga has also signed up to the The collected material is used in the A series of awareness campaigns was run authorized lubricant distributors are trained Play Clean (Jogue Limpo) campaign production of soap and biodiesel. The by the Instituto Ultra at the Company’s and alerted to the environmental risks of clients to return lubricant waste to for managing oil and lubricant waste. project operates in cities located in the São Paulo headquarters on the correct inappropriate disposal of waste. This is a sectorial movement for the states of São Paulo, Ceará, Rio Grande separation and disposal of trash, more the service stations environmentally correct end disposal do Sul and Bahia. In 2016, more than than 1 ton of white paper, newspapers, In partnership with LWART - a recognized of plastic packaging for lubricants as 500 thousand liters of oil were collected cardboard, plastic cups and cans being leader in Latin America for the collection required in the National Policy for Solid through the intermediary of 380 Ultragaz collected. The Institute also oversaw an of used or contaminated lubricant oils -, Waste (Law 12.305/2010). See more about resellers. It is estimated that more than extended version of the partnership with the company is promoting an Awarded this initiative (www.joguelimpo.org.br) . 500 thousand people were participants Bunge, again at company headquarters, Collection campaign for which there are Ipiranga operates a system of recyclable in 2016. Encouraged by initial results, in this project. A further company project for converting cooking oil into soap. raffle draws for travel prizes for those waste management and selection at its recycling initiatives through the medium Oxiteno seeks to adequately manage is the Ultragaz Takes Batteries and Cell delivering spent lubricants to Ipiranga’s head offices. The Ipiranga Clean Point is of collection points and awareness the waste generated from its productive Phones campaign where Ultragaz units. The initiative has produced positive a voluntary drop-off point for increasing campaigns have been intensified at processes through a partnership with resellers collect used batteries and results by providing the service stations recycling at a location with the largest Ipiranga’s operating units, which report its suppliers and service providers. As discarded cell phones, which are then with one more differentiated service and in concentration of company employees. monthly on the quantities of recyclable from 2016, the issue was made central sent for reprocessing or recycling. Ultragaz the process, demonstrating a commitment In addition to raising awareness as to materials generated through the corporate to the priorities of the business, refining collected 690 kilos of this material in 2016. to socio-environmental issues. During the the correct segregation of waste, the Credit360 system. In 2016, 50% of non- the existing management process and year, Ipiranga collected 59,919 m³ of oil. initiative has been well received by the hazardous waste was reused and 26% sent monitoring the specific indicators. The At Extrafarma, the principal focus is on recyclable material scavengers, waste in for recycling. company runs a project for enhancing the management of expired or damaged excess of 28 tons having been collected the value of products that have limited medications in addition to other waste commercial importance– the so-called such as syringes, needles and gauzes. co-products –, and which might normally The company operates a Health Services be disposed as waste, but on the basis Waste Management Plan (PGRSS), of this strategy, are used as raw materials executed by third party companies 500 in other productive processes such as authorized for the purpose by the Brazilian cement additives, diluents and industrial Health Surveillance Authority - Anvisa. additives. In 2016, sales of these items These companies provide transportation, thousand amounted to 22 thousand tons. treatment and final disposal suitable for such discarded materials. Additionally, all liters of cooking As part of the process of increasing expired medications, products suspended efficiency and reducing environmental for sale or with damaged packaging oil were delivered impacts, Oxiteno has set a target of are sent for incineration by companies reducing waste volumes generated per accredited by the environmental to Ultragaz ton of product by 40% in 2020 against a protection agencies and authorized by comparable level of 3.42 kg/t product in Anvisa. resellers in 2016 2011. In 2016, the company was able to reduce this amount by 23% to 2.62 kg /t product. Total volumes of waste rose in 2016.
Ultragaz’s Collect Oil Campaign: Ultragaz Collects and Soya Recycles (Campanha Junte Óleo: Ultragaz Coleta e Soya Recicla) in partnership with Bunge and Instituto Triângulo offers bars of biodegradable soap for every two liters of cooking oil waste delivered to the Ultragaz reseller. 80 ultra Annual Report 2016 Environmental Management 81
Solid non-hazardous waste (tons) Disposal of hazardous waste (%) 2016
Year Ipiranga1 Oxiteno2 Ultracargo Ultragaz Extrafarma Corporate Disposal Ipiranga Oxiteno Ultracargo Ultragaz
2014 5,067 2,541 379 1,514 n.d. n.d. Reuse 0 16 0 1
2015 6,330 3,381 343 1,089 127 n.d. Recycling 32 10 0 3
2016 4,073 5,647 187 1,148 129 214 Restoration 0 0 1 18
1. The peaks in non-hazardous waste reflect civil construction work at Ipiranga’s units. Incineration 12 2 91 7 2. A series of factors influenced performance in the generation of hazardous and non-hazardous waste: changes Energy harnessing - in operating conditions at Tremembé and Mauá; a new product developed at Camaçari; modernization work in 32 38 8 71 the industrial effluent disposal and collection network at some units; and the inclusion of waste generated at the co-processing Uruguay unit from 2015. Biological treatment 19 0 02 0
Industrial Landfill 5 341 0 0
Disposal of non-hazardous waste (%) 2016 1. Covers waste from the unit in Uruguay, this form of disposal being the only viable option in the country. Oxiteno has been a part of the Zero Landfill Program for more than 15 years and does not dispose hazard- ous waste in landfills. Disposal Ipiranga Oxiteno Ultracargo Ultragaz 2. 100% of all effluent generated at Ultracargo’s terminals is sent for biological treatment. Composting 3 0 0 0
Reuse 50 0 0 0
Recycling 26 22 32 39
Restoration 0 0 0 0
Incineration 0 8 0 0
Energy harnessing 0 13 0 0 (co-processing)
Landfill 20 32 68 59
Solid hazardous waste (tons)
Year Ipiranga Oxiteno Ultracargo1 Ultragaz
2014 2,452 2,819 839 452
2015 2,044 2,539 20,992 481
2016 2,335 3,9282 63,909 526
1. In 2015, waste and effluent from the fire in Santos (SP) inflated this result. In 2016, this waste was still in the process of being disposed, particularly in the case of effluent. 2. A series of factors influenced performance in the generation of hazardous and non- hazardous waste: changes in operating conditions at Tremembé and Mauá; a new prod- uct developed at Camaçari; modernization work in the industrial effluent disposal and collection network at some units; and the inclusion of waste generated at the Uruguay unit from 2015. 82 ultra Annual Report 2016 Financial Performance 83
Financial Performance
In this chapter
• Sales Balance • Consistent Results • Capital Markets
Results achieved in adverse times are evidence of the resilience of Ultra’s businesses 84 ultra Annual Report 2016 Financial Performance 85 Consistent Sales Results
Ipiranga’s sales volume recorded a Ultra continued to advance and grow in from the businesses contributed to this year-over-year decline of 9%. Despite Solid nature of the Company 2016 in line with its strategic plan and performance with the exception of Oxiteno, effective growth of 2% in the Brazilian consistent management, ensuring the more seriously affected by the challenging vehicle fleet, fuel sales volume for light translates into growth in revenue Company’s financial soundness, profitability conditions. vehicles (Otto cycle) declined by 9%, and longevity. Despite the macroeconomic a reflection of the economic scenario, and profits. Issue of bonds extended conditions, Ultra, together with its various Consolidated EBITDA amounted to R$ 4.2 worsening rates of unemployment and a the debt profile corresponding to business segments, benefited from a billion, a growth of 7%. Net earnings were R$ deterioration in the ratio of fuel prices to strategy of differentiation combined with 1,571 million, a year-over-year increase of 4% household incomes. Diesel sales volume 1.36x EBITDA resilience and extensive operational scale to due to the improvement in EBITDA between also registered a 9% reduction, again in produce one more year of positive results. comparative periods, partially offset by line with overall economic weakness. higher financial expenses and amortization Net revenues from sales and services and depreciation costs, a reflection of Sales volume at Oxiteno was 2% higher Ultragaz posted a 4% increase in the impacts of the partial interruption in were R$ 77,353 million, a 2% increase investments made during the course of the in 2016, the result of a 17% expansion sales volume in 2016 with 3% growth 2015 at Ultracargo’s Santos terminal due in relation to 2015. Improved revenue period. in commodities - reflecting the search in the bottled segment - the result of to the fire in April of that year. Excluding for more efficient use of capacity and investments in new resellers - and 6% in the Santos operations, port-handling the dilution of plant costs, above all in the bulk business due to investments in activity was up by 8%. the first half of 2016. These measures the capture of new clients. were adopted to offset the 1% decline in Extrafarma ended 2016 with 315 stores, EBITDA (R$ million) specialty chemicals, principally due to a Ultracargo’s total average storage an increase of 24% (61 stores) compared 26 weaker economy in Brazil. increased by 3%, above all due to to 2015. During the year, Extrafarma 2,769 740 357 29 increased fuel handling activities at the opened 71 new stores and closing ten. Suape and Aratu terminals, mitigating 2015 3,953
171 % 3,080 459 447 37 2 2016 4,217 advance in net Ipiranga Oxiteno Ultragaz Ultracargo Extrafarma revenues
Debt % Ultra ended fiscal year 2016 with gross thereby extending the debt profile. Net debt of R$ 11,417 million and gross cash debt at the end of 2016 corresponded 4 position of R$ 5,702 million, translating to 1.36x EBITDA for the last 12 months into net debt of R$ 5,715 million, an against 1.24x at the end of the preceding higher net increase of R$ 787 million compared with year. 2015. During the period, the Company income issued bonds worth US$ 750 million, 86 ultra Annual Report 2016 CORPORATE INFORMATION 87
Comparative performance 2015 2016 Variati0n (%) (R$ million)
Net revenues from sales and services 75,655 77,353 2
Costs of products and services sold 68,934 70,343 2
Gross profit 6,722 7,010 4 General and administrative expenses with sales and 3,838 4,097 7 marketing Other operating results, net 51 199 -
Result from sale of assets 27 6 -
Operating income 2,962 3,106 5
EBITDA 3,953 4,217 7
Depreciation and amortization 1,003 1,104 10
Equity income 11 7 -
Corporate information Credits
Ultrapar Participações S.A. Project Coordination BM&FBOVESPA: UGPA3 / NYSE: UGP Institutional Communication and Investor Capital Relations departments Investor Relations Department Av. Brigadeiro Luiz Antonio, 1.343 – 8º andar Consultancy and Editing markets São Paulo -SP - 01317-910 Report Sustentabilidade Telephone: 55 11 3177 7014 Fax: 55 11 3177 6107 Art Direction and Web Project E-mail: [email protected] Report Sustentabilidade www.ultra.com.br Photographs In 2016, Ultra’s shares traded on the Itaú Corretora de Valores S.A. Carlos Reinis BM&FBOVESPA reported an appreciation Check out further details on the Superintendence of Solutions for Glener Uehara of 13%. Ultra also declared dividends of R$ financial performance for 2016 Corporations Pisco Del Gaiso 907 million in 2016, 4% higher than 2015. Rua Urural, 111 – Prédio B – Térreo – Tatuapé Renato Stockler This amount represents a dividend yield of www.ultra.com.br/ri São Paulo, SP – 03084-010 Thiago Pelaes 2.5% on the average share price during the Telephone: 55 11 3003-9285 Ipiranga Archives period. Oxiteno Archives ADRs Depositary Bank Ultragaz Archives The Bank of New York Mellon Shareholders Relations Illustrations PO Box 358015 Pittsburgh, PA 15252-8015 Report Sustentabilidade Telephone: 1-800-BNY-ADRS (1-800-231- 5469) Acknowledgements Telephone calls outside the United States: We thank the participation of all Ultra’s 1-201-680-6825 employees who contributed to the E-mail: [email protected] preparation of this edition. www.bnymellon.com/shareowner/ equityaccess
Audit of Financial Statements Deloitte Touche Tohmatsu Auditores Independentes Rua Alexandre Dumas, 1.981 São Paulo, SP – 04717-906 Telephone: 55 11 5186 1000 www.ultra.com.br