1 intercement Relatório Anual 2010 perfil corporativo intercement annual report 2010
intercement annual report 2010 CREDITS
General Coordination Executive Committee
Coordination of Internal Communication Fernanda Guerra
Editorial Production TV1 Conteúdo
Photos Arquivo Intercement Futura Press (cover and pages 2, 10, 14, 33, 37, 48 and 56) Ricardo Correa (pages 6, 30, 46 and 59)
Printing Burti InterCement INTERCEMENT PARTICIPAÇÕES S/A IS THE NEW HOLDING OF THE CAMARGO CORREA CEMENT BUSINESS GROUP InterCement Brasil S/A is the new company name of Camargo Corrêa Cimentos S/A. This change was followed by the creation of InterCement Participações S/A, the holding company for the cement business, which will bring together InterCement Brasil S/A, the Argentinean Loma Negra and other international stakeholders. The aim of the changes is to meet the strategy of making the Company one of the 20 largest cement producers in the world by 2012.
IMPORTANT: Throughout this Report, information and results ascertained in 2010 by Camargo Corrêa Cimentos and its subsidiaries are presented, already under the new company name InterCement. 2 intercement 2010 annual Report Corporate profile 3
INTERCEMENT 2010 annual REPORT CONTENTS
4
OUR CORPORATE PROFILE
10 MESSAGE FROM MANAGEMENT
12 HOW THE CEMENT MARKET WORKS
16 OUR BUSINESS
MANAGEMENT PERFORMANCE
22 42
HOW WE PRODUCE HOW WE STRUCTURE OUR BUSINESS
26 47
HOW WE MARKET HOW WE MANAGE OUR RISKS
29 48 CIMPOR OUR SKILLS
30 51 OUR STRATEGY AND COMPETITIVE ADVANTAGES OUR VISION OF SUSTAINABILITY
32 55 WHERE WE ARE INVESTING HOW WE EVALUATE THE BUSINESS PROSPECTS
36 56 OUR FINANCIAL PERFORMANCE corporate information 4 intercement 2010 annual Report Corporate profile 5
With growing results in the cement market over the tional practices and is a signatory of the Cement Sus- OUR CORPORATE PROFILE years and in line with the expansion of InterCement tainability Initiative (CSI), the cement production arm domestically and internationally, the parent compa- of the World Business Council for Sustainable Devel-
ny Camargo Corrêa S/A acquired in 2010 about 33% opment (WBCSD). As a Benchmark in CO2 emissions, stake in the Portuguese cement company named InterCement invests in renewable energy and also
To meet the strategy of sustainable accelerated IN BRAZIL, Cimpor, which operates in 12 countries, including Bra- participates in the Climate Agenda prepared by the growth and become by 2012 one of the largest INTERCEMENT OWNS zil, whose transfer to the new holding InterCement Camargo Corrêa group, which lists nine commitments THE BRANDS CAUÊ & cement producers of the world, with strong inter- CIMENTO BRASIL Participações is in progress, becoming its largest indi- to the reduction and mitigation of the Greenhouse Ef- national participation in emerging countries, the vidual shareholder. fect Gases (GHGs). shareholders of Camargo Corrêa S/A and its parent The changes and results achieved in recent years company Camargo Corrêa S/A, promoted a partner- prove the success of the strategic sustainable proj- INTERCEMENT’S HOLDING ship restructuring in December 2010, which culmi- ect, which seeks to generate value for its stakehold- COMPANY - CAMARGO CORRÊA nated in the formation of a holding for the cement ers in the short, medium and long term. Repeating S/A - ACQUIRED IN 2010, NEARLY 33% OF THE STOCK SHARES business, named InterCement Participações S/A. the performance of previous years, InterCement OF PORTUGUESE CEMENT Furthermore, in deliberation of April 30, 2011, its closed the year with the expansion of its market PRODUCER CIMPOR, WHICH company name was amended from Camargo Cor- Dedicated to mineral extraction and production share, volume and revenue. OPERATES IN 12 COUNTRIES rêa Cimentos S/A to InterCement Brasil S/A. of cement, concrete and aggregates, InterCement Committed to the principles of sustainability, Inter- AND BECAME ITS LARGEST The new holding InterCement Participações S/A will currently controls one of the largest cement com- Cement guides its actions based on the best interna- INDIVIDUAL SHAREHOLDER have under its umbrella InterCement Brasil S/A, the Ar- plexes of South America, with capacity to produce gentinean cement producer Loma Negra and strategic 16 million tons of cement per year. It has consoli- participations in other companies linked to the sector. dated business units in Brazil and Argentina, trade InterCement Brasil S/A, the new name of Camargo Cor- operations in Bolivia and in Paraguay, and holds a rea Cimentos S/A is a privately held domestic company, concession for a railroad in Argentina, known as based in São Paulo and established in 1967, which has Ferrosur, more than 3000 km long, which transports 99.9% of its shares owned by Camargo Corrêa S/A, the raw materials, finished products and other goods. group’s holding company. InterCement has seven manufacturing plants in Brazil, which directly employ more than 2000 IN BRAZIL, INTERCEMENT professionals, and nine other plants in Argentina, HAS SEVEN PLANTS, where they have more than 2,700 employees at WHICH EMPLOY MORE work. The plants employ over 2,800 professionals in THAN 2 THOUSAND an outsourcing scheme. With the Cauê and Cimen- PROFESSIONALS, AND to Brasil brands, it ranks third in the Brazilian market NINE OTHER PLANTS and is the fifth largest concrete producer in Brazil. In IN ARGENTINA, WHERE Argentina, the subsidiary Loma Negra is the market MORE THAN 2,700 leader. Among other businesses, InterCement also ASSOCIATES ARE participates in the Palanca Cimentos project, which IN ACTIVITY is constructing a plant in Angola. TRUCKS TAKE THE ORE EXTRACTED FROM THE MINES UP TO THE PRODUCTION UNITS 6 intercement 2010 annual Report Corporate profile 7
OUR BACKGROUND Net revenue (R$ million)
2,474 2,362
2,042
1,598 1,481
923
680 580 624 503 423 302 200 150
1968 1991 1993 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Foundation of Inauguration of Inauguration of Acquisition of CCI comes to All the plants of Shareholders Start-up of Inauguration Raises capital Acquisition of Joint venture Acquisition of Acquisition of Entry into Shareholders In April 2011, Camargo Côrrea the 2nd line in the Bodoquena Cimento Cauê be known as the Company agreement to concrete of Ijaci Plant - with issue of Loma Negra, with Equipav the totality of CIMEC mill in aggregates agreement to build the company Industrial (CCI) the Apiaí plant - plant - Capacity with plants in Camargo Corrêa receive create Yguazú operations Capacity of 2.0 debentures leading company Group for CBC’s shares Suape - PE – market in plant in Angola name of Capacity grows of 0.8 MMt Pedro Leopoldo Cimentos certification ISO Cementos MMt in Argentina - operation from Equipav Capacity of 0.3 Argentina with (Palanca Cimentos) Camargo Corrêa to 1.3 MMt and in Santana 9001 (Paraguay) Capacity of 7.0 of concrete Group, thus MMt acquisition of - Capacity of 1.6 Cimentos S/A 1974 do Paraíso, both MMt business holding 100% of La Preferida de MMt was amended Inauguration of in MG - Capacity estabilishing its equity Olavarría S.A. to InterCement the 1st Plant in of 1.2 MMt the Companhia Acquisition of Brasil S/A, a Apiaí - Capacity Brasileira de Start of construc- approximately 33% deliberation of 0.8 MMt(*) Concreto (CBC) tion of a plant of Cimpor that marks the in Paraguay - beginning of a Capacity of 0.4 new phase of MMt the company’s expansion
(*) MMt (millions of tons) 8 intercement 2010 annual Report Corporate profile 9
MISSion Act in the cement industry’s value chain in a sustainable way, with innovation and excellence in management committed to customer needs and fulfillment of people, generating value for shareholder and respecting the environment and the communities that directly or indirectly have to do with our company.
VISion Be one of the 20 largest cement companies in the world by 2012.
VALUES Respect for people Responsible action Transparency Quality and innovation and the environment Comply with established Provide clear and Assure customers of the Always act in a correct laws of the countries and comprehensive information best possible quality in and fair way towards its regions where it operates; about activities, the execution of services shareholders, professionals, match the values defined achievements, policies and or provide products VIEW OF THE CEMENT PRODUCTION PLANT IN IJACI/MG customers, vendors, herein; act uprightly and performance in a systematic and continually invest governments, communities according to the universal and accessible manner. in the enhancement and society in general. standards of human of their activities and Act responsibly toward coexistence, without Focus on results their professionals. the environment. prejudice to race, sex, Always seek to maximize OUR CORPORATE STRUCTURE camargo corrêa s.a. (CCSA) creed, religion, position, performance in order The cement business is comprised of a holding, function or other . to ensure its survival, its investments, returns to named InterCement Participações S/A, created by intercement participações s.a. cimpor shareholders and appropriate the Camargo Corrêa Group, which owns 99.9% of 33% conditions for professionals. its preferred shares and common shares. InterCe- intercement brasil s.a. ment Participações controls InterCement Brasil S/A 99.90% OUR PERFORMANCE
is a publicly held company that owns direct partici- loma negra c.i.a.s.a. RESULT INDICATORS 2004 2005(2) 2006 2007 2008 2009 2010 % 2009/2010 pation in three cement companies in Latin America, 94.53% Gross income (R$ million) 898 1,187 1,901 1,946 2,660 3,036 3,132 3.0% three Brazilian power dams and a holding company. Cofesur (Ferrosur)/ Net income (R$ million) 624 923 1,481 1,598 2,042 2,362 2,474 4.7% Recycomb/La preferida de EBITDA (%) 245 305 456 400 420 641 616 -3.8% WHERE WE WORK Olavarría 80% Margin EBITDA (%) 39 33 31 25 21 27 25 -2 p.p. The cement production plants of the Company in Liquid profits / loss (R$ million) 618 123 193 211 186 541 226 -58.0% CC ESCOM BV Brazil are located in the cities of Apiaí and Jacareí and Investments (R$ million) 55 41 59 177 270 263 302 15.0% 50.1% in the State of São Paulo; Bodoquena in the State of yguazú OPERATIONAL INDICATORS 2004 2005 2006 2007 2008 2009 2010 % 2009/2010 Mato Grosso do Sul; Pedro Leopoldo, Santana do 35% Sales of cement and derivatives 2.7 7.0(3) 8.0 8.8 10.2 10.1 11.5 12.7% Paraíso and Ijaci in the State of Minas Gerais, and in itacamba (million tons)
Suape, State of Pernambuco. In Argentina, there are 16.66% Sales of concrete (million m³) 0.2 0.9(3) 1.6 2.2 2.4 2.5 2.3 -8.0%
nine plants located in the provinces of Neuquén, San baesa Aggregates volume ------1.3 - 9% Juan, Catamarca and Buenos Aires - which concen- (million tons) (1) maesa Tons carried (million tons) 4.8 5.1(3) 5.6 5.5 5.6 5.1 5.2 2.0% trates six of the nine plants. 6.35% Employees (at the end of the period) 676 2,761 2,671 4,000 4,808 4,751 4,787 0.7% The Company also owns 29 concrete plants, of estreito* Income per employee (R$ thousands) 1,328 430 712 487 553 639 654 2.3% which 18 are located in Brazil and 11 are in Argen- 4.44% EBITDA per employee 363 110 171 100 87 135 129 -4.5% tina, besides three aggregate mines, being two in ccc portugal Brazil (metropolitan area of São Paulo) and one in 100% The data for fiscal years 2009 and 2010 are in line with the international accounting standards (IfRS). (1) Figures for the railway concession the province of Buenos Aires. *participation as from 2011 (2) Pro Forma Income for 2005 in Argentina since date of acquisition, in July 2005 (3) This includes annual operating values in Argentina 10 intercement 2010 annual Report Corporate profile 11
OUR PRODUCTION For us, it is important to stress that we are ef- MESSAGE FROM MANAGEMENT REACHED A RECORD OF fectively in line with our values, a stance which we 11.5 MILLION TONS OF are sure will allow us to achieve our vision and fully CEMENT IN THE YEAR, comply with our mission. WITH A 12.74% IN THE In the social field, we computerized the target DEAR READER, YEAR’S ACCUMULATION control system related to the major individual in- I am pleased to present the major changes in cor- An important step in this direction is the already OF BRAZIL AND dicators of sustainability, which allows access to all porate structure of the cement business: the consti- mentioned acquisition of about 33% of Cimpor’s ARGENTINA associates, and elaborated the Corporate Social tution of a holding named InterCement Participa- stock by Camargo Corrêa S/A. Cimpor has 67% of Responsibility Policy, with the firm determination ções S/A, from its previous name Camargo Corrêa its assets concentrated in emerging markets - in line of disseminating the principles of sustainability and Cimentos S/A and it is underway the transfer to the with our focused growth strategy - as well as sig- expanding actions that promote positive trans- new holding InterCement Participações S/A a par- nificant market share in Brazil. The most important formation and create the adequate conditions for ticipation in the in the cemente Portuguese Cimpor thing is that this operation allows InterCement to practices (IfRS), an important step in our interna- communities to achieve self-reliance and to grow as (about 33%). The changes and acquisition of major place its focus on the cement sector and demon- tionalization process. we do at InterCement. equity interest in Cimpor are part of our ambitious strates the Company’s willingness to grow in strate- Among InterCement’s investments throughout We would like to thank our shareholders, as- business project, mentioned in the 2009 Report. The gic markets in a sustainable way. the year, the capacitation of our human capital and sociates, customers and other stakeholders who mention of the previous Report has one purpose: to To sustain the new brand’s strength, there were organizational structure review are important to have always trusted and supported our work. We demonstrate that this expansion project has been many positive results in 2010. Our production ensure the Company’s focus on income, stimulate are ready for a new cycle of expansion and we are carefully elaborated and consistently implemented. reached a record of 11.5 million tons of cement in continuous improvement and prepare our teams confident that the new stage will prove that Inter- We programmed each step toward this goal safely the year, with a 12.74% evolution in the year’s accu- for the challenges of growing. This led to improve Cement was born to be a reference of quality and and responsibly in order to build a strong and stable mulation of Brazil and Argentina This performance the levels of corporate governance, to provide sustainable growth. enterprise group, recognized for creating value with- reflects the continued investments in expansion of greater flexibility in the decision-making and to in and outside the country, which seeks results and to the industrial park and improvement of the oper- generate more value for the stakeholders. multiply value on a sustainable basis. ational efficiency with special heed to projects to- We invest in the search for energy self-sufficiency
The changes reflect the growth process and under- ward reducing emission levels of CO2, which main- through the acquisition of power plants, which re- José Édison Barros Franco pin InterCement’s position as an essentially multicultural tain InterCement among the companies with the duces the impact of our activities on the environ- Chairman of the Board of Directors group, present in several countries, which values diver- lowest emissions of greenhouse gases in the world. ment as a vital condition for InterCement, which aims sity, sponsors the convergence of ideas and values, par- Our consolidated gross revenue totaled R$ 3.13 to constantly evolve at all levels of sustainability. ticipates in the socioeconomic development of coun- billion, up 3% from 2009. The consolidated EBITDA, Through the subsidiary Ferrosur, we signed up a tries where it operates and builds the future significantly however, decreased by 3.8%, reflecting the appre- contract to sell the railway section between the cit- and sustainably. With the new structure and brand, ciation of the Real against the Argentinean Peso. ies of General Cerri (in the province of Buenos Aires) we have changed the role of the company that holds This impact has affected the net income, which to- and Zapala (in Neuquém) with the Argentina’s vale control over the companies in its sector to become a taled R$ 226 million within the year, a positive per- Logística, an operation that does not affect Ferro- cement company with international outreach, as the formance, but less achieved in 2009. If the valuation sur’s activities as a service provider for third parties, name itself suggests. Our goal is to achieve regional reduced profits in Real this year, on the other hand it nor modifies the logistics infrastructure of Loma leadership, particularly in Latin America and Africa, con- signaled the positive outlook of the domestic mar- Negra. Ferrosur still continues connecting the main sidering that as a Brazilian company, we can better un- ket, justifying our investments. In 2010, also fully im- cement plants meeting the needs of its parent com- derstand the peculiarities of these regions. plemented were the new international accounting pany in Argentina. 12 intercement 2010 annual Report Corporate profile 13
sumers are China, India, U.S.A., Brazil and Russia. HOW THE CEMENT The global statistics reveal that in recent years, the global cement consumption MARKET WORKS cement consumption has been increasing substan- tially in developing countries, a fact that avows In- 3,294 terCement’s strategy of concentrating its efforts in 2,998 2,763 2,830 2,568 South America and Africa. 2,337
CEMENT: OUR MAIN PRODUCT CEMENT IN BRAZIL Cement is a commodity produced from limestone. Brazil, the fourth largest cement market in the world, The limestone mines must be located relatively close according to the Global Cement Report, leads the to consumer centers to make production viable. With production and consumption in Latin America. Co- limited range, specifications and similar manufac- herent with the profile of this segment and the dy- 2005 2006 2007 2008 2009 2010 turing processes worldwide, the cost of imported namics of international market, the country has glob- Source: Global Cement Report 8th edition 2009 and cement may be considered low, but the operating al players, and sees the dealers as the main buyers. International Cement Review expenses make the final price 50% more costly. This Responsible for 1.8% of world consumption, Bra- follows from the cost of fuel, freight, manpower, the zil’s cement park has about 70 plants, 12 domestic dependence on transport (logistics) and the electric and foreign industrial groups, with installed capac- cement in brazil BRAZILIAN CONSUMPTION REACHED 59.1 MILLION TONS power used in the operational process. OF CEMENT IN 2010 ity of 67 million tons/year. Estimates of the National Association of Cement CEMENT INDUSTRY IN THE WORLD Industry (SNIC) show that the Brazilian consumer The cement industry exists in almost every country has reached 59.1 million tons in 2010, representing 9.7% CENTRAL-WEST and requires long-term and intensive capital (on av- an increase of 14.8% compared to the previous year. 20.2% NORTHEAST APPROXIMATE COMPOSITION erage between 200 and 300 US$/ton of turnover). This means that the country maintained its growth 7.0% NORTH OF THE COST OF CEMENT Brazil, where the 12 groups work, is one of the coun- pace that started in 2005 - reflecting the growth of 46.5% SOUTHEAST tries with the greatest competition, according to the the economy, housing programs and investments 16.5% SOUTH National Association of Cement Industry (known as in infrastructure - and is able to meet the current SNIC) - only the United States beats this figure. demand, but will need new investments soon - in According to data from International Cement line with the InterCement’s growth plan. 20% freights Review, the world production of cement reached Source: SNIC - Official until November - 18% Gas Preliminar SNIC Dec/10 with imports 13% maintenance about 3.3 billion tons in 2010. The five largest con- 11% electric power 11% workforce 27% others BRAZIL ACCOUNTS FOR 1.6% OF GLOBAL CEMENT CONSUMPTION AND RELIES ON CAPACITY TO PRODUCE 67 MILLION TONS PER YEAR 14 intercement 2010 annual Report Corporate profile 15
CEMENT IN ARGENTINA In a market where international players are pres- ent, InterCement is the leader with the Loma Negra brand, which accounted for almost half of the sales in a market that consumed 10.2 million tons of ce- IN THE ARGENTINE ment in 2010, a record volume in the cement in- MARKET, THE LOMA dustry and 10.1% over the 2009 production of 9.3 NEGRA BRAND IS million tons, according to data released by the As- THE LEADER sociation of Portland Cement Manufacturers. A sur- ly estimated economic activity showed 9.4% in vey by the entity shows that the Argentinean con- 2010’s accumulation. sumption increased significantly in a decade, going Despite the demand for infrastructure works, the from an average of 150 kg per capita in 2001 (with Argentinean cement sector focuses its business on RAW MATERIALS FOR CEMENT’COMPOSITION annual production of 5.45 million tons) to 254 kg distributors and resellers that serve the small works per capita in 2010. and repairs. Together, they account for more than This increase is the result of the good perfor- half of consumption, followed by concrete compa- OUR POSITION IN THE SECTOR principles of sustainability and excellence in corpo- mance of the agricultural sector and a recovery in nies and constructors. InterCement currently ranks third in the cement mar- rate management. While always paying close heed the Argentinean consumption, both by the private ket sharing position in Brazil and is the leader in Ar- to opportunities for improvement, it invests in in- sector and by infrastructure projects. After growing gentina, with traditional brands of renowned quality. novation, improvement of processes and in the ca- for six consecutive years, interrupted by the finan- It is also the fifth largest concrete producer in Brazil, pacitation of its talents to generate value for all its cial crisis in the international markets that extended with 18 concrete plants, most of which located in the stakeholders and thereby contribute to the sustain- throughout 2009, the market again showed posi- state of São Paulo, which consumed nearly 500 thou- ability of the business. tive outlook for the coming years, which favor ce- sand tons of cement from its plants in 2010. It also In its operations, InterCement adopts an ethi- ment industry. As evidence of this, Brazil’s month- has two quarries in the state of São Paulo, recently cal, transparent and respectful attitude toward its acquired. In Argentina, with the Lomax brand, the peers as well as in contact with vendors, custom- company holds 24% of the market share of concrete ers and other stakeholders, based on the principles CEMENT IN ARGENTINA in Buenos Aires. It also includes the La Preferida de of its Code of Conduct. To guide relationship of its Olavarría for the production of aggregates. professionals with stakeholders, the Company has The Company’s growth targets are ambitious. It a policy of its own that prevents abusive actions in focuses its efforts on measures streamlined with the commercial agreements (formal or informal) with 40.5% buenos aires competitors, customers or distributors, mitigates 24.5% central INTERCEMENT CURRENTLY risks associated with the anti-competitive behav- 11.7% NORTHWEST RANKS THIRD IN ITS ior and ensures that managers make decisions re- 8.9% cuyo CEMENT MARKET SHARE IN gardless of its partners or competitors. The Com- 7.6% PATAGONIA BRAZIL AND IS A LEADER pany also provides a channel to receive complaints, 6.7% NORTHEAST IN ARGENTINA called the ethics Line, with full confidentiality and independence, since it is managed by an outside PROFESSIONALS RELY ON A FRAMEWORK OF ENHANCEMENT COURSES AND BUSINESS OPPORTUNITIES FOR GROWTH IN consulting firm. THE COMPANY 16 intercement 2010 annual Report Corporate profile 17
OUR BUSINESS
WHAT WE PRODUCE holds almost 10% market share land its park indus- use 756 km infrastructure, in the stretch between InterCement produces cement, concrete and ag- trial produced 6 million tons in 2010. PRODUCTIVE UNITS the cities of general Cerri (in the province of Bue- gregates, and has the third largest cement complex The cement plants are located in cities Apiaí and nos Aires) and Zapala (in Neuquém), preserving in South America. Today, it has 16 units of cement Jacareí (São Paulo), Bodoquena (Mato Grosso do the right of the Loma Negra to carry their prod- companies - seven in Brazil and nine in Argentina - Sul), Pedro Leopoldo, Ijaci and Santana do Paraíso ucts. The operation also provides for the transfer which together produced 11.5 million tons in 2010, (Minas Gerais) and in Suape (Pernambuco), where of certain contracts of employment, and certain representing a 12.74% increase compared to previ- is represented by the mark Cement Brazil - the first assets owned by Ferrosur and will be implemented ous performance. plant in Northeastern Brazil to produce cement with after approval by the National Commission of Ar- The evolution of cement production recorded by the addition of slag. gentina’s Economy Defense (Comisión Nacional brazil 1 the Company both in Brazil and in Argentina, even be- de defesa de La Competência). The transfer price
3 2 fore the completion of numerous projects to expand PRODUCTION IN ARGENTINA bolivia will be US$ 60 million. the industrial park that are underway, reflects the fre- The Company began operating in Argentina in 2005 8 4 7 5 quent investments in processes to improve operational by acquiring a controlling stake in Loma Negra and paraguay OTHER INVESTMENTS 6 efficiency, the researches aimed at improving on a dai- its subsidiaries. Traditional and with high reliability 9 InterCement still owns a stake in Yguazú Cementos,
ly basis the quality of products and efforts to improve and reputation in the local market, Loma Negra is 16 1 suape a business unit located in Paraguay, at Itacambira argentina 2 santana business management. The record production of 2010 the market leader and its industry produced 5.5 mil- do paraíso Cementos, in Bolivia, at the Palanca Cement project 17 10 11 3 pedro leopoldo outdid the average growth of the sector and enabled lion tons in 2010. 4 ijaci to set up a cement factory in Angola - initiatives that 12 14 5 jacareí 13 15 historical operating brands in several plants. Loma Negra is the only company with a presence 18 6 apiaí demonstrate the Company’s commitment to grow 7 bodoquena in all regions of the country. It has nine units for 8 bolívia1 in key markets in a sustainable manner, creating val- 9 paraguai PRODUCTION IN BRAZIL manufacturing cement and 11 concrete production 10 ramallo ue for its stakeholders. 11 lomaser In Brazil, InterCement works with the Cauê and Ci- facilities, located in the provinces of Neuquén, San 12 olavarría 13 l’amalí mento Brasil. Recognized for its quality, the Com- Juan, Catamarca and Buenos Aires, which concen- 14 barker 15 sierra bayas pany produces cement, concrete and aggregates trates six of the nine plants. Loma Negra sells ce- 16 catamarca 17 san juan in seven plants - four integrated cement plants and ment, lime and special mortar with its brand, con- N.B. Only cement operations 18 zapala three mills - 18 units of concrete and two quarries. It crete with Lomax brand and aggregates for civil construction, through the subsidiary La Preferida seven of nine units of Loma Negra and connects the de Olavarría. Argentinean cement to major consuming centers. To meet its sustainable guidelines and environ- Currently, services for Loma Negra represent production (%) SALES VOLUME OF CEMENT mental conservation, InterCement relies on Recy- about 45% of the products carried by Ferrosur. For (millions of tons) comb, a plant that uses fuel blending technology, other customers, the railroad carries chemicals, 12 to eliminate industrial waste, which cooperates to fuels, raw materials, among others, mainly for the 10 reducing emissions of greenhouse effect gases. construction sector. In 2010, it transported 5,2 mil- 8 5.5 5.5 5.1 brazil 6 lion tons, up 2% achieved in 2009 in volume, with an 52% 5.3 4.1 4.9 argentina 4 FERROSUR: A COMPETITIVE EDGE average rate of US$ 10.86 per ton (+14%). 48% 2 2.9 3.1 3.5 4.7 5.1 6.0 In Argentina, InterCement has a competitive edge: For its strategic location, on August 24, 2010 Fer- 0 2005 2006 2007 2008 2009 2010 through Cofesur S/A, it holds 80% stake in Ferro- rosur signed a contract for the transfer of rights and
argentina brazil sur Roca SA (Ferrosur), with 3,181 km railway, which obligations of its assets to Vale Logística de Argenti- operates in central Argentina. The railway connects na S/A. The agreement guarantees Vale the right to PERFORMANCE 21
4 SUPPLY THEN, IT IS SENT TO THE DOSAGE STAGE, WHICH PREPARES THE CHAIN MIXTURE OF LIMESTONE, CLAY AND IRON ORE IN IDEAL PROPORTIONS FOR THE QUALITY AND TYPE OF Called by the ancient Romans as caementum, the CEMENT TO BE MADE. WORK Portland type cement comes from a mixture of at least IS DONE BY DIGITAL DOSING 70% limestone (abundant in nature), clay and iron SCALES AND CONTROLLED BY ore, where other additional ingredients are possible in THE CENTRAL LABORATORY. lesser content to obtain specific properties. Its chain of production requires high technical knowhow and the latest technology to produce a higher quality cement. InterCement has one of the most modern industrial parks of South America, delivering high 5 profitability with regard to the environment. THE GRINDING OF THE IDEAL MIXTURE PRODUCES A FINE POWDER KNOWN AS RAW MEAL. THE MATTER PASSES THROUGH CYCLONES WHERE THE AIR IS SEPARATED FROM THE PRE-HEATED MEAL. AT THIS POINT, THE RELEASE 1 OF CO TAKES PLACE, ACCELERATING 2 THE ORE IS EXTRACTED THROUGH DETONATION, THE DECARBONATION. AND THEN CARRIED TO THE PRODUCTION UNIT.
6 THEREAFTER, THE MEAL GOES 2 TO CALCINER AND IS HEATED UPON ARRIVAL, THE GREAT BOULDERS GO UP TO ITS MELTING POINT AT THROUGH CRUSHING, A PROCESS FOR REDUCING TEMPERATURES THAT REACH THE LIMESTONE INTO UNIFORM SIZED PEBBLES. 1,400 ° C. THE MATERIAL BECOMES A KIND OF LIQUID STATE MAGMA AND IS THEN COOLED QUICKLY. THE MATERIAL RETURNS TO ITS SOLID STATE, FORMING THE 3 CLINKER, BASED ON THE CEMENT. WITH UNIFORM SIZE, THE LIMESTONE DEPOSITS ARE DRIVEN TO PRE-HOMENIZATION DEPOSITS. AS THE QUALITY OF CEMENT MATERIALS DEPENDS ON CHEMICALLY HOMOGENEOUS MATERIALS, THE LIMESTONE PASSES THROUGH A SYSTEM STACKING LAYERS THAT UNIFY THE LAYERS ACCORDING TO THE BATCH THEY CAME IN. 7 THE CLINKER, PLUS THE GYPSUM, PLUS THE LIMESTONE OR ANY OTHER ADDED SUBSTANCE IS GROUND MIXED, THUS GENERATING THE CEMENT. THE CEMENT IS THEN READY TO BE SHIPPED EITHER IN BAGS OR IN BULK. 22 intercement 2010 annual Report Performance 23
col), and subject to verification of independent ex- HOW WE PRODUCE ternal consulting. The results show that the Com- evolucion of absolut pany has the lowest worldwide rates and became a emissions (MM ton. de CO2) benchmark in the control of GHG emissions. Inter- 0.037 0.029 2010 3.339 3.489 Cement currently has emission 535 kg CO per ton 2 0.036 0.030 The InterCement has one of the most modern in- THE COMPANY ADOPTS of cement produced, well below the annual average 2009 2.76 2.999 dustrial parks in South America, delivering high of 653 kg. 0.037 THE MEANS OF REDUCING 2008 2.507 3.44 profitability with respect towards the environment. THE IMPACT OF THEIR 0.037 Its units have a different operating model, which ACTIVITIES IN THE REDUCTION OF IMPACTS 2007 2.136 3.21 combines cutting-edge technology, automated InterCement uses cleaner fuels to generate power ENVIRONMENT AND IN 0 1 2 3 4 5 6 7 8 processes, scanned and tracked in a central labo- necessary for the furnace and reduce CO emis- cauê Loma negra ferrosur concreto COMMUNITIES CLOSE 2 ratory and experienced professionals, which allows sions. The technique, called co-processing, consists In 2010, RECYCLECOMB Issued 370 Tons. This amounts to TO THE RESERVES AND less than 0.001% ensuring the quality of the final product and multi- PRODUCTION UNITS, of burning industrial waste or municipal solid waste plying sustainable results. SINCE START OF THE (tires, waste oils, plastics and paints, among others) EVOLUTION OF ABSOLUTE To supply its production, the Company holds re- to replace traditional fuels, without creating new PRODUCTION PHASE EMISSIONS (MM ton. of CO2) serves of limestone mineral - which accounts for waste nor jeopardizing the environment intercement CSI-global* CSI-am.sul* CSI-brasil* about 90% of the cement composition - with ex- The main environmental impact of cement produc- To ensure supply of these products long-term (excl.br) traction guaranteed for several decades, in Brazil tion is the emission of CO , which occurs mainly (about contracts were entered into with the generating 700 653 2 615 and Argentina. Easy to find in nature, the limestone 98% of emissions) during two phases: in the calcina- industries at favorable cost, which has become a 600 585 mines need to be relatively close to major consump- tion (burning) process of the raw materials (particu- competitive advantage for the Company and sup- 500 400 t.cim ) tion centers in order to be viable, since the cost of larly limestone and clay) to generate clinker (cement ply guarantee for both Brazilian and Argentinean 2 O logistics has a significant weight in the composition base), when ‘decarbonization’ occurs and the burn- plants. Over the next two years, R$ 40 million will 300 Kg C ( 200 544 533 530 535 of prices - transport and energy together account for ing of fuels that feed the clinker furnace. Specialized 100 about 50 % of the cost of cement production. agencies estimate that the global cement industry is 0
Strategically located, the limestone mines run by responsible for about 5% of CO2 emissions deriving COVERED BELTS CONVEY 2007 2008 2009 2010 InterCement are within a radius of up to 20 km from from human activity. LIMESTONE FOR DOSAGE operational plants and close to major consumer In Brazil, however, the production of cement in- markets. The Company adopts means of reducing dustry accounts for less than 2% of the country’s the impact of their activities on the environment total emissions, according to 1st National Inventory and communities near reserves and production of Greenhouse Gases, concluded by the Ministry of units, since the early stage of production. It is im- Science and Technology. Within its management portant to stress that the accounting books have model, InterCement provides constant monitoring specific provisions for dealing with the recovery of of its emissions through annual inventories, used to the mines after the exploration period. monitor the progress of the actions prescribed in its mitigation plan. The emission inventories of greenhouse gases (GHGs), covering the years 2007, 2008, 2009 and 2010 were conducted according to the CSI protocol and the green house gases Protocol (GHG Proto- 24 intercement 2010 annual Report Performance 25
that is qualified and committed to the achievement Thermal matrix (%) of strategic objectives. CONSISTENT WITH ITS 4.0 6.0 7.5 Knowing this, the Company devotes significant por- STRATEGIC VISION, THE 14.0 12.0 13.3 16.0 12.0 21.0 Coprocessing 12.0 tion of its annual investments in training their employ- COMPANY’S SOCIAL ACTIONS 21.0 25.0 12.0 25.0 12.0 cHarcoal BALANCE THE 25.0 ees, with the aim of providing professional and per- SEEK TO 25.0 25.0 coal sonal growth. In all units, InterCement favors the hiring ECONOMIC, SOCIAL AND 58.0 57.0 49.5 ENVIRONMENTAL ASPECTS, 43.7 41.0 of local employees as a way of retaining talent, foster- 36.0 Petroleum coke ing career development, accelerating the process of WITHOUT LOSING FOCUS
2009 2010 2011 2012 2013 2014 adaptation to corporate culture and ensures that its ON THE PROPOSAL OF professionals are interested in partaking of social ini- OFFERING OPPORTUNITIES tiatives to support local communities. The Company TO THE YOUTH be invested in co-processing facilities, which will use believes that with such policy, it helps to keep young 174,000 tons of waste annually and replace 21% of people in their home town. Hence, this cooperates Consistent with its strategic vision, the Company’s COMPANY CONSTANTLY INVESTS IN EQUIPMENT FOR THE SAFETY OF ITS PROFESSIONALS the thermal array. with the growth of local economies, producing a vir- social actions seek to balance the economic, social tuous cycle that contributes to citizenship. and environmental impact without losing focus on CLEAN ENERGY In partnership with Instituto Camargo Corrêa, Inter- the proposal to provide opportunities for young Ideal school program As cement production requires high consumption Cement encourages its workers to participate in the people. These initiatives are divided into three proj- You are guided to improve the management of of thermal and electrical energy, InterCement in- Ideal Volunteer Program. The intention is to enhance, ects, in addition to the volunteer program, all coordi- public schools, seeking the enhancement of edu- vests in renewable energy produced by hydroelec- recognize and support the volunteer work of associ- nated by Instituto Camargo Corrêa: cation quality. The quality program in the manage- tric plants. The self production warrants lower emis- ates and their families that contribute to the commu- ment of public school serves children and adoles-
sions of CO2, provides a supply hedging and allows nity development of the municipalities involved. The Ideal Childhood Program cents aged 6 to 16 years and was first deployed in a lower production cost. Aware of this, since 1997 it highlight of the program was the implementation of Aimed at children aged zero to six, the program aims the city of Apiaí (SP). holds 9% stake in Maesa-Machadinho Energia S/A the “Good-Doing Day”, an initiative created in 2009 to protect the rights of early childhood and is pres- and since 2001, holds 5.3% of Baesa-Energética to commemorate 70 years of the Camargo Corrêa ent in the municipalities of Ijaci, Apiaí, Bodoquena, Ideal Future Program Barra Grande S/A. group. In 2010, the event has mobilized 1,897 volun- Santana do Paraíso, Pedro Leopoldo and Cabo de Its goal is to encourage entrepreneurship and gen- In 2011, it became responsible for 4.4% of the con- teers in Brazil and over 925 people in Argentina and Santo Agostinho. Coordinated by a representative erate employment as well as income for youths be- sortium that owns the hydroelectric plant of Estreito, Paraguay, among employees, families, vendors, cus- committee of stakeholders of the community, the tween 16 and 29 years. The program is conducted located on the border between the states of Mara- tomers and local communities, benefiting hundreds Community development Councils (known as CdC) in partnership with several entities, such as SESI, nhão and Tocantins. The consumption of “clean en- of families in over 70 actions. The program has 22 projects seeking to supple- SENAC, SENAI, SEBRAE, among others. The pro- ergy” (not produced from petroleum by-products) ment and strengthen the actions of government and gram invests in local potentials and opportunities accounted for 15.7% of the total energy consumed THE COMPANY BELIEVES communities. Originally chosen to house the Ideal for interaction with group companies and its net- by the Company in the year. THAT RETAINING Childhood program, InterCement is the first com- work of relationships. YOUNG PEOPLE IN pany of the Camargo Corrêa group since 2010 to un- The strategy for promoting community develop- INVESTMENT IN CITIZENSHIP THEIR HOMETOWN dergo the experience of simultaneously implement- ment is also being implemented in Argentina with InterCement’s investments in growth are not lim- CORROBORATES ing the Institute’s two other structural programs: the support of Loma Negra foundation. There, the ited to the new technologies, the latest generation THE GROWTH OF Ideal School and Ideal future. proposal is to promote interaction between differ- equipment or strategic stake in other companies. LOCAL ECONOMIES, ent generations to improve the situation of youths First of all, the Company believes these acquisitions PRODUCING A in five cities - Olavarría, Cañuelas, Zapala, Ramallo will only provide the expected return if it has a team VIRTUOUS CYCLE and Barker. 26 intercement 2010 annual Report Performance 27
more than 50% over Loma Negra’s corresponding HOW WE MARKET production. InterCement seeks to maintain a balanced portfo- lio of customers. Retail represents its main distribu- tion channel, although its share has fallen 10% over InterCement seeks to be present in markets with The Company the past ten years. Just as the concrete business- great potential for consumption, which values its has shown an es have been recording a steady growth rate, the differences and the quality of its services. In Bra- average expansion strong industrialization observed in the last five years zil, sales are concentrated in the Southeast, which of about 60% higher has boosted the expansion of industrial channels. accounts for 48% of domestic consumption of ce- than the market’s ment. Since 2006, the Company has been steadily Argentina increasing its market share in the region and in 2010 Customer satisfaction surveys confirm these find- In the Argentinean market, Loma Negra is the reached the mark of 14.4%, surpassing 13.7% re- ings; conducted in July 2010, the survey found 31% brand leader in the cement segment, with demand corded in 2009. of delighted customers and 55% of customers very concentrated in sales for small works and repairs. In four years, InterCement’s market share in Brazil satisfied with the products and services of the Com- Because of this profile, the company has a highly grew 2.1 percentage points, signaling that the ef- pany. InterCement also grew in the industrial sector: dispersed portfolio (no customers hold more than forts to achieve constant improvements in prod- it is already the second player, with 16% participation. 5% of total volume). ucts and services are recognized by customers. The To provide fast service, quality and efficiency, The high market share reflects the quality, the tech- Company has shown an average growth around the company has a logistics division in Brazil, which nical differentiation of its products and a business 60% higher than the market’s, which led to a gain transported 11 million tons in 2010. Of this total, strategy that combines specialized care, training and of 30% market share in the period and enabled In- 12% were transported by rail (and 88% through promotional events that encourage customer loyalty. terCement to shift from the fifth to the third place roads), double the market average, which carried within the ranking of the largest manufacturers. only 6% of its products by rail. In Argentina, more DIFFERENTIATED SERVICE than 5 million tons was transported by Ferrosur, with Aiming to ensure differentiated service, InterCe- THE PLANT REQUIRES INTENSIVE INVESTMENTS ment has consultants in specialized sales, promo-
loma negra (% channel mix)
8.0 8.0 8.0 7.0 8.0 9.0 Construction companies & Others 7.0 9.0 7.0 7.0 7.0 8.0 20.0 21.0 22.0 20.0 19.0 22.0 industries
AFTER GOING 65.0 63.0 65.0 64.0 concrete companie THROUGH THE 63.0 64.0 BAGGING MACHINES, THE CEMENT GOES distributors THROUGH CONVEYOR 2005 2006 2007 2008 2009 2010 BELTS FOR STORAGE AND DISTRIBUTION AT POINTS OF SALE 28 intercement 2010 annual Report Performance 29
tions to increase the turnover of sales points and Cimpor technical consulting services that help customers take greater advantage of the products. Moreover, in order to strengthen the relationship with industri- In line with its strategic goals and growth plan, the Par- al customers, a technical consulting area has been To build up closer ent Company Camargo Corrêa S/A , bought about created, prepared to assist in the optimization of in- relationships with 33% of Cimpor’s capital and became the largest single dustrial processes and thus contribute to reducing customers, shareholder of the Portuguese cement producer. The costs and improving products and services. the company is prepared operation enabled meeting its international strategy, The differentiated consultancy service is also of- to provide technical without deviating from the proposal of focusing its ac- fered in the Argentinean market. Loma Negra has consulting to assist in tivities on the emerging markets. complete teams of sales representatives, expert an- optimizing industrial With a presence in 12 countries in four continents, alysts and a contact center, with the background on processes Cimpor is one of the ten largest global producers of relationship with each customer. The Company also cement and has 67% of its assets in markets such as In Brazil, has technical assistance services, with mobile units, “ON THE RIGHT TRACK” PROGRAM Egypt, China, India, South Africa and Brazil - is the Cimpor holds and even offers theoretical measurement services Aware of the importance of road transport in its busi- largest international company with greatest pres- 9% of the market to indicate the optimal dosage each material should ness and in line with its corporate social responsibility, ence in emerging markets among all major compa- and is the fourth have to make up the best mix according to customer InterCement allied its business operations to social ini- nies worldwide. Also strong in the Portuguese and largest producer needs - being the only company in the Argentinean tiatives while actively participating in the “On the Right Spanish markets, CIMPOR, which remains indepen- in the country market to have a technical center with infrastruc- Track” Program, created by World Child Foundation, dent, still operates in Morocco, Cape Verde, Tunisia, ture and equipment to carry out detailed studies on in order to combat the sexual exploitation of children. Turkey and Mozambique and has a total capacity of which several international companies faced hard- concrete. Loma Negra also offers customized rela- In 2010, awareness campaigns were conducted in the 36 million tons/year. ship to grow as a result of the turmoil in the interna- tionship for client retention, which include special- units at Jacareí (São Paulo), Santana do Paraíso, Ijaci The expressive share in emerging markets allowed tional economy in the aftermath of the crisis of 2008 ized training for professionals in construction, such and Pedro Leopoldo (Minas Gerais) and Bodoquena CIMPOR to maintain its profitability - the largest in and 2009 . This strategic stake in emerging markets as architects, engineers and technicians. (Mato Grosso do Sul), which reached about 4,300 pro- the world among the major players - the period in proved to be a natural ‘hedging’ and proves the right fessionals in the asphalt. action taken in acquiring part of Cimpor’s capital. InterCement is also a partner of Childhood Brasil, Among all major Moreover, the investment offers conditions for lay- an arm of the World Childhood Foundation, an orga- companies worldwide, ing the foundations for a long-term and high value nization founded in 1999 by Queen Silvia of Sweden. Cimpor is the company creation for its stakeholders. Itsmission is to defend children’s rights and promote with increased presence better living conditions for children in vulnerable sit- in the emerging CIMPOR IN BRAZIL uations around the world. In Brazil, the organization markets In Brazil, Cimpor holds 9% of the market and is the works with a focus on protecting children against fourth largest producer in the country. Being located abuse and sexual exploitation. in regions where InterCement has no plants or has a small mill, Cimpor meets the objective of comple- menting the current industrial park.
PROFESSIONALS, WHO ARE TAILORED TO CATER TO CUSTOMERS’ NEEDS 30 intercement 2010 annual Report Performance 31
The company ranks among Our strategy and what sets us the major producers of the cement market, with special apart from the competition highlight for its low rates
of CO2 emissions.
InterCement’s strategic plan focuses on making the COMPETITIVE ADVANTAGES It has a replicable model of management and op- company one of the 20 largest cement producers in InterCement Participações S/A, InterCement Brasil erational excellence with focus on occupational health the world by 2012. To achieve this ambitious goal, S/A and its subsidiaries are committed to creating and safety. InterCement is investing in expanding its business- value for its shareholders and other stakeholders. To It successfully implemented programs for continu- es in Brazil and overseas, on the alert to the possi- do so, they rely on several competitive advantages ous improvement and innovation. bilities of mergers, acquisitions, greenfield projects that allow carrying out its strategy with excellence, As a reflection of its competent and responsible and brownfield, aiming to expand geographically, as follows : management, it provides good rates of return to its to become more competitive and generate value investors. RESEARCH LABORATORIES WARRANT THE FINAL QUALITY OF THE CEMENT for all its stakeholders. It relies on teams that are prepared for the expansion It has easy access to its own and third party resourc- In Brazil, the goal is to maintain a national pres- Consolidated position as the third largest cement es through promotion agencies, bank financing and ence – nowadays, the business units are concen- company in Brazil and a leader in Argentina, with rec- capital markets. Consistent with its strategy to innovate and con- trated in regions of greatest demand – and to dou- ognized brands in the market. It is a self-producer of electrical power in Brazil, stantly improve products, services, processes, meth- ble up the production, with investments in both It has the third largest industrial park in South Ameri- resources with direct impact on costs (Baesa’s rated ods and technology to offer quality products at organic growth and in deployment or acquisition of ca and one of the most modern and efficient. power – 698 MW, Maesa’s – 1140 MW and Estreito’s more competitive prices, InterCement is investing in new plants. In Argentina, the goal is to continue as It is strategically positioned in the concrete market. – 1087 MW) research, development and innovation. This practice the market leader. For its overseas operations, the It has three gravel quarries in strategic regions of São It enjoys flexibility in the use of fuel in Argentina. is just starting to bring the first results and over time intention is to maintain the strategy of operating Paulo and Buenos Aires province. It holds a record for the lowest rates worldwide will accumulate a technical knowledge of high value, in emerging countries, primarily in Africa and Latin It has planned investments of over R$ 6 billion in the emission of greenhouse gases (GHGs) in its difficult to be measured. America, and grow through acquisitions. coming years, without contemplating mergers and ac- production lines. The Company also constantly invests in technical The acquisition of approximately 33% of Cimpor, quisitions, which ensures substantial growth in produc- Expertise in the import of clinker, slag and professional development of its associates, be- achieved in 2010, proves this planning; even though tion volume. and other inputs. sides stimulating innovation and encouraging the it has strong participation in Portugal and Spain, It achieved solid, systematic financial income above It holds reserves of limestone, with guaranteed ex- interchange of best practices with subsidiaries over- 67% of the Portuguese cement company’s assets the market average and consistent with its expansion traction for several decades to come. seas. This culture enabled building up teams with ex- are in emerging markets. project. cellent technical level and a governing body with in- In line with its strategic objectives, the Company Its controlling shareholder is a sound family group INTANGIBLE ASSETS ternational experience. plans to grow in a consistent and sustainable man- and internationally renowned. Throughout its history, the Company has accumulated The brands of its products, namely, Cauê, Cimen- ner, implementing the best practices in processes, It features as the largest individual shareholder numerous assets that cannot be measured, by start- to Brasil and Loma Negra are respected and recog- green initiatives, policies on health and safety, risk of Cimpor. ing as part of a modern, strong and dynamic group, nized for their quality by customers, vendors and management and technology, inter alia, as well as It has a railway in Argentina, which increases recognized in Brazil and abroad. In over four decades other publics, and rely on structured social programs remain in the select list of operations with the low- its competitiveness. of experience in the cement market, it has acquired an that leverage the strength of its brand in cities where est emissions of greenhouse gases (GHGs). Present throughout the cement chain. important – and valuable – know-how of production, InterCement runs its operations. It has large availability of raw materials and which places it in the ranking of major producers, with
other inputs. highlight on the low levels of CO2 emissions. 32 intercement 2010 annual Report Performance 33
WHERE WE ARE INVESTING
InterCement wants to grow considerably in the years to come. And grow sustainably. To maximize the Company’s future value and achieve economic, social and environmental gains, the investments are geared not only for the construction of new plants but also for the development projects that aim to In 2010 alone, increase capacity and to enhance products, ser- Intercement invested vices, processes and systems, in order to reduce R$ 302.3 million operating costs and environmental impacts, and and by 2016, total
particularly to lower the levels of CO2 emissions. In investments are parallel, InterCement seeks to improve its corporate planned for over
governance and its management of risk and peo- R$ 6 billion Automated processes carry the ple, intent on consolidating the pillars for growth in inputs for preparation of cement the years to come. • In 2010, the project of a new mill in Cubatão In 2010, the Company made a total investment (SP) began, which should raise the production of R$ 302.3 million and by 2016 total investments capacity and enable the best logistical efficiency which includes environmental improvements, di- • With regard to environment, investments for the in- of more than 6 billion are expected to meet the and quality for InterCement’s service to customers versification of energy sources, operational efficien- stallation of new filters were completed in Argentina growth plan, without contemplating mergers and in the Southeast. cy and increase capacity, in order to ensure the sup- for the plants at Barker and Olavarría, which would acquisitions. Below are the main investments of In- ply of demand in a sustainable way and maintain its allow achieving environmental indicators similar to terCement: • The Company has also reinforced the operational leadership in manufacturing and marketing cement the world’s best rates. Additionally, other environ- strategy in the concrete and aggregates markets in the country. mental investments were made, such as the installa- INVESTMENTS IN BRAZIL and remained responsive to business opportunities. tion of alternative fuel power plant in L’Amali (the first • In December, the expansion project of the plant Specifically, after evaluating the portfolio of plants, • In Catamarca, Northwest Argentina, investments stage is complete and the second phase is expected at Bodoquena (MS) was completed, which in- some sites have been acquired for the production focused on expanding the milling capacity. A new to be complete by 2011) as well as installation of con- creased the rated capacity of the furnace from 1650 of concrete in metropolitan areas, apart from in- mill was installed, which started operations in Oc- tinuous gas emission meters at all the furnace fun- t/d to 1900 t/d thereby enabling enabled increased vestments to renew vehicles and other equipment. tober 2010 and will expand production by 800,000 nels. With these investments, InterCement reaffirms capacity of the cement and coke mills. Also, the In aggregates, operations were resumed at two tons to cater to the region’s demand. its commitment to respecting the environment and installation of a new palletizing warehouse was fi- gravel mines located in the region of São Paulo (SP). its path to becoming a cement company of reference nalized, reinforcing the company’s presence in the • In the province of Buenos Aires, began the sec- to environmental issues. Midwest region. Investments in Argentina ond phase of the project to increase the capacity • In Argentina, ongoing projects that will generate of the L’Amali plant. With its completion scheduled • In 2010, Loma Negra acquired from the North an increase of 1.6 million tons of cement grinding for 2011, the project should provide an increase of American Philips Services Corporation, 24.5% of the capacity are in progress. These projects are part of about 800 000 tons in storage and bagging capacity Recybom’s shares and took control of 100% of the an investment plan of the subsidiary Loma Negra, in the country’s main market. company’s capital stock. One of the most modern 34 intercement 2010 annual Report Performance 35
investiments (R$ MM) 245.7
43.0
13.4 0.2 energy Railroad concrete Cement & aggregates
InterCement is present in the Brazilian markets The company has extensive with greater potential cement knowledge of all the production processes for consumption 81.3% 14.2% concrete & aggregates
4.4% Railroad companies of industrial waste treatment in Argenti- construction of a plant with capacity to produce of the program, with initiatives aimed at generat- 0.1% energY na, Recycomb uses the fuel blending methodology, 400 thousand tons of cement per year. The total in- ing new opportunities for service delivery and cus- which allows destroying by heat – and safely – the vestment will be around US$ 100 million. The unit tomer service that effectively meet their needs and different types of industrial waste, besides extract- will become operational in 2012. expectations. ing thermal energy from these materials used in ce- The first stage of the project, of model develop- ment furnaces in replacing fossil fuels. Investments in Angola ment and funding proposals generated 350 ideas in Currently, Recycomb processes 50,000 tons of in- • After the pre-marketing operations, with the sales the areas of logistics, product, payment methods, In 2010, the dustrial waste per year and produces the Liquid Re- in 2009 of 25,000 tons of cement in Angola, the sub- packaging and differentiated services of concrete. company created a cyfuel and the Solid Recyfuel, which fuels generate sidiary together with Camargo Corrêa Escom Cement A committee evaluated the feasibility of the best program designed more than 2% of the thermal energy consumed by B.V., a Dutch company, entered into a shareholding proposals and in 2011 many ideas will be imple- to generate new Loma Negra. Its goal is to achieve 15% thermal sub- agreement with an Angolan group to constitute and mented with its own and dedicated structure. opportunities for stitution before 2014. The acquisition is a clear dem- implement a cement plant in Angola, known as Palan- providing services onstration of relevance to InterCement of topics such ca Cimentos. The works are in early stages. and catering to as industrial waste and non-polluting fuel use, issues customers in line with its commitment to sustainability. INNOVATION In 2009, the Company implemented an extensive Investments in Paraguay program to disseminate the culture of innovation • In Paraguay, through its jointly subsidiary with and encourage employees to seek new alternatives Yguazú Cementos S/A, InterCement continued the in their daily work. In 2010, the market was the focus 36 intercement 2010 annual Report Performance 37
Our financial performance volume Of sales Gross Revenue (R$ MM) consolidated (MMt) +13% 3133 +10% 3036 8 The comments made here about the economic and 11,6 2660 In 2010, 10.2 10.1 0.1 1,219 financial performance used the consolidated financial 1901 1947 InterCement 8.8 1,250 1,395 8.0 5.5 statements of Camargo Corrêa Cimentos S/A as prima- produced 11.5 5.5 5.0 1,027 5.3 1,104 million tons at 4.9 ry source. (For this report treated as InterCement), audi- its units in Brazil 1,410 1,641 1,906 4.7 5.1 6.0 797 920 ted by Deloitte Touche Tohmatsu, without the effects of and in Argentina 3.1 3.5 2006 2007 2008 2009 2010 operating results of Usiminas, participation was trans- 2006 2007 2008 2009 2010 ParaguaY argentina braZil ferred in 2009 to the holding company Camargo Cor- Paraguay argentina brazil rêa S/A For more information, please see the financial statements presented in the attached CD. The conso- lidated data are in line with international accounting SALES GROSS REVENUE standards (IFRS). The recovery of the economy, both in Brazil and in In 2010, InterCement’s consolidated gross revenue Argentina, allowed for increased sales of cement accrued R$ 3.13 billion, a 3% increase over R$ 3.03 Important: InterCement is a cement company that throughout the year. The expansion was higher in billion achieved in 2009. This performance reflects operates in line with the four principles of sustai- Brazil, where the sales volume recorded a high of growth in cement sales during the year and the nability - economic, social, environmental and cor- 900,000 tons. In Argentina, sales increased by 500 average best prices practiced. In Argentina, there porate governance aspects – and in the quest for thousand tons, results that confirm the projections of was a reduction in the consolidated figure due to results, with the aim of multiplying their sustainable increased consumption and endorse investments to the appreciation of the Brazilian Real against the Ar- value. In 2010, the Company recorded a slower gro- increase production. gentinean Peso. Gross revenue in the Argentinean wth than previous years, reflecting the combination In 2010, total consolidated sales, which inclu- Peso grew by 11%. of several factors, such as Real appreciation against de operations in Brazil and Argentina increased by the Dollar and increase in expenses, mainly related 12.7% as compared to 2009. In Brazil, sales accrued 6 to the maintenance and qualification of skilled labor million tons. In Argentina, 5.5 million tons were sold, - factors that will prepare the company for strong in addition to the 100,000 tons sold in Paraguay. Gross Revenue (by product) market growth in the years to come.
In Brazil, sales gross revenue (by country) 77% cement accrued 6 million tons. In Argentina, 17% concrete 5.5 million of 4% transport 2% others tons were sold 61% brazil 39% argentina 38 intercement 2010 annual Report Performance 39
ebItda (R$ MM) Gross Income (R$ MM)
DVA +8% 616.2 640.5 +13% 701,0 0.8 The chart below shows the wealth created by the 703.0 420.0 3.0 276.6 251.2 Company and its subsidiaries, as well as their distribu- 456.0 571.0 312.0 399.0 207.0 332.0 tion throughout 2010: 427.0 455.0 336.0 378.0 300.0 317.0 365.0 213.0 363.9 364.2 99.0 78.0 235.0 371.0 386.0 62.0 138.0 2006 2007 2008 2009 2010 2006 2007 2008 2009 2010 dva (simplified) ParaguaY argentina brazil ParaguaY argentina braZil
EBITDA GROSS PROFIT 51% taxes In 2010, consolidated EBITDA declined by 3.8% over Consolidated gross profit decreased by 0.2% over 22% personel 2009. The most relevant factors that explain this de- 2009. This variation is due to the appreciation of the 10% interest cline are: the appreciation of the Real against the Ar- Real against the Argentinean Peso, which reduced 1% leasing gentinean Peso, resulting in minus R$ 57.4 million, and the Argentinean subsidiary’s consolidated gross 8% profit share expenditures on strategic maintenance of plants, per- profit. 8% retained profit sonnel and strategic projects. These expenditures are INTERCEMENT COUNTS WITH aimed at preparing the company for strong market InterCement’s PROFESSIONALS PREPARED TO FACE growth in the coming years, thus anticipating some consolidated gross THE CHALLENGES OF THE GROWING PROCESS investments that would be made in subsequent years. revenue accrued R$ Obs: Note that 51% of added value was paid in the form of taxes. The reconciliation of amounts determined in EBIT- 3.13 billion in 2010, DA in the last two years allows a better understanding with 3% increase CONSOLIDATED FINANCIAL INCOME CONSOLIDATED NET PROFIT of the InterCement’s income: over 2009 The net financial income of 2010 found minus R$ Net income for 2010 was 58.1% less than in 2009, 87.4 million against minus R$ 29.9 million obtained going from R$ 540.7 million to R$ 226.4 million, due in 2009. The Brazilian Real appreciation was the primarily to: 1) The non-consolidated equity of Itaúsa main factor that led to this result. In 2009, the re- and Usiminas in 2010, since these investments were sumed appreciation of the Brazilian Real led to the transferred to the Parent Camargo Corrêa S/A in De- EBITDA RECONCILIATION recognition of a favorable exchange rate against a cember 2009 (effect of R$ 149.3 MM); 2) The devalu-
income indicators 2009 2010 low variation recorded in 2010. With assets and lia- ation of the Argentinean Peso against the Real (effect Net Profit (R$ million) 540,688 226,404 bilities in foreign currency, mainly U.S. Dollars and of R$ 88 million from one period to another); and 3) Equity Method (149,325) - Argentinean Pesos, its financial performance can be the increase in deferred Income Tax and Social Con- Income Tax and Social Contribution 53,356 127,476 affected by the exchange rate of such currencies. tribution because of the convergence to internatio- Net Financial Income 29,863 87,439 InterCement, together with Camargo Corrêa S/A, nal accounting practices (IFRS) with effect of R$ 43.7 Depreciation, Amortization and Premium 145,638 136,359 takes necessary actions for the mitigation of these million from one period to another.
Other Expenses 20,284 38,536 currency risks whenever necessary.
EBITDA 640,504 616,214 Management 42 intercement 2010 annual Report Management 43
HOW WE STRUCTURE president OUR BUSINESS (ceo)
CCC portugal
OUR CORPORATE GOVERNANCE Strategic Financial InterCement adopts the best corporate governance planning & risk management Human engineer & investor Legal business & audit Resources relations practices and often improves their management development model, guided by the directives of sustainability
and the principles of ethics, transparency, corpo- vice president of operations rate accountability and fairness in relations with all SINGLE MODEL FOR (cOo) its stakeholders. INTEGRATED MANAGEMENT Based on its relationship policy, the Company InterCement has 16 operating units located in vari-
maintains various channels of communication with ous parts of the Country and abroad, each with its un un Strategic Purchases argentina brazil these stakeholders and is attentive to opportuni- regional peculiarities. Given this diversity of mar- ties for improvement in all processes. To manage its kets, the Company uses a unique model of integrat- information technology business, it relies upon: ed and replicable management, multidisciplinary s s e e
d and participatory, based on the concept of matrix d ppli ppli e e r e e e & e & u u
ay technology & process u s s t t u s rcial rcial e e gat gat e e o strial strial & & e BOARD OF DIRECTORS management, which allows decentralizing decisions e u u rr ncr ncr mm mm e financ financ f o o parag o o ind ind c c aggr aggr The Board has the task of setting the overall strat- and enables local boards to take concerted action c c gistics gistics sustainability o o egy of the business, elect officers, define and eval- toward the Company’s objectives and in accor- l l uate investment projects, in addition to approv- dance with the characteristics of each region. ing the multi-annual plan and annual budget. The The Business Units, under support of the corpo- Council today has five members: a president, three rate areas, are coordinated by a General Director vice presidents and one advisor, all with a term of and have a complete organizational structure to cement industry, this structure has the generation The success of the unique model of integrated two years. perform its operational activities. The decision pro- of income and operational excellence as its pillars, and replicable management, implemented at all cess is shared with the Governance and Manage- with a high degree of standardization of processes units in Brazil and Argentina, is a reflection of the ment Committees, consisting of Directors, Superin- and management indicators of the value chain. high degree of leadership commitment, matu- The management tendents and Managers. Assessment of the Integrated and Replicable rity and technical know-how of production as well model is guided by Through multidisciplinary teams, who meet in cy- Management System (SGIR), made according to as the mastery of modern, efficient practices and the directives of cles of analyses of results and alignment, the model criteria consistent with the best international ref- management methodologies. The increase of 245 sustainability and seeks continuous improvement in business man- erences, was concluded in December 2010. The thousand tons of clinker from year 2009 to 2010 the principles of agement. Dynamic and replicable, the system im- surveys reveal that the rate of adherence to good (equivalent to 3.8%) is a clear example of this con- ethics, transparency, proves organizational learning, values and skills as management practices increased from 40.8% in tinuous improvement, considering the same asset corporate leaders, provides a systemic view of the Company 2009 to 50% in 2010. The goal is to reach 56.5% in base (furnaces). This evolution reflects the improve- accountability and and disseminates practices and concepts of social 2011 and achieve 80% compliance in 2014 – on pair ment efforts, focused on increasing productivity fairness in all its responsibility. Developed in line with best practices with “world class” companies in the management of and reducing downtime in clinker furnaces. public relations and experience of over 40 years experience in the its operations. Additionally, InterCement performed an organi- 44 intercement 2010 annual Report Management 45
• Management Committee Multidisciplinary and by region, the Management Committees are comprised of Directors, Superinten- The practice of dents and Managers. Each committee is structured joint decisions to perform its duties in managing the business and allows the to bring together professionals of functional areas. assessment The practice of joint resolutions allows us to evalu- of different ate important issues from different perspectives and perspectives and foci, contributed to the adoption of more consistent adopts more and effective measures, values participatory spirit, consistent encourages leadership and prepares the Company and effective to achieve its ambitious expansion project. measures THE PRACTICE OF JOINT DECISIONS ALLOWS THE ASSESSMENT OF DIFFERENT PERSPECTIVES AND • Ethics Committee Conduct seeks to disseminate the Company’s ethical ADOPTS MORE CONSISTENT AND EFFECTIVE MEASURES The Ethics Committee is comprised of executives values and is delivered to each collaborator upon his from the corporate areas and business units. It was admission. The Code is also available for public con- set up to discuss general issues related to ethics, with sultation on the company’s website. zational restructuring in 2010, aiming to make its the evolution of the management model (including emphasis on the Company’s Code of Conduct, and decision-making speedier and more efficient, es- human capital processes, company policies and per- envisages the proposal of policies and standards as- ETHICAL LINE pecially in matters connected with areas of func- formance evaluation), analyze business opportuni- sociated with the behavior and attitudes of business The Ethical Line is a direct channel of confidential tional responsibility, and creating value for its share- ties and investments, monitor the progress of proj- professionals. communication accessible to the Company’s asso- holders and other stakeholders. For creation of the ects and define process improvements, approve risk ciates and public relations, aimed at receiving com- new structure, which consolidates the participatory maps of the Company and Business Units, appraise CODE OF ETHICS AND CONDUCT plaints, comments, suggestions and reporting. It is model, all the existing committees were reviewed. and approve the alignment between the internal and The Company has adopted the Code of Business managed with the assistance of an external consult- The following committees ceased to exist: Human external communications and the crisis management Conduct introduced by Camargo Corrêa, which of- ing firm, PricewaterhouseCoopers, which guarantees Resources, Supply, Capacity and IT, and their du- plan (also manage potential crises) and, among other fers clear and set parameters of how the relationship absolute confidentiality of the information provided. ties were taken over by the respective corporate ar- duties, manage and oversee the operation of other must be defined among InterCement professionals The channel is well prepared to provide informa- eas (HR, Strategic Procurement, Strategic Planning, Committees, acting on their recommendations. and between the Company and its various outsid- tion about proper implementation of the Code of Business Developments and IT). And the following ers. Periodically enhanced and discussed among Conduct and to receive reports of deviations from Committees were maintained with adjustments: • Sustainability Committee associates and various stakeholders, the Code of the Code. When activated, the consultants pass the Which now also addresses the environmental issue. information to the Board of Risk Management and • Executive Committee The Company Audit, which evaluates it and takes appropriate ac- It comprises the President, Vice President of Opera- • Audit and Risk Management Committee adopts a Code of tion. Annually, the communication process of the tions, Corporate Officers and General Directors of Business Conduct Company requests the stakeholders directly asso- the UN (Business Units). It behoove the Committee to • Committee for Occupational with clear and ciated with operations such as customers, suppli- exercise leadership in the deployment of the Compa- Safety and Health defined ers and banks, among other things, full compliance ny’s strategy, monitor its implementation and decide It replaces the former Committee for Health, Safety parameters with the Code, with emphasis on the question of on directions and adjustments to the adopted strat- and Environment. gifts and Christmas presents. egy. It is also empowered to evaluate results, monitor 46 intercement 2010 annual Report Management 47
RELATIONSHIP WITH VENDORS How we manage InterCement’s relationship with its vendors and oth- er partners is guided by mutual respect, transpar- our risks ency and ethics. The Company has a policy for reg- istration of vendors that respects and includes prior With the aim of contributing to the Company’s sus- • IN 2014: Consolidate the process of risk certification of products and materials, where nec- tainability and enhancing the governance mecha- management with risk mitigation and essary. In all dealings with these partners, the Com- nisms, InterCement implemented several mecha- business-critical operations. pany focuses on financial and technical quality and nisms and processes to manage, monitor and reliability, the appropriate cost-benefit ratio and the minimize the risks of its business. Fully aligned to The risk management process also includes the integrity in conducting negotiations concerning the the Strategic Map, the risk management process development of indicators for monitoring the criti- environment, legislation, as well as the trading, so- uses the control methodology of COSO (Commit- cal processes - which sets the maximum tolerance cial and contractual rights. tee of Sponsoring of Organizations), designed to for the risk, among other aspects - and uses meth- assess and enhance the corporate risk control. The odologies such as Continuous Audit, Self-assess- ENGAGEMENT WITH STAKEHOLDERS process includes rules for managing these risks, ment of Controls, Internal Auditing as a monitor- With the goal of improving its engagement with the Map of Critical Processes and Critical Risk Map. ing tool (compliance) and ethical line (anti-fraud stakeholders, InterCement created the Manual of Updated in 2010, the Critical Risk Map identifies risk management process). For strategic reasons, Engagement with Stakeholders and suited the Pri- categories of major risks to be mitigated, monitored the Company decided that the risk management oritization Mapping Tool developed by the United or managed: strategic risks (which encompasses should be left to the “owners” of each process (Of- Nations and used in identifying stakeholders and en- governance, business and sovereign model), regu- ficers, Managers, Coordinators and Leaders or out- gagement issues to the Company’s conditions. latory, financial (market risk, credit and liquidity) and sourced professionals), coordinated by a Corporate The Company also conducted training and devel- operational (production process, logistics, person- Board, called the Risk Management and Audit Com- oped action plans for professionals at the plants of nel, information technology, environment and oth- mittee comprised of one Director and one Manager Concreto Brasil, Loma Negra and Yguazú. The bal- er processes). Also in 2010, action plans were out- from each Business Unit in Brazil and in Argentina, ance sheet of the stakeholders engagement plan for lined to mitigate the critical risks and set the actions consultants and external auditors (KPMG). the cement plants in 2010 shows a very positive bal- to be taken in future years: It is up to the Board, among other assignments, to ance: 89% of actions have been carried out success- define, update and disseminate methodologies to de- fully, surpassing the target of 70% in the Sustainabil- • IN 2011: The following will be implemented: 1) Pro- termine levels of tolerance, monitor the process and ity Multiplier forecast. cesses for Physical and Informational Assets Security, manage the monitoring instruments (internal audit- 2) Corporate structure and for risk management per ing, continuous auditing, self-assessment of controls Plant, 3) Crisis management structure, and 4) Action and ethical line), train the “process owners” so they plans to mitigate the critical risks defined in 2010, can manage the risks in their respective areas, besides The balance of the among others . submitting to the Executive Committee all relevant Engagement Plan of • IN 2012: Deployment of action plans to mitigate risks and strategies developed for mitigation. Stakeholders revealed other risks associated with the critical Process of Con- Moreover, a Risk Management Committee and that 89% of the crete, Aggregates and Operations, and replication an Audit Committee were set up, which, among actions were carried processes of risk management in the Business Units of other duties, will discuss and direct solutions for is- out with success, Paraguay and Angola. sues related to risks, crises, safety, accounting and exceeding the 70% • In 2013: Have a risk management process fully auditing. InterCement is certifying all the cement production plants in Brazil and in Argentina target implemented. 48 intercement 2010 annual Report Management 49
Our talent
InterCement has a policy of managing people in of one percentage point in relation to the research • Management Excellence: Aims to strengthen • Evaluation of Targets: Program for perfor- tune with the best modern practices in the market, applied in 2008. Action plans will be designed and the synergy between the various groups of leaders, mance evaluation, structured on the basis of indi- which values the skills and gives guidelines for re- implemented over the next two years. to permit the maturing of relations, greater efficien- vidual and collective targets. All evaluation results sults, encourages participation and professional cy in joint decision making and improvement in the are submitted to a committee of calibration and growth, and ensures equal treatment for all its pro- Organizational Restructuring quality of results. validation, and will set the benchmark for variable fessionals. Aware of the importance of having a mo- In 2010, to enhance its personnel management sys- compensation of each professional and possible tivated and competent team to enable their expan- tem, a review of the organizational structure was car- • The Business Today and in the Future: Its goal inclusion in the succession map. sion project, the Company seeks to recognize the ried out, in order to ensure continuous improvement is to promote the well-founded analysis and re- commitment of its professionals and offer good of performance and meet the growth challenges. flection about the current and future challenges • Maps of succession: The maps are constructed working conditions, adequate remuneration and The restructuring has enabled, among other things, of business and, therefore, focus on the develop- by Committees from the results of performance real career opportunities. increase of focus on the income of operations (prof- ment of the necessary conditions to overcome evaluation, which seeks to identify gaps, individual The remuneration policy uses the Hay system, it and loss) with the creation of the Operations Vice these challenges. career interests, skills and disposition for profes- which is based on ensuring market competitiveness. Presidency, enhancement and integration of the ma- sional relocation. To this end, frequent polls are conducted to identify jor planning and growth activities, creation of Strate- • Leadership and Cooperation with Focus on common values and methodologies practiced, in gic Procurement and Corporate Management and Results: Its goal is to train leaders for the exercise • Development Scholarship: Set annually, it is order to adjust its compensation structure. All em- Investor Relations, broadening of responsibilities of of Personnel Management and create conditions based on the average investment levels of the mar- ployees in Brazil have variable wages – an initiative the Audit Area, which now incorporates the Risk Man- for the participants to realize the strategic value of ket, determined by sources validated by the Orga- aligned with the Brazilian market – based on meet- agement process, coordinates the Innovation roles this theme. nizational Development Management. For this pro- ing performance targets, which considers the guide- at corporate level, to promote greater integration of gram, eligible professionals are those who are in the lines of the Company, Business Unit and individual processes and activities of Ferrosur with Loma Negra Within the policy designed to develop their talents, succession plan, associates promoted in the previ- goals. In Argentina, the initiative applies to the man- and maintain the current structure model of the Busi- other initiatives are worth mentioning, such as: ous year to positions of greater responsibility that agement and middle management, besides align- ness Units in Argentina and Brazil, with Ferrosur and have performed below average and provenly re- ment with market practices in the Country Yguazú (Paraguay) reporting to Argentina and Palan- • Job Posting: Designed to enable career progres- quire higher education, language skills or reinforce- InterCement also performs a Labor Climate Sur- ca (Angola) to Brazil. sion and development opportunity that focuses on ment of PDI (Individual Development Plan) action to vey every two years to ensure the alignment of the internal selection and recruitment of professionals. improve - apart from the special training plans for tools of human capital management, monitoring Professional Development In 2010, this program enabled 75 associates to ob- certain groups of associates, proposed by the Hu- levels of motivation and commitment of their as- In order to attract and retain talents, InterCement cre- tain promotion. man Resources Unit and approved by the Organiza- sociates and implement measures to raise the level ated a schedule of professional development pro- tional Development Management. of satisfaction of these professionals. In all surveys, grams, aligned to their strategic objectives. In 2010, • Young Professionals: Allows the inclusion of InterCement has obtained results above the mar- one of the main actions in this direction focused on youths in the labor market, within the areas they ket average in both countries. The latest research, the implementation of the Leadership Development chose for their careers. Students with up to two applied in December 2010, revealed a favorable in- Program (LDP), in partnership with Fundação Dom years of higher education participate in the program. dex of 67 points in Brazil and 59 points in Argentina, Cabral, structured around three axes: Within the year, 20 youngsters were benefited. recognized as the most critical market, an increase 50 intercement 2010 annual Report Management 51
HEALTH, SAFETY AND ENVIRONMENT Our vision InterCement has a Single Policy of Health, Safety and Environment (HSE), coordinated by a special In 2010, of sustainability Committee (Committee for Occupational Safety indicators of and Health) and led by the Board of Management safety have been and Sustainability Systems. This policy establishes verified by specialized InterCement adopts the best international prac- and standardizes practices, processes and proce- consultants tices on the understanding that sustainability is the dures to be followed by all employees - staff and foundation that can ensure business continuity. The Sustainability outsourced manpower. ny’s Management System. In 2010, safety indicators sustainability issue is at the top of its Strategy Map, is the main driver of To ensure adoption of best practices, the Com- have been checked by an expert consultancy, which the Company’s major driver (“maximize business InterCement that mittee has unified the performance indicators, gives greater credibility to the system. For the year, value in a sustainable way”) and is present in guide- seeks to maximize practices and procedures, and developed an EHS results of the frequency and seriousness rate under lines such as promoting effective relationship with business value in a subsystem manual, incorporated into the Compa- the EHS policy reached the following marks: stakeholders, acting with social, environmental and sustainable way business responsibility as well as working with high safety levels. Computerized system The Company has a Sustainability Committee For tracking targets, the main sustainability indicators and a corporate management solely dedicated to were fed into a computerized system (known as BI), rates of frequency & seriousness – actual rates and goals 2008-2012 the issue. It is a signatory of the major sustainability InterCement’s business intelligence system, which al- initiatives in its sector and has undertaken in-house lows access to updated information viewed by year, commitments with the Group (Letter of Innovation, quarter, month or day. Comprehensive, the system CIMENTO LN LOMA NEGRA CC CAUÊ CIMENTOS RESULTADO 2009 RESULTADO 2010 Sustainability Guidelines and Climate Agenda), be- allows obtaining consolidated information for the en- 10.000 sides preparing the Sustainability Policy, the HSE tire company of a country (Brazil or Argentina), for a Inaceitável LN (Health, Safety and Environment) Policy and Code particular production plant or even for a specific indi- CC of Conduct. cator, and monitoring its evolution. The Company is committed to disseminating the Presented in graph form, named “signal light”, the 1.000 Alerta principles of sustainability among its professionals. program displays the 16 socio environmental indica- Padrão LN As soon as they join the team, associates are made tors selected by the Sustainability Committee with aware of the Sustainability Policy and receive infor- targets set out in red, when they point to results be- CC 100 LN mation about how their area operates and what low expectations or green when the targets have al- Superior LN CC LN CC their responsibilities are. In 2010, InterCement also ready been achieved or surpassed. LN CC CC CC LN signed cooperation agreements with CETESB and The system also features the “sustainometer” in- World Class TAXA DE GRAVIDADE 10 Technology Research Institute (IPT), implemented dicator (which was so named after its similarity to a selective collection at the headquarters located in vehicle’s speedometer), a resource that provides an São Paulo (SP), actively participating in the ‘Good- immediate reading of the overall situation of the com- Doing Day’, with large mobilization in all places pany, a business unit or plant. The pointer shows the where the initiative was developed, in addition to percentage of sustainability targets already achieved 0 1 10 100 1000 drafting a Policy on Corporate Social Responsibility. as a whole. The “signal light” works as a management TAXA DE FREQUÊNCIA 52 intercement 2010 annual Report Management 53
methodology of the Brazilian GHG Protocol Program SUSTAINABILITY COMMITMENTS At year-end, 14 of the 22 and create pollutant gas policies and management plans that guarantee competitiveness, innovation and commitments undertaken DIMENSIONS THEME GOAL STATUS/RESULTS stimulate a low carbon economy in Brazil. CO Emissions Maintain the CO emissions of Accomplished: InterCement’s 2010 emissions by InterCement were 2 2 • Cement Sustainability Initiative (CSI): This (in kg CO2.ton of InterCement among the companies were 535 kg of CO2/ton of cement which places deployed, and by the end cement with less emissions (1st quartile) of CSI the company among those of least CSI emissions. movement is the cement arm of the World Business considering the “Global” (see graph evolution of the specific issue in pg 25) of 2011, the forecast and “Geographic Region” indexers Council for Sustainable Development (WBCSD), is to accumulate 19 NOx. SOx and MP Achieve 100% continuous measurement Up to date with the plan: currently 04 furnaces already an action that seeks to achieve sustainable devel- Environment (monitoring of NOx, SOx and particulate material have continuous measurement. The remaining 07 implemented topics continued) in cement furnaces by 2011 furnaces will undergo continuous measurement in 2011, opment through the reconciliation of three pillars: thus reaching 100% of the furnaces.
tool of the indicators, while the “sustainometer” is a economic growth, ecological balance and social Recovery of Have recovery plans in the CSI format for Up to date with the plan: we followed a schedule degraded areas 100% of mines by 2012 of works to ensure that by 2012 all the mines have a fast communication tool, designed to allow all profes- progress. The Company continues to work on com- (% of sites) recovery plan in the CSI format.
sionals to monitor the Company’s performance. mitments that must be completed by 2012. At year- Safety Achieve the TF and TG targets by 2012 Safety remains a major challenge for the Company. as proposed below (*): In 2010 we had two fatal accidents with others operating During year 2010, InterCement started a project end, 14 of 22 commitments were in place and until within our facilities and zero fatal accidents in the way and/or transport. In addition to the permanent called Pillar, which aims to modernize the informa- the end of 2011, the forecast is to accumulate 19 management actions and control, a company-wide Plan of Action was deployed aimed at achieving the proposed tion system used by the company and its subsidiaries. implemented topics. goals for 2012. To that end, a mapping of the processes in Brazil and In Argentina, Loma Negra participates in the Argentina was compiled, identifying opportunities for Consejo Empresario Argentino para El Desarrollo InterCement: TF = 2.22 and TG = 47 InterCement: TF = 3.25 and BT = 752 improvement, process integration and unification. Sostenible (CEADS), the Argentinean arm of the Cement Operations: TF = 1.50 and TG = Cement Operations: TF = 1.87 and TG = 1289 The new system will provide the basis for a replicable World Business Council for Sustainable Develop- 10 model of management, integrated and optimized, ment (WBCSD) and the Convenio de Lucha con- Social Operations in Concrete and Aggregates: Operations in Concrete and Aggregates: TF = 4.12 and TF = 3.50 and TG = 120 TG = 58 with a focus on results for operations in cement, con- tra El Trabajo Infantil, signed with the Ministério del Railway operations: TF = 4.73 and TG = Railway operations: TF = 12.15 and TG = 322 crete and aggregates. Trabajo y Seguridad Social de La Nación. Fundación 120 Loma Negra, in turn, is affiliated to RedEAmérica, Stakeholders Have Engagement Plans in 2010 with Accomplished: 100% of cement plants and stakeholders developed and implement- operation of Ferrosur rely on the Engagement Plan with COMMITMENTS TO formed by private entities that work on poverty re- ed for 100% of cement plants and stakeholders. Moreover, in 2010 Engagement plans were Ferrosur drawn up for concrete operations. SUSTAINABLE DEVELOPMENT duction and social inclusion. Have projects of Instituto Camargo Partially Accomplished: 100% of the locations where we InterCement guides its socio environmental actions Corrêa and the Loma Negra Foundation have cement plants in Brazil have the ICC projects. In in all places where cement plants are. Argentina, this percentage is 75% for the Loma Negra by practices of excellency, referenced and endorsed Certifications Foundation’s projects. by international organisms. The Company is a signa- In their quest for excellence, InterCement prepared a Certifications Certify the cement tory, among other initiatives, of such entities as: plan for certification of all its production units, both in plants as follows: Brazil and Argentina. 9001 – 100% by 2010 Accomplished: 100% of the cement plants are ISO 9001 certified. • Global Compact: Initiative spearheaded by the By the end of 2010, the Company had the following Management 14001 – 100% by 2014** In progress: in 2010, we reached 44% United Nations (UN) to encourage companies to certifications: of the cement plants with ISO 14001 certification.
adopt policies of sustainability and corporate social 18001 – 100% by 2015*** In progress: in 2010, we started the OHSAS 18001 responsibility, with emphasis on human rights, labor, • ISO 9001: all the 16 cement plants in operation are certification in 25% of the cement plants. environment and against corruption. already certified as well as the concrete units in Argen- • Business by Climate (EPC): Brazilian platform tina, railway concession and waste treatment units. (*) Considering its own and outsourced manpower in all operations (**) The original goal of 2012 was revised in light of the decision to focus efforts on unification and integration of systems and databases. where member companies commit to carry out in- • ISO 14.001: seven industrial cement plants and (***) The original goal of 2014 was revised in light of the decision to focus efforts on unification and integration of systems and databases. ventories of greenhouse gases in conformity with the one waste treatment unit are already certified. The 54 intercement 2010 annual Report Management 55
goal is to certify all other plants in Brazil and Argen- al health and safety and other existing requirements, tina by 2015. overcoming them whenever we deem appropriate; How we evaluate • OSHAS 18.001: a waste treatment plant is certi- • Educate, train and commit our professionals and fied and another four are in the certification pro- service providers on the environmental, health, safety the business prospects cess. The goal is to certify all the cement factories and social responsibility, rejecting all forms of discrimi- by 2015. nation, child labor and forced labor; Cement consumption in the country grew at an ac- • Measure, assess and communicate in a clear and celerated pace in 2010 and is expected to continue ENVIRONMENT transparent way, our environmental performances, to boom in the coming years, abandoning at once InterCement focuses its attention on measures to health and safety. the stability recorded in 2009. This growth resurging minimize the impacts of its activity on the environ- is mainly associated with improved levels of employ- Projections indicate ment through the most advanced production tech- IDEAS AND PRACTICE AWARD ment and income of Brazilian workers and the avail- that by 2011, cement nologies, process controls, risk management and ON SUSTAINABLE PRACTICES ability of credit to individuals, factors that promise to sales are expected specific actions. In 2010, the Company participated for the second continue bringing positive impact in 2011, despite the to record high in In 2010, there have been major advances in the time in the Ideas and Practice Award – Sustainable In- possibility that the government adopted measures to the double digit aspect of “climate change”: the 2008 and 2009 in- novation, created by the holding company Camargo curb inflation. . mark, repeating the ventories were completed, reaching 100% coverage Corrêa S/A and intended solely for the Group’s asso- The positive outlook for the cement market also re- performance in 2010 of emissions, and verified by independent specialist ciates in Brazil and abroad. Again, the company was flects the demand from government initiatives such companies. Further consolidated was the Road Map highlighted: registrations totaled 526, had seven proj- as the housing plan My House, My Life and works of on Climate Change, with goals defined and respon- ects rated among the finalists and won the prize in infrastructure, especially arising from the PAC, the ad- From the necessity to accelerate the construction sible parties appointed. three categories under “Ideas”. vances in the oil sector in Santos, and events like the processes for infrastructure works, InterCement be- With the responsibility and commitment to operat- InterCement encourages participation of its em- World Cup and the Olympics. lieves that the demand for concrete will increase faster ing worldwide in a safe and responsible manner, Inter- ployees for the Award, with the intent of disseminate than those of the cement market in the coming years, Cement respects the following principles and values in the principles of sustainability, showing the impor- both in Brazil and Argentina, a country which has their environmental management policy: tance of adopting sustainable practices, encourage InterCement believes also been favored by good results of their economy, creativity, motivate and mobilize its associates and that the demand for particularly in the agribusiness sector. Estimates are Values recognize its practices and business results . Altogeth- concrete will grow that the Argentinean market will provide substantial Care and respect for life – from these basic values, we er, 11% of the ideas presented in the previous edition to higher rates growth, which will increase cement consumption with ensure the health and safety of people while operat- of the Award have been deployed in the company. than cement market encouraging percentage figures. ing in harmony with the environment. in the years to come Projections indicate that by 2011, cement sales are both in Brazil and in expected to hit a high score of double digits, repeat- Principles Argentina ing the performance of 2010. This scenario confirms • Prevent and minimize environmental impacts and InterCement’s strategy to invest in business expansion risks to health and safety in our operations; to double its production capacity in the coming years, • Ensure the safety, health, welfare and quality of life; be present throughout the national territory and be- • Ensure the safety and reliability of our products come, as well, one of the largest cement producers in and services; the world. • Comply with environmental legislation, occupation- 56 intercement 2010 annual Report Management
CORPORATE INFORMATION
Board of BRAZILIAN ferrosur Directors BUSINESS UNIT General Director President General Director Luis Roberto Guillermo Irlicht José Édison Barros Franco Ricardo F. de Mendonça Lima Ferrosur Roca Vice President Directors Reconquista, 1088 Albrech Curt Reuter Domenech André Gama Schaeffer piso 7º – C1003ABV Cleber Acurcio Machado Buenos Aires – Argentina Vice President Dorivaldo Ferreira Phone + 54 11 4319-3000 Carlos Pires Oliveira Dias Rubens Prado Valentin Júnior Office in Portugal Vice President InterCement Brasil S.A. Luiz Roberto Ortiz Nascimento Av das Nações Unidas, 12.495 Director 04578-000 – São Paulo – Brazil Daniel Antonio Biondo Bastos Advisor Phone +55 11 3718-4200 Vitor Sarquis Hallack Av. da Liberdade, 230 - 7º. Piso BUSINESS UNIT 1250-148 Lisbon – Portugal Key Executives OF ARGENTINA Phone: +351 (21) 357 6032
Vice President of Operations General Director PARAGUAI Ricardo F. de Mendonça Lima Osvaldo Jorge Schutz General Manager Corporate Directors Cleber Ceroni directors Ariel Damiano Claudio Palaia Armando Silva Yguazú Cementos Cleber Acurcio Machado Eduardo Blake Av. Artigas, 1921 - Piso 3º Gueber Lopes Juan Masjoan Edificio Automotor Hector Grilli Asunción – Paraguay Jorge Eduardo Martinez Loma Negra Phone + 595 21 281 822 Luiz Augusto Klecz C.I.A.S.A. Nelson Tambelini Júnior Reconquista, 1088 angola Ricardo Frederico Buarque Barbosa piso 7º – C1003ABV Buenos Aires – Argentina General Director Corporate Phone + 54 11 4319-3000 Sérgio Bandeira superintendents Adriano Nunes Palanca Cimentos S.A. Marcelo Arantes Al. Manuel Van Dunem, 308/310 Ricardo Bonazzi Luanda – Angola Sergio Faifman Phone + 244 933302889
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