2017 Report Introduction This report showcases the main initiatives and performance of investment holding company Voto- rantim S.A. (VSA) from January 1 to December 31, 2017, as measured by the key indicators monitored by us. |GRI 102-1, 102-50| This report was prepared based on the IIRC inte- grated reporting framework, and in accordance with the GRI Standards for sustainability reporting: Core option. It also considers the principles of the UN Global Compact, the Organization for Economic Co- operation and Development (OECD), and the UN Sustainable Development Goals (SDGs). |GRI 102-54| Detailed information on each investee can be found in the annual reports of Votorantim Cimen- tos, Nexa Resources, Companhia Brasileira de Alumínio (CBA), Votorantim Energia, Fibria, Citrosu- co, and Banco Votorantim. The PDF version of this document is available at www.votorantim.com/relatorio and includes our consolidated financial statements and the GRI Con- tent Index. Comments, doubts, and suggestions about this report can be forwarded by e-mail to [email protected]. |GRI 102-53| Click on the Contents items (page 8), and on the page references of the GRI Content Index (page 7) to navigate this report. Click on any page’s header to return to the Contents page. Use the links throughout the report to access additional information. INTRODUCTION 2017 Report Votorantim INTRODUCTION 2 3 2017 Highlights NET REVENUE COMPLIANCE WEEK VOTORANTIM NEW LOGO ENVIRONMENTAL TECH FAIR R$27.2 billion, A week of PARTNERSHIP FOR Translates Votorantim’s STEWARDSHIP Nearly 3,000 people up 5% year-on-year compliance-related EDUCATION aspiration towards setting R$485 million invested by participated in the event activities for all investees 707 schools and over corporate goals for the next Votorantim 170,000 students in the 100 years program ADJUSTED EBITDA R$4.8 billion, up 12% year-on-year WIND POWER VOTORANTIM CENTER OF ORGANIZATIONAL NEXA’S IPO Construction of Ventos do INSTITUTE EXCELLENCE ENVIRONMENT Largest IPO in the metals Piauí wind farms Monitored investments Unification of the One of the Best Companies and mining sector of the completed, adding installed of over R$120 million in operations of the Shared to Start a Career and Best Americas in the last decade LEVERAGE capacity of 206 MW in an nearly 750 projects Solutions (CSC), Real Estate Companies to Work For, 2.60x net investment of Solutions (CSI), and according to Você S/A debt/adjusted EBITDA R$1.2 billion Information Technology magazine Proficiency (CCTI) centers MESSAGE FROM THE BOARD 2017 Report Votorantim MESSAGE FROM THE BOARD 4 5 Dynamic portfolio management |GRI 102-14| In our 100th anniversary, we want to adapt and anticipate changes, looking to the future and to businesses that will help perpetuate our company e went through a very We have made material invest- newable sources in Brazil. complex year in 2017, ments over the past few years. Even In August 2017—before the ex- W but even so our results though the Brazilian GDP contracted in pected deadline—Fibria completed reflect the diversification of our busi- 2015 and 2016, we have maintained all its Horizonte 2 project after having ness portfolio and how we prepare our approved projects, in such diverse fields invested R$7.3 billion, and consoli- company to move forward in different as mining, cement, pulp, and energy. dated its leading position in the glob- scenarios. Votorantim celebrated its Most important, we met the budget al pulp market. Also, Banco Votoran- 100th anniversary in early 2018—an targets of the projects we invest in: we tim prioritized digital transformation BOARD OF DIRECTORS. Left to right, sitting – José Roberto Ermírio de Moraes, Raul Calfat, and Marcelo Pereira Lopes de Medeiros; unusual milestone in Bra- and a new organizational standing – Sergio Eraldo de Salles Pinto, Oscar de Paula Bernardes Neto, Luis Ermírio de Moraes, and Cláudio Ermírio de Moraes zil’s corporate history—in a culture to diversify its op- trajectory that has taught With a very mature governance level, we erations. Companhia Brasileira de Alumínio states of Florida and California—and ruptive business models to ensure us that an entrepreneurial remained disciplined in our capital Given the complexity of (CBA) was adversely impacted by the prepaid some debt facilities. In early our investees remain competitive, mindset makes for a pe- management and new initiatives improved the Brazilian economic sce- low demand for aluminum in the do- 2017 we also entered into an agree- leading to our company’s perpetuity. rennial business. our internal controls and compliance nario, our more domestic mestic market, but good internation- ment to merge Votorantim Siderurg- One century ago we were born a Large economies market-oriented business- al prices ensured better results than ia’s and ArcelorMittal’s long steel op- textile company that has ever since have been thriving globally. The delivered in terms of deadlines, cost, es, such as the cement operation, were in prior years. erations in Brazil in exchange for a mi- evolved into a huge industrial con- United States recorded growth of and quality. Our investments have affected. Our businesses abroad, on On the other hand, the cement in- nority interest in the new company. glomerate, and more recently into an 2.3% in 2017, above the World strengthened the position of each the other hand, including the cement, dustry saw a decrease in demand in On the governance front, we have investment holding company with a Bank’s forecast of 2.1%; the Euro- company in their relevant markets, thus pulp and orange juice operations, ben- Brazil for the third consecutive year, taken on a series of initiatives to im- long-term vision. During this first pean Union has recovered well, with making them more competitive. efited from a more favorable foreign with the cumulative drop reaching prove our internal controls and com- century of life, we have kept up with GDP growth of 2.4%; and China has We have already become one of exchange rate. nearly 28% in three years, according pliance, including the Compliance the changes in the business universe transitioned to a more service-cen- the largest private energy traders in This has also occurred at Nexa Re- to data by the Brazilian cement asso- Week event to discuss ongoing is- and we are ready to continue to grow tered economy and recorded growth Brazil, and invested R$1.2 billion in sources, where its flagship product, ciation SNIC. In this scenario, Votoran- sues and reaffirm our stance to com- in a structured manner and perpetu- of 6.9%. In Brazil, the political crisis the construction of wind farms in the zinc, recorded an excellent and timely tim Cimentos has relied upon its geo- panies’ leaders. Our governance level ate our businesses, supporting our in- deepened, with its developments af- state of Piauí, with installed capacity recovery in prices during the consoli- graphic diversification strategy—with is very mature and in line with the vestees, always based on clear stew- fecting the economy. The passing of of 206 megawatts/year. This invest- dation of the company’s operations in good results in North America, Europe best practices of publicly-held com- ardship standards. The entrepreneur- the labor reform and the setting of ment marks Votorantim Energia’s Brazil and Peru, becoming one of the and Africa—and cost structure ratio- panies, even though several of our ial mindset is in our DNA, and we a ceiling for government expenses debut in the wind power generation five largest mining companies in the nalization to boost its performance. businesses, including the holding it- know it is key for perpetuating our were not enough to promote a sig- sector. By the end of 2017, the com- world and ranking among the first At Votorantim S.A., we remained self, are privately-held companies. business and paving the way for the nificant economic pickup. In spite of pany also announced a joint venture quartiles in production cost. The disciplined in how we allocate capital. In January 2018, we celebrate next 100 years. the growth recorded in some sec- with the Canada Pension Plan Invest- company has gone public with an IPO We influenced our investees into sell- Votorantim’s 100th anniversary. In Raul Calfat tors, most industries showed no ment Board (CPPIB) to boost busi- in the United States and Canada that ing non-core assets—such as the ce- the upcoming years we will further Chairman of the Board of Directors signs of recovery. nesses in energy generation from re- was well received by investors. ment units in China, Chile, and the U.S. focus on new technologies and dis- Votorantim S.A. MESSAGE FROM THE CEO 2017 Report Votorantim MESSAGE FROM THE CEO 6 7 100 years ahead |GRI 102-14| We reaffirm our commitment to doing business respecting the legacy that has brought us this far—we create value with social and environmental responsibility, contribute to people’s development, and anticipate the demands from society EXECUTIVE BOARD. Left to right, back – João Schmidt, Sergio Malacrida and Luiz Marcelo Fins; front – Luiz Caruso and João Miranda e closed 2017 celebrating over R$1 billion in 2016 to a net pension fund CPPIB for investments factor will always be the key capital Votorantim Institute program called way for citizens to express their de- the fact that we managed profit of R$810 million; our net debt/ in renewable energy, Nexa’s IPO in of any company. Votorantim Partnership for Educa- sire for change and support the W to rise to great challenges adjusted EBITDA ratio, which had re- the U.S. and Canada, and the expan- Our leaders’ vision of innovation tion (PVE), which has effectively causes they believe in.