Brazil’s Votorantim launches property arm as part of post-Covid rebound strategy

RIO DE JANEIRO, BRAZIL – Votorantim SA, one of Brazil’s biggest diversified holding companies, is launching a real estate arm, its chief executive said in an interview on Thursday, April 8, betting on further growth in demand for housing and a revamped office market.

Altre, as the newly-launched firm is called, is initially being seeded with unused Votorantim-owned industrial land, but CEO João Schmidt said it is looking for new assets, including the development of office buildings.

“After the pandemic, companies will change the way people work, with more room for remote work, but employees will still need a place to gather,” Schmidt told Reuters.

He added that tenants are likely to demand more space between workers and higher ceilings for better ventilation.

Votorantim’s push into real estate is part of an effort to diversify and provide a more stable stream of dividends. Apart from real estate, Votorantim is eyeing acquisition targets in infrastructure, energy, healthcare and cement plants outside Brazil.

On Thursday, the company announced it had swung to a R$3.1 billion ($552.78 million) loss in 2020 from a R$4.9 billion net income a year earlier, due to impairment charges on reduced cash generation expectations for mines in Peru and to higher debt payments in dollar-indexed debt.

Still, revenues grew by 19% to R$36.7 billion, and earnings before interest, taxes, depreciation and amortization (EBITDA) soared 39%. Votorantim’s net debt ended 2020 at 1.63 times its EBITDA, the lowest level for that ratio since 2008, and is expected to end this year in the same range.

Chief Financial Officer Sergio Malacrida said the group posted a profit in the first quarter of 2021, but the holding declined to provide any details or full-year outlook.

“There is a lot of uncertainty ahead, including the speed of vaccination and lower cash emergency payments by the government to help weather the pandemic,” Schmidt said.

He was also unsure whether Brazilians would renovate their homes at the same pace as they did in 2020, when many people upgraded amid lockdowns, boosting cement sales.

Votorantim Group

Votorantim Group is a family-controlled company and one of the largest industrial conglomerates in Latin America, operating in various sectors such as finance, energy, cement and steel.

It was founded in 1919 by José Ermírio de Moraes, an engineer from Pernambuco. Its model of corporate governance assures the  strategic controlling positions in the Executive Board.

The Group is the only closed-capital Brazilian company rated by the three main rating agencies in the world: Standard & Poors, Fitch Ratings, and Moody’s. The company was recognized by the IMD Business School and Lombard Odier Darier Hentsch Bank as the world’s best family company in 2005.

The family group operates in the following areas:

Banco Votorantim – Finance
Companhia Brasileira de Aluminio – Aluminum
Citrosuco – Agribusiness
Votorantim Cimentos – Cement
Votorantim Energia – Energy
Nexa Resources – Mining
Votorantim Siderurgia – Steel