• Competitive Advantages
• Strategy

Competitive Advantages

Randon has the following competitive advantages:

- Market Position, Leadership and Global Reference. Randon, a global provider of transportation and logistics solutions, is focused on sectors of Brazil´s economy with important positions in the global scenario, such as the agribusiness, mining, primary and industrial sectors. The Company has important positions in the markets in which it operates. Randon Implementos and Frasle are among the world`s five largest manufacturers in their respective markets (in production volume) and market leaders in Latin America and Brazil. All of the group´s other companies are leaders in Brazil in their markets, except for the financial service segment The Company’s reference positions in its market segments, combined with its excellent brand recognition and the quality of its products, makes it a benchmark in these areas, allowing it to influence market trends, increase profitability and tap new markets abroad.

- Market Diversification. Randon operates in the trailer and semi-trailer, railcar, specialty vehicles, auto parts and services segments, and exports its products to over a hundred countries. The Company’s products target different segments, including automakers and the auto parts aftermarket (auto parts and automotive systems) and end customer (trailers, railcars and specialty vehicles) markets. The Company is not dependent on a single client segment or specific sector of the economy. The Company’s assembly line is structured to rapidly and flexibly change the product mix to meet the needs of those segments and sectors presenting the highest consumption potential.

- High Level of Manufacturing Integration within the Company. Randon subsidiaries produce the main components needed to manufacture the Company’s products. This integration between the Company and its subsidiaries provides synergies with excellent gains in productivity, process optimization, cost reduction and independence in equipment production. Accordingly, the Company has the technological command of the greater part of its production chain. The bulk of the Company’s operations are located in Caxias do Sul, providing the Company with cost savings in both its administrative and logistics areas.

- World-Class Strategic Partners. Randon has long-term partnerships established with ArvinMeritor (partner of Randon Implementos at Master and Suspensys) and with Jost Werke (partner of Randon Implementos at Jost), both world leaders in their respective markets. These partnerships enable the transfer of state-of-the-art technology to the Company, and guarantee a broad distribution channel for its products in the export market.

- Constant Technological Innovation and Modern Manufacturing Plant. Randon continually pursues technological innovation. The Company develops in-house technology and incorporates technology from its strategic partners, and also acquires the latest technology from third parties. The Company’s manufacturing plants are among the most modern in the commercial trailer, railcar and auto parts segments, making extensive use of automated and large-scale parts production and of standardized products. This allows the Company to develop products of high technological quality and with higher added value.

- Cash Flow Generation Capacity and Financial Structure. In recent years, Randon has recorded consistent cash flow generation, which allowed for reducing debt and executing the investments needed to ensure sustained growth using a substantial share of own resources.

- Qualified Management and Staff. Randon is managed by a team with many years of experience in the sectors where the Company operates. The core management team has been with the Company for at least twenty years. In addition, the Company invests regularly in the development of its human resources. Accordingly, the Company’s team has the opportunity to take a wide variety of training, technical and management courses with the objective of developing and retaining qualified personnel.

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Strategy

The key elements of Randon’s strategy are:

- Maintain leadership position in the Brazilian market. Randon plans to regain its historic level of 40% market share in the commercial trailer market. The Company will continue to invest heavily in increasing its production capacity, reducing production bottlenecks, and expanding and modernizing its distribution network, as well as strengthening its image in Brazil as a unique player in road haulage solutions.

- Globalization. Randon plans to speed up its globalization process by strengthen ties with its current foreign partners (ArvinMeritor and Jost Werke) to become a global company. These alliances provide the Company with technology transfers and the opening of new distribution channels abroad for the Company’s products. The Company also plans to invest offshore to create subsidiaries, manufacturing plants, distribution centers and trade offices, as well as establish partnerships to assemble the Company’s products in other markets. In the latter case, in 2005 the Company formed partnerships with Marrocan, Algerian and Kenyan companies under which it will export to those markets trailers and semi-trailers as kits to be assembled by local partners. As a result, new markets may be opened for the Company’s products, driving growth in its operations.

- Internationalization. Randon continuously develops actions aimed at going more and more international and operates through its industrial plants in Argentina, the United States and China, as well through warehouses, international commercial offices and strategic partners in the African Continent.

- Technological Innovation. Randon plans to continue investing a relevant portion of its net income in developing new technologies and products. The Company believes that developing processes and products through its own research team, transferring technology from partners and acquiring the latest technology from third parties leads to improvements in terms of quality, cost reductions and the production of goods with higher value added.

- Diversification of the Product Portfolio. Randon plans to maintain a reasonable level of diversification in its product portfolio as well as flexibility in its assembly line, which allows it to take advantage of market opportunities arising from the development of specific sectors, as well as to mitigate risks resulting from slowdowns in other sectors.

- Strengthening its Relationship with Brazil´s auto industry. Randon plans to strengthen its relationship with local automakers, offering top quality and reliable products at competitive prices. Narrowing these ties provides an opportunity to supply products to the plants of these manufacturers located outside Brazil.