Message from Management

In alignment with our Purpose, "Life is made to last," in 2019 we worked to solidify innovative and sustainable products and services, aiming to maximize value creation, through the enhancement of our governance and our compliance program. As a result of a R$ 2 billion contribution made at the beginning of the year by our shareholder, Votorantim S.A. (VSA), and through financial liability management transactions, we restructured our debt profile by extending maturity and reducing costs while also reducing the Company’s gross debt. With the reduction in leverage, we recovered the investment grade rating granted by Standard & Poors and received an upgrade by Moody’s to one notch below investment grade.

In August 2019, we contracted a new Facility with Sustainability Linked Loan (SLL) provisions in the amount of US$ 290 million, with maturity in 2024. This is one of the first SLLs issued in the cement industry and is aligned with the Company’s sustainability commitments and strategy. In 2020, we will publish our 2030 Commitments, which will include specific targets for the decarbonization of our production process.

Thanks to our strategic position, solidity, financial discipline and sustainable performance, we can strengthen our role as industry leaders. In 2019, we announced the expansion of the Pecm unit in Cear, in which, in 2020, we will allocate R$ 200 million to increase our cement grinding capacity by 800,000 tons/year. We also completed new lines of aglime, in Nobres, and mortar, in Cuiab, both in the state of Mato Grosso, and acquired a mortar unit in the region of Belm, in the state of Par. In North America, we purchased United Materials (concrete and aggregates) in Buffalo, western New York, expanding our presence in the Great Lakes region. In terms of divestments, in April we concluded the sale of Shree Digvjay Cement Company, in India, to increase our focus on more strategic markets.

We improved our corporate governance by creating an integrated department of Governance, Risks, Compliance and Global Audit, which reports directly to the Audit Committee of the Board of Directors. This structure further strengthens processes that are vital to the management of a global company like Votorantim Cimentos, which is committed to highest levels of governance, risk management and compliance.

In a world where uncertainty and volatility have become the new normal, the strategy of geographic and product diversification has proven to be sound. In 2019, we faced severe economic crises in Argentina and Turkey, a complex political scenario in Bolivia and lower demand in Uruguay, as well as another year of lower-than-expected growth in Brazil. Nevertheless, our results in North America, Morocco, Spain and Tunisia allow us to maintain our projections that 2020 will be even better for Votorantim Cimentos.

We have always believed in the strength of people (employees, third party contractors, suppliers, partners and customers/consumers). With this in mind, we made two significant changes. One involves one of our strategic pillars: now, in addition to focusing on the customer, we will join the customer to focus on their needs, to make it even clearer that we want to view the business from their perspective.

We are increasingly aware of the macrotrends of the business world: demographic changes coupled with growing urbanization, climate changes that pose a major challenge to the economy and underscore the scarcity of natural resources, the need to focus on innovation and new technologies, and increasing pressure for larger companies to take on more social responsibility, among others. Since Marcelo Castelli assumed the position of global CEO of Votorantim Cimentos in early 2019, we have refined our strategic plan to revisit our purpose and ambition.

Votorantim Cimentos symbolizes Votorantim S.A.’s successful trajectory of over 100 years in Brazil. While remaining positive and confident about the future, we will continue to help Brazil to grow, preparing for a recovery in economic activity driven by the return of consumer confidence and the resumption of renovations and civil construction projects. A cement company is solid in nature. But we live in constant transformation and we are ready to adapt to new demands.

In several of the regions where we operate, we are drivers of local development and an important partner of public agencies in the work to improve the living conditions of the population. Hence, the importance of understanding the diversity of cultures in places where we operate and also reinforcing, on a daily basis, that safety is our main value, by focusing on people’s behaviors to ensure that our operations are efficient, but above all safe.

We are ready for the future. We are entrepreneurs; we are disciplined, creative and innovative— a family business that looks at the long term. We know that we will certainly face new waves of instability and uncertainty, but that doesn’t stop us from being confident in better times to come.

We would like to conclude our message with a tribute to Paulo Henrique de Oliveira Santos, former member and chairman of the Board of Directors of Votorantim Cimentos, who died in March of 2019 after an intense fight against cancer. As part of the Votorantim Group since 1993, Paulo played a significant role over 25 years and leaves behind a legacy of professionalism and integrity to all of us.

Board of Directors

Last Update on March 27, 2020

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