Votorantim Announces 1Q11 Results and Its First Sustainability Report

SAO PAULO, May 27, 2011 /PRNewswire/ -- Votorantim Participacoes S.A. releases today its first quarter 2011 (1Q11) results. Operational and financial information, except where otherwise stated, is presented on consolidated basis for the industrial segment, in Brazilian Real, according to International Financial Reporting Standards (IFRS). All comparisons take into consideration the same period of 2010, except where otherwise stated.

1. Business Performance

Votorantim's overall operating performance improved in the quarter compared to the same period in 2010. Sales volume increased in steel, metals and cement, while remained stable in pulp business. Consolidated net revenues and Ebitda amounted R$5,627 million and R$1,357 million, an increase of 11% and 1%, respectively. Ebitda margin declined from 26.5% to 24.0%, impacted by the cement and steel businesses. Metals business accounted for 45% of industrial EBITDA, cement 35%, steel 7% and pulp 13%:

• Metals: Aluminum and zinc sales volume increased 4% and 42%, respectively, and nickel decreased 4%. Milpo's consolidation boosted EBITDA and zinc sales volume. For aluminum, the strategy to focus sales of more value added products in the Brazilian market continues to support operating margin. In addition, LME price recovery led Ebitda to increase 109%, from R$308 million to R$643 million. Ebitda margin improved from 20% to 30%.
• Cement: production capacity and Ebitda were negatively impacted in Brazil, as a result of the exchange of certain production plants for Cimpor shares in 3Q10. Nevertheless, sales volume increased 1% in Brazil and 2% in North America. Net revenues went up 6% and totaled R$1,846 million, supported by price increase in Brazil. Ebitda decreased from R$662 million to R$498 million mainly due to the exchange of certain production plants for Cimpor shares. In addition, Ebitda was also impacted by higher electricity and petcoke costs in Brazil and increased inventory in North America.
• Steel: Long steel sales volume went up 31%. Net revenues, including Usiminas participation, increased 14%, from R$803 million to R$918 million, supported by higher demand in the Brazilian market. Ebitda totaled R$99 million, 37% decrease from R$157 million, mainly due to lower sales price and also to higher scrap and freight costs.
• Pulp: Increased demand in Europe offset lower shipments to North America and sales volume decreased 2%. Higher sales price led both, net revenues and Ebitda, to increase 2%.

2. Indebtedness & Liquidity

Total debt decreased 1%, from R$22.4 billion to R$22.2 billion. In April 2011, Votorantim had its debut in the 30 year bond market and issued the 7.25% US$750 million bond due in 2041. Proceeds were used to pre-pay certain trade related debt amounting R$1.2 billion. As a result, average debt maturity was extended to 7.4 years compared to 5.5 years in December 2010. Cash balance at the end of the quarter was R$ 7.4 billion, enough to cover 4.5 years of principal amortization.

Financial discipline continues to drive investment decision. Capex amounted R$1.1 billion, mainly for expansion projects. Investment in cement accounted for 47% of total Capex, metals 31%, steel 11% and pulp 9%.

3. Sustainability Report

Since the inception of its operations, Votorantim has been committed to responsible corporate practices to create value in the long run. As a result, ethics and best practices in industrial processes have driven Votorantim's business decisions during its 93 years of existence.

In 2008, Votorantim's principles of sustainability were consolidated and disclosed. The company is committed to work on the following critical issues:

1. Eco-efficiency and responsible use of resources  
2. Reduction of greenhouse gases (GHG) emission
3. Influence the supply chain
4. Biodiversity
5. Occupational health and safety management, including third parties
6. Employee development  
7. Development of surrounding communities  
8. Sustainable use of our products
9. Governance for sustainable growth and corporate development

Today, the company presents its first Sustainability Report following the GRI model. The Report was verified by Bureau Veritas, an independent assurance company, and submitted to GRI Report Services Administrator in Amsterdam, which has assigned a "B+" rating

All business units (cement, metals, pulp, steel, orange juice and energy) of Votorantim Industrial are covered by the Report, which states the strategy and management processes for sustainability.

4. Global Call

Votorantim is pleased to invite you to its 1Q 11 results Global Conference Call (in English)

Connection Numbers

Brazil: 0800-891-0015 | USA: 1 (877) 317-6776 | International: 1 (412) 317-6776

Password: Votorantim

Slides and webcast

A slide presentation will be available at our Investor Relations website www.votorantim.com/IR

If for some reason you can't access the website, please go to the following link:

http://webcast.mz-ir.com/publico.aspx?codplataforma=2849

CONTACT: Marcio Minoru, +011-55-11-3704-3086

SOURCE Votorantim Participacoes S.A.

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