By Olivia Alonso and Ivo Ribeiro | De Sao Paulo
Paranapanema designed for the coming years a new business plan, which will introduce and detail the market in early November. It contemplates economies of scale, reducing idleness and stabilization of its metallurgy operations in Bahia, falling copper processing costs and energy efficiency gains.
This is the essence of Project Paranapanema 2018, or PMA-2018, which was announced by the company on the eve of release of second quarter results and detailed now to Value PRO, information service in real time Value at the company president, Christopher Malik Akli.
The company’s aim of the plan is to leverage its results, which disappointed the market in recent quarters, and achieve an operating profit that brings return on capital invested by shareholders. In the first half, this return, known by its acronym “Roic” was negative.
Akli states that the reduction of idleness help leverage operating margins, as around 80% of the company’s cost is fixed. Today, the EBITDA margin (earnings before interest, taxes, depreciation and amortization) is in the 5% range in relation to net revenue.
In recent months, the company has not reached its full production capacity. After upgrades made in recent years, has the potential to produce 280,000 tons of copper cathodes in Dias D’Ávila (BA). This year, the volumes of the second and third quarters were affected by the exchange for their maintenance model of production lines, said Akli. Before, adjustments were made every two years; now the maintenance becomes continuous, with weekly charts. “We had some trouble to switch from one model to another,” says the executive.
Akli says Paranapanema also has spare capacity on the lines of drawing and rolling. From the cathode, the company makes about 70% of the total in rolled and drawn products, value-added on the same website, Bahia. In Sierra (ES), makes connections and, in Santo André unit (SP), produces laminates and copper pipes.
Last year, Paranapanema had net revenue of R $ 5.5 billion, generating EBITDA of R $ 332 million.
The company’s focus, from now on, will make the investments made in the past four years results that please shareholders, says Akli. “In recent years, was made an interesting work to establish the company’s focus in the copper business and increase volumes. Now, we are working to bring the returns,” he says.
In this direction, there is no provision for the first years investments beyond those limited to the depreciation of assets, of about £ 110 million a year. “Soon we will generate higher depreciation box,” said Akli, who took charge of the copper manufacturer a year ago.
Akli says that the adoption of the PMA 2018 is being accompanied by internal restructuring, with an adjustment in the number of employees, and also the adoption of a position of greater transparency with investors and market analysts.
Paranapanema, which was once a major producer of tin, today has 33% of its capital in the hands of small investors in the stock market. Its major shareholders are the pension funds Previ and Petros, Box, and Bonsucex, entrepreneur holding Silvio Tini.
The first step in a new relationship with investors, said Akli, will be the beginning of the disclosure, as of November, five projections that often accompanied this sector – Roic (return on capital measure), business investment discipline (“capex”), copper tonne for processing cost processed, factory utilization rate (actual production on ability) and selling, general and administrative per tonne processed.
On the conference the results for the third quarter of this year, scheduled for November 4, the company will present the expected numbers for each of these items for 2015 to 2018. “We want to allow greater predictability and return to a more structured communication with the market, “he says.
As for the internal restructuring include reducing the number of outsourced employees, managers and directors. “We primarizando the frame, especially in days D’Ávila by reducing the number of contractors and increasing the amount of direct employed in minor proportion”, said Akli. In management positions, there was renewal of 40 people: just over 20 brought the market and the rest promoted in the company.
It was also reduced structure on the board executive – from seven to five positions: President, Chief Financial Officer, primary copper and processed directors and corporate management. Cease to exist a gas financial officer and the vice presidency.
The company has the support of about ten consultants Galeazzi & Associados to put into practice all your changes. The work of the consultancy will last a year, counted from the beginning of August.
The company saw its shares fall heavily on the stock market this year and tries to revive investor confidence with the delivery of results. “It is time to consolidate results and give reliable projections. We will then be pushed by shareholders to make the investments,” says the executive.
Born in France, Akli is an agricultural engineer, master in biochemistry, and came to Brazil for the first time in 1986 and has undergone work in SUDENE (agreement with the French government). In 1993, settled in the country and has since held positions at Vivendi and Doux Frangosul. From 2006 to 2013, he worked in the French company Louis Dreyfus Commodities (LDC), in São Paulo. Before going to the Paranapanema, was president of Biosev, which is part of the LDC group.
Source: Value OnLine