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Table of Contents 03
2013, great expectations for results José Édison Barros Franco
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United by the same challenge Ricardo Lima
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Customer relations The customer is king!
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Results 2012 Very promising expectations
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Synergy Focus on capturing value
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ICC Volunteers on integration’s agenda
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Culture Foundation for success
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Trading Exports on the rise
IMPRINT Integration: Published by InterCement President: José Édison Barros Franco CEO Cimpor: Ricardo Lima Vice President of Organizational Development: Nelson Tambelini Júnior General Coordination: Fernanda Guerra Editorial Committee: Tatiana Nelsen, Virginia Vannoni and Filipa Mendes
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Graphic and Editing Project: unodesign Text Editing: Vogal Comunicações Head Journalist: Alberto Sarmento Paz (MTb18523/SP) Reporting: Luciana Fleury Texts in in the publication may be reproduced, with the original sources indicated and with prior permission from the editor
EDITORIAL
2013, great expectations for results The year 2013 will be a year of much work and dedication to actually establish the expectations related to the integration process. A great part of 2012’s efforts were focused on the planning and organization of the new structure and the establishment of corporate and business unit guidelines. Organizational Chart, Strategic and Executive Committees, Budget Planning – PO, among other definitions, are important, because they are the foundations from which the business’ macro strategies begin or on which they are established, projecting a healthy and competitive operation in the long term. This way it is easy to understand the great expectation involving 2013, the first complete year after integration and when the results of this process will already be effective and very illustrative of what we should project for the coming future. Some actions underway are particularly important for generating value. The Synergies and Opportunities Project and the new Organizational Culture are good examples. The first captures value in the short term and the second establishes the guidelines so, together, we can move towards meeting our strategic objectives in the long term. I also highlight three points in the search for excellence: innovation, research and development and customer relations. And not just for this year, but to incorporate it in our culture as intrinsic values to the business, as we did with the value of safety in every operation. With regard to innovation, tools have already been implemented, such as Radical Innovation Methodology, and we will continuously stimulate and motivate the teams to work in search of innovation. I understand that acting in this manner demands knowledge and a culture focused on innovation, and that is being constructed at our company. Customer relations is an area in which we have made important and decisive strides. Today, more than at any other moment in the history of our business, working in a differentiated manner, constructing ties of trust and credibility, generating new experiences when purchasing the product and truly having excellence in service as a goal will be decisive points for us to achieve our corporate objectives. And, in this aspect, besides all the tools and experiences, the professionals’ perception of what customers want counts, and a lot. Serving well is the minimum. We must exceed our customers’ expectations, offering – even before they want them – services and convenience. I am certain that investment in complete customer relations actions will define the major global competitors. And we, with team spirit and with a commitment to results, will be one of the models to follow. I also underscore that all these actions, projects and initiatives are being taken into account when elaborating the Multi-Year Plan 2014/2023, which will establish a set of strategic drivers for the future of the business. Absolutely all of the actions have in common the objective of building a stronger and more competitive company. That is our desire and we must work daily focused on results to effectively achieve them.
José Édison Barros Franco
Chairman of the Board of Directors at InterCement 3
United by the same challenge In the beginning of February, InterCement organized an unprecedented meeting in São Paulo. For the first time, all of the directors from the nine business units, InterCement’s corporate directors and some representatives from the Camargo Corrêa Group Board of Directors shared information and expectations about the business directly. Just the logistics that involves the displacement of all these professionals from their work stations in a moment of particularly sensitive integration is a fact to underscore. And I take advantage of this space to once again thank everyone for their presence, for I am certain it demanded great planning and organization. We can separate two distinct objectives with the meeting, both fully satisfied. First, the possibility for exchanging ideas and experiences in a direct and personal manner was created. This permits greater and more in-depth commitment among peers. On the other hand, everyone was able to debate and remove doubts regarding expectations and the next projected steps for this company. Some of the subjects in this edition of Integração magazine were presented prominently at the managerial meeting, such as the Synergies and Opportunities Project, the implementation of a new organizational culture, the guidelines for taking the social investment policy (in partnership with the Camargo Corrêa Institute – ICC) to the Cimpor units, the focus on customer relations as a longterm market differential, the opportunities that open in the trading area, in short, all these themes - and others - were shared. The fact that we gathered in person for the first time is also something very special, since it makes the discourse that we are together, committed and united around a major challenge real: transform InterCement into an ever stronger and more competitive company.
Ricardo Lima CEO Cimpor
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Challenges in Brazil Investment in the Brazil BU for enchanting customers begins with contracting and training Sales Consultants. They are prepared to manage the relationship and support the best practices in the customer’s business in priority channels. “We have specific marketing services, such as technical and business consultancy and shared goals programs that imply in improving the performance of the customer’s business. Contributing so it has superior results is a very positive path for long-lasting relationships,” says Dorivaldo Ferreira. One action that is being improved is primary care. Customer Service was recently restructured to enchant the customer from first contact, in the intention to purchase. Thus, since the beginning of 2013, the call center became internal and unified, working with a single database of information. Besides knowing the customer better, the new dynamic opens doors for e-commerce, a means of purchase that tends to be used more and more.
Brazil Experiences InterCement & You Experience The InterCement & You Experience is a relationship action that has already enchanted more than 90 customers. They were able to watch national and international shows, plays and musicals in personalized box seats at the Credicard Hall, a famous venue in São Paulo.
InterCement Forum This is an exclusive program for InterCement customers from diverse segments of civil construction. The objective is to bring relevant and updated information to help them make assertive decisions in their businesses, through an enriching debate with market data, technical analyses, standardization and innovation studies, involving professionals of reference in the sector and representatives of associations and other companies.
Ferreira comments that countless actions are underway to improve services (see box), however, what is important is for everyone at the company, from the operators to the president, to be focused on bringing excellence to the customer. “It is a long journey, but the return is guaranteed. If the customer perceives this differential, it becomes a true business partner,” he says.
Other examples Excellence in customer relations is a theme that is being dealt with at every InterCement business unit. Every country establishes its set of actions, because fully meeting customer needs passes through the perception of reality and local demands. In Portugal, an interesting example is the Encontro Cliente Mais, when the ten biggest buyers in the bulk and bag segments are recognized at a charming event. Prominent fact: the customers recognized in 2012 maintained the same
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purchase volume as the year before, when the domestic market fell more than 13%. Support for the customers’ promotional events is one of the successful strategies at the South Africa BU. Another important action is the granting of certificates to gold and silver customers, which the retailers exhibit prominently at their stores.
Challenges in Argentina
Argentina Experiences
Uncontested leader in the Argentine market, with great credibility in every sales channel and an unparalleled history of quality and customer service, the major challenge at the Argentina BU is to keep its expressive market share and premium price. “We will only be successful with relationship actions that reinforce our market differential. It is a huge effort, because we have companies that have been customers for 30, even 40 years,” says Juan Masjoan.
In partnership with the Institute of Higher Business Studies – IAE, the Austral University School of Business, the Argentina BU offers a training program for customers who exclusively distribute or use the company’s products in manufacturing concrete. Classes are geared towards business managers and their children with an active participation in company management. Besides training more than 120 customers, the action reinforces the Loma Negra brand with new generations. This year, in order to expand presence, classes will reach four cities in Argentina, besides Buenos Aires.
Long-term loyalty is explained by the perception that Loma Negra adds value to the customer’s business. This perception is the result of a series of factors, beginning with product quality. However, the company invests not only in adding, but also in generating value by innovating, and there are two emblematic examples: the business school and the concrete supplier consultancy (see box). Other actions aim at keeping the brand in evidence (highlighted image at the point of sale) and stimulating consumption through specific marketing programs (accumulate points and exchange them for household appliances). “We are always aware of opportunities for expanding this relationship, and there are several ways to do so, from sending personalized birthday cards to an invitation to our end-of-the-year party - by the way, a very popular event. In every case, we want to enchant our customers,” argues Masjoan.
School of Business
Consultancy for concrete suppliers The idea is to take technical and managerial knowledge to concrete suppliers throughout the country. Loma Negra provides true consulting by elaborating a study of the operation and evaluating several issues, such as use of employed machinery, evaluation of management systems, development of products and testing of raw materials, besides training professionals in Loma Negra technical center laboratories. One marketing action elaborated has some customer mixers using a company logo indicating that the concrete is being made with Loma Negra cement, which gives it a quality differential.
Innovation The objective of incorporating excellence in customer relations as an effective action guideline was also seen in the choice of the second theme implemented by the Radical Innovation Methodology, one of the main tools for innovation and differentiation at InterCement. The Customer Services Challenge began in August 2012 and it is currently in the prototype phase. “Differentiation through services is essential for the company to build solid ties with its customers,” says Adriano Nunes, Director of Innovation and Sustainability at InterCement.
industry map revealed (comparison of InterCement with its main competitors in roughly ten service attributes, such as delivery logistics and product mix) that InterCement is already at the forefront in relevant issues (delivery reliability, for example). “We have evolved continuously, but there is still much to improve. The Challenge, currently in the experimental stage, can contribute towards evolution in this area,” comments Adriano. For more information, visit our portal and consult the Click news bulletin.
Through surveys, interviews and workshops, the Challenge detected that the consumer’s profile is changing rapidly, with impacts on every type of business, including cement. The
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Results 2012
Very promising expectations
Today, InterCement is a reference in the global cement industry. With an ever more in-depth integration, the company is present among the 20 biggest global operations and operates with a focus on being one of the most profitable.
Present in nine countries, on three continents, and generating nearly 9.5 thousand direct jobs, InterCement has the great challenge of operating in very different realities (the 39 production units involve five different languages and five time zones!). However, the dissemination and understanding of company values and mission, the implementation of corporate programs related to production and safety, as well as actions for synergy and opportunities and for culture, already permit very promising expectations. The results in 2012, a year that was expected to be critical due to the integration of different processes and cultures (and which was worsened by the economic crisis in the Euro Zone and lower than expected growth in Latin America), strengthen the vision that the future reserves for us a solid presence and participation in the global market. “The year of 2012 was one of much planning and work to promote integration. We took a major and courageous step and now our eyes are focused on what each of the units stands out with the most. The sharing of experiences, ideas, expectations and commitment with results is much more effective than the sharing of physical assets,” says José Édison Barros Franco, Chairman of the Board at InterCement.
Generating nearly 9,5 thousand direct jobs 8
InterCement closed 2012 with sales of 27 million tons of cement and clinker. The numbers are surprising when comparing InterCement in 2011 and InterCement Cimpor in 2012. When evaluated in this manner, net revenues jumped 143% and cement and clinker sales grew 112% (even better
results in concrete – growth of 147% and in aggregates, 181%). However, the most relevant fact, EBITDA margin (acronym that indicates operating profits before payment of interest, taxes, depreciation and amortization) for 2012 was (InterCement Cimpor), higher than the 24% obtained by InterCement in 2011. “In nominal values, EBITDA recorded growth of 177%. This number is especially important, because it is an indicator that the operation (production, administration and sales) is very healthy and drives us to new challenges,” argues José Édison. EXPANSION Operating at full force throughout its entire new perimeter of activity in South America, Europe and Africa, InterCement foresees strengthening its position as a result of its international presence. For such, it has an ambitious investment plan that considers the increase in capacity in certain countries – most especially Brazil and Mozambique – and expansion to new geographic areas – process in which exports from Portugal present strong importance. In 2012, the company’s global investments reached R$ 950 million (compared to the R$ 580 million in 2011), a sum that should be maintained for the next three years. Among the new projects, it is worth underscoring the more than 3.5 thousand ton/ year capacity increase installed in Brazil by the end or 2014. Thus, InterCement’s installed capacity will exceed 40 million tons.
“Internationalization permits reducing risk. And this was proved after analyzing company numbers for 2012. The units located in strategic and complementary sites constitute a harmonious and balanced set,” says Ricardo Lima, CEO of Cimpor. For 2013, Lima is incisive: “Now, we know the operation better. We are in an advanced process of synergy identification – and consequent capture of value - and we have established all managerial conditions for a promising future. It is time to make a difference, to put proposed actions into practice, aligning operations and activities in the diverse countries of operation.”
Cement and clinker sales grew 112%
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SYnERgY
focus on
capturing value synergy project will transform opportunities detected in the integration process into actual gains
The integration of two companies is much more than the sum of their assets. A consistent and well-planned integration process clears the way for countless new opportunities, based on sharing information, applying best practices, among other factors. In order to raise opportunities for capturing value after integration, the McKinsey consultancy group, with the support of professionals from each of the business units, mapped the entire operation. The result of this evaluation identified synergies and opportunities that indicate actions to be developed and the value that could be obtained with integration. This initial phase was very important for the integration of local teams with corporate work lines. Furthermore, a more critical eye is often necessary for pointing out new scenarios, since unit professionals are mainly focused on excellence in the operating routine. And this only happens when there is actual mutual collaboration between the teams. The project is being developed within the scope of the business units, with support for Corporate Controllership, which has the commitment to ensure implementation of tools for the effective control of actions, for providing support and monitoring the units, for disseminating good practices, as well as for continuing the evaluation of new opportunities. This action stands out as a result of the consolidated values which are already committed in the Budget Plan - PO 2013. “However, there are always projects that were not initially identified and which can further enrich the project,� says Ana Carolina Carvalho, Manager of Corporate Controllership.
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sYneRgIes anD oPPoRTUnITIes PRoJeCT Presented at the Executives Meeting, the project detected a total of 103 leverages for synergy. The Brazil BU is responsible for 77 and 73% of the amount to be saved, where only three areas (Commercial, Supplies and Operations) concentrate more than 65% of the gains. Brazil’s greater relevance in the project is in the fact the country is the only one where there were two industrial operations, clearing the way for more opportunities for synergy.
a focus on results, we are certain we will be able to meet – and if possible exceed – our objectives,” argues Daniel Garcia, responsible for the Office of Synergies at the Brazil BU.
A specific work group was created in January to enhance Brazil’s results. The Office of Synergies is responsible for assisting directorate leaders to implement and accompany initially projected results. Besides that, the Corporate Controllership has defined a set of management tools such as the use of AMS - Action Management System as a project management tool, permitting the standardization of controls in every country. “The Office of Synergies in Brazil is necessary due to the major impact on local operations. Furthermore, it will also generate benchmarking for all other countries,” observes Ana Carolina, who cites some of the examples of synergy actions underway: optimization of freight costs, realignment of contracts with suppliers and replacement of clinker with slag. “Some experiences were detected at InterCement, others at Cimpor, and still others were detected by the company’s new operational situation. And good practices are embraced without reservation.” The positive results have already been accounted, and not only in Brazil. In Mozambique, for example, a new perspective of the local market enabled a realignment of commercial policy with expressive gains. “It is important to mention that the involvement of all professionals for the actual delivery of synergies committed in the PO has been very satisfactory. With
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ICC
Volunteers on integration’s agenda The core guidelines of social volunteer actions defined by the ICC will be taken to every InterCement business unit. Committed to social, environmental and economic development of those regions in which it operates, InterCement has a consistent policy for sustainability. Specifically in the issue of social responsibility and volunteer work, the actions are developed in partnership with the Camargo Corrêa Institute (ICC), which establishes the social investment methodology and programs that should be followed by the entire organization.
is for all Brazilian units stemming from Cimpor to have at least one GAIV and one CIVICO organized and in operation by the end of 2013.
The social investment dimension is also part of the integration process and, soon, all InterCement units spread about the nine countries where the company is present, will be aligned in relation to the concepts and systematization of the volunteer policy. “Integration passes necessarily through the incorporation of social investment policies. Like the safety and operational policies, among others, being implemented in routines, volunteer actions will also be included,” explains Adriano Nunes, Director of Innovation and Sustainability at InterCement.
To drive and take this knowledge to all operations, over coming months, the area will promote a road show to the business units in South Africa, Egypt, Mozambique and Portugal, aimed at sensitizing, aligning and leveling expectations in relation to the InterCement social investment model. Concepts, models of operation and good practices will be presented, however the action plans will be developed jointly with the units themselves, for they are the ones with insight on local demands.
At the moment, an evaluation of all social investment, defined previously within the ambit of Cimpor, is underway, for a future proposition and alignment of actions tied to group values.
“This is a moment for reorganizing the social investment agenda at every business unit, even in Brazil and Argentina,” says Nunes.
volUnTeeR aCTIon aT The bRazIl bU Based on the premise that you cannot have one company with two different structures and two different philosophies, the Brazil BU gained relevance in the integration process. There is an enormous effort underway for all operations stemming from Cimpor to absorb the knowledge and align their actions and investments based on the methodology developed by the ICC. Since the beginning of 2013, InterCement and the ICC have been promoting the Ideal Volunteer Program through presentation meetings. The choice takes into consideration that the engagement of new professionals in corporate volunteer activities permits integrating the unit in the communities, according to the social investment strategy. Besides presenting the possibilities for action, these meetings stimulate the creation of the CIVICOs (Committee for the Incentive of Volunteers and Interaction with the Community) and GAIVs (Ideal Volunteer Action Groups). The expectation 12
MozaMbIQUe, InITIal aCTIon InterCement’s social values will also be taken to all business units. “The company’s international presence demands the internationalization of volunteer activities,” observes Nunes.
Throughout the entire evaluation in progress, which will permit establishing a panorama for each unit, a diagnostic study is already in underway at the Mozambique BU. “We need to focus to generate effective and long-lasting results. The first step will be taken in Mozambique, where we expect to have a project structures by the end of 2013,” he says.
do Well day Organized in August, the Do Well Day will raise another challenge for InterCement social volunteer action: have all 39 production units participate in the 2013 edition. “We want this date to be binding. We are going to encourage all units to be ready to participate,” says Nunes.
CULTURE
foundation for sucess Integration has placed the company in a more complex scenario. Today, InterCement gathers operations in countries with very different cultures and experiences and since the outset of this integration process, there was the full understanding that it would be necessary to build a new organizational culture. “We are going to take advantage of what is best in each unit and realign these experiences to the new corporate moment. We will thus construct, together, a more international culture, although respecting the particularities of every country, ensuring they all feel represented and motivated to make our vision of the future come true,” says José Édison Barros Franco, Chairman of the Board of Directors at InterCement. Construction of the new culture began at the end of 2012 and counted on the participation of all professionals. The culture survey provided a first look, an initial diagnosis, about the current perception of the professionals. Based on the analysis of these data and comparative studies with the best global practices, the McKinsey consulting group – which is conducting the process together with company leaders – presented a report with strengths and opportunities for improvement.
CoMMITMenT bY all The construction of a cultural organization has a mid- to long-term impact, since it establishes foundations on which the company will develop. There is evidence that more than 60% of the integration processes that did not work had the culture issue at the center. Reinforcing: there is no financial performance without organizational health and it takes a solid culture to permit renewal, restructuring and perpetuity of the business in a healthy manner. The companies at the top for some time are those with successful people management practices and concerns with personal and collective development, among other points. José Édison points out that this process is being constructed by the company’s professionals. “They are all active agents as they participate, for example, in culture and climate surveys. However, the success of this effort will only be possible with the commitment of professionals who, after promoting the culture, should live the behaviors recommended for this new phase at InterCement.”
To refine this analysis, discussions and interviews were organized with focus groups. Then, a project was developed that projects several actions and a communication plan to disclose each action to everyone. “Since it is a very complex project, in order to ensure its efficiency we are going to launch it in April as a pilot project at the Argentina BU. The unit was chosen since it has already experienced a similar process (in 2006 with the integration of Cauê - Loma Negra),” explains José Édison.
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Trading
Exports
on the rise InterCement’s international presence permits a broadening of trading actions, with competitive prices and availability of products, serving regions with high demand by units that, due to diverse situations, have a margin for export operations. In 2012, activity recorded growth greater than 30% in relation to volume traded the year before. Of the total of 2.2 million tons of exported products (cement, clinker, plaster, among others) nearly 70% came from the Portugal BU. Besides Portugal, four other business units also exported something and the InterCement products arrived in 17 countries. The biggest volumes were sent to Algeria, Mozambique and Paraguay. The quantities exported through Portugal increased nearly 38%. This result has been very relevant since, due to the strike at Portuguese ports that
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lasted nearly four months, it was necessary to elaborate new strategies for operating the ships. The commitment and teamwork by all parties involved (customer relations, production and logistics) were fundamental for guaranteeing these results. The effort to serve with excellence, even in adverse conditions, has guaranteed our customers’ recognition: there are already contracts for 2013 that indicate a 34% growth compared to 2012, just in exports leaving from Portugal. It is important to mention that cement exports from the Portugal BU have been reinforced with the “big bag” packaging that has great resistance to several movements that involve cement exports in bags. This packaging has been greatly praised by the customers and it is, no doubt, one of the critical factors for the success of export operations.
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