Revista Integration Ed. 24

integration

in review

Bimonthly publication with news and information for InterCement employees

FOCUS ON RESULTS Guaranteeing the establishment of BP 2013 aligns us with the objective of constructing a robust, unique, strong and competitive company

nº 24 – july/august 2013

TABLE OF CONTENTS 03

Always at the forefront José Édison Barros Franco

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Plan and work Ricardo Lima

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Company One year of management

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Day of doing good 2013 Exercising citizenship

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Strategy Focus on delivering results

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Research and development In search of cutting edge technology

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Marketing / Relacionamento Examples of good practices

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Brand Brand architecture defined

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

Always at the forefront On July 16, we are celebrating the first anniversary of our new organization. It was on this date that, after the successful IPO, the first measures were taken to integrate InterCement and Cimpor management under a single shareholder structure, aimed at a single, integrated, strong and competitive company.

Moments like these are unforgettable, and they drive us to retrospectively evaluate everything we have achieved – and everything we have yet to do!

As a means of celebration, we have organized an event that summarizes our values and our focus: it was a moment of celebration; however, at the same time, we also have the participation of all operations, seeking to transmit information and positions in a clear and objective manner.

Organized at the company headquarters in São Paulo, the event included simultaneous translation for the diverse locations in South Africa, Argentina, Paraguay, Egypt, Mozambique, Portugal and Brazil.

Some of the new guidelines established were reinforced, such as the Vision 2023, Mission, Tag Line, organizational culture project and the new strategy for using and applying the corporate brand and the local brands. All these points have been constructed over the past few months, aimed at strategically meeting the needs for a new company configuration, making room for the consolidation of the current position and preparing it for higher flights.

I want to reinforce a point that permeates our entire history and is the essence of this company: the capacity to gather committed professionals with the ability to align expectations, plans and goals. Without this characteristic, our path would have been much more sinuous.

Now, what is behind us is history, and these are the professionals, with their eyes on the future and who know our mission and vision for the next 10 years, who will lead InterCement to become a robust company with an international presence. A company that sincerely believes in relationships, in the strength of its international brand and of its local brands, and in the wealth that results from the sum of different cultures.

Our commitment with diversity, with sustainability and with innovation should guide us.

For such, we need to be aware of the people and processes; plan every detail and execute this planning to the most minimal details, while remaining flexible and agile so we can re-evaluate our routes.

I believe the potential for synergy between InterCement and Cimpor is greater than we initially imagined, although much effort is needed to achieve this potential to its fullest.

That is because when the synergies were planned, there was no way to fully evaluate an important variable: the commitment and dedication of the teams. And what I can say is that the teams are highly driven and that makes all the difference.

Congratulations to all the professionals of this great company, which is just beginning its very successful path.

José Édison Barros Franco

Chairman of the Board of Directors at InterCement

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Plan and work Besides being a major commitment, one of InterCement’s most notable characteristics is delivery of previously agreed upon results. This procedure is intrinsic to all functions, areas and spheres of the company: planning and working to achieve desired results.

Most especially in 2013, we have a special and very challenging and instigating ingredient: this will be the first complete year after integration. In other words, it is the moment to take the synergies to the utmost, experience opportunities and overcome the obstacles the new structure offers us.

InterCement practically doubled in size, and this new configuration clearly has an impact on relations with the market, suppliers, clients and communities – and this should be well-evaluated so we can remain focused on our objective of constructing a bigger and more competitive company.

The importance of delivering results established in the Budget Plan – BP 2013 is absolutely relevant for achieving our strategic objectives. Just a comment: the definition of the BP is founded on objective issues and on the capacity detected through evaluations of countless variables. It is not a decision of what you want, but rather of what you can actually get, based on an effort of excellence by all areas of the company - which, in short, means a proactive action by all professionals.

These consolidated numbers in the BP are also designed within a strategy of maintenance and long-term business growth. Thus the importance of “delivering results”, since they are what guarantee InterCement’s solid consolidation and its future investments.

The company suffers with external variables that are beyond its control, such as the excessive fluctuation of the dollar in Brazil and the global economic slowdown, but that should not be a motive for us to shy away from the objective of fully meeting BP 2013.

Many efforts are being put forth in this sense: the synergies are moving forward with important results; the integration of procedures and processes has permitted record shipping in various production units; the new commercial policy has expanded markets; in short, there is a set of “positive news” that encourages us and is an indicator of InterCement’s great potential.

This second semester should be carefully examined by all. The in-house gains we are achieving should overcome the difficulties of the external environment. And, at these moments, we need to be very austere in our decisions and eventually even more agile, for example, in the implementation of cost cutting actions.

Therefore, delivering results is a common theme for all InterCement professionals at all our 40 production units spread about the world. The big commitment by all teams will be fundamental for us to close 2013 with numbers compatible with expectations.

Once again, I invite you all to join us in meeting our objectives.

Ricardo Lima CEO Cimpor

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Company

One year of

management Accompany the interview with José Édison Barros Franco, Chairman of the Board of Directors of InterCement, and Ricardo Lima, CEO of Cimpor, about this first year of effective actions in the integration process.

Integration›› After one year of work, are expectations being realized?

José Édison • We have always believed in the synergies, and they are holding true, sometimes with even greater agility and better results than projected. This is particularly due to the great commitment by the teams for success in the integration process.

Ricardo Lima • The great effort in defining what I call the company’s pillars, which are Vision 2023, Mission, Values and Tag Line, a guide for where we want to be in the future and the attributes that should accompany us on this journey, must be underscored.

Integration›› Is the new culture another fundamental pillar?

José Édison • No doubt, we have constructed one of the most consistent business histories over the past two decades and the culture refers to how we do things, how we get involved and make commitments, how we motivate ourselves and, most especially, how we are able to motivate everyone to seek the expected results Since we have a much bigger company today, we had to discuss what the new organizational culture would be and align it to long-term objectives.

Integration›› Which points deserve special attention?

Ricardo Lima • There is no such thing as a finished example of everything that has been achieved, but, beyond integration and synergy of processes and procedures, what unites us is the aspiration to construct a more competitive company, that focuses on results, valorizes meritocracy and diversity. The integration processes (with Cimpor and Loma Negra) show that respecting people, believing in their capacities and skills and providing room for receiving contributions and suggestions are fundamental aspects for motivating and stimulating teams.

Integration›› What is the message for the professionals at this moment you celebrate one-year of management?

José Édison • I’d say we are doing a great job. I have the feeling that the teams are motivated and determined for the process to work. The joint effort by everyone around a single objective is a great feat, but we must remain firm in this journey. And it is necessary to continuously communicate to everyone what is happening to guarantee transparency and ensure alignment.

Ricardo Lima • I believe we have been able to establish the guidelines that will lead us to a consistent future, highlighting InterCement’s values. Now, we need to focus on the goals defined in BP 2013 so we can deliver expected results and, thus, continue in this growth process in a vigorous manner.

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Day of doing good 2013

Exercising citizenship

Action reaches those countries where InterCement is present

What can be observed is that the concept has been fully absorbed and there is intense engagement and a desire for realization�

Luiz Eduardo Rielli Sustainability Manager

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Among the countless efforts made for the integration of InterCement operations, the structuring of the private social investment model has not been forgotten and it had a great moment to demonstrate its transforming force with the holding of Day of doing good 2013.

The concern about having an adjusted timetable for the constitution of CIVICOs (Committee for Incentives to Volunteer Work and Interaction with the Community) and GAIVs (Ideal Volunteer Action Group) aimed at the quick start of activities geared towards community development is fully in line with the way chosen by InterCement to experience its values and it is coherent with the “building sustainable partnerships” signature that has guided the company’s present and future actions at the moment. As a result of this effort, all InterCement units are confirmed as participants in Day of doing good 2013, forming unprecedented and international solidarity (August 25, in Argentina, Brazil and Paraguay and October 20 in the other countries).

Luiz Eduardo Rielli, Manager of Sustainability at InterCement, says the Sustainability area is focusing on offering the support needed for those units in which the action will occur for the first time. He underscores the great engagement with which the professionals embraced the idea.

An example is the expectation from professionals at the InterCement Mozambique’s Matola unit.

“We are all enthused about the idea of collaborating to improve social conditions in cities neighboring our production units, dedicating a little more of our attention and time to sustainable volunteer activities with strategic meaning, constructed collectively and which can be integrated in the professionals’ culture and day-to-day activities. Our country has enormous shortages and social inequities, which has enormous relevance for praiseworthy initiative such as this,” says Hélder Harman Morar, of the unit’s Office of Development.

The participation of all units in the first Day of doing good 2013held immediately after integration was a goal for InterCement within its private social investment vision. It will also be important to effectively demonstrate to the internal and external publics the high commitment with social, environmental and economic development in the communities where it operates. “It is something strategic for our business. Furthermore, developing the volunteer spirit in teams is a means to promote integration, a sense of belonging and the appreciation of each professional, improving the organizational climate,” explains Rielli.

CHAIN OF SOLIDARITY Created in 2009 as the means chosen by the Camargo Corrêa Group to celebrate its 70-year history, Day of doing good 2013 has become an annual event during which Group company professionals and their families and friends simultaneously perform voluntary actions on behalf of the surrounding communities. The activities are organized by GAIVs and are developed in accordance with locally identified demands. Examples include structural renovations and improvements at charities and public schools and the promotion of cultural, sport, leisure and healthcare activities offered to inhabitants of communities where the Group operates.

Under the slogan, “Be big and embrace a cause”, sixteen Group companies participate in this fifth edition, forming a veritable army of volunteers that will benefit communities in more than 120 Brazilian cities and other locations in South Africa, Argentina, Egypt, Spain, United States, Mexico, Mozambique, Paraguay, Peru, Portugal and Venezuela.

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Strategy

Focus on results

Internal results are positive, but the external scenario challenges the professionals to be even more assertive to establish planned results.

The second semester reserves a very proactive performance for delivering results for all InterCement professionals. Excellence should be the motto for all our activities, seeking something more in each of them and every day, a superior result, in short, an effective contribution for InterCement to establish its planned objectives.

As pointed out by Ricardo Lima, CEO of Cimpor, in the editorial of this edition of Integração Magazine, “we need to be very austere in our decisions and eventually even more agile, for example, in the implementation of cost cutting actions.” Accompany the perception of Ricardo Lima and José Édison Barros Franco, Chairman of the Board of Directors of InterCement, about the moment at the company and the expectations surrounding the delivery of results.

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Integration›› 2013 is the first complete year of InterCement as a single company. What is the importance of establishing the Budget Plan – BP 2013?

José Édison • First, it is necessary to be clear that this is not the only year we need to reach – and if possible exceed – established goals. This should be a continuous thought, especially because we establish long-term strategies, and the results do not end with the closing of the fiscal year.

They have an impact on future fiscal years in terms of, for example, new investments. It is also worth underscoring that, with its new structure, InterCement has much more representativeness within the Camargo Corrêa Group, and this commitment to deliver results has become even more effective.

Ricardo Lima • And establishing the BP means effectively collaborating towards construction of the company we all want: robust, united, strong and competitive.

Integration›› The new structure permits access to a broad range of opportunities and generates unprecedented challenges. How has the establishing of these expectations been?

Ricardo Lima • – I believe that for a long time, we are going to obtain benefits from the synergies of this integration, beyond the immediate doubling of global market share. We have more efficient logistics models, gains of scale in supplies, improvements in production processes, among several other aspects. All in accordance with internal benchmarking, and with 40 plants, we have the potential for more gains. Now, our immediate focus is on meeting BP 2013, thus, the importance of speeding up this process for internalizing gains.

José Édison • It is very emblematic for several units to be breaking records less than one year after integration. This indicates the best practices are being disseminated and this will be decisive for InterCement’s future.

Integration›› The global economic situation is on hold. How are we going to overcome this moment?

José Édison • The InterCement asset portfolio is unique and positions it in a set of growing countries that are not exactly on hold. That is the reason behind strong operations in Latin America and Africa, with a platform in Portugal, which helps us envision the internationalization processes better. We know that in these regions there may be difficulties resulting from their stage of development (such as the volatility of the dollar in Brazil), but, no doubt, there is no stagnation.

Ricardo Lima • At these moments of volatility in the external scenario plus the need for InterCement to generate expected results – after all, the Group made an extraordinary effort in terms of financial and human resources to hold Cimpor’s IPO – some characteristics should be more explored, like agility

and austerity. Thus, we cautiously opt for reductions in investments that do not necessarily need to be done at this moment. But, that does not mean to stop continuously strengthening the company. So much so, in July we made an agreement that allowed us to lease another production unit in Mozambique.

Integration›› How do we want to get to the end of 2013?

José Édison • In a simple and objective manner: without any significant deviations from the BP. The managers participated in the quarterly schedule review and a fitting action plan was recorded for the moment, which will be implemented at each of InterCement’s operations. I am convinced we can achieve what has been planned and that will be possible with the commitment of all the teams.

Working in a determined manner and being creative when the originally planned way to obtain results proves hard to execute are attributes valued by InterCement and, at this moment, decisive for achieving goals.

Ricardo Lima • This is fundamental: commitment by all professionals. No procedure or process can survive on its own. It is implemented, managed and provided feedback by professionals, and the more aware and more proactive they are, the greater the excellence and better the results. There is no doubt that this first year after integration is also the most challenging. But, once again, we are going to work focused on results and finish the year even stronger for having gone through such an important period for the company together.

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Research and Development

In search of

cutting edge

technology R&D has been working to position InterCement as a highly innovative company in the sector, that invests not only in the continuous improvement of its processes, but most especially in solutions to revolutionize how it works, breaking paradigms and proving it is possible to innovate in the cement production process. There are currently nine projects underway.

IN-PROGRESS PROJECTS Development of technology for cement production from construction and demolition waste›› it is InterCement Brasil’s first R&D project to receive non-reimbursable funding from a public source (BNDES – National Bank of Economic and Social Development), in which 50% of the sum will be paid using bank resources. The objective is to develop an alloy with low CO2 emissions using aggregates and cement resulting from construction and demolition waste.

Status: it is in its final phase for releasing the sum to be provided by BNDES and the study should be initiated in mid-August.

Creation of a Center for Technology in carbon nanotubes and nanotechnology studies applied to cement›› carried out in partnership with Petrobras and the Federal University of Minas Gerais (UFMG), aims at creating the first, independent, national research center dedicated to the study of nanotechnology applied to cement for civil construction, cement for oil wells and polymers. It also receives 50% funding from BNDES. Status: the project was approved by the BNDES in August. The funds will actually be released in January 2014. Work now continues with the 10

formalization and documentation process for releasing the money.

Use of biomass as a fuel for furnaces›› conducted in partnership with Embrapa, the idea is to map what exists of biomass residue generators surrounding InterCement units to evaluate their use and to analyze which crop could be stimulated for the production of biomass that may be used as a biofuel.

Status: project initiated in January 2013, and technical visits have been made to five units.

Short-term opportunities with sugarcane bagasse and elephant grass have already been pointed out by researchers.

Use of steel slag for producing cement ›› an initiative carried out in partnership with IPT (Technological Research Institute) and with ArcelorMittal, it intends to use steel slag, a steel mill residue, to replace clinker on a large scale in cement production. With strong mobilization

by IPT and InterCement, non-reimbursable funding was obtained from Embrapii, which will cover 53% of the program.

Status: cooperation agreements have been signed with IPT and ArcelorMittal, and the studies should begin in mid-September.

Creation of a Center for Technology in Sustainable Concrete›› project carried out with the Polytechnic School – Department of Civil Engineering at USP (University of São Paulo). Its goal is to create a

For those who think there is nothing to discover in an age-old product like cement. This is not a serious opinion to be considered.

It is simply wrong. Our R&D programs not only have great potential for adding value to the company, but also can be fundamental for reducing the sector’s environmental footprint.”

Seiiti Suzuki

Manager of Research and Development at InterCement

center of technology fully geared towards the development of concrete with low consumption of binding agents and, thus, with a much smaller environmental footprint.

Status: studies began in January with researchers initially evaluating the concrete production database for centers stemming from InterCement and Cimpor.

Capturing of CO2 using microalgae›› with a strong environmental component, the objective of the project, developed in partnership with the Federal University of São Carlos and University of Santa Maria, is to use microalgae to capture the carbon dioxide emitted in the cement manufacturing process. Complementary studies will analyze the best destination for the algae after their life cycle: as ration for fish (in partnership with the Higher School of Agriculture Luiz de Queiroz of the University of São Paulo), or as food for farm-raised shrimp (together with the Federal University of Ceará).

Status: the cooperation agreement with the universities for the first phase of the project should be signed in September, with research beginning in October.

Low carbon clinker›› an initiative resulting from a partnership with the Higher Technical Institute (IST) of the University of Lisbon, has already resulted in the deposit of the first patent totally developed under InterCement’s leadership: an innovation that, introduced in the process, will permit a reduction of up to 25% of CO2 emissions resulting from clinker production.

Status: in progress. The first phase of lab tests has been finalized. The contract was renewed for ongoing development and new lab formulations will be tested and applied on a semi-industrial scale.

“Umbrella” agreement for cutting edge research with IST›› agreement that foresees the development of cutting edge technology together with IST in nine topics of interest for InterCement, and to be researched as per demand. The initial possibilities include the life cycle analysis of the production process for cement aimed at evaluating its environmental impact from the extraction of raw materials to after life cycle residue.

Status: agreement signed in July; future research themes are under discussion.

Project for capturing and storing Carbon›› initiative in which InterCement participates as a supporter together with several cement companies, members of the European Cement Research Association.

The project seeks ways to capture carbon emitted by cement furnaces.

Status: in-progress, this long-term project will extend until 2015. The focus of these studies is on the best process for capturing CO2.

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Marketing / Relationship

Examples of

good practices They come from Argentina, Brazil and Paraguay and they are indicators of how the company operates to consolidate its relations with stakeholders.

InterCement has an important characteristic: its great effort to reinforce actions with all stakeholders.

This positioning materializes in relationship actions with communities and clients. In this edition, Integração magazine brings three examples of good local practices aligned with the direction of maintaining and continuously reinforcing our commercial brands.

InterCement Argentina kicked off a communication campaign to reinforce relations with the communities where the operation units are located.

Brazil shows what it did to present the brand in a region where it began to operate commercially; and Portugal presents an event for recognizing clients successfully organized more than 20 years ago.

Take a look.

INTERCEMENT ARGENTINA Speaking directly with the communities Aligned with the Tag Line “Building Sustainable Partnerships” and InterCement’s mission, the unit has been developing a communication campaign with a focus on those regions in which the company is present.

“We have nine cement and four concrete plants, effectively impacting 11 cities in 13 neighboring regions. Within a modern concept of sustainability, we have to work with these communities, respecting their interests and contributing towards their development, including with direct initiatives through the Loma Negra Foundation,” explains Mario Ariel Casasco, Manager of Institutional Relations at InterCement Argentina.

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In order to keep the population informed of all the company’s initiatives, whether environmental improvements, actions for driving economic activity or even as a social investment agent, the campaign was conceived in steps, which inter-relate to reaffirm the unique reputation of the Loma Negra - InterCement Argentina brand.

There are four steps: the good neighbor (the company is and always will be with the community); a company with open doors (transparency); acting today, thinking of tomorrow (sustainability is the key to a promising future); and setting tendencies for the future (we are an innovative and world-class company).

Casasco says a map was drawn of all local means of communication, since these residents have more affinity with small radio stations or local newspapers than with the national media. “The results have been very positive. We feel that these sustainable alliances are increasingly more consistent,” observes Casasco.

As an example of a campaign already produced, InterCement Argentina paid tribute to the 100th Anniversary of Zapala, the city where the factory has operated since 1970.

The great effort to reinforce relations with all stakeholders is one of InterCement’s most notable characteristics.

INTERCEMENT BRASIL Cauê brand reaches Manaus In July, InterCement Brasil introduced itself to the market in Manaus (AM), a region with high potential, through a marketing campaign that included ads in the print (newspapers) and electronic media (local TV scheduling) and the creation of an exclusive hot site (www. cauedeverdade.com.br).

“This promotion was necessary to mark our entrance in this market, showing everyone, clients, suppliers and population, our objectives, products and values,” comments Luis Laguna, Manager of Marketing at InterCement Brasil.

Before the campaign, the company did a great job of strategic planning to evaluate the variables that could impact the business, such as, which regions would be served initially; what the commercial and logistics strategy is, and even the option for the Cauê brand.

“The campaign sends the message that we arrived to stay. So, besides presenting products, we also focus on introducing InterCement, its international presence and the location of its factories in Brazil,” observes Laguna, advising that other locations in the Brazilian North will soon be served, with specific strategies.

works for the Airport of Manaus, and we are being called by regional constructors due to the ads. It is a major challenge, but we have the quality and determination to increasingly expand our market share,” underscores Laguna.

INTERCEMENT PORTUGAL Client Plus “Client Plus Meetings” are an example of how the construction of consistent relations with clients has a decisive impact on business results. Organized every year since 1991, the event brings company administration and the major clients close together.

In 2012, the ten most important clients of Cimpor cement, limestone and mortar, in sack and bulk segments, were invited. “In order to have an idea of the importance of this relationship action, the clients who participated represent 22% of InterCement’s overall sales volume in Portugal,” says Paulo Capristano, Director of Commercial Services.

Another important fact, in 2011, “Clients Plus” maintained their cement purchases at their 2010 level, whereas the internal market saw an estimated drop of 13%.

“Today, participating in this meeting is a desire of the client, because it is a pleasant event of recognition that always leads to the sharing of experiences and exchanging of ideas,” he says.

And the results have been very positive, with sales growing exponentially as a result of an appropriate product and a great effort by the teams. “Besides that, a contract was signed for supplying cement to 13

Brand

Brand architecture

defined InterCement now endorses its local brands

By the end of September, all InterCement operations will be aligned with the new strategy for corporate brands. InterCement now endorses all its local brands, granting each of them the strength of its international presence and its values – innovation, sustainability, social volunteering.

Thus, for example, Cimpor is used in Portugal, while endorsed by InterCement. This only does not occur in Brazil where the name of the country is added to the InterCement brand (see examples on the side). “As we already informed, the integration brought the need for an ample debate about the use of the InterCement brand and of the local brands. After an intense evaluation, with a study of endorsements and rescuing of brands, we decided on this new positioning,” says Fernanda Guerra, Manager of Internal Communication.

In order to standardize knowledge and the application of the brand, the Communication area created an internal campaign about the theme, which started in July in all the countries, with the premise that the action should be encompassing, reaching 100% of the professionals.

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The campaign, developed in five languages (Portuguese of Portugal, Brazilian Portuguese, Spanish, English and Arabic), provides a series of pieces and gives instructions that should be followed for the correct production and implementation of materials that will be developed in accordance with the needs and evolution of the process in each country.

“It is important for all professionals to be aligned as quickly as possible regarding the implications of adopting the new corporate brand and local brands, clearly setting the objectives and the role of each in consolidating this process,” underscores Fernanda.

The campaign’s slogan is “People who build a new story”, reinforcing the beginning of what hopes to be a great story that today encompasses 9 countries and more than 9 thousand people gathered around a single project.

Portugal

Egypt

Argentina

Brazil

Mozambique

South Africa

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