Corporate Reorganization

In December 1996, a controlling interest in Eucatex was acquired through the transfer of the ownership interests of RNTL Participações S/C Ltda. to Mr. Paulo Maluf and Mrs. Sylvia L. Maluf. The new controlling shareholders appointed a new management and Mr. Flávio Maluf was elected the Chief Executive Officer of Eucatex and took a series of medium and long-term measures focused on reducing costs, capitalizing the Company and redesigning its operational and commercial strategy.

Eucatex underwent a corporate and administrative reorganization that included the merger of its subsidiaries into the Company with the purpose of reducing operating expenses and expediting management decisions.

Some of the key cost-cutting initiatives implemented by the new management included:

  • Reducing from 26 to 8 the number of executive officers;
  • Reducing the number of employees from 4,357 to 2,541 by the end of 2004;
  • Divesting the Terpene and Activated Clay businesses, which were recording losses and lacked synergies with the other businesses of Eucatex, and divesting, in the last quarter of 2002, the Industrial Filters business;
  • Shuttering unprofitable production lines, such as: Fiberglass, Rock Wool, Fire Suppression Doors, Façades and Collor Walls;
  • Reducing variable production costs, redesigning product lines and launching new higher-value products;
  • Expanding the production capacity of higher-value products and modernizing production lines through significant investments in the Salto and Botucatu units.

Examples of these investments include:

  • Installing a modern painting line and finish foil line for panels to reduce costs and expand production capacity;
  • Modernizing and expanding production capacity at the doors and panels production unit;
  • Expanding production capacity at the MDP panel production unit, with its annual production capacity of MDP panels expanding from 200,000 m³ to approximately 430,000 m³;
  • Installing the new laminated flooring production line; and
  • Installing the T-HDF/MDF Unit.

By adopting these measures, the Company was able to generate significant improvements in its results that included: (i) Net Revenue growth of 231% or R$376 million in the period from 1995 to 2004; (ii) growth in Revenue per Employee from R$37,000 to R$212,000 in the period from 1995 to 2004; and (iii) significant improvement in its Operating Income (before restructuring expenses and net financial expenses), which went from an operating loss of R$25 million to operating income of R$36 million in the period from 1995 to 2004;

Year 1995 2000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2013 x 1995
Net Revenue (R$ thousand) 162,682 358,591 557,577 570,053 623,522 700,936 666,676 794,002 899,120 963,468 1,118.266 587%
Number of Employees 4,357 3,096 2,621 2,382 2,318 2,227 2,061 2,622 2,430 2,451 2,464 -43%
Net Revenue/Employee
37 116 213 239 269 315 323 349 1 370 393 454 1115%
Operating Income (loss) before Restructuring Expenses and Net Financial Expenses*
-25 45 26 27 71 137 229 2 119 2 132 2 126 ¹ 162 ¹ 548%

¹Amounts in accordance with IFRS

* In millions of Brazilian reais

Eucatex Group

Revenue, Operating Income and Productivity

Annualized Net Revenue per Employee

Net Operating Revenue | Operating Income (Loss) before Financial Income (Loss) | Net

Operating Revenue / Employee

The chart clearly shows the evolution in the Company’s Operating Income (before financial expenses and restructuring expenses).