102-10 | 102-14
A crisis like never before, impacting global health and with significant economic repercussions, made 2020 an absolutely atypical year, which imposed a series of challenges on companies and society around the world. Faced with this difficult situation, we demonstrated our strength and resilience, emerged from it strengthened, and reaffirmed our values.
Worldwide, governments adopted different strategies to contain the pandemic. Some of the more restrictive ones included border closures, strict lockdowns and curfews. In addition, the turbulent presidential election in the United States and the country’s continued trade dispute with China contributed to an estimated 3.5% global economic contraction in 2020, according to the International Monetary Fund (IMF).
In Brazil, the impact of the pandemic on economic activity was significant. The reduction of interest rates to a historic low, the economic stimulus through emergency aid granted by the Federal Government and the devaluation of the real transformed the macroeconomic context of our businesses.
At Votorantim, we were quick to react, focusing first on people, then on our financial health and the continuity of our operations, and finally on supporting society.
Our sense of community prevailed, attesting to an aspect that is very important to us: our concern for the social dimension, expressed both internally, through our support to our employees and their families, and externally, through our work in communities to mitigate the effects of the pandemic from the very beginning. Considering the budget reallocation from the Votorantim Institute, donations made directly by the companies and the shareholder family, and an additional donation of R$ 50 million made by Votorantim, the total amount allocated to initiatives to address the pandemic totaled approximately R$ 150 million, which enabled more than 400 initiatives in different areas. Also through the resource allocation announced by the Votorantim Institute, we and our companies contributed to the expansion of vaccine plants in Rio de Janeiro and São Paulo, which will give Brazil greater autonomy in terms of vaccine supply.
The importance of our prudent management, from a financial perspective—which prepares us for times of uncertainty—also became evident. Our companies managed to maintain operational stability despite new conditions resulting from the pandemic, and we achieved better consolidated results than originally estimated before the crisis. Compared to 2019, our net revenues increased 19%, totaling R$ 36.7 billion, and our adjusted EBITDA grew 35%, reaching R$ 6.9 billion. Our leverage (net debt/adjusted EBITDA) was 1.63x, a very comfortable level in the consolidated calculation.
Another strength was our portfolio diversification, which provides balance and enables us to face new situations. Despite a scenario of new risks and uncertainties, we continued to advance our long-term strategies, supporting the growth plans of our companies. In addition, we continued to prospect for new investments in other segments and regions, seeking diversification according to our strategy and in line with the Board’s investment mandate.
And it was not just about financial results: we learned more, had confidence and demonstrated adaptability to face adversity, and responded promptly to a new demand for faster decisions, through streamlined processes and increased employees autonomy.
We continued to evolve our governance, based on providing autonomy to our portfolio companies while also seeking, as a holding company, to influence cross-cutting themes, such as Environmental, Social and Governance (ESG) issues. Internally, we advanced our succession planning by continuing to follow our management approach and outlined strategy, with the transition of our executive leadership and the appointment of João H. Schmidt as CEO of Votorantim S.A. At the Board level, Marcos Lutz joined us as an independent board member.
Our entrepreneurial spirit, which has always characterized Votorantim, will be relevant in a still challenging future scenario marked by geopolitical tension and questions about commercial relations between countries. In Brazil, the scenario also includes some uncertainties, mainly related to fiscal issues. The absence of signs that reinforce fiscal responsibility could have negative effects on other macroeconomic variables, such as foreign exchange and interest rates, and jeopardize a sustainable growth resumption. However, we look to the future with optimism, while working in the present with prudence and responsibility.
In our century-old history, we have gone through many crises, and have always succeeded in overcoming them. This trajectory is guided by values that reflect our essence and which have been updated this year: Integrity, Collaboration and Courage are our drivers not only in our day-to-day activities, but also for our long-term vision, which motivates us to continue going further.
Eduardo Vassimon
Chairman of the Board of Directors, Votorantim S.A.
