UPDATE 2-Votorantim to keep investment stable this year, CEO says
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By Guillermo Parra-Bernal and Alberto Alerigi Jr
SAO PAULO, March 3 (Reuters) - Votorantim Industrial SA plans to invest about the same amount this year as it did in 2014, as Brazil's largest diversified industrial conglomerate seeks to tap opportunities in the cement and zinc segments, Chief Executive Officer João Miranda said on Tuesday.
Capital spending at the São Paulo-based group could stay around the 2.5 billion reais ($860 million) invested in 2014, Miranda said in an interview. About one-quarter of that amount could go to increasing cement capacity in some Brazilian regions and expanding the zinc unit in Peru and Brazil, he added.
In recent years, one in every four reais that Votorantim invested went to expanding its five main businesses. Fast growth in demand for cement in Brazil's northeastern and mid-western regions, as well as zinc output at Cia Minera Milpo SA, its Peru-based subsidiary, should be the main targets of Votorantim Industrial's new investment, he said.
Stable investment at Votorantim is helping to reduce its leverage, even as a currency slump and rising borrowing costs made debt servicing more expensive for Brazilian companies last year. Its debt fell to 2.3 times earnings before interest, taxes, depreciation and amortization (EBITDA) last year, from 3.1 times at the end of 2013.
"This level of investment helps us keep strict capital discipline," Miranda said. "It allows us to continue pursuing our goal of reducing our leverage and becoming more cost-competitive simultaneously."
Profit at Votorantim Industrial, controlled by Brazil's Ermirio de Moraes family, rose sevenfold to 1.68 billion reais last year. Adjusted EBITDA jumped 32 percent, helping dilute a 2.4 percent increase in gross debt.
A comfortable level for Votorantim Industrial's debt could be about two times EBITDA, Miranda said, adding that controlling shareholders "would like to see leverage falling below that." Continuación...