Operational Strategy

Itaúsa's main objectives are to develop the Conglomerate's major strategies, make encompassing financial decisions that determine the macro-economic planning of the subsidiaries and generate business sustainability.

The companies' daily management and strategy definition are autonomous processes. However, they share an alignment with values and principles, ethics and quality to guarantee the generation of value for stakeholders when providing the best services in their respective areas of operation.

As part of its strategy to enter the international market, the opening of the Itaú Unibanco unit in Switzerland was authorized by the government of that country. The bank Itaú Suisse, located in the city of Zurich, serves customers seeking global investment opportunities. They benefit from the expertise and structure of the largest private bank in the Southern hemisphere and from partnerships with top local financial institutions.

Within this context of Itaúsa Conglomerate business globalization, the company signed a commercial and cooperation agreement with China UnionpayCo. Ltd. (CUP), which allows customers from the Chinese bank to withdrawal funds at the over 30,000 Itaú Unibanco ATM machines. With a presence in over 90 countries and with head office in Shangai, CUP has over 400 member institutions.

In November 2010, the company Duratex signed a proposal to acquire all of the shares of Elizabeth Louças Sanitárias Ltda., an operation concluded in February 2011. This industrial unit, located in João Pessoa (PB), will add 1.8 million parts per year to the company's annual capacity. The transaction involved payment of R$80 million, an investment that will help increase Deca's market share in Brazil's Northeastern region.

In the Deca Division, other important highlights include the investments for the expansion of the bathroom accessory production capacity in Cabo de Santo Agostinho, Pernambuco, and the reactivation and expansion of the Queimados unit in Rio de Janeiro, which will increase the division's capacity to 11.7 million parts per year, including the acquisition, or 63% above the current base.

The bathroom fixture segment is also receiving the benefits of investments in the expansion of its Jundiaí unit (SP) which, when completed, will achieve a capacity of 18.2 million parts per year, 15.2% above the current base. The total investments planned for these projects involve approximately R$400 million, to be made between 2010 and 2012.

In the wood and derivatives segment, Duratex acquired 8,671 hectares of lands with planted forests through a bidding process held in 2010. The lands are located in the State of São Paulo, which from a logistics and forest productivity perspective will allow for the supply of wood under highly favorable cost conditions for future expansions in the region. With this acquisition, the total area occupied by the Duratex forests includes 225,000 hectares, including 52% on company-owned lands and 48% on leased lands.

Itautec closed the year engaged in a full restructurization process. In 2010, it worked to intensely promote a new strategic positioning in all areas of the company. The work was focused on strengthening the company's capacity to compete up to speed with new market demands. There was also an internal transformation, including some changes to the organizational structure, as the company sought to increase its capacity to compete in all its areas: production, services and product sales.

With an impact on the Itautec product and service portfolio, as well as on company's management, it was able to strengthen its capacity to manage working capital, resulting in strong cash positioning.

In the automation segment, Itautec manufactured and installed 12,200 ATM machines and 4,100 self-service terminals, among other devices, for major financial institutions in different regions of the country. The new business opportunities resulted from the intensified search for new technologies related to the modernization of the bank branches, with a focus on enhanced convenience for customers and the improvement of operational processes.

At Elekeiroz, the corporate governance dynamic produced a new management strategy. With the restructurization of the Boards and Committees, and with the participation of independent professionals, the company revised the Strategic Plan for the next five years and also defined the priority investments for each one of its industrial sites. This plan is focused on the expected market growth, production cycles and required maintenance, competition with imported products and use of renewable raw materials aligned with sustainability guidelines and as an alternative to oil dependence.

Reflecting the control measures it has implemented for atmospheric emissions, Elekeiroz implemented a carbon dioxide recovery project at the Camaçari site (BA). The installed recovery capacity is 10,000 tons per year. The recovered carbon dioxide (CO2) is sold to a company that produces industrial gases, which receives it via a pipeline system and incorporates it into its matrix of sellable products. Before, this gas was released into the atmosphere.

Elekeiroz is currently expanding its Unsaturated Polyester Resin and 2-Ethylhexanoic Acid units, with both projects scheduled for conclusion in 2011, increasing the company's offer to the consumer market.

Also planned for 2011 is the final revision of the economic feasibility studies for acrylic acid, acrylates and superabsorbent polymers. After this final revision, the development's budget will be examined one more time and approved by the company and Itaúsa Boards of Directors.