Elekeiroz S.A.

As the second generation of the petrochemical chain, Elekeiroz products are designed for the industry that serves the final consumer in the civil construction, automotive, footwear and clothing, food, agro-industrial and visual communication and advertising segments, in addition to a range of other chemical industries. The domestic market is the main destination for the products and accounted for 88% of the issued volume in 2010. The organic products accounted for 53% of all sales, while the inorganic and retail products accounted for the remaining 47%.

In 2010, there was an accentuation of the Brazilian economic recovery that began at the end of 2009. The temporary tax reduction was important for increasing the domestic demand for high added value goods, whose manufacturing process involves a high participation of chemical products.

The national segment that produces intermediary chemicals for industrial use, in which Elekeiroz operates, accumulated a 7% growth compared to that of 2009 in terms of production and sales in the domestic market. The average price index practiced for this segment grew 11.4% during the year, but was still lower than that of 2008. The poor growth of the development economies in contrast to that of emerging countries such as Brazil was the main factor responsible for the slow recovery of the practiced margins.

The national apparent consumption for the segment accumulated a 13% increase in 2010. Imports grew 28%, while exports reduced 10%.

In 2010, the Gross Revenue reached R$1.0 million and the Net Revenue R$850.5 million, representing 47% and 49% growth, compared to 2009, respectively. The positive results achieved indicated a net profit of R$45.2 million, Ebitda of R$87.7 million, Ebitda Margin of 10.3% and Return on Average Net Equity (ROE) of 10.1% per year.

The exports, which were made to 35 countries, involved a total of R$162.4 million, with an impressive 86% growth compared to 2009. Of this total, the Asian continent, primarily China, accounted for 44%, South America, 30%, North America, 18%, and the remaining 8% were distributed between Europe and certain countries in Africa and the Middle East. It is important to point out the opening of new markets such as the United Arab Emirates, Australia, Morocco and Tunisia. As a result, the relationship between exports and the net revenue increased from 15% in 2009 to 19% in the accumulated result for 2010.

There was also a significant improvement in the indebtedness profile with financial institutions, which allowed the company to enter into a comfortable situation at the end of December 2010, when this indebtedness was reduced to R$44.2 million, equal to only 50% of the Ebitda and 9% of the Net Equity. The cash equivalents, at R$88.3 million, exceeded the indebtedness twice-fold.

"There is always an exchange of knowledge among the companies of the Itaúsa Conglomerate, even when these operate in different markets. The three companies from the industrial segment have a joint set of procedures, where that which applies at a certain company may also be practiced here, and vice-versa. With a history dating back 116 years, Elekeiroz is a modern and competitive company with a high potential for development."

Reinaldo Rubbi

CEO of Elekeiroz