April 2, 2019 / 4:04 PM / 18 days ago

Brazil's Votorantim eyes further diversification as leverage falls

SAO PAULO, April 2 (Reuters) - Votorantim SA, one of Brazil's biggest diversified industrial groups, is preparing to further diversify its portfolio after reaching its leverage ratio goal in 2018, Chief Executive Officer João Miranda said on Tuesday in an interview.

The group is seeking investments in areas such as infrastructure and commercial properties in Brazil, as well as cement or building materials makers in developed countries, he added.

Net income reached 2 billion reais last year, up 141 percent from 2017, helped by its cement unit and a weaker Brazilian currency. Revenues rose 19 percent.

Votorantim's net debt ended 2018 at 13.2 billion reais ($3.42 billion), up 7 percent from the previous year. Still, that is equivalent to 1.9 times adjusted earnings before interest, taxes, depreciation and amortization, down from 2.62 times EBITDA in 2017.

This ratio is likely to come down even further this year after Votorantim sold part of its stake in pulp maker Fibria to Suzano Papel e Celulose SA for roughly 8 billion reais in a deal concluded in January.

CFO Sergio Malacrida said 3.5 billion reais from the sale of Fibria has already been used this year to pay down debt owed by the holding company and its cement unit.

After tax payments and dividends to shareholders, the pulp maker sale added 2.5 billion reais to Votorantim's coffers.

"The group is not in a rush to invest, but it seeks assets to ensure a steady flow of dividends," Miranda said.

The diversification strategy will be led by Eduardo Vassimon, former chief executive of Itaú Unibanco's wholesale banking unit Banco Itaú BBA, who is slated to replace Raul Calfat as Votorantim's chairman, starting in May.

Votorantim previously expanded into power generation by forming a joint venture with Canada Pension Plan Investment Board (CPPIB) to invest in a series of wind energy projects in 2017. Last year, the consortium won a privatization auction to acquire Cesp.

The group's capital expenditures in 2019 are likely to reach 3.5 billion reais, compared to 2.6 billion reais last year, as Votorantim renews and expands some plants, such as its Nexa Resources SA unit's zinc project in the Brazilian state of Mato Grosso.

$1 = 3.8651 reais Reporting by Carolina Mandl; Editing by David Gregorio

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