Message from the Entrepreneurial Leader
In the last crop year, we set a new sugarcane crushing volume record of 29.3 million tons, 23% higher than in the previous crop year, with this performance demonstrating the operating potential and excellence of Odebrecht Agroindustrial.
Despite the country's challenging scenario, particularly for companies in the sugar and ethanol industry, we surpassed nearly all of the targets set for the period and demonstrated the high level of maturity of our teams and of our operations in Brazil's new agricultural frontier.
Many factors led us to deliver this level of performance, which include better planning for the off-season, enhanced operational stability and the capacity to constantly identify opportunities for improvement and to better execute the improvement plans. One of the main drivers of this performance, however, was the attitude and commitment of our Team Members in pursuing innovation and capturing efficiency gains in their day-to-day activities.
One example of the initiatives that proved successful is the Monthly Productivity Program, which rewards Team Members in the agricultural operations when they surpass their targets. In the past year, the program helped to significantly reduce absenteeism and, most importantly, strengthened the sense of belonging among Team Members, leading them to act as owners of the Business and as protagonists in their career advancement. Another highlight was the significant advances in our health and safety indicators and our relentless pursuit of a zero-accident workplace.
Over the course of practically one decade, we have constantly learned how to operate more and more efficiently and with less waste. Consequently, we have reduced costs while making significant investments in expanding our units. Last year we concluded the expansion project at the Eldorado Unit, whose sugarcane crushing capacity increased to 3.5 million tons.
In our agriculture areas, we maintained our strong focus on the qualified expansion of our sugarcane planted area, which is supported by our effective identification of the areas that offer the highest potential in terms of productivity. Today, some 52% of our areas are planted with 18-month sugarcane and we have continuously reduced the repair times of our machinery and equipment. We also expanded the Agricultural Suppliers Program by attracting to the country’s new agricultural frontiers large companies, which now supply us with growing sugarcane volumes. Consequently, we fostered job growth in these regions, improved the efficiency of our agricultural operations and reduced our production risks and costs.
In addition to the technical and operational improvements, we have been making consistent progress in strengthening our governance and management policies and practices. Our target for 2016 is to join PróÉtica, an initiative of the Federal Controller General (CGU) to recognize companies with firm commitments to business integrity and combating corruption, and to become a signatory to the UN Global Compact, whose ten principles support companies’ engagement in actions to respect human rights, uphold good labor practices, protect the environment and combat corruption.
Upholding these commitments represents the natural evolution of our Company, which has long-standing investments in programs such as Social Energy and Believe Jr., which are important tools for promoting vocational training for young professionals and social development in local Communities. We also launched last year our Sustainability Guidelines, which attest to the Company's maturation in managing this topic.
On the financial front, in the first half of this year, we concluded the process to strengthen our capital structure, which includes capital injections of around R$6 billion and lengthening almost all our debt. Despite the severe economic crisis faced by the country and the sugar and ethanol industry, this investment reflects the Odebrecht Group’s confidence in our potential and in the importance of ethanol as a source of clean and renewable energy for Brazil.
For the 2016/2017 crop year, which began in April this year, our prospects are good, given the recovery in international sugar prices and in ethanol’s competitiveness in Brazil, following the elimination of price controls and the adoption of an energy policy that promotes biofuels through actions such as reinstating the CIDE tax levied on gasoline. In the long term, biofuels will make important contributions to reducing greenhouse gas emissions and to meeting the target of containing the increase in global temperature by up to 2°C, as established in the Paris Agreement signed at COP-21.
To take advantage of these opportunities and reach our crushing volume target of 31 million tons in the new crop year, we must remain focused on delivering better operating and financial results, as well as better safety and quality indicators.
I want to thank each and every one of our Team Members, who successfully overcome the challenges and contribute year after year to producing clean and renewable energy for a better future.
Luiz de Mendonça – Entrepreneurial Leader