Brazilian flair: a look back at this year’s IR winners

Some have heralded 2010 as a watershed for investor relations at Brazilian listed companies. CVM, the Brazilian securities commission, has ushered in a series of key measures to raise transparency at Brazilian companies as well as ease comparability with other listed companies around the world by pushing forward the adoption of IFRS as an accounting standard.

‘IR in Brazil becomes the focus of the information and the link to transparency,’ explains Ricardo Florence, the executive president of IBRI, the Brazilian IR institute. In his view, the changes will ultimately improve IR. ‘Companies may now be more focused on the information they give to the market,’ he sums up.

Before the disclosure of new rules, which came into effect at the beginning of this year, Brazilian companies had already faced another challenge: the adoption of IFRS. This is another important step for Brazilian market growth.

‘The adoption of IFRS will make Brazilian companies more accessible to the international market, allowing for greater comparability,’ comments Pedro Malan, former finance minister and current trustee of the International Accounting Standards Committee Foundation, which is linked to the International Accounting Standards Board, the body responsible for developing international accounting rules. Malan also notes that the global financial crisis has made the process of convergence with international rules even more urgent. ‘I am convinced this will be extremely beneficial to the capital markets,’ he says.

After dealing with many of the challenges of 2010, 300 members of the Brazilian IR community welcomed the opportunity to recognize their achievements at this year’s IR awards, held in São Paulo.

Itaú Unibanco
Itaú Unibanco gets firm commitment from senior management and puts the onus on creating shareholder value, two characteristics that probably helped steer it to victory in 2010. This year it won the grand prix for best IR in the large-cap category, and also came out on top in the award for best performance in IR by a CEO, rewarding Roberto Setubal.

The company has had a successful year: net income in the first half of 2010 was R$6.4 bn ($3.6 bn), with an average annualized return on equity of 24.2 percent. Today, Itaú Unibanco is among the 10 largest banks in the world in terms of market value.

After the challenge of finalizing the merger process between Itaú and Unibanco at the height of the crisis in 2008, the bank’s goal now is to start the process of internationalization. ‘In a few years Brazil will be the fifth-largest economy in the world behind only the US, China, Japan and Germany. It is quite natural that a country with this economic dimension develops international banks, and investor relations will be of vital importance to this process in the future,’ says Setubal.

Vale
This year the company again received the highest number of awards, coming top in three out of a possible 16 categories. It won for best annual report, best conference call and best IR website. ‘Our goal is always to be number one. We are constantly reviewing and seeking to improve our performance,’ says Roberto Castello Branco, the IR director at Vale.

The senior management doesn’t just have awards to celebrate, however. The company’s performance in the second quarter surprised the market positively and showed the strength of the multinational in the mining sector. ‘We are living the best moment in our history,’ said company president Roger Agnelli during a recent conference call with analysts.

The mining company announced a profit of R$6.6 bn in the second quarter, an increase of 344 percent over the same period last year and the largest in company history for the period April-June. ‘The result was excellent, driven by an improved market and our effort in production with reduced costs,’ summarizes Castello Branco.

Silvio Guerra, Localiza
As IRO of Localiza, the largest vehicle rental company in Latin America, Silvio Guerra does not hide his pride at being named best IR officer at a large-cap company. ‘The award demonstrates the proper positioning of Localiza in the market, despite the company’s relative newness,’ Guerra says.  Localiza has brought in some innovations in its short history as a public company: on the same day it went public, the IR department created a corporate governance checklist to reassure investors. It was also the first to disclose the quarterly balance 12 days after the close of the quarter, even though the law allows a 45-day delay. ‘This strategy is important because anticipating the release of the results attracts the attention of analysts,’ explains Guerra.

José Roberto Pacheco, OdontoPrev
OdontoPrev is the only publicly traded company in the world entirely devoted to dentistry. Its IRO José Roberto Pacheco was voted best IR officer at a small or mid-cap company, while the firm itself won the grand prix for best IR at a small or mid-cap company.  

Pacheco said the IR team takes corporate governance seriously, including the rights of minority shareholders. The entry of Bradesco as a shareholder in October 2009 consolidated OdontoPrev’s leadership as a provider of dental plans in Latin America, a position earned over 10 years. With the new control structure and development prospects, the company’s stock more than doubled in price and the market value reached R$3 bn, attracting new analysts and investors.

Natura
Natura won the gongs for best corporate sustainability and best corporate governance at this year’s awards. ‘It is the result of our commitment,’ says Helmut Bossert, the company’s IR manager. ‘Sustainability is composed of three things: economic and financial results, concern about environmental issues, and social issues. These are all part of the company’s DNA.’  

This is the fourth consecutive time Natura has received the award for sustainability. Bossert says the idea of environmental sustainability for Natura is not just about being more socially responsible, but also about taking the concept to its supply chain. ‘It is the result of a lot of hard work from IR,’ he explains. ‘We took action to increase transparency.’

Cemig and Minerva
To understand a company is not just to know the numbers, you also have to consider management and strategy. That’s why companies host analyst days, to give attendees the chance to look beyond the numbers.

Cemig showed its experience in this area by picking up the award for best meetings with the analyst community (large cap) for the second year in a row. But it isn’t just experience that counts: Minerva, which joined the public markets in 2007, has been rewarded in its pursuit of excellence with the award for best meetings with the analyst community (small and mid-cap).

GOL Linhas Aéreas and Drogasil
GOL and Drogasil were the winners of this year’s awards for most progress in IR in the large-cap and small or mid-cap categories, respectively. GOL has consciously attempted to be more proactive, a change in attitude that began in the third quarter of 2008, after the company restructured its shareholding. The firm became more active in the market, showing improved outcomes and lower costs, and enhanced its operational structure, leading to better exploited synergies. ‘IR became more proactive in disseminating information, press releases and invitations to conference calls. We also extended participation in roadshows,’ explains Rodrigo Alves, IRO of GOL.

Since listing in July 2007, Drogasil has achieved another goal: to be the only company in the pharmaceutical retail industry listed on the Brazilian market. This achievement complicates any comparison of the company’s performance with its peers and, consequently, further analysis by investors. ‘We are very happy with the award,’ says Roberto Listik, IRO of Drogasil.

Positivo Informática
Even in times of crisis, Positivo Informática never ceases to strengthen its relationship with shareholders and investors. One of the main tools for reaching investors is the website, which won the award for best IR website in the small or mid-cap category.

For Silvia Emanoele Sewaybricker, IR manager of Positivo, ‘the award reflects the direct view of the market, as the voting is done by analysts and investors.’ The company also aims to recognize IR best practice in Brazil and the work of businesses and professionals to communicate with the market.

‘In addition to information about the company itself, the website should contain data on the market, competition and the tax environment. In the section ‘Fundamentals and spreadsheets’, for example, investors have access to financial and operational data and quarterly historical information. This ongoing concern to maintain an information-rich site is one way to empower investors and analysts who want to make a valuation of the company.’

Petrobras
Petrobras won the award for best IR for individual investors, an accolade it has won five times previously. ‘The important thing is that those who vote in this category are the retail investors, so it shows that, increasingly, we are on track and keeping the focus on individuals,’ says IR manager for individual investors Paulo Campos.

His team not only serves individual shareholders, but also prospects for new investors. ‘We aim to meet shareholders’ demands,’ Campos says. The IR unit focused on individual investors is linked to manager-coordinator Alexandre Quintão and reports to the IR executive manager Theodore Helms, who is based in the company’s New York office, and to CFO and chief IRO Almir Barbassa.

The author, Ronnie Nogueira, is publisher of Revista RI, the Brazilian investor relations magazine.

About the research
Extensive independent research is at the foundation of the IR Magazine Brazil Awards. This year the research team canvassed more than 250 analysts and investors to uncover the standout IR professionals in Brazil. This research forms the basis for the awards, which are the best benchmark for IR in the region. Full details of the winners can be found here.