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Good morning, everyone, and thank you for holding. Welcome to Unipar's Fourth Quarter 2020 Results Conference Call. With us here today -- today, we have Mauricio Russomanno, CEO; and Christian Schnitzlein, CFO and CIRO. This event is being recorded. [Operator Instructions] This event is also being broadcasted live via webcast through MZiQ platform. It may be accessed at Unipar's website at www.ri.unipar.com, where the presentation is also available. Participants may view the slides in any order they wish. The replay of this event will be available shortly after its conclusion. [Operator Instructions] They will be answered throughout the Q&A session or by the IR team after the conference has finished. Before proceeding, let me mention that forward statements -- forward-looking statements are based on the beliefs and assumptions of Unipar management and on information currently available to the company. They involve risks and uncertainties because they relate to future events and therefore, depend on circumstances that may or may not occur. Investors and analysts should understand that conditions related to macroeconomic conditions, industry and other factors could also cause results to differ materially from those expressed in such forward-looking statements. And now I will then turn the conference over to Mr. Mauricio Russomanno, CEO of the company. He will start this presentation. Please, Mr. Mauricio, you may proceed.
Thank you, operator. Good afternoon, everyone. We cannot talk about 2020 without talking about COVID-19. It's a pandemic that we have not yet won, but we have been acting responsibly to protect our teams, to support society and to keep the continuity of our operations, which produce essential items for people's daily lives and also to fight this virus. I'd like to highlight that we more than doubled the net income of our company when compared to 2019. We reached BRL 370 million. EBITDA was around BRL 1 billion. In the PVC market, we had a sudden change in the demand in the month of March of 2020, mainly due to the stopping of civil construction works. And after that, there was a recovery and a very strong base starting in May -- sorry, in Q3. In the chlorine products market, demand was heated throughout the year, most of all in the production segments of essential items to fight COVID-19. On the other hand, the world soda market had an excess of supply throughout most of the year, and this was caused by an impact in the reduction of industrial activity in some segments. Favorable results in 2020 were reached due to the implementation of a new corporate strategy at Unipar and also due to favorable current situations such as a strong demand for PVC in the second quarter and the depreciation of the real, the Brazilian real. I'd like to talk also about the new Unipar strategy, whose goal is to continue our sustainable growth and also to preserve our commitment to develop and keep close to our collaborators, to our communities, to our business partners and to our responsibility towards the environment, health and safety. This growth strategy was translated and implemented into 4 major pillars for Unipar: people, operational excellence, focus on the client's business and sustainability. In each one of these pillars, there was a tactical definition consistent to the company's new moment and to our future ambitions. We managed to be agile and assertive throughout months that were critical during the pandemic. In the people pillar, we implemented a new management model and also an entrepreneur mindset. They were decisive to create a sense of urgency that is necessary and to immediately mobilize our company to go through the most challenging months of 2020. We defined 3 priorities to manage this crisis at Unipar: one is to care for our teams and their family members; two, to support society and communities around our plants; and three, ensuring the operational continuity of our plants because Unipar is committed to keep our products flowing into the market. Although this period has been very challenging, we decided to increase investments in professional development, with the goal of preparing our teams for the future. We created programs such as Equilibre, or balance, to support the physical and mental health of our collaborators and their family members. And we also established an ongoing and open dialogue with them, building proximity and trust amongst all of us. We also decided not to fire anyone throughout the most critical months of the pandemic, and we moved more than 200 people around the company in 2020. The result was a positive environment and a reliable environment so everyone could have a good performance and give their best in a time of uncertainty. In operational excellence, we created 2 years ago a program to improve the reliability of our plants. With this program, we've increased the investments and resources dedicated to preventive maintenance and to the renewal of assets. This was decisive for Unipar to react to the few changes in demand that were quite steep throughout 2020, and it allowed us to reach records of production in all our units with a safety level superior to previous years. At no moment at all throughout 2020 did we have to interrupt our activities. Another important object in this pillar is to increase efficiency and competitiveness of our operations. We also want to increase variable costs, reduce losses throughout the process and find access to more competitive sources of raw material. We are competing in international markets with countries that have a cost structure and access to raw material that is more cost effectively, and I'm talking here about power, electric power and ethylene. We signed a joint venture with AES to build a wind park in the state of Bahia in Brazil, and this is the first step in that direction, an important one because it will ensure us that we will have access to clean energies at a lower cost for our company. And the focus in the business -- in the customer's business pillar, we've organized to support and meet different profiles and customer needs. We supported them by funding receivables. We managed inventory. There was a supply of essential products to keep the continuity of the operations in this industry. Therefore, our [indiscernible] base of customers, but we've also acquired new customers throughout last year. These and other initiatives are contributing for Unipar to be more and more sustainable. We did several initiatives also to preserve the financial health of our company. We have low debts of debt or indebtedness, high liquidity, and we had strict cost management. We also work in collaboration with our suppliers, including the financial aspect because we want to keep and adjust the supply of products, ensuring the continuity of operations. As a company, we believe that we also play a role and a responsibility with society, and that's why we assess our results and our success beyond financial returns. We [indiscernible] communities around our operations in order to help in their development and to give back on what they give us. We supported the communities with donations of products, of staples, of hygiene products -- basic hygiene products, face shields and ventilators, both in Brazil and Argentina, and that happened throughout the most critical time of the pandemic. We've also invested in social projects that caused direct impact on over 10,000 people. That was on the second semester. I would like to finalize by thanking all of our partners, our customers, shareholders, our suppliers and the community as a whole and, first and foremost, the Unipar team, who acted in a very responsible and committed way to our company and to society. In 2021, our commitment is renewed to go on with this journey. I now give the floor to Christian Schnitzlein so that he can introduce the results.
Good afternoon, everyone. I hope you're all well and healthy. Thank you, Mauricio. If you were following on the presentation, now we are on Slide 5. We have the highlights. On slides 6 and 7, we have financial results. Slide 6, it's against the previous quarter, so Q4 and Q3, and Slide 7 year-to-date, so that's 2020 against 2019. The net revenue of Q4 had a slow decrease of 2% when compared to Q3 in 2020. That was caused by a lower price of soda in international market. In the year-to-date numbers, net revenue was 27% above 2019. This difference is due to large volumes of sales and better international prices of PVC. Our GOGS, or GOGS, in Q4 was of BRL 650 million -- 60 -- sorry, 15% below Q3. Throughout the year, GOGS added up to BRL 2.5 billion. Our consolidated EBITDA for 2020 was up BRL 946 million, 63% above 2019, and this is a reflection of our increased revenue and margins. The net income of Unipar was BRL 370 million in 2020. And on Slide 8, you see the company debt levels as well as our cash generation. In late 2020, we had a negative bank debt, with a liquid cash position, a net cash position of BRL 400 million. We have a debt from acquiring Indupa, and with that, our total net debt is of approximately BRL 313 million. Our ratio, net debt to EBITDA is 0.33x. Good results and strong cash generation in 2020 brought a deleveraging that you can see here. We reinforce here the commitment of this company with this ongoing search for good cash allocation and to optimize our capital structure. This is an ongoing battle for us. I'd like to let you know that during our March 17 Board meeting, the proposal to distribute BRL 15.3 million in dividends was approved, added up to an anticipation of BRL 72 million. This adds up to BRL 87 million in dividends, and that follows on the company's dividend distribution policy, that means 25% of the net income of the controlling company. In that same Board meeting, the proposal to approve our reserves was approved through a new distribution of dividends in the amount of BRL 96.4 million. Therefore, after this approval by the assembly, the amount of dividends to be distributed will be of BRL 111 million. I would now like to open for a Q&A session, please. I'd like to remind you that if we cannot answer your questions through our webcast right now, or RI team will contact you afterwards. Please, operator, you can proceed.
[Operator Instructions] If there are no questions, then I will pass the floor now to Mr. Christian. He will answer questions received through the webcast and some questions that were sent previously by e-mail through -- for the company. Christian, you may proceed.
So I'm going to read some questions that we received, and I'm going to reply to them with Mauricio. The first came from Daniela Saturno from KPR Investments. It's actually a twofold question. Do you see a scenario of continuity of PVC prices above $1,000 in 2021, 2022? Second part, in Q4 [ 2020 ], with a 35% EBITDA margin, do you believe you will preserve this margin in the next quarters? Mauricio, would you like to take that?
Thank you for your question. Regarding PVC prices above $1,000 in '21, '22, we cannot foresee what will happen in the future regarding PVC prices. Last year, we can comment on. There were some situations that helped because PVC prices were above $1,000. Some plants in the U.S. and Europe stopped. There was a heated demand in civil construction sector. So the future price of PVC will depend on market movements -- world market movements and on what happens to these plants. Our prices are a global reference or actually, we take the global reference. And when we look at the future, we want to preserve this 35% margin, but as for prices, would depend on variations. However -- and we at Unipar, we are doing our part. As I mentioned before, we have one of our pillars, which is operational excellence, and within this pillar, we are always looking at ways to improve our competitiveness and decrease costs. So we have a series of programs to improve our production processes, our ratios to reduce costs, looking for other raw material that might be more competitive. And the goal of that is to preserve our profitability at appropriate levels and positive levels, I would say.
Next question comes from [ Guilhermida Fonseca ] -- or [ Guilherme Fonseca ]. Congratulations on your results. We know that Unipar is aware of market movements. Will there be any M&As in 2021? Mauricio, please?
Thank you for your question. Unipar is always looking for business opportunities for the companies for either acquisitions or other internal models to expand different business lines. Regarding on M&A movement in 2021, well, it all depends on all these projects we've studied. And throughout the M&A process, this should make sense -- it would have to make sense for the company should we have an M&A process. Of course, we are always looking at market movements. It's not just that it's 2021, 2022. However, it always depends on it being a good business, a good deal for the company that will bring us the expected returns for our companies and our company and our shareholders.
Thank you, Mauricio. We have a question now from [ Marconi ]. Congratulations on your results. Is there a possibility to give more details of your expenses and the balance sheet? And is there a perspective of share movements in the short term?
Well, [ Marconi ], this year, we held an event earlier this year. We granted some shares. That was a plan that we launched earlier this year, and this has an impact in expenses. It's a nonrecurring event, of course. It took place earlier this year, and it probably will not happen again in the next few months, although the plan is still valid, and that is the main impact in the increase in expenses -- operational expenses. There is movement also of employees. 200 people moved around the company, aligned to the strategy that Mauricio mentioned. We had some people who changed departments or took new positions, and that had also some impact, although smaller. Consultancy impact and law firms, which we pay in dollars, and the dollar is more expensive now in Brazil. As for [ share ], [Audio Gap] don't have any perspectives on that. We have a question from [ Cayo Mateos ]. Will there be -- will you stop production in the next few months? Could that have an impact on results? Mauricio, would you like to comment?
I can do that, yes. Every year, we have some program stoppings or stoppages in the company. This is normal for a chemical company -- a chemical products company and to keep our factory ready to operate. So we do have program stoppages, preventive maintenance stoppages, I would say. And there are some [Audio Gap] due to legislatory issues. We have one that will start next week, and that will be motivated by a stoppage in one of our main raw material providers or suppliers. So we will have a stop until late April. This was -- this is already contemplated, okay, in our preparation for the next few months when it comes to inventory and how the company will operate in an ongoing manner. So these are regular expected stoppages in our different plants or in our different sites. That's what we usually have throughout the year.
Thank you, Mauricio. We have another question from [ Rafael Hibero ]. Congratulations on the excellent results. I'd like to know if there is an expectation to switch this trend in increased managerial expenses. Well, [ Rafael ], as I mentioned in another response -- and thank you for your question. We are constantly searching to have the lowest possible costs. We had some costs earlier this year that are nonrecurring. In January this year, again, we had this movement that I mentioned that put pressure in our expenses, but we are constantly working to decrease our expenses, digitalizing our business and increasing our efficiency. We have another question from [ Jayi ]. What is the price perspective for PVC for the rest of this year?
Well, as I mentioned before, this is not something that we are expecting or that -- or actually, this is not something we are capable of foreseeing or predicting. It depends on the economic activity around the world and in the plants that are or are not operating, their capacity to deliver on the product. So it's really hard to forecast what's going to happen with PVC prices in the next few years, and most of all, until the end of this year. But we do have to be prepared to the price variations, and that's why we take initiatives in our company, to have our company always healthy and generating the results we want to achieve.
Thank you, Mauricio. Question from [ Eloisa Cruz ]. What would you need to operate at 90% of capacity?
Thank you for your question. Well, what would we need to operate at 90% of our capacity? Actually, the operation of our plants depends on some factors. Of course, market situation, demand levels, also these maintenances and programmed stoppages and also unprogrammed stoppages. So it's actually a combination of these factors, of these events. So to keep on increasing our market share, having more -- if demand in Brazil and Argentina keeps strong, that will help. And also, we depend on aligning these stoppages. Once again, we do some preventive maintenance. They are programmed to keep our machines running at their optimum capacity, respecting cost objectives, of course, and also looking at unprogrammed maintenances due to external events, maybe an energy issue or any other external factor that might cause an impact in part of -- all of -- one of our plants.
Thank you, Mauricio. Now we have a question from [ Leandro Cantaro Alves ] from the [ AA Company ]. At what stage is the program of rebuying shares? Well, our program to rebuy -- buyback of shares [Audio Gap] [indiscernible] potential to still keep on going, and we will allocate this whenever we believe this type of capital allocation makes sense. We will then use this tool to do good capital allocation. So yes, this is a valid and ongoing program. We have another question from [ Rafael Hibero ]. Could you give us a brief preview on the demand for PVC in the first semester or quarter of 2021? [ Mauricio, can you just comment ] on that?
Thank you, Christian. Yes, we cannot give a preview on that. But what I can say is that the main consumer of PVC is the civil construction industry in Brazil and in the world as a whole. So we are constantly following up on the performance of civil construction around the world. And you can follow up on that because it gives us a hint on what might happen to PVC in different markets around the world in the next few months. Let's bear in mind that world PVC prices are usually set by the U.S. and Asia, and we use that as a reference in our company.
Thank you, Mauricio. We have a question from [ Rogerio ]. He's an individual investor. Is there potential to [ bona fide ] shares in 2021? Well, [ Rogerio ], we do have currently a movement to adjust our reserves or inventory of our equity, but we -- the company is focusing on distributing dividends. So that is the moment when we could have this initiative, but the company decided to distribute dividends for adjustment purposes. So right now, we do not have any plans on that regard. We have a question from [ Joel Carlos ] from [ Negotiary Experts ]. Congratulations on your results. What are the avenues of growth for the next 3 years? Is there any plan to expand your PVC capacity? Mauricio, please?
Thank you for your question. We do have some relevant areas. One of these avenues is the approval by our Congress of the framework for sanitation services that was -- it was actually approved late last year and the goal that framework -- legal framework is to provide universal wastewater treatment for 90% of the Brazilian population and also sewage treatment. In the next 10 years, this will certainly be one of the growth and expansion drivers because PVC can be used to create the infrastructure that will be necessary. And after the infrastructure is there, our products are used for wastewater treatment as well our chemical products. So that is, of course, an area we're following on, and we want to be well positioned to take advantage of these opportunities. Other avenues of growth are the expansion of our company to other geographies, either within Brazil or Argentina or Latin America in the soda, chlorine industries or PVC. And another relevant aspect is the perspective of growth in Brazil and Argentina when we talk about per capita consumption of goods we provide raw materials for. That could be soda, chlorine or PVC. However, we look not just as -- at top line growth areas, but also ways to generate value, looking at the whole chain. I was talking recently about our joint venture with AES Energy to ensure wind energy for the next few years, and that's clean energy at more competitive costs than the ones we have right now. This also generates value. So we are looking at other projects, analyzing our supply chain either when it comes to raw material or to logistics, and value generation might come from those sides as well for our company.
Thank you, [ Mauricio ]. We have 3 questions about the gas legislation. I'm going to try to put them into one. [ Lucas Muñoz ], [ Guilherme Fonseca ] and [ Evaldo Bautista ], they ask, what is the benefit of the gas legislation for Unipar? What is the impact in our margins? And how does the company see this legal framework for gas services?
Thank you, [ Lucas ] and [ Guilherme ] and [ Julio ], was that? Yes. [ Evaldo ], my apologies. [ Evaldo ], [ Guilherme ] and [ Lucas ], the gas legislation is a very important framework for our industry. Now the [ perspective ] [Audio Gap] to acquire gas at a more competitive [Audio Gap] in other regions of the world, mostly the U.S., where we compete, they have access to this raw material and to gas, most of all, due to shale gas at very low costs. That has an impact in electric power and ethylene costs. So it's a positive perspective or outlook for us. Some things help us actually. One of them is that we will have a free market for gas, and that will allow for competition between suppliers, just like we have with power -- electric power right now. And that, of course, can reduce the cost of gas. And also, that can help us by creating a possibility to pursue new products in which we rely on gas as an energy source. So that can indeed provide new investment options or new areas for our company.
Thank you, Mauricio. [ Julius Sez Arquello ] has a question. Now that leveraging is slow, is there a perspective to work with debentures to take advantage of low interest rates? Or do you want to keep your net cash? Okay. I can answer this one. Our company tries to allocate capital in the best possible way. We know that we are a capital-intense industry, and we tend to remain leveraged to use opportunities and internal projects or growth and maybe new fronts we can grow as well. So we always tend to have low cash. We look at the possibilities. We look at market windows, and we analyze all these areas to make our decisions. That's not necessarily deleveraging levels we wish to preserve. If we have better opportunities, we will allocate our cash, and we will allocate according to opportunities in our strategic plan. We have another question from [ Paulo ] from [ Zonta Quent ]. Congratulations on your results. What is the main tangible advantage for your company? And what is in your road map to increase disadvantage in a sector that might be seen as commodity? Mauricio, please?
Well, our main advantage -- we have a couple, I would say. A couple of important advantages. We are -- our plants are located in excellent places. So we have plants in Cubatão and Santo André in the state of São Paulo, the Southeastern region, which is the largest Brazilian market. And with that, Unipar can access these markets in a quick manner. It delivers convenience to many customers in our country that are located around this region. And we also have freight, which is quite -- freight costs, which is quite important. We have to take the -- our products to the areas. We act in a competitive, convenient way, and we cannot fail because most of our customers are industrial companies such as ours, which depend on the reliability of the supply of raw material by their partners. And if there is any problem with supply, that might bring important consequences, of course. Another advantage that we have right now is our financial position. We have cash liquidity. And on the one hand, during the pandemic -- and of course, we expect this pandemic to end soon, but we must be [indiscernible] ground, if this goes on for more time. And we have to take advantage of projects that might appear throughout the next few months. Another important topic, I would say, in the markets we're in is that Unipar is a company that has been in Brazil and in Argentina for many years. We have a track record and a long-term relationship to our customers and partners in this region. And that was really important during the pandemic because supply chains, in general terms, suffered alterations, of course, due to all the uncertainties from the customer side and from the supply side. So we use that to our benefit and to the [ benefit of ] our whole supply chain. The relationship that we used to come close to this chain, we took information from the customers and took this information to our suppliers, trying to balance needs, contracts for raw material and their supply. So these are, I would say, some of the advantages that we have. We are well positioned in these census to have a competitive edge.
Thank you, Mauricio. So there are no further questions. We have some questions that are actually sort of a repetition of those that we have answered, but we can answer them individually, okay?
So this concludes today's question-and-answer session. I would like to invite Mr. Mauricio to proceed with his closing remarks. Please go ahead, Mr. Mauricio.
Thank you, operator. I'd like to thank all the colleagues that prepared this call. And most of all, I would like to thank our partners, our shareholders, our customers, suppliers, our community for their ongoing support throughout 2020, which was a challenging year for all of us. It was indeed a difficult year, a very uncertain year. We did not know what the consequences of the pandemic would be in people's lives. And I firmly believe that we could not have achieved our financial results and also, we could not have achieved the support we gave to our collaborators, their families and our community without counting on everyone's help. Regarding financial results, I would like once again to thank the whole Unipar team. Ever since the beginning of the pandemic and when we decided to treat the pandemic as a crisis, we defined our goals. The team mobilized and engaged, not just to give operational continuity to the company, but we also moved on, working with our discipline and the earnestness we need to interpret all of our strategies and projects. Part of the company remained in the plants, in the frontline, working presentially and in presence, facing the pandemic and producing goods that are essential for all of us and also several products that are used to fight COVID. We also had some back-office people who managed to stay at home in a home-office system. And they were putting a lot of effort from their homes to keep the company connected and working with the same sense of urgence to meet the needs of our clients, of our partners and of our community. So thank you all so much. And let's move on and keep on fighting so that we keep the good path in 2021, looking at financial results and also remaining this reliable partner that we have been throughout the pandemic. We want to support everyone so that we can minimize the consequences of this pandemic, first in the number of infections and to decrease the number of severe diseases. That's the main way to help. Thank you very much, and see you next time.
This concludes the Unipar's conference call for today. Thank you very much for your participation. Have a nice day. [Statements in English on this transcript were spoken by an interpreter present on the live call.]