Votorantim Celulose e Papel SA (VCP)

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Claudio Freitas

www.zacks.com

Votorantim Celulose e Papel S.A. (VCP) is a leading paper company incorporated in the state of S o Paulo, Brazil. It is a part of Votorantim Group, controlled by the Ermirio de Morais family, which is one of the largest private industrial conglomerates in Brazil. The Votorantim Group has dealings in the cement industry, pulp, paper, mining, metallurgy, chemical, processed orange juice, and financial services, among others. The company also runs a paper distribution division, KSR, which possesses an extensive product line, including graphic papers and products. Votorantim manufactures an array of paper products, including coated and uncoated printing and writing paper, thermal and carbonless paper, and other specialty paper products. In addition, the company produces short fiber eucalyptus pulp, both for its own use and for sale to other paper companies. Votorantim had four manufacturing facilities (two integrated pulp and paper plants in Jacarei and Luiz Antonio and two specialty paper plants in Piracicaba and Mogi da Cruzes, all in the state of S o Paulo). During the first quarter 2007 the company made an asset swap with International Paper (IP). VCP transferred its Luiz Antonio Mill and its respective forestry to IP (integrated production of 355,000 tons per year), and received in turn a 1 million tons of pulp mill under construction in the city of Tres lagoas, Brazil, and its forestry base. The company has a diverse clientele, mostly concentrated in Brazil (which accounted for approximately 53% of revenue in 2007). Product-wise, pulp contributed approximately 49% of total revenues in 2007 and paper contributed with the balance. After the recent asset swap we expect pulp to reach around 70% of total sales in the near future, while paper would reach the balance.

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