Category: Doing Business

ThyssenKrupp writes off US$ 4bn over Steel Americas operation in Brazil

The plant in Sepetiba Bay, Brazil: It should produce more cheaply than Germany - it produced more expensive

The plant in Sepetiba Bay, Brazil: It should produce more cheaply than Germany – it produced more expensive

Mismanagement and corruption

The crisis of ThyssenKrupp has much to do with the new steel mill in Sepetiba, Brazil: It should produce steel slabs at a significant lower cost compared to the slabs produced in Germany. In fact, the slab was $ 170 more expensive.

The loss was caused primarily by a 3.6 billion euro write down on its steel mills in the United States and Brazil, which Thyssen is trying to sell. The book value of the mills, bundled in the Steel Americas business, is now 3.9 billion euros, well below the 12 billion euros Thyssen invested in the unit over the years. The division had been meant to give ThyssenKrupp a foothold in the Americas, but costs for the mills ran far over budget while demand for the steel they made subsided.

Thyssen said management at the time based its decisions on overly optimistic projections and took too long to tell the supervisory board of problems with the project, which eventually forced Hiesinger’s predecessor Ekkehard Schulz to step down.

The story of a gigantic bad investment.

It should have been the really big coup. What came out is a disaster, likely to shake this company to its foundations. The titan ThyssenKrupp staggers. The largest German steel and technology company in Brazil literally built the steel mill in the slumps  in the bay of Sepetiba. The construction of the steel plant, which would produce steel slabs far cheaper than German plants, without all kinds of cumbersome environmental regulations, fell into a multi-billion dollar disaster. On top of that, fishermen and residents complain against the steel  work due to massive environmental violations.

“At first we had no luck, then came bad luck,” humorously said by Gerhard Cromme, Chairman of the Supervisory Board ThyssenKrupp, almost a year ago to appease the shareholders at the Annual General Meeting in Bochum’s Ruhr Congress. Already there was clear how much of this entrepreneurial venture would come to stand the Group: Instead of the originally planned 1.9 billion euros it cost – until then – a quadruple it.

Not tricked, only optimistic

Cromme, who had recently commissioned a legal investigation into the case, tried to defend the executive management and Board of ThyssenKrupp. They had cheated nor deceived, they had reported only too optimistic.

The shareholders are now more than worried, especially since ThyssenKrupp on Wednesday night fired half board. “Shows this radical solution us how serious the situation is,” says Thomas Hecht Fischer, CEO of the managing director of the German association for securities (DSW), and: “We must now assume that it is about a completely different dimension.

Market value well below book value

The book value of the plants in Brazil and in the U.S. is seven billion euros, but the market value is rather under four billion euros. Therefore ThyssenKrupp has written down around €3 billion. Furthermore, ThyssenKrupp is accused of bribery and violating antitrust regulations. . Now even the has to be feared that the full German steel industry stands on trial.

70 kilometers from Rio de Janeiro can be seen what ThyssenKrupp did stumble: the blast furnaces, the coke plant, the power plant, which is situated between the sea and the favelas of Rio de Janeiro steel work. In September 2006, as Ekkehard Schulz, the former chief executive of Thyssen-Krupp, the first sod was done here, the future seemed glorious. And the numbers that make up the consulting firm McKinsey worked in their feasibility study promised great things.

Cheap energy, low costs labour and “easy” environmental regulations

 

With cheaper energy, lower wages, fewer environmental regulations, each Brazilian steel slab should be $ 55 cheaper per ton of steel produced than in Germany. Million tons of steel were to be transported by ship, refined in Germany or in the United States. A supposedly lucrative large investment.

The reality however was different. The steel mill site turned out to be so muddy and slumpy that an extra million dollar investment had to be made to make sure the mill was not sinking in the slumps. But above all, it was decided in the Thyssen-Krupp’s boardroom, that a Chinese company was given the order to commission the work, rather than the fully owned German subsidiary Uhde.  A decision that was to proved to be fatal. From year to year became the mill became more expensive to build. Up to today the plant due still does not run at full capacity due to technical problems. The steel slab is already $ 170 more expensive than from German production.

The coking plant: build, demolished, rebuild

And the coking plant, which was also built by the Chinese, has been demolished. Uhde, which was rejected at the first time because of their higher priced  is now building at the same place a new one.Of course this will not be free of charge.

Additionally in 2007, the protests of fishermen came for the pollution of their fish-rich coast. And as soon as the plant was turned into operation in June 2010, it was raining polluted dust all over the place. Residents protested and complained. The dust was found to be adversely affected by toxic heavy metals. The prosecutor of Rio de Janeiro rose soon after charges of massive environmental violations.

“Mr. Cromme, how often were you there?”

Despite all the delays, construction, technical and polluting defects, no one at the board of ThyssenKrupp seems to have recognized the problems and take proper measures. “Mr. Cromme how often were you even there?” Said one shareholder at the shareholders meeting in January 2011.

The day after the shareholders meeting on December the 11th, ThyssenKrupp Chief Executive Heinrich Hiesinger vowed to clean up Germany’s top steel-maker after recent losses and corruption allegations prompted him to axe half his management board.

“I’m not going to talk anything up here, because it is obvious that a great deal has gone wrong in the past,” he told journalists at a news conference on Tuesday, the day after Thyssen reported a 4.7 billion euro ($6.08 billion) annual loss.

Thyssen also decided not to pay shareholders a dividend for the first time in the company’s history,

To be continued…..

 

 

Public-sector pay in Brazil: Shaming the unshameable | The Economist

 

How the bureaucrats rob the taxpayers

How the bureaucrats rob the taxpayers

Public-sector pay in Brazil: Shaming the unshameable | The Economist

When his time as São Paulo’s mayor finishes at the end of the year, jokes Gilberto Kassab, he will look for work in the garages of the city’s municipal assembly. This month the city’s legislature published, for the first time, the salaries of some of its 2,000 employees. Half the 700 people named, paulistanos were surprised to learn, take home more each month than the assembly’s chairman, who earns 7,223 reais ($3,508) after tax.

House of Representatives approves purchase of agricultural land by foreigners

Agriculture Committee of the House of Representatives approves purchase of agricultural land by foreigners

The Agriculture Committee of the House of Representatives approved on Wednesday (13th of June 2012) the text of the bill that allows the acquisition of large plots of land by Brazilian companies controlled by foreigners. Today, the actual limit is up to 100 “fiscal units” (módulos ficais).

Fiscal unit is a unit of land measurement used in Brazil. It is expressed in hectares and is variable and is determined for each municipality, taking into account:

  • main type of farming in the municipality;
  • proceeds from the exploitation prevalent;
  • other farms in the municipality which, although not predominant, are expressive function of income or area used;
  • concept of family property.

Today, by law, foreign companies can buy up to 5 000 hectares, never exceeding 25% of the municipal area of the location of the farm. Citizens of the same foreign nationality can not together have more than 10% of the area of a municipality.

The text proposes that Brazilian companies with foreign capital are treated as domestic companies, no limit for land acquisition. The companies and foreign people, who currently limit the acquisition of 100 and 50 fiscal modules, respectively, can now acquire up to one quarter of the municipality where the farm.

The proposal also eliminates the authorization or license from the National Institute of Colonization and Agrarian Reform (Incra) for acquisition by foreigners of rural property tax of up to four modules and rental tax of up to ten modules. The legislation established the current limit of three modules operating indefinitely.

Non-governmental organizations

The acquisition of land by non-governmental organizations (NGO’s) with foreign capital or headquarters outside of Brazil, which is not mentioned in current law, is prohibited in the new proposal. Upon approval, the report will be turned into a bill and distributed to other committees for analysis, then, be voted on in Congress.

Facebook Blasts into Top Position

Facebook Blasts into Top Position in Brazilian Social Networking Market Following Year of Tremendous Growth – comScore, Inc.

Facebook Brazil

Facebook Brazil

São Paulo, Brazil, January 17, 2012 – comScore, Inc. (NASDAQ: SCOR), a leader in measuring the digital world, today released data showing that Facebook assumed the top place in the Brazilian social networking market following a year of exceptional growth. In December 2011, Facebook.com attracted 36.1 million visitors – representing an increase of 192 percent in the past twelve months – to surpass Orkut as the leading social networking destination in the market.

“Facebook’s rapid ascent in the Brazilian market has certainly been one of the most interesting stories to develop during the course of 2011,” said Alex Banks, comScore managing director for Brazil. “Brazil has always been a particularly social market and now owns the fifth largest social networking population in the world. But despite the cultural affinity for social media, Facebook adoption had traditionally lagged in the market. That has all changed in the past year, during which the site has tripled in audience size as engagement has grown sevenfold to assume the leadership position in the market.”

Facebook.com, Orkut and Windows Live Profile Lead Social Networking Rankings

Results from the recent comScore study It’s a Social World revealed that Brazil was one of just seven markets (including China, Japan, South Korea, Vietnam, Poland and Russia) where Facebook did not lead the local social networking class according to October 2011 data.

In December 2011, however, Facebook.com finally secured the top place in Brazil’s social networking ranking with 36.1 million visitors age 6 and older accessing the site from a home or work computer, nearly tripling in audience size in the past year. Orkut, which fell to the #2 place with 34.4 million visitors, still managed to grow its audience 5 percent in the past year despite Facebook’s growing prominence. Windows Live Profile ranked third with 13.3 million visitors (up 13 percent), while Twitter.com ranked fourth with 12.5 million visitors (up 40 percent).

 

“Brazilians are ruining FACEBOOK …”

"CNN says that Mark is saddened by the behavior of Brazilian Facebook"

“CNN says that Mark is saddened by the behavior of the Brazilian at Facebook”

The news channel CNN said that the behavior of the Brazilians on the social network site Facebook is saddening Mark Zuckerberg. “On the one hand, Brazilians are growing Facebook, however they ruin everything,” he said.

Facebook engineers were considering allowing the inclusion of images in the format animated GIF-pictures (moving images), but Mark refused the idea because he has seen the behaviour of Brazilians at the social network site Orkut, which is loaded wioth animated gif’s.

According to Mark, if Facebook make room for the gifs, sharing among users will be equal to the Brazilian Orkut, full of colorful moving letters, loaded with messages of affection and love.

 

Closing Facebook in Brazil

On the possibility of closing the Facebook in Brazil, Mark drops . “I will not blame the Brazilians use the network, but will create a manual of behavior.”

When asked about Facebook is turning into a Orkut in Brazil, Mark said that there is no difference between social networks, the difference is Who uses. “Any service that has the Internet users in Brazil, in large proportions, it becomes a problem,” he said.

 

[important]

Source: G17.com.br

Note of the editor: This article has been published in Portuguese on the site G17.com.br. So, please don’t take this serious. It has been republished by many serious news websites in Brazil. However, for those of you intending to do business and want to learn about the culture you might be interested to read the various comments been made by the readers.

[/important]

 

Billionaire Batista in Talks to Sell $1 Billion EBX Stake

Billionaire Batista in Talks to Sell $1 Billion EBX Stake

via Billionaire Batista in Talks to Sell $1 Billion EBX Stake.

Eike Batista

Eike Batista in Veja magayine

as the billionaire continues his quest to become the world’s richest man.

“Imagine me getting my engine and adding another turbo charger,” Batista said in a telephone interview from Rio de Janeiro late yesterday. Earlier in the day he had announced a deal to sell 5.63 percent of his empire of commodity companies to Abu Dhabi’s Mubadala Development Co. for $2 billion.

The Brazilian mining and energy magnate has seen his net worth surge 17.6 percent this year to $26.5 billion, making him the 11th richest person on Earth, according to the Bloomberg Billionaires Index, a daily ranking of the world’s wealthiest.

 

GE to build R$60 million plant in Brazil’s Bahia

Reinaldo Garcia   CEO and president of GE Latin America

Reinaldo Garcia CEO and president of GE Latin America

General Electricplans to build a R$60 million plant in the northeastern Brazilian state of Bahia to assemble wind turbines as the market for wind power surges in the South American country, Reinaldo Garcia, head of the company’s operations in Latin America, said Wednesday.

The plant will be built during the next six to 12 months, Garcia told reporters in Rio de Janeiro.

Brazil has seen interest in wind-power projects take off over the past decade, and has been adding about 2,000 megawatts of new wind-power capacity every year as prices for wind power fall below the costs of other sources.

GE reportedly has secured about one-fifth of the supply contracts for those Brazilian wind farms.

10 most innovative Brazilian corporations according to Fast Company magazine

Over the last decade, Brazil has become fertile source for creativity and disruptive business models. The innovation revolution is alive both among start-ups and among the thousands of Brazilian multinationals. A new report from INSEAD and the OECD Development Centre argues that by developing new business models, “in several revealing cases, Brazilian businesses are redefining global business”.

Brazilian companies among the world’s 50 most innovative companies

Fast Company magazine published their annual list of the world’s 50 most innovative companies – among them, two Brazilian groups, biological control experts Bug Agentes Biológicos and  Boo-box, an ad network that offers innovative solutions targeting technology and different formats of advertisements for the web.  The magazine  also published their list of Brazilian innovative enterprises.

1 – Bug Agentes Biológicos

Bug Agentes Biológicos mass-produces wasps to combat larvae and stinkbugs that threaten sugarcane and soybean plants, two of Brazil’s largest cash crops. This past year, Bug perfected a way to spray its wasps onto soy fields, just as pesticides are spread via airplane. “We can liberate the insects in the right dose, at the right speed, and with the right protection so they can be effective,” says Francisco Jardim, a Brazilian VC who has invested in Bug and sits on its board. Wasps, for example, need to be protected until their wings grow big enough for flight, or else ants present a threat. (Isn’t nature grand?)

 

Bug’s timing feels right. Brazil is the world’s third-largest agricultural exporter (behind the United States and EU); it recently passed the U.S. as the largest consumer of pesticides. Yet the country has begun to phase out the more noxious chemical pesticides Brazilian farmers use despite diminishing effectiveness. Bug has the only alternative approved by Brazilian agricultural, health, and environmental ministries. It’s currently at 100% capacity with plans in 2012 to double the acreage it covers.

2 – Boo-box

Boo-Box Equipe

Boo-box equipe

The boo-box is the largest Internet advertising technology in Latin America. An ad network that offers innovative solutions targeting technology and different formats of advertisements for the web. In their network appears around 3 billion ads per month. Boo-box has more than 40,000 affiliate publishers that produce content every day on their blogs, websites and social network profiles. The subjects dealt with by our publishers are the most diverse, for all tastes and audiences: automotive, beauty, food, health, tourism, and more. There are 310,000 websites and blogs in total, and 23 000 profiles Twitter! All this great content attracts audience: more than 80 million people per month, equivalent to 100% of Internet users in Brazil. People interested in staying on top of all that is happening on the internet and the world. technology of boo-box bridges the gap between advertisers who want to communicate with this audience, and publishers that offer advertising space on their websites and blogs.

The Brazilian advertising network exploded last year, quintupling the number of ads it placed to reach some 80% of its home country’s web users. The key, says founder Marco Gomes, is creating novel ad formats “where people are already paying attention,” such as in Twitter feeds or blog text. Next up: targeting all of Latin America. “There’s a lot of room to grow,” says Gomes, citing a recent merger with Argentine semantics firm Popego. “The car isn’t the center of our culture anymore, it’s the computer.

3 – EBX

Eike Batista

Eike Batista

Eike Batista’s holding – the richest Brazilian man’s businesses include mining and logistics companies, among many, many others.

For bringing fresh dirt. Brazil’s march toward self-sufficiency got an extra push from EBX this year. Grupo EBX’s Acu Superport, originally dreamed up as a “highway” to send raw goods to China, will now include a compound capable of holding 3 million tons of nitrogen-enriched fertilizer a year. Acu’s infrastructure can shuttle the resource to Brazil’s three major regions responsible for 87% of the country’s agricultural output.

4 – Stefanini

Stefanini

Stefanini

Stefanini offers consulting services, solution development and integration, Business Process Outsourcing, application and infrastructure outsourcing, and more.

For going where the clients are. Brazil’s largest IT services company cemented its global presence by expanding further into fellow emerging economy and outsourcing powerhouse, China. Stefanini also has designs on making inroads in Japan: Its new software development center is located in Jilin , a city in China that has a large Japanese-speaking population.

4 – Embraer

Embrear

Embrear

Aerospace conglomerate that produces commercial, military, and executive aircrafts.

For serving and protecting its country. New ventures into defense and security will pay off for the world’s fourth-largest aircraft manufacturer and its home country. Embraer has its eyes set on building Brazil’s first geostationary satellite, a move that will boost the country’s communication, remote imaging, and weather prediction capabilities.

5 – Petrobras

Oil rig

Oil rig BRazil

Petrobras has operations in the entire oil and gas productive chain and in the production of biofuels and of other alternative energy sources.

Petrobras recently made the biggest oil discoveries in Brazil in the pre-salt layer located between the states of Santa Catarina and Espírito Santo, where major volumes of light oil were found.

The first results indicate very large volumes. Just to have an idea, the Tupi accumulation alone, located in the Santos Basin, has recoverable volumes estimated at 5 to 8 billion barrels of oil equivalent (oil plus gas). Meanwhile, the Guará well, also in the Santos Basin, holds 1.1 to 2 billion barrels of light oil and natural gas.

For shoring up innovation in the Gulf of Mexico, post-Deepwater Horizon. This year, Petrobras received long-awaited U.S. Interior regulatory approval for the first floating deepwater oil and natural gas production and storage facility in the Gulf, positioning it to lead other energy companies toward what’s being billed as a safe new way to tap into natural resources. Located 165 miles off the Louisiana coastline, Petrobras’ Chinook-Cascade facility’s mobility makes it stand out from typical fixed platform sites; it can be unhooked and moved out of the path of hurricanes to avoid long-term oil shortages. The project has 600,000 barrels of oil storage capacity and can process 80,000 barrels per day.

6 – Predicta

Behavioral marketing targeting firm

For opening the app marketplace to web developers. São Paulo-based Predicta launched SiteApps in April 2011 as a platform for easy-to-use website optimization. Developers can post their free or paid apps on the site; users can then install the tool (from analytics to social media widgets) onto their websites.

8 – F*Hits

Network of fashion bloggers

For blogging Brazil’s fashionable ascent. A rising middle class has brought luxury to Brazilian storefronts but not laptops. Alice Ferraz’s blog collective–featuring 26 style mavens’ takes on fashion–attracts more than 3.5 million uniques a month, besting traditional style bible Marie Claire Brazil.

9 – Apontador

The leading internet geolocation company in the country

For defining the way Brazil does local. Apontador has long moved away from its mapping roots to become the top geolocation service company in Brazil. In 2011 it rolled out Apontador+, a feature that lets businesses create pages on the site to see how Apontador users (more than 12 million a month) interact with their brand.

10 – Vostu

Online games

For bringing radio to gaming. Fresh from a copyright infringement settlement with Zynga, Vostu soldiers on as the first company to incorporate radio into its social gaming. Users can now hear Brazilian pop hits and gaming advice instead of canned music and sound effects while building farms and cities on its popular games MiniFazenda and MegaCity. Listeners can also earn rewards by completing in-game missions promoted on the station.

 

2012 Brazilian Income tax (IRPF) to be submitted latest April 30th

Carnaval is over, the Lion is coming

After having celebrated New Year and Carnaval it is now time to start the year really. As per today you can fill out and submit your income tax.

"Leao Imposto"

Up to April 30th to declare your income to the Brazilian tax authorities

This year, the application to fill out your income tax declaration has been available before March 1st 2012.  According to the Receita Federal, anticipating the release of the application to facilitate the lives of those who need to state, helping to get familiar with the program. With this, the Receita Federal changes the system that prevailed in recent years, when it was available only on the day that began officially the delivery of application for the income tax. However, informs the Receita Federal, people have to wait until 8am on 1st March to send the statement, even if they fill out the form in advance. The deadline for submission is 23:59 on 30 April this year.

For this reason, it is good to be aware. “Whoever fails to deliver is subject to a fine for delay, calculated as follows: there is tax due, the fine will be 1% per calendar month or fraction thereof of delay, incident on what is owed, even if fully paid, subject to the minimum values ??of R $ 165.74 and a maximum of 20% of this tax. However, there being nothing to pay, the fine will be R $ 165.74, “warns the tax expert Richard Domingue, CEO of Confirp Accounting.

To facilitate the life of the taxpayer, MasterclassBrazil today brings a series of articles on the IRPF. Know who is obliged to declare, how to send the document, which models and how not to fall into the fine mesh.

American Farmers ‘Amazed’ by Brazilian Agriculture – Farm Futures

After ten days of touring Southern Brazil in early February, 34 U.S. farmers from 10 states came away very impressed with this country’s agricultural potential, despite the drought that withered crops on most of the farms we visited.

via American Farmers ‘Amazed’ by Brazilian Agriculture – Farm Futures.

Load more