QUEIROZ GALVÃO

MENSAGEM DOS ADMINSITRADORES
A N N U A L R E P O R T 2 009
Q U E I R O Z G A LVÃ O
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or the Queiroz Galvão Group, 2009 was marked by the consolidation of
strategic trends defined more than ten years ago, when it began to operate
in sectors requiring long-term investments and more complex technologies.
This consolidation has guided us to intensify, in recent years, the preparation of
a new corporate configuration and the standardization of processes and systems
to integrate our companies with global partners and clients, making them more
agile and qualifying them to meet stricter requirements.
In 2009, those efforts left important milestones. We streamlined our strategic
decisions to favor a long-term view; we restructured our corporate governance,
bringing together shareholders in the Group’s Board of Directors, consolidated
our best practices and accelerated the standardizing of processes and systems.
Also, we strengthened our ties with the financial market. One of the results of
these closer ties was the assessment in 2009 of Fitch Ratings, which classified
Construtora Queiroz Galvão, the Group’s largest company, as AA-. For Fitch, the
conservative structure of its capital, the company’s robust liquidity and satisfactory
operating performance denote a very low credit risk in the Brazilian context.
Due to all this, in a year that began as critical for the economies of almost all
countries, a selection of investments inspired by confidence in the prospects
of Brazil’s good performance guaranteed to the Queiroz Galvão Group invoicing
25.85% higher than in 2008.
With regard to the corporate restructuring and in line with the growth of the
real estate market, our activities in this sector became an autonomous area,
alongside Foods, Participations and Concessions, Construction, Environmental
Engineering, Oil and Gas and Steel.
Besides streamlining strategic decisions and favoring a long-term view, restructuring our corporate governance, which brought together
shareholders in the Group’s Board of Directors,
accelerated the standardizing of processes and
systems and the selection, integration and consolidation of our best practices.
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After facing the 2008/2009 crisis with the option of preserving liquidity by
postponing new launchings, Queiroz Galvão Desenvolvimento Imobiliário has
already resumed its growth rate and this year should double the historic figure
achieved in 2007, to then maintain growth of around 40% until 2013, inclusively.
At the end of the first half of 2010, it will have four regional bases in Pernambuco,
São Paulo, Bahia and in Rio de Janeiro. While the Pernambuco head office will
concentrate engineering, project preparation, administration and finance, to
optimize costs and expertise, the other offices will mostly concentrate on sales.
New demands produced by Brazil’s burgeoning consumer market have made this
a moment of great opportunities for Brazilian engineering in almost all segments.
To take advantage of it, Queiroz Galvão Desenvolvimento Imobiliário launched
in 2009 the industrial name Slim, which unifies the company’s knowledge and
experience for building family homes at affordable prices.
At Construtora Queiroz Galvão, that environment was felt principally in projects in
the infrastructure segment, such as the Mário Covas Ring Road and the expansion
of the São Paulo City Subway, noting the tendency toward a more equitable
geographical distribution of investments, with works like the modernization of the
Areia Branca island-port, in Rio Grande do Norte, and the construction of the Sertão
Channel in Alagoas, and the North-South Railroad in which we participated along
the stretch between Ouro Verde and Anápolis, in Goiás.
Also in the infrastructure segment, social inclusion and environmental care are
increasingly more important values, leading us to participate in large projects.
In Rio de Janeiro, Construtora Queiroz Galvão took part in two excellent examples,
the Rocinha PAC (Accelerated Growth Program) and the Fundão Channel.
The same inspiration motivated the growth of Vital Engenharia Ambiental, which
today attends 8.6 million persons spread across four regions of the country.
At the same time, with the pre-salt discoveries, more projects are appearing
in the industrial assembly segment, involving onshore and offshore works.
In 2009, Construtora Queiroz Galvão won, through its subsidiary Quip S.A., the
assembly of the P-55 and P-63 platforms and began the works of the P-59 and
P-60 jack-ups, to be delivered early next year, making up US$2.1 billion of
contracts just in the offshore segment. Important among onshore projects, is
the construction of the Hydrosulphurization (HDS) Plant for producing cracked
naphtha at the Duque de Caxias (Reduc) Refinery in the State of Rio de Janeiro.
Aiming to reduce the toxic pollutants produced by burning gasoline, this project
involves major technological challenges and is yet another showing the weight that
environmental preoccupation is gaining in the economy and in business.
Considering the Federal Government’s strategy of encouraging diversification
of the energy sources that will sustain economic growth, our Participations and
Concessions area is implementing various new projects in the electric energy sector
and is developing studies for installing wind energy plants in the northeast of Brazil.
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In the sanitation concessions segment, we are continuing to converge our equity
participations to Saneamento Ambiental Águas do Brasil S.A. (Saab). In 2009,
approximately R$100 million were invested in 13 municipalities in which the Saab
companies work, to attend around two million persons and to attain coverage rates
much higher than the Brazilian average.
Also in the Participations and Concessions area, the Atlântico Sul Shipyard,
designed to be the largest and most modern in Brazil, is nearing completion. The
first vessel was delivered in the first half of 2010 and the market prospects are
more than promising. In light of the orders produced by the pre-salt exploration
requirements, its portfolio already has 21 contracts for building vessels, as well as
the hull of the P-55 platform.
Still decisively influenced by the pre-salt discoveries, the heavy investments
made by Queiroz Galvão Óleo & Gás (QGOG) in recent years are beginning to return
in 2010, either through chartering and providing services, or through exploration
and production.
In 2009, the Queiroz Galvão/SBM consortium won the bidding for chartering
a FPSO vessel to operate at the pre-salt level of the Tupi Nordeste Field, in the
Santos Basin, for the next 20 years, as from 2012. And 2010 already has as a
milestone the arrival in Brazil of the new semisubmersible platforms Gold Star
and Lone Star, as well as the return of the FPSO vessel Capixaba to Brazil, after
remodeling, to take over contracts for five, seven and 12 years, respectively. In the
exploration and production segment, after a minor decline due to the economic
crisis, the Manati Field resumed its earlier production rate. Working in eight
exploratory blocks, three of which in the commercial evaluation phase, QGOG is
today Brazil’s largest private company producing equivalent oil.
Despite the momentary stagnation of economies most affected by the world crisis,
we are continuing to strive for strategic positions in the international construction
market. Among our victories is the entry into Latin American markets with major
infrastructure demands — Venezuela, the Dominican Republic and Nicaragua —
and our strengthening in Libya, where new bids are being evaluated.
Similarly, funds continue to enter the Foods and Steel areas, the most affected by
the crisis, considering their production goes mostly to the foreign market. After
this moment of retraction ends, those investments will bring in the resumption of
sustainable growth in those business areas. In Steel, there is the important Clean
Development Mechanism (CDM), based on the reduction of liquid emissions of
greenhouse gases (GGE) during the production of charcoal, already validated by
an independent audit designated by the United Nations Organization (UNO) and in
the approval phase by the Brazilian Government. As soon as its approval comes
through, the project will be sent for registration in the United Nations Framework
Convention on Climate Change (UNFCCC). At the same time, two new CDM-related
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projects are being implemented through additional plantings of eucalyptus and feeding of
blast furnaces with renewable origin charcoal.
Put into practice, the vision we have for the coming years consists of heavy investments
in qualification of professionals and in the continual effort to improve methods,
processes and systems, bearing in mind that the development sought by countries
imposes standards of global excellence and the assumption of new values – particularly,
environmental care and social responsibility. Transformed into business vectors, those
values must be increasingly considered presuppositions indispensable for each action,
relationship, plan, project or strategy. Lastly, there remains the permanent guidance
of staying humble, so that we will never miss an opportunity of learning.
BOARD OF DIRECTORS OF THE
QUEIROZ GALVÃO GROUP
Antonio Augusto de Queiroz Galvão
Carlos de Queiroz Galvão
Fernando de Queiroz Galvão
Marcos de Queiroz Galvão
Maurício José de Queiroz Galvão
Ricardo de Queiroz Galvão
Roberto de Queiroz Galvão