Interview with Marcelo Odebrecht

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14th Annual Global
CEO Survey
Marcelo Odebrecht
CEO, Odebrecht
Interview Transcript
Interview with Marcelo Odebrecht
CEO, Odebrecht
PwC: What indicators are you
watching to tell you how the global
economy, or specific local
economies, will develop in 2011?
MO: We are watching indicators like
commodities and GDP growth Asia,
Latin America and Africa. Any growth
or weakeness in the developing
world has a much larger impact in the
economic activity wordwide, since it
diretly means more volume of products
and services, than in the developed
world.. We are also watching closely
the exchange rates, and the relatively
devaluation of the US Dollar.
PwC: What is the outlook beyond
2011 and what are the major risks
in that outlook?
MO: We are quite optimistic about
what lies ahead of us. We do believe
that most of the countries in Latin
America, Africa and Asia will continue
to grow steadily for the next feel years.
Specially those that has done their
internal homework and or has plenty
of natural resources. The US for their
part, has always proved to be able to
reinvented themselves, and they do have
the flexibility and pragmatism to keep
doing that. My doubts are with regard to
Europe, and their capability and even
their willingness no change and do what
has to be done, for returning to the
growth path.
With regard to the risks, the main one
is a downturn in de China economy,
what I do not expect, what will have a
major impact in the volumes and prices
of products and services wordwide. The
order risk is that the Developed world
tried to hold to their status, not allowing
more influence and participation of the
developing countries in politics, trade
and the overall economy.
14th Annual Global
CEO Survey
Interview Transcripts
PwC: In what areas has your
strategy been most resilient
through the economic crisis, and
what strategic changes have you
had to make?
MO: Anchored originally in construction
and petrochemical business, the group’s
strategy has proven to be successful
in diversifying and increasing the
investments in logistics, urban mobility,
road concessions, , ports, airports, oil
and gas, sanitation, real estate, sugar,
renewable energy (mainy hydro and
sugar cane etanol) and sustainable
products such the green polyethylene
we have started producing this year in
commercial scale. Odebrecht has either
consolidated its business by acquiring or
merging with important players or has
been able to spin off the business from
its holding company to give each new
business even more focus and flexibility
and to which helped including to attract
strategic partners and new capital
for the investments thghoutout the
Organization, that will amount over
US$ 30 between 2010 and 2013.
PwC: How would you describe your
biggest strategic opportunity today,
as well as the biggest risks
associated with that strategy?
MO: The biggest strategic opportunity
today is to develop the several
businesses which have been spun
off from the holding company, have
received investments from third parties,
and are now in their growing process,
with interesting forecasts ahead.
As the group has diligently prepared
itself to reach the current and
forthcoming levels of operations, risks
have been cautiously measured in order
to provide enough confidence for now
and the next steps ahead. Preparing the
Marcelo Odebrecht
CEO, Odebrecht
right people to lead these businesses
has been an important measure as well.
Said that with the large growth that
we have been facing to identify and
integrate the right people has been our
major concern. In 2010 alone we have
to hire more than 30k new people,
totalling now 120k worldwide
PwC: How are you changing your
approach to raising capital, in
terms of the sources of capital
that are most attractive today
[e.g., countries/markets, sources
such as banks v. capital markets,
or capital structure]?
MO: Our group has been adequately
mixing debt and equity capital, domestic
and international markets, private
investors and public transactions, and
has reinforced sources of capital which
count on flows of receivables as their
main way out for repayment – i.e.,
mostly non-recourse project finance
as opposed to corporate guarantees.
This strategy not only reinforces the
company’s main credit ratings, but also
contributes to our investment choices,
as financial and strategic partners will
conduct their own due diligence of the
prospective businesses and, once they
volunteer to join us in such ventures,
they end up by validating our own
choices of investment.
PwC: How are any changes to the
outlook for access-to-capital
affecting your strategic plans?
14th Annual Global
CEO Survey
Interview Transcripts
MO: For projects within Brazil, BNDES
[Brazilian Development Bank] has
become a major source and perhaps one
of the only existing possibilities for
long-term affordable funding. No
entanto, a alta demanda de
investimentos no Brasil irá requerer
capacidade de acesso a fontes
alternativas de financiamento de longo
prazo, em complemento às fontes de
origem pública. O Governo Brasileiro
recentemente determinou uma série de
incentivos para atrair capital privado
nacional e internacional para o
financiamento de longo prazo.
A eficácia dessas medidas, ainda a ser
comprovada, será relevante para o
sucesso da implementação do nosso
plano de investimento no Brasil. Outras
medidas ainda precisam ser avaliadas,
como a disponibilidade de proteção
cambial de longo prazo, para permitir
que as empresas do nosso grupo que têm
operações eminentemente em moeda
local possam acessar fontes de capital
internacional em moeda estrangeira,
sem colocar em risco a saúde financeira..
Aside from Brazil, our presence in other
countries has provided us with active
capital markets and willingness from
investors to come up with adequate
funding for both debt and equity, in size
and under conditions which have
satisfied our general needs.
PwC: How is the current volatility
of the business environment
changing your people strategy?
MO: Na nossa cultura empresarial,
denominamos “Pequena Empresa” a
unidade em que desenvolvemos nossa
atividade empresarial, como um
contrato de prestação de serviço, uma
planta industrial, uma concessionária de
serviço público, ou um pólo agroindustrial. Cada Pequena Empresa é
liderada por um integrante com plena
aderência a nossa cultura e com plena
capacidade empreendedora – a quem
denominamos “Empresário-Parceiro”.
Uma parte central da nossa estratégia de
mitigação de riscos e de sucesso no
empreendedorismo em um ambiente de
alta volatilidade é assegurar que as
decisões sejam tomadas sempre no nível
da Pequena Empresa pelo seu respectivo
Empresário-Parceiro. É este quem
Marcelo Odebrecht
CEO, Odebrecht
sempre terá as melhores condições para
avaliar os desafios e oportunidades que
emergem das relações com Clientes,
Fornecedores, Sociedade e Parceiros,
bem como assegurar a agilidade
necessária para tomar a decisão certa e
no tempo, assim como a flexibilidade
para definir quaisquer ajustes de rumo
que a ambiente volátil possa sugerir.
implantando para atuação em grandes
obras de engenharia. Esse programa
assegura que as comunidades locais
tenham uma oportunidade de
crescimento profissional e de renda, e ao
mesmo tempo evita fluxos migratórios
desordenados, que historicamente
trouxeram impactos negativos na
sustentabilidade dessas regiões.
PwC: How might the private
sector do more to contribute to
social well-being in areas that
were once considered the
government’s responsibility
[e.g., reducing poverty or
addressing climate change]?
Em todo o Brasil, no ano de 2010
treinamos 35.000 trabalhadores, dos
quais 15.000 foram contratados para
atuar em nossas obras. No ano de 2009,
as empresas da Organização Odebrecht
investiram R$ 84,5 milhões em 417
programas sociais, sendo 262 no Brasil e
155 em outros países. Estes programas
ocorreram em 688 comunidades,
beneficiando diretamente 446.879
pessoas. Foram mobilizadas, para
operacionalização dos programas, 430
organizações parceiras.
MO: Cada vez mais a classe empresarial
tem percebido que responsabilidade
social passa a ser uma condição
necessária para o crescimento e
perpetuidade do negócio. Nenhuma
grande Organização pode ou deve
ignorar isto.
Sem dúvida, a principal
responsabilidade de qualquer
empresário é gerar riquezas maiores e
melhores para seus clientes, integrantes,
acionistas e comunidade de atuação,
oferecendo produtos e serviços
sustentáveis do ponto de vista social,
econômico e ambiental.
No entanto, nossa Organização, assim
como outras, tem ido muito além: temos
investido enormes somas e energia na
formação de pessoas para o trabalho,
apoiado a preservação das culturas
locais onde atuamos, e investindo em
programas junto às comunidades no
sentido de garantir seu autodesenvolvimento de modo sustentável.
14th Annual Global
CEO Survey
Interview Transcripts
Um exemplo dessa atuação da
Odebrecht é o programa de formação de
mão-de-obra “Acreditar”, cujo objetivo é
capacitar integrantes das comunidades
em torno dos projetos que estamos
PwC: How also should the private
sector contribute to national
competitiveness, in areas that were
once considered the government’s
responsibility [such as building
infrastructure and contributing to
the skill base in the workforce]?
MO: Entendemos que o setor privado
pode contribuir com agilidade na
tomada de decisão, eficiência na
implantação e operação, e apetite para
alocação de capital em ativos de infraestrutura. Essa atuação privada
proporciona uma melhor prestação de
serviços públicos, o aumento de
competitividade das economias e
contribui com melhores indicadores
sócio-ambientais. Através das parcerias
público-privadas, o setor privado
também pode viabilizar determinados
investimentos com equações criativas de
alocação ótima de riscos e
responsabilidades.Com isto o governo
pode concentrar seus recursos e energia
Marcelo Odebrecht
CEO, Odebrecht
em investimentos em áreas sociais
críticas como educação básica e saúde,
na melhor capacitação e remuneração
de todo o funcionalismo público, e nas
áreas típicas de Estado como segurança,
defesa e agencias reguladoras.
Odebrecht, through construction and
concession management, has engaged
in several areas which have been
predominantly under the government’s
responsibility, such as toll road
concessions, ports, sports arenas,
urban transportation (underground,
urban trains and the like), water and
sewage treatment, among others.
We see this initiative as part of the
private sector’s contribution to taking
on more responsibility, in line with
the government’s strategy, but adding
to it whenever this proves to be an
interesting approach from an
entrepreneurial viewpoint.
Examples of our participation in
infrastructure sectors can be seen in
projects like IIRSA’s in Peru (multimodal roads, integrating countries
in Latin America), Santo Antônio
Hydroelectric Power Plant (largest of its
kind under construction, showing the
lowest ratio between the reservoir area
and the total energy generation in its
peer group in Brazil) and Rio de Janeiro
Metropolitan Area Urban Train.
PwC: In what ways have you been
affected by the government
becoming more active in the private
sector, for example, as an owner or
investor, other than regulation?
MO: We have seen an adequate sharing
of roles whenever Public-Private
Partnerships (PPPs) are applicable.
The government commits a certain
amount of periodic resources which will
allow the private sector to be interested
in combining efforts in a certain project.
14th Annual Global
CEO Survey
Interview Transcripts
In turn, the private sector is encouraged
to develop other business in the
surroundings of that project in order to
generate additional revenues, which will
be split with the government all through
the time of the operation of the main
asset – be it a road, a port, a sports arena
or other businesses. This combination
of roles is seen as an interesting
opportunity for the government to
develop the adequate infrastructure in
sectors where it would otherwise be
unable to do so, due to lack of funding.
Likewise, it allows the private sector to
play a long-term role in such projects,
with the possibility of creating a steady
flow of receivables after the completion
of each project is assured.
PwC: What is the one thing that
governments can do to improve the
environment in which you operate,
other than reduce the overall
burden of regulation?
MO: Create specific incentives for
investors to drive their money towards
the financing of long-term projects,
at attractive costs to entrepreneurs,
through mechanisms like project bonds,
which hold a specific characteristic
of getting their payment back from
the flow of receivables, rather than
relying on corporate guarantees for
their repayment.
PwC: In what ways do rising
levels of government debt, either
n your home country or in your
key markets concern you?
MO: As long as there is fiscal
responsibility in terms of the debt
management, not much burden in the
short-term and taking for granted that
the increase in debt is mostly due to
investments in basic sectors of the
economy (infrastructure, education,
sanitation, security, bioenergy,
Marcelo Odebrecht
CEO, Odebrecht
alternative energy, real estate and
similar segments), there is little concern
about the impacts of the growth in the
Brazilian government debt – especially
because our country has been practising
good financial discipline long before
the 2008 crisis. As for the rising level
of debt elsewhere in the world, we are
concerned about how the US and the
EU will manage their current problems,
but believe that many experts are
holding responsibility for this challenge
and, hopefully, it will cause no more
impact hereafter. In the other countries
where our group has a presence,
it looks as if there are sound policies
in place and good perspectives ahead.
Nós acreditamos e incentivamos que
Governos e Empresas devem seguir
como regra investir com eficiência
para criação de riquezas para as
próximas gerações, gerando renda
inclusive para servir eventual dívida
contraída, em oposição a um modelo
insustentável de se gastar no presente,
acumulando-se dívida, sem gerar
riqueza equivalente, e deixando para
futuras gerações a responsabilidade de
saneamento financeiro.
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