rossi’s strategy for the economic segment 2009/2010 presentation
TRANSCRIPT
Rossi’s Strategy for the Economic Segment 2009/2010
Target Public
Market Performance
Strategy for the segment
Conclusion
Agenda
Outlook
Target Public
Market Performance
Agenda
> Income profile
> Classification of pyramid level
> Distribution and Regional Deficit
> Expectations
Strategy for the segment
Conclusion
Outlook
Target Public
Income Segments Property Value
0 to 3 m.w from R$ 42,000
3 to 10 m.w from R$ 64,000
Income Profile
Glossary:M.W = minimum wages
PÚBLICO ALVOTarget Public
Classification of Pyramid Level
Source:IBGE - PNAD 2007 | Minimum wage: R$ 465.00
SOCIAL CLASS MINIMUM WAGES FAMILY INCOME(MAX/MONTH)
E 0 to 2 R$ 930.00
D 2 to 4 R$ 1,860.00
C 4 to 10 R$ 4,650.00
B 10 to 20 R$ 9,300.00
A > 20 > R$ 9,300.00
Target Public
Source:Number of houses and housing deficit by macro-region: IBGE -PNAD 2007
CDE Class Distribution and Regional Deficit*
7%
7%
28%
42%
15%
10%
34%
37%
12%
7%
# of Houses CDE = 46,266,852 | 86% of Brazil
Housing Deficit = 7.2 million houses
Target Public
Source:Survey prepared exclusively for Rossi by Instituto Data Popular in 2008.
Younger public:
Property acquisition is related to the desire
for greater independence
Young couples: Understand that beginning a life
together means limiting expenses and focus on what they can pay with
optimism
Couples with children:
Seek a quiet and safe place with a broad range of
services where they can raise their children
Expectations regarding the property
Price, location and installment amount are the deciding factors in purchasing property
Security, space and leisure activities also influence the decision, but are secondary factors.
To reduce condominium payment, accepts fewer leisure options.
Caixa’s financing is essential to make purchase possible and predictable.
Regardless of the age group, everyone agrees that paying rent is a waste of money.
PÚBLICO ALVO > ExpectativasTarget Public
Source:2008 Survey by Data Popular and Avenida Brasil.
Many still live with their parents or in rented apartments or in properties lent by their family or live together with other family members.
Consumers share a lot of their consumption experiences: word-of-mouth
71% of class C youth plan to (or dream of) buying their
own property within the next 5 years
Purchasing their own home is a sign that they are
succeeding in life.
70 to 75% are apprehensive about buying property: delivery and payment
44% look after their neighbors’ children
People with community-living traits: mutual help
Expectations regarding the property
Target Public
Market Performance
Strategy for the segment
Conclusion
Agenda
Outlook
> Brazilian Economic Scenario> Government Housing Package> Sector’s Outlook
Market Performance
Brazilian Economic Scenario
Government Housing Package
Sector’s Outlook
Market Performance
Brazilian Economic Scenario
Government Housing Package
Sector’s Outlook
Market Performance
Increased financing terms: Up to 30 Years
Increased financing amount: Up to 100%
Increased Minimum Wage: Higher purchasing power
Interest: up to 4.5% + TR
Brazilian Economic ScenarioMain Changes
Market Performance
Brazilian Economic ScenarioIncome Growth 2002 - 2007
Income Distribution2007 (%)
50%
Income Growth2002 x 2007
D
C
4%
26%
34%
14%
E
B
A
Total: +27%
(260 billion reais)
+2 billion
+43 billion
+69 billion
+111 billion
+35 billion
41%
100(1.24 trillion reais)
Fonte:IBGE, PNAD 2002 and PNAD 2007. Deflated by IPCA.Income in 2002 = R$ 976 billion – PNAD 2002.
Sectors’ OutlookPotential demand growth in Brazil
100(56.5 million)
85%
2%
12%
31%
14%
E
D
C
B
A
Total: +18%
(8.8 million)
+200,000
+1.2 million
+2.7 million
+3.7 million
+1 million
42%
Source:IBGE, PNAD 2002 x 2007 Number of families in 2002 = 47.7 million – PNAD 2002
Number of Families Distribution2007 (%)
Number of Families Growth2002 x 2007
Market Performance
14
Brazilian Economic Scenario
Government Housing Package
Market Performance
Sector’s Outlook
ObjectiveProvide more than 1 million houses for families with income of 0 to 10 minimum wages.
Market Performance
Government Housing PackageKey incentives
Property value
Up to R$ 130,000 - São Paulo, Rio de Janeiro, Distrito Federal and metropolitan regions.
Up to R$ 100,000 - Cities with more than 500,000 inhabitants and metropolitan regions.
Up to R$ 80,000 - Other municipalities.
Income (minimum wage)
Subsidies SP/RJ/DF and MRs (R$)
Over 100,000 inhab.(R$)
Between 50,000 and 100,000 inhab.
(R$)
3 23,000 17,000 13,000
4 16,000 10,000 6,000
5 9,000 3,000 2,000
6 2,000 2,000 2,000
Subsidies
Up to 3 minimum wages - 100% and exemption from life insurance in the installments
3 to 6 minimum wages - Partial in loans (see table)
Market Performance
Government Housing PackageKey incentives
Deposit Guarantee System (Fundo Garantidor )
Up to 5 minimum wages - 36 months without payment
5 to 8 minimum wages - 24 months without payment
8 to 10 minimum wages - 12 months without payment
Reduction of lending risk.
Refinancing of part of the installments in case of loss of income.
Cheaper insurance.
Market Performance
Interest
Up to 3 minimum wages - Installment is 10% of income, with minimum R$ 50 and maximum R$ 139
3 to 5 minimum wages - 5.00% p.a. + TR | 4.50% p.a. + TR*
5 to 6 minimum wages - 6.00% p.a. + TR | 5.50% p.a. + TR*
6 to 10 minimum wages - 8.16% p.a. + TR | 7.66% p.a. + TR*
Note:* With FGTS contribution for three years or more
Government Housing PackageKey incentives
Reduction of notary expenses for the borrower
Up to 3 minimum wages - 100%
3 to 6 minimum wages - 90%
6 to 10 minimum wages - 80%
Environmental License
Reduction of deadline to 30 days and greater speed in approval process
Financing Line
Term - up to 30 years for payment
Commitment - maximum of 30% of income
Financing - up to 100%.
Market Performance
Reduction of notary expenses for the company
Property value up to R$ 60,000 - 90%
Property value up to R$ 80,000 - 80%
Property value up to R$ 130,000 - 75%
Government Housing PackageKey incentives
Market Performance
Brazilian Economic Scenario
Government Housing Package
Sector’s Outlook
Market Performance
2005Scenario
2009Scenario
Prior to Package
2009Scenario
Prost Package**
Property value (R$) 80,000 80,000 80,000
Subsidy (R$) 0 0 19,501*
Interest Real Estate Credit (p.a.) 13% 8.16% 5%
Term (months) 120 240 300
Monthly income (Minimum Wages) 9.7 6.6 3.5
Monthly income (R$) 4,500 3,022 1,627
Sector’s OutlookPotential demand growth in Brazil
Note:* Subsidy calculated by monthly income of 3.5 minimu wages in São Paulo, Rio de Janeiro, Federal Distric and other metro. regions** Considering 100% financing
Market Performance
130,000.00
0 10.00
Un
its p
rice
(R
$)
Income (MW)
SP/RJ/DF E RMsSector’s OutlookNew scenario outlook
80,000.00
Pre-package
Post-package
3.50 6.60
Increase of 30.5 million families in the market
(+ 270%)
Source:IBGE – PNAD 2007 – The total number of homes in Brazil is 56.5 Million.* With contribution of the FGTS for 3 months or more
5 to 63 to 5 6 to 10 Minimum Wage
6% -5.5%5% – 4.5% 8.16% - 7.66% Interest (p.a)*
Target public
Market performance
Strategy for the segment
Conclusion
Agenda
Outlook
> Focused structure> Large scale development> Exclusive sales model> Financial structure alined with Caixa> Diferentiated marketing> Product Line
Rossi’s Strategy
Structure focused on the economic segment
Multifunctional structure
working inpartnership with regional offices
Agility in operations
Dissemination of know-how
Creation of a specialized team to serve the target public in the economic segment.
Investment in market research.
Development of standardized products.
Rossi’s Strategy
Differentiated Business Model
Matrix Structure with Regional Expertise.
Control, development and standardization.
Knowledge of needs and access to local facilities
Strategy ProductsFinance Marketing SalesEngineering Administrative
Matrix Economic Segment
Regional expertise
Business management
Operations
Regional Offices
Legenda:
Estado em atuação
Escritório regional
Área em prospecção
AL
PE
RN
PB
RS
PR
SP
MG
RJ
ES
BA
SC
CE
GO
MS
AM
PA MA
AC
RRAP
RO TO
PI
MT SE
Regional Nordeste
Regional Belo Horizonte
Regional Rio de Janeiro
Regional São Paulo
Regional Sul
Regional Campinas e Oeste Paulista
Regional Operations with local partnerships 61 cities in 15 states
Rossi’s Strategy
Better analysis of local demand.
Meeting regional expectations.
Agility in approval process.
Access to qualified services in the region.
Immediate access to a highly valued land bank.
Rossi’s Strategy
Nordeste Regional Office
Diagonal
Gabriel Bacelar
Grupo Fator
Belo Horizonte Regional
Office
AEL
Alicerce
Toctao
TropicalCampinas and Oeste
Paulista Reg. Office
Ambience
Antonio Andrade
Cristais Prado
Direcional
Forn
Gabriel Penteado
GNO
Monir Goraieb
Paiquerê
Splice
Tarraf
South Regional
Office
Cádiz
JL
Melnick
Thá
Tedesco
Rio de Janeiro Regional
Office
Carmo e Calçada
Costa Andrade
Cittá
Decta
Metron
Newserrat
Cycohrp
Scon
São Paulo Regional
Office
ACH
Capital
JBianchi
MZM
Montante
Paulo Mauro
Local Partners
27
827 network terminals.
Control: automated and integrated processes nationwide (SAP).
Dynamism: videoconference for real-time exchange of information.
Security: information stored in a Data Center with speedy and secure access.
Continuous improvement: constant monitoring of materials and services from suppliers.
Control and innovationInformation Systems
Rossi’s Strategy
Pioneer and a 10-year
experienceusing SAP
Rossi’s Strategy
Experience in large-scale product development.
Supply agreement for cheaper products.
Investment in market research.
Development based on target cost.
Large-Scale Development
PLANO 100 VIDA NOVA VILLA FLORA VERTICAISPRAÇAS
RESIDENCIAIS
1992 1996 1999 2007 2007
56 to 85 m² 45 to 59 m² 46 to 115 m² 46 to 62 m² 50 to 82 m²
Self financingStyle, quality and
basic finishes
Planned Neighborhood.
CommunityMore Privacy Residential Squares
13,438 units delivered
5,620 units delivered2,850 units
delivered and 490 launched
1,174 units underconstruction
5,633 unitslaunched
Large-Scale DevelopmentExperienced management
Rossi’s Strategy
*Note:Number of units delivered in the economic segment = 25,000 Number of unites delivered at standarized product lines = 21,908
foundationsinstallations
interior design
urban planning
architectural project
sustainability
structural project
landscaping
Large-Scale DevelopmentStandarized products
Rossi’s Strategy
Rossi’s Strategy
Large-Scale DevelopmentOptimized Plan
Rossi’s Strategy
Large-Scale DevelopmentProject Rationale
Alignment of internal walls tooptmize cosntruction
Conected water system
Shaft to ease maintemance
Commomgas instalation
All living rooms Facing the front
of the building
American kitchen to optimize
the storage space
Natural lighting in all rooms
80 cm
230 cm
Rossi’s Strategy
Large-Scale DevelopmentIndustrialized Process – Villa Flora
Rossi’s Strategy
Large-Scale DevelopmentIndustrialized Process – Construction of Precast Panels
EffectivenessHigher investment in training the sales team.
Consistency Differentiated training contentGreater consistency and relevance of message
Exclusive Strategy Sales at street stores located in busy areas
Rossi’s Strategy
Exclusive Sales ModelClient satisfaction at the time of purchase
A B
ROSSI BROKER CLIENT
Traditional Strategy
ROSSI BROKER CLIENT
A
Rossi’s Sales Strategy
30,000 active customers.
11,000 customers attended per month. (*)
84% of customers satisfied. (**)
Relationship with support program from purchase to delivery.
Source:(*) Monthly average in 2008 according to Rossi’s internal survey.(**) Grades above 8 in 2008 according to Rossi’s internal survey.
Rossi Customer ServiceCustomer satisfaction in the relationship
Rossi’s Strategy
Financial Structure aligned with Caixa Econômica Federal Easy access to financing
Rossi’s Strategy
Official correspondent of the Caixa Econômica Federal.
Documentation related to financing prepared internally.
Speed in collection of documents.
Quick credit approval and issue of agreement.
Unified customer service channel from purchase to signing of loan agreement.
Relationship with Caixa Econômica Federal since 1998.
More than 3,000 units passed with Credito Associativo.
Rating “A” (Highest rating conferred by Caixa Econômica Federal)
Long-term relationship Management of product line.Strengthening of the Rossi brand. Constant contact of the brand with the family’s growth.
Cost OptimizationStandard materials adaptable to regions.
EfficiencySingle advertising agency and national-level management.
ControlProduction costs approved nationwide.
Rossi’s Strategy
Differentiated Marketing
Note:*Article puiblished on O Globo newspaper, edition of May 15, 2009.
Rossi’s Strategy
Product Line for the Economic Segment
15 MW
10 MW
3 MW
PraçasResidenciais
VillaFlora
NovoMercado
Rossi’s Strategy
Units from 46 to 115 m²
Prices starting at R$ 78,000
100% financed
Installments starting at R$ 310.00 (when living)*
Planned neighborhood
NGO working to foster and preserve citizenship
and community spirit
Rossi Villa Flora
Note:* Average installment calculated using the Constant Amortization System (decreasing installments) Considering subsidy for monthly income of 3,3 m.w in SP/RJ/DF and Metro. Reg – 300 months
Rossi’s Strategy
CommunityNGO efforts to develop and preserve
citizenship and community spirit between
the residents.
Soil Conservation Internal pavement is of interlocking concrete, which allows greater water
permeability, thus preventing floods.
SecurityCondominiums are constructed in pockets, which ensures greater security since the homes face the yards.
Organic Garden The community garden is a where residents can grow organic food and teach children about the importance of healthy eating habits, free of agro-toxins.
Selective Trash Collection Trash cans specifically designed for recyclable trash.
Trash collection is done by a non-profit organization.
Single Gate
Gated condominiums with single gate
controlling the entrance and exit of dwellers
and visitors.
Environmental Conservation Villa Flora has twice the green area required by
law.
Rossi Villa Flora
42
Rossi’s Strategy
Units from 50 to 82 m²
Prices starting at R$ 95,000
100% financed
Installments starting at R$ 450.00 (when living) *
Community squares
Meticulous installation and landscaping
Differentiated architectural project
Concern for sustainability
Rossi Praças Residenciais
Note: *Average installment calculated using the Constant Amortization System (decreasing installments)Considering subsidy for monthly income of 4,5 m.w in SP/RJ/DF and Metro. Reg – 300 months
Rossi’s Strategy
Granite slabs for higher property appreciation.
Clay tiles for increased thermal comfort and better quality of life.
Roof made of reforested wood. Lower environmental impact.
Structural masonry walls. Rooms without pillars and beams for better space utilization.
Units delivered with 100% finished flooring. Quality and finishing.
Close-coupled tank and bowl for reduced water consumption and increased savings
Textured facade with framed doors and windows and aluminum molding. Increased property value and lower maintenance expenses.
Rossi Praças Residenciais
Rossi’s Strategy
VillaFlora
PraçasResidenciais
NovoMercado
15 MW
10 MW
5 MW
3 MW
Product Line for the Economic Segment
47
Nova linha de produtos Rossi Exclusiva no Segmento Econômico
Qualidade Rossi
Pagamento Ideal
Meu primeiro Rossi
Lançamento: Maio/2009www.rossiideal.com.br
Estratégia Rossi
Linhas de Produto do Segmento Econômico
VillaFlora
PraçasResidenciais
Rossi Ideal
15 SM
10 SM
3 SM
50
VillaFlora
PraçasResidenciais
Rossi Ideal
15 SM
10 SM
3 SM
51
Rossi’s Strategy
Product Line for the Economic Segment
Rossi’s Strategy
Units from 42 to 63 m²
Prices starting at R$ 64,000
100% financed
Installments starting at R$ 222.00*
Rossi Ideal
Standardized product line
Meticulous installation and landscaping
Leisure options appropriate for low condominium
cost.
Note:Average installment calculated using the Constant Amortization System (decreasing installments). Considering subsidy for monthly income of 3.0 m.w in SP/RJ/DF and Metro. Reg. – 300 months
One and two floor
houses
Low-story buildings
Residentialtowers
Rossi’s Strategy
Structural masonry walls. Rooms without pillars and beams for better space utilization.
Close-coupled water tank and toilet bowl for reduced water consumption and increased savings.
Kitchen integrated to living room for more space.
Natural ventilation in bathrooms.
Windows in all rooms for cross ventilation and natural light.
Obs.: All these benefits are in both 2-bedroom and 3-bedroom blueprints.
Rossi IdealFloor Plan
Rossi’s Strategy
Rossi Ideal
Rossi Ideal condominiums bring together all of Rossi’s know-how and working methods to
give you access to high quality at ideal payment conditions.
ROOF
Ceramic tile for greater thermal comfort.
PLAYGROUND FOR CHILDREN
Children’s play area in compliance with ABNT safety norms.
COMMUNITY HALL
Furnished and equipped social areas for more comfort in the condominium.
SWIMMING POOL FOR CHILDREN
Fenced area for greater safety for children.
Target public
Market performance
Strategy for the segment
Conclusion
Agenda
Outlook
> Land bank for the segment
> Land bank for the program
> Expected launches
Rossi Planning
Villa Flora28,200
Praças Residenciais7,000
Rossi Ideal56,700
TOTAL: 91,900 = R$ 8.6 Bi*
Economic Segment Land bank
*Note:Purchased or in advanced negotiations.
Rossi Planning
Land bank eligible for the programPSV of R$ 7.2 billion
Rossi’s Units in the Segment = 80,000 units
Present in all Brazilian regions.
Results Reached
Launches in units per year
4,600
2,421
15,000
20,000
13,000
18,000
2007 2008 2009 2010
Un
its
*Note:In line with data presented in 2007.
Accomplished
Expected for 2009/2010
Target public
Market performance
Strategy for the segment
Conclusion
Agenda
Outlook
Summary
Consolidated and ready to launch land bank.
Experience in the economic segment: products, management and services.
Experience in cost-efficient construction processes.
Pre-approved financial planning with Caixa Econômica Federal.
Excellent historical relationship with Caixa Econômica Federal, for more than 10 years.
Contact: IR Team
Conclusion
Cássio Elias AudiCFO and Investor Relations Officer
Maria Claudia BiolchiniInvestor Relations [email protected]. (55 11) 3759-7516
Thank you!