We continuously review and improve our strategic planning, based on a constant factor: our focus on our long-term vision and constant effort to increase our profitability, aiming at maximizing shareholders return. We have consistently exceeded the targets set forth in our strategic plan in past cycles, though robust employee engagement and clear communication.
Strategic Planning Cycles
Consistent and conservative growth: Our planning is based on consistent and conservative growth in a structured way. Accordingly, a cycle that is focused on volume growth is followed by a cycle of stabilization of operations, while the next cycle will resume a growth focus, and so on.
One principle of our growth strategy is to grow without putting our operations at risk. As a result, our growth must be fueled by our competencies. For example, over the last 10 years, we have consolidated our performance in the high-standard segment and thereafter we began operating in the medium/high standard segment. Subsequently, after consolidating our expertise in medium/high, we moved on to the low-standard segment, without geographic expansion, and reached a leadership position for this segment in the metropolitan region of the city of Porto Alegre.
Focus on Brazil’s Southern Region: Leveraging our historical experience in the area, we have maintained a strong focus on the southern region of Brazil, where we enjoy a deep knowledge of real estate development activities and growth opportunities. Among our initiatives in Brazil’s south, and because of our belief that combining our know-how with that of other companies would lead to success, we have built partnerships that were very well received by the market. One example of this is the speed of sales of real estate developments with our partners, such as the incorporation of Urbanizadora, a company focused on subdivision and urbanization in the interior of the State of Rio Grande do Sul, Brazil, through a partnership with Arcadia Urbanismo, a significant operator in this market since 2002. We are present in 10 cities in the State of Rio Grande do Sul, and we believe that our expansion via Urbanizadora in this region, and also in the interior of the State of Rio Grande do Sul, fulfilled pent-up demand for new subdivisions.
Planning Focused on Efficiency, Products and Strength: Our planning is based on three fundamental pillars:
- Efficiency: Our efficiency pillar underlies our planning and focuses on attracting, developing and retaining the best professionals, in addition to our development as a company with an above-average operational capacity, and oriented to the satisfaction of our customers.
With a strong “ownership” culture, we reinforce our values for each employee on a daily basis by:
- being customer-oriented;
- being disciplined;
- focusing on results;
- being high-performance team; and
- remembering that the Company is comprised of people.
Based on these values, continuous improvement of our processes, and the qualification of our team, in 2019 we spent only 5% of our net operating revenues on administrative expenses, and maintained an average turnover rate of only 3% for the years of 2019, 2018 and 2017.
- Products: We design and develop each of our products based on our customers’ needs. This focus allows us to anticipate and meet their demands, always guided by our purpose of transforming the way that people live, work and interact, through our products. Since 2017, we have launched over four thousand units, considering all our segments of operations. These launches satisfied previously unmet demand.
Thinking about our customers and their needs, we strive to create innovative products that better suit developing market demands; add value to our developments; and, consequently, increase our profitability, as evidenced by the market recognition achieved by our differentiated products.
To accomplish these goals, we begin our development process by mapping and purchasing plots of land that are the most appropriate in terms of meeting market demands and accommodating the projects created by our team. We follow a structured process in order to ensure favorable conditions required for acquisition of new plots of land based on the expertise of team, developed since our founding. We develop a robust landbank that is comprised of plots of land in desirable locations, contributing to our growth and market leadership.
Currently, we have PSV of R$11 billion (including land that we have the option to purchase) that is intended to meet the needs of our target customers through the projects developed by our specialized team. Each of our developments has unique attributes that are thoroughly planned to best accommodate the lifestyle desired by our customers, and to deliver to our investors one of the highest ROAEs in the real estate market, according to publicly-available sources.
Together with our other operating areas, our engineering team is constantly seeking new technologies in order to continue delivering quality in construction, with focus on a “zero problems” culture aimed at reducing costs and increasing customer satisfaction.
- Strength: In order to achieve solid and sustainable growth, we seek to obtain a clear understanding of the risks that are inherent to real estate development activities, so that we can be prepared and protect ourselves. Accordingly, we create our products based on numerous studies and on attention to detail, which we believe is the only way to minimize costly errors. Through the application of this principle, we have maintained our operational efficiency and delivered earnings and positive ROAE throughout the last decade (2010-2019), even in years of economic and political crisis in Brazil (2015-2019).
With controlled indebtedness and low levels of financial leverage, we are able to avoid many of the significant risks inherent to the intense capital needs common in the civil construction sector.
Additionally, our risk monitoring structure cover operational, financial, legal, reputational and other risks to which we are subject. Our culture is serious and ethical and relies on embedded controls that enables us to anticipate, address and mitigate risks in a proactive manner and with minimal financial and/or reputational impact.
Finally, through multiple social responsibility programs, including the adoption of squares and parks in the city of Porto Alegre, we give back to the regions where we operate, and participate in joint actions with the local community, which enables us to build a strong brand that is recognized by the market, and subject to continuous renewal as we adapt to new needs.