annual report 2017

All of our operations showed significant progress in 2017, supported by the first signs of economic recovery, after a three-year recession that caused extensive social-economic damage and put 13 million people out of jobs in Brazil.

Traffic on our toll roads increased by 3%, shopping mall sales rose 7.5%, our residential real estate development business sales growth reached 10%, and cargo volume on our rail lines grew 19% – all undeniable indicators of the economic recovery trend. This performance, a result of the first steps of the country’s recovery process, combined with the contribution of new assets incorporated into our portfolio and the significant investments that matured during the period, supported our EBITDA growth of almost 110% year-over-year.

These results confirm the correction of our strategy adopted in recent years, of expanding investments when the country was facing serious adversities, and are also a sign of support and
confidence from our investors, funding providers and partners in Brazil´s capacity to overcome challenging times.

Our companies invested approximately BRL 5 billion in expansion: we inaugurated a new VLI terminal in Santos, a hydroelectric power plant and a bagasse-fired thermal generation plant; finished the new L’Oreal headquarters building in Rio de Janeiro and the building at Nações 17,007 in São Paulo; opened the first 520 km (of a total of 4,300 km) of power transmission lines and concluded the lane duplication of BR-116 highway in Serra do Cafezal, as well as other stretches on Autopista Fluminense, Intervias and Autovias; finished 16 real estate developments totaling 3,400 units and expanded our agricultural area in the State of Maranhão.

Investments in new assets and businesses surpassed BRL 20 billion in 2017. We completed the acquisition of Nova Transportadora do Sudeste S/A (NTS), a gas pipeline network in the Southeastern region of Brazil, with an investment of approximately BRL 16 billion, as well as BRK Ambiental, where we invested approximately BRL 3 billion together with our partners. We added a new high-quality commercial building to our portfolio (Tower B of the EZ Towers Complex in São Paulo) for BRL 670 million and incorporated another 300 MW of power generation capacity, distributed across 14 new wind farms in the State of Bahia, resulting from the acquisition of Terra-Form Global.

Although the 2018 scenario holds a great degree of political uncertainty, especially due to the October general elections, we are confident that the high resilience of our portfolio, combined with the focus on operational excellence and conservative debt levels, will allow us to harvest the results of the investments we have made in the coming years.

Left: NTS´ gas compression station; Right: BRK´s sewage tratment station.

On a personal level, I am closing my cycle as the CEO of Brookfield Brasil, undertaking the duties of Executive Chairman and entrusting the position I’ve held for the last 10 years to my colleague, Henrique Carsalade Martins, who became CEO in January 2018. I am extremely pleased to make this transition, both for the pleasure of having experienced such intense and profitable years at our company and for the possibility of passing on the position to someone who will bring along a great deal of energy, professional capacity and insight.

To all those who have participated in this building process, my eternal gratitude.

To our investors, lenders and shareholders, as well as our thousands of employees who have supported us and contributed to our success, our most sincere thanks.