Favorit debuts in SP with first unit outside the South
Valor Econômico
Founded in 1996 by German Rudolf Fritsch, then 58 years old, steel distributor Favorit, headquartered in Cachoeirinha (RS), opens this Friday the first unit outside the southern region. The new branch is located in Itupeva (SP), in a region between the capital of São Paulo and the municipality of Campinas, and it will cater to the clients of the company in São Paulo, Minas Gerais, Rio de Janeiro and Northern of Paraná.
According to Fritsch, the expansion follows the recovery of the steel sector after the crisis and, in the coming years, it may include the opening of a branch in Minas Gerais. With a portfolio of 2 thousand clients, Favorit is seeing strong growth in the demand in sectors such as machinery and equipment, autoparts, tractors and agricultural implements, he explained. Besides the headquarters, the company has units in Caxias do Sul, São Leopoldo and Gravataí, in Rio Grande do Sul, besides Curitiba, in Paraná.
Focused on the lines of steel for mechanical construction, seamless pipes, stainless steel, special steel for tooling and matrices, structural profiles and beams, the distributor supplies cut and drawn parts and it invested R$ 7 million (US$ 3.9 million) in the new unit. The branch of São Paulo may already account for 20% of the earnings in 2010 and increase the levels of profitability of the company, due to the gains of scale of the operations, informed the entrepreneur. The projection of Favorit is to end the year with earnings of R$ 215 million (US$ 119.4 million), 25% more than in 2009, but it is still 15% below the result of 2008. The foreseen sales volume, on its hand, gets to 43 thousand tons, compared to t last year's 28 thousand tons and 40 thousand tons in 2008, a pace of expansion above the variation of the earnings, which was affected by the fall in the prices of steel in 2009.
According to the businessman, the prices of the steel for mechanical construction retreated 15% in May and another 5% in December last year due to the fall in the demand. Now, with the reheating of the sales and the perspectives of high in the cost of the iron ore, the sector expects the beginning of the process of arrangement of the tables, but not before 60 days, believes Fritsch. According to him, the steel industries fear the Government facilitates the imports in case the internal prices rise too quickly. The average terms for payment granted the clients are also going back to normal. At the peak of the fall in the sales, in the first half of last year, they [terms] went from 35 to 60 or even 65 days. Today, according to him, the period is already near 50 days and it should return to pre-crisis levels within the coming months.
Favorit purchases steel from steel industries such as Gerdau and Vallourec & Mannesmann, but it imports nearly 5% of what it consumes from Europe, basically large gauge bars and blocks heavier than 20 tons. The company also has an inventory of 16 thousand tons, enough to supply the market during four months in the current pace of sales.