Private sector starts new investment cycle
Valor Econômico
On Friday, the Board of Directors of Meias Lupo hit the hammer and decided to more than double the volume of investments in 2010, going from the R$ 18 million (US$ 10 million) defined last year to R$ 37 million (US$ 20.6 million). R$ 32 million (US$ 17.8 million) of that total should be intended for the purchase of machinery and accessories, mainly for the production of sportswear. In February, Lupo had already received 98 machines imported from Italy at its plant of Araraquara, in São Paulo, to increase the production of socks. With those measures, the company intends to increase the capacity by 15% over 2009, when it produced 90 million socks, says the commercial officer of Lupo, Valquírio Cabral. "The earnings are expected to grow by 20% to 22% this year. In the first two months, the increase was nearly 24%".
The history of Lupo is a good portrait of the investment cycle that starts getting strong again in Brazil. The main engine of the company is the domestic market, which accounts for 95% of its businesses. Companies focused on the domestic market are investing in the increase of the productive capacity, pushed by the strength of the labor market and by a wide range of credit, says the head of the Economic Department of the BNDES (National Development Bank), Fernando Puga. The setting is more positive in the oil and gas sector, with inversions driven by Petrobras.
The amount of companies that have announced investment projects greatly increased as of November according to a survey made by Bradesco. In February, they were 103, the highest level since the 110 from May 2008. The Director of Surveys and Economic Studies of Bradesco, Octavio de Barros, says the investments are "sprayed" through the economy, highlighting that the industry, which has suffered a lot in 2009, has resumed investing heavily. As Brazil showed strength at a time of great uncertainty, the companies feel safe to invest in projects of greater magnitude, with wide horizons, says Barros, who foresees an increase of 21.1% for the investments this year. The resumption of the inversions is clear in the demand for loans for the purchase of machinery and equipment with the BNDES, fueled by the low interest rate charged in the Program for Investment Maintenance (PSI), 4.5% a year.
In the sectors aimed more at the domestic market, the car and the petrochemical sectors are the ones that stand out the most. The car industry should invest R$ 32 billion (US$ 17.8 billion) between 2010 and 2013, 40.8% more than in the cycle from 2005 to 2008. In the petrochemical sector, the projects get to R$ 36 billion (US$ 20 billion) between 2010 and 2013, 87.1% above the prior period. Another good piece of news, according to Puga, is that there have been positive signs in sectors that export important industrial inputs, such as paper and pulp, and steel.