The exit of the cement giant LafargeHolcim from the country adds to that of other multinationals, such as Sony, Ford, LG and Mercedes-Benz, which also announced divestments in Brazil

After the multinationals Sony, Ford, LG and Mercedes-Benz announced divestment in the country, the multinational cement giant LafargeHolcim communicated to the Brazilian subsidiary, earlier this week, that it will sell its operations in Brazil. If carried out, the deal will cause a big change in the industry, since LafargeHolcim is the third largest producer in the country, behind Votorantim and Intercement, in terms of installed capacity, according to 2017 data.

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Itaú BBA bank was hired to lead the sale process. The transaction could reach US$ 1,5 billion (the equivalent of R$ 8,35 billion), according to executives interviewed by the agency.

Largest cement company, LafargeHolcim is present in nine states in the Southeast (São Paulo, Rio de Janeiro, Minas Gerais and Espírito Santo), Northeast (Bahia, Pernambuco, Paraíba and Rio Grande do Norte) and Midwest (Goiás) regions. According to the company's website, there are ten industrial plants, 1.400 employees in the country and 90 worldwide.

The move is part of LafargeHolcim's move to sell assets to lower its debt. Since 2018, for example, the company has sold a number of its assets outside Europe, such as those located in Indonesia and Malaysia.

Other multinationals also announced leaving Brazil

If materialized, the exit joins the movement of other multinationals from different sectors, such as Sony, Ford, LG and Mercedes-Benz, which announced divestments in Brazil, in recent months, amid the economic crisis in the country.

The departure of the group along with Sony, Ford, LG and Mercedes-Benz will happen despite the civil construction market live a positive moment in Brazil. According to the National Union of the Cement Industry (SNIC), the production of the material increased by 19% from January to March 2021, to 15,3 million tons, compared to the same period of the previous year. In the pre-pandemic, production had been hampered by a period of heavy rains. In March, the high was 34,6% compared to 2020, to 5,5 million tons.

Infrastructure concessions can help accelerate cement consumption

The latest SNIC report states that while there is some good news on the horizon – such as infrastructure concessions, which help to accelerate cement consumption -, there are also negative signs for the economy, such as the distribution of “thinner” emergency aid and a high unemployment rate, above 14%. Home sales, however, remain strong, boosted by the single-digit base interest rate.

“You can't bet on Brazil's long-term growth. Companies don't have time to waste, they will favor places with stronger growth. Brazil is lagging behind in the process of reforms and infrastructure. The concessions have happened with very little growth in construction, of airports ready, without a more significant push for heavy construction. Brazil became impoverished and expensive,” says Sergio Vale, chief economist at MB Associados.

In a move contrary to Sony, Ford, LG and Mercedes-Benz, the multinational auto parts manufacturer Bosch decided to bring its production from the USA to Brazil

The German multinational auto parts manufacturer, Bosch, was against the movement of Sony, Ford, LG and Mercedes-Benz, which decided to withdraw investments and production in Brazil, and brought to the country the production of injectors and injector nozzles for trucks, which were produced in its factories in the United States, thus expanding the division of diesel injection systems in its factory in Curitiba.

Furthermore, the intention of the multinational german is to supply not only the domestic market, but also to export a large amount – which can reach up to half of production.