Liquid Fuel Distribution Sector to Remain Attractive for Investors

Interview with Sidney Amaral, Vice President of Royal FIC Petróleo

How would you define the sector you work on?

Our sector is already consolidated and well defined. The energy sector has not undergone significant changes during the last 10 years, but we evaluate some recent changes on the business environment mainly in 2013. After a calm period, some important changes happened. The sector grew around 5% each year during 10 years and in 2013 it grew 4.5%. This growth is well above the GDP, what tells us that the energy sector, specially the liquid fuel sector, remains solid and is very attractive for investors.

Let us talk specifically about your company. Where did your company stand last year and where does it stand now?

Royal FIC is a Brazilian company that has been on the market for 17 years. It has an annual turnover of 2.1 billion Reals selling liquid fuel (gasoline, diesel and hydrous ethanol). In 2012 we had a billing result of 1.8 billion reals and in 2013 we had a result of 2.1 billion Reals. Our sales grew 20% in 2013 and we have high expectations for this year.

Do you think that the growth will be maintained in the future?

There is no doubt about it. Brazil is still a very attractive country. Although we have an inflation rate of 6% and a GDP growth of 2%, during this year we will host the World Cup and, in two years, we will host the Olympic Games. Brazil still has a lot to do in terms of infrastructure and, as the PAC (Programa de Aceleração de Crescimento – Growth Acceleration Program) projects become a reality, this country will continue its strong growth.

What happened with the company last year?

FIC has a national participation, but we thought we needed to be globally connected, so we looked for investors outside Brazil and we now have some North American investors.

We have been investing in technology to ensure our system’s reliability. We have implemented SAP Software more than 10 years ago, the company has an audited balance for 2005, and FIC is also 3 times certified by ISO 9001, ISO 14001 and OHSAS 18001 standards.

There was no big company in the fuel distribution sector, because the multinationals terminated distribution in Brazil some years ago. Nowadays, we can observe a comeback and that’s why we made contacts to attract investment and to be globally connected.

Are you open to other national or international investors?

Yes, we are. The company was closed to the outside during 17 years (a family managed the company). This company underwent a professionalization phase, with the establishment of the Board of Directors, the Executive Vice-President, and the CEO. After this phase, the company is open to the world and ready to talk with Brazilian and foreign investors.

Why should investors choose your company? What are the advantages that the company offers?

First, because we are the number one company in the “white flags” market (gas stations that aren’t under a multinational flag). That fact already shows we are leaders and our company is very successful.

The energy sector presents no big risk to investment. Diesel alone accompanies the GDP growth in percentage, because diesel has a bigger market than gasoline. Diesel goes to agribusiness and to the corporate market (companies, end consumer, etc.). In the last 10 years, diesel grew at a rate of 3.9% each year, which shows there is a solid market. That is why investors know that their investment is safe.

Can you describe the type of clients you have?

We have a much diversified client portfolio. In the first place (our main focus) comes the independent gas stations, in second place comes the agribusiness and in third place comes local authorities and public organizations.

Is the business with independent gas stations likely to grow?

The agribusiness is the most likely to grow. However, the biggest market is the one of the independent gas stations.

Which are your projects in terms of sales and strategic moment for 2014?

We are trying to perform changes on the inside. That means we are improving in terms of business management, taking our team towards execution. We have a well-structured plan to focus our team on the execution of what we already planned at the beginning of 2013. We are trying to change into a more pragmatic, day-to-day management, leaving medium term issues aside and taking care of short-term issues to focus on daily results.

If you could accomplish your dream goals, what would be the company’s situation in five years from now?

We want to sell 3 times more than we are selling now. Our sales value is of 2 billion Reals/year and we want to be able to sell between 5 and 5.8 billion Reals/year five years from now. It is possible to be done, because, although we have a big billing result, we have a small market share (1.3%). If we multiply it for 3, we will attain a market share of 4%.

Our strategy is also to associate with an international flag, but we are still brainstorming.

Is there the possibility to sell the company completely?

To be 100% bought is not part of our plan. The company shareholders know they have a good business on their hands, so the company would like to associate, to merge, and to sell a part to become a bigger company.

Have you ever thought about diversifying your products or services?

We have some plans to enter the lubricants and additives markets. We have interest in these niche markets.

In general, this sector does not have a good image in terms of environment. Which measures does the company take in terms of environment protection?

We are a company certified by ISO standards. The sector image is not yet positive, although it has somewhat changed over the last 10 years. NP, the regulatory agency of the sector has been working seriously and closing companies that are not working correctly. These actions have brought credibility to the sector. We hope NP is able to continue this supervision work.

What would be your message to our Brazilian and international readers? What would you like to say about your sector and about your company?

Brazil is still a promising land and, to invest here, is still safe. In general, Brazilian people speak English and we are able to communicate in a business environment.

Our country is still very young and we have much to grow. Just as an example: In the USA, you have 1 car per 1.5 inhabitants, in Europe you have 1 car per 3.5 inhabitant, In Brazil you have 1 car per 8 inhabitants. That means that there are many cars yet to be sold. That is also one of the reasons why some automotive industries have been investing and building industrial centers in national territory. Having this in mind, we conclude that the Brazilian business environment in the liquid fuel sector is a favorable environment for investment and for return on investment.

Investing in a winner company like Royal FIC is a step in the right direction.

FAIR USE POLICY
This material (including media content) may not be published, broadcasted, rewritten, or redistributed. However, linking directly to the page (including the source, i.e. Marcopolis.net) is permitted and encouraged.