Business strategy
The following ongoing projects implement Aracruz business strategy:
- Economies of scale resulting from new capacity increases. The commencement of the operation of the Fiberline C Expansion Project at the end of May 2002 increased Aracruz nominal production capacity from 1,300,000 to over 2,000,000 tons per year in the middle of 2002. The Fiberline C Expansion Project relies on Aracruz technology advances and benefits from its existing overhead and management structure, which has absorbed the new activity without significant additional fixed costs.
- Improvements in forestry technology using advanced genetic techniques, which will result in an increase in the forest yield.
- Optimization of transportation logistics. Transportation of wood to the Mill comprises a large portion of the cost of the pulp production. Improve in transportation logistics and costs are a priority for the Company. At the end of 2002, Aracruz improved the logistics of its rail transportation. The Company also launched its Multimodal Transportation Systems?Maritime and Rail?, the main objective of which is to enhance logistics and further integrate its Mill-Port-Forest system.
- Redesign of management processes with the support of state-of-the-art information technology in order to improve efficiency and reduce costs. In 2001, Aracruz implemented new modules of the company-wide SAP R/3 enterprise system that controls, simplifies and integrates its business processes. The Company is currently using virtually all the modules supplied by SAP, both in the pulp mill and the sawmill operations. Recently, Aracruz has selected the ?mySAP.com? platform to improve connectivity with customers and suppliers.
- Increase of competitiveness. The competitiveness of Aracruz business operations, combined with its significant cash generation capabilities, has led the Company to evaluate from time to time various future strategic alternatives, including further increase of current pulp operations either through acquisitions or expansion of existing capacity, and/or further acquisitions of additional forests.
Updated on January 5, 2006
