Message from
the Management

In 2015, Ultra benefited from its strategic option for resilient businesses, with a significant operations scale and scope for differentiation. The company was confident in executing its investment plan, and maintained its solid and stable financial position.

Corporate governance,
strategy and value creation

During a year marked by the worsening of the economy and a political crisis that had a significant influence on the business community’s willingness to invest, Ultra benefited from its strategic option for resilient businesses, with a significant scale of operations and scope for differentiation. The company was confident in executing its investment plan, increasing the amounts invested every year, and maintained its solid and stable financial position, a characteristic of its business culture. The results continue to increase reflecting decisions taken and investments made from previous years, even facing a more challenging economic condition. In 2015, Ultra reported a consolidated EBITDA of R$ 4.0 billion, an amount 25% higher than that in 2014. In the same comparison basis, net income increased by 21%, reaching R$ 1.5 billion.

As another important step taken to the constant evolution of our corporate governance and to become a more diversified and solid company we had the renewal of part of the Board of Directors, now composed by professionals with new experiences and skills to strengthen the company’s decision making process. There were also changes in the Executive Board, with the transfer of André Covre, after eight years as Chief Financial and Investor Relations Officer, to assume the position of Chief Executive Officer of Extrafarma, and the arrival of André Pires to assume the position of Chief Financial and Investor Relations Officer.

In order to continue the development of our multi-business culture, Ultra took new steps in 2015 in an effort to deepen the preparation of its leadership to deal with future challenges, with a demand for new skills and business opportunities. For this reason, a robust development program was launched with the purpose of supplying the company with skilled leaders, endowed with flexibility and adaptability in all Ultra’s businesses.

In 2015, Ipiranga maintained its expansion strategy of its service stations network, mainly based on the conversion of unbranded service stations and the opening of new ones. This strategy encompasses the whole country, mainly focused on the Midwest, Northeast and North regions of Brazil, which offer a combination of attractive factors: at the same time these are areas in which there are more unbranded service stations that can be converted, such areas also have higher growth rates of consumption of fuels in Brazil. In 2015, Ipiranga’s service stations network increased by 2%, totaling 7,230 points of sale.

Besides, in the aspect of differentiation through diversification and innovation in products, services and convenience, Ipiranga expanded its am/pm network, the largest convenience store chain in Brazil, by 12% in 2015, reaching 1,910 units in total. Ipiranga presented in São Paulo new configurations of the am/pm store concept, which increases the offer of convenience in urban service stations by offering fresh products – fruits, vegetables, meats – and a broader range of fast foods. It was also launched in São Paulo a flagship store of the “am/pm Estação”, a model developed for road service stations, with a broader offer of convenience and personal care for long distance drivers and travelers.

Our differentiated position enables us to take advantage of cross-fertilization opportunities to generate value. Extrafarma opened drugstores in Ipiranga’s service stations. The initiative add value to points of sale, increasing convenience and differentiation and boosting profitability. Simultaneously, this strategy offers Extrafarma a growth accelerator.

Upon implementing the strategy of seeking leadership on surfactants in the Americas, in November Oxiteno approved the building of an alkoxylation plant in Pasadena, State of Texas (USA), with expected investments of US$ 113 million until 2017. With this plant, Oxiteno will significantly expand its presence and competitiveness in the largest surfactant market in the world, the United States, and will strengthen its position in NAFTA trading bloc, where it will take advantage of more competitive raw materials and efficient logistics.

Ultragaz continued to use the resilience of its market and the solid competitive differential of its brand and the reseller network. Following its focus in a more differentiated performance and the tradition of creating new niche markets and sales channels, in 2015 Ultragaz accelerated the implementation of “UltraPronto”, a modality of hiring of services in bulk segment, launched in 2014, which allows the installation through a turnkey concept, reducing the execution time of the customer’s project by 30%. Other examples of increasing the convenience to customers and expansion of the potential of Ultra’s cross-business benefits: Ultragaz is now selling “vale-gás” voucher in am/pm and Extrafarma stores and offering Ipiranga’s “Km de Vantagens” loyalty program to its customers.

In April 2015, Ultracargo suffered a high impact incident which required an unprecedented mobilization of resources to be overcome: a fire occurred in six tanks in Santos. The incident demanded efforts from Ultra and its businesses to, first of all, cooperate with the authorities to fight fire and avoid, as far as possible, its potential impacts to third parties. After this incident, the company made efforts to deal with its consequences and promote the repair and recovery of the site. Due to the incident, the activities of part of Santos (SP) terminal remained suspended until the end of 2015, which affected Ultracargo’s pace of business.

In parallel, Ultracargo continued to seek and analyze opportunities to strengthen its position as port operator, taking advantage of its geographic location, with presence in the most important ports for handling of bulk liquids in Brazil.

Extrafarma focused throughout this transition year on raising its management standards in the retail pharmacy business, preparing itself to a stronger growth. The unit improved the quality standards of the stores, which allows a better purchase experience, with team qualification, better visual communication and focus on the consumer.

For this reason, we made investments in researches, team training and in a program with all stores’ managers with the purpose of implementing an entrepreneurship culture and owner’s mindset.

As a whole, Ultra and its businesses starts 2016 stronger and prepared to assess opportunities for market gains occasionally offered by the Brazilian economic situation for companies managed with the right balance between prudence and ambition. In its strategic choices so far, the company has taken important measures to maintain itself as an institution, always pursuing value creation and growth. This is the Ultra’s commitment.

Paulo G. A. Cunha
Chairman of the
Board of Directors

Thilo Mannhardt
Chief Executive Officer