STRATEGY AND COMPETITIVE ADVANTAGES

Strategy

• Sustainable growth of the businesses
  Our main target is to increase the value invested by our shareholders, as well as strengthen our presence in the markets in which we operate, through the sustainable growth of our businesses. Historically, our businesses grew organically and through acquisitions. We aim at continue with this strategy both in the domestic and international market, always respecting the community, our employees, shareholders and the environment.
  
  
• Build on the strength of our fuels distribution brands
  Our brands in the fuel distribution business, Ultragaz and Ipiranga, have a high recognition associated with quality, safety and efficiency. We intend to reinforce this market perception by continuing to supply high quality products and services and introducing new services and the maintenance of the highest levels of operational excellence.
  
  
• Maintain exclusivity in LPG distribution
  We intend to preserve our strong relationship with dealers by keeping their distribution exclusivity and avoiding geographic overlap. We plan to continue to invest in training our dealers, in order to maximize efficiency, further strengthen our relationships with them and promote the high standards of our distribution network. In parallel, we plan to increase our operational efficiency and productivity at Ultragaz.
  
  
• Competitive advantages in the fuel distribution market
  Ipiranga aims at differentiate itself in the market by offering added value services to its products, aiming at obtain the consumer preference, supported by an agile and flexible relationship with its clients and partners.
  
  
• Expand Oxiteno through scale growth and technological differentiation, inside and outside Brazil
  We intend to continue to expand Oxiteno’s production capacity ahead of demand in Brazil. As we expand, we plan to continue our efforts to apply the best global practices to Oxiteno’s plants and production processes objecting to maintain its differentiated level of technological competitiveness.
  
  Oxiteno will continue to strongly invest in research and development focused on developing new product applications to meet clients’ needs, offering products with higher added value. Oxiteno’s growth strategy includes the expansion in the specialty chemicals international market through acquisitions, consolidating the leadership in Latin America and increasing the presence abroad by opening commercial offices.
  
  
• Expand Ultracargo’s operations as provider of integrated logistics services
  Ultracargo’s strategy is to invest in the optimization of its assets through the rendering of differentiated services, expanding its scope and developing new transport modes, services and markets.
  
  
• Maintain financial strength
  We seek to maintain a sound financial position to allow us to pursue investment opportunities and enhance our shareholders’ return on their investment in our company. Credit rating agency Moody’s classifies Ultrapar as Baa3, equivalent to the so called investment grade. Standard & Poor’s rates Ultrapar as BB+, one notch below investment grade, with positive outlook. Additionally, all foreign currency denominated debt is hedged until its maturity. We have been consistently distributing dividends to our shareholders. During the last five years we have paid yearly dividends representing an average of approximately 49% of our net income.
  

Competitive Advantages

• Leading market positions across businesses
  Ultragaz is the largest LPG distributor in Brazil and one of the ten largest independent dealers in the world in terms of volume sold. It has a national market share of 24% and is present in every state, excluding the Amazon region, reaching more than 10million homes. For the year ended December 31, 2006, Ultragaz’s total volume sold reached 1.5 million tons of LPG.
  
  In 2007 we acquired the fuel and lubricant distribution business of the Ipiranga Group in the South and Southeast regions of Brazil. Through this acquisition Ultrapar became the largest private company in the fuels distribution business in Brazil, with approximately 15% of market share. In 2008 Ultrapar consolidated its vice leader position in the sector with the acquisition of Texaco’s branded fuels distribution business in Brazil, reaching nationwide coverage in the sector.
  
  Oxiteno is the largest producer of ethylene oxide and its principal derivatives in the South America region and is also a major producer of specialty chemicals. Our chemical operations supply a broad range of market segments, particularly agricultural chemicals, food, cosmetics, leather, detergents, packaging for beverages, thread and polyester filaments, brake fluids, petroleum, paints and varnishes. For the year ended December 31, 2006, Oxiteno sold approximately 542 thousand tons of chemical products. In the Brazilian market for these products we compete principally with imports.
  
  Ultracargo is a leading provider of integrated logistics for chemicals and fuels, with 21% of Brazil’s tank storage capacity for special bulk cargo. Ultracargo accounts for approximately 70% of all tank capacity for liquids at the Aratu terminal in the State of Bahia, which serves South America’s largest petrochemical complex.
  
  
• Solid business mix
  Our operations encompass the distribution of fuels, the production of ethylene oxide and its derivatives and the transportation and storage of special bulk cargo. We believe our businesses mix provide us with increased financial capability and flexibility across the businesses in which we operate. Our solid business mix makes us less vulnerable to economic fluctuations and allows us to pursue growth opportunities as they arise in any of our business segments.
  
  
• Highly efficient LPG distribution network
  In addition to making direct sales of bottled LPG, Ultragaz is the only LPG distributor in Brazil with an exclusive network of independent dealers. This network comprises approximately 4,000 dealers who exclusively represent Ultragaz. This has enabled Ultragaz to control the quality and productivity of its dealers leading to a strong brand name recognition associated with quality, safety and efficiency, and also allows frequent contact with its customers. In addition, Ultragaz was the first to introduce LPG small bulk delivery in Brazil, with lower distribution cost than bottled distribution, and over the years has built a strong client base.
  
  
• Cost efficient operations
  Oxiteno’s operations have a high degree of production efficiency derived from scale. Ultragaz has significant market presence in densely populated areas, which allows it to operate its filling plants and distribution system with a high level of capacity utilization and efficiency. Additionally, the introduction by Ultragaz of a small bulk delivery system has also collaborated for a more efficient LPG distribution for the commercial segment.
  
  
• Strong operational track record
  Our business has presented a solid operational track record. Since 1998, we experienced consolidated annual compounded average growth rates of 15% in EBITDA and 26% in net income, in spite of the overall macroeconomic volatility in Brazil during this same period. This growth has been driven by the operational performance of all our businesses.
  
  
• Experienced management team
  We are led by a strong and experienced management team with a proven track record in the LPG, petrochemical and specialized logistics industries. Our senior management team possesses an average of 20 years of experience in the company, is a significant shareholder in our company, and has variable remuneration linked to performance and value generation, measured by an economic value-added model (EVA®).
  
  
• Alignment with our shareholders’ interests
  Our by-laws provide important rights that align the interests of all our shareholders, including our controlling shareholders, management shareholders and minority shareholders. If our controlling shareholders sell their controlling stake in our Company, our by-laws provide that holders of our preferred and common shares have the right to sell their shares in a public tender offer at the same price and with the same payment terms as our controlling shareholders (Tag along right).