Duratex changes its name to Dexco and begins a new growth phase

The 3-year investment plan is worth around €400 million, including almost €100 million to be spent on the construction of a new tile factory in Botucatu (São Paulo)

Duratex, a major Brazilian group which owns the brands Ceusa and Portinari (ceramic tile producers acquired respectively in 2017 and 2019), Deca and Hydra (sanitaryware, taps, accessories), Duratex and Durafloor (wood products for the furniture industry, laminate and vinyl flooring), has approved a R$2.5 billion (approximately €400 million) investment plan to sustain the group’s new growth cycle over the period 2021-2024. To mark the start of the new development phase the company also announced a change of name, becoming Dexco on 15 July.

As chairman Antonio Joaquim de Oliveira (Photo on the right) explained, the investments will be used to expand all the group’s divisions – Bathroom Furnishings, Tiles and Wood (Dexco’s core business, which will receive R$500 million, around €80 million) – in order to increase production capacity by 10% and expand the forestry base in northeastern Brazil.

Antonio Joaquim de Oliveira

The largest sum (R$1.1 billion, approximately €175 million) will be allocated to Deca for the purpose of boosting capacity by 30% in the sanitaryware segment (R$550 million, more than half of which will be used for factory automation) and by 35% in the tapware segment (R$600 million).

But the most ambitious project of all concerns the Tile division. In addition to modernising the existing lines in Urussanga and Criciuma (Santa Catarina) and installing new automated equipment, Dexco plans to invest R$600 million (around €96 million) in the construction of a new Industry 4.0 factory in Botucatu in the state of São Paulo which is scheduled to come into operation in 2023. “It will be the most modern factory in Brazil,” says Antonio Joaquim de Oliveira. “It will have two lines for large slabs and a production capacity of 10 million sqm/year, increasing the group’s total volumes by 35%” compared to the current level of around 28 million sqm/year. “We chose Botucatu because of its location close to Brazil’s most dynamic markets, the greater availability of natural gas, and its proximity to the group’s other plants in the wood sector (in Agudos) and bathroom furniture (Jundiaí),” he continues.

The entire investment programme will be financed by shareholder equity, “spread out over three years to keep the debt level low “, noted Oliveira. As a result, production in the three business segments will be expanded gradually between now and 2024 and will allow for a good improvement in margins. For the same reason, the Bathroom (Deca) and Tile divisions’ teams were merged in the first half of 2021, a move that Oliveira expects will generate synergies worth R$150 million (around €24 million) over a period of four years.

Alongside the increase in production, Dexco’s development plan also includes parallel initiatives such as the creation of a Corporate Venture Capital fund (with initial capital of R$100 million or approximately €16 million) for investments in start-ups and scale-ups involved in technological innovation of processes and products suitable for integration into the company’s business.

A further R$100 million has been used to acquire a minority stake in ABC da Construção, a construction materials distribution company with a chain of 93 physical stores in the states of São Paulo, Rio de Janeiro and Minas Gerais. According to Oliveira, the company has strong growth potential and already boasts excellent logistics and a well-established e-commerce business. In this case, Dexco’s aim is to cater more closely to end consumers and gain a better understanding of their needs, while also developing its digital capabilities in market data management. A further step towards a greater presence in the retail market will be the opening of the first Dexco flagship store, planned for 2022.

“We are optimistic about the trend in the civil construction market, which is expected to remain positive at least for the next three years,” says Oliveira. “70% of our sales are for renovations and we are still riding the Brazilian real estate’s expansionary wave that began in 2019.”

• 2020-2021 results

Dexco Group, whose major shareholders are Itausa (Investimentos Itaú SA) and Bloco Seibel, reported a consolidated net revenue of R$5.88 billion in 2020 (approximately €940 million, up 17.3% on 2019), along with EBITDA of 21.9% at R$1.29 billion (+41.7%).

The Wood Division contributed 55.3% to the sales results, Deca (Bathroom Furnishings) 29.2%, and the Tile Division 15.5%.

The Tile segment was the one that recorded the biggest increase in revenue (+82.3% on 2019) to reach R$910.9 million (approximately €145.5 million), driven by a similar percentage increase in sales volumes to 24.3 million sqm (the process of integration of Portinari was completed in 2020 following the acquisition on 22 May 2019 and the same year a new line for large size tile production came into operation). Although exports increased, they continued to make up only approximately 10% of revenues.

The results for the first half of 2021 are even more positive. Consolidated net revenue increased by 69.5% compared to the first half of 2020, reaching R$3.74 billion (approximately €598 million), with EBITDA rising to 26.6%. Revenues in all three divisions grew strongly: Wood +83.8% (sales volumes +43.2%), Bathroom Furniture +54.7% (sales volumes +37.2%) and Ceramic Tiles +48% (volumes +31.8% to 12.3 million sqm).