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Corporate Presentation | 2Q12
“Forward looking statements included in this presentation regarding the
Company’s business, operating and financial results and Company’s growth
are only predictions and were based on management's expectations
Disclaimer
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regarding future performance. These expectations are highly dependent on
market conditions, Brazilian economic scenario, industry performance and
international markets, and are therefore subject to change.”
• Recognitions: the Eternit’s Governance is awarded again
IR Magazine Award – best program for individuals investors
APIMEC 2012 Award
• Reduction of sales volume:
Chrysotile Mineral: 6.6%
Fiber Cement: 15.0%
Highlights of 2Q12 (when compared to 2Q11)
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Concrete Tiles: 7.8%
• Net Consolidated Revenue amounted to R$ 211.0 million, a 5.0% improvement
• EBTIDA was R$ 39.3 million, a growth of 24.4%
• Net Income was R$ 27.0 million, a growth of 28.7%
• Margins:
Gross margin of 44% - (+ 6 p.p.)
EBITDA margin of 19% - (+3 p.p.)
Net margin 13% - (+ 3 p.p.)
Eternit Group
Activity
Manufacture of fiber cement and commercialization of bathroom
chinaware and metallic fittings and components for construction systems
Chrysotile Mining
Manufacture of concrete tiles and commercialization of sanitary ware
The largest and most diversified roof coverings industry in Brazil - 2012
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components for construction systems of sanitary ware
Industrial Units 4 1 1 6
Market Share
Leader in fiber cement –32% of Market Share
The world's 3rd
largest – 15% of Market Share
Leader in concrete tiles –35% of Market
Share5th largest of Brazil in sanitary wares
Capacity 1 million tons / fiber cement300 thousand
tons10 million m²
Capacity Used Fiber cement - 80% 100% Around 60%
Plants Location – Fiber cement and Crhysotile Mining
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1) Anápolis/GO; 2) Colombo/PR; 3) Goiânia/GO; 4) Rio de Janeiro/RJ; 5) Simões Filho/BA and 6) São Paulo/SP.
Commercial Branches
Showroom Location
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Come visit usRebouças Avenue, 2175 – São Paulo / SP
Plants Location – Concrete tiles
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Diversified Portfolio – Chrysotile Mineral
Main use of the crhysotile mineral
99% of the world production of chrysotile is
used for fiber cement products:
• Tiles;
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• Tiles;
• Covering plates;
• Wall panels;
• Water pipes and water tanks; and
• Etc.
Diversified Portfolio – Fiber Cement Tiles
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Diversified Portfolio – Metallic Fittings
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Diversified Portfolio - Components for constructions systems
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Diversified Portfolio – Water tanks and filters
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Diversified Portfolio – Bathroom chinaware and lavatory seats
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Diversified Portfolio – Metal Fittings
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Diversified Portfolio – Synthetic Marble
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Diversified Portfolio – Concrete Tiles
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Diversified Portfolio – Full Roofing Solutions
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SAMA - Overview
Global Market – Chrysotile Mineral - 2011
Canada 4%
Russia – 50%
Kazakhstan – 11%
China – 20%
1919
Global Consumption (MM of Ton)
Brazil 15%
2011
2.2
2008
2.4
2007
2.4
2006
2.3
2005
2.3
2004
2.1
2009
2.1
2010
2.2
Sales of Chrysotile Mineral (thous. tons)
- 0.8 %2,3 %
2Q12 x 2Q11
• Domestic Market – reduction of 9.0%
• Foreign Market– reduction of 4.0%
1H12 x 1H11
• Domestic Market – reduction of 9.9%
• Foreign Market – increase of 11.5%
2020
1H10 1H11 1H12 2Q10 2Q11 2Q12
67.3 63.5 70.834.1 37.4 36.0
77.6 84.7 76.3
40.4 42.0 38.2
144.9 148.2 147.1
74.5 79.4 74.2
Domestic Market Foreign Market
- 6.6%6,6 %
Eternit and Tégula - Overview
Residential Market Industrial and Commercial Market
Fiber cement38%
Metallic40%
Other11%
Ceramics
Concrete4%
Ceramics
Fiber cement
51%
Covering market – Brazil - 2011
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Total Market Market Evolution (MM m2)
Metallic12%
Ceramics35%
Fiber cement47%
Other
2%
40% Ceramics11%45%
51%
Concrete
4%
2005 2006 2007 2008 2009 2010 2011
406 425459
505 495534
5618%5%
10% -2% 8%
Source: Estimation of the Production Chain of Fiber Cement
5%
Structure of the Industrial Park in 2011
BrazilianFiber Cement
MarketETERNIT
Installed Capacity (tons / year) Approximately 2,820,000 1,000,000
Capacity utilization Around 86% Around 85%
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Capacity utilization Around 86% Around 85%
Consumption (ton / year) 2,434,000 859,300
Companies 11 32% Market Share
Plants 19 5
Selling Points 39,000 15,000
Structure of the Industrial Park in 2011
Brazilian concreteroofing market TÉGULA
Installed Capacity (m² / year) Approximately 24.0 million 8.0 million
Capacity utilization Around 70% Around 70%
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Consumption (m² / year) 16.9 million 5.9 million
Companies130
35% Market Share
Plants 6
Sales of Fiber Cement* (thous. tons)
- 11.3 %6.0 %
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* Includes components for construction systems
- 15.0 %15.7 %
1H10 1H11 1H12 2Q10 2Q11 2Q12
389.5 412.9366.3
181.7 210.2 178.7
Concrete Tiles (thous. square meters)
18.5 % -1.9 %
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*Tégula was acquired on February 11 2010. The amount of 477 thousand m2 doesn’t refer to Eternit.
14.8 % -7.8 %
1H10* 1H11 1H12 2Q10 2Q11 2Q12
477
1,887
2,3642,801 2,773
1,3001,493 1,376
Economic and Financial Performance
Consolidated Net Revenue (R$ million)
11.2 % 8.8 %
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Domestic Market Foreign Market
13.2 % 5.0 %
1H10 1H11 1H12 2Q10 2Q11 2Q12
54.2 44.4 73.8 27.0 25.3 39.8
294.1 342.9347.4
150.6 175.7 171.2
348.3387.3
421.2
177.6 201.0 211.0
Net Revenue Breakdown
2007 1H12
Fiber cementConcrete tiles and Accessories
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(*) Other: metallic roofing tiles, polyethylene water tanks, lavatory seats and metallic bathroom fittings, water pipe filters, synthetic marble and components for construction systems.
Chrysotile Mineral32.3%
Fiber cement50.0%
and Accessories10.3%
Bathroom Chinaware4.8%
Others (*)2.6%
New Business17.7%
COGS Breakdown – 2Q12
Fiber Cement Chrysotile Mineral
Raw material (*) 63%
Workforce10%
Depreciation4%
Others costs20%
Energy3%
Materials (**) 28%
Workforce49%
Depreciation5%
Others costs10%
Energy8%
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(*) - Cement (46%), Chrysotile Ore (43%) and other (11%)
(***) - Cement (56%), sand (32%) and other (12%)
(**) – Fuel, explosives, packaging, among other
Concrete Tiles
10%
Raw material (***)48%
Workforce17%Depreciation
11%
Others costs20%
Energy4%
EBITDA (in R$ million)
-19.6 % 47.5 %
3131
-13.1 % 24.4 %
1H10 1H11 1H12 2Q10 2Q11 2Q12
72.0
57.9
85.5
36.3 31.539.3
Net Income (in R$ million)
- 20.4 % 50.5 %
- 13.7 % 28.7 %
47.5
37.8
56.9
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1H10 1H11 1H12 2Q10 2Q11 2Q12
37.8
24.321.0
27.0
Margins
45%
38%
44%46%
38%
44%
3333
Net MarginEBITDA MarginGross Margin
21%
15%
20% 20%
16%19%
14%
10%
14% 14%
10%13%
1H10 1H11 1H12 2Q10 2Q11 2Q12
Capital Expenditures
4
59
Capital Expenditures (in R$ million)
3535
1S10 1S11 1S12 2T10 2T11 2T12
2112 11 13
6 6
4
34
352
210
10
19 21 17
11 16
Investiments
Acquisition Tégula
Capacity Increase – Eternit
Molds and New Business
Equipment and Trucks - SAMA
Land acquisition – Ceará State
Capacity Increase – Tégula
Development unit of Synthetic Marble
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Production LineResin SiloSynthetic Marble
Products
Location of Multiproduct Plant - Ceará State
35 km
Linha Gás Natural
Cimenteira
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Land of 400 000 m²
15 km
Share of 40%Knowledge of manufacturing and
products technologyLow cost production
Share of 60%Knowledge of the local marketStrong distribution network
Multi-Product Unit in the Ceará State - Bathroom Chinaware Plant
Joint-Venture: Companhia Sulamericana de Cerâmica S. A.
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Low cost productionExpertise in new product
developmentExpertise in new market
development
Strong distribution networkEfficient logisticsBrand strength
Investment ResourcesKnowledge in Brazil
Investments: R$ 97 millionCapacity: 1,500,000 pieces per yearStatus of the building: initiatedEnd building: December 2012
Forecast of Gross Revenue at full capacity: approximately R$ 127 millionStraight Workforce: 330 employees
Artistic view and lay out of the Bathroom Chinaware Plant
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Capital Markets
Ownership Structure – Jul/12
Shareholding Structure
Geração L. Par. F. I. A. 15.27%
Luiz Barsi Filho 13.47%
Victor Adler + VIC DTVM 6.70%
Management 1.59%
Treasurystock 0.03%
Board of Directors MemberSince
59.8%
2.2%
10.50%
27.5%
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Clubs. Funds and Foundations
FREE-FLOAT 76.10%
Individual Investors
CorporationsInvestors Abroad
Advisory Board MemberSince
Guilherme Affonso Ferreira 2011Mário Fleck 2011Victor Adler 2012
Board of Directors SinceSérgio Alexandre Melleiro (*) 1993Lírio Albino Parisotto (*) 2004
Élio A. Martins 2007Luiz Barsi Filho 2008
Marcelo Munhoz Auricchio 2011Luis Terepins (*) 2011
Benedito Carlos Dias da Silva (*) 2012(*) Independent member
2.2%
Liquidity
Number of shareholders Average Traded Volume (R$ thousand)
6,6155,910
6,633 6,6271,108
975
1,482
4242
(*) Until July 20122009 2010 2011 2012(*) 2009 2010 2011 2012(*)
794
73
102 97
81 72
Policy of Remuneration - Net Income X Distributed Earnings
In R$ million
76 % 79 % 74%Pay Out 95%
4343
2009 2010 2011 2012
73
57*55
72
54**
Net Income Dividends and Interest on own capital (*) Until June 2012 / (**) Until August 2012
Policy of Remuneration - Dividend Yield
15.1%
9.3%9.1%8.8%
10.9%
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(*) Unitl June 2012
Source: Eternit e BACENSavings (**)Eternit – Yield(*) CDB (**)
2009 2010 2011 2012
7.5%6.7%6.9% 6.9%
7.5%
1.7%
9.1%8.8%
2.3%
Eternit’s Shares Performance (Dec/06 – Jul/12)
Between 12/28/2006 to 7/31/2012, Eternit’s shares appreciated 79.0% and IBOVESPA
appreciated 26.1%.
In the same period, including the payment of dividends and interest on own capital, Eternit’s
shares appreciated 211.5%.
R$ 10.85
200
220ETER3
IBOVESPA
4545
56,097
R$ 10.85
40
60
80
100
120
140
160
180
Dec
-06
Feb-0
7A
pr-07
Jun-0
7A
ug-07
Oct
-07
Dec
-07
Feb-0
8A
pr-08
Jun-0
8A
ug-08
Oct
-08
Dec
-08
Feb-0
9A
pr-09
Jun-0
9A
ug-09
Oct
-09
Dec
-09
Feb-1
0A
pr-10
Jun-1
0A
ug-10
Oct
-10
Dec
-10
Feb-1
1A
pr-11
Jun-1
1A
ug-11
Oct
-11
Dec
-11
Feb-1
2A
pr-12
Outlook
Favorable Moment for Civil Construction
4747
Economic Figures
Minimum Wage (R$) Workforce (R$ million)
Source: BACEN
CAGR: 11.0% CAGR: 5.96%
4848
Food Basic Basket SP x Minimum Wage (purchasing power)
%Minimum Wage (R$) Food Basic Basket in SP (R$)
Source: IBGE and DIEESE
Source: BACEN
Source: BACEN
Source: IBGE
Credit Availability Unemployment Rate - BrazilGovernment, Industry, Housing, Rural, Commerce, Credit
Individuals (R$ billlion)
Economic Figures
4949
Source: BACEN
Source: IBGE
Growth of the Brazilian Savings
R$ billlion (%) Chg YoY
Source: BACEN -SBPE
Residences - Perception of Demand
Residences – Perception of Demand
NeedNeedSome kind ofSome kind of
renovation or renovation or expansionexpansion
77%77%
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Source: ANAMACO (National Association of Construction MaterialTraders) / Study by João Pinheiro Foundation, official estate of statistics of Minas Gerais
/ ABECIP (Brazilian Association of Real Estate and Savings Entities) – 2nd ABECIP Seminar – Real Estate Panorama: Opportunities and Challenges.
• The FGV studies show that between 2010 e 2022, the number of homes will grow in Brazilby na average of 1.9 million/year;
77%77%
Permanent Homes in Brazil44.5 million homesPermanent Homes – 57.8
million
Housing Deficit – 5.5 million
Housing Deficit by Family Income by Minimum Wages
In thousand of Units
Geographic RegionUp to Three
Three toFive
Five toTen
More thanTen
RegionalHousingDeficit
North 492 43 17 3 555
Northeast 1,861 55 23 8 1,947
Southeast 1,791 178 65 12 2,406
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In 2008, the estimated housing deficit was 5.5 millions units, the majority concentraded in the C and D classes.
Source: study by the João Pinheiro Foundation, official statistics body for the state of Minas Gerais.
Southeast 1,791 178 65 12 2,406
South 484 66 26 4 581
Midwest 375 22 14 6 417
TotalApproximateHousingDeficit
5,003 364 146 33 5,546
Indicators
Brazilian GDP x Civil Construction GDP x Eternit Gross Consolidated Revenue Home Mortgage Credit as % of GDP
37.1
16.8 18.3 15.7
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• In Brazil, the home mortgage credit reached 4.7% of GDP in 2011 and it should reach 11% in 2014.
Source: ABECIP (Brazilian Association of Real Estate and Savings Entities ) – 2nd ABECIP Seminar – Real Estate Panorama: Opportunities and Challenges.
(E) Estimated
Source: BACEN. The growth of the Eternit gross consolidated revenue was deflated by IGP-M.
Source: ABECIP, BACEN and FEBRABAN (Brazilian Banks Federation).
2007 2008 2009 2010 2011 2012(E)
5.0 8.2
(6.3)
11.6
3.6 4.0 5.4 5.1
(0.2)
7.5 2.7 2.5
8.6
16.8 18.3 15.7
7.9
GDP Construction (%) GDP Brazil (%) Eternit (%)
Reduction in the interest rates for the finance of construction materials
To stimulate the sales of construction materials, the Caixa Econômica Federal (the Federal
Savings Bank - CEF) announced in July 2012:
• reduction in the interest rates for the line of finance for the acquisition of constructionmaterials – Construcard;
• extension of repayment conditions from 60 to 96 months; and
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• R$ 5 billion of funds to be made available for this year, with no set maximum limit on
financing – this will be dependent on each client’s monthly repayment capacity.
Construcard can be used to: the purchase of construction materials in
general, acquisition of fitted furniture and solar heating systems.
Currently there are more than 65 thousand sales outlets in
Brazil with commercial agreements enabling to operate this line.
Source: Caixa Econômica Federal – www..caixa.gov.br
Expansion and Maintenance of Residential Units
(in thousands of units)
Residences – Management Model
New Residential Edifices
(in thousands of units)
55
Source: ANAMACO (National Association of Construction Material Trades)- Sample Survey by ANAMACO – Data for sector 2010
Consumer Profile
Where do they make their purchases? With home maintenance – who decides the purchse?
Self-management/Self-
construction34%
Construtora/
Bricklayer/Works Foreman/Engineer
65%
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With home building – who decides the purchase?
Source: ANAMACO (National Association of Construction Material Trades)- Adapted from Sample Survey by ANAMACO/Latin Panel on the Conditions of the Homes - 2007
Construtora/Empreiteira
1%
Self-management/Self-
construction27%
Builder/Contractor
2%
Bricklayer/Works Foreman/Engineer 71%
Consumer Profile
Responsible for the Indication and Recomendation of Brand
57
Source: ANAMACO (National Association of Construction Material Trades)- Sample Survey by ANAMACO/Latin Panel on the Conditions of the Homes - 2007
Chrysotile – The Brazilian Mineral
Chrysotile – The Brazilian Ore
The use of Chrysotile ore in Brazil is regulatedby the Federal Law 9,055/95, by Decree2,350/97 and by regulatory standards foroccupational health and safety. It is alsoprovided in the Convention 162 of theInternational Labor Organization (OIT).
White Ore
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Serpentinite rock with Chrysotile Ore fibers
White Ore
Bends and silky fibers without tip
Biopersistence*: 2.5 days
*Biopersistence: Time that a inhaled particle remains inthe lungs before being eliminated by the body’s defensemechanisms. To cause lung damage, the fiber must havepenetration and durability capacities in the alveoli.
High Concentration of Magnesium:3MgOSiO2H2O
Brazil concludes important research about chrysotile ore risks
Project Asbesto Ambiental“Ambiental Exposition to Asbesto: Evaluation of Risk and Effects in Health”
Process CNPq n. 420001/2006-9
The results of the research were announced on November 25 2010 anddemonstrates that:
Among the householders surveyed, no clinical, respiratory functional and
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Among the householders surveyed, no clinical, respiratory functional andhigh resolution tomographic alterations were found that could beattributed to atmospheric asbestos fiber inhalation.
In the occupational assessment, no new alterations were identified orprogression in pleural and interstitial deterioration of individuals in thesample Group exposed after 1980 and who underwent High ResolutionComputed Tomography scans in the two studies.
The full version of this research can be found in www.sectec.go.gov.br.
Public Hearing
In the light of a request made by the National Confederation of Workers in Industry – CNTI, the Federal Supreme Court – STF has arranged a public hearing between August 24 and 31, 2012 to debate the use of asbestos.
With the request from the CNTI is seeking to involve society on theissue of asbestos in the light of its importance to Brazil.Representatives of government bodies, medical doctors and
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Representatives of government bodies, medical doctors andscientists of various nationalities, technicians and sector employeeswill take part in the hearing.
Subsequently, the Minister-rapporteur, Marco Aurélio de Mello, willhave the necessary time to decide his vote, after which the DirectActions of Unconstitutionality - ADIs (4066 and 3937) can bysubmitted for judgment on merit by a plenary session of the courtbefore the end of the year.
Greater details can be found by acessing www.stf.jus.br (inPortuguese)
Corporate and Environmental Management
Corporate Management
Launch ................... November 2004
Open Doors Program
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Launch ................... November 2004
Purpose .................
Contribute to society’s better understanding of the mining and processing of Chrysotile Ore and the manufacture of fiber cement products in a sustainable manner.
Location ........... Five production plants of Eternit and the SAMA mining company
Visitors ............... 53,000 until Jun 2012
Target ................... All society
Environment Focused Management
Zero Reject Monitoring Air Quality Water Reuse Reforestation Work
6464
Quelônios Project - Animal Conservation Area
The only breeding program of Amazon turtles in Brazil and Reintegration of Wild Animal Nature in partnership with IBAMASeedling Nursery
Social Actions
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IR Magazine Brazil Awards 2012: For the second consecutive year, IR Magazine awarded Eternit’s Individual Investor Relations Program as the best of Brazil in the small & mid-cap category (companies with sales of less than R$ 3 billion).
Recognitions - 2012
66
APIMEC 2012 Award: APIMEC – Association of Capital Markets Analysts and Investment Professionals – national chapter, awarded the APIMEC Prize 2012 to Eternit in the B category, companies with consolidated revenue of up to R$ 3 billion.
Great Place To Work: In May 2012, SAMA and Precon Goiás were elected “The Best Companies to work for in the Center-West”. SAMA came 3rd in the ranking and Precon Goiás, 6th.
Eternit – An option for investment
ADR - Level I
ETNTY
Governance
6767
Growthwith
Dividends
Vision ofFuture
Case ofSuccess
BrandBrand
Information
Élio A. [email protected]
Paula Dell Agnolo [email protected]
Frederico Gomes [email protected]
Rodrigo Lopes da [email protected]
6868
Este material foi produzido compapeis certificados FSC (ForestStewardship Council), que é umagarantia de que a matéria-primaadvém de uma floresta manejada deforma ecologicamente correta,socialmente e economicamenteviável.
www.blogdaeternit.com.br
www.eternit.com.br/ir Phone: (55-11) 3038-3818
(55-11) 3194-3881
(55-11) 3194-3872 @Eternit_RI
Dr. Fernandes Coelho Street, 85 – 8th floor
Pinheiros – São Paulo / SP
05423-040
Eternit starts a new cycle
Welcome to the next
6969
to the next 70 years