Rossi’s Strategy for the Economic Segment 2009/2010 Presentation

Rossi’s Strategy for the Economic Segment 2009/2010

Target Public

Market Performance

Strategy for the segment

Conclusion

Agenda

Outlook

Target Public

Market Performance

Agenda

> Income profile

> Classification of pyramid level

> Distribution and Regional Deficit

> Expectations


Conclusion

Outlook

Target Public

Income Segments Property Value

0 to 3 m.w from R$ 42,000

3 to 10 m.w from R$ 64,000

Income Profile

Glossary:M.W = minimum wages

PÚBLICO ALVOTarget Public

Classification of Pyramid Level

Source:IBGE - PNAD 2007 | Minimum wage: R$ 465.00

SOCIAL CLASS MINIMUM WAGES FAMILY INCOME(MAX/MONTH)

E 0 to 2 R$ 930.00

D 2 to 4 R$ 1,860.00

C 4 to 10 R$ 4,650.00

B 10 to 20 R$ 9,300.00

A > 20 > R$ 9,300.00

Target Public

Source:Number of houses and housing deficit by macro-region: IBGE -PNAD 2007

CDE Class Distribution and Regional Deficit*

7%

7%

28%

42%

15%

10%

34%

37%

12%

7%

# of Houses CDE = 46,266,852 | 86% of Brazil

Housing Deficit = 7.2 million houses

Target Public

Source:Survey prepared exclusively for Rossi by Instituto Data Popular in 2008.

Younger public:

Property acquisition is related to the desire

for greater independence

Young couples: Understand that beginning a life

together means limiting expenses and focus on what they can pay with

optimism

Couples with children:

Seek a quiet and safe place with a broad range of

services where they can raise their children

Expectations regarding the property

Price, location and installment amount are the deciding factors in purchasing property

Security, space and leisure activities also influence the decision, but are secondary factors.

To reduce condominium payment, accepts fewer leisure options.

Caixa’s financing is essential to make purchase possible and predictable.

Regardless of the age group, everyone agrees that paying rent is a waste of money.

PÚBLICO ALVO > ExpectativasTarget Public

Source:2008 Survey by Data Popular and Avenida Brasil.

Many still live with their parents or in rented apartments or in properties lent by their family or live together with other family members.

Consumers share a lot of their consumption experiences: word-of-mouth

71% of class C youth plan to (or dream of) buying their

own property within the next 5 years

Purchasing their own home is a sign that they are

succeeding in life.

70 to 75% are apprehensive about buying property: delivery and payment

44% look after their neighbors’ children

People with community-living traits: mutual help

Expectations regarding the property

Target Public

Market Performance


Conclusion

Agenda

Outlook

> Brazilian Economic Scenario> Government Housing Package> Sector’s Outlook

Market Performance

Brazilian Economic Scenario

Government Housing Package

Sector’s Outlook

Market Performance



Sector’s Outlook

Market Performance

Increased financing terms: Up to 30 Years

Increased financing amount: Up to 100%

Increased Minimum Wage: Higher purchasing power

Interest: up to 4.5% + TR

Brazilian Economic ScenarioMain Changes

Market Performance

Brazilian Economic ScenarioIncome Growth 2002 - 2007

Income Distribution2007 (%)

50%

Income Growth2002 x 2007

D

C

4%

26%

34%

14%

E

B

A

Total: +27%

(260 billion reais)

+2 billion

+43 billion

+69 billion

+111 billion

+35 billion

41%

100(1.24 trillion reais)

Fonte:IBGE, PNAD 2002 and PNAD 2007. Deflated by IPCA.Income in 2002 = R$ 976 billion – PNAD 2002.

Sectors’ OutlookPotential demand growth in Brazil

100(56.5 million)

85%

2%

12%

31%

14%

E

D

C

B

A

Total: +18%

(8.8 million)

+200,000

+1.2 million

+2.7 million

+3.7 million

+1 million

42%

Source:IBGE, PNAD 2002 x 2007 Number of families in 2002 = 47.7 million – PNAD 2002

Number of Families Distribution2007 (%)

Number of Families Growth2002 x 2007

Market Performance

14



Market Performance

Sector’s Outlook

ObjectiveProvide more than 1 million houses for families with income of 0 to 10 minimum wages.

Market Performance

Government Housing PackageKey incentives

Property value

Up to R$ 130,000 - São Paulo, Rio de Janeiro, Distrito Federal and metropolitan regions.

Up to R$ 100,000 - Cities with more than 500,000 inhabitants and metropolitan regions.

Up to R$ 80,000 - Other municipalities.

Income (minimum wage)

Subsidies SP/RJ/DF and MRs (R$)

Over 100,000 inhab.(R$)

Between 50,000 and 100,000 inhab.

(R$)

3 23,000 17,000 13,000

4 16,000 10,000 6,000

5 9,000 3,000 2,000

6 2,000 2,000 2,000

Subsidies

Up to 3 minimum wages - 100% and exemption from life insurance in the installments

3 to 6 minimum wages - Partial in loans (see table)

Market Performance


Deposit Guarantee System (Fundo Garantidor )

Up to 5 minimum wages - 36 months without payment

5 to 8 minimum wages - 24 months without payment

8 to 10 minimum wages - 12 months without payment

Reduction of lending risk.

Refinancing of part of the installments in case of loss of income.

Cheaper insurance.

Market Performance

Interest

Up to 3 minimum wages - Installment is 10% of income, with minimum R$ 50 and maximum R$ 139

3 to 5 minimum wages - 5.00% p.a. + TR | 4.50% p.a. + TR*



Note:* With FGTS contribution for three years or more


Reduction of notary expenses for the borrower

Up to 3 minimum wages - 100%

3 to 6 minimum wages - 90%

6 to 10 minimum wages - 80%

Environmental License

Reduction of deadline to 30 days and greater speed in approval process

Financing Line

Term - up to 30 years for payment

Commitment - maximum of 30% of income

Financing - up to 100%.

Market Performance

Reduction of notary expenses for the company

Property value up to R$ 60,000 - 90%




Market Performance



Sector’s Outlook

Market Performance

2005Scenario

2009Scenario

Prior to Package

2009Scenario

Prost Package**

Property value (R$) 80,000 80,000 80,000

Subsidy (R$) 0 0 19,501*

Interest Real Estate Credit (p.a.) 13% 8.16% 5%

Term (months) 120 240 300

Monthly income (Minimum Wages) 9.7 6.6 3.5

Monthly income (R$) 4,500 3,022 1,627

Sector’s OutlookPotential demand growth in Brazil

Note:* Subsidy calculated by monthly income of 3.5 minimu wages in São Paulo, Rio de Janeiro, Federal Distric and other metro. regions** Considering 100% financing

Market Performance

130,000.00

0 10.00

Un

its p

rice

(R

$)

Income (MW)

SP/RJ/DF E RMsSector’s OutlookNew scenario outlook

80,000.00

Pre-package

Post-package

3.50 6.60

Increase of 30.5 million families in the market

(+ 270%)

Source:IBGE – PNAD 2007 – The total number of homes in Brazil is 56.5 Million.* With contribution of the FGTS for 3 months or more

5 to 63 to 5 6 to 10 Minimum Wage

6% -5.5%5% – 4.5% 8.16% - 7.66% Interest (p.a)*

Target public

Market performance


Conclusion

Agenda

Outlook

> Focused structure> Large scale development> Exclusive sales model> Financial structure alined with Caixa> Diferentiated marketing> Product Line

Rossi’s Strategy

Structure focused on the economic segment

Multifunctional structure

working inpartnership with regional offices

Agility in operations

Dissemination of know-how

Creation of a specialized team to serve the target public in the economic segment.

Investment in market research.

Development of standardized products.

Rossi’s Strategy

Differentiated Business Model

Matrix Structure with Regional Expertise.

Control, development and standardization.

Knowledge of needs and access to local facilities

Strategy ProductsFinance Marketing SalesEngineering Administrative

Matrix Economic Segment

Regional expertise

Business management

Operations

Regional Offices

Legenda:

Estado em atuação

Escritório regional

Área em prospecção

AL

PE

RN

PB

RS

PR

SP

MG

RJ

ES

BA

SC

CE

GO

MS

AM

PA MA

AC

RRAP

RO TO

PI

MT SE

Regional Nordeste

Regional Belo Horizonte

Regional Rio de Janeiro

Regional São Paulo

Regional Sul

Regional Campinas e Oeste Paulista

Regional Operations with local partnerships 61 cities in 15 states

Rossi’s Strategy

Better analysis of local demand.

Meeting regional expectations.

Agility in approval process.

Access to qualified services in the region.

Immediate access to a highly valued land bank.

Rossi’s Strategy

Nordeste Regional Office

Diagonal

Gabriel Bacelar

Grupo Fator

Belo Horizonte Regional

Office

AEL

Alicerce

Toctao

TropicalCampinas and Oeste

Paulista Reg. Office

Ambience

Antonio Andrade

Cristais Prado

Direcional

Forn

Gabriel Penteado

GNO

Monir Goraieb

Paiquerê

Splice

Tarraf

South Regional

Office

Cádiz

JL

Melnick

Thá

Tedesco

Rio de Janeiro Regional

Office

Carmo e Calçada

Costa Andrade

Cittá

Decta

Metron

Newserrat

Cycohrp

Scon

São Paulo Regional

Office

ACH

Capital

JBianchi

MZM

Montante

Paulo Mauro

Local Partners

27

827 network terminals.

Control: automated and integrated processes nationwide (SAP).

Dynamism: videoconference for real-time exchange of information.

Security: information stored in a Data Center with speedy and secure access.

Continuous improvement: constant monitoring of materials and services from suppliers.

Control and innovationInformation Systems

Rossi’s Strategy

Pioneer and a 10-year

experienceusing SAP

Rossi’s Strategy

Experience in large-scale product development.

Supply agreement for cheaper products.

Investment in market research.

Development based on target cost.

Large-Scale Development

PLANO 100 VIDA NOVA VILLA FLORA VERTICAISPRAÇAS

RESIDENCIAIS

1992 1996 1999 2007 2007

56 to 85 m² 45 to 59 m² 46 to 115 m² 46 to 62 m² 50 to 82 m²

Self financingStyle, quality and

basic finishes

Planned Neighborhood.

CommunityMore Privacy Residential Squares

13,438 units delivered

5,620 units delivered2,850 units

delivered and 490 launched

1,174 units underconstruction

5,633 unitslaunched

Large-Scale DevelopmentExperienced management

Rossi’s Strategy

*Note:Number of units delivered in the economic segment = 25,000 Number of unites delivered at standarized product lines = 21,908

foundationsinstallations

interior design

urban planning

architectural project

sustainability

structural project

landscaping

Large-Scale DevelopmentStandarized products

Rossi’s Strategy

Rossi’s Strategy

Large-Scale DevelopmentOptimized Plan

Rossi’s Strategy

Large-Scale DevelopmentProject Rationale

Alignment of internal walls tooptmize cosntruction

Conected water system

Shaft to ease maintemance

Commomgas instalation

All living rooms Facing the front

of the building

American kitchen to optimize

the storage space

Natural lighting in all rooms

80 cm

230 cm

Rossi’s Strategy

Large-Scale DevelopmentIndustrialized Process – Villa Flora

Rossi’s Strategy

Large-Scale DevelopmentIndustrialized Process – Construction of Precast Panels

EffectivenessHigher investment in training the sales team.

Consistency Differentiated training contentGreater consistency and relevance of message

Exclusive Strategy Sales at street stores located in busy areas

Rossi’s Strategy

Exclusive Sales ModelClient satisfaction at the time of purchase

A B

ROSSI BROKER CLIENT

Traditional Strategy

ROSSI BROKER CLIENT

A

Rossi’s Sales Strategy

30,000 active customers.

11,000 customers attended per month. (*)

84% of customers satisfied. (**)

Relationship with support program from purchase to delivery.

Source:(*) Monthly average in 2008 according to Rossi’s internal survey.(**) Grades above 8 in 2008 according to Rossi’s internal survey.

Rossi Customer ServiceCustomer satisfaction in the relationship

Rossi’s Strategy

Financial Structure aligned with Caixa Econômica Federal Easy access to financing

Rossi’s Strategy

Official correspondent of the Caixa Econômica Federal.

Documentation related to financing prepared internally.

Speed in collection of documents.

Quick credit approval and issue of agreement.

Unified customer service channel from purchase to signing of loan agreement.

Relationship with Caixa Econômica Federal since 1998.

More than 3,000 units passed with Credito Associativo.

Rating “A” (Highest rating conferred by Caixa Econômica Federal)

Long-term relationship Management of product line.Strengthening of the Rossi brand. Constant contact of the brand with the family’s growth.

Cost OptimizationStandard materials adaptable to regions.

EfficiencySingle advertising agency and national-level management.

ControlProduction costs approved nationwide.

Rossi’s Strategy

Differentiated Marketing

Note:*Article puiblished on O Globo newspaper, edition of May 15, 2009.

Rossi’s Strategy

Product Line for the Economic Segment

15 MW

10 MW

3 MW

PraçasResidenciais

VillaFlora

NovoMercado

Rossi’s Strategy

Units from 46 to 115 m²

Prices starting at R$ 78,000

100% financed

Installments starting at R$ 310.00 (when living)*

Planned neighborhood

NGO working to foster and preserve citizenship

and community spirit

Rossi Villa Flora

Note:* Average installment calculated using the Constant Amortization System (decreasing installments) Considering subsidy for monthly income of 3,3 m.w in SP/RJ/DF and Metro. Reg – 300 months

Rossi’s Strategy

CommunityNGO efforts to develop and preserve

citizenship and community spirit between

the residents.

Soil Conservation Internal pavement is of interlocking concrete, which allows greater water

permeability, thus preventing floods.

SecurityCondominiums are constructed in pockets, which ensures greater security since the homes face the yards.

Organic Garden The community garden is a where residents can grow organic food and teach children about the importance of healthy eating habits, free of agro-toxins.

Selective Trash Collection Trash cans specifically designed for recyclable trash.

Trash collection is done by a non-profit organization.

Single Gate

Gated condominiums with single gate

controlling the entrance and exit of dwellers

and visitors.

Environmental Conservation Villa Flora has twice the green area required by

law.

Rossi Villa Flora

42

Rossi’s Strategy



100% financed

Installments starting at R$ 450.00 (when living) *

Community squares

Meticulous installation and landscaping

Differentiated architectural project

Concern for sustainability

Rossi Praças Residenciais

Note: *Average installment calculated using the Constant Amortization System (decreasing installments)Considering subsidy for monthly income of 4,5 m.w in SP/RJ/DF and Metro. Reg – 300 months

Rossi’s Strategy

Granite slabs for higher property appreciation.

Clay tiles for increased thermal comfort and better quality of life.

Roof made of reforested wood. Lower environmental impact.

Structural masonry walls. Rooms without pillars and beams for better space utilization.

Units delivered with 100% finished flooring. Quality and finishing.

Close-coupled tank and bowl for reduced water consumption and increased savings

Textured facade with framed doors and windows and aluminum molding. Increased property value and lower maintenance expenses.

Rossi Praças Residenciais

Rossi’s Strategy

VillaFlora

PraçasResidenciais

NovoMercado

15 MW

10 MW

5 MW

3 MW


47

Nova linha de produtos Rossi Exclusiva no Segmento Econômico

Qualidade Rossi

Pagamento Ideal

Meu primeiro Rossi

Lançamento: Maio/2009www.rossiideal.com.br

Estratégia Rossi

Linhas de Produto do Segmento Econômico

VillaFlora

PraçasResidenciais

Rossi Ideal

15 SM

10 SM

3 SM

50

VillaFlora

PraçasResidenciais

Rossi Ideal

15 SM

10 SM

3 SM

51

Rossi’s Strategy


Rossi’s Strategy



100% financed

Installments starting at R$ 222.00*

Rossi Ideal

Standardized product line

Meticulous installation and landscaping

Leisure options appropriate for low condominium

cost.

Note:Average installment calculated using the Constant Amortization System (decreasing installments). Considering subsidy for monthly income of 3.0 m.w in SP/RJ/DF and Metro. Reg. – 300 months

One and two floor

houses

Low-story buildings

Residentialtowers

Rossi’s Strategy

Structural masonry walls. Rooms without pillars and beams for better space utilization.

Close-coupled water tank and toilet bowl for reduced water consumption and increased savings.

Kitchen integrated to living room for more space.

Natural ventilation in bathrooms.

Windows in all rooms for cross ventilation and natural light.

Obs.: All these benefits are in both 2-bedroom and 3-bedroom blueprints.

Rossi IdealFloor Plan

Rossi’s Strategy

Rossi Ideal

Rossi Ideal condominiums bring together all of Rossi’s know-how and working methods to

give you access to high quality at ideal payment conditions.

ROOF

Ceramic tile for greater thermal comfort.

PLAYGROUND FOR CHILDREN

Children’s play area in compliance with ABNT safety norms.

COMMUNITY HALL

Furnished and equipped social areas for more comfort in the condominium.

SWIMMING POOL FOR CHILDREN

Fenced area for greater safety for children.

Target public

Market performance


Conclusion

Agenda

Outlook

> Land bank for the segment

> Land bank for the program

> Expected launches

Rossi Planning

Villa Flora28,200

Praças Residenciais7,000

Rossi Ideal56,700

TOTAL: 91,900 = R$ 8.6 Bi*

Economic Segment Land bank

*Note:Purchased or in advanced negotiations.

Rossi Planning

Land bank eligible for the programPSV of R$ 7.2 billion

Rossi’s Units in the Segment = 80,000 units

Present in all Brazilian regions.

Results Reached

Launches in units per year

4,600

2,421

15,000

20,000

13,000

18,000

2007 2008 2009 2010

Un

its

*Note:In line with data presented in 2007.

Accomplished

Expected for 2009/2010

Target public

Market performance


Conclusion

Agenda

Outlook

Summary

Consolidated and ready to launch land bank.

Experience in the economic segment: products, management and services.

Experience in cost-efficient construction processes.

Pre-approved financial planning with Caixa Econômica Federal.

Excellent historical relationship with Caixa Econômica Federal, for more than 10 years.

Contact: IR Team

Conclusion

Cássio Elias AudiCFO and Investor Relations Officer

Maria Claudia BiolchiniInvestor Relations [email protected]. (55 11) 3759-7516

Thank you!