2016

EXECUTIVE SUMMARYANNUAL

REPORT’S

3 Welcome to Duratex

4 We are a constantly evolving company

6 How we create value with our business

9 Solidity and ethics in our governance

10 Risk management contributes to our continual growth

11 Market challenges lead us to new frontiers

13 Efficiency and productivity in operations

14 Drivers of our growth 15 Pillars for sustainable development

17 Developing people and creating a value network

19 Extending the positive environmental impact throughout the chain

Introduction

Message from the Company’s leaders

Business model

Our strategy

People

Processes

Market Context

21 Innovating with sustainable solutions

23 We are prepared for the future

Products and services

Outlook

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INTRODUCTION

Welcome to Duratex

For the second year in a row, we are publishing the

Executive Summary of our Annual Report, reporting to

the market and to society on how we created value for

all of our stakeholders through our processes, prod-

ucts and services. Our goal is to clearly and objectively

show how we manage risks and leverage the econom-

ic, social and environmental benefits of our business

while also defining strategy, investments and the man-

ner in which the company is managed.

In drafting this report, we once again considered

Integrated Reporting guidelines, developed by the In-

ternational Integrated Reporting Council, aimed at en-

hancing the quality of information provided to stake-

holders and understanding of the interdependence

between the various types of capital – financial, man-

ufactured, intellectual, human, social and relationship

and natural – in our business model. The full version of

our Annual Report is also aligned with the guidelines of

the G4 version of the GRI (Global Reporting Initiative).

You will find both documents on our website in Portu-

guese and in English.

The information in the report regards the period of

January 1 to December 31, 2016 and covers all compa-

ny operations. Questions, criticism and suggestions can

be sent by e-mail to sustentabilidade@duratex.com.

br or investidores@duratex.com.br.

Happy reading.

Our Report considers Integrated Reporting

guidelines to show how we create value for all of

our stakeholders

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We are a constantly evolving company

Since our founding in 1951, we have played a prominent

role in the Brazilian economy, contributing to innovation

and growth of the national industrial sector. Our business

started with a wood fiberboard panel plant in the city of

Jundiaí (São Paulo) and it is now spread across eight states

in Brazil and is in Colombia. We have 11,000 employees

and our products are sold nationwide and exported to

over 50 countries.

Over these last 65 years, we have continually and sus-

tainably grown, going through the different cycles of ex-

pansion and contraction of the Brazilian economy. Within

the current context, we have maintained our strategy of

forecasting market trends and adapting our business to

leverage value creation for stakeholders and offer quali-

ty and state-of-the-art products. In addition to being pi-

oneers in the fiberboard panel production, we were the

first company in Brazil to manufacture MDF panels and

high-resistance laminate floors as well as the first in South

America to obtain Forest Stewardship Council® (FSC®)

certification for planted eucalyptus forests.

Early this decade, we made significant investments in

growing our production capacity and meeting the grow-

ing demand at that time, with acquisitions of production

units in the Deca and Wood divisions. We expanded our

operations in the electric showerhead segment, guaran-

teeing growth of the Hydra-Corona brand. In the panels

area, positive performance by Tablemac, our Colombian

subsidiary, drove our decision to take over shareholder

control and go private with the company last year.

Since 2014, with the onset of an economic slowdown

that impacted various sectors, we continued to focus on

strengthening our efficiency and competitiveness. Boost-

ing exports to reduce the company’s dependency on the

domestic market and diversifying business risks continue

to be strategic guidelines. In 2016, foreign market reve-

nue growth totaled BRL 750 million, up by 24.5% year-

over-year (including Tablemac sales). Wood panel exports

were 34.6% higher in relation to 2015. In the Deca divi-

sion, we also sought to grow our exports, which increased

by 20.9% over the last year; nevertheless, we still need to

overcome the challenges of logistics and development for

sanitary ware and metals for the foreign markets.

MESSAGE FROM THE COMPANY’S LEADERS

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MESSAGE FROM THE COMPANY’S LEADERS

Antonio Joaquim de OliveiraChief Executive Officer

In 2016, we solidified the SGD (Duratex Management

System), with greater efforts made towards lowering

costs within our operations, and we achieved impres-

sive results – such as 8.5% fewer general and adminis-

trative expenses. To strengthen our strategy, we started

a wide-ranging process of reviewing and enhancing our

corporate culture. We began to jointly build Our Way of

Being and Doing, which expresses the values, behaviors

and commitments we are building upon to conduct our

business. This is how we will increase employee commit-

ment, customer and consumer satisfaction and suppli-

er engagement, leading us to attain our strategic goals

more quickly.

From the operational standpoint, one of the high points

of the last year was a 39% drop in the number of employ-

ee accidents compared to 2015. This improved perfor-

mance is directly related with the Duraseg Program and

with incorporation of the culture of safety by our em-

ployees, especially with effective action by managers in

monitoring, controlling and advising their teams. This is a

good result, but we must continue to improve to achieve

an increasingly safe and accident-free operation.

We continue to focus on strengthening our efficiency and

competitiveness, with actions to lower costs and

boost productivity

Salo Davi SeibelChairman of the Board of Directors

To adapt our strategy to this context, we began building

a new strategic plan, which will be finalized in 2017 and

will outline investment guidelines up to 2025. Consider-

ing this same timeline, we already have the Sustainabil-

ity Strategy, revised last year, which is aimed at further

clarifying our pillars of action, our aspirations, material

themes and goals by 2025.

We are working to continually enhance our processes

and management. With a revitalized corporate culture and

motivated professionals, we are ready to seize opportuni-

ties in the sectors in which we work and in new business

areas, growing the value created for our stakeholders.

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BUSINESS MODEL

How we create value with our business

Celebrating our 65-year anniversary in 2016, we are

working to produce and sell products for the furniture

and finishings sectors in the civil construction industry

through the Wood and Deca divisions. Our operating

structure includes 11,000 employees, 15 industrial

units located in the South, Southeast and Northeast

regions of Brazil and three additional Tablemac units

in Colombia, a company in which we hold a 99% stake.

Notable among the products in our portfolio are wood

(MDP and MDF) and fiberboard paneling, sanitary

ware and metals and electric showerheads.

Our work in the forestry segment is unique, as we are

recognized for our good management practices and ac-

tions to preserve native areas. With 275,000 hectares

of forest areas in Brazil and 11,000 hectares in Co-

lombia, we produce eucalyptus seedlings in nurseries,

planting them at our own farms and at leased farms and

using the wood to supply the fiberboard and paneling

factories. We also manufacture the resin used to bind

the particles and fibers in MDP and MDF panels. Ver-

ticalization of operations and the proximity between

planted areas and industrial units are some of our main

competitive advantages, adding value to our business

at a lower cost.

The strength of our brands, which have been award-

ed and recognized by the market, is a major asset, since

it conveys credibility and confidence to customers and

consumers.

11 k

EMPLOYEES

INDUSTRIAL UNITS IN BRAZIL

15 INDUSTRIAL UNITS IN COLOMBIA

3

286 k HECTARES OF FORESTRY AREAS**Considers planted forests and areas for improvement and conservation in Brazil and Colombia

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BUSINESS MODEL

MAP OF OPERATIONS

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BUSINESS MODEL

In 2016, the way we communicate our model to all of our stakeholders

evolved. We developed infographs with simple depictions of our processes

and good social and environmental practices within each of our segments of

action (Sanitary Ware, Metals, Panels and Forestry), showing how we create

value through our products and services in the six capitals, as proposed

by the IIRC (International Integrated Reporting Council). At our units,

business models are displayed in locations with large movement of people,

contributing to the engagement of our

employees and to give visibility

to our visitors.

OUR WAY OF CREATING VALUE

To be a reference company that is recognized by customers, employees, community, suppliers and investors as the best option, due to the quality of our products, services and relationships.

OUR MISSION OUR VISION• Sustainability• Integrity• Commitment• Emphasis on people• Exceed expectations• Continuous improvement• Innovation

OUR VALUES

Natural Capital

Human Capital

Social and Relationship Capital

Manufactured Capital

Intellectual Capital

Financial Capital

To meet our customer’s requirements with excellence, by developing and offering products and services that contribute to the improvement of people’s quality of life, while generating wealth in a sustainable manner.

*Go to our website and see how we generate value in each capital

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BUSINESS MODEL

Solidity and ethics in our governanceOur governance structure is made up of the Board

of Directors, which establishes the strategic direction

of the business, and by the Executive Board. With nine

members – six representing the controlling companies

and three independent members – the Board of Direc-

tors is supported by five Committees that assess and ad-

dress the most relevant aspects of our administration.

Our Executive Board is responsible for executing strategic

planning and is made up of 11 members – the CEO, two Vice

Presidents (Wood and Deca) and eight Directors of adminis-

trative, commercial and operational areas.

Ethics and transparency are solid values of our governance

and are translated by the Code of Ethics and Conduct and by

policies regarding aspects of environment, anti-corruption,

risk management and other themes.

To learn more about the members on the Board of Direc-

tors and Executive Board and about our corporate policies,

visit the Investor Relations website.

Shareholding structure as at the end of december 2016 (in %)

Itaúsa and families Ligna and family Free Float

20%

40 %

40%

Our comitees

*Made up solely of independent members of the Board of Directors

Sustainability

Evaluation of Transactions with Related Parties*

Disclosure and Negociation

Audit and Risk Management

Personnel, Governance and Nomination

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BUSINESS MODEL

Risk management contributes to our continual growth

To assure our longevity and capacity to create value,

we have an organizational structure to manage risk in

our business. The main tool guiding this process is the

Duratex risk map, created in 2011 and revised every two

years using evaluations and analyses by managers from

the administrative and operational areas.

Mapping done in the last cycle identified 54 risks, catego-

rized into five areas: strategic, governance, financial, opera-

tional and regulatory. In 2016, we conducted a broad review

of the social and environmental risks of our business, con-

sidering themes such as water, power, atmospheric emis-

sions, supplier relations, community relations and others.

Risks mapped are prioritized using a tool that assesses

the degree of impact and vulnerability to which we are ex-

posed. This matrix allows us to classify each risk as low,

medium, high or critical. For high and critical risks, we es-

tablish mitigation plans and risk managers are designat-

ed for continual monitoring.

The governance of this process is carried out by the

Risk Commission, whose head is the CFO and which also

includes five other managers. During the last year, the

sustainability department was formally included within

this structure. The Commission is also responsible for

providing accountability every semester for action plans

executed to the Audit and Risk Management Committee,

which advises our Board of Directors.

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MARKET CONTEXT

Market challenges lead us to new frontiers

The performance of our business has been impact-

ed by the economic situation in Brazil, which has been

sluggish since 2014, and by the civil construction

and furniture sectors, both of which were negative-

ly affected by higher inflation, interest rates and un-

employment rates. With this set of factors, the two

biggest markets where Duratex operates showed

downward year-over-year growth in 2016.

For this period, wood panel consumption in Brazil

was down by 2.2%, according to data from Ibá (Brazil-

ian Tree Industry). The Wood division shipped 2.6%

less in volume, considering consolidated results from

Brazil and Colombia. Using the same comparison,

revenue from the construction materials industry

was 11.5% lower, according to the Abramat (Asso-ciação Brasileira da Indústria de Materiais de Construção

- Brazilian Association of the Construction Materials

Industry) index. With better performance than the

rest of the market, the Deca division’s revenues were

3.7% lower.

From January to December 2016, our EBITDA, an

indicator that shows the company’s capacity to gen-

erate operating cash, fell by 18.6%, totaling BRL 681

million at the end of the period.

2013 2014 2015 2016

3.0 %

Abramat Index Deca net revenue evolution

Deca division performance18.2 %

-6.6 %

-1.8 %

-12.6 %

1.7 %

-3.7 %

-11.5 %

2.506 2.642 2.598 2.595

2013 2014 2015 2016

Wood net revenue (in BRL million) Apparent consumption of panels in Brazil (in ‘000 m3) | Source: Ibá Foreign market share over Wood net revenue

7,656

Wood division performance

7,2686,386 6,238

5 %14 %

21 %27 %

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MARKET CONTEXT

This result is the direct result of projects and actions

developed under the auspices of the SGD (Duratex

Management System), which enhanced processes and

increased efficiency across our production chain – from

highlighting production and inventory management to

managing the performance of sales teams. Moreover,

we have outperformed our competitors, with addition-

al support from investments made to improve custom-

er service and the quality of services provided and to

strengthen recognition of our brands and relationships

with architects, specifiers and tastemakers.

In the Wood division segment, one strategy adopted

by the biggest manufacturers was to increase exports in

order to offset falling domestic market demand. In the

24.5% growth in our foreign market

net revenues**Includes exports from Brazil

and Tablemac

last year, Brazilian panel sales in the foreign market have in-

creased 62% in relation to 2015, according to a survey by Ibá.

Aware of this opportunity, we began to structure our oper-

ations in 2014 to serve these new markets, outlining a plan

for export growth - in 2016, Brazilian sales abroad were up

by 32.0% year-over-year. Our products currently reach over

50 countries, spread across every continent except Antarcti-

ca, with notable penetration into markets in South America,

Central America, Africa and the USA.

To reinforce our action in the foreign market, we have opened

a distribution center in Peru and we invested approximately

BRL 93 million to increase our share in Tablemac to 99%, our

subsidiary manufacturing wood panels in Colombia.

In the Deca division, penetration in foreign markets is sub-

stantial in South American countries where the brand’s quality

is recognized among consumers. In other regions, such as Africa,

we are looking at investing in marketing and publicity to take ad-

vantage of the opportunities on the market. At Hydra-Corona,

showerhead exports can also be leveraged in markets that, like

Brazil, mostly use electricity to power products.

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MARKET CONTEXT

Efficiency and productivity in operations

In our strategy to grow and respond to the

economic adversity, we continue to focus on

developing cost-cutting and efficiency-boost-

ing initiatives, actions that are part of the SGD

(Duratex Management System), a system

based on financial gains resulting from en-

hancement of our processes. At the start of the

SGD, there were around 300 macro actions; at

the end of 2016, there were over 800 actions.

Notable within this context are Zero-Based

Budgeting, review of our logistics model and

tight control of consumption of raw materials.

There are also projects to optimize back office

activities and improve the sales model.

With the actions covered under the SGD,

general and administrative expenses were

8.5% lower in 2016 than the year prior, with

the costs of products sold rising by just 2.9%.

For comparison purposes, accumulated infla-

tion over the last 12 months was 6.3%, show-

ing our commitment to good management of

our revenues and increased operational effi-

ciency. Our investments for the year totaled

BRL 474 million and went towards maintain-

ing forestry and industrial operations.

In the last year, the sale of land located far

away from our factories that had a good as-

sessment for other agricultural activities

added BRL 30.8 million to gross results. We

also sold eucalyptus forests to other forestry

industry companies, generating BRL 74.8 mil-

lion. It is important to note that the volume of

wood we produce continues to be sufficient to

guarantee supply for our factories and also to

serve customers in other segments. In 2016,

one advance we made was to structure a com-

mercial area dedicated to serving companies

that purchase processed wood and wood

chips for various uses, such as generating pow-

er from biomass.

Investments in 2016 (in BRL million)

EBITDA and net earning

2013 2014 2015 2016

1,200.1

Adjusted recurring EBITDA (in BRL million) Recurring net earning (loss) (in BRL million)

EBITDA margin

561.6

952.1

359.0

836.7

221.9

681.0

-13.0

31.0 %

23.9 %21.1 %

17.4 %

2013 2014 2015 2016

Net revenue

154.3

Foreign market (in BRL million) Domestic market (in BRL million)

Exports market share over net revenue

3,718.4

406.8

3,557.7

602.5

3,360.7

750.3

3,159.5

4.0 % 4.2 %

6.4 %

8.6 %

190.1

190.892.9

OPA (takeover bid) Tablemac

Maintenance and Projects Forest Opex

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OUR STRATEGY

Drivers of our growth

Through our activities, we offer products and services that

contribute to improving people’s quality of life and to sus-

tainably creating value for all or our stakeholders – share-

holders and investors, employees, suppliers, customers, the

communities surrounding our units and society in general.

To expand this value creation, the growth of our business

is based on a solid governance structure and consistent

strategic planning, which considers social, environmental

and economic impacts and that has three guiding pillars: in-

creased exports, organic growth of production capacity and

acquisition of new business in segments that have related

opportunities for the markets in which we operate.

In relation to the new macroeconomic scenario and market

conditions, we began reviewing this strategic planning in

2016 and will finalize this review in 2017, presenting new

goals to be achieved by 2025. We also began a wide-rang-

ing project to revitalize the company’s corporate culture,

focused on reinforcing ethical values, revising aspects that

require improvement and incorporating new attitudes

that will lead us towards strategic goals. This movement

involved shareholders, the executive board, managers and

coordinators in order to build Our Way of Being and Doing.

Throughout 2017, our new culture will be introduced and

spread to all company employees, using long-term work

that will consolidate the most efficient and productive way

for us to do business.

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OUR STRATEGY

Pillars for sustainable development

The social and environmental impacts of business are also considered in strategic

definition of our investments and action plans. The way we address these aspects

within activities and operations was improved over the last year, with the review

of the Sustainability Strategy, which was collectively created by Duratex areas and

managers in 2016.

The strategy has pillars and relevant themes upon which we have established the

social and environmental performance targets to be achieved by 2025. For each

pillar, we also defined our aspirations, which show our commitments to the sustain-

able development of business and society.

Sustainability strategy

People

Developing people and creating a value network

We promote the development of employees, customers, consumers and local communities

• Working conditions and employee development

• Customers and consumers engagement

• Local community relations and development

ProcessesExtending the positive environmental impact throughout the chain

We continually improve the operations, targeting environmental balance in the value chain

• Ecoefficiency• Climate change• Sustainable forest

management• Sustainable

supply chain

Products and services

Innovating with sustainable solutions

We aim to be a benchmark in supplying competitive and sustainable solutions that combine design, technology, high quality and innovation

• Sustainable raw materials and solutions

New businesses models

Building new business with sustainability

We seek new business models which create value for the stakeholders regarding the environmental, social and economic challenges

We do not cover material themes to our business in this pillar, but rather investigative areas that are being analyzed by the shareholders. This work is treated as strategic and confidential, which is why we do not report on it in a specific chapter of this document

PIL

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OUR STRATEGY

Since 2013, when we formalized our first sustainabil-

ity commitments, we have expanded incorporation of

corporate responsibility into the company’s manage-

ment. In the last five years (2012-2016), we reduced

waste disposal by 31%, due to internal reuse actions

- the reduction in production volumes also contributed

to this decline. Direct emissions of greenhouse gases

decreased by 29%. Another step forward was OHSAS

18001 certification of 11 units between 2015 and 2016,

establishing guidelines and standards for increased safe-

ty of operations and to prevent accidents.

With the review of the Sustainability Strategy, we are

trying to make our goals and commitments even more

clear and aligned with the reality of the production and

administrative areas, dividing responsibility among all

employees so that our growth is continual and perennial.

This evolutionary and learning process is proof of our

commitment to improving our management and grow-

ing value creation. In the upcoming chapters, we will de-

scribe the connection of actions and investments made

in our business with the pillars and relevant themes in

our Sustainability Strategy.

The process of building our Sustainability

Strategy began with analysis of internal Duratex

policies and documents, of current practices and of

evaluations of our performance using platforms and

methodologies recognized by the market – DJSI (Dow

Jones Sustainability Index) and the BM&FBovespa

Corporate Sustainability Index (ISE).

We also surveyed inputs and assessments using

interviews with company executives and external

stakeholders (opinion-makers), in addition to studies

and documents produced by organized civil society

organizations - such as the FSC. We furthermore

performed benchmarking studies, involving

evaluation of the sustainability management

strategy and mechanisms used by 15 companies in

the wood, sanitary ware and metals and electric

showerheads sectors as well as representatives

from other segments recognized for having

adopted good practices.

The diagnosis made based on this information,

with support from external consultants, shows that

sustainability is part of the view of shareholders

and is found within the company’s strategic

guidelines. However, we have the challenge of

translating this vision to all of our employees

using greater proximity to the business,

so that goals are clearly understood and

pursued and the value we create for

society can be better measured.

HOW WE BUILD OUR SUSTAINABILITY STRATEGY

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PEOPLE

Developing people and creating a value network

servation of situations of risk. Over the last year, our lead-

ers made over 21,000 observations in industrial operations,

in the forestry management areas and in offices. Within

this procedure, managers assess the activities performed

by employees from an operational safety standpoint and

provide feedback that praises good practices and discuss-

es points of caution and improvement to be implemented.

Our goal is to continue working to lower the accident fre-

quency rate with our own and third-party employees.• Working conditions and

employee development• Customers and consumers engagement• Local community relations and

development

STRATEGIC TOPICS

With a focus on improving working conditions and

the development of our employees, our investments

are aimed at making operations safer and at making

the company attractive to talent while also retaining

talent, providing conditions for professional develop-

ment and the formation of new leaders in line with our

corporate culture.

In these areas, one of the chief results achieved in

2016 was a 39% reduction in employee accidents com-

pared to 2015. This performance is the direct result

of actions developed by the Duraseg Management

System, which raises awareness and dialog among

leaders and teams to foster a culture of safety and ob-

39% FEWER ACCIDENTS*

Duraseg results

LESS HOURS LOST ON ACCIDENTS WITH TIME OFF*

SAFETY OBSERVATIONS MADE BY LEADERS

*Comparison between 2016 and 2015

We promote the development of employees, customers, consumers and local communities

OUR ASPIRATION

29%

21K

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PEOPLE

To promote professional development of our employ-

ees, we continually enhance the GIP (Integrated Person-

nel Management) Program, a system for evaluating the

performance of our teams. In 2016, we invested in train-

ing managers that conduct this evaluation process and fo-

cused on developing tools that show our employees’ com-

petencies and strengths. This is also an important step in

the development of leaders who are open to dialog, which

strengthens our ability to attract the best talent to our

business and keep them at the company. At the same time,

this process gives us tools to identify employees with the

potential to hold leadership positions within our succes-

sion plan and to drive business towards strategic goals.

Our personnel management strategy, consolidated in

2014 in a manner aligned with our strategic planning,

was reviewed last year. Using a collaborative process, we

looked at the advances made so far and the challenges

that lie ahead, updating our guidelines and developing our

priorities into concrete objectives and action plans that

will continue to be executed in 2017 and the coming years.

In relations with customers and consumers, we made

progress in training and free education for carpenters

and plumbers who install our products. Over the last

year, investments of around BRL 766,000 were made in

these initiatives, positively impacting over 16,000 pro-

fessionals in the sectors we serve. We will seek to further

expand these actions in the coming years, reinforcing the

loyalty of these opinion-makers to our brands and the

recognition of our products’ attributes of sustainability

and innovation.

With a focus on improving relations with the communi-

ties neighboring our units and on promoting local devel-

opment, in 2016 we mapped stakeholders in communities

and held dialogs with these publics at two units – Agudos

(SP) and São Leopoldo (RS). These meetings will support

construction of action plans for continued improvement

of relations with our local publics. Over the coming years,

our goal is to train our employees so that they act as lo-

cal agents of engagement and contribute to driving rec-

ognition of social and environmental responsibility as an

attribute of our business.

The Formare program, developed in partnership with

Fundação Iochpe, also shows one of the ways we generate

value within this pillar. In 2016, we started the first class

of the Formare Apprentice program at the Botucatu (SP)

unit, benefitting 18 socially vulnerable young people who

will be eligible for hiring by the company after 10 months

of practical and theoretical classes.

In 2016, we launched our

Education for Sustainability

Program, geared towards raising

awareness and educating all of

our employees on this topic. In a

round of dialog with around 25

professionals, participants discuss

the topics of energy, water, climate

change, human rights, social and

environmental risks, and more –

and their impacts on the world,

on Brazil and on their everyday

professional and personal

lives. In the last year, over 100

multipliers conducted dialogs

in all of our units, reaching

around 2,000 employees.

ENGAGEMENT OF OUR EMPLOYEES

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PROCESSES

Extending the positive environmental impact throughout the chain

Eco-efficiency initiatives carried out within our pro-

cesses are aimed at continual end-to-end reduction of

water and power consumption and of waste sent to land-

fills. They also seek to drive expansion of thermal power

generation based on renewable resources, lowering de-

pendence on fossil fuels and reducing Greenhouse Gas

(GHG) emissions. In 2016, our total power consumption

fell by 4% and 15% less waste was sent to landfill com-

pared to the previous year.

One highlight of our business model in the climate

change theme, which we also looked to reinforce in

2016, is a positive carbon balance. This means that dur-

ing their lifecycle, the trees in our forestry areas capture

more carbon from the atmosphere than we emit in our

production activities. This data is obtained through for-

est carbon and GHG emissions inventories that we draft

each year, according to the guidelines of the Brazilian

GHG Protocol Program. Our GHG inventory has under-

gone external auditing since 2011.

We moreover face the challenge of growing knowl-

edge on the carbon emissions of our value chain and

continuing to find solutions that lower our emissions

and contribute to our migration to a low-carbon econ-

omy. Within this context, in 2016 we strengthened our

action with other organizations and academic centers,

sharing experiences and knowledge on this topic. At the

Companies for the Climate forum, a GVCes (Fundação

Getúlio Vargas Center for Sustainability Studies) initia-

tive, we remained participants last year in the Volunteer

Emissions Trade System. This action will allow us to be

better prepared for future carbon pricing scenarios and

will also contribute to building a possible economic in-

strument within the Brazilian market, aimed at reducing

We continually improve the operations, targeting environmental balance in the value chain

OUR ASPIRATION

• Ecoefficiency• Climate change• Sustainable forest management• Sustainable supply chain

STRATEGIC TOPICS

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PROCESSES

GHG and fulfilling Brazil’s global commitments to com-

bat climate change.

Our management and performance related to GHG

emissions are reported on to stakeholders through the

annual questionnaire we submit voluntarily to the CDP

(Carbon Disclosure Project), which joins global environ-

mental performance indicators from companies to assist

investors in the decision-making process. In 2016, our

report was given a grade of A-, placing the company in

the Leadership category of the CDP. In relation to man-

agement of risks and opportunities within this theme, we

received a grade of A and were considered a reference.

One area of action where we are making progress is

in the lifecycle analysis of our products, measuring envi-

ronmental impacts throughout the entire value chain. In

2016, the Deca division kicked off a pilot project to study

the water and carbon footprint of the Aspen faucet, one

of the company’s bestselling models in its competitive

line. The goal of the study, done in conjunction with the

GVCes, is to fully assess environmental impacts, from

mining of raw materials to post-consumer disposal.

Our forestry management has been certified accord-

ing to FSC standards since 1995. In 2016, we invested

around BRL 2.7 million in forestry research, including in

resources to enhance genetics, which are important to

produce trees that better withstand pests and diseases

and are better adapted to the different climate condi-

tions in the regions where our farms are located.

We continually incorporate state-of-the-art tech-

nology to monitor forests, in order to improve planting

and management techniques. One of the most recent

actions is the use of drones, which take high resolution

photos while flying over the plantations and provide

precise information to our technical teams. In line with

our Sustainability Strategy, we have enhanced and ex-

panded our actions to engage with local communities

so as to further mitigate any adverse impacts resulting

from forestry operations.

Our main tool for managing relations with the sup-

ply chain is the GFD (Duratex Supplier Management)

Program, which began in 2012 and is aimed at sustain-

able development, generation of shared value and dis-

semination of good social and environmental practices

in our chain. In 2016, we revised the self-assessment

questionnaires given to suppliers that take part in the

GFD and held two workshops to raise awareness of our

buyers and partners in relation to the topics of sustain-

ability and ethical conduct.

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PRODUCTS AND SERVICES

Innovating with sustainable solutions

Innovation is one of the drivers of our business model

and is geared towards development of new products and

services that increase our ability to improve our consum-

ers’ quality of life. In this sense we can mention water-

and power-saving products as well as panels made with

FSC-certified wood, which reduce social and environmen-

tal impact within the value chain, maintaining well-being

and comfort, important values of our brand.

Our portfolio has different options with innovative and

sustainable features, such as Deca’s 389 water-saving

products, which allow for less water to be used than in tra-

ditional models. In 2016, we expanded this portfolio with

the launch of nine new products of this kind.

We aim to be a benchmark in supplying competitive and sustainable solutions that combine design, technology, high quality and innovation

OUR ASPIRATION

• Sustainable raw materials and solutions

STRATEGIC TOPIC

Also in the last year, we innovated at Deca with an au-

tomatic machining system to transform plaster blocks

into molds for fabrication of sanitary ware. The first

projects have already begun to be executed and are ex-

pected to cut the total development time for our prod-

ucts by up to 50%, by replacing the manual procedure.

At Hydra-Corona, products such as the Polo Hybrid

shower exemplify how we are seeking to reduce environ-

mental impacts and increase consumer well-being. This

product uses electricity to heat water when bathing be-

gins, compared to the gas system, which does not reach

full functionality, guaranteeing comfort without wast-

ing cold water.

At the Wood division, our certified wood panels from

planted forests contribute to reducing deforestation as

well as the use of illegally obtained supplies. In developing

our products, we focus on creating solutions to meet our

customers’ needs and demands. One recent innovation

is MDP Ultra, ideal for use in more humid environments.

Exclusively sold abroad, this panel especially meets the

demand of customers and consumers in Andean coun-

tries, whose weather conditions require more resistant

products. Another new product is MadeFibra Fire, the

first flame-retardant MDF in the Brazilian market.

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We also want to expand the use of renewable raw mate-

rials in our products, lessening the environmental impacts

of production processes and of the entire value chain, while

also finding solutions related to appropriate disposal of

post-consumer waste, which meet the needs of our custom-

ers and consumers. This is a huge challenge in our industry

and will be a highlight of our actions in the coming years.

In the Wood division, we are continuing to assess how

to enhance our production processes to use less resin

(whose ingredients contain formaldehyde) in the process

of binding the particles and fibers in MDP and MDF pan-

w

To promote innovation in our products and

processes, we encourage and continually train

our employees to be aware of and look for new

solutions. One of the chief actions carried out in

2016 along these lines was Innovation Week, which

brought together Duratex representatives and

leading guests on this topic.

Among subjects discussed at the event were the

history of innovation at Duratex, creativity and

entrepreneurship in the digital age and technologies

that are changing the civil construction industry. In

addition, virtual reality glasses were made available

to employees so that they could see the company’s

other units through an innovative digital experience.

Within our strategy, it is our goal to strengthen

the culture of innovation and value employees with

innovative profiles. The Imagine Program, in action

at the company since 2012, is evidence of our

openness to receiving suggestions for ideas from

all of our professionals. If these ideas qualify as

innovative, they are awarded.

Last year, to further drive our innovation

management, we began a review of governance

on this theme and of our internal processes.

This will be an important step so that we may

continue to forecast trends and grow in the

medium and long term.

IMPULSE FOR INNOVATION

els. The technology we use in our operations has resulted

in a gradual reduction of this kind of input; however, one

of the biggest challenges for industry companies within

this process is to balance environmental advantages with

economic and financial impacts as well as increased pro-

duction costs.

In Brazil, we are one of the manufacturers of wood pan-

eling and flooring  to promote gradual reduction of  for-

maldehyde and increase the competitiveness of Brazil-

ian products internationally, placing them in line with the

strictest international standards. 

GOODS AND SERVICES

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OUTLOOK

Brazilian economic indicators show that recovery of

the Brazilian market, which is fundamental to driving the

growth of our business, will be a slow and gradual process

throughout 2017.

Amidst this scenario, we will remain strategically fo-

cused on building an increasingly efficient, competitive

and innovative company. The actions of the SGD (Duratex

Management System) will be maintained and expanded in

an effort to lower costs, cut expenses and obtain financial

gains. The results we have attained over the last two years

are permanent and better prepare us to seize the oppor-

tunities that will arise when the economy gains strength.

On our strategic agenda, we will work to automate our

production control and inventory management processes,

streamlining decision-making and management of our re-

sources. To support our commercial area, we are intensify-

ing investments in digital tools to allow for closer and more

dynamic relationships with our customers. Among our

teams, we are increasing the use of collaborative work tech-

nologies, which will result in more agility and productivity.

Our customers will directly benefit from the restructur-

ing of product shipping, transport and delivery activities.

Our new logistics model will give our process more quality

and efficiency.

We are prepared for the future

In addition to operational and financial goals, we contin-

ue to disseminate our Sustainability Strategy, pursuing the

targets outlined for each pillar and relevant theme for our

business. To continue to generate and share value with all

of our stakeholders, we should promote reduction of envi-

ronmental impacts in our products, development of more

eco-efficient processes, engagement of customers, con-

sumers, employees and neighboring communities with our

vision of sustainability and dissemination of good practic-

es throughout our supplier chain.

Continued review of our corporate culture, a process we

began in 2016, is another important element to achieving

our strategic goals. With Our Way of Being and Doing, our

leaders and employees will be even more confident and

prepared for the challenges that lie ahead.

Our main goal is to sustainably evolve our business. In-

creased revenue and sales in the domestic and foreign

markets will be accompanied with management of effi-

cient investments, geared toward reducing economic and

socio-environmental risks in forestry and industrial oper-

ations as well as toward seizing opportunities in new busi-

ness models. We are more and more prepared for a new

cycle of growth.

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DuratexAvenida Paulista, 1.938 5th floor, Bela Vista – São Paulo (SP)CEP: 01310-942 – PO box: 7.611Tel.: (11) 3179-7733www.duratex.com.br

CreditsEditing and general coordination | Investor Relations Executive Management and Sutainability and Communication ManagementEditorial and design | Usina82Photography | Gilberto Marques and Duratex collectionInfographic | Martini