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The year 2004 was highlighted by operational improvements, deriving from the continuous investments made by the Company in the last few years. We also celebrated the 50th anniversary of the Jundiaí Plant, which dates back to the foundation of Duratex. The celebration was held at the Unit, and was attended by approximately 600 guests, including current and former employees.

This year’s results were brought about by an increased production capacity in the different product lines and by an improvement on the product mix, which coincided with a favorable economic scenario. As a result, the Company grew above the Brazilian market average and advanced its leadership position in the segments in which it operates.

The Wood Division experienced a strong performance evolution as a consequence of the increased production capacity of medium and high-density fiberboards (MDF and HDF), as well as the enriched product mix. Due to the increased capacity, and as a means of securing its strategic self-sufficiency in wood supply, the Company acquired approximately 4.1 thousand hectares of land and forests in the State of São Paulo, in the vicinity of the Agudos and Botucatu Plants. Meanwhile, important investments aimed at increasing board-coating capabilities were carried out, with the expanded capacity in the Low-Pressure coating line, the refinement of the board painting process – which was speeded up – and the installation of new equipment for manufacturing particle boards with differentiated surfaces for painting.

In the Deca Division, investments were directed at the automation of important production processes, scale improvements and technological update, which allowed for the development of new products, with innovative design and highly differentiated, both in sanitary vitreous chinaware and metal fittings. The main releases in vitreous china were the rectangular, concave and square-shaped sinks. In metal fittings, the highlight was the introduction of the Cromo Showerhead, a worldwide innovation. This showerhead can be adjusted according to the different states of mind, by changing colors.

By the end of the year, the Company implemented a series of commercial cost-restriction measures at Deca, with the objective of improving the operating result, since the civil construction sector displayed another year of weak performance due to the unfavorable scenario.

With the intent of reducing its exposure to the internal market, Duratex further invested in its furniture export project, under the InterD+ brand, achieving an increase in exports, as well as strengthening the brand in the American market by taking part in the Kitchen & Bath Expo in Chicago, and initiating shipments to the US.

Finally, a number of relevant actions aimed at improving our Corporate Governance were adopted throughout the second half of the year. The Company announced the gradual extinguishment of the Beneficiary Parts, the increase on the minimum dividend to 30% of adjusted net income, and the distribution of extraordinary dividends. These measures positively surprised the market agents, resulting in share valorization and generating value for the shareholders.

Updated on October, 2005