CEDO3: quote, dividends and indicators for Cedro Textil

Companhia de Fiação e Tecidos Cedro e Cachoeira, known in the market as Cedro Textil (shares CEDO3 and CEDO4 traded on B3), is one of the most traditional companies in the Brazilian textile industry, with origins dating back to 1868. Its starting point was the creation of Companhia Mascarenhas Irmãos by brothers Antônio Cândido, Bernardo and Caetano Mascarenhas, focused on producing fabrics to serve the market in the backlands of Minas Gerais. The Fábrica do Cedro plant in Caetanópolis (MG) began operations in 1872, after the acquisition of textile equipment in the United States, and is considered one of the symbols marking the beginning of the country’s industrialization process. In 1883, the merger of the Cedro operations with those of Fábrica da Cachoeira resulted in the incorporation of Companhia de Fiação e Tecidos Cedro e Cachoeira, often cited as the first private joint-stock corporation in Brazil, a corporate structure that, with adjustments over time, still underpins the company today.

Throughout the 20th century, Cedro Textil expanded its industrial facilities and developed its own infrastructure to support operations. In 1929, the company inaugurated the Usina Pacífico Mascarenhas hydro plant in Serra do Cipó to generate electricity for its factories. In the post–World War II period, with the beginning of exports, it set up the Fábrica Santo Antônio plant in Sete Lagoas (MG), inaugurated in 1950 and later modernized with new finishing lines and air-jet looms. From the 1980s onward, the company expanded into regions benefiting from Sudene incentives, with the creation of Cedronorte in Pirapora and Companhia de Fiação e Tecidos Santo Antônio, which installed the Fábrica Victor Mascarenhas plant, designed to produce denim fabrics using state-of-the-art equipment. These moves consolidated Cedro Textil as a relevant producer of cotton and blended fabrics, focused on fashion, professional uniforms and protective segments.

Cedro Textil’s business model is based on an integrated textile industry, encompassing spinning, weaving, finishing and commercialization of fabrics and apparel products. The company’s corporate purpose covers textile production and related activities, garment manufacturing and clothing sales, including professional uniforms, accessories and personal protective equipment (PPE) aimed at workplace safety, as well as the import and export of products related to its value chain. The company also engages in complementary activities such as agriculture, livestock and forestry, as well as the generation, distribution and transmission of electricity for its own consumption, with the possibility of selling surplus power. Its industrial operations are currently organized into three plants and one distribution center in Minas Gerais: production units in Sete Lagoas and Pirapora, and a distribution center in Contagem.

Cedro Textil’s production process is capital- and technology-intensive, comprising sequential stages ranging from raw-material warehousing to the shipment of the final product. The main raw material is cotton, complemented by fibers such as polyester. In spinning, cotton is transformed into yarn using either conventional ring-spinning systems or the Open-End rotor system. The yarns produced feed warping and sizing machines that prepare sized warp beams for the looms. The looms simultaneously use yarns on sized beams and yarns on bobbins to form greige fabric. This fabric goes through a set of finishing operations, including singeing to remove surface fibrils, mercerization with caustic soda to increase luster and improve dye uptake, bleaching with hydrogen peroxide, rotary-cylinder printing, polymerization to fix pigments, sueding for a velvety handfeel, dyeing, tentering processes to adjust width and apply finishes, calendering to soften the hand, and sanforizing to control shrinkage. At the end, the fabrics are inspected, graded and packed according to order specifications.

From a commercial standpoint, Cedro Textil structures its distribution through a network of representatives and diversified channels. In the domestic market, it works with dozens of representatives spread across the main consumer hubs, with a strong presence in the states of São Paulo, Pernambuco, Minas Gerais, Goiás, Santa Catarina and Paraná. Sales are directed to various industrial and commercial segments, including professional garment manufacturers, fashion garment manufacturers, wholesalers, cash-and-carry retailers, traditional retailers and industry in general. The latest revenue breakdown shows a higher share from professional and fashion garment manufacturers, reflecting the company’s relevance in uniform, corporate apparel and jeanswear/workwear segments. Cedro Textil does not show significant concentration in large buyers, with no customers individually accounting for more than 5% of net revenue in recent periods, suggesting a highly diversified client base.

In the foreign market, Cedro Textil maintains a presence mainly in Latin America, with representatives in countries such as Argentina, Bolivia, Ecuador, Paraguay, Uruguay, Peru and Venezuela. Export revenues, however, account for only a small portion of gross sales, around a few percentage points, with no material impact on consolidated results. Shares CEDO3 and CEDO4, traded on B3, reflect a business whose revenue generation is largely concentrated in the Brazilian market, subject to the supply-and-demand dynamics of textile commodities and the development of the apparel sector in the country. The main raw material, cotton, is acquired from multiple domestic suppliers under contracts based on delivery schedules and prices tied to market benchmarks such as the ESALQ index, which heightens the company’s exposure to cost volatility in this commodity.

From a regulatory standpoint, Cedro Textil does not operate in a sector subject to specific tariff regulation or dependent on public concessions, but it is subject to a set of rules that affect its industrial and administrative operations. The operation of plants and offices requires compliance with zoning rules, municipal licensing, business permits and fire department authorizations, conditions necessary to avoid penalties such as fines, shutdowns and civil liability. In the area of data protection, the company states that it complies with the General Data Protection Law (LGPD), structuring processes for handling customer, employee and supplier information with a focus on transparency, purpose and security. In addition, it maintains licenses and operating permits considered necessary for the development of its industrial activities.

In terms of environmental, social and governance practices, Cedro Textil has been developing internal initiatives, even though it has not yet published an annual sustainability report structured according to international standards as of the reference date. Since 2005, the company has adopted a Corporate Policy for Quality, Environment, Health and Safety, tied to management systems certified under ISO 9001 and ISO 14001. The Integrated Management System, coordinated by a representative of senior management, sets objectives, targets, indicators and environmental management programs, with periodic internal audits and oversight of suppliers and service providers critical to the Environmental Management System. The company conducts an inventory of greenhouse gas emissions under scopes 1 and 2, with registration on a public platform, indicating a degree of monitoring of its carbon footprint.

On the environmental front, Cedro Textil highlights the management of its main raw material, cotton, purchasing fibers with certifications such as ABR (Algodão Brasileiro Responsável), from ABRAPA, and BCI (Better Cotton Initiative). Its industrial policy aims to reduce waste, supported by technological modernization and process controls aligned with ISO standards, focusing on efficient use of resources and mitigation of environmental impacts. On the social front, the company maintains a tradition of engagement with the communities in the municipalities where it operates, by generating jobs, paying local taxes and supporting social organizations. Initiatives include financial contributions to non-governmental organizations and fabric donations to daycare centers, religious entities, service clubs, treatment clinics and hospitals. Cedro Textil is also one of the founding companies of Instituto Minas Pela Paz, an organization that works on social inclusion, job training for people in vulnerable situations, support for individuals leaving the prison system and adolescents subject to socio-educational measures, in line with several UN Sustainable Development Goals. These practices demonstrate a gradual integration of environmental, social and governance principles into the corporate strategy, alongside the company’s core textile activity.