CEDO3 Cedro Textil

Cedro Textil, traded on B3 under the tickers CEDO4 and CEDO3, is one of the most traditional companies in the Brazilian textile industry, with a history of more than 150 years. Its starting point dates back to 1868, with the creation of Companhia Mascarenhas Irmãos, founded by brothers Antônio Cândido, Bernardo and Caetano Mascarenhas to operate a fabric factory that supplied the backlands of Minas Gerais, which at the time depended on muleteers for distribution. In 1872, operations began at the Fábrica do Cedro in Caetanópolis (MG), following a contract with a textile equipment manufacturer from New Jersey in the United States, a move that symbolizes one of the early milestones in the country’s industrialization process. The unit remains in operation after several modernization cycles, which reinforces the company’s operational continuity and the longevity of its industrial facilities.

In the following years, the group expanded its industrial footprint with the creation of new companies and factories, such as Companhia Mascarenhas Irmãos & Barbosa in 1873 and the Fábrica da Cachoeira in 1877, dedicated to finer fabrics to avoid direct competition with the Fábrica do Cedro. In 1883, the companies that owned the Cedro and Cachoeira plants merged, giving rise to Companhia de Fiação e Tecidos Cedro e Cachoeira, considered the first private corporation (sociedade anônima) in Brazil, a name that remains to this day. Over the 20th century, the company increased its production capacity and infrastructure, including the construction of the Usina Pacífico Mascarenhas, inaugurated in 1929 in Serra do Cipó (MG) for power generation for the factories, as well as the installation of the Fábrica Santo Antônio in Sete Lagoas (MG), inaugurated in 1950 and later modernized with new finishing lines and air-jet looms.

From the 1980s onward, Cedro Textil intensified its industrial expansion in Minas Gerais with the creation of the subsidiary Companhia de Fiação e Tecidos Cedronorte, which gave rise to the Fábrica Caetano Mascarenhas in Pirapora (MG), and, in 1989, Companhia de Fiação e Tecidos Santo Antônio, responsible for the Fábrica Victor Mascarenhas, also in Pirapora, focused on producing denim fabrics with state-of-the-art equipment. In 2003, this subsidiary was recognized in an industry publication as a standout in the Brazilian textile sector. In the following years, the company carried out corporate reorganizations, including the merger of Cedronorte in 2014, the creation of vehicles for asset and real estate management, and restructurings in 2017, 2018 and 2022 to optimize administrative, financial and tax aspects. In 2023, it increased its stake in its subsidiary Santo Antônio and, in 2025, approved the merger of wholly owned subsidiaries, seeking administrative simplification and the capture of synergies.

The corporate purpose of Companhia de Fiação e Tecidos Cedro e Cachoeira covers the textile industry and related activities, as well as the manufacturing and commercialization of apparel products, including professional uniforms, in addition to accessories and personal protective equipment (PPE) aimed at workplace safety. The company’s corporate scope also provides for the export and import of products related to its core activities, along with agricultural, livestock and forestry activities. Additionally, its corporate purpose includes the generation, distribution and transmission of electricity for its own consumption, with the option to sell any surplus. In practice, Cedro Textil operates mainly through three factories in Minas Gerais and a distribution center in Contagem (MG), in addition to its subsidiary Santo Antônio, located in Pirapora, in the Sudene development area, focused on textile production.

Cedro Textil’s business model is centered on transforming cotton and polyester into yarns and fabrics, through a complete industrial flow that includes spinning, weaving and finishing. The company’s production process begins in the raw-material warehouse and runs through sequential stages such as the opening room, carding, drawing frames, roving frames, spinning frames, winders, warpers and sizing machines, until reaching the weaving mills, grey goods room and finishing, ending with shipping. In spinning, cotton and polyester are turned into yarn by ring spinning frames or rotor spinning (open-end). These yarns are then warped onto beams and sized to feed the looms, which interlace yarns on bobbins and sized beams to form grey fabric. Next, the fabric goes through a series of finishing processes, such as singeing, mercerization, bleaching, printing, polymerization, sanding, dyeing, width setting in stenters, calendering, sanforization and inspection, ensuring the specific touch, color, dimensional stability and final quality characteristics demanded by customers.

From a commercial standpoint, Cedro Textil uses a network of sales agents to distribute its products in the domestic and foreign markets. In Brazil, it relies on around 60 sales representatives, and abroad it operates through 10 representatives, focusing on Latin American countries. Physical distribution of products targets different profiles of industrial and commercial customers, with 2023 revenue mainly concentrated in professional garment manufacturers, fashion garment manufacturers, wholesalers, wholesale/retail, retail, industry and other channels, without reliance on any major individual customers, since no customer accounted for 5% or more of total net revenue between 2020 and 2024. Sales cover the entire domestic market, with a stronger presence in states such as São Paulo, Pernambuco, Minas Gerais, Goiás, Santa Catarina and Paraná. In the foreign market, exports are concentrated in countries such as Argentina, Bolivia, Ecuador, Paraguay, Uruguay, Peru and Venezuela, but international exposure remains limited, with export revenue equivalent to 2.82% of gross sales revenue in 2024 and 3.30% in 2023.

The company operates in what is considered a competitive textile market, facing competition from various industry players in Brazil. Among the main competitors mentioned by Cedro Textil itself are companies such as Vicunha Têxtil, Têxtil Canatiba, Santista Têxtil, Companhia Têxtil Santanense, Capricórnio Têxtil, Santana Têxtil, Tecelagem Jolitex, Companhia Valença Industrial, Covolan Indústria Têxtil, Ematex Industrial e Comercial Têxtil, among others. The company states that it does not have reliable statistics that would allow it to estimate its market share, which underscores the fragmented and highly contested nature of the segment. In terms of supplies, the main raw material is cotton, sourced from Brazilian suppliers with known origin and ABR certification, via contracts with scheduled deliveries. The company also consumes large volumes of chemicals such as dyes, reagents, caustic soda, peroxides and packaging materials, inputs that are largely commodities subject to price volatility, without dependence on any specific supplier.

On the regulatory front, Cedro Textil and its subsidiary report that they are not subject to material impacts from government regulation on their activities, nor do they record significant impacts from foreign regulation, given the still limited contribution of exports to consolidated revenue. Regarding environmental, social and governance (ESG) practices, the company states that, as of the date of its Reference Form, it did not publish a specific annual sustainability report, although it recognizes the importance of the topic and is internally assessing measures to improve ESG disclosures. Since 2005, the company has had a Corporate Policy for Quality, Environment, Health and Safety aligned with NBR ISO 9001, implemented in 1997, and NBR ISO 14001, adopted in 2005, managed by an Integrated Management System with a representative from top management. It conducts greenhouse gas emission inventories for scopes 1 and 2, with data recorded on a public platform, and pays close attention to environmental management and relationships with critical suppliers.

On the social front, Cedro Textil highlights a track record of engagement in the communities where it operates, in small and medium-size cities in Minas Gerais, aware of the economic and social impact of its local operations. The company reports social responsibility initiatives, including financial contributions to non-governmental organizations around its factories and fabric donations to daycare centers, religious organizations, service clubs, treatment clinics for chemical dependency and hospitals. In addition, it is one of the founding companies of Instituto Minas pela Paz, a civil society organization of public interest linked to the Federation of Industries of the State of Minas Gerais (FIEMG), which develops social assistance programs and socio-professional inclusion for inmates, former inmates and at-risk adolescents through vocational courses and projects such as Trampolim and the Programa Descubra. These initiatives are aligned with the UN Sustainable Development Goals, particularly those related to poverty eradication and quality education, and form part of the social and governance agenda that the company is beginning to emphasize in its institutional communication.

For individual investors following CEDO4 and CEDO3 shares on B3, Cedro Textil presents itself as a long-established industrial textile company, with production concentrated in Minas Gerais, operations mainly in the domestic market, complementary presence in Latin America and a position in a competitive sector that is intensive in raw materials such as cotton. Its history of corporate reorganizations, plant investments and environmental and social management initiatives provides the backdrop against which its operations and results are generated, without the company depending on specific sector regulation or on a few large customers to sustain its revenue.