CEDO3

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 textile mill supplying the market in 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, in 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 underscores the operational continuity and longevity of the company’s industrial base.

In the following years, the group expanded its industrial footprint with the creation of new companies and mills, such as Companhia Mascarenhas Irmãos & Barbosa in 1873 and Fábrica da Cachoeira in 1877, dedicated to finer fabrics to avoid direct competition with Fábrica do Cedro. In 1883, the companies that owned the Cedro and Cachoeira mills merged, giving rise to Companhia de Fiação e Tecidos Cedro e Cachoeira, considered the first private joint-stock company (sociedade anônima) in Brazil, a name that remains in place to this day. Throughout the 20th century, the company expanded its production capacity and infrastructure, including the construction of the Usina Pacífico Mascarenhas, inaugurated in 1929 in Serra do Cipó (MG) to generate electricity for the mills, 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 the production of denim fabrics with state-of-the-art equipment. In 2003, this subsidiary was recognized in an industry publication as a highlight in the Brazilian textile sector. In subsequent 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 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 personal protective equipment (PPE) and accessories aimed at occupational safety. The company’s corporate scope also contemplates the export and import of products related to its core activities, as well as agricultural, livestock, and forestry activities. Additionally, its corporate purpose includes the generation, distribution, and transmission of electricity for its own consumption, with the possibility of commercializing any surplus. In practice, Cedro Textil conducts its activities mainly through the operation of three mills in Minas Gerais and a distribution center in Contagem (MG), as well as through its subsidiary Santo Antônio, located in Pirapora, within the area covered by Sudene, focused on textile production.

Cedro Textil’s business model is centered on transforming cotton and polyester into yarns and fabrics, through a full 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 machines, drawing frames, roving frames, spinning frames, winding machines, warpers, and sizing machines, up to the weaving mills, greige room, and finishing, culminating in shipping. In spinning, cotton and polyester are transformed into yarn via ring spinning frames or rotor spinning (open-end). These yarns are then warped into beams and sized to feed the looms, which interlace yarns from cones and sized beams to form greige fabric. The fabric then goes through a series of finishing processes such as singeing, mercerization, bleaching, printing, polymerization, sueding, dyeing, width setting in stenters, calendering, sanforizing, and inspection, ensuring the specific handfeel, color, dimensional stability, and final quality required by customers.

From a commercial standpoint, Cedro Textil uses a network of sales representatives to distribute its products in domestic and foreign markets. In Brazil, it has around 60 sales reps, and abroad it operates through 10 representatives, focusing on Latin American countries. Physical distribution serves different profiles of industrial and commercial customers, with 2023 revenue mainly concentrated in professional apparel manufacturers, fashion apparel manufacturers, wholesalers, wholesale/retail, retail, industry, and other channels, without dependence on any individually relevant customers, as 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 the international contribution remains limited, with export revenues amounting to 2.82% of gross sales in 2024 and 3.30% in 2023.

The company operates in a textile market considered competitive, facing rivalry from several industry players in Brazil. Among its main competitors cited 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, reinforcing the fragmented and highly contested nature of the segment. In terms of supplies, the main raw material is cotton, purchased from Brazilian suppliers with known origin and ABR certification, through 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 any material effects from government regulation on their activities, nor do they record any material impact from foreign regulation, given the still limited weight of exports in consolidated revenue. Regarding environmental, social, and governance (ESG) practices, the company states that, as of the Reference Form date, it did not publish a specific annual sustainability report, although it acknowledges the importance of the topic and is internally evaluating measures to improve ESG disclosure. Since 2005, the company has maintained a Corporate Policy for Quality, Environment, Health, and Safety, aligned with standards 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 devotes attention to environmental management and relationships with critical suppliers.

On the social front, Cedro Textil highlights a history of engagement in the communities where it operates, in small and medium-sized cities in Minas Gerais, aware of the economic and social impact of its local operations. The company reports carrying out social responsibility actions, including financial contributions to non-governmental organizations in the vicinity of its mills and donations of fabrics to daycare centers, religious entities, 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 Federação das Indústrias do Estado de Minas Gerais (FIEMG), which develops social assistance programs and socio-professional inclusion initiatives for inmates, former inmates, and at-risk adolescents through vocational courses and projects such as Trampolim and the Descubra Program. These initiatives align with the UN Sustainable Development Goals, especially those related to poverty eradication and quality education, and form part of the social and governance agenda that the company is beginning to highlight in its institutional communication.

For individual investors following CEDO4 and CEDO3 shares on B3, Cedro Textil presents itself as a long-established textile manufacturing company, with a production base concentrated in Minas Gerais, operations mainly in the domestic market, complementary presence in Latin America, and exposure to a competitive sector that is intensive in raw materials such as cotton. Its history of corporate reorganizations, industrial 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 small number of major customers to sustain its revenue.