02DIVERSIFICATION WITH QUALITY AND TRANSPARENCY

INVESTOR RELATIONS

Following the maturing of Brazil's capital markets and the increase in the number of private investors, stimulated by the possibility of long-term gains, Eternit created its investor relations department in 2004. Since that time, it has been gaining the confidence and credibility in this market, this aspect receiving special attention by the Company's Executive Board.

The mission of this department is to maintain transparency in the providing of accounts and establish a dialogue channel with shareholders and investors, attending to any of their requests within a maximum period of 72 hours. One of the most important tools used for this purpose is the bilingual IR site (www.eternit.com.br/ri or www.eternit.com.br/ir), which is constantly updated to include the Company's financial results and initiatives, as well as information on chrysotile ore, in addition to blog (www.blogdaeternit.com.br). There is also the Customer Relationship Management system (CRM), which is able to identify the wishes of investors in advance, through the management of data.  The IR area also hosts public meetings to Internet conferences, virtual access and conference calls, publishing releases and fact-sheets, carrying out national and international roadshows, as well as holding special individual lunch meetings. In 2010, approximately 760 contacts were made with investors, shareholders and interested parties, with more than 70 meetings being held.

In this way, Eternit strengthens its relationship with the institutions which cover the Company and publish information in it through their reports.  At the end of 2010, six institutions (one more than in 2009) were covering the company's shares, with one of them recommending a Buy, three of them recommending a Hold as a result of the chrysotile ore legal issue, while two of them had their recommendation Under Revision.

With the object of thinly spreading its shareholder base Eternit, in partnership with stockbrokers and investment clubs, held meetings at universities in the public and private sector for young people who were not yet investors on the stock exchange. In addition to contributing to the dissemination of the capital markets in Brazil, Eternit has put itself within reach of this public audience as an investment option.

Eternit was cited by IR Magazine Awards Brazil as being one of the five best companies in investor relations terms, for individual investors. The Company was chosen in a poll carried out by the Getulio Vargas Foundation's Brazilian Economic Institute among 5000 individual investors, in addition to 400 market analysts and institutional investors.  IR Magazine is the most important international publication on investor relations, and its award celebrates the excellence of the Company's communications with its shareholders and its IR practices in Brazil.

ETERNIT AS AN INVESTMENT

SHARES LISTED ON THE BM&FBovespa

BM&FBovespa began 2010 maintaining the recovery seen in 2009 following the global financial crisis.  The Ibovespa,
the main index of the Brazilian stock exchange, ended the year at 69,304 points, up 1.04% compared to the previous year.

Against this background, the shares of Eternit, trading under the ticket code ETER3, appreciated by38.9% during the year, outperforming the Ibovespa, despite the challenges imposed by the chrysotile ore legal issue.
In this same period, if we were to consider the remuneration paid to shareholders (dividends and interest-on-equity), Eternit's shares are up by 48.2%.

On December 31, Eternit passed a milestone in its history, with its market capitalisation exceeding the R$ 1 billion mark.

ADRs ON THE OTC

In May 2010, the Company's Level 1 American Depositary Receipt program was implemented by the SEC (U.S. Securities and Exchange Comission) and approved by the CVM (Brazilian Securities Commission) in April 2010. Each ADR represents one ordinary share of the Company and is traded on the American over-the-counter market under the ticket code ETNTY.

The objective of launching the Company's ADRs on the US over-the-counter market is to provide international visibility for Eternit, as well as offering foreign investors another investment option. In 2010 no ADRs were issued, but on the other hand, the participation of foreign investors in Eternit's capital doubled as a result of the publication of its results in the international market.

SHAREHOLDING BREAKDOWN

On January 15, 2010 Eternit authorised a capital increase of R$ 107.4 million, the equivalent of  17.9 million ordinary shares. As a result of this operation, Eternit's paid-up capital was expanded to 89.5 million ordinary shares, compared to the 71.6 million as at the end of December 2009. This private share subscription was a success, because the operation was finalised with the appearance of a mass of shareholders in less than 60 days, demonstrating their confidence in Eternit.

Eternit has no controlling shareholder or shareholders agreement. Only three shareholders hold more than 5% of the capital, together holding  39.20%* of the total. Eternit's Executive Board has also acquired shares through the share acquisition plan, and as at February 28, 2011, held  1.81% of the paid-up capital.**

*Position in February 2010.
**The current position can be found on www.eternit.com.br/ir.

The confidence in Eternit's shares is demonstrated not only by the results seen in the capital markets, despite all the challenges, but also the presence of the Company's shareholders in every state in Brazil. The highest concentration of investors is in the Southeast, with 77% of the shares, with the highest concentration being seen in the state of São Paulo.

As a result of the increase in the stake of the three largest shareholders during 2010, the number of shareholders, the average daily trading volume and the average number of trades, all showed a drop compared to 2009. But, compared to the last six years, all these figures are showing a significant increase, as portrayed in the charts below.

DIVIDENDS

Eternit is recognised by the capital markets as being a good dividend payer. In 2010, the Company's dividend yield was 9.3%. The average over the last few years is over 13%.

Taking into account the capital increase, which raised the number of shares by 17.9 million compared to the previous year, the amount distributed to shareholders increased by 3.5%.  Despite these factors, the dividend yield was actually lower because the Company's share value was a higher, ending the year at R$ 12.00, compared to R$ 9.00 the previous year. Payment of dividends and interest-on-equity has historically taken place every quarter.  As a result of this practice, there is a large percentage of private individual shareholders in Eternit's shareholding structure. The Company's dividend policy is established in Article 50 of its bylaws:

Annually, net profit for the period is allocated as follows:

• 5% (five percent) for the constitution of a legal reserve until it reaches 20% (twenty percent) of the paid-up capital;
• 5% (five percent) for the constitution of a statutory reserve, the maintenance of the Company's working capital, until this reaches 10% (ten percent) of the paid-up capital;
• Amounts destined, in accordance with the proposal by the Board of Directors, for the creation of a contingency reserve, a reserve for profits to be realised and a profit retention reserve, in accordance with Article 196 of Law 6404/76, obeying the legal requirements and limits;
• The balance remaining is entirely allocated to the distribution of dividends.
  

IN 2010, THE DIVIDEND YIELD AMOUNTS TO 9.3%. THE AVERAGE OVER THE LAST FEW YEARS IS OVER 13%

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