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Media | News
08.13.10 - Fibria settles its derivatives debt, improves its EBITDA margin and benefits from synergy gains
- Fibria makes 2nd quarter net profit of R$ 130 million
- Net Debt / EBITDA ratio down to 4.7x in 2Q10
- EBITDA of R$ 730 million is 87% higher than that for the same period of 2009
São Paulo – Fibria closed the second quarter of 2010 with an EBITDA of R$ 730 million, an 87% increase in relation to that for the same period of 2009. The EBITDA rose by 14 percentage points, from 26% in the 2Q09 to 40% in the 2Q10, largely as a result of the higher net average pulp price. Fibria’s net operating revenue in the 2Q10 amounted to R$ 1.8 billion, 23% more than in the same period of 2009.
The positive scenario for the market pulp sector, buoyed by the low inventory levels at global producers and the picking up of demand, particularly in Europe and North America, has caused the pulp price to rise from a low of US$475 a ton, in April 2009, to a June 2010 European market high of US$ 920 a ton.
Production and Sales
The company’s pulp production volume, at 1.2 million tons, was 9% lower than that of the second quarter of 2009, due to the impact of scheduled maintenance stoppages at Aracruz/ES, Três Lagoas/MS and Veracel/BA, which are carried out annually in order to safeguard the operational excellence at the mills. It should also be pointed out that the comparison with the same period of 2009 also reflects the impact on production figures of the sale of the Guaíba Unit, located in Rio Grande do Sul.
Pulp sales exceeded the production level in the 2Q10, at 1.3 million tons, which was just 7% lower than the figure for the second quarter of 2009, entirely due to the reduced product availability, for the abovementioned reasons. Pulp inventories fell once more, closing the second quarter at 33 days’ production, against 35 days at the end of the first quarter of 2010.
Revenue and EBITDA
Fibria’s net operating revenue came to a total of R$ 1.8 billion, 23% higher than that for the second quarter of 2009. The net revenue from pulp sales amounted to R$ 1.5 billion, 33% more than in the same period of 2009, due to the 44% increase in the net average pulp price, in reais, which more than offset the 7% lower sales volume. The net revenue from paper came to R$ 244 million, a decline of 18% in relation to that of the 2Q09, mainly due to the lower sales volume (-16%), which was in turn a reflection of the sale of the Guaíba Unit.
The EBITDA for the 2Q10 was R$ 730 million, an increase of 87% in relation to that of the same period of 2009. The EBITDA margin rose by 14 percentage points, from 26% in the 2Q09 to 40% in the 2Q10.
Debt
Fibria continued to implement its new strategy for managing its financial liabilities. In April, the company carried out a bond issue for the sum of US$ 750 million, with a ten-year maturity (Fibria 2020). It also announced an offer to exchange Fibria 2019 bonds (issued in October 2009) for new Fibria 2020 bonds, in order to realign its interest curve, liquidity and limitation clauses with the company’s new situation. The exchange offer was taken up by holders of 94% of the bonds, which is above the market average for such transactions. The resources were partially used in full settlement of the outstanding derivatives debt, which came to a total of US$ 511 million, thereby enabling the company to relieve itself of the remaining restrictions and guarantees in relation to that liability. The balance was used to pay off other, short-term debt bearing higher interest rates.
On June 30, 2010, the company’s Gross debt stood at R$ 13.2 billion, representing a reduction of R$ 2.9 billion in relation to the figure at the end of the second quarter of 2009. The net debt, of R$ 10.8 billion, was down by 18% in comparison with that at the end of the second quarter of 2009. The reduction of the level of indebtedness and the strong cash generation both contributed to the continued lowering of the company’s leverage, with the ratio of Net Debt / EBITDA down to 4.7x in the second quarter of 2010, compared to 7.2x at the end of the second quarter of 2009.
Growth
The company plans to accelerate implementation of the project for the construction of a new mill at Três Lagoas, with an annual production capacity of 1.5 million tons, bringing the start up forward to 2014. With regard to the Veracel II project, Fibria continues to negotiate with its partner in that joint venture for the construction of a new mill, with an annual production capacity of 1.5 million tons.
Synergies
Fibria proceeded with its plans to derive the synergies announced in 2009, initiating in the first half of 2010 more than 85% of the actions programmed for the entire year. Added to the synergies that are already being obtained, these actions are generating gains of close to R$ 2 billion, at net present value. The company is maintaining its estimate of deriving gains from synergies in 2010 amounting to almost R$ 2.3 billion, at net present value.
See the full results release for the second quarter of 2010 at: www.fibria.com.br/ri.
