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Modified on 07.23.2014

Media | Releases

July 23, 2014 - Fibra profits R$631 million in the second quarter of 2014

The company posts a 5% growth in pulp sales compared with the second quarter of 2013, closing the period at 1.334 million tons.
New debt management initiatives in the face of market opportunities allow for a 3.8% decrease in the company's annual cost of debt in Dollars and for an increase in its average term.
Growth in surplus power sales lowers pulp production cash costs.
Leverage drops to 2.3x in Reals (2.4x in Dollars), the lowest ever since the company's inception.

São Paulo (SP) - Fibria, the global largest producer of eucalyptus pulp, closed the second quarter with a net income of R$631 million. The result is a significant improvement compared to the R$19 million profit posted in the first quarter of this year and to the R$593 million loss posted a year earlier.

Among the main factors leading to this result, the highlight is on the securing of premium Tax (IPI) credits under the Special Export Program (BEFIEX) for the net after-tax amount of R$568 million, and the improved income given the lower impact with financial costs arising from transactions involving the repurchase of company debt. Excluding these effects, Fibria's net income would have been of approximately R$139 million in the second quarter, reaching a cumulative profit of R$358 million in the first half of the year.

The company's pulp sales were up 12% over the 1Q14, and 5% year-on-year, closing at 1.334 million tons. As a result, pulp inventories ended the quarter in 52 days, a level considered optimal for its logistics chain and a day less than in 2013.

Pulp production stood at 1.271 million tons, steady compared to 1Q14, and down 1% YoY due to the scheduled maintenance shutdown at the Veracel plant, which, unlike in 2013, took place mainly in the second quarter. Over the past twelve months, Fibria's sales added up to 5.265 million tons of pulp, representing more than 100 percent of its production in the period.

Responsive to market opportunities, this quarter the company gave continuity to its debt management initiatives, with the highlight on the early liquidation of 78% of the 2021 Bond ($430 million), with a cost of 6.75% per annum, and the issuance of a new Bond worth $600 million maturing in 2024, which, in addition to having a lower cost of 5.25% per year, also increased the average maturity of its debt to 52 months. Fibria ended the 1H2014 with annual savings of $63 million in interest payments due to debt management initiatives it has deployed and to a 3.8% decrease in the average cost of its debt in Dollars per year./p>

Fibria reported an adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of R$ 594 million, with a margin of 35%, a reduction of 13% and 8% percent over the previous quarter and the same period of 2013, respectively. The decrease in EBITDA in the second quarter is explained mainly by lower net pulp prices in Reais and higher cost of goods sold - largely due to the increase in the sales volume.

Thanks to its structural condition of energy producer, through cogeneration from renewable natural resources, Fibria supplies its production process and is still able to generate surplus power. This quarter, the company delivered impressive results in energy sales, lowering its costs and increasing its competitiveness.

In the second quarter, there were additional energy sales of R$23/t over the first quarter of the year, and of R$27/t compared to 2Q13, substantially contributing to the quarter's production cash cost rise of 2.2% YoY, below the inflation in the period as measured by the IPCA, at 6.5 percent, and lower than the devaluation of the Real against the U.S. Dollar, which topped at 7.9%. Fibria is still pursuing the goal of keeping the increase in its production cash costs below inflation in 2014.