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Modified on 10.22.2014

Media | Releases

October 22, 2014 - Fibria posts record-high third-quarter pulp sales volume of 1.37 million metric tons

Sales surpassed production in the last 12 months, reducing inventories to 50 days.
Dollar-denominated net debt fell to its lowest level ever, of under US$ 3 billion, reflecting the ongoing efforts in liability management.
Higher sales of surplus power and operating efficiency gains improved competitiveness and kept the cash cost of pulp production stable compared to last year, despite the inflation in the period.

São Paulo (SP) - Fibria, the world’s leading eucalyptus pulp producer, set a new record by registering the highest sales volume ever for a third quarter, of 1.37 million metric tons, or 3% higher sequentially and 5% higher than in the prior-year period.

According to Guilherme Cavalcanti, chief financial and investor relations officer at Fibria, the record sales volume is particularly significant given the seasonality typical for this time of the year, when pulp demand falls due to summer vacation in the Northern Hemisphere, leading to temporary shutdowns at paper mills, especially in Europe. In the last 12 months, Fibria's sales amounted to 5,336 million metric tons, which surpassed its pulp production in the period of 5.251 million metric tons, enabling the Company's inventory to fall from 56 days to end September at 50 days. Net sales revenue in the third quarter amounted to R$1.75 billion, an increase of 3% over the second quarter, bringing the total in the last 12 months to R$7 billion.

The cash cost of pulp production was R$502 per metric ton, down 10% on the prior quarter, mainly due to the lower impact from scheduled maintenance shutdowns, which this quarter were carried out only at the Jacareí Unit in São Paulo, and to the higher operating efficiency of mills, resulting in lower input consumption and maintenance costs. In comparison with the prior-year period, the cash cost of production remained stable, mainly due to management's rigorous efforts to take advantage of opportunities to sell renewable energy and to the good performance at Units in managing costs. In the fourth quarter, for which no maintenance shutdowns are scheduled, Fibria will continue to work to optimize its positive energy balance by generating surplus power and reducing its consumption.

Excluding the effects from surplus power sales, Fibria’s cash cost of production in the third quarter of2014 would have been R$525 per metric ton, which represents an increase of only 4.8% on the same quarter last year, compared to the inflation of 6.75% in the period measured by the IPCA consumer price index. The result is explained by the excellent performance of mills, which in September registered the lowest cash cost of production of recent years.

Fibria recorded adjusted EBITDA (earnings before interest, tax, depreciation and amortization) of R$613 million, which increased 3% sequentially, driven mainly by the higher sales volume, and was down 19% on the prior-year period This is explained in large part by the drop in pulp prices in U.S. dollar and by the lower impact from local-currency depreciation in the period. EBITDA margin remained stable sequentially at 35% and contracted by 6 percentage points from the third quarter of 2013.

Since it exports over 90% of its production, Fibria contracts most of its debt in U.S. dollar. As a result, any depreciation in the Brazilian real results in an immediate increase in the balance of its debt translated into local currency. In the third quarter, the 11% depreciation in the BRL generated a currency translation loss of R$643 million, which explains in large part the non-cash net loss of R$359 million in the period. Excluding the effects from currency translation, Fibria would have posted net income of R$94 million in the third quarter and R$161 million in the first nine months of 2014, with these figures also excluding the nonrecurring events in prior periods.

Always attentive to opportunities in the market, the Company continued its liability management initiatives and reduced its gross debt in the last 12 months by 18% to US$756 million and its dollar-denominated interest expenses by 21%. Fibria ended the quarter with net debt of US$2.98 billion, setting a new all-time record. In comparison with the third quarter of 2013, net debt registered a significant decline of 19% to US$711 million. The Company's leverage, as measured by the ratio of Net Debt to EBITDA in USD, stood at 2.5 times, within the target established in the Fibria Debt and Liquidity Policy, whose objective is to obtain an investment grade credit rating.

Fibria continues to pursue opportunities to further improve its debt maturity profile. These initiatives include the prepayment of the 2019 and 2021 bonds, with the latter transaction approved this morning and announced to bondholders.

“After a third quarter marked by important accomplishments, Fibria starts the fourth quarter of 2014 with a positive scenario for pulp prices, no scheduled maintenance shutdowns, the generation of surplus power and seasonally stronger pulp demand,” said Marcelo Castelli, Fibria CEO. “We continue now even more competitive on the course we have set.”

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