FIBRIA: Company Posts Largest Quarterly Net Loss Since 2015

(RTTNews) - Brazil's Fibria posted a R$ 259 million net loss in the second quarter, after a profit of R$ 745 million in the same period of 2016. It was the worst result for the company since the R$ 601 million loss posted in the third quarter of 2015 and the weakest result for a second quarter since 2013.

Fibria posted losses even after an increase in production, sales, and revenues. Pulp production rose by 3% in the second quarter from a year earlier, to 1.330 million tons, while sales soared by 14%, to 1.534 million tons, a record for the second quarter. Net revenue increased 16%, to R$ 2.775 billion.

Fibria's EBITDA - adjusted for non-recurring factors, with no cash impact - grew 16%, reaching R$ 1.071 billion, influenced by higher sales volume and by an 11% increase in average pulp price in dollars.

According to Fibria, "pulp prices climbed steadily, mainly due to continued high demand in Asia throughout the quarter." The company noted that the increase in its average net price in dollars was close to the PIX/Foex index for Europe's hardwood pulp (BHKP), which rose 15% in the quarter.

Fibria's expenses with financial items, however, overshadowed all of the positive operational factors, totaling R$ 789 million in the second quarter of 2017, compared to a R$ 1.095 billion gain in the same period last year.

The primary reason for the negative financial items result was the real depreciation, which in turn affected the company's debt value. In the second quarter, financial costs related to foreign exchange fluctuations reached R$ 495 million, compared to a R$ 968 million revenue in the same period last year.

Fibria points out that "the prospect of a more competitive market due to new capacity should be accompanied by possible supply reductions of up to 500 thousand tons in the 2H17, which, together with favorable macroeconomic conditions, should balance market fundamentals next quarter."