Eldorado Brasil Celulose
Eldorado Cites Lower Pulp Prices, Real Appreciation as Reasons for 19% Drop in EBITDA; Leverage Rises to 5.1x
Thu 06/01/2017 07:19 AM
Relevant Document:
June 1 Earnings Statement
Eldorado Brasil Celulose reported its delayed, unaudited first-quarter 2017 earnings on Wednesday after the market closed, disclosing total net revenue of 696 million Brazilian reais ($207.34 million) for the period, down 11% from the R$779 million reported a year earlier. The company cited as reasons the appreciation of the Brzilian real against the U.S. dollar and the lower average pulp price in U.S. dollars when compared with the first quarter of 2016.
The Brazilian pulp and paper firm ended the first quarter of 2017 with an EBITDA of R$357 million, a 19% decrease compared with the R$440 million disclosed in the period in 2016. EBITDA margin, meanwhile, stood at 51%, compared with 56% for the first quarter of 2016.
Net debt as of the end of first quarter of 2017 was R$7.71 billion, a decrease compared with the R$8.17 billion reported at the end of the year-earlier period. Cash and cash equivalents as of the end of the first quarter stood at R$760.06 million, compared with R$1.044 billion reported at the end of the first quarter of the prior year.
Net cash generated from operating activities was R$274.8 million. The company spent R$89.3 million on forest development costs and R$20.5 million on additions to tangible and intangible assets, compared with R$85.6 million and R$48.7 million in the same period a year earlier. Taxes recoverable were negative R$56 million, compared with R$29.6 million in the fourth quarter of 2016.
Eldorado records a taxes recoverable balance in its assets, relating to ICMS and deferred income tax and social contribution arising from a temporary difference and recurring tax losses from prior years.
Other income - which flows into cash from operations and, in the latest fiscal year, included ICMS credits and COFINS credits related to grants for investments under a tax incentive package by the Mato Grosso do Sul government for use in future industrial expansion, as well as PIS/COFINS credits arising from purchases of inputs for pulp production and export - was R$33.3 million in first quarter 2017, compared with R$57.4 million in the same period a year earlier.
The company says the realization of these recoverable taxes is “based on a technical study and on purchase and sale projections for future years.” The realization of the deferred taxes is based on the expectation of future taxable profits.
Leverage, expressed by net debt/EBITDA, increased to 5.1x from 4.1x in the same period a year earlier.
Below is the company’s historical leverage:
Below is the company’s debt profile:
And here, the company’s amortization schedule:
Pulp revenue per ton was R$1,603.69, compared with R$2,206.80 in the first quarter, as the market continues to anticipate a much-discussed increase of pulp supply in 2017. A summary of the company’s indicators is below:
The company reached its highest quarterly production level since beginning operations, with 433,000 tons of pulp, while reducing cash costs per ton by 10% sequentially, to R$533 per ton, due to an increase in utilization of Eldorado’s own planted wood, a reduction in the cash consumption by wood acquisition of R$44.5 million compared with the first quarter of 2016, a decrease in the average transport distance between the forests and mill of 55km, resulting in R$17.6 million of cost savings, and a reduction of chemical consumption and reduced utiliy costs.
A breakdown is here:
On May 15, Eldorado said it would delay the release of its audited first-quarter results, citing a mandatory change of independent auditors and a delay in the publication of its 2016 annual earnings report.
Eldorado and its controlling shareholders were hit with corruption allegations in 2016, when Brazil's Federal Police raided the pulp firm’s headquarters as part of a wider bribery probe. Eldorado hired Veirano Advogados and E&Y to conduct an independent investigation into the alleged corruption links.
Since then, Eldorado’s holding company, J&F Investimentos, and its controlling shareholders have been the subject of a wider political scandal involving allegations of bribery and corruption going all the way up to the Brazilian president. J&F agreed a R$10.3 billion leniency deal with prosecutors this week.
June 1 Earnings Statement
Eldorado Brasil Celulose reported its delayed, unaudited first-quarter 2017 earnings on Wednesday after the market closed, disclosing total net revenue of 696 million Brazilian reais ($207.34 million) for the period, down 11% from the R$779 million reported a year earlier. The company cited as reasons the appreciation of the Brzilian real against the U.S. dollar and the lower average pulp price in U.S. dollars when compared with the first quarter of 2016.
The Brazilian pulp and paper firm ended the first quarter of 2017 with an EBITDA of R$357 million, a 19% decrease compared with the R$440 million disclosed in the period in 2016. EBITDA margin, meanwhile, stood at 51%, compared with 56% for the first quarter of 2016.
Net debt as of the end of first quarter of 2017 was R$7.71 billion, a decrease compared with the R$8.17 billion reported at the end of the year-earlier period. Cash and cash equivalents as of the end of the first quarter stood at R$760.06 million, compared with R$1.044 billion reported at the end of the first quarter of the prior year.
Net cash generated from operating activities was R$274.8 million. The company spent R$89.3 million on forest development costs and R$20.5 million on additions to tangible and intangible assets, compared with R$85.6 million and R$48.7 million in the same period a year earlier. Taxes recoverable were negative R$56 million, compared with R$29.6 million in the fourth quarter of 2016.
Eldorado records a taxes recoverable balance in its assets, relating to ICMS and deferred income tax and social contribution arising from a temporary difference and recurring tax losses from prior years.
Other income - which flows into cash from operations and, in the latest fiscal year, included ICMS credits and COFINS credits related to grants for investments under a tax incentive package by the Mato Grosso do Sul government for use in future industrial expansion, as well as PIS/COFINS credits arising from purchases of inputs for pulp production and export - was R$33.3 million in first quarter 2017, compared with R$57.4 million in the same period a year earlier.
The company says the realization of these recoverable taxes is “based on a technical study and on purchase and sale projections for future years.” The realization of the deferred taxes is based on the expectation of future taxable profits.
Leverage, expressed by net debt/EBITDA, increased to 5.1x from 4.1x in the same period a year earlier.
Below is the company’s historical leverage:
Below is the company’s debt profile:
And here, the company’s amortization schedule:
Pulp revenue per ton was R$1,603.69, compared with R$2,206.80 in the first quarter, as the market continues to anticipate a much-discussed increase of pulp supply in 2017. A summary of the company’s indicators is below:
The company reached its highest quarterly production level since beginning operations, with 433,000 tons of pulp, while reducing cash costs per ton by 10% sequentially, to R$533 per ton, due to an increase in utilization of Eldorado’s own planted wood, a reduction in the cash consumption by wood acquisition of R$44.5 million compared with the first quarter of 2016, a decrease in the average transport distance between the forests and mill of 55km, resulting in R$17.6 million of cost savings, and a reduction of chemical consumption and reduced utiliy costs.
A breakdown is here:
On May 15, Eldorado said it would delay the release of its audited first-quarter results, citing a mandatory change of independent auditors and a delay in the publication of its 2016 annual earnings report.
Eldorado and its controlling shareholders were hit with corruption allegations in 2016, when Brazil's Federal Police raided the pulp firm’s headquarters as part of a wider bribery probe. Eldorado hired Veirano Advogados and E&Y to conduct an independent investigation into the alleged corruption links.
Since then, Eldorado’s holding company, J&F Investimentos, and its controlling shareholders have been the subject of a wider political scandal involving allegations of bribery and corruption going all the way up to the Brazilian president. J&F agreed a R$10.3 billion leniency deal with prosecutors this week.
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