SAO PAULO, Brazil, April 19 - Suzano Papel e Celulose (Bovespa: SUZB5), one of Latin America's largest integrated producers of pulp and paper, announces consolidated results for first quarter 2006. The operating and financial figures in this release are the consolidated results, in Reais, according to the Brazilian Corporate Law accounting method. Unless otherwise stated, they do not include the effect of consolidation of 23.03% of Ripasa S.A. Celulose e Papel, Unless otherwise stated, comparisons are between first quarter 2006 (1Q06) and first quarter 2005 (1Q05).
Access to the Conference Call/webcast on these results:
In English:
April 25 -- 10:30 a.m. (EDT)
Access: +1-973-582-2757
PIN: 7268654
Replay: +1-973-341-3080
PIN: 7268654
In Portuguese:
April 25 -- 9:00 a.m. (Brasilia)
Access: +011-55-11-2101-4848; Password: Suzano
Replay: +011-55-11-2101-4848; Password: Suzano
Highlights:
-- Strong recovery in Brazilian domestic paper market -- net sales to this
market were 22.8% up year-on-year, and 60% of total paper net sales,
in 1Q06.
-- Ebitda margin up 5.3 percentage points from 4Q05, in spite of the
strength of the Real.
-- Market pulp cash production cost (excluding cost of standing wood) was
reduced to R$ 433.9/ton (US$ 197.8/ton).
-- Net income of R$ 152.2 million.
R$ '000
Financial indicators 4Q05 1Q06 1Q05
Sales volume (tons) 386,250 326,598 291,318
Net Sales 678,373 583,977 580,321
Net Income (2,996) 152,188 90,983
Ebitda 190,468 195,133 211,566
Net Income per share (0.0106) 0.5360 0.3205
Ebitda Margin 28.1% 33.4% 36.5%
Net Debt/LTM Ebitda 2.75 3.00 2.38
Net Debt/LTM Ebitda
pro forma(***) 1.88 2.11 1.64
Net Sales in US$ 301,405 266,254 217,756
Ebitda* in US$ 84,622 88,999 79,324
(*) Ebitda=Operating result plus depreciation, depletion and
amortization.
(**) UDM=Last twelve months.
(***) Does not consider payment of R$ 743 million for the acquisition of a
23.03% controlling stake in Ripasa.
Ebitda: 1Q06 vs. 1Q05
(Gross profit less sales, administrative and other operating expenses, plus depreciation, depletion and amortization on deferred items.)
Higher pulp dollar prices and domestic market paper sales, and lower costs and expenses, were the main factors that partially compensated for the effect of the further strengthening of the Real on Suzano's results, with gross margin down to 36.9%, compared with 40.6% in 1Q05.
Ebitda in 1Q06 was R$ 195.0 million, 7.8% less than in 1Q05. Ebitda margin (on net sales) was 33.4%, compared to 36.5% in 1Q05. Measured in US$, Ebitda reached US$ 88.9 million, 12.1% more than in 1Q05.
Main positive effects on Ebitda in this quarter:
(i) Higher volume sold in both paper and pulp.
(ii) Unit sales cost 4.8% lower, at R$ 1,127/ ton.
(iii) Reduction of SG&A expenses, reflecting higher volume of sales to the
domestic market, lower personnel expenses and reduction of expenses.
Main offsetting effect:
(i) Average price in Reais 10.2% lower -- mainly in exports.
Ebitda: 1Q06 vs. 4Q05
In the comparison with 4Q05, Ebitda was 2.4% higher in Reais, and 5.2% higher in dollars. Ebitda margin in 1Q06 was 5.3 percentage points higher than in 4Q05, increasing from 28.1% to 33.4%.
The main positive effects causing the increase in Ebitda were:
(i) Improvement in the sales mix: more sales of paper in the
domestic market.
(ii) Reduction of SG&A expenses; and no non-recurring items.
These items were partially offset by:
(i) Lower volumes sold.
(ii) The stronger Real affecting export sales.
Net income: 1Q06 vs. 1Q05
As well as the operating factors affecting Ebitda, other factors affected net income -- which was R$ 152.2 million in 1Q06, vs. R$ 91.0 million in 1Q05, as follows:
(i) Gain on FX variations of R$ 102.6 million, due to the strengthening
of the Real in 1Q06 (this compares with a gain of R$ 6.9 million
in 1Q05).
(ii) Higher net financial revenue, at R$ 40.0 million in 1Q06, vs.
R$ 30.6 million in 1Q05.
(iii) Non-operating revenues, at R$ 4.7 million, were R$ 5.1 million lower
than in 1Q05 -- due to lower sales of standing wood.
(iv) Higher income tax provision, at R$ 55.7 million in 1Q06, vs.
R$ 38.8 million in 1Q05.
Net income: 1Q06 vs. 4Q05
The increase in net income from 4Q05 to 1Q06 was even greater than the comparison with 1Q05, mainly due to the negative effect of the weakening of the Real on FX-related expenses in 4Q05. The main factors that impacted net income were:
(i) Strengthening of the Real, with positive effect on net FX variations
-- which represented revenue of R$ 102.6 million in 1Q06, compared
to expense of R$ 94.2 million in 4Q05.
(ii) The provision for income tax and Social Contribution in 1Q06 was
R$ 55.7 million, vs. a tax credit of R$ 19.5 million in 4Q05.
(iii) Non-operating revenue of R$ 4.7 million, compared to net
non-operating expenses of R$ 23.4 million in 4Q05.
Capex of R$ 328.8 million in 1Q06
Capital expenditure in 1Q06 totaled R$ 328.8 million: (i) R$ 267.6 million in the Mucuri Project; (ii) R$ 41.3 million on current industrial and forestry investments; (iii) R$ 18.6 million on the Capim Branco power plant; and (v) R$ 1.3 million on other projects, including the forest base expansion in Sao Paulo.
The Capim Branco I hydroelectric power plant, with capacity of 250MW, started operating in March 2006. It is part of the Capim Branco generation complex, in which Suzano has 22.3%, and which will have total capacity of 450MW. Suzano's expenditure on the project in the quarter was R$ 18.6 million.
Net debt: US$ 1.150 billion
Consolidated net debt at March 31, 2006 was R$ 2.499 billion. The reduction in Ebitda, and the volume of investment in the expansion projects, contributed to this higher figure.
Suzano Papel e Celulose is one of the largest integrated producers of paper and eucalyptus pulp in Latin America, with pulp production capacity of 1.1 million tons/year and paper production capacity of 820 thousand tons/year. It offers a broad range of pulp and paper products to the Brazilian and international markets, and has leadership positions in key segments of the Brazilian markets. It has four principal product lines: (i) eucalyptus pulp; (ii) uncoated woodfree printing and writing paper; (iii) coated woodfree printing and writing paper; and (iv) paperboard. Suzano Papel e Celulose has 50% of the controlling interest in Ripasa S.A Celulose e Papel ("Ripasa"), which produces pulp, printing and writing paper, specialty papers, paperboard and cardboards. Ripasa reported net sales of R$ 1.4 billion in 2004 from sales of 612,000 tons of products. It has four industrial units in Sao Paulo State and forest areas totaling 86,400 hectares.
Forward-looking statements
Certain statements in this document may constitute forward-looking statements - projections or statements about future expectations. Such statements are subject to known and unknown risks and uncertainties, which could cause such expectations not to materialize or actual results to differ materially from those set forth in the forward-looking statements. These risks include: changes in future demand for the Company's products, changes in the factors which affect domestic and international prices of the products, changes in the cost structure, changes in seasonal market patterns, changes in prices charged by competitors, exchange rate variations, or changes in the Brazilian political or economic scenario, or in emerging and international markets in general.
Contacts:
Investor relations:
Gustavo Poppe
Fernando Mearim
Rosely D' Alessandro
Raquel Eri Kim
Tel: +011-55-11-3037-9061
ri@suzano.com.br
Press office:
Fernanda Burjato
GWA Comunicacao Integrada
+011-55-11-3816-3922
gwa@gwacom.com
Exports:
sales@suzano.com.br
