Brazilian pulp major Suzano reports strong operating cash generation of R$ 723 million in 2Q16
(Brazil, Aug. 03, 2016) 2Q16 Highlights:
–New records set for Revenue, Adjusted EBITDA and Operating Cash Generation¹ in the LTM² of R$ 10.9 billion, R$ 4.94 billion and R$ 3.8 billion, respectively.
–Consolidation of the paper price increase in the domestic market and advance in the Suzano+ Program.
–Lower cash cost in the quarter (ex-maintenance downtime): R$ 636/ton (-R$ 18/ton vs. 1Q16).
–Adjusted EBITDA of R$ 803/ton, demonstrating the resilience of the paper industry.
Net Revenue
Suzano’s net revenue in 2Q16 amounted to R$ 2,503.5 million. Pulp and paper sales volume in the quarter amounted to 1,205.1 thousand tons, increasing 2.1% from 1Q16 and 8.1% from 2Q15. In the first six months of the year, the net revenue totaled R$ 5,211.8 million with 2,385.2 thousand tons of paper and pulp commercialized.
The performance of consolidated net revenue compared to 2Q15 is mainly explained by the growth in pulp and paper sales, the weaker BRL offsetting the lower pulp list price in USD, and the higher paper price in the domestic market.
Compared to 1Q16, the decrease in net revenue was due to the depreciation in the BRL against the USD, which had a negative impact on export revenue. In the first six months of the year, the increase is explained by the higher pulp sales volume, the weaker local currency and the higher paper price in the domestic market.
Pulp Business Unit
Data from the Pulp and Paper Products Council (PPPC) show that pulp shipments in 2Q16 increased 4.2% compared to the same period last year, while eucalyptus shipments increased 8.7%. Suzano sold 910.3 thousand tons of market pulp in 2Q16, which was 13.1% higher than in 2Q15 (+105 thousand tons) and in line with the sales volume recorded in 1Q16 (+4 thousand tons).
In 6M16, pulp shipments amounted to 24.0 million tons, increasing 4.1% from the year-ago period, while eucalyptus shipments amounted to 9.6 million tons (+7.7% vs. 6M15). Suzano’s pulp sales in the six-month period came to 1.8 million tons, advancing 9.3% in relation to 6M15.
The pulp inventories reported by the PPPC ended June at 34 days, in line with the industry’s seasonality.
In USD, the average net pulp price in 2Q16 was US$ 491/ton, declining US$ 29/ton (-5.5%) and US$ 115/ton (-18.9%) from 1Q16 and 2Q15, respectively. In 6M16, the average net pulp price stood at US$ 506/ton, down US$ 86/ton (-14.6%) from 6M15.
In BRL, the average net price in 2Q16 was R$ 1,725/ton, down 15.2% from 1Q16, due to the currency’s appreciation against the USD and the deterioration in the list price, especially for hardwood pulp, throughout the period.
Compared to 2Q15, the average net price decreased 7.4% due to the deterioration in the pulp list price, which was partially offset by exchange variation in the period.
In the first six months of the year, the average net price was R$ 1,879/ton, increasing 6.8% from 6M15, benefitting from the depreciation in the BRL against the USD, which was partially offset by the lower list price.
Paper Business Unit
According to the Forestry Industry Association (Ibá), Brazilian demand for printing and writing paper and paperboard (domestic industry sales + imports) decreased 5.7% in 2Q16 compared to 2Q15. In the same period, the domestic sales presented a contraction of 1.4%, while the exports reduced by 26.7%. In comparison with 1Q16, the total domestic demand increase by 0.9% with the domestic sales growing 1.5% and imports decreasing 2.6%.
In the first six months of 2016, Brazilian demand for these papers was down 5.8% compared to 6M15, reflecting the 36.4% lower paper imports, which were partially offset by the 1.8% increase in sales by Brazilian producers.
Suzano’s paper sales in 2Q16 amounted to 294.7 thousand tons, down 4.9% compared to 2Q15. The 7.5% increase compared to 1Q16 is explained by industry seasonality. In the six-month period, sales remained flat at 569 thousand tons.
The average net paper price in the domestic market in 2Q16 was R$ 3,196/ton, increasing 16.0% and 6.1% from 2Q15 and 1Q16, respectively. In the first six months of the year, the average net price stood at R$ 3,105/ton, or 12.8% higher than in the same period of
2015.
The average net price in USD of exported paper in 2Q16 was US$ 886/ton, down 10.1% and 0.2% from 2Q15 and 1Q16, respectively. In BRL, the price of exported paper in 2Q16 increased 2.7% compared to 2Q15 and decreased 10.4% compared to 1Q16 due to exchange variation in the period and the mix of geographies and products/formats. In 6M16, the average price stood at US$ 883/ton, down 11.8% compared to 6M15. (Source: Suzano)
