SAO PAULO, Brazil, April 27 /PRNewswire-FirstCall/ -- Today Suzano Papel (Bovespa: SUZB5), one of Latin America's largest integrated producers of pulp and paper, announces consolidated results for first quarter 2007 (1Q07). This release gives consolidated operational and financial figures in Reais, by the Brazilian Corporate Law accounting method. Comparisons, unless otherwise stated, are between 1Q07 and 1Q06.
The results in this release include Suzano's 50% holding in Ripasa. Year- on-year comparisons are made with the consolidated results based on the company's actual holdings in Ripasa in each period.
Net sales revenue
Exports provided 48.7% of our net revenue in 1Q07, totaling R$ 394 million, 27.4% higher in Reais than in 4Q06. This reflects export volume 28.5% higher, since the domestic market did not absorb all of our production.
The domestic market, with revenue of R$ 415 million -- 15.3% lower than in 4Q06 and 12.1% higher than in 1Q06 -- accounted for 51.3% of revenue.
Total revenue in 1Q07, R$ 809 million, was 23.3% higher than in 1Q06 -- reflecting both the company's sound performance and the 50% share in Ripasa (increased from its 1Q06 level of 23.03%).
Adjusted Ebitda
Our 1Q07 adjusted Ebitda was R$ 275 million, 5.2% more than in 4Q06, and 26.9% more than in 1Q06. Contributing factors include 26.3% reduction in operational expenses compared to 4Q06 and price increases for non-coated papers.
Although the large export volume was achieved in the context of a stronger Real, Ebitda margin on net sales revenue was 33.9%, compared to 32.7% in 4Q06, and 33.0% in 1Q06. Adjusted Ebitda expressed in dollars was US$130 million, compared with US$121 million in the last quarter of 2006.
Principal factors affecting the quarter's Ebitda:
(i) Higher volume of paper and pulp sold.
(ii) Higher prices for non-coated papers, with pulp prices sustained.
(iii) Reduction in sales and administrative expenses.
These effects were offset by:
(i) Unit COGS 0.7% higher than in 4Q06;
(ii) Provisions for questionable receivables;
(iii) Further appreciation of the Real;
(iv) Paper exports being a larger share of total revenue (43.9% in 1Q07,
33.9% in 4Q06 and 38.3% in 1Q06)
Net profit
Our 1Q07 net profit, R$ 106 million, is 17.7% more than in 4QO6, and 30.3% less than in 1Q06.
As well as the operational factors affecting adjusting Ebitda mentioned above, other factors in the difference in net profit are:
(i) Income tax increased R$ 35 million in the quarter, on reversal of a
75% tax reduction from ADENE (the economic authority for the
Northeast of Brazil) and other taxes accounted in 2006.
(ii) Non-utilization of the 75% reduction in the income tax rate from
ADENE, also in this quarter, since taxable profit was zero.
(iii) The weaker dollar in 1Q07 reduced our debt in US currency, producing
a positive financial revenue.
Tax incentive concession for the Mucuri Unit
In March 2007, the company's unit at Mucuri was given the right, under a tax incentive legislation for the region, to apply accelerated depreciation on fixed assets acquired as of January 1, 2006.
This accelerated depreciation represents deferral of income tax payments for the useful life of the asset (in most cases 35 years). An amount equal to the depreciation accounted is added to taxable profit in future years.
The use of this new tax advantage generates a significant improvement in cash flow. To counter this, the 75% reduction in taxable profit under a previously granted tax benefit from ADENE is lost in 2006 and 2007, because the resulting taxable profit in those two years will be zero.
The company's economic and financial gain from the deferral of taxation -- arising from the accelerated depreciation under the new tax incentive structure -- is significantly greater than the effect of the loss of the 75% reduction in income tax liability. However, note that the new tax benefit is not immediately apparent in the income statement, because assets and liabilities are not posted at present value (discounted cash flow value).
Debt
Our net debt situation was improved: consolidated net debt at the end of 1Q07 was R$ 4,084.5 million, representing 3.72 times cash flow in the period (last 12 months Ebitda). This compares with debt of R$ 3,918.7 million, and a net debt/Ebitda ratio of 3.77 in 4Q06.
Capital expenditure
The company's capital expenditure (excluding capital expenditure on operational units of Ripasa) in the first quarter of 2007 totaled R$ 331.2 million (US$154.0 million) -- including: (i) R$ 47.6 million on forestry activities, industrial facilities, administration and logistics; (ii) R$ 6.6 million on the Capim Branco hydroelectric complex; (iii) R$ 273.6 million on the Mucuri project; and (iv) R$ 3.4 million on general capital expenditure projects.
CONFERENCE CALL AND WEBCAST ON THESE RESULTS
In Portuguese:
May 2 9:00 a.m. (Brasilia) / 8 a.m. (New York)
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In English:
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Suzano Papel e Celulose, with annual revenue of RS$ 1.4 billion, is one of the largest vertically integrated producers of eucalyptus pulp and paper in Latin America, with annual production capacity for 700,000 tons of market pulp and 1.1 million tons of paper. It offers a broad range of pulp and paper products for the domestic and international markets, with leadership positions in key Brazilian markets. It has four product lines: (i) eucalyptus pulp; (ii) uncoated woodfree printing and writing paper; (iii) coated woodfree printing and writing paper; and (iv) paperboard.
Forward-looking statements
Certain statements in this document may be 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 be substantially different from expectations. 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, in the emerging or international markets.
Contacts
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