Brazilian Pulp Producer Fibria Swings to Fourth Quarter 2012 Profit

Jan. 31, 2013 - Fibriaís 2012 results were directly influenced by the Companyís good performance in 4Q12. Highlights included record production and sales volumes, stable cash cost, free cash flow generation and net debt at its lowest since Fibria's founding.

Throughout the year, the world economic scenario was marked by uncertainties that brought challenges to the pulp industry. However, market fundamentals were consistent, with pulp demand from emerging markets driving growth, especially with new tissue paper machines in China that kept inventories balanced. These factors helped the recovery of hardwood pulp prices, which opened the year at US$652/t and closed it at US$776/t (PIX/FOEX BHKP Europe index), up 19%. The dollarís average appreciation of 17% in 2012 also pushed a greater cash flow due to Fibria's predominantly export-oriented business.

The Company beat its 2011 production record, reaching 5.3 million tons in 2012, with production increasing 2% in the year. This result was influenced by 4Q12 production, which totaled 1.4 million tons, the largest volume produced in a single quarter since Fibria was founded. It should be noted that this performance was derived from increased operating efficiency at practically all production units with the maturity of several initiatives including synergies captured with Fibriaís creation. The increased operating stability, cost control and a lack of maintenance downtime drove cash cost down to R$446/t in 4Q12.

In the year, cash cost was stable at R$473/t, compared to R$471/t in 2011, even with inflation of 5.8% according to the Extended Consumer Price Index (IPCA) and the average 17% rise in the dollar on cash cost exposed to this currency. Pulp sales also broke records in 4Q12 and 2012, surpassing production levels in both periods. Fibria sold 1.5 million tons in the quarter for increases of 19% and 7% quarter-on-quarter and year-on-year, respectively, and 5.4 million tons in the year, increasing 4% over 2011. As a result, inventories closed the year down to 46 days.

Adjusted EBITDA rose to R$753 million in 4Q12, up 32% and 93% quarter-on-quarter and year-on-year, respectively. EBITDA margin expanded to 41%. EBITDA per ton reached R$499/t (US$243/t), up 80% over 4Q11. Thus, in 2012, adjusted EBITDA totaled R$2,253 million, increasing 15% over the R$1,964 million posted in 2011.

Solid operating performance offset the negative financial result in 4Q12, both driven by the dollarís rise against the real. Fibria recorded net income of R$48 million in the quarter, compared to losses of R$212 million and R$358 million 3Q12 and 4Q11, respectively. Foreign exchange impacts from the closing dollarís 9% appreciation over total dollardenominated debt (93% of total debt) caused losses of R$698 million in 2012, less than the R$868 million losses in 2011. In large part, this was an accounting effect. Free cash flow totaled R$836 million in the year, chiefly due to the higher EBITDA, initiatives to improve working capital and CAPEX control.

For Fibria's full fourth quarter 2012 financial report, go to: fibria.infoinvest.com.br and click on the link "FQ12 Earnings Release."

SOURCE: Fibria