Fibria completes repositioning of core pulp business with sale of last paper asset, the Piracicaba unit, reports Q3 pulp sales increased 7% year-over-year, remained stable quarter-over-quarter

Kendall Sinclair

SAO PAULO , October 27, 2011 (press release) – The Piracicaba Unit, the Company’s last paper asset, was sold to OJI Paper for US$313 million
Net revenue was R$1.45 billion, with EBITDA margin at 33% and sales of 1.2 million tons
The challenging global scenario, with the dollar’s appreciation, had an accounting impact in the Company’s balance sheet but no cash effect

The third quarter of 2011 was marked the conclusion of Fibria’s strategic repositioning exclusively in the core business of pulp and the forestry base. Despite macroeconomic challenges with the real’s depreciation against the dollar, the Company’s stable pulp production and sales in the period demonstrate the strength of the Company’s decision. The sale of its last paper asset, the Piracicaba Unit, to OJI Paper helped maintain the Company’s cash and liquidity position.

Fibria’s pulp sales increased 7% year-on-year and remained stable quarter-on-quarter. The Company’s EBITDA was R$476 million, with a margin of 33%. Net operating revenue totaled R$1.45 billion, stable quarter-on-quarter. Net debt totaled R$9.542 billion, falling 6% year-on-year, while the appreciation of the U.S. dollar drove a 20% quarter-on-quarter increase.

The 19% appreciation of the U.S. dollar against the real in the third quarter had accounting impacts on the Company’s balance sheet but no cash effect, as conversion of the dollar-denominated debt (92% of the total) to reais at the end of September, caused Fibria to post a loss of R$1.1 billion. As more than 90% of its production is exported, most of the Company’s debt is denominated in dollars for a natural hedge.

Due to the adverse macroeconomic scenario, the Company has maintained its focus on the Competitiveness Project with initiatives such as structural optimization, process review and simplification, and debt reduction. A R$201 million reduction in capital investments (CAPEX) for 2011 was approved, bringing CAPEX for the year to R$1.44 billion. The Company has also worked toward increasing liquidity events, with the sale of the Losango forest asset. Other initiatives target reducing investments in working capital.

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