The Brazilian pulp producer Eldorado, which exports to several markets such as North America, ended the fourth quarter of 2020 with a net profit of R $ 641 million (over $ 112 million at the current exchange rate), a value six times higher compared to the gains of 2019. The company benefited from the improvement in operations and the positive impact of exchange rate variation on the financial line.
In the accumulated result of last year, however, the company had a net loss of R $ 108 million, reflecting the negative net effect of R $ 1.4 billion of the exchange rate variation on debt expressed in foreign currency, which has no cash effect.
In 2020, Eldorado’s net revenue reached R $ 4.4 billion (over $ 700 million), with growth of 4%, and Ebitda (earnings before interest, taxes, depreciation and amortization) rose 7%, to R $ 2.1 billion, with margin of 49%.
The company’s main challenge remains the net debt, which was R $ 6.78 billion in December. In the same month, the cash position was R $ 890 million.
The organization’s total gross debt is R $ 7.73 billion (almost $ 1.4 billion), of which R $ 5.6 billion is due in the short term. Most of these commitments refer to credit lines related to exports, which are usually renewed at maturity. However, the pulp maker will still need to pay the US $ 350 million issued in 2016, maturing in mid-2021.
In a note, the company’s financial director, Fernando Storchi, said that “the company ended 2020 with free cash generation of R $ 1.05 billion and with a drop in the leverage level, a trend that should persist in the coming quarters”.
According to the company, the cash cost of pulp production in the interval is considered to be very competitive – the value was R $ 555 per ton in the fourth quarter and R $ 591 per ton in the year.
The company produced 1.77 million tons of pulp in the year, down 1% from 2019, due to the scheduled shutdown at the Três Lagoas (MS) plant in the first quarter. In July, it recorded the highest monthly production in history, of 163.5 thousand tons.
In 2020, the sales volume was 1.799 million tons, a decrease of 5%. Even so, the company’s inventories remain below the levels considered adequate.
It should be noted that the control of Eldorado Brasil is the target of a dispute between the partners J&F Investimentos and Paper Excellence (PE).