Street Calls of the Week
Introduction & Market Context
Eucatex SA Industria e Comercio (EUCA4) presented its second quarter 2025 results on August 14, showing strong performance across all business segments against a backdrop of mixed industry conditions. The Brazilian construction materials manufacturer capitalized on favorable export conditions while maintaining growth in domestic markets.
According to industry data presented by the company, the construction materials sector (ABRAMAT Index) showed modest growth of 2.2% in the first half of 2025, with a full-year projection of 2.8%. This represents a significant improvement from the negative growth experienced in 2022 (-7.0%) and 2023 (-2.0%).
The real estate paint market (ABRAFATI Index) is projected to grow 1.6% in 2025, following a stronger 5.9% growth in 2024. This segment has shown more resilience than the broader construction materials market in recent years.
Meanwhile, the flooring market has rebounded in the first half of 2025 with 6.5% growth after experiencing contraction in previous years, including a 1.6% decline in 2024 and a more significant 5.5% drop in 2023.
Quarterly Performance Highlights
Eucatex reported impressive financial results for Q2 2025, with net revenue reaching R$784.1 million, a 13.8% increase compared to Q2 2024. This growth was driven by strong performance across all business segments, with exports showing particularly robust expansion.
The company’s business is divided into three main segments, each contributing significantly to overall revenue. The Civil Construction segment represents 36% of net revenue (R$283.1 million), growing 5.3% year-over-year. The Industry & Resale segment accounts for 35% of revenue (R$274.8 million), with 8.0% growth. Most notably, Exports contributed 28% of revenue (R$221.7 million) and showed exceptional growth of 40.8% compared to Q2 2024, driven by improved sales volumes, higher prices, and favorable exchange rates.
The company’s financial metrics showed improvement across the board. Gross profit reached R$286.9 million with a margin of 36.6%, up from 32.4% in Q2 2024. Recurring EBITDA increased to R$191.6 million, representing a margin of 24.4% compared to 20.7% in the same period last year. Recurring net income grew by 34.5% to R$88.4 million.
Detailed Financial Analysis
Eucatex continued to strengthen its financial position during the quarter. The company reduced its net debt by 7.0% from the previous quarter to R$560.2 million. More importantly, the net debt to recurring EBITDA ratio improved to 0.8x, down from 0.9x in Q1 2025 and 1.1x at the end of 2024, indicating enhanced financial stability.
The company has maintained disciplined working capital management, which has contributed to its improved financial position. The financial cycle (measured in days) has remained relatively stable over recent quarters, allowing the company to efficiently manage its cash flow while supporting growth.
Eucatex continued its investment program, with capital expenditures of R$87.7 million in Q2 2025, slightly higher than the R$80.0 million invested in Q2 2024. The majority of investments were directed toward forestry operations (56%) and panel factories (30%), with the remainder allocated to paints (9%) and other areas (5%). For the first half of 2025, the company has invested R$173.6 million, representing approximately 50% of the R$347.8 million planned for the full year.
Strategic Initiatives & Sustainability
Sustainability remains a core focus for Eucatex, particularly in its forestry operations. The company manages 142 farms covering 48,300 hectares, with 39,200 hectares under effective plantation. These forestry assets not only provide raw materials for production but also contribute to the company’s environmental sustainability goals.
Eucatex has received recognition for its sustainability efforts. The company’s paint division was awarded the Selo Social 2024, and Eucatex was recognized by the British magazine World Finance as one of the leading companies in industrial sustainability in its 2025 edition.
The company has also strengthened its corporate governance practices, with three independent members on the Board of Directors, specialized committees for Audit, Ethics, Human Resources, Governance, and Strategy, and the implementation of an independent Ethics Channel.
Forward-Looking Statements
Looking ahead, Eucatex is well-positioned to continue its growth trajectory, supported by its diversified business segments and strong export performance. The company’s improved financial position provides flexibility for future investments and potential expansion.
The wood panels market in Brazil shows signs of improvement, with capacity utilization increasing as idle capacity decreased from 23% in Q2 2024 to 20% in Q2 2025. This trend, combined with the modest growth expected in the construction materials and paint markets, provides a favorable backdrop for Eucatex’s continued performance.
With its strategic investments in forestry and manufacturing operations, along with its focus on sustainability and corporate governance, Eucatex appears well-prepared to navigate the evolving market conditions while maintaining its growth momentum in both domestic and international markets.
Full presentation:
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