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Investing.com -- Brazilian pulp and paper producer Suzano reported second-quarter EBITDA of R$6.1 billion, exceeding analyst expectations despite year-over-year challenges.
The quarterly results represented a 25% increase from the previous quarter, though they were 3% lower compared to the same period last year. The figure surpassed Bank of America estimates by 3.6% and Bloomberg consensus by 2.5%.
The stronger-than-expected performance was primarily driven by robust pulp shipments, which increased 23% quarter-over-quarter and were 6% above Bank of America estimates. This positive factor was partially offset by higher pulp cash costs per ton, which exceeded estimates by 1.6%.
Paper operations showed some weakness, with shipments coming in 2.7% below expectations and realized paper prices 3% lower than anticipated.
The year-over-year EBITDA decline of 3% resulted from several factors, including a 13% drop in USD pulp prices, higher cash costs, and increased selling, general and administrative expenses. These higher expenses were attributed to increased logistics costs, working capital effects, and expenses related to Suzano’s new US Packaging (NYSE:PKG) operation.
These negative impacts were partially mitigated by a 9% depreciation of the Brazilian real and a 28% increase in shipments compared to the same quarter last year.
Suzano’s leverage ratio decreased slightly by 0.1x quarter-over-quarter to 3.0x net debt to EBITDA in Brazilian real terms, while increasing 0.1x to 3.1x when measured in US dollars.
Free cash flow to equity reached approximately R$1.158 billion, yielding about 2% for the quarter. This modest yield was pressured by the low pulp price environment, an R$860 million increase in working capital, and investments related to the Cerrado mill.
Bank of America analysts described the results as "a decent set of operational results surprising on the shipments side."
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