UPDATE 1-Fibria posts fourth straight loss on hefty debt burden

by on July 26, 2012 1:27 pm BST

Thu Jul 26, 2012 9:27am EDT

* Net loss beats analyst expectations of bigger shortfall

* Currency tumble drives up dollar debt servicing costs

* Weak real helps adjusted EBITDA rise 12 pct annually

SAO PAULO, July 26 (Reuters) – Fibria ,
the world’s largest producer of eucalyptus pulp, reported a net
loss for the fourth consecutive quarter on Thursday, as the
impact of a weaker currency on the company’s debt outweighed an
increase in export proceeds.

Fibria lost 524 million reais ($257.9 million) in the second
quarter, compared with a 215 million real profit a year earlier,
according to a securities filing. The results beat estimates of
a 731 million real loss in a Reuters poll of nine analysts.

Despite record-low interest rates in Brazil and near-zero
rates in developed markets, Fibria continues to struggle under a
heavy debt load that leaves the company’s balance sheet
vulnerable to currency fluctuations.

A 10 percent decline in the value of Brazil’s real against
the U.S. dollar led to an 865 million real shortfall attributed
to monetary and currency fluctuations in the quarter, compared
with a gain of 327 million reais in the same period last year.

Fibria’s net debt climbed to 8.462 billion reais at the end
of June, up 6 percent from the same period last year, but down 6
percent from the previous quarter.

Still, the company took steps to improve its debt-servicing
terms by using proceeds from the sale of 235 million reais worth
of land and 1.36 billion reais of new shares to buy back $514
million in debt.

Earnings before interest, taxes, depreciation, amortization
and other one-off expenses rose 12 percent from a year earlier
to 550 million reais, beating a forecast of 528 million reais.
The weaker real and stable pulp prices helped increase the
competitiveness of the company’s exports, Fibria said.

The indicator, knows as EBITDA, is a popular gauge of
operating profitability.

Net debt fell to 4.7 times EBITDA in the second quarter over
the prior 12 months from 5.2 times in the prior quarter.