Bloomberg News

Fibria Posts Second Straight Loss as Pulp Price Falls

February 02, 2012

(Corrects information on earnings per share in last paragraph in story originally published Feb. 1.)

Feb. 1 (Bloomberg) -- Fibria Celulose SA, the world’s largest pulp producer, reported a loss for a second straight quarter after prices for the paper-making material declined amid waning demand in Europe.

The fourth-quarter net loss was 358 million reais ($206.4 million), compared with net income of 162 million reais a year earlier, Sao Paulo-based Fibria said today in a statement to Brazil’s securities regulator. That was more than the 202.7 million-real average loss estimated by seven analysts surveyed by Bloomberg.

Demand from European paper makers, which buy almost half of Fibrias’s pulp, is slowing as the region’s debt crisis crimps growth. Pulp prices will likely continue to fall in coming months, Banco Bradesco SA’s Raphael Biderman said.

A recovery in prices “seems even more unlikely in light of the European debt crisis,” Biderman, an analyst at the Osasco, Brazil-based bank, wrote in a report before earnings were released.

Net sales dropped 11 percent from a year earlier to 1.4 billion reais.

Fibria was formed in 2009, when Votorantim Celulose & Papel SA bailed out Aracruz Celulose SA after the bigger rival posted more than $2 billion of losses stemming from wrong-way currency bets. Fibria has since raised about $2.6 billion in asset sales in a bid to reduce debt.

Banks allowed Fibria to exceed covenants on 2.5 billion reais of loans without paying a waiver fee or higher rates after the Brazilian real’s 17 percent decline in the third quarter boosted foreign obligations in local-currency terms. Dividend payments were limited to the mandatory minimum of 25 percent of profits until July 2012 as part of the accord with banks, Fibria said Dec. 20.

The company booked a financial loss of 142 million reais after the Brazilian currency gained 0.7 percent in the quarter, compared with a financial gain of 35 million reais in the year- earlier period. Under Brazilian accounting rules, a reduction in foreign debt stemming from a currency rally is booked as a gain.

Fibria rose 0.4 percent in Sao Paulo trading today to close at 14.31 reais. Earnings were announced after markets closed.

Fibria reported a per-share loss of 80 centavos for the quarter, compared with a gain of 30 centavos a year earlier.

--With assistance from Fabiola Moura in New York and Helder Marinho in Sao Paulo. Editors: Carlos Caminada, Dale Crofts

To contact the reporter on this story: Lucia Kassai in Sao Paulo at

To contact the editor responsible for this story: Dale Crofts at

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