Fibria is a company that has learned how to prepare for a wide variety of economic and market scenarios. In recent years, the company has achieved financial soundness based on criteria, risk analysis, and a balanced cost, expense, and investment structure, which allowed the company to share value with its strategic audiences, thereby creating a virtuous cycle.
This position has given the company stability to overcome the difficulties experienced by the forestry sector in 2016. The drop in pulp prices, due to pressure from the Chinese market, and the appreciation of the Brazilian real against the US dollar contributed to the lower results, compared with the previous year.
In permanent dialogue with our shareholders and investors, we demonstrated that, despite the expansion of the Três Lagoas unit (Horizonte 2 Project) having leveraged our indebtedness, this is a low-cost initiative that will provide significant results. After its completion, Fibria's pulp production capacity will be 37% higher, but at a lower cost than the company's current average cost, positively impacting our EBITDA and our free cash generation.
Highlights of our economic performance in 2016
We recorded sales volumes of 5.504 million tons in 2016, 8% above 2015. This additional volume is mainly due to increased demand for pulp in Asia in the last quarter of 2015.
Net income totaled BRL 1.664 billion, a growth of 365% compared with 2015, which allows us to propose payment of dividends of BRL 393 million, which corresponds to the minimum mandatory payment according to corporate law.
Net revenue totaled BRL 9.615 billion (including revenue from sale of pulp from Klabin), 5% less than recorded in 2015. EBITDA was BRL 3.742 billion.
CAPEX totaled BRL 6.182 billion, 25% below initial forecast of 8.189 billion as a result of a cost reduction in the Horizonte 2 Project, influenced by the financial execution curve of the project, gains in negotiation with suppliers, and smaller investments in pulp logistics projects.
Cash position of BRL 4.717 billion (equivalent to USD 1.447 billion), coupled with unused credit lines referring to the financing of the expansion of the Três Lagoas unit (Horizonte 2 Project) and the issue of bonds (USD 700 million), is sufficient to cover the remaining investments required to complete the project and debt amortization up to the end of 2019.
The Horizonte 2 Project ended 2016 with 77% of the physical work and 57% of the financial investment completed.
Green Bonds
In January 2017, Fibria issued notes in the international market in the amount of USD 700 million, maturing in January 2027 and an interest rate of 5.50% per annum. Since these notes were issued to finance or refinance assets with sustainability attributes, they are classified in the market as Green Bonds.
Fibria's issue is in line with its strategy of strengthening the company's cash position. The resources are earmarked for projects with environmental benefits that contribute to the achievement of its Long-Term Goals.
See Fibria's rendering of accounts for issuing Green Bonds.
MAIN FINANCIAL INDICATORS11
| 2014 | 2015 | 2016 | |
|---|---|---|---|
| Net revenue from sales (BRL million) | 7,084 | 10,081 | 9,615 |
| Net income (BRL million) | 163 | 357 | 1,664 |
| Assets (BRL million) | 25,594 | 29,434 | 34,440 |
| Net equity (BRL million) | 14,616 | 12,815 | 13,818 |
| EBITDA (BRL million) | 2,791 | 5,337 | 3,742 |
| Net Debt/EBITDA UDM (USD) | 2.40 | 1.78 | 3.30 |
| Pulp production (thousand tons) | 5,274 | 5,185 | 5,021 |
| Pulp sales (thousand tons) | 5,305 | 5,118 | 5,504 |
| Market cap (BRL billion) | 18.0 | 28.7 | 17.7 |
| Production cash cost (BRL/ton) | 519 | 618 | 680 |
| Price of shares - FIBR3 (BRL) | 32.5 | 51.9 | 31.9 |
1 Includes 50% of Veracel.
VALUE ADDED STATEMENT (IN BRL THOUSAND)
| VALUE ADDED STATEMENT | |
|---|---|
| 2016 | |
| Revenue | |
| Gross sales of products and services (less returns) | 9,838,796 |
| Write-back (provision) for deterioration of credits receivable | 470 |
| Revenue associated with the construction of own assets and other | 2,689,336 |
| 12,528,602 | |
| Inputs acquired from third parties | |
| Cost of products and services sold (includes raw materials) | -7,201,273 |
| Materials, energy, third-party services, and other | -579,661 |
| -7,780,934 | |
| Gross value added | 4,747,668 |
| Withholdings | |
| Depreciation, amortization, and depletion | -1,922,741 |
| Depletion of wood from partnership operations | -60,702 |
| Net value added | -1,983,443 |
| Value added received in transfer | |
| Results of equity accounting | -751 |
| Financial revenue and active exchange variations | 4,351,159 |
| Deferred income tax and social insurance contribution | |
| 4,350,408 | |
| Total value added for distribution | 7,114,633 |
| Value added distribution | |
| People and payroll charges | 752,912 |
| Direct remuneration | 563,390 |
| Benefits | 156,561 |
| Government Severance Indemnity Fund (FGTS) | 32,961 |
| Taxes, fees and contributions | 1,798,405 |
| Federal | 1,634,163 |
| State | 123,394 |
| Municipal | 40,848 |
| Accrued interest, passive exchange variation and leases | 2,899,700 |
| Dividends | 393,026 |
| Retained profit (loss in the period) | 1,261,822 |
| Interests of noncontrolling shareholders | 8,768 |
| Value added distributed | 7,114,633 |