Companhia Melhoramentos de São Paulo (MSPA3) Q2 2024 earnings summary

Executive summary

• Q2 adjusted revenue reached R$48.4m, up 13% QoQ and down 3% YoY; reported net revenue was R$37.2m, down 23% YoY.

• Forestry faced weak domestic paperboard production and elevated imported inventories; publishing continued restructuring, while Altea benefited from real estate sales.

• Announced a new sustainable food-packaging plant in Camanducaia, with operations expected to begin in early 2025.

Financial highlights

• Q2 consolidated net income was R$0.9m vs. R$7.0m YoY; H1 net loss was R$6.1m vs. R$1.2m in H1 2023.

• Q2 EBITDA was R$5.1m, down 79% YoY; adjusted EBITDA, excluding non-cash accounting movements, was R$12.8m, down 12% YoY.

• H1 net revenue was R$77.5m, down 21% YoY; H1 EBITDA was R$14.3m, down 52%, and adjusted EBITDA was R$13.0m, down 35%.

• Q2 gross profit fell 25% in absolute terms; as a share of revenue, it declined 19%, mainly due to lower fixed-cost absorption.

• Net financial expense improved to R$0.6m in Q2 from R$4.4m YoY; H1 net financial expense was R$6.2m vs. R$9.0m.

Outlook and guidance

• The new sustainable-packaging plant is planned for Camanducaia, focused on food-industry packaging, with operations expected in early 2025.

• Forestry described market weakness as temporary; paperboard imports were slowing, though imported-product inventories remained above stable-market levels.

• Publishing’s restructuring is intended to simplify products and processes and make the business more agile for new-product development.