Companhia Melhoramentos de São Paulo (MSPA3) Q3 2023 earnings summary

Executive summary

• Q3 2023 net revenue was R$40.5m, down 20% YoY; net income was R$8.8m versus a R$7.4m loss in Q3 2022.

• 9M net income was R$7.6m, compared with a R$23.8m loss in 9M 2022; forest operations improved efficiency while publishing and fiber sales faced weaker demand.

Financial highlights

• Q3 EBITDA was R$19.0m versus R$1.1m YoY; adjusted EBITDA, excluding non-recurring movements without cash impact, was R$19.6m.

• 9M EBITDA was R$49.0m versus R$6.8m; adjusted EBITDA was R$39.7m, reflecting R$9.4m of non-recurring movements.

• 9M consolidated revenue was R$138.7m, down 6% YoY; financial result was a R$12.5m loss versus a R$9.3m loss in 9M 2022.

Segment performance

• Forestry/fibers 9M revenue was R$116.3m versus R$117.1m; gross profit increased to R$40.2m from R$30.7m.

• Forestry gross profit rose 61% YoY in Q3; gross margin improved from 17% to 27% of revenue on operating efficiencies, pricing and better raw-material utilization.

• Fiber sales volume was 15,317 tons in Q3, down 11% YoY; unit revenue fell 12% YoY as lower pulp prices made alternative fibers more competitive.

• Publishing Q3 sales fell 40% YoY to R$5.4m; retail was weakest, while institutional sales were the only channel with a positive comparison.

• Real estate results benefited from Swiss Park lot sales, the Nova Caieiras V sale and disposals of land outside the property strategy.