Dexco (DXCO3) Q2 2025 earnings summary

Executive summary

• Pro forma adjusted and recurring EBITDA reached R$1,313 million in 1H25, with strong contributions from the Wood Division and LD Celulose, despite economic volatility and cost pressures.

• Consolidated net revenue rose 6.3% year-over-year to R$2,121.7 million in 2Q25, driven by Wood Division performance and forestry trading, offsetting declines in Finishes.

• Adjusted & Recurring EBITDA increased 17.6% year-over-year to R$442.6 million, with margin up to 20.9%, mainly from Wood and LD Celulose.

• Recurring net income dropped 71.5% year-over-year to R$29.9 million, impacted by a high base in 2Q24 and negative financial results.

• Sustaining free cash flow was negative R$90.6 million, reflecting higher working capital needs and inventory replenishment.

Financial highlights

• Net revenue for 1H25 reached R$4,024.2 million, up 2.4% year-over-year, with Wood Division up 6.0%.

• Adjusted & Recurring EBITDA for 2Q25 was R$442.6 million (+17.6% YoY); pro-forma including LD Celulose was R$702.2 million.

• Gross margin (pro-forma) for 2Q25 was 24.6%, down 12.4 p.p. year-over-year due to a high base from biological asset revaluation.

• Net debt at quarter-end was R$5,499.3 million, with leverage at 3.39x net debt/EBITDA.

• Market cap at quarter-end was R$4,595.0 million, with share price at R$5.67.

Outlook and guidance

• Operational discipline and efficiency gains are expected to support improved profitability in 2H25, especially as macroeconomic conditions stabilize.

• Price increases and sustained demand expected in the panels market, supporting Wood Division performance.

• Botucatu unit ramp-up and manufacturing optimization to improve Tiles Division efficiency.

• Metals & Sanitary Ware Division anticipated to benefit from factory reorganization and efficiency gains.

• LD Celulose faces a scheduled maintenance shutdown and external challenges, including lower dissolving wood pulp prices.