Dexco (DXCO3) Q2 2025 earnings summary

Executive summary

• Pro forma adjusted and recurring EBITDA reached R$1,313 million in 1H25, driven by strong Wood Division and LD Celulose performance, with LD Celulose operating at full capacity and delivering high productivity and robust margins.

• Finishes Division and Tiles Division delivered positive results in 2Q25 despite cost pressures and competitive challenges, aided by higher-value product mix and operational improvements.

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

• 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

• Adjusted and recurring EBITDA for 2Q25 was R$443 million (margin 20.9%), and R$788 million in 1H25 (margin 19.6%), excluding LD Celulose equivalence.

• Wood Division adjusted and recurring EBITDA was R$428 million in Q2, up 34% year-over-year, with a margin of 29.9%.

• LD Celulose 2Q25 EBITDA was R$529 million (margin 60.5%), with Dexco's share at R$259.5 million.

• Net debt at quarter-end was R$5,499.3 million, leverage at 3.39x net debt/EBITDA, and average debt maturity of 4.3 years.

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

Outlook and guidance

• Strong demand and price increases expected in the wood panels market, supporting Wood Division performance in 2H25.

• Tiles Division expects efficiency gains from the Botucatu plant ramp-up and manufacturing optimizations.

• Metals and Sanitary Ware anticipate operational improvements and cost control from factory reorganization.

• LD Celulose faces a scheduled maintenance shutdown in H2 2025 and external challenges, but outlook remains positive.

• Macroeconomic and political uncertainty persists, with a focus on deleveraging and efficiency projects.