Eternit (ETER3) Q2 2024 earnings summary

Executive summary

• Net revenue reached R$276.5 million in 2Q24, up 7% year-over-year and 4% sequentially, driven by higher sales in all segments, especially fiber cement and chrysotile exports.

• Recurring EBITDA was R$16 million (6% margin), stable year-over-year, while adjusted EBITDA including non-recurring gains reached R$34 million due to a R$20 million asset sale.

• Net income for 2Q24 was R$12 million, up significantly from 2Q23, mainly due to non-recurring gains from asset sales.

• Gross margin declined to 21% from 26% in 2Q23 due to lower prices and capacity utilization.

• The company is awaiting court approval to conclude its judicial recovery process after favorable recommendations from the Public Prosecutor.

Financial highlights

• Gross profit was R$57.9 million, down 13.5% year-over-year.

• Operating expenses decreased, with selling expenses down 18% and G&A down 9% year-over-year.

• Net debt stood at R$144 million, up 89% year-over-year, with gross debt of R$154 million.

• Recurring net income was negative R$343 thousand in 2Q24, compared to a positive R$3.9 million in 2Q23.

• Operating cash flow for 1H24 was R$52.8 million, up from R$11.9 million in 1H23.

Outlook and guidance

• Focus remains on monetizing recent strategic investments, cost control, and disciplined capital allocation.

• The company expects continued ramp-up of the new Caucaia/CE fiber cement plant and further market recovery in construction materials.

• Market expects 2024 GDP growth of 2.15% and inflation (IPCA) of 4.05%.

• Construction materials industry projected to grow 3% in 2024.