Irani Papel e Embalagem (RANI3) Q3 2024 earnings summary

Executive summary

• Net revenue reached R$426.4 million in 3Q24, up 4.5% year-over-year and 8.4% sequentially, driven by higher sales in Sustainable Packaging (Corrugated Cardboard).

• Net profit was R$37.6 million, down 41.8% year-over-year and 6.1% sequentially, mainly due to higher OCC costs, lower corrugated cardboard prices, reduced fair value change in biological assets, and increased depreciation from Gaia investments.

• Adjusted EBITDA was R$125.3 million, with a margin of 29.4%, 6.0% lower year-over-year but 6.1% higher sequentially, reflecting cost pressures and operational gains from Gaia projects.

• Recognized for transparency, innovation, and workplace quality, including the Anefac Transparency Trophy and GPTW Brasil rankings.

• Strong cash position of R$586.1 million, with 91% of gross debt long-term and 98% in local currency.

Financial highlights

• Gross profit in 3Q24 was R$156.0 million, with a gross margin of 36.6%, down 10.1 p.p. year-over-year.

• Net margin was 8.8% in 3Q24, down from 15.8% in 3Q23.

• Net debt/Adjusted EBITDA was 2.26x, up from 2.10x a year ago, but within the 2.5x policy target.

• Adjusted free cash flow for the last 12 months was R$289.3 million, up 27% year-over-year, with a yield of 12.8%.

• Dividend yield for the last 12 months was 4.36%, with R$132.5 million paid.

Outlook and guidance

• Management expects continued operational improvements and cash generation as Gaia Platform projects mature.

• OCC prices stabilized after earlier spikes, with supply-demand balance expected through year-end.

• ROIC is expected to strengthen as returns from Gaia investments grow.

• S&P reaffirmed 'brAA' credit rating with a stable outlook, citing solid liquidity and anticipated cash flow growth.

• 2025 anticipated to be better than 2024 in terms of pricing, margins, and volumes.