ETERNIT S.A. Earnings Release
2Q22
Earnings Release
Contents | |
Operating Performance ..................................................................................................................................... | 6 |
Consolidated Financial Performance ................................................................................................................. | 10 |
Capital Markets............................................................................................................................................... | 16 |
Events Subsequent to the Reporting Period ...................................................................................................... | 17 |
Appendices..................................................................................................................................................... | 18 |
2Q22 | 2 |
Earnings Release
São Paulo, August 9, 2022 - Eternit S.A. - under Court-Supervised Reorganization (B3: ETER3, "Eternit" or "Company") announces today the results for the 2nd quarter of 2022. Except where stated otherwise, the operational and financial information of the Company is presented on a consolidated basis in thousands of Brazilian reais, in accordance with the Brazilian accounting standards, especially Federal Law 6,404/76 and guidelines issued by the Accounting Pronouncements Committee ("CPC") and approved by the Securities and Exchange Commission of Brazil ("CVM"), which should be read together with the financial statements and notes for the quarter ended June 30, 2022. All comparisons in this earnings release are with the 2nd quarter of 2021, except where stated otherwise.
Highlights
2Q22
Operating performance in 2Q22 surpasses 1Q22 and Eternit announces Interest on Equity of R$18 million
MARKET CAP (06/30/2022)
R$575 million
CLOSING SHARE PRICE (06/30/2022) R$9.31
NUMBER OF SHARES (06/30/2022) 61,776,575
FREE FLOAT
99.98%
INVESTOR RELATIONS ri@eternit.com.br
Videoconference:
Wednesday, August 10, 2022.
3 p.m. (BRT) | 2 p.m. (EDT)
Webcast:
https://choruscall.com.br/eternit/2Q22.htm
2Q22/1Q22 PERFORMANCE
Net Revenue of R$292 million
(+13%).
Gross Profit of R$107 million (+25%), with Gross Margin of 37%.
Recurring EBITDA of R$58 million (+21%), with Recurring EBITDA Margin of 20%.
Recuring Net Income of R$41 million (+30%).
2Q22 | 3 |
Earnings Release
Message from Management
The Eternit Group's results in 2Q22 were marked by superior operating performance compared to the previous quarter, with Net Revenue of R$292 million (+13%), Recurring EBITDA of R$58 million (+21%) and Recurring Net Income of R$41 million (+30%). Net Income came to R$40 million in 2Q22 and R$83 million in the year.
The highlights of the quarter include improved results from the Chrysotile segment, thanks to the realignment of export prices and sales growth, which led to gross margin from the business of 53%, up 16 p.p. from 1Q22.
In the fiber-cement segment, the Company's performance was affected by lower sales of roofing panels, which declined 18% in 1H22 compared to 1H21, and higher costs of raw materials (+33%). However, Recurring EBITDA margin stood at 20%, which is comparable with the better performance registered between 2012 and 2020.
On July 29, 2022, Eternit concluded the acquisition of 100% of the capital stock of Confibra. The acquisition will increase Eternit's capacity to produce fiber-cement roofing panels by around 20% and is in line with its strategy of growth and industry consolidation, strengthening the Company's position in the state of São Paulo, where Confibra has a strong presence.
In continuation of its solar roofing tile technology development program, the Company obtained the patent for the invention of "Photovoltaic Cell and Manufacturing Process of Encapsulated Photovoltaic Cell".
Regarding the program to modernize fiber-cement units, the Company continued expansion work at its units in Goiânia and Rio de Janeiro, which will jointly represent additional production capacity of 7,000 tons per month, about 10% of current capacity, both with startup expected in 3Q22.
The greenfield project at the fiber-cement roofing panels unit in Caucaia, Ceará, obtained from the State Government of Ceará the tax benefits from the Ceará Industrial Development Fund (CDI) as part of the FDI/PROVIN Program. Construction work on the unit is in the earthwork stage and the contract to build the infrastructure (civil, electric and hydraulic works) was signed in July.
As part of the Court-Supervised Reorganization Plan, Eternit's bankruptcy-related debt was approximately R$42 million on June 30, 2022, of which around R$35 million refer to the loan borrowed from Banco da Amazônia (BASA) to build the polypropylene fiber unit of Eternit Amazônia.
As for the end of the Court-Supervised Reorganization, the Company still awaits the judgment of the Special Appeal filed by it at the Superior Court of Justice (STJ) against the unfavorable decision by the Court of Appeals of the State of São Paulo (TJSP), seeking to reestablish the original payment plan for Class I creditors.
Finally, the Company approved a policy for dividends and interest on equity, which establishes quarterly announcements and semiannual payments. Accordingly, the Eternit Board of Directors Meeting held on August 9, 2022 approved the payment of interest on equity of around R$18.4 million related to the 1H22 results.
2Q22 | 4 |
Earnings Release
Main Indicators
Consolidated - R$ thousand | 2Q22 | 2Q21 | Chg. % | 1Q22 | Chg. % | 1H22 | 1H21 | Chg. % |
Gross Sales Revenue | 351,034 | 350,645 | 0,1 | 324,291 | 8,2 | 675,325 | 689,260 | (2,0) |
Net revenue | 292,086 | 287,317 | 1,7 | 259,693 | 12,5 | 551,779 | 557,602 | (1,0) |
Gross profit | 107,458 | 132,831 | (19,1) | 85,938 | 25,0 | 193,396 | 253,125 | (23,6) |
Gross margin | 37% | 46% | - 9 p.p. | 33% | 4 p.p. | 35% | 45% | - 10 p.p. |
Net income (loss) for the | 40,346 | 59,655 | (32,4) | 42,297 | (4,6) | 82,643 | 118,089 | (30,0) |
period | ||||||||
Net margin | 14% | 21% | - 7 p.p. | 16% | - 2 p.p. | 15% | 21% | - 6 p.p. |
Adjusted Net Income/Loss | 41,470 | 61,237 | (32,3) | 31,838 | 30,3 | 73,308 | 121,332 | (39,6) |
Adjusted Net Margin | 14% | 21% | (33,4) | 12% | 2 p.p. | 13% | 22% | - 9 p.p. |
EBITDA CVM 527/12 | 56,781 | 88,798 | (36,1) | 64,271 | (11,7) | 121,052 | 171,225 | (29,3) |
EBITDA Margin CVM 527/12 | 19% | 31% | - 12 p.p. | 25% | - 6 p.p. | 22% | 31% | - 9 p.p. |
Adjusted EBITDA | 58,484 | 91,194 | (35,9) | 48,424 | 20,8 | 106,908 | 176,139 | (39,3) |
Adjusted EBITDA Margin | 20% | 32% | - 12 p.p. | 19% | 1 p.p. | 19% | 32% | - 13 p.p. |
Economy and Market
Inflationary pressures have strongly affected the world's major economies and the situation worsened in the first half of 2022 due to the Russia - Ukraine war, which strongly affected grain and fuel prices. In the United States, inflation (CPI-U) in the last 12 months reached 9.1% in June. In Brazil, inflation measured by the IPCA index in the last 12 months reached 11.89%, remaining above two digits since September 2021, forcing the Brazilian Central Bank (BCB) to announce consecutive increases in the basic interest rate (SELIC), which ended 1H22 at 13.25%.
Market expectations disclosed in the Focus Report[1] of BCB predict GDP growth of 1.93% in 2022, with inflation measured by the IPCA rate of 7.30% and SELIC rate of 13.75% p.a. at the end of the year.
According to the Brazilian Construction Materials Industry Association (ABRAMAT)[2], revenue from the construction materials sector not adjusted for inflation decreased in June, down 1.2% from May and 6.6% from June 2021. In 1H22, the reduction was 8.5% in relation to the previous year.
According to ABRAMAT, this scenario of contraction should be reversed in the final months of the year, leading it to maintain its projected revenue growth of 1% for the construction materials sector in 2022.
[1] FOCUS Report - July 22, 2022 | *ABRAMAT projection |
[2]ABRAMAT: www.abramat.org.br- ABRAMAT index July 12, | |
2022 |
2Q22 | 5 |
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Eternit SA published this content on 09 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 09 August 2022 23:03:03 UTC.
