BRAZIL – Dexco, the largest wooden panel manufacturer in Brazil, faced challenges due to market weaknesses in the 3Q-2023, impacting sales volumes negatively.
Although operations normalized in August and September, the overall impact resulted in an 18.2% decrease in Net Revenue compared to 3Q-2022, amounting to BRL 1,769.0 million. Despite significant revenues from standing wood sales in the first half, they were insufficient to offset market conditions and the price repositioning by the Finishing for Construction Division. Consequently, Dexco closed 9M23 with Net Revenue of BRL 5,434.7 million, a 16.5% decline from the same period in 2022.
Export volumes also experienced a 16.9% decrease compared to 3Q-2022, with revenue from this channel dropping by 26.7%. Lower input costs in the Wood Division failed to compensate for the impacts of reducing production in the Finishing for Construction Division to match reduced market demand. Dexco concluded the quarter with an Adjusted and Recurring EBITDA of BRL 287.9 million, marking a 30.7% decline versus 3Q-2022, with a margin of 16.3%. Over 9M-2023, Adjusted and Recurring EBITDA reached BRL 988.8 million, with a margin of 18.2%, reflecting a 27.6% drop and a 2.8 p.p. margin decrease compared to the same period in 2022.
During the quarter, Dexco strategically closed its Panels manufacturing operation in Manizales, Colombia, aligning with the Division’s focus on cost competitiveness and capital allocation. This unit, consisting of older assets, held limited production capacity, and its closure resulted in a recognized non-recurring event of BRL 22.8 million.
The decline in operational results led to Recurring Net Income of BRL 94.8 million in 3Q-2023, reflecting a substantial 41.8% decrease compared to 3Q-2022. For 9M-2023, Recurring Net Income was 48.0% lower than the same period in 2022, concluding at BRL 293.4 million.
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