Arauco's sales drop 13.3% in the second quarter

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Arauco, one of the world’s largest forestry companies, reported sales revenues of USD 1,351.6 million during the second quarter of 2019, a 13.3 percent decrease compared to the same period of 2018.

Adjusted EBITDA reached USD 343.3 million, a 36.2 percent or USD 195.1 million decrease compared to the same period of 2018. Net income reached USD 57.4 million, a 75.9 percent or USD 180.8 million decrease compared to the same period of 2018.

The market scenario continued deteriorating in the 2Q-2019 due to a lower demand and high inventory levels, deepening the downward trend in pulp prices. The stability that was seen by the end of the first quarter, did not remain in this period. The uncertainty on the macro economic situation, largely because ofthe China-US trade war, impacted negatively on the paper and packaging demand and therefore on pulp demand.

Sales of composite panels increased compared to the previous quarter, with sales volume going up 6.0% (including MDF and Particleboard), which was slightly offset by a 0.3% average price decrease.

The Latin American market remained balanced, even though it was affected by a slow economic growth and in a lower level, by some oversupply coming from Brazil. In this country, markets were complicated during the second quarter of the year due to MDF supply growth and a sluggish local economy.

In Argentina, the company had a more stable quarter compared to the beginning of the year, with less fluctuations in the exchange rate. However, political uncertainties may affect the whole market down the road.

In the US and Canada, the shutdown of three plants of a relevant competitor resulted in better sales conditions for Particleboard during the second quarter. Regarding MDF, supply and demand were balanced, and market outlook will depend on the general economy.

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