SANTIAGO, Chile, Feb. 25 /PRNewswire-FirstCall/ --
FOURTH QUARTER 2008 HIGHLIGHTS
-- Masisa implemented a financial strengthening plan in the fourth quarter
to reduce debt, raise the debt maturity profile and strengthen the
shareholders' equity base by means of various initiatives including: a capital
increase of US$100 million; subscription of a long-term syndicated bank loan
of US$103 million; placement of long-term bonds in UF in the Chilean market
amounting to US$100 million; divestment of non-strategic assets in Brazil by
US$70 million; securing a long-term bank loan of US$30 million and the
reduction of financial liabilities in Bolivares by US$65 million, all of which
amounts to US$468 million. The following items of this plan had been
successfully carried out by December: the syndicated loan of US$103 million;
the reduction of debt in Bolivares of US$65 million; the award of the tender
to sell non-strategic assets in Brazil of US$70 million. Moreover, an
Extraordinary Shareholders' Meeting held on December 16, 2008, approved the
US$100 million capital increase with the aim of placing it in March 2009 and
the commitment of the controlling shareholder of subscribing its entire share
equivalent to US$65 million. As of the date of this press release, the entire
plan had been fully carried out, with the exception of the capital increase,
which will be undertaken in March. Due to this plan, the company now has all
its debt structured in the long term, with maturities in 2009 amounting to
US$52.1 million for long-term debt maturities. As a result of this financial
plan, Masisa forecasts that by March 2009 it will have reduced its net debt by
approximately 20% compared with September 2008 and will have a cash balance of
approximately US$116 million.
-- On December 23, 2008, Masisa successfully completed the tender process
of its sawmill and forestry assets located in Rio Negrinho in the state of
Santa Catarina in Brazil. As of that date, Masisa awarded the sale of the
sawmill and the forestry landholdings, which included 13,511 hectares of lands
and a surface area of 7,140 planted hectares. The sale envisaged a total price
of US$70,250,000 for the set of assets and generated net income before tax of
approximately US$9,605,000. The proceeds obtained in January 2009 from this
sale were used to paying off debt.
-- On January 7, 2009, Masisa placed UF long-term bonds in the domestic
Chilean market amounting to US$100 million. The issue consisted of a single
tranche 21-year maturity and 10-year grace and was placed at an annual
interest rate of 6.42%. Moreover, a long-term loan of US$30 million was closed
in early February. The proceeds from both transactions were used to pay off
short-term liabilities.
-- Sales in the fourth quarter of 2008 were US$28.4 million or 11% down on
the same quarter in 2007 and amounted to US$231.3 million. This drop was
mainly due to the effect of the devaluation of local currencies in most
countries where the company operates on the prices measured in US dollars. In
effect, the Chilean peso had a 27.3% devaluation on average from the fourth
quarter of 2007 to the same period in 2008. The real devalued by 27.6%, the
Mexican peso by 19.7% and the Colombian peso by 13.3% in the same period. The
consolidated impact of this on sales amounted to US$24.2 million. A slowdown
of the board market due to the global economic crisis was evident at the end
of the quarter, which led to lower sales volumes measured in cubic meters of
particleboard (PB) (-28.6%) and medium density fiberboard (MDF) (-7.2%), which
were offset in part by price increases of PB (+9.9%) and more than offset by
price increases of MDF (+9.3%). Other reasons for the drop in sales were: the
lack of oriented strand board (OSB) sales due to the sale of the OSB mill to
Louisiana Pacific in May last year and; lower sales of MDF and finger-joint
moldings due to the slowdown of the real estate market in the United States.
Sales of sawn lumber and doors rose by 24.8% and 6.2%, respectively.
-- The operating margin in US dollars plunged 43.3% from US$69.9 million
to US$39.7 million, mainly due to the drop in sales arising from the
devaluation of local currencies in most markets that was not fully offset by
cost reductions due to the effect of such devaluations, as approximately 45%
of the operating costs are expressed in US dollars. Likewise, the operating
margin on sales fell from 26.9% in the fourth quarter of 2007 to 17.1% in the
fourth quarter of 2008. Although the company has continued to implement price
increases on its MDF and PB boards (9.3% and 9.9%, respectively), and kept up
proactive management of its product mix focused on products with a higher
margin, it was not possible to fully offset the cost increases of the main raw
materials, i.e., resin, wood and energy, and there were also the effects of
the mentioned devaluation of local currencies. The recovery of operating
margins will arise from gradual price increases made selectively, cost
reductions of resins, freight and energy due to lower market prices effective
as of the first quarter of 2009, and fixed cost reductions related to
stoppages of productive plants of low profitability and reductions of shifts
aimed at controlling the stock levels.
-- The sales and administrative expenses to sales ratio was 13.6% in the
fourth quarter of 2008, which was an improvement on the 15.3% of sales in the
fourth quarter of 2007. The company is implementing cost reduction projects,
which will continue to reduce expenses in 2009.
-- As a result of lower sales, mainly because of the devaluation of local
currencies in most countries where the company operates, operating income
plummeted -72.8%, amounting to US$8.2 million against the US$30.2 million in
the fourth quarter of 2007.
-- Net income was US$15.5 million in the fourth quarter of 2008, which was
a 6.7% increase on the same quarter in 2007. This increase is explained by
non-operating income soaring 223.9% to US$19.2 million.
-- Anticipating unfavorable board demand conditions, Masisa has adopted
measures to reduce the possible adverse effects of the global economic crisis.
To such end, it has implemented operating changes including the closure of
plants, shift reductions, divestment of non-strategic assets and restructured
the administrative and management structure, which entailed acknowledging
extraordinary expenses of US$20.3 million. These operating measures have
allowed maintaining working capital levels at the same level as at the close
of 2007, excluding accounts receivable for the sale of the assets of Rio
Negrinho. This improved the working capital to sales ratio from 26.5% to
24.3%.
Quarter ended
Dec 31, Mar 31, Jun 30, Sep 30, Dec 31,
2007 2008 2008 2008 2008
(expressed in millions of US$, except per
share information as a %)
Sales 259.7 257.6 278.6 286.1 231.3
Operating Margin 69.9 65.6 70.5 66.8 39.7
% of sales (1) 26.9% 25.4% 25.3% 23.4% 17.1%
Sales & Administration
Expenses (39.7) (35.1) (36.1) (39.0) (31.4)
% of sales (1) -15.3% -13.6% -13.0% -13.6% -13.6%
Operating Income 30.2 30.4 34.4 27.8 8.2
% of sales (1) 11.6% 11.8% 12.3% 9.7% 3.6%
EBITDA (2) 47.8 48.1 54.2 46.8 26.8
% of sales (1) 18.4% 18.7% 19.5% 16.4% 11.6%
Net Income for the Period 14.6 11.5 3.3 13.2 15.5
(1): As a % of sales in the quarter.
(2): EBITDA is Operating Income + Depreciation + Amortization + Depletion
Forecasts and Estimates
This press release may contain forecasts which are different statements
from historical facts or current conditions and include the management's
current vision and estimates of future circumstances, industry conditions and
the Company's performance. Some forecasts may be identified by the use of
terms such as "may", "should", "anticipates", "believes", "estimates",
"expects", "plans", "intends", "forecasts", and other similar expressions.
Statements about future market share, projected future competitive strengths,
the implementation of significant operating and financial strategies, the
direction of future operation, and the factors or trends affecting financial
conditions, liquidity or operating income, are examples of forecasts. Such
statements reflect the current management vision and are subject to various
risks and uncertainties. There is no guarantee that the expected events trends
or results will actually occur. These statements are made based on many
assumptions and factors including general economic and market conditions,
industry conditions, and operating factors. Any changes in such assumptions or
factors could lead to the current results of Masisa and the projected Company
activities to materially differ from current expectations.
About Masisa
Masisa is a leading furniture and interior architecture board production
and marketing Company in Latin America. It owns forest assets in most of the
region, thereby guaranteeing the raw material for its wood board business.
Masisa's value proposal is to be a reliable brand, and a Company close to all
its stakeholders, anticipating market needs by means of product and service
innovation, and operating responsibly towards society and the environment.
Masisa has production plants in Chile, Argentina, Brazil, Venezuela and
Mexico, all of which will have the ISO 14,001 and OHSAS 18,001 certification.
Masisa is currently building an MDP plant in Montenegro, Brazil that will have
an annual production capacity of 750,000 cubic meters of MDP and an annual
melaminating capacity of 300,000 cubic meters. This plant will be the
Company's largest plant in Latin America, mainly for supply to the Brazilian
market.
For further information, please contact: Investor Relations (56 2) 350 6038,
investor.relations@masisa.com
www.masisa.com
