Irani Papel e Embalagem (RANI3) Q4 2024 earnings summary

Executive summary

• Net revenue for 2024 reached BRL 1,627.5 million (R$1,627.5 million), up 2.1% year-over-year, with Q4 revenue at BRL 424.4 million, up 10.1% year-over-year, driven by higher volumes and improved prices in packaging and paper segments.

• Adjusted EBITDA for 2024 was BRL 475.7 million, down 3.0% year-over-year due to increased costs, especially OCC, with Q4 EBITDA at BRL 115.4 million and a margin of 27.2%.

• Net profit for 2024 was BRL 304.5 million, a 20.6% decrease year-over-year, but Q4 profit surged to BRL 186.2 million, mainly due to a BRL 168.2 million non-recurring tax credit.

• Net debt/EBITDA ended at 2.26x, within the company’s policy target of 2.5x, with total debt at BRL 3,680 million and cash of BRL 642 million.

• Company maintained strong liquidity, with a cash position of R$604.2 million at year-end.

Financial highlights

• Gross profit in 2024 was R$625.4 million, down 8.9% year-over-year; gross margin fell 4.7 p.p. to 38.4%.

• Operating profit before taxes and interest was R$207.5 million, down 59.0% from 2023.

• Adjusted free cash flow for 2024 was R$237.7 million, a 10.6% decrease year-over-year; free cash flow yield was 11.7%.

• Dividend yield for the year was 4.82%, with a payout of 126.04% of net income and R$0.53 per share distributed.

• Investments (Capex) reached R$228.6 million in 2024, focused on reforestation, maintenance, and modernization.

Outlook and guidance

• Management expects price recovery and margin reestablishment in 2025, with strong demand in key segments and gradual market recovery, especially in Argentina.

• Price increases implemented in late 2024 are expected to positively impact results in 2025, with further adjustments possible in Q2 and Q3.

• Deleveraging is anticipated as higher margins and improved results materialize.

• Company anticipates continued positive impact from Gaia Platform investments and expects to maintain returns above cost of capital.

• In Brazil, tax reform and lower interest rates are expected to support moderate GDP growth and benefit the sustainable packaging sector.