SAO PAULO (Reuters) - Brazilian wood pulp processor Eldorado Brasil Celulose SA´s improved cash generation will help the company weather fallout from the corruption scandal involving its parent company, J&F Investimentos, Chief Executive Officer José Carlos Grubisich said in an interview on Wednesday.
Eldorado had first-quarter net income of 178 million reais ($55 million), according to unaudited financial statements released on Wednesday, reversing a loss of 171 million reais ($53 million) a year earlier.
Two corruption probes targeting the company and mandatory rotation of independent auditors delayed the financial statements, Grubisich said. Lower financial expenses and cash costs boosted earnings.
J&F agreed on Tuesday to pay 10.3 billion reais in fines after its founders, Joesley and Wesley Batista, admitted to bribing lawmakers and politicians in a massive corruption scandal that deepened Brazil’s financial crisis.
Eldorado’s net debt is equivalent to 7.7 times its earnings before interest, taxes, depreciation and amortization, a gauge of operational profit known as Ebitda.
Grubisich said the company had 1 billion reais in cash by the end of first quarter and he is confident Eldorado will be able to roll over trade finance lines that represent the bulk of its 2.1 billion short-term debt.
He said the company is continuing talks with potential partners interested in injecting up to $1 billion into the company to finance expansion, and said investors have not given up after the release of the plea deal.
“Pulp prices are rising and we cut our cash costs by 16 percent, our financials are much stronger”, Grubisich said.
Reporting by Tatiana Bautzer; Editing by Leslie Adler