(02/10/2015) Paranapanema (PMA), Brazil’s major copper producer, ended 2014 with a net income of R$ 124 million, a result 20 times higher than in 2013. The adjusted EBITDA was R$ 358.3 million, 8% higher than the same period, with adjusted EBITDA margin of 7.6%, 1.6 percentage points higher.

The discipline and efficiency in the use of the capital employed, one of the premises defined in the company’s business strategy, enabled the company to generate positive free cash flow in R$ 604 million, versus R$ 481.7 million loss in the previous year. The numbers reflect the change in the company’s management model and the adoption of the 2018 Paranapanema Plan, with extensive review of the operational commercial and financial processes, focusing on the sustainability of the company’s business.

“The results we collected in 2014 indicate that the company’s reorganization and the management plan that we set up until 2018 established the right foundation for the continuity of the company and creating shareholder value. We managed to raise the gross margin of 5.9% in late 2013 to 9.4% in 2014, in a sequence of five high quarters”, says Paranapanema’s president, Christophe Malik Akli.

The total sales volume reached 266,700 tons and net revenue was R$ 4.7 billion. There was great company’s deleveraging as a result of the improvement in the Adjusted EBITDA, which fell from 2.2x in 2013 to 0.8x in 2014.

During 2014, we invested R$ 69 million, 65% lower than the approved capital budget for the year (R$ 194 million). “Within the 2018 Paranapanema objectives, the company conducted extensive review of the investment strategy and chose to reset the focus, which was previously to expand production capacity for the increased capacity utilization”, explains Thiago Alonso de Oliveira, CFO and Investor Relations Director.

At the end of the reorganization stage, Paranapanema estimates that the capital investments are going to be equivalent to the company’s depreciation (around R$ 120 million), but for 2015 it expects investments of R$ 190 million, due to the investments scheduled for 2014 which were not performed during the restructuring phase.

The company kept the targets disclosed in the third quarter of 2014 for five indicators that best reflect the results of the management plan in place for 2018, as follows:

(a) an increase of approximately 25% in cathode production;
(b) 13% decrease of administrative and general expenses per ton and
(c) 15% the cost of transformation of copper per ton sold;
(d) maintenance of Capex equivalent to 100% of depreciation of assets;
(e) and decreased number of days of working capital invested from 155 to 120 days.