2005 Annual Report
Executive Summary | Value Creation
2005’s results
Being among the lowest-cost producers in the world grants Aracruz a strong competitive advantage in the pulp market.
The startup of the activities of Veracel, a joint venture with Stora Enso, was one of the main factors leading to the increase in the volume of pulp sales and the subsequent increase in net income and cash generation (EBITDA), supporting a sustainable growth in shareholder rewards in the form of dividends and interest on stockholders’ equity, and facilitating the Company’s plans.
The EBITDA (adjusted for some strictly accounting events) of $668.9 million was 14% higher than the $595.0 million achieved in 2004. The EBITDA margin, of 50%, reflects the Company’s competitive advantage as one the lowest-cost producers in the world in the industry.
Consolidated net income, reaching $341 million in accordance with accounting principles generally accepted in the United States of America (US GAAP), was a record, representing an increase of 50% compared with the previous year.
| Main variances between 2004’s and 2005’s results | ||
|---|---|---|
| US$ million | ||
| Higher pulp sales price | 115 | |
| Higher pulp sales volume | 26 | |
| Effect price on costs | (50) | |
| Increase of net financial income | 52 | |
| Higher gains on currency remeasurement, net | 5 | |
| Equity results of affiliated companies | (32) | |
| Others | (2) | |
The complete analysis of the Company’s results in 2005 is presented in the Financial Information section.