Brazil Real Drop Prompts Rally in Pulp Makers Fibria, SuzanoJulia Leite
Fibria Celulose SA, the world’s largest pulp producer, rose to a two-month high in Sao Paulo as Brazil’s currency tumbled for a fifth day, bolstering exporters’ revenue.
The shares gained 4.3 percent to 25 reais at the close of trading, the highest since April 9. Suzano Papel & Celulose SA, Brazil’s second-biggest pulp company after Fibria, climbed 3.2 percent to 7.95 reais. The Ibovespa rose 0.7 percent.
The real tumbled 1.5 percent to a four-year low, prompting the central bank to intervene for a third day this week to stem the selloff. Fibria and Suzano each get at least 78 percent of their pulp revenue from outside Brazil, according to presentations posted on their websites.
“The higher dollar could benefit their results in the next few quarters,” Joao Pedro Brugger, who helps manage 330 million reais at Leme Investimentos, said by phone from Florianopolis, Brazil. “The companies have done their homework well in terms of cleaning up their balance sheets and could be a good choice with the rising dollar and Brazilian stocks under pressure.”
The real has plunged 9.6 percent over the past 30 days, the biggest monthly rout since September 2011. The currency briefly erased its drop today as the central bank sold $2.99 billion of foreign-exchange swap contracts, marking the seventh day of intervention in three weeks to stem losses and contain inflation.
Banco Santander Brasil SA analysts Alex Sciacio and Felipe Reis raised their recommendation on Fibria to hold on June 14, according to a research report. The stock is a “good vehicle to weather current foreign exchange rate volatility” based on its dollar-denominated revenue and deleveraging of the balance sheet, they wrote in a research note to clients.