Votorantim Celulose e Papel S.A. (
VCP) is a leading paper company incorporated in the state of S?o Paulo, Brazil. It is a part of Votorantim Group, controlled by the Ermirio de Morais family, which is one of the largest private industrial conglomerates in Brazil. The Votorantim Group has dealings in the cement industry, pulp, paper, mining, metallurgy, chemical, processed orange juice and financial services, among others.
We are changing our current recommendation on Votorantim Celulose S.A. from Hold to Sell. The short-term outlook for pulp prices is quite uncertain as a result of the current credit crisis. Third quarter results were disappointing, and the pulp cash production cost increased during the quarter due to the stoppage of production in the Jacare? and Conpacel units.
The recent reduction in the demand in Europe and North America, especially the U.S. financial crisis, resulted in a decrease in pulp list prices all over the world. Moreover, after the recent loss announced by
Aracruz Celulose S.A. (
ARA), the merger no longer seems like a great idea.
