Automob, Desktop, and Eucatex: Mixed Fortunes in 4Q24 Brazilian Markets

The shares of Automob (AMOB3) plummeted over 10% on the Ibovespa (IBOV), leading the negative end of Brazil’s main stock index following the release of its fourth-quarter 2024 (4Q24) financial results.

By around 1:00 PM (Brasília time), AMOB3 was down 10%, trading at R$0.27—near its all-time low of R$0.25. During the session, the stock hit a decline of 13.33%, dropping to R$0.26. Follow the real-time updates.

This steep drop is a direct reaction to the 4Q24 earnings report released by the company on Friday, March 21, 2025. Automob, a major vehicle dealership group controlled by the Simpar holding company, recorded a net loss of R$101 million ($18 million) between October and December 2024, reversing a slightly positive result from the same period in 2023.

The company’s EBITDA (earnings before interest, taxes, depreciation, and amortization) totaled R$62 million ($11 million), down 27.3% compared to 4Q23 and a sharp 52% decline from the previous quarter.

The EBITDA margin deteriorated significantly, falling from 0.8% in 4Q23 to a negative 3.1% in 4Q24. On an adjusted basis, the net loss was R$7 million ($1 million), while adjusted EBITDA rose to R$127 million ($22 million) from R$67 million ($12 million) a year earlier.

Despite the loss, gross revenue for the quarter reached R$3,400 million ($596 million), up 11.63% year-over-year, driven by a 35.9% growth in the light vehicle segment throughout 2024.

For the full year, Automob reported a record net revenue of R$12,200 million ($2,140 million), a 28.7% increase from 2023, and an adjusted EBITDA of R$511 million ($90 million), up 10.7%.

However, the adjusted net profit for 2024 plummeted 77.9% to R$30 million ($5 million), heavily impacted by challenges in the agricultural sector and rising financial costs, with a negative financial result of R$121 million ($21 million) in 4Q24 alone.

Automob emerged in late 2024 from a corporate restructuring of Vamos (VAMO3), becoming Brazil’s largest dealership network with 192 stores across 35 brands.

Analysts from Bradesco BBI noted that despite the overall loss, the passenger car segment showed resilience, with ongoing integration from mergers and acquisitions (M&A) expected to yield further synergies in future quarters.

Earlier in 2025, Automob announced plans for a reverse stock split to lift its share price above R$1.00, following a B3 notice about its “penny stock” status (shares below R$1.00). The stock’s volatility reflects its current market challenges, but its expansive network and M&A strategy signal potential for recovery.

Desktop (DESK3): Steady Growth Amid Macro Headwinds

Despite a challenging macroeconomic environment in 4Q24, Desktop (DESK3) delivered solid growth in revenue, EBITDA, and profit, aligning closely with market expectations.

The company’s net revenue rose 11% year-over-year to R$292 million ($51 million), driven by a modest price increase and a significant net addition of 114,000 customers to its base.

Looking ahead, Desktop projects 27,000 net customer additions in 1Q25, a pace nearing double digits monthly, which is impressive given the tough economic backdrop.

Excluding non-recurring expenses tied to stock option plans and M&A activities, costs and expenses grew in line with revenue. Commercial and administrative expenses rose but were offset by lower provisions for doubtful accounts.

As a result, EBITDA climbed 11% to R$150.2 million ($26 million), with a stable margin of 51.4%. However, financial results weakened by R$13 million ($2 million) compared to 4Q23 due to higher interest rates, increased gross debt, and costs from debenture prepayments.

This was partly mitigated by effective liability management, reducing the cost of debt from CDI+2.7% to CDI+1.3% and extending the average debt term from 4.2 to 5.4 years, while leverage remained steady at 2.4x net debt/EBITDA.

Without non-recurring effects, net profit reached R$54.1 million ($9 million), up 8% from 4Q23. For the full year, adjusted net profit surged 33% to R$198.8 million ($35 million), underscoring Desktop’s resilience.

Based in São Paulo, Desktop is a leading broadband provider in Brazil’s interior regions, leveraging organic growth and strategic acquisitions. Despite dialing back expansion in late 2024 due to worsening macro conditions, the company maintained high margins and robust growth, reinforcing its strong fundamentals.

Trading at less than 5x enterprise value/EBITDA for 2025 and 2026, Desktop remains a top pick by Empiricus Research.

Eucatex (EUCA4): Margin Recovery and Revenue Growth

Eucatex (EUCA4) reported its 4Q24 results, showcasing revenue growth across all divisions and a recovery in margins, though net profit declined. Consolidated net revenue expanded 13.7% year-over-year to R$753.6 million ($132 million), fueled by a better product mix and price adjustments following cost pressures from rising resin prices in 3Q24.

Gross profit outpaced revenue growth, reaching R$261.3 million ($46 million), with a 1.1 percentage point gain in gross margin. In the Industry and Resale segment (MDP/MDF/THDF panels and fiberboard), revenue hit R$284.4 million ($50 million), up 15.7% from 4Q23, driven by higher-margin products and price hikes.

The Construction segment, buoyed by the Minha Casa Minha Vida housing program and successful trade fair participation, saw revenue of R$279 million ($49 million), a 5.5% increase. Exports surged 33.4% due to new product launches, strong U.S. demand, and favorable exchange rates.

However, operating expenses rose to R$144.9 million ($25 million), or 19.2% of net revenue (up from 17.4% in 4Q23), with nearly half the increase tied to freight and overhead costs for exports.

Recurring EBITDA, excluding non-cash biological asset variations, grew 26.9% to R$165 million ($29 million), with a margin of 21.9% (up 2.3 points from 4Q23).

Despite this operational strength, net profit fell from R$76.3 million ($13 million) in 4Q23 to R$42.1 million ($7 million) in 4Q24, impacted by the absence of tax credits that boosted 4Q23 results, higher interest rates, and negative currency effects on debt.

Net debt edged up to R$593 million ($104 million) from R$550.9 million ($97 million) in 3Q24, but leverage remained healthy at 1x net debt/EBITDA.

Founded in 1951 and headquartered in São Paulo, Eucatex is a key player in Brazil’s wood panel and paint markets, benefiting from both domestic housing initiatives and export growth.

After a challenging 3Q24, its ability to pass on costs in 4Q24 highlights pricing power. Trading below 5x enterprise value/EBITDA, Eucatex is a continued recommendation by Empiricus.

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