Dexco S.A.

What it is

Dexco produces and sells wooden panels, flooring, bathroom fittings, and ceramic tiles in Brazil and internationally, operating through four segments: Wood Panels, Metals and Sanitary Ware, Coatings, and Soluble Pulp — with brands including Duratex, Durafloor, Deca, Portinari, Ceusa, and Castelatto.

It is the largest producer of wood panels in the Southern Hemisphere, and runs 17 industrial plants across eight Brazilian states plus two in Colombia, alongside five forestry units.

It also holds a joint venture with Austrian firm Lenzing for the production of soluble cellulose, a plant that began operations in April 2022.

Who owns it

Dexco is controlled jointly by the Itaúsa Group and the Ligna Group. Itaúsa — the investment holding company of the Setúbal and Villela families — holds roughly 40% of the shares, while Ligna (the Seibel family) holds around 20%; the rest trades freely on the B3.

Insiders in aggregate hold 51.0% of votes; institutional investors hold a further 36.3%, leaving a free float of roughly 12.7% (our calculation). As a Novo Mercado-listed company, Dexco grants 100% tag-along rights to all minority shareholders.

Who runs it

Dexco named Raul Guimarães Guaragna as its new chief executive, with his appointment taking effect in April 2025. He brings more than 28 years of operational and commercial experience, with stints at Brahma, Embraer, International Paper, and Tereos before joining Dexco.

CFO is Lucianna Raffaini, who presented the company’s Q1 2026 results alongside Guaragna. His predecessor, Harry (Antonio Joaquim de Oliveira), stepped down as CEO and transitioned to the board in April 2024, before formally departing in April 2025.

The money, in plain words

Revenue has grown — from R$ 7.4 bn (US$1.4 bn) in 2023 to R$ 8.2 bn (US$1.6 bn) in 2025, a rise of roughly 11.7% over two years (our calculation) — but what the company keeps after costs has collapsed. Net profit fell from R$ 790 mn (US$153 mn) in 2023 to just R$ 1.2 mn (US$233 k) in 2025: a net profit margin of barely 0.01%, down from 10.7% two years earlier (our calculation).

The problem is twofold: the ceramics and coatings division lost profitability, and Brazil’s high interest rates made the company’s R$ 7.9 bn net debt (~US$ 1.53 bn, our calculation) brutally expensive to service. Return on equity — how much the company earns for every real its owners have invested — stands at just 1.06%, far below what any investor would expect as adequate compensation for the risk.

The balance sheet carries R$ 19.0 bn (US$3.7 bn) in total assets against R$ 11.8 bn (US$2.3 bn) in liabilities, leaving R$ 6.8 bn (US$1.3 bn) in equity; with only R$ 579 mn (US$112 mn) in cash, the company has little room to manoeuvre if conditions do not improve.

What it is doing now

In the first quarter of 2026, total recurring net revenue grew 6.1% to R$ 2.0 bn (US$388 mn), and gross margin improved from 23.4% to 27.4% — a sign that price increases and cost discipline are beginning to work. Recurring net income reached R$ 72 mn (US$14 mn) in the quarter, an improvement of 78% year-on-year.

Management’s stated priorities are deleveraging, cost control, and efficiency improvements, with an expectation of better capacity utilisation and a gradual recovery in tiles by 2026.

What to watch

• Debt cost: R$ 7.9 bn (US$1.5 bn) in net debt at Brazilian interest rates is the single largest drag on earnings; any rate cuts by the central bank would flow directly to the bottom line.
• Tiles turnaround: the ceramics and coatings segment was the main source of margin collapse; whether the new CEO can restore it is the central question of the next two years.
• LD Celulose contribution: the Lenzing joint venture for soluble cellulose swings results quarter to quarter and warrants separate monitoring.
• Free float liquidity: with only ~12.7% of shares freely traded (our calculation), the stock is tightly held and can be illiquid; price moves may not fully reflect underlying value.

This is news, not investment advice.