Fitch affirms Aracruz Celulose

Fitch Ratings said it affirmed Brazil-based Aracruz Celulose SA's BBB foreign- and local-currency issuer default ratings and AA+(bra) national scale rating.

The agency said the investment-grade ratings are supported by Aracruz's relatively low financial leverage and strong business position, which is primarily a result of the company's low-cost production capabilities and its high-quality bleached eucalyptus kraft market pulp. Through the first nine months of 2006, the company's cash cost of production was one of the lowest in the world, averaging $190 per ton. Aracruz's excellent cost structure has enabled it to generate positive cash flows during troughs in the volatile pulp cycle, allowing it to grow without compromising its balance sheet.

Aracruz ended 2005 with $1.295 billion of debt and $558 million of cash and marketable securities, and total debt to EBITDA was 2x.

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