Votorantim Celulose SA (VCP)

We are maintaining our Sell recommendation on Votorantim Celulose S.A. (VCP). The short-term outlook for pulp prices is quite uncertain as a result of the current credit crisis.

Fourth quarter results were bad as expected, but the pulp and paper sales volume were in line with the company's guidance in spite of the production stoppage in the Jacarei and Conpacel units in November 2008.

The recent reduction in demand in Europe and North America, along with the U.S. financial crisis, resulted in a decrease in pulp list prices all over the world. The growth in net debt is a problem and the lack of transparency in the merger deal with ARA raises many doubts.