Suzano (SUZ) 6-K Current report (foreign)

Exhibit 99.1

 

CONSOLIDATED BALANCE SHEET

	Note		June 30, 2023		December 31, 2022
ASSETS
CURRENT
Cash and cash equivalents		5		11,860,415		9,505,951
Marketable securities		6		7,913,730		7,546,639
Trade accounts receivable		7		6,488,192		9,607,012
Inventories		8		6,422,496		5,728,261
Recoverable taxes		9		747,847		549,580
Derivative financial instruments		4.5		3,747,881		3,048,493
Advances to suppliers		10		103,181		108,146
Dividends receivable		11				7,334
Other assets				778,557		1,021,234
Total current assets				38,062,299		37,122,650
NON-CURRENT
Marketable securities		6		441,140		419,103
Recoverable taxes		9		1,357,354		1,406,363
Deferred taxes		12		147,638		3,986,415
Derivative financial instruments		4.5		1,731,906		1,825,256
Advances to suppliers		10		1,981,199		1,592,132
Judicial deposits				342,017		362,561
Other assets				289,433		279,955
Biological assets		13		16,914,120		14,632,186
Investments		14		640,269		612,516
Property, plant and equipment		15		56,028,308		50,656,634
Right of use		19.1		5,230,789		5,109,226
Intangible		16		15,112,147		15,192,971
Total non-current assets				100,216,320		96,075,318
TOTAL ASSETS				138,278,619		133,197,968

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

1

CONSOLIDATED BALANCE SHEET

	Note		June 30, 2023			December 31, 2022
LIABILITIES
CURRENT
Trade accounts payable		17		6,347,954			6,206,570
Loans, financing and debentures		18.1		5,532,543			3,335,029
Lease liabilities		19.2		710,906			672,174
Derivative financial instruments		4.5		483,512			667,681
Taxes payable				425,156			449,122
Payroll and charges				629,911			674,525
Liabilities for assets acquisitions and subsidiaries		23		101,207			1,856,763
Dividends payable				2,678			5,094
Advances from customers				74,538			131,355
Other liabilities				541,190			494,230
Total current liabilities				14,849,595			14,492,543
NON-CURRENT
Loans, financing and debentures		18.1		68,999,788			71,239,562
Lease liabilities		19.2		5,485,078			5,510,356
Derivative financial instruments		4.5		1,735,204			4,179,114
Liabilities for assets acquisitions and subsidiaries		23		179,657			205,559
Provision for judicial liabilities		20.1		3,175,080			3,256,310
Employee benefit plans		21.2		701,933			691,424
Deferred taxes		12		11,377			1,118
Share-based compensation plans		22.3		183,589			162,117
Advances from customers				136,161			136,161
Other liabilities				121,144			157,339
Total non-current liabilities				80,729,011			85,539,060
TOTAL LIABILITIES				95,578,606			100,031,603
EQUITY		24
Share capital				9,235,546			9,235,546
Capital reserves				22,584			18,425
Treasury shares				(1,381,600	)		(2,120,324	)
Profit reserves				22,690,645			24,207,869
Other reserves				1,650,150			1,719,516
Retained earnings				10,370,124
Controlling shareholders´				42,587,449			33,061,032
Non-controlling interest				112,564			105,333
Total equity				42,700,013			33,166,365
TOTAL LIABILITIES AND EQUITY				138,278,619			133,197,968

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

2

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

			Second quarter						Semester ended
	Note		April 1 to June 30, 2023			April 1 to June 30, 2022			June 30, 2023			June 30, 2022
NET SALES		27		9,159,634			11,519,655			20,436,017			21,262,490
Cost of sales		29		(6,228,181	)		(6,122,925	)		(12,196,855	)		(11,555,765	)
GROSS PROFIT				2,931,453			5,396,730			8,239,162			9,706,725
OPERATING INCOME (EXPENSES)
Selling		29		(626,809	)		(625,567	)		(1,231,162	)		(1,197,708	)
General and administrative		29		(427,208	)		(364,768	)		(817,443	)		(701,232	)
Income (expense) from associates and joint ventures		14		(14,052	)		19,049			419			9,307
Other, net		29		1,205,293			161,993			1,183,989			159,426
OPERATING PROFIT BEFORE NET FINANCIAL INCOME				3,068,677			4,587,437			7,374,965			7,976,518
NET FINANCIAL INCOME (EXPENSES)		26
Financial expenses				(1,149,041	)		(1,133,402	)		(2,308,066	)		(2,183,523	)
Financial income				404,137			194,283			789,898			352,567
Derivative financial instruments				2,903,766			(1,575,557	)		4,899,019			4,620,886
Monetary and exchange variations, net				2,376,817			(4,459,984	)		3,624,935			3,170,689
NET INCOME (LOSS) BEFORE TAXES				7,604,356			(2,387,223	)		14,380,751			13,937,137
Income and social contribution taxes
Current		12		(97,226	)		(63,703	)		(211,003	)		(122,637	)
Deferred		12		(2,429,507	)		2,632,715			(3,849,332	)		(3,326,601	)
NET INCOME FOR THE PERIOD				5,077,623			181,789			10,320,416			10,487,899
Attributable to
Controlling shareholders’				5,073,127			175,625			10,310,498			10,480,342
Non-controlling interest				4,496			6,164			9,918			7,557
Earnings (loss) per share
Basic		25.1		3.90544			0.13057			7.87524			7.77949
Diluted		25.2		3.90397			0.13054			7.87231			7.77825

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

3

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	Second quarter						Semester ended
	April 1 to June 30, 2023			April 1 to June 30, 2022			June 30, 2023			June 30, 2022
Net income for the period		5,077,623			181,789			10,320,416			10,487,899
Other comprehensive income (loss)
Fair value investments in equity measured at fair value through other comprehensive income		(742	)		1,775			(1,376	)		(2,058	)
Tax effect on the fair value of investments		252			(603	)		468			700
Items with no subsequent effect on income		(490	)		1,172			(908	)		(1,358	)
Exchange rate variations on conversion of financial information of subsidiaries abroad		11,607			3,001			(8,832	)		(6,852	)
Realization of exchange variation on investments abroad					(14	)					(14	)
Items with subsequent effect on income		11,607			2,987			(8,832	)		(6,866	)
		5,088,740			185,948			10,310,676			10,479,675
Attributable to
Controlling shareholders’		5,084,244			179,784			10,300,758			10,472,118
Non-controlling interest		4,496			6,164			9,918			7,557

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

4

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Attributable to controlling shareholders’
	Share capital			Capital reserves				Profit reserves
	Share Capital	Share issuance costs		Stock options granted		Treasury shares		Tax incentives		Legal Reserve	Reserve for capital increase		Special statutory reserve		Investment reserve	Dividends proposed		Other reserves		Retained earnings (losses)	Total		Non-controlling interest		Total equity
Balances at December 31, 2021	9,269,281	(33,735	)	15,455		(218,265	)	812,909		235,019	2,513,663		279,344			86,889		2,114,907			15,075,467		99,663		15,175,130
Total comprehensive income
Net income for the period																				10,480,342	10,480,342		7,557		10,487,899
Other comprehensive income for the period																		(8,224	)		(8,224	)			(8,224	)
Transactions with shareholders
Stock options granted (Note 22.3)				2,668																	2,668				2,668
Shares granted (Note 22.3)				(2,365	)	2,365
Share repurchase (note 24.2)						(601,551	)														(601,551	)			(601,551	)
Unclaimed dividends forfeited																				194	194				194
Fair value attributable to non-controlling interest																							(2,539	)	(2,539	)
Proposed additional dividend payment (note 1.2.2)											(97	)				(86,889	)				(86,986	)			(86,986	)
Payment of supplementary dividends (note 1.2.3)											(719,903	)	(80,000	)							(799,903	)			(799,903	)
Internal changes in equity
Proposed minimum mandatory dividends								(502	)		502
Realization of deemed cost, net of taxes																		(57,845	)	57,845
Balances at June 30, 2022	9,269,281	(33,735	)	15,758		(817,451	)	812,407		235,019	1,794,165		199,344					2,048,838		10,538,381	24,062,007		104,681		24,166,688
Balances at December 31, 2022	9,269,281	(33,735	)	18,425		(2,120,324	)	879,278		1,404,099	19,732,050		2,192,442					1,719,516			33,061,032		105,333		33,166,365
Total comprehensive income
Net income for the period																				10,310,498	10,310,498		9,918		10,320,416
Other comprehensive income for the period																		(9,740	)		(9,740	)			(9,740	)
Transactions with shareholders
Shares granted (Note 22.3)				4,159																	4,159				4,159
Shares repurchased (Note 24.2)					��	(778,500	)														(778,500	)			(778,500	)
Treasury shares cancelled (Note 1.2.5)						1,517,224							(1,517,224	)
Fair value attributable to non-controlling interest																							(2,687	)	(2,687	)
Internal changes in equity
Constitution of reserves (Note 25.3)											(14,972,324	)			14,972,324
Realization of deemed cost, net of taxes																		(59,626	)	59,626
Balances at June 30, 2023	9,269,281	(33,735	)	22,584		(1,381,600	)	879,278		1,404,099	4,759,726		675,218		14,972,324			1,650,150		10,370,124	42,587,449		112,564		42,700,013

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

5

CONSOLIDATED STATEMENTS OF CASH FLOW

	June 30, 2023			June 30, 2022
OPERATING ACTIVITIES
Net income (loss) for the period		10,320,416			10,487,899
Adjustment to
Depreciation, depletion and amortization		3,451,862			3,505,869
Depreciation of right of use (Note 19.1)		141,654			109,860
Sublease of ships					(11,314	)
Interest expense on lease liabilities		223,237			210,597
Result from sale and disposal of property, plant and equipment and biological assets, net (Note 29)		111,195			(8,041	)
Income (expense) from associates and joint ventures		(419	)		(9,307	)
Exchange rate and monetary variations, net (Note 26)		(3,624,935	)		(3,170,689	)
Interest expenses on financing, loans and debentures, net (Note 26)		2,309,587			1,851,948
Capitalized loan costs (Note 26)		(511,650	)		(108,972	)
Accrual of interest on marketable securities		(529,887	)		(279,092	)
Amortization of transaction costs (Note 26)		32,421			36,838
Derivative gains, net (Note 26)		(4,899,019	)		(4,620,886	)
Fair value adjustment of biological assets (Note 13)		(1,256,315	)		(171,618	)
Deferred income tax and social contribution (Note 12.3)		3,849,332			3,326,601
Interest on actuarial liabilities (Note 21.2)		34,615			29,616
Provision for judicial liabilities, net (Note 20.1)		62,154			63,001
Tax litigation reduction program		14,031
Provision for doubtful accounts, net (Note 7.3)		10,287			2,088
Provision for inventory losses, net (Note 8.1)		(854	)		(9,519	)
Provision for loss of ICMS credits, net (Note 9.1)		202,961			34,676
Other		10,494			7,501
Decrease (increase) in assets
Trade accounts receivable		2,573,633			464,246
Inventories		(372,295	)		(744,261	)
Recoverable taxes		(335,807	)		(168,111	)
Other assets		235,459			69,152
Increase (decrease) in liabilities
Trade accounts payable		(105,036	)		997,290
Taxes payable		82,064			90,938
Payroll and charges		(63,898	)		(67,050	)
Other liabilities		(158,527	)		(180,291	)
Cash generated from operations		11,806,760			11,738,969
Payment of interest on financing, loans and debentures (Note 18.3)		(2,352,484	)		(1,919,402	)
Capitalized loan costs paid		511,650			108,972
Interest received on marketable securities		391,601			229,925
Payment of income taxes		(89,482	)		(94,393	)
Cash provided by operating activities		10,268,045			10,064,071
INVESTING ACTIVITIES
Additions to property, plant and equipment (Note 15)		(5,759,447	)		(3,397,882	)
Additions to intangible (Note 16)		(197	)		(69,100	)
Additions to biological assets (Note 13)		(2,899,032	)		(2,135,997	)
Proceeds from sales of property, plant and equipment		97,412			98,328
Capital increase in subsidiaries and affiliates		(35,075	)		(26,863	)
Marketable securities, net		(683,505	)		(4,691,843	)
Advances for acquisition (receipt) of wood from operations with development and partnerships		(410,024	)		(174,490	)
Dividends received		4,869			6,604
Asset acquisition (Note 23)		(1,615,140	)		(1,699,869	)
Acquisition of subsidiaries (Note 1.2.3)		(1,072,657	)
Net cash from acquisition of subsidiaries		5,002
Cash used in investing activities		(12,367,794	)		(12,091,112	)
FINANCING ACTIVITIES
Proceeds from loans, financing and debentures (Note 18.3)		5,276,816			265,090
Receipt of derivative transactions (Note 4.5.4)		1,664,900			186,312
Payment of loans, financing and debentures (Note 18.3)		(765,533	)		(853,625	)
Payment of leases (Note 19.2)		(577,132	)		(499,372	)
Payment of dividends		(2,415	)		(1,801,562	)
Liabilities for assets acquisitions and subsidiaries		(16,929	)		(109	)
Shares repurchased (Note 24.2)		(721,052	)		(502,065	)
Cash provided (used) by financing activities		4,858,655			(3,205,331	)
EXCHANGE VARIATION ON CASH AND CASH EQUIVALENTS		(404,442	)		(646,323	)
Increase (decrease) in cash and cash equivalents, net		2,354,464			(5,878,695	)
At the beginning of the period		9,505,951			13,590,776
At the end of the period		11,860,415			7,712,081
Increase (decrease) in cash and cash equivalents, net		2,354,464			(5,878,695	)

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

6

 

1. COMPANY´S OPERATIONS

Suzano S.A. (“Suzano”) and its subsidiaries (collectively the “Company”) is a public company with its headquarters in Brazil, at Avenida Professor Magalhães Neto, No. 1,752 - 10^th floor, rooms 1010 and 1011, Bairro Pituba, in the city of Salvador, State of Bahia, and its main business office in the city of São Paulo.

Suzano’s shares are traded on B3 S.A. (“Brasil, Bolsa, Balcão - “B3”), listed in the New Market under the ticker SUZB3, and its American Depositary Receipts (“ADRs”) in a ratio of 1 (one) per common share, Level II, are traded in the New York Stock Exchange (“NYSE”) under the ticker SUZ.

The Company has 13 industrial units, located in the cities of Cachoeiro de Itapemirim and Aracruz (Espírito Santo State), Belém (Pará State), Eunápolis and Mucuri (Bahia State), Maracanaú (Ceará State), Imperatriz (Maranhão State), Jacareí, Limeira, Suzano, Rio Verde and Mogi das Cruzes (São Paulo State) and Três Lagoas (Mato Grosso do Sul State). Additionally, it has five technology centers, 23 distribution centers and three ports, all located in Brazil.

These units produce hardwood pulp from eucalyptus, coated paper, paperboard, uncoated paper and cut size paper and packages of sanitary paper (consumer goods - tissue) to serve the domestic and foreign markets.

Pulp and paper are sold in foreign markets by Suzano, as well as through its wholly-owned subsidiaries and/or its sales offices in Argentina, Austria, China, Ecuador, United States of America, and Singapore.

The Company's operations also include the commercial management of eucalyptus forest for its own use, the operation of port terminals, and the holding of interests, as a partner or shareholder, in other companies or enterprises, and the generation of electricity in the pulp production process and its commercialization.

The Company is controlled by Suzano Holding S.A., through a voting agreement whereby it holds 47.12% of the common shares of its share capital.

These unaudited condensed consolidated interim financial information was authorized by the Board of Directors on August 1, 2023.

7

 

1.1. Equity interests

The Company holds equity interests in the following entities:

			% equity interest
Entity/Type of investment	Main activity	Country	June 30, 2023			December 31, 2022
Consolidated
F&E Tecnologia do Brasil S.A. (Direct)	Biofuel production, except alcohol	Brazil		100.00	%		100.00	%
Fibria Celulose (USA) Inc. (Direct)	Business office	United States of America		100.00	%		100.00	%
Fibria Overseas Finance Ltd. (Direct)	Financial fundraising	Cayman Island		100.00	%		100.00	%
Fibria Terminal de Celulose de Santos SPE S.A. (Direct)	Port operations	Brazil		100.00	%		100.00	%
FuturaGene Ltd.	Biotechnology research and development	England		100.00	%		100.00	%
FuturaGene Delaware Inc. (Indirect)	Biotechnology research and development	United States of America		100.00	%		100.00	%
FuturaGene Israel Ltd. (Indirect)	Biotechnology research and development	Israel		100.00	%		100.00	%
FuturaGene Inc. (Indirect)	Biotechnology research and development	United States of America		100.00	%		100.00	%
Maxcel Empreendimentos e Participações S.A. (Direct)	Holding	Brazil		100.00	%		100.00	%
Itacel - Terminal de Celulose de Itaqui S.A. (Indirect)	Port operations	Brazil		100.00	%		100.00	%
MMC Brasil Indústria e Comércio Ltda (Direct)(1)	Industrialization and commercialization of wipes, cleaning and sanitary products.	Brazil		100.00	%
Mucuri Energética S.A. (Direct)	Power generation and distribution	Brazil		100.00	%		100.00	%
Paineiras Logística e Transportes Ltda.  (Direct)	Road freight transport	Brazil		100.00	%		100.00	%
Portocel - Terminal Espec. Barra do Riacho S.A. (Direct)	Port operations	Brazil		51.00	%		51.00	%
Projetos Especiais e Investimentos Ltda. (Direct)	Commercialization of equipment and parts	Brazil		100.00	%		100.00	%
SFBC Participações Ltda. (Direct)	Packaging production	Brazil		100.00	%		100.00	%
Stenfar S.A. Indl. Coml. Imp. Y. Exp. (Direct)	Commercialization of paper and computer materials	Argentina		100.00	%		100.00	%
Suzano Austria GmbH. (Direct)	Business office	Austria		100.00	%		100.00	%
Suzano Canada Inc. (Direct)	Lignin research and development	Canada		100.00	%		100.00	%
Suzano Ecuador S.A.S. (Direct) (2	Commercialization of paper	Ecuador		100.00	%
Suzano Finland Oy (Direct)	Industrialization and commercialization of cellulose, microfiber cellulose and paper	Finland		100.00	%		100.00	%
Suzano International Finance B.V (Direct)	Financial fundraising	Netherlands		100.00	%		100.00	%
Suzano International Trade GmbH. (Direct)	Business office	Austria		100.00	%		100.00	%
Suzano Material Technology Development Ltd. (Direct)	Biotechnology research and development	China		100.00	%		100.00	%
Suzano Operações Industriais e Florestais S.A. (Direct)	Industrialization, commercialization and exporting of pulp	Brazil		100.00	%		100.00	%
Suzano Pulp and Paper America Inc. (Direct)	Business office	United States of America		100.00	%		100.00	%
Suzano Pulp and Paper Europe S.A. (Direct)	Business office	Switzerland		100.00	%		100.00	%
Suzano Shanghai Ltd. (Direct)	Business office	China		100.00	%		100.00	%
Suzano Shanghai Trading Ltd. (Direct) (3)	Business office	China		100.00	%
Suzano Singapura Pte. Ltd (Direct) (4)	Business office	Singapore		100.00	%
Suzano Trading International KFT(Direct)	Business office	Hungary		100.00	%		100.00	%
Suzano Ventures LLC (Direct)	Corporate venture capital	United States of America		100.00	%		100.00	%

8

 

			% equity interest
Entity/Type of investment	Main activity	Country	June 30, 2023			December 31, 2022
Joint operation
Veracel Celulose S.A. (Direct)	Industrialization, commercialization and exporting of pulp	Brazil		50.00	%		50.00	%
Equity
Biomas Serviços Ambientais, Restauração e Carbono S.A. (Direct) (5)	Restoration, conservation and preservation of forests	Brazil		16.66	%		100.00	%
Ensyn Corporation (Direct) (6)	Biofuel research and development	United States of America		26.07	%		26.59	%
F&E Technologies LLC (Direct/Indirect)	Biofuel production, except alcohol	United States of America		50.00	%		50.00	%
Ibema Companhia Brasileira de Papel (Direct)	Industrialization and commercialization of paperboard	Brazil		49.90	%		49.90	%
Spinnova Plc (Direct)	Research of sustainable raw materials for the textile industry	Finland		19.03	%		19.03	%
Woodspin Oy (Direct/Indirect)	Development and production of cellulose-based fibers, yarns and textile filaments	Finland		50.00	%		50.00	%
Fair value through other comprehensive income
Celluforce Inc. (Direct)	Nanocrystalline pulp research and development	Canada		8.28	%		8.28	%

1) On June 1, 2023, the Company completed the acquisition of MMC Brasil Indústria e Comércio Ltda.(Note 1.2.3.)

2) On March 8, 2023, establishment of legal entity with full equity interest from Suzano S.A.

3) On May 19, 2023, establishment of legal entity with full equity interest from Suzano S.A.

4) On May 23, 2023, establishment of legal entity with full equity interest from Suzano S.A.

5) On February 27 and March 21, 2023, equivalent contributions were made by the six shareholders of Biomas to constitute an equity interest (Note 1.2.6).

6) On May 17, 2023, the percentage of interest was changed due to the dilution of the shares.

9

 

1.2. Major events in the six-month period ended June 30, 2023

1.2.1. Effects of the war between Russia and Ukraine

The Company has continuously monitored the impacts of the current conflict between Russia and Ukraine, both direct and indirect, on society, the economy and markets (global and domestic), with the objective of evaluating possible impacts and risks for the business.

The Company's assessment has covered four main areas:

(i) Personnel: Suzano does not have employees or facilities of any nature in any of the locations directly impacted by the conflict.

(ii) Supply Chain: the Company did not identify any short-term or long-term risk of possible interruptions or shortages of materials for its industrial and forestry activities. So far, the only effects observed have been greater volatility in commodities and energy prices.

(iii) Logistics: internationally, there was no change in the Company’s logistical operations, with all the routes used remaining unchanged and the moorings in the planned locations being maintained. At the domestic level, no changes in logistical flows were identified.

(iv) Commercial: to date, the Company has continued with its transactions as planned, maintaining service to its customers in all its sectors of activity. Sales to a few customers located in Russia were suspended, without any significant financial impact.

As a result of the current scenario, the Company has taken steps to expand its monitoring of the situation, together with its main stakeholders, in order to ensure any updates and information flows required for its global decision-making are available in a timely manner.

1.2.2. Cerrado Project

On October 28, 2021, the Company's Board of Directors approved the realization of the Cerrado Project, which consists of building a pulp production mill in the municipality of Ribas do Rio Pardo, in the state of Mato Grosso do Sul.

The plant will have an estimated nominal capacity of 2,550,000 tons of eucalyptus pulp production per year, with an estimated period for starting operations in the second semester of 2024. The total investment is R$22,200,000, with payments during the years of 2021 to 2024.

1.2.3. Acquisition of tissue business in Brazil

On June 1 2023, the Company acquired the totality of the quotas held by Kimberly-Clark Brasil Indústria e Comércio de Produtos de Higiene Ltda. (“KC Brasil”) in MMC Brasil Indústria e Comércio Ltda (“MMC Brasil”) for the consideration of US$212,029 million (equivalent to R$1,072,657) paid in cash (“Transaction”).

MMC Brasil had no operations until the contribution made by KC Brasil as a result of the carve out carried out in May 25, 2023 of the assets related to the business of manufacturing, marketing, distributing and selling of tissue products, including toilet paper, paper towels, napkins, tissues, as well as other paper products in Brazil, including ownership of the brand “NEVE” of KC Brasil.

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The following table summarizes the allocation of the preliminary purchase price:

Total purchase consideration (full payment on closing)	1,072,657
Book value of Shareholders' Equity of MMC Brasil	587,226
Fair value adjustment
Inventories (1)	7,120
Property, plant and equipment (2)	105,858
Trademark and patents (3)	189,655
Net identifiable assets acquired	889,859
Goodwill (4)	182,798

(1)            Measured considering the balance of finished products based on selling price, net of selling expenses.

(2)            Measured based on the analysis of market data on comparable transactions and cost quantification, based on the estimate of replacement or replacement value of the assets.

(3)            Measured based on revenue projections for products under the evaluated brands, according to the Refief from Royalties methodology.

(4)            Goodwill is attributable to the workforce and expected future profitability of the acquired business. It will be deductible for tax purposes.

No deferred tax was recognized on the fair value adjustments as there is an expectation of merging MMC within the fiscal year of 2023.

Considering the fact that MMC Brasil was created based on a carve out of a portion of the KC Brasil businesses, counterparty of the transaction, there is no previous history of revenue and/or profits specifically for the acquired entity to be considered or included in a pro forma consolidated revenue and pro forma consolidated profit as if the acquisition had occurred on January 1, 2023.

Acquisition related costs of R$12,105 are included in administrative expenses in profit or loss.

1.2.4. Federal Supreme Court (“STF”) decision – Effectiveness of final and unappealable tax decisions

On February 8, 2023, the Federal Supreme Court in Brazil concluded the judgments of Items 881 and 885, which discussed the effects of res judicata. Notwithstanding, considering the information available as of the date of these unaudited condensed consolidated interim financial information, the Company is not a party to any litigation related to a tax not being collected due to a past decision considered unappealable, therefore, the Company has no material adjustment due to the decision.

1.2.5. Treasury shares cancelled

On February 28, 2023, the Board of Directors decided to cancel 37,145,969 common shares, with an average cost of R$40.84 (forty reais and eighty-four cents) per share, in the amount of R$1,517,224, that were being held in treasury, without changing the share capital and against the balances of available profit reserves. After the cancellation of shares, the share capital of R$9,269,281 is now divided into 1,324,117,615 common shares, all nominative, book-entry and without par value.

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1.2.6. Biomas

On September 5, 2022, Biomas Serviços Ambientais, Restauração e Carbono Ltda. (“Biomas”) was initially established by Suzano S.A.

On November 12, 2022, Suzano in partnership with Itaú Unibanco S.A, Marfrig Global Foods S.A., Rabobank Foundational Investments B.B., Santander Corretora de Seguros, Investimentos e Serviços S.A. and Vale S.A., announced an alliance during an event held at the Climate Conference, COP27, in Egypt, for the creation of a company focused entirely to forest restoration, conservation and preservation activities in Brazil.

After the transformation of Biomas into a joint venture, Suzano, together with Marfrig, Rabobank and Vale, made a commitment to invest R$20,000 each partner, in accordance to the terms of the respective investment agreements on February 27, 2023, once the conditions precedent and closing acts established in said agreements were fulfilled. Itaú and Santander made their respective capital contributions on March 21, 2023.

For the period ended June 30, 2023, the amount of R$30,000 (R$5,000 for each partner) was fully paid with a remaining balance of R$90,000 (R$15,000 for each partner) to be paid.

With the completion of the above investments, each company now holds 16.66% of equity interest at Biomas.

2. BASIS OF PREPARATION AND PRESENTATION OF UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The Company’s unaudited condensed consolidated interim financial information, of the six-month period ended June 30, 2023, are prepared in compliance with the international standard IAS 34 Interim Financial Reporting issued by the International Accounting Standards Board (“IASB”) and disclose all the applicable significant information related to the financial information, which is consistent with the information used by Management in the performance of its duties.

The Company’s unaudited condensed consolidated interim financial information are expressed in thousands of Brazilian Reais (“R$”), as well as the amounts of other currencies, when applicable, were also expressed in thousands, unless otherwise stated.

The preparation of unaudited condensed consolidated interim financial information requires Management to make judgments, use estimates and adopt policies in the process of applying accounting practices that affect the disclosed amounts of revenues, expenses, assets and liabilities, including the disclosure of contingent liabilities assumed. However, the uncertainty inherent to these judgements, assumptions and estimates could result in material adjustments to the carrying amount of certain assets and liabilities in future periods.

The Company reviews its judgments, estimates and assumptions continually as disclosed in the annual financial statements for the year ended December 31, 2022 (Note 3.2.34). There were no changes in these judgments, estimates and assumptions compared to disclosed on December 31, 2022.

The unaudited condensed consolidated interim financial information prepared on historical cost basis, except for the following material items recognized:

(i) Derivative and non-derivative financial instruments measured at fair value;

(ii) Share-based payments and employee benefits measured at fair value; and

(iii) Biological assets measured at fair value;

The unaudited condensed consolidated interim financial information was prepared under the going concern assumption.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited condensed consolidated interim financial information was prepared based on the information of Suzano and its subsidiaries on the same base date, except for subsidiary MMC Brasil and associates Ensyn and Spinnova, as well as in accordance with consistent accounting policies and practices.

The unaudited condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended December 31, 2022, considering that its purpose is to provide an update on the activities, events and significant circumstances in relation to those disclosed in the consolidated financial statements. Therefore, unaudited condensed consolidated interim financial information focus on new activities, events and circumstances and do not duplicate the information previously disclosed, except when Management judges that the maintenance of the information is relevant.

The accounting policies have been consistently applied to all consolidated companies.

There were no changes on such policies and estimates calculation methodologies, except for the application of the new accounting policies as of January 1, 2023 and whose estimated impact was disclosed in the annual financial statements of December 31, 2022, as disclosed in the Note 3.1.

3.1. New accounting policies and changes in accounting policies adopted

The new standards and interpretations issued, until the issuance of the Company’s unaudited condensed consolidated interim financial information, are described below.

3.1.1. Accounting policies adopted

3.1.1.1. Presentation of the financial statements – IAS 1 – Classification of liabilities as current and non-current (applicable for annual periods beginning on/or after January 1, 2023, with early adoption permitted)

The amendments to IAS 1 affect only the presentation of liabilities as current or non-current in the balance sheet, and not the amount or the timing of the recognition of any asset, liability, income or expense, or the information disclosed about these items.

The amendments clarify that the classification of liabilities as current or non-current is based on the rights existing at the balance sheet date, specify that the classification is not affected by expectations about whether an entity will exercise its right to postpone the settlement of the liability, explain that the rights exist if restrictive clauses are complied with at the balance sheet date, and introduce the definition of 'settlement' to clarify that it refers to a transfer to a counterparty of an amount in cash, equity instruments, other assets or services.

The Company assessed the content of this pronouncement and did not identify any impacts.

3.1.1.2. Amendments to IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements – Disclosure of Accounting Policies (applicable for annual periods beginning on/or after January 1, 2023, with early adoption permitted)

The amendments change the requirements in IAS 1 with regard to the disclosure of accounting policies. The amendments replace all instances of the term ‘significant accounting policies’ with ‘material accounting policy information’. Accounting policy information is material if, considered together with other information included in an entity’s financial statements, it can reasonably be expected to influence the decisions that the primary users of the financial statements make on the basis of those financial statements.

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The supporting paragraphs in IAS 1 are also amended to clarify that accounting policy information that relates to immaterial transactions, other events or conditions is immaterial, and need not be disclosed. Accounting policy information may be material because of the nature of the related transactions, other events or conditions, even if the amounts are immaterial. However, not all accounting policy information relating to material transactions, other events or conditions is itself material.

The Company assessed the content of this pronouncement and did not identify any impacts.

3.1.1.3. Amendments to IAS 8 Definition of Accounting Estimates (applicable for annual periods beginning on/or after January 1, 2023)

The amendments replace the definition of a change in accounting estimates with a definition of accounting estimates. Under the new definition, accounting estimates are “monetary amounts in financial statements that are subject to measurement uncertainty”. The definition of a change in accounting estimates was deleted. However, the Board retained the concept of changes in accounting estimates in the Standard through the following clarifications:

(i) A change in accounting estimates that results from new information or new developments does not constitute the correction of an error

(ii) The effects of a change in an input or a measurement technique used to develop an accounting estimate represent changes in accounting estimates if they do not result from the correction of prior period errors

The Company assessed the content of this pronouncement and did not identify any impacts.

3.1.1.4. Amendments to IAS 12 – Deferred tax related to assets and liabilities arising from a single transaction (applicable for annual periods beginning on/or after January 1, 2023)

The amendments introduce a further exception to the initial recognition exemption. Under the amendments, an entity may not apply the initial recognition exemption for transactions that give rise to equal taxable and deductible temporary differences.

Depending on the applicable tax law, equal taxable and deductible temporary differences may arise from the initial recognition of an asset and liability in a transaction that is not a business combination and affects neither the accounting nor the taxable profit. For example, this may arise upon the recognition of a lease liability and the corresponding right-of-use asset, applying IFRS 16 at the commencement date of a lease.

Following the amendments to IAS 12, an entity is required to recognise the related deferred tax asset and liability, with the recognition of any deferred tax asset being subject to the recoverability criteria in IAS 12.

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The amendments apply to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period, an entity recognises:

(i) A deferred tax asset (to the extent that it is probable that taxable profits will be available against which the deductible temporary difference can be utilized) and a deferred tax liability for all deductible and taxable temporary differences associated with:

· Right-of-use assets and lease liabilities; and

· Decommissioning, restoration and similar liabilities and the corresponding amounts recognised as part of the cost of the related asset.

(ii) The cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or another component of equity, as appropriate) at that date.

The Company assessed the content of this pronouncement and did not identify any impacts.

4. FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT

4.1. Financial risks management

4.1.1. Overview

In the six-month period ended June 30, 2023, there were no significant changes in the financial risk management policies and procedures compared to those disclosed in the annual financial statements for the year ended December 31, 2022 (Note 4).

The Company maintained its conservative approach and strong cash and marketable securities position, as well as its hedging policy.

4.1.2. Classification

All transactions with financial instruments are recognized for accounting purposes and classified in the following categories:

	Note		June 30, 2023		December 31, 2022
Assets
Amortized cost
Cash and cash equivalents		5		11,860,415		9,505,951
Trade accounts receivable		7		6,488,192		9,607,012
Dividends receivable		11				7,334
Other assets (1)				788,401		931,173
				19,137,008		20,051,470
Fair value through other comprehensive income
Investments - Celluforce		14.1		23,541		24,917
				23,541		24,917
Fair value through profit or loss
Derivative financial instruments		4.5.1		5,479,787		4,873,749
Marketable securities		6		8,354,870		7,965,742
				13,834,657		12,839,491
				32,995,206		32,915,878
Liabilities
Amortized cost
Trade accounts payable		17		6,347,954		6,206,570
Loans, financing and debentures		18.1		74,532,331		74,574,591
Lease liabilities		19.2		6,195,984		6,182,530
Liabilities for assets acquisitions and subsidiaries		23		280,864		2,062,322
Dividends payable		11		2,678		5,094
Other liabilities (1)				137,148		147,920
				87,496,959		89,179,027
Fair value through profit or loss
Derivative financial instruments		4.5.1		2,218,716		4,846,795
				2,218,716		4,846,795
				89,715,675		94,025,822
				56,720,469		61,109,944

1) Does not include items not classified as financial instruments.

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4.1.3. Fair value of loans and financing

The estimated fair values of loans and financing are set forth below:

	Yield used to discount/ methodology	June 30, 2023		December 31, 2022
Quoted in the secondary market
In foreign currency
Bonds	Secondary Market		37,361,853		40,309,832
Estimated present value
In foreign currency
Export credits (“Prepayment”)	LIBOR		16,760,316		17,724,315
Assets Financing	SOFR		217,540		138,644
IFC - International Finance Corporation	SOFR		3,105,751
In local currency
BNDES – TJLP	DI 1		230,227		292,487
BNDES – TLP	DI 1		1,971,409		1,393,010
BNDES – Fixed	DI 1		10,219		21,656
BNDES – SELIC (“Special Settlement and Custody System”)	DI 1		644,710		575,129
BNDES - Currency basket	DI 1		4,122		10,866
CRA (“Agribusiness Receivables Certificate”)	DI 1/IPCA		1,264,031		1,835,336
Debentures	DI 1		6,663,101		5,643,440
NCE (“Export Credit Notes”)	DI 1		1,381,393		1,384,396
NCR (“Rural Credit Notes”)	DI 1		293,475		294,089
Export credits (“Prepayment”)	DI 1		1,303,156		1,320,415
			71,211,303		70,943,615

The book values of loans and financing are disclosed in Note 18.

Management considers that, for its other financial liabilities measured at amortized cost, their book values approximate their fair values,and therefore the fair value information is not being presented.

4.2. Liquidity risk management

The Company’s purpose is to maintain a strong cash and marketable securities position to meet its financial and operating commitments. The amount held in cash is intended to cover the expected outflows in the normal course of its operations, while the cash surplus is generally invested in highly liquid financial investments according to the Cash Management Policy.

The cash position is monitored by the Company’s Management, by means of management reports and participation in performance meetings with determined frequencies. During the six-month period ended June 30, 2023, the variations in cash and marketable securities were as expected, and the cash generated from operations was mostly used for investments and debt service.

All derivative financial instruments were traded over the counter and do not require deposit guarantee margins.

The remaining contractual maturities of financial liabilities are presented as of the balance sheet date. The amounts as set forth below consist of undiscounted cash flow, and include interest payments and exchange rate variations, and therefore may not reconcile with the amounts disclosed in the balance sheet.

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	June 30, 2023
	Book value		Future value		Up to 1 year		1 - 2  years		2 - 5  years		More than 5 years
Liabilities
Trade accounts payable		6,347,954		6,347,954		6,347,954
Loans, financing and debentures		74,532,331		101,685,556		9,107,311		12,248,908		29,960,769		50,368,568
Lease liabilities		6,195,984		10,891,670		1,113,507		1,959,036		1,774,219		6,044,908
Liabilities for asset acquisitions and subsidiaries		280,864		313,645		98,899		94,575		89,293		30,878
Derivative financial instruments		2,218,716		3,125,242		527,889		827,564		1,740,146		29,643
Dividends payable		2,678		2,678		2,678
Other liabilities		137,148		137,148		52,585		84,563
		89,715,675		122,503,893		17,250,823		15,214,646		33,564,427		56,473,997

	December 31, 2022
	Book value		Future value		Up to 1 year		1 - 2  years		2 - 5  years		More than 5 years
Liabilities
Trade accounts payable		6,206,570		6,206,570		6,206,570
Loans, financing and debentures		74,574,591		105,341,912		6,823,274		7,899,772		39,476,527		51,142,339
Lease liabilities		6,182,530		11,053,487		1,050,947		992,379		2,668,855		6,341,305
Liabilities for asset acquisitions and subsidiaries		2,062,322		2,203,302		1,986,633		99,331		57,421		59,917
Derivative financial instruments		4,846,795		6,515,262		728,070		1,341,108		4,299,970		146,114
Dividends payable		5,094		5,094		5,094
Other liabilities		147,920		147,920		61,500		86,420
		94,025,822		131,473,547		16,862,088		10,419,010		46,502,773		57,689,675

4.3. Credit risk management

In the six -month period ended June 30, 2023, there were no significant changes in the credit risk management policies compared to those disclosed in the annual financial statements for the year ended of December 31, 2022 (Note 4).

4.4. Market risk management

In the six-month period ended June 30, 2023, there were no significant changes in the market risk management policies and procedures compared to those disclosed in the annual financial statements for the year ended December 31, 2022 (Note 4).

4.4.1. Exchange rate risk management

As disclosed in the financial statements for the year ended December 31, 2022 (Note 4), the Company enters into U.S.Dollar selling transactions in the futures markets, including strategies involving options, to ensure attractive levels of operating margins for a portion of revenue. Such transactions are limited to a percentage of the net surplus foreign currency over a 24-months’ time horizon and therefore, are matched to the availability of currency for sale in the short term. The Company's Board of Directors approved the contracting of extraordinary hedge, in addition to the strategy mentioned above, for investments in the Cerrado Project, with a term of up to 36 months as of November 2021, in an amount of up to US$1,000,000. On July 27, 2022, the Board of Directors approved the expansion of the program, increasing the maximum amount (notional) to US$1,500,000, maintaining the previously established deadline. In order to provide transparency on the hedge program for the Cerrado Project, since December 31, 2021 the Company has started to prominently disclose the respective contracted operations.

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The assets and liabilities that are exposed to foreign currency, substantially in U.S. Dollars, are set forth below:

	June 30, 2023			December 31, 2022
Assets
Cash and cash equivalents		11,248,274			8,039,218
Marketable securities		4,826,627			4,510,652
Trade accounts receivable		4,845,044			7,612,768
Derivative financial instruments		4,202,786			3,393,785
		25,122,731			23,556,423
Liabilities
Trade accounts payable		(2,028,936	)		(2,030,806	)
Loans and financing		(60,176,982	)		(61,216,140	)
Liabilities for asset acquisitions and subsidiaries		(186,058	)		(2,053,259	)
Derivative financial instruments		(2,136,399	)		(4,698,323	)
		(64,528,375	)		(69,998,528	)
		(39,405,644	)		(46,442,105	)

4.4.1.1. Sensitivity analysis – foreign exchange rate exposure – except for derivative financial instruments

For market risk analysis, the Company uses scenarios to evaluate both its asset and liability positions in foreign currency, and the possible effects on its results. The probable scenario represents the amounts recognized, as they reflect the conversion into Brazilian Reais on the balance sheet date (R$ to U.S.$ = R$4.8192).

This analysis assumes that all other variables, particularly interest rates, remain constant. The other scenarios considered the depreciation of the Brazilian Real against the U.S. Dollar at the rates of 25% and 50% before taxes.

The following table set forth the potential impacts at their absolute amounts:

	June 30, 2023
	Effect on profit or loss
	Probable (base value)			Possible (25%)			Remote (50%)
Cash and cash equivalents		11,248,274			2,812,069			5,624,137
Marketable securities		4,826,627			1,206,657			2,413,314
Trade accounts receivable		4,845,044			1,211,261			2,422,522
Trade accounts payable		(2,028,936	)		(507,234	)		(1,014,468	)
Loans and financing		(60,176,982	)		(15,044,246	)		(30,088,491	)
Liabilities for asset acquisitions and subsidiaries		(186,058	)		(46,515	)		(93,029	)

4.4.1.2. Sensitivity analysis – foreign exchange rate exposure – derivative financial instruments

The Company has sales operations in US$ in the futures markets, including strategies using options, to ensure attractive levels of operating margins for a portion of its revenue. These operations are limited to a percentage of the total exposure to US$ over a 24-month horizon, or to investments in the Cerrado Project, according to the extraordinary hedge described above, and are therefore pegged to the availability of ready-to-sell foreign exchange in the short term.

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In addition to the transaction described above, the Company also taken out derivative instruments linked to the US$ and subject to exchange fluctuations, seeking to adjust the debt's currency indexation to the cash generation currency, as provided for in its financial policies.

For the calculation of the mark-to-market (“MtM”) price, the exchange rate of the last business day of the period is used. These market movements caused a positive impact on the mark-to-market position entered into by the Company.

This analysis below assumes that all other variables, particularly the interest rates, remain constant. The other scenarios considered the depreciation of the Brazilian Real against the US$ by 25% and 50%, before taxes, based on the base scenario on June 30, 2023.

The following table set out the possible impacts assuming these scenarios:

	June 30, 2023
	Effect on profit or loss
	Probable (base value)			Possible 25%			Remote 50%
Dollar/Real
Derivative financial instruments
Derivative options		3,201,865			(3,777,232	)		(7,621,974	)
Derivative swaps		(450,678	)		(1,728,220	)		(3,442,041	)
Derivative Non-Deliverable Forward (‘NDF’) Contracts		159,434			(286,048	)		(572,176	)
Embedded derivatives		187,618			(85,533	)		(171,067	)
NDF parity derivatives (1)		140,411			(47,180	)		(84,699	)
Commodity Derivatives		22,421			(5,607	)		(11,212	)
Dollar/Euro
Derivative financial instruments
NDF parity derivatives (1)		140,411			(562,869	)		(1,125,812	)

(1) Long positions at US$/EUR parity in order to protect the Capex cash flow of the Cerrado Project against the appreciation of the Euro.

4.4.2. Interest rate risk management

Fluctuations in interest rates could increase or reduce the costs of new loans and existing contracted operations.

The Company is constantly looking for alternatives for the use of financial instruments in order to avoid negative impacts on its cash flow.

Considering that on March 5, 2021, the Financial Conduct Authority ("FCA") announced the discontinuation date of the 3-month LIBOR as June 30, 2023, the Company initiated negotiations of the terms for swapping the indexers of its debt contracts and related derivatives upon this announcement.

As of June 30, 2023, the Company had R$15,566 related to loan and financing contracts, and R$15,151 related to derivative contracts, and it conducted the contract amendment process with the counterparties of each contract to ensure that the terms and market best practices were adopted at the time of the index transition starting from June 2023. On July 1, 2023, the contracts will be indexed to SOFR, which has been adopted as the new reference interest rate by the capital market. This negotiation will not have a substantial impact on the balances presented in the loan and financing and derivative instrument categories.

The Company understands that it will not be necessary to change the risk management strategy due to the change of indexation of its financial contracts linked to LIBOR.

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4.4.2.1. Sensitivity analysis – exposure to interest rates – except for derivative financial instruments

For its market risk analysis, the Company uses scenarios to evaluate the sensitivity of changes in operations impacted by the following rates: Interbank Deposit Rate (“CDI”), Long Term Interest Rate (“TJLP”), Special System for Settlement and Custody (“SELIC”) and the London Interbank Offered Rate (“LIBOR”), which could impact the results. The probable scenario represents the amounts already booked, as they reflect Management’s best estimates.

This analysis assumes that all other variables, particularly exchange rates, will remain constant. The other scenarios considered a depreciation of 25% and 50% in market interest rates.

The following table set forth the possible impacts assuming these scenarios in absolute amounts:

	June 30, 2023
	Effect on profit or loss
	Probable		Possible (25%)		Remote (50%)
CDI/SELIC
Cash and cash equivalents		560,985		19,144		38,287
Marketable securities		3,528,243		120,401		240,803
Loans and financing		8,125,522		277,283		554,567
TJLP
Loans and financing		277,763		5,055		10,111
LIBOR
Loans and financing		15,645,428		216,902		433,803
SOFR
Loans and financing		3,115,211		41,030		82,060

4.4.2.2. Sensitivity analysis – exposure to interest rates – derivative financial instruments

This analysis assumes that all other variables remain constant. The other scenarios considered a depreciation of 25% and 50% in market interest rates.

The following table sets out the possible impacts of these assumed scenarios:

	June 30, 2023
	Effect on profit or loss
	Probable			Probable 25%			Remote 50%
CDI
Derivative financial instruments
Liabilities
Derivative options		3,201,865			(388,599	)		(747,669	)
Derivative swaps		(450,678	)		(5,108	)		(11,749	)
LIBOR
Derivative financial instruments
Liabilities
Derivative swaps		(450,678	)		260,364			520,442

4.4.2.3. Sensitivity analysis to changes in the consumer price indices of the US economy

For the measurement of the probable scenario, the United States Consumer Price Index (“US-CPI”) was considered on June 30, 2023. The probable scenario was extrapolated considering a depreciation of 25% and 50% in the US-CPI to define the possible and remote scenarios, respectively.

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The following table sets out the possible impacts, assuming these scenarios in absolute amounts:

	June 30, 2023
	Effect on profit or loss
	Probable (base value)		Possible (25%)			Remote (50%)
Embedded derivative in a commitment to purchase standing wood, originating from a forest partnership agreement		187,618		(31,171	)		(64,295	)

4.4.3. Commodity price risk management

The Company is exposed to commodity prices, mainly in the selling price of pulp in the international market. The dynamics of rising and falling production capacities in the global market and macroeconomic conditions may impact the Company´s operating results.

Through a specialized team, the Company monitors hardwood pulp prices and analyses future trends, adjusting the forecasts aimed at assisting with preventive measures to calculate the different scenarios. There is no sufficiently liquid financial market to mitigate the risk of a material portion of the Company’s operations. Hardwood pulp price protection instruments available on the market have low liquidity and low volume, and high levels of distortion in price formation.

The Company is also exposed to international oil prices, reflected in logistical costs for selling in the export market, and indirectly in the costs of other supply, logistics and service contracts. In such cases, the Company evaluates whether to contract derivative financial instruments to mitigate the risk of price variations in its results.

4.5. Derivative financial instruments

The Company determines the fair value of derivative contracts, which differ from the amounts realized in the event of early settlement due to bank spreads and market factors at the time of quotation. The amounts presented by the Company are based on an estimate using market factors and use data provided by third parties, measured internally and compared to calculations performed by external consultants and by counterparties.

Details of derivative financial instruments and their respective calculation methodologies are disclosed in the annual financial statements for the year ended December 31, 2022 (Note 4).

4.5.1. Outstanding derivatives by type of contract, including embedded derivatives

The positions of outstanding derivatives are set forth below:

	Notional value, net in U.S.$				Fair value
	June 30, 2023		December 31, 2022		June 30, 2023			December 31, 2022
Instruments as part of protection strategy
Operational hedges
ZCC		4,815,050		6,866,800		3,201,865			1,596,089
NDF (R$ x US$)		243,100		248,100		159,434			(2,474	)
NDF (€ x US$)		399,328		544,702		140,411			161,055
Debt hedges
Swap LIBOR to Fixed (US$)		3,143,877		3,200,179		927,104			1,052,546
Swap IPCA to CDI (notional in Brazilian Reais)		2,130,618		1,741,787		245,159			278,945
Swap IPCA to Fixed (US$)				121,003					(29,910	)
Swap CDI x Fixed (US$)		1,265,004		1,863,534		(1,262,085	)		(2,566,110	)
Pre-fixed Swap to US$ (US$)		350,000		350,000		(360,856	)		(503,605	)
Commodity Hedge
Swap US-CPI (US$) (1)		130,810		124,960		187,618			40,418
Swap VLSFO/Brent		128,307				22,421
						3,261,071			26,954
Current assets						3,747,881			3,048,493
Non-current assets						1,731,906			1,825,256
Current liabilities						(483,512	)		(667,681	)
Non-current liabilities						(1,735,204	)		(4,179,114	)
						3,261,071			26,954

1) The embedded derivative refers to a swap contract for the sale of price variations in United States Dollars and US-CPI within the term of a forest partnership with a standing wood supply contract.

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The current contracts and the respective protected risks are set forth below:

(i) Swap CDI x Fixed US$: positions in conventional swaps exchanging the variation of the Interbank Deposit rate (“DI”) for a fixed rate in United States Dollars (“US$”). The objective is to change the debt indexed in Brazilian Reais to US$, in compliance with the Company's natural exposure to US$ receivables.

(ii) Swap IPCA x CDI (notional in Brazilian Reais): positions in conventional swaps exchanging the variation of the Amplified Consumer Price Index (“IPCA”) for the DI rate. The objective is to change the debt indexed in reais, in compliance with the Company's cash position in Brazilian Reais, which is also indexed to DI.

(iii) Swap IPCA x Fixed US$: positions in conventional swaps exchanging the variations of the IPCA for a fixed rate in US$. The objective is to change the debt indexed in Brazilian Reais to US$, in compliance with the Company's natural exposure to US$ receivables.

(iv) Swap LIBOR x Fixed US$: positions in conventional swaps exchanging a post-fixed rate (LIBOR) for a fixed rate in US$. The objective is to protect the cash flow against changes in the US interest rate.

(v) Pre-Fixed Swap R$ x Fixed US$: positions in conventional swaps of a fixed rate in Reais for a fixed rate in US$. The objective is to change the exposure of debts in Brazilian Reais to US$, in compliance with the Company's natural exposure to US$ receivables.

(vi) Zero-Cost Collar (“ZCC”): positions in an instrument that consists of the simultaneous combination of a purchase of put options and the sale of call options in US$, with the same principal amount and maturity, with the objective of protecting the cash flow of exports. Under this strategy, an interval is established where there is no deposit or receipt of financial margin at the option maturity. The objective is to protect the cash flow of exports against the depreciation of the Brazilian Real.

(vii) Non-Deliverable Forward contracts (“NDF”): ”): short positions in US$ futures contracts with the objective of protecting the cash flow from exports against the depreciation of the Brazilian Real.

(viii) Swap US-CPI: The embedded derivative refers to the swap contracts for selling price variations in US$ and the US-CPI in forest partnership with a standing wood supply contract.

22

(ix) Non-Deliverable Forward contracts: EUR and US$: call positions at EUR/US$ parity to protect the Capex cash flow of the Cerrado project against the appreciation of the Euro.

(x) Swap Very Low Sulphur Fuel Oil / Brent (“VLSFO”): Long positions in oil, aimed at hedging logistical costs related to maritime freight contracts against the increase in oil prices.

The variation in the fair values of derivatives on June 30, 2023 compared to the fair values measured on December 31, 2022 are explained substantially by the appreciation of the Brazilian Real against the US Dollar and by settlements during the period. There were also impacts caused by the variations in the Pre, Foreign Exchange Coupon and LIBOR curves in the operations.

It is important to highlight that the outstanding agreements on June 30, 2023 are over-the-counter market operations, without any type of collateral margin or forced early settlement clause due to variations from market marking.

4.5.2. Fair value by maturity schedule

	June 30, 2023			December 31, 2022
2023		2,413,838			2,380,812
2024		1,785,080			297,156
2025		(477,814	)		(1,225,193	)
2026 onwards		(460,033	)		(1,425,821	)
		3,261,071			26,954

4.5.3. Outstanding assets and liabilities derivatives positions

The outstanding derivatives positions are set forth below:

			Notional value				Fair value
	Currency		June 30, 2023		December 31, 2022		June 30, 2023			December 31, 2022
Debt hedges
Assets
Swap CDI to Fixed (US$)		R$		4,623,091		7,081,545		368,657			617,835
Swap Pre-Fixed to US$		R$		1,317,226		1,317,226					45,329
Swap LIBOR to Fixed (US$)		US$		3,143,877		3,200,000		927,104			1,052,546
Swap IPCA to CDI		IPCA		2,294,552		2,041,327		325,275			427,417
Swap IPCA to US$		IPCA				610,960
								1,621,036			2,143,127
Liabilities
Swap CDI to Fixed (US$)		US$		1,265,000		1,863,534		(1,630,742	)		(3,183,945	)
Swap Pre-Fixed to US$		US$		350,000		350,000		(360,856	)		(548,934	)
Swap LIBOR to Fixed (US$)		US$		3,143,877		3,200,000
Swap IPCA to CDI		R$		2,130,618		1,741,787		(80,116	)		(148,472	)
Swap IPCA to US$		US$				121,003					(29,910	)
								(2,071,714	)		(3,911,261	)
								(450,678	)		(1,768,134	)
Operational hedge
Zero cost collar (US$ x R$)		US$		4,815,050		6,866,800		3,201,865			1,596,089
NDF (R$ x US$)		US$		243,100		248,100		159,434			(2,474	)
NDF (€ x US$)		US$		399,328		544,702		140,411			161,055
								3,501,710			1,754,670
Commodity hedge
Swap US-CPI (standing wood) (1)		US$		130,810		124,960		187,618			40,418
Swap VLSFO/Brent		US$		128,307				22,421
								210,039			40,418
								3,261,071			26,954

1) The embedded derivative refers to the swap contracts for selling price variations in US$ and the US-CPI in forest partnership with a standing wood supply contract.

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4.5.4. Fair value settled amounts

The settled derivatives positions are set forth below:

	June 30, 2023			December 31, 2022
Operational hedge
Zero cost collar (R$ x US$)		1,445,973			718,618
NDF (R$ x US$)		18,538			8,301
NDF (€ x US$)		50,679			7,113
		1,515,190			734,032
Commodity hedge		8,853
Swap VLSFO/other		8,853
Debt hedge
Swap CDI to Fixed (US$)		(283,888	)		(261,570	)
Swap IPCA to CDI (Brazilian Reais)		158,092			(5,180	)
Swap IPCA to Fixed (US$)		(3,945	)		171
Swap Pre-Fixed to US$		52,746			54,128
Swap LIBOR to Fixed (US$)		217,852			(239,356	)
		140,857			(451,807	)
		1,664,900			282,225

4.6. Fair value hierarchy

Financial instruments are measured at fair value, which considers the fair value as the price that would be received from selling an asset or paid to transfer a liability in an unforced transaction between market participants at the measurement date.

For the six-month period ended June 30, 2023, there were no changes between the 3 (three) levels of hierarchy and no transfers between levels 1, 2 and 3.

	June 30, 2023
	Level 2		Level 3		Total
Assets
At fair value through profit or loss
Derivative financial instruments		5,479,787				5,479,787
Marketable securities		8,354,870				8,354,870
		13,834,657				13,834,657
At fair value through other comprehensive income
Other investments - CelluForce				23,541		23,541
				23,541		23,541
Biological assets				16,914,120		16,914,120
				16,914,120		16,914,120
Total assets		13,834,657		16,937,661		30,772,318
Liabilities
At fair value through profit or loss
Derivative financial instruments		2,218,716				2,218,716
		2,218,716				2,218,716
Total liabilities		2,218,716				2,218,716

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	December 31, 2022
	Level 2		Level 3		Total
Assets
At fair value through profit or loss
Derivative financial instruments		4,873,749				4,873,749
Marketable securities		7,965,742				7,965,742
		12,839,491				12,839,491
At fair value through other comprehensive income
Other investments - CelluForce				24,917		24,917
				24,917		24,917
Biological assets				14,632,186		14,632,186
				14,632,186		14,632,186
Total assets		12,839,491		14,657,103		27,496,594
Liabilities
At fair value through profit or loss
Derivative financial instruments		4,846,795				4,846,795
		4,846,795				4,846,795
Total liabilities		4,846,795				4,846,795

4.7. Climate change

In the annual financial statements for the year ended December 31, 2022, the risks and opportunities information linked to climate change and the sustainability strategy were disclosed, which did not change significant during the six-month period ended June 30, 2023, except for the items presented in Note 4.7.1.

4.7.1. Opportunities linked to climate change and the sustainability strategy

4.7.1.1 Biomas

As disclosed in Note 1.2.6, Suzano and five other global companies created Biomas with objective of restoring, conserving and preserving native forests in Brazil.

The initiative aims to restore and protect, over a period of 20 years, native forest in some of Brazil´s most valuable ecosystems, such as the Amazon, Atlantic Forest and Cerrado biomes – The area is equivalent to the territory of Switzerland or the state of Rio de Janeiro, in Brazil.

The initiative aims to promote a sustainable business model from a financial perspective, enabling each restoration, conservation, and preservation projects to be viable through the commercialization of carbon credits, as removals and avoided emissions, reducing tons of CO2e from the atmosphere.

The first stage will involve the identification and prospecting of areas, promoting nurseries for the large-scale production of native trees, engaging local communities in Biomas activities, discussing the application of the project in public areas, partnering with carbon certification platforms and implementing pilot projects.

4.7.1.2 Generation of carbon credits

The Company has ongoing carbon credit projects certifications, including:

· Horizonte de Carbono Project, which aims to restore degraded areas through the reforestation of native and eucalyptus trees. On March 30, 2023, the certifier Verra completed the validation and verification of 1.9Mt CO2e of the Horizonte Project (VCS ID 3350), of which 10% will be allocated to the Verra reserve and 1.7Mt CO2e is eligible for the issuance of credits. The Company has not yet issued such credits.

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The carbon credits are registered by Verra, an accredited company that holds a global platform, which is also responsible for the custody of the credits. This company has developed the Verified Carbon Standard (VCS) program, currently regarded as the global reference standard, in the best understanding of the company.

4.7.1.3 Production of wood-based textile fiber

In May 2023, Woodspin, located in Finland, inaugurated the first factory producing sustainable, recyclable and fully biodegradable textile fiber from responsibly grown wood, the result of the joint venture between Spinnova and Suzano. This new type of “green fabric” has the potential to replace less sustainable materials used in many products. This unit will be used for market development and technology improvement.

For the construction and operation of textile fiber projects, Woodspin uses Suzano's microfibrillated cellulose (MFC) as raw material.

4.8. Capital management

The main objective is to strengthen the Company’s capital structure, aiming to maintain an appropriate level of financial leverage while mitigating risks that could affect the availability of capital for business development.

The Company continuously monitors significant indicators, such as consolidated financial leverage, which is the ratio of total net debt to adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”).

5. CASH AND CASH EQUIVALENTS

	Average yield p.a. %		June 30, 2023		December 31, 2022
Cash and banks (1)		5.34		10,327,055		8,064,193
Cash equivalents
Local currency
Fixed-term deposits (compromised)		97.30 of CDI		560,985		1,441,758
Foreign currency
Fixed-term deposits (2)		6.01		972,375
				11,860,415		9,505,951

1) Refers mainly to investments in foreign currency under the Sweep Account modality, which is a remunerated account the balance of which is invested and made available automatically each day.

2) Refers to Time Deposit applications, with maturity up to 90 days, which is a remunerated bank deposit with a specific maturity period and is subject to an insignificant risk of changes in value.

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6. MARKETABLE SECURITIES

	Average yield p.a. %		June 30, 2023		December 31, 2022
In local currency
Private funds		112.40 of CDI		1,034,750		1,208,975
Private Securities (“CDBs”)		100.51 of CDI		2,052,353		1,827,012
CDBs - Escrow Account (1)		100.24 of CDI		441,140		419,103
				3,528,243		3,455,090
Foreign currency
Time deposits (2)		6.39		4,563,527		4,386,589
Other				263,100		124,063
				4,826,627		4,510,652
				8,354,870		7,965,742
Current				7,913,730		7,546,639
Non-Current				441,140		419,103

1) Includes escrow accounts, which will be released only after obtaining the applicable governmental approvals, and pending compliance by the Company with the conditions precedent in transactions involving the sale of rural properties.

2) Refers to Time Deposit investments, with maturities over 90 days, which are remunerated bank deposits with specific maturity periods.

7. TRADE ACCOUNTS RECEIVABLE

7.1. Breakdown of balances

	June 30, 2023			December 31, 2022
Domestic customers
Third parties		1,599,377			1,915,745
Related parties (Note 11) (1)		73,564			99,608
Foreign customers
Third parties		4,845,044			7,612,768
(-) Expected credit losses		(29,793	)		(21,109	)
		6,488,192			9,607,012

1) The balance refers to transactions with Ibema Companhia Brasileira de Papel.

The Company carries out factoring transactions for certain customer receivables where transfers the control and all risks and rewards related to these receivables to the counterparty, so these receivables are derecognized from accounts receivable in the balance sheet. This transaction refers to an additional cash generation opportunity and is therefore classified as a financial asset measured at amortized cost. The impact of these factoring transactions on the accounts receivable as of June 30, 2023, was R$4,227,031 (R$6,889,492 as of December 31, 2022).

7.2. Breakdown of trade accounts receivable by maturity

	June 30, 2023		December 31, 2022
Current		5,432,105		8,652,376
Overdue
Up to 30 days		855,757		777,150
From 31 to 60 days		44,915		74,253
From 61 to 90 days		50,212		54,784
From 91 to 120 days		9,921		20,975
From 121 to 180 days		50,728		18,945
From 181 days		44,554		8,529
		6,488,192		9,607,012

7.3. Roll-forward of expected credit losses

	June 30, 2023			December 31, 2022
Opening balance		(21,109	)		(34,763	)
Additions		(10,464	)		(5,228	)
Reversals		177			3,576
Write-offs		1,536			12,355
Exchange rate variations		67			2,951
Closing balance		(29,793	)		(21,109	)

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The Company maintains guarantees for overdue receivables as part of its commercial operations, through credit insurance policies, letters of credit and other guarantees. These guarantees avoid the need to recognize expected credit losses, in accordance with the Company's credit policy.

7.4. Main customers

The Company has 1 (one) customer responsible for 12.37% of the net sales of pulp segment on June 30, 2023 (10.67% on December 31, 2022) and no main customer responsible for more than 10% of the net sales of paper segment on June 30, 2023 and December 31, 2022.

8. INVENTORIES

	June 30, 2023		December 31, 2022
Finished goods
Pulp
Domestic (Brazil)		501,037		616,415
Foreign		1,711,100		1,426,064
Paper
Domestic (Brazil)		535,026		358,973
Foreign		245,267		192,671
Work in process		119,644		93,964
Raw materials
Wood		1,586,058		1,480,616
Operating supplies and packaging		745,413		716,089
Spare parts and other		978,951		843,469
		6,422,496		5,728,261

Inventories are disclosed net of estimated losses.

8.1. Roll-forward of estimated losses

	June 30, 2023			December 31, 2022
Opening balance		(105,989	)		(91,258	)
Additions		(23,859	)		(89,552	)
Reversals		24,713			33,492
Write-offs		17,893			41,329
Closing balance		(87,242	)		(105,989	)

On June 30, 2023 and December 31, 2022, there were no inventory items pledged as collateral.

9. RECOVERABLE TAXES

	June 30, 2023			December 31, 2022
IRPJ/CSLL – prepayments and withheld taxes		328,747			179,812
PIS/COFINS – on acquisitions of property, plant and equipment (1)		87,955			89,334
PIS/COFINS – operations		615,322			523,970
PIS/COFINS – exclusions from ICMS (2)		458,319			570,945
ICMS – on acquisitions of property, plant and equipment (3)		358,999			167,286
ICMS – operations (4)		1,446,388			1,423,375
Reintegra program (5)		76,549			65,971
Other taxes and contributions		39,690			39,057
Provision for loss on ICMS credits (6)		(1,306,768	)		(1,103,807	)
		2,105,201			1,955,943
Current		747,847			549,580
Non-current		1,357,354			1,406,363

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1) Social Integration Program (“PIS”) and Social Security Funding Contribution (“COFINS”): Credits whose realization is based on the years of depreciation of the corresponding asset.

2) The Company and its subsidiaries filed lawsuits over the years seeking the exclusion of ICMS from the PIS and COFINS contribution tax basis, in relation to certain transactions during various periods from March 1992, details on the initial recognition were disclosed in the financial statements of December 31, 2021.

3) Tax on Sales and Services (“ICMS”): Credits from the acquisition of property, plant and equipment are recovered on a straight-line basis over a four-year period, from the acquisition date, in accordance with the relevant regulation, the ICMS Control on Property, Plant and Equipment (“CIAP”).

4) ICMS credits accrued due to the volume of exports and credit generated from product import transactions: Credits are concentrated in the States of Espírito Santo, Maranhão, Mato Grosso do Sul e São Paulo, where the Company realizes the credits through the sale of credits to third parties, after approval from the State Ministry of Finance of each State. Credits are also being realized through the consumption of consumer goods (tissue) transactions in the domestic market.

5) Special Regime of Tax Refunds for Export Companies ("Reintegra"): Reintegra is a program that aims to refund the residual costs of taxes paid throughout the export chain to taxpayers, to make them more competitive in foreign markets.

6) Related to provisions for ICMS credit balances that are not probable to be recovered.

9.1. Roll-forward of provision for loss

	ICMS
	June 30, 2023			December 31, 2022
Opening balance		(1,103,807	)		(1,064,268	)
Addition (1)		(217,782	)		(221,903	)
Write-off					18,464
Reversal		14,821			163,900
Closing balance		(1,306,768	)		(1,103,807	)

1) Refers, substantially, to the accumulated ICMS credits of the state of Mato Grosso do Sul, arising from the construction operations of the Cerrado Project, and of the state of Espirito Santo, of the accumulated credits due to the volume of exports.

10. ADVANCES TO SUPPLIERS

	June 30, 2023		December 31, 2022
Forestry development program and partnerships		1,981,199		1,592,132
Advance to suppliers - others		103,181		108,146
		2,084,380		1,700,278
Current		103,181		108,146
Non-current		1,981,199		1,592,132

In the annual financial statements for the year ended December 31, 2022, the characteristics of the advances were disclosed, which did not change during the six-month period ended June 30, 2023.

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11. RELATED PARTIES

The Company's commercial and financial transactions with the controlling shareholder and Companies owned by the controlling shareholder Suzano Holding S.A. ("Suzano Group") were carried out at specific prices and conditions, as well as the corporate governance practices adopted by the Company, and those recommended and/or required by the applicable legislation.

The transactions refers mainly to:

Assets: (i) accounts receivable from the sale of pulp, paper, tissue and other products; (ii) dividends receivable; (iii) reimbursement for expenses; and (iv) social services;

Liabilities: (i) loan agreements;(ii) reimbursement for expenses; (iii) social services; (iv) real estate consulting; and (v) dividends payable.

Amounts in the statements of income: (i) sale of pulp, paper, tissue and other products; (ii) loan charges and exchange variation; (iii) social services and (viii) real estate consulting.

For the six-month period ended June 30, 2023, there were no material changes in the terms of the agreements, deals and transactions entered into, nor were there any new contracts, agreements or transactions of any different nature entered into between the Company and its related parties.

30

11.1. Balances recognized in assets and liabilities and amounts of transactions during the period

	Assets		Liabilities				Sales (purchases), net
	June 30, 2023	December 31, 2022	June 30, 2023		December 31, 2022		June 30, 2023		June 30, 2022
Transactions with controlling shareholders
Suzano Holding		5					22		30
		5					22		30
Transactions with companies of the Suzano Group and other related parties
Management (expect compensation – Note 11.2)			(4	)	(5	)	(810	)	(15	)
Bexma Participações Ltda		1					4		4
Bizma Investimentos Ltda		1					3		4
Civelec Participações Ltda	4,575						4,825
Fundação Arymax							1		1
Ibema Companhia Brasileira de Papel (1)	73,564	106,940	(12,033	)	(3,705	)	108,105		90,916
Instituto Ecofuturo - Futuro para o Desenvolvimento Sustentável		3	(1,124	)	(66	)	(3,959	)	(2,267	)
IPLF Holding S.A.		23					2		2
Nemonorte Imóveis e Participações Ltda							(88	)	(105	)
	78,139	106,968	(13,161	)	(3,776	)	108,083		88,540
	78,139	106,973	(13,161	)	(3,776	)	108,105		88,570
Assets
Trade accounts receivable (Note 7)	73,564	99,608
Dividends receivable		7,334
Other assets	4,575	31
Liabilities
Trade accounts payable (Note 17)			(13,161	)	(3,776	)
	78,139	106,973	(13,161	)	(3,776	)

1) Refers mainly to the sale of pulp.

31

11.2. Management compensation

Expenses related to the compensation of key management personnel, which include the Board of Directors, Fiscal Council and Board of Statutory Executive Officers, recognized in the statement of income for the period, are set out below:

	June 30, 2023		June 30, 2022
Short-term benefits
Salary or compensation		23,822		24,741
Direct and indirect benefits		1,194		464
Bonus		4,724		3,516
		29,740		28,721
Long-term benefits
Share-based compensation plan		12,407		25,726
		12,407		25,726
		42,147		54,447

Short-term benefits include fixed compensation (salaries and fees, vacation pay, mandatory bonus and “13^th month’s salary” bonus), payroll charges (Company’s share of contributions to social security – “INSS”) and variable compensation such as profit sharing, bonuses and benefits (company car, health plan, meal voucher, market voucher, life insurance and private pension plan).

Long-term benefits include the stock option plan and phantom shares for executives and key members of Management, in accordance with the specific regulations disclosed in Note 22.

12. INCOME AND SOCIAL CONTRIBUTION TAXES

12.1. Deferred taxes

The Company calculates income tax and social contribution taxes, current and deferred, based on the following rates: (i) 15% plus an additional 10% on taxable income in excess of R$240 for IRPJ; and (ii) 9% for CSLL, on the net income. Balances are recognized in the Company's income on an accruals basis.

Subsidiaries domiciled in Brazil have their taxes calculated and provisioned in accordance with the current legislation and their specific tax regime, including, in some cases, the presumed profit method. Subsidiaries domiciled abroad are subject to taxation in their respective jurisdictions, according to local regulations.

Deferred income and social contribution taxes are recognized at the net amounts in non-current assets or liabilities.

In Brazil, Law nº. 12,973/14 revoked article 74 of Provisional Measure nº. 2,158/01 and determines that the parcel of the adjustment of the value of the investment in subsidiaries, direct and indirect, domiciled abroad, equivalent to the profit earned by them before income tax, except for exchange rate variation, must be added in the determination of taxable income and the social contribution calculation basis of the controlling entity domiciled in Brazil, at each year ended.

The Company management believes in the validity of the provisions of international treaties entered by Brazil to avoid double taxation. In order to ensure its right to non-double taxation, the Company filed a lawsuit in April 2019, which aims to exempt the double taxation in Brazil, of profits earned by its subsidiary located in Austria, according to Law No. 12,973/14. Due to the preliminary injunction granted in favor of the Company in the aforementioned lawsuit, the Company decided not to add the profit from Suzano International Trading GmbH, located in Austria, when determining its taxable income and social contribution basis of the net profit of the Company for the six-month period ended June 30, 2023. There is no provision for tax related to the non-double taxation profits of such subsidiary in 2022.

32

12.1.1. Deferred income and social contribution taxes

	June 30, 2023		December 31, 2022
Tax loss		1,203,724		1,207,096
Negative tax basis of social contribution		453,538		445,250
Assets - temporary differences
Provision for judicial liabilities		292,460		268,596
Operating provisions and other losses		1,030,664		999,028
Exchange rate variations		2,369,677		4,297,503
Amortization of fair value adjustments arising from business combinations		665,983		680,142
Unrealized profit on inventories		164,996		363,052
Leases		328,682		364,838
		6,509,724		8,625,505
Liabilities - temporary differences
Goodwill - tax benefit on unamortized goodwill		1,161,410		1,023,103
Property, plant and equipment - deemed cost		1,174,570		1,217,349
Depreciation accelerated for tax-incentive reason (1)		834,389		869,997
Capitalized loan costs		404,955		210,834
Fair value of biological assets		1,027,008		703,274
Deferred taxes, net of fair value adjustments		384,016		398,950
Tax credits - gains from tax lawsuit (exclusion of ICMS from the PIS and COFINS basis)		155,828		194,121
Derivatives gains (“MtM”)		1,108,764		9,164
Provision of deferred taxes on results of subsidiaries abroad		98,984
Other temporary differences		23,539		13,416
		6,373,463		4,640,208
Non-current assets		147,638		3,986,415
Non-current liabilities		11,377		1,118

(1) Accelerated tax depreciation is taken as a benefit only in the income tax calculation bases.

12.1.2. Breakdown of accumulated tax losses and social contribution tax losses carried forward

	June 30, 2023		December 31, 2022
Tax loss carried forward		4,814,896		4,828,384
Negative tax basis of social contribution carried forward		5,039,311		4,947,222

12.1.3. Roll-forward of deferred tax assets

	June 30, 2023			December 31, 2022
Opening balance		3,985,297			8,729,929
Tax loss		(3,372	)		50,220
Negative tax basis of social contribution		8,288			34,176
Provision for judicial liabilities		23,864			19,251
Operating provisions and other losses		31,636			33,898
Exchange rate variation		(1,927,826	)		(2,257,699	)
Derivative gains (“MtM”)		(1,099,600	)		(2,202,857	)
Amortization of fair value adjustments arising from business combinations		775			8,970
Unrealized profit on inventories		(198,056	)		64,164
Leases		(36,156	)		(8,534	)
Goodwill - tax benefit on unamortized goodwill		(138,307	)		(276,614	)
Property, plant and equipment - deemed cost		42,779			99,510
Depreciation accelerated for tax-incentive reason		35,608			74,952
Capitalized loan costs		(194,121	)		(111,435	)
Fair value of biological assets		(323,734	)		(272,308	)
Deferred taxes on the results of subsidiaries abroad		(98,984	)
Credits on exclusion of ICMS from the PIS/COFINS tax base		38,293			3,906
Other temporary differences		(10,123	)		(4,232	)
Closing balance		136,261			3,985,297

33

12.2. Reconciliation of the effects of income tax and social contribution on profit or loss

	June 30, 2023			June 30, 2022
Net income (loss) before taxes		14,380,751			13,937,137
Income tax and social contribution benefit (expense) at the statutory nominal rate of 34%		(4,889,455	)		(4,738,627	)
Tax effect on permanent differences
Taxation (difference) on profits of subsidiaries in Brazil and abroad (1)		815,768			1,473,037
Equity method		143			3,164
Thin capitalization (2)		(27,114	)		(198,725	)
Credit related to the Reintegra Program		3,694			3,677
Director bonuses		(3,481	)		(11,176	)
Tax incentives		41,769			22,464
Donations/Fines – Other		(1,659	)		(3,052	)
		(4,060,335	)		(3,449,238	)
Income tax
Current		(193,265	)		(116,819	)
Deferred		(2,830,430	)		(2,446,211	)
		(3,023,695	)		(2,563,030	)
Social Contribution
Current		(17,738	)		(5,818	)
Deferred		(1,018,902	)		(880,390	)
		(1,036,640	)		(886,208	)
Income and social contribution benefits (expenses) for the period		(4,060,335	)		(3,449,238	)
Effective rate of income and social contribution tax expenses		28.23	%		24.75	%

1) The difference in the taxation of subsidiaries is substantially due to the differences between the nominal tax rates in Brazil and those of subsidiaries located abroad.

2) The Brazilian thin capitalization rules establish that interest paid or credited by a Brazilian entity to a related party abroad may only be deducted for income tax and social contribution purposes if the interest expense is viewed as necessary for the activities of the local entity, and when certain limits and requirements are met. On June 30, 2023 and June 30, 2022, the Company did not meet all of the limits and requirements, and therefore the expense is not deductible for the period.

12.3. Tax incentives

The Company benefits from a tax incentive for partial reduction of the income tax obtained from operations carried out in areas under the jurisdiction of the Northeast Development Superintendence (“SUDENE”) and the Superintendence of Amazon Development (“SUDAM”). The IRPJ reduction incentive is calculated based on the activity profits (exploitation profits) and considers the allocation of the operating profit based on the incentive production levels for each product.

Area/Regions	Company	Maturity
Northeast Development Superintendence (“SUDENE”)
Mucuri (BA) - Line 1	Suzano	2024
Mucuri (BA) - Line 2	Suzano	2027
Eunápolis (BA)	Veracel	2025
Imperatriz (MA)	Suzano	2024
Aracruz (ES)	Portocel	2030
Aracruz (ES)	Suzano	2031
Superintendence of Amazon Development (“SUDAM”)
Belém (PA)	Suzano	2025

34

13. BIOLOGICAL ASSETS

The roll-forward of biological assets is as set forth below:

	June 30, 2023			December 31, 2022
Opening balance		14,632,186			12,248,732
Additions		2,899,032			4,957,380
Depletions		(1,805,371	)		(3,665,057	)
Gain on fair value adjustments		1,256,315			1,199,759
Disposals		(36,278	)		(82,331	)
Other write-offs		(31,764	)		(26,297	)
Closing balance		16,914,120			14,632,186

The calculation of fair value of the biological assets falls under Level 3 in the hierarchy set forth in IFRS 13 — Measurement of Fair Value, due to the complexity and structure of the calculation.

The assumptions such as the average annual growth (“IMA”), discount rate, and average gross selling price of eucalyptus, stand out as being the most sensitive, where increases or reductions in these assumptions could generate significant gains or losses in the measurement of fair value.

The assumptions used in the measurement of the fair value of biological assets were as follow:

i) Average cycle of forest formation between 6 and 7 years;

ii) Effective area of forest from the 3^rd year of planting;

iii) The IMA consists of the estimated volume of production of wood with bark in m³ per hectare, ascertained based on the genetic material used in each region, silvicultural practices and forest management, production potential, climate factors and soil conditions;

iv) The estimated average standard cost per hectare includes silvicultural and forest management expenses, applied to each year of formation of the biological cycle of the forests, plus the costs of land lease agreements and the opportunity cost of owning land;

v) The average gross selling prices of eucalyptus were based on specialized research on transactions carried out by the Company with independent third parties; and

vi) The discount rate used in cash flows is measured based on the capital structure and other economic assumptions of an independent market participant in the sale of standing wood (forests).

35

The table below discloses the measurement of the premises adopted:

	June 30, 2023			December 31, 2022
Planted useful area (hectare)		1,105,168			1,097,081
Mature assets		181,573			134,752
Immature assets		923,595			962,329
Average annual growth (IMA) – m3/hectare/year		37.61			37.07
Average gross sale price of eucalyptus – R$/m3		97.34			90.16
Discount rate - % (post-tax)		8.8	%		9.1	%

The pricing model considers the net cash flows, after the deduction of taxes on profit at the applicable rates.

The fair value adjustment justified by the combined variations of the indicators mentioned above resulted in a positive variation of R$1,256,315 recognized in other operating income (expenses), net (Note 30).

	June 30, 2023		December 31, 2022
Physical changes		432,212		(37,088	)
Price		824,103		1,236,847
		1,256,315		1,199,759

The Company manages the financial and climate risks related to its agricultural activities in a preventive manner. To reduce the risks arising from edaphoclimatic factors, the weather is monitored through meteorological stations and, in the event of pests and diseases, our Department of Forestry Research and Development, an area specialized in physiological and phytosanitary aspects, has procedures to diagnose and act rapidly against possible occurrences and losses.

The Company has no biological assets pledged for the six-month period ended June 30, 2023 and the year ended December 31, 2022.

14. INVESTMENTS

14.1. Investments breakdown

	June 30, 2023		December 31, 2022
Investments in associates and joint ventures		383,500		354,200
Goodwill		233,228		233,399
Other investments evaluated at fair value through other comprehensive income - Celluforce		23,541		24,917
		640,269		612,516

36

14.2. Investments in associates and joint ventures

	Information of joint ventures as at								Company Participation
	June 30, 2023								Carrying amount				In the income (expenses) for the period
	Equity		Income (expenses) of the period			Participation equity (%)			June 30, 2023		December 31, 2022		June 30, 2023			June 30, 2022
Associate
Ensyn Corporation		2,684		(16,508	)		26.07	%		700		1,250		(4,304	)		5,597
Spinnova Plc (1)		526,204					19.03	%		100,137		113,079		(6,706	)		(4,939	)
										100,837		114,329		(11,010	)		658
Joint ventures
Domestic (Brazil)
Biomas		28,962		(1,051	)		16.66	%		4,825				(175	)
Ibema Companhia Brasileira de Papel		366,704		76,069			49.90	%		182,985		158,996		21,524			8,764
Foreign
F&E Technologies LLC		9,928					50.00	%		4,964		5,230
Woodspin Oy		179,778		(19,376	)		50.00	%		89,889		75,645		(9,688	)		(1	)
										282,663		239,871		11,661			8,763
Other movements										23,541		24,917		(232	)		(114	)
										23,541		24,917		(232	)		(114	)
										407,041		379,117		419			9,307

1) The average share price quoted on the Nasdaq First North Growth Market (NFNGM) was EUR4.91 (four euros and ninety-one cents) on June 30, 2023.

15. PROPERTY, PLANT AND EQUIPMENT

	Land		Buildings		Machinery, equipment and facilities		Work in progress		Other (1)		Total
Average rate %			3.52		6.24				17.41
Accumulated cost	9,791,102		9,415,818		43,949,632		1,603,915		1,104,601		65,865,068
Accumulated depreciation			(3,577,097	)	(23,344,836	)			(773,432	)	(27,695,365	)
Balance as of December 31, 2021	9,791,102		5,838,721		20,604,796		1,603,915		331,169		38,169,703
Additions	5,089		516		381,741		11,220,806		15,832		11,623,984
Additions of merged companies	3,829,344										3,829,344
Write-offs	(69,773	)	(10,613	)	(58,435	)			(3,384	)	(142,205	)
Depreciation			(310,429	)	(2,367,163	)			(124,464	)	(2,802,056	)
Transfers	930,646		246,782		1,057,714		(2,451,570	)	194,292		(22,136	)
Accumulated cost	14,486,408		9,644,875		45,160,365		10,373,151		1,281,328		80,946,127
Accumulated depreciation			(3,879,898	)	(25,541,712	)			(867,883	)	(30,289,493	)
Balance as of December 31, 2022	14,486,408		5,764,977		19,618,653		10,373,151		413,445		50,656,634
Additions (2)	11,504				233,146		6,159,347		4,567		6,408,564
Amounts from the acquisition of MMC Brasil (3)	4,572		110,965		451,969		8,306		13,353		589,165
Write-offs	(23,121	)	(30,925	)	(31,743	)			(57,907	)	(143,696	)
Depreciation			(152,674	)	(1,236,907	)			(65,881	)	(1,455,462	)
Transfers	255,036		158,860		1,051,866		(1,609,709	)	117,050		(26,897	)
Accumulated cost	14,734,399		9,852,001		46,791,386		14,931,095		1,347,625		87,656,506
Accumulated depreciation			(4,000,798	)	(26,704,402	)			(922,998	)	(31,628,198	)
Balance as of June 30, 2023	14,734,399		5,851,203		20,086,984		14,931,095		424,627		56,028,308

1) Includes vehicles, furniture and utensils and computer equipment.

2) The addition of work in progress refers, mainly to the Cerrado Project, of which R$649,116 is a non-cash effect in the period.

3) On June 1, 2023, the Company completed the acquisition of MMC Brasil Indústria e Comércio Ltda.(Note 1.2.3.)

37

On June 30, 2023, the Company evaluated the business, market and climate impacts, and did not identify any event that indicated the need to perform an impairment test and to record any impairment provision for property, plant and equipment.

15.1. Items pledged as collateral

On June 30, 2023, property, plant and equipment items pledged as collateral for loan transactions and legal proceedings, consisting mainly of the units of Suzano and Três Lagoas totalling R$12,856,211 (R$12,773,662 in the same units as at December 31, 2022).

15.2. Capitalized expenses

For the six-month period ended June 30, 2023, the Company capitalized loan costs in the amount of R$511,650 (R$359,407 as of December 31, 2022). The weighted average interest rate, adjusted by the equalization of the exchange rate effects, utilized to determine the capitalized amount was 11.78% p.a. (12.49% p.a. as of December 31, 2022).

16. INTANGIBLE

16.1. Goodwill and intangible assets with indefinite useful lives

	June 30, 2023		December 31, 2022
Goodwill - Facepa		119,332		119,332
Goodwill - Fibria		7,897,051		7,897,051
Goodwill - MMC Brasil (1)		182,798
Other (2)		4,018		3,405
		8,203,199		8,019,788

1) Refers to the goodwill of the MMC Brasil business combination, whose allocation of the purchase price is disclosed in note 1.2.3.

2) Refers to other intangible assets with indefinite useful lives such as servitude of passage and electricity.

The goodwill is based on expected future profitability supported by valuation reports, after the purchase price allocation.

Goodwill is allocated to cash-generating units as presented in Note 28.4.

For the six-month period ended June 30, 2023, the Company did not identify any event that indicated the need to perform the impairment test and to record any impairment provision for intangible assets.

38

16.2. Intangible assets with limited useful lives

			June 30, 2023			December 31, 2022
Opening balance				7,173,183			8,014,740
Additions				197			90,499
Fair value adjustment MMC Brasil (1)				189,655
Write-offs							(51	)
Amortization				(489,650	)		(966,796	)
Transfers and others				35,563			34,791
Closing balance				6,908,948			7,173,183
Represented by	Average rate %
Non-competition agreements		5.00		4,971			5,128
Port concessions		4.30		547,242			554,832
Lease agreements		16.90		10,624			14,374
Supplier agreements		12.90		48,146			55,554
Port service contracts		4.20		564,501			579,289
Cultivars		14.30		50,980			61,176
Trademarks and patents (1)		9.05		199,024			10,935
Customer portfolio		9.10		5,336,369			5,746,860
Supplier agreements		17.60		16,142			21,427
Software		20.00		122,013			113,946
Other		5.75		8,936			9,662
				6,908,948			7,173,183
Cost				12,229,915			12,004,503
Amortization				(5,320,967	)		(4,831,320	)
Closing balance				6,908,948			7,173,183

1) On June 1, 2023, the Company completed the acquisition of MMC Brasil Indústria e Comércio Ltda.(Note 1.2.3.)

17. TRADE ACCOUNTS PAYABLE

	June 30, 2023		December 31, 2022
In local currency
Related party (Note 11.1) (1)		13,161		3,776
Third party (2)(3)		4,305,857		4,171,988
In foreign currency
Third party (3)		2,028,936		2,030,806
		6,347,954		6,206,570

1) The balance refers mainly to transactions with Ibema Companhia Brasileira de Papel.

2) Within the balance of suppliers, there are values under supplier finance arrangement that were subject to anticipation with financial institutions at the exclusive option of certain suppliers, without changing the originally defined purchase conditions (payment terms and negotiated prices). The balance related to such operations on June 30, 2023 was R$243,229 (R$416,643 at December 31, 2022).

3) Within the balance of suppliers, the following balances refer to the Cerrado Project, R$988,892 (R$625,645 on December 31, 2022) in local currency and R$1,656,702 (R$1,370,833 on December 31, 2022) in foreign currency.

39

18. LOANS, FINANCING AND DEBENTURES

18.1. Breakdown by type

		Average annual		Current				Non-current				Total
Type	Interest rate	interest rate - %		June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022		June 30, 2023		December 31, 2022
In foreign currency
BNDES	UMBNDES		5.4		4,174		11,207						4,174		11,207
Bonds	Fixed		5.0		832,242		907,059		39,928,218		43,218,286		40,760,460		44,125,345
Export credits (“export prepayments”)	LIBOR/Fixed		6.2		1,719,005		156,156		14,597,783		16,779,064		16,316,788		16,935,220
Assets financing	SOFR		3.6		44,320		26,755		177,526		113,217		221,846		139,972
IFC - International Finance Corporation	SOFR		5.9		1,845				2,850,036				2,851,881
Others					10,647		5,980						10,647		5,980
					2,612,233		1,107,157		57,553,563		60,110,567		60,165,796		61,217,724
In local currency
BNDES	TJLP		8.4		55,034		69,495		221,302		246,004		276,336		315,499
BNDES	TLP		10.7		53,908		41,640		2,346,197		1,775,991		2,400,105		1,817,631
BNDES	Fixed		4.5		8,563		18,666		2,004		4,011		10,567		22,677
BNDES	SELIC		13.3		67,951		67,115		836,034		814,320		903,985		881,435
CRA (“Agribusiness Receivables Certificates”)	CDI/IPCA		9.6		1,269,990		1,829,966						1,269,990		1,829,966
NCE (“Export credit notes”)	CDI		11.0		78,548		76,463		1,378,261		1,277,616		1,456,809		1,354,079
NCR (“Rural producer certificates”)	CDI		10.7		12,981		13,144		274,265		274,127		287,246		287,271
Export credits (“export prepayments”)	Fixed		8.1		1,339,409		77,694				1,315,813		1,339,409		1,393,507
Debentures	CDI		11.7		33,926		33,689		6,388,162		5,421,113		6,422,088		5,454,802
					2,920,310		2,227,872		11,446,225		11,128,995		14,366,535		13,356,867
					5,532,543		3,335,029		68,999,788		71,239,562		74,532,331		74,574,591
Interest on financing					1,141,837		1,238,623						1,141,837		1,238,623
Non-current funding					4,390,706		2,096,406		68,999,788		71,239,562		73,390,494		73,335,968
					5,532,543		3,335,029		68,999,788		71,239,562		74,532,331		74,574,591

40

18.2. Breakdown by maturity – non-current

	2024	2025	2026	2027	2028	2029 onwards	Total
In foreign currency
Bonds	5,970	1,640,973	2,495,454	3,350,524	2,406,200	30,029,097	39,928,218
Export credits (“export prepayments”)	894,202	5,254,429	4,656,085	3,793,067			14,597,783
Assets financing	22,774	46,987	48,860	48,123	10,782		177,526
IFC - International Finance Corporation				187,413	883,520	1,779,103	2,850,036
	922,946	6,942,389	7,200,399	7,379,127	3,300,502	31,808,200	57,553,563
In local currency
BNDES – TJLP	22,052	98,809	85,571	7,090	3,590	4,190	221,302
BNDES – TLP	21,408	60,963	80,573	141,272	138,439	1,903,542	2,346,197
BNDES – Fixed	2,004						2,004
BNDES – SELIC	28,720	217,090	217,135	28,057	28,103	316,929	836,034
NCE (“Export credit notes”)		640,800	637,460	25,000	25,000	50,001	1,378,261
NCR (“Rural producer certificates”)		137,500	136,765				274,265
Debentures		2,340,550	2,333,776		748,306	965,530	6,388,162
	74,184	3,495,712	3,491,280	201,419	943,438	3,240,192	11,446,225
	997,130	10,438,101	10,691,679	7,580,546	4,243,940	35,048,392	68,999,788

41

18.3. Roll-forward of loans, financing and debentures

	June 30, 2023			December 31, 2022
Opening balance		74,574,591			79,628,629
Fundraising, net of issuance costs		5,276,816			1,335,715
Interest accrued		2,309,587			4,007,737
Monetary and exchange rate variations, net		(4,543,048	)		(3,949,020	)
Settlement of principal		(765,533	)		(2,517,934	)
Settlement of interest		(2,352,484	)		(4,019,072	)
Amortization of fundraising costs		32,402			69,649
Others (fair value adjustments to business combinations)					18,887
Closing balance		74,532,331			74,574,591

18.4. Breakdown by currency

	June 30, 2023		December 31, 2022
Brazilian Reais		14,355,349		13,347,244
US Dollars		60,172,808		61,216,140
Currency basket		4,174		11,207
		74,532,331		74,574,591

18.5. Fundraising costs

The fundraising costs are amortized based on the terms of agreements and the effective interest rate.

					Balance to be amortized
Type	Cost		Amortization		June 30, 2023		December 31, 2022
Bonds		434,970		255,182		179,788		210,822
CRA and NCE		125,222		119,769		5,453		10,838
Export credits (“export prepayments”)		191,710		132,897		58,813		75,520
Debentures		59,216		16,279		42,937		9,984
BNDES		63,588		52,692		10,896		12,016
IFC - International Finance Corporation		41,943		459		41,484
Others		18,147		17,412		735		873
		934,796		594,690		340,106		320,053

18.6. Guarantees

Some loan and financing agreements have guarantees clauses, in which the financed equipment or other property, plant and equipment are offered as collateral by the Company, as disclosed in Note 15.1.

The Company does not have contracts with restrictive financial clauses (financial covenants) which must be complied with.

18.7. Relevant transactions entered into during the period

18.7.1. BNDES

On June 27, 2023, the Company raised R$500,000 from BNDES indexed to the Long-Term Rate ("TLP"), plus a fixed interest rate of 5.23% p.a., with a principal grace period of 7 (seven) years and maturity in December 2037. The funds were allocated to projects in the forestry sector.

42

18.7.2. International Finance Corporation (“IFC”)

On December 22, 2022, the Company obtained a new credit line ("A&B Loan") to be financed by the International Finance Corporation (IFC) and a syndicate of commercial banks, in a total amount of US$600,000 (equivalent to R$2,891,520).

The financing consists of the following parts: (i) "A-loan" in the amount of US$250,000 (equivalent to R$1,204,800) with IFC's own resources, at a cost of Term SOFR + 1.80% p.a. and a total term of eight years, with a principal grace period of six years; and (ii) "B-loan," a syndicated loan in the amount of US$350,000 (equivalent to R$1,686,720) at a cost of Term SOFR + 1.60% p.a. and a total term of seven years, with a principal grace period of five years.

This credit line was fully utilized by June 30, 2023.

The credit operation has sustainability performance indicators (KPIs) associated with goals for: (a) reducing greenhouse gas (GHG) emissions intensity, and (b) increasing the representation of women in leadership positions within the Company. The funds will be allocated to the Cerrado Project.

18.7.3. Advance of exchange contract (“ACC”)

On May 19, 2023, the Company raised US$100,000 (equivalent to R$481,920) from BNP Paribas at a fixed rate of 6.00%, with maturity in May 2024.

On June 21, 2023, the Company raised US$35,000 (equivalent to R$168,672) from BNP Paribas at a fixed rate of 6.52%, with maturity in June 2024.

18.7.4. Debenture

On June 29, 2023, the Company issued debenture in the amount of R$1,000,000.

The debenture consists of two parts: (i) an amount of R$500,000 at a cost of IPCA + 6.0188% p.a. and a total term of seven years, with a single maturity in 2030; and (ii) an amount of R$500,000 at a cost of IPCA + 6.2477% p.a. and a total term of ten years, with a single maturity in 2033.

18.8. Significant transactions settled during the period

On June 22, 2023, the Company settled a CRA contract in the amount of R$685,239 (principal and interest), with an original maturity in June 2023 and a cost of IPCA + 5.9844%.

19. LEASES

19.1. Right of use

The balances rolled forward are set out below:

	Lands			Machinery and equipment			Buildings			Ships and boats			Vehicles			Total
Balance as at December 31, 2021		2,868,411			86,464			88,410			1,748,008			2,730			4,794,023
Additions/updates		849,996			66,821			61,647						4,216			982,680
Depreciation (1)		(360,225	)		(40,732	)		(64,301	)		(124,890	)		(2,303	)		(592,451	)
Write-offs (2)		(75,026	)														(75,026	)
Balance as at December 31, 2022		3,283,156			112,553			85,756			1,623,118			4,643			5,109,226
Additions/updates		290,722			85,493			78,547						490			455,252
Depreciation (1)		(188,802	)		(51,778	)		(29,419	)		(62,445	)		(1,191	)		(333,635	)
Write-offs (2)		(54	)														(54	)
Balance as at June 30, 2023		3,385,022			146,268			134,884			1,560,673			3,942			5,230,789

1) The amount of depreciation related to land is substantially reclassified to biological assets to make up the formation costs.

2) Write-off due to cancellation of contracts.

43

For the six-month period ended June 30, 2023, the Company does not have commitments to lease agreements not yet in force.

19.2. Lease liabilities

The balance of lease payables on June 30, 2023, measured at present value and discounted at the respective discount rates are set forth below:

Nature of agreement	Average rate - % p.a. (1)		Maturity (2)	Present value of liabilities
Lands and farms		12.52	April/2050		3,673,964
Machinery and equipment		11.43	April/2035		217,381
Buildings		10.84	September/2031		122,556
Ships and boats		11.39	February/2039		2,178,580
Vehicles		10.83	July/2026		3,503
					6,195,984

1) To determine the discount rates, quotes were obtained from financial institutions for agreements with characteristics and average terms similar to the lease agreements.

2) Refers to the original maturities of the agreements and, therefore, does not consider eventual renewal clauses.

The balances rolled forward are set out below:

	June 30, 2023			December 31, 2022
Opening balance		6,182,530			5,893,194
Additions		455,252			982,680
Write-offs (2)		(54	)		(75,026	)
Payments		(577,132	)		(1,044,119	)
Accrual of financial charges (1)		327,374			612,042
Exchange rate variations		(191,986	)		(186,241	)
Closing balance		6,195,984			6,182,530
Current		710,906			672,174
Non-current		5,485,078			5,510,356

1) On June 30, 2023, the amount of R$104,137 related to interest expenses on leased lands was capitalized to biological assets to represent the formation cost (R$178,429 as of December 31, 2022).

2) Write-off due to cancellation of contracts.

The maturity schedule for future payments not discounted to present value related to lease liabilities is disclosed in Note 4.2.

19.2.1. Amounts recognized in the statement of income for the period

The amounts recognized are set out below:

	June 30, 2023		June 30, 2022
Expenses relating to short-term assets		5,559		1,038
Expenses relating to low-value assets		946		571
		6,505		1,609

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20. PROVISION FOR JUDICIAL LIABILITIES

The Company is involved in certain legal proceedings arising in the normal course of its business, which include tax, social security, labor, civil, environment and real estate.

The Company classifies the risk of unfavorable decisions in legal proceedings, based on legal advice, which reflects the estimated probable losses.

The Company’s Management believes that, based on the available information as of the date of these unaudited condensed consolidated interim financial information, its provisions for tax, social security, labor, civil, environment and real estate risks, accounted for according to IAS 37 are sufficient to cover estimated losses related to its legal proceedings, as set forth below:

20.1. Roll-forward and changes in the provisions for probable losses based on the nature of the proceedings, net of judicial deposits

	June 30, 2023
	Tax and social security			Labor			Civil, environment and real estate			Contingent liabilities assumed (1) (2)			Total
Provision balance at the beginning of the period		419,915			255,805			118,729			2,645,705			3,440,154
Payments		(1,192	)		(22,839	)		(868	)					(24,899	)
Reversal		(4,968	)		(28,652	)		(7,507	)		(88,612	)		(129,739	)
Additions		29,147			62,979			11,155						103,281
Monetary adjustment		13,158			10,700			8,889						32,747
Provision balance		456,060			277,993			130,398			2,557,093			3,421,544
Judicial deposits		(145,567	)		(77,101	)		(23,796	)					(246,464	)
Provision balance at the end of the period		310,493			200,892			106,602			2,557,093			3,175,080

1) Amounts arising from tax-related lawsuits with a possible or remote probability of loss in the amount of R$2,410,363 and civil lawsuits in the amount of R$146,730, measured and recorded at the estimated fair value resulting from the business combination with Fibria, in accordance with paragraph 23 of IFRS 3 – Business Combinations.

2) Reversal due to a change in likelihood and/or due to settlement.

	December 31, 2022
	Tax and social security			Labor			Civil, environment and real estate			Contingent liabilities assumed (1) (2)			Total
Provision balance at the beginning of the year		477,096			178,925			82,592			2,694,541			3,433,154
Payments		(14,948	)		(44,516	)		(20,497	)					(79,961	)
Reversal		(71,446	)		(53,211	)		(15,577	)		(48,836	)		(189,070	)
Additions		14,036			157,562			56,834						228,432
Monetary adjustment		15,177			17,045			15,377						47,599
Provision balance		419,915			255,805			118,729			2,645,705			3,440,154
Judicial deposits		(149,951	)		(12,270	)		(21,623	)					(183,844	)
Provision balance at the end of the year		269,964			243,535			97,106			2,645,705			3,256,310

1) Amounts arising from tax-related lawsuits with a possible or remote probability of loss in the amount of R$2,448,564 and civil lawsuits in the amount of R$197,141, measured and recorded at the estimated fair value resulting from the business combination with Fibria, in accordance with paragraph 23 of IFRS 3 – Business Combinations.

2) Reversal due to a change in likelihood and/or due to settlement.

45

20.1.1. Tax and social security

On June 30, 2023, the Company has 30 (thirty) (31 (thirty-one) as of December 31, 2022) administrative and judicial proceedings of a tax or social security nature in which the disputed matters are related to IRPJ, CSLL, PIS, COFINS, ICMS among others, whose amounts are provisioned when the likelihood of loss is deemed probable by the Company’s external legal counsel and by Management.

20.1.2. Labor

On June 30, 2023, the Company has 1,176 (one thousand, one hundred and seventy-six) as of December 31, 2022) labor lawsuits.

In general, the provisioned labor proceedings are related primarily to matters frequently contested by employees of agribusiness companies, such as wages and/or severance payments, in addition to suits filed by outsourced employees of the Company.

20.1.3. Civil, environment and real estate

On June 30, 2023, the Company has 77 (seventy-seven) (66 (sixty-six) as at December 31, 2022) civil, environmental and real estate proceedings.

The provisioned Civil, environment and real estate proceedings are related primarily to the payment of damages, including those arising from contractual obligations, traffic-related injuries, possessory actions, environmental restoration obligations, claims and others.

20.2. Contingencies with possible losses

The Company is involved in tax, civil and labor lawsuits, whose losses have been assessed as possible by Management, supported by legal counsel, and therefore no provision was recorded:

	June 30, 2023		December 31, 2022
Taxes and social security (1)		9,211,342		8,201,246
Labor		224,181		321,428
Civil and environmental (1)		4,981,793		4,414,877
		14,417,316		12,937,551

1) The amounts above do not include the fair value adjustments allocated to possible loss risk contingencies representing R$2,537,335 (R$2,614,518 as of December 31, 2022), which were recorded at fair value resulting from business combinations with Fibria, in accordance with paragraph 23 of IFRS 3 – Business Combinations, as presented in Note 20.1.1. above.

In the six-month period ended June 30, 2023, there were no significant changes in the main nature of these contingencies compared to those disclosed in the annual financial statements for the year ended December 31, 2022 (Note 20).

20.3. Contingent assets

In the six-month period ended June 30, 2023, there were no significant changes in the main nature of these contingencies compared to those disclosed in the annual financial statements for the year ended December 31, 2022 (Note 20).

46

21. EMPLOYEE BENEFIT PLANS

The Company provides supplementary pension plan and defined benefit plan, such as medical assistance and life insurance. The characteristics of such benefits were disclosed in the annual financial statements for the year ended December 31, 2022 (Note 21), which did not change during the six-month period ended June 30, 2023.

21.1. Pension plan

Contributions made by the Company, for Suzano Prev pension plan managed by Brasilprev Seguros e Previdência S.A., for the six-month period ended June 30, 2023 amounted R$8,650 (R$7,308 as of June 30, 2022) recognized under the cost of sales, selling and general and administrative expenses.

21.2. Defined benefits plan

The Company offers the following post-employment benefits in addition to the pension plans, which are measured based on actuarial calculations and recognized in the unaudited condensed consolidated interim financial information.

The roll-forward of actuarial liabilities prepared based on actuarial report is set forth below:

	June 30, 2023			December 31, 2022
Opening balance		691,424			675,158
Interest on actuarial liabilities		34,615			59,258
Actuarial loss					12,231
Exchange rate variations					(577	)
Amount arising from the acquisition of MMC Brasil		1,457
Benefits paid		(25,563	)		(54,646	)
Closing balance		701,933			691,424

22. SHARE-BASED COMPENSATION PLAN

For the six-month period ended June 30, 2023, the Company has 3 (three) share-based, long-term compensation plans: (i) Phantom stock option plan (“PS”); (ii) Share Appreciation Rights (“SAR”), both settled in local currency; and (iii) restricted shares, settled in shares.

The characteristics and measurement method of each plan were disclosed in the annual financial statements for the year ended December 31, 2022 (Note 22), which did not change during the six-month period ended June 30, 2023.

22.1. Long term compensation plans (“PS and SAR”)

The roll-forward arrangements are set out below:

	Number of shares
	June 30, 2023			December 31, 2022
Opening balance		7,583,185			5,415,754
Granted during of the period		3,318,892			4,152,200
Exercised (1)		(244,464	)		(1,474,506	)
Exercised due to resignation (1)		(24,743	)		(175,552	)
Abandoned/cancelled due to resignation		(225,126	)		(334,711	)
Closing balance		10,407,744			7,583,185

1) The average price of the share options exercised and exercised due to termination of employment on June 30, 2023 was R$47.78 (forty seven reais and seventy eight cents) ((R$48.79 (forty eight reais and seventy nine cents) as at December 31, 2022).

47

22.2. Restricted shares plan

The position is set forth below:

Program	Date of execution of the contract	Grant date	Price on grant date		Shares Granted		Restricted year for transfer of shares
2020	01/02/2020	01/02/2021	R$	51.70		111,685	01/02/2024
2021	01/02/2021	01/02/2022	R$	53.81		113,161	01/02/2025
2022	01/02/2022	01/02/2023	R$	52.00		101,164	01/02/2026
2023	01/02/2023	01/02/2023	R$	49.58		161,355	01/02/2026
						487,365

22.3. Measurement assumptions

The amounts corresponding to the services received and recognized are set forth below:

	Liabilities and Equity					Statement of income and Equity
	June 30, 2023		December 31, 2022			June 30, 2023			June 30, 2022
Non-current liabilities
Provision for phantom stock plan		183,589		162,117			(32,731	)		(31,389	)
Equity
Stock options granted		22,584		20,790			(4,159	)		(2,668	)
Shares granted				(2,365	)					2,365
		22,584		18,425			(4,159	)		(303	)
							(36,890	)		(31,692	)

23. LIABILITIES FOR ASSETS ACQUISITIONS AND SUBSIDIARIES

	June 30, 2023		December 31, 2022
Assets acquisitions
Vitex/Parkia (1)				1,758,365
				1,758,365
Business combinations
Facepa (2)		25,884		42,655
Vale Florestar Fundo de Investimento em Participações ("VFFIP") (3)		254,980		261,302
		280,864		303,957
		280,864		2,062,322
Current		101,207		1,856,763
Non-current		179,657		205,559

1) On June 22, 2022, the Company acquired all the shares of the Parkia structure companies, in the amount of US$667,000 (equivalent to R$3,444,255 on the date of execution of the agreement), upon the payment of US$330,000 (equivalent to R$1,704,054 on the date of the transaction), on June 22, 2023, the payment of the second installment in the amount of US$337,000 (equivalent to R$1,615,140 on the transaction date) was made.

2) Acquired in March 2018, for the amount of R$307,876, upon the payment of R$267,876, with the remainder updated at the IPCA, adjusted for possible losses incurred up to the payment date, with maturity in March 2028.

3) On August 2014, the Company acquired Vale Florestar S.A. through VFFIP, for a total amount of R$528,941 upon the payment of R$44,998, and the remainder with maturity up to August 2029. The annual settlements, carried out in the month of August, are subject to interest and updated by the variations of the US Dollar exchange rate, and partially updated by the IPCA.

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24. SHAREHOLDERS’ EQUITY

24.1 Share capital

On June 30, 2023, Suzano’s share capital was R$9,269,281 divided into 1,324,117,615 common shares, all nominative, book-entry shares without par value. Expenses related to the public offering were R$33,735, totaling a net share capital of R$9,235,546. The breakdown of the share capital is as set out below:

	June 30, 2023				December 31, 2022
	Quantity		(%)		Quantity		(%)
Controlling Shareholders
Suzano Holding S.A.		367,612,329		27.76		367,612,329		27.01
Controller		196,064,797		14.81		195,064,797		14.33
Managements and related persons		34,097,609		2.57		34,102,309		2.51
Alden Fundo de Investimento em Ações		26,154,744		1.98		26,154,744		1.91
		623,929,479		47.12		622,934,179		45.76
Treasury (Note 24.2)		32,466,900		2.45		51,911,569		3.81
Other shareholders		667,721,236		50.43		686,417,836		50.43
		1,324,117,615		100.00		1,361,263,584		100.00

By a resolution of the Board of Directors, the share capital may be increased, irrespective of any amendments to the Bylaws, up to the limit of 780,119,712 common shares, all exclusively book-entry shares.

For the six-month period ended June 30, 2023, SUZB3 common shares closed the period quoted at R$44.22 (forty-four reais and twenty-two cents) and R$48.24 (forty-eight reais and twenty-four cents) on December 31, 2022.

24.2 Treasury shares

In the six-month period ended June 30, 2023, the Company had 32,466,900 (51,911,569 as of December 31, 2022) of its own common shares held in treasury, with an average cost of R$42.55 (forty-two reais and fifty-five cents) per share, with a historical value of R$1,381,600 (R$2,120,324 as at December 31, 2022) and the market corresponding to R$1,435,686 (R$2,504,214 as at December 31, 2022).

On February 28, 2023, 37,145,969 common shares were cancelled, as described in Note 1.2.5.

The Company has repurchase programs, approved on October 27, 2022, with a limit of 20,000,000 common shares of its own issue, with a term of 18 months. Up to June 30, 2023, the Company had repurchased 17,701,300 common shares with a total of R$778,500, of which R$721,052 had a cash effect up to June 30, 2023 and R$57,448 were settled in the subsequent month.

	Quantity		Average cost per share		Historical value		Market value
Balances at December 31, 2021		12,042,004		18.13		218,265		656,530
Realization in the restricted stock plan		130,435		18.13		2,365		8,156
Repurchase		40,000,000		47.61		1,904,424		1,904,424
Balances at December 31, 2022		51,911,569		40.84		2,120,324		2,504,214
Repurchase		17,701,300		43.98		778,500		778,500
Canceled		37,145,969		40.84		1,517,224		1,570,532
Balances at June 30, 2023		32,466,900		42.55		1,381,600		1,435,686

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25. EARNINGS (LOSS) PER SHARE

25.1 Basic

The basic earnings (loss) per share is measured by dividing the profit attributable to the Company’s shareholders by the weighted average number of common shares issued during the period, excluding the common shares acquired by the Company and held as treasury shares.

	June 30, 2023			June 30, 2022
Resulted of the period attributable to controlling shareholders		10,310,498			10,480,342
Weighted average number of shares in the period – in thousands		1,336,021			1,361,264
Weighted average treasury shares – in thousands		(26,791	)		(14,088	)
Weighted average number of outstanding shares – in thousands		1,309,230			1,347,176
Basic earnings (loss) per common share – R$		7.87524			7.77949

25.2 Diluted

The diluted earnings (loss) per share is measured by adjusting the weighted average of outstanding common shares, assuming the conversion of all common shares with dilutive effects.

	June 30, 2023		June 30, 2022
Resulted of the period attributed to controlling shareholders		10,310,498		10,480,342
Weighted average number of shares during the period (except treasury shares) – in thousands		1,309,230		1,347,176
Average number of potential shares (stock options) - in thousands		487		215
Weighted average number of shares (diluted) – in thousands		1,309,717		1,347,391
Diluted earnings (loss) per common share – R$		7.87231		7.77825

25.3 Profit reserves

Reserves are constituted by the allocation of the Company's profits, after the allocation for the payment of the minimum mandatory dividends and after the allocation to the various profit reserves.

In April 26, 2023, the shareholders' meeting approved the retention of profits in the amount of R$14,972,324, for investments on the Company's productive capacity and improvement of processes in order to meet the Company's growth strategy commitments.

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26. NET FINANCIAL RESULT

	June 30, 2023			June 30, 2022
Financial expenses
Interest on loans, financing and debentures (1)		(1,797,937	)		(1,742,976	)
Amortization of transaction costs (2)		(32,421	)		(36,838	)
Interest expenses on lease liabilities (3)		(223,237	)		(210,597	)
Amortization of fair value adjustments					(9,452	)
Other		(254,471	)		(183,660	)
		(2,308,066	)		(2,183,523	)
Financial income
Cash and cash equivalents and marketable securities		683,608			303,822
Other		106,290			48,745
		789,898			352,567
Results from derivative financial instruments
Income		6,758,955			8,653,252
Expenses		(1,859,936	)		(4,032,366	)
		4,899,019			4,620,886
Monetary and exchange rate variations, net
Exchange rate variations on loans, financing and debentures		4,543,048			3,812,954
Leases		191,986			176,291
Other assets and liabilities (4)		(1,110,099	)		(818,556	)
		3,624,935			3,170,689
Net financial result		7,005,786			5,960,619

1) Excludes R$511,650 arising from capitalized loan costs, substantially related to property, plant and equipment in progress of the Cerrado Project for the six-month period ended June 30, 2023 (R$108,972 as at June 30, 2022).

2) Includes expense of R$19 arising from transaction costs on loans and financing that were recognized directly in the statement of income (R$39 as at June 30, 2022).

3) Includes R$104,137 referring to the reclassification to the biological assets item for the composition of the formation cost (R$84,470 as of June 30, 2022).

4) Includes effects of exchange rate variations of trade accounts receivable, trade accounts payable, cash and cash equivalents, marketable securities and others.

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27. NET SALES

	June 30, 2023			June 30, 2022
Gross sales		24,552,121			25,466,749
Sales deductions
Returns and cancellations		(65,560	)		(42,388	)
Discounts and rebates		(3,019,895	)		(3,187,446	)
		21,466,666			22,236,915
Taxes on sales		(1,030,649	)		(974,425	)
Net sales		20,436,017			21,262,490

28. SEGMENT INFORMATION

28.1 Criteria for identifying operating segments

The Board of Directors and Board of Statutory Executive Officers evaluates the performance of the Company’s business segments through EBITDA.

The operating segments defined by the Company’s management are set forth below:

i) Pulp: comprised of the production and sale of hardwood eucalyptus pulp and fluff pulp, mainly to supply the foreign market.

ii) Paper: comprises the production and sale of paper to meet the demands of both the domestic and foreign markets. Consumer goods (tissue) sales are classified under this segment due to their immateriality.

Information related to total assets by reportable segment is not disclosed, as it is not included in the set of information made available to the Company’s management, which makes investment decisions and determines the allocation of resources on a consolidated basis.

In addition, with respect to geographical information related to non-current assets, the Company does not disclose such information, as all property, plant and equipment, biological and intangible assets are in Brazil.

28.2 Information of operating segments

	June 30, 2023
	Pulp			Paper			Total
Net sales		16,302,347			4,133,670			20,436,017
Domestic market (Brazil)		1,249,493			2,971,910			4,221,403
Foreign markets		15,052,854			1,161,760			16,214,614
EBITDA		9,155,697			1,812,784			10,968,481
Depreciation, depletion and amortization								(3,593,516	)
Operating profit before net financial income (“EBIT”) (1)								7,374,965
EBITDA margin (%)		56.16	%		43.85	%		53.67	%

1) (“Earnings before interest and tax”).

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	June 30, 2022
	Pulp			Paper			Total
Net sales		17,496,421			3,766,069			21,262,490
Domestic market (Brazil)		1,246,965			2,589,671			3,836,636
Foreign market		16,249,456			1,176,398			17,425,854
EBITDA		10,168,584			1,402,897			11,571,481
Depreciation, depletion and amortization								(3,594,963	)
Operating profit before net financial income (“EBIT”) (1)								7,976,518
EBITDA margin (%)		58.12	%		37.25	%		54.42	%

1) (“Earnings before interest and tax”).

28.3 Net sales by product

Products	June 30, 2023		June 30, 2022
Market pulp (1)		16,302,347		17,496,421
Printing and writing paper (2)		3,384,698		3,089,666
Paperboard		708,576		644,809
Other		40,396		31,594
		20,436,017		21,262,490

1) Net sales of fluff pulp represent approximately 0.8% of total net sales, and therefore were included in market pulp net sales. (0.8% as at June 30, 2022).

2) Net sales of tissue represent approximately 3.1% of total net sales, and therefore were included in printing and writing paper net sales. (2.5% as at June 30, 2022).

28.4 Goodwill based on expected future profitability

The goodwill based on expected future profitability arising from the business combination was allocated to the disclosable segments, which correspond to the Company's cash-generating units (“CGUs”), considering the economic benefits generated by such intangible assets. The allocation of goodwill is set out below:

	June 30, 2023		December 31, 2022
Pulp		7,897,051		7,897,051
Paper (1)		302,130		119,332
		8,199,181		8,016,383

1) On June 1, 2023, the Company completed the acquisition of MMC Brasil.(Note 1.2.3.)

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29. INCOME (EXPENSES) BY NATURE

	June 30, 2023			June 30, 2022
Cost of sales
Personnel expenses		(711,401	)		(652,396	)
Costs of raw materials, materials and services		(5,336,373	)		(5,351,098	)
Logistics costs		(2,129,684	)		(2,176,264	)
Depreciation, depletion and amortization		(3,144,107	)		(3,088,132	)
Other (1)		(875,290	)		(287,875	)
		(12,196,855	)		(11,555,765	)
Selling expenses
Personnel expenses		(126,331	)		(115,604	)
Services		(62,108	)		(63,133	)
Logistics costs		(516,380	)		(509,420	)
Depreciation and amortization		(475,228	)		(474,249	)
Other (2)		(51,115	)		(35,302	)
		(1,231,162	)		(1,197,708	)
General and administrative expenses
Personnel expenses		(489,463	)		(437,176	)
Services		(171,346	)		(142,973	)
Depreciation and amortization		(55,014	)		(51,639	)
Other (3)		(101,620	)		(69,444	)
		(817,443	)		(701,232	)
Other operating (expenses) income net
Rents and leases		1,476			1,058
Results from sales of other products, net		48,312			34,723
Results from sales and disposals of property, plant and equipment, intangible and biological assets, net		(111,195	)		8,041
Result on fair value adjustment of biological assets		1,256,315			171,618
Depletion and amortization		80,833			19,057
Tax credits - ICMS from the PIS/COFINS calculation basis					(1,324	)
Provision for judicial liabilities		(71,878	)		(64,300	)
Other operating income (expenses), net		(19,874	)		(9,447	)
		1,183,989			159,426

1) Includes R$411,718 related to maintenance downtime, costing (R$368,606 as at June 30, 2022).

2) Includes expected credit losses, insurance, materials for use and consumption, travel, accommodation, trade fairs and events.

3) Includes, substantially, corporate expenses, insurance, materials for use and consumption, social programs and donations, travel and accommodation.

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