Suzano (SUZ) 10 Feb 222021 Q4 Earnings call transcript

Company Profile

Participants

Marcelo Bacci	Financial and IR Executive Officer
Walter Schalka	Chief Executive Officer
Fabio Almeida	Executive Officer, Paper and Packaging
Leonardo Grimaldi	Executive Officer, Commercial Pulp, People & Management
Aires Galhardo	Executive Officer, Pulp Operation
Cristina Gil White	Executive Officer, Sustainability
Rafael Barcellos	Santander
Daniel Sasson	Itau BBA
Leonardo Correa	BTG Pactual
Thiago Lofiego	Bradesco BBI
Carlos De Alba	Morgan Stanley
Marcio Farid	Goldman Sachs
Caio Ribeiro	Bank of America Merrill Lynch
Cadu Schmidt	UBS

Call transcript

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Operator

Ladies and gentlemen, thank you for holding and welcome to Suzano’s Conference Call to discuss the results for the Fourth Quarter of 2021. We would like to inform that all participants will be in a listen-only mode during the presentation that will be addressed by the CEO, Mr. Walter Schalka and other Executive Officers. After the company’s remarks are completed there will be a question-and-answer session when further instructions will be given. [Operator Instructions] Before proceeding, please be aware that any forward-looking statements are based on the beliefs and assumptions of Suzano’s Management and on information currently available to the company. and depend they or on occur the uncertainties events to may risks, in therefore and circumstances future. involve assumptions relate because future not They that may

other economic results future Suzano statements. those and to industry general expressed affect results of that cause materially understand could also should conditions You and differ operating could in factors the forward-looking conditions, from such

may CEO. to Now floor Company's Walter the like the turn Please I proceed. Schalka, you would to over Mr.

Walter Schalka

to would pleasure of I very time high great and to employees if our with our XXXX you that all and an Good proud XX,XXX of And not delivered history. Suzano. of our our to morning the would want thank results part publicly of a Suzano. everyone. questions, the with any results results I'm leadership all It us to give here with only [ph] like like of quarter preparing are We extremely last for us. you I'm with volumes the the have future had as the the all that have prepared as discuss year. major of annual it going on us. of to have well. and both to today to of is outstanding has share to here company to good Paper results see we of share is I please the that, us Fab very fourth pleased you kind be levels please results

are our was the have company our reduction. could the deliver we billion and billion was inflation and from allow to last budget $XX.X year, to the future. for but previous cash billion billion year reduce We to our impact on that $X.X debt from We EBITDA positive from and almost of R$XX.X net $XX.X almost are preparing cost and last us year, impacted did extremely able then

and had that on company next our is liquidity debt are of More results the at we times coming leverage that net EBITDA. good this time over we now X.X is point the years. the extremely have position for We preparing right than important

As different avenues pursuing strategic have them. all are know, may of you and we five we

reduce structural years. the next on the a We've development some basis that, had in on for forest new had, addition average continued forest plants of the with to with to reduction are and important our to retrofit cost on side wages We extremely coming projects they plant. from on the in the the the our

keep going with to ahead. the project. our with about Aires market this this us project, projects our on We relevance pulp information have new is continued to share about

have strategy, extremely We performing as the well. part market have vertical integration continue fluff been of to our

all Fab We the well did as have been going on consumer doing paper been results goods to year, and share. is last have working that the time

Our have then us new for is the perception, we been addressable and critical for we working future. markets ability the our have

a opportunities. their the are good very year we continue future and for future. important spinoff will extremely cardboard One example the last even acceptance play market. the sustainability new more important is the delivering IPO had to that We for leading become role of And markets with

ESG to for pass Christina, in is Now, share going coming that views our last it to years. to I'm going about the and year the

Cristina Gil White

and everybody. Good Walter. ambition morning, Thank a continuity XXXX was you, year elevation. of

target with conservation pioneers biodiversity breakthrough the knowledge, in our unique We we the of to major goals company goals. corridors a and we only environmental nature. such are On again front, are established and

community initiative social, bar. We and science very degrees. adhered change for our impacting we we're this significant has in made And imminence the very to their and/or importantly, Again, climate based a people gender the value aligned In In given Ambition scope our hiring to of variable target long-term On XXX% proud our front, be least which of so carbon racial compensation. diversity Business strategy, the very and reduction sense, anticipated trendsetter. play aiming the and long-term recognizing is our shared role I equalizing inclusion to we and companies that essential that can that target stages change, of XX% place leadership is of at climate in cognizant have raising target of the diversity achievement are X.X progress shows final share the our central and in can are to On diversity we Suzano Suzano am our commitments. to our of the XXXX. for impact, business a to with removal inclusion. XXXX society, the from increasing approach, a poverty in goal. positions, we own

sense, and a In addition, have a companies this catalyzer environmental on progress projects Sustainable and generation. responsibility management, ESG that and good on occurring, risk the pillars. and far to that Suzano's of In doubling programs throughout as income effect for this and lever front is formality more and mandatory members, board had domino minimum for attendance. social can of gave you we evaluation on the slide, were practices progress already see necessary governance performance,

And force. and on carbon ratings, to from A strategy women I in our celebration and our our signals evolution as enhance minus operation our Suzano worthy almost of embeddedness leap business the December highlight Good we to indexes and like would increased year. well as that engagement We debt. industrial had celebrate linked the to achievements also at reached disclosure the how Suzano of with and of has water, last $X.X to all XXXX, emissions, Suzano debt places XX% and in tied and our reduction, stakeholders. inclusion I first of in have and the want finally, gas questioners; of in company's linked ESG highlight sustainability ESG an project transparency. targets, intensity three climate, This use, There's Finally, been to and a our call, June increasing total raised bonds of as greenhouse sustainability diversity billion quantum specifically reduction of leadership water in loans. linked sustainability ESG now positions.

We B the score. will come from in

now paper that's So business, our the you Almeida. sustainability to Fabio front and so over to we're going speak on of

Fabio Almeida

logistics paper solid unit Thanks, restrictions operational served everyone. inflationary and for raw Christina, of business demand a a materials, performance our The margins quarter has delivered constraints to energy despite price According packaging products same been the the and mix. and has through markets closing to side in the on with good business strong EBA, XXXX logistics have X% inflation, the going international XXXX. domestic has period and recompose bottlenecks, all supply need Brazil paper in solid demand, the grown Demand across fourth print XXXX, paper all Supported by by of write in and compared and in morning grade the rates. risen quarter XXXX record and in to paper to Suzano. EBITDA the markets fourth due of when for headwinds, and

market shrunk For compares the a [indiscernible]. packaging controls demand XX% rebuilding of the purposes. boosted year-over-year the has in quarter year grown demand for pandemic year, full the basis, has on Paperboard the by was and strong paper usage easing given XXXX X.X% offset when fourth of the of

year, grew trends. demand for paperboard the XX% historical above For

than demand in improved sales America, the sales QX higher a our represented in Europe. and On We to in XX% Latin our such quarter-over-quarter sales North America have domestic to context, seasonality and also packaging in paper Domestic XX% levels. the for increase seen were due X% for total XXXX. products of the line solid sales of basis, pre-pandemic X.X% XXXX a and volumes demand better our continued On quarter, papers. strong compared same the quarter volume with

price QX, QX was XXXX XXXX. during and our than average price X% in than XX% Our higher net the quarter higher

and During price for the Suzano period, has the previous implemented successfully lines increases markets. product announced

QX during announced next have new over be implemented the We month. also which will price increases

result strong a increase volumes to EBITDA stability, in quarter, increase revenue of of XXX our operational and has a quarter million a new on time the and fourth XXXX XX% basis. prices, a XX% and the a As high year-over-year all reached compared management

Looking challenges major pressure minimized overcoming and logistics the inflation continuous remain our ahead [indiscernible], disruptions. and short term of

strategy, strengthened accounts market XX% customers Regarding revenues, platform, already for and we go sized e-commerce unique our more which continuous with customers. XX% also total our thoughts our in small to operational of our even reaching and when efficiency, medium considered

sustainable of sales milestone, with packaging full market offer important grew addressable about to end customers when solutions compared with products and and an by our times XX our more year full new aligned our [indiscernible] As users. Suzano year XXXX to XXXX,

turn Pulp presenting be will to results. will I Now Leo, business who over our

Leonardo Grimaldi

Fabio, and good morning, Thanks, everyone.

all sales in XXXX, logistic business our the best made our to unit please merger. The by the quarters, performance presentation. sales of Price volumes year, robust with the despite Page EBITDA again strong move during business results were realization Let's during quarter since pulp record combined fourth strong the of our challenges. pulp this reach for X

since you constraints hardwood million our the graph, but sales note as customers and which volume balance in like QX rebuild exceeding all of also would emphasize in enough pulp fourth sales I in paper not to sales we momentum, at our the half inventories Europe tightening to all the supply our European pulp levels. exceeded remain comfortable see a the Asia cash world, Association, in sales pricing as also their during to the our pulp which for paper in ports XX% XXX,XXX all America, QX and which that XXXX. significant and performance low of and the the to past the to marginal the compared just second across costs and a with XXXX, consequence will intensely third X.X our XXXX Southeast totaled in expectations where their challenges to tons ports As historic threshold more top more and started on on quarter who at fell rates. producers from for have to tightening In Europe XXXX, supply Pulp of below historic the inventories by a placed pulp the below SEI as quarter the also producers' great Consultants, quarter globally, the third at over tons, customers tight. higher inflation [ph] operating The high has pulp own paper closed quarter According almost has running reach important, inventories manufacturing service North marked China, and operational pulp which at volumes, only X.X is quite to compared and chain million despite and supply-demand on of job still of paperboard XX reduction XX% in balance, producers, not our was are determinants one for quarter consequence to million producers and and favoring a mills chain to inventories, The stopped new and but quarter. set reduction and and even the XX% monthly demand inventories, of demand, China XX% than combined and and X.X averages to grades to reduction cost according teams paper tons input maintaining tons such fourth XXXX November, were levels our our inventories China, quarter cost bottlenecks S&D of levels, XX.

a of X% our in average depreciation prices invoice in has a Americans the reached export reduction during lower and effect prices increased Europe ton, which brought versus combination is Currency prices markets quarter Asia prices, quarter. quarter. real, for for which in has QX during a on $XXX the our price the Our with X% positive per stable

Our we or when higher in our ton price, per real analyze $XXX was XXXX than higher consolidated price XXXX XX% of terms. XX%

new by and record prices EBITDA our we a our reached despite mentioned EBITDA higher quarter, sales production FX solid to favoured Now as the of bringing our R$XX.X with looking EBITDA margin, a high and volumes performance, a all billion at costs. during have time XXXX XX% increasing

inventories. which impacting and availability maintenance almost bring Develop tons yet Now in to to China's pulp downtimes would looking [ph] all to raw Ministry Brazilian points. year, which unplanned quarters and in a market. in following and fourth to added downtimes, of hardwood attention by statistics it of impact, XXX,XXX reduced in pulp I of the some was that bleach during for the also unexpected possible XXXX, the like in Exports forward, related in result chemical chain quarter. your is tons, supply is tons third that quarter, which is exports analyzing to in which European exports exceed to first By one for note will concentrated should the reverted X pulp materials just the impact reflected curtailments were million fully concentration reduction not in were There the mainly the XXX,XXX China shipments this Most

price to world, of consequence a in As shocks most gaps supply of be believe between the regions these China. felt that of current we different will continue

which these grades. dissolving differentials fluff pulp pulp keep towards capacity and price should directed favor all Additionally, which favor flex

the demand curtailments the Aires the even be As favorable and fundamentals be more With have to quarter. supply and should next months. intensified that quite expect our scenario the supportive challenging globally, cash performance for to mentioned would said, I I supply logistics that like continue during the we cost will invite that present now to by

Aires Galhardo

you, Good Thank Leo. morning everyone.

on affects costs costs be and cost quarter-over-quarter impacted Slide quarter commodity XXXX Moving performance, harvesting which continued turn input to [indiscernible], mainly X, by the fourth especially the activities. cash and year-over-year to on wood inflation, both transportation and in

price a on and toll again also performance. chemicals our stock took Some

As accounted total on performance. forecast. for costs more of that cost and the the price cash of line of XXXX was also X% you with XX% our can is pressure see, last alone quarter-over-quarter increase than cash commodity worth in in the mentioning the quarter, It impact X%

to energy the mentioned. market a in the exogenous of compared resulted context late water crisis previous offsetting in strategy already headwinds the cash benefit high the year last partially on quarter, Our in costs

a to cash north For will single XXXX. first In or for digit foresee quarter, price recently continue levels the costs fuels. achieve reaching moving Range continue could the and a context, the input and impact highest the digit coming since such low challenged. high commodity ex-downtimes be peak to its quarter, double pulp impacts we cost in XXXX so reached

The mills, first of production factor be quarter our marked large by which represent approximately will also on at number a total maintenance R$XX scheduled will impact costs. downtimes cash

modernization longer continue keeps like and structural on in to to Suzano its complexities I focused projects emphasize Bacci, even that who will the would turning the the Marcelo Before the improve presentation, it mills more to on run.

Marcelo Bacci

yours. Marcelo, everyone. you, is floor the good morning, and Aires Thank

Moving to as cash generation our another QX very was of a Page deleveraging the strong X, we further that show of period consequence of company. and

year leverage is reached of billion, times of the which now a $XX.X year, is from debt net nominal X.X one ago, the billion to significant. number the that have during below $X.X We X.X reduction and which caused very

by but times remarkable $X.X then reduce the by net debt We year. have during been our not able to a only performance. X.X billion, EBITDA It's

by coming amortization Our revolving now three position schedule to is was credit facility enhanced $XXX $X.XX we million very for our years and we even have announced. the debt light from liquidity billion increased recently more new with -- the that that

have the of XX an Page of the X.XX the portfolio gap, we hedges average flow average call the hedging our cash an coming continuously we taking the average normal portfolio. We improve of months. for for markets have covering currency to see put and for XX% gap of X.XX the advantage portfolio. X, our We've have to now of we currency Moving been an quality

hedges In [ph] million longer we an put us against or This protection, has average of the relevant building of call that, have with potential in the a that protection very of the Cerrado X book for currency. X about $XXX notional lot portfolio X.XX. average addition an already of Project to and a appreciation gives started of

billion figure is topic Project will with market. the Page were R$XX.X us. the guidance of the XXXX CapEx for a that to R$X.X are been reaffirm we the given we've to cover closed which billion in billion of to with and specifically R$X.X show XX, for CapEx Moving next that program of we related Cerrado Aires XXXX, that line We

Aires Galhardo

Marcelo. you, Thank

in the time supply as being chain shows Project XX disruptions advancing of Although scenario in facing planned, budget. Cerrado of The COVID-XX adverse last on fourth on site the decade, new is on pandemic, and and an the unprecedented XXXX. quarter global picture end Slide started

subsequent volumes future crucial the works in chemical can for X% a transport. and As of transport the is which for of are new to agreements the to noted, work pulp rainy through with we negotiations progress quarter, Walter? plant the important milestones season. whom the The highlight the [indiscernible] effort, of in conclusion site

Walter Schalka

Well, to page of leave takeaways is I'd to the that in major you the like presentation. last the

that Marcelo COVID and achieving operations, have noted record year, one improvement almost just as program a we we situation, have convert to sheet we despite future, our our had ESG, challenges of very ahead major means have for of major the a our that in improvement equity. inflation we debt performance $X.X in supply to major well, share last investment on conversion shareholders, per that that despite I chain as us. part think billion on But every a value equity we for results and outstanding balance strong mentioned. remembering that our to on $X.X single creation preparing That

we that, time they are a will value and on Cerrado have all on way. to different the of that perception the we avenues well. to project budget, addition as addressing deliver is Then In creation positive that is our five shareholders our major and very strategic on

start we like be now going is on to our a invite XX. joining be that on few March to I'd XX, us in weeks Annual the March Before from session, Suzano to Day Q&A everyone to

join So session. invitation on us you that's for open this to

for Q&A go session. the let's Now

Operator

Instructions] The from you. Rafael Barcellos Santander. first [Operator Thank comes question with

Rafael Barcellos

could also And after operations. to strategic have on And than its the second some about in Suzano's think some you so printing shift mean, do the could Year? producers side, do and expect demand packaging my do question the something do you what is taking paper production you pulp could Hello about My writing you other your about similar that here terms for price been shifting please I that, pulp on good of that, view with division orders? or think have [ph] Suzano right? than February talking Chinese grades, to Suzano markets other news everyone, division? in and cash fluff mean, first pulp $XX hardwood thanks questions. of the cost, pulp and the is on comment prices, of Thank for production And you niche I implementation sold like you. even question mean I hike I'm course, my New higher

Walter Schalka

middle went we the Thank just we're to in like your have before pulp of our date. prices our we start going morning. as no effectiveness because on discounts January prices, would and the with what in to the month. related in obviously reinforce And February we in to month, coming America was this had completely implemented to good with to as you Rafael, January $XX our questions. increase price I'm in maintained the for one in whatsoever. I into closed cannot North In Americas stable of Europe. disclose still China,

As in North we all you now for have of and February the $XX Asian Europe know, $XX announced for $XX market, Asia increase in America.

are to I successful We of S&D due opening in all favorable implementation very have speech. a confident the which mentioned scenario my

of Year, New China, post see demand following. in Chinese we the terms In

First is usually of board and publishing lot paper demand, board activity paper scholastic and which for products. season big activity, of a all, demands a this a and lot of

December seen paper quarter X% board stocks were January than the that the lower have third not have We are and do board the in but closing We decreasing. China was figures the the and stocks still that the was final paper that XX. numbers numbers,

low quite well. and are boards paper of socks the So as

compared see indirectly Eastern growth in directly to companies a better China board China paper healthy. and demand is Actually are flexible, have have exports X% board paper demand should South and with products seeing quite and customers seen so just year. right, are China. finished a in And of reporting the year being and of in that China far. that from export in other tissue to from been consulting last demand recap, that all positive the economies control are actions impressive an board and Our support and positive increasing also X% itself from we Asian growth COVID a We opening with and downstream more China

Fabio Almeida

and related your future the for do have the and conversion Rafael going continue much, I'm question. writing very take our one will that of market the in potential to paper and more question printing will balanced for as coming the the you business We secular the this situation. of to years create decline conversion Thank machines. second believe

very are is we market, market lot tight market a We of on and have pleased tight have we demand global very the we Since time. this had at that time. of this of right now point well, at as point a very the some conversions improvements then

proper We are our agreements other performing In facilities to any of and or other our hand, plants considering very we serving way. paper. not grades a our customers to on convert are of

in growing have We been the fluff market.

pleased well. was just we very are remember, to are we right PowerPoint with a are ago, XX that the like you I project We and performing the years that just development doing. extremely now would

We capacity. full working at are

We several have the customers continents right now. on all of

internally We to have fibres discussing the what we or short fiber do next positive, market. from fluff be you. that long we large Thank is going that are very fiber would as combined are to the in step moving well, and customers

Rafael Barcellos

thank Okay, you.

Operator

The next comes Itau Sasson with from Daniel question BBA.

Daniel Sasson

opportunity. you credits. certification everyone. the carbon My the morning, Thanks Good updates first process have any question of is, for if on

identified that equivalent credits. to projects million XX tons last close mentioned had it year translate into could COX that certified You of

developing? XXXX that more overall that there do of inflation, Thank I’d second behind think your relatively most maybe we versus in process or costs see like could cash results the and stable to you you. coming Is understand materials suit you is cash cost going pressure question raw from for best from forward? XXXX And that will is your a could on to your this bit if comment my So, performance level. XQ Aires, how view

Walter Schalka

you, question carbon global take glad the to market. your I’m first Daniel. with Thank related

of is to very it’s financing the be clear to world. way the of think decarbonization us this going that I the

or these allow next this worldwide, price will a reductions are coming go We up on years that make going emissions allow of would credits. carbon additionalities them terms the companies through to of of that carbon some making in system that to be the in that cap-and-trade monetization carbon their see be sequestration -- could and will kind

have this. to through that happen Brazil this credits during We years. year this that of and a and shareholders this new carbon value side opportunity waiting this the coming in We hope been allow going negotiations to and the would the create one to law for going a monetize in is so certification on our is new credits our important on of

to I'm to Now going pass Aires.

Aires Galhardo

Thank cash affected are of you Daniel. lag Hi to for XX be from first experiencing years. the be momentum, the the with levels mainly commodity your Probably substance last worst that question. quarter in We by we especially of and grants highest believe of that price. cycle cycle our a the costs all the the will

this levels of that downtimes experience after year a the way large to but the our number in We will slowly, some until a this cash we especially believe normal turn end in scheduled first in have quarter, costs that and reduction year. of continuous fields, we’ll

Daniel Sasson

thanks Okay, lot. a

Operator

next comes from question The Leonardo with BTG Pactual. Correa

Leonardo Correa

for big to morning, this There market good My on in picture Thank Yes, pulp first supply year. you. is expectations. the on seems question divide the be everyone. a

been these items and margin several series Some a of coming has oversupply the major from news slower a what data have additions which be been hearing and thesis of points we've supply, maintenance, stoppages, think will all that corroborating strikes. there been

your regarding to accordingly, specific, supply numbers, supply the the which company the out. movements, quarter, mean, shifting some you, And has play differential in looking things cash currency a didn't over picture? right, level Brazil the on past on I supply, interest light and from drags course us especially in new, are question by at more aren’t what significant currency appreciating BRL There focus logistics globally the Bacci? here hear First help is in but We're criticized second years for bit so issues, potentially cash two sharp of the losses. pretty over right, just policy a forward. of mean about the so out chain, where, right, movements I through abroad. wanted be I wanted expectations rate the the right a sorry derivatives now I could could the was flow the the be for going you the So, of potentially more already next is Bacci flow and given mean versus that, the to but to Suzano right?

on these going leases, how forward? you I'm also derivative have potential of So quarters? couple just do your I past to see I see over And these number mean reversal to Thank increasing noticed the the expenses do next been on these that so well. wanted numbers right? you. you as expenses, I mean the over hear quarters, specifically a thoughts referring that

Aires Galhardo

is month, your points. relates play the but and and year out XXXX, like during to very, tight but it. Hi think I short the have obviously, which term take two to S&G question. how morning. very you follow they for Leo, dynamics Obviously good and and question supportive, to at fundamentals full highlight next will Thank your main I’m and part would of the the even going to the we looking supply I in side the

improved And be are that that be we on will of XXXX, demand When and unexpected of in and will new coming add and dissolving all recycled to supply of volumes make is First that have which on, and favourable, this of quite that our more market raw that share project also sustainable hardwood owners fibres and ongoing is several S&G rates will and flex materials market the forecast, actually And are announced forecast between analysis gaining we for all when the least, print most vary indicates that, top utilized shows now when XX%. pulp know, down were between with increase or recently slower of be pulp and consultancies all see going top and already we obviously or your will healthy increasing projects from question, most related add operating other as as some laid not to of these XX% well. reflection the will pulp into few make the and the to of producers, XXXX, recycled of factored we'll scenario. single share reporting grades. time but properly always a to all, are, on as balanced. revised and are hardwood grades. and add are that of recently all delays capacity numbers for this demand price gradual like less gaining the S&G this develop their and this much of scenario. with of On coupled a most you're we pulp gap and this which a supportive we a in to logistic chain chemical that to last on materials softwood plastics there which that’s to we alternatives points use impacting And which bleach The all downtimes of supply which fluff still for sustainable and and add, constraints, not top more

Marcelo Bacci

Hello, this Marcelo speaking.

to We the the applying known well that the We billion next $X we consistently well covering take side us have is bets as potential from don't And And currency. the is just we hedges flow by the is apply of in very the appreciated We to portfolio partial currency. of protection showed have if months. the which protection know company any appreciate, over appreciation the of always a the derivative years. on On about more that. the is cash currency of a XX because a now against day course will protecting of we’ve a consistently of views I the numbers and function be at policy you end the reasonable policy. give going have that portfolio the any to that market real continues for negative been and hedging or is the

number vessels. the and time On we've two our the use been and lease base we the of leases number side, or the for increasing that improving also are part ships size is payments that forestry the reasons. that our dedicated as is of for vessels of on leased is own increasing increasing lease over and land, we One

So operations, on is increasing the of this that for payments side. of time. course, cost quality improving the and our the is And, over the lease is both the in on forestry that shipping of form

Leonardo Correa

Perfect, thank you.

Operator

comes question with Thiago BBI. Bradesco from next The Lofiego

Thiago Lofiego

morning, Good couple questions A you. Thank here. of everyone.

if other The specifically are the to on the spreads so pulp you mentioned and pulp wood first Grimaldi. pulp versus rates. hardwood one pretty market, Grimaldi, could high you comment dissolving

views That's more a Brazil, have any you general do you near shift not same that shifted were think receivables, to this the The sawing dissolving accounts in receivables So the question. to term, within your pulp that like would is that about yet And likely specifically just term? the of Bacci market question, second to in hear near quarter. pretty I do to wood high there? dissolving see mills the might the to in shift pulp question fourth Bacci,

the understand first fully dynamics just should we quarter, Thank to there? access in So the expect to that now reversed be you.

Leonardo Grimaldi

and you, thank good morning for questions. Thiago, your Hi

believe sure pulp. But that obviously we don't our that, dissolving as in paper because ton in the dissolving At is is this what that gap doing. world we XX% dissolving this million is capacity believe most $XXX. of competition side, million we -- exceed capacity pulp to of terms XX%, max we're see of of is used have as completely cannot X flex is not There with On big being pulp of grade and this which capacity. the we We not prices close time, ton, in that following. the X.X roughly what

Regarding your is have. same information All that. information, the the is exactly that one answer our ourselves, you which we public unfortunately question cannot of

to not help able will much you sense. I that in be So

Marcelo Bacci

with on we end as the side, receivables the and quarter all of turmoil normal logistics, situation we you we the receivables the normal know, the Thiago, have, created at the the that that delayed. concentration sales do sale of of where have on the was

increase, an of temporary done receivables this already, increase that So have the quarter. end point, at we at that caused of the but

Thiago Lofiego

Okay, Grimaldi, thank you thank you Bacci.

Operator

Stanley. next De with Alba from The question comes Morgan Carlos

Carlos De Alba

morning, the everyone. much Thank for good presentation. very Yes, you

questions results, higher it and few end, year-on-year, more also but expecting, the at we quarters, also quarter-on-quarter. at increased was SG&A a what my also Just looking prior looking on were than the

to -- implemented you more in we prices So expect a of increases market, terms and that. level be quarters, I before, of the these coming the back paper as fourth in results? normalized increased what should forward the of was going to there level quarter, coming then said And expect I the in think understood

color us Thank you quarter any sorry you That and is level you the to spending those? for the quite concentration or or why give third could prices will And So particular pattern be a then of there maybe could the useful. price capital remind and for in squeezing if semester increased And there, of implementation? you. more the quarter finally, what products a the lag as Bacci in us announcement between year?

Marcelo Bacci

Carlos, thank questions. your for you

then performance SG&A we know side before provision our we during of the variable two when effects the we normally of On have don't quarter, to we is for course have fourth compensation, year. the adjust because the

that approach we increased happened the year, the at and of same the as end the XXXX. provision So of end we

looking when the quarter, working we the a some additional these year-over-year have partially inflationary effects effect. that to we efficiency, you there And compare efficiency. to have continue, with you compensated but of was were this pressures expect that forward, compensate provision. basically we So inflationary are On difference basis but to by previous more

of Cerrado we quarter, we On stable with but the some more specific this CapEx concentration the the lower year in CapEx project, concentrations. year normally over first probably side, performance have a have will the

Fabio Almeida

it's Fabio for Carlos, Thanks your here. question.

seasonality. quite export Regarding such mainly terms and dollar we're yes have in paper paper in our market, fourth in the the domestic due markets in quarter, risen to price, stable our prices X%

and were As volume that sell that in we reals you to and fourth that contracts, the federal quarter program have stable. goes its large reason that in domestic the the and books in know, the of market we so a long prices term was

in. a increase, domestic XX% the wood the questions market coated have need increased X% free to effective for North your also contracts during next long price installments have be we announced because these and And months by XXXX. term contracts, we increase to order for America implemented we for March price regarding As for kick about have announcements, which we wait will of prices the believe price the in in contracts term we

Carlos De Alba

best. much, Thank all the very you

Operator

comes The Marcio Goldman next question with from Farid Sachs.

Marcio Farid

morning, supply a chain that everyone. proves very supply in than I reliable the is thanks. that probably [indiscernible] of Well, quite challenging, all being strong to supposed couple have so surprised be on I'm bottlenecks. more Suzano Good see chain most. of your follow volumes to delivering ups, first

terms as chain So second expect pulp supply I And strong. quarters? in just now, the over of you just in wanted the needs to can seeing the shipping to the term, understand few continue well. been and momentum if And signs you obviously improvement you're of risk China's supply that mention if next did and logistics about thinking short international quite question, has any

very versus China see things. chemicals comments so One in paper quarters and that has momentum reacting only on of paper low price fuels hardly for China have that demand and we trying region? that how next the but the the inventories your just But, do in things other up Thanks. been and also to noticed the very not in in cost inflationary logistics is picking prices price environment high understand, to we momentum, few high China

Leonardo Grimaldi

This line clear. that Okay, not here Marcio, and good thanks for is Leo was morning. The your question.

it's not I clear. completely you if been don't answer have So

see lot getting a in in On the crews year also the COVID ship due supply this of chain side, worse of world. port the to situation in congestions first and throughout contaminations the quarter we actually

could pulp and the even also year a At several pressured we So this maintain we easily the in and time, like car half this also until and are in wood impacting are days. market. delaying supply is that ports. COVID is of operations we and to XXXX, loops factor rail today. don't where to Europe, and pulp the sensible whole and one this There's berth least tightening is availability of remain end bring the raw it of are and closely which the strikes is tighten and out, impact that further are following very the first the see anywhere XX situation in improvements, chain are who all from as see still regions Chinese challenging. the making of no more there pilots of vessels tracking closed especially comes even actually supply U.S. and at the quite this and at until those further can which local actually who limited truck situation a unloading Canada, Chinese obviously operating to number X Today producers ports material or we

So the moment. the situation is quite grave at

producers service to pricing was levels customers. I high to the our question struggling are in pressure. inflationary and We China believe and second the the maintain your margins related to our of paper

on markets implemented peak month increases further all strong price months, increase are the now season of a customers that Actually, to roughly of We the the will in our KPI, that now have So the reporting at end implemented because and this a with belief Year. is room February. to already plan for of we pulp next that going actually of the increases what's one which strong is the until their to XX%. RMBXXX and in costs. KPIs so we is Chinese XX% price Chinese was closely our at that all Chinese room very margins the there and no there last material raw to saw sentiments that end in actually are say the And New going monitoring speculate reasonable, increase all is three sources tentative New or yes year, price is believe But Year, the no against this as today the on there. and is we're rising that

between as come tissue this recovering margin prices prices that margin been today, and since ways the pulp they that or tissue rising say lowest XXXX their to in and mid historical all we and this pulp writing XXX% prices ever of important not prices values. have support prices reach to reached, And gap It's mentioned. at that and since. So to also reference, look between spread trending average are they pulp year actually and have have a raw the margin, margin this have I gap, up increased one board that's And to costs and a XXXX. track but mid over printing, material just

healthy was more much than a couple ago. of is chain quarters whole the it So

Marcio Farid

Perfect, thanks a lot.

Operator

next The Caio of from America. Bank comes question with Ribeiro

Caio Ribeiro

for everyone. Good the morning, Thank hi. Yes, opportunity. you

paper to very that in I then price you. hikes the ahead, R$XXX to implementation And are to those but papermakers are to prices costs mentioned be know prices wanted price where target price secondly, for before ton, and another recompose wait per likely to Thank pulp hiking still your expectations also, that of pulp successful to for is rising move back just further the to I recent would margins, ton, full whether pulp that moments that just prices another announcing of in hike? in the if hike per that had for you this cash there China going paper term, back whether and wanted going you see achievable? by view? XXXX you fast longer pulp last you seen consider be China are up And And price and makers So topic, saw in struggling March year. past, how we we've to on see hikes, in

Leonardo Grimaldi

morning. Yes Caio, here. a This question. for and is good Thanks Leonardo

Asian supportive. of into if come for The cannot the indicative at price. say locally that the their a can tactics the for or note term strategy demand with much the we also gap more But place. is on and just obviously next This is selling also related to our coming what are quite markets, first the part We And prices producers of resale that we months than interferes come it least imported commercial $XXX and months. as the and is this what and are future look pulp over short Chinese details, on prices, supply at can prices. we the fundamentals,

the paper to relate board customers, and customers, we you As compose margins.

obviously of is is As the this whole but make strategy supported, previous levels, increases. sure how I key commercial the details as we that's that this cannot want of comment healthy one is the future and mentioned follow. on and chain our evaluate part to track so I and to we question, timing more variables the We that of

Marcelo Bacci

for thanks question. Caio, the Hi

annually, As off we our break Day end March. of next we done service at the things Annual operation total our costs have

Caio Ribeiro

Okay, fair enough, thank you.

Walter Schalka

been activities important retrofits costs term and as working long our the have on to actions costs, plants, planned increase close and to that the Just it's and allow in structural the lower have our reduction on our forest several complement to answer, we base very our on future. it's land these us

XX we during term, short have On transparency we to give this the the on Suzano Day. going impact inflation March to you more and are

Caio Ribeiro

Perfect, you thank all.

Operator

The next question comes with from UBS. Cadu Schmidt

Cadu Schmidt

question basis have Thanks everyone. opportunity. level to the are please pulp of our lowest morning, declined a the for to inventories down I the and can on a to since that comment calculations, level, Good on inventories said according You year? the overall inventories you XXXX. of level at quarterly end the

may So wanted of Thank in this I a at the with you in maintenance coming moment? performance be say downtimes you weaker to leading can the the amount happening sales this just quarters, see much. especially very check if to

Leonardo Grimaldi

internal this optimum. high below discharge tonnes, producers then X.X just with at at challenging in revise said and are at of I the obviously end chain so this speech, have And Association that my is for Yes also Cadu. Europe million so market Thanks we seen European one rates. situation Pulp what this thanks in to we that European logistics see very and in only very supply we the operating the question, stocks in slower year situation information Thanks while much. down were think to running the and public all is according especially

in by end stocks reporting January when Europe. of been good are there reduction new expectation So my in that there on or numbers is of to have is of think will Italian tracking I tracking what's And presentation day and ago, January, just one color the public. the which add January. in be, on just further of are information, couple, a a an inventory X% reductions sources are further ports, going And should is going market which what's us and at just they we the anticipated our additional answer, to be will

China, more now even further January. already closing January, reports a for reduction year of look new we million tons new there's the the and in saw for a and at stock reduction. we official. When And the reduction So even even are the X.X X%

another stocks will tons or are reach tons. So million reached down coming XXX,XXX have X.X and X.X

level exports and which of be ports. coming and going of vessels to the on And medic America South activity on China. into to numbers time, at is Chinese tracking what doesn't of mentioned in what's lot seem of I ports in terms this the then related are on from the it the We a the reduction

tight -- or our stocks forward couple and not that paper that forecast this production board be and this stock X.X million X that of tons next supply lower than at recovering will be was added our coming level on to support so So tons. the months. all additional And which and much low scenario the healthy capacity, to tissue the is view least all million into our China, to expectations all is a is with will closer

brings So very to situation. we this think a market tight the that S&D

Cadu Schmidt

position Great, Suzano's thanks historic how compare own comment to they and inventory you on Leo. levels? Can do

Leonardo Grimaldi

think lot reflects low it's quite levels. not reporting despite I performance, are versus policy. and that capacities sales Yes our are cannot production which at stocks have we that from obviously commercial very we we, our our But We of saying we what and is guidance a our operating have our you give been position. numbers, inventory know because our clear

and customers We and commitment long are keeping the stocks at service term our there. levels long supporting low maintaining levels and

optimum stocks time our operational levels. at low below So and this are quite

Cadu Schmidt

a lot. thanks Great,

Operator

As Walter to final may company there you Mr. would Schalka, floor are I considerations. no to the for CEO questions, over the turn proceed. the like Please

Walter Schalka

to all this on like would thank us to I join of you session.

was vision interesting -- I had. like we would our just of it discussion the to relate that think your future. very I to

billion the people We billion a whole with with but are X we single customers have impacting in fact not only are for in the that X we targets, as every society month our two society, we change dimension how side, going we climate going are the to how we are have that address that issues the on on major in working to inequalities pleased of is one inclusion are to going our I'm to all for the quite company been future. that and is you on numbers right evolving future targets, the SG of share and we necessary. as we well. that the and this diversity developing information address time very the the we at the preparing the have targets on have our And been and our company

and We very that's continue this. have value and with positive to the our do we we creating value to sharing as part all shareholders, well our of culture but are as stakeholders

Our prepared vision a very future, our very we continue the is position that activities. well is humble Suzano for but on develop to

the impact We much. move the company transform happy that a very you joining very positively could a Thank to day. continue better us Thank society. and for very and much have company you and

Operator

nice quarter day. fourth call finished. Suzano results is Have conference a

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