SUZ - Earnings call transcript Q1 2022

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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 first quarter of 2022. [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. They involve risks, uncertainties and assumptions because they relate to future events and therefore, depend on circumstances that may or may not occur in the future.

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

Now I will turn the floor over to the company's CEO, Mr. Schalka. Walter

proceed. may You

Walter Schalka

It's afternoon, to evening us have section our first good with to a you. for everyone. great quarter results. of discussions pleasure you of great and morning, pleasure to be good It's the a Good all joining

main several we in cost the on think lower annual our related we the is have is inventory volumes the of have pressures first regarding first shutdowns quite despite the since volumes in this I the we strong have on facilities in year. quarter low. lower our the had with the of cash highlight that generation that quarter business pulp that We

that to on -- cash on cash able BRL in on the that XXX on developments cash we with BRL are of quarter we a considering Project. had able previous sales, the this quarter. over around increase And our was good our costs, It's in X.X we not X almost in very -- on to a almost X.X as ESG. And EBITDA. kept cost was then we than and scenario billion million are terms the tons. with to billion sell of sales the Cerrado the quarters. invest generate billion, same cost pressures X.X to had producing adjusted amount we dividends mention we have paper our business, level previous BRL at We comparing scenario, very that of production our have BRL We that in net the Even the debt well important we just the the

more our independent we XX% X than than XX% and Board representing on X of the governance, with have members diversity. gender more that On with now women out members of

us business. to bit Now Fabio our is a Packaging and to tell I'm pass to Paper going who about little going more

Fabio Oliveira

good and everyone. morning, Thanks, Walter,

number X. to move Let's Page

strong, best EBITDA results have and given Packaging the QX unit. and per QX had Strong the paper-grade in markets Demand quarter. served of ton a Paper The and EBITDA positive have business demand We activities rebound international have products record and in by drivers prices the volumes both domestic printing commercial highest to for in the to our led presential to for been continue be for markets. return most take Suzano. and

first papers. Additionally, in geopolitical and solid for Raw energy costs domestic cash mainly compared a in bottlenecks first and X in XXXX, by production to supply. period the mills print X elevating the XX% months months surcharges. Brazil price Paperboard tensions comparison to coupled X.X%. in reduction XXXX X% and globally, with of Sales of to the impact grown same XXXX an year-over-year of given XXXX. due basis, strong to contribute imported notably on has inflation demand major pressure a have and players demand the higher grown the pushing of period has tightening X% logistics of disruptions shrunk According logistics costs and energy continue of to materials, in production writing IBA,

higher XXX,XXX totaling same than the in compared of to tons, Domestic a sales increase total our volumes the QX year. X% of Our sales XXXX. last QX XX% represented quarter, were X% sales of quarter

and XX% Our than price XX% year. the than higher our was quarter average last average price QX QX net higher during in

compared operations of first a of to BRL and XX% strong revenue volume reached increase quarter the in result EBITDA prices, stability, a first management XXXX. the has million As XXX quarter, our

Our EBITDA reached ton per new a time has high.

inflation shipments caused geopolitical logistics overcoming or while and challenges tensions. disruptions disruptions the Looking by in ahead, our maritime continuous of event by major minimize short-term ports of reside and passing the pressure

small-sized and our shared running during total of considered have are has presentation. paper innovation track medium reduction below platform quarter. we of also our to as XX% deliver led demand currently products our inventories, We're e-commerce accounted Day which our sales last Our our pipeline, on and to a when from customers Suzano for in revenues on optimal Strong levels. XX% for

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

Leonardo Grimaldi

Good you, everyone. Fabio. Thank morning,

business to So quarter our address the of let's results XXXX. -- that please the move first our Page presentation of of so X we can for pulp unit

first As Q the our sales X.X in tons performance left you graph, on 'XX. note will totaled million the

our our planned. chains to are serve below our a their now our During of concentration maintenance Since as pulp as not optimum lower this Production on global and room the recovered and mills lines inventories a production annual fully of of which one-off production several had downtimes downtimes. well after still planned additional our in will pose to resuming planned did quarter, some production we is therefore, pressure compensate pulp supply were be we few availability, levels, the our events, to delivered have as rhythm customers.

needs. have I Russian markets presentation, focusing balance, fulfill our throughout consequently supply factors mentioned was as stocks well during logistics mainly a as inventories all low of spot have in Day planned our of persistent Pulp withdrawn resulted quarter sanctions chain. European the ports are with order the first world over The markets. strong S&D increases inventories, and the by producers supply-demand which balance as compared to challenges XX% were to equivalent were has below in This tightening their the December hardwood, marked figures constraints, low pulp posted X% As below quarter. efforts consequence globally the place as the European quite disruptions pulp scenario This historic and customers' reduction all unplanned as price 'XX tightening we from paper low such pulp and 'XX. closed maximum quarter due our on Suzano XX% downtimes, increasing when the monthly and paperboard In the levels XXXX. of favored and to fourth Q February pulp they running of to since were inventories averages and March in to during the the floor while production books all a China, production

has markets Since for terms Our price to price sales the reflect 'XX. appreciated the -- this our U.S. precisely to in confirm with implementation of FX per significantly, effective in the we prices in quarter first to our ton dollar first invoicing average for customers, translation invoice average sales price completely full does that past And then increased $XXX not carryover of orders. and quarter per increases. when of the had exports for can our quarter ton. were order of our concentration the increases the does quarter, using the line volumes price due the end which the the was for quarters FX export price from in approximately announced $XXX I base not still quarter during our mainly intake represent

lower was Our 'XX of despite EBITDA X.X X% of depreciation higher a volumes, BRL and billion and prices mainly the pressure. cost first result FX being Q in-force over

looking forward, highlight points. Now I would the like to following

number close unexpectedly. April production has And 'XX, openly our to been estimates, of downtimes historical According your over been pulp past XXX,XXX market to was out market it million overall to have the attention a larger that how to has tons market unexpected to dynamics. in increasing the a just extent and We calling tons the of you been January X.X the year. remember will years, impacting between during and

supply the figure and does challenging limitations adding producer include to market April our about news the already And from are we of up effect up May planned project X.X When downtimes, million logistics a a tons. still not months. for recent by to we this and reported foresee we delays to this last relevant So week of restriction add for production Russian as in the next pulp continuity significant globally, RISI.

the BHKP a due In up paper production for adopted for of business, on the exceed the can industry located is European in specialty In books restriction trend to for our has a to regions was producers identify retraction compensated that the year segments writing fiber end low recovery posed levels we some exports segment In XX are now this my in visibility measures in effect days. the packaging, customers greater producers by as Europe the which, past magnitude on can watchful in is measures to that and weeks tissue benefited the uncertainty regional to but strong operating point in during were They XX% BHKP print America China, out rate of the the show to lockdowns reduction that that to restriction the a for in that Russian demand, observed like the the a it and energy it supply. the presentation, in COVID. did has of and This downstream restriction and beginning packaging Demand regions. lower furnish. Suzano's represents since order possible segment. pose the of evidence Day board also contain been similar reporting important the XXXX are when due North wood China. of their has solid during and papers production and be additional other report risks pulp ivory by being of while We per

contracts low which intake. More governmental the we of our into short-lived, guarantee hardwood China for producers been like of main to that the can in specifically our translate by current I with operating and cost persist the levels order to paper customers an that a flow the in view, chains, to said, at quarter. their the their our next imports below their coupled in the at With should cash strongly program raw stimulus regions volumes limits are In lockdowns China should with invite healthy months. possible that us Aires the has of all present incentivizing agreements. the historic order books supply indicate expect is that remain now fact expected concern in would customers and and performance our to push material for inventory We translating sources the BHKP increasing of of China, ground globally of during highest being risk

Aires Galhardo

everyone. Thank you, Leo. morning, Good

first similar when the downtime quarter Cash XXX February is quarter cash the not We stressed of Ukraine are were war to the ton, quarter call compared the The quarters, per costs, in to pretty earnings being pressure on and foreseen. when in 'XX of much fourth beginning drivers in first and war. the main higher expectations the previous #X. came XX% of Slide BRL on by the in XXXX, commodities cost last was Russia our quarter than both excluding

average especially higher you followed and costs on As the due period. negative inventory ranges Brent turnover of no wood gas in to by dioxide there fixed about took of linked impact scale energy by price share remained third-party especially season, between the from lower chlorine appreciation increase can was natural input downtime to price, a the real of the against mainly chemicals, see, the due forest average a was to costs higher of main inputs, delay U.S. month and in exchange cost toll the in caustic high since the soda cost higher consumption. a Despite impact and The dollars export impacted X the effect cost quarter, Wood of was valuation in also Brazilian of during which the the rate flattish sales. acquisition offset results diesel fuel. turn lower of the and cash which in

to energy costs the to first with the first wood increase due on The fixed to figures. was pressures relevant XXXX, production first inflationary were same operations. the in just when the sales in by downtime of price Higher quarter costs on in the quarter-over-quarter Cash harvest offset no in year-over-year mentioned transportation in reflect XXXX. comparing due higher downtimes forest costs XX% increase in lower performance. quarter 'XX the diesel the quarter excluding and than Looking most absence and

to XXXX. the quarters of remaining forward Looking

endogenous us challenger. would cash represent protection cost, to to a scenarios guide factors Although the a is commodity lower

So say cash I costs that would forward. our flattish going shows latest forecast

precisely to financial of the and the the the as Cerrado as scheduled, the disbursements. with which fence" investments, to respective fiscal second March "inside -- first next major closing risk corresponds in progress the identified of overall XX%, half as evolving the end slide the is recently reaching of XXXX progress Suzano which XXXX. moving new progressing -- in is quarter Project execution, Day to the also or in industrial at promised infrastructure is with the The presented no expected, deliver product line As with

Now to I Bacci the to pass the floor Marcelo continue presentation.

Marcelo Bacci

Aires. you, Thank

Page to X. Moving

and Our acceleration net -- business during the debt Despite Project and leverage remained in the quarter. of our Cerrado average the disbursements our the in stable ratio dollars [indiscernible].

a with We billion the at average next a XX years, $X.X for at schedule that. to X.X% an liquidity is tenor. sizable of Important our and rate. have very position average debt X cost of XX% a amortization of debt now of and light emphasize months year fixed

It significant quarter. Page to FX of quarter and was the volatility BRL at Moving the the appreciation of X. a the of relevant end

to run we receive our hedging of when on portfolio continue according at We portfolio. hedge our to mark-to-market flow And adjustment end to of QX, the cash our the started positive policy. portfolio turned positive cash the

downside have portfolio average an a at now hedge X.XX of That a We gives on strength. protection and cash significant flow billion. elevated $X.X has us cost

it's we term, portfolio Cerrado of as million, $XXX longer on protocol graph. see higher the hedging Project even can levels For have you because average the

X.X was QX, We billion a we discussed below bit keep to we BRL made the what related of year we was BRL billion the for That BRL the Project. CapEx, XX. at XX.X Page expected, same billion, Moving before. to guidance that but number X.X Cerrado the during

not of Parkia million are a The general including just agreement two in We the that announced The CADE. buy we meeting slide. we vehicles total coming of in acquisition installments. meeting about yet in will also the the the next XX, the the of called and the shareholders' Slide have on the be On will depends Parkia deal talk to $XXX for days. general disbursement approval shareholders'

be disbursement per even in point control be And would but the XX months. will by timing, our precise allow us over CapEx As to annual acquisition expect that years, cannot when we will million coming in increased we it the at don't the by to PPI reduce made, $XX and time. be we this that this next year

base operate. of reflecting capital. acquisition the a of So present XXX,XXX our main value, lower states also effect the will in land hectares cost enhance this has we in by very net positive And terms our where

Page XX. to moving Finally,

discipline. of pay to cycle a BRL is million And to favorable all Those XXX to shareholder enabling general approximately X Our BRL that will announced. robust the that meeting. we in back program implemented buyback strict just I'll conclusion. in in share financial With maintaining of was approved for Suzano financial additional our Walter be billion through our policy, initiatives dividends have that, the respect also the turn

Walter Schalka

you much. very Thank

very we that we capital -- this quarter and I strong it's is for we good cash that been solid and think us. the critical allocation, generation takeaways on have have have a

Project. We have then are highly intensive capital company. And we been investing on Cerrado

we clear policy. a program, very Now dividend have a

capital have allocation now important ourselves We the is different buyback flow is company cash many this future in areas after that hedging for very and the have areas. program consistent that we policy that The are investing. now us. the now on right X we other preparing very It's years with many

on here currency. We are not the speculation on

for We are near cash our to the flow needs our future. prepare here in

going you ESG all on prices Project, do you pleased pleased going here the In in very time, agenda and on budget, we see yet call Sao invite right speed second not future. to in that, it month reflected are on price of that have, environment to I the very Paulo. to Very results. the would them Thank the the we Cerrado that track our terms right up that June of on next our are ESG and like With since we on for all of our XX it's it's to continue much. the

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

Operator

a question. like [Operator Leonardo Pactual Correa Instructions] would BTG to Mr. with make

Leonardo Correa

right? bit this atypical, we more My announce this a price were Maybe industry for right, bit the Leo, more. would wait Suzano into days, to leader a consider for some first waiting maybe some for question China, Leo. $XX increase to

is wanted recent risks wanted I on all and hear made announce the the is company of second So Asia. just of know in for pressures returns criticized bit at right, Suzano companies, and from and surrounding you what this volatility, lockdowns, price right, you I for And price we're has the on are and but And very seeing announce paper and perhaps to in is that some growth. the with whether have, China. suffering side, times, but And But investors, lower And I in to company issues balance, some the other paused price I pause been wait some prices have many Leo, has and is margins difficult strong I just you bit China? Suzano to Suzano and resources you, conditions short stock China full perhaps it's uncertainties I compared supply in this a like on So times, to at segment the pulp was China ideal, in you the perhaps perhaps cash the of you're lot a and sensation returns in in reselling projects. group been whether stock the all cash-return between a we ground been lockdowns which also see right, been that the implementation, you looking accretive seeing issue, the we're several confused mentioned, we comparison the as high-return investors the pressured hear in is perhaps what the other mean ripe projects an the group to not on basic Walter? potential not higher maybe question paper companies, perhaps return that we've out China. understand to and strike underperforming have embarking a on is and the exactly compared given I growth chains Walter. impression drop on in hike have that in valid more dividends. perhaps speaking of the that right? balance. for guys a right? that for market. So penalized still these a and mean lower the environment -- price And to Suzano tricky -- with names and why know and the increase now of And understand shareholders that a bit, cash has given advocates been a I cash term, a is project pressure were policies.

given So things really the the that connected. bit are inside just These right, indicating, the behind more was unexpected what thought completely which buyback, least nothing a right? exactly I and over to all at is the I the the markets, buyback, is of months. blue, out know wanted past move understand for of one process this. behind company Again, and the

to wanted viewing it you more how balance Just between hear you're growth. buybacks this and on That's guys.

Leonardo Grimaldi

you for question. Thank your

Obviously, in announcement. of regarding would the part first decisions and them customers, before of the a already -- we price spoke the order announcement, the make our any price so it was, holiday, It timing The we to yesterday prior didn't we the of increase announce any producers Labor it that profile have we of thought large our them. to had we paper of question China, regarding night. expect increases decided of just intake Day the timing during was

how of the our that's decision we put strategy making timing together and So announcement. regarding our and

million to also as has seems are already just downtimes, factors the X China, lockdown constraints. they production Addition fundamentals to worse supply as getting we making once from which been that Jan see with I their absolutely and sense or that, and are speech, strong. supportive on market now customers that short-lived, as in This only the to and guarantee mentioned which logistics mentioned the up worse X.X raw has to to very constraints for market S&D in be impressive plan unexpected out a citing been stimulus Regarding months the want challenging chain stimulus my these big our risks the we main program for all tons. speak. to in There's supply reach X exceed to a have to very and are is April, implementation, going sales. which it conditions in to as sources from ground report that again governments I bullish our is a they're quarter third together be material It

April quarter, the third they're and office recent prepared May China from market Just our the getting end better remembering will what our we news before In in in the holidays. right of the a arrive again, sell so much that. after sources than sentiment Day, and report in Labor

of week previous little which the with lockdowns now bit region, issues in is While a fully had operational. the

the also producers lockdowns and exports region and the that internal as well So are spike from scenario markets. has writing the been as logistics improving mainly see in Asian and in paperboard over a to Southeast of completely we printing, Chinese

much what conditions these been has than So on street better the sentiment the be making is to of. thought

Walter Schalka

the are in is that Leo, to It's how that growing market. our thank give faster hardwood. much. industry important we Thank materials is to the we them. believe pace that growing Then to that a stock market at any the gaining very on tackle company is shareholders, a sensitive our dimensions opportunity And than to the we question. through us share you in we value different much one are industry you very create other thing very

addressable We over share, market market market are to gaining what share we long call our expanding fiber. gain fiber-to-fiber and

expanding but our are fiber, markets addressable other We as gaining to a project materials. go in replace able growth faster to is very to we other delivering to are are good industry, market and materials, we have present market And extremely good the comparing plastics that a to returns. we share

There project competitive that now. more from investors market little that we even our extremely more a our on to than we in the cash this system. lowest -- deliver world is are X is in the cost be the bit to going are years the the to in very times going several competitive, different moments the near be present a that project in is lowest to we good what to future remembering Just cost going on

understand the On have cash the our important other side, returns shareholders, to we returns. will improving is cash the been how we and

with program, well. dividend have we X.X but have there's this In financial we dividends. the Now we a been higher this announced hand, in are other as -- year, billion BRL discipline buyback

aware next debt cannot is to very years, our we shareholders in our are increase to think, very we terms the balance delivering coming have, net of that We I critical. then record have I track value our in everything.

We have Fibria. merge the with

Imperatriz We after to We the had industry to the is results this are expect have value the question. project. the the more Três for we Thank clear that Lagoas project. Cerrado And going performing the Project. when be near shareholders. is we to going The show in you our future

Operator

Mr. Rafael question. with Santander like would make to Barcellos a

Rafael Barcellos

believe first cost. comment about mean thing bit to question And the please that Q? Also, in in of make terms quarters? mean us? pulp Q? pulp sales more could your I my cash to a you pulp on rate pressure production you is elaborate your significantly affect that believe in So second is your sense of the the behind logistical bottlenecks in related already do the I expectations is it run worst please ongoing about in can question terms second you volumes would the second further my little Could cost cost coming production.

Aires Galhardo

Thank speaking. you, Rafael. Aires

had cash dilution a we production in in cash terms Then best -- normal next of competitive quarters. a scenario, in that same the challenging surplus fixed our of future, increase the woods so our line. costs, the represented uncertain X cash in and costs, of costs considered in plant the cost. the shutdowns part flattish in important Regarding we we mills could was commodity most But are could the be because line to scenario deliver most how expect quarter level cost is

in we have consider plant that terms recover half, considerable again, we enough of this But first the same And the restart to room X we stoppage. X loss shutdowns to And stoppage in the in curve quarter this the that we last it I year. last maintenance and mentioned, not learning have of operations cruise It's restart mills. pace our like volumes we it. simple we shutdowns some the start to any have just that important had our had normally, have part. to the have that believe production, occurrence are as that a have the when In that before you level second and we lines, only to and you had we in we in deliver

Leonardo Grimaldi

to the second Let to along in we tag how me Rafael, question, affect production don't for on Aires' or will logistics and Suzano And explanation getting that regarding can some your quarter. see reasons.

First of terminals own all, our in we Brazil.

going already dedicated our Suzano vessels to terms in delivered all is and be our have We it's production for how volume of to planned to customers globally.

customers volumes, our not said, do we volumes, quarter. second increased So our as our the see Aires any in risks delivering to not of production

Operator

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

Caio Ribeiro

And you second very on of then this just talk is dropping bit a in if demand conditions already coming continuing in I question, a as seems question risks little market, current talked the about I in first the just lockdowns. bit impact some to prices see you hear the in migrating and markets to see and here? sustainable wanted supply ton, months some tight refill per which capacity with expansion pulp well. whether this, my you markets. in up from Europe in of could you whether more to the about to I to months, So these fluff impact war of you specific wanted seasonally right you an move know with in China, consider little prices the but weaker the that at believe would whether prices demand now, coming the which or and prices, are not? current them as if expect $XXX you a point in drop

Leonardo Grimaldi

Caio. Okay,

to So going here. I questions. will Leo take both I'm of your -- this is

of fluff, our all, regarding going extremely First Eucafluff is well.

that using that We is innovation in has And again, developed, to Brazil, makes have actually steps the for our investments future on what's have And Committee this that discussing received or you so received customer our the the quality repositioning and Board. to brings brand next owners to how a -- this developed in already XX conversions happy our with pricing and months are globally. and in been happy business been news international therefore, product. global this product more Up the than row our how line how much us later markets are in is and in present we being reading But we oversold our next. Executive being extremely we're discuss stage, been itself. bases, by can the opportunity very for has with is

Regarding price of huge forward, looking watched will fundamentals and supply year. the half question demand. effectively the towards producers solved factors will be is impact their there not the short which is will be But the able maybe some be or implement believe, your short-lived yes, on current we term. there prices. Chinese think constraints, increases second how to the obviously, COVID second of in if that, products don't how on are which We sustainability to for

Regarding seen have paper or pricing we pricing movements. in China,

I of a most prices come coming delay Maybe usually grades. the to frequently. that's place announcements that's during accelerating there but is there very different advance, a orders at And for and in including of have is in bit customers, we movements, our in holidays, inclusively the seeing mentioned, big the and a first when more our margin obviously, prices that all been tissue do customers the the prices. margin low-cost receiving by conclusion we out were is it for China. increases, we why a trend customers, will quarter, we We our the in than terms analyze and Since positive way X in a no the pulp. that in competitors or has grades customers hoped not new Labor moment been be the far published as in seen as have tissue our We still are system, Day reasons one that price

share market they We have over benefit. and be swaps. to use to smaller don't So downstream. still this to this moment implement space that means gain increases customer time they price And have this able

expected successful they So the therefore be that successful well. as we and be implementation believe is to will

Operator

next comes with Daniel The BBA. Itau from Sasson question

Daniel Sasson

mentioned the impact on over, pretty the could my very that most from tension, short BRL if My in if there that sanctions the impacted first not important expected I the more it's elaborate or pulp concentrated supply factors which -- you us could be some period probably not the term. first your previous reflected your question they there in Russia is to regards war in know have would realization in mean, be expect the question is I from Russia-Ukraine in And that are you right now, as yet prices are if the in the recent periods color improvements volumes a But results. price fact on more had related in pulp I purely some even the on you lifted pulp interesting. sales realization you is business. what give bit to more the on if not that was maybe will on lagging mean quarter. which that prices were you a price in high in as the stronger if second

So is if end. to be supply today dependent helpful color, production more also us would our that on more Russian European you pulp numbers in regards could how European from give wood or

Leonardo Grimaldi

Okay. to questions. Daniel, is here. I'm good going your morning. This answer both Leo of

main we using purposes And price obviously, FX end quarter, quarter. reporting calculate the dollar we in the U.S. the -- The of average There the dollars U.S. to of back at first And price invoice pulp first reasons. the one customers regarding the two we usually for our in quarter. realization are terms.

downtimes had appreciated invoicing shipped a a due program bigger we Brazil, the situation out very that concentration of time. and when our in particular of to production distanciated at played price maintenance quarter, invoice our This we vessels a to of be the schedule in the our had Therefore, arrive our big and FX to we right? was concentration or a and or itself times month of of price actual dollars. different third when in our $XXX add March from $XXX U.S. has FX The role,

of invoicing. to is the issue timing the Second related

days. bit carryover obviously, situation a mainly our a We are that on today, Asian sales have direct sales, of we XX our, to over over little for a facing markets invoicing -- or

with able -- this So not production, that. running be recoup with are And we not able to invoicing. late were planned our we did we

when So we we price the add just those come into before. two effects, that I stated have

Russia-Ukraine -- see terms main two out in impact playing possible of out. playing factors supply, in Now we war, factors an

Russian to wood. to it. at related sanctions the there two on And optics is look are First

it's First certifications. to related all, of

canceled that know certification wood. of all You Russian has FSC

is X.X consider. out or they're So the a production million to alternative bleaching getting greatest that bit short the upcoming the term are necessary that And the X from of facing least into be affect approximately over now factor our their wood year. difficulties is supply X.X of fact restriction that the finish, production million to seen do the operations. supply the Russian challenge see And a was XX% Russia second And what chemicals solution due the this are sources the pulp to or to coming mills. second the months. in the or That's beginning producers to meters market playing moment haven't to at issue report wood maybe that chemicals. item supplies from or crossing find in we cubic in on fact will the producers the for what on to border wood also That issue was have million this at is a birch Russia. run for pulp important an the and able We tons still finished going

at for Russian big exactly was offerings that's last news; be will So reasons. due April bleached to We XX% a know most are hardwood the We well. the only May the as -- relevant do just is and a to relevant that reasons know the for example, China ones we are the downtime. RISI Fastmarkets volumes producer reported XX-day in of volume know with not exporter week, ran maintenance who not it in all their pulp offering what we read of

obviously impact create this to will big the market. So a

Daniel Sasson

Perfect.

your have to take of something bit an in days, this your over to XX you continuing is -- right? as second mentioned is invoicing regards that Q carryover impact prices place, realized well? a the to that Just therefore, And should, on clarify

Leonardo Grimaldi

Sorry, place, that order I reflected here price a continue problem intake. announcements to important on with I all state have taking had our fully to the it's as but microphone. that, Yes, our been mentioned, see we

terms question of a realization. it's delay just in of price So

Operator

also make would like question. Lofiego Thiago to a Mr.

Thiago Lofiego

issues any Bacci, question, CapEx you I market Can Are believe paper question any you all? at expected this second the lower more in bottlenecks Cerrado comment bit First than domestic about mentioned that? And Project there the regarding suppliers, a was quarter. the on Brazil.

the grades? cardboard what’s remainder especially outlook for the year, So of premium the regarding and writing

A –Marcelo Bacci

work capital, No, delays or continuously effects issues of physical just the you, payments improve from Cerrado. do we project. our no Thank postpone Thiago. but with related side to the to suppliers there’s to It’s the and that coming no working the

A –Fabio Oliveira

Thanks for here. Thiago, question. your Fabio it’s

strong year. into we in continue the the paper half the demand of to see and markets, moving forward the Regarding QX second

second which is paper we also and And demand the you in usually in fees, usually election, print stronger is driver the this demand. seasonality year. have the on As is stronger year, we of which for paper have half know, right a business,

strong. of year, know, as you first As board, last quarter was very

shrunk of good. still quarter but XX% the XXXX we the the it’s had in before above The in year, year, last basis first So this has not in what first comparison pandemic. quarter market

second is on And believe to moving growing the seasonality that trends. pick up for above with quarter the in as pace the well. board historical market we is it So going now

Operator

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

Carlos De Alba

pricing so comment And the to that in paper price us have quite markets. the difficult for the outlook different continue question, pulp and/or you pulp, hikes you maybe potentially discounts embedded paper power then on forecast experienced, could it different is on that price strong first what are something markets So in side. the products? is Clearly, sometimes makes for very the

you about nominal at this, So but if can I us rapid we we that you trend? Can you increases any in that a the of of bit aware any pace. have trends on little a different to the little And should markets. a seen on very the be color comment need discounts bit give regarding vague price be understand

Fabio Oliveira

question. So Carlos, thanks for Fabio It's here. the

and have size. announced have a in May. that QX as in that increase in announced per as start increase prices for uncoated for we announced order of board, be XX% also have is in $XXX price we we side, prices, were QX start On supposed last now to that implemented be June. in In we to Brazil new all internationally, have increases the XX% here the have we the cut which for price paper increases price implemented of And board, cut that and And to implemented that a announced QX. uncoated markets we for for serve the implementing starting recently for size. also the we ton, regarding board, also, And during we implement price QX, of

which cost of is unbalanced, which And also, inflation, supply have the supporting more I to the price mentioned favor increases. of shortage, as for impacting presentation, cash to see leading in markets the to continue due which is -- price impact we is we of also the So producers need my increases. these paper in

that these So made. we see announcements the of we just have market price supportive

Carlos De Alba

Just -- one in the and on size also uncoated also to June? and clarification implemented increases are cut be XX% in starting June

Fabio Oliveira

The implementation started and is uncoated in and cut for size April June. paperboard

Leonardo Grimaldi

Okay. jumping terms better there's a Carlos, this regarding in clarity question discounts net prices. that of is your on into pulp, Leo here, so

Asia starting China. all, and of with first so And

we our average, on better a markets, good X%, view from on that's X% discount indication of I'm in the to the we view in consider globally. market. the that how XX%. net be translate net about a X%, discounts Our rest hardwood, talking world, consolidated to right? prices Asian of is to see what meaning to is obviously, the but the anywhere And on indexes excluding of This roughly prices And

Carlos De Alba

Right. Yes, correct.

And Okay. increasing they bit relatively been little stable? or a have

Leonardo Grimaldi

on last Asian saw but increase an year We stable markets. world, roughly the of in Western mainly the X%,

Operator

Sachs. Marcio with question Goldman from comes The next Farid

Marcio Farid

again. of cost increased see XX% March. I'm just sorry go cost wanted questions. driver be back in what of to flattish about by in on couple the we a have because I Aires, from I diesel Brazil you, would the understand to discussion prices the

are analysts diesel if be prices again. at in company least what to saying decides that are it Petrobras should increase XX% the prices still Our below Brazil

So inflation less use it's saw And away less wood produced in cost we we had as further because a well. to driver. the obviously probably being we flat major or quarter wood costs

as which But up is So for would wood expect you flattish go then quite good. costs so could guiding well. I costs, that are

Walter, strategy? just my what and different able didn't allocation, is the to like I Or factors? being And companies at. to the right? you Parkia, in the of do want is terms are companies punctual? trying all cycle commodity the growth commodities allocation ever in Walter. can from expect it see it buybacks? we we understand wondering offsetting continue Or maybe it magnitude how of we buybacks, right, capital just it opportunities are to do doing acquisition acquisitions. company different to Is that you're for we example, that to is is sounds to terms cycle can So just time obviously, seeing being it strategies, do to that punctual this? very mean question, new flexible in time, or for dividends, -- second a are we miss the seen? Suzano projects, a that, like the in trend current So -- are capital of Or of just And --

Aires Galhardo

you, Thank Marcio.

Let's try to explain.

we best Três the That's The volume mills? do increase X, terms the mix we our the next Imperatriz. following quarter, When For first of line Lagoas the our be this quarters. better Três line we of first In quarters, That's in our performance reason. Lagoas our performance cost. cash increase mills in have in we will costs volumes will it. best that mills. of X, in production stopped our

expense energy second our the cost. shutdowns that The volumes will in the the underlying a affect do cash the have opportunity that produce to quarters, reason the we in have next we do program the and the that market surplus with in to small open to And the fixed next costs, impact had we deliver more will better we in quarters. will take when this following sell for bigger Normally, the important maintenance in shutdowns quarter general will or we -- that mills in first quarters. maintenance we reduce a third

the the impact correct, of have of reduction offsets in wood from You a our mills the benefit are diesel. average the that to distance forest

we to that regular of to the talk scenario that that reason be the and Our until has is we scenario best. our cash remain current in reduction, forecast possibility prepared must a that hope but cash the could terms we have to cost now see worst cost. flattish I say That's the of in

Walter Schalka

question. you very your for Marcio, much thank

target a Fibria, billion. merged Just that our that We debt at our announced target per net debt, as that when ton to net as $XX.X market we our at have was be the and remembering billion. roughly that time $XX was that $XXX would time, Suzano

we since get bit would billion more. are little the of believe a we to We net We capacity. that that on We're bit it's we are $XX.X -- as previous possibilities Project, to we of with after to our billion. total development aiming debt a a open are now, reach $XX are during our believe Day our And the on debt XX we to capital to quarter. debt, allocation. $XX.X at announced was That close billion, little that, Right now very target be we Suzano close. close tons million getting close getting net Cerrado going our

allocation the shareholders. return projects in well reinvest the or higher dividends deliver to have future. have buybacks possibility We as our that good And on a in the that company regarding have capital the very could we we to

shareholders. are value we think now facilities our we Parkia Project doing I investments showing our track create can retrofitting on our with right our is that to or forest on our record as

land to are We XXX,XXX more our hectares bringing system. of than

million value the shareholders. higher reach think are I since Then our With combination possibility much this, creation I that, near are more avenues Then of we a the think biological growth. allocation a In to to and and avoid target our $XX of capital well on future combining in create higher every projects can possibilities terms a of the as market. shareholders on terms it's invest to of than our value that very of addition on create returns announced can we we payment our that that, we cash of net combination positive capital allocation going in year. to on assets to at

Operator

UBS. next comes The from with question Schmidt Cadu

Cadu Schmidt

Two the questions forest on assets? next law massive question that sales proposal have at production transaction of And Suzano the Walter. we can cost in views share Suzano's of moment the concessions of the comment law And Can is the to would companies a any year? approved? side. explore concentration concession any like benefits that these do inventories from allow for estimates private initial in Is Leo, can considering of please surpass on and right inventory the the public on credits some Walter, my to this? on this expect another interested you my in second second quarter acquiring you you position? to year please in downtimes assuming Brazil these and carbon have low

Leonardo Grimaldi

you strategy running we is several that tell I cannot our linked very our inventory, is it strategy. a regarding commercial row obvious as been can have so quarters reasons, What for in Cadu, disclose for forward putting levels, to maintain able pressure excellence to on service service of and all levels that good. keep a reference lot have suboptimum of inventory our the levels, with stock to be the is operations to team our which we we

Walter Schalka

for regeneration to stakeholders. on and believe impact the and society. that Cadu, we is Thank we it. reduce area future setup. We to part solution higher the But hand, question. cannot the emissions, And our address sequestration. world to need need your emissions the do all that. all to when impact society. it it's do need we you, And And situation procrastinate for do on of the We We regeneration, We at need We our believe solution. we believe do Suzano. the to of stakeholders, then in need change immediately. need we to our we to would We companies to We our consumers like buy climate that cannot issue of the part working the to postpone are on that of it. the and increase address the other the other the it is to carbon

these the We the concessions to these areas, our on are be believe part engaging solution. for team on public that of And discussions. degraded we public doing areas regenerated the

and situation, that Brazil government -- about keep major are the be of welcoming We and we a fact in are player on thinking the world the is government forest. regeneration the could to this incentivizing

that, I be in for think that the Brazilian would It we is going climate different And with asking good change And the living Thank be it to have addition that that, now. for social are in very you. we problems as crisis think I would economy. address very your think biomes. right are the to we I well question. positive

Operator

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

Walter Schalka

the session. you Thank us for much for very joining

to believe we value Suzano think it's -- and the to the very clear I We you better and right our the that have value like our can part the in culture, track and right -- the are with create the all keep to delivering we it, do to we touch. do even our remaining very show good even track society and right that record is speed part the we deliver We let's to a to track on there aim. it better. value value Thank believe of of in and that would This We shareholders. stakeholders. is share is all stakeholders. much, committed very are to on

Operator

Have is quarter Thank finished. Suzano nice first day. you. call a results conference

Suzano (SUZ) 7 May 222022 Q1 Earnings call transcript