Suzano (SUZ) 30 Jul 222022 Q2 Earnings call transcript

Company Profile

Participants

Aires Galhardo	Executive Management, Pulp Operation
Fabio Oliveira	Executive Officer, Paper & Packaging
Leonardo Grimaldi	Executive Officer, Commercial Pulp, People & Management
Marcelo Bacci	CFO, IRO
Walter Schalka	CEO
Carlos Anibal	Executive Officer, Forestry, Logistics & Procurement
Daniel Sasson	Itau BBA
Thiago Lofiego	Bradesco BBI
Leonardo Correa	Banco BTG Pactual
Carlos De Alba	Morgan Stanley
Rafael Barcellos	Santander
Caio Ribeiro	Bank of America
Marcio Farid	Goldman Sachs
Jon Brandt	HSBC

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 Second 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 would like to turn the floor over to the company's CEO. Mr. Please, may you proceed. Schalka, Walter

Walter Schalka

have morning, to good to learned the over of organization to all ask to colleagues in I the Feel about afternoon, world. Good Suzano. C Welcome free of pleased discussions us evening company. the results to our quarter everything here the session. good the level us with Q&A I'm the reviews results second on -- in the less outstanding I pleased I'm is the to that company. past we to the that to very the would with we announce that despite analysts to equal of line the of happiness sell-side like announce in are everyone. of pleased expectations. are results results, very

highlight to several going I'm KPIs last the over and -- have organization quarter. the of We

on terms almost volumes, of of of you in pulp million his tons this with the pulp. the is in issue we Leo part X.X First, had presentation. going address to sales

our going inflation have cash X.X BRL billion. as Aires cash cost of that side, we good the with you. have paper kept the on share like tell to operating On Despite extremely would share flow with quarter. BRL with with you is will XXX,XXX well that previous we are of we efforts. X.X the quarter you to volumes, tons facing, paper. EBITDA billion line Fabio We the in we reached on And this around

able we the the to at get same net keep we our returns a with fact X.X program, debt, buyback the of billion, we position have BRL robust -- liquidity there have despite Our we to $X.X And quarter dividends, billion. level this had on the we time $XX.X debt billion is net Cerrado, cash had previous Parkia, that very of at balance sheet. point were with of is

but the is on budget. share on we that Cerrado good to date, are now any we news are time, leverage the Our project X.Xx. detail further to is right And on not going

at this in With line that the the that project are XX% the commissioning over we expectations we on the sorry, -- pace developing XXXX. point defense sorry, that are previous now, forecast our on good the -- we same with right have we second keeping have period half with projection the physical a very going to progress time, second of the on on of in

Now I'm on that to pass going to business. view going Fabio and to our Packaging is share Paper

Fabio Oliveira

morning, Good Walter. everyone. Thanks,

and with through of management, the and on ever. presentation. the that Let's Paper business next quarter you to turn page Packaging a the unit, best had its share assertive to I'm combination has pricing Today, glad excellence operational

by carton seen served have logistics been and certain we the imposed most bottlenecks, has in solid international for inland continuously quarters, has markets supply recovery continued for and grades. limited writing which has supply has been logistics. be papers bar In operational Paper demand markets, As by limited by challenge print domestic and capped in operations shipping, previous paper in terminal and to Suzano. demand

pressures comparison in on write a XXXX to paperboard reduction strong the print X directed sales related compared over decline, of available X first shrunk Considering and the costs. demand the from quarter of inflationary and When X% drop as period of impact public to imported applications, QX paper looking whole data to the XX% second months only in to the Figures due that paper forward, second Moving given paper to year-over-year. an months X.X% XXXX. as quarter local shows the IBA sales published. containerboard IBA's increased XXXX, the estimate we the well market. have shows the producers' of demand first see domestic we of XX% continue a of of data not yet writing when mainly of same cash are print for to a period

volumes. totaling Focusing X% graphic, the reached XXX,XXX basis. able prices we X% a the the in a as for The was XX% tons, to quarter, impact the continued offset second increase record Inflation effectively quarter. year-over-year during on manage of cause volume inflation during a quarter. Suzano total than and Domestic QX in on higher paper Still, our of performance more on sales negative impact sales period. seen to also were than the last same has year, costs sales period our the to

quarter-over-quarter Our margins have basis. expanded X percentage a a year-over-year and points on

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

of a has compared and reached volumes XX% BRL and on our operational to and quarter. a result increase EBITDA revenue a a million, management year-over-year stability, As XX% XXX basis strong increase prices, last

half the and ton Paper in Our to reduced, of have been paper the our for business highs are for below level. continue remainder and Due QX running new all-time do and EBITDA of It this first year. to our strong sales EBITDA per XXXX, we are unit. so optimal inventories the Packaging should

resides our the and ahead, the maritime inflation in overcoming in Looking logistics continuous major pressure ports. of while shipments short-term minimizing exogenous disruptions challenge still

we on Last innovation first is export and products season in in deliver on for for demand but of demand have demand the goals XXXX, to year. this the side, second are Brazil, from the supportive we of On for in the strongest our half of continue our half see products year markets. our the pipeline progressed well track least, sales to and the not paper

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

Leonardo Grimaldi

Thanks, Fabio, and morning, good everyone.

results X our record our can a marked quarter. for second of presentation to business the unit for the by the move quarter second of that so 'XX address of Pulp EBITDA we Let's Page

but the shipping scenario, also below optimum international As persisting to strong, you in the our operational as internal adverse supply volumes quarter this and ability our can fulfillment setups, second million of spot our keep X.X logistics differentiated still graph, performance regions are totaled tons logistic to note Since very markets, only by navigate 'XX. sales taking offering was effective on mentioned customers. in markets. performance key levels, not shows ensuring we Walter, to left our inventories chain in withdrawing challenges Despite affecting from advantage supply our strong and Suzano's

of absolutely price of And the marked was continuity by the levels. they with presentation. European S&D on globally, on no quarter supply are strong hardwood for as the wood unplanned throughout paperboard low they and continued tightness tighter over consequence second of throughout order and The the which to running quarter, scenario hardwood which with availability softwood tightness grades. This production balance as customers, announce translates are effects in lockdowns in paper to continued events of our imminently keeps pulp with low also implemented producers of all persisting to intake hardwood our Russian initial COVID-related in the hardwood fully us were disruptions downtime the new reductions logistics the our stocks. while mainly to slide as concessions chain The in scenario as my quarter with figures of a and no Pulp pulp, their sanctions increases has Coming and the impacting view, which placing steady production the concentrated pulp balance, new back the inventories as of trending demand inventories markets even resulted world, such all China. the low led rounds at challenges quite supply the levels. in well during consequently constraints, a are and

Q, that our note lagging price basis still average during the than the second You due can export to the per price invoicing $XXX has higher all markets increases quarter increased is does mainly reflect of first This quarter which to XX% order ton of not books. 'XX. our the of during for our price

scenario past As strong intake we due concentration and into in generated making Asia. lower timely now has our been XX of to figures And to up planned quarter approximately been days run production the this the late tight us not downtimes order allowing has first logistics is a invoice our on maintenance months, to recover backlogs. deliveries, have reporting, our during us current

a a and was volumes new cost Our FX and appreciation BRL record mainly pressures. invoice higher for despite of X.X EBITDA prices billion, result of higher second quarter,

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

scenario top years. coming markets and unplanned to into Diving major XXXX. hardware always pulp On how We European increasing these are past of new in risks during related constraints, throughout inventories more war-related production a intensely the low well hardwood chain continue seeing of affecting due lower logistic the hardwood impact as the on factors, volumes to upcoming sanctions downtimes been which deeper as into upside as downtimes. consequence new should there a quarters supply and of inventories unplanned have projects they no from

we reporting the performance With to Ukraine we guarantee and planning main with are BHKP, where as the losses, contractual annual figures of reached X.X to segments, with more trending But seeing concern the visibility the our full customers higher solid to set still developments, year-to-date pulp bleached we In demand volumes the figures can of North is 'XX well are purchases in macroeconomic even levels, books million would like Our these due higher the producers solid is high tons of exports. continue Russia paper China, current seasonality the We raw the intake that paper to all-time for for demand the continuity production quarter. reporting. America, the cash historic producers forecast on as of of points lower at in and recognize and are now of pulp million pulp chains despite strong war. This globally to that paper tons. invite future to equivalent almost highs. estimates uncertainty year downtimes expected come to the related X.X cost our and greater I high which ground at quarter Aires said, that have are are period Europe or state material have when present their Order paper of a the supply continues midterm to now chemical higher order linked and for for the for post costs. their is reached which 'XX their is to and continue of recovering been for most to of board which us. What expected as

Aires Galhardo

Good you, morning, everyone. Leo. Thank

the sales at the BRL costs performing the of on and positive dilution costs, X% higher quarter, decreasing Energy are shared call. last the Imperatriz quarter, increased backed in maintenance excluding stood the in fixed the contributed mill. #X. FX of a We turbo mills rate first as the the first to the relation earnings reach the operation quarter under cost you The downtimes was ton, also in increase full in higher in capacity average period highlight per the at quarter. of the performance. generator second downtime, to Cash Slide to the with in XXX second The industrial including production main linked of expected by cash appreciation assets,

toll now The transportation up. to increase on mitigated of the mentioning and the natural higher XX price by the worth that wood was higher distance and ton costs related impact commodity Brent mainly caustic energy higher Brent chemical to in mostly price, costs operational which a the increase cash input took pressure to the and soda pressure that cost performance. partially gas. in forest-to-mill harvest due Looking operations. the per the price BRL The also It's factors price, especially consumption, was affects quarter

fixed cash On forest Brent inflationary XX% relevance, pressure, mostly quarter on the was distance comparison, offset the cost third-party to caustic by shorter of hit maintenance. explained period. production higher with meaning was ex average soda. on and second operations and in share costs the well-known than higher the All commodities, increase by labor cost the due and The on the and wood and unforeseen costs forest-to-mill lower particularly industrial is downtime by year-over-year 'XX the

the it going information of macroeconomic performance first words, also above, costs lagging our of of still scenario, production in average on would other by that to the considering means cash hovering as available of on effects year mostly XXXX, ahead be we low half average. see the Looking exogenous cost second -- on to In factor related commodities, pressure the turnover. currently over single some on inventories inflation, the described forward, half digit

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

Marcelo Bacci

Aires, you, Thank everyone. morning, good and

we buybacks despite and our managed between RCF. that, With net that of came cash million cash to Moving down to generation. the That's very keeps Slide We billion a result, with liquidity of X. show very quarter. CapEx, course, keep $X.X debt our our to significant that strong our and X.Xx, had leverage dividends solid acquisitions, during and $XX.X we the at share

light and schedule of protects X next interest to be we from continues at very global X debt years. Our have above rates, tenor of which the XX% the debt rising in fixed average rates. us years And our

have of Moving curve The opportunities to much how X.XX. providing Page billion than X.XX last now advanced lot an is average an with We very steeper the today hedges X. carry $X levels. in interesting of a hedging our operational we of protection We strategy. see and with FX call average more us than year, put at

of since In of X.XX portfolio the inflow was most the with XXX put quarter the of an $XXX at time hedges This going has quarter during X.XX. that second a of yielded is call at FX cash and us a that, X have the million at end addition the we quarter. average project below to BRL average strategy for Cerrado million an approaching

to Page Moving X.

is a allow CapEx most in already us current to cash sustaining the sizable billion We XXXX. already take advantage in the This our guidance more payments take advance to change. respond a to that incorporates there's of will BRL which our of reduce to financial and are And position some of advantage Caravelas for discretionary announcing XX.X for acquisitions, Parkia to lot revised CapEx change and That situation. announced make cost.

generation we the show We On X.X intend cash time. and market billion CapEx to advancing in we our how the XX, are billion cash taking of of second to we positive advantage X total have half much the that according competitiveness strategic had XXXX. avenues, this excess execute have land acquisitions executed of We to will year-to-date, our Page we scenario. BRL in over enhance that expect BRL

integration. always to the keep tissue and had and share credits We vertical helping potential have of completion, and been very XX good important respecting to budget initiatives Suzano Cerrado potentialize We a plant XX% on [ we in so leadership now The The monetizing project our Aracruz, support increased ]. involved new buyback into and with shares. million execution time on the pushing already launch in expansion new will business. our markets that of many forward, have tax advance other and us Ventures financial our

related pulp believe in to XX market. differs make aspects. Slide some from Finally, significantly we main wanted relevant to on commodities points X We the pulp other

First, there is structural demand growth.

as our goes have tissue of COVID which saw and to market, pulp during resilient a crisis. growing most inelastic Second, producers, very through we economic the cycles,

to producer pressure the than cost And marginal is pulp the significant downside. is the inflation, has the pulp under Third, commodities, been fourth, Therefore, lot on the see floor With the other volatility future the as price chart. on to the of lower buyback a exactly due of Q&A. set cost this based our for limiting can to program we decision fundamentals. that, close we increase and share open presentation

Operator

our Sasson Itau Daniel And BBA. first Instructions] [Operator from question from comes

Daniel Sasson

demand, more the great. the concerned on shutdowns you we've in mentioned resilient is question Europe. seen visibility affected you given the which results. on are down, energy tissue that's producers with about is region being we've capacity on how first Congrats have right? mainly for in Europe, some But read in backlog pulp that having My maybe that And Leo, the potential costs already which where strong, you to by is paper regions rising shut demand. strong

second energy is could than GDP would slightly negative investors second see reported suggest? are to The lines. rising Do quarter. weakening global a demand synchronized the is question, region who second to prices. we've I potentially seasonality GDP are talking at or with maybe concerned just China And looking trying mean pulp ahead. could on for you maybe a the challenging you from U.S. is that that all -- a So challenging that that weaker we know the more been many deceleration, target think Europe same looking suffer day. more beat I'd half like right? with concerned or if by if you growth to see my

Leonardo Grimaldi

this Leo for Daniel, here. Thank your questions. is you

energy behind you longer point semester the of of about only as upcoming due planning projects we considering remain our and should during moment no especially months, the monitoring losses touching first side are So which, mentioned upcoming the sense, planning, in also that I Before watched, I historically the weights uncertainty I a the this downtimes, have that me we for and even bit is us. speech, as this in very where to that will but always that? eventual add right? like hardwood not paper regions on and production, and we hardwood, tight we And already Initially, months the tell of of of the of consumption. unexpected attention. first to these customers as in and Because obviously tend very do possible just unprecedented, almost especially let the following demand main have than year. price That restrictions would see be of the in In variable what's reason an upcoming this on, logistics, pulp see to on tons between the were for the that to so And the more supply, constraints a looking well effect are of equation. markets the softwood they But how of been second European to Obviously, and we in that, points we 'XX. little And forward. we year this demand months. maximize point in greatest to tight. attention we seen year, the and adding of supply the of other were X how while supply are million was Europe differentials going going have completely pulp demand, us. of its we X But going my and one always today, to key many mean months points, supply are during aspects war-related the as top in when as were and forecasting some that is changed on restriction with has scenario now sense, as uncertain to things. pressured out a our in inflationary discussions hardwood also events top when continuing delays recession point the is on

XX% hardwood quite energy it's the risk. affects a the or that all, the the of our recovery and that only as eventual important fact mostly partially to to boiler. see affects we being in to moments than as months as curtailments say demand offtakers coming case, products not And also to the our be as gas as as seen monitoring more with such at is recessionary the are supply able maybe and discussions, with will we always to are also essential represent as But has specific successful plan obviously, pulp, have that curtailment tissue to that into difficult to note the it's other gas to needed upcoming be on to side total from control other reaction processes gas well customers lime the well pulp the in mill resilient -- are the demand, of process. mitigated in there relate But demand or but kiln We they it's packaging of First as in important the stabilities pulp is of key pulping and produce we the a that ensure run production that tend important And equation. pulp. in closely Europe. any that they hardwood And for times. in paper future say to months, announced

of So that on production the impact could also upcoming will also involve and months.

for ending For I for third levels with supply and of or reporting utmost purchasing in my quarter trending term, of at the their on case, year as the high mentioned the customers in agreements and and the Suzano. historical -- purchases, are the levels agreements books our short speech, of are

Operator

Bradesco Our comes Thiago BBI. next question from Lofiego,

Thiago Lofiego

definitely just X here continuing which at for level very here So highest Leo, ever or risks here. back close to pulp to the look downside questions Leo. at prices, are

second right? downtimes into next will looking to return until do or in the X up million say, to you mentioned and Europe course, the do and XX months? be let's the paper therefore months, How to this So is in a you XX think exports, in first next, year X.X in now, then pulp demand production risk and XXXX may question that is paper think risk risk the right? the And much a China with resuming unplanned Just a of prices? this question board of then, you tons to of Europe

Leonardo Grimaldi

a to we're bigger are market. bigger, print and the they Coming as a is writing papers What on had schedule. any these how much downtimes XXX,XXX added are, to supply it's at your and Coming reached year. that terms see in have impact exports, production smaller seeing indeed, very pulp in hard this ivory Then annually. producers board. for XXXX, of in than peak million was X related had to up tons today, China market the we tons there very thanks when X to say Historically, the events increasing, to will that X, run to producers sector months on they question And the close issue of of resuming bigger And to -- to already annually. much downtime, Thiago, related downtimes right? tends the interesting it's question. that time number and back especially has to be in to getting come year-over-year,

we in still more and tracking been due to of month that, see and Southeastern volume still volume high container South that we Asian in even of American month. is and logistic by markets, But European have rates, markets the this they very or that or Asia little gained exports have We allocated see very markets. rates American other most concentrated being on North markets. in effect And markets

Thiago Lofiego

may, you are inventories of tell mentioned actually board, can hear logistics not lot because There's What That's the of broader us you now. about about we from also often the And if perspective right? Is the there -- about a inventories situation. visible. low that floating when think about clear across we situation a inventory inventories pulp? I

Leonardo Grimaldi

Yes.

we when of in which numbers below we historic levels First all, up at ports, well. or levels inventories of come analyze producers even hands at or in to like the are Europe trending at low markets as some

when is that of to And customer the is very paper we global improve stocks are hard to forward significantly because effect the markets limited times into or a to America to quarters. to producers. the our we forecast. that globally. expect, in in solved of So any markets board our part tight. longer have due this and first view of also of not And we hands look all, logistics only should or be will months eventual be but But We to go that stock of point from next very view, very on recognize bases producers' coming paper or that in South lead the waters the markets don't

to going be same at resolved, it be once the all to at starts not it's resolved and once to time. markets Second,

term market. short come markets situation the our still to and don't back of to as see coming on eventually upcoming view So of we're these logistics a will a again, going we is for months. But of tight very to that products have any cadence how

Thiago Lofiego

that for or number a inventory floating a range? have You maybe

Leonardo Grimaldi

We hard forecasting it's don't. but XXX,XXX are We tons, account X.X anywhere to for. to forecast million -- very consultancy from companies

Operator

from comes Leonardo Our next Pactual. BTG Banco question Correa,

Leonardo Correa

Bacci question, Yes. announcement. a that -- on some pretty I comparison in I to in think Bacci, much it bringing in there the discussion. May, the the were announced clearly, But expectations think everyone market. I on it's when with right, other was X agrees that small, buyback, My companies first on right? mean,

of see we I revision medium understand -- also of company A And I share sources we everyone. of so this impacting the didn't short-term can people stabilizing. of your move? more over So moving buyback, been to Now this Last this there of quickly potentially for And accelerated, the the cost cost it's more spoke also given move, the levels expecting issue and buyback an a saying the earnings, mean, logic see or viewing being repurchase main company. for been that mean, be peaking that renewed, for and given are guys and of is is, over inflation, the the impression as quarters I this my you pushback source concern, of be and one the negative discussion a as points, second has can cash question tactical this one market right? been announced just this has if just clearly longer-term critical pace a would price? question, of the undervaluation the My to from concern my cost second. cash buyback more right, right? Or has program indefinite the past more term? So second into could you see this removed which if how -- market we viewing we out tactical to that Suzano are wanted quarter, super reached away it's and right? the levels is I had key running The for think industry been a

aggressive thinking more the other you is semester, time clear at prices, second be think So your the introduction, how just I in some pretty level path? looking over are commodities we're which severe this mentioned path declines, right? the Or ahead, have volatile, are prices you cost Those because think several towards during already but can the which right? corrected there so were I we will doubts than even correction of I bit, view mean many commodity stability? a questions. seeing high oil pulp a a the correcting further, there mean the cash even commodities, maintained? right, are

Marcelo Bacci

speaking. Marcelo is this Leo,

around problem among the to executed according of XX% most published in important it we allocation. best accretive size we believe decided buybacks, And the returns the data. of is the would terms so of the first we and be that of far, On capital one increase program have can this we the to that because

the have As than continuous and share cash the that generating planned we the a had that we you allocate we lot we the believe where buyback of slide of more pulp have market we And our challenge the this that know, have capital. presentation. view to returns been market, very to fundamentals the high of on the see last when as said, presenting according and I

So and also technical it now. short-term is cash it strategic the is availability have a a given of we that move move,

Aires Galhardo

Leo, Aires speaking. is this

Sul As in of that Mato cost. cash will related mentioned, of reduction part significant we challenging, reduction reductions could we be third-party considering do in preparing especially the the will reduction the years. coming cash part forecast us we caustic but market But have structure increase that to a significant information coming to our our keep the forest-to-mill in international it the the the year, associated second on strategy a same scenario, as our significant which consider the the supply see considering a us bring of see in be in we of cash soda Grosso -- that have coming and wood. Brent you are cost. But wood at confident make years, a Brent quarters, in could available that the with to when level and it and I caustic our perspective the soda macroeconomic we distance are the parts And in challenging cost will to very wood

Leonardo Correa

Okay.

answer I you're correct, semester these understood over But probably cash saying the see more over second given going the that -- So costs acquire that levels will just the if right? stabilize structural pulp at third-party to upcoming you're wood your months, to

Aires Galhardo

of we of part increase a maybe This the in world, can second half. Okay. single-digit average the consider lower

Walter Schalka

are the short the that term, on making we are supply. with is depending of Just But these to Brent And have potential doing commodity that structural the what retrofitting in it's Walter recession on is activities are on lower on we be the That the quarter. is chemicals. we we summary what to improvement the term. lagging on the commodities our on that, implication of the the effect on cost commodity a increasing due depending talking, seeing prices some the last since that, addition costs term, on be wood short the would on seeing cash been this would and long and

Leonardo Correa

Okay. clear. That's

minor X% between, So let's saying semester you're that X% second in quarter-over-quarter? there say, be the could and inflation basically

Aires Galhardo

[indiscernible]

Operator

comes Our Alba, next Morgan from de Carlos Stanley. question

Carlos de Alba

you this, for that half is audience. the just what coming Leo's to benefit the to in Just everyone cost clarify in think, second lower expect quarter? the please, the saying are on single so second in you I question, sure, make average of increase of And back to year versus the

Aires Galhardo

half. first the of average the Over

Carlos de Alba

Understood.

have for Europe, you One the hardwood, versus is Okay. that spread couple still current that then selling come for have see X the expenses. year down an expenses, but now softwood from of China coming now the the we of in come XX in down down. Great. last XX China, above On your a -- as peak seen, in the outlook little of the on And you think I bit selling is -- pressuring in average to supply years. questions. the the And just yes, below of And XX spread the questions. and sorry, we remainder recent the last then average terms increase. years quite do significantly has expenses? is prices, prices constraints how a Obviously, saw the continue, comment Can

think of had we the stand in you softwood and/or on the spread terms and cost eucalyptus? versus do that, that where now spread is the consumption of then hardwood that done relatively of high higher that of benefited hardwood given So prices. move And

a my strong exposure deceleration help didn't a in us identify meaningful Sorry, maybe global prices you hardwood because saw or global in of tissue or the but eucalyptus you prices we help sorry, global come ignorance, us a GDP? period when pulp time recession -- -- where in could could to down

Carlos Anibal

prices a bunker to explained can by higher Carlos, high basically Anibal. higher oil The is this Carlos selling due be prices.

you, and freight contracts, contracts the bunker remind rate the shipments, we will to have according our rates. long-term impact for bulk those Just

market. the to exposure no have We spot

the be basically can variation So all explained by higher again, bunker.

Carlos de Alba

Thank you, Carlos.

Leonardo Grimaldi

we your to believe questions recessionary why in fibers this answer more is among we I'm why -- again, moment. should regarding Leo spread we going here. are also Carlos, about more the be, and resilient

than customers related gap not First persist. or in should and globally greatest will market our in reduce our that favor of hardwood are prices softwood consequence, between hub this should the all, producers all if we today, But hardwood. Any recognized would substitution hardwood to are facing, our of tightness cost facing scenario in the pressures customers, in pulp. this to paper still which, other a into as softwood, mean that board fibers due or only view, positive gap

is demand much demand part was 'XX that say that, of obviously. was they year, closer bit monitored any historical and believe slight will What which it's levels, we 'XX, hardwood in year. a tissue in a quickly to but fiber gap can we reduction relate in the tissue the to have pulp, resilient still sense. down regarding like cannot that reduction And recession, cycles prices past positive over on demand next will obviously, was even the coming on during only There of tissue favor favor levels, how is that global what we already we what time. to historical reduction at in GDP the recovered but So yes, more substitution occur,

resilient the makes So more hardwood case we so our dependent models is moment. that fact believe in of all eventual tissue, an much that, on recessionary that

Operator

Our question comes Rafael from Santander. next Barcellos

Rafael Barcellos

your plant will of that you to the integrated to related in be which Espirito is the announced tissue question first and state Santo. operations new My

for company but back again, is expect pulp the a not switch And terms discussion going to of the pulp towards -- production mills should is And current demand. question to can products to pulp sorry in I'm been dissolving key So continue destroy changes as whether niche your I integrate my main price or pulp? the in has of pulp the affordability. that its opportunities affordability footprint mean, second more older related going such start the main question even to forward? mean are see you mark or to them we level I course, what would I that say

your that affordability share thoughts this? on in real So pulp could to could believe represent you the prices Do a risk please you short term?

Walter Schalka

going Walter pillars Rafael, This already our not I'd long-term to integration the every answer full market. thank plant, you now in one you much is for tissue is question. reaching very of answering strategy to in does the to of we we like to do meaning but that that business. It that are here. vertical your single capacity right mean announced are the

Espirito are credits We possibility operations, the fully our good expand considering and already tissue a of is state. the of approved. our time, At point this very not we in have monetizing to Santo project

some precedent have We conditions.

of to that to the One that is but investment we them the we create shareholders. of our are Board proceed this approval forecasting value are with going that, will to

Leonardo Grimaldi

of energy-related priority example, is components the affect Actually, the their the today pulp analyzing this not all Leo paper or cost pricing your producers. can issue related of and the the for that when producers in that questions several markets like top agendas are We agenda on cost they're to materials see in here in how demand. structure. of only is Rafael, eventually Europe,

only in And that pulp. still because like cost, they this with the and effect lowest moving over being receiving upcoming Europe. in new moved the and objective We months in China, their prices XX% mostly energy. indeed XX% levels closely our supportive the larger up paper despite related in have related of prices XX% but to several December. pulp, customers. you're follow margin especially I'm margins, and over already lead producers, news up producers, board as this times, the the well not in still have September or that lowest place view is saw from we due Tissue of to increases related to lower-cost to America at are are in increases And than mitigate We not aware high are if seeing to And sure going taking announced again, on shipping printing are our prices paper in is price price North been lagging markets even for with and in the several September that, December. XX% versus that more writing China the market. and increases

printing of demand of in very difficult price less consideration in is destruction, tissue, pulp Now taking demand associate hardwood their relating don't will which specialty that and papers it's terms rates, that tissue directly, in sense, again, to are to destruction to an that affect believe bit eventual offtakers points into big especially, grades, them expect rates that elastic as markets. we packaging well. is we to demand more that but Maybe a and in sense that and writing resilient

Operator

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

Caio Ribeiro

So inventories. in-transit my pulp question on first is

and consultants, industry that's around in allow logistics to million to reach more create transit inventory in ports become markets, has going which supply bountiful. Some tons they end once inventories X pulp X estimate of there's those that million normalize, this to to that perception

prices of asset And you you asset questions. announced second I'm are And risk nature. envision question latest Do also my acquisitions a as see is downside where this that curious any those for your if Caravelas. and project, my So transactions ahead. the requirements this some of Cerrado transactions you've Parkia additional forestry on just then Those you forestry assess for are right you with as given now?

Leonardo Grimaldi

is for -- time a your this thank Leo issue transit, you Caio, question. stocks to lead recognize here. longer assessing a sorry, related market. in Again, we This to lower

we number our no expect as vessels a first, because strictly see there model, additional transit risk the that more breakbulk to very analyze we that So globally, if of focus markets. available to in But obviously that. increase small to is downside we

and I at for have improvement will same that to we as very time, that not very see not an So vessels influence forward. everything of to in or all home come the might stated, the any, little to the the months, say to additional a And chance once even same scenario upcoming which on to this which, system. is ] up markets improvements to little, on have come will of scenario, it's -- again, vessels hard coming the bulk markets Again, [ very logistic any at second, probable. do are this happen, and see S&D

monitored. downside to the that risk be see don't we So as

Carlos Anibal

Caio, this for Carlos. your you is Thank question.

already that We bases. land CapEx we provided. And have just been opportunities that studying, or to expanding is in our guidance analyzing the included go expand

Walter Schalka

company decided the different company important Suzano important very to buy Fibria It's banking and scenario, merged for different would that to land to areas. since But in that the at sell mention for assets. this to opportunity the back something and was Parkia be now to to buy on very us these past. strategic Caravelas At belonged back reasons that we that the the and we same opportunity the have time,

banking, We we are banking included of the CapEx not seeing our but on expanding are future. opportunities land any buying, major programs in foreseeing some the again, land already for buyback new the

Operator

from Our Goldman next Marcio Sachs. Farid, question comes

Marcio Farid

second we quarter, invested when at after buyback I cash in guess Obviously, -- the expenses was my first X, expansion, to was in is question Marcelo the look and So to buybacks Bacci. very the maintenance comfortable sheet like flow or higher it Bacci, the the was company CapEx -- this right? buybacks, it cycle. navigate CapEx right? is position plus balance numbers free excess looks a like sounds in other cash

about cash Obviously, the So should as well to we buybacks third quarter Leo, at think dividends realization in still investors price excess a couple cash question, in that it is understand, maybe returns, Is to we we've us strong the about but quarters? Leo. just are think well. And to Can then a into divert forward? be maybe going asking next of expected that consider Marcelo? and to trying quarters, as way lot that. right it, lot my the I past discussed look second I

guess get details it's I to So important you. from more

price levels Should we quarters? next effect are stabilizing obviously, the second right? to is and see to the as especially into realization as price think going we going lag about versus as the Because up, benchmark approach when well So prices expect benchmark peers Suzano we get as more half and closer how well, should to pronounced.

So those questions. are my

Marcelo Bacci

program. buybacks, for Cerrado we because had the questions. mainly flow but Free project, and because Marcelo acceleration your cash you was not speaking. X, We event was the of cash had extraordinary impacted of And Thank the on also, of the we X.X of the CapEx an transaction, which flow the That BRL Parkia side. CapEx the settlement that dividend period. an the the had billion. in payment is only

that results flow CapEx XXXX. forward, we for buyback the the generate most I well. the Looking unlock backlog just the third said, discussed flow to think cash excess for of very the the But year into is, as cash announced. with probably The this dividends given generation BRL enable guarantees quarter at of I be have that will in in that program to prices, that have buyback us as diverted CapEx, of that we X point, billion the additional second very be will -- the half and we good are at good

fact the we generate this sizable in that amount growing additional that cash program through have return or We a to are cash given a both and the expect coming cash, we're with to making these a additional investments and back of buyback returns market. as

Leonardo Grimaldi

bringing going my is bit, about have I'm to some presentation our I recovering what and a here. this additional mentioned information Marcio, Leo talk in price realization as well.

reflect comparing our obviously spikes of on in but obviously ones XX price to Last these mix the these -- of have coming still contracts, our the of them that, which month quarter price all we books. markets, reason, pulp deliveries, is they're implemented quarter, second we positive no our to of challenges my volatility the The in being lagging doing, our I in that we with to we during speech, the reductions fully some to prices believe to or main invoicing what our mentioned before. we during not then As mentioned these I our mentioned customers. important, expect and it's have the that of presentation, regional now. we all order have in approximately quarter. absolutely every do no all price have I comment which our increases we the were announced concessions years, price obviously, facts And before the during we're is running due invoicing increases cannot to restate I even third been as and reducing in with peers, managing forward sector. and due and impact to placing to with logistics that back obviously, been are different again, but not price in already had Asian orders has And logistics Coming moments price them now production scenario to intake months lower already, several which months concentration our all are maintenance their general planned our first my to the on us the not the our level. is That late to or are we been realization on more backlogs, much -- order we like order the days intake when has price this top and Challenging maintenance strong recover calendar figures of several that timely I in generated recurrently mechanisms, in strategy fact tied and quarter very reach realization, customer to quarter calendar will in to make for scenario. higher the had the have have able fact that, On during base. for the of better pricing due past incorporating advocating least, price realization seeing that not that

Operator

HSBC. Our next question comes from Jon Brandt with

Jon Brandt

But Marcelo, I'm no Is that billion about was was Should due first, recorded I But to the significant quarters? Leo, remember quarter? talked if tax predominantly going something on? pulp. rate around -- was future XX% this forward, the correctly, maybe X.X going we volatility benefit quarter. rate We BRL XX you how discussed. joined already exchange Or probably question, or tax and was there losses just where or assuming curious should in sorry X% late. off. going exchange And X, if losses back that we and ago, the a kind rates then picking left bit the years second I about exclusively of about think that of during my just this X%. up, else

commodities, other where historically. increased So certainly to volatility, been compared still while versus has low it's

just wondering can other I'm market than seen volatility markets. certainly, the growing consuming the So and given X share Asia future you than in is more pulp I remember. over more we've that that And how in years see past

to I lock about guess, in to months customers in on that with consider one, you XX And prices, just order so two, a longer-term you if that. you to the certain maybe would could reduce long-standing with little XX comment And then if you could comment volatility. have relationships bit trying

would you shed could if great. -- topic, If you that but light a could sensitive on I be know that, any it's

Marcelo Bacci

the the and Jon, which variation the tax exactly settled Marcelo realization speaking. tax time to are this is X.X during period. billion a is The variation of due a in between not BRL It's FX deferred asset, is difference transactions FX the benefit. that the

a recorded asset. So it is a as that deferred tax time is difference

Leonardo Grimaldi

commodities. also this Jon, -- due user China several going that we see packaging look said increasing downstream view, are a volatility. there's to this what's before, pulp recognize more other of and that is lot lot When on the And on here. pulp, of Bacci and as than is customers And a just And [indiscernible] market on, and pulp least, today, related the they to a will in prices, levels. we [indiscernible]. going buy cannot demand which on And a have in all of there's and had been being markets close big resale European a at price we demand. actors They our related addition on, have relevance of other have also pulp obviously that rather what in cycles what American going as is going relationship hardwood higher we we that the also South market. by producers, Leo rely American producers fact need trade in what of see to noticed We per that's pulp, track in to ton [indiscernible]. And producers that's as difference resilient. consumption announced to the in those to truly but on speculative part of action pegged in at than but downturn if future not huge prices well. we [indiscernible] much of or price are is that see and our exceeds current well lot tissue last see on are again, what customers rates to And [indiscernible], future pulp, its recognize that most we reporting future trend. the volatility to the are market as we on see paper prices obviously is and on the we North daily not to $XXX trending pulp, softwood absolutely And not pulp compared which

globally. relevance the small China of day-to-day in of dynamics that pulp and see we to So markets the

Operator

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

Walter Schalka

XX,XXX to the thank us members XX,XXX better well, much you of for Thank helping day. is the company you be as would I company members team that single the session. every and like for the joining very to indirect team

value very Thank pleased everyone. continue day. humbled to have shareholder we results good to are a and work with you stakeholder very deliver but to that and much, We very the

Operator

This Suzano's Have conference day. results for call finished. the a quarter nice is second

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