Suzano (SUZB3) Q2 2024 earnings summary

Executive summary

• Adjusted EBITDA reached R$6.3 billion in 2Q24, up 38% sequentially and 60% year-over-year, driven by higher pulp prices, increased sales volumes, and favorable FX rates, with operating cash generation of R$4.5 billion.

• Net income was a loss of R$3.8 billion, mainly due to negative FX and derivative impacts on financial results.

• Strategic investments included a 15% stake in Lenzing (EUR230 million) and entry into the US packaging market via Pactiv (US$110 million), with options for future control.

• The Cerrado Project, the world's largest single-line pulp mill, began operations on time and on budget, with expected production of 900,000 tons in 2024 and 2 million tons annualized within 12 months.

Financial highlights

• Net revenue was R$11.5 billion in 2Q24, up 22% sequentially and 25% year-over-year, with 80% from exports.

• Adjusted EBITDA margin reached 55%, up from 48% in 1Q24 and 43% in 2Q23.

• Net debt stood at R$66.6 billion (US$12.0 billion), with net debt/Adjusted EBITDA at 3.2x in USD, down from 3.5x in 1Q24.

• Operating cash generation was R$4.5 billion (+80% QoQ, +104% YoY).

• Free cash flow was R$601 million, impacted by higher capex and negative derivative cash adjustments.

Outlook and guidance

• The Cerrado Project is expected to produce 900,000 tons in 2024 and reach 2 million tons annualized within 12 months.

• Total operational expenditure for pulp is forecast at R$1,750/ton by 2027, in line with the plan.

• No refinancing risk until 2029, with a well-aligned cash flow hedging portfolio.

• Capex guidance for 2024 remains unchanged, focused on the Cerrado Project and maintenance.

• Expecting continued strong demand for print, writing, and carton board in Brazil, supported by seasonality and upcoming elections.