Suzano (SUZB3) Q3 2024 earnings summary

Executive summary

• Net revenue in 3Q24 reached R$12.3 billion, up 7% sequentially and 37% year-over-year, driven by higher sales volumes and favorable exchange rates despite challenging pulp market conditions in China.

• Adjusted EBITDA was R$6.5 billion, up 4% from 2Q24 and 77% year-over-year, with a margin of 53%.

• The Ribas do Rio Pardo Unit began operations in July, exceeding efficiency expectations and contributing to cost dilution and sales growth.

• Leverage declined to 3.1x net debt/EBITDA in USD, despite net debt rising to $12.9 billion due to asset acquisitions and share buybacks.

• Strategic acquisitions included forestry assets, Lenzing, and Suzano Packaging US, supporting business strategy and competitiveness.

Financial highlights

• Pulp sales volume rose 6% year-over-year to 2,635 thousand tons; paper sales grew 9% to 360 thousand tons.

• Adjusted EBITDA per ton from pulp was R$2,162 (+85% YoY); from paper, R$2,294 (-3% YoY).

• Net income for the quarter was R$3.2 billion, reversing a loss in the prior quarter and up from a loss in 3Q23.

• Operating cash generation was R$4.4 billion, with adjusted free cash flow at R$3.8 billion.

• Net debt/Adjusted EBITDA was 3.2x in BRL and 3.1x in USD, with net debt at R$70.2 billion.

Outlook and guidance

• Ribas do Rio Pardo Unit ramp-up is on track, targeting 900 thousand tons in 2024 and 2 million tons by 12 months of operation.

• Capex guidance for 2024 is R$16.5 billion, with R$1.5 billion remaining for the Cerrado Project through 2025.

• Total operational expenditure for pulp is forecast at R$1,750/ton by 2027, with further cost reductions expected as Ribas ramps up.

• Focus remains on value generation from new assets, Cerrado Project delivery, and continued deleveraging.

• Enhanced resilience expected in all price scenarios following investment cycle completion.