EX-99.2 3 d604917dex992.htm EX-99.2

EX-99.2

Table of Contents

Exhibit 99.2

Adjusted EBITDA¹ in 2Q18 of R$1,449/ton, leading the industry

São Paulo, August 9, 2018. Suzano Papel e Celulose (B3: SUZB3), one of the largest integrated pulp and paper producers in Latin America, announces today its consolidated results for the second quarter of 2018 (2Q18).

MAIN HIGHLIGHTS

• Operating Cash Generation² and Adjusted EBITDA² set new records in the quarter: R$1.28 billion and R$1.57 billion, respectively.

• Strong performance in the pulp segment, supported by the effect from exchange variation: adjusted EBITDA¹/ton of R$1,646/ton (+59.4% on 2Q17).

• Marginal increase in cash cost in LTM: R$593/ton, 0.8% higher than in LTM to 2Q17.

• Solid results and new increases in paper prices in both the domestic and international markets: adjusted EBITDA¹/ton of R$892/ton (+25.8% on 2Q17).

• Truck drivers’ strike: production loss of approximately 80,000 tons of market pulp and of approximately 25,000 tons of paper in 2Q18, which adversely affected sales.

• Investments: conclusion of the acquisition of around 9,500 hectares in rural areas and 1,200,000 m³ of wood in São Paulo state from Duratex S.A.

• Transaction with Fibria: authorization granted without restrictions by Federal Trade Commission (U.S. antitrust agency, case formally filed at CADE (Brazil) and SAMR (China) and pre-filing in European Union and Turkey, issuance of declaration of effectiveness by the Securities Exchange Commission of the United States of America.

• Financing of Fibria Transaction: 6^th debentures issue (R$4.7 billion | US$1.3 billion) and reduction of financial commitment to US$4.4 billion.

Financial Data (R$ million)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				6M18				6M17				D  Y-o-Y
Net Revenue			3,204				2,530				26.6	%			2,999				6.8	%			6,203				4,784				29.7	%
Adjusted EBITDA¹			1,573				1,157				36.0	%			1,528				2.9	%			3,101				2,004				54.7	%
Adjusted EBITDA Margin¹			49.1	%			45.7	%			3.4 p.p.				51.0	%			-1.9 p.p.				50.0	%			41.9	%			8.1 p.p.
Net Financial Result			(3,970	)			(678	)			485.6	%			(157	)			2422.8	%			(4,127	)			(553	)			646.6	%
Net Income			(1,849	)			199				-1031.3	%			813				-327.4	%			(1,036	)			649				-259.7	%
Operating Cash Generation²			1,279				910				40.5	%			1,265				1.1	%			2,543				1,532				66.0	%
Net Debt /Adjusted EBITDA¹ (x)			1.7 x				2.7 x				-1.0 x				1.7 x				0.0 x				1.7 x				2.7 x				-1.0 x

Operational Data (‘000 tons)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				6M18				6M17				D  Y-o-Y
Sales			1,085				1,188				-8.7	%			1,160				-6.4	%			2,245				2,369				-5.2	%
Pulp			802				917				-12.5	%			876				-8.5	%			1,678				1,832				-8.4	%
Paper			284				272				4.3	%			284				-0.2	%			568				537				5.8	%
Production			1,134				1,215				-6.7	%			1,215				-6.7	%			2,349				2,363				-0.6	%
Pulp			821				931				-11.9	%			920				-10.8	%			1,741				1,805				-3.6	%
Paper			313				283				10.5	%			295				6.1	%			608				558				9.1	%

1 Excludes non-recurring items. | ² Operating Cash Flow corresponds to Adjusted EBITDA less sustaining capex. | ³ Considers results of Consumer Goods Unit.

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2Q18 EARNINGS RELEASE

The consolidated quarterly information has been prepared in accordance with the Securities and Exchange Commission (CVM) and Accounting Standards Committee (CPC) standards and is in compliance with International Accounting Standard (IFRS) issued by the International Accounting Standard Board (IASB). The data contained in this document was obtained from the financial information as made available to the CVM. The operating and financial information is presented based on consolidated numbers in Reais (R$). Summaries may diverge due to rounding. Non-financial data, such as volume, quantity, average price, average price, in Reais and Dollars, were not reviewed by independent auditors.

CONTENTS
Pulp Business Performance			3
Pulp Sales Volume and Revenue			3
Pulp Cash Cost			4
Pulp Segment EBITDA			5
Pulp Operating Cash Generation and ROIC			5
Paper Business Performance			6
Paper Sales Volume And Revenue			6
Paper EBITDA			7
Paper Operating Cash Flow and ROIC			7
Economic and Financial Performance			8
Net Revenue			8
Production			8
Cost of Goods Sold			9
Operating Expenses			9
Adjusted EBITDA			9
Financial Income and Expenses			10
Derivative Transactions			10
Transaction with Fibria			12
Net Income (Loss)			13
Indebtedness			13
Investments			14
Cash Flow and ROIC			15
Capital Markets			17
Fixed Income			18
Rating			18
Events			19
Events in the Period			19
Subsequent Events			20
Upcoming Events			21
IR Contacts			21
Appendices			22
Appendix 1 – Operating Data			22
Appendix 2 – Consolidated Statement of Income			23
Appendix 3 – Consolidated Balance Sheet			24
Appendix 4 – Consolidated Statement of Cash Flow			25
Appendix 5 – EBITDA			26
Appendix 6 – Segmented Statement of Income			27

Corporate Information			29
Forward-Looking Statements			29

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2Q18 EARNINGS RELEASE

PULP BUSINESS PERFORMANCE

PULP SALES VOLUME AND REVENUE

Data from the World 20 Report of the Pulp and Paper Products Council (PPPC) show that, in 2Q18, global pulp shipments grew 3.3% on the same period last year. Meanwhile, global eucalyptus pulp shipments grew 3.4%. Suzano sold 801.8 thousand tons of market pulp in 2Q18, 8.5% less than in 1Q18 and 12.1% less than in 2Q17 due to downtime at Mucuri Unit (line 1) and the truck drivers’ strike.

In 6M18, the industry’s pulp shipments amounted to 25.4 million tons, up 1.9% on the year-ago period, while eucalyptus shipments came to 10.8 million tons, increasing 4.5% on 6M17. Pulp sales came to 1.7 million tons in the first half of the year, down 8.4% on 6M17, reflecting the partial rebuilding of the Company’s inventories.

The level of global pulp inventories reported by the PPPC ended June at 35 days.

The average net pulp price in USD in 2Q18 was US$745/ton, increasing US$14/ton (+1.9%) from 1Q18 and US$168/ton (+29.2%) from 2Q17. In 6M18, the price stood at US$737/ton, increasing US$195/ton (+36.0%) from 6M17. The higher net pulp price is mainly explained by the positive and solid fundamentals of the international pulp industry.

The average net price in BRL in 2Q18 was R$2,688/ton, increasing 13.3% and 45.0% compared to 1Q18 and 2Q17, respectively, supported mainly by the higher list price for pulp and by the depreciation in the BRL against the USD. In 6M18, the net price stood at R$2,524/ton, increasing 46.6% from 6M17, reflecting the weaker BRL and the consecutive increases in the pulp list price in US dollar.

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2Q18 EARNINGS RELEASE

PULP CASH COST

The consolidated cash cost of market pulp production in 2Q18 was R$630/ton excluding downtimes and R$683/ton including downtimes.

Consolidated cash cost of market pulp production in the last 12 months was R$593/ton excluding downtime (vs. R$589/ton in LTM 2Q17) and R$629/ton including downtime (vs. R$607/ton in LTM 2Q17).

Cash cost in 2Q18 rose by R$63/ton compared to 2Q17 (+11.0%), mainly reflecting the increases in input costs and fixed costs caused by the lower produced volume.

¹  In line with market practices and for comparison purposes, the methodology for calculating cash cost was changed in 1Q18 and does not consider the depletion of the standing timber of third parties.

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2Q18 EARNINGS RELEASE

PULP SEGMENT EBITDA

Pulp Business		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				LTM 2Q18				LTM 2Q17				D  Y-o-Y
Adjusted EBITDA (R$ ‘000)			1,319,798				946,576				39.4	%			1,285,290				2.7	%			4,672,289				2,731,478				71.1	%
Sales Volume (ton)			801,751				916,529				-12.5	%			876,037				-8.5	%			3,460,733				3,545,829				-2.4	%
Adjusted EBITDA (R$/ton)			1,646				1,033				59.4	%			1,467				12.2	%			1,350				770				75.3	%

The performance of Adjusted EBITDA from pulp in the above periods reflects primarily the higher pulp list price and the effect from exchange variation in the period.

PULP OPERATING CASH GENERATION AND ROIC

The profitability of the pulp business was leveraged by the pulp price and by the effect from exchange variation in the period.

Pulp Business (R$ ‘000)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				LTM 2Q18				LTM 2Q17				D  Y-o-Y
Adjusted EBITDA			1,319,798				946,576				39.4	%			1,285,290				2.7	%			4,672,289				2,731,478				71.1	%
Sustaining Capex			(246,419	)			(208,028	)			18.5	%			(213,801	)			15.3	%			(958,169	)			(829,675	)			15.5	%
Operating Cash Flow			1,073,378				738,549				45.3	%			1,071,489				0.2	%			3,714,120				1,901,802				95.3	%
Cash Taxes2																							(66,950	)			(4,175	)			1503.4	%
Monetization of ICMS																							24,637				—				n.a.
Capital Employed																							18,246,021				17,782,371				2.6	%
Asset																							18,927,168				18,506,827				2.3	%
Liabilities																							681,147				724,456				-6.0	%
ROIC1 (%)																							20.1	%			10.7	%			9.5 p.p.

¹  ROIC = (Operating Cash Generation – Cash taxes) / Capital Employed (assets – liabilities). | ² Income and Social Contribution taxes.

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2Q18 EARNINGS RELEASE

PAPER BUSINESS PERFORMANCE

PAPER SALES VOLUME AND REVENUE

According to the Forestry Industry Association (Ibá), domestic sales of Printing & Writing paper and Paperboard declined 1.3% in 2Q18 compared to the same period of 2017, while imports fell 13.3%.

In 6M18, sales by local producers grew 0.5% from 6M17, while imports contracted 1.1%.

Suzano’s paper sales amounted to 283.6 thousand tons in 2Q18. Due to truck drivers’ strike the sales volume was in line compared to 1Q18. Compared to 2Q17, sales advanced 4.3%, driven primarily by tissue paper sales volume and the incorporation of the volumes from Facepa. In the year to date, sales volume came to 567.7 thousand tons, advancing 5.8% on 6M17.

The average net paper price in the domestic market in 2Q18 stood at R$3,755/ton, representing increases of R$415/ton (12.4%) and R$593/ton (18.7%) compared to 1Q18 and 2Q17, respectively, in line with the upward trend in prices in the global market. In 6M18, the average net paper price in the domestic market stood at R$3,552/ton, up 12.0% on the year-ago period.

In USD, the average net paper price in the export market in 2Q18 was US$989/ton, representing increases of US$44/ton (4.7%) and US$101/ton (11.4%) from 1Q18 and 2Q17, respectively. In BRL, the average net paper price in the export market in 2Q18 was R$3,567/ton, representing increases of 16.4% and 25.0% from 1Q18 and 2Q17, respectively, explained by the effect from exchange variation in the period. In 6M18, the average net paper price in the export market stood at US$965/ton, up 10.7% from 6M17.

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2Q18 EARNINGS RELEASE

PAPER EBITDA

Paper Business		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				LTM 2Q18				LTM 2Q17				D  Y-o-Y
Adjusted EBITDA (R$ ‘000)			252,932				192,831				31.2	%			242,993				4.1	%			1,039,706				924,591				12.5	%
Sales Volume (ton)			283,610				271,948				4.3	%			284,041				-0.2	%			1,211,521				1,163,156				4.2	%
Adjusted EBITDA (R$/ton)			892				709				25.8	%			855				4.2	%			858				795				8.0	%

The performance of Adjusted EBITDA from paper in 2Q18 compared to 2Q17 is explained by the price increases successfully implemented in the domestic and international markets. Note that the paper business is incorporating the results from the consumer goods business, which is still in the ramp-up phase.

PAPER OPERATING CASH FLOW AND ROIC

The profitability of the paper business benefitted from higher paper prices in the domestic and export markets, which were offset by the higher costs and expenses generated primarily by the consumer goods business, which is still in the ramp-up phase.

Paper Business (R$ ‘000)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				LTM 2Q18				LTM 2Q17				D  Y-o-Y
Adjusted EBITDA			252,932				192,831				31.2	%			242,993				4.1	%			1,039,707				924,591				12.5	%
Sustaining Capex			(47,517	)			(38,361	)			23.9	%			(49,818	)			-4.6	%			(227,287	)			(189,382	)			20.0	%
Operating Cash Flow			205,415				154,470				33.0	%			193,176				6.3	%			812,420				735,209				10.5	%
Cash Taxes2																							(8,138	)			(7,754	)			4.9	%
Monetization of ICMS																							87,883				—				n.a.
Capital Employed																							6,520,944				5,608,484				16.3	%
Asset																							7,292,306				6,196,674				17.7	%
Liabilities																							771,362				588,190				31.1	%
ROIC1 (%)																							13.7	%			13.0	%			0.7 p.p.

¹  ROIC = (Operating Cash Generation – Cash taxes) / Capital Employed (assets – liabilities). | ² Income and Social Contribution taxes.

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2Q18 EARNINGS RELEASE

ECONOMIC AND FINANCIAL PERFORMANCE

NET REVENUE

Suzano’s net revenue in 2Q18 amounted to R$3,203.8 million. Pulp and paper sales in the quarter amounted to 1,085.4 thousand tons, decreasing by 6.4% from 1Q18 and by 8.7% from 2Q17. In 6M18, net revenue came to R$6,202.7 million, with 2,245.4 thousand tons of paper and pulp sold.

Despite the lower volume sold in 2Q18, the performance of consolidated net revenue (6.8%) compared to 1Q18 is explained mainly by the effect from exchange variation in the period.

Compared to 2Q17, net revenue growth was driven by the higher pulp price in USD (average FOEX in Europe in 2Q18 of US$1,044 vs. US$783 in 2Q17), by the higher paper price in USD and in BRL and by the effect from exchange variation.

The net revenue growth in 6M18 compared to 6M17 reflects the weaker BRL and the higher pulp list price.

PRODUCTION

Production (‘000 tons)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				6M18				6M17				D  Y-o-Y
Market Pulp			821				931				-11.9	%			920				-10.8	%			1,741				1,805				-3.6	%
Paper			313				283				10.5	%			295				6.1	%			608				558				9.1	%
Total			1,134				1,215				-6.7	%			1,215				-6.7	%			2,349				2,363				-0.6	%

In 2Q18, Line 1 of the Mucuri Unit (Bahia) underwent scheduled maintenance downtime, which affected pulp and paper production volumes in relation to prior quarters.

During the quarter, the Company registered a total production loss of approximately 80 thousand tons of market pulp and approximately 25 thousand tons of paper during the truck driver’s strike, when mills were shut down or operating at reduced capacity. No downtimes are scheduled for the Company’s Units in 3Q18.

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2Q18 EARNINGS RELEASE

COST OF GOODS SOLD

Cost of goods sold (COGS) in 2Q18 amounted to R$1,678.6 million or R$1,546.6/ton. Compared to 2Q17 and 1Q18, COGS increased by 10.9% and 5.8% respectively, reflecting the lower sales volume in the period. In 6M18, COGS came to R$3,265 million, 6.0% higher than in 6M17, also due to the lower sales volume in the period.

COGS (R$ ‘000)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				6M18				6M17				D  Y-o-Y
Pulp			980,974				920,630				6.6	%			963,168				1.8	%			1,944,142				1,894,359				2.6	%
Paper			697,598				592,733				17.7	%			622,758				12.0	%			1,320,356				1,185,549				11.4	%
Consolidated			1,678,574				1,513,364				10.9	%			1,585,926				5.8	%			3,264,500				3,079,908				6.0	%
COGS (R$/ton)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				6M18				6M17				D  Y-o-Y
Pulp			1,224				1,004				21.8	%			1,099				11.3	%			1,159				1,034				12.1	%
Paper			2,460				2,180				12.9	%			2,192				12.2	%			2,326				2,209				5.3	%
Consolidated			1,547				1,273				21.5	%			1,367				13.1	%			1,420				1,300				9.2	%

OPERATING EXPENSES

Expenses (R$ ‘000)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				6M18				6M17				D  Y-o-Y
Selling Expenses			150,305				94,418				59.2	%			121,957				23.2	%			272,262				195,042				39.6	%
General and Administrative Expenses			203,667				120,691				68.8	%			147,353				38.2	%			351,020				232,288				51.1	%
Total Expenses			353,972				215,109				64.6	%			269,310				31.4	%			623,282				427,330				45.9	%
Total Expenses/Sales Volume (R$/ton)			326				181				80.2	%			232				40.5	%			278				180				53.8	%

Total selling and administrative expenses stood at R$326/ton in 2Q18, representing increases of 80.2% in relation to 2Q17 and of 40.5% in relation to 1Q18.

Compared to 2Q17, selling expenses increased by 59.2% or R$55.9 million, reflecting the additional expenses with structuring the consumer goods business of approximately R$31 million and the higher expenses with logistics in the domestic market due to hikes in freight costs after the truck drivers’ strike. Compared to 1Q18, the consumer goods business accounted for an increase of approximately R$22 million.

The increases in general and administrative expenses compared to both 2Q17 (+68.8%) and 1Q18 (+38.2%) are explained by the higher expenses with profitability-based compensation due to higher stock prices (approximately R$50 million) and by the expenses with the consumer goods structure, especially after the incorporation of Facepa and the expenses with the Fibria transaction (approximately R$16 million).

ADJUSTED EBITDA

Consolidated		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				LTM 2Q18				LTM 2Q17				D  Y-o-Y
Adjusted EBITDA (R$ ‘000)			1,572,729				1,156,566				36.0	%			1,528,283				2.9	%			4,139,266				3,673,227				12.7	%
EBITDA Margin (%)			49.1	%			45.7	%			3.4 p.p.				51.0	%			-1.9 p.p.				66.7	%			76.8	%			-10.1 p.p.
Sales Volume (ton)			1,085,360				1,188,477				-8.7	%			1,160,078				-6.4	%			3,586,895				4,708,985				-23.8	%
Adjusted EBITDA (R$/ton)			1,449				973				48.9	%			1,317				10.0	%			1,154				780				47.9	%

The growth in Adjusted EBITDA in 2Q18 compared to the above periods was driven primarily by the higher pulp list price, the weaker BRL and the higher paper prices in the domestic market.

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2Q18 EARNINGS RELEASE

FINANCIAL INCOME AND EXPENSES

Resultado Financeiro (R$ mil)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				6M18				6M17				D  Y-o-Y
Financial Expenses			(325,521	)			(278,630	)			16.8	%			(234,273	)			38.9	%			(559,794	)			(560,793	)			-0.2	%
Interest on loans and financing (local currency)			(61,163	)			(105,834	)			-42.2	%			(59,458	)			2.9	%			(120,621	)			(230,968	)			-47.8	%
Interest on loans and financing (foreign currency)			(127,764	)			(122,192	)			4.6	%			(115,868	)			10.3	%			(243,632	)			(237,990	)			2.4	%
Capitalized interest1			232				2,046				-88.7	%			304				-23.7	%			536				3,519				-84.8	%
Other financial expenses			(136,826	)			(52,649	)			159.9	%			(59,251	)			130.9	%			(196,077	)			(95,354	)			105.6	%
Financial Income			45,007				83,611				-46.2	%			36,726				22.5	%			81,733				182,286				-55.2	%
Interest on financial investments			40,788				78,817				-48.2	%			33,082				23.3	%			73,870				170,517				-56.7	%
Other financial income			4,219				4,794				-12.0	%			3,644				15.8	%			7,863				11,769				-33.2	%
Monetary and Exchange Variations			(1,139,051	)			(348,746	)			226.6	%			(28,406	)			3909.9	%			(1,167,457	)			(177,905	)			556.2	%
Foreign exchange variations (Debt)			(1,471,701	)			(372,288	)			295.3	%			(37,911	)			3782.0	%			(1,509,612	)			(119,367	)			1164.7	%
Other foreign exchange variations			332,650				23,542				1313.0	%			9,505				3399.7	%			342,155				(58,538	)			-684.5	%
Derivative income (loss), net2			(2,550,067	)			(134,152	)			1800.9	%			68,603				-3817.1	%			(2,481,464	)			3,669				-67733.2	%
NDF			(1,144,478	)			11,110				-10401.3	%			—				n.a.				(1,144,478	)			11,054				-10453.5	%
Zero-Cost Collars			(825,852	)			(104,309	)			691.7	%			24,937				-3411.8	%			(800,915	)			(15,095	)			5205.8	%
Foreign-Currency Debt Hedge			(579,698	)			(40,047	)			1347.5	%			43,500				-1432.6	%			(536,198	)			5,686				-9530.1	%
Other3			(39	)			(906	)			-95.7	%			166				-123.7	%			127				2,024				-93.7	%
Net Financial Result			(3,969,632	)			(677,917	)			485.6	%			(157,350	)			2422.8	%			(4,126,982	)			(552,743	)			646.6	%

1 Capitalized interest due to construction in progress.

²  Variation in mark-to-market adjustment plus adjustments paid and received, considering the end-of-month exchange rate (R$/US$3.8558 on 6/30/2018).

³  Other includes LIBOR operations.

Financial expenses increased by 38.9% in 2Q18 compared to 1Q18, explained by the effects from exchange variation in the period and by the expenses with the commitment for financing facilities worth US$9.2 billion made available for the business combination with Fibria. The 16.8% increase compared to 2Q17 reflects the lower interest rates in Brazil and the financial expenses with said commitment.

Financial income in 2Q18 compared to 1Q18 was adversely affected by the lower interest rates in Brazil.

Inflation adjustment and exchange variation generated a loss of R$2,550 million in the quarter due to the effect from foreign exchange variation, with a negative accounting effect from the mark-to-market adjustments of the portion of liabilities denominated in foreign currency, with cash effects limited to maturities or amortizations of liabilities.

The Company posted a net financial expense of R$3,969.6 million in 2Q18, compared to the net financial expense of R$157.4 million in 1Q18 and the net financial expense of R$677.9 million in 2Q17.

DERIVATIVE TRANSACTIONS

Suzano carries out derivatives transactions exclusively for hedging purposes.

The Company’s currency exposure policy seeks to minimize the volatility of its cash generation and to impart greater flexibility to cash flow management. The policy currently stipulates that surplus dollars may be partially hedged (up to 75% of exchange variation exposure over the next 18 months) using plain vanilla instruments (Zero Cost Dollar and NDF) and matched with dollar inflows.

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Zero Cost Dollar transactions minimize the adverse effects from slight variations in exchange rates. The instrument protects an exchange variation range that is favorable to cash flow, within which the Company does not pay or receive the adjustment. In addition to protecting the Company in such scenarios, this characteristic makes it possible to capture higher benefits on export revenue in any scenarios of U.S. dollar appreciation. The Company constantly monitors the market and analyzes the attractiveness at any given time of fully or partially reversing the transaction.

At June 30, 2018, the value of the principal of operations involving forward dollar sales through Zero Cost Collars (ZCC) was US$2,315 million, whose maturities are distributed from April 2018 to October 2019 and were contracted in a range from R$3.00 to R$4.58.The current scenario of volatility in the BRL/USD exchange rate makes this the most adequate strategy for protecting the Company’s cash flow.

Cash Flow Hedge

Maturity

Avarege Strike Put

Avarege Strike Call

Notional (million)

Zero-Cost Collars

3Q18

3.12

3.96

USD 295

Zero-Cost Collars

4Q18

3.07

4.02

USD 325

Zero-Cost Collars

1Q19

3.11

4.00

USD 380

Zero-Cost Collars

2Q19

3.18

4.00

USD 275

Zero-Cost Collars

3Q19

3.40

4.12

USD 520

Zero-Cost Collars

4Q19

3.30

4.08

USD 370

Zero-Cost Collars

1Q20

3.90

4.33

USD 150

Total

USD 2,315

The Company also uses currency and interest rate swaps to mitigate the effects from exchange and interest rate variations on the balance of its debt and on its cash flow. Contracts swapping different interest rates and inflation indexes may be entered into as a way to mitigate the mismatch between financial assets and liabilities.

At June 30, 2018, the Company held US$815.3 million in swaps of CDI for a fixed rate in USD. In 2Q18, derivative transactions posted a loss of R$793 million.

Debt Hedge		Maturity				Receive		Pay		Notional (million)
Swap			4Q20			Brazilian Real CDI		US Dollar Fixed		USD 815
Total										USD 815

In addition to hedge operations for cash flow and debt, we carried out new hedge operations for the transaction with Fibria. All derivative instruments to hedge the transaction are plain vanilla, as approved by the Company’s Derivatives Policy.

At June 30, 2018, the value of the principal of operations involving forward dollar sales through NDFs was US$3,500 million, with average forward rate of R$3.64, whose maturities are distributed from April 2019 to November 2019, as well as ZCCs, whose value of the principal was US$1,250 million, with maturities distributed from May 2019 to October 2019 and contracted in a range from R$3.50 to R$4.16. At June 30, 2018, the Company held US$1,250 million in swaps of CDI for a fixed rate in USD.

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Fibria’s Operation - Hedge		Maturity		Strike Range / Avarega Foward / Index		Notional (million)
Zero-Cost Collars		2Q19		3.50 – 4.02		USD 200
Zero-Cost Collars		3Q19		3.50 – 4.16		USD 900
Zero-Cost Collars		4Q19		3.50 – 4.00		USD 200
NDF		2Q19		3.80		USD 900
NDF		3Q19		3.60		USD 2.200
NDF		4Q19		3.54		USD 400
Swap		2Q26		Brazilian Real CDI—US Dollar Fixed		USD 1,250
Total						USD 6,050

TRANSACTION WITH FIBRIA

On March 15, 2018, the Company announced a transaction with Fibria worth R$29.0 billion (US$8.8 billion, at the exchange rate on the day) and informed that it already had credit facilities worth US$9.2 billion to cover the cash needs of the transaction, whose disbursement is subject, among other conditions, to the consummation of the Transaction. The guaranteed financing is divided into two tranches: the first (term loan) in the amount of US$2.3 billion with term of six years and the second (bridge loan) in the amount of US$6.9 billion with term of three years.

In 2Q18, the Company carried out its 6th debentures issue (R$4.7 billion | US$1.25 billion) and, given the strong cash generation in the period and the guaranteed term loan (US$2.3 billion), as of June 30, 2018, the amount to be disbursed under the bridge loan was R$17.8 billion (US$4.6 billion).

¹ Cash tranche: each Fibria’s share will receive R$52.50, to be adjusted from 03/15/2018 until signing to closing. | ² Commitment: US$ 2,3 billion, exchange rate on 06/30/2018 (R$3.8558/US$).

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NET INCOME (LOSS)

The Company posted a net loss of R$1,849.0 million in 2Q18, compared to the net income of R$813.1 million in 1Q18 and the net income of R$198.5  million in 2Q17.

INDEBTEDNESS

On June 30, 2018, gross debt stood at R$18.0 billion (90.6% long-term maturities and 9.4% short-term maturities), with 55.6% denominated in foreign currency and 44.4% in local currency. The percentage of gross debt denominated in foreign currency, considering the adjustment for derivatives, was 96.3%.

Net debt stood at R$9.9 billion (US$2.6 billion) on June 30, 2018, compared to R$9.3 billion (US$2.8 billion) on March 31, 2018.

Debt (R$ ‘000)		06/30/2018				06/30/2017				D  Y-o-Y				03/31/2018				D  Q-o-Q
Local Currency			7,979,130				4,110,856				94.1	%			3,608,021				121.1	%
Short Term			1,142,945				755,891				51.2	%			636,178				79.7	%
Long Term			6,836,184				3,354,965				103.8	%			2,971,844				130.0	%
Foreign Currency			9,983,341				9,531,570				4.7	%			9,038,085				10.5	%
Short Term			551,469				1,239,730				(55.5	%)			796,796				(30.8	%)
Long Term			9,431,872				8,291,840				13.7	%			8,241,289				14.4	%
Gross Debt			17,962,471				13,642,426				31.7	%			12,646,106				42.0	%
(-) Cash			8,027,522				3,630,769				121.1	%			3,392,005				136.7	%
Net Debt			9,934,949				10,011,657				(0.8	%)			9,254,101				7.4	%
Net Debt/Adjusted EBITDA1 (x)			1.7x				2.7x				(1.0x	)			1.7x				0.0x

1 Excludes nonrecurring items.

Suzano contracts debt in foreign currency as natural hedge, since net operating cash generation is denominated in foreign currency. This structural exposure allows it to contract export financing in USD to match financing payments with receivable flows from sales.

Suzano actively and expressly demonstrates its commitment to deleverage sustainably and to adopt adequate and efficient structures and costs for its market positioning and operating and managerial capacity.

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The ratio of net debt to Adjusted EBITDA in BRL stood at 1.7x on June 30, 2018, stable in relation to March 31, 2018. In USD, the ratio of net debt to Adjusted EBITDA was 1.5x on June 30, 2018, compared to 1.7x on March 31, 2018. The reduction in the ratio in USD is explained by the effect from exchange variation in the period.

In June 2018, the average cost of debt in USD was 4.6% p.a. (debt in BRL adjusted by the market swap curve). The average term of consolidated debt ended the quarter at 90 months (vs. 85 months in March 2018).

INVESTMENTS

Capital expenditure amounted to R$1,282.0 million in the year to date, R$557.6 million of which was invested in industrial and forest maintenance. Expenditures on the Structural Competitiveness and Adjacent Businesses projects came to R$610.5 million, which primarily consisted of the acquisition of Facepa (R$267.9 million), the acquisition of land and forests from Duratex (R$150.3 million) and the Tissue (Maranhão and Bahia states) and Lignin projects.

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For 2018, capex is estimated at R$2.8 billion, of which R$1.2 billion corresponds to sustaining capex and R$1.6 billion to the Adjacent Businesses and Structural Competitiveness projects.

Capex (R$ ‘000)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				6M18				6M17				D  Y-o-Y
Sustaining			293,937				246,388				19.3	%			263,619				11.5	%			557,555				471,871				18.2	%
Industrial Maintenance			68,780				46,532				47.8	%			54,779				25.6	%			123,559				103,381				19.5	%
Forestry Maintenance			225,156				199,856				12.7	%			208,840				7.8	%			433,996				368,490				17.8	%
Structural Competitiveness and Adjacent Business			232,373				112,084				107.3	%			378,169				-38.6	%			610,541				234,782				160.0	%
Other			47,148				29,570				59.4	%			66,795				-29.4	%			113,943				45,617				149.8	%
Total			573,457				388,042				47.8	%			708,582				-19.1	%			1,282,040				752,270				70.4	%

CASH FLOW AND ROIC

(R$ ‘000)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				LTM 2Q18				LTM 2Q17				D  Y-o-Y
Adjusted EBITDA			1,572,729				1,156,566				36.0	%			1,528,283				2.9	%			5,711,995				3,673,228				55.5	%
Sustaining Capex			(293,937	)			(246,388	)			19.3	%			(263,619	)			11.5	%			(1,185,456	)			(1,019,057	)			16.3	%
Operating Cash Flow			1,278,792				910,178				40.5	%			1,264,664				1.1	%			4,526,539				2,654,171				70.5	%

Suzano’s operating cash generation (Adjusted EBITDA less sustaining capex) amounted to R$1.3 billion in 2Q18 and R$4.5 billion in the last 12 months. The variations in the comparison periods are explained by the depreciation in the BRL against the USD, the higher pulp list price, the higher paper price in the international and domestic markets and the consolidation of Facepa’s results as from 2Q18.

Losses in market pulp and paper production and sales volumes caused by the truck drivers’ strike adversely affected operational cash generation and ROIC.

Consolidated ROIC stood at 18.4%. The 7.1 p.p. increase compared to the 12 months to 2Q17 is explained by the higher profitability of the pulp segment due to depreciation in the BRL against the USD, the higher pulp price and the successful implementation of paper price increases in the international and domestic markets. The consumer goods business unit (Tissue) adversely affected profitability, since it is still in the ramp-up phase.

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Consolidated ROIC (R$ ‘000)		LTM 2Q18				LTM 2Q17				D  Y-o-Y
Operating Cash Flow			4,526,541				2,654,170				70.5	%
Cash taxes²			(75,088	)			(11,930	)			529.4	%
Monetization of ICMS			112,521				—				n.a.
Capital Employed			24,766,964				23,390,854				5.9	%
Asset			26,219,474				24,703,500				6.1	%
Liabilities			1,452,510				1,312,646				10.7	%
ROIC1 (%)			18.4	%			11.3	%			7.1 p.p.

¹  ROIC = (Operating Cash Generation – Cash taxes) / Capital Employed (assets – liabilities).

² Income and Social Contribution taxes.

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CAPITAL MARKETS

On June 30, 2018, Suzano’s common stock (SUZB3) was quoted at R$44.97/share. The Company’s stock is listed on the Novo Mercado, the listing segment of the São Paulo Exchange (B3) with the highest corporate governance standards.

Source: Bloomberg.

Source: Bloomberg.

On June 30, 2018, the Company’s capital stock was represented by 1,105,826,145 common shares (SUZB3) traded on the B3, of which 12,042,004 were treasury shares. Suzano’s market capitalization was R$49.7 billion on June 30, 2018. In 2Q18, the free-float stood at 42.5% of the total capital.

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* Latin America excluding Brazil.

FIXED INCOME

		Unit				Jun/17				Mar/18				Jun/18
Suzano 2021—Price			USD/k				105.9				105.3				104.1
Suzano 2021—Yield			%				4.0				3.9				4.3
Suzano 2026—Price			USD/k				103.4				104.9				102.0
Suzano 2026—Yield			%				5.3				5.0				5.4
Suzano 2047—Price			USD/k				101.3				113.3				113.5
Suzano 2047—Yield			%				6.9				6.0				6.8
Treasury 10 years			%				2.3				2.7				2.9

RATING

Agency

National Scale

Global Scale

Outlook

Fitch Ratings

AAA

BBB-

Stable

Standard & Poor’s

brAAA

BBB-

Stable

Moody’s

Aaa.br

Ba1

Stable

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EVENTS

EVENTS IN THE PERIOD

The Material Fact notices and the Notices to the Market mentioned below are available on the website of the Securities and Exchange Commission of Brazil (CVM) and on the Company’s IR website (www.suzano.com.br/ri).

Conclusion of the acquisition of land and forests in the State of São Paulo

On April 27, 2018, the Company informed its shareholders and the market that, complementing the Material Fact notice published on February 5, 2018, it had concluded the acquisition of approximately nine thousand five hundred hectares (9,500 ha) of rural areas and one million, two hundred thousand cubic meters (1,200,000 m³) of forests from Duratex.

Truck drivers’ strike

On May 24, 2018, the Company informed to its shareholders and the general market that the production and distribution of its products had been adversely affected by the truck drivers’ strike in Brazil. The Company emphasized it was taking all measures necessary to minimize any impacts from this situation.

Shutdown of operations

On May 28, 2018, pursuant to CVM Instruction 358, of January 3, 2002, as amended, and complementing the Notice to the Market disclosed on May 24, 2018, the Company informed its shareholders and the market that, despite adopting all measures to minimize the effects from the truck drivers’ strike, Suzano had been forced to shut down its operations due to such event.

Resignation of member of the Board of Directors

On May 28, 2018, the Company informed its shareholders and the general market that Mr. Marco Antonio Bologna had tendered his resignation as a member of the Board of Directors and the Audit Committee of the Company. His letter of resignation was considered and accepted by Suzano’s Board of Directors. For the time being, the outgoing Director will not be replaced, with Suzano’s Board of Directors formed by eight (8) members, who were elected at the Annual Shareholders’ Meeting of the Company held on April 26, 2018.

Amendment to the Calendar of Corporate Events

On May 28, 2018, in response to Official Letter/CVM/SEP/nº02/2018 issued by the Securities and Exchange Commission of Brazil (CVM), dated February 28, 2018, the Company informed its shareholders and the general market that it had amended its Annual Calendar of Corporate Events 2018, to bring forward, to May 28, 2018, the date for the filing of its Reference Form, which previously was scheduled for May 30, 2018.

Authorization from U.S. antitrust authority

On June 1, 2018, the Company informed its shareholders and the general market that it had received a notification from the Federal Trade Commission (FTC), the antitrust authority of the United States, of the early conclusion of the analysis of the transaction between Suzano and Fibria, which constitutes an authorization without restrictions for the transaction in the United States of America.

Gradual resumption of operations

On June 1, 2018, the Company informed its shareholders and the general market that, on May 31, 2018, it had started to gradually resume operations at all of its industrial plants, including the distribution and invoicing of its products.

Production Loss

On June 7, 2018, the Company informed its shareholders and the general market that it had a total production loss of approximately 80 thousand tons of market pulp and approximately 25 thousand tons of paper during the truck driver’s strike, when units were shut down or operating partially.

6^th Debentures Issue

On June 26, 2018, the Company informed its shareholders and the general market that, complementing the Material Fact notice published on March 16, 2018, its Board of Directors had approved, in connection with the transaction to combine the shareholder bases of the Company and Fibria Celulose S.A. through a

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corporate reorganization as disclosed in such Material Fact notice, the 6^th issue of debentures of the Company, in the amount of R$4,681,100,000.00, with a maturity of eight years, yield of 112.5% of the CDI rate and issue date of June 29, 2018.

SUBSEQUENT EVENTS

The Material Fact notice mentioned below is available on the website of CVM and on the Company’s IR website

(www.suzano.com.br/ri).

Acquisition of land and forests in the State of São Paulo

On July 2, 2018, the Company informed its shareholders and the general market that exercised the option to acquire around twenty thousand (20,000) hectares of rural areas and five million, six hundred thousand cubic meters (5,600,000 m³) of Duratex’s forests, for R$749.4 million, adjusted in accordance with the Contract.

Protocol and Justification of Merger

On July 26, 2018, the Company informed its shareholders and the general market that the Board of Directors of Suzano, among other matters, approved the execution of the Merger Agreement (“Merger Agreement”) between Suzano, Fibria Celulose S.A. (“Fibria”), and Eucalipto Holding S.A. (“Holding”), which establishes the terms and conditions of the corporate restructuring that will enable the combination of the operations and shareholding bases of Suzano and Fibria, which is the object of the Commitment to Vote and Assumption of Obligations signed on March 15, 2018 and announced by the Company through a Material Fact notice on March 16, 2018 (“Operation”).

Auction of Itaqui Port (State of MA)

On July 27, 2018, the Company informed its shareholders and the general market that the bid submitted by it in connection with Auction 03/2018 conducted Brazil’s National Water Transport Agency (“ANTAQ”) received the best classification.

Export Credit Note

On July 31, 2018, the Company informed its shareholders and the general market that it obtained financing from Banco Safra S.A. through the issue of an Export Credit Note (“NCE”), in the total amount of seven hundred seventy million, six hundred thousand reais

Reduction of Financial Commitment

On July 31, 2018, the Company informed its shareholders and the general market that it approved, in connection with the transaction aimed at combining the operations and shareholder bases of the Company and Fibria Celulose S.A. (“Fibria”) through a corporate restructuring process, as per the terms disclosed in said Material Fact notice (“Operation”), the reduction from six billion, nine hundred million (US$ 6,900,000,000.00) to four billion, four hundred million (US$ 4,400,000,000.00) of the existing firm financial commitment with certain international financial institutions to finance the cash portion of the Operation, whose disbursement is subject, among other conditions, to the consummation of the Operation.

Declaration of Effectiveness by the Securities Exchange Commission of the United States of America

On August 9, 2018, the Company informed its shareholders and the general market that the declaration of effectiveness was issued on August 8, 2018 by the Securities Exchange Commission of the United States of America (SEC) for the registration statement filed by Suzano with SEC for purposes of calling and holding and approval the Extraordinary Shareholders’ Meetings of Suzano and of Fibria, to be held at first call on September 13, 2018, as provided for in the Call Notices published on August 9, 2018, of the proposed corporate reorganization for the combination of operations and shareholders bases of Suzano and of Fibria, which was the object of the Voting Agreement and Other Obligations entered into on March 15, 2018 disclosed by the Companies through Material Facts published on March 16, 2018, pursuant to the terms and conditions of the protocol and justification entered into by and between the managers of Suzano, Fibria and Eucalipto Holding S.A., approved by the Boards of Directors of Suzano and Fibria during the meetings held on July 26, 2018 and disclosed by the Companies on the same date.

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UPCOMING EVENTS

Earnings Conference Call (2Q18)

Date: August 9, 2018 (Thursday)

Portuguese (with simultaneous translation)		English
9:30 a.m. (Brasília time)		9:30 a.m. (Brasilia time)
8:30 a.m. (New York time)		8:30 a.m. (New York time)
1:30 p.m. (London time)		1:30 p.m. (London time)
Tel: +55 (11) 3193-1001 or (11) 2820-4001		Tel: +1 (646) 828-8246 (access code: Suzano)

Please connect 10 minutes before the conference call is scheduled to begin.

The conference call will be held in English, feature a slide presentation and be transmitted simultaneously via webcast. The access links will be available on the Company’s Investor Relations website (www.suzano.com.br/ri).

If you are unable to participate, the webcast link will be available for future consultation on the Company’s Investor Relations website.

IR CONTACTS

Marcelo Bacci

Rafael Mastrocola

Danielle Cheade

Fernanda Brienza

Matheus Chiderolli

Tel: +55 (11) 3503-9061

ri@suzano.com.br

www.suzano.com.br/ri

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APPENDICES

APPENDIX 1 – Operating Data

Revenue breakdown (R$ ‘000)		2Q18				2Q17				D  Y-o-Y				1Q18				D  Q-o-Q				6M18				6M17				D  Y-o-Y
Exports			2.312.191				1.821.048				27,0	%			2.192.050				5,5	%			4.504.241				3.350.956				34,4	%
Pulp			2.001.072				1.558.835				28,4	%			1.899.779				5,3	%			3.900.851				2.862.978				36,3	%
Paper			311.119				262.213				18,7	%			292.271				6,4	%			603.390				487.978				23,7	%
Domestic Market			891.602				708.822				25,8	%			806.809				10,5	%			1.698.412				1.432.821				18,5	%
Pulp			154.107				139.315				10,6	%			176.547				-12,7	%			330.654				289.611				14,2	%
Paper			737.496				569.507				29,5	%			630.262				17,0	%			1.367.757				1.143.210				19,6	%
Total Net Revenue			3.203.793				2.529.870				26,6	%			2.998.859				6,8	%			6.202.653				4.783.777				29,7	%
Pulp			2.155.179				1.698.150				26,9	%			2.076.326				3,8	%			4.231.505				3.152.589				34,2	%
Paper			1.048.615				831.720				26,1	%			922.533				13,7	%			1.971.147				1.631.188				20,8	%
Sales volume (tons)		2Q18				2Q17				D  Y-o-Y				1Q18				D Q-o-Q				6M18				6M17				D Y-o-Y
Exports			823.272				918.389				-10,4	%			890.383				-7,5	%			1.713.655				1.810.758				-5,4	%
Pulp			736.056				826.529				-10,9	%			795.030				-7,4	%			1.531.086				1.634.664				-6,3	%
Paper			87.215				91.861				-5,1	%			95.353				-8,5	%			182.568				176.094				3,7	%
Paperboard			12.279				16.779				-26,8	%			14.332				-14,3	%			26.611				30.036				-11,4	%
Printing & Writing			74.936				75.081				-0,2	%			81.021				-7,5	%			155.957				146.058				6,8	%
Domestic Market			262.089				270.088				-3,0	%			269.694				-2,8	%			531.783				557.755				-4,7	%
Pulp			65.694				90.000				-27,0	%			81.007				-18,9	%			146.701				197.254				-25,6	%
Paper			196.394				180.088				9,1	%			188.688				4,1	%			385.082				360.500				6,8	%
Paperboard			30.139				28.132				7,1	%			30.021				0,4	%			60.160				58.274				3,2	%
Printing & Writing			143.457				144.808				-0,9	%			148.364				-3,3	%			291.822				288.867				1,0	%
Other paper1			22.798				7.148				218,9	%			10.303				121,3	%			33.101				13.359				147,8	%
Total sales volume			1.085.360				1.188.477				-8,7	%			1.160.078				-6,4	%			2.245.438				2.368.512				-5,2	%
Pulp			801.751				916.529				-12,5	%			876.037				-8,5	%			1.677.787				1.831.919				-8,4	%
Paper			283.610				271.948				4,3	%			284.041				-0,2	%			567.651				536.594				5,8	%
Paperboard			42.418				44.911				-5,6	%			44.353				-4,4	%			86.771				88.309				-1,7	%
Printing & Writing			218.393				219.889				-0,7	%			229.385				-4,8	%			447.779				434.925				3,0	%
Other paper1			22.798				7.148				218,9	%			10.303				121,3	%			33.101				13.359				147,8	%
Average net price (R$/ton)		2Q18				2Q17				D Y-o-Y				1Q18				D Q-o-Q				6M18				6M17				D Y-o-Y
Exports			2.809				1.983				41,6	%			2.462				14,1	%			2.628				1.851				42,0	%
Pulp			2.719				1.886				44,1	%			2.390				13,8	%			2.548				1.751				45,5	%
Paper			3.567				2.854				25,0	%			3.065				16,4	%			3.305				2.771				19,3	%
Domestic Market			3.402				2.624				29,6	%			2.992				13,7	%			3.194				2.569				24,3	%
Pulp			2.346				1.548				51,5	%			2.179				7,6	%			2.254				1.468				53,5	%
Paper			3.755				3.162				18,7	%			3.340				12,4	%			3.552				3.171				12,0	%
Total			2.952				2.129				38,7	%			2.585				14,2	%			2.762				2.020				36,8	%
Pulp			2.688				1.853				45,1	%			2.370				13,4	%			2.522				1.721				46,6	%
Paper			3.697				3.058				20,9	%			3.248				13,8	%			3.472				3.040				14,2	%

¹  Paper from other manufacturers sold by the distributor and tissue paper.

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2Q18 EARNINGS RELEASE

APPENDIX 2 – Consolidated Statement of Income

Consolidated Financial Statement (R$ ‘000)		2Q18				2Q17				D Y-o-Y				1Q18				D Q-o-Q				6M18				6M17				D Y-o-Y
Net Revenue			3.203.795				2.529.870				26,6	%			2.998.859				6,8	%			6.202.654				4.783.778				29,7	%
Cost of Goods Sold			(1.678.574	)			(1.513.364	)			10,9	%			(1.585.926	)			5,8	%			(3.264.500	)			(3.079.908	)			6,0	%
Gross Profit			1.525.221				1.016.506				50,0	%			1.412.933				7,9	%			2.938.154				1.703.870				72,4	%
Gross Margin			47,6	%			40,2	%			7,4 p.p.				47,1	%			0,5 p.p.				47,4	%			35,6	%			11,8 p.p.
Operating Expense/Income			(354.713	)			(208.188	)			70,4	%			(279.230	)			27,0	%			(633.943	)			(426.865	)			48,5	%
Selling Expenses			(150.305	)			(94.418	)			59,2	%			(121.957	)			23,2	%			(272.262	)			(195.042	)			39,6	%
General and Administrative Expenses			(203.667	)			(120.691	)			68,8	%			(147.353	)			38,2	%			(351.020	)			(232.288	)			51,1	%
Other Operating Income (Expenses)			(673	)			2.917				-123,1	%			(9.867	)			-93,2	%			(10.540	)			(4.357	)			141,9	%
Equity Equivalence			(68	)			4.004				-101,7	%			(53	)			28,3	%			(121	)			4.822				-102,5	%
EBIT			1.170.508				808.318				44,8	%			1.133.703				3,2	%			2.304.211				1.277.005				80,4	%
Depreciation, Amortization & Depletion			374.932				332.615				12,7	%			384.938				-2,6	%			759.870				698.343				8,8	%
EBITDA			1.545.440				1.140.933				35,5	%			1.518.641				1,8	%			3.064.081				1.975.348				55,1	%
EBITDA Margin (%)			48,2	%			45,1	%			3,1 p.p.				50,6	%			-2,4	p.p.			49,4	%			41,3	%			8,1 p.p.
Adjusted EBITDA1			1.572.729				1.156.566				36,0	%			1.528.283				2,9	%			3.101.011				2.003.916				54,7	%
Adjusted EBITDA Margin1			49,1	%			45,7	%			3,4 p.p.				51,0	%			-1,9 p.p.				50,0	%			41,9	%			8,1 p.p.
Net Financial Result			(3.969.632	)			(677.917	)			485,6	%			(157.350	)			2422,8	%			(4.126.982	)			(552.743	)			646,6	%
Financial Expenses			45.007				83.611				-46,2	%			36.726				22,5	%			81.733				182.286				-55,2	%
Financial Revenues			(325.521	)			(278.630	)			16,8	%			(234.273	)			38,9	%			(559.794	)			(560.793	)			-0,2	%
Exchange Rate Variation			(1.139.051	)			(348.746	)			226,6	%			(28.406	)			3909,9	%			(1.167.457	)			(177.905	)			556,2	%
Net Proceeds Generated by Derivatives			(2.550.067	)			(134.152	)			1800,9	%			68.603				-3817,1	%			(2.481.464	)			3.669				-67733,3	%
Earnings Before Taxes			(2.799.124	)			130.401				-2246,6	%			976.353				-386,7	%			(1.822.771	)			724.262				-351,7	%
Income and Social Contribution Taxes			950.153				68.143				1294,4	%			(163.226	)			-682,1	%			786.927				(75.571	)			-1141,3	%
Net Income (Loss)			(1.848.971	)			198.544				-1031,3	%			813.127				-327,4	%			(1.035.844	)			648.691				-259,7	%
Net Margin			-57,7	%			7,8	%			-65,6 p.p.				27,1	%			-84,8 p.p.				-16,7	%			13,6	%			-30,3 p.p.

¹  Excluding non-recurring items.

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2Q18 EARNINGS RELEASE

APPENDIX 3 – Consolidated Balance Sheet

Assets (R$ ‘000)		06/30/2018				03/31/2018				12/31/2017				09/30/2017				06/30/2017
Current Assets
Cash and Cash Equivalent			3.624.737				2.000.336				1.076.833				1.439.776				1.001.883
Financial Investments			4.402.785				1.391.669				1.631.505				2.410.173				2.628.886
Accounts Receivable			2.325.251				2.389.398				2.303.810				1.862.202				1.891.698
Inventories			1.477.406				1.321.436				1.207.961				1.408.791				1.336.768
Recoverable Taxes			365.551				320.038				306.140				423.523				415.056
Prepaid Expenses			132.027				182.593				37.016				52.317				51.823
Other Current Assets			451.108				278.188				233.610				398.580				339.164
Total Current Assets			12.778.865				7.883.658				6.796.875				7.995.362				7.665.278
Non-Current Assets
Other Accounts Receivable			1.022.984				816.295				770.792				793.692				784.042
Biological Assets			4.697.542				4.579.097				4.548.897				4.248.989				4.228.301
Investments			6.643				6.712				6.764				5.706				5.716
Property, Plant and Equipment			16.648.885				16.415.548				16.211.228				16.195.420				16.172.254
Intangible Assets			389.624				375.027				188.426				204.202				208.777
Total Non-Current Assets			22.765.678				22.192.679				21.726.107				21.448.009				21.399.090
Total Assets			35.544.543				30.076.337				28.522.982				29.443.371				29.064.368
Liabilities and Equity (R$ ‘000)		06/30/2018				03/31/2018				12/31/2017				09/30/2017				06/30/2017
Current Liabilities
Accounts Payable			646.969				600.564				610.476				641.537				614.587
Loans and Financing			1.694.415				1.432.974				2.115.067				1.785.368				1.995.621
Tax Liabilities			281.530				185.541				125.847				199.090				147.489
Salaries and Payroll Taxes			204.016				154.829				196.467				194.926				177.470
Other Payable			1.277.304				696.906				660.506				593.297				673.846
Total Current Liabilities			4.104.234				3.070.814				3.708.363				3.414.218				3.609.013
Non-Current Liabilities
Loans and Financing			16.268.057				11.213.131				10.076.789				11.347.543				11.646.806
Deferred Taxes			682.040				1.857.237				1.789.960				1.775.084				1.548.263
Provision			797.148				726.336				706.652				675.062				649.041
Other Liabilities			2.981.611				742.506				619.664				625.390				783.753
Total Non-Current Liabilities			20.728.856				14.539.210				13.193.065				14.423.079				14.627.863
Shareholders’ Equity
Share Capital			6.241.753				6.241.753				6.241.753				6.241.753				6.241.753
Capital Reserve			380.563				380.564				394.801				197.837				197.475
Treasury shares			(218.265	)			(218.265	)			(241.088	)			(241.006	)			(241.006	)
Profit Reserve			2.897.784				2.927.760				2.927.760				1.657.125				1.657.125
Equity Valuation Adjustment			2.395.646				2.295.927				2.298.328				2.273.885				2.308.364
Retained Earnings/Accumulated Losses			41.868				16.675				—				26.913				15.090
Retained Earnings/Losses of the period			(1.036.430	)			813.127				—				1.449.567				648.691
Total Equity			10.702.919				12.457.541				11.621.554				11.606.074				10.827.492
Non-controlling shareholders interests			8.534				8.772				—				—				—
Total Liabilities and Equity			35.544.543				30.076.337				28.522.982				29.443.371				29.064.368

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2Q18 EARNINGS RELEASE

APPENDIX 4 – Consolidated Statement of Cash Flow

Cash Flow Statement (R$ ‘000)		2Q18				2Q17				6M18				6M17
Cash flow from operating activities
Net income/(loss) for the period			(1.848.971	)			198.544				(1.035.844	)			648.691
Depreciation, depletion and amortization			374.932				332.615				759.870				698.343
Income from sale of fixed and biological assets			4.573				(740	)			5.079				(4.128	)
Equity pick-up in subsidiaries and affiliates			68				(4.004	)			121				(4.822	)
Exchange and monetary variations, net			1.302.367				319.673				1.319.020				59.521
Interest expenses, net			168.368				196.353				329.057				376.873
Derivative gains, net			2.550.067				134.152				2.481.464				(3.669	)
Expenses from deferred income and social contribution taxes			(1.175.250	)			(124.958	)			(1.109.800	)			(10.833	)
Interest on actuarial liabilities			8.617				9.506				17.234				19.012
Provision/ (reversal) for contingencies			27.727				8.868				27.960				17.092
Provision/ (reversal) for share-based payments			57.395				12.155				76.657				18.756
Addition to allowance for doubtful accounts, net			(1.369	)			5.105				4.923				8.609
Provision/ (reversal) for discounts - loyalty program			27.903				20.689				11.286				(15.876	)
Provision/ (reversal) for inventory losses and write-offs			21.418				1.132				18.373				1.705
Provision for losses and write-off with fixed and biological assets			3.317				769				12.299				3.923
Fair value adjustment of biological assets			(5.954	)			25.268				(5.954	)			25.268
Other provisions /(reversals)			(7.248	)			(44.980	)			(14.631	)			(22.702	)
Increase / (decrease) in accounts receivable			59.661				(280.014	)			45.422				(289.674	)
Decrease/ (increase) in inventories			(177.958	)			(85.839	)			(266.244	)			(28.357	)
Decrease/ (increase) in recoverable taxes			(6.999	)			(22.942	)			(5.758	)			(26.683	)
Increase / (decrease) in other current and non-current assets			39.370				232.822				(191.703	)			330.593
Decrease / (increase) in trade accounts payable			2.576				117.796				(8.327	)			85.902
Increase/(decrease) in other current and non-current liabilities			130.161				(264.870	)			350.890				(196.128	)
Taxes payable			402.361				433.560				402.361				433.560
Payment of interest			(175.720	)			(261.169	)			(370.122	)			(507.637	)
Payment of other taxes and contributions			(84.171	)			(126.912	)			(238.652	)			(265.931	)
Payment of income and social contribution taxes			(53.035	)			(34.650	)			(64.080	)			(52.836	)
Net cash from operating activities			1.644.206				797.929				2.550.901				1.298.572
Cash flow from investing activities
Financial investments			(2.981.934	)			482.326				(2.716.934	)			(430.037	)
Cash from the acquisition of subsidiaries			—				—				21.436				—
Acquisition of subsidiaries			(6.032	)			—				(315.904	)			—
Additions to fixed assets, intangible assets and biological assets			(749.620	)			(470.743	)			(1.098.623	)			(824.102	)
Proceeds from asset divestment			16.822				1.038				31.865				9.547
Net cash (used in) / provided by investment activities			(3.720.764	)			12.621				(4.078.160	)			(1.244.592	)
Cash flow from financing activities
Funding			5.015.119				76.591				7.491.201				1.085.960
Settlement of derivative operations			(182.398	)			65.379				(169.362	)			162.333
Payment of loans			(1.079.938	)			(585.756	)			(3.214.568	)			(1.528.449	)
Payment of dividends			(210.205	)			(370.739	)			(210.205	)			(370.739	)
Dividends (acquisition) of own shares			—				—				8.514				8.514
Payment of debts with acquisition of assets			(3.071	)			(50.446	)			(3.071	)			(50.446	)
Net cash (used in) / provided by financing activities			3.539.507				(864.971	)			3.902.509				(692.827	)
Exchange variation on cash and cash equivalents			161.452				50.960				172.654				26.033
Increase (reduction) in cash and cash equivalents			1.624.401				(3.461	)			2.547.904				(612.814	)
Cash and cash equivalents at the beginning of the period			2.000.336				1.005.344				1.076.833				1.614.697
Cash and cash equivalents at the end of the period			3.624.737				1.001.883				3.624.737				1.001.883
Statement of the increase (reduction) in cash			1.624.401				(3.461	)			2.547.904				(612.814	)

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2Q18 EARNINGS RELEASE

APPENDIX 5 – EBITDA

(R$ ‘000, except where otherwise indicated)		2Q18				2Q17				6M18				6M17
Net Income			(1.848.971	)			198.544				(1.035.844	)			648.691
Net Financial Result			3.969.632				677.917				4.126.982				552.743
Income and Social Contribution Taxes			(950.153	)			(68.143	)			(786.927	)			75.571
EBIT			1.170.508				808.318				2.304.211				1.277.005
Depreciation, Amortization and Depletion			374.932				332.615				759.870				698.343
EBITDA1			1.545.440				1.140.933				3.064.081				1.975.348
EBITDA Margin			48,2	%			45,1	%			49,4	%			41,3	%
Write-downs of inventories			17.092				—				17.092				—
Expenses with Fibria’s transaction			16.248				—				17.787				—
Equity equivalence			68				(4.004	)			121				(4.822	)
Adjustment of the fair value of biological assets			(5.954	)			25.268				(5.954	)			25.268
Provision (Reversion) for losses with fixed assets, write-offs, taxes			—				—				7.366				1.157
Land conflict agreement			—				—				—				11.779
Others			(165	)			(5.631	)			518				(4.814	)
Adjusted EBITDA			1.572.729				1.156.566				3.101.011				2.003.916
Adjusted EBITDA Margin			49,1	%			45,7	%			50,0	%			41,9	%

¹  The Company’s EBITDA is calculated in accordance with CVM Instruction 527 of October 4, 2012.

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2Q18 EARNINGS RELEASE

APPENDIX 6 – Segmented Statement of Income

Financial Statement (R$ ‘000)		2Q18																2Q17
		Pulp				Paper				Non Segmented				Total Consolidated				Pulp				Paper				Non Segmented				Total Consolidated
Net Revenue			2.155.179				1.048.615				—				3.203.793				1.698.150				831.720				—				2.529.870
Cost of Goods Sold			(980.974	)			(697.598	)			—				(1.678.572	)			(920.630	)			(592.733	)			—				(1.513.364	)
Gross Profit			1.174.205				351.017				—				1.525.222				777.519				238.986				—				1.016.506
Gross Margin			54,5	%			33,5	%							47,6	%			45,8	%			28,7	%							40,2	%
Operating Expense/Income			(122.660	)			(232.054	)			—				(354.714	)			(78.443	)			(146.904	)			17.159				(208.188	)
Selling Expenses			(55.256	)			(95.049	)			—				(150.305	)			(34.731	)			(59.687	)			—				(94.418	)
General and Administrative Expenses			(67.495	)			(136.173	)			—				(203.668	)			(42.242	)			(78.449	)			—				(120.691	)
Other Operating Income (Expenses)			91				(764	)			—				(673	)			(1.470	)			(12.772	)			17.159				2.917
Equity Equivalence			—				(68	)			—				(68	)			—				4.004				—				4.004
EBIT			1.051.545				118.962				—				1.170.508				699.076				92.082				17.159				808.318
Depreciation, Amortization & Depletion			263.145				111.788				—				374.932				240.626				91.990				—				332.615
EBITDA			1.314.690				230.818				—				1.545.508				939.702				180.068				17.159				1.136.929
EBITDA Margin (%)			61,0	%			22,0	%							48,2	%			55,3	%			21,7	%							44,9	%
Adjusted EBITDA1			1.319.798				252.932				—				1.572.729				946.576				192.831				17.159				1.156.566
Adjusted EBITDA Margin1			61,2	%			24,1	%							49,1	%			55,7	%			23,2	%							45,7	%
Net Financial Result			—				—				(3.969.632	)			(3.969.632	)			—				—				(677.917	)			(677.917	)
Earnings Before Taxes			1.051.545				118.962				(3.969.632	)			(2.799.124	)			699.076				92.082				(660.758	)			130.401
Income and Social Contribution Taxes			—				—				950.153				950.153				—				—				68.143				68.143
Net Income (Loss)			1.051.545				118.962				(3.019.479	)			(1.848.971	)			699.076				92.082				(592.615	)			198.544
Net Margin			48,8	%			11,3	%							-57,7	%			41,2	%			11,1	%							7,8	%

¹  Excluding non-recurring items.

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2Q18 EARNINGS RELEASE

Financial Statement (R$ ‘000)		6M18																6M17
		Pulp				Paper				Non Segmented				Total Consolidated				Pulp				Paper				Non Segmented				Total Consolidated
Net Revenue			4.231.505				1.971.148				—				6.202.653				3.152.589				1.631.189				—				4.783.778
Cost of Goods Sold			(1.944.142	)			(1.320.356	)			—				(3.264.498	)			(1.894.358	)			(1.185.550	)			—				(3.079.908	)
Gross Profit			2.287.364				650.792				—				2.938.155				1.258.231				445.639				—				1.703.870
Gross Margin			54,1	%			33,0	%							47,4	%			39,9	%			27,3	%			0,0	%			35,6	%
Operating Expense/Income			(231.988	)			(401.956	)			—				(633.944	)			(172.336	)			(271.688	)			17.159				(426.865	)
Selling Expenses			(103.087	)			(169.175	)			—				(272.262	)			(75.132	)			(119.911	)			—				(195.042	)
General and Administrative Expenses			(118.191	)			(232.830	)			—				(351.021	)			(81.301	)			(150.987	)			—				(232.288	)
Other Operating Income (Expenses)			(10.710	)			170				—				(10.540	)			(15.903	)			(5.613	)			17.159				(4.357	)
Equity Equivalence			—				(121	)			—				(121	)			—				4.822				—				4.822
EBIT			2.055.375				248.836				—				2.304.211				1.085.895				173.951				17.159				1.277.005
Depreciation, Amortization & Depletion			537.337				222.534				—				759.871				503.808				194.535				—				698.343
EBITDA			2.592.712				471.491				—				3.064.203				1.589.703				363.664				17.159				1.970.526
EBITDA Margin (%)			61,3	%			23,9	%							49,4	%			50,4	%			22,3	%			0,0	%			41,2	%
Adjusted EBITDA1			2.605.088				495.925				—				3.101.013				1.608.264				378.492				17.159				2.003.915
Adjusted EBITDA Margin1			61,6	%			25,2	%							50,0	%			51,0	%			23,2	%			0,0	%			41,9	%
Net Financial Result			—				—				(4.126.982	)			(4.126.982	)			—				—				(552.743	)			(552.743	)
Earnings Before Taxes			2.055.375				248.836				(4.126.982	)			(1.822.771	)			1.085.895				173.951				(535.584	)			724.262
Income and Social Contribution Taxes			—				—				786.927				786.927				—				—				(75.571	)			(75.571	)
Net Income (Loss)			2.055.375				248.836				(3.340.055	)			(1.035.844	)			1.085.895				173.951				(611.155	)			648.691
Net Margin			48,6	%			12,6	%							-16,7	%			34,4	%			10,7	%			0,0	%			13,6	%

1 Excluding non-recurring items.

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Table of Contents

2Q18 EARNINGS RELEASE

Corporate Information

Suzano Pulp and Paper, which reported net revenue of R$10.5 billion in 2017, is one of the largest vertically integrated producers of paper and eucalyptus pulp in Latin America, with annual production capacity of 3.6 million tons of market pulp and 1.2 million tons of paper. Suzano Pulp and Paper offers a broad range of pulp and paper products for the domestic and export markets: (i) eucalyptus pulp; (ii) hardwood fluff pulp; (iii) uncoated printing and writing paper; (iv) coated printing and writing paper; (v) paperboard; and (vi) tissue paper.

Forward-looking Statements

This release may contain forward-looking statements. Such statements are subject to known and unknown risks and uncertainties that could cause the expectations expressed not to materialize or to differ substantially from the expected results. These risks include changes in future demand for the Company’s products, changes in factors affecting domestic and international product prices, changes in the cost structure, changes in the seasonal patterns of markets, changes in prices charged by competitors, foreign exchange variations, changes in the political or economic situation of Brazil, and changes in emerging and international markets. The forward-looking statements were not reviewed by our independent auditors.

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