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Financial Instruments and Risks Management (Tables)
12 Months Ended
Dec. 31, 2019
Financial Instruments and Risks Management  
Schedule of financial instruments by category

 

 

 

 

 

 

  

December 31,

  

December 31,

 

 

2019

 

2018

Assets

 

   

 

   

Amortized cost

 

   

 

   

Cash and cash equivalents (Note 5)

 

3,249,127

 

4,387,453

Trade accounts receivable (Note 7)

 

3,035,817

 

2,537,058

Other assets

 

563,993

 

263,110

 

 

6,848,937

 

7,187,621

Fair value through other comprehensive income

 

   

 

   

Other investments (Note 14)

 

20,048

 

 —

 

 

20,048

 

 —

 

 

 

 

 

Fair value through profit or loss

 

   

 

   

Derivative financial instruments (Note 4.6)

 

1,098,972

 

493,934

Marketable securities (Note 6)

 

6,330,334

 

21,098,565

 

 

7,429,306

 

21,592,499

 

 

14,298,290

 

28,780,120

Liabilities

 

   

 

   

Amortized cost

 

   

 

   

Loans, financing and debentures (Note 18.1)

 

63,684,326

 

35,737,509

Lease liabilities (Note 19.2)

 

3,984,070

 

 —

Liabilities for assets acquisitions and subsidiaries (Note 23)

 

541,615

 

992,512

Trade accounts payable (Note 17)

 

2,376,459

 

632,565

Other liabilities

 

578,061

 

404,655

 

 

71,164,531

 

37,767,241

Fair value through profit or loss

 

   

 

 

Derivative financial instruments (Note 4.6)

 

2,917,913

 

1,636,700

 

 

2,917,913

 

1,636,700

 

 

74,082,444

 

39,403,941

 

Summary of estimated fair value of loans and financing

 

 

 

 

 

 

 

 

  

Yield used

  

December 31,

  

December 31,

 

 

to discount

 

2019

 

2018

Quoted in the secondary market

 

   

 

   

 

   

In foreign currency

 

   

 

   

 

   

Bonds

 

U.S.$

 

30,066,087

 

15,035,165

Estimated to present value

 

   

 

   

 

   

In foreign currency

 

   

 

   

 

   

Export credits ("Pre-payment")

 

LIBOR U.S.$

 

17,213,963

 

12,819,072

Export credits ("Finnvera")

 

LIBOR U.S.$

 

   

 

832,907

Export credits ("ACC/ACE")

 

DI 1

 

575,521

 

1,732,088

In local currency

 

   

 

   

 

   

BNP – Forest Financing

 

DI 1

 

193,646

 

   

BNDES – TJLP

 

DI 1

 

1,895,959

 

206,601

BNDES - TLP

 

DI 1

 

535,812

 

   

BNDES – Fixed

 

DI 1

 

113,979

 

348,827

BNDES – Selic ("Special Settlement and Custody System")

 

DI 1

 

693,969

 

   

BNDES - Currency basket

 

DI 1

 

54,420

 

169,243

CRA ("Agribusiness Receivables Certificate")

 

DI 1

 

6,039,983

 

2,383,775

Debentures

 

DI 1

 

5,534,691

 

4,721,603

FINAME ("Special Agency of Industrial Financing")

 

DI 1

 

14,168

 

   

FINEP ("Financier of Studies and Projects")

 

DI 1

 

5,138

 

   

NCE ("Export Credit Notes")

 

DI 1

 

1,445,383

 

1,501,623

NCR ("Rural Credit Notes")

 

DI 1

 

288,122

 

297,375

Export credits ("Pre-payment")

 

DI 1

 

1,464,798

 

   

FDCO ("West Center Development Fund")

 

DI 1

 

571,904

 

   

 

 

 

 

66,707,543

 

40,048,279

 

Schedule of contractual maturities of financial liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

2019

 

 

Total book

 

Total future

 

Up to 1

 

1 - 2

 

2 - 5

 

More than

 

  

value

  

value

  

year

  

years

  

years

  

5 years

Liabilities

 

   

 

   

 

   

 

   

 

   

 

   

Trade accounts payables

 

 2,376,459

 

 2,376,459

 

 2,376,459

 

 

 

Loans, financing and debentures

 

 63,684,326

 

 89,708,210

 

 8,501,278

 

 5,692,149

 

 29,088,292

 

 46,426,491

Lease liabilities

 

 3,984,070

 

 7,109,966

 

 559,525

 

 1,426,011

 

 1,186,386

 

 3,938,044

Liabilities for asset acquisitions and subsidiaries

 

 541,615

 

 618,910

 

 103,132

 

 101,149

 

 315,989

 

 98,640

Derivative financial instruments

 

 2,917,913

 

 8,299,319

 

 1,488,906

 

 415,791

 

 1,258,200

 

 5,136,422

Other liabilities

 

 578,061

 

 578,061

 

 456,338

 

 121,723

 

 

 

 

 74,082,444

 

 108,690,925

 

 13,485,638

 

 7,756,823

 

 31,848,867

 

 55,599,597

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

2018

 

  

Total book

  

Total future

  

Up to 1

  

1 - 2

  

2 - 5

  

More than

 

  

value

  

value

  

year

  

years

  

years

  

5 years

Liabilities

 

   

 

   

 

   

 

   

 

   

 

   

Trade accounts payables

 

 632,565

 

 632,565

 

 632,565

 

 

 

Loans, financing and debentures

 

 35,737,509

 

 54,020,082

 

 5,158,441

 

 4,091,669

 

 18,372,597

 

 26,397,375

Liabilities for asset acquisitions and subsidiaries

 

 992,512

 

 1,099,331

 

 495,862

 

 100,715

 

 316,730

 

 186,024

Derivative financial instruments

 

 1,636,700

 

 2,149,710

 

 790,679

 

 736,715

 

 465,853

 

 156,462

Other liabilities

 

 404,655

 

 404,655

 

 367,314

 

 37,341

 

 

 

 

 39,403,941

 

 58,306,342

 

 7,444,861

 

 4,966,440

 

 19,155,180

 

 26,739,859

 

Schedule of credit exposures using internal credit grading

 

 

 

 

 

 

 

December 31,

 

December 31,

 

  

2019

  

2018

Low (1)

 

2,775,364

 

2,447,184

Average (2)

 

168,836

 

66,587

High (3)

 

133,613

 

60,466

 

 

3,077,813

 

2,574,237


1)

Current and overdue to 30 days.

2)

Overdue between 30 and 90 days.

3)

Overdue more than 90 days and renegotiated with the customer or with guarantees.

 

Schedule of the book value of financial assets representing the exposure to credit risk

 

 

 

 

 

 

 

December 31,

 

December 31,

 

  

2019

  

2018

Cash and cash equivalents

 

3,249,127

 

4,387,453

Marketable securities

 

6,330,334

 

21,098,565

Derivative financial instruments

 

830,426

 

493,934

 

 

10,409,887

 

25,979,952

 

Schedule of credit exposures using external credit grading

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents and

 

 

 

 

marketable securities

 

Derivative financial instruments

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

  

2019

  

2018

  

2019

  

2018

Risk rating (1)

 

 

 

 

 

 

 

 

AAA

 

190,360

 

19,736,151

 

 

141,296

AA+

 

 —

 

5,257,518

 

 

 —

AA

 

 —

 

68,207

 

 

259,711

AA-

 

56,388

 

422,899

 

 

 —

A+

 

606,757

 

 —

 

 27,363

 

 —

A

 

188,458

 

80

 

 165,851

 

51,281

A-

 

211,238

 

1,160

 

 222,761

 

 —

brAAA

 

7,153,079

 

 —

 

 404,693

 

brAA+

 

745,177

 

 —

 

 9,758

 

brAA

 

372,188

 

 —

 

 

brAA-

 

23,050

 

 —

 

 

brA

 

17,847

 

 —

 

 

Others

 

14,919

 

 1

 

 

41,646

 

 

9,579,461

 

25,486,016

 

 830,426

 

493,934


1)

We use the Brazilian Risk Rating and the rating is given by agencies Fitch Ratings, Standard & Poor’s and Moody’s.

 

Schedule of net exposure of assets and liabilities in foreign currency

 

 

 

 

 

 

 

December 31,

 

December 31,

 

  

2019

  

2018

Assets

 

   

 

   

Cash and cash equivalents

 

2,527,834

 

1,143,968

Trade accounts receivables

 

2,027,018

 

1,661,108

Derivative financial instruments

 

9,440,141

 

493,685

 

 

13,994,993

 

3,298,761

 

 

 

 

 

Liabilities

 

 

 

 

Trade accounts payables

 

(1,085,207)

 

(72,680)

Loans and financing

 

(45,460,138)

 

(26,384,721)

Liabilities for asset acquisitions and subsidiaries

 

(288,172)

 

(333,049)

Derivative financial instruments

 

(11,315,879)

 

(1,464,569)

 

 

(58,149,396)

 

(28,255,019)

Net liability exposure

 

(44,154,403)

 

(24,956,258)

 

Summary of yield curves used to calculate fair value of derivative financial instruments

 

 

 

 

 

 

 

 

Interest rate curves

 

 

 

Term

  

Brazil

  

United States of America

  

Dollar coupon

  

1M

 

4.41% p.a.

 

1.91% p.a.

 

13.33% p.a.

 

6M

 

4.33% p.a.

 

1.84% p.a.

 

4.37% p.a.

 

1A

 

4.56% p.a.

 

1.77% p.a.

 

3.40% p.a.

 

2A

 

5.28% p.a.

 

1.68% p.a.

 

2.93% p.a.

 

3A

 

5.79% p.a.

 

1.66% p.a.

 

2.81% p.a.

 

5A

 

6.43% p.a.

 

1.70% p.a.

 

2.87% p.a.

 

10A

 

7.01% p.a.

 

1.86% p.a.

 

3.31% p.a.

 

 

Schedule of derivatives by type of contract

 

 

 

 

 

 

 

 

 

 

 

Notional value in U.S.$

 

Fair value

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

  

2019

  

2018

  

2019

  

2018

Instruments contracted with protection strategy

 

 

 

 

 

 

 

 

Operational Hedge

 

 

 

 

 

 

 

 

NDF (R$ x U.S.$)

 

 

150,000

 

 —

 

17,036

Zero Cost Collar (R$ x U.S.$)

 

3,425,000

 

3,040,000

 

67,078

 

(134,814)

 

 

 

 

 

 

 

 

 

Debt hedge

 

 

 

 

 

 

 

 

Interest rate hedge

 

 

 

 

 

 

 

 

Swap LIBOR to Fixed (U.S.$)

 

2,750,000

 

2,757,143

 

(444,910)

 

(170,707)

Swap IPCA to CDI (notional in Reais)

 

843,845

 

 

233,255

 

Swap IPCA to Fixed (U.S.$)

 

121,003

 

 

30,544

 

Swap CDI x Fixed (U.S.$)

 

3,115,614

 

2,402,110

 

(1,940,352)

 

(853,141)

Pre-fixed Swap to U.S.$ (U.S.$)

 

350,000

 

 

 

(33,011)

 

 

 

 

 

 

 

 

 

 

 

Hedge de Commodity

 

 

 

 

 

 

 

 

Swap US-CPI standing wood (U.S.$)

 

679,485

 

 

 

268,547

 

 

Swap Bunker (oil)

 

365

 

5,344

 

(92)

 

(1,140)

 

 

 

 

 

 

(1,818,941)

 

(1,142,766)

 

 

 

 

 

 

 

 

 

Current assets

 

   

 

   

 

260,273

 

352,454

Non-current assets

 

   

 

   

 

838,699

 

141,480

Current liabilities

 

   

 

   

 

(893,413)

 

(596,530)

Non-current liabilities

 

   

 

   

 

(2,024,500)

 

(1,040,170)

 

 

 

 

 

 

 

 

 

 

 

   

 

   

 

(1,818,941)

 

(1,142,766)

 

Schedule of maturity analysis for derivatives

 

 

 

 

 

 

 

December 31,

 

December 31,

 

  

2019

  

2018

2019

 

 

(244,069)

2020

 

(633,644)

 

(180,333)

2021

 

 98,850

 

87,851

2022

 

(154,734)

 

83,692

2023

 

 185,209

 

80,052

2024

 

(197,718)

 

82,963

2025

 

(606,827)

 

(486,958)

2026 onwards

 

(510,077)

 

(565,964)

 

 

(1,818,941)

 

(1,142,766)

 

Schedule of long and short positions of outstanding derivatives

 

 

 

 

 

 

 

 

 

 

 

 

 

Notional value

 

Fair value

 

 

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

 

  

Currency

  

2019

  

2018

  

2019

  

2018

Debt hedge

 

   

 

   

 

   

 

   

 

   

Assets

 

   

 

   

 

   

 

   

 

   

Swap CDI x Fixed (U.S.$)

 

R$

 

11,498,565

 

8,722,620

 

11,673,117

 

119,178

Swap Pre-Fixed to U.S.$ (U.S.$)

 

R$

 

1,317,226

 

 

 

1,478,336

 

 —

Swap LIBOR x Fixed (U.S.$)

 

U.S.$

 

2,750,000

 

2,757,143

 

11,063,970

 

 —

Swap IPCA x CDI

 

IPCA

 

933,842

 

 

 

1,093,067

 

 —

Swap IPCA x U.S.$

 

IPCA

 

499,441

 

 

 

579,307

 

 —

 

 

   

 

 

 

 

 

25,887,797

 

119,178

Liabilities

 

   

 

 

 

 

 

 

 

 

Swap CDI x Fixed (U.S.$)

 

U.S.$

 

3,115,614

 

2,402,110

 

(13,613,469)

 

(972,319)

Swap LIBOR x Fixed (U.S.$)

 

U.S.$

 

350,000

 

2,757,143

 

(1,511,347)

 

(170,707)

Swap LIBOR x Fixed (U.S.$)

 

U.S.$

 

2,750,000

 

 

 

(11,508,880)

 

Swap IPCA x CDI

 

R$

 

843,845

 

 

 

(859,812)

 

Swap IPCA x U.S.$

 

U.S.$

 

121,003

 

 

 

(548,763)

 

 

 

   

 

 

 

 

 

(28,042,271)

 

(1,143,026)

 

 

   

 

 

 

 

 

(2,154,474)

 

(1,023,848)

Operational hedge

 

 

 

 

 

 

 

 

 

 

Zero cost collar (U.S.$ x R$)

 

U.S.$

 

3,425,000

 

3,040,000

 

67,078

 

(134,814)

NDF (R$ x U.S.$)

 

U.S.$

 

 

150,000

 

 

 

17,036

 

 

 

 

 

 

 

 

67,078

 

(117,778)

Commodity hedge

 

 

 

 

 

 

 

 

 

 

Swap US-CPI (standing wood)

 

U.S.$

 

679,485

 

 

268,547

 

Swap Bunker (oil)

 

U.S.$

 

365

 

5,344

 

(92)

 

(1,140)

 

 

 

 

 

 

 

 

268,455

 

(1,140)

 

 

 

 

 

 

 

 

(1,818,941)

 

(1,142,766)

 

Schedule of settled derivatives

 

 

 

 

 

 

 

December 31,

 

December 31,

 

  

2019

  

2018

Operational hedge

 

   

 

   

Zero cost collar (R$ x U.S.$)

 

(104,040)

 

(110,271)

NDF (R$ x U.S.$)

 

 63,571

 

(1,235,448)

 

 

(40,469)

 

(1,345,719)

Commodity hedge

 

 

 

 

Swap Bunker (oil)

 

 3,804

 

 

 

 3,804

 

Debt hedge

 

 

 

 

Swap CDI x Fixed (U.S.$)

 

(68,362)

 

 19,145

Swap IPCA x CDI

 

 23,024

 

Swap Pre-Fixed to U.S.$ (U.S.$)

 

(26,358)

 

Swap LIBOR x Fixed (U.S.$)

 

(27,088)

 

(4,939)

 

 

(98,784)

 

 14,206

 

 

(135,449)

 

(1,331,513)

 

Schedule of fair value hierarchy

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

2019

 

  

Level 1

  

Level 2

  

Level 3

 

Total

Assets

 

   

 

   

 

   

 

 

Fair value through profit or loss

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

 1,098,972

 

 

 1,098,972

Marketable securities

 

 1,631,319

 

 4,699,015

 

 

 6,330,334

 

 

 1,631,319

 

 5,797,987

 

 

 7,429,306

 

 

 

 

 

 

 

 

 

Fair value through other comprehensive income

 

 

 

 

 

 

 

 

Other investments - CelluForce

 

 

 

 20,048

 

 20,048

 

 

 

 

 20,048

 

 20,048

 

 

 

 

 

 

 

 

 

Biological assets

 

 

 

 

 

 10,571,499

 

 10,571,499

 

 

 

 

 10,571,499

 

 10,571,499

Total assets

 

 1,631,319

 

 5,797,987

 

 10,591,547

 

 18,020,853

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Fair value through profit or loss

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

 2,917,913

 

 

 2,917,913

 

 

 

 2,917,913

 

 

 2,917,913

Total liabilities

 

 

 2,917,913

 

 

 2,917,913

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

2018

 

  

Level 1

  

Level 2

  

Level 3

 

Total

Assets

 

   

 

   

 

   

 

 

Fair value through profit or loss

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

 493,934

 

 

 493,934

Marketable securities

 

 14,933,513

 

 6,165,052

 

 

 21,098,565

 

 

 14,933,513

 

 6,658,986

 

 

 21,592,499

 

 

 

 

 

 

 

 

 

Biological assets

 

 

 

 4,935,905

 

 4,935,905

 

 

 

 

 4,935,905

 

 4,935,905

Total Assets

 

 14,933,513

 

 6,658,986

 

 4,935,905

 

 26,528,404

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

Fair value through profit or loss

 

 

 

 

 

 

 

 

Derivative financial instruments

 

 

 1,636,700

 

 

 1,636,700

 

 

 

 1,636,700

 

 

 1,636,700

Total Liabilities

 

 

 1,636,700

 

 

 1,636,700

 

Exchange rate risk | Financial instruments, excluding derivatives  
Financial Instruments and Risks Management  
Summary of sensitivity analysis

 

 

 

 

 

 

 

 

 

December 31,

 

 

2019

 

  

Effect on profit or loss and equity

 

 

 

 

Possible

 

Remote

 

 

Probable

 

(25%)

 

(50%)

Cash and cash equivalents

 

2,527,834

 

631,959

 

1,263,917

Trade accounts receivable

 

2,027,018

 

506,755

 

1,013,509

Trade accounts payable

 

1,085,207

 

271,302

 

542,604

Loans and financing

 

45,460,138

 

11,365,035

 

22,730,069

Liabilities for asset acquisitions and subsidiaries

 

288,172

 

72,043

 

144,086

 

Exchange rate risk | Derivative financial instruments  
Financial Instruments and Risks Management  
Summary of sensitivity analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

2019

 

 

Effect on profit or loss and equity

 

 

 

 

Possible

 

Remote

 

Possible

 

Remote

 

 

Probable

 

(+25%)

 

(+50%)

 

(-25%)

 

(-50%)

Financial instruments derivatives

 

 

 

 

 

 

 

 

 

 

Derivative options

  

(2,198,750)

  

(4,087,518)

  

(8,175,033)

  

(4,087,510)

  

(8,175,024)

Derivative swaps

 

66,981

 

(2,710,465)

 

(6,048,324)

 

(3,011,787)

 

(6,383,188)

 

Interest rate risk | Financial instruments, excluding derivatives  
Financial Instruments and Risks Management  
Summary of sensitivity analysis

 

 

 

 

 

 

 

 

 

December 31,

 

 

2019

 

 

Effect on profit or loss and equity

 

 

Probable

 

Possible (25%)

 

Remote (50%)

CDI

 

   

 

   

 

   

Cash and cash equivalents

 

 630,075

 

 6,931

 

 13,862

Marketable securities

 

 6,330,334

 

 69,634

 

 139,267

Loans and financing

 

 11,482,992

 

 581,039

 

 252,626

 

 

 

 

 

 

 

TJLP

 

 

 

 

 

 

Loans and financing

 

 9,720,880

 

 622,671

 

 270,727

 

 

 

 

 

 

 

LIBOR

 

 

 

 

 

 

Loans and financing

 

 16,229,715

 

 356,183

 

 154,862

 

Interest rate risk | Derivative financial instruments  
Financial Instruments and Risks Management  
Summary of sensitivity analysis

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31,

 

 

2019

 

 

Effect on profit or loss and equity

 

 

 

 

Probable

 

Remote

 

Probable

 

Remote

 

 

Probable

 

(+25%)

 

(+50%)

 

(-25%)

 

(-50%)

CDI

  

   

  

   

  

   

  

   

  

   

Financial instruments derivatives

 

   

 

   

 

   

 

   

 

   

Liabilities

 

   

 

   

 

   

 

   

 

   

Derivative options

 

66,981

 

(72,473)

 

(142,327)

 

75,530

 

154,446

Derivative swaps

 

(2,198,750)

 

(42,752)

 

(83,345)

 

44,995

 

92,339

Libor

 

   

 

   

 

   

 

   

 

   

Financial instruments derivatives

 

   

 

   

 

   

 

   

 

   

Liabilities

 

   

 

   

 

   

 

   

 

   

Derivative swaps

 

(2,198,750)

 

163,314

 

326,151

 

(163,811)

 

(328,121)

 

U.S. Consumer Price Index | Derivative financial instruments  
Financial Instruments and Risks Management  
Summary of sensitivity analysis

 

 

 

 

 

 

 

 

 

December 31,

 

 

2019

 

 

Impact of an increase/decrease of

 

 

US-CPI on the fair value

 

 

Probable

 

Possible (25%)

 

Remote (50%)

Embedded derivative in forestry partnership and standing wood supply agreements

  

268,547

  

107,815

  

220,514

 

Commodity price risk  
Financial Instruments and Risks Management  
Summary of sensitivity analysis

 

 

 

 

 

 

 

 

 

December 31,

 

 

2019

 

 

Impact of an increase/decrease of price risk

 

  

Probable

  

Possible (25%)

  

Remote (50%)

Oil derivative

 

(92)

 

478

 

864