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SEGMENT INFORMATION | 12 Months Ended
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Dec. 31, 2020
SEGMENT INFORMATION |
SEGMENT INFORMATION | 29.SEGMENT INFORMATION 29.1.Criteria for identifying operating segments The Company evaluates the performance of its business segments through the operating result. The information disclosed under “Not Segmented” is related to income statement and balance sheet items not directly attributed to the pulp and paper segments, such as, net financial result and income and social contribution taxes expenses, in addition to the balance sheet classification items of assets and liabilities. The operating segments defined by Management are set forth below:
| (i) |  | Pulp: comprises production and sale of hardwood eucalyptus pulp and fluff pulp mainly to supply the foreign market, with any surplus sold in the domestic market.
| (ii) |  | Paper: comprises production and sale of paper to meet the demands of both domestic and foreign markets. Consumer goods (tissue) sales are classified under this segment due to its immateriality.
Information related to total assets by reportable segment is not disclosed, as it is not included in the set of information made available to the Company's administration, which makes investment decisions and determine allocation of resources on a consolidated basis. In addition, with respect to geographical information related to non-current assets, the Company does not disclose such information, as all of our property, plant and equipment, biological and intangible assets are located in Brazil. 29.2.Information of operating segments
|  | December 31, 2020 |
|  |  |  |  |  | Not |  |  |
|  | Pulp |  | Paper |  | segmented |  | Total |
Net sales |  | 25,578,265 |  | 4,882,012 |  |  |  | 30,460,277 |
Domestic market (Brazil) |  | 1,609,449 |  | 3,358,186 |  |  |  | 4,967,635 |
Foreign market |  | 23,968,816 |  | 1,523,826 |  |  |  | 25,492,642 |
Asia |  | 12,921,081 |  | 196,266 |  |  |  | 13,117,347 |
Europe |  | 6,409,879 |  | 262,924 |  |  |  | 6,672,803 |
North America |  | 4,340,956 |  | 263,328 |  |  |  | 4,604,284 |
South and Central America |  | 184,590 |  | 723,603 |  |  |  | 908,193 |
Africa |  | 112,310 |  | 77,705 |  |  |  | 190,015 |
Cost of sales |  | (15,754,930) |  | (3,211,401) |  |  |  | (18,966,331) |
Gross profit |  | 9,823,335 |  | 1,670,611 |  |  |  | 11,493,946 |
Gross margin (%) |  | 38.4% |  | 34.2% |  |  |  | 37.7% |
Operating income (expenses) |  | (2,409,483) |  | (641,069) |  |  |  | (3,050,552) |
Selling |  | (1,770,036) |  | (404,616) |  |  |  | (2,174,652) |
General and administrative |  | (1,016,093) |  | (427,099) |  |  |  | (1,443,192) |
Other operating, net |  | 390,178 |  | 140,972 |  |  |  | 531,150 |
Income(loss) from associates and joint ventures |  | (13,532) |  | 49,674 |  |  |  | 36,142 |
Operating profit before net financial income ("EBIT") (1) |  | 7,413,852 |  | 1,029,542 |  |  |  | 8,443,394 |
Operating margin (%) |  | 29.0% |  | 21.1% |  |  |  | 27.7% |
Financial result, net |  |  |  |  |  | (26,085,523) |  | (26,085,523) |
Net income (loss) before taxes |  | 7,413,852 |  | 1,029,542 |  | (26,085,523) |  | (17,642,129) |
Income taxes |  |  |  |  |  | 6,927,194 |  | 6,927,194 |
Net income (loss) for the year |  | 7,413,852 |  | 1,029,542 |  | (19,158,329) |  | (10,714,935) |
Profit (loss) margin for the year (%) |  | 29.0% |  | 21.1% |  |  |  | (35.2)% |
Result of the year attributable to controlling Shareholders |  | 7,413,852 |  | 1,029,542 |  | (19,168,222) |  | (10,724,828) |
Result of the year attributed to non-controlling shareholders |  |  |  |  |  | 9,893 |  | 9,893 |
Depreciation, depletion and amortization |  | 6,232,376 |  | 540,404 |  |  |  | 6,772,780 |
| 1) |  | Earnings before interest and tax.
|  | December 31, 2019 |
|  |  |  |  |  | Not |  |  |
|  | Pulp |  | Paper |  | segmented |  | Total |
Net sales |  | 21,027,686 |  | 4,985,264 |  |  |  | 26,012,950 |
Domestic market (Brazil) |  | 1,833,936 |  | 3,480,279 |  |  |  | 5,314,215 |
Foreign market |  | 19,193,750 |  | 1,504,985 |  |  |  | 20,698,735 |
Asia |  | 9,605,799 |  | 136,882 |  |  |  | 9,742,681 |
Europe |  | 5,950,832 |  | 221,697 |  |  |  | 6,172,529 |
North America |  | 3,592,563 |  | 382,628 |  |  |  | 3,975,191 |
South and Central America |  | 44,556 |  | 710,086 |  |  |  | 754,642 |
Africa |  |  |  | 53,692 |  |  |  | 53,692 |
Cost of sales |  | (17,440,018) |  | (3,303,464) |  |  |  | (20,743,482) |
Gross profit |  | 3,587,668 |  | 1,681,800 |  |  |  | 5,269,468 |
Gross margin (%) |  | 17.1% |  | 33.7% |  |  |  | 20.3% |
Operating income (expenses) |  | (2,089,286) |  | (679,719) |  | 128,115 |  | (2,640,890) |
Selling |  | (1,503,775) |  | (401,504) |  |  |  | (1,905,279) |
General and administrative |  | (806,774) |  | (366,584) |  |  |  | (1,173,358) |
Other operating, net |  | 209,577 |  | 68,062 |  | 128,115 |  | 405,754 |
Income from associates and joint ventures |  | 11,686 |  | 20,307 |  |  |  | 31,993 |
Operating profit before net financial income ("EBIT") (1) |  | 1,498,382 |  | 1,002,081 |  | 128,115 |  | 2,628,578 |
Operating margin (%) |  | 7.1% |  | 20.1% |  |  |  | 10.1% |
Financial result, net |  |  |  |  |  | (6,725,781) |  | (6,725,781) |
Net income (loss) before taxes |  | 1,498,382 |  | 1,002,081 |  | (6,597,666) |  | (4,097,203) |
Income taxes |  |  |  |  |  | 1,282,461 |  | 1,282,461 |
Net income (loss) for the year |  | 1,498,382 |  | 1,002,081 |  | (5,315,205) |  | (2,814,742) |
Profit (loss) margin for the year (%) |  | 7.1% |  | 20.1% |  |  |  | (10.8)% |
Result of the year attributable to controlling Shareholders |  | 1,498,382 |  | 1,002,081 |  | (5,317,981) |  | (2,817,518) |
Result of the year attributed to non-controlling shareholders |  |  |  |  |  | 2,776 |  | 2,776 |
Depreciation, depletion and amortization |  | 7,575,630 |  | 516,322 |  |  |  | 8,091,952 |
| 1) |  | Earnings before interest and tax.
|  | December 31, 2018 |
|  |  |  |  |  | Not |  |  |
|  | Pulp |  | Paper |  | segmented |  | Total |
Net sales |  | 8,783,274 |  | 4,660,102 |  |  |  | 13,443,376 |
Domestic market (Brazil) |  | 744,566 |  | 3,307,074 |  |  |  | 4,051,640 |
Foreign market |  | 8,038,708 |  | 1,353,028 |  |  |  | 9,391,736 |
Asia |  | 3,837,998 |  | 101,695 |  |  |  | 3,939,693 |
Europe |  | 2,810,899 |  | 225,111 |  |  |  | 3,036,010 |
North America |  | 1,340,907 |  | 210,831 |  |  |  | 1,551,738 |
South and Central America |  | 48,904 |  | 774,730 |  |  |  | 823,634 |
Africa |  |  |  | 40,661 |  |  |  | 40,661 |
Cost of sales |  | (3,965,912) |  | (2,956,419) |  |  |  | (6,922,331) |
Gross profit |  | 4,817,362 |  | 1,703,683 |  |  |  | 6,521,045 |
Gross margin (%) |  | 54.8% |  | 36.6% |  |  |  | 48.5% |
Operating income (expenses) |  | (626,887) |  | (886,347) |  |  |  | (1,513,234) |
Selling expenses |  | (212,869) |  | (385,857) |  |  |  | (598,726) |
General and administrative expenses |  | (275,859) |  | (549,350) |  |  |  | (825,209) |
Other operating income (expenses), net |  | (138,159) |  | 41,284 |  |  |  | (96,875) |
Income from associates and joint ventures |  |  |  | 7,576 |  |  |  | 7,576 |
Operating profit before net financial income ("EBIT") (1) |  | 4,190,475 |  | 817,336 |  |  |  | 5,007,811 |
Operating margin (%) |  | 47.7% |  | 17.5% |  |  |  | 37.3% |
Financial result, net |  |  |  |  |  | (4,842,513) |  | (4,842,513) |
Net income (loss) before taxes |  | 4,190,475 |  | 817,336 |  | (4,842,513) |  | 165,298 |
Income taxes |  |  |  |  |  | 154,516 |  | 154,516 |
Net income (loss) for the year |  | 4,190,475 |  | 817,336 |  | (4,687,997) |  | 319,814 |
Profit margin for the year (%) |  | 47.7% |  | 17.5% |  |  |  | 2.5% |
Result of the year attributable to controlling shareholders |  | 4,190,475 |  | 817,336 |  | (4,688,118) |  | 319,693 |
Result of the year attributed to non-controlling shareholders |  |  |  |  |  | 121 |  | 121 |
Depreciation, depletion and amortization |  | 1,105,381 |  | 457,842 |  |  |  | 1,563,223 |
| 1) |  | Earnings before interest and tax.
With regard to the foreign market revenues of the pulp operating segment, China and USA are the main countries in relation to net revenue, 47.97% and 16.54%, respectively, for the year ended December 31, 2020 (China and USA represented 40.00% and 16.54%, respectively, on December 31, 2019). With regard to the foreign market revenues of the paper operating segment, Argentina and USA are the main countries in relation to net revenue, representing 18.06% and 17.92%, respectively, for the year ended December 31, 2020 (USA, Peru e Argentina represented 24.64%, 12.70% e 11.61% , respectively, on December 31, 2019). There is no other individual foreign country that represents more than 10% of net revenue in the foreign market for the years ended December 31, 2020 and December 31, 2019. 29.3.Net sales by product The following table set forth the breakdown of consolidated net sales by product:
|  | December 31, |  | December 31, |  | December 31,
Products |  | 2020 |  | 2019 |  | 2018
Market pulp(1) |  | 25,578,265 |  | 21,027,686 |  | 8,783,274
Printing and writing paper(2) |  | 3,891,002 |  | 4,100,502 |  | 3,834,380
Paperboard |  | 935,047 |  | 823,360 |  | 764,701
Other |  | 55,963 |  | 61,402 |  | 61,021
Net sales |  | 30,460,277 |  | 26,012,950 |  | 13,443,376
| 1) |  | Net sale from fluff pulp represents approximately 0.6% of total net sales and, therefore, was included in market pulp net sales.
| 2) |  | Tissue is a recently launched product and its revenues represent approximately 2.6% of total net sales and, therefore, was included in printing and writing paper net sales.
29.4.Goodwill based on expected future profitability The goodwill based on expected future profitability arising from the business combination were allocated to the disclosable segments, which correspond to the Company's cash-generating units (“CGU”), considering the economic benefits generated by such intangible assets. The allocation of intangibles is set forth below:
|  | December 31, |  | December 31,
|  | 2020 |  | 2019
Pulp |  | 7,897,051 |  | 7,942,486
Consumer goods |  | 119,332 |  | 119,332
|  | 8,016,383 |  | 8,061,818

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