EX-99.1 2 tm2115423d1_ex99-1.htm EXHIBIT 99.1

Exhibit 99.1

Suzano S.A.

Unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

(In thousands of R$, unless otherwise stated)

CONSOLIDATED BALANCE SHEETS

ASSET	Note	March 31, 2021		December 31, 2020
CURRENT
Cash and cash equivalents	5		5,334,508		6,835,057
Marketable securities	6		4,028,038		2,212,079
Trade accounts receivable	7		3,692,928		2,915,206
Inventories	8		3,989,789		4,009,335
Recoverable taxes	9		406,352		406,850
Derivative financial instruments	4.5		414,094		484,043
Advances to suppliers	10		41,492		43,162
Other assets			752,011		738,924
			18,659,212		17,644,656
Assets held for sale	1.2.2				313,338
Total current assets			18,659,212		17,957,994

NON-CURRENT
Marketable securities	6		236,344		184,778
Recoverable taxes	9		832,173		834,575
Deferred taxes	12		11,044,593		8,677,002
Derivative financial instruments	4.5		856,828		857,377
Advances to suppliers	10		1,203,265		1,015,115
Judicial deposits			275,118		257,789
Other assets			224,663		235,341

Biological assets	13		11,094,744		11,161,210
Investments	14		379,564		359,071
Property, plant and equipment	15		38,580,957		39,156,890
Right of use	19.1		4,566,956		4,344,078
Intangible	16		16,572,051		16,759,528
Total non-current			85,867,256		83,842,754

TOTAL ASSET			104,526,468		101,800,748

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

Suzano S.A.

Unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

(In thousands of R$, unless otherwise stated)

CONSOLIDATED BALANCE SHEETS

LIABILITIES	Note	March 31, 2021			December 31, 2020
CURRENT
Trade accounts payable	17		2,393,144			2,361,098
Loans, financing and debentures	18.1		2,143,255			2,043,386
Lease liabilities	19.2		632,812			620,177
Derivative financial instruments	4.5		2,670,708			1,991,118
Taxes payable			239,910			170,482
Payroll and charges			349,263			492,728
Liabilities for assets acquisitions and subsidiaries	23		114,889			101,515
Dividends payable			6,228			6,232
Advance from customers			92,505			25,171
Other liabilities			336,480			360,916
Total current liabilities			8,979,194			8,172,823

NON-CURRENT
Loans, financing and debentures	18.1		73,770,784			70,856,496
Lease liabilities	19.2		5,045,285			4,571,583
Derivative financial instruments	4.5		7,157,597			6,126,282
Liabilities for assets acquisitions and subsidiaries	23		428,678			400,713
Provision for judicial liabilities	20.1		3,255,140			3,255,955
Employee benefit plans	21.2		788,948			785,045
Deferred taxes	12					570
Share-based compensation plans	22.3		223,915			195,135
Advance from customers			199,595
Other liabilities			112,991			98,768
Total non-current liabilities			90,982,933			86,290,547
TOTAL LIABILITIES			99,962,127			94,463,370

EQUITY	24
Share capital			9,235,546			9,235,546
Capital reserves			11,822			10,612
Treasury shares			(218,265	)		(218,265	)
Other reserves			2,065,162			2,129,944
Retained loss			(6,636,122	)		(3,926,015	)
Controlling shareholders´			4,458,143			7,231,822
Non-controlling interest			106,198			105,556
Total equity			4,564,341			7,337,378
TOTAL LIABILITIES AND EQUITY			104,526,468			101,800,748

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

Suzano S.A.

Unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

(In thousands of R$, unless otherwise stated)

CONSOLIDATED STATEMENTS OF INCOME (LOSS)

	Note	March 31, 2021			March 31, 2020
NET SALES	27		8,889,166			6,980,793
Cost of sales	29		(4,845,034	)		(4,819,999	)
GROSS PROFIT			4,044,132			2,160,794

OPERATING INCOME (EXPENSES)
Selling	29		(581,766	)		(514,936	)
General and administrative	29		(382,554	)		(314,836	)
Income from associates and joint ventures	14		10,266			711
Other, net	29		516,853			16,731
OPERATING PROFIT BEFORE NET FINANCIAL INCOME (EXPENSES)			3,606,931			1,348,464

NET FINANCIAL INCOME (EXPENSES)	26
Financial expenses			(990,933	)		(1,086,424	)
Financial income			24,227			120,754
Derivative financial instruments			(2,493,950	)		(9,058,792	)
Monetary and exchange variations, net			(5,206,465	)		(12,419,586	)
LOSS BEFORE TAXES			(5,060,190	)		(21,095,584	)

Income and social contribution taxes
Current	12		(64,149	)		(54,360	)
Deferred	12		2,369,080			7,730,883
LOSS FOR THE PERIOD			(2,755,259	)		(13,419,061	)

Attributable to
Controlling shareholders’			(2,757,244	)		(13,422,530	)
Non-controlling interest			1,985			3,469

Loss per share
Basic	25.1		(2.04358	)		(9.94835	)
Diluted	25.2		(2.04358	)		(9.94835	)

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

Suzano S.A.

Unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

(In thousands of R$, unless otherwise stated)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

	March 31, 2021			March 31, 2020
Loss for the period		(2,755,259	)		(13,419,061	)
Other comprehensive income (loss)
Exchange rate variation and fair value investments in equity measured at fair value through other comprehensive income		2,941			1,100
Tax effect of the above items		(1,000	)		(374	)
Items with no subsequent effect on statement of income		1,941			726

Exchange rate variation on conversion of financial statements of the subsidiaries abroad		(19,586	)		(3,360	)
Items with subsequent effect on statement of income		(19,586	)		(3,360	)
		(2,772,904	)		(13,421,695	)

Attributable to
Controlling shareholders’		(2,774,889	)		(13,425,164	)
Non-controlling interest		1,985			3,469

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

Suzano S.A.

Unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

(In thousands of R$, unless otherwise stated)

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

	Attributable to controlling shareholders’
	Share capital					Capital reserves							Retained earnings reserves
	Share capital		Share issuance costs			Stock options granted		Other		Treasury shares			Legal Reserve		Other reserves			Retained loss			Total			Non- controlling interest			Total equity
Balances at December 31, 2019		9,269,281		(33,735	)		5,979		6,410,885		(218,265	)		317,144		2,221,341						17,972,630			115,339			18,087,969
Total comprehensive income
Loss for the period																			(13,422,530	)		(13,422,530	)		3,469			(13,419,061	)
Other comprehensive income for the period																(2,634	)					(2,634	)					(2,634	)
Transactions with shareholders
Stock options granted							300															300						300
Fair value attributable to non-controlling interest																									(1,697	)		(1,697	)
Internal changes in equity
Realization of deemed cost, net of taxes																(12,871	)		12,871
Balances at March 31, 2020		9,269,281		(33,735	)		6,279		6,410,885		(218,265	)		317,144		2,205,836			(13,409,659	)		4,547,766			117,111			4,664,877

Balances at December 31, 2020		9,269,281		(33,735	)		10,612				(218,265	)				2,129,944			(3,926,015	)		7,231,822			105,556			7,337,378
Total comprehensive income
Loss for the period																			(2,757,244	)		(2,757,244	)		1,985			(2,755,259	)
Other comprehensive income for the period																(17,645	)					(17,645	)					(17,645	)
Transactions with shareholders
Stock options granted							1,210															1,210						1,210
Fair value attributable to non-controlling interest																									(1,343	)		(1,343	)
Internal changes in equity
Realization of deemed cost, net of taxes																(47,137	)		47,137
Balances at March 31, 2021		9,269,281		(33,735	)		11,822				(218,265	)				2,065,162			(6,636,122	)		4,458,143			106,198			4,564,341

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

Suzano S.A.

Unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

(In thousands of R$, unless otherwise stated)

CONSOLIDATED STATEMENTS OF CASH FLOWS

	March 31, 2021			March 31, 2020
OPERATING ACTIVITIES
Loss for the period		(2,755,259	)		(13,419,061	)
Adjustment to
Depreciation, depletion and amortization (Notes 26 and 29)		1,734,134			1,590,393
Depreciation of right of use (Note 19.1)		46,821			39,330
Sublease of ships		(11,420	)
Interest expense on lease liabilities		109,040			95,350
Result from sale and disposal of property, plant and equipment and biological assets, net (Note 29)		(496,844	)		4,488
Income from associates and joint ventures (Note 14.2)		(10,266	)		(711	)
Exchange rate and monetary variations, net (Note 26)		5,206,465			12,419,586
Interest expenses with financing, loans and debentures, net (Note 26)		758,171			890,073
Premium expenses with early settlements		32,933
Capitalized interest (Note 26)		(402	)		(3,803	)
Accrual of interest on marketable securities		(15,111	)		(58,870	)
Amortization of fundraising costs (Note 26)		41,020			25,250
Derivative losses, net (Note 26)		2,493,950			9,058,792
Deferred income tax and social contribution (Note 12.3)		(2,369,080	)		(7,730,883	)
Interest on actuarial liabilities (Note 21.2)		13,964			13,195
Provision (reversal) for judicial liabilities, net (Note 20.1)		4,311			(8,772	)
Allowance for doubtful accounts, net (Note 7.3)		1,762			5,522
Provision for inventory losses, net (Note 8.1)		5,462			16,168
Provision for loss of ICMS credits, net (Note 9.1)		7,458			19,571
Other		551			5,438
Decrease (increase) in assets
Trade accounts receivables		(514,616	)		(608,145	)
Inventories		(56,458	)		424,128
Recoverable taxes		(2,390	)		200,988
Other assets		37,986			101,406
Increase (decrease) in liabilities
Trade accounts payables		88,245			(94,248	)
Taxes payable		102,603			(59,487	)
Payroll and charges		(143,474	)		(92,262	)
Other liabilities		(29,577	)		(208,734	)
Cash provided by operations		4,279,979			2,624,702
Payment of interest with financing, loans and debentures (Note 18.2)		(1,175,388	)		(1,167,141	)
Payment of premium with early settlements		(32,933	)
Interest received from marketable securities		14,049			52,486
Payment of income taxes		(35,144	)		(28,931	)
Cash provided by operating activities		3,050,563			1,481,116

INVESTING ACTIVITIES
Additions to property, plant and equipment (Note 15)		(263,979	)		(299,425	)
Additions to intangible (Note 16)		(734	)		(469	)
Additions to biological assets (Note 13)		(703,830	)		(578,224	)
Proceeds from sale of property, plant and equipment		1,164,928			27,905
Capital increase (Note 14.3)		(6,328	)
Marketable securities, net		(1,866,464	)		1,145,994
Advance for acquisition of wood from operations with development		(167,176	)		(68,957	)
Acquisition of non-controlling interests		(6,482	)
Cash provided (used) in investing activities		(1,850,065	)		226,824

FINANCING ACTIVITIES
Proceeds from loans, financing and debentures (note 18.2)		8,969,521			3,663,623
Payment of derivative transactions (note 4.5.4)		(712,547	)		(172,797	)
Payment of loans, financing and debentures (note 18.2)		(11,177,120	)		(4,503,548	)
Payment of leases (note 19.2)		(249,128	)		(157,209	)
Liabilities for assets acquisitions and subsidiaries					(2,838	)
Cash used by financing activities		(3,169,274	)		(1,172,769	)

EXCHANGE VARIATION ON CASH AND CASH EQUIVALENTS		468,227			764,031

Increase (reduction) in cash and cash equivalents, net		(1,500,549	)		1,299,202
At the beginning for the period		6,835,057			3,249,127
At the end for the period		5,334,508			4,548,329
Increase (reduction) in cash and cash equivalents, net		(1,500,549	)		1,299,202

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

COMPANY´S OPERATIONS

Suzano S.A., together with its subsidiaries (“Suzano” or collectively “Company”), is a public company with its headquarters office in Brazil, at Avenida Professor Magalhães Neto, no. 1,752 - 10th floor, rooms 1010 and 1011, Bairro Pituba, in the city of Salvador, State of Bahia, and the main business office in the city of São Paulo.

Suzano owns shares traded in B3 S.A. (“Brasil, Bolsa, Balcão - “B3”), listed on the New Market under the ticker SUZB3 and American Depositary Receipts (“ADRs”) in a ratio of 1 (one) common share, Level II, traded in the New York Stock Exchange (“NYSE”) under the ticker SUZ.

The Company holds 12 industrial units, located in the cities of Cachoeiro de Itapemirim and Aracruz (Espírito Santo, State), Belém (Pará, State), Eunápolis and Mucuri (Bahia, State), Maracanaú (Ceará, State), Imperatriz (Maranhão, State), Jacareí, Limeira, Rio Verde and Suzano, being 2 units (São Paulo, State) and Três Lagoas (Mato Grosso do Sul, State).

These units produce hardwood pulp from eucalyptus, paper (coated paper, paperboard, uncoated paper and cut size paper) and packages of sanitary paper (consumer goods - tissue) to serve the domestic and foreign markets.

Pulp and paper are sold in the foreign market directly by Suzano, as well as through its wholly-owned subsidiaries in Austria, the United States of America, Switzerland and Argentina and sales offices in China.

The Company’s operations also include the commercial operation of eucalyptus forest for its own use, the operation of port terminals, and the holding of interest, as partner or shareholder, in any other company or enterprise, and the generation and sale of electricity.

The Company is controlled by Suzano Holding S.A., through a voting agreement whereby it holds 45.73% of the common shares of its share capital.

These unaudited condensed consolidated interim financial information was approved by Board of Directors on May 10, 2021.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

1.1.

Equity interest

The Company holds equity interest in the following entities:

					% equity interest
Entity	Main activity	Country	Type of investment	Accounting method	March 31, 2021			December 31, 2020
Celluforce Inc.	Nanocrystalline pulp research and development	Canada	Direct	Fair value through other comprehensive income		8.30	%		8.30	%
Ensyn Corporation	Biofuel research and development	United States of America	Direct	Equity		25.30	%		25.30	%
F&E Technologies LLC	Biofuel production, except alcohol	United States of America	Direct	Equity		50.00	%		50.00	%
F&E Tecnologia do Brasil S.A.	Biofuel production, except alcohol	Brazil	Direct	Consolidated		100.00	%		100.00	%
Fibria Celulose (USA) Inc.	Business office	United States of America	Direct	Consolidated		100.00	%		100.00	%
Fibria Overseas Finance Ltd.	Financial fundraising	Cayman Island	Direct	Consolidated		100.00	%		100.00	%
Fibria Terminal de Celulose de Santos SPE S.A.	Port operation	Brazil	Direct	Consolidated		100.00	%		100.00	%
Ibema Companhia Brasileira de Papel	Industrialization and commercialization of paperboard	Brazil	Direct	Equity		49.90	%		49.90	%
Maxcel Empreendimentos e Participações S.A.	Holding	Brazil	Direct	Consolidated		100.00	%		100.00	%
Itacel - Terminal de Celulose de Itaqui S.A.	Port operation	Brazil	Indirect	Consolidated		100.00	%		100.00	%
Mucuri Energética S.A.	Power generation and distribution	Brazil	Direct	Consolidated		100.00	%		100.00	%
Paineiras Logística e Transportes Ltda.	Road freight transport	Brazil	Direct	Consolidated		100.00	%		100.00	%
Portocel - Terminal Espec. Barra do Riacho S.A.	Port operation	Brazil	Direct	Consolidated		51.00	%		51.00	%
Projetos Especiais e Investimentos Ltda.	Commercialization of equipment and parts	Brazil	Direct	Consolidated		100.00	%		100.00	%
Rio Verde Participações e Propriedades Rurais S.A.	Forest assets	Brazil	Direct	Consolidated		100.00	%		100.00	%
SFBC Participações Ltda.	Packaging production	Brazil	Direct	Consolidated		100.00	%		100.00	%
Spinnova Oy	Research and development of sustainable raw materials (wood) for the textile industry	Finland	Direct	Equity		23.44	%		23.44	%
Stenfar S.A. Indl. Coml. Imp. Y. Exp.	Commercialization of paper and computer materials	Argentina	Direct	Consolidated		100.00	%		100.00	%
Suzano Austria GmbH.	Business office	Austria	Direct	Consolidated		100.00	%		100.00	%
Suzano Canada Inc.	Lignin research and development	Canada	Direct	Consolidated		100.00	%		100.00	%
Suzano International Trade GmbH.	Business office	Austria	Direct	Consolidated		100.00	%		100.00	%
Suzano Operações Industriais e Florestais S.A.	Industrialization, commercialization and exportation of pulp	Brazil	Direct	Consolidated		100.00	%		100.00	%
Suzano Pulp and Paper America Inc.	Business office	United States of America	Direct	Consolidated		100.00	%		100.00	%
Suzano Pulp and Paper Europe S.A.	Business office	Switzerland	Direct	Consolidated		100.00	%		100.00	%
Suzano Shanghai Ltd.	Business office	China	Direct	Consolidated		100.00	%		100.00	%
Suzano Trading International KFT	Business office	Hungary	Direct	Consolidated		100.00	%		100.00	%
Suzano Trading Ltd.	Business office	Cayman Island	Direct	Consolidated		100.00	%		100.00	%
FuturaGene Ltd.	Biotechnology research and development	England	Indirect	Consolidated		100.00	%		100.00	%
FuturaGene AgriDev Xinjiang Company Ltd. ⁽¹⁾	Biotechnology research and development	China	Indirect	Consolidated					100.00	%
FuturaGene Biotechnology Shangai Company Ltd.	Biotechnology research and development	China	Indirect	Consolidated		100.00	%		100.00	%
FuturaGene Delaware Inc.	Biotechnology research and development	United States of America	Indirect	Consolidated		100.00	%		100.00	%
FuturaGene Israel Ltd.	Biotechnology research and development	Israel	Indirect	Consolidated		100.00	%		100.00	%
FuturaGene Hong Kong Ltd.	Biotechnology research and development	Hong Kong	Indirect	Consolidated		100.00	%		100.00	%
FuturaGene Inc.	Biotechnology research and development	United States of America	Indirect	Consolidated		100.00	%		100.00	%
Veracel Celulose S.A. ⁽²⁾	Industrialization, commercialization and exportation of pulp	Brazil	Direct	Proportional Consolidated		50.00	%		50.00	%
Woodspin Oy ⁽³⁾	Development, production, distribution and commercialization of wood-based textile fibers, yarns and filaments, produced from cellulose and microfibrillated cellulose.	Finland	Direct/Indirect	Equity		50.00	%

On March 18, 2021, liquidation of the legal entity.

Joint operation with Stora Enso, a company located in Finland.

On March 23, 2021, established of joint venture controlled with Spinnova Oy, a company located in Finland.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

1.2.

Major events in the three-month period ended March 31, 2021

1.2.1.

Effects arising from COVID 19

With the advent of the pandemic of COVID-19, popularly known as the new coronavirus, Suzano has adopted and has maintained preventive and mitigating measures, in compliance with rules and policies established by national and international health authorities, in order to minimize, the harmful effects of the pandemic, referring to the safety of people, society and their businesses.

Thus, Company’s initiatives are based on three pillars:

(i)

Protection for people: in order to provide security to its employees and third parties workers on site, Suzano adopted a series of measures to minimize exposure of its team and / or mitigate exposure risks.

(ii)

Protection of society: one of Suzano’s three cultural drivers is: “It is only good for us, if it is good for the world”. Since the beginning of the pandemic, Suzano has adopted a series of measures to protect society, including:

•

Donation of toilet paper, napkins and disposable diapers produced by the Company for needy regions.

•

Acquisition of 159 respirators and 1,000,000 hospital masks for donation to the Federal and State Governments.

•

Participation in joint action with Positivo Tecnologia, Klabin, Flextronics and Embraer, to support the Brazilian company Magnamed, in the production of respirators to deliver to the Federal Government. Suzano’s disbursement in this action was R$9,584 in 2020.

•

Construction of a field hospital in Teixeira de Freitas (BA) in conjunction with Veracel, which has already been handed over to the state government and opened in July 2020.

•

Establishement a partnership with Fatec of Capão Bonito for the production of gel alcohol.

•

Loan of forklifts to move donations received by the Red Cross.

•

Maintenance of all direct jobs.

•

Maintenance, for 90 days (until the end of June 2020) of payment of 100% of the cost of the payroll of service providers’ workers who had their activities suspended due to the pandemic, aiming at the consequent preservation of jobs.

•

Creation of the a support program for small suppliers, a social support program for small farmers to sell their products through the home delivery system in 38 communities supported by Suzano’s Rural and Territorial Development Program (“PDRT”) in 5 states and social program with the objective of provide 125,000 masks in communities for donation in 5 states.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

•

Launch a program to support its portfolio of small and medium-sized paper customers entitled “Tamo Junto” with the objective of ensuring that these companies have the financial and management capacity to resume activities.

•

Support for the State Government of Maranhão in setting up the Imperatriz Temporary Hospital, donating R$2,031.

•

Provision of 280,000 cubic meters of oxygen to the State of Amazonas.

•

Construction of a new treatment center for COVID-19 in São Paulo, in partnership with Gerdau, BTG Pactual, Península Participações and through joint efforts with Hospital Israelita Albert Einstein and the Municipal Government of São Paulo.

The disbursements made for carrying out the social actions implemented by Suzano, totaled R$4,555 through March 31, 2021 (Note 29).

(iii)

Protection for business: to date, the Company continues with its normal operations and a crisis management committee has been implemented.

The paper and pulp sector were recognized by the World Health Organization (“WHO”), as well as by several countries, as a producer of goods essential to society. Therefore, in order to fulfill the responsibility arising from the essentiality of the business, Suzano has taken measures to ensure, to the greatest extent possible, operational normality and full service to its customers, increasing the level of wood and raw material inventories in the factories and has been advancing its inventories of finished goods product bringing them closer to their customers to mitigate possible risks of disruption in the factories’ supply chain and the sale of their products.

The current situation resulting from the COVID-19 also implies a higher credit risk, especially for its customers in the paper business. Thus, the Company has also been monitoring the evolution of this risk and implementing measures to mitigate it, and so far, there has been no significant financial impact.

As previously disclosed in the quarterly information for the period ended March 31, 2020, the Company temporarily stopped the production at the paper production lines of the Mucuri and Rio Verde units, however, the activities of the factories were resumed at normal level at the beginning of July 2020 and have been maintained until now.

Finally, it is worth noting that, as a result of the current scenario, the Company has made and maintained a vast communication effort to its main stakeholders, ensuring transparency and adequate flow of information about dynamics of the social and economic conjuncture.

1.2.2.

Conclusion of commitment to purchase and sale of rural properties and forests with conditions precedent (“Closing”)

On January 5, 2021, through a Notice to the Market, the Company informed the conclusion of the transaction with Bracell SP Celulose Ltda.(“Bracell”) and Turvinho Participações Ltda. (“Turvinho”), receiving the final purchase price of R$1,056,755 in connection with the terms of the purchase and sale of rural properties and forests, with the conditions precedent agreement signed between the parties.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

From the total amount received:

R$375,860 was recognized in other liabilities, since it is related to the sale of eucalyptus forests (mature) and biological assets in formation (immature), which will be recognized in other operating results upon delivery of the wood, scheduled for 2027; and

ii)

R$680,895 was recognized in other operating results, in compliance with the obligation to delivery and transfer the possession of the rural properties. The cost of properties in the amount of R$289,867, previously classified non-current assets held for sale, was realized and recognized in other operating results, generating a net income of R$391,028.

In addition, of the amount received for the sale of rural properties, R$50,415 was classified as marketable securities of long-term as escrow account, whose amount will only be released after compliance with the documentary regularization of certain rural properties as defined in the terms of the purchase and sale. Regularization costs were estimated at R$8,000 and were recognized in the other operating results.

In the three-month period ended March 31, 2021, the Company recognized sales revenue in the amount of R$790,865 as a result of the transfer of control of part of the assets.

1.2.3.

New facility in Cachoeiro de Itapemirim (ES)

In early 2021, the Company inaugurated a new facility located in the city of Cachoeiro de Itapemirim, in the state of Espírito Santo, which will convert tissue paper (soft and high-absorption papers) into finished products.

Mimmo and Max Pure brand toilet papers will be produced. The facility has the capacity to produce 30 thousand tons per year of toilet paper, which is equivalent to 1,000,000 rolls/day.

BASIS OF PREPARATION AND PRESENTATION OF UNAUDITED CONDENSED CONSOLIDATED INTERIM FINANCIAL INFORMATION

The Company’s unaudited condensed consolidated interim financial information, of the three-month period ended March 31, 2021, are prepared in compliance with the international standard IAS 34 Interim Financial Reporting issued by the International Accounting Standards Board (“IASB”) and disclose all the applicable significant information related to the financial information, which is consistent with the information used by Management in the performance of its duties.

The Company’s unaudited condensed consolidated interim financial information are expressed in thousands of Brazilian Reais (“R$”), as well as the amounts of other currencies, when applicable, were also expressed in thousands, unless otherwise stated.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

The preparation of unaudited condensed consolidated interim financial information requires Management to make judgments, use estimates and adopt assumptions in the process of applying accounting practices, that affect the disclosed amounts of revenues, expenses, assets and liabilities, including contingent liabilities. However, the uncertainty inherent to these judgements, assumptions and estimates could result in material adjustments to the carrying amount of certain assets and liabilities in future periods.

The Company reviews its judgments, estimates and assumptions continually as disclosed in the annual financial statements for the year ended December 31, 2020 (Note 3.2.34). There were no changes in these judgments, estimates and assumptions compared to disclosed on December 31, 2020.

The unaudited condensed consolidated interim financial information was prepared on historical cost basis, except for the following material items recognized:

(i)

derivative and non-derivative financial instruments measured at fair value;

(ii)

share-based payments and employee benefits measured at fair value;

(iii)

biological assets measured at fair value; and

(iv)

deemed cost of property, plant and equipment.

The main accounting polices applied in the preparation of these unaudited condensed consolidated interim financial information are presented in Note 3.

The unaudited condensed consolidated interim financial information were prepared under the going concern assumption.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The unaudited condensed consolidated interim financial information was prepared based on the information of Suzano and its wholly-owned subsidiaries on the three-month period ended March 31, 2021, as well as in accordance with consistent accounting practices and policies.

The unaudited condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended December 31, 2020, considering that its purpose is to provide an update on the activities, events and significant circumstances in relation to those disclosed in the consolidated financial statements. Therefore, unaudited condensed consolidated interim financial information focus on new activities, events and circumstances and do not duplicate the information previously disclosed, except when Management judges that the maintenance of the information is relevant.

The accounting policies have been consistently applied to all consolidated companies.

There were no changes on such policies and estimates calculation methodologies, except for the application of the new accounting policies as of January 1, 2021 and whose estimated impact was disclosed in the annual financial statements of December 31, 2020, as disclosed in the Note 3.1.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

3.1.

New accounting policies and changes in accounting policies adopted

The new and changed standards and interpretations issued, but not yet in force until the issuance of the Company’s unaudited condensed consolidated interim financial information, are described below. The Company intends to adopt these new standards, changes and interpretations, if applicable, when it come into force and does not expect to have a material impact on the financial statements.

3.1.1.

Interest Rate Reform – IAS 39 / IFRS 7 and IFRS 9 - Phase 2 (Applicable on / or after January 1, 2021, early adoption permitted)

The adoption of phase 2, it is summarized as follows:

(i)

changes in contractual cash flows: practical expedient that allows to replace, as a consequence of the reform, the effective interest rate of a financial asset or financial liability with a new economically equivalent rate, without derecognition of the contract;

(ii)

hedge accounting requirements: end of exemptions for evaluating the effectiveness of hedge accounting relationships (Phase 1), and

(iii)

disclosure: requirements about the disclosure of risks to which the Company is exposed by the reform, risk management and evolution of the IBORs transition.

The Company assessed content of this pronouncement and does not expect to have significant impacts on its debts and derivatives linked to LIBOR (note 4.4.2).

3.1.2.

Business Combination IFRS 3 - Reference to the conceptual framework

The amendments update IFRS 3 so that it refers to the 2018 Conceptual Framework instead of the 1989 Structure. It also include in IFRS 3 the requirement that, for obligations within the scope of IAS 37, the buyer applies IAS 37 to determine whether there is a present obligation on the acquisition date due to past events. For a tax within the scope of IFRIC 21 - Levies, the buyer applies IFRIC 21 to determine whether the event that resulted in the obligation to pay the tax occurred up to the date of acquisition.

The amendments add an explicit statement that the buyer does not recognize contingent assets acquired in a business combination.

The changes are applicable to business combinations whose acquisition date occurs on or after the beginning of the first reporting period beginning on/or after January 1, 2022. Early adoption is permitted if the entity also adopts all other updated references (published together with the updated Conceptual Framework) on the same date or earlier.

3.1.3.

Lease – IFRS 16 - update of the original issued on June 16, 2020 (Applicable on/or after April 1, 2021, early adoption permitted)

On March 31, 2021, this pronouncement was changed as a result of benefits related to COVID-19 granted to lessee under lease agreements. The Company assessed the content of this pronouncement and did not identify any impacts, for the clauses of the current lease agreements remained unchanged.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT

4.1.

Financial risks management

4.1.1.

Overview

In the three-month period ended March 31, 2021, there were no significant changes in the financial risk management policies and procedures compared to those disclosed in Note 4 to the annual financial statements for the year ended December 31, 2020.

The Company maintained its conservative approach and strong cash and marketable securities position, as well as its hedge policy, during the crisis caused by the pandemic of COVID-19 and even though there were impacts on the fair value of its financial instruments due to the effects on all global economies, the impacts were as expected, according to sensitivity analyses disclosed in previous reports, and measures were taken in relation to the risks associated to the financial instruments, in particular to the risks of liquidity, credit and exchange rate variation, as set forth below.

4.1.2.

Rating

All transactions with financial instruments are recognized for accounting purposes and classified in the following categories:

	Note		March 31, 2021		December 31, 2020
Assets
Amortized cost
Cash and cash equivalents		5		5,334,508		6,835,057
Trade accounts receivable		7		3,692,928		2,915,206
Other assets				976,674		974,265
				10,004,110		10,724,528
Fair value through other comprehensive income
Other investments		14.1		29,280		26,338
				29,280		26,338
Fair value through profit or loss
Derivative financial instruments		4.5.1		1,270,922		1,341,420
Marketable securities		6		4,264,382		2,396,857
				5,535,304		3,738,277
				15,568,694		14,489,143
Liabilities
Amortized cost
Trade accounts payable		17		2,393,144		2,361,098
Loans, financing and debentures		18.1		75,914,039		72,899,882
Lease liabilities		19.2		5,678,097		5,191,760
Liabilities for assets acquisitions and subsidiaries		23		543,567		502,228
Dividends payable				6,228		6,232
Other liabilities				449,471		459,684
				84,984,546		81,420,884
Fair value through profit or loss
Derivative financial instruments		4.5.1		9,828,305		8,117,400
				9,828,305		8,117,400
				94,812,851		89,538,284
				79,244,157		75,049,141

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

4.1.3.

Fair value of loans and financing

The estimated fair values of loans and financing are set forth below:

	Yield used to discount	March 31, 2021		December 31, 2020
Quoted in the secondary market In foreign currency
Bonds	Secondary Market		46,698,696		43,703,482
Estimated to present value
In foreign currency
Export credits (“Pre-payment”)	LIBOR		22,023,351		20,546,778
In local currency
BNDES – TJLP	DI 1		401,762		1,399,177
BNDES – TLP	DI 1		577,871		647,235
BNDES – Fixed	DI 1		67,784		76,732
BNDES – Selic (“Special Settlement and Custody System”)	DI 1		576,838		960,215
BNDES - Currency basket	DI 1		29,334		27,239
CRA (“Agribusiness Receivables Certificate”)	DI 1/IPCA		3,283,486		3,286,792
Debentures	DI 1		5,645,477		5,498,793
NCE (“Export Credit Notes”)	DI 1		1,329,571		1,322,813
NCR (“Rural Credit Notes”)	DI 1		285,171		283,702
Export credits (“Pre-payment”)	DI 1		1,375,738		1,490,242
			82,295,079		79,243,200

The Management considers that for its other financial liabilities measured at amortized cost, its book values approximate to their fair values and therefore the information on their fair values is not being presented.

4.2.

Liquidity risk management

As disclosed in note 4 to annual the financial statements as of December 31, 2020, the Company’s purpose is maintaining a strong cash and marketable securities position to meet its financial and operating obligations. The amount held as cash is used for payments expected in the normal course of its operations, while the cash surplus amount is invested in highly liquid financial investments according to Cash Management Policy.

The cash position is monitored by the Company’s senior management, by means of management reports and participation in performance meetings with determined frequency. In the three-month period ended March 31, 2021, the impacts in cash and marketable securities were as expected and the cash generated in the operation was used for the most part to debt redemption, including in advance.

The remaining contractual maturities of financial liabilities are disclosed at the date of this financial information reporting date. The amounts as set forth below, consist in the undiscounted cash flows and include interest payments and exchange rate variation, and therefore may not be reconciled with the amounts disclosed in the balance sheet.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

	March 31, 2021
	Book value		Future value		Up to 1 year		1 - 2 years		2 - 5 years		More than 5 years
Liabilities
Trade accounts payables		2,393,144		2,393,144		2,393,144
Loans, financing and debentures		75,914,039		106,921,163		4,803,369		5,785,406		35,630,252		60,702,136
Lease liabilities		5,678,097		10,181,590		888,433		832,663		1,561,905		6,898,589
Liabilities for asset acquisitions and subsidiaries		543,567		614,748		124,529		142,734		247,973		99,512
Derivative financial instruments		9,828,305		14,928,833		2,748,758		1,314,273		5,543,287		5,322,515
Dividends payable		6,228		6,228		6,228
Other liabilities		449,471		449,471		449,471
		94,812,851		135,495,177		11,413,932		8,075,076		42,983,417		73,022,752

	December 31, 2020
	Book value		Future value		Up to 1 year		1 - 2 years		2 - 5 years		More than 5 years
Liabilities
Trade accounts payables		2,361,098		2,361,098		2,361,098
Loans, financing and debentures		72,899,882		101,540,320		4,034,595		6,619,518		36,751,023		54,135,184
Lease liabilities		5,191,760		9,552,075		620,177		806,560		2,198,419		5,926,919
Liabilities for asset acquisitions and subsidiaries		502,228		573,920		116,376		112,155		253,419		91,970
Derivative financial instruments		8,117,400		10,868,858		1,999,811		1,296,199		4,133,320		3,439,528
Dividends payable		6,232		6,232		6,232
Other liabilities		459,684		459,684		360,916		98,768
		89,538,284		125,362,187		9,499,205		8,933,200		43,336,181		63,593,601

4.3.

Credit risk management

In the three-month period ended March 31, 2021, there were no significant changes in the credit risk management policies compared to those disclosed in Note 4 to the annual financial statements for the year ended of December 31, 2020, except for set forth below.

4.3.1.

Trade accounts receivable and advances to supplier

The Company has commercial and credit policies aimed at mitigating any risks arising from its customers’ default, mainly through hiring of credit insurance policies, bank guarantees provided by first-tier banks and collaterals according to liquidity. Moreover, portfolio customers are subject to internal credit analysis aimed at assessing the risk regarding payment performance, both for exports and for domestic sales.

For customer credit assessment, the Company applies a matrix based on the analysis of qualitative and quantitative aspects to determine individual credit limits to each customer according to the identified risk. Each analyze is submitted for approval according to established hierarchy and, if applicable, to approval from the Management’s meeting and the Credit Committee.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

4.3.2.

Banks and financial institutions

In the three-month period ended March 31, 2021, there were no significant changes in the credit risk management policies and procedures related to bank and financial institutions compared to those disclosed in note 4 to the annual financial statements for the year ended December 31, 2020.

4.4.

Market risk management

In the three-month period ended March 31, 2021, there were no significant changes in the market risk management policies and procedures compared to those disclosed in note 4 to the annual financial statements for the year ended December 31, 2020.

4.4.1.

Exchange rate risk management

As disclosed in note 4 of the annual financial statements for the year ended December 31, 2020, the Company hires U.S.Dollar selling transactions in the futures markets, including strategies involving options, to ensure attractive levels of operating margins for a portion of revenue. Such transactions are limited to a percentage of the net surplus foreign currency over an 18-months’ time horizon and therefore, are matched to the availability of currency for sale in the short term.

The net exposure of assets and liabilities in foreign currency which is substantially in U.S. Dollars, is set forth below:

	March 31, 2021			December 31, 2020
Assets
Cash and cash equivalents		5,167,560			6,370,201
Trade accounts receivables		2,691,828			1,938,614
Derivative financial instruments		525,202			621,385
		8,384,590			8,930,200
Liabilities
Trade accounts payables		(553,524	)		(492,617	)
Loans and financing		(62,601,237	)		(58,145,087	)
Liabilities for asset acquisitions and subsidiaries		(347,424	)		(313,022	)
Derivative financial instruments		(8,852,562	)		(6,994,363	)
		(72,354,747	)		(65,945,089	)
Net liability exposure		(63,970,157	)		(57,014,889	)

4.4.1.1.

Sensitivity analysis – foreign exchange rate exposure – except financial instruments derivatives

For market risk analysis, the Company uses scenarios to jointly evaluate assets and liabilities positions in foreign currency, and the possible effects on its results. The probable scenario represents the amounts recognized, as they reflect the translation into Brazilian Reais on the base date of the balance sheet (R$ to U.S.$ = R$5.6973).

This analysis assumes that all other variables, particularly, the interest rates, remains constant. The other scenarios considered the appreciation/depreciation of the Brazilian Real against the U.S. Dollar at the rates of 25% and 50%, before taxes.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

The following table set forth the potential impacts in absolute amounts:

	March 31, 2021
		Effect on profit or loss and equity
		Probable (base value)		Possible (25%)	Remote (50%)
Cash and cash equivalents		5,167,560		1,291,890	2,583,780
Trade accounts receivable		2,691,828		672,957	1,345,914
Trade accounts payable		(553,524	)	138,381	276,762
Loans and financing		(62,601,237	)	15,650,309	31,300,619
Liabilities for asset acquisitions and subsidiaries		(347,424	)	86,856	173,712

4.4.1.2.

Sensitivity analysis – foreign exchange rate exposure – financial instruments derivatives

The Company hires sales operations of U.S. Dollar in the futures markets, including strategies with options, in order to ensure attractive levels of operating margins for a portion of revenue. These operations are limited to a percentage of the net foreign exchange surplus over the 18-month horizon and, therefore, are attached to the availability of ready-to-sell foreign exchange in the short term.

Due to pandemic of COVID-19 and the effects on all global economies over the past 12 months, financial markets have experienced volatility throughout the period with a strong sense of aversion to risk, with a consequent substantial devaluation of the Real against the U.S. Dollars.

For the calculation of mark-to-market (“MtM”), the PTAX of the penultimate business day of the quarter was used, in December 2020 it was R$5.1967 and in March 2021 it was R$5.7642, with an increase of 11%. These market movements caused a negative impact on the mark-to-market hedge position entered by the Company.

It is important to mention that the impact caused by fluctuations in the exchange rate, whether positive or negative, will also affect the hedged asset. Therefore, even though there was a negative impact on the fair value of derivative transactions in the period, this impact was partially offset by the positive effect on the Company’s cash flow and, if the exchange rate remains stable, it will be offset by the appreciation of the hedge object in the coming periods. In addition, considering that hedge contracts are limited by the policy in a maximum of 75% of the total exposure in U.S. Dollars, the exchange rate devaluation will always benefit, in a net way, the Company’s cash generation in the long run.

The following table set forth the potential impacts assuming these scenarios:

	March 31, 2021
		Effect on profit or loss and equity
		Probable (base value)		Possible (+25%)		Remote (+50%)		Possible (-25%)	Remote (-50%)
		5.7642		7.2053		8.6463		4.3232	2.8821
Financial instruments derivatives
Derivative Non-Deliverable Forward (‘NDF’)		(30,418	)	(111,976	)	(223,952	)	111,975	223,951
Derivative options		(1,419,606	)	(4,661,595	)	(10,272,812	)	4,333,928	9,845,461
Derivative swaps		(7,486,054	)	(3,443,646	)	(6,834,660	)	3,338,380	6,729,393

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

4.4.2.

Interest rate risk management

Fluctuations in interest rates may imply effects of increased or reduced costs on new loans and operations already contracted.

The Company is constantly looking for alternatives for the use of financial instruments in order to avoid negative impacts on its cash flow.

Considering the extinction of LIBOR over the next few years, the Company is evaluating its contracts with clauses that envisage the discontinuation of the interest rate. Most debt contracts linked to LIBOR have some clause to replace this rate with a reference index or equivalent interest rate and, for contracts that do not have a specific clause, a renegotiation will be carried out between the parties. Derivative contracts linked to LIBOR provide for a negotiation between the parties for the definition of a new rate or an equivalent rate will be provided by the calculation agent.

It is worth mentioning that the clauses related to replacement of the indexes in the Company’s debt contracts indexed to LIBOR, establish that any replacement of the indexation rate in the contracts can only be evaluated in two circumstances (i) after the communication from an official government entity with formalization of the replacement/extinguishment of the effective rate of the contract, and this communication must define the exact date on which LIBOR will be extinguished and / or (ii) syndicated operations begin to be executed at a rate indexed to the Secured Overnight Financing Rate (“SOFR”). Considering that on March 5, 2021, the Financial Conduct Authority (“FCA”) announced the date of extinction of LIBOR 3M for June 30, 2023, the Company can, from this announcement, start negotiations terms of exchange of indexes for its debt contracts and related derivatives.

The Company mapped all contracts subject to IBOR reform that have yet to transition to an alternative benchmark rate and for the three-month period ended March 31, 2021 the Company has R$21,365,758 related to loan and financing contracts and R$1,613,264 related to derivative contracts and, initiated contact with the respective counterparties of each contract, to ensure that the terms and good market practices are adopted at the time of the transition of the index until June 2023, and these terms are still under negotiation between the parties.

The Company understands that it will not be necessary to change the risk management strategy due to the change in the indexes of the financial contracts linked to LIBOR.

The Company believes it is reasonable to assume that the negotiation of the indexes in its contracts, will move towards to the replacement of LIBOR by SOFR, because the available information, so far, indicates that SOFR will be the new interest rate adopted by the capital market. Based on the information available, the Company does not expect to have significant impact on its debts and derivatives linked to LIBOR.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

4.4.2.1.

Sensitivity analysis – exposure to interest rates – except financial instruments derivatives

For market risk analysis, the Company uses scenarios to evaluate the sensitivity that variations in operations impacted by the rates: Interbank Deposit Rate (“CDI”), Long Term Interest Rate (“TJLP”), Special System for Settlement and Custody (“SELIC”) and the London Interbank Offered Rate (“LIBOR”) which may impact the results. The probable scenario represents the amounts already booked, as they reflect the best estimate of the Management.

This analysis assumes that all other variables, particularly exchange rates, remain constant. The other scenarios considered appreciation/depreciation of 25% and 50% in the market interest rates.

The following table set forth the potential impacts in absolute amounts:

	March 31, 2021
		Effect on profit or loss and equity
		Probable		Possible (25%)	Remote (50%)
CDI/SELIC
Cash and cash equivalents		7,401		49	98
Marketable securities		4,264,382		28,252	56,503
Loans and financing		(9,365,105	)	62,044	124,088

TJLP
Loans and financing		(414,079	)	4,545	9,089

LIBOR
Loans and financing		(20,113,793	)	9,768	19,536

4.4.2.2.

Sensitivity analysis – exposure to interest rates – financial instruments derivatives

This analysis assumes that all other variables remain constant. The other scenarios considered appreciation/depreciation of 25% and 50% in the market interest rates.

The following table set forth the potential impacts assuming these scenarios:

	March 31, 2021
		Effect on profit or loss and equity
		Probable		Probable (+25%)		Remote (+50%)		Probable (-25%)		Remote (-50%)
CDI
Financial instruments derivatives
Liabilities
Derivative Non-Deliverable Forward (‘NDF’)		(30,418	)	(2,732	)	(5,414	)	2,783		5,618
Derivative options		(1,419,606	)	(99,416	)	(196,956	)	101,633		205,839
Derivative swaps		(7,486,054	)	(29,460	)	(57,957	)	30,396		61,642

LIBOR
Financial instruments derivatives
Liabilities
Derivative swaps		(7,486,054	)	63,244		126,467		(63,249	)	(126,521	)

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

4.4.2.3.

Sensitivity analysis for changes in the consumer price index of the US economy

For the measurement of the probable scenario, the United States Consumer Price Index (US-CPI) was considered on December 31, 2020. The probable scenario was extrapolated considering an appreciation/depreciation of 25% and 50% in the US-CPI to define the possible and remote scenarios, respectively, in absolute amounts.

The following table set forth the potential impacts in absolute amounts:

	March 31, 2021
		Effect on profit or loss and equity
		Probable (base value)		Possible (25%)		Remote (50%)
		2.22	%	3.09	%	3.71	%
Embedded derivative in forestry partnership and standing wood supply agreements		290,377		181,845		373,301

4.4.3.

Commodity price risk management

The Company is exposed to commodity prices that reflect mainly on the pulp sale price in the foreign market. The dynamics of opening and closing production capacities in the global market and the macroeconomic conditions may have an impact on the Company´s operating results.

Through a specialized team, the Company monitors the pulp price and analyses future trends, adjusting the forecast that aims to assisting preventive measures to properly conduct the different scenarios. There is no liquid financial market to sufficiently mitigate the risk of a material portion of the Company’s operations. Pulp price protection operations available on the market have low liquidity and low volume and large distortion in price formation. No relevant changes were observed in relation to pulp prices and future markets related to this index due to the crisis caused by the pandemic of COVID-19.

The Company is also exposed to international oil prices, which is reflected on logistical costs for selling to the export market and indirectly in the costs of other supplies. In this case, the Company evaluates the contracting of derivative financial instruments to mitigate the risk of price variation in its result.

In the three-month period ended March 31, 2021, a hired position to hedge its logistics costs was purchased in the amount of US$15,281 (US$37,757 as of December 31, 2020).

4.4.3.1.

Commodity price risk management

This analysis assumes that all other variables, except price risk, remain constant. The other scenarios considered appreciation/depreciation of 25% and 50% of oil price in the market.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

The following table set forth the potential impacts in absolute amounts:

March 31,

2021

Effect on profit or loss and equity

Probable

(base value)

Possible (25%)

Remote (50%)

VLSFO derivative

26,296

14,338

28,675

4.5.

Derivative financial instruments

The Company determines the fair value of derivative contracts, which differ from the amounts realized in the event of early settlement due to bank spreads and market factors at the time of quotation. The amounts presented by the Company are based on an estimate using market factors and use data provided by third parties, measured internally and compared to calculations performed by external consultants and by counterparties.

Details of derivative financial instruments and their respective calculation methodologies are disclosed in note 4 to the annual financial statements for the year ended December 31, 2020.

4.5.1.

Outstanding derivatives by type of contract, including embedded derivatives

The positions of outstanding derivatives are set forth below:

	Notional value in U.S.$				Fair value
	March 31, 2021		December 31, 2020		March 31, 2021			December 31, 2020
Instruments hired with protection strategy
Operational Hedge
ZCC		4,112,250		3,212,250		(1,419,526	)		(780,457	)
NDF (R$ x US$)		80,000		80,000		(30,414	)		7,948

Debt hedge
Interest rate hedge
Swap LIBOR to Fixed (U.S.$)		3,600,000		3,683,333		(827,168	)		(1,059,192	)
Swap IPCA to CDI (notional in Brazilian Reais)		843,845		843,845		280,472			285,533
Swap IPCA to Fixed (U.S.$)		121,003		121,003		(179,394	)		(114,834	)
Swap CDI x Fixed (U.S.$)		2,267,057		2,267,057		(5,911,930	)		(4,977,309	)
Pre-fixed Swap to U.S.$ (U.S.$)		350,000		350,000		(786,096	)		(508,328	)

Commodity Hedge
Swap US-CPI (U.S.$) ⁽¹⁾		634,928		646,068		290,377			354,900
Swap VLSFO ⁽²⁾		15,281		37,757		26,296			15,759
						(8,557,383	)		(6,775,980	)

Current assets						414,094			484,043
Non-current assets						856,828			857,377
Current liabilities						(2,670,708	)		(1,991,118	)
Non-current liabilities						(7,157,597	)		(6,126,282	)
						(8,557,383	)		(6,775,980	)

The embedded derivative refers to swap contracts for the sale of US-CPI variations within the term of the forest partnership and standing wood supply contracts.

As of December 31, 2020 includes Swap Brent, whose contracts were fully settled in the subsequent period.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

The current contracts and the respective protected risks are set forth below:

Swap CDI x Fixed US$: positions in conventional swaps exchanging the variation in the Interbank Deposit rate (“DI”) for a fixed rate in United States Dollars (“US$”). The objective is to change the debt index in Brazilian Reais to US$, in compliance with the Company’s natural exposure of receivables in US$.

ii)

Swap IPCA x CDI: positions in conventional swaps exchanging variation of the Amplified Consumer Price Index (“IPCA”) for DI rate. The objective is to change the debt index in Reais, in compliance with the Company’s cash position in Brazilian Reais, which is also indexed to DI.

iii)

IPCA swap x Fixed US$: positions in conventional swaps exchanging variation of the IPCA for a fixed rate in US$. The objective is to change the debt index in Brazilian Reais to US$, in compliance with the Company’s natural exposure of receivables in US$.

iv)

Swap LIBOR x Fixed US$: positions in conventional swaps exchanging post-fixed rate (LIBOR) for a fixed rate in US$. The objective is to protect the cash flow from changes in the US interest rate.

Pre Fixed Swap R$ x Fixed US$: positions in conventional swaps a fixed rate in Reais for a fixed rate in US$. The objective is to change the exposure of debts in Brazilian Reais to US$, in compliance with the Company’s natural exposure of receivables in US$.

vi)

Zero-Cost Collar (“ZCC”): positions in an instrument that consists of the simultaneous combination of purchase of put options and sale of call options of US$, with the same principal and maturity value, with the objective of protecting the cash flow of exports. In this strategy, an interval is established where there is no deposit or receipt of financial margin upon expiration of options. The objective is to protect the cash flow of exports against decrease Real.

vii)

Non Deliverable Forward (“NDF”): positions sold in futures contracts of US$ with the objective of protecting the cash flow of exports against the decrease in the Brazilian Real.

viii)

Swap Very Low Sulphur Fuel Oil (“VLSFO”) (oil): oil purchase positions, with the objective of protecting logistical costs related to ocean freight contracts, against the increase in oil prices.

ix)

Swap US-CPI: The embedded derivative refers to sale swap contracts of variations of US-CPI within the terms of the forest partnership and standing wood supply contracts.

The pandemic of COVID-19 negatively impacted the financial markets and, consequently, caused increased volatility throughout the year, devaluing the Brazilian Real against the U.S. Dollar by 40%, as previously mentioned. The variation in the fair value of derivatives for the three-month period ended March 31, 2021 compared to the fair value measured on December 31, 2020 is explained substantially by this significant devaluation of the local currency. There were also less significant impacts caused by the variation in the Pre, Foreign Exchange Coupon and LIBOR curves in transactions.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

It is important to highlight that, the outstanding agreements for the three-month period ended March 31, 2021, are over-the-counter market, without any kind of guarantee margin or early settlement clause forced by changes from mark to market, including possible variations caused by the pandemic of COVID-19.

4.5.2.

Fair value by maturity schedule

	March 31, 2021			December 31, 2020
2021		(1,700,787	)		(1,507,075	)
2022		(1,426,203	)		(918,030	)
2023		(498,155	)		(433,195	)
2024		(830,788	)		(705,859	)
2025		(2,088,818	)		(1,684,124	)
2026 onwards		(2,012,632	)		(1,527,697	)
		(8,557,383	)		(6,775,980	)

4.5.3.

Outstanding of assets and liabilities derivatives positions

The outstanding derivatives positions are set forth below:

		Notional value				Fair value
	Currency	March 31, 2021		December 31, 2020		March 31, 2021			December 31, 2020
Debt hedge
Assets
Swap CDI to Fixed (U.S.$)	R$		8,594,225		8,594,225		28,106			719
Swap Pre-Fixed to U.S.$ (U.S.$)	R$		1,317,226		1,317,226		91,605			136,192
Swap LIBOR to Fixed (U.S.$)	US$		3,600,000		3,683,333		148,575			61,120
Swap IPCA to CDI	IPCA		998,233		974,102		280,472			285,533
Swap IPCA to U.S.$	IPCA		533,878		520,973
							548,758			483,564
Liabilities
Swap CDI to Fixed (U.S.$)	US$		2,267,057		2,267,057		(5,940,036	)		(4,978,028	)
Swap LIBOR to Fixed (U.S.$)	US$		350,000		350,000		(877,701	)		(644,520	)
Swap LIBOR to Fixed (U.S.$)	US$		3,600,000		3,683,333		(975,743	)		(1,120,312	)
Swap IPCA to CDI	R$		843,845		843,845
Swap IPCA to U.S.$	US$		121,003		121,003		(179,394	)		(114,834	)
							(7,972,874	)		(6,857,694	)
							(7,424,116	)		(6,374,130	)
Operational hedge
Zero cost collar (U.S.$ x R$)	US$		4,112,250		3,212,250		(1,419,526	)		(780,457	)
NDF (R$ x U.S.$)	US$		80,000		80,000		(30,414	)		7,948
							(1,449,940	)		(772,509	)
Commodity hedge
Swap US-CPI (standing wood)	US$		634,928		646,068		290,377			354,900
Swap VLSFO	US$		15,281		37,757		26,296			15,759
							316,673			370,659
							(8,557,383	)		(6,775,980	)

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

4.5.4.

Fair value settled amounts

The settled derivatives positions are set forth below:

	March 31, 2021			December 31, 2020
Operational hedge
Zero cost collar (R$ x U.S.$)		(599,391	)		(2,268,158	)
NDF (R$ x U.S.$)		(37	)		(60,815	)
		(599,428	)		(2,328,973	)
Commodity hedge
Swap Bunker (oil)		21,840			(85,468	)
		21,840			(85,468	)
Debt hedge
Swap CDI to Fixed (U.S.$)		(53,090	)		(1,888,906	)
Swap IPCA to CDI (notional in Brazilian Reais)					10,601
Swap IPCA to Fixed (U.S.$)					10,054
Swap Pre-Fixed to U.S.$		26,690			59,351
Swap LIBOR to Fixed (U.S.$)		(108,559	)		(242,299	)
		(134,959	)		(2,051,199	)
		(712,547	)		(4,465,640	)

4.6.

Fair value hierarchy

For the three-month period ended March 31, 2021, there were no changes between the 3 (three) levels of hierarchy and no transfers between levels 1, 2 and 3 during the periods disclosed.

	March 31, 2021
	Level 1	Level 2	Level 3	Total
Assets
Fair value through profit or loss
Derivative financial instruments		1,270,922		1,270,922
Marketable securities	724,646	3,539,736		4,264,382
	724,646	4,810,658		5,535,304

Fair value through other comprehensive income
Other investments - CelluForce			29,280	29,280
			29,280	29,280

Biological assets			11,094,744	11,094,744
			11,094,744	11,094,744
	724,646	4,810,658	11,124,024	16,659,328

Liabilities
Fair value through profit or loss
Derivative financial instruments		9,828,305		9,828,305
		9,828,305		9,828,305
		9,828,305		9,828,305

	December 31, 2020
	Level 1	Level 2	Level 3	Total
Assets
Fair value through profit or loss
Derivative financial instruments		1,341,420		1,341,420
Marketable securities	444,712	1,952,145		2,396,857
	444,712	3,293,565		3,738,277

Fair value through other comprehensive income
Other investments - CelluForce			26,338	26,338
			26,338	26,338

Biological assets			11,161,210	11,161,210
			11,161,210	11,161,210
	444,712	3,293,565	11,187,548	14,925,825

Liabilities
Fair value through profit or loss
Derivative financial instruments		8,117,400		8,117,400
		8,117,400		8,117,400
		8,117,400		8,117,400

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

4.7.

Capital management

The main objective is to strengthen the Company’s capital structure, aiming to maintain an adequate financial leverage, and to mitigate risks that may affect the availability of capital in business development.

The Company monitors constantly significant indicators, such as, consolidated financial leverage, which is the ratio of total net debt to its adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”).

CASH AND CASH EQUIVALENTS

	Average yield p.a. %		March 31, 2021		December 31, 2020
Cash and banks		0.39		4,563,274		6,212,318

Cash equivalents
Local currency
Fixed-term deposits ⁽¹⁾		74.53 of CDI		7,401		115,032

Foreign currency
Fixed-term deposits ⁽¹⁾		0.37		763,833		507,707
				5,334,508		6,835,057

Refers to Time Deposit and Sweep Account applications, maturing up to 90 days.

Time Deposit is a remunerated bank deposit with a specific maturity period.

Sweep Account is an interest-bearing account. At the end of the day, the balance remaining in the account is automatically applied and automatically made available the next business day in the morning.

MARKETABLE SECURITIES

	Average yield p.a. %		March 31, 2021		December 31, 2020
In local currency
Private funds		89.44 of CDI		176,219		175,317
Public titles measured at fair value through profit or loss		89.44 of CDI		724,646		444,712
Private Securities (Compromised)		101.92 of CDI		3,124,931		1,585,605
Private Securities (Compromised) - Escrow Account ⁽¹⁾		102.00 of CDI		236,344		184,778
Other				2,242		6,445
				4,264,382		2,396,857

Current				4,028,038		2,212,079
Non-Current				236,344		184,778

Includes escrow account, which will be released only after obtaining the applicable governmental approvals and compliance by the Company with the precedent conditions related to transactions with (i) CMPC Celulose Riograndense SA (“CMPC”) as a result of the Losango Project, for sale land and forests, whose agreement was signed in December 2012 and (ii) Turvinho, for the sale of rural properties (Note 1.2.2.).

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

TRADE ACCOUNTS RECEIVABLE

7.1.

Breakdown of balances

	March 31, 2021			December 31, 2020
Domestic customers
Third parties		993,918			970,796
Related parties (Note 11) ⁽¹⁾		49,682			47,685

Foreign customers
Third parties		2,691,828			1,938,614

(-) Expected credit losses		(42,500	)		(41,889	)
		3,692,928			2,915,206

The balance refers to transactions with Ibema, an entity that is not consolidated by the Company.

The Company performs factoring transactions for certain customers’ receivables where, substantially all risks and rewards related to these receivables are transferred to the counterpart, so that these receivables are derecognized from accounts receivable in the balance sheet. This transaction refers to an additional cash generation opportunity and may be discontinued at any time without significant impact on the Company’s operation and is therefore classified as a financial asset measured at amortized cost. The impact of these factoring transactions on the accounts receivable for the three-month period ended March 31, 2021, is R$6,463,158 (R$5,388,370 as of December 31, 2020).

7.2.

Breakdown of trade accounts receivable by maturity

	March 31, 2021		December 31, 2020
Current		3,546,809		2,603,229
Overdue
Up to 30 days		83,117		209,210
From 31 to 60 days		15,234		51,420
From 61 to 90 days		14,769		2,062
From 91 to 120 days		4,191		6,665
From 121 to 180 days		395		8,618
From 181 days		28,413		34,002
		3,692,928		2,915,206

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

7.3.

Rollforward of the expected credit losses

	March 31, 2021			December 31, 2020
Beginning balance		(41,889	)		(41,996	)
Addition		(1,792	)		(9,350	)
Reversal		30			3,328
Write-off		1,961			7,737
Exchange rate variation		(810	)		(1,608	)
Ending balance		(42,500	)		(41,889	)

The Company maintains guarantees for overdue securities in its commercial operations, through credit insurance policies, letters of credit and other guarantees. These guarantees avoid the need to recognize expected credit losses, in accordance with the Company’s credit policy.

7.4.

Main customers

The Company has 1 (one) customer responsible for more than 10% of net sales of pulp and/or paper segment for the three-month period ended March 31, 2021. The Company has no customer responsible for more than 10% of net sales of pulp segment for the year ended December 31, 2020.

INVENTORIES

	March 31, 2021		December 31, 2020
Finished goods
Pulp
Domestic (Brazil)		561,666		553,229
Foreign		1,075,944		1,102,994
Paper
Domestic (Brazil)		290,728		225,058
Foreign		87,130		87,638
Work in process		80,670		81,465
Raw material		1,352,036		1,450,507
Spare parts and other		541,615		508,444
		3,989,789		4,009,335

Inventories are disclosed net of estimated losses.

8.1.

Rollforward of estimated losses

	March 31, 2021			December 31, 2020
Beginning balance		(79,885	)		(106,713	)
Addition ⁽¹⁾		(8,120	)		(77,173	)
Reversal		2,658			11,498
Write-off ⁽²⁾		29,653			92,503
Ending balance		(55,694	)		(79,885	)

Refers substantially to the raw material in the amount of R$5,306 (R$56,305 as of December 31, 2020).

Refers mainly to the amounts of (i) finished pulp product of R$957 (R$32,018 as of December 31, 2020) and (ii) raw material of R$27,751 (R$49,550 as of December 31, 2020).

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

For the three-month period ended March 31, 2021, there were no inventory items pledged as collateral (there were no inventory items pledged as collateral as of December 31, 2020).

RECOVERABLE TAXES

	March 31, 2021			December 31, 2020
IRPJ/CSLL – prepayments and withheld taxes		196,123			223,754
PIS/COFINS – on acquisition of property, plant and equipment ⁽¹⁾		100,581			126,990
PIS/COFINS – operations		306,315			287,206
PIS/COFINS – exclusion ICMS ⁽²⁾		128,115			128,115
ICMS – on acquisition of property, plant and equipment ⁽³⁾		110,575			112,672
ICMS – operations ⁽⁴⁾		1,429,664			1,393,260
Reintegra program ⁽⁵⁾		110,191			110,121
Other taxes and contributions		29,201			24,089
Provision for loss of ICMS credits ⁽⁶⁾		(1,172,240	)		(1,164,782	)
		1,238,525			1,241,425

Current		406,352			406,850
Non-current		832,173			834,575

Social Integration Program (“PIS”) and Social Security Funding Contribution (“COFINS”): Credits whose realization is in connection with depreciation year of the corresponding asset.

The Company filed legal actions claiming the exclusion of ICMS from the PIS and COFINS contribution tax basis, in relation to certain operations for certain periods starting from March 1992.

Regarding this subject, the Federal Supreme Court (“STF”) initially decided on March 15th, 2017, that ICMS is not included in the tax basis of the aforementioned contributions. The Federal Government made an appeal (“Embargos de Declaração”) in October 2017, requesting the reversal of the STF’s initial decision among other items. The appeal has yet to be judged.

Based on the STF’s initial decision and the legal opinion provided by external legal consultants, the Company believes that the probability of the STF altering its decision is remote. The Company thus started to exclude the ICMS from the tax basis of the referred contributions since August 2018, a practice also supported by court decisions.

The Company has additional claims for which a final decision has not been received and for which no asset or gain have been recorded (Note 20.3).

Tax on Sales and Services (“ICMS”): Credits from the acquisition of property, plant and equipment are recovered on a linear basis over a four period, from the acquisition date, in accordance with the relevant regulation, ICMS Control on Property, Plant and Equipment (“CIAP”).

ICMS credits accrued due to the volume of exports and credit generated in operations of entry of products: Credits are concentrated in the State of Espírito Santo, Maranhão, Mato Grosso do Sul, São Paulo and Bahia, where the Company realizes the credits through sale of credits to third parties, after approval from the State Ministry of Finance of each State. Credits are also being realized through consumption in its consumer goods (tissue) operations in the domestic market that are already operational in State of Maranhão.

Special Regime of Tax Refunds for Export Companies (“Reintegra”): Reintegra is a program that aims to refund the residual costs of taxes paid throughout the exportation chain to taxpayers, to make them more competitive in foreign markets.

Includes the provision for discount on sale to third parties of the accumulated ICMS credit in State of Maranhão and the provision for full loss of the low probability of realization of the units of States of Espírito Santo, Mato Grosso do Sul and Bahia due to the difficulty of its realization.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

9.1.

Rollforward of provision for loss

	ICMS			PIS/COFINS			Total
Balance as of December 31, 2019		(1,304,329	)		(21,132	)		(1,325,461	)
Addition		(64,107	)					(64,107	)
Write-off		57,254			21,132			78,386
Reversal ⁽¹⁾		146,400						146,400
Balance as of December 31, 2020		(1,164,782	)					(1,164,782	)
Addition		(17,458	)					(17,458	)
Reversal ⁽¹⁾		10,000						10,000
Balance as of March 31, 2021		(1,172,240	)					(1,172,240	)

Refers to the reversal of the provision for loss resulting from the recovery of ICMS credits from the State of Espírito Santo through sale to third parties.

10.

ADVANCE TO SUPPLIERS

	March 31, 2021		December 31, 2020
Forestry development program		1,203,265		1,015,115
Advance to suppliers		41,492		43,162
		1,244,757		1,058,277

Current		41,492		43,162
Non-current		1,203,265		1,015,115

In the annual financial statements for the year ended December 31, 2020, the characteristics of the advances were disclosed, which did not change during the period of 2021.

11.

RELATED PARTIES

The Company’s commercial and financial operations with controlling shareholder and Companies owned by controlling shareholder Suzano Holding S.A. (“Suzano Group”). For transactions with related parties, it is determined that the usual market prices and conditions for these transactions are observed, as well as the corporate governance practices adopted by the Company and those recommended and/or required by the legislation.

For the three-month period ended March 31, 2021, there were no material changes in the terms of the agreements, deal and transactions entered into, nor were there any new contracts, agreements or transactions of different natures entered into between the Company and its related parties in relation to those disclosed in the annual financial statements for the year ended December 31, 2020.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

11.1.

Balances recognized in assets and liabilities

		Balances receivable (payable)
	Nature	March 31, 2021		December 31, 2020
Transactions with controlling shareholders
Suzano Holding S.A.	Granting of guarantees and administrative expenses			3
				3
Transactions with companies of the Suzano Group and other related parties
Management	Reimbursement for expenses	(6	)	(5	)
Bexma Participações Ltda.	Reimbursement for expenses			1
Bizma Investimentos Ltda.	Reimbursement for expenses			1
Ensyn Corporation	Loan			2,829
Ibema Companhia Brasileira de Papel	Sale of pulp	49,682		47,685
Ibema Companhia Brasileira de Papel	Sale of other products	1,066		695
Ibema Companhia Brasileira de Papel	Purchase of products	(3,362	)	(2,834	)
Ibema Companhia Brasileira de Papel	Dividends receivable	6,415		6,415
Ibema Companhia Brasileira de Papel	Interest on shareholders’ equity	1,218		1,218
Instituto Ecofuturo - Futuro Para o Desenvolvimento Sustentável	Social services	(63	)	1
Nemonorte Imóveis e Participações Ltda.	Real estate consulting			(15	)
		54,950		55,991
		54,950		55,994

Assets
Trade accounts receivable		49,682		47,685
Other accounts receivable		8,699		11,163
Liabilities
Trade accounts payable		(3,425	)	(2,849	)
Other accounts payable		(6	)	(5	)
		54,950		55,994

11.2.

Amounts transacted in the period


		Expenses (income)
	Nature	March 31, 2021		March 31, 2020
Transactions with controlling shareholders
Suzano Holding S.A.	Granting of guarantees and administrative expenses	(659	)	(1,072	)
		(659	)	(1,072	)
Transactions with companies of the Suzano Group and other related parties
Management	Reimbursement for expenses	(76	)	(319	)
Bexma Participações Ltda.	Reimbursement for expenses	2		3
Bizma Investimentos Ltda.	Reimbursement for expenses	2		2
Ensyn Corporation	Loan charges	1
Ibema Companhia Brasileira de Papel	Sale of paper	36,680		24,419
Ibema Companhia Brasileira de Papel	Purchase of products	(2,367	)	(1,007	)
Instituto Ecofuturo - Futuro para o Desenvolvimento Sustentável	Social services	(63	)	(2,016	)
IPLF Holding S.A.	Reimbursement for expenses	1		1
Mabex Representações e Participações Ltda.	Aircraft services			50
Nemonorte Imóveis e Participações Ltda.	Real estate consulting	(46	)	(50	)
		34,134		21,083
		33,475		20,011

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

11.3.

Management compensation

Expenses related to the compensation of key management personnel, which include the Board of Directors, Fiscal Council and Board of Statutory Executive Officers, recognized in the statement of income for the period, are set for the below:

	March 31, 2021		March 31, 2020
Short-term benefits
Salary or compensation		11,832		10,204
Direct and indirect benefits		202		230
Bonus		1,517		3,437
		13,551		13,871
Long-term benefits
Share-based compensation plan		52,625		50,669
		52,625		50,669
		66,176		64,540

Short-term benefits include fixed compensation (salaries and fees, vacation, mandatory bonus and “13^th salary” bonus), payroll charges (Company share of contributions to social security – INSS) and variable compensation such as profit sharing, bonus and benefits (company car, health plan, meal voucher, market voucher, life insurance and private pension plan).

Long-term benefits include the stock option plan and phantom shares for executives and key members of the Management, in accordance with the specific regulations as disclosed in Note 22.

12.

INCOME AND SOCIAL CONTRIBUTION TAXES

The Company and its wholly-owned subsidiaries located in Brazil are subject to the tax regime based on taxable income. The wholly-owned subsidiaries located abroad are taxed in their respective jurisdictions, according to local regulations.

In Brazil, the Law nº. 12,973/14 revoked article 74 of Provisional Measure nº. 2,158/01 and determines that the parcel of the adjustment of the value of the investment in wholly-owned subsidiary, direct and indirect, located abroad, equivalent to the profit earned by it before income tax, except for exchange rate variation, must be added in the determination of taxable income and the social contribution calculation basis of the controlling entity located in Brazil, at the each year ended.

Management’s Company believes on the validity of the provisions of international treaties entered into Brazil to avoid double taxation. In order to guarantee its right to non-double taxation, the Company filed a lawsuit in April 2019, which aims at a non-double taxation, in Brazil, of profit earned by its wholly-owned subsidiary located in Austria, according to Law n°. 12,973/14. Due to the preliminary injunction granted in favor of the Company in the records of the aforementioned lawsuit, the Company decided not to add the profit from Suzano International Trading GmbH, located in Austria, in determining of taxable income and social contribution basis of the net profit of the Company for the three-month period ended March 31, 2021. There is no provision for tax related to the profit of such wholly-owned subsidiary in 2021.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

12.1.

Deferred income and social contribution taxes

	March 31, 2021		December 31, 2020
Tax loss		1,072,160		1,013,008
Negative tax basis of social contribution		360,738		329,412

Assets temporary differences
Provision for judicial liabilities		245,541		233,100
Operating provisions and other losses		974,145		1,051,096
Exchange rate variation		7,891,918		6,112,906
Derivatives losses (“MtM”)		2,909,510		2,303,833
Amortization of fair value adjustment on business combination		715,589		718,645
Unrealized profit on inventories		234,701		176,847
Lease		376,528		287,066
Provision of deferred taxes on results of subsidiaries abroad		12,235		33,893
Other temporary differences ⁽¹⁾				158,172
		14,793,065		12,417,978

Liabilities temporary differences
Goodwill - Tax benefit on unamortized goodwill		539,028		469,875
Property, plant and equipment - deemed cost		1,390,528		1,385,642
Accelerated tax depreciation		1,004,572		1,025,136
Borrowing cost		101,471		110,036
Fair value of biological assets		190,721		237,879
Deferred taxes, net of fair value adjustment on business combination		461,754		469,419
Tax credits - gains in tax lawsuit (exclusion of ICMS from the PIS and COFINS contribution tax basis)		43,559		43,559
Other temporary differences		16,839
		3,748,472		3,741,546

Non-current assets		11,044,593		8,677,002
Non-current liabilities				570

On December 29, 2020, with the final decision of Administrative Council for Economic Defense’s (“CADE”) approval related to the purchase and sale agreement of rural property, Management and legal advisors understand that all conditions suspensive were implemented, with the tax recognition of capital gain being required, pursuant to art. 117 of the National Taxation Code (“CTN”). As the accounting recognition only occured at the Closing of the transaction, on January 5, 2021 (Note 1.2.2) with the fulfillment of the performance obligation and delivery of the ownership of the properties to the client, there was a need to establish the deferred tax asset on this difference temporary, in the amount of R$175,202.

Except for tax loss carryforwards, the negative basis of social contribution and accelerated depreciation are only achieved by the Income Tax (“IRPJ”), other tax bases were subject to both taxes.

The breakdown of accumulated tax losses and social contribution tax loss carryforwards is set forth below:

March 31,

2021

December 31,
2020

Tax loss carry forward

4,288,638

4,052,013

Negative tax basis of social contribution carryforward

4,008,200

3,660,133

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

The rollforward of net balance of deferred income tax is set for the below:

	March 31, 2021			December 31, 2020
Beginning balance		8,676,432			1,555,165
Tax loss		59,151			412,759
Negative tax basis of social contribution		31,326			183,066
(Reversal) provision for judicial liabilities		12,441			(32,471	)
Operating provision (reversal) and other losses		(44,452	)		136,400
Exchange rate variation		1,779,012			4,110,964
Derivative losses (“MtM”)		605,677			1,685,406
Amortization of fair value adjustment on business combination		4,609			37,917
Unrealized profit on inventories		57,854			(116,475	)
Lease		89,462			265,022
Goodwill - Tax benefit on unamortized goodwill		(69,153	)		(253,018	)
Property, plant and equipment - deemed cost		(4,886	)		120,578
Accelerated tax depreciation		20,564			88,064
Borrowing cost		8,565			(5,487	)
Fair value of biological assets		14,659			(184,377	)
Deferred taxes on the result of subsidiaries abroad		(21,658	)		497,743
Other temporary differences ⁽¹⁾		(175,010	)		175,176
Ending balance		11,044,593			8,676,432

On December 29, 2020, with the final decision of CADE’s approval related to the purchase and sale agreement of rural property (note 1.2.2), Management and legal advisors understand that all conditions suspensive were implemented, with the tax recognition of capital gain being required, pursuant to art. 117 of the National Taxation Code (“CTN”). As the accounting recognition occured at the Closing of the Transaction, on January 5, 2021 (Note 1.2.2) with the fulfillment of the performance obligation and delivery of the ownership of the properties to the client, there was a need to establish the deferred tax asset on this difference temporary, in the amount of R$175,202.

12.2.

Reconciliation of the effects of income tax and social contribution on profit or loss

	March 31, 2021			March 31, 2020
Loss before taxes		(5,060,190	)		(21,095,584	)
Income tax and social contribution benefit (expense) at statutory nominal rate of 34%		1,720,465			7,172,499

Tax effect on permanent differences
Taxation (difference) on profit of wholly-owned subsidiaries abroad ⁽¹⁾		774,234			573,858
Equity method		3,490			242
Thin capitalization ⁽²⁾		(179,717	)		(45,213	)
Credit related to Reintegra Program		1,836			1,404
Tax incentives applicable to income tax ⁽³⁾					3,557
Director bonus		(8,185	)		(2,345	)
Donations / fines and other		(7,192	)		(27,479	)
		2,304,931			7,676,523
Income tax
Current		(61,645	)		(50,399	)
Deferred		1,740,224			5,683,928
		1,678,579			5,633,529
Social Contribution
Current		(2,504	)		(3,961	)
Deferred		628,856			2,046,955
		626,352			2,042,994
Income and social contribution benefits (expenses) on the period		2,304,931			7,676,523

Effective rate of income and social contribution tax expenses		45.55	%		36.39	%

The effect of the difference in taxation of subsidiaries is substantially due to the difference between the nominal rates of Brazil and subsidiaries abroad.

The brazilian thin capitalization rules establish that interest paid or credited by a brazilian entity to a related party abroad may only be deducted for income tax and social contribution purposes if the interest expense is viewed as necessary for the activities of the local entity and when determined limits and requirements are met. On March 31, 2021 the Company did not meet all limits and requirements.

Tax incentives applicable to ICMS, which is deducted from the calculation basis of Income Tax and Social Contribution.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

12.3.

Tax incentives

Company has a tax incentive for the partial reduction of the income tax obtained by the operations carried out in areas of the Northeast Development Superintendence (“SUDENE”) in the Mucuri (BA), Eunápolis – Veracel (BA) and Imperatriz (MA) regions. The IRPJ reduction incentive is calculated based on the activity profit (exploitation profit) and considers the allocation of the operating profit by the incentive production levels for each product. The incentive of lines 1 and 2 of Mucuri (BA) facility expire, respectively, in 2024 and 2027, Imperatriz facility, expire in 2024 and Eunápolis – Veracel (BA), facility expire in 2025.

13.

BIOLOGICAL ASSETS

The rollforward of biological assets is set forth below:

Balances on December 31, 2019	10,571,499
Addition	3,392,975
Depletion	(3,094,742	)
Transfers	(23,471	)
Gain on fair value adjustment	466,484
Disposal	(93,847	)
Other write-offs	(57,688	)
Balances on December 31, 2020	11,161,210
Addition	703,830
Depletion	(728,161	)
Transfers	23,471
Disposal	(60,649	)
Other write-offs	(4,957	)
Balances on March 31, 2021	11,094,744

The Company reassesses the main assumptions used to measure the fair value of biological assets every six months in June and December.

The Company has no biological assets pledged as of March 31, 2021 or December 31, 2020.

14.

INVESTMENTS

14.1.

Investments breakdown

	March 31, 2020		December 31, 2020
Investments in associates and joint ventures		113,924		96,373
Goodwill		236,360		236,360
Other investments evaluated at fair value through other comprehensive income		29,280		26,338
		379,564		359,071

Investments are disclosed net of estimated losses.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

14.2.

Investments in associates and joint ventures

									Company Participation
	Information of joint ventures as of March 31, 2021								In equity				In the income of the period
	Equity		Income of the period			Participation equity (%)			March 31, 2021		December 31, 2020		March 31, 2021			March 31, 2020
Associate
Ensyn Corporation		42,099		(4,004	)		25.30	%		10,651		5,472		(1,013	)		(3,351	)
Spinnova Oy		62,867		(5,299	)		23.44	%		14,736		15,387		(1,242	)		(1,439	)
										25,387		20,859		(2,255	)		(4,790	)

Joint ventures
Ibema Companhia Brasileira de Papel		165,984		25,092			49.90	%		82,826		70,305		12,521			6,672
F&E Technologies LLC		11,422					50.00	%		5,711		5,209					(1,171	)
										88,537		75,514		12,521			5,501
										113,924		96,373		10,266			711

15.

PROPERTY, PLANT AND EQUIPMENT

	Lands			Buildings			Machinery, equipment and facilities			Work in progress			Other ⁽¹⁾			Total
Average rate %					4.14			5.80						16.32

Cost
Balance as of December 31, 2019		10,321,574			8,767,789			42,520,577			969,701			933,326			63,512,967
Additions		2,274			2,825			194,086			1,289,738			14,332			1,503,255
Write-offs		(213,399	)		(26,564	)		(92,915	)		(18,853	)		(25,189	)		(376,920	)
Transfer and other ⁽²⁾		(198,144	)		459,084			562,747			(1,357,202	)		137,126			(396,389	)
Balance as of December 31, 2020		9,912,305			9,203,134			43,184,495			883,384			1,059,595			64,242,913
Additions								45,684			216,369			1,926			263,979
Write-offs		(371,999	)		(639	)		(8,091	)					(142	)		(380,871	)
Transfer and other ⁽²⁾		289,395			43,159			220,683			(328,101	)		8,889			234,025
Balance as of March 31, 2020		9,829,701			9,245,654			43,442,771			771,652			1,070,268			64,360,046

Depreciation
Balance as of December 31, 2019					(2,979,916	)		(18,850,386	)					(561,720	)		(22,392,022	)
Additions					(291,862	)		(2,390,583	)					(110,012	)		(2,792,457	)
Write-offs					25,992			64,397						8,067			98,456
Balance as of December 31, 2020					(3,245,786	)		(21,176,572	)					(663,665	)		(25,086,023	)
Additions					(87,504	)		(581,617	)					(29,618	)		(698,739	)
Write-offs					164			4,880						103			5,147
Transfer and other					(1	)		481						46			526
Balance as of March 31, 2020					(3,333,127	)		(21,752,828	)					(693,134	)		(25,779,089	)

Book value
Balance as of December 31, 2020		9,912,305			5,957,348			22,007,923			883,384			395,930			39,156,890
Balance as of December 31, 2021		9,829,701			5,912,527			21,689,943			771,652			377,134			38,580,957

Includes vehicles, furniture and utensils and computer equipment.

Includes transfers carried out between the items of property, plant and equipment, intangible, inventories and assets held for sale (Note 1.2.2).

For the three-month period ended March 31, 2021, the Company did not identify any impairment of property, plant and equipment.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

15.1.

Items pledged as collateral

For the three-month period ended March 31, 2021, property, plant and equipment items that are pledge as collateral for loans transactions and lawsuits, consisting substantially of the units of, Imperatriz, Limeira, Mucuri, Suzano and Três Lagoas totaled R$20,530,584 (R$20,903,151 consisting substantially of the units of Aracruz, Imperatriz, Limeira, Mucuri, Suzano and Três Lagoas as of December 31, 2020).

15.2.

Capitalized expenses

For the three-month period ended March 31, 2021, the Company capitalized interest in the amount of R$402 (R$3,803 as of March 31, 2020). The weighted average interest rate, adjusted by the equalization of exchange rate effects, utilized to determine the capitalized amount was 10.51% p.a. (9.21% p.a. as of March 31, 2020).

16.

INTANGIBLE

16.1.

Goodwill and intangible assets with indefinite useful life

	March 31, 2021		December 31, 2020
Facepa		119,332		119,332
Fibria		7,897,051		7,897,051
Other ⁽¹⁾		1,196		1,196
		8,017,579		8,017,579

Refer to other intangible assets with indefinite useful life such as servitude and electricity.

The goodwill is based on expected future profitability supported by valuation reports, after purchase price allocation.

Goodwill are allocated to cash-generating units as presented in Note 28.4.

For the three-month period ended March 31, 2021, the Company did not identify any trigger to perform the impairment test.

16.2.

Intangible assets with determined useful life

		March 31, 2021			December 31, 2020
Beginning balance			8,741,949			9,649,789
Additions			734			2,307
Amortization			(243,068	)		(980,385	)
Transfers and others			54,857			70,238
Ending balance			8,554,472			8,741,949
Represented by	Average rate %
Non-compete agreement	46.1 and 5		5,706			5,706
Research and development agreement	5.4		64,179			66,272
Ports concession	4.3		207,041			209,506
Lease agreements	16.9		27,497			29,373
Supplier agreements	12.9		81,479			85,182
Port service contracts	4.2		631,703			639,275
Cultivars	14.3		96,862			101,960
Development and implementation of systems	11.2		1,324			1,392
Trademarks and patents	10.0		15,866			16,627
Customer portfolio	9.1		7,183,569			7,388,820
Supplier agreements	17.6		39,916			41,250
Software	20.0		113,242			123,788
Others	5.0		86,088			32,798
			8,554,472			8,741,949

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

17.

TRADE ACCOUNTS PAYABLE

	March 31, 2021		December 31, 2020
In local currency
Related party (Note 11.1) ⁽¹⁾		3,425		2,849
Third party		1,836,195		1,865,632
In foreign currency
Third party		553,524		492,617
		2,393,144		2,361,098

The balance refers to transactions with Ibema and Instituto Ecofuturo entities that are not consolidated by the Company.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

18.

LOANS, FINANCING AND DEBENTURES

18.1.

Breakdown by type


			Current						Non-current				Total
Type	Interest rate	Average annual interest rate - %	March 31, 2021			December 31, 2020			March 31, 2021		December 31, 2020		March 31, 2021			December 31, 2020
In foreign currency
BNDES	UMBNDES	4.80		6,469			2,506			23,457		24,486		29,926			26,992
Bonds	Fixed	5.44		395,314			779,046			40,825,167		37,232,554		41,220,481			38,011,600
Export credits (“export prepayment”)	LIBOR/Fixed	1.92		711,603			718,623			20,654,155		19,400,208		21,365,758			20,118,831
Others				3,175			2,516							3,175			2,516
				1,116,561			1,502,691			61,502,779		56,657,248		62,619,340			58,159,939
In local currency
BNDES	TJLP	6.67		71,132			276,441			339,680		1,254,222		410,812			1,530,663
BNDES	TLP	10.88		24,423			25,535			517,651		522,367		542,074			547,902
BNDES	Fixed	4.92		28,302			29,115			40,738		47,177		69,040			76,292
BNDES	SELIC	5.30		36,321			98,531			777,086		1,068,959		813,407			1,167,490
CRA (“Agribusiness Receivables Certificates”)	CDI/IPCA	9.34		811,733			32,156			2,310,442		3,025,527		3,122,175			3,057,683
NCE (“Export credit note”)	CDI	8.08		6,023			15,184			1,275,366		1,275,045		1,281,389			1,290,229
NCR (“Rural producer certificate”)	CDI	9.97		760			2,738			273,646		273,578		274,406			276,316
Export credits (“export prepayment”)	Fixed	8.06		41,581			77,570			1,313,930		1,313,661		1,355,511			1,391,231
Debentures	CDI	8.22		27,527			7,590			5,415,815		5,415,061		5,443,342			5,422,651
Others (Working capital and Industrial Development Fund (“FDI”) and fair value adjustment on business combination)	Fixed	0.40		(21,108	)		(24,165	)		3,651		3,651		(17,457	)		(20,514	)
				1,026,694			540,695			12,268,005		14,199,248		13,294,699			14,739,943
				2,143,255			2,043,386			73,770,784		70,856,496		75,914,039			72,899,882

Interest on financing				563,913			935,010							563,913			935,010
Non-current funding				1,579,342			1,108,376			73,770,784		70,856,496		75,350,126			71,964,872
				2,143,255			2,043,386			73,770,784		70,856,496		75,914,039			72,899,882

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

18.2.

Rollforward in loans, financing and debentures

	March 31, 2021			December 31, 2020
Beginning balance		72,899,881			63,684,326
Fundraising, net issuances		8,969,521			14,761,796
Interest accrued		758,171			3,286,254
Premium with repurchase of bonds					391,390
Exchange rate variation, net		5,597,530			13,365,471
Settlement of principal		(11,177,120	)		(19,092,810	)
Settlement of interest		(1,175,388	)		(3,244,949	)
Settlement of premium with early repurchase					(378,381	)
Amortization of fundraising costs		38,390			87,959
Others		3,054			38,826
Ending balance		75,914,039			72,899,882

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

18.3.

Breakdown by maturity – non current

	2022		2023		2024		2025		2026		2027 onwards		Total
In foreign currency
BNDES		11,111		12,346										23,457
Bonds						2,000,227		1,911,263		2,968,014		33,945,663		40,825,167
Export credits (“export prepayment”)		1,007,008		1,695,498		4,994,432		7,539,900		4,490,638		926,679		20,654,155
		1,018,119		1,707,844		6,994,659		9,451,163		7,458,652		34,872,342		61,502,779
In local currency
BNDES – TJLP		48,243		65,301		37,309		89,746		84,422		14,659		339,680
BNDES – TLP		14,149		18,866		18,866		17,618		21,161		426,991		517,651
BNDES – Fixed		18,119		18,606		4,013								40,738
BNDES – Selic		23,898		56,536		48,357		174,425		174,470		299,400		777,086
CRA (“Agribusiness Receivables Certificates”)		757,109		1,553,333										2,310,442
NCE (“Export credit note”)								640,800		634,566				1,275,366
NCR (“Rural producer certificate”)								137,500		136,146				273,646
Export credits (“export prepayment”)						1,313,930								1,313,930
Debentures								2,340,550		2,327,687		747,578		5,415,815
Others (Working capital, FDI and fair value adjustment on business combination)		3,651												3,651
		865,169		1,712,642		1,422,475		3,400,639		3,378,452		1,488,628		12,268,005
		1,883,288		3,420,486		8,417,134		12,851,802		10,837,104		36,360,970		73,770,784

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

18.4.

Breakdown by currency

	March 31, 2021		December 31, 2020
Brazilian Reais		13,282,876		14,727,803
U.S. Dollar		62,601,237		58,145,087
Currency basket		29,926		26,992
		75,914,039		72,899,882

18.5.

Fundraising costs

The fundraising costs are amortized based on terms agreements and effective interest rate.

			Balance to be amortized
Type	Cost	Amortization	March 31, 2021	December 31, 2020
Bonds	390,104	138,561	251,543	238,568
CRA and NCE	125,222	95,540	29,682	32,374
Export credits (“export prepayment”)	171,542	47,604	123,938	56,028
Debentures	24,467	9,184	15,283	16,039
BNDES (“IOF”) ⁽¹⁾	62,658	47,253	15,405	40,611
Others	18,147	16,793	1,354	1,422
	792,140	354,935	437,205	385,042

Tax on Financial Operations

18.6.

Relevant transactions entered into the period

18.6.1.

Export Prepayment Agreements (“EPP”)

On February 10, 2021, the Company, through its wholly-owned subsidiary Suzano Pulp and Paper Europe S.A. (“Suzano Europe”), entered into a sustainability-linked export prepayment agreement in the amount of US$1.570.000 (equivalent to R$8,481,768 on the transaction date) maturing in six years, with quarterly interest rate payment of LIBOR plus 1.15%, which may be subject to positive or negative adjustments ranging from -2bps/+2bps p.a. depending on our progress in achieving certain milestones towards satisfying key performance metrics (“KPIs”) related to our industrial water withdrawals and greenhouse gas emissions, as confirmed by an independent external verifier.

18.7.

Relevant transactions settled in the period

18.7.1.

Early settlement of financing with BNDES

On February 9, 2021, the Company early settled a financing contract with BNDES, in the principal amount of R$1,454,025, with original maturity in May 2026 and monthly interest rate indexed to SELIC + 3% p.a. and TJLP + 2%, transaction cost in the amount of R$24,097 and premium payment in the amount of R$32,933.

18.7.2.

Export Prepayment Agreements (“EPP”)

On March 8, 2021, the Company, through its wholly-owned subsidiary Suzano Pulp and Paper Europe S.A., partially settled the export prepayment agreement in the principal amount of US$1,666,848 (equivalent to R$9,558,205 on the transaction date), with original maturity in December 2023 and quarterly interest payments of 1.15% p.a. plus quarterly LIBOR.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

18.8.

Guarantees

Some loan and financing agreements have guarantees clauses, in which the financed equipment or other property, plant and equipment are offered by the Company, as disclosed in Note 15.1.

The Company does not have contracts with restrictive financial clauses (financial covenants) to be complied with.

19.

LEASE

19.1.

Right of use

The rollforward is set forth below:

	Lands and farms			Machines and equipment’s			Buildings			Ships and boats			Vehicles			Total
Balance as of December 31, 2019		1,769,645			130,051			45,999			1,904,455			87			3,850,237
Additions/updates		858,085			45,624			90,616			95,768			2,675			1,092,768
Amortization		(265,091	)		(18,078	)		(43,903	)		(122,904	)		(313	)		(450,289	)
Write-offs		(74,578	)		(72,332	)		(1,728	)								(148,638	)
Balance as of December 31, 2020		2,288,061			85,265			90,984			1,877,319			2,449			4,344,078
Additions/updates		330,234			1,448			11,867			2,630			4,335			350,514
Amortization ⁽¹⁾		(71,980	)		(2,290	)		(12,936	)		(28,879	)		(2,716	)		(118,801	)
Write-offs											(8,835	)					(8,835	)
Balance as of March 31, 2021		2,546,315			84,423			89,915			1,842,235			4,068			4,566,956

On March, 2021, the amount of R$71,980 (R$43,994 as of March 31, 2020) related to land was reclassified to biological assets to compose the formation cost.

For the three-month period ended March 31, 2021, the Company is not committed to lease agreements not yet in force.

19.2.

Lease liabilities

The balance of lease payables for the three-month period ended March, 2021, measured at present value and discounted by the respective discount rates are set forth below:

Nature of agreement	Average rate - % p.a. ⁽¹⁾	Maturity ⁽²⁾	Present value of liabilities
Lands and farms	11.45	July/2048		2,625,742
Machines and equipment’s	10.62	July/2032		197,780
Buildings	9.80	November/2044		77,009
Ships and boats	11.39	February/2039		2,773,677
Vehicles	10.04	October/2023		3,889
				5,678,097

To determine the discount rates, quotes were obtained from financial institutions for agreements with characteristics and average terms like the lease agreements.

Refers to the original maturities of the agreements and, therefore, do not consider eventual renewal clause.

The Company have renewed the subleasing transaction of 2 (two) ships, under the same conditions as before, for another period of 10 months and the amount of US$7,500 (equivalent to R$40,253 on the transaction date), only replacing the ships, due to the need for planned operational maintenance. The transaction has been effective since February 08, 2021 for one of the ships and for the second one the restart is scheduled for May 2021.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

The rollforward is set forth below:

Balance as of December 31, 2019	3,984,070
Additions	1,092,768
Write-offs	(148,638	)
Payments	(824,245	)
Accrual of financial charges ⁽¹⁾	486,286
Exchange rate variation	601,519
Balance as of December 31, 2020	5,191,760
Additions	350,514
Write-offs	(8,835	)
Payments	(249,128	)
Accrual of financial charges ⁽¹⁾	136,478
Exchange rate variation	257,308
Balance as of March 31, 2021	5,678,097

Current	632,812
Non-current	5,045,285

On March 31, 2021, the amount of R$27,438 related to interest expenses on leased lands was capitalized to biological assets to compose the formation cost (R$19,431 as of March 31, 2020).

The maturity schedule of future payment not discounted to present value related to lease liabilities is disclosed in Note 4.2.

19.2.1.

Amounts recognized in the statement of income for the period

The amounts recognized are set for the below:

	March 31, 2021		March 31, 2020
Expenses relating to short-term assets		1,504		3,527
Expenses relating to low-value assets		1,158		1,577
		2,662		5,104

20.

PROVISION FOR JUDICIAL LIABILITIES

The Company is involved in certain legal proceedings arising from the normal course of business, which include tax, social security, labor, civil and environment risks.

The Company classifies the risk of unfavorable decisions in the legal proceedings, based on legal advice, which reflect the estimated probable losses.

The Company’s Management believes that, based on the elements existing at the base date of these unaudited condensed consolidated interim financial information, its provision for tax, social security, civil, environment and labor risks, accounted for according to IAS 37 is enough to cover estimated losses related to its legal proceedings, as set forth below:

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

20.1.

Rollforward of provisions for probable losses, net of judicial deposits

	March 31, 2021
Nature of provisions	Judicial deposits			Provision		Provision, net
Taxes and social security		(137,383	)		2,979,213		2,841,830
Labor		(54,351	)		209,382		155,031
Civil and environment		(2,998	)		261,277		258,279
		(194,732	)		3,449,872		3,255,140

	December 31, 2020
Nature of provisions	Judicial deposits			Provision		Provision, net
Taxes and social security		(135,641	)		2,984,230		2,848,589
Labor		(57,780	)		217,180		159,400
Civil and environment		(3,495	)		251,461		247,966
		(196,916	)		3,452,871		3,255,955

20.1.1.

Changes in the provision according to the nature of the proceedings for probable losses

	March 31, 2021
	Tax and social security			Labor			Civil and environment			Contingent liabilities ^{(1) (2)}			Total
Beginning balance		476,070			217,180			50,368			2,709,253			3,452,871
Payments					(8,133	)								(8,133	)
Write-off		(31	)		(15,513	)		(1	)		(8,195	)		(23,740	)
Additions		1,229			11,751			6,876						19,856
Monetary adjustment		1,991			4,098			2,929						9,018
Ending balance		479,259			209,383			60,172			2,701,058			3,449,872

Amounts arising from lawsuits with probability of loss possible and remote, of tax nature in the amount of R$2,499,956 and civil in the amount of R$201,102, measured and recorded at the estimated fair value resulting from the business combination with Fibria, in accordance with paragraph 23 of IFRS 3 – Business Combination.

Reversal due to a change in prognosis and/or settlement.

	December 31, 2020
	Tax and social security			Labor			Civil and environment			Contingent liabilities ^{(1) (2)}			Total
Beginning balance		492,413			227,139			64,897			2,902,352			3,686,801
Payments		(23,162	)		(43,783	)		(14,618	)					(81,563	)
Write-off		(23,106	)		(52,333	)		(25,223	)		(193,099	)		(293,761	)
Additions		20,560			64,053			17,337						101,950
Monetary adjustment		9,365			22,104			7,975						39,444
Ending balance		476,070			217,180			50,368			2,709,253			3,452,871

Amounts arising from lawsuits with probability of loss possible and remote, of tax nature in the amount of R$2,508,162 and civil in the amount of R$201,091, measured and recorded at the estimated fair value resulting from the business combination with Fibria, in accordance with paragraph 23 of IFRS 3 – Business Combination.

Reversal due to a change in prognosis and/or settlement.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

20.1.2.

Tax and social security

For the three-month period ended March 31, 2021, the Company was a defendant in 51 (fifty-one) (51 (fifty-one) as of December 31, 2020) administrative proceedings as well as tax lawsuits in which the disputed matters related, Income Tax (“IRPJ”), Social Contribution (“CSLL”), Social Integration Program (“PIS”), Social Security Funding Contribution (“COFINS”), Social Security Contribution, Tax on Sales and Services (“ICMS”), among others whose amounts are provisioned for when the likelihood of loss is deemed probable by the Company’s external legal counsel and the Management.

20.1.3.

Labor

For the three-month period ended March 31, 2021, the Company was a defendant in 1,033 (one thousand and thirty-three) (1,010 (one thousand and ten) as of December 31,2020) labor lawsuits.

In general, labor lawsuits are related primarily to matters frequently contested by employees in agribusiness companies, such as certain wages and/or severance payments, in addition to suits filed by outsourced employees of the Company.

20.1.4.

Civil and environment

For the three-month period ended March 31, 2021, the Company is a defendant in approximately in 69 (sixty-nine) (58 (fifty eight) as of December 31, 2020) civil and environmental lawsuits.

Civil proceedings are related primarily to payment of damages, such as those resulting from contractual obligations, traffic-related injuries, possessory actions, environmental restoration obligations, claims and others.

20.2.

Provisions for possible losses

The Company is involved in tax, civil and labor lawsuits, for which losses have been assessed as possible by Management with the support from legal counsel and therefore no provision was recorded:

	March 31, 2021		December 31, 2020
Taxes and social security ⁽¹⁾		7,171,050		7,145,147
Labor		261,560		263,971
Civil and environment ⁽¹⁾		3,304,797		3,068,884
		10,737,407		10,478,002

The amounts above do not include the fair value adjustment allocated to probable contingencies of R$2,669,783 (R$2,677,970 as of December 31, 2020), which were recorded at fair value resulting from business combinations with Fibria, in accordance with paragraph 23 of IFRS 3 – Business Combination, as presented in note 20.1.1. above.

In the three-month period ended March 31, 2021, there were no significant changes in the main nature of these contingencies compared to those disclosed in Note 20 to the annual financial statements for the year ended December 31, 2020.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

20.3.

Contingent assets

21.

EMPLOYEE BENEFIT PLANS

The Company offers supplementary pension plan and defined benefit plan, such as medical assistance and life insurance. The characteristics of such benefits were disclosed in the annual financial statements for the year ended December 31, 2020 and have not been changed during the period of 2021.

21.1.

Pension plan

Contributions made by the Company, for Suzano Prev pension plan managed by BrasilPrev, for the three-month period ended March 31, 2021 amounted R$3,270 (R$1,732 as of March 31, 2020) recognized in under cost of sales, selling and general and administrative expenses.

21.2.

Defined benefits plan

The Company offers medical assistance and life insurance in addition to the pension plans, which are measured by actuarial calculation and recognized in the unaudited condensed consolidated interim financial information.

The rollforward of actuarial liability prepared based on actuarial report, is set forth below:

Balance on December 31, 2019	736,179
Interest on actuarial liabilities	53,092
Actuarial loss	33,843
Employee contribution	(88	)
Exchange rate variation	487
Benefits paid	(38,468	)
Balance on December 31, 2020	785,045
Interest on actuarial liabilities	13,964
Exchange rate variation	20
Benefits paid	(10,081	)
Balance on March 31, 2021	788,948

22.

SHARE-BASED COMPENSATION PLAN

For the three-month period ended March 31, 2021, the Company had 3 (three) share-based, long-term compensation plans, (i) Phantom stock option plan (“PS”) and (ii) Share Appreciation Rights (“SAR”), both settled in local currency and (iii) common stock options, settled in shares.

The characteristics and measurement method of such each plan were disclosed in the annual financial statements for the year ended December 31, 2020 and have not been changed during the period of 2021.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

22.1.

Long term compensation plans (“PS and SAR”)

The rollforward is set forth below:

	March 31, 2021			December 31, 2020
	Number of outstanding options
Beginning balance		5,772,356			5,996,437
Granted during of the period		627,648			1,770,384
Exercised ⁽¹⁾		(631,962	)		(1,789,413	)
Exercised due to resignation ⁽¹⁾		(20,203	)		(21,253	)
Abandoned / prescribed due to resignation		(174,195	)		(183,799	)
Ending balance		5,573,644			5,772,356

The average price for share options exercised and exercised due to termination of employment, for the three-month period ended March 31, 2021 was R$55.11 (fifty-five Brazilian Reais and eleven cents) (R$43.14 (forty-three Brazilian Reais and fourteen cents) as of December 31, 2020).

22.2

Common stock option plan

The position is set forth below:

Program

Date of grant

Deadline for the
options to become
exercisable

Price on
grant date

Shares Granted

Restricted year for
transfer of shares

Program 4

01/02/2018

01/02/2019

R$39.10

130,435

01/02/2022

Program 2020

01/02/2020

01/02/2021

R$51.70

106,601

01/02/2024

22.3

Balances and result

The amounts corresponding to the services received and recognized are set forth below:

	Liabilities and Equity				Statement of income and Equity
	March 31, 2021		December 31, 2020		March 31, 2021			March 31, 2020
Non-current liabilities
Provision for phantom stock plan		223,915		195,135		(64,154	)		(25,337	)
Equity
Stock option granted		11,822		10,612		(1,210	)		(300	)
Total general and administrative expenses from share-based transactions						(65,364	)		(25,637	)

23.

LIABILITIES FOR ASSETS ACQUISITIONS AND SUBSIDIARIES

	March 31, 2021		December 31, 2020
Lands and forests acquisition
Real estate receivables certificates ⁽¹⁾		38,527		37,104
		38,527		37,104
Business combination
Facepa ⁽²⁾		42,754		41,721
Vale Florestar Fundo de Investimento em Participações (“VFFIP”) ⁽³⁾		462,286		423,403
		505,040		465,124
		543,567		502,228

Current		114,889		101,515
Non-current		428,678		400,713

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

Refers to obligations with the acquisition of land, farms, reforestation and houses built in Maranhão, updated by IPCA.

Acquired in March 2018, for the amount of R$307,876, upon payment of R$267,876 and the remaining updated at IPCA, adjusted by possible losses incurred up to the payment date, with maturities in March 2023 and March 2028.

On August 2014, the Company acquired the Vale Florestar S.A. through VFFIP, for the total amount of R$528,941 with a upon payment of R$44,998 and remaining with maturity to August 2029. The monthly settlements are subject to interest and updated by the variation of the U.S. Dollar exchange rate and partially updated by the IPCA.

24.

SHAREHOLDERS’ EQUITY

24.1

Share capital

For the three-month period ended March 31, 2021, the Suzano’s share capital is R$9,269,281 divided into 1,361,263,584 common shares, all nominative, book-entry shares without par value. The share capital is net of the public offering expenses of R$33,735. The breakdown of the share capital is set forth below:

	Ordinary
	Quantity		(%)
Controlling Shareholders
Suzano Holding S.A.		367,612,329		27.01
Controller		194,809,797		14.31
Managements		33,920,862		2.49
Alden Fundo de Investimento em Ações		26,154,741		1.92
		622,497,729		45.73
Treasury		12,042,004		0.88
Other shareholders		726,723,851		53.39
		1,361,263,584		100.00

By resolution of the Board of Directors, the share capital may be increased, irrespective of any amendment to the Bylaws, up to the limit of 780,119,712 common shares, all exclusively book-entry shares.

For the three-month period ended March 31, 2021, SUZB3 common shares ended the period quoted at R$68.55 (sixty-eight Reais and fifty-five cents) (R$58.54 (fifty-eight Brazilian Reais and fifty-four cents) on December 31, 2020).

24.2

Treasury shares

For the three-month period ended March 31, 2021, the Company has 12,042,004 common shares of own issuance held in treasury, with an average cost of R$18.13 (eighteen Brazilian Reais and thirteen cents) per share, with historical value of R$218,265 and market value corresponding to R$825,479. For the three-month period ended March 31, 2021 and 2020, there was no movement of purchase or sale.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

25.

EARNINGS (LOSS) PER SHARE

25.1

Basic

The basic earnings (loss) per share is measured by dividing the profit attributable to the Company’s shareholders by the weighted average common shares issued during the period, excluding the common shares acquired by the Company and held as treasury shares.

	March 31, 2021			March 31, 2020
Resulted of the period attributable for controlling shareholders’		(2,757,244	)		(13,422,530	)
Weighted average number of shares in the period		1,361,264			1,361,264
Weighted average treasury shares		(12,042	)		(12,042	)
Weighted average number of outstanding shares		1,349,222			1,349,222
Basic loss per common share - R$		(2.04358	)		(9.94835	)

25.2

Diluted

The diluted earnings (loss) per share is measured by adjusting the weighted average of outstanding common shares, assuming the conversion of all common shares that would cause dilution.

	March 31, 2020			March 31, 2020
Resulted of the period attributed to controlling shareholders’		(2,757,244	)		(13,422,530	)
Weighted average number of shares in the period (except treasury shares)		1,349,222			1,349,222
Weighted average number of shares (diluted)		1,349,222			1,349,222
Diluted loss per common share - R$		(2.04358	)		(9.94835	)

Due to the loss in the period, the Company does not consider the dilution effect in the measurement.

26.

NET FINANCIAL RESULT

	March 31, 2021			March 31, 2020
Financial expenses
Interest on loans, financing and debentures ⁽¹⁾		(757,769	)		(885,584	)
Premium expenses on early settlements		(32,933	)
Amortization of fundraising costs ⁽²⁾		(41,020	)		(25,569	)
Amortization of fair value adjustment on business combination		(3,054	)		(5,330	)
Interest expense on lease liabilities		(136,478	)		(114,781	)
Other financial expenses		(19,679	)		(55,160	)
		(990,933	)		(1,086,424	)
Financial income
Cash and cash equivalents and marketable securities		19,907			70,052
Amortization of fair value adjustment on business combination					23,809
Other financial income		4,320			26,893
		24,227			120,754
Income from derivative financial instruments
Income		51,926			34,803
Expenses		(2,545,876	)		(9,093,595	)
		(2,493,950	)		(9,058,792	)
Monetary and exchange rate variation, net
Exchange rate variation on loans, financing and debentures		(5,597,530	)		(13,187,550	)
Lease		(257,308	)		(596,328	)
Other assets and liabilities ⁽³⁾		648,373			1,364,292
		(5,206,465	)		(12,419,586	)
Net financial result		(8,667,121	)		(22,444,048	)

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

Does not include R$402 arising from capitalized interest for the three-month period ended March 31, 2021 (does not include R$3,803 as of March 31, 2020 and includes R$3,118 endorsement and guarantee in the three-month period ended March 31, 2020).

Includes an expense of R$2,630 arising from transaction costs with loans and financing that were recognized directly to the statement of income (R$319 as of March 31, 2020).

Includes effects of exchange rate variations of trade accounts receivable, trade account payable, cash and cash equivalents, marketable securities and other.

27.

NET SALES

	March 31, 2021			March 31, 2020
Gross sales		10,303,345			8,257,293
Sales deductions
Returns and cancelations		(14,339	)		(21,673	)
Discounts and rebates		(1,051,893	)		(945,349	)
		9,237,113			7,290,271

Taxes on sales		(347,947	)		(309,478	)

Net sales		8,889,166			6,980,793

28.

SEGMENT INFORMATION

28.1

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 statement of income 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:

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 our property, plant and equipment, biological and intangible assets are located in Brazil.

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

28.2

Information of operating segments

	March 31, 2021
	Pulp			Paper			Not segmented			Total
Net sales		7,593,580			1,295,586						8,889,166
Domestic market (Brazil)		454,351			894,124						1,348,475
Foreign market		7,139,229			401,462						7,540,691
Cost of sales		(4,015,712	)		(829,322	)					(4,845,034	)
Gross profit		3,577,868			466,264						4,044,132
Gross margin (%)		47.1	%		36.0	%					45.5	%

Operating income (expenses)		(382,677	)		(54,524	)					(437,201	)
Selling		(477,598	)		(104,168	)					(581,766	)
General and administrative		(278,406	)		(104,148	)					(382,554	)
Other operating, net		375,582			141,271						516,853
Income(loss) from associates and joint ventures		(2,255	)		12,521						10,266
Operating profit before net financial income (“EBIT”) ⁽¹⁾		3,195,191			411,740						3,606,931
Operating margin (%)		42.1	%		31.8	%					40.6	%

Financial result, net								(8,667,121	)		(8,667,121	)

Net income (loss) before taxes		3,195,191			411,740			(8,667,121	)		(5,060,190	)

Income taxes								2,304,931			2,304,931

Net income (loss) for the period		3,195,191			411,740			(6,362,190	)		(2,755,259	)
Profit (loss) margin for the period (%)		42.1	%		31.8	%					(31.0	)%

Attributable to
Controlling shareholders’		3,195,191			411,740			(6,364,175	)		(2,757,244	)
Non-controlling interest								1,985			1,985

Depreciation, depletion and amortization		1,629,575			136,906						1,766,481

1)	EBIT (“Earnings before interest and tax”).

	March 31, 2020
	Pulp			Paper			Not segmented			Total
Net sales		5,886,723			1,094,070						6,980,793
Domestic market (Brazil)		398,367			763,672						1,162,039
Foreign market		5,488,356			330,398						5,818,754
Cost of sales		(4,129,175	)		(690,824	)					(4,819,999	)
Gross profit		1,757,548			403,246						2,160,794
Gross margin (%)		29.9	%		36.9	%					31.0	%

Operating income (expenses)		(631,643	)		(180,687	)					(812,330	)
Selling		(418,221	)		(96,715	)					(514,936	)
General and administrative		(224,053	)		(90,783	)					(314,836	)
Other operating, net		16,592			139						16,731
Income from associates and joint ventures		(5,961	)		6,672						711
Operating profit before net financial income (“EBIT”) ⁽¹⁾		1,125,905			222,559						1,348,464
Operating margin (%)		19.1	%		20.3	%					19.3	%

Financial result, net								(22,444,048	)		(22,444,048	)

Net income (loss) before taxes		1,125,905			222,559			(22,444,048	)		(21,095,584	)

Income taxes								7,676,523			7,676,523

Net income (loss) for the period		1,125,905			222,559			(14,767,525	)		(13,419,061	)
Profit (loss) margin for the period (%)		19.1	%		20.3	%					(192.2	)%

Attributable to
Controlling shareholders’		1,125,905			222,559			(14,770,994	)		(13,422,530	)
Non-controlling interest								3,469			3,469

Depreciation, depletion and amortization		1,539,864			108,338						1,648,202

EBIT (“Earnings before interest and tax”).

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

28.3

Net sales by product

The following table set forth the breakdown of net sales by product:

Products	March 31, 2021		March 31, 2020
Market pulp ⁽¹⁾		7,593,580		5,886,723
Printing and writing paper ⁽²⁾		1,033,000		881,758
Paperboard		252,227		197,446
Other		10,359		14,866
Net sales		8,889,166		6,980,793

Net sale from fluff pulp represents approximately 0.7% of total net sales and, therefore, was included in market pulp net sales.

Tissue is a recently launched product and its revenues represent approximately 2.1% of total net sales and, therefore, was included in printing and writing paper net sales.

28.4

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:

	March 31, 2021		December 31, 2020
Pulp		7,897,051		7,897,051
Consumer goods		119,332		119,332
		8,016,383		8,016,383

Suzano S.A.

Notes to the unaudited condensed consolidated interim financial information
Three-month period ended March 31, 2021

29.

RESULTS BY NATURE

	March 31, 2021			March 31, 2020
Cost of sales ⁽¹⁾
Personnel expenses		(266,635	)		(236,980	)
Costs with raw materials, materials and services		(1,919,569	)		(1,720,594	)
Logistics cost		(1,053,114	)		(1,007,721	)
Depreciation, depletion and amortization		(1,503,890	)		(1,381,201	)
Other ⁽²⁾		(101,826	)		(473,503	)
		(4,845,034	)		(4,819,999	)
Selling expenses
Personnel expenses		(53,299	)		(43,930	)
Services		(26,775	)		(28,799	)
Logistics cost		(252,334	)		(182,515	)
Depreciation and amortization		(235,622	)		(233,679	)
Other ⁽³⁾		(13,736	)		(26,013	)
		(581,766	)		(514,936	)
General and Administrative expenses
Personnel expenses		(265,412	)		(186,008	)
Services		(55,988	)		(67,651	)
Depreciation and amortization		(25,677	)		(25,101	)
Social actions COVID-19		(4,555	)
Other ⁽⁴⁾		(30,922	)		(36,076	)
		(382,554	)		(314,836	)
Other operating (expenses) income net
Rents and leases		1,028			1,080
Result from sale of other products, net		10,312			18,977
Result from sale and disposal of property, plant and equipment and biological assets, net ^{(2) (5)}		497,288			(4,488	)
Insurance reimbursement		523
Depreciation and amortization		(1,292	)		(8,221	)
Other operating income, net		8,994			9,383
		516,853			16,731

Includes R$582 related to idle capacity and maintenance downtime (R$92,868 as of March 31, 2020).

Includes R$444 related to the formation cost of the biological asset applied directly in the statement of income (there was no formation cost applied directly in statement of income on March 31, 2020).

Includes expected credit losses, insurance, materials of use and consumption, travel, accommodation, trade fairs and events.

Includes corporate expenses, insurance, materials of use and consumption, social programs and donations, travel and accommodation.

Includes, substantially, the net gain on the sale of rural properties and forests to Turvinho and Bracell (Note 1.2.2.).