EX-99.1 2 tm2122472d3_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

Leverage in USD down to 3.3 times

Record quarterly Adjusted EBITDA, up 22%

 

São Paulo, August 11, 2021. Suzano S.A. (B3: SUZB3 | NYSE: SUZ), one of the world’s largest integrated pulp and paper producers, announces today its consolidated results for the 2nd quarter of 2021 (2Q21).

 

HIGHLIGHTS

 

•Pulp sales of 2,537 thousand tons (-9% vs. 2Q20).

 

•Paper sales of 296 thousand tons (+26% vs. 2Q20).

 

•Adjusted EBITDA1 and Operating cash generation²: R$5.9 billion and R$4.9 billion, respectively.

 

•Adjusted EBITDA1/ton3 from pulp of R$2,166/ton (+56% vs. 2Q20).

 

•Adjusted EBITDA1/ton4 from paper of R$1,506/ton (+12% vs. 2Q20).

 

•Average net pulp price – export market: US$636/t (+35% vs. 2Q20).

 

•Average net paper price4 of R$4,731/ton (+9% vs. 2Q20).

 

•Pulp cash cost ex-downtime of R$680/ton (+13% vs. 2Q20).

 

•Decrease in leverage to 3.3 times in USD and 3.1 times in BRL.

 

Financial Data (R$ million)   2Q21   1Q21   ΔQ-o-Q    2Q20   ΔY-o-Y    LTM5 2Q21 
Net Revenue   9,844    8,889    11%   7,996    23%   34,217 
Adjusted EBITDA1   5,942    4,864    22%   4,180    42%   18,550 
Adjusted EBITDA Margin1   60%   55%   6 p.p.    52%   8 p.p.    54%
Adjusted EBITDA Margin¹ ex- Klabin3   60%   55%   6 p.p.    52%   8 p.p.    54%
Net Financial Result   9,743    (8,667)   -    (5,657)   -    3,091 
Net Income   10,037    (2,755)   -    (2,053)   -    12,038 
Operating Cash Generation2   4,940    3,866    28%   3,372    47%   14,641 
Net Debt /Adjusted EBITDA1 (x) - R$   3.1 x    4.0 x    -0.9 x    5.6 x    -2.5 x    3.1 x 
Net Debt /Adjusted EBITDA1 (x) - US$   3.3 x    3.8 x    -0.4 x    4.7 x    -1.4 x    3.3 x 

 

Operational Data ('000 tons)   2Q21   1Q21   ΔQ-o-Q    2Q20   ΔY-o-Y    LTM5 2Q21 
Sales   2,833    2,944    -4%   3,013    -6%   11,640 
Pulp   2,537    2,653    -4%   2,778    -9%   10,380 
Paper4   296    291    2%   235    26%   1,261 

 

¹Excluding non-recurring items. | 2Excludes Klabin’s sales volume. | 3Considers Adjusted EBITDA less sustaining capex (cash basis) | 4Considers the results of the Consumer Goods Unit. | 5Last 12 months. 

 

 

 

 

 

 

 

 

The consolidated quarterly information has been prepared in accordance with the Securities and Exchange Commission (CVM) and Accounting Standards Committee (CPC) standards and is in compliance with International Accounting Standard (IFRS) issued by the International Accounting Standard Board (IASB). The data contained in this document was obtained from the financial information as made available to the CVM. The operating and financial information is presented based on consolidated numbers in Reais (R$). Summaries may diverge due to rounding. Non-financial data, such as volume, quantity, average price, average price, in Reais and Dollars,

were not reviewed by independent auditors.

 

CONTENTS  
   
EXECUTIVE SUMMARY 3
PULP BUSINESS PERFORMANCE 3
PULP SALES VOLUME AND REVENUE 3
PULP CASH COST 5
PULP SEGMENT EBITDA 7
OPERATING CASH FLOW FROM THE PULP SEGMENT 8
PAPER BUSINESS PERFORMANCE 9
PAPER SALES VOLUME AND REVENUE¹ 9
OPERATING CASH FLOW FROM THE PAPER SEGMENT 11
FINANCIAL PERFORMANCE 12
NET REVENUE 12
CALENDAR OF SCHEDULED MAINTENANCE DOWNTIMES 12
COST OF GOODS SOLD (COGS) 13
SELLING EXPENSES 13
GENERAL AND ADMINISTRATIVE EXPENSES 13
ADJUSTED EBITDA 14
FINANCIAL RESULT 14
DERIVATIVE OPERATIONS 15
NET INCOME (LOSS) 18
DEBT 18
CAPITAL EXPENDITURE 21
OPERATING CASH GENERATION 21
FREE CASH FLOW 22
SPINNOVA 22
COVID-19 22
ESG 24
TOTAL OPERATIONAL EXPENDITURE - PULP 25
CAPITAL MARKETS 25
FIXED INCOME 26
RATINGS 26
UPCOMING EVENTS 27
IR CONTACTS 27
APPENDICES 28
APPENDIX 1 - Operating Data 28
APPENDIX 2 – Consolidated Statement of Income and Goodwill Amortization 30
APPENDIX 3 – Consolidated Balance Sheet 31
APPENDIX 4 – Consolidated Statement of Cash Flow 32
APPENDIX 5 – EBITDA 33
APPENDIX 6 – Segmented Income Statement 34

 

Page 2 of 36

 

 

 

EXECUTIVE SUMMARY

 

The recovery of pulp market fundamentals that was already evident in the previous quarter had an impact on the Company's results.

 

Pulp prices continued to perform well during 2Q21 on the back of favorable fundamentals, both on the supply and demand side, with the end of the quarter being marked by signs of cooling off, especially in China given the approaching period of greater seasonal effects. In paper business, demand remained buoyant, enabling further price increases in both the domestic and international markets, supporting the achievement of the highest quarterly EBITDA in its history when considering paper and consumer goods. These factors, combined with the average weaker BRL, drove adjusted EBITDA in the quarter to R$5.9 billion and operating cash generation to R$4.9 billion – the highest since the creation of Suzano.

 

As for financial management, the Company once again reduced its net debt in USD and leverage, as measured by net debt/adjusted EBITDA in the last twelve months. Its liquidity position remained solid, representing zero refinancing risk until 2023. Suzano remains focused on financial discipline, which is evident from the clear and consistent policies implemented over time. Continuing its debt management program, at the end of June the Company issued a new Sustainability-Linked Bond (SLB) in the international market, with the principal amount of US$ 1 billion and a yield of 3.28% per year, associated with the goals for reducing the use of industrial water by 2026 and reaching 30% in the representation of women occupying a leadership position in the Company by 2025, becoming the first issue in emerging markets to include a social indicator of Diversity & Inclusion.

 

Another highlight of the quarter on the ESG front, was the release of a pioneering goal in the Pulp & Paper industry about Biodiversity, by establishing the commitment of connecting half a million hectares of priority areas for biodiversity conservation in the Cerrado, Atlantic Forest and Amazon biomes by 2030.

 

PULP BUSINESS PERFORMANCE

 

PULP SALES VOLUME AND REVENUE

 

Demand for pulp in 2Q21 followed the different trends in the paper segment in each of the main markets. In Europe and North America, the positive scenario in the printing and writing, packaging and special paper market resulted enabled successive price increases, while the destocking of tissue paper by end consumers, especially in the North American market, pressured producers who were forced to temporarily scale down production. In China, demand for diverse paper types remained firm until mid-quarter, though it showed signs of cooling off at the end of the period mainly due to the seasonality expected during the middle of the year.

 

Despite the absence of significant events that could result in unscheduled production stoppages, maintenance downtimes during the spring season across the Northern Hemisphere played an important role in reducing local pulp supply in 2Q21, boosting the demand for imported pulp. However, logistics problems, especially those related to ship delays and shortage of containers, remained a cause for concern.

 

As such, the imbalance among market fundamentals drove the performance in pulp prices during the quarter. The difference between softwood and hardwood pulp prices remained high, which too continued to favor the substitution of fibers. According to PIX/FOEX, the difference between softwood and hardwood pulp prices at the end of the quarter was US$201/ton in Europe and US$186/ton in China.

 

In this context, Suzano’s pulp sales totaled 2,537 thousand tons, down 4% and 9%, respectively, from 1Q21 and 2Q20.

 

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Average net price in USD of the pulp sold by Suzano was US$ 629/ton, an increase of 20% and 35%, respectively, from 1Q21 and 2Q20, resulting from the increase in the international pulp prices. Average net pulp price in the export market was US$636/ton (compared to US$532/ton in 1Q21 and US$471/ton in 2Q20).

 

 

 

Average net price in BRL was R$3,329/ton in 2Q21, up 16% and 33%, respectively, from 1Q21 and 2Q20, accompanying the growth trend in the international market prices.

 

The higher net price in USD led to the 11% and 21% growth, respectively, in net revenue from pulp in relation to 1Q21 and 2Q20, despite de sales volume reduction and lower average exchange rate.

 

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PULP CASH COST

 

Cash cost excluding downtime in 2Q21 came to R$ 680/ton, 9% higher than in 1Q21, due to: i) higher spending on raw materials, mainly impacted by the Brent energy prices (especially natural gas), higher expenditure on packaging due to the increase in the price of steel and chlorine dioxide due to the higher energy price; as well as higher consumption of materials due to periodic replacements; ii) the increase in wood costs on account of higher transport and harvest costs caused by the increase in the price of diesel, and the record of COVID-19 pandemic impact (previously recorded directly in COGS); iii) higher fixed costs as a result of higher expenses with materials and routine services during the execution of scheduled downtimes; and iv) the lower result from utilities on account of lower energy exports, caused by the reduction in the operational availability of turbogenerators, despite the increase in spot prices. The negative impact of the exchange rate, against the average FX appreciation noticed in the quarter (3%), is related to the turnover effect of raw material inventories caused by the delay of approximately one month between acquisition and consumption.

 

 

 

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¹Excludes the impact of maintenance and administrative downtimes.

 

Cash cost excluding downtime in 2Q21 was 13% higher than in 2Q20, due to: i) higher spending on raw materials as a result of higher energy prices (increase in oil and natural gas prices due to the rise in Brent prices), higher prices of chemicals (especially chlorine dioxide due to higher energy cost) and greater expenditure on packaging due to the increase in the price of steel and greater consumption of materials due to periodic replacements; ii) the increase in wood costs on account of higher transport and harvest costs caused by the increase in the price of diesel, and COVID-19 pandemic impact; iii) the increase in fixed costs due to the postponement of maintenance activities in light of the COVID-19 pandemic; and iv) the result from utilities, which was affected by lower exports despite the increase in spot prices.

 

 

 

¹Excludes the impact of maintenance and administrative downtimes.

 

Page 6 of 36

 

 

 

 

 

 

 

¹Based on cash cost excluding downtimes. Excludes energy sales.

 

PULP SEGMENT EBITDA

 

Pulp segment  2Q21   1Q21     ΔQ-o-Q    2Q20     ΔY-o-Y    LTM 2Q21 
Adjusted EBITDA (R$ million)   5,496    4,466    23%   3,862    42%   16,876 
Sales volume (k ton)   2,537    2,653    -4%   2,777    -9%   10,380 
Pulp adjusted¹ EBITDA (R$/ton)   2,166    1,683    29%   1,391    56%   1,626 

 

¹ Excludes non-recurring items and PPA effects.

 

Adjusted EBITDA from pulp in 2Q21 was 23% higher than in 1Q21, mainly due to the higher net average price in USD (+20%) and lower SG&A expenses, largely caused by the decline in variable selling expenses (logistics costs reduction). These effects were partially offset by the decline in average USD against BRL (3%), lower sales volume (-4%) and higher cash COGS per ton, impacted by higher production costs, higher Brent and scheduled maintenance downtimes. The 29% growth in adjusted EBITDA per ton was driven by the price effects and the decline in SG&A expenses, which were partially offset by the stronger BRL and the higher cash COGS.

 

Compared to 2Q20, the 42% growth in adjusted EBITDA from pulp is mainly due to the 35% increase in net average price, which was partially offset by lower sales volume (-9%) and higher cash COGS per ton (due to higher production cost and higher Brent). Adjusted EBITDA per ton increased 56% due to the price factor but was partially offset by the increase in the cash COGS.

 

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¹ Excludes non-recurring items and PPA effects.

 

OPERATING CASH FLOW FROM THE PULP SEGMENT

 

Operating cash flow - Pulp (R$ million)   2Q21    1Q21    ΔQ-o-Q    2Q20    ΔY-o-Y    LTM 2Q21 
Adjusted EBITDA¹   5,496    4,466    23%   3,862    42%   16,876 
Maintenance Capex²   (935)   (938)   0%   (742)   26%   (3,621)
Operating Cash Flow   4,561    3,528    29%   3,120    46%   13,255 

 

¹ Excludes non-recurring items and PPA effects.

² Cash basis.

 

 

 

¹ Excludes sales volume related to the agreement with Klabin.

 

Operating cash generation per ton in the pulp segment was 35% and 60% higher than in 1Q21 and 2Q20, respectively, impacted by the growth in adjusted EBITDA per ton (as explained earlier), partially offset by higher maintenance capex per ton.

 

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PAPER BUSINESS PERFORMANCE

 

The following data and analyses incorporate the joint results of the consumer goods and paper businesses.

 

PAPER SALES VOLUME AND REVENUE¹

 

According to data published by Brazil's Forestry Industry Association (IBÁ), demand for printing and writing in Brazil grew 67% in 2Q21 compared to 2Q20. The main reason for this growth is the fact that 2Q20 marked the worst moment of consumption during the pandemic, with demand reaching the lowest level in April 2020.

 

Comparing the first half of 2021 with the same period last year, demand in Brazil for printing and writing increased 32%, which is driving the gradual recovery in demand since July 2020. Another trend fueling this growth since 1Q21 is paper sales to the paperboard industry, characterized by the use of uncoated paper as an alternative to paper shavings in applications such as corrugated medium and liners for paper boxes.

 

This phenomenon of developing new paper applications is the result of the paper and packaging industry’s shift towards developing solutions for the prevailing scenario. Physical distancing measures implemented last year led to changes in consumption that considerably accelerated the growth of e-commerce in Brazil. The spike in demand for this channel, combined with the strong decline in the supply of shavings to produce paper boxes, created a favorable environment for the use of alternative printing and writing solutions for producing these packages.

 

Demand from the printing and writing industry in Brazil without such application is estimated to grow 23% in the first semester compared to the same period in 2020. Growth in 2Q21 compared to 2Q20 is 59%.

 

In this context, the potential impact on paper sales caused by measures to contain the pandemic differs according to the product line: printing and writing papers are still adversely affected by the lower circulation of people but these papers, especially those related to corporate and educational segments, have a bright outlook for the second half of the year due to the progress of vaccination across Brazil and the improvement of economic activity.

 

Demand for paperboard in Brazil grew 28% in 1H21 compared to the same period in 2020. Demand in 2Q21 in relation to 2Q20 grew 36%. This growth was not only due to the high demand in the packaging market but also due to the contrast with the comparison base last year, which registered the lowest ever consumption when the restrictive measures related to the pandemic were at their peak in 2020.

 

Consolidating both market segments (Suzano's accessible paper market), growth was 31% in 1H21 and 55% in 2Q21 compared to 2Q20. The industry thus continues to reinforce the gradual recovery in demand, especially in lines dedicated to packaging such as paperboard and paper boxes.

 

Suzano's domestic paper sales (printing and writing, paperboard and tissue) totaled 208 thousand tons in 2Q21, an increase of 4% from 1Q21 and 48% from 2Q20. Sales in 1H21 totaled 409 thousand tons, up 27% year over year, in line with the market trend.

 

Paper sales in the international markets totaled 88 thousand tons, a reduction of 3% from 1Q21 and 8% from 2Q20 due to the logistical bottlenecks in exports through containers. This volume corresponded to 30% of total sales volume in 2Q21 (vs. 31% and 40% in 1Q21 and 2Q20, respectively).

 

Driven by the gradual economic recovery and seasonality effects during the period, Suzano's total paper sales in 2Q21 grew 2% in relation to 1Q21 and 26% from 2Q20.

 

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1Includes the Consumer Goods Unit.

 

Average net price in 2Q21 was R$4,731/ton, up 9% from 2Q20, due to price increases in the domestic market. Compared to 1Q21, average net price rose 6% due to price increases across all product lines in the domestic market, driven mainly by heavy demand in the paperboard market, and the price recovery in all the international markets where the Company operates.

 

Net revenue from paper was R$1,399 million in 2Q21, an 8% increase vs. 1Q21 due to the price increase as a result of the reasons cited above. Compared to 2Q20, the increase was due to the normalization of sales volumes to pre-pandemic levels and a 9% increase in prices.

 

 

 

1Includes the Consumer Goods Unit.

 

PAPER SEGMENT EBITDA

 

 

Paper segment   2Q21    1Q21    ΔQ-o-Q    2Q20    ΔY-o-Y    LTM 2Q21 
Adjusted EBITDA (R$ million)   445    399    12%   317    40%   1,673 
Sales volume (k ton)   296    291    2%   235    26%   1,261 
Paper adjusted¹ EBITDA (R$/ton)   1,506    1,368    10%   1,348    12%   1,328 

 

¹ Excludes non-recurring items and PPA effects.

 

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Adjusted EBITDA from paper in 2Q21 was R$445 million, a 12% growth in comparison to 1Q21, mainly due to higher prices (domestic and international markets). Compared to 2Q20, the increase reached 40%, mainly due to higher sales volume and price increases in all product lines.

 

 

 

OPERATING CASH FLOW FROM THE PAPER SEGMENT

 

Operating cash flow - Paper (R$ million)   2Q21    1Q21    ΔQ-o-Q    2Q20    ΔY-o-Y    LTM 2Q21 
Adjusted EBITDA¹   445    399    12%   317    40%   1,673 
Maintenance Capex²   (66)   (61)   9%   (65)   2%   (287)
Operating Cash Flow   379    338    12%   252    50%   1,386 

 

¹ Excluding non-recurring items.

² Cash basis.

 

 

 

Operating cash generation per ton in the paper segment was R$1,282, up 11% from 1Q21 due to the increase in prices. Capex levels in the comparable quarters remained virtually in line. Compared to 2Q20, the indicator was 20% higher, mainly due to the increase in sales volume and higher prices in the domestic and international markets.

 

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FINANCIAL PERFORMANCE

 

NET REVENUE

 

Suzano’s net revenue in 2Q21 was R$9,844 million, 84% of which came from exports (vs. 85% in 1Q21 and 88% in 2Q20). Compared to 1Q21, the 11% growth in net revenue was due to the higher net average price of pulp in USD, which was partially offset by the 3% decline in average USD vs. BRL and the 4% drop in pulp and paper sales volume. The 23% growth in consolidated net revenue in 2Q21 compared to 2Q20 is the result of higher net average pulp price in USD, which was partially offset by the 6% decline in sales volume and the 2% decline in average USD vs. BRL.

 

 

 

¹Excludes service revenue from Portocel.

 

CALENDAR OF SCHEDULED MAINTENANCE DOWNTIMES

 

 

¹Veracel is a joint operation between Suzano (50%) and Stora Enso (50%) with total annual capacity of 1,120 thousand tons.

²Includes integrated capacities and fluff.

 

Page 12 of 36

 

 

 

 

COST OF GOODS SOLD (COGS)

 

COGS (R$ million)   2Q21    1Q21    ΔQ-o-Q    2Q20    ΔY-o-Y    LTM 2Q21 
COGS (Income statement)   4,778    4,845    -1%   4,789    0%   18,980 
Depreciation, depletion and amortization   1,434    1,504    -5%   1,462    -2%   5,867 
Cash COGS   3,344    3,341    0%   3,327    1%   13,113 
Sales volume   2,833    2,945    -4%   3,013    -6%   11,640 
Cash COGS/ton (R$/ton)   1,180    1,135    4%   1,104    7%   1,127 

 

Cash COGS in 2Q21 totaled R$3,344 million, or R$1,180/ton. Compared to 1Q21, cash COGS remained stable, with the decline in sales volume (-4%) and in average USD vs. BRL (-3%) offset by higher production costs and the impact of scheduled maintenance downtimes. Cash COGS per ton increased 4% due to the increase in production costs and the impact of downtimes, which were partially offset by higher average BRL vs. USD.

 

Compared to 2Q20, cash COGS increased 1%, mainly due to higher cash cost of production and higher logistics costs as a result of higher Brent, which was partially offset by lower sales volume (-6%). Cash COGS per ton was 4% higher than in the same period last year due to the production cost factor and Brent effect mentioned earlier.

 

SELLING EXPENSES

 

Selling expenses (R$ million)   2Q21    1Q21    ΔQ-o-Q    2Q20    ΔY-o-Y    LTM 2Q21 
Selling expenses (Income Statement)   497    582    -15%   547    -9%   2,191 
(-) Depreciation, depletion and amortization   235    236    0%   227    4%   916 
Cash selling expenses   262    346    -24%   320    -18%   1,275 
Sales volume   2,833    2,944    -4%   3,013    -6%   11,640 
Cash selling expenses/ton (R$/ton)   92    118    -21%   106    -13%   110 

 

Cash selling expenses decreased 24% from 1Q21, mainly due to the reduction in sales volume and logistics expenses (in turn due to lower expenses associated with inland logistics in North America and Europe). Cash selling expenses per ton fell 21%, mainly due to the reduction in logistics expenses, as mentioned above.

 

Compared to 2Q20, the 18% decline in cash selling expenses is mainly due to lower sales volume and the decline of logistics expenses (again explained by the reduction in expenses associated with inland logistics in North America and Europe). Cash selling expenses per ton declined 21%, due to the logistics factors mentioned above.

 

GENERAL AND ADMINISTRATIVE EXPENSES

 

General and Administrative Expenses (R$ million)   2Q21    1Q21    ΔQ-o-Q    2Q20    ΔY-o-Y    LTM 2Q21 
General and Administrative Expenses (Income Statament)   353    383    -8%   336    5%   1,528 
Depreciation, depletion and amortization¹   26    26    2%   19    39%   86 
Cash general and administrative expenses   327    357    -8%   317    3%   1,442 
Sales volume   2,833    2,944    -4%   3,013    -6%   11,640 
Cash general and administrative expenses/t (R$/ton)   115    121    -5%   105    10%   124 

 

Compared to 1Q21, the 8% decline in cash general and administrative expenses is mainly due to the reduction in personnel expenses (variable compensation), which was partially offset by higher expenses with third-party services. On a per-ton basis, there was a decrease of 5% due to the same factors.

 

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Compared to 2Q20, cash general and administrative expenses increased 3%, mainly due to higher expenses with personnel and third-party services. On a per-ton basis, the 10% increase is explained by the same factors.

 

Other operating income (expenses) amounted to an income of R$910 million in 2Q21, compared to an income of R$517 million in 1Q21 and R$196 million in 2Q20. The increase in relation to 1Q21 is mainly due to the adjustment to the fair value of biological assets (which is made in the second and fourth quarter of each year) and the booking of tax credits related to the recognition of the right to exclude ICMS from the PIS and COFINS calculation base, all of which were partially offset by lower income from the sale of land and forests. Compared to 2Q20, the increase is also mainly due to the higher positive effect of the adjustment to the fair value of biological assets and the above-mentioned booking of tax credits.

 

ADJUSTED EBITDA

 

Consolidated   2Q21   1Q21   ΔQ-o-Q    2Q20   ΔY-o-Y    LTM 2Q21 
Adjusted EBITDA (R$ million)¹   5,942    4,864    22%   4,180    42%   18,550 
Adjusted EBITDA¹ Margin - ex-Klabin   60%   55%   5 p.p.    52%   8 p.p.    54%
Sales Volume ex-Klabin (k ton)   2,833    2,944    -4%   3,013    -6%   11,640 
Adjusted EBITDA¹ ex-Klabin/ton (R$/ton)   2,097    1,652    27%   1,387    51%   1,594 

¹ Excludes non-recurring items and PPA effects.

 

The growth in adjusted EBITDA in 2Q21 compared to 1Q21 is due to the 20% increase in net average pulp price in USD and lower SG&A expenses, partially offset by the decline in average USD vs. BRL (3%), lower sales volume and the increase in cash COGS per ton, as mentioned earlier. The 27% increase in EBITDA per ton is the result of price and SG&A expenses reduction, partially offset by the depreciation of the average USD vs. BRL (-3%) and production cost increase.

 

Compared to 2Q20, the 42% increase in Adjusted EBITDA was largely due to higher net average price of pulp in USD (+35%), partially offset by the decline in sales volume (-6%) and in average USD vs. BRL (2%), as well as higher cash COGS per ton (higher cost of production and logistics costs). Adjusted EBITDA per ton increased 51% due to the price factor and was partially offset by the exchange rate effect and higher cash COGS per ton.

 

FINANCIAL RESULT

 

Financial Result (R$ million)   2Q21   1Q21   ΔQ-o-Q    2Q20   ΔY-o-Y    LTM 2Q21 
Financial Expenses   (932)   (991)   -6%   (1,033)   -10%   (4,263)
Interest on loans and financing (local currency)   (146)   (132)   10%   (191)   -24%   (617)
Interest on loans and financing (foreign currency)   (590)   (626)   -6%   (660)   -11%   (2,817)
Capitalized interest¹   1    0    -    4    -84%   4 
Other financial expenses   (197)   (233)   -15%   (187)   6%   (832)
Financial Income   46    24    91%   82    -44%   195 
Interest on financial investments   29    20    48%   38    -23%   88 
Other financial income   17    4    290%   44    -62%   107 
Monetary and Exchange Variations   6,896    (5,206)   -    (2,930)   -    4,508 
Foreign exchange variations (Debt)   7,663    (5,598)   -    (3,177)   -    5,065 
Other foreign exchange variations   (768)   391    -    247    -    (557)
Derivative income (loss), net²   3,733    (2,494)   -    (1,776)   -    2,652 
Cash flow hedge   1,748    (1,277)   -    (1,064)   -    1,343 
Debt hedge   2,015    (1,185)   -    (679)   -    1,495 
Others³   (30)   (32)   -7%   (33)   -9%   (186)
Net Financial Result   9,743    (8,667)   -    (5,657)   -    3,092 

¹ Capitalized interest due to construction in progress.

² Variation in mark-to-market adjustment (2Q21: -R$4,103 million | 1Q21: -R$8,557 million), plus adjustments paid and received (2Q21 = -R$722 million).

³ Includes commodity hedging and embedded derivatives.

 

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Financial expenses were down 6% from 1Q21, mainly due to the 3% depreciation of the average USD against the BRL. Compared to 2Q20, the 10% reduction was due to the decrease on interest in local currency, in turn as a result of the settlement of debts such as CRA, BNDES, FDCO and BNB, and due to the reduction on interest in foreign currency, mainly due to the withdraw of RCF (Revolving Credit Facility) in that quarter as an initiative to strengthen the cash position, subsequently settled as disclosed to the market at the time. Those effects were partially offset by the 6% increase in other financial expenses, related to charges on assignment of receivables due to the greater volume of operations of this nature.

 

Financial income grew 91% in relation to 1Q21, due to the increase in CDI, the main index of the company's financial investments and higher cash position. Compared to 2Q20, financial income decreased 44% due to the drop in interest rates on foreign currency investments, cash position reduction and the decline in revenue from goodwill resulting from the merger of Fibria, which was fully amortized in 2020.

 

Inflation adjustment and exchange variation had a positive impact of R$6,896 million on the Company’s quarterly financial result due to the 12% increase in the end-of-period rate of BRL against USD on the foreign currency portion of debt (81% of total debt). Note that the accounting impact of exchange variation on foreign currency debt has a cash impact only on the respective maturities.

 

Derivative operations generated an income of R$3,733 million in 2Q21, mainly due to the effect of stronger BRL on debt hedge and cash flow transactions, despite the negative impact caused by the variations in the fixed, coupon and Libor rate curves on the transactions. The mark-to-market adjustment of derivative instruments on June 30, 2021 was an expense of R$4,103 million, compared to an expense of R$8,557 million on March 31, 2021, representing a positive variation of R$4,455 million. Note that the impact of BRL appreciation on the derivatives portfolio generates a cash impact only upon the respective maturities. The net effect on cash, which refers to the maturity of derivative operations in the second quarter, was a negative R$722 million (R$192 million expense from debt hedge and R$530 million expense from operating and commodity hedge).

 

Due to the above factors, net financial result in 2Q21, considering all financial expense and income lines, was an income of R$9,743 million, compared to an expense of R$8,667 million in 1Q21 and R$5,657 million in 2Q20.

 

DERIVATIVE OPERATIONS

 

Suzano carries out derivative operations exclusively for hedging purposes. The following table reflects the position of derivative hedging instruments on June 30, 2021:

 

  Notional (US$ million)   Fair Value (R$ million) 
Hedge¹   Jun/2021    Mar/2021    Jun/2021    Mar/2021 
Debt   6,507    6,486    (5,218)   (7,424)
Cash Flow   3,857    4,192    860    (1,450)
Others²   613    650    255    317 
Total   10,976    11,329    (4,103)   (8,557)

¹Refer to note 4 of the 1Q21 Quarterly Financial Statements (ITR) for further details and fair value sensitivity analysis.

2Includes commodity hedge and embedded derivatives.

 

The Company’s financial policy seeks to minimize the volatility of its cash generation and to impart greater flexibility to cash flow management. Currently, the policy stipulates that surplus dollars may be partially hedged (at least 40% and up to 75% of exchange variation exposure over the next 18 months) using plain vanilla instruments, such as Zero Cost Collars (ZCC) and Non-Deliverable Forwards (NDF).

 

ZCC transactions establish minimum and maximum limits for the exchange rate that minimize adverse effects in the event of significant appreciation in the BRL. If the exchange rate is within such limits, the Company neither pays nor receives any financial adjustments. Therefore, the Company is protected in scenarios of extreme BRL appreciation. However, these transactions also limit potential gains in scenarios of extreme BRL depreciation. This characteristic allows for capturing greater benefits from export revenue in a potential scenario of USD appreciation within the range contracted.

 

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On June 30, 2021, the outstanding notional value of operations involving forward dollar sales through ZCCs was US$3,778 million, whose maturities are distributed from July 2021 to November 2022, with an average forward rate ranging from R$5.21 to R$6.00. On the same date, the outstanding notional value of operations involving forward USD sales through NDFs was US$80 million, whose maturities are distributed between October 2021 and March 2022 and with an average rate of R$5.36. In 2Q21, cash flow hedge operations resulted in a gain of R$1,748 million. The mark-to-market adjustment (fair value) of ZCC transactions was a gain of R$837 million and for NDFs was a gain of R$23 million at the end of the quarter.

 

The following table presents a sensitivity analysis of the cash impact that the Company could have on its cash flow hedge portfolio (ZCC and NDF) if the future exchange rate remains the same as at the end of 2Q21 (R$/US$ = 5.00) in the coming quarters; as well as the projected variation in cash impact for each R$0.10 variation above the call strike level of each quarter. Note that the figures presented in the table are the Company’s projections based on the end-of-period curves and could fluctuate depending on market conditions.

 

           Cash adjustment (R$ million) 
Maturity (up to)  Strike Range   Notional
(US$ million)		   Actual   R$ / US$ = 5.00 (2Q21)  

Sensitivity at R$ 0.10 / US$

variation (+/-)1

 
                     
       Zero Cost Collars           
2Q21   -    -    (562)   -    - 
3Q21   4.87 – 5.67    807         12    (81)
4Q21   5.22 – 6.12    969    -    222    (97)
1Q22   5.37 – 6.10    731    -    271    (73)
2Q22   5.33 – 6.06    961    -    316    (96)
3Q22   5.31 – 6.01    270    -    84    (27)
4Q22   5.10 – 6.02    40    -    4    (4)
Total   5.21 – 6.00    3,778    (562)   908    (378)
                          
NDF                         
2Q21                         
3Q21   5.33    50    -    16    (5)
4Q21   -    -    -    -    - 
1Q22   5.42    30    -    12    (3)
Total   5.36    80    0    28    (8)

¹ Note: sensitivity of adjustments for exchange rates above the strike.

 

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

 

On June 30, 2021, the Company had outstanding (notional value) US$6,507 million distributed as shown in the table below. In 2Q21, the result of liability hedge transactions was a gain of R$2,015 million, mainly due to BRL appreciation in the period. The mark-to-market (fair value) of such operations was negative by R$5,218 million at the end of the quarter.

 

            Notional (US$ million)    Fair value (R$ million) 
Debt Hedge   Maturity (up to)   Currency   Jun/2021    Mar/2021    Jun/2021    Mar/2021 
   Swap (PRÉ x USD)   2024   USD   350    350    (529)   (786)
   Swap (CDI x USD)   2026   USD   2,267    2,267    (4,166)   (5,912)
   Swap (IPCA x USD)   2023   USD   121    121    270    (179)
  Swap (LIBOR x USD)   2026   USD   3,600    3,600    (706)   (827)
   Swap (IPCA x CDI)   2023   BRL   169¹    148    (86)   280 
Total           6,507    6,486    (5,218)   (7,424)

1Translated at the closing exchange rate (5.00).

 

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The following table presents a sensitivity analysis1 of the cash impact that the Company could have on its debt hedge portfolio (swaps) if the future exchange rate remains the same as at the end of 2Q21 (R$/US$ = 5.00) in the coming quarters; as well as the projected variation in cash impact for each R$0.10 variation on the same reference exchange rate (2Q21). Note that the figures presented in the table are the Company’s projections based on the end-of-period curves and could fluctuate depending on market conditions.

 

        Cash adjustment (R$ million 
Maturity (up to)    Notional
(US$ million)		    Actual    R$ / US$ = 5.00 (2Q21)    

Sensitivity at R$

0.10 / US$

variation (+/-)1

 
2Q21        (192)          
3Q21   83    -    (113)   (4)
4Q21   83    -    (138)   (7)
2022    737    -    (728)   (60)
2023    2,187    -    (118)   (49)
2024    1,369    -    (249)   (46)
2025    1,194    -    (880)   (90)
>2026    855    -    (953)   (85)
Total    6,508    (192)   (3,179)   (341)

¹Sensitivity analysis considers variation only in the exchange rate (R$/US$), while other variables are presumed constant.

 

Other transactions involving the Company’s derivatives are related to the embedded derivative resulting from the forestry partnerships and commodity hedges (maritime fuel), as described below.

 

         

Notional

(US$ million)

  

Fair value

(R$ million)

  

Cash adjustment

(R$ million)

 
Other hedges   

Maturity

(up to)

   Index   Jun/2021    Mar/2021    Jun/2021    Mar/2021    2Q21   1Q21
Embedded derivative   2035   Fixed USD | USD US-CPI   613    635    255    290    -    - 
Commodities   2021   Brent/VLSFO   -    15    -    26    32    22 
Total           613    650    255    317    32    22 

 

Forestry partnership agreements and wood supply agreements signed on December 31, 2013 are denominated in USD per cubic meter of standing timber, adjusted by U.S. inflation measured by the Consumer Price Index (CPI), which is not related to inflation in the economic environment where the forests are located and, hence, constitutes an embedded derivative. This instrument, which is presented in the table above, consists of a swap contract with the short leg consisting of the variations in the US-CPI during the period of the agreements mentioned below. See note 4 of the 2Q21 Financial Statements for more details and for a sensitivity analysis of the fair value in case of a sharp rise in the U.S. CPI. On June 30, 2021, the outstanding (notional) value of the operation was US$613 million. The result of this swap in 2Q21 was a loss of R$36 million. The mark-to-market (fair value) adjustment of these operations generated a gain of R$255 million at the end of the quarter.

 

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The Company is also exposed to international Brent prices, which is reflected in the logistics costs of exports and in certain raw materials. In this case, the Company evaluates the possibility of contracting derivative instruments to mitigate the risk.

 

On June 30, 2021, the Company did not have open commodity hedge transactions. The result of these operations in 2Q21 was positive by R$ 6 million.

 

 

 

 

*Debt in BRL translated into USD at the closing exchange rate of the month (R$/US$5.00 on 06/30/2021).

 

NET INCOME (LOSS)

 

In 2Q21, the Company posted net income of R$10,037 million, compared to net loss of R$2,755 million in 1Q21 and R$2,053 million in 2Q20. The growth in relation to 1Q21 was driven by financial income which, in turn, is due to the effects of exchange variation on debt and the result from derivative transactions, as well as higher operating income. Compared to 2Q20, the increase of R$12,792 million in net income mainly reflects the growth in financial income (lower impact of negative exchange variation on debt and derivatives) and better operating income.

 

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DEBT

 

Debt (R$ million)  06/30/2021   03/31/2021   Δ Y-o-Y   06/30/2020   Δ Q-o-Q 
Local Currency   13,275    13,295    0%   16,765    -21%
Short Term   1,003    1,027    -2%   1,966    -49%
Long Term   12,272    12,268    0%   14,799    -17%
Foreign Currency   55,202    62,619    -12%   63,863    -14%
Short Term   917    1,117    -18%   3,580    -74%
Long Term   54,285    61,503    -12%   60,283    -10%
Gross Debt   68,477    75,914    -10%   80,629    -15%
(-) Cash   11,271    9,599    17%   12,687    -11%
Net debt   57,206    66,315    -14%   67,941    -16%
Net debt/Adjusted EBITDA1(x) - R$   3.1x   3.9x   -0,8x   5.6x   -2.5x
Net debt/Adjusted EBITDA1(x) - US$   3.3x   3.8x   -0,5x   4.7x   -1.4x

¹ Excluding non-recurring items.

 

Gross debt on June 30, 2021 amounted to R$68.5 billion, composed of 97% long-term maturities and 3% short-term maturities. Debt denominated in foreign currency accounted for 81% of the Company's total debt, while debt in local currency accounted for the remaining 19%. The percentage of gross debt denominated in foreign currency, considering the effect of debt hedge, was 97%. Gross debt declined 10% in relation to 1Q21 (R$7.5 billion), chiefly due to the appreciation of BRL against USD.

 

Suzano contracts debt in foreign currency as a natural hedge, since net operating cash generation is denominated in foreign currency (U.S. dollar) due to its predominant status as an exporter. This structural exposure allows the Company to match loans and financing payments in USD with receivable flows from sales.

 

*Corresponding mainly to transaction costs (issue, funding etc.).

 

On June 30, 2021, the total average cost of debt in USD was 4.4% p.a. (debt in BRL adjusted by the market swap curve), compared to 4.5% p.a. on March 31, 2021. The average term of consolidated debt at the end of the quarter was 87 months (90 months in March 2021).

 

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¹ Considers the portion of debt with currency swaps. The original debt was 81% denominated in USD and 19% in BRL.

 

Cash and cash equivalents on June 30, 2021 amounted to R$11,271 million, 75% of which were invested in foreign currency fixed-income and short-term investments. The local currency portion was invested in government and fixed-income bonds, remunerated at a percentage of the DI rate.

 

The Company has a stand-by credit facility in foreign currency of US$500 million (R$2,501 million) available through February 2024. This facility helps improve the company's liquidity position and can be withdrawn during times of uncertainty, such as during the first half of 2020, when the COVID-19 pandemic broke out. As a result, the current cash position of R$11,271 million plus the facility described above amount to a readily available cash position of R$13,772 million.

 

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Net debt on June 30, 2021 stood at R$57.2 billion (US$11.4 billion), compared to R$66.3 billion (US$11.6 billion) on March 31, 2021. The biggest impact on net debt in local currency came from the appreciation of the BRL against the USD (12%).

 

Financial leverage, measured as the ratio of net debt to Adjusted EBITDA in BRL, stood at 3.1 times on June 30, 2021, compared to 3.9 times in 1Q21. The same ratio in USD, a measure established in Suzano’s financial policy, fell from 3.8 times in 1Q21 to 3.3 times on June 30, 2021.

 

Stand-by facilities

 

 

 

Cash on hand

 

 

  

 

The breakdown of total gross debt between trade and non-trade finance on June 30, 2021 is shown below:

 

   2021   2022   2023   2024   2025   2026
onward		   Total 
Trade Finance¹   12%   35%   46%   75%   62%   13%   31%
Non Trade Finance²   88%   65%   54%   25%   38%   87%   69%

 

 

¹ ACC, ACE, NCE, PPE

² Bonds, BNDES, CRA, Debentures, among others.

 

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CAPITAL EXPENDITURE

 

 

In 2Q21, capital expenditure (cash basis) totaled R$1,264 million, down 4% from 1Q21, mainly due to lower expenses with land, forests and port terminals (lower spending on the Maranhão port project), which were partially offset by higher expenses with the Cerrado Project due to the hiring of temporary works and earthmoving services. Compared to 2Q20, capex increased 25% as a result of higher investments on maintenance (mainly in forestry maintenance) and in the Cerrado Project, as mentioned earlier.

 

Investments (R$ million)   2Q21   1Q21   ΔQ-o-Q    2Q20   ΔY-o-Y    LTM
2Q21		    

Guidance

2021

 
Maintenance   1.001   999   0%   808   24%   3,304    4,038 
Industrial maintenance   141   149   -5%   113   25%   576    829 
Forestry maintenance   849   845   1%   691   23%   2,619    3,076 
Others   11   5   119%   4   176%   109    133 
Expansion and modernization   29   27   7%   67   -57%   614    240 
Land and forestry   49   184   -73%   66   -25%   768    752 
Port terminals   11   93   -88%   33   -65%   287    152 
Maintenance   0   -   -    -   -    -    79 
Cerrado Project1   174   21   746%   39   343%   227    957 
Total   1,264   1,323   -4%   1,012   25%   5,200    6,218 

 

 

1Some capital expenditures have been reclassified to better reflect those expenditures that became part of the Cerrado Project.

 

OPERATING CASH GENERATION

 

 

Operating cash flow - Consolidated (R$ million)   2Q21   1Q21   ΔQ-o-Q    2Q20   ΔY-o-Y    LTM 2Q21 
Adjusted EBITDA1   5,942   4,864   22%   4,180   42%   18,550 
Maintenance Capex2   (1,001)  (999)  0%   (808)  24%   (3,908)
Operating Cash Flow   4,940   3,866   28%   3,372   47%   14,641 
Operating Cash Flow (R$/ton)³   1,744   1,313   33%   1,119   56%   1,258 

 

 

¹ Excludes non-recurring items and PPA effects.

² Cash basis.

³ Excludes sales volume from Klabin.

 

Operating cash generation, measured by adjusted EBITDA less sustaining capex (cash basis), amounted to R$4,940 million in 2Q21. The increase in operating cash generation per ton compared to 1Q21 is related to the growth of EBITDA per ton. The 56% increase in relation to 2Q20 is related to the EBITDA growth mentioned earlier, partially offset by higher sustaining capex per ton.

 

 

 

Page 22 of 36

 

 

 

 

FREE CASH FLOW

 

 

Free Cash Flow (R$ million)   2Q21    1Q21    ΔQ-o-Q    2Q20    ΔY-o-Y    LTM 2Q21 
Adjusted EBITDA   5,942    4,864    22%   4,180    42%   16,788 
(-) Total Capex¹   (1,332)   (969)   38%   (1,083)   23%   (5,237)
(-) Leasing contracts – IFRS 16   (226)   (249)   -9%   (197)   15%   (945)
(+/-) D Working capital   (573)   (518)   -    593    -    916 
(-) Net interest   (280)   (1,194)   -77%   (441)   -36%   (3,322)
(-) Income taxes   (36)   (35)   1%   (34)   5%   (196)
(-) Dividend payment   (2)   0    -    0    -    (2)
Free cash flow   3,492    1,900    84%   3,018    16%   8,000 
(+) Capex ex-maintenance   241    101    -7%   161    50%   748 
(+) Dividend payment   2    0    -    0    -    2 
Free cash flow - Adjusted   3,735    2,000    73%   3,178    18%   8,750 
(-) Derivative cash adjustment   (722)   (713)   -    (1,661)   -57%   (4,066)
Free cash flow - Adjusted - after derivatives²   3,013    1,288    108%   1,517    99%   4,684 

 

 

1Accrual basis.

²Free cash flow prior to dividend payments and capex ex-maintenance (accrual basis).

 

Free cash flow considering the adjustment for derivatives stood at R$3,013 million in 2Q21, compared to R$1,288 million in 1Q21 and R$1,517 million in 2Q20. Compared to the previous period, free cash flow grew 108%, driven by growth in adjusted EBITDA and the lower concentration of net interest payments (especially on bonds), which were partially offset by the increase in sustaining capex (accrual basis).

 

Compared to 2Q20, the 99% increase was driven by the 42% growth in adjusted EBITDA, lower payments resulting from derivative adjustments and lower net interest payments (gross debt reduction). These effects were partially offset by the negative variation in working capital and higher sustaining capex. With regard to the variation in working capital, it is worth highlighting the receivables line, which was largely impacted by the higher net average price of pulp, and the inventory line, whose quarterly variation was driven by higher inventories of finished products and cost increases (in contrast to the decline in inventories during 2Q20)

 

SPINNOVA

 

On May 17, 2021, the Company increased the capital stock of its affiliated company Spinnova by EUR 5 million (equivalent to R$33 million on the transaction date), thus increasing its interest from 23.44% to 27.15% and holding 9,808,530 shares.

 

On June 24, 2021, Spinnova held its Initial Public Offering (IPO) on the Nasdaq First North Growth Market, issuing 13,140,605 shares and raising EUR 100 million (equivalent to R$588 million on the transaction date).

 

As a result of the share issue, Suzano’s interest in Spinnova declined from 27.15% to 19.91%.

 

The investment totaled EUR21 million (R$125 million on June 30, 2021), after the IPO that generated the aforementioned equity dilution, and consequent gain on the remeasurement of the investment in the amount of EUR 19 million (R$116 million in the transaction date).

 

COVID-19

 

 

With the onset of the COVID-19 pandemic, Suzano adopted and has maintained preventive and mitigatory measures in compliance with the rules and policies established by Brazilian and international health authorities to minimize the impacts of the COVID-19 pandemic on the safety of people, society and its business.

 

The Company’s actions are based on three pillars: (1) People; (2) Society; (3) Business Continuity.

 

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(1)People: To ensure the safety of its employees and contractors who work in its operations, Suzano adopted a series of measures to mitigate their exposure and/or mitigate the risks of exposure.

 

(2)Society: One of Suzano’s three culture drivers is “It's only good for us if it's good for the world.” Accordingly, from the onset of the pandemic till now, the Company has taken a series of measures to protect society, including:

 

·Donation of tissue paper, napkins and disposable diapers produced by it to needy regions.

 

·Acquisition of 159 ventilators and 1 million medical masks for donation to the federal and state governments.

 

·Participation in a joint effort with Positivo Tecnologia, Klabin, Flextronics and Embraer to support the Brazilian company Magnamed in manufacturing ventilators, which were delivered to the Brazilian government. Suzano invested R$9.6 million in this action in 2020.

 

·Construction of a field hospital in Teixeira de Freitas, Bahia, jointly with Veracel, which was delivered to the state government and inaugurated in July 2020.

 

·Partnership with the vocational school Fatec in Capão Bonito to produce hand sanitizer.

 

·Forklifts lent to transport the donations received by the Red Cross.

 

·Maintenance of all direct jobs.

 

·Maintenance for 90 days (until the end of June 2020) the payment of 100% of the payroll expenses of employees of service providers whose operations were suspended because of the pandemic, in order to protect jobs.

 

·Creation of a support program for small suppliers, a social program to help small farmers sell their produce via a home delivery system in 38 communities assisted by Suzano’s Rural Land Development Program (“PDRT”) in five states, and a social program to produce 125,000 masks in local communities for donation in five states.

 

·Launch of a support program for small and midsized paper clients called “We’re Together” to ensure that these companies have the financial and managerial capacity to resume operations.

 

·Support for the State Government of Maranhão in setting up the Imperatriz Temporary Hospital, donating R$3 million.

 

·Supply of 280,000 m³ 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.

 

·Donation of oxygen concentrators, acquired in a joint effort involving Suzano, Bradesco, BRF, B3, Embraer, Gerdau, Grupo Ultra, Itaú Unibanco, Magazine Luiza, Marfrig, Natura & Co and Unipar, to the Health Ministry, which is tasked with the logistics of distributing the devices.

 

·Donation of 66,000 m³ of oxygen to the city of Imperatriz in Maranhão and 1,300 m³ to Aracruz in Espírito Santo.

 

Donations made in support of social actions implemented by Suzano totaled R$19 million in 2Q21, (see Note 29 – Result by Nature to the Financial Statements).

 

(3)Business continuity: To date, the Company is maintaining its operations normally and has set up a crisis management committee that continues to function.

 

Page 24 of 36

 

 

 

 

The pulp and paper sector was recognized by the World Health Organization (WHO) and diverse countries as a producer of essential goods for society. Hence, to meet the responsibility arising from the essential nature of its business, Suzano took measures to ensure, to the maximum extent possible, that it maintains its operations normally and meets its clients’ requirements by increasing the level of wood and raw material inventories at plants and expanding its inventories of finished products, besides reaching out to its clients to minimize any risks of stockout at plants along the logistics chain and guarantee the sale of their products.

 

The current scenario arising from COVID-19 also implies higher credit risk, especially among its paper clients. Therefore, the Company has been monitoring this risk and implementing measures to mitigate it. To date, there have been no significant financial impacts.

 

As previously disclosed during the year 2020, the Company carried out a temporary 30-day production shutdown, as of April 27, 2020 and May 1, 2020, respectively, on the paper production lines at the Mucuri and Rio mills Green, however, the activities of the factories returned to normal levels in early July 2020 and have been maintained so far.

 

Lastly, it is important to mention that in light of the current scenario, the Company has taken and maintained intensive communication efforts to further increase interactions with its main stakeholders in order to ensure adequate transparency and flow of information with them in a timely manner aligned with the current social and economic situation. All key updates on its measures and activities in the context of COVID-19 are available on the Company’s Investor Relations website.

 

The Company has also created a webpage with information on all its actions related to COVID-19: https://www.suzanocontraocoronavirus.com.br

 

ESG

 

In the second quarter of 2021, we made significant progress in the ESG agenda. To further strengthen Suzano's relations with its suppliers and encourage the adoption of joint commitments to reduce emissions, the company launched the Climate Change in the Value Chain Program in April in partnership with CDP, an international non-profit organization. This alliance will engage and assist our suppliers in measurements, data transparency, establishment of targets, as well as the assessment of risks and opportunities related to climate change. The program will help expand knowledge on the theme across the value chain, consequently enabling suppliers to streamline their emissions management practices.

 

In June, Suzano held its ESG Call, which registered more than 1,300 participants. The company sought to: (i) report on progress in governance and transparency in Annual Report 2020 and Indicator Center released in May, 4 “Position Papers” on relevant subjects, (ii) present the status of its long-term goals in 2020 and perspectives; and (iii) announce its new Biodiversity long term goal. The Company also discussed important topics such as combating deforestation and reinforced its willingness to play an active role at COP 15 on Biodiversity and COP 26 on Climate Change. The event also featured a debate (Q&A) with our executive board, which was mediated by our special guest Pavan Sukhdev, with the objective of promoting an interaction with transparency and quality on issues that are important for the company. The recorded event is available on Suzano’s channel on YouTube and the presentation can be accessed at the Company’s Investor Relations website.

 

In what refers to its new biodiversity goal, it is worth mentioning that it represents an innovative objective for the global pulp and paper industry, by having as a commitment connecting half a million hectares of priority areas for biodiversity conservation in the Cerrado, Atlantic Forest and Amazon biomes by 2030, which will help preserve biodiversity and balance among the ecosystems, which is an important factor for Suzano’s operations and to face global challenges.

 

Still in June, Suzano issued a Sustainability-Linked Bond (SLB) in the international market through its wholly-owned subsidiary Suzano Austria GmbH ("Suzano Austria"), in the principal amount of US$1 billion, with a yield of 3.280% p.a. and coupon of 3.125% p.a., to be paid semiannually and maturing on January 15, 2032. The bond is linked to two targets: (i) 12.4% reduction in the industrial use of water by the end of 2026; and (ii) 30% of leadership positions in the Company occupied by women by the end of 2025. As such, the issue is the first in the emerging markets to be linked to a Diversity & Inclusion indicator. The Sustainability Linked Securities Framework and the Second-Party Opinion from ISS-ESG are available at the Company’s Investor Relations website, as well as all the other contents mentioned above.

 

Page 25 of 36

 

 

 

 

TOTAL OPERATIONAL EXPENDITURE - PULP

 

As disclosed through a Material Fact notice on March 24, 2021, the estimated total operating expenditure for 2024 is approximately R$1,400/ton, and the trend for the indicator remains as planned, considering the exchange and inflation assumptions used.

 

CAPITAL MARKETS

 

On June 30, 2021, Suzano’s stock was quoted at R$59.81/share (SUZB3) and US$12.04/share (SUZ). The Company’s stock is listed on the Novo Mercado, the listing segment of the São Paulo Stock Exchange (B3 – Brasil, Bolsa e Balcão) with the highest corporate governance standards, and on the New York Stock Exchange (NYSE) - Level II.

 

 

 

Source: Bloomberg.

 

 

 

Source: Bloomberg.

 

On June 30, 2021, the Company's share capital was represented by 1,361,263,584 common shares, of which 12,042,004 were held in Treasury. Suzano’s market capitalization on June 30, 2021 was R$81.4 billion. Free float in 2Q21 corresponded to 54% of the total capital.

 

Page 26 of 36

 

 

 

  

 

FIXED INCOME

 

   Unit   Jun/21   Mar/21   Jun/20   Δ Y-o-Y   Δ Q-o-Q 
Fibria 2024 – Price   USD/k    112.02    110.95    107.46    4.2%   1.0%
Fibria 2024 – Yield   %    0.98    1.62    3.18    -69.2%   -39.4%
Fibria 2025 – Price   USD/k    108.04    107.27    103.25    4.6%   0.7%
Fibria 2025 – Yield   %    1.65    1.99    3.22    -48.8%   -17.2%
Suzano 2026 – Price   USD/k    117.76    117.34    109.49    7.5%   0.4%
Suzano 2026 – Yield   %    2.02    2.25    3.97    -49.0%   -9.9%
Fibria 2027 – Price   USD/k    116.45    114.17    108.13    7.7%   2.0%
Fibria 2027 – Yield   %    2.32    2.83    4.07    -43.1%   -17.9%
Suzano 2029 – Price   USD/k    119.41    117.32    109.06    9.5%   1.8%
Suzano 2029 – Yield   %    3.09    3.44    4.70    -34.2%   -10.1%
Suzano 2030 – Price   USD/k    113.45    110.26    102.33    10.9%   2.9%
Suzano 2030 – Yield   %    3.19    3.62    4.69    -32.1%   -12.1%
Suzano 2031 – Price   USD/k    104.79    103.38    -    -    1.4%
Suzano 2031 – Yield   %    3.16    3.34    -    -    -5.3%
Suzano 2047 – Price   USD/k    134.97    127.93    110.07    22.6%   5.5%
Suzano 2047 – Yield   %    4.65    5.06    6.22    -25.2%   -8.0%
Treasury 10 years   %    1.47    1.74    0.66    123.7%   -15.7%

Note: Senior Notes issued with face value of 100 USD/k

 

RATINGS

 

Agência  Escala Local  Escala Global  Perspectiva
Fitch Ratings  AAA  BBB-  Estável
Standard & Poor’s  br.AAA  BBB-  Estável
Moody’s  Aaa.br  Baa3  Estável

 

Page 27 of 36

 

 

 

 

UPCOMING EVENTS

 

Earnings Conference Call (2Q21)

 

Date: August 12, 2021 (Thursday)

 

Portuguese (simultaneous translation) English
10.00 a.m. (Brasilia) 10:00 a.m. (Brasília)
9:00 a.m. (New York) 9:00 a.m. (New York)
2:00 p.m. (London) 2:00 p.m. (London)
Tel.: +55 (11) 3181-8565 Tel.: +1 412 717-9627

 

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

 

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

 

If you are unable to participate, the webcast link will be available for future consultation on the Investor Relations website of Suzano S.A.

 

IR CONTACTS

 

Marcelo Bacci

Camila Nogueira

Luísa Puccini

Mariana Dutra

Roberto Costa

 

Tel.: +55 (11) 3503-9330

ri@suzano.com.br

www.suzano.com.br/ir

 

Page 28 of 36

 

 

 

APPENDICES

 

APPENDIX 1 - Operating Data

 

Revenue breakdown (R$ '000)  2Q21    1Q21    Δ Q-o-Q    2Q20    Δ Y-o-Y    6M21    6M20    Δ Y-o-Y 
Exports  8,292,725    7,540,691    10%   7,043,721    18%   15,833,416    12,862,475    23%
Pulp  7,885,580    7,139,229    10%   6,633,011    19%   15,024,809    12,121,368    24%
Paper  407,145    401,462    1%   410,710    -1%   808,607    741,107    9%
Domestic Market  1,551,714    1,348,475    15%   951,952    63%   2,900,189    2,113,991    37%
Pulp  559,797    454,351    23%   343,201    63%   1,014,148    741,568    37%
Paper  991,917    894,124    11%   608,751    63%   1,886,041    1,372,423    37%
Total Net Revenue  9,844,439    8,889,166    11%   7,995,673    23%   18,733,605    14,976,466    25%
Pulp  8,445,377    7,593,580    11%   6,976,212    21%   16,038,957    12,862,936    25%
Paper  1,399,062    1,295,586    8%   1,019,461    37%   2,694,648    2,113,530    27%

 

Sales volume (‘000)  2Q21    1Q21    Δ Q-o-Q    2Q20    Δ Y-o-Y    6M21    6M20    Δ Y-o-Y 
Exports  2,427,453    2,540,952    -4%   2,710,040    -10%   4,968,405    5,421,701    -8%
Pulp  2,339,906    2,450,654    -5%   2,615,068    -11%   4,790,560    5,241,607    -9%
Paper  87,547    90,298    -3%   94,972    -8%   177,845    180,094    -1%
Paperboard  8,647    9,954    -13%   21,935    -61%   18,601    37,534    -50%
Printing & Writing  75,732    78,208    -3%   69,425    9%   153,940    138,091    11%
Other paper1  3,168    2,136    48%   3,612    -12%   5,304    4,469    18%
Domestic Market  405,371    403,623    0%   303,030    34%   808,994    715,479    13%
Pulp  197,193    202,648    -3%   162,540    21%   399,841    392,298    2%
Paper  208,178    200,975    4%   140,490    48%   409,153    323,181    27%
Paperboard  41,501    39,687    5%   27,854    49%   81,188    56,659    43%
Printing & Writing  138,448    134,688    3%   81,399    70%   273,136    204,266    34%
Other paper1  28,229    26,600    6%   31,237    -10%   54,829    62,256    -12%
Total Sales Volume  2,832,824    2,944,575    -4%   3,013,070    -6%   5,777,399    6,137,180    -6%
Pulp  2,537,099    2,653,302    -4%   2,777,608    -9%   5,190,401    5,633,905    -8%
Paper  295,725    291,273    2%   235,462    26%   586,998    503,275    17%
Paperboard  50,148    49,641    1%   49,789    1%   99,789    94,193    6%
Printing & Writing  214,180    212,896    1%   150,824    42%   427,076    342,357    25%
Other paper1  31,397    28,736    9%   34,849    -10%   60,133    66,725    -10%

 

  ¹ Paper of other manufacturers sold by Suzano and tissue paper.  

 

Average net price (R$/ton)  2Q21    1Q21    Δ Q-o-Q    2Q20    Δ Y-o-Y    6M21    6M20    Δ Y-o-Y 
Exports  3,416    2,968    15%   2,599    31%   3,187    2,372    34%
Pulp  3,370    2,913    16%   2,536    33%   3,136    2,313    36%
Paper  4,651    4,446    5%   4,325    8%   4,547    4,115    10%
Domestic Market  3,828    3,341    15%   3,141    22%   3,585    2,955    21%
Pulp  2,839    2,242    27%   2,111    34%   2,536    1,890    34%
Paper  4,765    4,449    7%   4,333    10%   4,610    4,247    9%
Total  3,475    3,019    15%   2,654    31%   3,243    2,440    33%
Pulp  3,329    2,862    16%   2,512    33%   3,090    2,283    35%
Paper  4,731    4,448    6%   4,330    9%   4,591    4,200    9%

 

 

Page 29 of 36

 

 

 

 

 

Average net price (US$/ton)  2Q21  1Q21  ΔQ-o-Q   2Q20  ΔY-o-Y   6M21  6M20  ΔY-o-Y 
Exports  645  543  19%  482  34%  592  482  23%
Pulp  636  533  19%  471  35%  582  470  24%
Paper  878  813  8%  802  9%  844  836  1%
Domestic Market  722  611  18%  583  24%  666  600  11%
Pulp  536  410  31%  392  37%  471  384  23%
Paper  899  813  11%  804  12%  856  863  -1%
Total  656  552  19%  492  33%  602  496  21%
Pulp  628  523  20%  466  35%  574  464  24%
Paper  893  813  10%  803  11%  852  853  0%

 

FX Rate BRL/USD  2Q21  1Q21  ΔQ-o-Q   2Q20  ΔY-o-Y 
Closing  5.00  5.70  -12%  5.48  -9%
Average  5.30  5.47  -3%  5.39  -2%

 

Page 30 of 36

 

 

 

 

APPENDIX 2 – Consolidated Statement of Income and Goodwill Amortization

 

Income Statement

(R$ ‘000)

  2Q21   1Q21   ΔQ-o-Q   2Q20   ΔY-o-Y   6M21   6M20   ΔY-o-Y 
Net Revenue   9,844,439    8,889,166    11%   7,995,673    23%   18,733,605    14,976,466    25%
Cost of Goods Sold   (4,777,655)   (4,845,034)   -1%   (4,788,694)   0%   (9,622,689)   (9,608,693)   0%
Gross Debt   5,066,784    4,044,132    25%   3,206,979    58%   9,110,916    5,367,773    70%
Gross Margin   51.5%   45.5%   6 p,p,    40.1%   11 p,p,    48.6%   35.8%   13 p,p, 
                                         
Operating Expense/Income   139,703    (437,201)   -    (690,805)   -    (297,498)   (1,503,135)   -80%
Selling Expenses   (496,934)   (581,766)   -15%   (547,098)   -9%   (1,078,700)   (1,062,034)   2%
General and Administrative Expenses   (353,004)   (382,554)   -8%   (335,715)   5%   (735,558)   (650,551)   13%
Other Operating Income (Expenses)   909,543    516,853    76%   195,671    365%   1,426,396    212,402    572%
Equity Equivalence   80,098    10,266    680%   (3,663)   -    90,364    (2,952)   - 
EBIT   5,206,487    3,606,931    44%   2,516,174    107%   8,813,418    3,864,638    128%
                                         
Depreciation, Amortization & Depletion   1,696,755    1,766,481    -4%   1,709,381    -1%   3,463,236    3,357,581    3%
                                         
EBITDA   6,903,242    5,373,412    28%   4,225,555    63%   12,276,654    7,222,219    70%
EBITDA Margin (%)   70.1%   60.4%   10 p,p,    52.8%   17 p,p,    65.5%   48.2%   17 p,p, 
                                         
Adjusted EBITDA1   5,941,750    4,864,298    22%   4,179,838    42%   10,806,048    7,206,009    50%
Adjusted EBITDA Margin1   60.4%   54.7%   6 p,p,    52.3%   8 p,p,    57.7%   48.1%   10 p,p, 
                                         
Net Financial Result   9,742,584    (8,667,121)   -212%   (5,657,238)   -272%   1,075,463    (28,101,286)   -104%
Financial Expenses   46,263    24,227    91%   82,419    -44%   70,490    203,173    -65%
Financial Revenues   (932,159)   (990,933)   -6%   (1,033,126)   -10%   (1,923,092)   (2,119,550)   -9%
Exchange Rate Variation   6,895,657    (5,206,465)   -232%   (2,930,209)   -335%   1,689,192    (15,349,795)   -111%
Net Proceeds Generated by Derivatives   3,732,823    (2,493,950)   -250%   (1,776,322)   -310%   1,238,873    (10,835,114)   -111%
Earnings Before Taxes   14,949,071    (5,060,190)   -395%   (3,141,064)   -576%   9,888,881    (24,236,648)   -141%
                                         
Income and Social Contribution Taxes   (4,912,372)   2,304,931    -313%   1,088,546    -551%   (2,607,441)   8,765,069    -130%
                                         
Net Income (Loss)   10,036,699    (2,755,259)   -464%   (2,052,518)   -589%   7,281,440    (15,471,579)   -147%
Net Margin   102.0%   -31.0%   133 p,p,    -25.7%   128 p,p,    38.8%   -103.3%   142 p,p, 

 

1 Excluding non-recurring items and PPA effects.

 

Goodwill amortization - PPA (R$ ‘000)  2Q21   1Q21  ΔQ-o-Q    2Q20   ΔY-o-Y 
COGS  (149,751)  (142,737) 5%   (153,832)  -3%
Selling Expenses  (207,763)  (207,591) 0%   (206,787)  0%
General and administrative expenses  (2,668)  (2,149) 24%   2,094   -227%
Other operational revenues (expenses)  (6,008)  2,259  -366%   (5,085)  18%
Financial results  (3,054)  (3,054) 0%   18,479   -117%

 

Page 31 of 36

 

 

 

 

APPENDIX 3 – Consolidated Balance Sheet

 

Assets (R$ ’000)  06/30/2021   03/31/2021   06/30/2020 
Current Assets               
Cash and cash equivalents   8,585,570    5,334,508    10,473,701 
Financial investments   2,448,267    4,028,038    2,030,560 
Trade accounts receivable   3,979,086    3,692,928    3,762,875 
Inventories   4,404,865    3,989,789    4,206,778 
Recoverable taxes   382,415    406,352    888,245 
Derivative financial instruments   1,204,841    414,094    152,978 
Advance to suppliers   35,821    41,492    106,636 
Other assets   758,427    752,011    281,471 
Total Current Assets   21,799,292    18,659,212    21,903,244 
                
Non-Current Assets               
   Financial investments   237,345    236,344    182,936 
   Recoverable taxes   1,156,151    832,173    712,279 
   Deferred taxes   6,224,616    11,044,593    10,454,646 
   Derivative financial instruments   764,156    856,828    925,459 
   Advance to suppliers   1,249,628    1,203,265    1,149,832 
Judicial deposits   298,049    275,118    268,462 
Other assets   222,695    224,663    231,633 
                
Biological assets   11,720,857    11,094,744    10,672,724 
Investments   497,083    379,564    325,420 
Property, plant and equipment   38,190,785    38,580,957    40,242,196 
Right of use on lease agreements   4,571,713    4,566,956    4,199,804 
Intangible   16,375,218    16,572,051    17,225,097 
Total Non-Current Assets   81,508,296    85,867,256    86,590,488 
                
Total Assets   103,307,588    104,526,468    108,493,732 
                
Liabilities and Equity (R$ ´000)   06/30/2021    03/31/2021    06/30/2020 
Current Liabilities               
Trade accounts payable   2,575,168    2,393,144    2,081,533 
Loans, financing and debentures   1,920,072    2,143,255    5,546,123 
Accounts payable for lease operations   593,691    632,812    704,174 
Derivative financial instruments   1,010,897    2,670,708    4,529,091 
Taxes payable   233,277    239,910    274,858 
    Payroll and charges   444,938    349,263    380,762 
    Liabilities for assets acquisitions and subsidiaries   112,446    114,889    127,721 
    Dividends payable   11,185    6,228    4,891 
Advance from customers   115,260    92,505      
Other liabilities   361,197    336,480    284,828 
Total Current Liabilities   7,378,131    8,979,194    13,933,981 
                
Non-Current Liabilities               
Loans, financing and debentures   66,556,926    73,770,784    75,082,454 
Accounts payable for lease operations   4,773,303    5,045,285    4,469,798 
Derivative financial instruments   5,060,920    7,157,597    7,369,241 
    Liabilities for assets acquisitions and subsidiaries   396,923    428,678    530,414 
    Provision for judicial liabilities   3,271,679    3,255,140    3,441,451 
    Actuarial liabilities   792,387    788,948    744,105 
    Deferred taxes             75,354 
Share-based compensation plans   212,500    223,915    151,365 
Advance from customers   165,439    199,595      
Other liabilities   111,888    112,991    84,134 
Total Non-Current Liabilities   81,341,965    90,982,933    91,948,316 
                
Shareholders’ Equity               
Share capital   9,235,546    9,235,546    9,235,546 
Capital reserves   13,033    11,822    6,418,344 
Treasury shares   (218,265)   (218,265)   (218,265)
Retained earnings reserves             317,144 
Other reserves   2,028,382    2,065,162    2,191,704 
    Retained loss   3,429,696    (6,636,122)   (15,453,035)
Controlling shareholders´   14,488,392    4,458,143    2,491,438 
                
Non-controlling interest   99,100    106,198    119,997 
 Total Equity   14,587,492    4,564,341    2,611,435 
Total Liabilities and Equity   103,307,588    104,526,468    108,493,732 

 

Page 32 of 36

 

 

 

 

APPENDIX 4 – Consolidated Statement of Cash Flow

 

Cash Flow (R$ ‘000)   2Q21    2Q20    6M21    6M20 
OPERATING ACTIVITIES                    
Net income (loss) for the period   10,036,699    (2,052,518)   7,281,440    (15,471,579)
Depreciation, depletion and amortization   1,655,769    1,648,285    3,389,903    3,238,678 
Depreciation of right of use   53,355    53,979    100,176    93,309 
Sublease of ships   (9,315)   (11,365)   (20,735)   (11,365)
Interest expense on lease liabilities   103,500    108,138    212,540    203,488 
Result from sale and disposal of property, plant and equipment and biological assets, net   (24,329)   (13,831)   (521,173)   (9,343)
Income from associates and joint ventures   (80,098)   3,663    (90,364)   2,952 
Exchange rate and monetary variations, net   (6,895,657)   2,930,209    (1,689,192)   15,349,795 
Interest expenses with financing, loans and debentures, net   735,399    846,702    1,493,570    1,736,775 
Capitalized loan costs   (647)   (4,137)   (1,049)   (7,940)
Premium expenses with early settlements   786    -    33,719    - 
Accrual of interest on marketable securities   (23,496)   (15,232)   (38,607)   (74,102)
Amortization of fundraising costs   15,482    16,018    56,502    41,268 
Derivative losses, net   (3,732,823)   1,776,322    (1,238,873)   10,835,114 
Fair value adjustment of biological assets   (564,533)   (173,733)   (564,533)   (173,733)
Deferred income tax and social contribution   4,820,858    (1,092,015)   2,451,778    (8,822,898)
Interest on actuarial liabilities   13,961    13,332    27,925    26,527 
Provision (reversal) for judicial liabilities, net   29,214    (13,480)   33,525    (22,252)
Allowance for doubtful accounts, net   2,394    4,728    4,156    10,250 
Provision for inventory losses, net   5,205    16,452    10,667    32,620 
Provision for loss of ICMS credits, net   15,937    28,580    23,395    48,151 
Tax credits   (315,431)   -    (315,431)   - 
Other   10,451    7,360    11,002    12,798 
Decrease (increase) in assets   (1,008,411)   830,437    (1,543,889)   948,814 
Trade accounts receivables   (707,774)   814,715    (1,222,390)   206,570 
Inventories   (396,394)   42,347    (452,852)   466,475 
Recoverable taxes   14,575    (86,487)   12,185    114,501 
Other assets   81,182    59,862    119,168    161,268 
Increase (decrease) in liabilities   435,200    (237,556)   452,997    (692,287)
Trade accounts payables   363,463    (258,727)   451,708    (352,975)
Taxes payable   30,303    83,722    132,906    24,235 
Payroll and charges   95,675    72,583    (47,799)   (19,679)
Other liabilities   (54,241)   (135,134)   (83,818)   (343,868)
Cash provided by operations   5,279,470    4,670,338    9,559,449    7,295,040 
Payment of interest with financing, loans and debentures   (304,437)   (515,272)   (1,479,825)   (1,682,413)
Payment of premium with early settlements   (786)   -    (33,719)   - 
Interest received from marketable securities   24,018    74,093    38,067    126,579 
Payment of income taxes   (35,585)   (33,763)   (70,729)   (62,694)
Cash provided by operating activities   4,962,680    4,195,396    8,013,243    5,676,512 
                     
INVESTING ACTIVITIES                    
Additions to property, plant and equipment   (406,609)   (259,701)   (670,588)   (559,126)
Additions to intangible   (17,409)   (44)   (18,143)   (513)
Additions to biological assets   (907,844)   (823,200)   (1,611,674)   (1,401,424)
Proceeds from sale of property, plant and equipment   96,080    33,982    1,261,008    61,887 
Capital increase   (44,490)   -    (50,818)   - 
Marketable securities, net   1,578,249    2,918,367    (288,215)   4,064,361 
Advance for acquisition of wood from operations with development   (64,981)   75,501    (232,157)   6,544 
Dividends received   6,453    -    6,453    - 
Acquisition of non-controlling interests   -    -    (6,482)   - 
Cash provided (used) in investing activities   239,449    1,944,905    (1,610,616)   2,171,729 
                     
FINANCING ACTIVITIES                    
Proceeds from loans, financing and debentures   337,093    3,036,906    9,306,614    6,700,529 
Payment of derivative transactions   (721,741)   (1,661,453)   (1,434,288)   (1,834,250)
Payment of loans, financing and debentures   (555,432)   (1,721,392)   (11,732,552)   (6,224,940)
Payment of leases   (226,355)   (197,080)   (475,483)   (354,289)
Payment of dividends   (2,322)   -    (2,322)   - 
Liabilities for assets acquisitions and subsidiaries   (1,520)   (2,832)   (1,520)   (5,670)
Cash used by financing activities   (1,170,277)   (545,851)   (4,339,551)   (1,718,620)
                     
EXCHANGE VARIATION ON CASH AND CASH EQUIVALENTS   (780,790)   330,922    (312,563)   1,094,953 
                     
Increase (reduction) in cash and cash equivalents, net   3,251,062    5,925,372    1,750,513    7,224,574 
At the beginning for the period   5,334,508    4,548,329    6,835,057    3,249,127 
At the end for the period   8,585,570    10,473,701    8,585,570    10,473,701 
Increase (reduction) in cash and cash equivalents, net   3,251,062    5,925,372    1,750,513    7,224,574 

 

 

Page 33 of 36

 

 

 

APPENDIX 5 – EBITDA

 

(R$ '000, except where otherwise indicated)   2Q21    2Q20    6M21    6M20 
Net income   10,036,699    (2,052,518)   7,281,440    (15,471,579)
Net Financial Result   (9,742,584)   5,657,238    (1,075,463)   28,101,286 
Income and Social Contribution Taxes   4,912,372    (1,088,546)   2,607,441    (8,765,069)
EBIT   5,206,487    2,516,174    8,813,418    3,864,638 
Depreciation, Amortization and Depletion   1,696,755    1,709,381    3,463,236    3,357,581 
EBITDA1   6,903,242    4,225,555    12,276,654    7,222,219 
EBITDA Margin   70.1%   52.8%   65.5%   48.2%
                     
Social actions and operational expenses related to COVID-19   19,141    73,660    23,696    74,253 
Fair Value Update - Biological Asset   (564,533)   (173,733)   (564,533)   (173,733)
Ibema goodwill write-off   125    -    125    - 
Tax credits - exclusion of ICMS in the PIS and COFINS calculation basis   (315,431)   -    (315,431)   - 
Transaction expenses with Fibria   -    14    -    927 
Demobilization of machinery and equipment - FACEPA   -    199    -    199 
PPA Effect (Write-Off)   -    2,444    -    8,242 
Equity method   (80,098)   3,663    (90,364)   2,952 
Expenses with obligations and contract
cancellations		   -    2,800    -    8,809 
Provision - Tax on the transfer of real estate for the regularization of land acquired prior to 2015   -    10,529    -    10,529 
Provision - ICMS credit loss   16,156    26,852    23,134    42,217 
Provision - Regularization of development contract   114    -    114    - 
ICMS accrual complement   -    7,855    -    10,488 
Adjustments - Losango Project   -    -    (9,138)   - 
Income from the sale and disposal of property, plant and equipment and biological assets   (36,966)   -    (538,209)   (1,093)
Adjusted EBITDA   5,941,750    4,179,838    10,806,048    7,206,009 
Adjusted EBITDA Margin   60.4%   52.3%   57.7%   48.1%

 

 

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

 

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APPENDIX 6 – Segmented Income Statement

 

    2Q21    2Q20 
Segmented Financial
Statement (R$ '000)		   Pulp    Paper    

Non

Segmented

    

Total

Consolidated

    Pulp    Paper    

Non

Segmented

    

Total

Consolidated

 
Net Revenue   8,445,377    1,399,062    -    9,844,439    6,976,212    1,019,461    -    7,995,673 
Cost of Goods Sold   (3,890,070)   (887,585)   -    (4,777,655)   (4,117,353)   (671,341)   -    (4,788,694)
Gross Profit   4,555,307    511,477    -    5,066,784    2,858,859    348,120    -    3,206,979 
Gross Margin   53.9%   36.6%   -    51.5%   41.0%   34.1%   -    40.1%
                                         
Operating Expense/Income   141,835    (2,132)   -    139,703    (548,316)   (142,489)   -    (690,805)
  Selling Expenses   (378,184)   (118,750)   -    (496,934)   (457,123)   (89,975)   -    (547,098)
  General and Administrative Expenses   (254,048)   (98,956)   -    (353,004)   (236,172)   (99,543)   -    (335,715)
  Other Operating Income (Expenses)   695,544    213,999    -    909,543    153,620    42,051    -    195,671 
Equity Equivalence   78,523    1,575    -    80,098    (8,641)   4,978    -    (3,663)
EBIT   4,697,142    509,345    -    5,206,487    2,310,543    205,631    -    2,516,174 
                                         
Depreciation, Amortization & Depletion   1,550,059    146,696    -    1,696,755    1,586,667    122,714    -    1,709,381 
                                         
EBITDA   6,247,201    656,041    -    6,903,242    3,897,210    328,345    -    4,225,555 
EBITDA Margin   74.0%   46.9%   -    70.1%   55.9%   32.2%   -    52.8%
                                         
Adjusted EBITDA1   5,496,348    445,402    -    5,941,750    3,894,112    285,726    -    4,179,838 
Adjusted EBITDA Margin1   65.1%   31.8%   -    60.4%   55.8%   28.0%   -    52.3%
                                         
Net Financial Result   -    -    9,742,584    9,742,584    -    -    (5,657,238)   (5,657,238)
                                         
Earnings Before Taxes   4,697,145    509,342    9,742,584    14,949,071    2,310,544    205,630    (5,657,238)   (3,141,064)
                                         
Income and Social Contribution Taxes   -    -    (4,912,372)   (4,912,372)   -    -    1,088,546    1,088,546 
                                         
Net Income (Loss)   4,697,145    509,342    4,830,212    10,036,699    2,310,544    205,630    (4,568,692)   (2,052,518)
Net Margin   55.6%   36.4%   -    101.95%   33.1%   20.2%   -    -25.7%

 

1 Excluding non-recurring items and PPA effects.

 

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    6M21    6M20 
Segmented Financial
Statement (R$ '000)		   Pulp    Paper    

Non

Segmented

    

Total

Consolidated

    Pulp    Paper    

Non

Segmented

    

Total

Consolidated

 
Net Revenue   16,038,957    2,694,648    -    18,733,605    12,862,936    2,113,530    -    14,976,466 
Cost of Goods Sold   (7,905,782)   (1,716,907)   -    (9,622,689)   (8,246,527)   (1,362,166)   -    (9,608,693)
Gross Profit   8,133,175    977,741    -    9,110,916    4,616,409    751,364    -    5,367,773 
Gross Margin   50.7%   36.3%   -    48.6%   35.9%   35.6%   -    35.8%
                                         
Operating Expense/Income   (240,841)   (56,657)   -    (297,498)   (1,179,960)   (323,175)   -    (1,503,135)
  Selling Expenses   (855,781)   (222,919)   -    (1,078,700)   (875,343)   (186,691)   -    (1,062,034)
  General and Administrative Expenses   (532,454)   (203,104)   -    (735,558)   (460,226)   (190,325)   -    (650,551)
  Other Operating Income (Expenses)   1,071,126    355,270    -    1,426,396    170,212    42,190    -    212,402 
Equity Equivalence   76,268    14,096    -    90,364    (14,603)   11,651    -    (2,952)
EBIT   7,892,334    921,084    -    8,813,418    3,436,449    428,189    -    3,864,638 
                                         
Depreciation, Amortization & Depletion   3,179,633    283,603    -    3,463,236    3,126,528    231,053    -    3,357,581 
                                         
EBITDA   11,071,967    1,204,687    -    12,276,654    6,562,977    659,242    -    7,222,219 
EBITDA Margin   69.0%   44.7%   -    65.5%   51.0%   31.2%   -    48.2%
                                         
Adjusted EBITDA1   9,962,141    843,907    -    10,806,048    6,571,007    635,002    -    7,206,009 
Adjusted EBITDA Margin1   62.1%   31.3%   -    57.7%   51.1%   30.0%   -    48.1%
                                         
Net Financial Result   -    -    1,075,463    1,075,463    -    -    (28,101,286)   (28,101,286)
                                         
Earnings Before Taxes   7,892,335    921,083    1,075,463    9,888,881    3,436,449    428,189    (28,101,286)   (24,236,648)
                                         
Income and Social Contribution Taxes   -    -    (2,607,441)   (2,607,441)   -    -    8,765,069    8,765,069 
                                         
Net Income (Loss)   7,892,335    921,083    (1,531,978)   7,281,440    3,436,449    428,189    (19,336,217)   (15,471,579)
Net Margin   49.2%   34.2%        38.8%   26.7%   20.3%        -103.3%

 

1 Excluding non-recurring items and PPA effects.

 

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