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Financial instruments and risk management | 6 Months Ended
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Jun. 30, 2024
Financial Instruments and Risk Management [Abstract] |
Disclosure of financial instruments [text block] | 4 FINANCIAL INSTRUMENTS AND RISKS MANAGEMENT 4.1 Financial risks management 4.1.1 Overview In the six-month period ended June 30, 2024, there were no significant changes in the financial risk management policies and procedures compared to those disclosed in the annual financial statements for the year ended December 31, 2023 (Note 4). The Company maintained its conservative approach and strong cash and marketable securities position, as well as its hedging policy. 4.1.2 Classification All transactions with financial instruments are recognized for accounting purposes and classified in the following categories:
| Note |  | 06/30/2024 |  | 12/31/2023
Assets |  |  |  |  |
Amortized cost |  |  |  |  |
Cash and cash equivalents | 5 |  | 7,246,498 |  |  | 8,345,871 |
Trade accounts receivable | 7 |  | 7,224,926 |  |  | 6,848,454 |
Other assets (1) |  |  | 670,095 |  |  | 737,222 |
|  |  | 15,141,519 |  |  | 15,931,547 |
Fair value through other comprehensive income |  |  |  |  |
Investments | 14.1 |  | 31,364 |  |  | 23,606 |
|  |  | 31,364 |  |  | 23,606 |
Fair value through profit or loss |  |  |  |  |
Derivative financial instruments | 4.5.1 |  | 3,884,621 |  |  | 4,430,454 |
Marketable securities | 6 |  | 14,815,013 |  |  | 13,267,286 |
|  |  | 18,699,634 |  |  | 17,697,740 |
|  |  | 33,872,517 |  |  | 33,652,893 |
Liabilities |  |  |  |  |
Amortized cost |  |  |  |  |
Trade accounts payable | 17 |  | 5,058,959 |  |  | 5,572,219 |
Loans, financing and debentures | 18.1 |  | 88,624,374 |  |  | 77,172,692 |
Lease liabilities | 19.2 |  | 6,604,352 |  |  | 6,243,782 |
Liabilities for assets acquisitions and subsidiaries | 23 |  | 211,226 |  |  | 187,187 |
Dividends and interests on own capital payable |  |  | 3,010 |  |  | 1,316,528 |
Other liabilities (1) |  |  | 481,507 |  |  | 116,716 |
|  |  | 100,983,428 |  |  | 90,609,124 |
Fair value through profit or loss |  |  |  |  |
Derivative financial instruments | 4.5.1 |  | 5,732,329 |  |  | 2,436,072 |
|  |  | 5,732,329 |  |  | 2,436,072 |
|  |  | 106,715,757 |  |  | 93,045,196 |
|  |  | 72,843,240 |  |  | 59,392,303 |
(1)Does not include items not classified as financial instruments. 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/methodology |  | 06/30/2024 |  | 12/31/2023
Quoted in the secondary market |  |  |  |  |
In foreign currency |  |  |  |  |
Bonds | Secondary Market |  | 43,616,964 |  |  | 38,703,379 |
Estimated present value |  |  |  |  |
In foreign currency |  |  |  |  |
Export credits (“Prepayment”) | SOFR |  | 17,671,131 |  |  | 17,783,760 |
Assets Financing | SOFR |  | 379,014 |  |  | 278,107 |
ECA - Export Credit Agency | SOFR |  | 691,611 |  |  |
IFC - International Finance Corporation | SOFR |  | 3,165,736 |  |  | 3,198,761 |
In local currency |  |  |  |  |
BNDES – TJLP | DI 1 |  | 175,745 |  |  | 215,458 |
BNDES – TLP | DI 1 |  | 2,285,041 |  |  | 2,712,762 |
BNDES – Fixed | DI 1 |  | 1,757 |  |  | 3,903 |
BNDES – Selic (“Special Settlement and Custody System”) | DI 1 |  | 604,215 |  |  | 686,798 |
Assets Financing | DI 1 |  | 62,955 |  |  | 75,622 |
Debentures | DI 1/IPCA |  | 10,659,539 |  |  | 8,881,277 |
NCE (“Export Credit Notes”) | DI 1 |  | 95,229 |  |  | 110,396 |
NCR (“Rural Credit Notes”) | DI 1 |  | 2,141,198 |  |  | 2,228,806 |
Export credits (“Prepayment”) | DI 1 |  | 823,967 |  |  | 824,035 |
|  |  | 82,374,102 |  |  | 75,703,064 |
The book values of loans and financing are disclosed in Note 18. Management considers that, for its other financial assets and liabilities measured at amortized cost, their book values approximate their fair values, and therefore the fair value information is not being presented. 4.2 Liquidity risk management The Company’s purpose is to maintain a strong cash and marketable securities position to meet its financial and operating commitments. The amount held in cash is intended to cover the expected outflows in the normal course of its operations, while the cash surplus is generally invested in highly liquid financial investments according to the Cash Management Policy. The cash position is monitored by the Company’s Management, by means of management reports and participation in performance meetings with determined frequencies. During the six-month period ended June 30, 2024, the variations in cash and marketable securities were as expected, and the cash generated from operations was mostly used for investments and debt service. All derivative financial instruments were traded over the counter and do not require deposit guarantee margins. The remaining contractual maturities of financial liabilities are presented as of the balance sheet date. The amounts as set forth below consist of undiscounted cash flow, and include interest payments and exchange rate variations, and therefore may not reconcile with the amounts disclosed in the balance sheet.
|  |  |  |  |  |  |  |  |  |  | 06/30/2024
| Book value |  | Undiscounted cash flow |  | Up to 1 year |  | 1 - 2 years |  | 2 - 5 years |  | More than 5 years
Liabilities |  |  |  |  |  |  |  |  |  |  |
Trade accounts payables | 5,058,959 |  |  | 5,058,959 |  |  | 5,058,959 |  |  |  |  |  |  |
Loans, financing and debentures | 88,624,374 |  |  | 118,976,266 |  |  | 13,708,238 |  |  | 8,967,446 |  |  | 42,773,201 |  |  | 53,527,381 |
Lease liabilities | 6,604,352 |  |  | 11,631,398 |  |  | 1,230,619 |  |  | 1,113,432 |  |  | 2,930,245 |  |  | 6,357,102 |
Liabilities for asset acquisitions and subsidiaries | 211,226 |  |  | 210,946 |  |  | 91,922 |  |  | 18,624 |  |  | 85,035 |  |  | 15,365 |
Derivative financial instruments | 5,732,329 |  |  | 6,887,436 |  |  | 615,555 |  |  | 191,218 |  |  | 674,980 |  |  | 5,405,683 |
Dividends and interests on own capital payable | 3,010 |  |  | 3,010 |  |  | 3,010 |  |  |  |  |  |  |
Other liabilities | 481,507 |  |  | 481,507 |  |  | 422,471 |  |  | 59,036 |  |  |  |  |
| 106,715,757 |  |  | 143,249,522 |  |  | 21,130,774 |  |  | 10,349,756 |  |  | 46,463,461 |  |  | 65,305,531 |
|  |  |  |  |  |  |  |  |  |  | 12/31/2023
| Book value |  | Undiscounted cash flow |  | Up to 1 year |  | 1 - 2 years |  | 2 - 5 years |  | More than 5 years
Liabilities |  |  |  |  |  |  |  |  |  |  |
Trade accounts payables | 5,572,219 |  |  | 5,572,219 |  |  | 5,572,219 |  |  |  |  |  |  |
Loans, financing and debentures | 77,172,692 |  |  | 105,526,852 |  |  | 7,648,237 |  |  | 12,983,542 |  |  | 31,355,362 |  |  | 53,539,711 |
Lease liabilities | 6,243,782 |  |  | 11,021,519 |  |  | 1,172,568 |  |  | 1,045,795 |  |  | 2,743,793 |  |  | 6,059,363 |
Liabilities for asset acquisitions and subsidiaries | 187,187 |  |  | 215,891 |  |  | 94,948 |  |  | 18,314 |  |  | 87,520 |  |  | 15,109 |
Derivative financial instruments | 2,436,072 |  |  | 2,801,258 |  |  | 66,433 |  |  | 1,278,953 |  |  | 1,191,014 |  |  | 264,858 |
Dividends and interests on own capital payable | 1,316,528 |  |  | 1,316,528 |  |  | 1,316,528 |  |  |  |  |  |  |
Other liabilities | 116,716 |  |  | 116,716 |  |  | 58,955 |  |  | 57,761 |  |  |  |  |
| 93,045,196 |  |  | 126,570,983 |  |  | 15,929,888 |  |  | 15,384,365 |  |  | 35,377,689 |  |  | 59,879,041 |
4.3 Credit risk management In the six-month period ended June 30, 2024, there were no significant changes in the credit risk management policies compared to those disclosed in the annual financial statements for the year ended of December 31, 2023 (Note 4). 4.4 Market risk management In the six-month period ended June 30, 2024, there were no significant changes in the market risk management policies and procedures compared to those disclosed in the annual financial statements for the year ended December 31, 2023 (Note 4). 4.4.1 Exchange rate risk management As disclosed in the financial statements for the year ended December 31, 2023 (Note 4), the Company enters into US$ 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 a 24-months’ time horizon and therefore, are matched to the availability of currency for sale in the short term. The Company's Board of Directors approved the contracting of extraordinary hedge, in addition to the strategy mentioned above, for investments in the Cerrado Project, with a term of up to 36 months as of November 2021, in an amount of up to US$1,000,000. On July 27, 2022, the Board of Directors approved the expansion of the program, increasing the maximum amount (notional) to US$1,500,000, maintaining the previously established deadline. In order to provide transparency on the hedge program for the Cerrado Project, since December 31, 2021 the Company has started to prominently disclose the respective contracted operations. The assets and liabilities that are exposed to foreign currency, substantially in US$, are set forth below:
| 06/30/2024 |  | 12/31/2023
Assets |  |  |
Cash and cash equivalents | 5,149,219 |  |  | 6,432,557 |
Marketable securities | 2,811,914 |  |  | 7,378,277 |
Trade accounts receivable | 5,393,033 |  |  | 5,049,609 |
Derivative financial instruments | 3,041,184 |  |  | 3,070,594 |
| 16,395,350 |  |  | 21,931,037 |
Liabilities |  |  |
Trade accounts payable | (1,200,975) |  |  | (1,625,011) |
Loans and financing | (71,901,265) |  |  | (61,304,673) |
Liabilities for asset acquisitions and subsidiaries | (150,121) |  |  | (127,598) |
Derivative financial instruments | (4,980,878) |  |  | (1,867,882) |
| (78,233,239) |  |  | (64,925,164) |
| (61,837,889) |  |  | (42,994,127) |
4.4.1.1 Sensitivity analysis – foreign exchange rate exposure – except for derivative financial instruments For market risk analysis, the Company uses scenarios to evaluate both its asset and liability positions in foreign currency, and the possible effects on its results. The probable scenario represents the amounts recognized, as they reflect the conversion into Brazilian Reais on the balance sheet date (R$ to US$ = R$5.5589). This analysis assumes that all other variables, particularly interest rates, remain constant. The other scenarios considered the depreciation of the Brazilian Real against the US$ at the rates of 25% and 50% before taxes. The following table set forth the potential impacts at their absolute amounts:
| 06/30/2024
| Effect on profit or loss
| Probable (base value) |  | Possible (25%) |  | Remote (50%)
Cash and cash equivalents | 5,149,219 |  |  | 1,287,305 |  |  | 2,574,610 |
Marketable securities | 2,811,914 |  |  | 702,979 |  |  | 1,405,957 |
Trade accounts receivable | 5,393,033 |  |  | 1,348,258 |  |  | 2,696,517 |
Trade accounts payable | (1,200,975) |  |  | (300,244) |  |  | (600,488) |
Loans and financing | (71,901,265) |  |  | (17,975,316) |  |  | (35,950,633) |
Liabilities for asset acquisitions and subsidiaries | (150,121) |  |  | (37,530) |  |  | (75,061) |
4.4.1.2 Sensitivity analysis – foreign exchange rate exposure – derivative financial instruments The Company has sales operations in US$ in the futures markets, including strategies using options, to ensure attractive levels of operating margins for a portion of its revenue. These operations are limited to a percentage of the total exposure to US$ over a 24-month horizon, or to investments in the Cerrado Project, according to the extraordinary hedge described above, and are therefore pegged to the availability of ready-to-sell foreign exchange in the short term. In addition to the transaction described above, the Company also taken out derivative instruments linked to the US$ and subject to exchange fluctuations, seeking to adjust the debt's currency indexation to the cash generation currency, as provided for in its financial policies. For the calculation of the mark-to-market (“MtM”) price, the exchange rate of the last business day of the period is used. These market movements caused a negative impact on the mark-to-market position entered into by the Company. This analysis below assumes that all other variables, particularly the interest rates, remain constant. The other scenarios considered the depreciation of the Brazilian Real against the US$ by 25% and 50%, before taxes, based on the base scenario on June 30, 2024. The following table set out the possible impacts assuming these scenarios:
| 06/30/2024
| Effect on profit or loss
| Probable (base value) |  | Possible 25% |  | Remote 50%
Dollar/Real |  |  |  |  |
Derivative financial instruments |  |  |  |  |
Derivative options | (1,333,266) |  |  | (6,410,594) |  |  | (14,619,086) |
Derivative swaps | (589,917) |  |  | (2,262,706) |  |  | (4,443,068) |
Derivative Non-Deliverable Forward (‘NDF’) Contracts | (77,902) |  |  | (318,622) |  |  | (671,020) |
Embedded derivatives | 66,945 |  |  | (155,851) |  |  | (311,701) |
NDF parity derivatives (1) | 9,371 |  |  | (154,754) |  |  | (273,597) |
Commodity Derivatives | 77,059 |  |  | 19,264 |  |  | 38,528 |
Dollar/Euro |  |  |  |  |
Derivative financial instruments |  |  |  |  |
NDF parity derivatives (1) | 9,371 |  |  | (93,190) |  |  | (192,420) |
(1)Long positions at US$/EUR parity in order to protect the Capex cash flow of the Cerrado Project against the appreciation of the Euro. 4.4.2 Interest rate risk management Fluctuations in interest rates could increase or reduce the costs of new loans and existing contracted operations. The Company is constantly looking for alternatives for the use of financial instruments in order to avoid negative impacts on its cash flow due to fluctuations in interest rates in Brazil or abroad. 4.4.2.1 Sensitivity analysis – exposure to interest rates – except for derivative financial instruments For its market risk analysis, the Company uses scenarios to evaluate the sensitivity of changes in operations impacted by the following rates: Interbank Deposit Rate (“CDI”), Long Term Interest Rate (“TJLP”), Special System for Settlement and Custody (“SELIC”) and SOFR, which could impact the results. The probable scenario represents the amounts already booked, as they reflect Management’s best estimates. This analysis assumes that all other variables, particularly exchange rates, will remain constant. The other scenarios considered a depreciation of 25% and 50% in market interest rates. The following table set forth the possible impacts assuming these scenarios in absolute amounts:
| 06/30/2024
| Effect on profit or loss
| Probable |  | Possible (25%) |  | Remote (50%)
CDI/SELIC |  |  |  |  |
Cash and cash equivalents | 1,952,958 |  |  | (50,777) |  |  | (101,554) |
Marketable securities | 11,208,299 |  |  | (291,416) |  |  | (582,832) |
Loans and financing | 9,240,306 |  |  | 292,225 |  |  | 584,449 |
TJLP |  |  |  |  |
Loans and financing | 224,140 |  |  | 3,922 |  |  | 7,845 |
SOFR |  |  |  |  |
Loans and financing | 24,015,749 |  |  | 323,942 |  |  | 647,885 |
4.4.2.2 Sensitivity analysis – exposure to interest rates – derivative financial instruments This analysis assumes that all other variables remain constant. The other scenarios considered a depreciation of 25% and 50% in market interest rates. The following table sets out the possible impacts of these assumed scenarios:
| 06/30/2024
| Effect on profit or loss
| Probable |  | Probable 25% |  | Remote 50%
CDI |  |  |  |  |
Derivative financial instruments |  |  |  |  |
Liabilities |  |  |  |  |
Derivative options | (1,333,266) |  |  | (662,127) |  |  | (1,317,419) |
Derivative swaps | (589,917) |  |  | (80,807) |  |  | (158,606) |
SOFR |  |  |  |  |
Derivative financial instruments |  |  |  |  |
Liabilities |  |  |  |  |
Derivative swaps | (589,917) |  |  | (143,819) |  |  | (275,609) |
4.4.2.3 Sensitivity analysis to changes in the consumer price indices of the US economy For the measurement of the probable scenario, the United States Consumer Price Index (“US-CPI”) was considered on June 30, 2024. The probable scenario was extrapolated considering a depreciation of 25% and 50% in the US-CPI to define the possible and remote scenarios, respectively. The following table sets out the possible impacts, assuming these scenarios in absolute amounts:
| 06/30/2024
| Effect on profit or loss
| Probable (base value) |  | Possible (25%) |  | Remote (50%)
Embedded derivative in a commitment to purchase standing wood, originating from a forest partnership agreement | 66,945 |  |  | (33,119) |  |  | (68,055) |
4.4.3 Commodity price risk management The Company is exposed to commodity prices, mainly in the selling price of pulp in the international market. The dynamics of rising and falling production capacities in the global market and macroeconomic conditions may impact the Company´s operating results. Through a specialized team, the Company monitors hardwood pulp prices and analyses future trends, adjusting the forecasts aimed at assisting with preventive measures to calculate the different scenarios. There is no sufficiently liquid financial market to mitigate the risk of a material portion of the Company’s operations. Hardwood pulp price protection instruments available on the market have low liquidity and low volume, and high levels of distortion in price formation. The Company is also exposed to international oil prices, reflected in logistical costs for selling in the export market, and indirectly in the costs of other supply, logistics and service contracts. In such cases, the Company evaluates whether to contract derivative financial instruments to mitigate the risk of price variations in its results. 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 the annual financial statements for the year ended December 31, 2023 (Note 4). 4.5.1 Outstanding derivatives by contract type, including embedded derivatives The positions of outstanding derivatives are set forth below:
|  | Notional value, net in U.S.$ |  | Fair value in R$
|  | 06/30/2024 |  | 12/31/2023 |  | 06/30/2024 |  | 12/31/2023
Instruments as part of protection strategy |  |  |  |  |  |  |  |
Operational hedges |  |  |  |  |  |  |  |
Zero Cost Collar |  | 6,547,200 |  |  | 4,500,200 |  |  | (1,333,266) |  |  | 1,968,337 |
NDF (R$ x US$) |  | 357,500 |  |  | 505,000 |  |  | (77,902) |  |  | 162,776 |
NDF (€ x US$) |  | 68,512 |  |  | 262,088 |  |  | 9,371 |  |  | 100,362 |
Debt hedges |  |  |  |  |  |  |  |
Swap SOFR to Fixed (US$) |  | 1,437,593 |  |  | 2,555,626 |  |  | 391,912 |  |  | 741,492 |
Swap IPCA to CDI (notional in Brazilian Reais) |  | 5,078,782 |  |  | 4,274,397 |  |  | (364,433) |  |  | 47,645 |
Swap CDI x Fixed (US$) |  | 909,612 |  |  | 1,025,000 |  |  | (318,356) |  |  | (1,081,964) |
Pre-fixed Swap to US$ (US$) |  |  |  | 200,000 |  |  |  |  | (203,045) |
Swap CDI x SOFR (US$) |  | 610,171 |  |  | 125,000 |  |  | (277,115) |  |  | 25,774 |
Swap SOFR to SOFR (US$) |  | 150,961 |  |  | 150,961 |  |  | (21,923) |  |  | (16,615) |
Commodity Hedge |  |  |  |  |  |  |  |
Swap US$ e US-CPI (1) |  | 139,342 |  |  | 131,510 |  |  | 66,945 |  |  | 230,471 |
Zero Cost Collar (Brent) |  | 121,865 |  |  | 163,100 |  |  | 30,535 |  |  | (3,148) |
Swap VLSFO/Brent |  | 76,684 |  |  | 142,794 |  |  | 46,524 |  |  | 22,297 |
|  |  |  |  |  | (1,847,708) |  |  | 1,994,382 |
Current assets |  |  |  |  |  | 1,161,258 |  |  | 2,676,526 |
Non-current assets |  |  |  |  |  | 2,723,363 |  |  | 1,753,928 |
Current liabilities |  |  |  |  |  | (469,544) |  |  | (578,763) |
Non-current liabilities |  |  |  |  |  | (5,262,785) |  |  | (1,857,309) |
|  |  |  |  |  | (1,847,708) |  |  | 1,994,382 |
(1)The embedded derivative refers to a swap contract for the sale of price variations in US$ and US-CPI within the term of a forest partnership with a standing wood supply contract. The current contracts and the respective protected risks are set forth below: (i)Swap CDI x Fixed US$: positions in conventional swaps exchanging the variation of the Interbank Deposit rate (“DI”) for a fixed rate in US$. The objective is to change the debt indexed in Brazilian Reais to US$, in compliance with the Company's natural exposure to US$ receivables. (ii)Swap IPCA x CDI (notional in Brazilian Reais): positions in conventional swaps exchanging the variation of the Amplified Consumer Price Index (“IPCA”) for the DI rate. The objective is to change the debt indexed in reais, in compliance with the Company's cash position in Brazilian Reais, which is also indexed to DI. (iii)Swap SOFR x Fixed US$: positions in conventional swaps exchanging a post-fixed rate (SOFR) for a fixed rate in US$. The objective is to protect the cash flow against changes in the US interest rate. (iv)Pre-Fixed Swap R$ x Fixed US$: positions in conventional swaps of a fixed rate in Reais for a fixed rate in US$. The objective is to change the exposure of debts in Brazilian Reais to US$, in compliance with the Company's natural exposure to US$ receivables. (v)SOFR x SOFR Swap: swap position exchanging a fixed rate added to SOFR for another fixed rate added to SOFR. The objective is to generate a fee discount for Prepayment with the banking institution, allowing for reversal mechanisms. (vi)CDI x SOFR Swap: positions in conventional swaps exchanging the variation in the Interbank Deposit rate (“DI”) for a post-fixed rate (“SOFR”) US$. The objective is to change the debt index in reais to US$, aligning with the natural exposure of the Company's US$ receivables and capturing a lower cost of debt through the fluctuation of SOFR rate projections. (vii)Zero Cost Collar: positions in an instrument that consists of the simultaneous combination of a purchase of put options and the sale of call options in US$, with the same principal amount and maturity, with the objective of protecting the cash flow of exports. Under this strategy, an interval is established where there is no deposit or receipt of financial margin at the option maturity. The objective is to protect the cash flow of exports against the depreciation of the Brazilian Real. (viii)Non-Deliverable Forward contracts (“NDF”): short positions in US$ futures contracts with the objective of protecting the cash flow from exports against the depreciation of the Brazilian Real. (ix)Swap US-CPI: The embedded derivative refers to the swap contracts for selling price variations in US$ and the US-CPI in forest partnership with a standing wood supply contract. (x)Non-Deliverable Forward contracts: EUR and US$: call positions at EUR/US$ parity to protect the Capex cash flow of the Cerrado project against the appreciation of the Euro. (xi)Swap Very Low Sulphur Fuel Oil / Brent (“VLSFO”): Long positions in oil, aimed at hedging logistical costs related to maritime freight contracts against the increase in oil prices. (xii)Zero Cost Collar (Brent): positions in an instrument that consists of the simultaneous combination of buying call options and selling put options for oil - Brent, with the same principal value and maturity, with the objective of protecting input costs of oil derivatives. In this strategy, an interval is established where there is no deposit or receipt of financial margin at the expiration of the options. The objective is to protect costs against rising oil prices. The variation in the fair values of derivatives on June 30, 2024 compared to the fair values measured on December 31, 2023 are explained substantially by the depreciation of the Brazilian Real against the US$ and by settlements during the period. There were also impacts caused by the variations in the Pre Fixed, Foreign Exchange Coupon and SOFR curves in the operations. It is important to highlight that the outstanding agreements on June 30, 2024 are over-the-counter market operations, without any type of collateral margin or forced early settlement clause due to variations from market marking. 4.5.2 Fair Value Maturity Schedule
| 06/30/2024 |  | 12/31/2023
2024 | 471,913 |  |  | 2,097,763 |
2025 | (230,840) |  |  | 233,072 |
2026 | (379,675) |  |  | (574,871) |
2027 onwards | (1,709,106) |  |  | 238,418 |
| (1,847,708) |  |  | 1,994,382 |
4.5.3 Outstanding assets and liabilities derivatives positions The outstanding derivatives positions are set forth below:
|  |  |  | Notional value |  | Fair value
|  | Currency |  | 06/30/2024 |  | 12/31/2023 |  | 06/30/2024 |  | 12/31/2023
Debt hedges |  |  |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |  |  |
Swap CDI to Fixed |  | US$ |  | 4,748,394 |  |  | 3,898,011 |  |  | 1,618,434 |  |  | 223,776 |
Swap Pre-Fixed to US$ |  | US$ |  |  |  | 738,800 |  |  |  |  |
Swap SOFR to Fixed |  | US$ |  | 1,437,593 |  |  | 2,555,626 |  |  | 430,489 |  |  | 1,104,984 |
Swap IPCA to CDI |  | R$ |  | 5,229,379 |  |  | 4,320,471 |  |  | 308,989 |  |  | 161,542 |
Swap CDI to SOFR |  | US$ |  | 3,117,625 |  |  | 644,850 |  |  | 679,637 |  |  | 32,560 |
Swap SOFR to SOFR |  | US$ |  | 150,961 |  |  | 150,961 |  |  | 6,717 |  |  | 6,681 |
|  |  |  |  |  |  |  | 3,044,266 |  |  | 1,529,543 |
Liabilities |  |  |  |  |  |  |  |  |  |
Swap CDI to Fixed |  | US$ |  | 909,612 |  |  | 1,025,000 |  |  | (1,936,790) |  |  | (1,305,740) |
Swap Pre-Fixed to US$ |  | US$ |  |  |  | 200,000 |  |  |  |  | (203,045) |
Swap SOFR to Fixed |  | US$ |  | 1,437,593 |  |  | 2,555,626 |  |  | (38,577) |  |  | (363,492) |
Swap IPCA to CDI |  | R$ |  | 5,078,782 |  |  | 4,274,397 |  |  | (673,422) |  |  | (113,897) |
Swap CDI to SOFR |  | US$ |  | 610,171 |  |  | 125,000 |  |  | (956,752) |  |  | (6,786) |
Swap SOFR to SOFR |  | US$ |  | 150,961 |  |  | 150,961 |  |  | (28,640) |  |  | (23,296) |
|  |  |  |  |  |  |  | (3,634,181) |  |  | (2,016,256) |
|  |  |  |  |  |  |  | (589,915) |  |  | (486,713) |
Operational hedge |  |  |  |  |  |  |  |  |  |
Zero Cost Collar (US$ x R$) |  | US$ |  | 6,547,200 |  |  | 4,500,200 |  |  | (1,333,266) |  |  | 1,968,337 |
NDF (R$ x US$) |  | US$ |  | 357,500 |  |  | 505,000 |  |  | (77,902) |  |  | 162,776 |
NDF (€ x US$) |  | US$ |  | 68,512 |  |  | 262,088 |  |  | 9,371 |  |  | 100,362 |
|  |  |  |  |  |  |  | (1,401,797) |  |  | 2,231,475 |
Commodity hedge |  |  |  |  |  |  |  |  |  |
Swap US-CPI (standing wood) (1) |  | US$ |  | 139,342 |  |  | 131,510 |  |  | 66,945 |  |  | 230,471 |
Zero Cost Collar (Brent) |  | US$ |  | 121,865 |  |  | 163,100 |  |  | 30,535 |  |  | (3,148) |
Swap VLSFO/Brent |  | US$ |  | 76,684 |  |  | 142,794 |  |  | 46,524 |  |  | 22,297 |
|  |  |  |  |  |  |  | 144,004 |  |  | 249,620 |
|  |  |  |  |  |  |  | (1,847,708) |  |  | 1,994,382 |
(1)The embedded derivative refers to the swap contracts for selling price variations in US$ and the US-CPI in forest partnership with a standing wood supply contract. 4.5.4 Fair value settled amounts The settled derivatives positions are set forth below:
| 06/30/2024 |  | 12/31/2023
Operational hedge |  |  |
Zero Cost Collar (R$ x US$) | 580,961 |  |  | 2,987,953 |
NDF (R$ x US$) | 39,368 |  |  | 155,458 |
NDF (€ x US$) | 57,391 |  |  | 84,332 |
| 677,720 |  |  | 3,227,743 |
Commodity hedge | 63,904 |  |  | 80,516 |
Swap VLSFO/other | 63,904 |  |  | 80,516 |
Debt hedge |  |  |
Swap CDI to Fixed (US$) | (1,562,218) |  |  | (438,417) |
Swap IPCA to CDI (Brazilian Reais) | (14,722) |  |  | 256,683 |
Swap IPCA to Fixed (US$) |  |  | 21,139 |
Swap Pre-Fixed to US$ | (221,462) |  |  | (104,827) |
Swap SOFR to SOFR | 800 |  |  |
Swap CDI to SOFR (US$) | (22,911) |  |  | 7,729 |
Swap SOFR to Fixed (US$) | 396,102 |  |  | 508,720 |
| (1,424,411) |  |  | 251,027 |
| (682,787) |  |  | 3,559,286 |
4.6 Fair value hierarchy Financial instruments are measured at fair value, which considers the fair value as the price that would be received from selling an asset or paid to transfer a liability in an unforced transaction between market participants at the measurement date. For the six-month period ended June 30, 2024, there were no changes between the 3 (three) levels of hierarchy and no transfers between levels 2 and 3.
|  |  |  | 06/30/2024
|  | Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |  |
At fair value through profit or loss |  |  |  |  |  |
Derivative financial instruments |  | 3,884,621 |  |  |  |  | 3,884,621 |
Marketable securities |  | 14,815,013 |  |  |  |  | 14,815,013 |
|  | 18,699,634 |  |  |  |  |  | 18,699,634 |
At fair value through other comprehensive income |  |  |  |  |  |
Other investments |  |  |  | 31,364 |  |  | 31,364 |
|  |  |  |  | 31,364 |  |  | 31,364 |
Biological assets |  |  |  | 19,801,748 |  |  | 19,801,748 |
|  |  |  |  | 19,801,748 |  |  | 19,801,748 |
Total assets |  | 18,699,634 |  |  | 19,833,112 |  |  | 38,532,746 |
Liabilities |  |  |  |  |  |
At fair value through profit or loss |  |  |  |  |  |
Derivative financial instruments |  | 5,732,329 |  |  |  |  | 5,732,329 |
|  | 5,732,329 |  |  |  |  |  | 5,732,329 |
|  | 5,732,329 |  |  |  |  |  | 5,732,329 |
|  |  |  |  | 12/31/2023
| Level 2 |  | Level 3 |  | Total
Assets |  |  |  |  |
At fair value through profit or loss |  |  |  |  |
Derivative financial instruments | 4,430,454 |  |  |  |  |  | 4,430,454 |
Marketable securities | 13,267,286 |  |  |  |  |  | 13,267,286 |
| 17,697,740 |  |  |  |  |  | 17,697,740 |
At fair value through other comprehensive income |  |  |  |  |
Other investments - CelluForce |  |  |  | 23,606 |  |  | 23,606 |
|  |  |  | 23,606 |  |  | 23,606 |
Biological assets |  |  |  | 18,278,582 |  |  | 18,278,582 |
|  |  |  | 18,278,582 |  |  | 18,278,582 |
Total assets | 17,697,740 |  |  | 18,302,188 |  |  | 35,999,928 |
Liabilities |  |  |  |  |
At fair value through profit or loss |  |  |  |  |
Derivative financial instruments | 2,436,072 |  |  |  |  |  | 2,436,072 |
| 2,436,072 |  |  |  |  |  | 2,436,072 |
Total liabilities | 2,436,072 |  |  |  |  |  | 2,436,072 |
4.7 Cybersecurity Suzano has a Public Information Security Policy, which aims to establish guidelines regarding cyber security management and controls at Suzano, seeking to mitigate vulnerabilities, preserve and protect assets, mainly information and personal data, in accordance with current laws, regulations and contractual obligations, covering the confidentiality, integrity, availability, authenticity and legality of information. The Policy establishes responsibilities to avoid damages, which may represent financial impacts, image and reputation, exposure of information, interruption of operations, among other damages due to cyber-attacks. For the six-month period ended June 30, 2024, no material incidents associated with cybersecurity were identified that could affect the confidentiality, integrity and/or availability of the systems used by the Company. 4.8 Climate change In the annual financial statements for the year ended December 31, 2023, the risks and opportunities information linked to climate change and the sustainability strategy were disclosed, which did not change significant during the six-month period ended June 30, 2024. 4.8.1 Disaster in the State of Rio Grande do Sul, Brazil In the last week of April 2024, Rio Grande do Sul suffered from large-scale flooding after storms that devastated the state, with unprecedented elevations in the Guaíba River basins in Porto Alegre, and Lagoa dos Patos in Pelotas and Rio Grande, which also overflowed, flooding hundreds of cities in the state. The Company has a distribution center in the city of Cachoeirinha, metropolitan region of Porto Alegre, however, it was not directly impacted by the floods and the indirect impacts are not material. 4.9 Capital management The main objective is to strengthen the Company’s capital structure, aiming to maintain an appropriate level of financial leverage while mitigating risks that could affect the availability of capital for business development. The Company continuously monitors significant indicators, such as consolidated financial leverage, which is the ratio of total net debt to adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“Adjusted EBITDA”).

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