Suzano (SUZB3) Q2 2024 earnings summary

Executive summary

• Adjusted EBITDA reached R$6.3 billion, up 38% from 1Q24 and 60% year-over-year, with strong operational performance and cash generation, initiating a deleveraging cycle.

• Strategic investments included a 15% stake in Lenzing (EUR230 million) and entry into the US packaging market via Pactiv, supporting downstream and international growth.

• The Cerrado Project, the world's largest single-line pulp mill, began operations on time and on budget, with ramp-up underway and 900,000 tons expected in 2024.

Financial highlights

• Adjusted EBITDA was R$6.3 billion, up from R$4.6 billion in 1Q24 and R$3.9 billion in 2Q23, with EBITDA margin rising to 55%.

• Net revenue reached R$11.5 billion, up 22% sequentially and 25% year-over-year, with 80% from exports.

• Net income was a loss of R$3.77 billion, mainly due to BRL depreciation and derivative losses.

• Free cash flow (adjusted) was R$1.92 billion, up 7% from 1Q24 but down 64% year-over-year.

• Capex totaled R$3.96 billion, focused on the Cerrado Project and maintenance.

Outlook and guidance

• The Cerrado Project is expected to produce 900,000 tons in 2024 and reach 2 million tons annualized within 12 months.

• Focus remains on maximizing long-term returns, maintaining financial discipline, and no refinancing risk until 2029.

• Total operational expenditure for pulp is forecast at R$1,750/ton by 2027.

• Cash costs projected to remain stable ex-downtime, with improvement expected post-Cerrado ramp-up.