Suzano (SUZB3) Q3 2024 earnings summary

Executive summary

• Sales volumes and EBITDA increased, driven by a well-defined commercial strategy, favorable FX, and strong Ribas do Rio Pardo Unit performance, despite higher cash costs and challenging Chinese pulp market conditions.

• The Ribas mill ramp-up exceeded efficiency expectations, marking the peak of higher costs as past, with further improvements anticipated.

• Largest investment cycle completed, enabling a new phase of competitiveness and cash generation.

• Leverage continued its planned decline, reaching 3.1x net debt/EBITDA, with net debt in USD at $12.9 billion.

• Strategic acquisitions in forestry assets, Lenzing, and Suzano Packaging US support business strategy and value extraction.

Financial highlights

• Adjusted EBITDA reached R$6.5 billion, up 4% sequentially and 77% year-over-year, with margin at 53%.

• Net revenue was R$12.3 billion, up 7% from 2Q24 and 37% year-over-year, with 79% from exports.

• Operating cash generation was R$4.4 billion, and net income was R$3.2 billion, reversing a loss in 2Q24.

• Net debt rose to $12.9 billion due to asset acquisitions and share buybacks, but leverage ratio improved to 3.1x.

• Paper and packaging EBITDA decreased 8% year-over-year due to lower prices, despite higher sales volumes.

Outlook and guidance

• Focus remains on value generation from new assets, Cerrado Project delivery, and continued deleveraging.

• Ribas do Rio Pardo Unit ramp-up on track, targeting 900k tons in 2024 and 2.0 million tons by 12 months of operation.

• 2025 CapEx to be lower, with further cash cost reductions anticipated as Ribas ramps up.

• Logistics costs to remain high due to ongoing disruptions, but cash costs expected to improve in Q4 with no major maintenance stoppages.

• Enhanced resilience expected in all price scenarios following investment cycle completion.