0001104659-19-028243.txt : 20190509 0001104659-19-028243.hdr.sgml : 20190509 20190509165658 ACCESSION NUMBER: 0001104659-19-028243 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 33 CONFORMED PERIOD OF REPORT: 20190509 FILED AS OF DATE: 20190509 DATE AS OF CHANGE: 20190509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Suzano S.A. CENTRAL INDEX KEY: 0000909327 STANDARD INDUSTRIAL CLASSIFICATION: PAPER MILLS [2621] IRS NUMBER: 000000000 FILING VALUES: FORM TYPE: 6-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-38755 FILM NUMBER: 19811467 BUSINESS ADDRESS: STREET 1: AV. PROFESSOR MAGALHAES NETO, 1,752 STREET 2: 10TH FLOOR, ROOMS 1010 AND 1011 CITY: SALVADOR - BA STATE: D5 ZIP: 41 810-012 BUSINESS PHONE: 551121384588 MAIL ADDRESS: STREET 1: AV. BRIGADEIRO FARIA LIMA, 1,355 STREET 2: 7TH FLOOR CITY: PINHEIROS, SAO PAULO - SP STATE: D5 ZIP: 01 452-919 FORMER COMPANY: FORMER CONFORMED NAME: Suzano Papel e Celulose S.A. DATE OF NAME CHANGE: 20180322 FORMER COMPANY: FORMER CONFORMED NAME: COMPANHIA SUZANO DE PAPEL E CELULOSE /FI DATE OF NAME CHANGE: 19930719 6-K 1 a19-9705_16k.htm 6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 


 

FORM 6-K

 


 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

 

For the month of May, 2019.

 

Commission File Number 333-226596

 


 

Suzano S.A.

(Exact name of registrant as specified in its charter)

 


 

SUZANO INC.

(Translation of Registrant’s Name into English)

 

Av. Professor Magalhaes Neto, 1,752

10th Floor, Rooms 1010 and 1011

Salvador, Brazil 41 810-012

(Address of principal executive office)

 


 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

 

Form 20-F x

 

Form 40-F o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

 

 

 


 

Enclosures:

 

Exhibit 99.1 – Earnings Release for First Quarter 2019.

 

2


 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: May 9, 2019.

 

 

 

SUZANO S.A.

 

 

 

 

By:

/s/ Marcelo Feriozzi Bacci

 

Name:

Marcelo Feriozzi Bacci

 

Title:

Chief Financial Officer and Investor Relations Director

 

3


EX-99.1 2 a19-9705_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Lower volatility and resilient results

 

São Paulo, May 9, 2019. Suzano S.A. (B3: SUZB5 | NYSE: SUZ), one of the largest pulp and integrated paper producers in the world, announces today its consolidated results for the first quarter of 2019 (1Q19). Data of comparison quarters (4Q18, 1Q18 and LTM(4)) are a simple sum or the weighted average of Suzano + Fibria.

 

HIGHLIGHTS

 

·                  Merger of Fibria concluded on April 1, 2019 and tranding name change to Suzano S.A.

 

·                  Adjusted EBITDA(1) and Operating cash generation(2) of R$2.8 billion and R$1.8 billion, respectively.

 

·                  Pulp adjusted EBITDA(1)/ton of R$1,480/ton.

 

·                  Average net sales price of pulp in the export market of US$711/ton.

 

·                  Average net sales price of paper of R$4,000/ton.

 

·                  Synergies — capture curve as planned.

 

·                  Pulp cash cost mainly impacted by higher fixed cost: R$667/ton ex-downtimes.

 

Financial Data (R$ million)

 

1Q19

 

1Q18(3)

 

D Y-o-Y

 

4Q18(3)

 

D Q-o-Q

 

LTM 1Q19

 

Net Revenue

 

5,699

 

6,692

 

-15

%

7,242

 

-21

%

30,709

 

Adjusted EBITDA(1)

 

2,761

 

3,352

 

-18

%

3,550

 

-22

%

15,770

 

Adjusted EBITDA Margin(1)

 

48

%

50

%

-2 p.p.

 

49

%

-1 p.p.

 

51

%

Adjusted EBITDA Margin ex- Klabin(1)

 

50

%

53

%

-323

%

52

%

-2 p.p.

 

54

%

Net Financial Result

 

(1,936

)

(427

)

353

%

1,679

 

 

(9,257

)

Net Income

 

(1,229

)

1,428

 

 

2,987

 

 

721

 

Operating Cash Generation(2)

 

1,781

 

2,583

 

-31

%

2,465

 

-28

%

11,907

 

Net Debt /Adjusted EBITDA(1) (x) - R$

 

3.4 x

 

1.9 x

 

1.5 x

 

1.5 x

 

1.9 x

 

3.4 x

 

Net Debt /Adjusted EBITDA(1) (x) - US$

 

3.3 x

 

1.9 x

 

1.5 x

 

1.4 x

 

1.9 x

 

3.3 x

 

 

 

Operational Data (‘000 tons)

 

1Q19

 

1Q18(3)

 

D Y-o-Y

 

4Q18(3)

 

D Q-o-Q

 

LTM 1Q19

 

Sales

 

2,003

 

2,751

 

-27.2

%

2,435

 

-17.7

%

10,518

 

Pulp

 

1,729

 

2,467

 

-29.9

%

2,085

 

-17.1

%

9,274

 

Paper(3)

 

274

 

284

 

-3.5

%

350

 

-21.7

%

1,244

 

Production

 

2,465

 

2,802

 

-12.0

%

2,918

 

-15.5

%

11,187

 

Pulp

 

2,173

 

2,508

 

-13.4

%

2,581

 

-15.8

%

9,924

 

Paper(3)

 

292

 

294

 

-0.8

%

337

 

-13.5

%

1,263

 

 


(1)  Excludes non-recurring items. | (2) Operating cash generation corresponds to Adjusted EBITDA less maintenance Capex. | (3) Includes results of the Consumer Goods Unit. | (4) Last 12 months.

 

 


 

The consolidated quarterly information has been prepared in accordance with the Securities and Exchange Commission and Accounting Standard 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, in Reais and Dollars, were not reviewed by independent auditors.

 

CONTENTS

 

PULP BUSINESS PERFORMANCE

3

PULP SALES VOLUME AND REVENUE

3

PULP CASH COST

4

PULP SEGMENT EBITDA

5

OPERATING CASH FLOW FROM THE PULP SEGMENT

6

PAPER BUSINESS PERFORMANCE

7

PAPER SALES VOLUME AND REVENUE

7

OPERATING CASH FLOW FROM THE PAPER SEGMENT

8

ECONOMIC AND FINANCIAL PERFORMANCE

9

NET REVENUE

9

PRODUCTION

9

COST OF GOODS SOLD

10

OPERATING EXPENSES

11

ADJUSTED EBITDA

13

FINANCIAL INCOME (EXPENSES)

14

DERIVATIVES OPERATIONS

15

DEBT

16

CAPITAL INVESTMENTS

18

OPERATIONAL CASH GENERATION

19

IFRS 16

19

DIVIDENDS

19

SYNERGIES

20

CAPITAL MARKETS

21

FIXED INCOME

22

RATING

22

EVENTS SUBSEQUENT TO THE REPORTING PERIOD

23

UPCOMING EVENTS

24

IR CONTACTS

24

APPENDICES(2)

25

APPENDIX 1 — Operating Data

25

APPENDIX 2 — Consolidated Statement of Income

27

APPENDIX 3 — Consolidated Balance Sheet

28

APPENDIX 4 — Consolidated Statement of Cash Flow

29

APPENDIX 5 — EBITDA

30

APPENDIX 6 — Segmented Income Statement

31

Forward-Looking Statements

32

 

2


 

PULP BUSINESS PERFORMANCE

 

PULP SALES VOLUME AND REVENUE

 

The beginning of 2019 was marked by a challenging market scenario. Pulp demand in the first quarter, which is traditionally weaker, was further affected by uncertainties related to macroeconomic factors and the weak performance of the graphic paper segments, especially in the Asian and European markets. However, the market conditions showed an improvement in the demand at the end of the quarter, especially in Asia.

 

Suzano sold 1,729 thousand tons of market pulp in 1Q19 (including Klabin volumes), 17% less than in 4Q18 and 30% in comparison to 1Q18, due to its commercial strategy.

 

 

Average net price in U.S. dollar of Suzano was US$705/ton in 1Q19, down US$32/ton (-4%) and US$13/ton (-2%) compared to 4Q18 and 1Q18, respectively. Average net price in dollar in the export market was US$711/ton (-4% vs. 4Q18 and -2% vs. 1Q18).

 

Average net price in Brazilian real in 1Q19 was R$2,660/ton, 5% lower than in 4Q18, impacted by pulp price reduction in USD and the 1% appreciation of the BRL against the USD in the same period. Compared to 1Q18, average net price in reais increased 14%, due to the depreciation of the average BRL against the USD of 16%, partially offset by the decrease of 2% of the net pulp price in USD.

 

 

3


 

PULP CASH COST

 

Consolidated cash cost of market pulp production in 1Q19 was R$667/ton excluding downtimes and R$733/ton including downtimes.

 

 

Cash cost ex-downtime in 1Q19 increased R$55/ton in relation to 1Q18 (+9%), mainly due to: i) the higher fixed cost caused by lower production volume; ii) the higher wood cost due to supply mix and higher average radius; and iii) the higher prices of inputs, especially natural gas. These effects were partially offset by better results from energy sales which, in turn, were caused by the increase in prices and sales volumes.

 

 

4


 

Cash cost ex-downtime in 1Q19 increased R$16/ton vs. 4Q18 (+2%), mainly due to the higher fixed cost on account of the lower production volume in the period, and the higher wood cost (supply mix). These effects were partially offset by better results from energy sales, which too were due to higher prices and sales volumes.

 

 

Consolidated cash cost of market pulp production in the last 12 months was R$ 634/ton excluding downtime (vs. R$ 595/ton in LTM 1Q18) and R$ 664/ton including downtime (vs. R$ 619/ton in LTM 1Q18).

 

 

PULP SEGMENT EBITDA

 

Pulp Segment

 

1Q19

 

1Q18

 

D Y-o-Y

 

4Q18

 

D Q-o-Q

 

Adjusted EBITDA (R$ million)

 

2,471

 

3,109

 

-21

%

3,120

 

-21

%

Sales volume (th. ton) — ex-Klabin

 

1,669

 

2,307

 

-28

%

1,924

 

-13

%

Pulp Adjusted EBITDA ex-Klabin (R$/ton)

 

1,480

 

1,348

 

10

%

1,621

 

-9

%

 

Adjusted EBITDA from the pulp segment in relation to 1Q18 mainly reflects the lower sales volume, higher cash COGS and higher average net pulp price in BRL.

 

5


 

 

 

OPERATING CASH FLOW FROM THE PULP SEGMENT

 

Pulp Segment (R$ million)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Adjusted EBITDA

 

2,471

 

3,109

 

-21

%

3,120

 

-21

%

Maintenance Capex

 

(894

)

(719

)

24

%

(1,029

)

-13

%

Operating Cash Flow

 

1,577

 

2,390

 

-34

%

2,091

 

-25

%

 

 


(1) Excludes sales volumes from Klabin.

 

Pulp operating cash flow was 9% lower than 1Q18, due to the adjusted EBITDA reduction and maintenance capex increase. Quarter-on-quarter, the decrease is explained also by the Adjusted EBITDA decrease, partially offset by lower maintenance capex.

 

6


 

PAPER BUSINESS PERFORMANCE

 

PAPER SALES VOLUME AND REVENUE

 

According to the Forestry Industry Association (Ibá), domestic sales of printing & writing paper and paperboard contracted 4% between 1Q19 and the same period the previous year, while imports decreased 13%.

 

Suzano’s paper sales totaled 274 thousand tons in 1Q19, down 3% from 1Q18, reflecting the market performance. The 22% decrease in sales volume compared to 4Q18 is explained by the seasonal nature of the domestic market in these product lines.

 

 

Average net price sold in the domestic market stood at R$4,098/ton in 1Q19, representing increases of R$119/ton (3%) and R$757/ton (23%) compared to 4Q18 and 1Q18, respectively, which is in line with the upward trend in prices in the domestic market.

 

In USD, the average net paper price in the export market in 1Q19 was US$995/ton, increasing US$5/ton (1%) from 4Q18 and US$50/ton (5%) from 1Q18. In BRL, the price of paper exported in 1Q19 was R$3,752/ton, decreasing R$18/ton (-1%) from 4Q18 and increasing R$687/ton (22%) from 1Q18, mainly due to exchange rate variation in the period.

 

 

7


 

EBITDA FROM THE PAPER SEGMENT

 

Paper Segment

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Adjusted EBITDA (R$ million)

 

290

 

243

 

19

%

431

 

-33

%

Sales volume (ton)

 

274

 

284

 

-3

%

350

 

-22

%

Paper Adjusted EBITDA (R$/ton)

 

1,058

 

855

 

24

%

1,229

 

-14

%

 

The performance of Adjusted EBITDA from paper in 1Q19 compared to 1Q18 is explained by price increases, especially in the domestic market, depreciation of the BRL against the USD and reduction in administrative expenses. Compared to 4Q18, the decrease was caused by lower sales volume, mainly due to the seasonality period, higher expenses as a result of the general maintenance downtimes (lower dilution of fixed costs) and higher expenses with inputs.

 

 

OPERATING CASH FLOW FROM THE PAPER SEGMENT

 

Paper Segment
(R$ million)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Adjusted EBITDA

 

290

 

243

 

19

%

431

 

-33

%

Maintenance Capex

 

(87

)

(50

)

74

%

(56

)

55

%

Operating Cash Flow

 

203

 

193

 

5

%

375

 

-46

%

 

 

8


 

ECONOMIC AND FINANCIAL PERFORMANCE

 

NET REVENUE

 

Suzano’s net revenue in 1Q19 amounted to R$5,699 million. Pulp and paper sales in the quarter totaled 2,003 thousand tons, decreasing by 18% from 4Q18 and by 27% from 1Q18.

 

 


(1) Does not include port services revenue from Portocel.

 

The performance of consolidated net revenue in 1Q19 compared to 4Q18 is largely explained by lower pulp sales volume (-17%) and, to the decline in the average net price of pulp in U.S. dollars (-4%) and the 1% appreciation of the BRL against the USD.

 

Compared to 1Q18, the decline in net revenue is mainly due to the 30% drop in pulp sales volume, which was partially offset by the increase on the net pulp price in BRL (+17%), due to the the depreciation of the average BRL against the USD (16%) and by the increase in paper revenue (+19%), as a result of higher prices.

 

PRODUCTION

 

Production (th. ton)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Market Pulp

 

2,173

 

2,508

 

-13

%

2,581

 

-16

%

Paper

 

292

 

294

 

-1

%

337

 

-13

%

Total

 

2,465

 

2,802

 

-12

%

2,918

 

-16

%

 

In the 1st quarter of 2019, we carried out scheduled downtimes at the B and C lines of the Aracruz Unit, line 2 of the Mucuri Unit, as well as at the Limeira, Suzano and Veracel Units. In addition, production volumes were impacted by the Company’s decision in performing its inventory management (currently above normal levels), ensuring demand was met in the period. According to Material Fact released on May 9, 2019, the Company plans to produce a total market pulp production of 9.0 to 9.4 million tons by 2019. This production adequacy aims the inventory management during the year, having fully assured the availability of pulp to meet the demand of our customers.

 

9


 

See below the maintenance downtimes schedule at Suzano from 2018 through 2020:

 

 


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

(2) Includes integrated capacities.

 

COST OF GOODS SOLD

 

COGS — Income Statement (R$ million)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Pulp

 

3,980

 

3,168

 

26

%

3,020

 

32

%

Paper

 

745

 

623

 

20

%

825

 

-10

%

Consolidated

 

4,725

 

3,791

 

25

%

3,845

 

23

%

 

COGS — Income Statement (R$/ton)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Pulp

 

2,302

 

1,284

 

79

%

1,449

 

59

%

Paper

 

2,716

 

2,192

 

24

%

2,354

 

15

%

Consolidated

 

2,359

 

1,378

 

71

%

1,579

 

49

%

 

As a result of the assets combination with Fibria, Suzano assessed the fair market value of the assets acquired and liabilities assumed from Fibria and made the corresponding allocations in the balance sheet (Purchase Price Allocation — PPA — please see note 1.1 of the quarter Financial Statements). For an operational analysis purposes in 1Q19, the following information excludes the effects of the allocation of surplus value on COGS in the period, whose impact was an additional expense of R$1,360 million in COGS.

 

COGS — ex-PPA (R$ million)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Pulp

 

2,620

 

3,168

 

-143

%

3,020

 

-145

%

Paper

 

745

 

623

 

20

%

825

 

-10

%

Consolidated

 

3,365

 

3,791

 

-116

%

3,845

 

-116

%

 

COGS — ex-PPA (R$/ton)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Pulp

 

1,515

 

1,284

 

18

%

1,449

 

5

%

Paper

 

2,716

 

2,192

 

24

%

2,354

 

15

%

Consolidated

 

1,680

 

1,378

 

22

%

1,579

 

6

%

 

Excluding the above effect from PPA, COGS in 1Q19 came to R$3,365 million, or R$1,680/ton. Compared to 1Q18, COGS decreased 11%, due to lower pulp sales volume, which was partially offset by higher cash COGS, mainly due to a higher concentration of general maintenance downtimes in 1Q19, reduced benefits

 

10


 

from the Reintegra program, higher cash cost ex-downtimes and the higher sales volumes from Consumer Goods business. Note the effect on COGS of R$81 million in this quarter of alignment of the accounting allocation criteria, after the combination of assets with Fibria, which refers mainly to the reclassification to COGS of a portion of logistics expenses, up to 2018 recorded under selling expenses in Fibria.

 

 

Compared to 4Q18, the 12% decrease was due to lower pulp and paper sales volume, partially offset by higher cash COGS which, in turn, was impacted by higher cost with scheduled maintenance downtimes and higher cash production cost ex-downtimes. The aforementioned effect of accounting allocation criteria mainly on logistics expenses from “selling expenses” to “logistic costs” in COGS represents an impact of R$48 million in 1Q19. vs. 4Q18.

 

 

OPERATING EXPENSES

 

Operating Expenses — Income Statement
(R$ million)

 

1Q19

 

1Q18

 

D Y-o-Y

 

4Q18

 

D Q-o-Q

 

Selling Expenses

 

441

 

307

 

44

%

340

 

30

%

General and Administrative Expenses

 

331

 

221

 

49

%

400

 

-17

%

Total Expenses

 

772

 

528

 

46

%

740

 

4

%

Total Expenses/Sales Volume (R$/ton)

 

385

 

192

 

101

%

304

 

27

%

 

11


 

Operating Expenses — ex-PPA (R$ million)

 

1Q19

 

1Q18

 

D Y-o-Y

 

4Q18

 

D Q-o-Q

 

Selling Expenses

 

236

 

307

 

-23

%

340

 

-31

%

General and Administrative Expenses

 

330

 

221

 

49

%

400

 

-17

%

Total Expenses

 

566

 

528

 

7

%

740

 

-24

%

Total Expenses/Sales Volume (R$/ton)

 

282

 

192

 

47

%

304

 

-7

%

 

Excluding the effects of PPA of R$205 million from the result in 1Q19, selling expenses decreased 23% from 1Q18 due to the effect of the alignment of accounting allocation criteria with the Fibria shares merger (mainly selling expenses now booked under COGS in 1Q19). Moreover, there was a decrease due to lower sales volume, which was offset by the appreciation in the average USD / BRL rate (+16%), lower fixed cost dilution and the structuring of the Consumer Goods business.

 

 

Compared to 4Q18, the 31% decrease is also explained by the alignment of the accounting allocation criteria of R$45 million. The remaining variation is mainly due to lower sales volume.

 

 

Excluding the same PPA effect from general and administrative expenses (R$1 million), the 49% increase in this line compared to 1Q18 is due to the R$48 million accounting allocation (related to a part of variable compensation and contingencies, previously allocated as “other operational expenses/revenues”), in addition to expenses arising from the transaction with Fibria, the end of tax exemptions on payroll and the bigger Consumer Goods structure, especially after the Facepa merger.

 

12


 

 

Compared to 4Q18, apart from the accounting allocation effect of R$163 million, the decrease is due to lower expenses with variable compensation and expenses related to the transaction with Fibria.

 

 

ADJUSTED EBITDA

 

Consolidated

 

1Q19

 

1Q18

 

D Y-o-Y

 

4Q18

 

D Q-o-Q

 

Adjusted EBITDA (R$ million)

 

2,761

 

3,352

 

-18

%

3,550

 

-22

%

EBITDA Margin ex-Klabin (%)

 

50

%

53

%

-3 p.p.

 

52

%

-2 p.p.

 

Sales Volume ex-Klabin (th. ton)

 

1,944

 

2,591

 

-25

%

2,275

 

-15

%

Adjusted EBITDA ex-Klabin (R$/ton)

 

1,421

 

1,294

 

10

%

1,561

 

-9

%

 

Adjusted EBITDA in 1Q19 was R$2,761 million, and the decrease in relation to 1Q18 was mainly explained by the lower pulp and paper sales volume (-27%), and the higher cash COGS, as explained earlier. These factors were partially offset by the apreciation of the USD against the BRL (-16%).

 

Compared to 4Q18, Adjusted EBITDA was mainly affected by the lower sales volume of pulp and paper, higher cash COGS, the lower net pulp price in U.S. dollars (-4%) and lower average FX.

 

13


 

FINANCIAL INCOME (EXPENSES)

 

Financial Result (R$ million)

 

1Q19

 

1Q18

 

D Y-o-Y

 

4Q18

 

D Q-o-Q

 

Financial Expenses

 

(993

)

(551

)

80

%

(860

)

15

%

Interest on loans and financing (local currency)

 

(421

)

(245

)

72

%

(374

)

13

%

Interest on loans and financing (foreign currency)

 

(448

)

(212

)

112

%

(380

)

18

%

Capitalized interest (1)

 

1

 

3

 

-83

%

0

 

22

%

Other financial expenses

 

(125

)

(98

)

27

%

(107

)

17

%

Financial Income

 

149

 

105

 

42

%

359

 

-58

%

Interest on financial investments

 

140

 

87

 

61

%

341

 

-59

%

Other financial income

 

9

 

18

 

-49

%

19

 

-50

%

Monetary and Exchange Variations

 

(456

)

(107

)

326

%

635

 

-172

%

Foreign exchange variations (Debt)

 

(306

)

(96

)

217

%

850

 

-136

%

Other foreign exchange variations

 

(150

)

(11

)

1316

%

(216

)

-30

%

Derivative income (loss), net (2)

 

(637

)

126

 

-607

%

1,545

 

-141

%

Cash flow hedge

 

(75

)

38

 

 

1,290

 

 

Debt hedge

 

(563

)

89

 

 

316

 

 

Others(3)

 

2

 

(1

)

 

(61

)

 

Net Financial Result

 

(1,936

)

(427

)

353

%

1,679

 

-215

%

 


(1) Capitalization of interest related to works in progress.

(2) Mark-to-market variation plus adjustments paid and received, considering the closing exchange rate of the month (R$/US$3.8967 on 3/31/2019).

(3) Considers commodities hedge and embedded derivatives.

 

Financial expenses increased 15% in 1Q19 compared to 4Q18 and were impacted by funding operations in late 2018 and the first quarter of 2019, due to the asset combination with Fibria. Compared to 1Q18, the 80% increase in financial expenses reflects the loans taken out for the business combination with Fibria and higher average FX (1Q19: 3.77 | 1Q18: 3.24).

 

Compared to 4Q18, financial income in 1Q19 was negatively impacted by the cash positions decrease due to payments related to the business combination with Fibria.

 

Exchange variation and inflation adjustment had a negative impact of R$456 million on the Company’s financial result in the quarter, due to the 0.6% depreciation of the BRL against the closing USD on the foreign currency portion of the debt and due to fresh borrowings in 1Q19 at a more appreciated FX, whose negative accounting effect on total foreign currency debt has cash effects only at the respective maturities.

 

The derivatives operations result was impacted by the high volatility in the financial market during the quarter, which caused a large variation in the MtM (mark to market) of derivative operations. This variation in MtM can be explained mainly by: 1) the contracting of new operations during the quarter and 2) the variation of the Pre curve in the CDI x USD swaps, the Libor variation in the Libor x USD swaps and the depreciation of the exchange rate on the existing contracts. The mark-to-market of derivative financial instruments at March 31, 2019 was negative by R$1,540 million, against the negative MtM of R$879 million as of December 31, 2018, resulting in a negative variation of R$662 million.

 

The Company posted a net financial expense of R$ 1,936 million in 1Q19, compared to net financial income of R$ 1,679 million in 4Q18 and a net financial expense of R$ 427 million in 1Q18.

 

14


 

DERIVATIVES OPERATIONS

 

Suzano carries out derivatives operations exclusively for hedging purposes.

 

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

 

ZCC operations establish minimum and maximum limits for the exchange rate that minimize adverse effects in the event of a strong appreciation of the BRL. If the exchange rate is within such limits, the Company neither pays nor receives any financial adjustments. For extreme scenarios of BRL appreciation, the Company is protected. At the same time, this characteristic allows for capturing greater benefits from export revenue in a potential scenario of USD appreciation within the range contracted. The current scenario of volatility in the BRL/USD exchange rate made this the best strategy to hedge the cash flow of the Company, which is constantly monitoring the market and analyzing the attractiveness at any given moment for full or partial reversal of the operation.

 

On March 31, 2019, the amount outstanding of the operations (notional) involving forward dollar sales through ZCCs was US$6,295 million, whose maturities are distributed from April 2019 to September 2020 and were contracted in a range from R$3.58 to R$4.28, as well as NDFs whose reference (notional) was US$150 million, with an average forward rate of R$4.04. The mark-to-market (fair value) of ZCC and NDF operations was negative at R$233 million and positive at R$16 million, respectively, at the end of the quarter.

 

Cash Flow Hedge

 

Maturity

 

Strike Range / Average Forward

 

Notional
(US$ million)

 

Zero-Cost Collars

 

2Q19

 

3.58 - 4.11

 

1,170

 

Zero-Cost Collars

 

3Q19

 

3.72 - 4.09

 

1,635

 

Zero-Cost Collars

 

4Q19

 

3.73 - 4.14

 

1,170

 

Zero-Cost Collars

 

1Q20

 

3.87 - 4.28

 

940

 

Zero-Cost Collars

 

2Q20

 

3.86 - 4.19

 

695

 

Zero-Cost Collars

 

3Q20

 

3.93 - 4.09

 

685

 

NDF

 

3Q19

 

4.04

 

150

 

Total

 

 

 

 

 

6,445

 

 

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

 

On March 31, 2019, the Company held US$3,209 million in swaps of CDI x USD, US$2,757 million in swaps of Libor for a fixed rate in USD, US$210 million in Pre x USD and R$844 million in swaps from IPCA to CDI. In 1Q19, the derivative operations resulted in a loss of R$563 million. The mark-to-market (fair value) of these operations was negative by R$1,570 million at the end of the quarter.

 

Debt Hedge

 

Maturity

 

Currency

 

Notional
(million)

 

Swap (PRÉ x USD)

 

2019

 

USD

 

10

 

Swap (CDI x USD)

 

2020

 

USD

 

1,559

 

Swap (IPCA x CDI)

 

2023

 

BRL

 

844

 

Swap (LIBOR x USD)

 

2023

 

USD

 

757

 

Swap (LIBOR x USD)

 

2024

 

USD

 

2,000

 

Swap (PRÉ x USD)

 

2024

 

USD

 

200

 

Swap (CDI x USD)

 

2026

 

USD

 

1,650

 

 

Forestry partnership agreements and timber supply agreements signed on December 30, 2013 by Fibria Celulose S.A. are denominated in USD per cubic meter of standing timber, adjusted by U.S. inflation

 

15


 

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, presented in the table below, consists of a swap contract with the short leg consisting of the variations in the U.S. CPI during the period of the agreements mentioned below. See note 4 of the 1Q19 Financial Statements for more details and for a sensitivity analysis of the fair value in case of a substantial variation in the U.S. CPI. On March 31, 2019, the outstanding amount (notional) of the operation was US$713 million. The mark-to-market (fair value) of these operations was positive at R$241 million at the end of the quarter

 

Embedded Derivative

 

Maturity

 

Index

 

Notional
(US$ million)

 

Embedded Derivative

 

2035

 

Fixed USD - USD US-CPI

 

713

 

Total

 

 

 

 

 

713

 

 

 

 


* Debt in BRL converted to USD considering closing FX of the month (R$/US$ 3.8967 on March 31, 2019).

 

DEBT

 

Debt (R$ million)

 

03/31/2019

 

03/31/2018

 

Δ Y-o-Y

 

12/31/2018

 

Δ Q-o-Q

 

Local Currency

 

19,605

 

11,619

 

69

%

17,859

 

10

%

Short Term

 

3,740

 

1,188

 

215

%

2,455

 

52

%

Long Term

 

15,865

 

10,430

 

52

%

15,404

 

3

%

Foreign Currency

 

41,160

 

19,949

 

106

%

38,546

 

7

%

Short Term

 

3,694

 

1,362

 

171

%

4,048

 

-9

%

Long Term

 

37,466

 

18,587

 

102

%

34,498

 

9

%

Gross Debt

 

60,765

 

31,568

 

92

%

56,405

 

8

%

(-) Cash

 

6,959

 

9,802

 

-29

%

32,436

 

-79

%

Net Debt

 

53,806

 

21,766

 

147

%

23,969

 

124

%

Net Debt/Adjusted EBITDA(1) (x) — R$

 

3.4x

 

1.9x

 

1,5x

 

1.5x

 

1,9x

 

Net Debt/Adjusted EBITDA(1) (x) — US$

 

3.3x

 

1.9x

 

1,5x

 

1.4x

 

1,9x

 

 


(1) Excludes nonrecurring items.

 

Gross debt on March 31, 2019 amounted to R$61 billion, composed of 88% long-term maturities and 12% short-term maturities, with 68% denominated in foreign currency and 32% in local currency. The percentage of gross debt denominated in foreign currency, considering the effect of debt hedge from BRL to USD, was 89%. The 8% increase in gross debt vs. 4Q18 reflects the fresh borrowings in the quarter for the business combination with Fibria and the settlements in the normal course of debt amortization, as well as liability management processes.

 

16


 

Suzano contracts debt in foreign currency as a natural hedge, since net operating cash generation is denominated in foreign currency. This structural exposure allows it to contract export financing in USD to match financing payments with receivables from sales.

 

The balance of cash and cash equivalents on March 31, 2019 was R$6,959 million, of which 61% were invested in local currency, government bonds and fixed-income instruments, while the remainder was invested in short term investments abroad.

 

The Company has 2 untapped revolving credit facility in the amount of R$2,948 million which is available through 2024. These funds, although untapped, help improve the company’s liquidity conditions. As a result, the current cash position of R$6,959 million plus this line of R$2,948 million amounts to a readily available cash position of R$9,907 million. Accordingly, the ratio of cash (including the stand by credit facility) to short-term debt stood at 1.3x at March 31, 2019.

 

On March 31, 2019, net debt stood at R$54 billion (US$14 billion), compared to R$24 billion (US$6 billion) on December 31, 2018. The variation is mainly due to the payment of approximately R$28 billion to settle the transaction with Fibria.

 

 


* Transaction costs (issuance, borrowings, etc.) and impacts of the fair value resulting from Fibria transaction.

 

 

17


 

 

The leverage ratio measured by net debt to Adjusted EBITDA in BRL stood at 3.4 times on March 31, 2019, compared to 3.2 times on December 31, 2018 (as per the pro forma result presented in the 4Q18 earnings release). In USD, the ratio of net debt to Adjusted EBITDA was 3.3 times on March 31, 2019 vs 1.5 times at the end of 2018.

 

On March 31, 2019, the average cost of debt in BRL was 4.7% p.a. (considering the debt in BRL adjusted by the market swap curve). The average term of consolidated debt ended the period at 75 months (vs. 77 months in December 2018).

 

 


(1) Considers the share of the debt with swap to foreign currency. The original debt was 68% in USD and 32% in BRL.

 

CAPITAL INVESTMENTS

 

In 1Q19, capital investments totaled R$1,428 million, of which R$980 million was invested in forest and industrial maintenance. Investments in Land and Forests totaled R$278 million, and were aimed at capturing gains from current operations, as well as creating alternatives for business growth.

 

In 2019, Capex is estimated at R$6.4 billion, of which R$4.0 billion in Maintenance Capex and R$1.4 billion related to acquisitions of land and forests.

 

Capex (R$ million)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Sustaining

 

980

 

769

 

27

%

1,085

 

-10

%

Industrial Maintenance

 

167

 

112

 

50

%

226

 

-26

%

Forestry Maintenance

 

786

 

643

 

22

%

841

 

-6

%

Other

 

27

 

14

 

86

%

18

 

46

%

Expansion and Modernization

 

79

 

1,376

 

-94

%

180

 

-56

%

Land and Forestry

 

278

 

 

 

301

 

-8

%

Port Terminals

 

91

 

 

 

139

 

-35

%

Total

 

1,428

 

2,145

 

-33

%

1,705

 

-16

%

 

18


 

OPERATING CASH FLOW GENERATION

 

(R$ million)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Adjusted EBITDA

 

2,761

 

3,352

 

-18

%

3.550

 

-22

%

Sustaining Capex

 

(980

)

(769

)

27

%

(1,085

)

-10

%

Operating Cash Flow

 

1,781

 

2,583

 

-31

%

2,465

 

-28

%

Operating Cash Flow (R$/ton)

 

889

 

939

 

-5

%

1,013

 

-12

%

 

Operating cash flow generation, measured by Adjusted EBITDA less sustaining capex, was R$1,781 million in 1Q19. The decrease in relation to 1Q18 reflected the lower sales volume, higher cash COGS and higher maintenance Capex, which was partially offset by the appreciation of the average USD against the BRL in the period. In relation to 4Q18, the 28% decrease mainly reflects the lower sales volume, higher cash COGS and lower pulp prices.

 

 

IFRS 16

 

The Company adopted accounting standard CPC 06(R2) / IFRS 16 as of January 1, 2019. As a result, it recognized on January 1, 2019 the amounts corresponding to the right-of-use of current contracts, in amounts equivalent to the present value of obligations assumed with its counterparties. These balances will be amortized over the terms of the leases. Upon adoption of the standard, the Company recognized R$4,016 million lease liabilities for contracts that meet the definition of lease. Such liabilities were recorded in the “Trade Accounts Payable — Lease” (current and non current), not being characterized as debt. Most of the impact referes to land lease (R$2,072 million), followed by leasing of ships (R$1,656 million). For further details, please refer to note 18.2 of the 1Q19 financial statements.

 

DIVIDENDS

 

The Bylaws of Suzano establish that, for the purposes of minimum mandatory dividend, the lowest of the following amounts should be considered: i) 25% of net income from the year, less Legal Reserve and Tax Incentives;  or ii) 10% of Operating Cash Generation in the fiscal year.

 

The Annual Shareholders Meeting held on April 18, 2019 approved the payment of dividends totaling R$600 million, corresponding to R$ 0.44470086 per common share of the Company, of which R$ 3.5 million as mandatory minimum dividends and R$ 596.5 million attributable to the existing profit reserves. The dividend base date was April 18, 2019 (ex-dividend date - April 19, 2019) and the payment was made by the Company on April 30, 2019.

 

19


 

SYNERGIES

 

On March 26, 2019, the Company announced its projected synergy gains from the business combination with Fibria Celulose S.A. Suzano expects to capture gradually from 2019 to 2021, operating synergies estimated at between R$800 million and R$900 million per year (before taxes) on a recurring basis after 2021, through a reduction in costs, expenses and capital expenditure in the procurement, forest, industrial, logistics, sales, administrative and personnel areas, and expects to capture tax synergies that will result in tax deductible of around R$2.0 billion a year, from the merger of Fibria with Suzano.

 

The estimated amount of operating synergies mentioned above does not include the costs of implementing the initiatives linked to these synergies, which are estimated by the Company at approximately R$200 million by 2021, 50% of which is planned for 2019. Synergies have been captured as planned.

 

20


 

CAPITAL MARKETS

 

On March 31, 2019, SUZB3 stock was quoted at R$46.55/share and SUZ stock was quoted at US$24.13. The Company’s stock is listed on the Novo Mercado, the trading segment of the São Paulo Exchange (B3) with the highest corporate governance standards, and also is traded on the New York Stock Exchange (NYSE) - Level II.

 

 

Source: Bloomberg.

 

 

Source: Bloomberg.

 

On March 31, 2019, the capital stock of the Company was represented by 1,361,263,584 common shares, of which 12,042,004 were treasury shares. Suzano’s market capitalization stood at R$63.4 billion on March 31, 2019. In 1Q19, free float corresponded to 53.3% of the total capital.

 

21


 

 

FIXED INCOME

 

 

 

Unit

 

Mar/18

 

Dec/18

 

Mar/19

 

Suzano 2021 — Price

 

USD/k

 

105.3

 

103.8

 

104.6

 

Suzano 2021 - Yield

 

%

 

3.9

 

3.9

 

3.3

 

Fibria 2024 — Price

 

USD/k

 

103.4

 

102.0

 

105.2

 

Fibria 2024 — Yield

 

%

 

4.6

 

4.8

 

4.1

 

Fibria 2025 — Price

 

USD/k

 

96.8

 

94.7

 

98.7

 

Fibria 2025 — Yield

 

%

 

4.6

 

5.0

 

4.2

 

Suzano 2026 — Price

 

%

 

104.9

 

102.5

 

106.6

 

Suzano 2026 - Yield

 

USD/k

 

5.0

 

5.3

 

4.7

 

Fibria 2027 - Price

 

%

 

103.9

 

101.1

 

105.0

 

Fibria 2027 — Yield

 

USD/k

 

5.0

 

5.3

 

4.7

 

Suzano 2029 — Price

 

USD/k

 

 

102.5

 

106.5

 

Suzano 2029 - Yield

 

%

 

 

5.7

 

5.1

 

Suzano 2047 — Price

 

USD/k

 

113.3

 

103.0

 

111.6

 

Suzano 2047 - Yield

 

%

 

6.0

 

6.8

 

6.1

 

Treasury 10 years

 

%

 

2.7

 

2.7

 

2.4

 

 

RATING

 

Agency

 

National Scale

 

Global Scale

 

Outlook

 

Fitch Ratings

 

AAA

 

BBB-

 

Stable

 

Standard & Poor’s

 

brAAA

 

BBB-

 

Stable

 

Moody’s

 

Aaa.br

 

Ba1

 

Stable

 

 

22


 

EVENTS SUBSEQUENT TO THE REPORTING PERIOD

 

On April 1, 2019, the Company announced to the market the approval of the merger of Fibria Celulose S.A., a wholly-owned subsidiary of the Company, with the transfer of all its shareholders’ equity into the Company and its consequent dissolution. Consequent to the merger, the Company will succeed Fibria in all its rights and obligations. For further details, please refer to note 28 of the Financial Statements.

 

On April 29 and April 30, 2019 Suzano S.A, performed the integral optional amortization of the totality of the ECA (Export Credit Agencies), through the payment of the principal total amount of US$208 million (equivalent to R$822 million).

 

23


 

UPCOMING EVENTS

 

Earnings Conference Call (1Q19)

 

Date: May 10, 2019 (Friday)

 

Portuguese (simultaneous translation)

English

2:00 p.m. (Brasília)

2 p.m. (Brasília)

1:00 p.m. (New York)

1 p.m. (New York)

6:00 p.m. (London)

6 p.m. (London)

Tel: +55 (11) 3193-1001 or (11) 2820-4001

Tel: +1 (646) 828-8246 (access code: Suzano)

 

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

 

The conference call will be held in English, feature a slide presentation and be transmitted simultaneously via 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

Danielle Cheade

Fernanda Brienza

Roberto Costa

Raimundo Guimarães

 

Tel.: +55 (11) 3503-9330

ri@suzano.com.br

www.suzano.com.br/ir

 

24


 

APPENDICES(2)

 

APPENDIX 1 — Operating Data

 

Revenue breakdown (R$ ‘000)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Exports

 

4,385,794

 

5,512,485

 

-20

%

5,606,756

 

-22

%

Pulp

 

4,096,451

 

5,220,214

 

-22

%

5,218,305

 

-21

%

Paper

 

289,343

 

292,271

 

-1

%

388,451

 

-26

%

Domestic Market

 

1,313,206

 

1,154,407

 

14

%

1,612,460

 

-19

%

Pulp

 

505,535

 

524,145

 

-4

%

634,383

 

-20

%

Paper

 

807,672

 

630,262

 

28

%

978,077

 

-17

%

Total Net Revenue

 

5,699,000

 

6,666,892

 

-15

%

7,219,216

 

-21

%

Pulp

 

4,601,986

 

5,744,359

 

-20

%

5,852,688

 

-21

%

Paper

 

1,097,014

 

922,533

 

19

%

1,366,528

 

-20

%

 

Sales volume (tons)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Exports

 

1,604,730

 

2,307,305

 

-30

%

1,946,532

 

-18

%

Pulp

 

1,527,621

 

2,211,951

 

-31

%

1,843,511

 

-17

%

Paper

 

77,109

 

95,353

 

-19

%

103,021

 

-25

%

Paperboard

 

10,940

 

14,332

 

-24

%

17,380

 

-37

%

Printing & Writing

 

66,169

 

81,021

 

-18

%

85,641

 

-23

%

Domestic Market

 

398,574

 

443,676

 

-10

%

486,985

 

-18

%

Pulp

 

201,462

 

254,988

 

-21

%

241,127

 

-16

%

Paper

 

197,112

 

188,688

 

4

%

245,858

 

-20

%

Paperboard

 

30,174

 

30,021

 

1

%

34,129

 

-12

%

Printing & Writing

 

145,321

 

148,364

 

-2

%

188,857

 

-23

%

Other paper(1)

 

21,617

 

10,303

 

110

%

22,872

 

-5

%

Total sales volume

 

2,003,304

 

2,750,981

 

-27

%

2,434,899

 

-18

%

Pulp

 

1,729,082

 

2,466,939

 

-30

%

2,084,638

 

-17

%

Paper

 

274,222

 

284,041

 

-3

%

350,261

 

-22

%

Paperboard

 

41,114

 

44,353

 

-7

%

51,509

 

-20

%

Printing & Writing

 

211,177

 

229,385

 

-8

%

274,498

 

-23

%

Other paper(1)

 

21,931

 

10,303

 

113

%

24,254

 

-10

%

 

Average net price (R$/ton)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Exports

 

2,733

 

2,389

 

14

%

2,880

 

-5

%

Pulp

 

2,682

 

2,360

 

14

%

2,831

 

-5

%

Paper

 

3,752

 

3,065

 

22

%

3,771

 

0

%

Domestic Market

 

3,295

 

2,602

 

27

%

3,311

 

0

%

Pulp

 

2,509

 

2,056

 

22

%

2,631

 

-5

%

Paper

 

4,098

 

3,340

 

23

%

3,978

 

3

%

Total

 

2,845

 

2,423

 

17

%

2,965

 

-4

%

Pulp

 

2,662

 

2,329

 

14

%

2,808

 

-5

%

Paper

 

4,000

 

3,248

 

23

%

3,901

 

3

%

 

25


 

Average net price (US$/ton)

 

1Q19

 

1Q18

 

Δ Y-o-Y

 

4Q18

 

Δ Q-o-Q

 

Exports

 

725

 

737

 

-2

%

756

 

-4

%

Pulp

 

711

 

728

 

-2

%

743

 

-4

%

Paper

 

995

 

945

 

5

%

990

 

1

%

Domestic Market

 

874

 

802

 

9

%

869

 

1

%

Pulp

 

665

 

634

 

5

%

691

 

-4

%

Paper

 

1,087

 

1,030

 

6

%

1,044

 

4

%

Total

 

754

 

747

 

1

%

778

 

-3

%

Pulp

 

706

 

718

 

-2

%

737

 

-4

%

Paper

 

1,061

 

1,001

 

6

%

1,024

 

4

%

 


(1) Papers of other manufacturers sold by Suzano and tissue paper.

(2) Data of comparison quarters (4Q18 and 1Q18) are a simple sum or the weighted average of Suzano + Fibria.

 

26


 

APPENDIX 2 — Consolidated Statement of Income

 

Income Statement
(R$ mil)

 

1Q19

 

1Q18

 

D  Y-o-Y

 

4Q18

 

D  Q-o-Q

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue

 

5,698,999

 

6,692,026

 

-15

%

7,241,895

 

-21

%

Cost of Goods Sold

 

(4,724,893

)

(3,791,072

)

25

%

(3,844,991

)

23

%

Gross Profit

 

974,106

 

2,900,954

 

-66

%

3,396,904

 

-71

%

Gross Margin

 

17.1

%

43.3

%

-26 p.p.

 

46.9

%

-30 p.p.

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expense/Income

 

(789,294

)

(604,304

)

31

%

(1,204,835

)

-34

%

Selling Expenses

 

(441,303

)

(306,800

)

44

%

(340,056

)

30

%

General and Administrative Expenses

 

(330,765

)

(221,321

)

49

%

(399,924

)

-17

%

Other Operating Income (Expenses)

 

(18,884

)

(76,130

)

-75

%

(468,562

)

-96

%

Equity Equivalence

 

1,658

 

(53

)

-3228

%

3,707

 

-55

%

EBIT

 

184,812

 

2,296,650

 

-92

%

2,192,069

 

-92

%

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, Amortization & Depletion

 

2,471,286

 

1,004,938

 

146

%

945,450

 

161

%

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

2,656,098

 

3,301,588

 

-20

%

3,137,519

 

-15

%

EBITDA Margin (%)

 

46.6

%

49.3

%

-3 p.p.

 

43.3

%

3 p.p.

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

2,761,243

 

3,352,282

 

-18

%

3,550,406

 

-22

%

Adjusted EBITDA Margin(1)

 

48.5

%

50.1

%

-2 p.p.

 

49.0

%

-1 p.p.

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Financial Result

 

(1,936,143

)

(427,430

)

353

%

1,679,457

 

-215

%

Financial Expenses

 

149,322

 

105,203

 

42

%

359,252

 

-58

%

Financial Revenues

 

(992,804

)

(551,371

)

80

%

(860,202

)

15

%

Exchange Rate Variation

 

(455,727

)

(106,930

)

326

%

635,064

 

-172

%

Net Proceeds Generated by Derivatives

 

(636,934

)

125,668

 

-607

%

1,545,343

 

-141

%

Earnings Before Taxes

 

(1,751,331

)

1,869,220

 

-194

%

3,871,526

 

-145

%

 

 

 

 

 

 

 

 

 

 

 

 

Income and Social Contribution Taxes

 

522,199

 

(440,978

)

-218

%

(884,259

)

-159

%

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

(1,229,132

)

1,428,472

 

-186

%

2,987,267

 

-141

%

Net Margin

 

-21.6

%

21.3

%

-43 p.p.

 

41.2

%

-63 p.p.

 

 


(1) Excluding non-recurring items.

 

27


 

APPENDIX 3 — Consolidated Balance Sheet

 

Assets (R$ ‘000)

 

31/03/2019

 

31/12/2018

 

31/03/2018

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and Cash Equivalent

 

3,095,885

 

6,181,900

 

4,852,443

 

Financial Applications

 

3,687,230

 

25,625,844

 

4,451,487

 

Accounts Receivable

 

3,507,439

 

3,862,323

 

3,670,005

 

Inventories

 

8,044,651

 

5,861,406

 

3,910,279

 

Recoverable Taxes

 

944,407

 

557,832

 

718,541

 

Prepaid Expenses

 

83,196

 

72,000

 

183,000

 

Other Current Assets

 

957,658

 

765,426

 

443,755

 

Total Current Assets

 

20,320,466

 

42,926,731

 

18,229,510

 

 

 

 

 

 

 

 

 

Non-Current Assets

 

 

 

 

 

 

 

Other Accounts Receivable

 

4,631,925

 

4,595,430

 

4,480,144

 

Biological Assets

 

9,752,742

 

9,515,526

 

8,783,567

 

Investments

 

228,684

 

214,381

 

164,141

 

Property, Plant and Equipment

 

41,998,207

 

32,620,900

 

31,590,991

 

Intangible

 

18,465,253

 

4,879,131

 

4,961,193

 

Right of Use on lease agreements

 

3,910,574

 

 

 

Total Non-Current Assets

 

78,987,385

 

51,825,368

 

49,980,036

 

Total Assets

 

99,307,851

 

94,752,099

 

68,209,546

 

 

Liabilities and Equity (R$ ‘000)

 

31/03/2019

 

31/12/2018

 

31/03/2018

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts Payable

 

4,049,078

 

4,166,503

 

3,065,480

 

Debentures, Loans and Financing

 

7,422,784

 

6,779,732

 

2,682,367

 

Tax Liabilities

 

32,475

 

372,994

 

310,352

 

Salaries and Payroll Taxes

 

303,419

 

635,751

 

267,573

 

Other Payable

 

2,407,381

 

2,402,700

 

1,165,474

 

Total Current Liabilities

 

14,215,137

 

14,357,680

 

7,491,246

 

 

 

 

 

 

 

 

 

Non-Current Liabilities

 

 

 

 

 

 

 

Debentures, Loans and Financing

 

53,341,845

 

49,901,771

 

29,017,178

 

Deferred Taxes

 

803,241

 

1,038,000

 

1,857,000

 

Provision

 

4,112,647

 

 

 

Derivatives Instruments

 

2,108,659

 

1,166,285

 

206,482

 

Other Liabilities

 

4,372,969

 

2,039,519

 

1,896,347

 

Total Non-Current Liabilities

 

64,739,361

 

54,145,575

 

32,977,007

 

 

 

 

 

 

 

 

 

Shareholders’ Equity

 

 

 

 

 

 

 

Share Capital

 

9,269,281

 

15,971,006

 

15,970,506

 

Capital Reserve

 

6,383,671

 

688,190

 

400,402

 

Treasury shares

 

(218,265

)

(218,000

)

(240,550

)

Profit Reserve

 

3,677,153

 

3,604,126

 

6,176,515

 

Equity Valuation Adjustment

 

2,332,964

 

6,115,681

 

4,520,420

 

Retained Earnings/Accumulated Losses

 

13,137

 

(318,000

)

17,000

 

Retained Earnings/Losses of the period

 

(1,226,803

)

318,000

 

813,000

 

Total Equity

 

20,231,138

 

26,161,003

 

27,657,293

 

 

 

 

 

 

 

 

 

Non-controlling shareholders interests

 

122,215

 

87,841

 

84,000

 

Total Liabilities and Equity

 

99,307,851

 

94,752,099

 

68,209,546

 

 

28


 

APPENDIX 4 — Consolidated Statement of Cash Flow

 

Fluxo de Caixa (R$ mil)

 

1Q19

 

1Q18

 

Cash flow from operating activities

 

 

 

 

 

Net income/(loss) for the period

 

(1,229,132

)

1,428,242

 

Depreciation, depletion and amortization (Note 26)

 

863,474

 

1,004,938

 

Depletion of wood resources from forestry partnership programs

 

8,986

 

 

Amortization of fair value — Fibria (Note 26)

 

1,566,648

 

 

Amortization of fair value — Facepa (Note 26)

 

4,218

 

 

Amortization of right of use agreements - IFRS 16

 

27,959

 

 

Appropriation of lease agreements - IFRS 16

 

38,715

 

 

Results from sale and disposals of property, plant and equipment and biological assets, net

 

(11,288

)

8,745

 

Provision for losses and write-off with fixed and biological assets

 

 

8,982

 

Equity in earnings of subsidiaries (Note 13 (a) e (c))

 

(1,658

)

37

 

Exchange and monetary variations, net

 

455,727

 

95,653

 

Interest expenses, net

 

823,958

 

388,574

 

Settlement of interest on financial investments

 

(228,047

)

 

Amortization of the cost of funding

 

31,574

 

 

Derivative (gains) losses, net (Note 23)

 

636,934

 

(125,668

)

Deferred income tax and social contribution expenses (Note 11.1)

 

(651,448

)

(212,550

)

Interest on actuarial liabilities (Note 20.2)

 

13,421

 

8,617

 

Provision/ (Reversal) for judicial liabilities

 

(10,296

)

233

 

Provision for stock-based compensation plan

 

 

19,262

 

Allowance for doubtful accounts, net

 

7,724

 

6,292

 

Reversal / (provision) for rebate program

 

 

(16,617

)

Estimated loss (reversal) in inventories and write-offs

 

(1,739

)

(3,045

)

Provision for loss of ICMS credits, net

 

37,063

 

33,860

 

Other provisions

 

65,227

 

1,160

 

Decrease (increase) in assets

 

 

 

 

 

Related parties

 

331,901

 

(97,239

)

Trade accounts receivable

 

(942,669

)

(468,286

)

Inventories

 

58,745

 

(17,759

)

Recoverable taxes

 

84,564

 

(203,073

)

Increase (decrease) in liabilities

 

 

 

 

 

Trade accounts payables

 

75,087

 

(663,903

)

Taxes payable

 

245,692

 

(92,000

)

Payroll and charges

 

(332,520

)

 

Other liabilities

 

(304,819

)

221,729

 

Cash provided by operations activities

 

 

 

 

 

Payment of interest

 

(783,745

)

(141,488

)

Interest received from financial investments

 

175,057

 

(200,022

)

Payment of other taxes and contributions

 

 

(154,481

)

Payment of income taxes

 

(310,977

)

(20,045

)

Net cash from operating activities

 

744,336

 

810,148

 

 

 

 

 

 

 

Cash flow from investing activities

 

 

 

 

 

Financial investments

 

21,756,512

 

(113,203

)

Cash from the acquisition of subsidiaries

 

 

21,000

 

Derivative transactions settled

 

 

37,562

 

Increase of capital in subsidiaries

 

(11,216

)

 

Advance for acquisition of wood from operations with development

 

(126,866

)

 

Additions to investments

 

(1,547,610

)

(1,136,000

)

Acquisition of subsidiaries

 

(26,002,541

)

(310,000

)

Proceeds from asset divestment

 

33,933

 

16,000

 

Net cash (used in) / provided by investment activities

 

(5,897,788

)

(1,484,641

)

 

 

 

 

 

 

Cash flow from financing activities

 

 

 

 

 

Proceeds from loans (Note 17.1)

 

3,673,049

 

3,033,000

 

New leases contracts

 

50,044

 

 

Issue of Debentures (Note 17.6)

 

3,998,780

 

 

Payment of derivative transactions

 

24,765

 

13,000

 

Payment of loans and financing (Note 17.1)

 

(1,735,541

)

(3,206,000

)

Payment of leases

 

(118,237

)

 

Payment of dividends

 

(68

)

 

Payment of debentures (Note 17.6)

 

(2,000,000

)

 

Proceeds from own shares

 

 

9,000

 

Others financing

 

(377

)

737

 

Liabilities for assets acquisitions

 

(1,701

)

 

Treasuary shares

 

 

211

 

Net cash (used in) / provided by financing activities

 

3,890,714

 

(150,052

)

Exchange variation on cash and cash equivalents

 

(28,830

)

(3,000

)

Increase (reduction) in cash and cash equivalents

 

(1,291,568

)

(275,000

)

Cash and cash equivalents at the beginning of the period

 

4,387,453

 

5,127,600

 

Cash and cash equivalents at the end of the period

 

3,095,885

 

4,852,400

 

Statement of the increase (reduction) in cash

 

(1,291,568

)

(275,200

)

 

29


 

APPENDIX 5 — EBITDA

 

(R$ ‘000, except where otherwise indicated)

 

1Q19

 

1Q18

 

Net Income

 

(1,229,132

)

1,428,472

 

Net Financial Result

 

1,936,143

 

427,430

 

Income and Social Contribution Taxes

 

(522,199

)

440,978

 

EBIT

 

184,812

 

2,296,880

 

Depreciation, Amortization and Depletion

 

2,471,286

 

1,004,938

 

EBITDA(1)

 

2,656,098

 

3,301,818

 

EBITDA Margin

 

46.6

%

49.3

%

 

 

 

 

 

 

Expenses with Fibria’s transaction

 

69,373

 

1,539

 

Accruals for losses on ICMS credits

 

35,158

 

33,860

 

Sprout cancellation

 

 

7,366

 

Property, Plant and Equipment disposal

 

1,858

 

8,239

 

Reconciliation adjustments

 

 

684

 

Tax credits/Contingencies reversal

 

 

(408

)

Indemnity - FACEPA

 

413

 

 

Equity equivalence

 

(1,658

)

37

 

Others

 

2

 

(853

)

Adjusted EBITDA

 

2,761,244

 

3,352,282

 

Adjusted EBITDA Margin

 

48.5

%

50.1

%

 


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