0001104659-19-037073.txt : 20190624 0001104659-19-037073.hdr.sgml : 20190624 20190624060401 ACCESSION NUMBER: 0001104659-19-037073 CONFORMED SUBMISSION TYPE: 6-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20190624 FILED AS OF DATE: 20190624 DATE AS OF CHANGE: 20190624 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: 19913173 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 a19-11811_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 June, 2019.

 

Commission File Number 001-38755

 


 

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 —Unaudited condensed consolidated interim financial information as of March 31, 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: June 24, 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 a19-11811_1ex99d1.htm EX-99.1

Exhibit 99.1

 

Suzano S.A.

Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

Condensed Consolidated Interim Balance Sheet

 

 

 

Note

 

March 31,
2019

 

December 31,
2018

 

Assets

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

Cash and cash equivalents

 

5

 

3,095,885

 

4,387,453

 

Financial Investments

 

6

 

3,687,230

 

21,098,565

 

Trade accounts receivable

 

7

 

3,507,439

 

2,537,058

 

Inventories

 

8

 

8,044,651

 

1,853,104

 

Recoverable taxes

 

9

 

944,407

 

296,832

 

Derivative financial instruments

 

4

 

615,887

 

352,454

 

Advances to suppliers

 

 

 

102,857

 

98,533

 

Assets held for sale

 

 

 

329

 

5,718

 

Other assets

 

 

 

321,781

 

169,175

 

 

 

 

 

 

 

 

 

Total current assets

 

 

 

20,320,466

 

30,798,892

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Recoverable taxes

 

9

 

771,696

 

231,498

 

Financial Investments

 

6

 

175,559

 

 

 

Deferred taxes

 

11

 

1,431,134

 

8,998

 

Derivative financial instruments

 

4

 

760,448

 

141,480

 

Advances to suppliers

 

 

 

948,636

 

218,493

 

Judicial deposits

 

 

 

342,247

 

129,005

 

Other assets

 

 

 

202,205

 

93,935

 

 

 

 

 

 

 

 

 

Biological assets

 

12

 

9,752,742

 

4,935,905

 

Investments

 

13

 

228,684

 

14,338

 

Property, plant and equipment

 

14

 

41,998,207

 

17,020,259

 

Right of Use on lease agreements

 

18.1

 

3,910,574

 

 

 

Intangible assets

 

15

 

18,465,253

 

339,841

 

 

 

 

 

 

 

 

 

Total non-current assets

 

 

 

78,987,385

 

23,133,752

 

 

 

 

 

 

 

 

 

Total assets

 

 

 

99,307,851

 

53,932,644

 

 

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

1


 

Suzano S.A.

Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

Condensed Consolidated Interim Balance Sheet

 

 

 

Note

 

March 31,
2019

 

December
31, 2018

 

Liabilities

 

 

 

 

 

 

 

Current

 

 

 

 

 

 

 

Trade accounts payable

 

16

 

4,049,078

 

632,565

 

Loans and financing

 

17.1

 

5,340,700

 

3,425,399

 

Debentures

 

17.6

 

2,082,084

 

1,297

 

Lease obligations

 

18.2

 

504,828

 

 

 

Derivative financial instruments

 

4

 

808,560

 

596,530

 

Taxes payable

 

 

 

228,240

 

243,835

 

Payroll and charges

 

 

 

303,419

 

234,192

 

Liabilities for assets acquisitions and subsidiaries

 

 

 

487,682

 

476,954

 

Dividends payable

 

 

 

11,343

 

5,434

 

Advance from customers

 

 

 

63,709

 

75,159

 

Other liabilities

 

 

 

335,494

 

367,313

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

 

14,215,137

 

6,058,678

 

 

 

 

 

 

 

 

 

Non-current

 

 

 

 

 

 

 

Loans and financing 

 

17.1

 

48,679,573

 

27,648,657

 

Debentures

 

17.6

 

4,662,272

 

4,662,156

 

Lease obligations

 

18.2

 

3,511,378

 

 

 

Derivative financial instruments

 

4

 

2,108,659

 

1,040,170

 

Liabilities for assets acquisitions and subsidiaries

 

 

 

516,815

 

515,558

 

Provision for judicial liabilities

 

19

 

3,527,818

 

351,270

 

Employee benefits

 

20

 

584,829

 

430,427

 

Deferred taxes

 

11

 

803,241

 

1,038,133

 

Share-based compensation plans

 

21

 

131,571

 

124,318

 

Other liabilities

 

 

 

213,206

 

37,342

 

 

 

 

 

 

 

 

 

Total non-current liabilities

 

 

 

64,739,362

 

35,848,031

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

 

78,954,499

 

41,906,709

 

 

 

 

 

 

 

 

 

Equity

 

22

 

 

 

 

 

Share Capital

 

 

 

9,269,281

 

6,241,753

 

Capital reserves

 

 

 

6,383,671

 

674,221

 

Treasury shares

 

 

 

(218,265

)

(218,265

)

Retained earnings

 

 

 

3,677,153

 

2,992,590

 

Other reserves

 

 

 

2,332,963

 

2,321,708

 

Retained loss

 

 

 

(1,213,666

)

 

 

 

 

 

 

 

 

 

 

Controlling interest in subsidiaries’ equity

 

 

 

20,231,137

 

12,012,007

 

 

 

 

 

 

 

 

 

Non-controlling interest in subsidiaries’ equity

 

 

 

122,215

 

13,928

 

 

 

 

 

 

 

 

 

Total equity

 

 

 

20,353,352

 

12,025,935

 

 

 

 

 

 

 

 

 

Total equity and liabilities

 

 

 

99,307,851

 

53,932,644

 

 

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

2


 

Suzano S.A.

Unaudited condensed consolidated interim financial information

Three-month period ended March 31, 2019

(In thousands of R$, unless otherwise stated)

 

Condensed Consolidated Interim Statements of Income (loss)

 

 

 

Note

 

March 31,
2019

 

March 31,
2018

 

Net sales revenue

 

24

 

5,698,999

 

2,994,579

 

Cost of sales

 

26

 

(4,724,893

)

(1,583,414

)

Gross profit

 

 

 

974,106

 

1,411,165

 

Operating income (expenses)

 

 

 

 

 

 

 

Selling expenses

 

26

 

(441,303

)

(121,957

)

General and administrative expenses

 

26

 

(330,765

)

(147,353

)

Equity in earnings (loss) joint venture and associates

 

13

 

1,658

 

(53

)

Other operating income (expenses), net

 

26

 

(18,884

)

(9,867

)

Operating profit before net financial income (expenses)

 

 

 

184,812

 

1,131,935

 

Net financial income (expenses)

 

23

 

 

 

 

 

Financial expenses

 

 

 

(992,804

)

(234,273

)

Financial income

 

 

 

149,322

 

36,726

 

Derivative financial instruments

 

 

 

(636,934

)

68,603

 

Monetary and exchange variations, net

 

 

 

(455,727

)

(28,406

)

Net income (loss) before taxes

 

 

 

(1,751,331

)

974,585

 

Income taxes

 

11

 

 

 

 

 

Current

 

 

 

(129,249

)

(104,216

)

Deferred

 

 

 

651,448

 

(64,849

)

Net income (loss) for the period

 

 

 

(1,229,132

)

805,520

 

Result of the period attributed to the controlling shareholders

 

 

 

(1,226,803

)

805,520

 

Result of the period attributed to non-controlling shareholders

 

 

 

(2,329

)

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share

 

22.2

 

 

 

 

 

Basic — earnings (loss) per share

 

 

 

(0.93686

)

0.73725

 

Diluted — earnings (loss) per share

 

 

 

(0.93686

)

0.73631

 

 

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

3


 

Suzano S.A.

Unaudited condensed consolidated interim financial information

Three-month period ended March 31, 2019

(In thousands of R$, unless otherwise stated)

 

Condensed Consolidated Interim Statements of Comprehensive Income (loss)

 

 

 

March 31,
2019

 

March 31,
2018

 

 

 

 

 

 

 

Net income (loss) for the period

 

(1,229,132

)

805,520

 

 

 

 

 

 

 

Items that will not be reclassified to profit or loss

 

 

 

 

 

 

 

 

 

 

 

Variation on financial assets measured at fair value through of comprehensive income

 

 

 

 

 

Ensyn Corporation (“Ensyn”)

 

1,323

 

 

 

CelluForce Inc. (“CelluForce”)

 

462

 

 

 

Spinnova Oy (“Spinnova”)

 

(315

)

 

 

 

 

1,470

 

 

 

 

 

 

 

 

 

Tax effect of the above items

 

(500

)

 

 

 

 

970

 

 

 

Item that may be subsequently reclassified to profit or loss

 

 

 

 

 

 

 

 

 

 

 

Exchange variation on conversion of financial statements and on foreign investments

 

11,745

 

14,274

 

 

 

 

 

 

 

Total comprehensive income (loss)

 

(1,216,417

)

819,794

 

Result for the period attributed to the controlling shareholders

 

(1,214,088

)

819,794

 

 

 

 

 

 

 

Result for the period attributed to non-controlling shareholders

 

(2,329

)

 

 

 

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

4


 

Suzano S.A.

Unaudited condensed consolidated interim financial information

Three-month period ended March 31, 2019

(In thousands of R$, unless otherwise stated)

 

Condensed Consolidated Interim Statements of Changes in Equity

 

 

 

 

 

Capital reserve

 

 

 

Retained reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

Share
Capital

 

Stock
options
granted

 

Share
issuance
costs

 

Tax
incentives

 

Other

 

Treasury
shares

 

Tax
incentives

 

Legal
Reserve

 

Reserve for
capital
increase

 

Special
statutory
reserve

 

Dividends
proposed

 

Other
reserves

 

Retained
earnings
(loss)

 

Total

 

Non-
controlling
interest

 

Total
equity

 

Balances at December 31, 2017

 

6,241,753

 

14,237

 

(15,442

)

396,006

 

 

 

(241,088

)

 

 

406,898

 

2,281,328

 

234,591

 

 

 

2,298,328

 

 

 

11,616,611

 

 

 

11,616,611

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

805,520

 

805,520

 

 

 

805,520

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14,274

 

 

 

14,274

 

 

 

14,274

 

Transactions with shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock options granted

 

 

 

72

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

72

 

 

 

72

 

Sale of treasury shares to meet stock-based compensation plan

 

 

 

 

 

 

 

 

 

 

 

8,514

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,514

 

 

 

8,514

 

Non-controlling interest arising on business combination

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,772

 

8,772

 

Internal changes in equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partial realization of assets’ deemed cost adjustment, net of deferred taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(16,675

)

16,675

 

 

 

 

 

 

 

Issue of treasury shares to employees

 

 

 

(14,309

)

 

 

 

 

 

 

14,309

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at March 31, 2018

 

6,241,753

 

 

 

(15,442

)

396,006

 

 

 

(218,265

)

 

 

406,898

 

2,281,328

 

234,591

 

 

 

2,295,927

 

822,195

 

12,444,991

 

8,772

 

12,453,763

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balances at December 31, 2018

 

6,241,753

 

5,100

 

(15,442

)

684,563

 

 

 

(218,265

)

 

 

422,815

 

1,730,629

 

242,612

 

596,534

 

2,321,708

 

 

 

12,012,007

 

13,928

 

12,025,935

 

Total comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net (loss) for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,226,803

)

(1,226,803

)

(2,329

)

(1,229,132

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12,715

 

 

 

12,715

 

 

 

12,715

 

Transactions with shareholders:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Share capital increase (Notes 1.1 and 22.1)

 

3,027,528

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,027,528

 

 

 

3,027,528

 

Share issuance costs

 

 

 

 

 

(18,293

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18,293

)

 

 

(18,293

)

Stock options granted

 

 

 

1,421

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,421

 

 

 

1,421

 

Non-controlling interest arising on business combination

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

110,616

 

110,616

 

Internal changes in equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transfer of tax incentives

 

 

 

 

 

 

 

(684,563

)

 

 

 

 

684,563

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Partial realization of assets’ deemed cost adjustment, net of deferred taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,137

)

13,137

 

 

 

 

 

 

 

Realization of asset revaluation reserve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,290

 

 

 

6,290

 

 

 

6,290

 

Exchange rate effect related to controlled hyperinflation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,387

 

 

 

5,387

 

 

 

5,387

 

Issue of common shares related to business combination (note 1.1)

 

 

 

 

 

 

 

 

 

6,410,885

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6,410,885

 

 

 

6,410,885

 

Balances at March 31, 2019

 

9,269,281

 

6,521

 

(33,735

)

 

 

6,410,885

 

(218,265

)

684,563

 

422,815

 

1,730,629

 

242,612

 

596,534

 

2,332,963

 

(1,213,666

)

20,231,137

 

122,215

 

20,353,352

 

 

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

5


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information

Three-month period ended March 31, 2019

(In thousands of R$, unless otherwise stated)

 

Condensed Consolidated Interim Statements of Cash Flows

 

 

 

March 31,
2019

 

March 31,
2018

 

Operating activities

 

 

 

 

 

Net income (loss) for the period

 

(1,229,132

)

805,520

 

Adjustment to:

 

 

 

 

 

Depreciation, depletion and amortization (Note 26)

 

863,474

 

384,938

 

Depletion of wood resources from forestry partnership programs

 

8,986

 

 

 

Fair value adjustment on acquisition of Fibria - Amortization (Note 26)

 

1,566,648

 

 

 

Fair value adjustment on acquisition of Facepa - Amortization (Note 26)

 

4,218

 

 

 

Amortization of lease-use right

 

27,959

 

 

 

Interest expense on lease liabilities

 

38,715

 

 

 

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

 

(11,288

)

9,488

 

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

 

(1,658

)

53

 

Exchange and monetary variations, net

 

455,727

 

16,653

 

Interest expenses, net

 

823,958

 

185,853

 

Settlement of interest on financial investments

 

(228,047

)

(25,164

)

Amortization of the cost of funding

 

31,574

 

 

 

Derivative (gains) losses, net (Note 23)

 

636,934

 

(68,603

)

Deferred income tax and social contribution expenses (Note 11.1)

 

(651,448

)

64,849

 

Interest on actuarial liabilities (Note 20.2)

 

13,421

 

8,617

 

Provision/ (Reversal) for judicial liabilities

 

(10,296

)

234

 

Allowance for doubtful accounts, net

 

7,724

 

6,292

 

Estimated loss (reversal) in inventories and write-offs

 

(1,739

)

(3,045

)

Provision for loss of ICMS credits, net

 

37,063

 

 

 

Other provisions

 

65,227

 

(7,384

)

Decrease (increase) in assets

 

 

 

 

 

Trade accounts receivable

 

331,901

 

(26,576

)

Inventories

 

(942,669

)

(90,798

)

Recoverable taxes

 

58,745

 

1,241

 

Other assets

 

84,564

 

(220,446

)

Increase (decrease) in liabilities

 

 

 

 

 

Trade accounts payables

 

75,087

 

(10,903

)

Taxes payable

 

245,692

 

(154,481

)

Payroll and charges

 

(332,520

)

19,262

 

Other liabilities

 

(304,819

)

229,477

 

Cash provided by operations

 

1,664,001

 

1,125,077

 

Payment of interest

 

(783,745

)

(194,402

)

Interest received from financial investments

 

175,057

 

 

 

Payment of income taxes

 

(310,977

)

(11,045

)

Cash provided by operating activities

 

744,336

 

919,630

 

Investing activities

 

 

 

 

 

Cash provided by the merger of subsidiary

 

 

 

21,436

 

Additions to property, plant and equipment (Note 14)

 

(705,246

)

(142,226

)

Additions to intangible assets (Note 15.3)

 

(636

)

(57

)

Additions to biological assets (Note 12)

 

(791,684

)

(206,720

)

New lease contracts

 

(50,044

)

 

 

Proceeds from sale of assets

 

33,933

 

15,043

 

Increase of capital in subsidiaries (Note 13 c))

 

(11,216

)

 

 

Financial investments

 

21,756,512

 

265,000

 

Advance for acquisition of wood from operations with development (non-current)

 

(126,866

)

(10,627

)

Acquisition of subsidiaries, net cash

 

(26,002,541

)

(309,872

)

Cash used in investing activities

 

(5,897,788

)

(368,023

)

Financing activities

 

 

 

 

 

Proceeds from loans (Note 17.1)

 

3,673,049

 

2,476,082

 

New leases contracts

 

50,044

 

 

 

Issue of Debentures (Note 17.6)

 

3,998,780

 

 

 

Payment of derivative transactions

 

24,765

 

13,036

 

Payment of loans and financing (Note 17.1)

 

(1,735,541

)

(2,134,630

)

Payment of leases

 

(118,237

)

 

 

Payment of dividends

 

(68

)

 

 

Payment of debentures (Note 17.6)

 

(2,000,000

)

 

 

Proceeds from own shares

 

 

 

8,514

 

Liabilities for assets acquisitions and subsidiaries

 

(1,701

)

(2,308

)

Others financing

 

(377

)

 

 

Cash provided by financing activities

 

3,890,714

 

360,694

 

Exchange variation on cash and cash equivalents

 

(28,830

)

11,202

 

Increase (reduction) in cash and cash equivalents

 

(1,291,568

)

923,503

 

Cash and cash equivalents at the beginning for the period

 

4,387,453

 

1,076,833

 

Cash and cash equivalents at the end for the period

 

3,095,885

 

2,000,336

 

Statement of increase (reduction) in cash and cash equivalents

 

(1,291,568

)

923,503

 

 

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

 

6


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

1                             Company Information

 

Suzano S.A., (current social denomination of Suzano Papel e Celulose S.A., as Extraordinary General Meeting hold on April 1st, 2019), hereinafter referred to as the “Suzano” and together with its subsidiaries hereinafter referred to as (the “Company”), is a publicly-held corporation with registered office in the city of Salvador, State of Bahia, Brazil.

 

Suzano owns shares traded in B3 S.A. - Brasil, Bolsa, Balcão, New Market Listing Regulation under the acronym (SUZB3).

 

On December 10, 2018, Suzano began trading its American Depositary Receipts (“ADRs”), Level II, pursuant to a program approved by the Brazilian Securities and Exchange Commission (“CVM”).

 

After the conclusion of the transaction involving Fibria Celulose S.A. (“Fibria”), on January 14, 2019, the Company now owns 11 industrial units, located in Aracruz (Espírito Santo, State), Belém (Pará, State), Eunápolis — Veracel Celulose S.A. (“Veracel”), a jointly-controlled entity — and Mucuri (Bahia, State), Fortaleza (Ceará, State), Imperatriz (Maranhão, State), Jacareí, Limeira, Rio Verde and Suzano (São Paulo, State) and Três Lagoas (Mato Grosso, State).

 

These units produce hardwood pulp from eucalyptus, paper (coated paper, paperboard, uncoated paper and cut size paper) and jumbo rolls of sanitary paper (consumer goods - tissue) to serve the domestic and foreign markets.

 

Pulp and paper are sold in the foreign market directly by Suzano, as well as through its subsidiaries in Argentina, the United States of America, Switzerland and Austria and its sales offices in China and England.

 

The Company’s corporate purpose also includes the commercial operation of eucalyptus forest for its own use, the operation of port terminals, and the holding of interest, as partner or shareholder, in any other company or project, and the generation and sale of electricity.

 

The Company is controlled by Suzano Holding S.A., through a Voting Agreement whereby it holds 45.80% of the common shares of its share capital.

 

This unaudited condensed consolidated interim financial information was approved by the Management Company’s on May 8, 2019.

 

7


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

1.1  Major events in the period

 

Corporate events

 

i)  Business Combination with Fibria

 

On January 3, 2019 (acquisition date of control by Suzano), after the fulfillment of all conditions for the conclusion of the transaction to combine the operations and shareholding base of Suzano and Fibria, was performed the exchange of Fibria’s shares by Suzano’s shares and, on January 14, 2019, Suzano completed the corporate reorganization process, following the terms of the Agreement signed by both entities on March 15, 2018.

 

The consideration by Fibria, defined in terms of the Agreement, was as follows:

 

a) Share exchange ratio

 

On January 2, 2019, pursuant to Notice to Shareholders, the exchange ratio of the common shares issued by the Eucalipto Holding S.A. (“Holding”) held by Fibria’s shareholders for shares issued by Suzano was adjusted from 0.4611 to 0.4613, being the exchange ratio of 0.4613 considered as final. The adjustment in the exchange ratio, compared to the originally announced, was due to (i) a change in the total number of shares issued by Fibria ex-treasury and disregarding the shares resulting from the vesting of option plans between those in the Protocol and Justification and present date of 553,080,611 shares for 553,733,881 shares and (ii) alteration of the number of shares issued by Suzano ex-treasury and disregarding the shares resulting from the vesting of option plans between that contained in the Protocol and Justification and the present date of 1,091,984,141 shares to 1,093,784,141 shares.

 

As a result of this adjustment, (i) Suzano issued, as a result of the merger of the Holding, 255,437,439 new common shares in the market value of R$ 36.95, totaling amount of R$ 9,438,413, of which R$ 3,027,528 was recognized as capital increase and R$ 6,410,885, as capital reserve; and (ii) the amount attributed to Suzano’s common share to calculate the capital gain, as disclosed in the Notice of Shareholders on November 29, 2018, increased from R$ 15.38 attributed to 0.4611 common share for R$ 15.39 attributed to 0.4613 common share of Suzano.

 

b) Cash installment

 

On January 10, 2019, by means of the Notice to Shareholders, the Company communicated the final value of the Adjusted Cash Portion, corresponding to the redemption value of each Holding’s redeemable preferred share, originally equivalent to R$ 52.50, (i) reduced by the amount of dividends declared by Fibria on December 3, 2018 and paid in Brazil on December 12, 2018 in the amount of R$ 5.03 (ii) plus R$ 2.73, corresponding to the variation of the average daily rate of Brazilian interbank deposits expressed as an annual percentage, based on 252 business days, calculated and disclosed daily by B3 (“DI Rate”), between March 15, 2018 and the Expiration Date of the Transaction including January 10, 2019 (including) and January 14, 2019 (including), the DI Rate was estimated at 6.40% per annum, with a total and final amount of R$ 50.20 per share, making up the final amount of the Adjusted Cash Amount of R$ 27,797,441.

 

8


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

The amounts mentioned above are gross, not considering any tax impacts on the payment to Fibria Resident or Non-Resident Shareholders, which are detailed in the Notice to Shareholders disclosed on November 29, 2018.

 

Suzano performed a valuation analysis of the fair market value of the assets of Fibria acquired and liabilities assumed and using the full consideration for the Merger, performed the allocations for such assets and liabilities.

 

The following table summarizes the preliminary purchase price allocation based on the appraisal report prepared by an independent and specialized entity:

 

Cash consideration

 

27,797,441

 

Issuance of shares (Suzano)

 

9,438,413

 

Total consideration

 

37,235,854

 

 

 

 

 

Book value of Fibria’s shareholders’ equity

 

14,149,004

 

Elimination of the book value of existing goodwill, net of the deferred income taxes

 

(3,495,077

)

Mandatory minimum dividends (eliminated balance)

 

724,829

 

Book value of Fibria’s shareholders’ equity, net of goodwill

 

11,378,756

 

 

 

 

 

Fair value adjustment on acquisition of Fibria (assets and liabilities):

 

 

 

Inventories

 

2,178,903

(a)

Property, plant and equipment

 

9,445,315

(b)

Customer relationship

 

9,030,779

(c)

Port Assets

 

749,060

(d)

Possible contingent losses

 

(2,970,546

)(e)

Loans and Financing

 

(59,921

)(f)

Taxes recoverable

 

(235,843

)(g)

Other assets and liabilities, net

 

368,624

(h)

Deferred taxes, net

 

(546,324

)(i)

Total impact of fair value

 

17,960,047

 

Preliminary goodwill

 

7,897,051

(j)

 

The Company has not yet finalized its valuation of all identifiable assets and liabilities acquired in the acquisition and therefore some of these amounts are provisional. These amounts may be adjusted as valuations are finalized.

 


(a) Calculated considering the balance of finished products based on selling price, net of selling expenses and an accepted margin based on the results achieved in 2018.

 

(b) Determined based on the analysis of market data on comparable transactions and cost quantification, based on the estimate of replacement or replacement value of the assets.

 

(c) In order to determine the fair value adjustment in the customer portfolio, the income approach and the MPEEM (Multi Period Excess Earnings Method) method were used to measure the present value of the income that will be generated during the remaining useful life of the asset. Considering the 5-year history of Fibria’s sales data and the churn rate that measures customer satisfaction and customer permanence in the portfolio, the adjustment was calculated using estimated discounted cash flows.

 

(d) Fibria has concession contracts and port assets to assist in port operations in Brazil. For fair value calculation of these assets was considered the income approach, the MPEEM (Multi Period Excess Earnings Method) method that measures the present value of the income that will be generated during the remaining useful life of the asset and method of direct cost differential.

 

(e) In the business combination, for the calculation of the fair value of the contingencies, whose chances of loss were classified as possible and remote, Fibria’s Management and its external and independent advisors were considered for their fair values, whose amounts were measured based on the analyzes of Fibria’s external lawyers.

 

9


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

(f) The adjustment to fair value of loans and financing was calculated based on the fair value of the Bonds, based on the quotation of the security in the secondary market, and the adjustment to present value considering the market rate at the base date (On December 31, 2018).

 

(g) For the measurement of the fair value of the taxes to be recovered, the amount to be recovered, discounted to the present value considering the expected Selic rate for the tax period, was considered.

 

(h) In other net assets and liabilities, including supply contracts, accounts receivable and advances to suppliers, the income evaluation methodology, the present value and the direct cost differential were used.

 

(i) Deferred income tax on fair value adjustments of assets of Veracel and Portocel. For the remaining fair value, we did not recognize deferred income taxes liabilities due to Fibria’s Legal Merger in April 2019.

 

(j) Goodwill is attributable to the strong market position and expected future profitability of Fibria in negotiations in the eucalyptus pulp market.

 

For more information on the business combination refer note 13.1

 

2                               Presentation of the unaudited condensed consolidated interim financial information

 

2.1  Preparation basis and presentation

 

The consolidated condensed interim financial information was prepared and is presented in accordance with the international standard IAS 34 Interim Financial Reporting and disclose all the applicable significant information related to the financial information, which is consistent with the information utilized by management in the performance of its duties.

 

The interim information was prepared using the historical cost as the basis of value, except for certain financial assets and liabilities and biological assets that are measured at fair value.

 

2.1.1  Consolidated Interim Financial Information

 

The unaudited condensed consolidated interim financial information was prepared based on the information of Suzano and its subsidiaries on the reference date, as well as in accordance with consistent accounting practices and policies.

 

The subsidiaries are consolidated from the date control is obtained until the date that control ceases to exist. For jointly controlled operations, the balances of assets, liabilities, revenues and expenses are proportionally recognized in relation to the participation in the joint operation. In the case of joint control with other companies, these investments are accounted for using the equity method.

 

In the consolidation process, the balances in the balance sheet and income statement accounts corresponding to the transactions carried out with subsidiaries are eliminated, as well as the unrealized gains and losses and the investments in these subsidiaries and their respective equity accounting results.

 

The unaudited condensed consolidated interim financial information of the Balance Sheet, Statements of Income (loss), Statements of Comprehensive Income (loss), Statements of Changes in Equity and Statements of Cash Flows,  as well the

 

10


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

corresponding notes to the financial information regarding to the three-month period ended March 31, 2019, existing on this unaudited condensed consolidated interim financial information are not comparable with the last annual financial statements as at December 31, 2018 and the unaudited condensed consolidated interim financial information for the three-month period ended March 31, 2018 due to the conclusion of the business combination of Fibria in January 2019, as disclosed in Note 1.1 above. Thus, as from January 1, 2019, Suzano started to consolidate Fibria’s interim accounting information.

 

Companies included in the Company’s consolidated interim financial information:

 

 

 

 

 

Interest in capital (%)

 

Investee

 

Type of interest

 

March 31,
2019

 

December 31,
2018

 

AGFA - Comércio, Administração e Participações Ltda

 

Direct

 

100

%

100

%

Asapir Produção Florestal e Comércio Ltda (i)

 

Direct/Indirect

 

100

%

50

%

Comercial e Agrícola Paineiras Ltda

 

Direct

 

100

%

100

%

Eucalipto Holding S.A. (ii)

 

Direct

 

 

 

100

%

Facepa - Fábrica de papel da Amazônia S.A.

 

Direct/Indirect

 

92,80

%

92,80

%

FuturaGene Brasil Tecnologia Ltda

 

Indirect

 

100

%

100

%

FuturaGene Ltd

 

Indirect

 

100

%

100

%

Ibema Companhia Brasileira de Papel

 

Joint venture

 

49,90

%

49,90

%

Maxcel Empreendimentos e Participações S.A.

 

Direct

 

100

%

100

%

Mucuri Energética S.A.

 

Direct

 

100

%

100

%

Ondurman Empreendimentos Imobiliários Ltda

 

Direct

 

100

%

100

%

Paineiras Logística e Transporte Ltda

 

Direct

 

100

%

100

%

Stenfar S.A. Indll. Coml. Imp. Y. Exp.

 

Direct/Indirect

 

100

%

100

%

Sun Paper and Board Limited

 

Direct

 

100

%

100

%

Suzano Áustria GmbH

 

Direct

 

100

%

100

%

Suzano Luxembourg

 

Direct

 

100

%

100

%

Suzano Pulp and Paper America Inc

 

Direct

 

100

%

100

%

Suzano Pulp and Paper Europe S.A.

 

Direct

 

100

%

100

%

Suzano Trading Ltd

 

Direct

 

100

%

100

%

Itacel - Terminal de Celulose de Itaqui S.A.

 

Indirect

 

100

%

 

 

Fibria Celulose S.A.

 

Direct

 

100

%

 

 

Fibria Terminais Portuários S.A.

 

Indirect

 

100

%

 

 

Fibria Terminal de Celulose de Santos SPE S.A.

 

Indirect

 

100

%

 

 

F&E Participações Ltda.

 

Indirect

 

100

%

 

 

F&E Tecnologia do Brasil S.A.

 

Indirect

 

100

%

 

 

Portocel - Terminal Espec. Barra do Riacho S.A.

 

Indirect

 

51

%

 

 

Projetos Especiais e Investimentos S.A.

 

Indirect

 

100

%

 

 

Veracel Celulose S.A.

 

Joint operation

 

50

%

 

 

Fibria Celulose (USA) Inc.

 

Indirect

 

100

%

 

 

Fibria Innovations Inc.

 

Indirect

 

100

%

 

 

Fibria International Trade GmbH

 

Indirect

 

100

%

 

 

Fibria Overseas Finance Ltd.

 

Indirect

 

100

%

 

 

Fibria Overseas Holding KFT.

 

Indirect

 

100

%

 

 

Fibria Trading International KFT.

 

Indirect

 

100

%

 

 

 


(i) The full control was acquired after the acquisition of Fibria.

(ii) Company merged in January 2019, as mentioned in note 1.1.

 

On January 21, 2019, Voto — Votorantim Overseas Trading Operations IV Limited (former Fibria’s joint operation) repurchased its shares owned by Fibria.

 

3                             Accounting Policies

 

The interim financial information was prepared using accounting practices consistent with those used in the preparation of the annual financial statements at December 31, 2018, except for the application of the new accounting standards as of January 1, 2019, described below and which the estimated impacts were previously disclosed in the annual financial statements as of December 31, 2018.

 

11


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

The consolidated interim financial information should be read in conjunction with the audited annual financial statements of the Company and Fibria for the year ended December 31, 2018, considering that its purpose is to provide an update on the activities, events and significant circumstances in relation to those presented in the annual financial statements.

 

The following accounting practices were not described in the notes to the financial statements of Suzano as of December 31, 2018, but are relevant for this quarter, especially considering the acquisition of Fibria, as described in Note 1.1.

 

(i)   Reclassification — Statements of cash flows

 

The Company made certain reclassifications on its Statements of cash flows regarding the three-month period ended March 31, 2018, substantially in operating activities, for a better comparison with the Statements of cash flows for the three-month period ended March 31, 2019.

 

3.1  New Accounting Policies Adopted

 

3.1.1   Leases — IFRS 16

 

The Company adopted IFRS 16 as of January 1, 2019.

 

This standard determines that lessees must recognize future liabilities in their liabilities and their right to use the leased asset for all lease agreements, with exemption allowed to short-term or low-value contracts. Short-term or low-value contracts for the exemption of the standard refers to contracts where the individual value of the assets is lower than US$ 5 thousand and maturity date is before 12 months, represented, mainly, by equipment of technology and vehicles.

 

The Company adopted the standard using a modified retrospective approach that does not require the restatement of the comparative balances.

 

In adopting IFRS 16, the Company recognized the lease liabilities in relation to the contracts that meet the definition of lease, whose liabilities were measured at the present value of the remaining lease payments, discounted based on the incremental loan rate. Assets associated with the right of use were measured at the amount equal to the lease liability on January 1st, 2019, with no impact on retained earnings.

 

The Company used the following practical expedients allowed by the standard:

 

a) The use of a single discount rate for a portfolio of leases with similar characteristics;

 

b) Leases whose maturity will occur within 12 months of the date of initial adoption of the standard, accounting will be as short-term leases (directly in the income statement);

 

c) The accounting of lease payments as expenses in the case of leases for which the underlying asset is of low value; and

 

12


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

d) The use of hindsight in determining the lease term, when the agreement contains options to extend or terminate the lease.

 

e) The Company excluded initial direct costs of measuring the right to use asset at the date of initial application.

 

The effects of adopting this new standard are presented in note 18.

 

3.1.2                               Uncertainty over Income Tax Treatments — IFRIC 23

 

The interpretation is applicable when there are uncertainties as to the acceptance of the treatment by the Fiscal Authority. If acceptance is not likely, the values of tax assets and liabilities should be adjusted to reflect the best resolution of the uncertainty.

 

The Company has evaluated the changes introduced by this new standard and based on the analysis carried out, did not identify material changes that have an impact on its unaudited condensed consolidated interim financial information, or alter the recognition and measurement of uncertainties about tax treatment of income.

 

3.2 New standards, revisions and interpretations not yet in force

 

There are no other IFRSs or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Company’s condensed consolidated interim financial information.

 

13


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

4                             Financial Instruments and Risks

 

4.1                    Management of financial risks

 

a)                                   Overview

 

In the three-month period ended March 31, 2019, there were no significant changes in the financial risk management policies and procedures compared to those reported in Note 4 to the financial statements of December 31, 2018.

 

b)                                   Rating

 

All operations with financial instruments are recognized in the Company’s interim financial information, as shown below in the following categories:

 

 

 

March 31,
2019

 

December 31,
2018

 

Assets

 

 

 

 

 

At amortized cost

 

 

 

 

 

Cash and cash equivalents (Note 5)

 

3,095,885

 

4,387,453

 

Trade accounts receivable (Note 7)

 

3,507,439

 

2,537,058

 

Other assets

 

523,986

 

263,110

 

 

 

7,127,310

 

7,187,621

 

At fair value through profit and loss

 

 

 

 

 

Derivative financial instruments (Note 4)

 

1,376,335

 

493,934

 

Stock Options (Note 13. (d)))

 

5,845

 

 

 

Financial Investments (Note 6)

 

3,862,789

 

21,098,565

 

 

 

5,244,969

 

21,592,499

 

Fair value through other comprehensive income

 

 

 

 

 

Other investments (Note 13. (d))

 

202,960

 

 

 

 

 

202,960

 

 

 

Liabilities

 

 

 

 

 

At amortized cost

 

 

 

 

 

Loans and financing (Note 17.1)

 

54,020,273

 

31,074,056

 

Debentures (Nota 17.5)

 

6,744,356

 

4,663,453

 

Accounts payable for leasing operations (Note 18.2)

 

4,016,206

 

 

 

Accounts payable with acquisition of assets and subsidiaries

 

1,004,497

 

992,512

 

Suppliers and other liabilities

 

4,597,777

 

1,037,220

 

 

 

70,383,109

 

37,767,241

 

At fair value through profit and loss

 

 

 

 

 

Derivative financial instruments (Note 4)

 

2,917,219

 

1,636,700

 

 

14


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

c)           Fair value of loans and financing

 

The following is a breakdown of the estimated fair values of loans and financing:

 

 

 

Yield used
to discount
(*)

 

March 31,
2019

 

December 31,
2018

 

Quoted in the secondary market

 

 

 

 

 

 

 

In foreign currency

 

 

 

 

 

 

 

Bonds

 

US$

 

24,779,988

 

15,035,165

 

Estimated to present value

 

 

 

 

 

 

 

In foreign currency

 

 

 

 

 

 

 

Export credits (pre-payment)

 

LIBOR US$

 

16,778,162

 

12,819,072

 

Export credits (Finnvera)

 

LIBOR US$

 

2,277,492

 

832,907

 

Export credits (ACC/ACE)

 

DI 1

 

1,791,945

 

1,732,088

 

In local currency

 

 

 

 

 

 

 

BNDES — TJLP

 

DI 1 (ii)

 

1,990,925

 

206,601

 

BNDES — Fixed

 

DI 1

 

131,488

 

348,827

 

BNDES — Selic (Special Settlement and Custody System)

 

DI 1

 

625,687

 

 

 

Currency basket

 

DI 1

 

69,877

 

169,243

 

CRA (Agribusiness Receivables Certificate)

 

DI 1

 

7,560,271

 

2,383,775

 

FINEP (Financier of Studies and Projects)

 

DI 1

 

492

 

 

 

NCE (Export Credit Notes) in Reais

 

DI 1

 

1,419,457

 

1,501,623

 

NCR — (Rural Credit Notes)

 

DI 1

 

796,955

 

297,375

 

FDCO — (West Center Development Fund)

 

DI 1

 

598,800

 

 

 

 

 

 

 

58,831,539

 

35,326,676

 

 

The Company’s Management considers that for its other financial assets and liabilities measured at amortized cost, its book values approximate their fair values and therefore the information on their fair values is not being presented.

 

4.2                                         Liquidity risk

 

The following are the remaining contractual maturities (consolidated) of financial liabilities at the reporting date. The following amounts are cash flows, are undiscounted and include contractual interest payments and exchange variation, and therefore may not be reconciled with the amounts disclosed in the balance sheet.

 

15


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

 

 

March 31, 2019

 

 

 

Total Book
Value

 

Total Future
Value

 

Up to 1
year

 

1 - 2
years

 

2 - 5
years

 

More than 5
years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts payables

 

4,049,078

 

4,049,078

 

4,049,078

 

 

 

 

 

 

 

Loans and financing

 

54,020,273

 

76,502,622

 

7,110,396

 

11,069,704

 

24,863,159

 

33,459,363

 

Debentures

 

6,744,356

 

9,956,623

 

406,420

 

2,883,216

 

1,491,712

 

5,175,275

 

Lease obligation

 

4,016,206

 

6,587,184

 

633,828

 

598,760

 

1,534,325

 

3,820,271

 

Liabilities for asset acquisitions and subsidiaries

 

1,004,497

 

1,106,036

 

499,195

 

101,245

 

318,635

 

186,961

 

Derivative financial instruments

 

2,917,219

 

5,380,141

 

328,353

 

763,181

 

1,003,351

 

3,285,256

 

Other liabilities

 

548,699

 

548,699

 

335,495

 

213,204

 

 

 

 

 

 

 

73,300,328

 

104,130,383

 

13,362,765

 

15,629,310

 

29,211,182

 

45,927,126

 

 

 

 

December 31, 2018

 

 

 

Total Book
Value

 

Total Future
Value

 

Up to 1
year

 

1 - 2
years

 

2 - 5
years

 

More than 5
years

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

Trade accounts payables

 

632,565

 

632,565

 

632,565

 

 

 

 

 

 

 

Loans and financing

 

31,074,056

 

45,997,323

 

4,818,397

 

3,672,268

 

16,850,840

 

20,655,818

 

Debentures

 

4,663,453

 

8,022,759

 

340,044

 

419,401

 

1,521,757

 

5,741,556

 

Liabilities for asset acquisitions and subsidiaries

 

992,512

 

1,099,331

 

495,862

 

100,715

 

316,730

 

186,023

 

Derivative financial instruments

 

1,636,700

 

2,149,710

 

790,679

 

736,715

 

465,853

 

156,462

 

Other liabilities

 

404,655

 

404,655

 

367,314

 

37,341

 

 

 

 

 

 

 

39,403,941

 

58,306,342

 

7,444,861

 

4,966,440

 

19,155,180

 

26,739,859

 

 

4.3                   Market risk

 

4.3.1. Exchange rate risk

 

The following table shows the net exposure of assets and liabilities in foreign currency, primarily the U.S. dollar:

 

 

 

March 31,
2019

 

December 31,
2018

 

 

 

 

 

 

 

Assets

 

 

 

 

 

Cash and cash equivalents

 

2,649,942

 

1,143,968

 

Trade accounts receivable

 

2,418,951

 

1,661,108

 

Derivative financial instruments

 

 

 

493,685

 

 

 

 

 

 

 

 

 

5,068,893

 

3,298,761

 

Liabilities

 

 

 

 

 

Trade accounts payables

 

(2,594,837

)

(72,720

)

Loans and financing

 

(41,163,009

)

(26,384,721

)

Liabilities for asset acquisitions and subsidiaries

 

(339,682

)

(333,049

)

Derivative financial instruments

 

(1,694,864

)

(1,464,569

)

 

 

 

 

 

 

 

 

(45,792,392

)

(28,255,059

)

Liability exposure

 

(40,723,499

)

(24,956,298

)

 

Sensitivity analysis — foreign exchange exposure

 

For market risk analysis, the Company uses scenarios to jointly evaluate the long and short positions in foreign currency, and the possible effects on its results. The probable scenario represents the amounts already booked, as they reflect the translation into Brazilian reais on the base date of the balance sheet (R$/US$ = 3.8967).

 

The other scenarios were created considering the appreciation/depreciation of the Brazilian real against the U.S. dollar at the rates of 25% and 50%, before taxes.

 

The note below presents the potential impacts on the results assuming these scenarios (in absolute amounts):

 

16


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

 

 

March 31, 2019

 

 

 

 

 

Effect on Income and Equity

 

Consolidated

 

Probable

 

Possible Increase
D 25%)

 

Remote Increase
D 50%)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

2,649,942

 

662,486

 

1,324,971

 

Trade accounts receivable

 

2,418,951

 

604,738

 

1,209,476

 

Trade accounts payables

 

2,594,837

 

648,709

 

1,297,419

 

Loans and financing

 

41,089,813

 

10,272,453

 

20,544,907

 

Liabilities for asset acquisitions and subsidiaries

 

339,682

 

84,921

 

169,841

 

Derivatives Non-Deliverable Forward (“NDF”)

 

15,600

 

133,805

 

273,238

 

Derivatives Swap

 

1,415,593

 

3,776,284

 

7,402,589

 

Derivatives Options

 

233,359

 

4,922,848

 

10,823,684

 

 

4.3.2 Interest rate risk

 

Sensitivity analysis — exposure to interest rates

 

For market risk analysis, the Company uses scenarios to evaluate the sensitivity that variations in operations impacted by the rates: Interbank Deposit Rate (“CDI”), Long Term Interest Rate (“TJLP”), Special System for Settlement and Custody (“SELIC”) and the London Interbank Offered Rate (“LIBOR”) may have on its results. The probable scenario represents the amounts already booked, as they reflect the best estimate of the Management.

 

This analysis assumes that all other variables, particularly exchange rates, remain constant. The other scenarios were developed considering appreciation/depreciation of 25% and 50% in the market interest rates. The following table shows the potential impacts on the results (in absolute amounts):

 

 

 

March 31, 2019

 

 

 

Effect on Income and Equity

 

Consolidated

 

Probable

 

Possible Increase
D 25%)

 

Remote Increase
D 50%)

 

 

 

 

 

 

 

 

 

CDI

 

 

 

 

 

 

 

Cash and cash equivalents

 

343,466

 

5,495

 

10,991

 

Financial investments

 

3,862,789

 

61,805

 

123,609

 

Loans and financing

 

6,867,713

 

109,883

 

219,767

 

Debentures

 

6,744,356

 

107,910

 

215,819

 

Derivative Swaps

 

1,290,592

 

959,250

 

1,933,163

 

Derivative Options

 

241,417

 

129,606

 

276,054

 

 

 

 

 

 

 

 

 

TJLP

 

 

 

 

 

 

 

Loans and financing

 

1,949,193

 

30,505

 

61,010

 

LIBOR

 

 

 

 

 

 

 

Loans and financing

 

17,538,966

 

113,992

 

227,985

 

Derivative Swap

 

278,981

 

222,920

 

437,767

 

 

17


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

Sensitivity analysis for changes in the consumer price index of the US economy

 

For the calculation of the probable scenario, the United States Consumer Price Index (US-CPI) was considered on March 31, 2019. The probable scenario was extrapolated considering an increase / decrease of 25 % and 50% in the US-CPI to define the possible and remote scenarios, respectively

 

 

 

March 31, 2019

 

 

 

Impact of an increase/decrease of
US-CPI on the fair value - absolute
amounts

 

 

 

Possible (25%)

 

Remote (50%)

 

 

 

 

 

 

 

Embedded derivative in forestry partnership and standing wood supply agreements

 

111,213

 

228,044

 

 

4.4                                         Derivative financial instruments

 

The Company determines the fair value of derivative contracts and recognizes that these amounts may differ from the amounts realized in the event of early settlement. The amounts reported by the Company are based on an estimate and using data provided by a third party, calculated internally and compared with calculations performed by external consulting.

 

a)             Outstanding derivatives by type of contract (including embedded derivatives)

 

On March 31, 2019 and December 31, 2018, the positions of outstanding derivatives are presented below:

 

18


 

Suzano S.A.

Notes to the Unaudited condensed consolidated interim financial information as of March 31, 2019

(In thousands of R$, unless otherwise stated)

 

 

 

Notional value in US$

 

Fair value