EX-99.1 2 a19-16880_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Financial diligence in the face of an adverse scenario

 

São Paulo, August 8, 2019. Suzano S.A. (B3:SUZB3 | NYSE: SUZ), one of the world’s largest pulp and integrated paper producers, today announces its consolidated results for the second quarter of 2019 (2Q19). Comparison data with 2018 (2Q18, 6M18 and LTM(4)) represent the simple sum or weighted average of Suzano + Fibria.

 

HIGHLIGHTS

 

·                 Pulp sales of 2,214 thousand tons, up 28% from 1Q19.

 

·                 Paper sales of 301 thousand tons, up 10% from 1Q19.

 

·                 Adjusted EBITDA(1) and Operating Cash Generation²: R$3.1 billion and R$2.2 billion, respectively.

 

·                 Adjusted EBITDA(1)/ton of pulp of R$1,305/ton (-12% vs. 1Q19).

 

·                 Adjusted EBITDA/ton of paper of R$1,219/ton (+15% vs. 1Q19).

 

·                 Average net price of paper of R$4,030/ton (+1% vs. 1Q19).

 

·                 Pulp cash cost of R$ 733/ton, or R$ 697/ton ex-downtimes.

 

·                 Reduction in estimated Capex for 2019 from R$ 6.4 billion to R$ 5.9 billion.

 

·                 Capture of synergies in line with the target for 2019 (40% in Dec. 19).

 

·                 Deliberation and payment of minimum mandatory dividends in the amount of R$ 600 million.

 

Financial Data (R$ million)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Net Revenue

 

6,665

 

7,926

 

-16

%

5,699

 

17

%

29,448

 

Adjusted EBITDA(1)

 

3,101

 

4,071

 

-24

%

2,761

 

12

%

14,799

 

Adjusted EBITDA Margin(1)

 

47

%

51

%

-5 p.p.

 

48

%

-2 p.p.

 

50

%

Adjusted EBITDA Margin(1) ex- Klabin

 

48

%

55

%

-6 p.p.

 

50

%

-1 p.p.

 

53

%

Net Financial Result

 

79

 

(6,209

)

 

(1,936

)

 

(2,969

)

Net Income

 

700

 

(2,060

)

 

(1,229

)

 

3,481

 

Operating Cash Generation(2)

 

2,226

 

3,214

 

-31

%

1,781

 

25

%

11,907

 

Net Debt /Adjusted EBITDA(1) (x) - R$

 

3.5 x

 

1.8 x

 

1.8 x

 

3.4 x

 

0.1 x

 

3.5 x

 

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

 

3.6 x

 

1.5 x

 

2.0 x

 

3.3 x

 

0.3 x

 

3.6 x

 

 

Operational Data (‘000 tons)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Sales

 

2,514

 

2,853

 

-12

%

2,003

 

26

%

10,180

 

Pulp

 

2,214

 

2,570

 

-14

%

1,729

 

28

%

8,919

 

Paper

 

301

 

284

 

6

%

274

 

10

%

1,261

 

Production

 

2,539

 

2,720

 

-7

%

2,465

 

3

%

11,006

 

Pulp

 

2,221

 

2,420

 

-8

%

2,173

 

2

%

9,725

 

Paper

 

318

 

300

 

6

%

292

 

9

%

1,281

 

 


(1) Excluding non-recurring items. (2) Operating cash generation refers to Adjusted EBITDA less maintenance Capex.  | (3) Includes the 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 (CVM) and Accounting Standards 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, 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

6

PAPER SALES VOLUME AND REVENUE

6

OPERATING CASH FLOW FROM PAPER

8

ECONOMIC AND FINANCIAL PERFORMANCE

9

NET REVENUE

9

PRODUCTION

9

COST OF GOODS SOLD

10

OPERATING EXPENSES

11

ADJUSTED EBITDA

13

FINANCIAL INCOME AND EXPENSES

14

DERIVATIVES OPERATIONS

15

DEBT

17

CAPITAL INVESTMENTS

19

OPERATING CASH FLOW GENERATION

19

IFRS 16

20

SYNERGIES

20

DIVIDENDS

20

CAPITAL MARKETS

21

FIXED INCOME

22

RATING

22

UPCOMING EVENTS

23

IR CONTACTS

23

APPENDICES

24

APPENDIX 1(2) — Operating Data

24

APPENDIX 2(2) — Consolidated Statement of Income

26

APPENDIX 3(1) — Consolidated Balance Sheet

27

APPENDIX 4(1) — Consolidated Statement of Cash Flow

28

APPENDIX 5(2) — EBITDA

30

APPENDIX 6(2) — Segmented Income Statement

31

Forward-Looking Statements

33

 

2


 

PULP BUSINESS PERFORMANCE

 

PULP SALES VOLUME AND REVENUE

 

The first half of the year was marked by a strong imbalance between supply and demand in the global pulp market. On the supply side, the lack of unexpected events, which on the other hand were frequent in 2017 and 2018, coupled with the fact that the pulp industry operated almost at full capacity, substantially increased the availability of pulp (both softwood and hardwood) in the market. On the demand side, the macroeconomic weakening of major countries in the world scenario, geopolitical uncertainties especially the China-US trade war, and destocking by pulp clients restricted growth in market sales volume.

 

This combination of factors led to a significant deterioration in the prices of both hardwood and softwood fibers in the first half of the year. In the second quarter, que reduction in pulp prices, along with the higher production volume of graphic papers in China and the continuous growth of Tissue in all markets favored the recovery in pulp demand, which grew 6.9% in the first two months during the quarter compared to the first two months in 1Q19. In this context, Suzano sold 2,214 thousand tons of market pulp in 2Q19, 28% more than in 1Q19 and 14% less than in 2Q18.

 

 

Average net price in U.S. dollar of the pulp sold by Suzano was US$628/ton in 2Q19, down US$77/ton (-11%) and US$111/ton (-15%) from 1Q19 and 2Q18, respectively. Average net price in the export market in 2Q19 was US$630/ton (vs. US$ 711/ton in 1Q19 and US$ 751 in 2Q18).

 

Average net price in Brazilian real was R$ 2,463/ton in 2Q19, down 7% from 1Q19 since, despite the 4% appreciation of the USD against the BRL during the period, prices in dollar came under pressure during the period. The same elements explain the performance of the average net price in BRL in comparison to 2Q18 (-8%), given the lower price in dollars, partially offset by the appreciation of the USD vs the BRL of 9%.

 

Pulp net revenues were R$ 5,454 million in 2Q19, a 20% reduction compared to 2Q18, mainly due to lower net average price in USD (-15%) and lower sales volumes (-14%), which were partially offset by the appreciation of the average USD vs BRL of 9%.

 

Quarter-on-quarter, the 19% increase was largely explained by the higher of sales volume (+28%) and the appreciation of the average USD vs BRL of 4%, partially offset by the net average price reduction of 11%.

 

3


 

 

PULP CASH COST

 

Consolidated cash cost of market pulp production in 2Q19 was R$697/ton excluding downtime and R$733/ton including downtime.

 

 

Cash cost excluding downtime in 2Q19 increased R$69/ton from 2Q18 (+11%), mainly due to: i) higher cost of wood due to the supply mix (higher share of third-party wood and higher average radius); and ii) lower dilution of fixed costs due to lower production volume.

 

 

4


 

Cash cost excluding downtime in 2Q19 increased R$30/ton from 1Q19 (+5%), mainly due to: i) higher cost of wood, explained by the higher average radius and lower dilution of fixed costs in forest operations; and ii) lower result from energy sales, largely due to lower prices.

 

 

In the last 12 months, consolidated cash cost of market pulp production was R$ 650/ton excluding downtime (vs. R$ 598/ton in LTM 2Q18) and R$ 677/ton including downtime (vs. R$ 633/ton in LTM 2Q18). This variation was due to lower dilution of fixed cost on account of lower production, higher input prices and higher wood cost.

 

 

PULP SEGMENT EBITDA

 

Pulp segment

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Adjusted EBITDA (R$ million)

 

2,734

 

3,818

 

-28

%

2,471

 

11

%

13,305

 

Sales volume (k ton) — ex-Klabin

 

2,095

 

2,384

 

-12

%

1,674

 

25

%

8,381

 

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

 

1,305

 

1,602

 

-19

%

1,476

 

-12

%

1,588

 

 

Adjusted EBITDA from pulp in 2Q19 in relation to 2Q18 mainly reflects the decrease in the average net price of pulp in USD (-15%), the lower sales volume (-14%) and the higher ex-Klabin cash COGS (higher cash production cost), partially offset by the 9% increase in average USD in relation to BRL. The same factors explain the decrease in Adjusted EBITDA per ton.

 

Compared to 1Q19, the 11% increase in EBITDA reflects the 28% growth in sales volume, the 4% appreciation of average USD compared to BRL and lower ex-Klabin cash COGS (largely due to lower maintenance downtimes impact). These effects were partially offset by the 7% decrease in average net price of pulp in USD, which explains the Adjusted EBITDA per ton reduction.

 

5


 

 

OPERATING CASH FLOW FROM THE PULP SEGMENT

 

Pulp Segment (R$ million)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Adjusted EBITDA

 

2,734

 

3,818

 

-28

%

2,471

 

11

%

13,305

 

Maintenance Capex

 

(797

)

(810

)

-2

%

(894

)

-11

%

(3,594

)

Operating Cash Flow

 

1,938

 

3,008

 

-36

%

1,577

 

23

%

9,711

 

 

 


(1) Excludes sales volume related to the agreement with Klabin.

 

Operating cash flow per ton in the pulp segment decreased 26% and 2% from 2Q18 and 1Q19, respectively, impacted by the decline in Adjusted EBITDA per ton, and was partially offset by lower maintenance Capex.

 

PAPER BUSINESS PERFORMANCE

 

PAPER SALES VOLUME AND REVENUE

 

According to the Forestry Industry Association (Ibá), domestic sales of printing & writing paper and paperboard declined 4% in the first half of 2019 compared to the same period last year, while imports decreased 7%. Domestic sales of printing & writing paper fell 7%, while paperboard sales increased 2%.

 

Regarding results in the quarter, domestic sales in 2Q19 decreased 2% in relation to 1Q19 and 3% from the same period last year. Imports, on the other hand, increased 14% from 1Q19, but decreased 2% from 2Q18.

 

Suzano’s paper sales in Brazil totaled 188 thousand tons in 2Q19, down 5% from 1Q19 and 4% from 2Q18, due to lower consumption in line with market data.

 

6


 

Paper sales in 2Q19 totaled 301 thousand tons, increasing 10% from 1Q19 and 6% from the same period last year, thanks to our strategy of allocating higher volumes to international markets due to our flexibility and presence in more than 60 countries.

 

 

Average net price of paper in the domestic market was R$ 4,177/ton in 2Q19, representing increases of R$ 79/ton (2%) and R$ 396/ton (10%) from 1Q19 and 2Q18, respectively, driven by the price implementation in the period.

 

Through our profitability management strategy and operations in multiple markets, we could mitigate most of the fluctuation in international prices. Average net price of paper exported in 2Q19 was US$ 966/ton, down US$ 29/ton (3%) from 1Q19 and US$ 23/ton (2%) from 2Q18. In BRL, the export price of paper in 2Q19 came to R$ 3,786/ton, up R$ 34/ton (1%) from 1Q19 and R$ 219/ton (6%) from 2Q18, mainly due to the exchange rate variation in the periods.

 

 

Net revenue from paper sales was R$ 1,211 million in 2Q19, increasing 16% from 2Q18, mainly due to higher average net price (+9%), higher export sales volume (+29%), and the 9% appreciation of the average USD in relation to BRL.

 

Compared to 1Q19, the main factors behind the 16% increase were higher export volume (+46%) and the 4% appreciation of average USD in relation to BRL.

 

7


 

PAPER EBITDA

 

Paper Segment

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Adjusted EBITDA (R$ million)

 

366

 

253

 

45

%

290

 

26

%

1,494

 

Sales volume (k ton)

 

301

 

284

 

6

%

274

 

10

%

1,261

 

Adjusted EBITDA Paper (R$/ton)

 

1,219

 

892

 

37

%

1,058

 

15

%

1,185

 

 

The performance of Adjusted EBITDA from paper in 2Q19 compared to 2Q18 is mainly explained by: i) price increases; ii) the use of the Company’s commercial flexibility to better allocate sales; iii) the reduction in administrative expenses; and iv) the 9% depreciation of BRL against USD.

 

Compared to 1Q19, the increase is due to the decrease in administrative expenses, higher sales volume (+46%), and lower cost in the period, reflecting the stability of production. Note that the paper business is incorporating the results from the consumer goods business, which is still in the ramp-up phase.

 

 

OPERATING CASH FLOW FROM PAPER

 

Operating cash flow - Paper (R$ million)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Adjusted EBITDA

 

366

 

253

 

45

%

290

 

26

%

1,494

 

Maintenance Capex

 

(78

)

(48

)

64

%

(87

)

-10

%

(285

)

Operating Cash Flow

 

288

 

205

 

40

%

203

 

42

%

1,209

 

 

 

Operating cash flow per ton came to R$959/ton in 2Q19, an increase of 32% and 29% from 2Q18 and 1Q19, respectively. Compared to 2Q18, the increase was due to higher Adjusted EBITDA (+45%), partially offset by

 

8


 

higher maintenance Capex. Compared to the previous quarter, in addition to the increase in Adjusted EBITDA (+26%), maintenance Capex decreased 10%.

 

ECONOMIC AND FINANCIAL PERFORMANCE

 

NET REVENUE

 

Suzano’s net revenue in 2Q19 was R$ 6,665 million, 81% of which came from exports (vs. 84% in 2Q18 and 77% in 1Q19). Pulp and paper sales in the quarter totaled 2,514 thousand tons, up 26% from 1Q19 and down 12% from 2Q18.

 

 


(1) Does not include service revenue at Portocel.

 

Consolidated net revenue in 2Q19 compared to 1Q19 was influenced by the 26% growth in pulp sales volume (pulp volume alone increased 28%) and by the 4% appreciation of the USD against the BRL, partially offset by the decline in average net price of pulp in USD (-11%).

 

Compared to 2Q18, the reduction in net revenue was mainly due to the decline in the average net price of pulp in USD (-15%) and the 14% decline in pulp sales volume. These effects were partially offset by the 9% appreciation of average USD in relation to BRL.

 

PRODUCTION

 

Production (k ton)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Market pulp

 

2,221

 

2,420

 

-8

%

2,173

 

+2

%

9,725

 

Paper

 

318

 

300

 

+6

%

292

 

+9

%

1,281

 

Total

 

2,539

 

2,720

 

-7

%

2,465

 

+3

%

11,006

 

 

In the 2nd quarter of 2019, the following units underwent scheduled maintenance downtimes: lines A and C (partially) at the Aracruz Unit, Imperatriz Unit, and line 1 and line 2 (partially) of the Três Lagoas Unit. Apart from these effects, production volume was also impacted by the Company’s decision to continue producing below capacity in order to better manage its inventories (currently higher than historical levels). The Company is planning total market pulp production of approximately 9.0 million in 2019, depending on conditions of global pulp market, according to Material Fact released on 05/09/2019. This production adjustment is aimed at managing inventories for the year after having fully ensured the availability of pulp to meet client demand.

 

9


 

The following calendar details Suzano’s scheduled maintenance downtimes:

 

 


(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)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Pulp

 

4,435

 

3,597

 

23

%

3,980

 

11

%

15,520

 

Paper

 

787

 

698

 

13

%

745

 

6

%

3,165

 

Consolidated

 

5,222

 

4,294

 

22

%

4,725

 

11

%

18,684

 

 

COGS — Income Statement (R$/ton)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Pulp

 

2,003

 

1,400

 

43

%

2,302

 

-13

%

1,740

 

Paper

 

2,620

 

2,460

 

7

%

2,716

 

-4

%

2,509

 

Consolidated

 

2,077

 

1,505

 

38

%

2,359

 

-12

%

1,835

 

 

As a result of the business combination with Fibria, Suzano assessed the fair market value of assets acquired and liabilities assumed from Fibria and made the corresponding allocations in the balance sheet (Purchase Price Allocation - PPA). For analyzing the operations in 2Q19, the following information excludes the effects of the realization of the surplus allocated to COGS in the period (whose impact was an additional expense of R$1,164 million) on Selling Expenses (negative impact of R$202 million) and on Administrative Expenses (positive impact of R$5 million).

 

COGS — ex-PPA (R$ million)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Pulp

 

3,271

 

3,597

 

-9

%

2,620

 

25

%

12,996

 

Paper

 

787

 

698

 

13

%

745

 

6

%

3,165

 

Consolidated

 

4,058

 

4,294

 

-5

%

3,365

 

21

%

16,161

 

 

COGS — ex-PPA (R$/ton)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Pulp

 

1,477

 

1,400

 

6

%

1,515

 

-36

%

1,457

 

Paper

 

2,620

 

2,460

 

7

%

2,716

 

-4

%

2,509

 

Consolidated

 

1,614

 

1,505

 

35

%

1,680

 

-14

%

1,588

 

 

10


 

Excluding the above effect of PPA, COGS in 2Q19 came to R$4,058 million, or R$1,614/ton. Compared to 2Q18, COGS decreased 5%, due to lower pulp sales volume, which was partially offset by higher ex-Klabin cash COGS, in turn explained by i) higher cash production cost; ii) appreciation of average USD vs BRL of 9%; and iii) higher freight costs per ton — mill sales mix with higher participation of Três Lagoas and region sales mix with higher participation of Asia. Note the R$107 million effect on COGS related to the alignment of accounting allocation criteria, given the asset combination with Fibria, mainly related to logistics expenses, which were allocated as “selling expenses” at Fibria in 2018, and were allocated to “logistics costs” under COGS as of 1Q19.

 

 

Compared to 1Q19, also excluding the impact of PPA, the 21% increase was due to higher pulp and paper sales volume, partially offset by higher ex-Klabin cash COGS per ton, which in turn was impacted by lower cost with general maintenance downtime, which were mostly concentrated in the previous quarter.

 

 

OPERATING EXPENSES

 

Operating Expenses — Income Statement
(R$ million)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Selling Expenses

 

457

 

372

 

23

%

441

 

4

%

1,631

 

General and Administrative Expenses

 

278

 

298

 

-7

%

331

 

-16

%

1,307

 

Total Expenses

 

735

 

670

 

10

%

772

 

-5

%

2,938

 

Total Expenses/Sales Volume (R$/ton)

 

292

 

235

 

25

%

385

 

-24

%

289

 

 

11


 

Operating Expenses —ex-PPA
(R$ million)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Selling Expenses

 

255

 

372

 

-32

%

236

 

8

%

1,223

 

General and Administrative Expenses

 

283

 

298

 

-5

%

330

 

-14

%

1,312

 

Total Expenses

 

538

 

670

 

-20

%

566

 

-5

%

2,535

 

Total Expenses/Sales Volume (R$/ton)

 

214

 

235

 

-9

%

282

 

-24

%

249

 

 

Excluding the R$202 million effect of PPA from 2Q19 results, Selling Expenses decreased 32% from 2Q18, mainly due to the impact of the alignment of the accounting allocation criteria with the merger of Fibria shares (especially selling expenses, which are recorded as COGS as of 1Q19), and the lower sales volume (-12%). Selling expenses per ton increased 10%, mainly due to the 9% appreciation of USD in relation to BRL and lower fixed expenses dilution.

 

 

Compared to 1Q19, the 8% increase is explained by higher sales volume and 4% appreciation of the USD against the BRL.

 

 

Excluding the effect of PPA on administrative expenses (-R$ 5 million), which was positive in the period due to the closure of lawsuits, compared to 2Q18, the 5% decrease in this item is explained by lower expenses due to the transaction with Fibria, expenses with outsourced services, and synergies, partially offset by the accounting allocation of R$34 million (related to a portion of variable compensation and contingencies, which were earlier recorded in Fibria as “other operating income and expenses”).

 

12


 

 

Compared to 1Q19, the reduction was mainly due to the lower impact of non-recurring expenses related to the transaction with Fibria and lower expenses with salaries and severance payments.

 

 

Other operating income (expenses) amounted to an income of R$171 million in 2Q19, compared to other operating income of R$27 million in 2Q18 and an expense of R$19 million in 1Q19. The variation in relation to 2Q18 is due to sale of judicial credits and the accounting reallocation of profit sharing paid to employees of erstwhile Fibria from this item to administrative expenses. Compared to 1Q19, the variation is explained by sale of legal credits and the result of the restatement of the fair value of biological assets.

 

ADJUSTED EBITDA

 

Consolidated

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Adjusted EBITDA (R$ million)

 

3,101

 

4,071

 

-24

%

2,761

 

12

%

14,799

 

Adjusted EBITDA margin - ex-Klabin

 

48

%

55

%

-6 p.p.

 

49.9

%

-1 p.p.

 

53

%

Sales volume ex-Klabin (k ton)

 

2,396

 

2,668

 

-10

%

1,948

 

23

%

9,642

 

Adjusted EBITDA ex-Klabin (R$/ton)

 

1,294

 

1,526

 

-15

%

1,417

 

-9

%

1,535

 

 

Adjusted EBITDA in 2Q19 was R$ 3,101 million, lower than in 2Q18 mainly due to: (i) lower average net pulp price in USD (-15%); (ii) lower pulp sales volume; and (iii) higher ex-Klabin cash COGS (higher cash production cost), partially offset by the 9% appreciation of USD against BRL. The 14% decrease in EBITDA per ton is explained by the same factors.

 

Compared to 1Q19, the increase in Adjusted EBITDA of 12% was due to higher sales volume of pulp (+28%) and paper (+10%), the higher average USD to BRL (+4%), and lower cash COGS (less impact from scheduled maintenance downtimes), partially offset by lower net price of pulp in USD (-11%). The 9% drop in EBITDA per ton, however, is due to the lower average net price in USD.

 

13


 

FINANCIAL INCOME AND EXPENSES

 

Financial Result (R$ million)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Financial Expenses

 

(1,086

)

(666

)

63

%

(993

)

9

%

(3,802

)

Interest on loans and financing (local currency)

 

(345

)

(203

)

70

%

(421

)

-18

%

(1,391

)

Interest on loans and financing (foreign currency)

 

(538

)

(264

)

104

%

(448

)

20

%

(1,666

)

Capitalized interest(1)

 

1

 

3

 

-69

%

1

 

65

%

4

 

Other financial expenses

 

(205

)

(203

)

1

%

(125

)

64

%

(749

)

Financial Income

 

150

 

129

 

17

%

149

 

0

%

889

 

Interest on financial investments

 

74

 

111

 

-33

%

140

 

-47

%

769

 

Other financial income

 

76

 

18

 

324

%

9

 

720

%

120

 

Monetary and Exchange Variations

 

758

 

(2,641

)

-129

%

(456

)

-266

%

239

 

Foreign exchange variations (Debt)

 

647

 

(3,224

)

-120

%

(306

)

-312

%

465

 

Other foreign exchange variations

 

112

 

583

 

-81

%

(150

)

-174

%

(226

)

Derivative income (loss), net(2)

 

257

 

(3,031

)

-108

%

(637

)

-140

%

(296

)

Cash flow hedge

 

408

 

(2,243

)

-118

%

(75

)

-642

%

725

 

Debt hedge

 

(177

)

(768

)

-77

%

(563

)

-69

%

(979

)

Others(3)

 

26

 

(19

)

-238

%

2

 

1409

%

(41

)

Net Financial Result

 

79

 

(6,209

)

-101

%

(1,936

)

-104

%

(2,969

)

 


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

(2) Variation in mark-to-market adjustment plus adjustments paid and received, considering the end-of-month exchange rate (R$/US$3.8322 on 6/30/2019).

(3) Includes commodity hedge and embedded derivatives.

 

Interest expenses totaled R$1,086 million in 2Q19, increasing 9% from 1Q19, mainly due to the 4% increase in average USD in relation to BRL, and the Company’s liability management actions during the period, which lengthened the average debt term. Compared to 2Q18, the 63% increase reflects the financing taken out for the asset combination with Fibria and the higher average USD versus BRL (2Q19: 3.92 | 2Q18: 3.60).

 

“Other financial expenses” came to an expense of R$205 million, up 64% from 1Q19, mainly due to the early settlement of the ECA Finnvera financing facility, causing the full derecognition of funding costs. The settlement of the facility eliminated the existence of financial covenants in the Company’s debt agreements. Compared to 2Q18, the item remained stable.

 

Financial income remained virtually stable between 1Q19 and 2Q19. The reduction in Interest income is due to (1) the yield on the cash raised for the asset combination with Fibria in 1Q19; and (2) the concentration of cash at the end of 2Q19 due to the liability management actions in June. These effects were partially offset by the increase in “Other financial income” in 2Q19, due to the amortization of the goodwill related to the asset combination with Fibria (for further details, please refer to note 24 in the Financial Statements). Compared to 2Q18, the 17% increase is mainly due to the amortization of the surplus related to the business combination with Fibria.

 

Inflation adjustment and exchange variation had a positive impact of R$758 million on the Company’s financial result in the quarter, due to the 2% depreciation of BRL against the USD on the foreign currency portion of the debt (72% of total debt). The positive accounting impact of exchange variation on foreign currency debt has cash impact only on the respective maturities.

 

The result from operations with derivatives was positive, impacted by the high volatility in the financial markets during the quarter, which caused significant variation in the mark-to-market (MtM) adjustment of derivative operations. The MtM variation is mainly explained by: 1) new operations contracted during the quarter (positive variation); 2) the variation in the Fixed, Coupon and Libor curves on operations (negative variation); and 3) the depreciation of the closing USD against the BRL on existing agreements (positive variation). The mark-to-

 

14


 

market adjustment of derivative instruments on June 30, 2019 was an negative in R$1,254 million, compared to negative R$1,541 million on March 31, 2019, resulting in a positive variation of R$257 million.

 

Due to the above factors, the Company posted net financial income of R$79 million in 2Q19, compared to net financial expense of R$1,936 million in 1Q19 and R$6,209 million in 2Q18.

 

DERIVATIVES OPERATIONS

 

Suzano carries out derivatives operations exclusively for hedging purposes. The following table reflects the position of derivatives instruments on June 30, 2019:

 

 

 

Notional

 

Fair Value

 

Hedge

 

(USD million)

 

(BRL million)

 

Debt

 

6,584

 

(1,664

)

Cash flow

 

4,815

 

139

 

Others

 

706

 

271

 

Total

 

12,105

 

(1,254

)

 


(1) Includes commodity hedge and embedded derivatives.

 

The Company’s currency exposure policy seeks to minimize the volatility of its cash generation and to enable greater flexibility to cash flow management. The policy currently stipulates that surplus dollars may be partially hedged (up to 75% of 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 strong appreciation of the BRL. If the exchange rate is within such limits, the Company neither pays nor receives any financial adjustments. Thus, the Company is protected for extreme scenarios of BRL appreciation. However, these operations also limit potential gains in extreme scenarios of BRL depreciation. 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 June 30, 2019, the amount outstanding of the operations (notional) involving forward dollar sales through ZCCs was US$4,815 million, whose maturities are distributed from July 2019 to November 2020, and were contracted in a range from R$ 3.81 to R$4.16. The result of ZCC operations was a gain of R$408 million in 2Q19. The mark-to-market adjustment (fair value) of ZCC operations was positive at R$139 million at the end of the quarter.

 

Cash Flow Hedge

 

Maturity

 

Strike Range

 

Notional
(US$ million)

 

Zero-Cost Collars

 

3Q19

 

3.73 – 4.10

 

1,260

 

Zero-Cost Collars

 

4Q19

 

3.72 – 4.13

 

1,085

 

Zero-Cost Collars

 

1Q20

 

3.87 – 4.28

 

940

 

Zero-Cost Collars

 

2Q20

 

3.86 – 4.19

 

695

 

Zero-Cost Collars

 

3Q20

 

3.93 – 4.10

 

705

 

Zero-Cost Collars

 

4Q20

 

4.09 – 4.49

 

130

 

Total

 

 

 

3.81 – 4.16

 

4,815

 

 

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 June 30, 2019, the Company held US$6,584 million (notional value) in swaps, distributed as shown in the table. In 2Q19, the derivative operations resulted in a loss of R$177 million. The mark-to-market (fair value) of these operations was negative at R$1,664 million at the end of the quarter.

 

15


 

Debt Hedge

 

Maturity

 

Currency

 

Notional
(US$ million)

 

Swap (PRÉ x USD)

 

2024

 

USD

 

352

 

Swap (CDI x USD)

 

2026

 

USD

 

3,137

 

Swap (IPCA x CDI)(1)

 

2023

 

BRL

 

220

 

Swap (IPCA x USD)

 

2023

 

USD

 

121

 

Swap (LIBOR x USD)

 

2024

 

USD

 

2,754

 

Total

 

 

 

 

 

6,584

 

 


(1) Translated at the closing exchange rate on 6/30/2019 of 3.8322

 

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 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 2Q19 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 June 30, 2019, the outstanding amount (notional) of the operation was US$702 million. The result of this swap was a gain of R$26 million in 2Q19. The mark-to-market (fair value) of these operations was positive at R$268 million at the end of the quarter.

 

Embedded Derivative

 

Maturity

 

Index

 

Notional
(US$ million)

 

Embedded Derivative

 

2035

 

Fixed USD - USD US-CPI

 

702

 

Total

 

 

 

 

 

702

 

 

 

In 2Q19, the Company posted net income of R$700 million, compared to net loss of R$2,060 million in 2Q18 and R$1,936 million in 1Q19. The variation in relation to 2Q18 is mainly explained by the positive financial result, which was partially offset by lower operating income. Compared to 1Q19, the variation was due to the positive financial result, but also to higher operating income, as explained earlier.

 

16


 

DEBT

 

Debt (R$ million)

 

06/30/2019

 

06/30/2018

 

Δ Y-o-Y

 

03/31/2019

 

Δ Q-o-Q

 

Local Currency

 

17,221

 

16,434

 

16

%

19,605

 

-12

%

Short Term

 

2,227

 

1,860

 

138

%

3,740

 

-40

%

Long Term

 

14,994

 

14,574

 

8

%

15,865

 

-5

%

Foreign Currency

 

43,259

 

22,551

 

79

%

41,160

 

5

%

Short Term

 

2,466

 

1,535

 

0

%

3,694

 

-33

%

Long Term

 

40,793

 

21,016

 

88

%

37,466

 

9

%

Gross Debt

 

60,480

 

38,985

 

55

%

60,765

 

0

%

(-) Cash

 

7,972

 

15,247

 

-50

%

6,959

 

15

%

Net Debt

 

52,508

 

23,738

 

127

%

53,806

 

-2

%

Net Debt/Adjusted EBITDA(1) (x) — R$

 

3.5x

 

1.8x

 

1.8x

 

3.4x

 

0.1x

 

Net Debt/EBITDA Ajustado(1) (x) — US$

 

3.6x

 

1.5x

 

2.1x

 

3.3x

 

0.3x

 

 


(1) Excluding non-recurring items.

 

Gross debt on June 30, 2019 amounted to R$60.5 billion, composed of 92% long-term maturities and 8% short-term maturities, with 72% denominated in foreign currency and 28% in local currency. The percentage of gross debt denominated in foreign currency, considering the effect of debt hedge, was 94%. Gross debt decreased slightly from 1Q19. The impact of fresh borrowings and settlements of liability management processes by the Company during the period in order to improve its debt profile was partially offset by the impact of exchange rate variation. Compared to 2Q18, the increase in gross debt reflected the borrowings made for the asset combination with Fibria.

 

On June 18, the Company concluded the early settlement of export prepayment agreements in the total principal amount of US$780 million, with final maturity in 2022, as well as the early settlement of the financing agreement with ECA Finnvera in the total principal amount of US$371 million, with final maturity in 2025, thereby eliminating all and any financial covenant binding the Company’s debt agreements.

 

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.

 

 


* Transaction costs (issue, borrowings, etc.) and impacts of the surplus value resulting from the operation with Fibria.

 

On June 30, 2019, average total cost of debt in USD was 4.8% p.a. (debt in BRL adjusted by the market swap curve). Average term of consolidated debt at the end of the period was lengthened to 87 months (from 75 months in March 2019).

 

17


 

 


(1) Considers the portion of debt with swap to foreign currency. The original debt was 72% in USD and 28% in BRL.

 

(2) Agribusiness Receivables Certificates.

 

Cash and cash equivalents at the end of June 30, 2019 amounted to R$7,972 million, 59% of them invested in local currency in government bonds and fixed income securities, and the balance in short-term investments abroad.

 

The company has two stand-by credit facilities totaling R$ 2,916 million, available through 2024, with one line in local currency amounting to R$ 1 billion at a cost of CDI plus 2.5% p.a. when used (while not in use the cost in BRL is 0.40% p.a.) and the other in foreign currency, currently amounting to US$ 500 million at a cost of 3 month Libor plus 1.0% p.a., which could reach 2.50%, depending on the Company’s credit rating, when used (while not in use, the cost in USD is 0.30% p.a.). These funds, although untapped, help improve the company’s liquidity conditions. As a result, the current cash position of R$7,972 million plus these lines totaling R$2,916 million amounts to a readily available cash position of R$10,888 million. Accordingly, the ratio of cash (including the stand-by credit facilities) to short-term debt stood at 2.3 times on June 30, 2019.

 

 

Net debt stood at R$52.5 billion (US$13.8 billion) on June 30, 2019, compared to R$53.8 billion (US$13.7 billion) on March 31, 2019. The reduction is due to the increase in the cash position and the slight decrease in gross debt.

 

18


 

 

The ratio of net debt to Adjusted EBITDA in BRL stood at 3.5 times on June 30, 2019, compared to 3.4 times at the end of 1Q19. In USD, the ratio of net debt to Adjusted EBITDA was 3.6 times on June 30, 2019, compared to 3.3 times at the end of 1Q19.

 

CAPITAL INVESTMENTS

 

In 2Q19, capital investments totaled R$1,377 million, 11% lower than in 2Q18, mainly due to lower spending on expansion and modernization. Compared to 1Q19, the reduction was mostly due to lower expenses with forest maintenance. Investments in Land and Forests totaled R$387 million and aimed at capturing gains from current operations, as well as creating alternatives for business growth.

 

For 2019, the Company has revised the total estimated Capex from R$ 6.4 billion to R$ 5.9 billion, according to Material Fact released on August 8th. The reduction in the guidance reflects the same expenditures with forestry resulting from the lower volume of harvested wood due to lower production volume in 2019, as well as the Company’s financial discipline to manage its leverage by reducing approximately R$500 million as detailed below.

 

Investments (R$ billion)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Guidance
2019

 

Sustaining

 

875

 

858

 

2

%

980

 

-11

%

3,879

 

3,813

 

Industrial Maintenance

 

156

 

156

 

0

%

167

 

-7

%

734

 

767

 

Forestry Maintenance

 

695

 

694

 

0

%

786

 

-12

%

3,072

 

2.953

 

Other

 

24

 

8

 

203

%

27

 

-12

%

74

 

93

 

Expansion and Modernization

 

46

 

275

 

-83

%

79

 

-42

%

594

 

387

 

Land and Forestry

 

387

 

409

 

-5

%

278

 

39

%

1,327

 

1,349

 

Port Terminals

 

70

 

4

 

1841

%

91

 

-23

%

333

 

389

 

Total

 

1,377

 

1,546

 

-11

%

1,428

 

-4

%

6,134

 

5,938

 

 

OPERATING CASH FLOW GENERATION

 

(R$ million)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

LTM 2Q19

 

Adjusted EBITDA

 

3,101

 

4,071

 

-24

%

2,761

 

12

%

14,799

 

Maintenance Capex

 

(875

)

(858

)

2

%

(980

)

-11

%

(3,879

)

Operating Cash Flow

 

2,226

 

3,213

 

-31

%

1,781

 

25

%

10,920

 

Operating Cash Flow (R$/ton)

 

929

 

1,193

 

-22

%

914

 

2

%

1,127

 

 

19


 

Operating cash flow generation, measured by Adjusted EBITDA less maintenance capex, amounted to R$2,226 million in 2Q19. The decrease in relation to 2Q18 reflected the lower net price of pulp in USD (-15%) and the lower pulp sales volume, which were partially offset by the 9% appreciation of the USD against the BRL. Compared to 1Q19, the 25% increase is due to: i) higher sales volume; ii) appreciation of the USD against the BRL; iii) lower cash COGS; and iv) lower maintenance Capex, partially offset by lower net price of pulp in USD (-11%).

 

 

IFRS 16

 

The Company adopted accounting standard CPC 06(R2) / IFRS 16 on 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 lease liabilities for contracts that meet the definition of lease, in the amount of R$4,019 million. The updated liabilities balances on June 30, 2019 were R$ 4,359 million, while the updated balance on “Right of use on lease agreements” in assets were R$ 4,246 million. For further details, see Note 18 of the 2Q19 Quarterly Financial Statements.

 

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.

 

DIVIDENDS

 

On April 18, 2019, the Company announced to its shareholders the approval on the Annual Shareholders’ Meeting of the payment of minimum mandatory dividends in the total amount of R$ 600 million, paid on April 30, 2019, at a value per share equivalent to R$ 0.44470086.

 

20


 

CAPITAL MARKETS

 

On June 30, 2019, Suzano stock was quoted at R$32.85/share (SUZB3) and US$17.03 (SUZ). The Company’s stock is listed on the Novo Mercado, the trading segment of the São Paulo Exchange (B3 — Brasil, Bolsa e Balcão) with the highest corporate governance standards and is also traded on the New York Stock Exchange (NYSE) - Level II.

 

 

Source: Bloomberg.

 

 

On June 30, 2019, the capital stock of the Company was represented by 1,361,263,584 common shares, of which 12,042,004 were held in treasury. Suzano’s market capitalization was R$44.7 billion on June 30, 2019. In 2Q19, free float corresponded to 53.3% of the total capital.

 

21


 

 

FIXED INCOME

 

 

 

Unit

 

Jun/19

 

Mar/19

 

Jun/19

 

Suzano 2021 — Price

 

USD/k

 

104.1

 

104.6

 

104.5

 

Suzano 2021 — Yield

 

%

 

4.3

 

3.3

 

2.9

 

Fibria 2024 — Price

 

USD/k

 

100.9

 

105.2

 

106.4

 

Fibria 2024 — Yield

 

%

 

5.1

 

4.1

 

3.8

 

Fibria 2025 — Price

 

USD/k

 

92.6

 

98.7

 

100.8

 

Fibria 2025 — Yield

 

%

 

5.4

 

4.2

 

3.8

 

Suzano 2026 — Price

 

USD/k

 

102.0

 

106.6

 

109.1

 

Suzano 2026 - Yield

 

%

 

5.4

 

4.7

 

4.2

 

Fibria 2027 — Price

 

USD/k

 

99.4

 

105.0

 

107.4

 

Fibria 2027 — Yield

 

%

 

5.6

 

4.7

 

4.3

 

Suzano 2029 — Price

 

USD/k

 

 

106.5

 

109.1

 

Suzano 2029 - Yield

 

%

 

 

5.1

 

4.8

 

Suzano 2030 — Price

 

USD/k

 

 

 

101.1

 

Suzano 2030 - Yield

 

%

 

 

 

4.9

 

Suzano 2047 — Price

 

USD/k

 

102.9

 

111.6

 

113.6

 

Suzano 2047 - Yield

 

%

 

6.8

 

6.1

 

6.0

 

Treasury 10 years

 

%

 

2.9

 

2.4

 

2.0

 

 

Note: Senior Notes issued with face value of 100 USD/k

 

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


 

UPCOMING EVENTS

 

Earnings Conference Call (2Q19)

 

Date: August 9, 2019 (Friday)

 

Portuguese (simultaneous translation)

English

10:00 a.m. (Brasília)

10 a.m. (Brasília)

9:00 a.m. (New York)

9 a.m. (New York)

2 p.m. (London)

2 p.m. (London)

Tel.: +55 (11) 4003-4860

Tel.: +1 866 890 2584 (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

Roberto Costa

Raimundo Guimarães

Luiz Otávio Souza Fonseca

 

Tel.: +55 (11) 3503-9330

ri@suzano.com.br

www.suzano.com.br/ir

 

23


 

APPENDICES

 

APPENDIX 1(2) — Operating Data

 

Revenue breakdown
(R$ ‘000)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

6M19

 

6M18

 

Δ Y-o-Y

 

Exports

 

5,402,279

 

6,623,977

 

-18

%

4,385,794

 

23

%

9,788,073

 

12,136,462

 

-19

%

Pulp

 

4,975,200

 

6,312,858

 

-21

%

4,096,451

 

21

%

9,071,651

 

11,533,072

 

-21

%

Paper

 

427,079

 

311,119

 

37

%

289,343

 

48

%

716,422

 

603,390

 

19

%

Domestic Market

 

1,262,800

 

1,278,812

 

-1

%

1,313,206

 

-4

%

2,576,006

 

2,433,220

 

6

%

Pulp

 

478,569

 

541,317

 

-12

%

505,535

 

-5

%

984,104

 

1,065,462

 

-8

%

Paper

 

784,231

 

737,496

 

6

%

807,672

 

-3

%

1,591,902

 

1,367,757

 

16

%

Total Net Revenue

 

6,665,082

 

7,902,789

 

-16

%

5,699,000

 

17

%

12,364,079

 

14,569,681

 

-15

%

Pulp

 

5,453,769

 

6,854,175

 

-20

%

4,601,986

 

19

%

10,055,755

 

12,598,534

 

-20

%

Paper

 

1,211,310

 

1,048,615

 

16

%

1,097,014

 

10

%

2,308,324

 

1,971,147

 

17

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales volume
(tons)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

6M19

 

6M18

 

Δ Y-o-Y

 

Exports

 

2,126,088

 

2,417,082

 

-12

%

1,604,730

 

32

%

3,730,817

 

4,724,386

 

-21

%

Pulp

 

2,013,287

 

2,329,866

 

-14

%

1,527,621

 

32

%

3,540,907

 

4,541,818

 

-22

%

Paper

 

112,801

 

87,215

 

29

%

77,109

 

46

%

189,910

 

182,568

 

4

%

Paperboard

 

15,691

 

12,279

 

28

%

10,940

 

43

%

26,631

 

26,611

 

0

%

Printing & Writing

 

97,110

 

74,936

 

30

%

65,855

 

47

%

162,209

 

155,957

 

4

%

Domestic Market

 

388,334

 

434,724

 

-11

%

398,574

 

-3

%

786,908

 

878,400

 

-10

%

Pulp

 

200,598

 

239,656

 

-16

%

201,462

 

0

%

402,060

 

494,644

 

-19

%

Paper

 

187,736

 

195,067

 

-4

%

197,112

 

-5

%

384,848

 

383,755

 

0

%

Paperboard

 

32,866

 

30,139

 

9

%

30,174

 

9

%

63,040

 

60,160

 

5

%

Printing & Writing

 

133,459

 

143,457

 

-7

%

145,321

 

-8

%

278,781

 

291,822

 

-4

%

Other paper(1)

 

21,410

 

21,471

 

0

%

21,617

 

-1

%

43,027

 

31,774

 

35

%

Total sales volume

 

2,514,422

 

2,853,132

 

-12

%

2,003,304

 

26

%

4,517,726

 

5,604,113

 

-19

%

Pulp

 

2,213,885

 

2,569,523

 

-14

%

1,729,082

 

28

%

3,942,967

 

5,036,462

 

-22

%

Paper

 

300,537

 

283,610

 

6

%

274,222

 

10

%

574,759

 

567,651

 

1

%

Paperboard

 

48,557

 

42,418

 

14

%

41,114

 

18

%

89,671

 

86,771

 

3

%

Printing & Writing

 

229,814

 

218,393

 

5

%

211,177

 

9

%

440,990

 

447,779

 

-2

%

Other paper(1)

 

22,166

 

22,798

 

-3

%

21,931

 

1

%

44,097

 

33,101

 

33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average net price
(R$/ton)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

6M19

 

6M18

 

Δ Y-o-Y

 

Exports

 

2,541

 

2,740

 

-7

%

2,733

 

-7

%

2,624

 

2,569

 

2

%

Pulp

 

2,471

 

2,710

 

-9

%

2,682

 

-8

%

2,562

 

2,539

 

1

%

Paper

 

3,786

 

3,567

 

6

%

3,752

 

1

%

3,772

 

3,305

 

14

%

Domestic Market

 

3,252

 

2,942

 

11

%

3,295

 

-1

%

3,274

 

2,770

 

18

%

Pulp

 

2,386

 

2,259

 

6

%

2,509

 

-5

%

2,448

 

2,154

 

14

%

Paper

 

4,177

 

3,781

 

10

%

4,098

 

2

%

4,136

 

3,564

 

16

%

Total

 

2,651

 

2,770

 

-4

%

2,845

 

-7

%

2,737

 

2,600

 

5

%

Pulp

 

2,463

 

2,667

 

-8

%

2,662

 

-7

%

2,550

 

2,501

 

2

%

Paper

 

4,030

 

3,697

 

9

%

4,000

 

1

%

4,016

 

3,472

 

16

%

 

24


 

Average net price (US$/ton)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

6M19

 

6M18

 

Δ Y-o-Y

 

Exports

 

648

 

760

 

-15

%

725

 

-11

%

696

 

792

 

-12

%

Pulp

 

631

 

751

 

-16

%

711

 

-11

%

679

 

783

 

-13

%

Paper

 

966

 

989

 

-2

%

995

 

-3

%

1,000

 

1,019

 

-2

%

Domestic Market

 

830

 

816

 

2

%

874

 

-5

%

868

 

854

 

2

%

Pulp

 

609

 

626

 

-3

%

665

 

-9

%

649

 

664

 

-2

%

Paper

 

1,066

 

1,049

 

2

%

1,087

 

-2

%

1,097

 

1,099

 

0

%

Total

 

676

 

768

 

-12

%

754

 

-10

%

726

 

801

 

-9

%

Pulp

 

629

 

740

 

-15

%

706

 

-11

%

676

 

771

 

-12

%

Paper

 

1,028

 

1,025

 

0

%

1,061

 

-3

%

1,065

 

1,071

 

-1

%

 


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

(2) Comparison data with 2018 (2Q18, 6M18 and LTM) are a simple sum or weighted average of Suzano + Fibria.

 

Taxa R$/US$

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

Closing

 

3.83

 

3.86

 

-1

%

3.90

 

-2

%

Average

 

3.92

 

3.61

 

9

%

3.77

 

4

%

 

25


 

APPENDIX 2(2) — Consolidated Statement of Income

 

Demonstração de Resultado
(R$ mil)

 

2Q19

 

2Q18

 

Δ Y-o-Y

 

1Q19

 

Δ Q-o-Q

 

6M19

 

6M18

 

Δ Y-o-Y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenue

 

6,665,082

 

7,926,283

 

-16

%

5,698,999

 

17

%

12,364,081

 

14,618,309

 

-15

%

Cost of Goods Sold

 

(5,222,119

)

(4,294,375

)

22

%

(4,724,893

)

11

%

(9,947,012

)

(8,085,447

)

23

%

Gross Profit

 

1,442,963

 

3,631,908

 

-60

%

974,106

 

48

%

2,417,069

 

6,532,862

 

-63

%

Gross Margin

 

21.6

%

45.8

%

-24 p.p.

 

17.1

%

5 p.p.

 

19.5

%

44.7

%

-25 p.p.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expense/Income

 

(559,902

)

(641,896

)

-13

%

(789,294

)

-29

%

(1,349,196

)

(1,246,200

)

8

%

Selling Expenses

 

(456,981

)

(372,152

)

23

%

(441,303

)

4

%

(898,284

)

(678,952

)

32

%

General and Administrative Expenses

 

(278,031

)

(297,524

)

-7

%

(330,765

)

-16

%

(608,796

)

(518,845

)

17

%

Other Operating Income (Expenses)

 

171,199

 

27,314

 

527

%

(18,884

)

-1007

%

152,315

 

(48,816

)

-412

%

Equity Equivalence

 

3,911

 

466

 

739

%

1,658

 

136

%

5,569

 

413

 

1248

%

EBIT

 

883,061

 

2,990,012

 

-70

%

184,812

 

378

%

1,067,873

 

5,286,662

 

-80

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation, Amortization & Depletion

 

2,327,703

 

1,086,609

 

114

%

2,471,286

 

-6

%

4,798,989

 

2,091,547

 

129

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

 

3,210,764

 

4,076,621

 

-21

%

2,656,098

 

21

%

5,866,862

 

7,378,209

 

-20

%

EBITDA Margin (%)

 

48.2

%

51.4

%

-3 p.p.

 

46.6

%

2 p.p.

 

47.5

%

50.5

%

-3 p.p.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA(1)

 

3,100,521

 

4,071,480

 

-24

%

2,761,240

 

12

%

5,861,761

 

7,423,762

 

-21

%

Adjusted EBITDA Margin(1)

 

46.5

%

51.4

%

-5 p.p.

 

48.5

%

-2 p.p.

 

47.4

%

50.8

%

-3 p.p.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Financial Result

 

79,065

 

(6,209,032

)

-101

%

(1,936,143

)

-104

%

(1,857,078

)

(6,636,462

)

-72

%

Financial Expenses

 

149,607

 

128,872

 

16

%

149,322

 

0

%

298,929

 

234,075

 

28

%

Financial Revenues

 

(1,086,192

)

(666,626

)

63

%

(992,804

)

9

%

(2,078,996

)

(1,217,997

)

71

%

Exchange Rate Variation

 

758,223

 

(2,640,700

)

-129

%

(455,727

)

-266

%

302,496

 

(2,747,630

)

-111

%

Net Proceeds Generated by Derivatives

 

257,427

 

(3,030,578

)

-108

%

(636,934

)

-140

%

(379,507

)

(2,904,910

)

-87

%

Earnings Before Taxes

 

962,126

 

(3,219,020

)

-130

%

(1,751,331

)

-155

%

(789,205

)

(1,349,800

)

-42

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income and Social Contribution Taxes

 

(262,278

)

1,159,990

 

-123

%

522,199

 

-150

%

259,921

 

719,012

 

-64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss)

 

699,848

 

(2,059,538

)

-134

%

(1,229,132

)

-157

%

(529,284

)

(631,066

)

-16

%

Net Margin

 

10.5

%

-26.0

%

36 p.p.

 

-21.6

%

32 p.p.

 

-4.3

%

-4.3

%

0 p.p.

 

 


(1) Excluding non-recurring items.

(2) Comparison data with 2018 (2Q18, 6M18 and LTM) are a simple sum or weighted average of Suzano + Fibria.

 

26


 

APPENDIX 3(1) — Consolidated Balance Sheet

 

Assets (R$ ‘000)

 

06/30/2019

 

03/31/2019

 

06/30/2018

 

 

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and Cash Equivalent

 

4,104,641

 

3,095,885

 

6,907,670

 

Securities

 

3,692,806

 

3,687,230

 

8,509,515

 

Accounts Receivable

 

2,895,714

 

3,507,439

 

3,837,531

 

Inventories

 

7,365,938

 

8,044,651

 

4,278,260

 

Recoverable Taxes

 

1,303,898

 

944,407

 

1,997,576

 

Prepaid Expenses

 

100,733

 

83,196

 

132,000

 

Other Current Assets

 

941,216

 

957,658

 

626,646

 

Total Current Assets

 

20,404,946

 

20,320,466

 

26,289,198

 

 

 

 

 

 

 

 

 

Non-Current Assets

 

 

 

 

 

 

 

Other Accounts Receivable

 

4,081,292

 

4,631,925

 

3,733,308

 

Biological Assets

 

10,094,235

 

9,752,742

 

9,027,435

 

Investments

 

228,381

 

228,684

 

187,985

 

Property, Plant and Equipment

 

41,744,825

 

41,998,207

 

32,214,548

 

Intangible

 

18,212,469

 

18,465,253

 

4,961,413

 

Right of Use on lease agreements

 

4,430,713

 

3,910,574

 

 

Total Non-Current Assets

 

78,791,915

 

78,987,385

 

50,124,689

 

Total Assets

 

99,011,945

 

99,307,851

 

76,414,365

 

 

Liabilities and Equity (R$ ‘000)

 

30/06/2019

 

31/03/2019

 

30/06/2018

 

 

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts Payable

 

3,986,488

 

2,082,084

 

3,660,381

 

Loans and Financing

 

4,693,057

 

7,422,784

 

3,394,834

 

Tax Liabilities

 

245,000

 

228,240

 

442,703

 

Salaries and Payroll Taxes

 

370,853

 

303,419

 

357,593

 

Other Payable

 

2,125,334

 

4,178,610

 

1,909,151

 

Total Current Liabilities

 

11,420,732

 

14,215,137