[SUZ] Suzano Thesis 2026: BHKP Pulp Cycle Drives Cerrado Capacity Capital Return

Key Takeaways

• SUZ FY2025 revenue ~R$58-62B / ~$10.5-11.2B (+25-35% YoY in BRL) with adj. EPS ~R$5.50-6.50 / ~$1.00-1.18 reflecting continued post-2024 ~R$50-54B aggregate Pulp revenue (~85%+ aggregate revenue mix; selected primary BHKP — Bleached Hardwood Kraft Pulp from eucalyptus) + selected continued post-2024 ~R$8-9B aggregate Paper revenue (~15% aggregate revenue mix; selected primary printing + writing + uncoated woodfree paper + selected various tissue) under continued President + CEO Beto Abreu since January 2024 (~2-year tenure as Suzano CEO; selected post-January 2019 Suzano Papel + Fibria merger + selected post-July 2024 Cerrado Project commercial operations).
• BHKP Pulp cycle (Bleached Hardwood Kraft Pulp): ~R$50-54B Pulp revenue (~85%+ revenue mix); selected primary BHKP from eucalyptus + selected ~13.0-14.0Mt aggregate annual Pulp production capacity (selected post-July 2024 Cerrado +2.55Mt commercial operations + selected various aggregate Imperatriz + Aracruz + Ribas + Mucuri + Três Lagoas + Belmonte mills); selected ~30%+ aggregate global BHKP market share + selected various aggregate ~$550-650/t aggregate Hardwood pulp realized price.
• Cerrado capacity + post-July 2024 commercial operations: selected post-July 2024 Cerrado Project ~$3.7B aggregate CapEx + 2.55Mt aggregate Cerrado annual Pulp production capacity addition + selected various aggregate ~$200-250/t aggregate Cerrado lowest-cost-quartile cash cost positioning + selected various aggregate ~+15-20% aggregate post-July 2024 Cerrado-driven Pulp production capacity growth.
• Capital return + balance sheet: ~R$3.50 / $0.65 annual dividend FY2025 (+10-15% growth post-2024 dividend acceleration; ~5-year continuous dividend track post-January 2019 Suzano + Fibria merger); selected ~R$5-10B aggregate FY2024-2025 buyback program (~R$3-5B aggregate FY2025); aggregate capital return ~R$8-12B / ~$1.5-2.2B FY2025; net leverage ratio ~3.5-4.0x net debt-to-adj. EBITDA (selected continued post-July 2024 Cerrado peak leverage); investment-grade Baa3/BBB credit rating.
• FY2026 thesis catalysts: BHKP Pulp cycle + Cerrado capacity + post-July 2024 commercial operations (selected ~$200-250/t aggregate Cerrado lowest-cost-quartile cash cost) + ~R$3.50 annual dividend + ~5-year continuous dividend track + ~R$8-12B aggregate annual capital return + selected projected post-2026 selected various aggregate ~3.0-3.5x → ~2.5-3.0x net leverage trajectory.

Company Background

Suzano S.A. (NYSE: SUZ; B3: SUZB3) is the largest global Bleached Hardwood Kraft Pulp (BHKP) producer + Latin America paper producer, founded 1924 as Companhia Suzano de Papel e Celulose by Leon Feffer in Suzano, São Paulo, Brazil (~101-year heritage; selected pioneer Brazilian pulp + paper). Selected post-January 2019 ~R$30B+ aggregate Suzano Papel e Celulose + Fibria Celulose merger creating combined Suzano S.A. + selected post-2019 NYSE listing transition (selected previously Suzano Papel ADR + Fibria ADR); selected post-2019-2024 selected various ~R$30B+ aggregate cumulative R&D + tuck-in M&A platform expansion (selected post-July 2024 Cerrado Project ~$3.7B aggregate CapEx + 2.55Mt aggregate Pulp commercial operations + selected post-2023 ~$1.3B+ Mondi Containerboard acquisition); selected post-January 2024 Beto Abreu CEO appointment (succeeded post-January 2024 Walter Schalka retirement); HQ São Paulo Brazil; ~32,000+ employees globally; selected ~31%+ aggregate Feffer family + selected various Brazilian aggregate ownership concentration.

SUZ operates 2 primary business segments: Pulp ~85%+ revenue (~R$50-54B — selected primary BHKP from eucalyptus + selected various Hardwood Kraft Pulp; ~13.0-14.0Mt aggregate annual production capacity) + Paper ~15% revenue (~R$8-9B — selected primary printing + writing + uncoated woodfree paper + selected various tissue + selected various coated). Geographic mix: Pulp ~70%+ revenue export (~R$35-38B; selected primary China + Asia Pacific + Europe + selected various) + Paper ~85%+ revenue Brazil (~R$7-8B); aggregate ~50% revenue export + ~50% revenue Brazil.

Capital return: ~R$3.50 / $0.65 annual dividend FY2025 (+10-15% growth post-2024 dividend acceleration; ~5-year continuous dividend track post-January 2019 Suzano + Fibria merger); selected ~R$5-10B aggregate FY2024-2025 buyback program (~R$3-5B aggregate FY2025); aggregate capital return ~R$8-12B / ~$1.5-2.2B FY2025; net leverage ratio ~3.5-4.0x net debt-to-adj. EBITDA; investment-grade Baa3/BBB credit rating.

BHKP Pulp Cycle (Bleached Hardwood Kraft Pulp)

The BHKP Pulp cycle is SUZ's foundation thesis: ~R$50-54B Pulp revenue (~85%+ revenue mix) + selected primary BHKP from eucalyptus + selected ~13.0-14.0Mt aggregate annual Pulp production capacity (selected post-July 2024 Cerrado +2.55Mt commercial operations + selected various aggregate Imperatriz + Aracruz + Ribas + Mucuri + Três Lagoas + Belmonte mills) + selected ~30%+ aggregate global BHKP market share + selected various aggregate ~$550-650/t aggregate Hardwood pulp realized price. Selected primary SUZ Pulp platform: ~13.0-14.0Mt aggregate annual production capacity + selected ~$200-250/t aggregate cash cost (selected lowest-cost quartile global BHKP) + selected ~30%+ aggregate global BHKP market share + selected various aggregate eucalyptus 7-year aggregate harvest cycle.

FY2025 Pulp dynamics (R$50-54B aggregate Pulp revenue): selected continued post-2024 ~13.0-14.0Mt aggregate annual Pulp production capacity + selected various aggregate ~$550-650/t aggregate Hardwood pulp realized price + selected post-July 2024 Cerrado +2.55Mt commercial operations + selected various aggregate ~30%+ aggregate global BHKP market share + selected various aggregate ~$200-250/t aggregate cash cost. Selected post-2024 ~R$1.50-2.50 / ~$0.30-0.50 incremental annual EPS contribution as BHKP Pulp cycle + Cerrado +2.55Mt + selected ~$200-250/t aggregate cash cost drives incremental margin + Pulp revenue.

FY2026 catalyst: continued BHKP Pulp cycle + ~R$1.50-2.50 incremental annual EPS contribution under continued President + CEO Beto Abreu leadership (~2-year tenure). Selected aggregate ~R$54-58B aggregate Pulp revenue + selected various ~13.5-14.5Mt aggregate annual Pulp production capacity + selected various aggregate ~$550-700/t aggregate Hardwood pulp realized price + selected various aggregate ~$200-250/t aggregate cash cost + selected various aggregate Cerrado full-year commercial operations. Risks: Klabin + International Paper + Stora Enso + UPM + Metsä Fibre + Domtar + Empresas CMPC + Arauco + selected various aggregate global BHKP + softwood + selected various aggregate competitive displacement + Hardwood pulp price cycle (selected various aggregate ~$400-700/t aggregate spot vs ~$550-650 aggregate normalized) + selected various aggregate China + Asia Pacific demand cycle.

Cerrado Capacity + Post-July 2024 Commercial Operations

The Cerrado capacity + post-July 2024 commercial operations is SUZ's primary growth thesis: selected post-July 2024 Cerrado Project ~$3.7B aggregate CapEx + 2.55Mt aggregate Cerrado annual Pulp production capacity addition + selected various aggregate ~$200-250/t aggregate Cerrado lowest-cost-quartile cash cost positioning + selected various aggregate ~+15-20% aggregate post-July 2024 Cerrado-driven Pulp production capacity growth.

FY2025 Cerrado dynamics: selected continued post-July 2024 Cerrado +2.55Mt commercial operations + selected various aggregate ~$200-250/t aggregate Cerrado lowest-cost-quartile cash cost + selected various aggregate Cerrado ramp-up trajectory + selected various aggregate ~+15-20% aggregate post-July 2024 Cerrado-driven Pulp production capacity growth. Selected post-2024 ~R$1.00-1.50 / ~$0.20-0.30 incremental annual EPS contribution as Cerrado capacity + post-July 2024 commercial operations + selected various aggregate ~$200-250/t aggregate Cerrado lowest-cost-quartile cash cost drives incremental margin + Pulp revenue.

FY2026 catalyst: continued Cerrado capacity + ~R$1.00-1.50 incremental EPS contribution. Selected aggregate ~13.5-14.5Mt aggregate annual Pulp production capacity + selected various aggregate Cerrado full-year commercial operations + selected various aggregate ~$200-250/t aggregate Cerrado lowest-cost-quartile cash cost + selected projected post-2026 selected various aggregate ~3.0-3.5x → ~2.5-3.0x net leverage trajectory. Risks: Cerrado ramp-up + selected various aggregate Cerrado yield + cash cost considerations + selected various aggregate Hardwood pulp supply-demand balance considerations (selected various aggregate ~2.55Mt aggregate Cerrado supply addition vs ~2-3Mt aggregate annual demand growth).

Capital Return + Dividend Track

Capital return + dividend track: ~R$3.50 / $0.65 annual dividend FY2025 (+10-15% growth post-2024 dividend acceleration; ~5-year continuous dividend track post-January 2019 Suzano + Fibria merger) + selected ~R$5-10B aggregate FY2024-2025 buyback program (~R$3-5B aggregate FY2025) + aggregate capital return ~R$8-12B / ~$1.5-2.2B FY2025 + net leverage ratio ~3.5-4.0x net debt-to-adj. EBITDA + investment-grade Baa3/BBB credit rating.

FY2026 catalyst: continued R$3.50-4.50 aggregate dividend (+10-30% aggregate selected dividend acceleration) + selected continued ~R$3-5B aggregate annual buybacks + selected continued investment-grade balance sheet + selected projected post-2026 selected various aggregate deleveraging. Selected ~5-year continuous dividend track + selected post-2024 dividend acceleration + selected post-July 2024 Cerrado peak leverage trajectory toward ~3.0-3.5x → ~2.5-3.0x net leverage trajectory support continued capital return + R&D + tuck-in M&A capacity + acquisition optionality.

Key Core Metrics

• FY2025 revenue ~R$58-62B / ~$10.5-11.2B (+25-35% YoY in BRL) vs R$45B FY2024; adj. EPS ~R$5.50-6.50 / ~$1.00-1.18
• 2 segments: Pulp ~85%+ (~R$50-54B), Paper ~15% (~R$8-9B)
• Geographic mix: Pulp ~70%+ revenue export (China + Asia Pacific + Europe) + Paper ~85%+ Brazil
• Pulp: ~13.0-14.0Mt aggregate annual production capacity; ~30%+ aggregate global BHKP market share
• Selected post-July 2024 Cerrado Project: ~$3.7B aggregate CapEx + 2.55Mt aggregate Cerrado annual Pulp capacity
• Cash cost: ~$200-250/t aggregate (selected lowest-cost-quartile global BHKP)
• Hardwood pulp realized price: ~$550-650/t
• ~1.20-1.25B diluted shares; ~R$8-12B / ~$1.5-2.2B total capital return FY2025
• ~R$3.50 / ~$0.65 annual dividend FY2025 (~5-year continuous dividend track post-January 2019 Suzano + Fibria merger)
• ~R$5-10B aggregate FY2024-2025 buyback program (~R$3-5B aggregate FY2025)
• Net leverage ratio ~3.5-4.0x net debt-to-adj. EBITDA
• Investment-grade Baa3/BBB credit rating
• President + CEO Beto Abreu (since January 2024); CFO Marcelo Bacci
• Selected ~31%+ aggregate Feffer family + selected various Brazilian aggregate ownership concentration

Market Evaluation

SUZ trades as the largest global BHKP pulp producer + Latin America paper producer levered to BHKP Pulp cycle + Cerrado capacity + post-July 2024 commercial operations + selected ~5-year continuous dividend track. Bull case: ~R$50-54B Pulp + ~R$8-9B Paper + ~13.0-14.0Mt aggregate annual production capacity + ~$550-650/t aggregate Hardwood pulp realized price + ~$200-250/t aggregate cash cost + selected post-July 2024 Cerrado +2.55Mt commercial operations + ~R$3.50 dividend (~5-year track) drive ~R$6.50-8.00 / $1.18-1.45 adj. EPS FY2026 (+15-25% YoY in BRL). Bear case: Klabin + International Paper + Stora Enso + UPM + Metsä Fibre + Domtar + Empresas CMPC + Arauco competitive displacement + Hardwood pulp price cycle severe ($400-500/t spot) + China + Asia Pacific demand cycle severe + Cerrado ramp-up + cash cost considerations + sustained ~3.5-4.0x net leverage + selected various aggregate Brazilian Real (BRL) FX volatility trigger material EPS compression. Base case: BHKP Pulp cycle + Cerrado capacity + ~5-year continuous dividend track + ~3.5-4.0x net leverage discipline support continued ~R$6.50-8.00 adj. EPS + ~R$8-13B aggregate capital return FY2026.

BHKP Pulp Cycle Drives Cerrado Capacity Capital Return Deep Dive

Selected continued post-2024 ~R$50-54B aggregate Pulp revenue (~85%+ revenue mix; selected primary BHKP from eucalyptus + selected ~13.0-14.0Mt aggregate annual Pulp production capacity) + selected continued post-2024 ~R$8-9B aggregate Paper revenue (~15% revenue mix; selected primary printing + writing + uncoated woodfree paper + selected various tissue) + selected continued post-July 2024 Cerrado Project ~$3.7B aggregate CapEx + 2.55Mt aggregate Cerrado annual Pulp commercial operations + selected continued post-2024 ~30%+ aggregate global BHKP market share + selected continued post-2024 ~$200-250/t aggregate cash cost (selected lowest-cost-quartile global BHKP) + selected continued post-2024 ~$550-650/t aggregate Hardwood pulp realized price + selected continued post-2024 selected various aggregate ~+15-20% aggregate post-July 2024 Cerrado-driven Pulp production capacity growth + selected ~R$3.50 / $0.65 annual dividend (+10-15% growth post-2024 dividend acceleration; ~5-year continuous dividend track post-January 2019 Suzano + Fibria merger) + selected ~R$3-5B aggregate annual buybacks + selected ~3.5-4.0x net leverage + investment-grade Baa3/BBB credit rating + selected ~31%+ aggregate Feffer family + selected various Brazilian aggregate ownership concentration drive SUZ's primary FY2026 thesis. President + CEO Beto Abreu (~2-year tenure) leadership continues post-January 2024 CEO appointment focus on BHKP Pulp cycle + Cerrado capacity + post-July 2024 commercial operations + capital return discipline + selected post-January 2019 Suzano Papel e Celulose + Fibria Celulose merger + 2019 NYSE listing. Risks: Klabin + International Paper + Stora Enso + UPM + Metsä Fibre + Domtar + Empresas CMPC + Arauco + selected various aggregate global BHKP + softwood + selected various aggregate competitive displacement + Hardwood pulp price cycle (selected various aggregate ~$400-700/t aggregate spot vs ~$550-650 aggregate normalized) + selected various aggregate China + Asia Pacific demand cycle + selected various aggregate Cerrado ramp-up + cash cost considerations + selected various aggregate Hardwood pulp supply-demand balance + selected various aggregate Brazilian Real (BRL) FX volatility + sustained ~3.5-4.0x net leverage + selected ~31%+ aggregate Feffer family + Brazilian ownership concentration governance considerations + selected post-January 2019 Suzano + Fibria merger integration considerations.