Suzano S.A. Q1 FY2025 earnings call

• Pulp: Inventories normalized, market uncertainty due to tariffs affecting customer negotiations and demand. Price discovery mode for buyers and sellers. - Paper and Packaging: Brazilian market print and write demand increased, Suzano packaging sales volume grew 62% QoQ due to improved operations. U.S. paperboard demand had fluctuations. - Costs: Cash production cost had a temporary 6% increase compared to Q4 2024 due to maintenance, expected to decline in coming quarters. - Balance Sheet: Net debt ticked up to BRL 12.9 billion, leverage slightly increased, but average maturity of debt improved from 73 to 76 months via liability management.

Pulp Business: EBITDA was BRL 4.3 billion, equivalent to a 49% EBITDA margin. Inventories were rebuilt to normalized levels despite maintenance downtimes. Price increases were implemented in Q1 but affected by order backlogs from Q4. Paper and Packaging Business: Brazilian operations saw price increases and sales volume growth in packaging, with Suzano packaging EBITDA improving 67% quarter over quarter. However, Brazilian operations were impacted by seasonality and annual maintenance downtime, but expected improved efficiency from the paper machine. Revenue contribution percentages weren't explicitly stated in absolute terms but discussed in context of overall performance.

• Deleveraging remains a priority. - Cash production costs expected to decline in coming quarters. - Suzano packaging operations on track to breakeven in the second half of 2025. - Investments will require higher returns due to global macroeconomic uncertainty.

• Macroeconomic uncertainty affecting demand and pricing. - Trade wars impacting customer negotiations and production. - Logistics constraints and volatility in pulp prices affecting operations and costs.

Q: How does Suzano's capital allocation strategy view potential acquisitions in the U.S. amidst trade policy changes?

A: Strategy unchanged, but analyzing market locally. Uncertainty leads to wait-and-see approach, but lower prices could present opportunities.

Q: Impact of oil price deflation on industry cash costs?

A: Consultant's analysis included FX impact, mainly in Europe. Marginal cash cost of producers in Europe increased due to currency appreciation, affecting cost structure.

Q: Potential production cuts and differences in inventories/profitability vs previous cycles?

A: Analyze marginal variable costs, including wood and logistics. Softwood producers face tougher cycles, creating opportunities for Suzano using softwood as substitution.

Q: Buybacks and returns compared to M&A opportunities?

A: Share price depressed, buybacks attractive, but leverage is a boundary. Focus on value creation, not diversification target.

Q: Cash cost curve and competitor adjustments?

A: Adjustments more likely in European hardwood producers. Chinese pulp producers' costs are competitive, but resale prices unsustainable. Suzano sells all produced volume.

Q: Higher return required for investments and dividend policy?

A: Return requirements depend on deal, but risk and return managed together. Dividend policy unchanged, returns provided as cash flow increases.