Earnings Call Transcript - SUZ Q2 2021

Operator, Operator

Ladies and gentlemen, thank you for holding and welcome to Suzano's Conference Call to discuss the results for the Second Quarter of 2021. We would like to inform you that all participants will be in a listen-only mode during the presentation of Mr. Walter Schalka, Chief Executive Officer; Marcelo Bacci, Financial and Investor Relations Executive Officer; Fabio Almeida, Paper and Packaging Executive Officer; Leonardo Grimaldi, Pulp Commercial Executive Officer; and Aires Galhardo, Pulp Operation Executive Officer. Before proceeding, please be aware that any forward-looking statements are based on the beliefs and assumptions of Suzano's management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events, and therefore depend on circumstances that may or may not occur in the future. You should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Suzano and could cause results to differ materially from those expressed in such forward-looking statements. Now I'd like to turn the floor over to Mr. Walter Schalka. Please, Mr. Walter Schalka, you may proceed.

Walter Schalka, CEO

Good morning, everyone. It's a great pleasure to be with you here. Welcome to the session of the second quarter results 2021 of Suzano. With me here, we have all the executive committee and will be ready for the Q&A session after our presentation. I would like to present to you an all-time record quarter EBITDA and free cash flow of the company, despite shorter than expected price realization with very good volumes in pulp and paper and a solid operational performance that reinforces our competitiveness and resilience. I think it's very important to bring to the surface our very robust balance sheet. We have long-term and low cost of debt and high liquidity, which is critical for the high capital-intensive industry that we are in. We continue to reduce our leverage, reaching 3.3 times net debt over EBITDA and we will continue to pursue our target of three times - between two and three times that is in our financial policy, which reinforces our financial discipline. It's very important as well to share that we have been pursuing five different avenues on our strategic view for the future, and we are very pleased to see developments in all of them. One of them is related to the expansion of our pulp relevance, which is currently presented by the Cerrado project. We are not going to share any additional information on this project with you today, as we are continuing to negotiate with different vendors across the different parts of the project. As we finalize all the agreements with the different parts, we will present them to our Board for approval, which we hopefully expect to happen in the coming months. It's also important to mention our ESG developments. We had our ESG call during the second quarter, where we presented our new targets on biodiversity, as well as our new Sustainability-Linked Bond related to water consumption and our diversity and inclusion initiatives related to women in leadership. I'm also pleased to mention that the IPO of Spinnova is one of the investments related to our innovation targets for the future, where we have approximately 20% market ownership and the current market cap of the company is over €500 million. Now I'm going to pass the floor to Fabio Almeida, who will share the results of our paper developments in the last quarter.

Fabio Almeida, Paper and Packaging Executive Officer

Thanks, Walter, and good morning everyone. Let's review the paper and packaging business unit results for the second quarter of 2021 on Slide 4. Despite the ongoing challenges imposed by the second wave of COVID in Brazil and Latin America during the quarter, Suzano delivered a solid performance on a year-over-year basis and even when compared to pre-pandemic levels, indicating demand recovery in both domestic and international markets along with improved pricing. Logistics bottlenecks have restricted our export volumes during the quarter. In the domestic market, we delivered our best second quarter in terms of volumes over the last five years. Volume-wise, our Q2 total sales were 32% higher than Q2 of 2020, mainly due to a weak comparative basis in 2020, the harvest quarter due to pandemic restrictions. Domestic sales represented 68% of our total sales in the quarter, totaling 182,000 tons, a 64% increase compared to the same quarter of 2020. Analyzing the quarter-over-quarter performance, the higher domestic volume was primarily due to improved seasonality in printer and writing papers consumption and strong paperboard sales addressing the growing demand for packaging goods. When we examine the international markets, demand has also recovered in the primary markets we serve. However, our export volumes faced negative impacts from the known outbound logistics constraints during the quarter. In the first semester, our total revenues have already surpassed 2019 pre-pandemic levels by 11%, thanks to a combination of higher prices and resilient volumes. Our average net price during the quarter was 11% higher than our average price in the same quarter of 2020 and 6% higher than Q1 2021. During this period, Suzano successfully implemented the previously announced price increases for our product lines in the markets we serve. With strong volumes, better regional location, and higher prices along with operational improvements, our EBITDA reached BRL 416 million in the quarter, marking a 64% increase compared to Q2 2020 and a 12% increase compared to Q1 2021. Our EBITDA margin reached over BRL 1,564 per ton, a new record for the paper and packaging business. Looking ahead, our primary short-term challenge lies in minimizing inflationary pressures while overcoming the continuous logistics disruptions of maritime shipments. Alongside improving operational efficiency, we are also strengthening our unique go-to-market strategy, reaching even more customers through our e-commerce platform, which already accounts for 24% of our total revenue and 65% when considering middle and small-sized customers. It’s also worth noting that we will continue to focus on our innovation pipeline. Sales of new products from Suzano have increased sixfold compared to the first semester of 2020, aligning with our strategy to expand our addressable market and provide more sustainable solutions to customers and end-users. Now I would like to invite Leo to present the results for our pulp business unit.

Walter Schalka, CEO

We are not hearing you, Leo. I think it would be better if you go for the next one and then we will come back to Leo.

Aires Galhardo, Pulp Operation Executive Officer

I'm speaking here about cash costs. We are on Slide 6. The second quarter '21 cash cost performance, both quarter-over-quarter and year-over-year was marked by the external pressures of rising commodity prices, primarily Brent affecting inputs and wood costs, followed by issues in the packaging wires and energy impacting chlorine dioxide again, on input costs. Other factors that contribute to increased cash costs include higher fixed costs due to routine maintenance during scheduled downtimes and lower volumes of energy exports due to our reduced operational availability of turbo generators. Additionally, in the second quarter, Suzano began recognizing disbursements related to COVID-19 in cash cost production, which is no longer considered a nonrecurring expense previously allocated directly to COGS. For the upcoming quarters, the company expects that cash production costs will largely remain flat over the second quarter, with a slight increase of low single digits. In the medium term, management initiatives such as energy efficiency, reduced distances between forests and mills, and reduced third-party wood procurement will contribute to mitigating cost pressures and enhance operational efficiency, aligning with cash cost guidance for 2024 disclosed to the market. Now I pass the floor to Marcelo Bacci to continue the presentation.

Leonardo Grimaldi, Pulp Commercial Executive Officer

Hi Aires, this is Leo here. Can you hear me now?

Aires Galhardo, Pulp Operation Executive Officer

I do. Yes, I do.

Leonardo Grimaldi, Pulp Commercial Executive Officer

Okay. So let's go back to Page 5. I apologize for the technical issues. I want to provide our perspective on the results of the pulp business unit. They were very strong for the second quarter of 2021, supported by positive sales volumes and increasing prices across all regions. As noted, our sales totaled 2.5 million tonnes in the second quarter, which is consistent with previous quarters prior to the 2020 and 2019 nonrecurring periods. Pulp consumption exceeded our expectations across all paper grades in Europe, but in China, the total intake was reduced at the end of May and June as paper and board producers took maintenance downtimes to adjust for weaker seasonal months, notably June and July. Our inventories closed the quarter below optimal operational levels, and this is still ongoing as we speak. We have been taking actions to ensure that our supply chain to customers remains unaffected. Our average export prices for the quarter reached $636 per ton, representing a 20% increase compared to Q1 '21. Specific nonrecurring factors impacted us this quarter and limited our ability to deliver even higher prices. I want to emphasize that we do not expect these factors to repeat in the coming quarters. Looking at our EBITDA performance, BRL 5.5 billion in the quarter represents an all-time record for the pulp business with a 65% EBITDA margin. Moving forward, we are sensing a pickup in order intake in China, especially after the recent price corrections, and we anticipate demand recovery for paper and board in all major markets by the end of August or early September, which should increase consumption and demand for pulp. On the supply side, we expect that logistic constraints will continue in the next quarter, alongside maintenance downtimes and unexpected outages, which RISI's recent forecast accounts for nearly 800,000 tonnes of unexpected downtime in the second semester. This all reinforces the supply challenges we face despite the gradual expected ramp-up of new capacity, with respective volumes likely only reaching major markets by the end of the fourth quarter. We also notice balanced pulp stocks in China, with a 6% reduction reported in July compared to June. In Europe, AeoPulp reports that pulp inventories at ports fell by 13% in July compared to June, marking the lowest level since early 2018. With that said, I will pass it back to Bacci for our financial position.

Marcelo Bacci, Financial and Investor Relations Executive Officer

Thank you, Leo. Let's move on to Page 7, where we see that during Q2, we invested significantly in our deleveraging path. Net debt reduced to $11.4 billion, representing a $1 billion reduction over the last 12 months. Our leverage ratio is now at 3.3x, down from 4.7 one year ago, a notable advancement. We maintain a very comfortable liquidity position with $3 billion in liquidity, covering our maturities up to 2024, with 90% of our debt maturing on or after 2023. Last quarter, we successfully issued a sustainability-linked bond at a very attractive rate, utilizing its proceeds to liquidate short-term maturities, which you can also see on the right-hand side of the page. Consequently, we have achieved an average debt tenure of 87 months. Moving to Page 8, we observe that Q2 saw a significant appreciation of the Brazilian real. Our hedging portfolio responded, delivering a marked-to-market gain that offsets potential lower future revenues. Naturally, this is not a cash gain but is relevant in the same way as past losses were. It should be evaluated over the business cycle we experience. Our dollar-denominated debt also realized FX gains following our strategy of maintaining exclusively dollar-denominated debt, either directly or through derivatives. Therefore, this strategy will mitigate potential lower revenues should the real continue to appreciate. By the end of the quarter, it was at 5, and we are currently at 5.24, indicating a changing situation. We continue to hold a robust cash flow hedge portfolio that safeguards us from further BRL appreciation. Our average portfolio now sits at 5.21, indicating progress in relation to our position last quarter. Turning to Page 9, our financial discipline is evidenced by our CapEx program. We disbursed BRL 1.3 billion during the quarter, matching Q1, and reaffirming our guidance of BRL 6.2 billion for the full year, already factoring in BRL 1 billion associated with the Cerrado project. With that, I will return the floor to Walter. Thank you.

Walter Schalka, CEO

I think it’s clear that we have been pursuing our strategic initiatives and following the five different avenues of value creation in the organization. One significant avenue is our resilience in terms of structural competitiveness. We have been focused on this, and we will continue to reduce our cash costs. This commitment to not only cash costs but also expenses is crucial for our future outlook and improving our solid operational performance. Although we face short-term impacts on our cash costs, we aim to mitigate these with essential management initiatives that play a vital role in our short-term results. We will maintain our financial discipline; leverage is a key metric for us, and we will keep working on this, not solely through liability management programs but also via our hedging portfolio. This is how we will drive an increase in our cash conversion from our operational results. As I mentioned earlier, we will continue our initiative on the Cerrado project, which is very significant, and I want to reaffirm our biodiversity and innovation positioning that will continue to create value for our shareholders and all stakeholders in the future. We acknowledge our substantial impact on society and aim to operate as agents of this process, addressing both social and environmental sides. We will persist in advocating to mitigate the issues highlighted by the IPCC recently regarding the importance of reducing greenhouse emissions. This responsibility lies with us as a society and as a company, and we cannot postpone it. Now we can proceed to our Q&A session. All the executive committee is prepared for your questions.

Operator, Operator

Mr. George Staphos would like to ask a question.

George Staphos, Analyst

Thanks for taking my question. Congratulations on the progress and thanks for the details on the call. I had three questions. I'll ask them in sequence. Leo, you mentioned a few factors that led to lower price realizations than you would have otherwise reported in the export market, including the reduction in orders from your captive customers in China and also delays in invoicing. Can you quantify for us, holding everything else equal, what your realizations would have otherwise looked like in Q2 had those factors not been at play? For the second question, could you comment on the ongoing issues in the tissue market in China between large and small producers? Has that situation improved, and are orders now flowing again from your perspective? Lastly, you mentioned cash costs being flat relative to Q2, yet we saw the impact of rising input cost pressures in the second quarter. Why do you believe you'll be able to keep costs flat to slightly up, and what specific initiatives do you have in place to reduce costs? Thank you, and good luck in the quarter.

Leonardo Grimaldi, Pulp Commercial Executive Officer

Thanks, George, for your question. Unfortunately, we cannot quantify the exact impact of each of these factors as that would disclose our commercial strategy, which is not beneficial for us. However, we should focus on these two factors: the absence of positive orders in May and June in China, where prices peaked, along with rollovers of invoicing from the first quarter to the second quarter for specific Asian customers. These were the main contributors to below-expected prices, which we can confirm, will not repeat in future quarters. Regarding tissue, order intake is recovering, not just in tissue but across all segments in China as of July following the price corrections both in pulp prices and also in paper and board prices throughout the chain in China. We're observing that the market is moving again, with intermediary stocks—specifically in tissue—reducing due to actions taken previously to curtail production. The mid-sized and small producers in the tissue sector are also returning to purchases and recovering production. Therefore, it appears that the corrections that happened in July contributed positively to the recovery of the market. In terms of cash costs, I previously indicated we projected a 7% increase but recognized 9%. However, we estimate that costs will remain flat or increase only by 1% to 2% in the following quarters. We anticipate reducing costs related to COVID-19 protocols as vaccination rates rise in Brazil. We've maximized availability in turbo generators, leading to increased earnings. Additionally, our consumption of chemicals and other inputs is under control, and we do not foresee any risks affecting cash costs.

Operator, Operator

Mr. Leonardo Correa would like to ask a question.

Leonardo Correa, Analyst

I will continue to press on the price realization from the quarter, which I believe to be a critical topic. I understand some limitations on disclosure, but could you assist us further in guiding the numbers for the next quarter? Focusing on carryovers happening this quarter, against a backdrop of a strong pulp price rally and regional price differences, what can we expect regarding price evolution in the third quarter? Given the significant drop in pulp prices recently, should we anticipate higher price levels compared to theoretical numbers in Q3? Additionally, regarding the pulp industry, it has been attempting to reduce discounts in Europe. How have you been observing the evolution of these discounts in the markets? Any insights would be appreciated. Thank you.

Leonardo Grimaldi, Pulp Commercial Executive Officer

Thank you for your questions, Leo here. Addressing your first inquiry on price realization and carryovers: due to our lower order intake in May and June, our supply chain to Asia is back on track. Thus, we are closely aligned with market price movements, allowing for minimal lags in our invoicing. Our ability to catch up with price dynamics should mitigate these lag effects in future months. On your second question about discounts, we have witnessed discounts increasing over time. This year, our customers' main concern is the fluctuating volatility in pricing. We recognize that discussions regarding contracts for 2022 have yet to commence. It remains unclear what will happen next year, but we see a predominant concern for stability from our customers' perspectives regarding pricing models to avoid price volatility in the long run.

Operator, Operator

Mr. Thiago Lofiego would like to ask a question.

Thiago Lofiego, Analyst

I have two questions here. First, regarding market conditions in China, Grimaldi, could you offer more context on whether the market is stabilizing after the recent price correction? Are you observing improved demand in light of the sharp drop in pulp prices? Moreover, please provide insights on the paper market in China—are paper prices starting to rise, and what is the current state of pulp inventory with papermakers in China? Lastly, regarding COVID, we noted one of the ports in China closed recently. Are there updates or concerns on that front? My second question pertains to paper demand in Brazil. In the context of the second half of the year and entering Q3, what can you share about demand for cardboard and print and writing grades? Do you predict any room for additional price initiatives in the domestic market?

Leonardo Grimaldi, Pulp Commercial Executive Officer

Thank you, Thiago. Starting with your questions on pulp market conditions, we expect demand to recover by the end of August and early September, not solely in China but globally. This period typically marks the start of a peak season for paperboard, which will also shift pulp volumes. We also perceive advantages from economies regaining momentum, as many are returning to pre-pandemic levels, which should significantly bolster the historical trend towards increased demand. Furthermore, the existing price spread between softwood and hardwood reaches almost $200, spurring softwood replacement with hardwood, which favors us. Finally, the low availability of recycled fibers, particularly sorted office products traditionally used in away-from-home tissue, has led non-traditional customers to explore virgin fiber alternatives. These factors are anticipated to amplify demand in the upcoming quarter. Regarding supply, we recognize that logistics present ongoing challenges and do not foresee an imminent resolution. Thus, logistics will remain a constraint for the global industry. Our customers are also facing challenges and are concerned about positioning their raw materials in anticipation of demand improvements in late August. We also anticipate surprises from maintenance downtimes, as RISI recently forecast 700,000 to 800,000 tonnes in unplanned downtimes this year. Consequently, when considering all these elements, we find the fundamentals encouraging. In terms of paper pricing, we've observed prices initially surge at the beginning of the year, then drop by 30% in May, causing margin compression, which likely contributed to pulp price declines in July. However, we're beginning to see indications of recovery, with price announcements around CNY 200 for August, suggesting a potential upward pricing trend as markets recover and demand returns to previous levels at the end of August. For your concluding inquiry on pulp inventories, we see that inventories in China remain controlled, with a noted decline last month of 6%. I will now pass it to Fabio for insights on the paper market.

Fabio Almeida, Paper and Packaging Executive Officer

Thank you, Thiago, for your question. Regarding paper demand in the second half of the year, historically, we observe stronger demand for print and writing papers in Brazil due to government purchases for the national book program. This year, we anticipate a similar pattern. Additionally, the reopening of schools for in-person attendance and the reopening of offices should further galvanize demand for paper. We have experienced a robust first half of the year in paperboard and expect the second half to perform comparably. The market remains tight due to the diminishing demand for sustainable products and e-commerce trends, and we do not foresee changes in this regard this year. As for pricing, we are continuously monitoring the market for emerging opportunities, but as of now, we feel we have positioned ourselves well concerning prices.

Thiago Lofiego, Analyst

Just a quick follow-up on paper prices. Will there be a positive carryover effect into the third quarter, as prices at the end of Q2 may have surpassed the average for the quarter?

Fabio Almeida, Paper and Packaging Executive Officer

Regarding paper prices, we have already implemented most of the announced price increases. Therefore, we should not anticipate a carryover effect.

Operator, Operator

Mr. Daniel Sasson would like to ask a question.

Daniel Sasson, Analyst

My first question pertains to your inventory. You noted they remain below normalized levels, which could indicate positive news since you're effectively selling everything you produce. Being below normalized levels, will you actively seek to restore inventories to more standard levels, or will you stick to the strategy of selling everything produced? My second question regards the supply-demand dynamics for the upcoming quarters. You referenced this earlier, but could you clarify your expectations on the start of new projects in the industry and when we might see those new clients effectively impact supply?

Leonardo Grimaldi, Pulp Commercial Executive Officer

Thanks for your question, Daniel. Concerning inventories, we cannot provide guidance on future inventories for Suzano. However, I can share that our Q4 stocks were historically low, and since then, they have remained below optimal operational levels, continuing into this quarter. At this moment, our priority is to keep production running without impacting our customers' supply. Regarding supply and demand, I will recap briefly: we foresee positive demand starting in the coming weeks, with the end of August marking the beginning of the peak paperboard season, which should drive pulp volumes. This demand is also anticipated to be strengthened by global economic recovery, greater softwood substitution by hardwood, and opportunities for virgin fiber due to low availability of recycled grades. In terms of supply, logistical constraints are expected to persist, complicating matters in the near term. As for new projects, we remain cautious about the timeline for the start-up and ramp-up periods, as we expect new capacities to arrive in the markets by at least Q4 of this year.

Operator, Operator

Mr. Carlos De Alba would like to ask a question.

Carlos De Alba, Analyst

I have a couple of inquiries. First, on the geographical distribution of your pulp sales, how do you view that moving forward in relation to Q2 or Q1? Will you see a greater proportion of shipments directed to the Chinese and Asian markets? Any insights would be very valuable. Secondly, regarding pulp production, while I understand you don't provide guidance, do you plan to consider market-related downtimes to reinforce the trends you've highlighted, or will you instead adhere to the regular maintenance schedules that have been communicated?

Leonardo Grimaldi, Pulp Commercial Executive Officer

Carlos, Leo here. Regarding geographical mix, we do not provide our geographical sales mix quarterly due to its sensitivity to our commercial strategy. However, I can share that we do not expect significant changes compared to last year—any immediate effects from Q2 should normalize in future periods. I will now pass it to Walter to respond to your second question.

Walter Schalka, CEO

Thank you, Carlos, for your question. We do not anticipate implementing market-related downtimes. We will maintain production at a regular level and continue our annual maintenance downtimes as established without any adjustments to total volume forecasts for 2021.

Operator, Operator

Mr. Rafael Barcellos would like to ask a question.

Rafael Barcellos, Analyst

I have a follow-up question regarding prices. Do you believe the new capacity set to arrive by the end of this year will begin to impact pulp price negotiations? Additionally, in terms of Spinnova, which Suzano currently holds nearly 20%, can you elaborate on how we should evaluate this investment? How does it influence your strategic positioning in the market and add value to Suzano going forward?

Leonardo Grimaldi, Pulp Commercial Executive Officer

Rafael, this is Leonardo. Addressing your first question about pulp prices: I don’t believe the corrections we observed in July are connected to any upcoming capacity launches. The adverse market conditions at that time dictated the pricing correction we experienced. Currently, market conditions remain robust in Europe and North America, with no price changes observed there. This situation is particular to Asia, where market adjustments occurred due to the fluctuations caused by lower paper prices affecting margins. Regarding market sentiment, I don’t see news regarding new capacity impacting the market at this time, considering the ramp-up periods and ongoing logistical constraints expected to delay volume supply, likely until Q4 or early next year.

Marcelo Bacci, Financial and Investor Relations Executive Officer

Rafael, this is Marcelo speaking. On the subject of Spinnova, the company possesses a promising technology for utilizing pulp in textile production. While production and sales levels are relatively low, the market perceives the technology's potential positively, which has even allowed the company to launch its IPO at an attractive valuation. Following the IPO, Suzano's stake stands at approximately 19%, and we firmly believe in the future of this technology. We also hold exclusive rights to implement this technology in a joint venture we're establishing with Spinnova, wherein we aim to produce final products and bring them to market in the coming years. We expect that as technology progresses, Suzano will integrate this innovation into our broader textile strategy.

Operator, Operator

Mr. Caio Ribeiro would like to ask a question.

Caio Ribeiro, Analyst

Thank you for fielding my question. My first inquiry pertains to the considerable price spread that currently exists among regions for pulp prices. How do you foresee this trend evolving in the upcoming quarters? Europe has recently exhibited relative strength in demand; do you think this will sustain higher prices relative to China, or might we see a closing of this gap in future quarters as more pulp volumes are shifted from China to that region? Regarding supply additions, looking at the long term, many proposed projects in China appear to be integrated mills, focusing on lowering their reliance on imported pulp. How might this impact demand growth prospects for pulp in the future, if at all? Thank you.

Leonardo Grimaldi, Pulp Commercial Executive Officer

Caio, this is Leo. Regarding price spreads, we prefer not to make future pricing predictions, but from a fundamental standpoint, this largely depends on market performance in upcoming weeks or months. We remain optimistic and expect a strong market in the second half of Q3 and into Q4. You are correct that there is currently a positive price difference in Europe and North America compared to Asia, a reversal from the situation in the first half of the year where Asia maintained the higher prices. Pricing typically lags between markets. Regarding new projects, we are closely monitoring announcements, which indicate significant volumes, but we remain cautious about the ability of these projects to contribute to future growth in the pulp sector due to key challenges: limited fiber availability in Southeast Asia and the higher costs associated with new pulp mills compared to existing operations.

Operator, Operator

We observed a reversal from the situation in the first half of the year when Asia had higher prices. Pricing usually varies between markets. As for new projects, we are paying close attention to announcements that suggest substantial volumes, but we are still cautious about these projects' potential to drive future growth in the pulp sector due to major challenges, including limited fiber availability in Southeast Asia and the higher costs linked to new pulp mills relative to current operations.

Walter Schalka, CEO

I believe we are nearing the conclusion of this session. I want to express my gratitude to everyone who joined us today. I want to convey a long-term perspective. Many questions during this discussion have focused on short-term impacts on pricing, supply and demand, and future pricing trends. We firmly believe the company is well-prepared for the road ahead. We are among the lowest-cost producers globally, and we will improve on this in the future. We will continue to expand our pulp production, with new projects like Cerrado representing a remarkably competitive opportunity going forward. We maintain confidence in our verticalization initiatives across paper, consumer goods, and fluff markets, showcasing our competitiveness in these sectors. We are also moving forward with bio-products derived from trees as part of our commitment to sustainability and innovation. Spinnova exemplifies the kinds of initiatives we are pursuing to diversify our market presence and increase our addressable market. Following COP26, carbon initiatives will gain even more significance, and we are committed to this. We are reporting record EBITDA and free cash flow for this quarter—our highest ever. We harbor optimism about our future, aiming to continuously create value for our shareholders. We are convinced of this mission and are committed to delivering value creation for our investors. Thank you, and I hope everyone gets vaccinated; protecting each other is vital. Thank you all, and have a great day.

Operator, Operator

Thank you. The Suzano second quarter results conference call has concluded. Have a nice day.