Suzano S.A 6-K, filed Feb 10, 2021
Suzano S.A. (SUZ)
About this 6-K
Suzano S.A filed this 6-K on February 10, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February, 2021.
Commission File Number 001-38755
Suzano S.A.
(Exact name of registrant as specified in its charter)
SUZANO INC.
(Translation of Registrant’s Name into English)
Av. Professor Magalhaes Neto, 1,752
10th Floor, Rooms 1010 and 1011
Salvador, Brazil 41 810-012
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F x Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
Enclosures:
Exhibit 99.1 – Earnings Release for Fourth Quarter 2020.
Exhibit 99.2 – Management Report 2020.
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: February 10, 2021
| SUZANO S.A. | ||
| By: | /s/ Marcelo Feriozzi Bacci | |
| Name: | Marcelo Feriozzi Bacci | |
| Title: | Chief Financial Officer and Investor Relations Director |
3
Exhibit 99.1
Strong resilience in 2020 despite adverse scenario
São Paulo, February 10, 2021. Suzano S.A. (B3: SUZB5 | NYSE: SUZ), one of the world’s largest integrated pulp and paper producers, announces today its consolidated results for the fourth quarter of 2020 (4Q20).
HIGHLIGHTS
| · | Pulp sales of 2,663 thousand tons (-9% vs. 4Q19). |
| · | Decrease in pulp inventories by approximately 1 million tons in 2020. |
| · | Paper sales of 354 thousand tons (-4% vs. 4Q19). |
| · | Adjusted EBITDA1 and Operating cash generation²: R$4.0 billion and R$3.0 billion, respectively. |
| · | Adjusted EBITDA1/ton3 from pulp of R$1,326 /ton (+79% vs. 4Q19). |
| · | Adjusted EBITDA1/ton4 from paper of R$1,227/ton (+7% vs. 4Q19). |
| · | Average net pulp price – export market: US$459/t (-2% vs. 4Q19). |
| · | Average net paper price4 of R$4,136/ton (+8% vs. 4Q19). |
| · | Pulp cash cost ex-downtime of R$622/ton (-1% vs. 4Q19). |
| · | Capture of operating synergies completed and ahead of schedule. |
| · | Deleveraging plan 100% executed. |
| Financial Data (R$ million) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | |||||||||||||||||||||||
| Net Revenue | 8,013 | 7,049 | 14 | % | 7,471 | 7 | % | 30,460 | 26,013 | 17 | % | ||||||||||||||||||||
| Adjusted EBITDA1 | 3,965 | 2,465 | 61 | % | 3,779 | 5 | % | 14,949 | 10,724 | 39 | % | ||||||||||||||||||||
| Adjusted EBITDA Margin1 | 49 | % | 35 | % | 15 p.p. | 51 | % | -1 p.p. | 49 | % | 41 | % | 8 p.p. | ||||||||||||||||||
| Adjusted EBITDA Margin¹ ex- Klabin2 | 49 | % | 37 | % | 13 p.p. | 51 | % | -1 p.p. | 49 | % | 43 | % | 6 p.p. | ||||||||||||||||||
| Net Financial Result | 6,238 | 1,624 | 284 | % | (4,223 | ) | - | (26,086 | ) | (6,726 | ) | - | |||||||||||||||||||
| Net Income | 5,914 | 1,175 | 403 | % | (1,158 | ) | - | (10,715 | ) | (2,815 | ) | - | |||||||||||||||||||
| Operating Cash Generation3 | 2,981 | 1,540 | 93 | % | 2,854 | 4 | % | 11,543 | 7,063 | 63 | % | ||||||||||||||||||||
| Net Debt /Adjusted EBITDA1 (x) - R$ | 4.3 x | 5.0 x | -0.7 x | 5.1 x | -0.8 x | 4.3 x | 5.0 x | -0.7 x | |||||||||||||||||||||||
| Net Debt /Adjusted EBITDA1 (x) - US$ | 4.3 x | 4.9 x | -0.6 x | 4.4 x | -0.1 x | 4.3 x | 4.9 x | -0.6 x | |||||||||||||||||||||||
| Operational Data ('000 tons) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | |||||||||||||||||||||||
| Sales | 3,017 | 3,288 | -8 | % | 2,846 | 6 | % | 12,000 | 10,668 | 12 | % | ||||||||||||||||||||
| Pulp | 2,663 | 2,920 | -9 | % | 2,527 | 5 | % | 10,823 | 9,412 | 15 | % | ||||||||||||||||||||
| Paper4 | 354 | 369 | -4 | % | 319 | 11 | % | 1,177 | 1,256 | -6 | % | ||||||||||||||||||||
| Production | 2,700 | 2,586 | 4 | % | 2,825 | -4 | % | 10,984 | 9,997 | 10 | % | ||||||||||||||||||||
| Pulp | 2,391 | 2,267 | 5 | % | 2,529 | -5 | % | 9,800 | 8,757 | 12 | % | ||||||||||||||||||||
| Paper4 | 309 | 319 | -3 | % | 296 | 5 | % | 1,184 | 1,240 | -4 | % | ||||||||||||||||||||
¹Excludes non-recurring items and PPA effects. | 2Excludes Klabin’s sales volume. | 3Considers Adjusted EBITDA less sustaining capex (cash basis). | 4Includes the results of the Consumer Goods Unit. | 5Last 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
| EXECUTIVE SUMMARY | 3 |
| PULP BUSINESS PERFORMANCE | 3 |
| PULP SALES VOLUME AND REVENUE | 3 |
| PULP CASH COST | 5 |
| PULP SEGMENT EBITDA | 7 |
| OPERATING CASH FLOW FROM THE PULP SEGMENT | 8 |
| PAPER BUSINESS PERFORMANCE | 9 |
| PAPER SALES VOLUME AND REVENUE¹ | 9 |
| OPERATING CASH FLOW FROM THE PAPER SEGMENT | 11 |
| ECONOMIC AND FINANCIAL PERFORMANCE | 12 |
| NET REVENUE | 12 |
| PRODUCTION | 13 |
| COST OF GOODS SOLD | 13 |
| SELLING EXPENSES | 14 |
| GENERAL AND ADMINISTRATIVE EXPENSES | 14 |
| ADJUSTED EBITDA | 15 |
| FINANCIAL INCOME | 15 |
| DERIVATIVE OPERATIONS | 16 |
| NET INCOME (LOSS) | 19 |
| DEBT | 19 |
| CAPITAL EXPENDITURE | 21 |
| OPERATING CASH GENERATION | 22 |
| FREE CASH FLOW | 23 |
| COVID-19 | 23 |
| ESG | 25 |
| SYNERGIES | 25 |
| TOTAL OPERATIONAL EXPENDITURE - PULP | 26 |
| EVENTS AFTER THE REPORTING PERIOD | 26 |
| CAPITAL MARKETS | 26 |
| FIXED INCOME | 28 |
| RATINGS | 28 |
| UPCOMING EVENTS | 29 |
| IR CONTACTS | 29 |
| APPENDICES | 30 |
| APPENDIX 1 - Operating Data | 30 |
| APPENDIX 2 – Consolidated Statement of Income and Goodwill Amortization | 32 |
| APPENDIX 3 – Consolidated Balance Sheet | 33 |
| APPENDIX 4 – Consolidated Statement of Cash Flow | 34 |
| APPENDIX 5 - EBITDA | 35 |
| APPENDIX 6 - Segmented Income Statement | 36 |
| Forward-Looking Statements | 38 |
| Page 2 of 38 |
| | |
EXECUTIVE SUMMARY
Despite the adverse market scenario, with pulp prices below their average of the last ten years, Suzano showed strong resilience and delivered important results in the year, evidenced, for example, by the expressive cash generation; the reduction of approximately 1 million tons of pulp inventories; for the execution of 100% of the deleveraging plan; and the 9% reduction in the cash cost of pulp production, mainly due to the synergies arising from the business combination with Fibria Celulose S.A. that occurred in January 2019.
The capture of these operational synergies was above planned and totaled, in the period from 2019 to 2020, on a recurring basis, the total of R$1.3 billion per year (before taxation). The amount was the result of a reduction in costs, expenses and capital investments from the supply, forestry, industrial, logistics, commercial, administrative and personnel areas.
Regarding financial management, the Company throughout 2020 reduced its net debt in USD and leverage, as measured by Net Debt/Adjusted EBITDA of the past twelve months. Its liquidity position remained solid, representing zero refinancing risk until 2022. Suzano remains focused on financial discipline, evidenced by clear and consistent policies over time, and believes that this way, it diligently exercises its role of generating and sharing long-term value.
On the ESG front, results in the fourth quarter of 2020 reiterated the progress of environmental, social and governance issues at Suzano. In November, the company was selected to be part of the select 2020-2021 portfolio of the Dow Jones Sustainability Index - Emerging Markets (DJSI Emerging Markets). In addition to Suzano, only ten other Brazilian companies are part of the new portfolios that are part of the DJSI family of indices. In early December, we were also selected to be part of the B3 Corporate Sustainability Index (ISE) portfolio of 2021. The portfolio announced is made up of 46 shares, from 39 companies, and will be valid between January 4 and December 30, 2021.
PULP BUSINESS PERFORMANCE
PULP SALES VOLUME AND REVENUE
The last quarter of 2020 was positive for the global pulp and paper industry in general, despite the uncertainties arising from the impact of the pandemic on the economy. The increasing number of cases of coronavirus infection and the resumption of lockdown adoption in some regions of Europe and North America did not have the same negative impact on the demand for pulp as seen previously in the first half of the year. The production of graphic papers in China has heated up with the entry of new capacities and the operating rate of the printing & writing mills in North America and Europe has recovered from the low levels observed most part of the year, following the seasonally warmer demand in the last months of the year. The other paper segments, especially those related to consumer goods, continued to perform well on a global level, with a strong emphasis on the consumption of toilet paper, which continued with the strong behavior as in previous months, mainly in North America.
The fourth quarter of 2020 was marked by supply reductions, mainly among softwood pulp producers who, due to extended production downtimes and the replacement of production with unbleached pulp or dissolving pulp, offered lower volumes to the market than in previous quarters. These movements, which also had problems on the logistical side, related to the restricted availability of containers and congestion at ports, associated with a strong demand, supported the global price increases announced for both hardwood and softwood pulp. During 2020, supply levels remained relatively balanced, with over 2 million tons of pulp unexpectedly withdrawn from the market offsetting the increase in production by some producers and temporary conversions of integrated capacities of dissolving pulp to market pulp.
In the last quarter of 2020, Suzano’s pulp sales totaled 2,663 thousand tons, up 5% from 3Q20 and down 9% in relation to 4Q19. In 2020, the company sold 10,823 thousand tons, 15% more than in 2019.
| Page 3 of 38 |
| | |
In the quarter, pulp was sold by Suzano at the average net price of US$456/ton, stable in relation to 3Q20 and down US$13/ton (-3%) from 4Q19, reflecting the drop in global pulp prices. Average net pulp price in the export market in 4Q20 was US$459/ton (compared to US$458/ton in 3Q20 and US$471/ton in 4Q19).
Average net price in BRL was R$2,459/ton in 4Q20, up 1% and 27% when compared to 3Q20 and 4Q19, respectively, due to the depreciation of the Brazilian real against the U.S. dollar in the period and the price variations in the export market since the end of 2019.
Net revenue from pulp was 16% higher than in 4Q19, mainly due to the 31% increase in average USD in relation to BRL, which was partially offset by lower average net price in USD (-3%).
Compared to 3Q20, the 6% increase in revenue was driven by the 5% growth in sales, better price and higher average exchange rate during the final months of the year.
| Page 4 of 38 |
| | |
PULP CASH COST
Cash cost excluding downtime in 4Q20 stood at R$622/t, decreasing R$9/ton from 4Q19 (-1%), due to: i) the lower wood cost on account of lower harvest costs, thanks to better operating performance, higher operating productivity and lower cost of diesel. Moreover, there was a decline in the consolidated average supply radius, mainly due to the decline registered in Aracruz (non-utilization of Losango wood) and Maranhão, as well as lower diesel costs; ii) lower costs with energy as a result of lower price, specially natural gas and synergies in supplies. These effects were partially offset by the 31% jump in average USD against the BRL (an impact of R$25/t), higher chemical costs mainly due to higher consumption and price increase (especially of chlorine dioxide), and higher fixed costs due to the concentration of scheduled maintenance downtimes and the consequent increase in expenses with materials and routine services.
| Page 5 of 38 |
| | |
¹Excludes the impact of maintenance and administrative downtimes.
Cash cost excluding downtime in 4Q20 was 4% higher than in 3Q20, due to: i) greater spending on energy due to increased consumption and higher prices, especially of natural gas; ii) higher fixed costs due to the increase in maintenance costs; and iii) higher wood costs, due to greater share of third-party wood and higher harvest costs (due to the higher maintenance intensity of machinery that typically occur in the last quarter of the year). These negative factors were partially offset by higher revenue from energy sales due to the price factor.
¹Excludes the impact of maintenance and administrative downtimes.
Cash cost excluding downtime in 2020 decreased 9% from 2019, due to lower wood and input costs (which were offset by the 31% increase in average USD vs. BRL) as well as fixed costs.
| Page 6 of 38 |
| | |
¹Based on cash cost excluding downtimes. Excludes energy sales.
PULP SEGMENT EBITDA
| Pulp segment | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| Adjusted EBITDA (R$ million) | 3,530 | 2,041 | 73 | % | 3,384 | 4 | % | 13,485 | 9,259 | 46 | % | |||||||||||||||||||||
| Sales volume (k ton) | 2,663 | 2,757 | -3 | % | 2,527 | 5 | % | 10,785 | 8,873 | 22 | % | |||||||||||||||||||||
| Pulp adjusted¹ EBITDA (R$/ton) | 1,326 | 741 | 79 | % | 1,339 | -1 | % | 1,250 | 1,043 | 20 | % | |||||||||||||||||||||
¹ Excludes non-recurring items and PPA effects.
The 73% increase in Adjusted EBITDA from pulp in 4Q20 compared to 4Q19 mainly reflects the 31% increase in average USD against the BRL and lower cash COGS (in turn, due to non-recurring existing adjustments in 4Q19, absence of Klabin's sales volumes and turnover effect on inventories), which was partially offset by lower sales (-9%), higher SG&A expenses and lower net average pulp price in USD (-3%). The 79% increase in adjusted EBITDA per ton is explained mainly by the FX depreciation and the cost factor, partially offset by the increase in administrative and selling expenses, and by the decrease in the average net pulp price in USD.
Compared to 3Q20, the 4% increase in adjusted EBITDA from pulp mainly reflects the 5% increase in sales volume and lower net average price. These effects were partially offset by higher administrative and selling expenses Adjusted EBITDA per ton remained practically stable.
| Page 7 of 38 |
| | |
¹ Excludes non-recurring items and PPA effects.
OPERATING CASH FLOW FROM THE PULP SEGMENT
| Segmento de Celulose (R$ milhões) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | |||||||||||||||||
| Adjusted EBITDA1 | 3,530 | 2,041 | 73 | % | 3,384 | 4 | % | 13,485 | 9,259 | 46 | % | ||||||||||||||
| Maintenance Capex2 | (894 | ) | (842 | ) | 6 | % | (854 | ) | 5 | % | (3,124 | ) | (3,343 | ) | -7 | % | |||||||||
| Operating Cash Flow | 2,636 | 1,200 | 120 | % | 2,530 | 4 | % | 10,361 | 5,916 | 75 | % |
¹ Excludes non-recurring items and PPA effects.
² Cash basis.
¹ Excludes sales volume related to the agreement with Klabin.
Operating cash generation per ton in the pulp segment increased 127% from 4Q19, reflecting the increase in Adjusted EBITDA per ton. Compared to 3Q20, the 1% reduction was due to the increase in sustaining capex per ton and the decrease in EBITDA per ton (as explained above).
| Page 8 of 38 |
| | |
PAPER BUSINESS PERFORMANCE
The following data and analyses incorporate the joint results of the consumer goods and paper businesses.
PAPER SALES VOLUME AND REVENUE¹
According to published data by Forestry Industry Association (Ibá), the demand in the printing & writing segment decreased by 16% in 4Q20 compared to 4Q19, accumulating a decrease of 24% in 2020 in relation to year 2019. Driven by the high demand for packaging in the domestic market, demand in Brazil for paperboard grew by 17% in 4Q20 compared to the same quarter of the previous year, ending the year 2020 with an increase of 7% in comparison to 2019.
Consolidating both markets (accessible market Suzano), there is a reduction of 8% in 4Q20 compared to 4Q19, and a decrease of 16% in demand compared to 2019. Even in face of this challenging scenario, we have observed since July 2020 a gradual recovery demand in the domestic market, with greater emphasis on the paperboard line.
Like the packaging market, the tissue market was also positively impacted in 2020. For that market, also reported by Ibá, demand in Brazil grew 2% in November compared to the same period last year.
Suzano's paper sales (printing and writing, paperboard and tissue) in Brazil totaled 258 thousand tons in 4Q20, an increase of 17% compared to 3Q20, given the pace of recovery in domestic sales, driven by the packaging market, as well as well as the seasonality of the market. In relation to 4Q19, sales remained stable.
Suzano's total paper sales in Brazil accumulated a 6% drop in 2020 compared to 2019, mainly due to the market retraction in 2Q20, during the period of greatest decrease in local demand, as a result of the isolation to contain the COVID-19 pandemic.
Paper sales in the international markets decreased by 3% compared to 3Q20, and by 14% compared to 4Q19, and represented 27% of the volume sold in the last quarter of 2020.
| Page 9 of 38 |
| | |
¹Includes the Consumer Goods unit.
The average net price was R$4,136/ton in 4Q20, showing an increase of R$292/ton (+8%) compared to 4Q19, due to price gains in the domestic market (+4%), and in exchange rate effect on export prices. In comparison to 3Q20, the increase of R$55/ton (+1%) was due to the recovery of prices in both the domestic and international markets (in US$), in addition to exchange rate effect on exports.
Net revenue from paper in 4Q20 was R$1,466 million, up 3% from 4Q19, mainly higher sales prices in the period. Compared to 3Q20, the 13% increase was due to the higher sales volume in the period.
PAPER SEGMENT EBITDA
| Paper segment | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | |||||||||||||||||
| Adjusted EBITDA (R$ million)¹ | 435 | 424 | 3 | % | 394 | 10 | % | 1,465 | 1,465 | 0 | % | ||||||||||||||
| Sales volume (k ton) | 354 | 369 | -4 | % | 319 | 11 | % | 1,177 | 1,256 | -6 | % | ||||||||||||||
| Paper adjusted¹ EBITDA (R$/ton) | 1,227 | 1,150 | 7 | % | 1,236 | -1 | % | 1,244 | 1,166 | 7 | % |
¹ Excludes non-recurring items and PPA effects.
Adjusted EBITDA from paper in 4Q20 was 3% higher than in 4Q19, mainly explained by the higher prices in the period, and reaching one of the highest historical levels.
Compared to 3Q20, Adjusted EBITDA from paper grew 10%, mainly due to higher sales volume as well as higher realized prices in 4Q20. EBITDA per ton remained practically stable.
| Page 10 of 38 |
| | |
OPERATING CASH FLOW FROM THE PAPER SEGMENT
| Operating cash flow - Paper (R$ million) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | |||||||||||||||||
| Adjusted EBITDA1 | 435 | 424 | 3 | % | 394 | 10 | % | 1,465 | 1,465 | 0 | % | ||||||||||||||
| Maintenance Capex2 | (90 | ) | (83 | ) | 9 | % | (70 | ) | 29 | % | (282 | ) | (318 | ) | -11 | % | |||||||||
| Operating Cash Flow | 345 | 341 | 1 | % | 324 | 6 | % | 1,183 | 1,147 | 3 | % |
¹ Excluding non-recurring items.
² Cash basis.
| Page 11 of 38 |
| | |
Operating cash generation per ton of paper in 4Q20 was R$974/t, up 5% from the previous year, due to the increase in adjusted EBITDA per ton.
Compared to 3Q20, operating cash generation per ton decreased 4% mainly due to the increase in sustaining capex, which in turn was due to the higher concentration of expenses in 4Q20 given contingency measures taken in the previous quarters to postpone and reduce costs due to pandemic.
ECONOMIC AND FINANCIAL PERFORMANCE
NET REVENUE
Suzano’s net revenue in 4Q20 was R$8,013 million, 81% of which came from exports (vs. 80% in 4Q19 and 82% in 3Q20). Compared to 4Q19, the 14% growth in net revenue mainly reflected the 31% increase in average USD against the BRL, partially offset by the 8% decline in sales volume and average net pulp price in USD. The 7% increase in consolidated net revenue in 4Q20 compared to 3Q20 is basically due to the 6% increase in total sales, which came to 3,017 thousand tons.
¹ Excludes service revenue from Portocel.
| Page 12 of 38 |
| | |
PRODUCTION
| Production (k ton) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| Market Pulp | 2,391 | 2,267 | +5 | % | 2,529 | -5 | % | 9,800 | 8,757 | +12 | % | |||||||||||||||||||||
| Paper | 309 | 319 | -3 | % | 296 | +5 | % | 1,184 | 1,240 | -5 | % | |||||||||||||||||||||
| Total | 2,700 | 2,586 | +4 | % | 2,825 | -4 | % | 10,984 | 9,997 | +10 | % |
In 4Q20, the following units underwent scheduled maintenance downtimes: Imperatriz and Jacareí Units, Line 1 of the Mucuri Unit and Lines 1 and 2 of the Três Lagoas Unit. As already disclosed by the Company, given the social scenario caused by the COVID-19 pandemic, in order to protect people and society, the Company decided to postpone most of its maintenance downtimes to the second half of the year. Pulp production decreased 5% in relation to 3Q20 due to higher impact of downtimes. Compared to the same period last year, the increase was due to the accelerated pace of production at pulp mills, which was partially offset by the impact of scheduled maintenance downtimes.
Following is the calendar of Suzano’s scheduled maintenance downtimes:
| 2019 | 2020 | 2021 | |||||||||||||||||||||||||||||||||||||||||||
| Mill - Pulp capacity | 1Q19 | 2Q19 | 3Q19 | 4Q19 | 1Q20 | 2Q20 | 3Q20 | 4Q20 | 1Q21 | 2Q21 | 3Q21 | 4Q21 | |||||||||||||||||||||||||||||||||
| Aracruz - Linha A (ES) – 590 kt | |||||||||||||||||||||||||||||||||||||||||||||
| Aracruz - Linha B (ES) – 830 kt | |||||||||||||||||||||||||||||||||||||||||||||
| Aracruz - Linha C (ES) – 920 kt | |||||||||||||||||||||||||||||||||||||||||||||
| Imperatriz (MA)² – 1,650 kt | No downtime | ||||||||||||||||||||||||||||||||||||||||||||
| Jacareí (SP) – 1,100 kt | No downtime | ||||||||||||||||||||||||||||||||||||||||||||
| Limeira (SP)² – 690 kt | |||||||||||||||||||||||||||||||||||||||||||||
| Mucuri - Line 1 (BA)² – 580 kt | No downtime | ||||||||||||||||||||||||||||||||||||||||||||
| Mucuri - Line 2 (BA) – 1,100 kt | |||||||||||||||||||||||||||||||||||||||||||||
| Suzano (SP)² – 620 kt | |||||||||||||||||||||||||||||||||||||||||||||
| Três Lagoas - Linha 1 (MS) – 1,300 kt | No downtime | ||||||||||||||||||||||||||||||||||||||||||||
| Três Lagoas - Linha 2 (MS) – 1,950 kt | No downtime | ||||||||||||||||||||||||||||||||||||||||||||
| Veracel (BA)¹ – 560 kt | |||||||||||||||||||||||||||||||||||||||||||||
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 and fluff.
COST OF GOODS SOLD
| COGS (R$ million) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| COGS | 4,884 | 5,810 | -16 | % | 4,474 | 9 | % | 18,966 | 20,743 | -9 | % | |||||||||||||||||||||
| Depreciation, depletion and amortization | 1,531 | 1,549 | -1 | % | 1,399 | 9 | % | 5,773 | 7,135 | -19 | % | |||||||||||||||||||||
| Cash COGS | 3,353 | 4,261 | -21 | % | 3,076 | 9 | % | 13,193 | 13,608 | -3 | % | |||||||||||||||||||||
| Sales volume | 3,017 | 3,288 | -8 | % | 2,846 | 6 | % | 12,000 | 10,668 | 12 | % | |||||||||||||||||||||
| Cash COGS/ton (R$/ton) | 1,111 | 1,296 | -14 | % | 1,081 | 3 | % | 1,099 | 1,276 | -14 | % |
¹ Includes amortization of goodwill surplus/loss (PPA)
Cash COGS in 4Q20 totaled R$3,353 million, or R$1,111/ton. Compared to 4Q19, cash COGS declined 21%, mainly due to lower sales volume, the absence of Klabin’s pulp sales, the inventory turnover effect, and due to the non-recurring adjustments that occurred in 4Q19, partially offset by the 31% increase in USD against the BRL. On a per-ton basis, the 14% reduction is also explained by the same factors above.
Compared to 3Q20, cash COGS increased 9% mainly due to higher sales volume (+6%) and higher pulp costs (higher production cost and greater impact of scheduled maintenance downtimes). On a per-ton basis, the indicator was 3% higher than in the previous quarter due to production cost.
| Page 13 of 38 |
| | |
SELLING EXPENSES
| Selling expenses (R$ million) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| Selling expenses | 590 | 538 | 10 | % | 523 | 13 | % | 2,175 | 1,905 | 14 | % | |||||||||||||||||||||
| Depreciation, depletion and amortization1 | 205 | 233 | -12 | % | 241 | -15 | % | 906 | 905 | 0 | % | |||||||||||||||||||||
| Cash selling expenses | 385 | 305 | 26 | % | 282 | 37 | % | 1,269 | 1,001 | 27 | % | |||||||||||||||||||||
| Sales volume | 3,017 | 3,288 | -8 | % | 2,846 | 6 | % | 12,000 | 10,668 | 12 | % | |||||||||||||||||||||
| Cash selling expenses/ton (R$/ton) | 128 | 93 | 38 | % | 99 | 29 | % | 106 | 94 | 13 | % |
¹ Includes amortization of goodwill surplus/loss (PPA)
Cash selling expenses increased 26% from 4Q19, mainly due to the 31% increase in average USD against the BRL, as well as higher logistics expenses arising from sales mix (higher share from North America), partially offset by the reduction in sales volume. On a per-ton basis, cash selling expenses increased 38% mainly due to the effect of exchange rate variation on expenses in foreign currency and sales mix.
When compared to 3Q20, the 37% increase in expenses with cash base sales is mainly explained by the higher logistics service (sales mix with higher share from North America) and higher sales volume. Expenses on cash basis sales per ton increased 29%, due to sales mix.
GENERAL AND ADMINISTRATIVE EXPENSES
General and Administrative Expenses (R$ million) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| General and Administrative Expenses | 480 | 286 | 68 | % | 313 | 53 | % | 1,443 | 1,173 | 23 | % | |||||||||||||||||||||
| Depreciation, depletion and amortization1 | 24 | (7)² | - | 10 | 140 | % | 78 | 26 | 199 | % | ||||||||||||||||||||||
| Cash general and administrative expenses | 456 | 293 | 56 | % | 303 | 51 | % | 1,365 | 1,147 | 19 | % | |||||||||||||||||||||
| Sales volume | 3,017 | 3,288 | -8 | % | 2,846 | 6 | % | 12,000 | 10,668 | 12 | % | |||||||||||||||||||||
| Cash general and administrative expenses/t (R$/ton) | 151 | 89 | 70 | % | 106 | 42 | % | 114 | 108 | 6 | % |
¹ Includes amortization of goodwill surplus/loss (PPA).
² Inverse effect due to the write-off of PPA on contingencies (write-off of cases initially reassessed in the business combination).
Compared to 4Q19, the 56% increase in cash general and administrative expenses is mainly due to the increase in personnel expenses (variable compensation). The same analysis explains the increase of 70% on a per-ton basis.
Compared to 3Q20, cash general and administrative expenses increased 51% due to higher personnel expenses (variable compensation) and third-party services. On a per-ton basis, the 42% increase is explained by the same factors.
Other operating income (expenses) amounted to an income of R$323 million in 4Q20, compared to an income of R$137 million in 4Q19 and expense of R$4 million in 3Q20. Compared to 4Q19, the variation is mainly explained by the higher result from the adjustment to fair value of biological assets and higher gains from asset divestments. Compared to 3Q20, the variation is mainly explained by the result of the adjustment to fair value of biological assets, which occurs in the second and fourth quarter of each fiscal year, as well as higher gains from asset divestments.
| Page 14 of 38 |
| | |
ADJUSTED EBITDA
| Consolidated | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||
| Adjusted EBITDA (R$ million)¹ | 3,965 | 2,465 | 61 | % | 3,779 | 5 | % | 14,949 | 10,724 | 39 | % | |||||||||||||
| Adjusted EBITDA¹ Margin - ex-Klabin | 49 | % | 37 | % | 13 p.p. | 51 | % | -1 p.p. | 49 | % | 43 | % | 6 p.p. | |||||||||||
| Sales Volume ex-Klabin (k ton) | 3,017 | 3,125 | -3 | % | 2,846 | 6 | % | 11,962 | 10,130 | 18 | % | |||||||||||||
| Adjusted EBITDA¹ ex-Klabin/ton (R$/ton) | 1,314 | 789 | 67 | % | 1,328 | -1 | % | 1,250 | 1,059 | 18 | % |
¹ Excludes non-recurring items and PPA effects.
Adjusted EBITDA in 4Q20 was higher than in 4Q19 due to the increase in average USD against the BRL (+31%) and the decrease in cash COGS, as detailed above. These effects were partially offset by higher SG&A, lower sales volume and the 3% decrease in net pulp price in USD, as explained above. The 67% increase in per-ton EBITDA is explained by exchange variation and lower production costs, which were partially offset by the increase in SG&A and lower pulp price.
Compared to 3Q20, the 5% increase in Adjusted EBITDA was mainly due to the 6% increase in total sales volume and higher net average price of pulp and paper (+1%), which were partially offset by the increase in SG&A. Per-ton adjusted EBITDA remained practically stable.
FINANCIAL INCOME
| Financial Result (R$ million) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||
| Financial Expenses | (974 | ) | (1,055 | ) | -8 | % | (1,365 | ) | -29 | % | (4,459 | ) | (4,179 | ) | 7 | % | ||||||||||||||
| Interest on loans and financing (local currency) | (169 | ) | (324 | ) | -48 | % | (171 | ) | -1 | % | (774 | ) | (1,444 | ) | -46 | % | ||||||||||||||
| Interest on loans and financing (foreign currency) | (594 | ) | (557 | ) | 7 | % | (1,007 | ) | -41 | % | (2,904 | ) | (2,140 | ) | 36 | % | ||||||||||||||
| Capitalized interest1 | 1 | 2 | 2 | 11 | 4 | |||||||||||||||||||||||||
| Other financial expenses | (212 | ) | (176 | ) | 20 | % | (190 | ) | 11 | % | (792 | ) | (599 | ) | 32 | % | ||||||||||||||
| Financial Income | 66 | 100 | -34 | % | 58 | 13 | % | 327 | 493 | -34 | % | |||||||||||||||||||
| Interest on financial investments | 19 | 87 | -78 | % | 20 | -4 | % | 147 | 392 | -63 | % | |||||||||||||||||||
| Other financial income | 47 | 13 | 263 | % | 39 | 21 | % | 181 | 101 | 78 | % | |||||||||||||||||||
| Monetary and Exchange Variations | 4,464 | 1,418 | - | (1,645 | ) | - | (12,531 | ) | (1,965 | ) | 538 | % | ||||||||||||||||||
| Foreign exchange variations (Debt) | 4,850 | 1,522 | - | (1,851 | ) | (13,365 | ) | (1,764 | ) | |||||||||||||||||||||
| Other foreign exchange variations | (387 | ) | (104 | ) | 271 | % | 206 | 835 | (201 | ) | ||||||||||||||||||||
| Derivative income (loss), net2 | 2,683 | 1,161 | - | (1,271 | ) | (9,423 | ) | (1,075 | ) | 776 | % | |||||||||||||||||||
| Cash flow hedge | 1,331 | 474 | - | (459 | ) | (3,170 | ) | 153 | ||||||||||||||||||||||
| Debt hedge | 1,430 | 731 | 96 | % | (766 | ) | (6,271 | ) | (1,255 | ) | 400 | % | ||||||||||||||||||
| Others3 | (78 | ) | (44 | ) | - | (46 | ) | 70 | % | 17 | 27 | -36 | % | |||||||||||||||||
| Net Financial Result | 6,238 | 1,624 | - | (4,223 | ) | - | (26,086 | ) | (6,726 | ) | - |
¹ Capitalized interest due to construction in progress.
2 Variation in mark-to-market adjustment (4Q20: -R$6,776 million | 3Q20: -R$10,778 million), plus adjustments paid and received (4Q20 = -R$1,318 million).
³ Includes commodity hedging and embedded derivatives.
Financial expenses totaled R$974 million in 4Q20, down 8% and 29% from 4Q19 and 3Q20, respectively. Compared to 4Q19, apart from the decline in debt indices in the BRL, such as CDI, SELIC and TJLP, there was debts maturing during the course of 2020, the CRAs being the highest one, in the amount of R$2.8 billion, which basically explains the decrease in interest expense in local currency. In relation to the increase in interest rates in foreign currency, the fall in Libor and the reduction in bond interest ended up offset by the appreciation of the average USD vs. BRL. Compared to 3Q20, the reduction was due to the financial expenses in the previous quarter, related to the partial repurchase of Senior Notes 2024, 2025 and 2026 amounting to R$391 million.
| Page 15 of 38 |
| | |
Financial income decreased 34% in relation to 4Q19 and increased 13% when compared to 3Q20. The year-on-year comparison, the decrease is due mostly to the reduction in interest rates that remunerate the company’s cash position. In relation to 3Q20, the increase was due to the greater accounting impact of the amortization of surplus value, resulting from the merger of Fibria.
Inflation adjustment and exchange variation had a positive impact of R$4,464 million on the Company’s quarterly financial result due to the appreciation in the closing rate of the BRL against the USD of 8% on the foreign currency portion of debt (80% of total debt). Note that the accounting impact from exchange variation on foreign currency debt has a cash impact only on the respective maturities.
Derivative operations generated an income of R$2,683 million in 4Q20, due to stronger BRL and the volatility of market curves applicable to debt hedge and cash flow transactions. There was also a negative impact caused by the variations in the Pre, Cupom and Libor rate curves on transactions, as a result of the higher instability scenario. The mark-to-market adjustment of derivatives on December 31, 2020 generated a loss of R$6,776 million, compared to a loss of R$10,778 million on September 30, 2020, representing a positive variation of R$4,002 million. Note that the impact of BRL variation vs. the USD on the derivatives portfolio generates a cash impact only upon the respective maturities. The net effect on cash, which refers to the maturity of derivative operations in the fourth quarter, was negative in the amount of R$1,318 million (R$901 million expense from debt hedge and R$394 million expense from operating hedge and R$23 million related to commodities).
Due to the aforementioned factors, net financial income in 4Q20 was R$6,238 million, compared to net financial income of R$1,624 million in 4Q19 and net financial expense of R$4,223 million in 3Q20.
DERIVATIVE OPERATIONS
Suzano carries out derivative operations exclusively for hedging purposes. The following table reflects the position of derivative hedging instruments on December 31, 2020:
| Notional (US$ million) | Fair value (R$ million) | |||||||||||||||
| Hedge1 | Dec/2020 | Sep/2020 | Dec/2020 | Sep/2020 | ||||||||||||
| Debt | 6,584 | 6,870 | (6,374 | ) | (8,706 | ) | ||||||||||
| Cash Flow | 3,292 | 3,535 | (773 | ) | (2,497 | ) | ||||||||||
| Others2 | 684 | 709 | 371 | 425 | ||||||||||||
| Total | 10,560 | 11,114 | (6,776 | ) | (10,778 | ) | ||||||||||
| ¹ | Refer to note 4 of the 2020 Financial Statements (DFP) for more details and fair value sensitivity analyses. | |
| ² | Includes commodity hedge and embedded derivatives. |
The Company’s financial policy seeks to minimize the volatility of its cash generation and to impart greater flexibility to cash flow management. Currently, the policy 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 transactions establish minimum and maximum limits for the exchange rate that minimize adverse effects in the event of significant appreciation in the BRL. If the exchange rate is within such limits, the Company neither pays nor receives any financial adjustments. Therefore, the Company is protected in scenarios of extreme BRL appreciation. However, these transactions also limit potential gains in scenarios of extreme BRL depreciation. This characteristic allows for capturing greater benefits from export revenue in a potential scenario of USD appreciation within the range contracted.
On December 31, 2020, the outstanding notional value of operations involving forward USD sales through ZCCs was US$3,212 million, whose maturities are distributed between January 2021 and June 2022, with an average forward rate ranging from R$4.68 to R$5.34. On the same date, the outstanding notional value of operations involving forward USD sales through NDFs was US$80 million, whose maturities are distributed between October 2021 and March 2022 and with an average strike of R$5.36. In 4Q20, cash flow hedge operations resulted in a gain of R$1,331 million. The mark-to-market adjustment (fair value) of ZCC transactions was a loss of R$781 million and for NDFs was a gain of R$8 million at the end of the quarter.
The following table presents a sensitivity analysis of the cash impact that the Company could have on its cash flow hedge portfolio (ZCC and NDF) if the future exchange rate remains the same as that at end of 4Q20 (R$/US$ = 5.20) in the coming quarters; as well as the projected variation in cash impact for each R$0.10 variation on the same reference exchange rate (4Q20). Note that the figures presented in the table are Company projections based on the end-of-period curves and could fluctuate depending on market conditions.
| Page 16 of 38 |
| | |
| Cash adjustment (R$ million) | ||||||||||||||||||||
| Maturity (up to) | Strike Range | Notional (US$ million) | Actual | R$ / US$ = 5.20 (4Q20)² | Sensitivity at R$0.10 / US$ variation (+/-)1 | |||||||||||||||
| Zero Cost Collars | ||||||||||||||||||||
| 4Q20 | - | - | (393 | ) | - | - | ||||||||||||||
| 1Q21 | 4.27 - 4.76 | 736 | - | (397 | ) | (74 | ) | |||||||||||||
| 2Q21 | 4.27 - 4.75 | 840 | - | (468 | ) | (84 | ) | |||||||||||||
| 3Q21 | 4.75 - 5.54 | 617 | - | (120 | ) | (62 | ) | |||||||||||||
| 4Q21 | 5.21 - 6.15 | 568 | - | 48 | (57 | ) | ||||||||||||||
| 1Q22 | 5.37 - 6.11 | 401 | - | 78 | (40 | ) | ||||||||||||||
| 2Q22 | 5.09 - 6.06 | 50 | - | 0 | (5 | ) | ||||||||||||||
| Total | 4.68 – 5.34 | 3,212 | (393 | ) | (859 | ) | (322 | ) | ||||||||||||
| NDF | ||||||||||||||||||||
| 4Q20 | - | - | (1 | ) | - | - | ||||||||||||||
| 1Q21 | - | - | - | - | 0 | |||||||||||||||
| 2Q21 | - | - | - | - | (5 | ) | ||||||||||||||
| 3Q21 | 5.33 | 50 | - | 7 | 0 | |||||||||||||||
| 4Q21 | - | - | - | - | (3 | ) | ||||||||||||||
| 1Q22 | 5.42 | 30 | - | 7 | 0 | |||||||||||||||
| 2Q22 | - | - | - | - | 0 | |||||||||||||||
| Total | 5.36 | 80 | (1 | ) | 14 | (8 | ) | |||||||||||||
¹ Note: sensitivity of adjustments for foreign exchange levels above maximum value of the strike.
² To calculate the mark-to-market adjustment, the PTAX rate of the penultimate business day for the period under analysis.
The Company also uses currency and interest rate swaps to mitigate the effects from exchange and interest rate variations on the balance of its debt and on its cash flow. Contracts swapping different interest rates and inflation indexes may be entered as a way to mitigate the mismatch between financial assets and liabilities.
On December 31, 2020, the Company held US$6,584 million (notional value) in swaps, distributed as shown in the table below. In 4Q20, the result of liability hedge transactions was a gain of R$1,430 million, mainly due to BRL appreciation in the period. The mark-to-market (fair value) of such operations was negative by R$6,374 million at the end of the quarter.
| Notional (US$ million) | Fair value (R$ million) | |||||||||||||||||||||||
| Debt Hedge | Maturity (up to) | Currency | Dec/2020 | Sep/2020 | Dec/2020 | Sep/2020 | ||||||||||||||||||
| Swap (PRÉ x USD) | 2024 | USD | 350 | 350 | (508 | ) | (719 | ) | ||||||||||||||||
| Swap (CDI x USD) | 2026 | USD | 2,267 | 2,567 | (4,977 | ) | (6,792 | ) | ||||||||||||||||
| Swap (IPCA x USD) | 2023 | USD | 121 | 121 | (115 | ) | (195 | ) | ||||||||||||||||
| Swap (LIBOR x USD) | 2026 | USD | 3,683 | 3,683 | (1,059 | ) | (1,252 | ) | ||||||||||||||||
| Swap (IPCA x CDI) | 2023 | BRL | 162¹ | 149 | 286 | 252 | ||||||||||||||||||
| Total | 6,584 | 6,870 | (6,374 | ) | (8,706 | ) | ||||||||||||||||||
¹ Translated at the closing exchange rate (5.20).
| Page 17 of 38 |
| | |
The following table presents a sensitivity analysis of the cash impact that the Company could have on its liability hedge portfolio (swaps) if the future exchange rate remains the same as that at the end of 4Q20 (R$/US$ = 5.20) in the coming quarters; as well as the projected variation in cash impact for each R$ 0.10 variation on the same reference exchange rate (4Q20). Note that the figures presented in the table are Company projections based on the end-of-period curves and could fluctuate depending on market conditions.
| Cash adjustment (R$ million) | ||||||||||||||||
| Maturity (up to) | Notional (US$ million) | Actual | R$ / US$ = 5.20 (4Q20) | Sensitivity
at | ||||||||||||
| 4Q20 | (901 | ) | ||||||||||||||
| 2021 | 333 | - | (685 | ) | (21 | ) | ||||||||||
| 2022 | 737 | - | (1,016 | ) | (60 | ) | ||||||||||
| 2023 | 2,180 | - | (454 | ) | (50 | ) | ||||||||||
| 2024 | 1,331 | - | (489 | ) | (46 | ) | ||||||||||
| 2025 | 1,156 | - | (1,157 | ) | (90 | ) | ||||||||||
| >2026 | 845 | - | (1,151 | ) | (83 | ) | ||||||||||
| Total | 6,584 | (901 | ) | (4,951 | ) | (350 | ) | |||||||||
¹ Sensitivity analysis considers variation only in the exchange rate (R$/US$), while other variables are presumed constant.
Other transactions involving the Company’s derivatives are related to the embedded derivative resulting from the forestry partnerships and commodity hedges (maritime fuel), as follows.
Notional | Fair
value | Cash
adjustment | ||||||||||||||||||||||||||
| Other hedges | Maturity | Index | Dec/2020 | Sep/2020 | Dec/2020 | Sep/2020 | 4Q20 | 3Q20 | ||||||||||||||||||||
| Embedded derivative | 2035 | Fixed USD | USD US-CPI | 646 | 646 | 355 | 474 | - | - | ||||||||||||||||||||
| Commodities | 2021 | Brent/VLSFO | 38 | 63 | 16 | (49 | ) | (23 | ) | (25 | ) | |||||||||||||||||
| Total | 684 | 709 | 371 | 425 | (23 | ) | (25 | ) | ||||||||||||||||||||
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, which is presented in the table above, consists of a swap contract with the short leg consisting of the variations in the US-CPI during the period of the agreements mentioned below. See note 4 of the 4Q20 Financial Statements for more details and for a sensitivity analysis of the fair value in case of a sharp rise in the U.S. CPI. On December 31, 2020, the outstanding (notional) value of the operation was US$646 million. The result from the swap in 4Q20 was a loss of R$120 million. The mark-to-market adjustment (fair value) of such operations generated a gain of R$355 million at the end of the quarter.
The Company is also exposed to international oil prices, which is reflected in the logistics costs involved in exports. In this case, the Company analyzes the contracting of derivative financial instruments to hedge the price of maritime fuel.
On December 30, 2020, the outstanding (notional) value of the operation was US$38 million. The result from this swap in 4Q20 was a gain of R$42 million. The mark-to-market (fair value) adjustment of these operations generated a gain of R$16 million at the end of the quarter.
| Page 18 of 38 |
| | |
* Debt in BRL translated into USD at the closing exchange rate of the month (R$/US$5.20 on 12/31/2020).
NET INCOME (LOSS)
In 4Q20 the Company posted net income of R$5,914 million, compared to net income of R$1,175 million in 4Q19 and a net loss of R$1,158 million in 3Q20. The growth in relation to 4Q19 is due to better financial result which, in turn, is due to the effects from exchange variation on debt and the results from derivative transactions, as well as higher operating income. Compared to 3Q20, the increase of R$7,072 million in net income mainly reflects the growth in financial income (positive exchange variation on debt and derivatives).
DEBT
| Debt (R$ million) | 12/31/2020 | 12/31/2019 | Δ Y-o-Y | 09/30/2020 | Δ Q-o-Q | |||||||||||||||
| Local Currency | 14,740 | 18,185 | -19 | % | 16,359 | -10 | % | |||||||||||||
| Short Term | 541 | 3,563 | -85 | % | 1,651 | -67 | % | |||||||||||||
| Long Term | 14,199 | 14,622 | -3 | % | 14,709 | -3 | % | |||||||||||||
| Foreign Currency | 58,160 | 45,500 | 28 | % | 62,131 | -6 | % | |||||||||||||
| Short Term | 1,503 | 2,665 | -44 | % | 2,673 | -44 | % | |||||||||||||
| Long Term | 56,657 | 42,835 | 32 | % | 59,458 | -5 | % | |||||||||||||
| Gross Debt | 72,900 | 63,685 | 14 | % | 78,490 | -7 | % | |||||||||||||
| (-) Cash | 9,232 | 9,579 | -4 | % | 9,758 | -5 | % | |||||||||||||
| Net debt | 63,668 | 54,106 | 18 | % | 68,731 | -7 | % | |||||||||||||
| Net debt/Adjusted EBITDA1(x) - R$ | 4.3 | x | 5.0 | x | -0.7 | x | 5.1 | x | -0.8 | x | ||||||||||
| Net debt/Adjusted EBITDA1(x) - US$ | 4.3 | x | 4.9 | x | -0.6 | x | 4.4 | x | -0.1 | x | ||||||||||
¹ Excluding non-recurring items.
On December 31, 2020, gross debt was R$72.9 billion, composed of 97% long-term maturities and 3% short-term maturities. Debt denominated in foreign currency accounted for 80% of the Company's total debt, while debt denominated in local currency accounted for the remaining 20%. The percentage of gross debt denominated in foreign currency, considering the effect of debt hedge, was 95%. Gross debt declined 7% from 3Q20 (R$5.6 billion) due to settlements related to Liability Management and the effect of exchange variation on debt in the period.
Suzano contracts debt in foreign currency debt as a natural hedge, since net operating cash generation is denominated in foreign currency (U.S. dollar) due to its predominant status as an exporter. This structural exposure allows the Company to match loans and financing payments in USD with receivable flows from sales.
| Page 19 of 38 |
| | |
*Corresponding mainly to transaction costs (issue, funding etc.) and impacts from surplus value resulting from the operation with Fibria.
On December 31, 2020, the average cost of debt in U.S. dollar was 4.5% p.a. (considering debt in BRL adjusted by the market swap curve) as against 4.5% p.a. on September 30, 2020. The average term of consolidated debt at the end of the year was 86 months (84 months in September 2020).
¹ Considers the portion of debt with currency swaps. The original debt was 80% denominated in USD and 20% in BRL.
Cash and cash equivalents on December 31, 2020 were R$9,232 million, 70% of which were invested in foreign currency in fixed-income and short-term investments, and the portion in local currency was invested in government and fixed-income bonds, remunerated at a percentage of the DI rate.
The company has two standby untapped credit facilities totaling R$3,598 million – one in Brazilian real for R$1 billion and available until 2021 and another for US$500 million available until 2024. These facilities help improve the company's liquidity position and can be withdrawn during times of uncertainty, such as during the first half of the year, when the COVID-19 pandemic broke out. As a result, the current cash position of R$9,232 million plus the facilities described above amount to a readily available cash position of R$12,830 million.
| Page 20 of 38 |
| | |
On December 31, 2020, net debt stood at R$63.7 billion (US$12.3 billion), compared to R$68.7 billion (US$12.2 billion) on September 30, 2020. The biggest impact on net debt in local currency came from the exchange variation during the period.
The ratio of net debt to Adjusted EBITDA in BRL stood at 4.3x on December 31, 2020 (vs. 5.1x in 4Q19). The same ratio in USD (a measure established in Suzano’s financial policy) fell to 4.3x on December 31, 2020 (vs. 4.4x in 3Q20).
The breakdown of gross debt between trade and non-trade finance on December 31, 2020 is shown below:
| 2021 | 2022 | 2023 | 2024 | 2025 | 2026 onwards | Total | ||||||||||||||||||||||
| Trade Finance¹ | 40 | % | 45 | % | 83 | % | 73 | % | 45 | % | 3 | % | 31 | % | ||||||||||||||
| Non-Trade Finance² | 60 | % | 55 | % | 17 | % | 27 | % | 55 | % | 97 | % | 69 | % | ||||||||||||||
¹ ACC, ACE, NCE, PPE
² Bonds, BNDES, CRA, Debentures, among others.
CAPITAL EXPENDITURE
In 4Q20, capital expenditure (cash basis) totaled R$1,173 million, down 15% from the same period in 2019, mainly due to lower expenses with land, forests and port terminals (lower spending on the Vértere project), partially offset by higher industrial maintenance expenses and the 31% increase in USD against the BRL. Compared to 3Q20, capex remained stable, with higher maintenance expenses, which were offset by lower investment in land and forests.
| Page 21 of 38 |
| | |
Capex 2020 remained in line with the guidance previously disclosed by the Company. For 2021, the Management approved a Capital Budget of R$4.9 billion, with R$4.0 billion allocated to industrial and forest maintenance.
| Investments (R$ million) | 4Q20 | 4Q19 | Δ Y-o-Y | 3Q20 | Δ Q-o-Q | 2020 | 2019 | Δ Y-o-Y | Guidance 2021 | ||||||||||||||||||
| Maintenance | 984 | 925 | 6 | % | 924 | 6 | % | 3,406 | 3,661 | -7 | % | 4,038 | |||||||||||||||
| Industrial maintenance | 271 | 177 | 53 | % | 149 | 82 | % | 608 | 711 | -15 | % | 829 | |||||||||||||||
| Forestry maintenance | 686 | 703 | -3 | % | 745 | -8 | % | 2,716 | 2,815 | -4 | % | 3,076 | |||||||||||||||
| Others | 28 | 44 | -38 | % | 31 | -10 | % | 83 | 135 | -39 | % | 133 | |||||||||||||||
| Expansion and modernization | 80 | 92 | -14 | % | 55 | 44 | % | 242 | 287 | -15 | % | 240 | |||||||||||||||
| Land and forestry | 70 | 130 | -46 | % | 152 | -54 | % | 365 | 868 | -58 | % | 426 | |||||||||||||||
| Port terminals | 17 | 106 | -84 | % | 25 | -32 | % | 120 | 369 | -67 | % | 152 | |||||||||||||||
| Others | 22 | 127 | -83 | % | 11 | 111 | % | 91 | 594 | -85 | % | 79 | |||||||||||||||
| Total | 1,173 | 1,380 | -15 | % | 1,167 | 0 | % | 4,225 | 5,778 | -27 | % | 4,935 |
OPERATING CASH GENERATION
| (R$ million) | 4Q20 | 4Q19 | Δ Y-o-Y | 3Q20 | Δ Q-o-Q | 2020 | 2019 | Δ Y-o-Y | ||||||||||||||||
| Adjusted EBITDA1 | 3,965 | 2,465 | 61 | % | 3,779 | 5 | % | 14,949 | 10,724 | 39 | % | |||||||||||||
| Maintenance Capex2 | (984 | ) | (925 | ) | 6 | % | (924 | ) | 6 | % | (3,406 | ) | (3,661 | ) | -7 | % | ||||||||
| Operating Cash Flow | 2,981 | 1,540 | 93 | % | 2,854 | 4 | % | 11,543 | 7,063 | 63 | % | |||||||||||||
| Operating Cash Flow (R$/ton) | 988 | 493 | 100 | % | 1,003 | -2 | % | 965 | 697 | 38 | % |
1 Excludes non-recurring items and PPA effects.
2 Cash basis.
3 Excludes sales volume from Klabin.
Operating cash generation, measured by Adjusted EBITDA less sustaining capex (cash basis), amounted to R$2,981 million in 4Q20. The 93% increase from 4Q19 reflects the higher EBITDA, as explained above, which was partially offset by the increase in sustaining capex. The increase in operating cash generation per ton compared to 4Q19 is related to EBITDA growth per ton. The 4% increase in relation to 3Q20 is related to the increase in EBITDA mentioned earlier, partially offset by higher sustaining capex. On a per-ton basis, the 2% decrease is due to the lower adjusted EBITDA per ton.
| Page 22 of 38 |
| | |
FREE CASH FLOW
| Free Cash Flow (R$ million) | 4Q20 | 4Q19 | Δ Y-o-Y | 3Q20 | Δ Q-o-Q | 2020 | 2019 | Δ Y-o-Y | ||||||||||||||||
| Adjusted EBITDA | 3,965 | 2,465 | 61 | % | 3,779 | 5 | % | 14,949 | 10,724 | 39 | % | |||||||||||||
| (-) Total Capex¹ | (1,710 | ) | (1,124 | ) | 52 | % | (1,226 | ) | 39 | % | (4,898 | ) | (4,868 | ) | 1 | % | ||||||||
| (+/-) D Working capital | 717 | (514 | ) | - | 1,290 | - | 2,264 | 468 | 383 | % | ||||||||||||||
| (-) Net interest | (321 | ) | (592 | ) | -46 | % | (1,560 | ) | -79 | % | (3,436 | ) | (2,600 | ) | 32 | % | ||||||||
| (-) Income taxes | (58 | ) | (55 | ) | 5 | % | (67 | ) | -14 | % | (188 | ) | (392 | ) | -52 | % | ||||||||
| (-) Dividend payment | - | (5 | ) | - | - | - | - | (607 | ) | - | ||||||||||||||
| Free cash flow | 2.592 | 175 | - | 2,215 | 17 | % | 8,690 | 2,725 | 219 | % | ||||||||||||||
| (+) Capex ex-maintenance | 259 | 216 | 20 | % | 163 | 76 | % | 784 | 1,418 | -45 | % | |||||||||||||
| (+) Dividend payment | - | 5 | - | 0 | - | 0 | 607 | - | ||||||||||||||||
| Free cash flow - Adjusted | 2.851 | 396 | 620 | % | 2,378 | 21 | % | 9,474 | 4,749 | 99 | % | |||||||||||||
| (-) Derivative cash adjustment | (1,318 | ) | (79 | ) | - | (1,313 | ) | 0 | % | (4,466 | ) | (135 | ) | - | ||||||||||
| Free cash flow - Adjusted - after derivatives | 1,533 | 317 | 384 | % | 1,065 | 46 | % | 5,009 | 4,614 | 9 | % |
1 On an accrual basis.
2 Free cash flow prior to dividend payments and capex ex-maintenance (accrual basis).
Free cash flow considering the adjustment for derivatives stood at R$1,533 million in 4Q20, compared to R$317 million in 4Q19 and R$1,050 million in 3Q20. The year-on-year increase was mainly due to higher adjusted EBITDA and the positive variation of working capital (notably for the taxes recoverable and accounts payable lines) and reduction of net interest, partially offset by the higher loss on derivative operations and higher sustaining capex.
Compared to 3Q20, the 46% increase was due to the significant decline in interest payments (lower concentration of bond payments and payments related to the partial repurchase of Senior Notes 2024, 2025 and 2026 in the previous quarter) and the 5% growth in Adjusted EBITDA. These effects were partially offset by the negative variation in working capital (especially in the accounts receivable line, which was impacted by the drop in volume sold and the lower pulp price in 3Q20) and higher sustaining capex. As for working capital, it is worth highlighting the decrease in accounts receivable caused by higher sales volume.
COVID-19
Suzano has been taking preventive and mitigatory measures aligned with the guidelines established by Brazilian and international health authorities to minimize the impacts from the COVID-19 pandemic regarding people safety and the continuity of its businesses.
The Company’s actions are based on three pillars: (1) People; (2) Society; (3) Business Continuity.
| (1) | People: to ensure the safety of its employees and contractors, Suzano adopted a series of measures and procedures to mitigate their exposure to the new coronavirus. The measures to protect people include the Company’s decision to maintain all direct jobs and to pay in advance 50% of the 13th salary bonus to all employees. |
| (2) | Society: Suzano understands its responsibility at this time to the communities in which it operates, guided by its culture driver “It’s only good for us if it’s good for the world.” Accordingly, from the onset of the outbreak to the present date, the Company has adopted a series of measures to protect society, including: |
| · | Donation of toilet paper, napkins and disposable diapers made by the Company to needy communities. |
| · | Donation of 159 ventilators and 1 million medical masks to federal and state governments. |
| Page 23 of 38 |
| | |
| · | Participation in the joint effort with Positivo Tecnologia, Klabin, Flextronics and Embraer to support the Brazilian company Magnamed in manufacturing ventilators, which were delivered to the Brazilian government. Suzano invested R$9 million in this action. |
| · | Construction of a field hospital in Teixeira de Freitas, Bahia, jointly with Veracel, which has already been delivered to the state government and was inaugurated in July 2020. |
| · | Partnership with the FATEC vocational school in Capão Bonito to produce hand sanitizer. |
| · | Forklifts lent to transport the donations received by the Red Cross. |
| · | Maintenance of all direct jobs. |
| · | Ensuring for 90 days (until end-June 2020) the payment of 100% of the payroll expenses of the workers of service providers whose operations were suspended because of the pandemic, in order to protect jobs. |
| · | Creation of a support program for small suppliers, a social program to help small farmers sell their products via a home delivery system in 38 communities assisted by Suzano’s Rural Land Development Program (“PDRT”) in 5 states, and a social program for producing 125,000 masks in local communities for donation in 5 states. |
| · | Launch of a support program for small and midsized paper clients called “We’re Together” to ensure that these companies have the financial and managerial capacity to resume operations. |
Expenditures to support the social actions implemented by Suzano totaled R$49 million as of December 31, 2020. Also, important noting is that another R$136 million was spent to adapt our operations to the current scenario of combating the coronavirus (see note 30 - Result by Nature of Financial Statements).
| (3) | Business continuity: to date, the company is maintaining its operations normally and has set up a crisis management committee that continues functioning. |
The pulp and paper industry was recognized by the World Health Organization (WHO) and diverse countries as a producer of essential goods for society. Hence, to meet the responsibility arising from the essential nature of its business, Suzano took measures to ensure, to the maximum extent possible, that it maintains its operations normally and meets its clients’ requirements by increasing the level of wood and raw material inventories at plants and expanding its finished product inventory, besides reaching out to its clients to minimize any risks of stockout at plants along the logistics chain and guarantee the sale of their products.
The current scenario arising from the novel coronavirus also implies higher credit risk, especially among its paper clients. Therefore, the Company has been monitoring this risk and implementing measures to mitigate it. To date, there have been no significant financial impacts.
Due to the physical distancing measures adopted in Brazil and many other countries that entail, for instance, the closure of schools and offices, demand for printing & writing paper has decreased. In light of this scenario, and as announced by various paper producers around the world, Suzano decided to temporarily reduce the volume of its paper production. As previously disclosed in the quarterly financial statements for the period ended March 31, 2020, the Company temporarily shut down its paper production lines at the Mucuri and Rio Verde Mills. However, operations resumed at these mills in early July 2020.
Lastly, it is important to mention that in light of the current scenario, the Company has undertaken and maintained intensive communication efforts to further increase interactions with its main stakeholders in order to ensure adequate transparency and flow of information with them in a timely manner aligned with the current social and economic situation. All key updates on its measures and activities in the context of COVID-19 are available on the Company’s Investor Relations website.
| Page 24 of 38 |
| | |
The Company has also created a webpage with information on all its actions related to COVID-19: https://www.suzanocontraocoronavirus.com.br
ESG
The 4Q20 results reaffirm the advances made by Suzano on its ESG agenda, referring to the more active participation in external evaluation processes from 2020 onwards. In November, the company was included in the select 2020-2021 portfolio of the Dow Jones Sustainability Emerging Markets Index (DJSI Emerging Markets). Apart from Suzano, only 10 other Brazilian companies have been included in the new portfolios underlying the DJSI indices.
In November, Suzano informed its shareholders and the market in general that the additional issue of debt securities was launched and priced under the scope of “3.750% Senior Notes due 2031” (Sustainability-Linked Bonds - SLB), in the principal amount of US$500 million with a yield of 3.100% per year (one of the lowest rates in Suzano's history in foreign borrowings) and a coupon of 3.750% per year, to be paid semi-annually, as of January 15, 2021, and maturing in January 15, 2031. The Notes have an environmental performance indicator (KPI) associated with a goal of reducing the intensity of greenhouse gas (GHG) emissions by the Company by 2025, evidencing Suzano's commitment as part of the solution to the global climate crisis and in convergence to the implementation of its Long Term 2030 emission reduction target published this year.
In early December, Suzano had also been included in the portfolio of the Corporate Sustainability Index of B3 in 2021. ISE tracks the performance of listed corporations based on the aspects of corporate sustainability, social justice, environmental balance and corporate governance. The portfolio announced consists of 46 stocks of 39 companies and is valid from January 4 to December 30, 2021.
In December, Suzano was also B rated in the Climate, Water and Forests questionnaires prepared by CDP, a non-profit organization considered a global reference in environmental impact reporting and management. CDP’s assessment considers the scope of disclosure, awareness and management of environmental risks, as well as implementation of best practices related to environmental leadership.
These results underscore the company’s relentless commitment to generating value sustainably in the long term besides demonstrating the integration and company-wide inclusion of the ESG agenda in Suzano’s business model.
SYNERGIES
In 2020, the Company concluded the curve of capture of operating synergies arising from the business combination with Fibria Celulose S.A. The synergies captured, on a recurring basis from 2021, exceeded plans, totaling R$1,317 million per year (before taxes) through reductions in costs, expenses and capex in the supplies, forestry, industrial, logistics, sales, administrative and personnel areas. As for tax synergies, the company maintains the perspective of achieving deductions of around R$2.0 billion a year.
1Does not include tax synergies. Supply Chain includes logistical / commercial synergies.
| Page 25 of 38 |
| | |
The estimated amount of operating synergies includes the costs of implementing the initiatives linked to these synergies, which totaled R$60 million, therefore, below the R$200 million previously estimated by the Company.
TOTAL OPERATIONAL EXPENDITURE - PULP
As disclosed through a Material Fact notice on February 13, 2020, the estimated total operating expenditure in 2024 remains at approximately R$1,300/t, and the trend for the indicator remains as planned, considering the exchange and monetary assumptions used.
EVENTS AFTER THE REPORTING PERIOD
Conclusion of Sale of Land and Forests
On January 5, 2021, the Company announced to its shareholders and the market that it concluded the transaction with Bracell SP Celulose Ltda. and Turvinho Participações Ltda., disclosed by it through a Notice to the Market on November 20, 2020, receiving the purchase price of R$1,056 million pursuant to the agreement for the Purchase and Sale of Timber, Commitment to Purchase and Sale of Rural Properties and Other Covenants, with the condition precedent signed by the parties.
The transaction is aligned with the Company’s deleveraging plan announced to the market and underscores the financial discipline adopted by Suzano in implementing its Debt Policy.
Early Debt Settlement
On February 9, 2021, the Company prepaid a financing contract with BNDES, in the principal amount of R$ 1,454 million, with original maturity in May 2026 and monthly interest rate indexed to SELIC + 3% p.a. and TJLP + 2% and transaction cost in the amount of R$30 million.
CAPITAL MARKETS
On October 6, 2020, the Company informed its shareholders and the market in general the closing of the public offering for the secondary distribution of 150,217,425 shares issued by Suzano and held by BNDES Participações SA - BNDESPAR, including 13,180,000 Shares in the form of American Depositary Shares (“ADSs”), at a price per share of R$46.00, totaling R$6.9 billion.
On December 31, 2020, Suzano’s stock was quoted at R$58.54/share (SUZB3) and US$11.18/share (SUZ). The Company’s stock is listed on the Novo Mercado, the listing segment of the São Paulo Stock Exchange (B3 – Brasil, Bolsa e Balcão) with the highest corporate governance standards, and on the New York Stock Exchange (NYSE) - Level II.
| Page 26 of 38 |
| | |
Source: Bloomberg.
Source: Bloomberg.
On December 31, 2020, the Company's share capital was represented by 1,361,263,584 common shares, of which 12,042,004 were held in Treasury. Suzano’s market capitalization stood at R$79.0 billion on December 31, 2020. In 4Q20, free float corresponded to 53% of the total capital.
| Page 27 of 38 |
| | |
FIXED INCOME
| Unity | Dec/20 | Sep/20 | Dec/19 | Δ Y-o-Y | Δ Q-o-Q | |||||||||||||||||||
| Suzano 2021 – Price | USD/k | - | - | 103.59 | - | - | ||||||||||||||||||
| Suzano 2021 – Yield | % | - | - | 2.41 | - | - | ||||||||||||||||||
| Fibria 2024 – Price | USD/k | 110.47 | 110.29 | 108.45 | 1.9 | % | 0.2 | % | ||||||||||||||||
| Fibria 2024 – Yield | % | 2.01 | 2.27 | 3.16 | -36.5 | % | -11.4 | % | ||||||||||||||||
| Fibria 2025 – Price | USD/k | 107.46 | 106.24 | 103.59 | 3.7 | % | 1.1 | % | ||||||||||||||||
| Fibria 2025 – Yield | % | 2.06 | 2.46 | 3.22 | -36.1 | % | -16.1 | % | ||||||||||||||||
| Suzano 2026 – Price | USD/k | 117.63 | 114.58 | 112.02 | 5.0 | % | 2.7 | % | ||||||||||||||||
| Suzano 2026 – Yield | % | 2.33 | 2.99 | 3.66 | -36.4 | % | -21.9 | % | ||||||||||||||||
| Fibria 2027 – Price | USD/k | 114.48 | 113.39 | 109.64 | 4.4 | % | 1.0 | % | ||||||||||||||||
| Fibria 2027 – Yield | % | 2.87 | 3.14 | 3.92 | -26.8 | % | -8.5 | % | ||||||||||||||||
| Suzano 2029 – Price | USD/k | 120.44 | 114.10 | 111.01 | 8.5 | % | 5.6 | % | ||||||||||||||||
| Suzano 2029 – Yield | % | 3.10 | 3.98 | 4.50 | -31.1 | % | -22.1 | % | ||||||||||||||||
| Suzano 2030 – Price | USD/k | 113.78 | 107.97 | 102.57 | 10.9 | % | 5.4 | % | ||||||||||||||||
| Suzano 2030 – Yield | % | 3.23 | 3.97 | 4.68 | -31.0 | % | -18.6 | % | ||||||||||||||||
| Suzano 2031 – Price | USD/k | 106.68 | 100.31 | - | - | 6.3 | % | |||||||||||||||||
| Suzano 2031 – Yield | % | 2.98 | 3.71 | - | - | -19.9 | % | |||||||||||||||||
| Suzano 2047 – Price | USD/k | 134.32 | 118.48 | 117.66 | 14.2 | % | 13.4 | % | ||||||||||||||||
| Suzano 2047 – Yield | % | 4.71 | 5.65 | 5.71 | -17.6 | % | -16.6 | % | ||||||||||||||||
| Treasury 10 years | % | 0.91 | 0.69 | 1.92 | -52.4 | % | 33.3 | % | ||||||||||||||||
Note: Senior Notes issued with face value of 100 USD/k
RATINGS
| Agency | National Scale | Global Scale | Outlook | |||||
| Fitch Ratings | AAA | BBB- | Negative | |||||
| Standard & Poor’s | brAAA | BBB- | Negative | |||||
| Moody’s | Aaa.br | Ba1 | Stable |
| Page 28 of 38 |
| | |
UPCOMING EVENTS
Earnings Conference Call (4Q20)
Date: February 11, 2021 (Friday)
| Portuguese (simultaneous translation) | English |
| 10:00 a.m. (Brasília) | 10:00 a.m. (Brasília) |
| 8:00 a.m. (New York) | 8:00 a.m. (New York) |
| 1:00 p.m. (London) | 1:00 p.m. (London) |
| Tel: +55 (11) 3181-8565 | Tel: +1 412 717-9627 |
Please connect 10 minutes before the conference call is scheduled to begin.
The conference call will be held in English and feature a presentation, with a simultaneous 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
Camilla Galvão
Mariana Dutra
Roberto Costa
Tel.: +55 (11) 3503-9330
ri@suzano.com.br
www.suzano.com.br/ir
| Page 29 of 38 |
| | |
APPENDICES
APPENDIX 1 - Operating Data
Revenue breakdown (R$ '000) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| Exports | 6,489,970 | 5,632,705 | 15 | % | 6,140,197 | 6 | % | 25,492,642 | 20,698,735 | 23 | % | |||||||||||||||||||||
| Pulp | 6,093,525 | 5,229,916 | 17 | % | 5,753,923 | 6 | % | 23,968,816 | 19,193,750 | 25 | % | |||||||||||||||||||||
| Paper | 396,445 | 402,789 | -2 | % | 386,274 | 3 | % | 1,523,826 | 1,504,985 | 1 | % | |||||||||||||||||||||
| Domestic Market | 1,523,006 | 1,416,255 | 8 | % | 1,330,638 | 14 | % | 4,967,635 | 5,314,215 | -7 | % | |||||||||||||||||||||
| Pulp | 453,450 | 401,800 | 13 | % | 414,431 | 9 | % | 1,609,449 | 1,833,936 | -12 | % | |||||||||||||||||||||
| Paper | 1,069,556 | 1,014,455 | 5 | % | 916,207 | 17 | % | 3,358,186 | 3,480,279 | -4 | % | |||||||||||||||||||||
| Total Net Revenue | 8,012,976 | 7,048,960 | 14 | % | 7,470,835 | 7 | % | 30,460,277 | 26,012,950 | 17 | % | |||||||||||||||||||||
| Pulp | 6,546,975 | 5,631,716 | 16 | % | 6,168,354 | 6 | % | 25,578,265 | 21,027,686 | 22 | % | |||||||||||||||||||||
| Paper | 1,466,001 | 1,417,244 | 3 | % | 1,302,481 | 13 | % | 4,882,012 | 4,985,264 | -2 | % |
| Sales volume (‘000) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| Exports | 2,556,991 | 2,810,850 | -9 | % | 2,432,865 | 5 | % | 10,411,557 | 8,983,744 | 16 | % | |||||||||||||||||||||
| Pulp | 2,460,736 | 2,699,547 | -9 | % | 2,334,152 | 5 | % | 10,036,495 | 8,580,692 | 17 | % | |||||||||||||||||||||
| Paper | 96,255 | 111,303 | -14 | % | 98,713 | -2 | % | 375,062 | 403,052 | -7 | % | |||||||||||||||||||||
| Paperboard | 10,078 | 17,915 | -44 | % | 15,204 | -34 | % | 62,816 | 62,219 | 1 | % | |||||||||||||||||||||
| Printing & Writing | 83,130 | 92,640 | -10 | % | 82,347 | 1 | % | 303,568 | 338,562 | -10 | % | |||||||||||||||||||||
| Other paper1 | 3,047 | 748 | 307 | % | 1,162 | 162 | % | 8,678 | 2,271 | 282 | % | |||||||||||||||||||||
| Domestic Market | 460,135 | 477,322 | -4 | % | 412,826 | 11 | % | 1,588,440 | 1,684,374 | -6 | % | |||||||||||||||||||||
| Pulp | 201,908 | 219,973 | -8 | % | 192,415 | 5 | % | 786,621 | 830,962 | -5 | % | |||||||||||||||||||||
| Paper | 258,227 | 257,349 | 0 | % | 220,411 | 17 | % | 801,819 | 853,412 | -6 | % | |||||||||||||||||||||
| Paperboard | 44,916 | 34,996 | 28 | % | 37,362 | 20 | % | 138,937 | 130,210 | 7 | % | |||||||||||||||||||||
| Printing & Writing | 182,526 | 190,773 | -4 | % | 152,069 | 20 | % | 538,861 | 619,802 | -13 | % | |||||||||||||||||||||
| Other paper1 | 30,785 | 31,580 | -3 | % | 30,980 | -1 | % | 124,021 | 103,400 | 20 | % | |||||||||||||||||||||
| Total Sales Volume | 3,017,126 | 3,288,172 | -8 | % | 2,845,691 | 6 | % | 11,999,997 | 10,668,118 | 12 | % | |||||||||||||||||||||
| Pulp | 2,662,644 | 2,919,520 | -9 | % | 2,526,567 | 5 | % | 10,823,116 | 9,411,654 | 15 | % | |||||||||||||||||||||
| Paper | 354,482 | 368,652 | -4 | % | 319,124 | 11 | % | 1,176,881 | 1,256,464 | -6 | % | |||||||||||||||||||||
| Paperboard | 54,994 | 52,911 | 4 | % | 52,566 | 5 | % | 201,753 | 192,429 | 5 | % | |||||||||||||||||||||
| Printing & Writing | 265,656 | 283,413 | -6 | % | 234,416 | 13 | % | 842,429 | 958,364 | -12 | % | |||||||||||||||||||||
| Other paper1 | 33,832 | 32,328 | 5 | % | 32,142 | 5 | % | 132,699 | 105,671 | 26 | % |
Average
net price (R$/ton) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| Exports | 2,538 | 2,004 | 27 | % | 2,524 | 1 | % | 2,448 | 2,304 | 6 | % | |||||||||||||||||||||
| Pulp | 2,476 | 1,937 | 28 | % | 2,465 | 0 | % | 2,388 | 2,237 | 7 | % | |||||||||||||||||||||
| Paper | 4,119 | 3,619 | 14 | % | 3,913 | 5 | % | 4,063 | 3,734 | 9 | % | |||||||||||||||||||||
| Domestic Market | 3,310 | 2,967 | 12 | % | 3,223 | 3 | % | 3,127 | 3,155 | -1 | % | |||||||||||||||||||||
| Pulp | 2,246 | 1,827 | 23 | % | 2,154 | 4 | % | 2,046 | 2,207 | -7 | % | |||||||||||||||||||||
| Paper | 4,142 | 3,942 | 5 | % | 4,157 | 0 | % | 4,188 | 4,078 | 3 | % | |||||||||||||||||||||
| Total | 2,656 | 2,144 | 24 | % | 2,625 | 1 | % | 2,538 | 2,438 | 4 | % | |||||||||||||||||||||
| Pulp | 2,459 | 1,929 | 27 | % | 2,441 | 1 | % | 2,363 | 2,234 | 6 | % | |||||||||||||||||||||
| Paper | 4,136 | 3,844 | 8 | % | 4,081 | 1 | % | 4,148 | 3,968 | 5 | % |
| Page 30 of 38 |
| | |
| Average net price (US$/ton) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| Exports | 470 | 486 | -3 | % | 469 | 0 | % | 474 | 583 | -19 | % | |||||||||||||||||||||
| Pulp | 459 | 470 | -2 | % | 458 | 0 | % | 463 | 566 | -18 | % | |||||||||||||||||||||
| Paper | 763 | 878 | -13 | % | 728 | 5 | % | 787 | 945 | -17 | % | |||||||||||||||||||||
| Domestic Market | 613 | 720 | -15 | % | 599 | 2 | % | 606 | 799 | -24 | % | |||||||||||||||||||||
| Pulp | 416 | 443 | -6 | % | 400 | 4 | % | 397 | 559 | -29 | % | |||||||||||||||||||||
| Paper | 767 | 957 | -20 | % | 773 | -1 | % | 812 | 1,032 | -21 | % | |||||||||||||||||||||
| Total | 492 | 520 | -5 | % | 488 | 1 | % | 492 | 617 | -20 | % | |||||||||||||||||||||
| Pulp | 455 | 468 | -3 | % | 454 | 0 | % | 458 | 566 | -19 | % | |||||||||||||||||||||
| Paper | 766 | 933 | -18 | % | 759 | 1 | % | 804 | 1,005 | -20 | % |
¹ Paper of other manufacturers sold by Suzano and tissue paper.
| FX Rate R$/US$ | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| Closing | 5.20 | 4.03 | 29 | % | 5.64 | -8 | % | 5.20 | 4.03 | 29 | % | |||||||||||||||||||||
| Average | 5.40 | 4.12 | 31 | % | 5.38 | 0 | % | 5.16 | 3.95 | 31 | % |
| Page 31 of 38 |
| | |
APPENDIX 2 – Consolidated Statement of Income and Goodwill Amortization
Income Statement (R$ ‘000) |
4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | 2020 | 2019 | ΔY-o-Y | ||||||||||||||||||||||||
| Net Revenue | 8,012,976 | 7,048,960 | 14 | % | 7,470,835 | 7 | % | 30,460,277 | 26,012,950 | 17 | % | |||||||||||||||||||||
| Cost of Goods Sold | (4,883,644 | ) | (5,810,056 | ) | -16 | % | (4,473,994 | ) | 9 | % | (18,966,331 | ) | (20,743,482 | ) | -9 | % | ||||||||||||||||
| Gross Debt | 3,129,332 | 1,238,904 | 153 | % | 2,996,841 | 4 | % | 11,493,946 | 5,269,468 | 118 | % | |||||||||||||||||||||
| Gross Margin | 39.1 | % | 17.6 | % | 21 p.p. | 40.1 | % | -1 p.p. | 37.7 | % | 20.3 | % | 17 p.p. | |||||||||||||||||||
| Operating Expense/Income | (718,307 | ) | (675,514 | ) | 6 | % | (829,110 | ) | -13 | % | (3,050,552 | ) | (2,640,890 | ) | 16 | % | ||||||||||||||||
| Selling Expenses | (590,024 | ) | (537,981 | ) | 10 | % | (522,594 | ) | 13 | % | (2,174,652 | ) | (1,905,279 | ) | 14 | % | ||||||||||||||||
| General and Administrative Expenses | (479,906 | ) | (285,586 | ) | 68 | % | (312,735 | ) | 53 | % | (1,443,192 | ) | (1,173,358 | ) | 23 | % | ||||||||||||||||
| Other Operating Income (Expenses) | 322,883 | 137,307 | 135 | % | (4,135 | ) | -7909 | % | 531,150 | 405,754 | 31 | % | ||||||||||||||||||||
| Equity Equivalence | 28,740 | 10,746 | 167 | % | 10,354 | 178 | % | 36,142 | 31,993 | 13 | % | |||||||||||||||||||||
| EBIT | 2,411,025 | 563,390 | 328 | % | 2,167,731 | 11 | % | 8,443,394 | 2,628,578 | 221 | % | |||||||||||||||||||||
| Depreciation, Amortization & Depletion | 1,761,660 | 1,778,853 | -1 | % | 1,653,560 | 7 | % | 6,772,780 | 8,091,952 | -16 | % | |||||||||||||||||||||
| EBITDA | 4,172,685 | 2,342,243 | 78 | % | 3,821,291 | 9 | % | 15,216,174 | 10,720,530 | 42 | % | |||||||||||||||||||||
| EBITDA Margin (%) | 52.1 | % | 33.2 | % | 19 p.p. | 51.1 | % | 1 p.p. | 50.0 | % | 41.2 | % | 9 p.p. | |||||||||||||||||||
| Adjusted EBITDA1 | 3,964,926 | 2,465,383 | 61 | % | 3,778,534 | 5 | % | 14,949,489 | 10,723,570 | 39 | % | |||||||||||||||||||||
| Adjusted EBITDA Margin1 | 49.5 | % | 35.0 | % | 15 p.p. | 50.6 | % | -1 p.p. | 49.1 | % | 41.2 | % | 8 p.p. | |||||||||||||||||||
| Net Financial Result | 6,238,407 | 1,624,574 | 284 | % | (4,222,644 | ) | -248 | % | (26,085,523 | ) | (6,725,781 | ) | 288 | % | ||||||||||||||||||
| Financial Expenses | 65,889 | 99,872 | -34 | % | 58,413 | 13 | % | 327,475 | 493,246 | -34 | % | |||||||||||||||||||||
| Financial Revenues | (974,494 | ) | (1,055,077 | ) | -8 | % | (1,365,381 | ) | -29 | % | (4,459,425 | ) | (4,178,848 | ) | 7 | % | ||||||||||||||||
| Exchange Rate Variation | 4,463,515 | 1,418,127 | 215 | % | (1,644,611 | ) | -371 | % | (12,530,891 | ) | (1,964,927 | ) | 538 | % | ||||||||||||||||||
| Net Proceeds Generated by Derivatives | 2,683,497 | 1,161,652 | 131 | % | (1,271,065 | ) | -311 | % | (9,422,682 | ) | (1,075,252 | ) | 776 | % | ||||||||||||||||||
| Earnings Before Taxes | 8,649,432 | 2,187,964 | 295 | % | (2,054,913 | ) | -521 | % | (17,642,129 | ) | (4,097,203 | ) | 331 | % | ||||||||||||||||||
| Income and Social Contribution Taxes | (2,735,081 | ) | (1,013,188 | ) | 170 | % | 897,206 | -405 | % | 6,927,194 | 1,282,461 | 440 | % | |||||||||||||||||||
| Net Income (Loss) | 5,914,351 | 1,174,776 | 403 | % | (1,157,707 | ) | -611 | % | (10,714,935 | ) | (2,814,742 | ) | 281 | % | ||||||||||||||||||
| Net Margin | 73.8 | % | 16.7 | % | 57 p.p. | -15.5 | % | 89 p.p. | -35.2 | % | -10.8 | % | -24 p.p. |
| Goodwill amortization - PPA (R$ ‘000) | 4Q20 | 4Q19 | ΔY-o-Y | 3Q20 | ΔQ-o-Q | |||||||||||||||
| COGS | (2,668 | ) | (138,646 | ) | -98 | % | (126,165 | ) | -98 | % | ||||||||||
| Selling Expenses | (206,310 | ) | (206,700 | ) | 0 | % | (206,474 | ) | 0 | % | ||||||||||
| General and administrative expenses | (1,191 | ) | 21,436 | - | 10,620 | - | ||||||||||||||
| Other operational revenues (expenses) | (5,380 | ) | (121 | ) | - | (14,686 | ) | -63 | % | |||||||||||
| Financial results | 20,756 | (108,357 | ) | - | (1,303 | ) | - |
1 Excluding non-recurring items and PPA effects.
| Page 32 of 38 |
| | |
APPENDIX 3 – Consolidated Balance Sheet
| Assets (R$ ’000) | 31/12/2020 | 30/09/2020 | 31/12/2019 | |||||||||
| Current Assets | ||||||||||||
| Cash and cash equivalents | 6,835,057 | 7,247,184 | 3,249,127 | |||||||||
| Financial investments | 2,212,079 | 2,327,353 | 6,150,631 | |||||||||
| Trade accounts receivable | 2,915,206 | 3,036,769 | 3,035,817 | |||||||||
| Inventories | 4,009,335 | 4,245,766 | 4,685,595 | |||||||||
| Recoverable taxes | 406,850 | 874,152 | 997,201 | |||||||||
| Derivative financial instruments | 484,043 | 209,970 | 260,273 | |||||||||
| Advance to suppliers | 43,162 | 102,765 | 170,481 | |||||||||
| Non-current assets held for sale | 313,338 | - | - | |||||||||
| Other assets | 738,924 | 479,903 | 335,112 | |||||||||
| Total Current Assets | 17,957,994 | 18,523,862 | 18,884,237 | |||||||||
| Non-Current Assets | ||||||||||||
| Financial investments | 184,778 | 183,893 | 179,703 | |||||||||
| Recoverable taxes | 834,575 | 748,584 | 708,914 | |||||||||
| Deferred taxes | 8,677,002 | 11,399,116 | 2,134,040 | |||||||||
| Derivative financial instruments | 857,377 | 922,225 | 838,699 | |||||||||
| Advance to suppliers | 1,015,115 | 1,071,249 | 1,087,149 | |||||||||
| Judicial deposits | 257,789 | 266,214 | 268,672 | |||||||||
| Biological assets | 11,161,210 | 10,759,599 | 10,571,499 | |||||||||
| Investments | 359,071 | 336,929 | 322,446 | |||||||||
| Property, plant and equipment | 39,156,890 | 39,736,484 | 41,120,945 | |||||||||
| Right of use on lease agreements | 4,344,078 | 4,242,105 | 3,850,237 | |||||||||
| Intangible | 16,759,528 | 17,014,465 | 17,712,803 | |||||||||
| Other assets | 235,341 | 235,309 | 228,881 | |||||||||
| Total Non-Current Assets | 83,842,754 | 86,916,172 | 79,023,988 | |||||||||
| Total Assets | 101,800,748 | 105,440,034 | 97,908,225 | |||||||||
| Liabilities and Equity (R$ ´000) | 31/12/2020 | 30/09/2020 | 31/12/2019 | |||||||||
| Current Liabilities | ||||||||||||
| Trade accounts payable | 2,361,098 | 2,157,286 | 2,376,459 | |||||||||
| Loans, financing and debentures | 2,043,386 | 4,323,325 | 6,227,951 | |||||||||
| Accounts payable for lease operations | 620,177 | 629,329 | 656,844 | |||||||||
| Derivative financial instruments | 1,991,118 | 4,117,393 | 893,413 | |||||||||
| Taxes payable | 170,482 | 315,080 | 307,639 | |||||||||
| Payroll and charges | 492,728 | 478,732 | 400,435 | |||||||||
| Liabilities for assets acquisitions and subsidiaries | 101,515 | 102,013 | 94,414 | |||||||||
| Dividends payable | 6,232 | 4,888 | 5,720 | |||||||||
| Other liabilities | 386,087 | 292,387 | 516,320 | |||||||||
| Total Current Liabilities | 8,172,823 | 12,420,433 | 11,479,195 | |||||||||
| Non-Current Liabilities | ||||||||||||
| Loans, financing and debentures | 70,856,496 | 74,166,284 | 57,456,375 | |||||||||
| Accounts payable for lease operations | 4,571,583 | 4,662,805 | 3,327,226 | |||||||||
| Derivative financial instruments | 6,126,282 | 7,792,461 | 2,024,500 | |||||||||
| Liabilities for assets acquisitions and subsidiaries | 400,713 | 429,357 | 447,201 | |||||||||
| Provision for judicial liabilities | 3,255,955 | 3,403,233 | 3,512,477 | |||||||||
| Actuarial liabilities | 785,045 | 747,984 | 736,179 | |||||||||
| Deferred taxes | 570 | 74,736 | 578,875 | |||||||||
| Other liabilities | 293,903 | 286,951 | 258,228 | |||||||||
| Total Non-Current Liabilities | 86,290,547 | 91,563,811 | 68,341,061 | |||||||||
| Shareholders’ Equity | ||||||||||||
| Share capital | 9,235,546 | 9,235,546 | 9,235,546 | |||||||||
| Capital reserves | 10,612 | 6,419,430 | 6,416,864 | |||||||||
| Retained earnings reserves | (218,265 | ) | (218,265 | ) | (218,265 | ) | ||||||
| Equity valuation adjustment | - | 317,144 | 317,144 | |||||||||
| Retained loss | 2,129,944 | 2,180,733 | 2,221,341 | |||||||||
| Total Equity | (3,926,015 | ) | (16,599,888 | ) | - | |||||||
| Shareholders’ Equity | 7,231,822 | 1,334,700 | 17,972,630 | |||||||||
| Non-controlling shareholders interests | 105,556 | 121,090 | 115,339 | |||||||||
| Total Liabilities and Equity | 101,800,748 | 105,440,034 | 97,908,225 | |||||||||
| Page 33 of 38 |
| | |
APPENDIX 4 – Consolidated Statement of Cash Flow
| Cash Flow (R$ ‘000) | 4Q20 | 4Q19 | 2020 | 2019 | ||||||||||||
| Cash flow from operating activities | ||||||||||||||||
| Net income/(loss) for the period | 5,914,351 | 1,174,776 | (10,714,935 | ) | (2,814,742 | ) | ||||||||||
| Depreciation, depletion and amortization | 1,693,458 | 1,762,015 | 6,565,441 | 7,898,775 | ||||||||||||
| Amortization of right of use | 59,967 | 47,292 | 186,768 | 154,217 | ||||||||||||
| Sublease of ships | (12,520 | ) | - | (35,841 | ) | - | ||||||||||
| Interest expense on lease liabilities | 113,516 | 73,042 | 397,746 | 226,103 | ||||||||||||
| Results from sale and disposals of property and biological assets, net | (55,303 | ) | 51,649 | (53,807 | ) | 77,930 | ||||||||||
| Equity equivalence | (28,740 | ) | (10,746 | ) | (36,142 | ) | (31,993 | ) | ||||||||
| Exchange rate and monetary variations, net | (4,463,515 | ) | (1,418,127 | ) | 12,530,891 | 1,964,927 | ||||||||||
| Interest expenses with loans, financing and debentures, net | 763,490 | 831,764 | 3,286,254 | 3,363,019 | ||||||||||||
| Interest expense with bond repurchases | - | - | 391,390 | - | ||||||||||||
| Capitalized interest | (745 | ) | (1,261 | ) | (10,636 | ) | (4,213 | ) | ||||||||
| Accrual of interest on marketable securities | (12,261 | ) | (101,715 | ) | (94,868 | ) | (392,018 | ) | ||||||||
| Amortization of fundraising costs | 29,225 | 13,004 | 101,741 | 185,807 | ||||||||||||
| Derivative (gains) losses, net | (2,683,497 | ) | (1,161,652 | ) | 9,422,682 | 1,075,252 | ||||||||||
| Fair value adjustment of biological assets | (292,751 | ) | (101,946 | ) | (466,484 | ) | (185,399 | ) | ||||||||
| Deferred income tax and social contribution expenses | 2,658,454 | 989,070 | (7,109,120 | ) | (1,528,571 | ) | ||||||||||
| Tax credit – Gain on tax action | - | - | - | (128,115 | ) | |||||||||||
| Interest on employee benefits | 13,286 | 5,734 | 53,092 | 44,496 | ||||||||||||
| Provision (reversal) of judicial liabilities, net | 14,046 | 48,665 | 1,288 | 26,807 | ||||||||||||
| Allowance for doubtful accounts, net | 812 | 2,078 | 6,022 | (12,286 | ) | |||||||||||
| Provision for (reversal of) inventory losses and write-offs | 94,393 | 76,479 | 65,675 | 107,269 | ||||||||||||
| Provision for loss of ICMS credits, net | 11,082 | 41,787 | (82,293 | ) | 129,283 | |||||||||||
| Impairment of non-financial assets | 45,435 | - | 45,435 | - | ||||||||||||
| Other | 9,539 | (49,656 | ) | 35,452 | (56,517 | ) | ||||||||||
| Decrease (increase) in assets | 374,383 | 117,802 | 2,250,235 | 2,080,352 | ||||||||||||
| Trade accounts receivables | (131,789 | ) | (1,023,818 | ) | 884,451 | 991,476 | ||||||||||
| Inventories | 91,186 | 1,217,349 | 651,203 | 873,420 | ||||||||||||
| Recoverable taxes | 397,545 | 104,148 | 659,930 | 241,934 | ||||||||||||
| Other assets | 17,441 | (179,877 | ) | 54,651 | (26,478 | ) | ||||||||||
| Increase (decrease) in liabilities | 342,744 | (518,555 | ) | 13,424 | (1,612,068 | ) | ||||||||||
| Trade accounts payables | 339,174 | (829,169 | ) | 140,480 | (1,555,697 | ) | ||||||||||
| Taxes payable | (88,437 | ) | (22,791 | ) | 47,212 | 240,871 | ||||||||||
| Payroll and charges | 13,985 | (38,902 | ) | 92,278 | (234,948 | ) | ||||||||||
| Other liabilities | 78,022 | 372,307 | (266,546 | ) | (62,294 | ) | ||||||||||
| Cash provided by operations, net | 4,588,849 | 1,871,499 | 16,749,410 | 10,568,315 | ||||||||||||
| Payment of interest with financing, loans and debentures | (361,788 | ) | (615,626 | ) | (3,244,949 | ) | (2,977,957 | ) | ||||||||
| Payment of interest on bonds repurchase | - | - | (378,382 | ) | - | |||||||||||
| Interest received from marketable securities | 40,702 | 23,268 | 186,853 | 377,804 | ||||||||||||
| Payment of income taxes | (58,200 | ) | (55,245 | ) | (188,296 | ) | (391,725 | ) | ||||||||
| Cash provided by operating activities | 4,209,563 | 1,223,896 | 13,124,636 | 7,576,437 | ||||||||||||
| Investing activities | ||||||||||||||||
| Additions to property, plant and equipment | (1,710,499 | ) | (1,124,275 | ) | (4,897,860 | ) | (4,868,427 | ) | ||||||||
| Proceeds from sale of property, plant and equipment | 94,690 | 44,905 | 183,504 | 198,644 | ||||||||||||
| Increase of capital in subsidiaries and associates | - | - | - | (45,856 | ) | |||||||||||
| Marketable securities, net | 85,948 | (1,049,228 | ) | 3,841,493 | 19,378,893 | |||||||||||
| Advance for acquisition of wood from operations with development | 47,815 | (61,285 | ) | 135,693 | (355,447 | ) | ||||||||||
| Acquisition of subsidiaries, net cash | - | - | - | (26,002,540 | ) | |||||||||||
| Dividends received | - | - | 753 | - | ||||||||||||
| Other investments | - | (21 | ) | - | (286 | ) | ||||||||||
| Cash used in investing activities, net | (1,482,046 | ) | (2,189,904 | ) | (736,417 | ) | (11,695,019 | ) | ||||||||
| Financing activities | ||||||||||||||||
| Proceeds from loans, financing and debentures | 4,178,624 | 2,677,927 | 14,761,796 | 18,993,837 | ||||||||||||
| Payment of derivative transactions | (1,318,184 | ) | (79,452 | ) | (4,465,640 | ) | (135,449 | ) | ||||||||
| Payment of loans, financing and debentures | (5,340,666 | ) | (1,745,186 | ) | (19,092,810 | ) | (13,994,708 | ) | ||||||||
| Payment of leases | (247,118 | ) | (219,774 | ) | (824,245 | ) | (645,071 | ) | ||||||||
| Payment of dividends | - | (4,897 | ) | - | (606,632 | ) | ||||||||||
| Sale of treasury shares to meet stock-based compensation plan | - | (879 | ) | - | (879 | ) | ||||||||||
| Liabilities for assets acquisitions and subsidiaries | (13,058 | ) | (9,084 | ) | (164,240 | ) | (479,480 | ) | ||||||||
| Other financing | - | 5,616 | - | 10,191 | ||||||||||||
| Cash provided (used) by financing activities, net | (2,740,402 | ) | 624,271 | (9,785,139 | ) | 3,141,809 | ||||||||||
| Exchange variation on cash and cash equivalents | (399,242 | ) | (123,782 | ) | 982,850 | (161,553 | ) | |||||||||
| Increase (reduction) in cash and cash equivalents | (412,127 | ) | (465,519 | ) | 3,585,930 | (1,138,326 | ) | |||||||||
| Cash and cash equivalents at the beginning for the period | 7,247,184 | 3,714,646 | 3,249,127 | 4,387,453 | ||||||||||||
| Cash and cash equivalents at the end for the period | 6,835,057 | 3,249,127 | 6,835,057 | 3,249,127 | ||||||||||||
| Increase (reduction) in cash and cash equivalents | (412,127 | ) | (465,519 | ) | 3,585,930 | (1,138,326 | ) | |||||||||
| Page 34 of 38 |
| | |
APPENDIX 5 - EBITDA
| (R$ '000, except where otherwise indicated) | 4Q20 | 4Q19 | 2020 | 2019 | ||||||||||||
| Net income | 5,914,351 | 1,174,776 | (10,714,935 | ) | (2,814,742 | ) | ||||||||||
| Net Financial Result | (6,238,407 | ) | (1,624,574 | ) | 26,085,523 | 6,725,781 | ||||||||||
| Income and Social Contribution Taxes | 2,735,081 | 1,013,188 | (6,927,194 | ) | (1,282,461 | ) | ||||||||||
| EBIT | 2,411,025 | 563,390 | 8,443,394 | 2,628,578 | ||||||||||||
| Depreciation, Amortization and Depletion | 1,761,660 | 1,778,853 | 6,772,780 | 8,091,952 | ||||||||||||
| EBITDA1 | 4,172,685 | 2,342,243 | 15,216,174 | 10,720,530 | ||||||||||||
| EBITDA Margin | 52.1 | % | 33.2 | % | 49.9 | % | 41.2 | % | ||||||||
| Expenses with Fibria's transaction | 59 | 3,924 | 992 | 79,870 | ||||||||||||
| PPA effect (Asset disposal) | 5,290 | 9,123 | 26,378 | 33,991 | ||||||||||||
| Indemnity – FACEPA | - | - | (1,093 | ) | - | |||||||||||
| Accruals for losses on ICMS credits | 10,075 | 97,061 | (81,818 | ) | 181,117 | |||||||||||
| ICMS accrual complement | - | - | 2,808 | |||||||||||||
| Contract renegotiation | - | 45,723 | - | 45,723 | ||||||||||||
| Losango Project Adjustments | - | 57,764 | - | 57,764 | ||||||||||||
| Fair value adjustment (others) | - | (32,705 | ) | - | (32,705 | ) | ||||||||||
| Labor lawsuits provision | - | 32,178 | - | 32,178 | ||||||||||||
| Expenses related to social actions to fight the Coronavirus | 54,852 | - | 136,100 | - | ||||||||||||
| Expenses with obligations and contract cancellations | - | - | 6,008 | - | ||||||||||||
| Adjustment of the fair value of biological assets | (292,750 | ) | (101,946 | ) | (466,483 | ) | (185,399 | ) | ||||||||
| Losses for PIS/COFINS provision | - | 21,132 | 11,063 | 21,132 | ||||||||||||
| COVID-19 - Donations | 32 | - | 48,590 | - | ||||||||||||
| ITBI Provision and Fees | - | - | 10,529 | - | ||||||||||||
| Project Mucuri 5.1 Closure | (1,005 | ) | - | 29,679 | - | |||||||||||
| Equity Interest | (28,740 | ) | (10,746 | ) | (36,142 | ) | (31,993 | ) | ||||||||
| Sale of judicial credits | - | 390 | - | (86,610 | ) | |||||||||||
| Fiscal credits (PIS/COFINS calculation base) | - | - | - | (128,115 | ) | |||||||||||
| Impairment of non-financial assets | 45,435 | - | 45,435 | - | ||||||||||||
| Others | (1,008 | ) | 1,241 | 1,269 | 16,087 | |||||||||||
| Adjusted EBITDA | 3,964,926 | 2,465,383 | 14,949,489 | 10,723,570 | ||||||||||||
| Adjusted EBITDA Margin | 50.6 | % | 36.3 | % | 48.9 | % | 43.5 | % | ||||||||
¹ The Company's EBITDA is calculated in accordance with CVM Instruction 527 of October 4, 2012.
| Page 35 of 38 |
| | |
APPENDIX 6 - Segmented Income Statement
| 4Q20 | 4Q19 | |||||||||||||||||||||||||||||||
| Segmented Financial Statement (R$ '000) | Pulp | Paper | Non Segmented |
Total Consolidated |
Pulp | Paper | Non Segmented |
Total Consolidated |
||||||||||||||||||||||||
| Net Revenue | 6,546,975 | 1,466,001 | 8,012,976 | 5,631,716 | 1,417,244 | 7,048,960 | ||||||||||||||||||||||||||
| Cost of Goods Sold | (3,915,873 | ) | (967,771 | ) | (4,883,644 | ) | (4,859,010 | ) | (951,046 | ) | (5,810,056 | ) | ||||||||||||||||||||
| Gross Profit | 2,631,102 | 498,230 | - | 3,129,332 | 772,706 | 466,198 | - | 1,238,904 | ||||||||||||||||||||||||
| Gross Margin | 40.2 | % | 34.0 | % | 39.1 | % | 13.7 | % | 32.9 | % | 17.6 | % | ||||||||||||||||||||
| Operating Expense/Income | (594,303 | ) | (124,004 | ) | - | (718,307 | ) | (557,552 | ) | (117,962 | ) | - | (675,514 | ) | ||||||||||||||||||
| Selling Expenses | (467,110 | ) | (122,914 | ) | (590,024 | ) | (419,438 | ) | (118,543 | ) | (537,981 | ) | ||||||||||||||||||||
| General and Administrative Expenses | (336,076 | ) | (143,830 | ) | (479,906 | ) | (200,354 | ) | (85,232 | ) | (285,586 | ) | ||||||||||||||||||||
| Other Operating Income (Expenses) | 230,705 | 92,178 | 322,883 | 56,355 | 80,952 | 137,307 | ||||||||||||||||||||||||||
| Equity Equivalence | (21,822 | ) | 50,562 | 28,740 | 5,885 | 4,861 | 10,746 | |||||||||||||||||||||||||
| EBIT | 2,036,799 | 374,226 | - | 2,411,025 | 215,154 | 348,236 | - | 563,390 | ||||||||||||||||||||||||
| Depreciation, Amortization& Depletion | 1,596,972 | 164,688 | 1,761,660 | 1,639,056 | 139,797 | 1,778,853 | ||||||||||||||||||||||||||
| EBITDA | 3,633,771 | 538,914 | - | 4,172,685 | 1,854,210 | 488,033 | - | 2,342,243 | ||||||||||||||||||||||||
| EBITDA Margin | 55.5 | % | 36.8 | % | - | 52.1 | % | 32.9 | % | 34.4 | % | - | 33.2 | % | ||||||||||||||||||
| Adjusted EBITDA1 | 3,529,835 | 435,091 | - | 3,964,926 | 2,041,559 | 423,824 | - | 2,465,383 | ||||||||||||||||||||||||
| Adjusted EBITDA Margin1 | 53.9 | % | 29.7 | % | - | 49.5 | % | 36.3 | % | 29.9 | % | 35.0 | % | |||||||||||||||||||
| Net Financial Result | - | - | 6,238,407 | 6,238,407 | - | - | 1,624,575 | 1,624,574 | ||||||||||||||||||||||||
| Earnings Before Taxes | 2,036,799 | 374,226 | 6,238,407 | 8,649,432 | 215,151 | 348,238 | 1,624,575 | 2,187,964 | ||||||||||||||||||||||||
| Income and Social Contribution
Taxes |
- | - | (2,735,081 | ) | (2,735,081 | ) | - | - | (1,013,188 | ) | (1,013,188 | ) | ||||||||||||||||||||
| Net Income (Loss) | 2,036,799 | 374,226 | 3,503,326 | 5,914,351 | 215,151 | 348,238 | 611,387 | 1,174,776 | ||||||||||||||||||||||||
| Net Margin | 31.1 | % | 25.5 | % | - | 73.8 | % | 3.8 | % | 24.6 | % | - | 16.7 | % | ||||||||||||||||||
1 Excluding non-recurring items and PPA effects.
| Page 36 of 38 |
| | |
| Segmented Financial Statement (R$ '000) | 2020 | 2019 | ||||||||||||||||||||||||||||||
| Pulp | Paper | Non Segmented | Total Consolidated | Pulp | Paper | Non Segmented | Total Consolidated | |||||||||||||||||||||||||
| Net Revenue | 25,578,265 | 4,882,012 | 30,460,277 | 21,027,686 | 4,985,264 | 26,012,950 | ||||||||||||||||||||||||||
| Cost of Goods Sold | (15,754,930 | ) | (3,211,401 | ) | (18,966,331 | ) | (17,440,018 | ) | (3,303,464 | ) | (20,743,482 | ) | ||||||||||||||||||||
| Gross Profit | 9,823,335 | 1,670,611 | - | 11,493,946 | 3,587,668 | 1,681,800 | - | 5,269,468 | ||||||||||||||||||||||||
| Gross Margin | 38.4 | % | 34.2 | % | 37.7 | % | 17.1 | % | 33.7 | % | 20.3 | % | ||||||||||||||||||||
| Operating Expense/Income | (2,409,483 | ) | (641,069 | ) | - | (3,050,552 | ) | (2,089,286 | ) | (679,719 | ) | 128,115 | (2,640,890 | ) | ||||||||||||||||||
| Selling Expenses | (1,770,036 | ) | (404,616 | ) | (2,174,652 | ) | (1,503,775 | ) | (401,504 | ) | (1,905,279 | ) | ||||||||||||||||||||
| General and Administrative Expenses | (1,016,093 | ) | (427,099 | ) | (1,443,192 | ) | (806,774 | ) | (366,584 | ) | (1,173,358 | ) | ||||||||||||||||||||
| Other Operating Income (Expenses) | 390,178 | 140,972 | 531,150 | 209,577 | 68,062 | 128,115 | 405,754 | |||||||||||||||||||||||||
| Equity Equivalence | (13,532 | ) | 49,674 | 36,142 | 11,686 | 20,307 | 31,993 | |||||||||||||||||||||||||
| EBIT | 7,413,852 | 1,029,542 | - | 8,443,394 | 1,498,382 | 1,002,081 | 128,115 | 2,628,578 | ||||||||||||||||||||||||
| Depreciation, Amortization& Depletion | 6,232,376 | 540,404 | 6,772,780 | 7,575,630 | 516,322 | 8,091,952 | ||||||||||||||||||||||||||
| EBITDA | 13,646,230 | 1,569,944 | - | 15,216,174 | 9,074,012 | 1,518,403 | 128,115 | 10,720,530 | ||||||||||||||||||||||||
| EBITDA Margin | 53.4 | % | 32.2 | % | - | 50.0 | % | 43.2 | % | 30.5 | % | - | 41.2 | % | ||||||||||||||||||
| Adjusted EBITDA1 | 13,484,920 | 1,464,569 | - | 14,949,489 | 9,259,198 | 1,464,372 | - | 10,723,570 | ||||||||||||||||||||||||
| Adjusted EBITDA Margin1 | 52.7 | % | 30.0 | % | 49.1 | % | 44.0 | % | 29.4 | % | 41.2 | % | ||||||||||||||||||||
| Net Financial Result | - | - | (26,085,523 | ) | (26,085,523 | ) | - | - | (6,725,781 | ) | (6,725,781 | ) | ||||||||||||||||||||
| Earnings Before Taxes | 7,413,852 | 1,029,542 | (26,085,523 | ) | (17,642,129 | ) | 1,498,382 | 1,002,081 | (6,597,666 | ) | (4,097,203 | ) | ||||||||||||||||||||
| Income and Social Contribution
Taxes |
- | - | 6,927,194 | 6,927,194 | - | - | 1,282,461 | 1,282,461 | ||||||||||||||||||||||||
| Net Income (Loss) | 7,413,852 | 1,029,542 | (19,158,329 | ) | (10,714,935 | ) | 1,498,382 | 1,002,081 | (5,315,205 | ) | (2,814,742 | ) | ||||||||||||||||||||
| Net Margin | 29.0 | % | 21.1 | % | -35.2 | % | 7.1 | % | 20.1 | % | -10.8 | % | ||||||||||||||||||||
1 Excluding non-recurring items and PPA effects.
| Page 37 of 38 |
| | |
Forward-Looking Statements
This release may contain forward-looking statements. Such statements are subject to known and unknown risks and uncertainties that could cause the expectations expressed to not materialize or differ substantially from expected results. These risks include, among others, changes in future demand for the Company’s products, changes in factors affecting domestic and international product prices, changes in the cost structure, changes in the seasonal patterns of markets, changes in prices charged by competitors, foreign exchange variations, changes in the political or economic situation of Brazil, as well as emerging and international markets. The forward-looking statements were not reviewed by our independent auditors.
| Page 38 of 38 |
Exhibit 99.2
MANAGEMENT REPORT
MESSAGE FROM MANAGEMENT
We began 2020 by announcing, during Suzano Day held in February, our ambitious long-term goals to be achieved by 2030, in convergence with the United Nations 2030 Agenda. Among the diverse commitments announced, our most challenging goals were becoming even more climate positive, removing 40 million tons of carbon equivalent from the atmosphere, offering 10 million tons of products from renewable sources, which replace plastics and other petroleum-based products, and mitigating the problem of income distribution by helping to lift 200,000 people out of poverty in our areas of influence.
Until then, it was not possible to estimate the impact of COVID-19 on society in 2020. Even before the authorities announced restrictive measures on circulation, we allowed more than 4,000 of our administrative employees to work from home and implemented a broad set of measures to directly take care of the 11,000 people who work every day in our operations. As in many organizations, Suzano needed to adapt, without knowing for sure the consequences, but we did everything we could to operate with the lowest risk of contamination for our employees and their families. All this without affecting customer service, while ensuring the supply of our products, which are essential for hygiene, education and welfare of our society. We did this while continuously supporting our clients and suppliers, especially those depend the most on our operations.
The pandemic also caused sudden changes in every work front of our business. Our Paper Business Unit was the worst affected. We faced a sharp decline in demand for printing and writing papers due to the closure of certain establishments, such as schools and offices and, in light of the scenario, we had to react very quickly to reorganize our production and inventories. We managed to recover our sales pace from the third quarter. On the other hand, we observed a growing demand worldwide for consumer goods, sanitary papers and packaging, which led our clients to operate close to capacity, driving the demand for pulp. It must be noted that despite all the difficulties faced in 2020, our forest, industry and logistics operations delivered exceptional performance, reflecting the commitment and dedication of all the employees of Suzano.
Despite the adverse market scenario, with pulp prices close to the lowest standards of the last ten years, Suzano remained strongly resilient, delivering remarkable results throughout the year, such as significant cash generation, reduction of approximately 1 million tons of pulp inventory, execution of 100% of the deleveraging plan, the 9% reduction in cash cost of pulp production, mainly due to the synergies captured from the business combination with Fibria Celulose S.A. in January 2019.
The capture of these operating synergies exceeded expectations, totaling R$ 1.3 billion per year (before taxes) on a recurring basis between 2019 and 2020. This amount resulted from the reductions in costs, expenses and capex in the supplies, forestry, industrial, logistics, sales, administrative and personnel areas.
Another highlight of the year was the global secondary public offering of Suzano shares by BNDESPAR, the investment arm of the Brazilian Development Bank (BNDES) which divested its entire 11% interest in the company for R$ 6.9 billion. The offering closed a long and important cycle of investments by BNDES in a highly capital intensive sector and in which Brazil is a global leader. The public offering, the biggest ever in the pulp and paper sector, enabled the expansion and greater dilution of Suzano’s shareholder base with the entry of new investors (37%) and a significant allocation by those whose investment criteria are based on ESG aspects (30%).
| Page 1 of 11 |
 | |
In 2020, we continued to align sustainability with business and intensified our initiatives in the world of sustainable finance. In the third quarter of 2020, we issued the first Sustainability-Linked Bond (SLB) in the Americas, the second worldwide and the first in line with the guidelines set by the International Capital Market Association (ICMA). We approached the market on two occasions: in September, when we raised US$ 750 million, and in November, when we resumed negotiations and raised over US$ 500 million, at annual interest rates of 3.95% and 3.10%, respectively, and coupon of 3.75%. In both cases, we obtained the lowest ever rates in our history of international funding operations - in the November issue, we obtained the lowest ever rate for Brazilian companies and for ten-year deals. We linked the issue of these bonds to the goal of reducing by 10.9% our greenhouse gas emissions by 2025, in line with the Company’s long-term goal for 2030, that stipulates a 15% reduction. We hope to contribute directly to combating climate change and, through this model of issue, increasingly stimulate other companies to undertake the same commitment.
Still on the ESG front, the results achieved in 2020 underscored the advances made by Suzano on the environmental, social and governance issues. In November, the company was included in the select 2020-2021 portfolio of the Dow Jones Sustainability Emerging Markets Index (DJSI Emerging Markets). Apart from Suzano, only 10 other Brazilian companies have been included in the new portfolios underlying the DJSI indices. In early December, we had also been included in the portfolio of the Corporate Sustainability Index (ISE) of B3 for 2021. The portfolio announced consists of 46 stocks of 39 companies and is valid from January 4 to December 30, 2021.
Lastly, we made significant advance in our performance on the social front. We increased the number of households served by our income generation programs from 10,550 to 14,700 and also helped to increase the income generated by these families. As a result, as part of our long term goal, we lifted people out of poverty in the communities where we operate during a year when we needed to help many of these families to find alternatives to keep working in the absence of consumers for their products. Still on the social front, we made advances on the issue of Diversity and Inclusion and reached the goals established for 2020 on gender diversity and LGBTI+, and we still have important challenges ahead regarding the goals of blacks and people with disabilities. This is an essential journey that brings us both challenges and the motivation to overcome them.
We at Suzano step into 2021, taking with us the imponderable lessons that 2020 taught us and the achievements made possible by our resilience. We will remain focused on creating sustainable and innovative solutions to the challenges faced by society in a constant process of transformation and renovation. Moving forward together, firmly.
The Management.
| Page 2 of 11 |
| | |
OVERVIEW
Suzano, the company resulting from the merger of Suzano Papel e Celulose and Fibria Celulose, is committed to becoming the global benchmark in the sustainable use of natural resources. A world leader in market pulp production and one of Latin America’s largest paper producers, the company exports to more than 80 countries and, through its products, is present in the lives of more than 2 billion people. With its ten plants and the joint operation Veracel, it has installed capacity of 10.9 million tons of market pulp and 1.4 million tons of paper per year.
The Company has over 35,000 direct and indirect employees and has been investing for more than 90 years in innovative solutions based on planted trees.
INNOVATION
Innovability – the fusion between innovation and sustainability – is a concept proposed by Suzano to innovate and create value in a sustainable manner throughout its value chain, from the nursery to the products and services we offer to our clients. Investments in R&D&I represent a competitive advantage for the company and support the construction of our long-term vision and goals.
In 2020, one of the greatest technological innovations in the area of Genetic Enhancement was the development of a novel clonal selection system, which helps to decide on the clones that will be planted in Suzano's forests, resulting in higher pulp productivity and mitigation of risks. On the Forest Management front, technological innovations are aimed at increasing forest yield and reducing operating costs, in line with the sustainability issues of the forest business. In 2020, all the recommendations were proposed, discussed and validated at the Suzano Management System (SMS) forum, which enabled the creation of the bases for operational planning, budget and increasing the yield of our forests.
In the field of Biotechnology, we made advances in diverse research platforms through our subsidiary FuturaGene. In the area of crop protection, we conducted regulatory studies on herbicide tolerance and pest resistance technologies, which will optimize the use of chemicals and bring other social and environmental gains. To increase crop yield, we expanded the experimental planting of clones derived from genetically modified eucalyptus, already approved by the National Technical Commission on Biosafety (CTNBio), which continues to produce excellent results. We have also started tests using other technologies for this purpose. Other highlights of the year were the advances made in Bioinformatics and Genomics. In this segment, we have identified parts of the genome responsible for an important characteristic of eucalyptus and we are ready, in 2021, to apply this discovery in the generation of new clones, significantly reducing the time of this process.
In pulp development, we expanded the use and development of digital technologies in production by using machine learning and virtual sensors. We streamlined production processes and supplied to the market two new pulp products to meet the technical and regulatory requirements of our clients. We also intensified the evaluation of technologies to add value to our industrial waste in line with Suzano’s long-term goals. In the Paper and Packaging Business Unit, we launched new products, such as paperboard made with post-consumer shavings (TPCyle) and paper for the bags market (Greenbag), as well as products that replace plastic in straws (Loop) and cups (BlueCup).
As for the future businesses of Suzano, in the Biorefinery segment, we partnered with Spinnova to produce textile threads from microfibrillated cellulose (MFC). We also intensified efforts to develop materials from renewable resources, such as bio-oil, nanocellulose, biocomposites and lignin for use in diverse value chains. Our bio-materials can replace fossil-based products, improve the performance of materials such as plastics and phenolic resins, and reduce the carbon footprint of these chains, in line with the Company’s long-term goals. We invested in the expansion of our pilot mills and in analytical resources at the Limeira Laboratory to ramp up our research capacity and reduce the time to market of our developments.
| Page 3 of 11 |
| | |
With the focus on ensuring the safety of all the R&D processes and projects at Suzano, in 2020 we rolled out a robust process to monitor the regulatory aspects related to the company’ business. With regard to intellectual property, we continued to protect our innovations, filing applications for 11 new patents and six new Eucalyptus cultivars. We also improved our intellectual property management by implementing a strategy to safeguard our industrial secrets.
PULP BUSINESS UNIT
Despite the negative impacts of the pandemic on the global economy, the pulp market remained buoyant throughout 2020, driven by shifting consumption behaviors, which led to a strong growth in the demand for sanitary paper and packaging. In this scenario, Suzano, anchored on its commercial strategy, ensured uninterrupted supply to all its clients and significantly reduced inventories, despite a scenario of constant challenges. Suzano registered record volumes in 2020, with production totaling 9,800 thousand tons (up 12% from 2019) and sales totaling 10,823 thousand tons (up 15% from 2019).
On the supply side, pulp availability in the market remained relatively balanced during the year, with more than 2 million tons of pulp unexpectedly withdrawn from the market, offsetting the increase in production by some producers, as well as the temporary conversions of integrated capacities and of dissolving pulp to market pulp for the paper industry.
Net revenue from pulp totaled R$ 25,578 million in 2020, (up 22% from 2019), due to the appreciation of the average USD against the BRL and the 15% growth in pulp sales despite the decline in price in USD (-19%). Exports accounted for 93% of total pulp revenue, while domestic sales represented 7%. With regard to distribution for end use, 64% of pulp sales went to sanitary paper production, 16% to printing and writing paper, 13% to special papers and 7% to packaging.
Average net price of pulp was US$ 458/ton in 2020 (down 19% from 2019), while average net price in BRL stood at R$ 2,388/ton, increasing 7% from 2020 despite the lower prices in USD since the depreciation of BRL against the USD during the year offset the price adjustments in the international market. Cash cost of production excluding downtime in 2020 was R$ 604 per ton, decreasing 9% from 2019, reflecting the capture of operating synergies from the business combination with Fibria, despite the 31% increase in average USD against the BRL, which mainly impacted the cost of raw materials.
PAPER AND PACKAGING BUSINESS UNIT
According to Brazil's Forestry Industry Association (Ibá), domestic sales of printing and writing paper and paperboard contracted 12% in 2020 compared to 2019, while imports declined 39%.
Suzano’s paper production reached 1.18 million tons, decreasing 5% from 2019. This decline is due to the cutback in the production of printing and writing paper to adapt to the demand scenario resulting from the COVID-19 pandemic, which was partially offset by the increase in tissue production, which was positively impacted by the pandemic. Paper sales totaled 1.18 million tons and, though this number represents a 6% decline from 2019, the results are positive considering the declines seen in the market.
In 2020, net revenue from paper sales was R$ 4,882 million, down 2% from the previous year. Net revenue from the domestic market declined 4%, while revenue from exports remained in line with the 2019 number, growing 1%. Of the total net revenue, 69% came from domestic sales and 31% from exports. The breakdown of Suzano's total revenue from paper sales in 2020 was: 84% in Latin America (including Brazil), 5% in North America and 11% in other regions. Average net paper price in 2020 was R$ 4,148/ton, 5% higher than in 2019.
| Page 4 of 11 |
| | |
ECONOMIC AND FINANCIAL PERFORMANCE
Results
The consolidated financial statements were prepared in accordance with the standards of the Securities and Exchange Commission of Brazil (CVM) and the Accounting Pronouncements Committee (CPC) and comply with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The operational and financial information of Suzano S.A. is presented on a consolidated basis and in Brazilian real (R$). Note that the numbers may present discrepancies due to rounding.
Net Revenue
Suzano’s net revenue in 2020 was R$ 30,460 million, an increase of 17% from the R$ 26,013 million in 2019, due to the increase in average USD against the BRL and the 15% growth in pulp sales, despite the decline in USD prices (-19%).
Cost of Goods Sold (COGS)
In 2020, cost of goods sold totaled R$ 18,966 million, down 9% from the R$ 20,743 million in 2019, due to the lower effect of PPA (-R$ 2.4 billion) and lower cash production cost (-9%), which were partially offset by the increase in average USD against the BRL, which affects the portion of cost denominated in USD and, logistics costs related to maritime freight.
Gross Profit
Gross profit increased from R$ 5,269 million in 2019 to R$ 11,494 million in 2020 due to operating results, mentioned above.
Selling and Administrative Expenses
Selling expenses totaled R$ 2,175 million in 2020, up 14% from the R$ 1,905 million registered in 2019. This increase is mainly due to the 31% increase in average USD against the BRL and the 15% growth in pulp sales volume. On a per-ton basis, the increase was 13%, mainly due to the effect of exchange rate variation on expenses in foreign currency and higher logistics expenses.
Administrative expenses came to R$ 1,443 million in 2020, an increase of 23% from the R$ 1,173 million in 2019, mainly due to the increase in personnel and other expenses related to the COVID-19 pandemic in 2020.
Adjusted EBITDA
Adjusted EBITDA in 2020 totaled R$ 14,949 million, 39% higher than the R$ 10,724 million in 2019. This increase is chiefly due to: (i) the increase in average USD against the BRL (31%); (ii) the growth in pulp sales volume (15%); and (iii) the lower cash cost of production (-9%).
Net Financial Result
Net financial result was an expense of R$ 26,085 million in 2020, compared to net financial expense of R$ 6,726 million in 2019. This result mainly reflects the increase in expenses with inflation adjustment, exchange variation and the loss on derivatives.
Inflation adjustment and exchange variation generated a negative impact of R$ 12,531 million on the 2020 result, compared to the negative impact of R$ 1,965 million in 2019. Derivative operations generated a loss of R$ 9,423 million in 2020, compared to a loss of R$ 1,075 million in 2019, mainly due to the strong impact of a weaker BRL and the high volatility on debt hedge transactions and cash flows. During 2020, the COVID-19 pandemic triggered major impacts on global economies, and efforts at risk aversion negatively affected the BRL in a highly volatile scenario.
| Page 5 of 11 |
| | |
Net Income (Loss)
As a result of the above, especially the effect of a weaker BRL on financial results, the Company recorded net loss of R$ 10,715 million in 2020, compared to net loss of R$ 2,815 million in 2019.
Debt
Gross debt on December 31, 2020 amounted to R$ 72,899 million, of which 97% were long-term maturities and 3% short-term maturities. Debt denominated in foreign currency accounted for 80% of the Company's total debt, while debt in local currency accounted for the remaining 20%. The percentage of gross debt denominated in foreign currency, considering the effect from debt hedge, was 95%. Comparing 2020 with the previous year, the increase in gross debt was mainly due to the 29% decline in BRL during the period.
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 receivable flows from sales.
On December 31, 2020, the total average cost of debt in USD was 4.5% p.a. (debt in BRL adjusted by the market swap curve). The average term of consolidated debt was 86 months at the end of the year.
Cash and cash equivalents on December 31, 2020 were R$ 9,232 million, 70% of which were invested in foreign currency in fixed-income and short-term investments, and the portion in local currency was invested in government and fixed-income bonds, remunerated at a percentage of the DI rate.
The company has two standby credit facilities untapped totaling R$ 3,598 million – one in Brazilian real for R$ 1 billion available until 2021 and the other for US$ 500 million available until 2024. These facilities help improve the company's liquidity position and can be withdrawn during times of uncertainty, such as during the first half of the year, when the COVID-19 pandemic broke out. As a result, the current cash position of R$ 9,232 million plus the facilities described above amount to a readily available cash position of R$ 12,830 million.
On December 31, 2020, net debt stood at R$ 63,667 million (US$ 12,252 million), compared to R$ 54,105 million (US$ 13,423 million) on December 31, 2019. The biggest driver of the increase in net debt in local currency was the exchange variation during the period.
The ratio of net debt to Adjusted EBITDA in BRL stood at 4.3x on December 31, 2020, compared to 5.0x at the end of 2019. The same ratio in USD (a measure established in Suzano’s financial policy) fell to 4.3x on December 31, 2020, from 4.9x at the end of 2019.
OPERATING CASH GENERATION
Operating cash generation (adjusted EBITDA less sustaining capex) amounted to R$ 11,543 million in 2020, up 63% from the R$ 7,063 million in 2019.
| (R$ million) | 2020 | 2019 | ||||||
| Adjusted EBITDA ¹ | 14,949 | 10,724 | ||||||
| Maintenance Capex² | (3,406 | ) | 3,661 | |||||
| Operating Cash Flow | 11,543 | 7,063 | ||||||
¹ Excludes non-recurring items and PPA effects.
² Cash basis.
| Page 6 of 11 |
| | |
DIVIDENDS
The Bylaws of Suzano establish a minimum mandatory dividend equivalent to the lowest amount between 25% of net income after constituting the legal reserves for the fiscal year or 10% of Operating Cash Generation from the respective fiscal year. Operating Cash Generation is obtained by deducting sustaining capex from Adjusted EBITDA. Since the Company recorded net loss in 2020 (R$ 10,715 million), there is no minimum dividend to be distributed in 2021.
RATINGS
During 2020, Suzano retained the investment grade rating (BBB-) on the global scale assigned by Standard and Poor’s and Fitch Ratings, with the outlook maintained at negative due to the prevailing adverse scenario in the pulp market, which gave rose to prospects of a slowdown in the Company’s deleveraging process. Moody’s assigned the ‘Ba1’ rating on a global scale, with a stable outlook.
CAPEX
Capex totaled R$ 4,225 million in 2020, of which R$ 3,406 million went to industrial and forest maintenance. Investments in Land and Forests totaled R$ 365 million, which primarily went to projects seeking new and more efficient areas to increase forest competitiveness and to support the Company's organic growth plans. Investments in Expansion and Modernization totaled R$ 242 million, mainly going to projects aimed at increasing the competitiveness of our indusial units. Investments in Port Terminals amounted to R$ 120 million and primarily went to implementing the Vértere project.
CAPITAL MARKETS
Suzano’s stock is listed on the Novo Mercado, the trading segment of the São Paulo stock exchange (B3 – Brasil, Bolsa e Balcão) with the highest corporate governance standards, and on the New York Stock Exchange (NYSE) – ADR Level II under the ticker symbols SUZB3 and SUZ, respectively.
On December 31, 2020, the capital stock of the Company was represented by 1,361,263,584 common shares (SUZB3 and SUZ), of which 12,042,004 common shares were held in treasury. SUZB3 stock ended the year quoted at R$ 58.54/share, while SUZ stock was quoted at US$ 11.18/share.
SUSTAINABILITY
Sustainability has always been an important theme in Suzano’s operations, strategies, decisions and relationships. However, the year 2020 showed that sustainability is necessary in all spheres for us to overcome the challenges faced by our society, and that this is a path of no return. We entered the era of regenerative economy and Suzano is aware of its role in recovering the environment and in perpetuating life beyond financial returns to ensure more equitable relations and the welfare of all beings.
As an extension of the sustainability practices that Suzano translates from its strategy to the daily management of environmental, social and governance issues, this year it was included in the portfolio of the Dow Jones Sustainability Index – Emerging Markets (DJSI Emerging Markets), as well as the Corporate Sustainability Index 2021 (ISE) and Carbon Efficient Index (ICO2 B3) of B3. Also in 2020, in the very first year of its participation in the Carbon Disclosure Project (CDP), Suzano was placed as “B” on the Climate, Water and Forest questions. CDP is a not-for-profit charity that is the global reference in the disclosure and management of environmental impacts. Such recognitions only reaffirm that the path being taken is the right one.
| Page 7 of 11 |
| | |
To guarantee the improvement of its ESG (Environmental, Social and Governance) practices, the Company has a Sustainability Committee, which advises the Board of Directors. In 2020, the Committee was a key driver behind the corporate commitments, long-term goals and the move towards sustainable finance.
Based on the purpose of Renewing Life Inspired by Trees, in 2021 Suzano will continue to seek improvements in this continuous journey of generating shared value. The Company publishes its annual Sustainability Report in accordance with GRI guidelines, which is filed with the Securities and Exchange Commission of Brazil (CVM) through the IPE system, under the category "Sustainability Reports" and is also available on the Investor Relations website in the “Sustainability” section.
COVID-19
The global scenario in 2020, drastically affected by the COVID-19 pandemic, brought to the spotlight profound discussions of how the Company sees - and the role it plays in - the world. Moreover, social issues such as economic inequality, diversity and inclusion, which are essential for meaningful progress on the theme, have never been the subject of so much internal discussion.
Suzano, in line with its driver “It’s only good for us if it’s good for the world,” addressed the issue on both the internal and external fronts. The Company always gave priority to the health of its employees and, even before restrictions were announced by authorities on circulation, it placed in working from home all the employees whose onsite presence at the units was not required. For employees whose presence was essential for the operations, it took all the required measures to minimize all risks. On the external front, Suzano helped import masks and ventilators from China, contributed to the production of 6,500 ventilators and assisted several other projects, such as the construction of field hospitals, support for suppliers to maintain the health of their businesses and, most recently, in January 2021, the Company helped the city of Manaus by sending 280,000 m3 of oxygen to mitigate the public health crisis there.
Despite the global scenario in 2020, Suzano incessantly sought progress on diverse sustainability fronts.
Long-Term Targets
The Company is aware of its impact on the lives of people, including its 2 billion consumers worldwide, which goes beyond the direct management of its business and the creation of jobs in the communities where its operations are located. In line with this sustainability strategy and based on issues it considers important, in early 2020 Suzano announced the following long-term targets to be achieved by 2030 in order to expand its role in the value chain and society:
Be even more climate positive:
- 40 million tons of carbon to be removed from the atmosphere by 2030 (removals – scope 1, 2 and 3 emissions);
Substitute plastics and petroleum products:
Offer 10 million tons of products from renewable origin to replace plastic and other petroleum-based products by 2030;
Mitigate the problem of income distribution:
Lift 200,000 people out of poverty in our areas of influence by 2030;
Climate Change:
Reduce specific emissions by 15% (scopes 1 and 2) by 2030;
Energy:
Increase by 50% the export of renewable energy by 2030;
| Page 8 of 11 |
| | |
Education:
Improve the IDEB indicator of the quality of education by 40% in all priority towns;
Industrial Waste:
Reduce by 10% the waste sent to landfills, transforming it into subproducts by 2030;
Water:
| · | Increase water availability by 100% in critical drainage basins by 2030; |
| · | Reduce by 15% the water withdrawn at industrial operations by 2030; |
Diversity and Inclusion:
| · | Fill 30% of leadership positions (managers and above) with women and 30% with black professionals1 by 2025; |
| · | Ensure 100% accessibility and inclusive working environments and zero prejudice witnessed or experienced by persons with disabilities (PWDs) by 2025. |
| · | Achieve 100% inclusive environment and zero prejudice witnessed or experienced by LGBTI+ employees2 by 2025. |
Another advance was the inclusion of the Diversity and Inclusion target in the variable compensation package of the entire company leadership. In addition, all other long-term goals are included in the variable remuneration of senior management for 2021.
Sustainability-Linked Bonds
In 2020, Suzano took an important step in the area of sustainable finance by linking financial operations to its ESG performance. In the second half of the year, the company issued a Sustainability-Linked Bond (SLB), in which the cost of the funds raised is linked to one or more sustainability targets. This operation in the bonds market was the first of its kind executed by Suzano, the second in the world, the first in the Americas and the first issue in compliance with the SLB Principles established by the International Capital Market Association (ICMA). The SLB was linked to an interim target to be achieved by 2025 of 0.190 tonCO2e/ton of product and is related to the 2030 goal of reducing emissions, thereby underlining our commitment to society. Moreover, the issue of an SLB by Suzano represented concrete evidence of monetizing its ESG - till then intangible - as well as a stimulus to seek fresh opportunities in sustainable finance in the future.
1. Terminology used by the Brazilian Institute of Geography and Statistics (IBGE), comprising black and brown people.
2. Suzano chose to use the acronym LGBTI+, which includes lesbians, gays, bisexuals, transgenders and intersex people, with the plus (+) sign representing other sexual orientations and gender identities and expressions.
GOVERNANCE
Since 2017, the Company has been listed on the Novo Mercado special listing segment of B3 S.A. – Brasil, Bolsa, Balcão, and since 2018, its shares have been listed on Level II American Depositary Receipts (ADRs) on the New York Stock Exchange (NYSE). Considering this broad regulatory environment in which the Company operates, Suzano is committed to corporate governance best practices, such as the principles issued by the Brazilian Institute of Corporate Governance (IBGC), the Securities and Exchange Commission of Brazil (CVM), the Securities Exchange Commission of USA (SEC) as well as B3 and NYSE.
The Company has a consistent and effective governance structure that functions in a clear, transparent and well-grounded manner to aid in the decision-making process and in the equitable treatment and protection of the interests of shareholders, the Company and the market.
| Page 9 of 11 |
| | |
In its mission, the Board of Directors maintains a broad vision, relying on the valuable participation and support from other bodies in the Company’s governance structure: the Shareholders Meeting, Executive Board, Statutory Audit Committee, Audit Board, Internal and External Audit and other non-statutory advisory committees reformulated in 2019, such as the Sustainability, Management and Finance, Strategy and Innovation, People, Compensation, and Eligibility Committees. In addition to the support from the management, supervision and advisory bodies, the Board of Directors has several tools to assist it in its governance activities, notably the Code of Conduct and the policies adopted by the Company, all in alignment with its Bylaws, which synthesize the corporate governance principles and disseminate these principles and practices across diverse governance fronts. These policies include the Related Party Policy, the Integrated Risk Management Policy, the Anticorruption Policy, the Material Act or Fact Disclosure Policy, the Trading Policy for Securities Issued by Suzano S.A. and the Debt Policy.
Through this management and control model, which relies on the engagement of all bodies and the use of the above-mentioned mechanisms and tools, as well as the disclosure and the guarantee of information transparency through the reference Form, the 20-F Form, the Governance Statement and diverse documents disclosed on the Investor Relations Website, the Company ensures compliance with the fundamental principles of transparency, equity, accountability and corporate responsibility in its relations with stakeholders while constantly improving its corporate governance.
AUDIT AND INTERNAL CONTROLS
Suzano's Internal Controls Management process is structured and covers the Management, including the Committees and Commissions that advise the Board of Directors and the Executive Board, the Management and all the Company's employees, with the purpose of allowing safer driving, and efficient business, in line with established regulations. Based on the annual review, or when required, process flows are continuously validated and compliance tests are regularly applied to assess the effectiveness of existing internal controls versus the risks to which Suzano is exposed. The Company systematically applies the Control Self Assessment (CSA) methodology, an integrated solution that helps to document, on a quarterly basis, the performance of controls related to financial statements and management, focusing on key obligations to the business, contributing to the permanent monitoring to the strict respect for laws, rules and regulations, policies and procedures, as well as in the implementation of contingency plans, ensuring proper segregation of function and avoiding conflicts of interest. In 2020, the Company intensified the review of its processes and controls, reinforced face-to-face training and e-learning with a focus on the expected behavior under the Sarbanes-Oxley Law (SOx), on the topics of Anti-Corruption, Loss Prevention and Fraud and reinforcing the Culture of Internal Controls.
Additionally, the controls are reviewed by the Internal Controls Management area, tested by internal auditors, evaluated by an independent external audit, and systematically reported to the Executive Board, Board of Directors, Statutory Audit Committee and Fiscal Council, through a minimum agenda established with these governance bodies.
In case of violation of internal rules and external requirements, disciplinary guidelines and/or corrective measures are taken. If necessary, these violations are referred to the Conduct Management Committee, an advisory body to the Board of Directors.
In compliance with Section 404 of the Sarbanes-Oxley Act, the effectiveness of internal controls related to financial information is based on criteria established in the Internal Control - Integrated Framework defined by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). According to this assessment, the controls are adequately designed and no significant and/or material deficiencies or observations were identified so far that could compromise the Company's certification. The findings of these assessments are submitted to the Audit Committee, the Audit Board and the independent audit firm PricewaterhouseCoopers Auditores Independentes, whose work corroborates the improvement in internal controls, especially those related to tax, accounting and information technology.
| Page 10 of 11 |
| | |
PEOPLE
Journey in Progress
Since 2019, through the Human Resources eXperience (HRX) program, Suzano encourages the exchange of ideas to jointly create an exceptional journey for employees in the organization.
The project involved 250 employees in diverse locations, positions and areas and, in 2020, its efforts resulted in the development of a new way of functioning, a new structure and new People and Management products. The area also underwent digital transformation and incorporated into its daily activities the principles of agility, employee-centric culture, data-orientation, change management and skills for the future.
Suzano Leader Profile
As part of this movement, we expanded our view of leadership and defined what we call the “Suzano Leader Profile,” which comprises six attributes linked to our Culture Drivers: Inspire, Communicate, Connect, Transform, Deliver results and Groom people.
360º Vision
In 2020, for the first time Suzano conducted the 360º assessment of its employees, which considers, in addition to the views of the direct manager, the opinion of peers, partners, leaders and team members on the performance of the employee. The company believes that this is one of the fundamental tools to build a more collaborative development plan. In this first assessment cycle, 78% of the company’s professionals took part.
Note that the 360º Vision, the performance forums (which analyze the deliveries and potential of employees) and other people development forums at Suzano started to consider in their analyses this year the six attributes of the Suzano leader profile.
The Value of Diversity
Suzano believes that a work environment that values diversity, respect and ethics, and where people truly feel welcomed is much more capable of developing the potential of its employees and the company as a whole. It is in the plurality of our team that we are best capable of understanding the diverse requirements of the market and society.
This belief has been taking root more vigorously in the company since the creation in 2016 of Plural, an organic and voluntary movement, which was institutionalized in 2019 and which made further advances in 2020. The movement encourages internal stakeholders to initiate and participate in discussions on diversity and inclusion, identify problems, find solutions and support top management in keeping important issues on these topics in the company’s plans.
Currently, some of the main diversity and inclusion issues on the agenda are part of the business strategy and are expressed in the company’s long- and short-term goals and in the compensation criteria of our managers and higher positions.
Suzano has made considerable progress in its journey of diversity and inclusion in recent years, but is aware that there is still a long way to go before it reaches a satisfactory level of equality in terms of race, gender and opportunities in its work environment and achieves its goal of ensuring an environment that is 100% inclusive and free of discrimination.
| Page 11 of 11 |