Suzano Q2 2026 Earnings Call Summary

1Key Financial Results and Metrics

Free Cash Flow: Reported strong free cash flow, contributing to a reduction in net debt from $13 billion in Q1 2026 to $12.8 billion in Q2 2026.

EBITDA: Brazilian operations EBITDA improved by 28% quarter-over-quarter but declined 20% year-over-year due to lower prices and export volumes.

Cash Costs: Cash costs (excluding downtimes) reached BRL 843 per ton, with a guidance of approximately BRL 800 per ton for the full year.

Leverage: Leverage increased slightly from 3.3x to 3.4x, attributed to a contraction in last 12-month EBITDA.

2Strategic Updates and Business Highlights

Acquisition of Arbex: The acquisition closed on July 1, 2026, with a focus on integration and capturing efficiency gains. A new management team is in place.

Operational Performance: Higher sales volumes and prices in the paper business, particularly in Brazil, with domestic print and write volumes growing 10% quarter-over-quarter.

Pulp Market Dynamics: Strong demand in Europe and North America, with pulp prices increasing due to inventory replenishments and geopolitical factors.

3Forward Guidance and Outlook

Demand Expectations: Anticipating higher demand in the second half of 2026, particularly in the paper and packaging sectors. A strong order book in the U.S. supports this outlook.

Cost Management: Confidence in achieving cash cost guidance, with expectations for efficiency gains from the Arbex acquisition and reduced downtimes.

Pulp Market: Positive sentiment for the second half of the year, with expectations of strengthening demand in Asia and potential price increases.

4Bad News, Challenges, or Points of Concern

Inflationary Pressures: Ongoing inflationary pressures on wood, oil-related products, and logistics costs, exacerbated by geopolitical tensions.

Operational Challenges: Longer-than-expected ramp-up following maintenance downtime at the Pine Bluff mill affected production and results.

Competitive Pressures: Declining export demand in the U.S. and Europe, with increased competition from Asian players impacting market dynamics.

5Notable Q&A Insights

Cash Cost Components: Management emphasized the importance of production levels and wood consumption in achieving cash cost targets, with no significant downtimes expected in the second half.

Leverage Strategy: Focus on deleveraging to below 2.5x debt to EBITDA by 2027-2028, primarily through free cash flow generation and potential divestments of non-core assets.

Market Dynamics: Discussion on the impact of Chinese imports and potential government actions to protect the domestic industry. Management remains optimistic about U.S. profitability despite recent challenges.

M&A Strategy: Management clarified that there are no immediate M&A plans, with a focus on improving operational competitiveness and deleveraging. Overall, Suzano's Q2 2026 results reflect a resilient operational performance amid challenging market conditions, with strategic initiatives aimed at enhancing efficiency and managing costs while navigating geopolitical uncertainties.