Slide 1: Eucalyptus fiber
Eucalyptus fiber
Slide 2: Agenda
agenda Highlights 3Q23 Business Strategy Financial Management
Slide 3: Highlights 3Q23
agenda Highlights 3Q23
Slide 4: With a new drop, cash cost reaches a lower level than same quarter last year
With a new drop, cash cost reaches a lower level than same quarter last year 1 Excluding Consumer Goods. | 2 Operating Cash Generation = Adjusted EBITDA less Sustaining Capex. | 3 Considers Finnvera credit line. | 4 Net Debt / Adjusted EBITDA in the last twelve months. 4 2.5 million tons (vs. 2.8 mi
Slide 5: Business Strategy
agenda Business Strategy
Slide 6: Challenges of a growing company: capital allocation and culture
6 Challenges of a growing company... CAPITAL ALLOCATION & CULTURE
Slide 7: Founder's mentality and culture drivers
Source: ¹illustration based on Founder’s Mentality (Bain & Company) Agility Trend towards a more complex organization Net benefits of size Founder’s mentality¹ HIGH HIGH LOW Focus Purpose: Culture drivers It´s only good for us if it´s good for the world People who inspire and transform Create and sh
Slide 8: Strategic avenues
Strategic avenues Play a leading role in sustainability Be “Best-in-Class” in the Total Pulp Cost vision Maintain relevance in Pulp Expand boldly into New Markets Advance in the links of the chain, always with competitive advantage
Slide 9: Expand boldly into New Markets
Expand boldly into New Markets
Slide 10: New bio businesses development
New bio businesses development Textile & MFC Lignine Carbon & Biomas Bio oil & Green energy 1 Excluding Consumer Goods. | 2 Operating Cash Generation = Adjusted EBITDA less Sustaining Capex. | 3 Considers Finnvera credit line. | 4 Net Debt / Adjusted EBITDA in the last twelve months. 10
Slide 11: Open innovation ranking and Suzano Ventures
TOP1 OPEN CORPS INNOVATION ON PULP & PAPER SECTOR TOP3 on total ranking TOP1 BRAZILIAN INNOVATIVE COMPANY MOST RECENT AWARD FROM BRAZIL’S NATIONAL CONFEDERATION OF INDUSTRY (CNI) Core business operations Universities & R&D centers Start-ups & Entrepreneurs Innovation Hubs & Accelerators Canada R&D I
Slide 12: Significant, diverse and global deal flow
Significant, diverse and global deal flow Source: Internal data, updated on September 14, 2023 Startups Scouted 351 Investments in start-ups foster business avenues Start-ups: vertical distribution – Total deal flow 13% 33% 36% 18% Biomaterial Packaging Forest Tech Carbon According to main office lo
Slide 13: Investments in start-ups foster business avenues
3 investments in start-ups foster business avenues Eucalyptus Biomaterial Activated carbon biomaterial for new battery types Up to US$ 6.7MN UK Sustainable Packaging Sustainable fiber packaging In progress Carbon and Forest-Tech Big data, AI and climate expertise Up to US$ 1.0MN ISRAEL
Slide 14: Be Best-in-Class in the Total Pulp Cost vision
Be “Best-in-Class” in the Total Pulp Cost vision
Slide 15: Worldwide, in the long run, will there be enough wood?
Worldwide, in the long run, will there be enough wood? According to FAO, consumption increased by 28% in the last three decades, while wood resources decreased by 4% Source: FAO (Food and Agriculture Organization) Global forest sector outlook 2050 15 Supply perspective Demand perspective Ukraine-Rus
Slide 16: In Brazil, eucalyptus planted area has not kept up with demand
In Brazil, eucalyptus planted area has not kept up with the growing demand for wood-based biomass 16 ¹Ibá - Brazilian Tree Industry | ²IBGE - Brazilian Institute for Geography and Statistics | ³S&P Global Average prices of farmland Reforestation, Pastureland, Grains and Sugarcane, in Real Terms | 4P
Slide 17: We Plant The Future: growing yield
In Suzano, “We Plant The Future” aimed at growing yield in the coming years... 17 1Euca farm base = planted & plantable areas. | ²MAI = Mean annual increment | 3Purely illustrative image 1,02 1,10 1,18 2020 2022 2024 E Conservation 1,37 1,49 1,67 2020 2022 2024 E Euca Farm Base¹ Total Suzano area br
Slide 18: Reducing farm to mill radius and third-party wood reliance
… and reducing “farm to mill” radius and reliance on third-party wood/spot market 18 64% 71% 77% 87% 36% 29% 23% 13% 2023E 2024-2025 2026-2028 2029-2032 Own Third-party Average distance from Suzano’s euca farms to mill (km) Wood source breakdown (Million m³) 6% spot market 7% wood partnership 201 18
Slide 19: Mato Grosso do Sul: new showcase in wood competitiveness
MS TRÊS LAGOAS Mill RIBAS DO RIO PARDO Mill In Mato Grosso do Sul, we are building a new showcase in terms of wood competitiveness 19 − “Euca Farms” land bank already stablished − Structural plantation program to be completed by late 2024 / early 2025 − Broadening field silviculture and genetic expe
Slide 20: Enhanced structural competitiveness mitigating inflationary pressures
Enhanced structural competitiveness has been mitigating inflationary pressures 20 Forest Industry Logistics ⚫ Parkia and Caravelas acquisition ⚫ Forest base expansion ⚫ Retrofits Aracruz and Jacareí ⚫ New biomass boiler in Aracruz ⚫ Itaqui and Santos ports, expansion and optimization (DPW and T32) ⚫
Slide 21: Maintain relevance in pulp
WL we i | 9W suzano MAINTAIN RELEVAONCE IN PULP
Slide 22: Cerrado Project: counting down to start-up by June/24
Cerrado Project Counting down to start-up by June/24 22 % Physical progress: (inside-the-fence¹) 3 43 82 100 2021 2022 2023 Jun. 2024 78% 1 Inside the fence includes investments in industrial and infrastructure. | ² All figures in 2023 currency (in real terms). | ³ Structural cash production cost an
Slide 23: Cerrado Project: learning curve
Cerrado Project Counting down to a well executed learning curve 23 - 50 100 150 200 250 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11Month 12 Accumulated Monthly Monthly production rate (t/month) Learning curve conclusion Scheduled downtime 2 MM t Learning
Slide 24: Global hardwood market pulp overview
Global hardwood market pulp overview Fiber to Fiber as the main additional demand vector 24 Sources: Suzano BI proprietary models via multiple market sources | ¹Deintegration considers potential volume displacement of high-cost integrated supply in China | ²Substitution of single use plastics (illus
Slide 25: Softwood dynamics should boost hardwood pulp demand
37,7 42,4 44,4 4,7 2,0 Other Fibers (softwood, non-wood); Recycled Fiber and declining SOP availability; Deintegration of pulp & paper producers1 Unleashed potential Additional 2022 Organic Growth 2027e Additional Fiber to Fiber 2027e Fossil to Fiber² Fossil to Fiber Global BHKP Demand Overview on f
Slide 26: Supply 2024: Suzano sales volume with Cerrado start-up
Overview Supply 2024 Suzano sales volume with Cerrado Project start-up 26 ~ 700 kt SELLABLE CERRADO PULP VOLUME IN 2024: Cerrado Project Commercial & logistics highlights 2Q24 3Q24 Start-up of expanded terminals at Santos Port (DPW and T32) Inventory build-up to meet optimal operational levels and s
Slide 27: Marginal Cash Costs
Marginal Cash Costs 27 Sources: Hawkins Wright and Suzano BI | | 1Avg. Quarterly PIX China calculated using only end of the month values within the quarter | 2Marginal Cash Cost analysis conducted by Hawkins Wright considering only market BHKP Over the next five years, market volatility could play a
Slide 28: Marginal Cash Costs and market-related downtimes
Marginal Cash Costs 28 Current price cycle has fostered an increase in market-related downtimes 69% 31% FY2021 60% 40% FY2022 44% 56% YDE 2023e (visible full year effect) 1.0 1.3 1.4 Other Market-related BHKP unexpected downtimes3 (Market Pulp) 300 350 400 450 500 550 600 650 700 750 800 850 900 1Q1
Slide 29: Fluff pulp is a growing market
Fluff pulp is a growing market, with demand expected to reach 8 Mt by 2027 29 Source: Price Hanna Hygiene Report. March/2023 and BMA May/2023 0.7 0.8 1.5 1.6 1.6 1.8 2.6 3.6 6.4 7.8 2022 2027 Adult incontinence Baby diapers Feminine hygiene Airlaid/other 78% Top 3 suppliers (located in North America
Slide 30: Eucafluff: successful fiber to fiber case
Eucafluff®: Successful fiber to fiber case through innovation 30 LOWER costs REDUCED environmental footprint Thinner, SOFTER and FLEXIBLE cores Eucalyptus fluff advantages: EXTRA DRY skin 0 500 1.000 0 450 8.000 600 150 750 7.000 900 1.500 2.000 2.500 3.000 3.500 4.000 4.500 5.000 5.500 6.000 6.500
Slide 31: Fiber to Fiber: competitiveness and scalability
Source: Material Fact, filed on October 26th, 2023 Fiber to Fiber: competitiveness and scalability 31 Pulp dryer machine conversion in Limeira mill Capacity 340 kt/y Flex capacity of Eucafluff and/or BHKP Bringing total capacity to 440 kt/y by 2025 Post-conversion cost further elevates our standing
Slide 32: Advance in the links of the chain
Advance in the links of the chain, always with competitive advantage
Slide 33: Paper & Packaging
9 suzano Paper & Packaging
Slide 34: Outstanding competitiveness in the global paper industry
Sources: ¹Afry | ²FisherSolver: total mill wood at transfer costs. Includes pulp cost. Historical costs without inflation adjustment | ³Cash Cost 1H2023 *Latam excludes Suzano. 2016 2023e 101 83 66% Coated Uncoated 34% Digitalization pressures P&W declines around the world 17 Mt 2016 – 2023e Demand
Slide 35: Sales transformation: expanding customer base
Sales transformation Suzano+ CRM and e-commerce Suzano+ 2.0 Omnichannel + AI Suzano+ LatAm Value chain advance and margin increase Customer service and sales process improvement Technology upgrade Data driven and customer service channels expansion Customer experience and customer centricity 2014 20
Slide 36: Cost competitive assets, go to market and innovation driving value
Cost competitive assets + unmatched go to market + innovation, all driving value creation 36 2014 2015 2016 2017 2018 2019 2020 2021 2022 ¹Excluding Consumer Goods. Historical figures without inflation adjustment ²Excluding impact of Management LTI . Innovation portfolio 2022 goal successfully achie
Slide 37: Consumer goods
Consumer goods
Slide 38: An accretive case of capital allocation with competitive advantages
An accretive case of capital allocation with competitive advantages 38 Source: ¹Nielsen Retail INA + C&C Toilet Paper – Weighted Distribution considers the brand representative in a cluster of most rentable selling points | ²Folha 2021 | ³Nielsen Homescan 2021. 0% 24% 2017 2023 Value market share 20
Slide 39: New tissue mill in Aracruz
New investment to enhance competitiveness in the most significant consumption region Source: Material Fact, filed on October 26th, 2023. 39 Capacity 60 kt/y (paper toilet and paper towel) Bringing total capacity to 340 kt/y by 2026 Start-up 1Q26 Capex R$650 MN (Total Capex) Use of VAT (ICMS) credit
Slide 40: Play a leading role in sustainability
Play a leading role in sustainability
Slide 41: Focus on material themes and deliveries
Suzano fully focused on material themes and deliveries 41 Climate Change Biodiversity Territorial Development Water Human Rights Diversity and Inclusion Supply Chain Management Innovability Commitments to Renewing Life Source: adherence analysis based on Recommendations Maturity Map da Accounting fo
Slide 42: Cerrado Project: a case towards the SDG Agenda
Cerrado Project A case towards the SDG Agenda 42 COMMITMENT Generate clean energy Combat climate crisis & Conserve biodiversity Reduce poverty & Ensure education Reduce waste & Protect our water Acting Pillars: − Education − Job generation − Income generation − Public administration − Infrastructure
Slide 43: Financial Management
agenda Financial Management
Slide 44: Seizing opportunities with diversified funding sources
0 50 100 150 200 250 ECA - Finnvera IFC Local Debentures (Average) Source: Bloomberg Seizing opportunities with diversified funding sources 44 Estimated cost inside bond yield curve at Issuance (bps) 0.8 0.6 0.6 Size (US$ billion) Issuance Nov/22 Dec/22 Jun-Sep/23 Bond 25 6,53% Bond 26 6,33% Bond 27
Slide 45: Debt carry cost and gain
-1% 6% 5% -1,5% -0,5% 0,5% 1,5% 2,5% 3,5% 4,5% 5,5% 6,5% jan/22 apr/22 jul/22 oct/22 jan/23 apr/23 jul/23 1Total cost of debt in USD adjusted by swap curve on Sep. 30, 2023, for BRL denominated debt. Cash return on cash position held abroad in USD on Sep. 30, 2023. USD cash return Cost of debt ~72%
Slide 46: Cost of carbon emissions in financial analysis
Cost of carbon emissions is incorporated into financial analysis, to assess risks of future public policies that may increase costs for the company Financial parameters Net present value Payback Shadow price Enabling price Viability assessment, to determine under which carbon market scenario the pro
Slide 47: Capital allocation decision tree
Capital allocation Decision tree Expand boldly into New Markets Be “Best-in-Class” in the Total Pulp Cost vision Advance in the links of the chain, always with competitive advantage Maintain relevance in Pulp Is it an investment with scale and growth opportunity? ⚫ Geographical diversification ⚫ Vol
Slide 48: Solid track record on disciplined capital allocation
13.5 10.4 11.5 3,4 4,3 4,0 1,4 Capital for Allocation Dividends/Share Buyback Modernization and Growth 0.4 0.0 Capital for Allocation Modernization and Growth Dividends/Share Buyback Net Debt 3Q23 Net debt (US$ billion) Deleveraging cycle Capital for allocation focused on strengthening balance sheet
Slide 49: Share buyback program adding value to shareholders
46.40 54.40 Average buyback price Share price Oct/231 : 17% return Share buyback program adding value to shareholders 49 1Closing price of 10/23/2023 Share price (R$) Buyback volume 60 million shares 1 st program (avg. price R$48.33) 2 nd program (avg. price R$46.84) 3 rd program (avg. price R$44.02
Slide 50: How we reached the first years and will move forward
How we reached the first 100 years and will move forward... Q&A Financial discipline Culture and innovability Accretive capital allocation track record Recurring investments in competitiveness Addressable markets expansion Higher cash generation level, post Cerrado Shared value as core to business s
Slide 51: Eucalyptus fiber
Eucalyptus fiber ir.suzano.com.br