Suzano reports record cash generation and approves Cerrado Project
The company reported operating cash generation of BRL 5.2 billion and approved the investment of BRL 14.7 billion in the new manufacturing unit
Suzano, the world’s largest eucalyptus pulp producer, had a positive third quarter, despite uncertainties regarding China’s pulp demand, rising commodity pressure on costs and bottlenecks in global logistics, recording cash generation operating cash flow of R$5.2 billion, a new quarterly record since the incorporation of Suzano SA, in January 2019. In the 12-month period ended in September this year, operating cash generation totaled R$17 billion.
The company announced that it ended the quarter with a loss of R$ 959 million, 17% below the loss registered a year earlier. Between July and September, business’s net revenue jumped 44% in the annual comparison, to R$ 10.76 billion. The result reflects the 6% increase in the total volume sold, to 3 million tons, the 43% higher average net pulp price and the 21% higher net average paper price. Compared to the second quarter, net revenue rose 9%.
During the period, Suzano sold 2.67 million tons of pulp, 6% more than registered in 2020, and 336 thousand tons of paper, an advance of 5% in the same comparison. Compared to the second quarter, the increase was 14%.
The result before interest, taxes, depreciation and amortization (Ebitda) adjusted in the quarter was the highest ever recorded by Suzano, reaching R$ 6.31 billion – growth of 67% in the annual comparison. As a result, Suzano’s Ebitda margin was 59%, compared to 51% a year earlier and 60% in the second quarter.
The company’s net financial result was negative, at R$7.77 billion in the quarter, due to losses from exchange and monetary variation of R$4.08 billion and R$2.53 billion from operations with derivatives to protect part of the cash flow. At the end of the quarter, the enterprise’s financial leverage was 2.7 times, down from 3.3 times seen three months earlier.
CERRADO PROJECT
The company’s board of directors also announced that it has approved the execution of the Cerrado Project, an investment of R$ 14.7 billion in the new factory in Ribas do Rio Pardo (MS), Brazil. The plan to build a new manufacturing unit awaited the green light from the collegiate and depended on the fall in financial leverage.
With results above expectations by the market, the project was approved with the same investment originally estimated, and nominal production capacity of 2.55 million tons of eucalyptus pulp per year, above the 2.3 million tons initially announced, demonstrating that the Suzano was successful in negotiations with suppliers.
In a material fact sent to the Brazilian Securities Commission (CVM), the company informed that disbursements will take place between 2021 and 2024. Previously scheduled for the first quarter of 2024, the start of operations was postponed to the second half of the same year.
More details about the Cerrado Project will be announced at an event to be held on November 5th.
