BELÉM, Brazil--(BUSINESS WIRE)--The world's largest pulp supplier, Suzano, today announces the signing of a Memorandum of Understanding (MoU) with the multinational technology business Tencent and the Brazilian non-profit Ecofuturo Institute, to pioneer new digital approaches to drive public engagement in conservation. The collaboration will leverage Suzano's expertise in sustainable forestry, Tencent's cutting-edge digital technology, and Ecofuturo's expertise in environmental education, to pi. ...

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Group 1 - The company Suzano (SUZ) faced pressure in the quarter due to a downturn in the pulp price cycle [2] - There is an expectation that many integrated pulp production facilities will be shut down, which may impact supply dynamics [2] - The Value Lab focuses on long-only value investment strategies, aiming for a portfolio yield of approximately 4% [1] Group 2 - The Valkyrie Trading Society is a team of analysts that share high conviction investment ideas, targeting non-correlated and outsized returns [2] - The Value Lab provides members with real-time updates, market news reports, and feedback on stock ideas [2] - The analysts involved have a beneficial long position in Suzano shares, indicating confidence in the company's future performance [3]

Financial Data and Key Metrics Changes - The company's leverage in dollar terms increased to 3.3 times, with stable net debt but a decline in EBITDA over the last 12 months due to lower pulp prices [6][7] - Cash cost production decreased by 7% compared to the third quarter of 2024, with cash costs running below BRL 800 per ton [4][5] Business Line Data and Key Metrics Changes - Significant reductions in wood costs were noted, driven by operational efficiencies and improved wood quality, contributing to lower specific consumption [3][4] - The cash cost of production ex-downtime is expected to be the most competitive in the fourth quarter of 2024-2025 [5] Market Data and Key Metrics Changes - Prices of domestic wood chips in China have increased, impacting the cash cost of production for Chinese producers [15][16] - The market for softwood is weaker compared to hardwood, with prices dropping due to an abundance of softwood in the Chinese market [17][18] Company Strategy and Development Direction - The company is focusing on reducing cash production costs and extracting value from recent investments, particularly in packaging and joint ventures [10][11] - Future CAPEX guidance for 2025 is set at BRL 13.3 billion, with expectations of a declining trend in CAPEX for subsequent years [9][65] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining cash costs below BRL 800 per ton and highlighted the importance of operational efficiencies [10][26] - The outlook for pulp prices remains cautious, with expectations of gradual price increases but limited optimism due to oversupply conditions [32][49] Other Important Information - The company has a healthy hedge portfolio with a total value of $6 billion, which could provide a positive cash impact of nearly BRL 2.5 billion over the next two years [8] - The company is committed to its guidance for 2027 and is confident in delivering on its targets [33] Q&A Session Summary Question: Dynamics of wood chips and softwood in the Chinese market - Management noted an uptick in prices for both domestic and imported wood chips in China, which is expected to increase cash costs for Chinese producers [15][16] Question: Cash cost trajectory and improvements - Management indicated that they aim to maintain cash costs below BRL 800 per ton and highlighted a 4% reduction in wood consumption per ton due to a new wood supply deal [25][26] Question: Expectations for London Pulp Week - Management expressed optimism about discussions on unsustainable market conditions and the potential for unexpected closures impacting supply dynamics [28][30] Question: Performance of the US packaging business - Management reported positive EBITDA contributions from the US packaging business and emphasized ongoing efforts to improve logistics and operational efficiency [38][39] Question: Updates on Lenzing investment - Management is currently analyzing trends and investment opportunities in Lenzing but has no immediate plans to increase their stake [37] Question: Long-term fundamentals for pulp - Management maintains a cautious view on the structural fundamentals for pulp, noting that while imports are increasing, local production remains stagnant [49] Question: Impact of floods in Southeast Asia on wood prices - Management acknowledged that recent floods have influenced wood chip prices in the short term, particularly in southern China and Vietnam [57][58] Question: Expansion CAPEX and future projects - Management indicated a declining trend in CAPEX for the next year, with fewer projects in the pipeline as major projects are completed [65]

Financial Data and Key Metrics Changes - The company's cash cost decreased by 7% compared to Q3 2024, driven by operational efficiencies and input cost reductions [2][4] - Net debt remained stable quarter-on-quarter, but leverage in dollar terms increased to 3.3 times due to a decline in EBITDA over the last 12 months primarily from lower pulp prices [3][4] - The cash cost of production ex-downtime is now below BRL 800 per ton, indicating strong operational performance [3][4] Business Line Data and Key Metrics Changes - The Ribas units contributed significantly to improvements across all cash cost components, particularly in wood costs, which saw a notable reduction [2][4] - The company is focusing on cash production costs and aims to maintain a competitive cash cost in the upcoming quarters [6][7] Market Data and Key Metrics Changes - Prices of domestic wood chips in China have increased, impacting the cash cost of production for Chinese producers [11][12] - The dynamics for softwood in China have weakened, with prices dropping due to an abundance of supply, while hardwood prices are recovering [10][12][14] Company Strategy and Development Direction - The company is committed to reducing cash costs and extracting value from recent investments, particularly in packaging and joint ventures [7][8][9] - Future CAPEX guidance for 2025 is set at BRL 13.3 billion, with a focus on maintaining operational efficiency and managing costs [6][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering competitive cash costs in Q4 2024-2025, despite potential downtimes affecting specific quarters [3][6] - The management highlighted the unsustainable pricing scenario in the pulp market, indicating a cautious outlook while monitoring market dynamics closely [20][34] Other Important Information - The company has a healthy hedge portfolio with a total value of $6 billion, which could provide a positive cash impact of nearly BRL 2.5 billion over the next two years [5] - The company is not planning to exercise the option to acquire an additional stake in Lenzing in the short term, focusing instead on analyzing market trends [27] Q&A Session All Questions and Answers Question: Dynamics of wood chips and softwood in the Chinese market - Management noted an uptick in prices for both domestic and imported wood chips in China, which is expected to increase cash costs for Chinese producers [11][12] Question: Cash cost improvements and future expectations - Management confirmed that they are running below BRL 800 per ton and are focused on maintaining this level while exploring further cost-cutting opportunities [15][18] Question: Expectations for London Pulp Week - Management indicated that the current market scenario is unsustainable, with expectations of increased closures and a potential shift in pricing dynamics [20][21] Question: Growth opportunities in the US paper market - Management highlighted that there are still significant growth opportunities in the US market, particularly in food service, and emphasized the focus on improving efficiency [47][48]

Earnings Conference Call 3Q25 Disclaimer This presentation contains what are considered "forward-looking statements," as defined in Section 27A of the 1933 Securities Act and Section 21E of the 1934 Securities Exchange Act, as amended. Some of these forward-looking statements are identified with words such as "believe," "may," "could," "would," "possible," "will," "should," "expect," "intend," "plan," "anticipate," "estimate," "potential," "outlook" or "continue," as well as the negative forms of these word ...

Core Insights - Suzano, the world's largest pulp producer, reported a 20% increase in combined pulp and paper sales, reaching 3.6 million tonnes in Q3 2025 compared to Q3 2024, driven by the new Ribas do Rio Pardo mill and U.S. paper production integration [1] Financial Performance - The cash cost of pulp production decreased by 7% to R$801 per tonne compared to Q3 2024, reflecting a downward trend in production costs and improved competitiveness [2] - Net revenue for Q3 2025 was R$12.2 billion, remaining broadly flat year-over-year, while adjusted EBITDA was R$5.2 billion and operating cash generation was R$3.4 billion, influenced by lower pulp prices and a weaker export exchange rate [3] - Net profit for the quarter totaled R$2 billion [3] Operational Highlights - Suzano Packaging achieved its first positive adjusted EBITDA from U.S. operations acquired in October 2024, indicating successful integration and value generation from the asset base [4] - The company's net leverage in U.S. dollars was 3.3 times at the end of the quarter, with a cash position of US$6.5 billion [4] Management Commentary - The CEO of Suzano emphasized the company's focus on improving competitiveness and cash generation, highlighting the efficiency of the Ribas do Rio Pardo mill and progress in establishing a joint venture with Kimberly-Clark [5]

Core Insights - In times of market volatility, investors are increasingly turning to value investing as a strategy to capitalize on discounted stock prices when others are selling off [1][3] Group 1: Value Investing Strategy - Value investing allows investors to purchase stocks at lower prices during market uncertainty, presenting opportunities for long-term gains [1] - The strategy can lead to "value traps" if not properly understood, where stocks underperform due to persistent issues rather than temporary setbacks [3] Group 2: Importance of PEG Ratio - The PEG ratio, defined as (Price/Earnings)/Earnings Growth Rate, is a crucial metric for value investors, with a lower PEG ratio indicating better value [5] - While P/E ratios alone may not accurately reflect a stock's true value, the PEG ratio helps in assessing intrinsic value [5] - Investors should also consider other parameters alongside the PEG ratio to enhance investment outcomes [6] Group 3: Screening Criteria for Value Stocks - Effective screening criteria for identifying potential value stocks include a PEG ratio lower than the industry median, a P/E ratio below the industry median, a Zacks Rank of 1 or 2, market capitalization over $1 billion, average trading volume exceeding 50,000, and upward revisions in earnings estimates greater than 5% [6] Group 4: Selected Stocks - Fox Corporation (FOX) has a Zacks Rank of 1, a Value Score of A, and a five-year historical growth rate of 12.3% [10] - Flex Ltd. (FLEX) also holds a Zacks Rank of 1, a Value Score of B, and a five-year historical growth rate of 35.1% [12] - Suzano S.A. (SUZ) has a Zacks Rank of 1, a Value Score of A, and a long-term expected growth rate of 52% [14] - Garrett Motion Inc. (GTX) maintains a Zacks Rank of 1, a Value Score of A, and a five-year expected growth rate of 23.1% [15]

Core Insights - The Zacks Paper and Related Products industry is facing subdued demand due to lower consumer spending and a decline in graphic paper demand driven by digitalization. However, the rise in e-commerce and steady demand from consumer-oriented markets like food, beverages, and healthcare are expected to support the industry. Increased environmental awareness is also driving growth as paper is seen as a sustainable packaging alternative [1][5]. Industry Overview - The Zacks Paper and Related Products industry includes companies that manufacture and sell a diverse range of paper products, including graphic paper, packaging paper, and absorbent hygiene products. The industry serves various sectors such as food and beverage, healthcare, and e-commerce, providing sustainable solutions for shipping, storage, and display [3]. Major Trends - The industry is experiencing weak demand and high costs, with the transition to digital media negatively impacting graphic paper demand. Companies are shifting production to focus on packaging and specialty paper. Rising costs for transportation, chemicals, and fuel are prompting industry players to implement pricing actions and cost reduction strategies [4]. - Despite current challenges, the industry's exposure to consumer-focused markets ensures stable earnings growth. The rise of e-commerce is increasing the importance of packaging, presenting significant growth opportunities for the industry [5]. M&A Activities - The demand for sustainable packaging is driving M&A activities within the industry. The merger of Smurfit Kappa and WestRock to form Smurfit Westrock is expected to enhance geographic reach and sustainability capabilities. International Paper's acquisition of DS Smith aims to strengthen its corrugated packaging business in Europe [6]. Industry Performance - The Zacks Paper and Related Products industry has outperformed the Basic Materials sector but lagged behind the S&P 500 over the past year, with an 11.2% gain compared to the sector's 3.6% and the S&P 500's 18.3% [10]. Valuation Metrics - The industry is currently trading at a trailing 12-month EV/EBITDA ratio of 8.67X, significantly lower than the S&P 500's 18.47X and the Basic Materials sector's 14.24X. Over the past five years, the industry has traded between 4.42X and 12.45X, with a median of 7.85X [13][16]. Company Highlights - **Smurfit Westrock**: The company is focused on asset optimization and has undergone significant transformation since 2023, aiming for a $400 million synergy target by the end of 2025. It has invested $1 billion in 2025 to enhance efficiency and sustainability [17][18]. - **Suzano**: The company has made strategic acquisitions to strengthen its position in the tissue market and is building a new tissue paper mill with an investment of R$650 million ($115 million). In Q2 2025, Suzano reported a 28% year-over-year increase in sales, driven by strong operational contributions from new production facilities [21][22].

Group 1 - Suzano S.A. is the world's largest producer of eucalyptus pulp, controlling 49% of the company and producing approximately 17% of global market pulp supply through over eight mills in Brazil [2][3] - The company generated around $3 billion in operating cash flow last year, with a market capitalization of $12 billion, resulting in a price-to-operating cash flow ratio of 3.2x [3] - Suzano benefits from a structural cost advantage due to the fast maturation of eucalyptus trees, which mature in about seven years compared to nearly 20 years for pine, leading to a low unit cash cost of approximately $150 per ton [3] Group 2 - The company is expanding its footprint through a $3.4 billion joint venture with Kimberly-Clark, which will give Suzano a controlling stake in 22 tissue mills across over 70 countries [4] - Additional growth drivers include acquisitions of U.S. paperboard mills and strong shareholder returns through buybacks and dividends [5] - While Suzano is seen as a cheap, cash-rich business with long-term competitive advantages, the optimal entry point for investors depends on a recovery in pulp prices [5]