Suzano S.A.(SUZ) - 2024 Q2 - Quarterly Report

Consolidated Balance Sheet The company's balance sheet shows a 6.62% increase in total assets to R$153.09 billion, alongside a 13.87% rise in liabilities and a 9.28% decrease in shareholders' equity Assets Overview Total assets increased by 6.62% to R$153.09 billion, primarily driven by growth in marketable securities, inventories, and biological assets Consolidated Assets (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | Change (%) | | :-------------------------- | :--------- | :--------- | :--------- | | Total Current Assets | 39,123,153 | 38,569,072 | 1.44% | | Total Non-Current Assets | 113,971,158 | 105,023,953 | 8.52% | | TOTAL ASSETS | 153,094,311 | 143,593,025 | 6.62% | | Cash and cash equivalents | 7,246,498 | 8,345,871 | -13.17% | | Marketable securities | 14,360,936 | 12,823,886 | 11.99% | | Inventories | 7,126,680 | 5,946,948 | 19.84% | | Biological assets | 19,801,748 | 18,278,582 | 8.34% | | Property, plant and equipment | 62,025,794 | 59,289,069 | 4.62% | Liabilities and Shareholders' Equity Overview Total liabilities rose 13.87% to R$112.48 billion, driven by non-current loans, while equity decreased 9.28% to R$40.61 billion due to retained losses Consolidated Liabilities and Shareholders' Equity (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | Change (%) | | :--------------------------------- | :--------- | :--------- | :--------- | | Total Current Liabilities | 15,754,075 | 14,795,040 | 6.48% | | Total Non-Current Liabilities | 96,726,041 | 83,987,685 | 15.17% | | TOTAL LIABILITIES | 112,480,116 | 98,782,725 | 13.87% | | Loans, financing and debentures (current) | 7,250,222 | 4,758,247 | 52.37% | | Loans, financing and debentures (non-current) | 81,374,152 | 72,414,445 | 12.37% | | TOTAL EQUITY | 40,614,195 | 44,810,300 | -9.28% | | Profit reserves | 24,522,473 | 35,376,198 | -30.68% | | Retained losses | (3,518,499) | 0 | N/A | Consolidated Statements of Income (Loss) The company reported a net loss of R$3.55 billion for the six months ended June 30, 2024, a sharp reversal from prior-year income, driven by negative financial results Income Statement Performance The company reported a R$3.55 billion net loss for the six months ended June 30, 2024, a significant decline from prior-year income, driven by negative net financial results Consolidated Statements of Income (Loss) (Six months YTD, in thousands of R$) | Metric | 06/30/2024 | 06/30/2023 | Change (R$) | Change (%) | | :------------------------------------ | :--------- | :--------- | :---------- | :--------- | | Net Sales | 20,952,738 | 20,436,017 | 516,721 | 2.53% | | Gross Profit | 9,159,629 | 8,239,162 | 920,467 | 11.17% | | Operating Profit Before Net Financial Income (Expenses) | 7,165,872 | 7,374,965 | (209,093) | -2.84% | | Net Financial Income (Expenses) | (14,113,723) | 7,005,786 | (21,119,509) | -301.46% | | Net Income (Loss) Before Taxes | (6,947,851) | 14,380,751 | (21,328,602) | -148.31% | | Income and social contribution taxes | 3,402,366 | (4,060,335) | 7,462,701 | -183.79% | | NET INCOME (LOSS) FOR THE PERIOD | (3,545,485) | 10,320,416 | (13,865,901) | -134.35% | | Basic Earnings (Loss) Per Share (R$) | (2.76777) | 7.87524 | (10.64301) | -135.15% | Consolidated Statements of Comprehensive Income (Loss) The company reported a total comprehensive loss of R$3.52 billion for the six months ended June 30, 2024, a significant reversal from prior-year income, reflecting the net loss Comprehensive Income Performance The company reported a R$3.52 billion total comprehensive loss for the six months ended June 30, 2024, a significant reversal from prior-year income Consolidated Statements of Comprehensive Income (Loss) (Six months YTD, in thousands of R$) | Metric | 06/30/2024 | 06/30/2023 | Change (R$) | Change (%) | | :------------------------------------ | :--------- | :--------- | :---------- | :--------- | | Net income (loss) for the period | (3,545,485) | 10,320,416 | (13,865,901) | -134.35% | | Other comprehensive income (loss) | 24,020 | (9,740) | 33,760 | -346.61% | | Total comprehensive income (loss) | (3,521,465) | 10,310,676 | (13,832,141) | -134.15% | Consolidated Statements of Changes in Equity Total equity decreased from R$44.81 billion to R$40.61 billion, primarily due to the net loss, share repurchases, and a capital increase Equity Changes Total equity decreased from R$44.81 billion to R$40.61 billion, primarily due to the net loss, share repurchases, and a capital increase from reserves Key Changes in Equity (in thousands of R$) | Item | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Balances at period end | 40,614,195 | 44,810,300 | | Net income (loss) for the period | (3,545,485) | N/A | | Other comprehensive income for the period | 24,020 | N/A | | Shares repurchased | (679,431) | (778,500) | | Treasury shares cancelled | N/A | N/A | | Increase in share capital | 10,000,000 | N/A | Consolidated Statements of Cash Flow Operating cash flow decreased by 11.16% to R$9.12 billion, with significant outflows from investing and financing activities, leading to an overall decrease in cash Cash Flow Performance Operating cash flow decreased by 11.16% to R$9.12 billion, investing activities resulted in a R$9.59 billion outflow, and financing shifted to a R$0.93 billion outflow Consolidated Statements of Cash Flow (Six months YTD, in thousands of R$) | Category | 06/30/2024 | 06/30/2023 | Change (R$) | Change (%) | | :------------------------------------ | :--------- | :--------- | :---------- | :--------- | | Cash provided by operating activities | 9,122,669 | 10,268,045 | (1,145,376) | -11.16% | | Cash used in investing activities | (9,587,057) | (12,367,794) | 2,780,737 | -22.48% | | Cash provided (used) by financing activities | (931,270) | 4,858,655 | (5,789,925) | -119.16% | | Exchange variation on cash and cash equivalents | 296,285 | (404,442) | 700,727 | -173.26% | | Increase (Decrease) in cash and cash equivalents, net | (1,099,373) | 2,354,464 | (3,454,000) | -146.70% | | Cash and cash equivalents at the end of the period | 7,246,498 | 11,860,415 | (4,613,917) | -38.90% | 1 Company's Operations Suzano S.A. is a Brazilian pulp and paper company with global operations, actively monitoring geopolitical risks and advancing strategic projects 1.1 Equity Interests Suzano S.A. is a Brazilian public company producing pulp and paper, operating 13 industrial units and holding diverse equity interests in various activities - Suzano S.A. is a Brazilian public company listed on B3 (SUZB3) and NYSE (SUZ), controlled by Suzano Holding S.A. (47.73% voting shares)[14][17] - The Company operates 13 industrial units, 4 technology centers, 30 distribution centers, and 4 ports, all located in Brazil[15] - Main products include hardwood pulp from eucalyptus, coated paper, paperboard, uncoated paper, cut size paper, and sanitary paper packages, serving both domestic and foreign markets[16] Selected Equity Interests (as of 06/30/2024) | Entity/Type of investment | Main activity | Country | % equity interest | | :------------------------ | :------------ | :------ | :---------------- | | F&E Tecnologia do Brasil S.A. (Consolidated) | Biofuel production | Brazil | 100.00 % | | FuturaGene Ltd. (Consolidated) | Biotechnology R&D | England | 100.00 % | | Portocel - Terminal Espec. Barra do Riacho S.A. (Consolidated) | Port operations | Brazil | 51.00 % | | Veracel Celulose S.A. (Joint operation) | Pulp industrialization | Brazil | 50.00 % | | Ensyn Corporation (Equity) | Biofuel R&D | United States | 25.53 % | | Ibema Companhia Brasileira de Papel (Equity) | Paperboard industrialization | Brazil | 49.90 % | | Spinnova Plc (Equity) | Sustainable textile materials R&D | Finland | 18.77 % | | Nfinite Nanotechnology Inc. (Fair value through OCI) | Smart nanocoatings R&D | Canada | 5.00 % | 1.2 Major Events in the Six-Month Period Ended June 30, 2024 Major events included geopolitical monitoring, Cerrado Project completion, share buyback, capital increase, and a strategic acquisition in specialty fibers - The Company continuously monitored the impacts of the war between Russia and Ukraine, and the Middle East conflict, assessing personnel, supply chain, logistics, commercial operations, and continuity of operations. No significant short-term or long-term risks of interruptions or shortages were identified, though volatility in commodity and energy prices was observed[22][23][27] - The Cerrado Project, a new pulp production mill in Mato Grosso do Sul with a nominal capacity of 2,550,000 tons per year, is expected to begin operations in July 2024, with a total investment of R$22,200,000 thousand[24] - On January 26, 2024, the Board approved the cancellation of 20,000,000 common shares held in treasury (R$853,725 thousand) and initiated a new share buyback program to acquire up to 40,000,000 common shares by July 26, 2025[25][26] - On April 25, 2024, the Company's capital stock increased by R$10,000,000 thousand through the capitalization of the Capital Increase Reserve, without issuing new shares, bringing the total capital stock to R$19,269,281 thousand[28][29] - On June 24, 2024, Suzano agreed to acquire a 15.00% minority stake in Lenzing Aktiengesellschaft for EUR 229,971 thousand (R$1,379,090 thousand), with an option to acquire an additional 15.00% through a mandatory takeover offer, subject to regulatory approvals[29][30][31] 2 Basis of Preparation and Presentation of Unaudited Condensed Consolidated Financial Information The unaudited interim financial information was prepared in compliance with IAS 34, expressed in thousands of Brazilian Reais, with no changes in judgments or estimates Basis of Preparation The unaudited interim financial information was prepared in compliance with IAS 34, expressed in thousands of Brazilian Reais, with no changes in judgments or estimates - The financial information is prepared in compliance with IAS 34 Interim Financial Reporting and is expressed in thousands of Brazilian Reais (R$)[32][33] - Management confirmed no changes in judgments, estimates, and assumptions compared to the annual financial statements for the year ended December 31, 2023[34][35] - The unaudited condensed consolidated interim financial information was authorized by the Board of Directors on August 6, 2024[18] 3 Summary of Material Accounting Policies The company consistently applied accounting policies, with no material impacts identified from new IFRS amendments effective January 1, 2024 3.1 New Accounting Policies and Changes in Accounting Policies Adopted Accounting policies were consistently applied, with no material impacts identified from new IFRS 7, IAS 7, IFRS 16, and IAS 1 amendments - Accounting policies have been consistently applied to all consolidated companies, with no changes in policies or estimates calculation methodologies, except for new policies effective January 1, 2024[38] - The Company assessed amendments to IFRS 7 and IAS 7 (Supplier financing agreements and Statement of cash flow), IFRS 16 (Lease liability in a sale and leaseback transaction), and IAS 1 (Classification of liabilities as current or non-current and non-current liabilities with covenants), and did not identify any material impacts[40][43][44][46][47] 4 Financial Instruments and Risks Management The company maintained its conservative financial risk management, liquidity, credit, and market risk policies, with no significant changes in the period 4.1 Financial Risks Management The company maintained its conservative financial risk management approach and hedging policy, with no significant changes in policies or procedures - No significant changes in financial risk management policies and procedures compared to December 31, 2023, maintaining a conservative approach and strong cash/marketable securities position, and hedging policy[49] Classification of Financial Instruments (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Assets | | | | Amortized cost | 15,141,519 | 15,931,547 | | Fair value through other comprehensive income | 31,364 | 23,606 | | Fair value through profit or loss | 18,699,634 | 17,697,740 | | Liabilities | | | | Amortized cost | 100,983,428 | 90,609,124 | | Fair value through profit or loss | 5,732,329 | 2,436,072 | Fair Value of Loans and Financing (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Quoted in the secondary market (Bonds) | 43,616,964 | 38,703,379 | | Estimated present value (Foreign currency) | 21,896,492 | 21,260,628 | | Estimated present value (Local currency) | 13,748,390 | 12,916,771 | | Total Fair Value | 82,374,102 | 75,703,064 | 4.2 Liquidity Risk Management The company maintains a strong cash and marketable securities position, with operating cash primarily used for investments and debt service - The Company maintains a strong cash and marketable securities position, with surplus cash generally invested in highly liquid financial investments[53] - During the six-month period ended June 30, 2024, cash generated from operations was mostly used for investments and debt service[54] Remaining Contractual Maturities of Financial Liabilities (Undiscounted cash flow, in thousands of R$) | Maturity | 06/30/2024 | 12/31/2023 | | :--------- | :--------- | :--------- | | Up to 1 year | 21,130,774 | 15,929,888 | | 1 - 2 years | 10,349,756 | 15,384,365 | | 2 - 5 years | 46,463,461 | 35,377,689 | | More than 5 years | 65,305,531 | 59,879,041 | | Total Undiscounted Cash Flow | 143,249,522 | 126,570,983 | 4.3 Credit Risk Management No significant changes occurred in the company's credit risk management policies during the six-month period ended June 30, 2024 - No significant changes in credit risk management policies compared to December 31, 2023[57] 4.4 Market Risk Management The company maintained market risk management policies, using hedges for exchange rate risk, with sensitivity analyses showing potential impacts from currency and interest rate fluctuations - No significant changes in market risk management policies and procedures compared to December 31, 2023[58] - The Company uses US$ selling transactions in futures markets and extraordinary hedges for the Cerrado Project (up to US$1,500,000 thousand) to manage exchange rate risk[59][64] Assets and Liabilities Exposed to Foreign Currency (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Assets | 16,395,350 | 21,931,037 | | Liabilities | (78,233,239) | (64,925,164) | | Net Exposure | (61,837,889) | (42,994,127) | Sensitivity Analysis – Foreign Exchange Rate Exposure (Non-Derivative, Effect on profit or loss, in thousands of R$) | Scenario | Cash and cash equivalents | Marketable securities | Trade accounts receivable | Trade accounts payable | Loans and financing | Liabilities for asset acquisitions and subsidiaries | | :--------- | :------------------------ | :-------------------- | :------------------------ | :-------------------- | :------------------ | :------------------------------------------------ | | Probable (base value) | 5,149,219 | 2,811,914 | 5,393,033 | (1,200,975) | (71,901,265) | (150,121) | | Possible (25% depreciation) | 1,287,305 | 702,979 | 1,348,258 | (300,244) | (17,975,316) | (37,530) | | Remote (50% depreciation) | 2,574,610 | 1,405,957 | 2,696,517 | (600,488) | (35,950,633) | (75,061) | Sensitivity Analysis – Foreign Exchange Rate Exposure (Derivative, Effect on profit or loss, in thousands of R$) | Scenario | Derivative options | Derivative swaps | Derivative NDF Contracts | Embedded derivatives | NDF parity derivatives (Dollar/Real) | Commodity Derivatives | NDF parity derivatives (Dollar/Euro) | | :--------- | :----------------- | :--------------- | :----------------------- | :------------------- | :----------------------------------- | :-------------------- | :----------------------------------- | | Probable (base value) | (1,333,266) | (589,917) | (77,902) | 66,945 | 9,371 | 77,059 | 9,371 | | Possible 25% | (6,410,594) | (2,262,706) | (318,622) | (155,851) | (154,754) | 19,264 | (93,190) | | Remote 50% | (14,619,086) | (4,443,068) | (671,020) | (311,701) | (273,597) | 38,528 | (192,420) | Sensitivity Analysis – Interest Rate Exposure (Non-Derivative, Effect on profit or loss, in thousands of R$) | Scenario | Cash and cash equivalents (CDI/SELIC) | Marketable securities (CDI/SELIC) | Loans and financing (CDI/SELIC) | Loans and financing (TJLP) | Loans and financing (SOFR) | | :--------- | :------------------------------------ | :-------------------------------- | :------------------------------ | :------------------------- | :------------------------- | | Probable | 1,952,958 | 11,208,299 | 9,240,306 | 224,140 | 24,015,749 | | Possible (25%) | (50,777) | (291,416) | 292,225 | 3,922 | 323,942 | | Remote (50%) | (101,554) | (582,832) | 584,449 | 7,845 | 647,885 | Sensitivity Analysis – Interest Rate Exposure (Derivative, Effect on profit or loss, in thousands of R$) | Scenario | Derivative options (CDI) | Derivative swaps (CDI) | Derivative swaps (SOFR) | | :--------- | :----------------------- | :--------------------- | :---------------------- | | Probable | (1,333,266) | (589,917) | (589,917) | | Possible 25% | (662,127) | (80,807) | (143,819) | | Remote 50% | (1,317,419) | (158,606) | (275,609) | Sensitivity Analysis – US-CPI Changes (Effect on profit or loss, in thousands of R$) | Scenario | Embedded derivative in a commitment to purchase standing wood | | :--------- | :------------------------------------------------------------ | | Probable (base value) | 66,945 | | Possible (25%) | (33,119) | | Remote (50%) | (68,055) | - The Company is exposed to commodity prices, mainly pulp and international oil prices, and monitors future trends to adjust forecasts and assist with preventive measures[77][78][79] 4.5 Derivative Financial Instruments Derivative fair values varied due to BRL depreciation and settlements, with the company using various instruments for operational, debt, and commodity hedging - The fair value of derivative contracts is estimated using market factors and data from third parties, with variations in H1 2024 explained by the depreciation of the Brazilian Real against the US$ and settlements[80][83] Outstanding Derivatives by Contract Type (Fair value in R$ thousands) | Instrument Type | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Operational hedges | (1,401,797) | 2,231,475 | | Debt hedges | (589,915) | (486,713) | | Commodity Hedge | 144,004 | 249,620 | | Total Fair Value | (1,847,708) | 1,994,382 | - The Company uses various derivative instruments including Swap CDI x Fixed US$, Swap IPCA x CDI, Swap SOFR x Fixed US$, Zero Cost Collar, NDF contracts, Swap US-CPI, Swap VLSFO/Brent, and Zero Cost Collar (Brent) for hedging operational, debt, and commodity risks[85] Fair Value Maturity Schedule (in thousands of R$) | Year | 06/30/2024 | 12/31/2023 | | :--- | :--------- | :--------- | | 2024 | 471,913 | 2,097,763 | | 2025 | (230,840) | 233,072 | | 2026 | (379,675) | (574,871) | | 2027 onwards | (1,709,106) | 238,418 | | Total | (1,847,708) | 1,994,382 | Fair Value Settled Amounts (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :-------------------- | :--------- | :--------- | | Operational hedge | 677,720 | 3,227,743 | | Commodity hedge | 63,904 | 80,516 | | Debt hedge | (1,424,411) | 251,027 | | Total Settled Amounts | (682,787) | 3,559,286 | 4.6 Fair Value Hierarchy Financial instruments are measured at fair value, categorized into Level 2 and Level 3, with no changes or transfers between levels in H1 2024 - Financial instruments are measured at fair value, categorized into Level 2 (derivative financial instruments, marketable securities) and Level 3 (other investments, biological assets)[89][90][91] - No changes between the 3 levels of hierarchy and no transfers between levels 2 and 3 for the six-month period ended June 30, 2024[89] Fair Value Hierarchy of Assets and Liabilities (in thousands of R$) | Category | Level 2 (06/30/2024) | Level 3 (06/30/2024) | Total (06/30/2024) | | :------------------------------------ | :------------------- | :------------------- | :----------------- | | Assets | | | | | At fair value through profit or loss | 18,699,634 | 0 | 18,699,634 | | At fair value through other comprehensive income | 0 | 31,364 | 31,364 | | Biological assets | 0 | 19,801,748 | 19,801,748 | | Total Assets | 18,699,634 | 19,833,112 | 38,532,746 | | Liabilities | | | | | At fair value through profit or loss | 5,732,329 | 0 | 5,732,329 | | Total Liabilities | 5,732,329 | 0 | 5,732,329 | 4.7 Cybersecurity Suzano maintains a Public Information Security Policy to manage cybersecurity risks, with no material incidents identified in H1 2024 - Suzano has a Public Information Security Policy to mitigate vulnerabilities and protect information and personal data[92] - No material incidents associated with cybersecurity were identified for the six-month period ended June 30, 2024[93] 4.8 Climate Change No significant changes occurred in climate change risks or sustainability strategy, and the Rio Grande do Sul distribution center was not materially impacted by floods - No significant changes in climate change risks and opportunities or sustainability strategy during the six-month period ended June 30, 2024[94] - The Company's distribution center in Cachoeirinha, Rio Grande do Sul, was not directly impacted by the April 2024 floods, and indirect impacts were not material[95][96] 4.9 Capital Management The company aims to strengthen its capital structure by maintaining appropriate financial leverage and mitigating risks, monitoring key indicators like net debt to Adjusted EBITDA - The main objective is to strengthen the Company's capital structure, aiming to maintain an appropriate level of financial leverage while mitigating risks[97] - The Company continuously monitors significant indicators, such as consolidated financial leverage (ratio of total net debt to Adjusted EBITDA)[97] 5 Cash and Cash Equivalents Cash and cash equivalents decreased by 13.17% to R$7.25 billion, comprising cash, bank balances, and local currency fixed-term deposits Cash and Cash Equivalents Breakdown Cash and cash equivalents decreased by 13.17% to R$7.25 billion, including cash, bank balances, and local currency fixed-term deposits Cash and Cash Equivalents (in thousands of R$) | Category | Average yield p.a. % | 06/30/2024 | 12/31/2023 | | :-------------------------- | :------------------- | :--------- | :--------- | | Cash and banks | 5.26% | 5,293,540 | 6,561,558 | | Fixed-term deposits (local currency) | 102.30% of CDI | 1,952,958 | 1,784,313 | | Total | | 7,246,498 | 8,345,871 | 6 Marketable Securities Marketable securities increased by 11.67% to R$14.82 billion, driven by local currency private and public securities, partially offset by foreign currency time deposits Marketable Securities Breakdown Marketable securities increased by 11.67% to R$14.82 billion, driven by local currency private and public securities, partially offset by foreign currency time deposits Marketable Securities (in thousands of R$) | Category | Average yield p.a. % | 06/30/2024 | 12/31/2023 | | :-------------------------- | :------------------- | :--------- | :--------- | | In local currency | | | | | Private funds | 109.95% of CDI | 1,372,479 | 1,295,296 | | Public Securities | IPCA + 5.90% | 794,800 | 0 | | Private Securities ("CDBs") | 101.97% of CDI | 9,381,743 | 4,150,313 | | CDBs - Escrow Account | 101.57% of CDI | 454,077 | 443,400 | | Foreign currency | | | | | Time deposits | 6.71% | 2,747,563 | 7,333,308 | | Other | | 64,351 | 44,969 | | Total | | 14,815,013 | 13,267,286 | 7 Trade Accounts Receivable Trade accounts receivable increased by 5.49% to R$7.22 billion, primarily from foreign customers, with significant factoring transactions and a slight decrease in expected credit losses 7.1 Breakdown of Balances Trade accounts receivable increased by 5.49% to R$7.22 billion, driven by foreign customers, with R$6.08 billion in derecognized factoring transactions Trade Accounts Receivable Breakdown (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Domestic customers (Third parties) | 1,787,948 | 1,785,157 | | Domestic customers (Related parties) | 73,977 | 45,650 | | Foreign customers (Third parties) | 5,393,033 | 5,049,609 | | Foreign customers (Related parties) | 315 | 0 | | Expected credit losses | (30,347) | (31,962) | | Total | 7,224,926 | 6,848,454 | - The Company carried out factoring transactions for R$6,081,569 thousand (R$4,273,623 thousand as of December 31, 2023) of customer receivables, derecognizing them from the balance sheet[102] 7.2 Breakdown of Trade Accounts Receivable by Maturity The majority of trade accounts receivable are current at R$6.15 billion, though overdue receivables, particularly in the 'Up to 30 days' category, increased Trade Accounts Receivable by Maturity (in thousands of R$) | Maturity | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Current | 6,150,528 | 5,904,402 | | Overdue (Up to 30 days) | 797,997 | 644,644 | | Overdue (From 31 to 60 days) | 135,966 | 57,395 | | Overdue (From 61 to 90 days) | 45,511 | 97,639 | | Overdue (From 91 to 120 days) | 31,552 | 40,533 | | Overdue (From 121 to 180 days) | 31,837 | 34,708 | | Overdue (From 181 days) | 31,535 | 69,133 | | Total | 7,224,926 | 6,848,454 | 7.3 Roll-forward of Expected Credit Losses Expected credit losses slightly decreased to R$30.35 million, primarily due to write-offs and provision reversals, partially offset by exchange rate variations Roll-forward of Expected Credit Losses (in thousands of R$) | Item | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Opening balance | (31,962) | (21,109) | | (Provisions)/Reversals, net | 3 | (35,202) | | Write-offs | 2,704 | 24,230 | | Exchange rate variations | (1,092) | 119 | | Closing balance | (30,347) | (31,962) | 7.4 Main Customers No single customer accounted for over 10% of net sales in pulp or paper segments, indicating a diversified customer base - As of June 30, 2024, no single customer was responsible for more than 10% of net sales in the pulp operating segment, and no main customers in the paper operating segment[106] 8 Inventories Total inventories increased by 19.84% to R$7.13 billion, driven by higher raw materials and finished goods, while estimated losses decreased Inventories Breakdown Total inventories increased by 19.84% to R$7.13 billion, primarily driven by higher raw materials (wood) and finished goods (pulp and paper) Inventories Breakdown (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Finished goods (Pulp) | 2,167,837 | 1,848,109 | | Finished goods (Paper) | 802,268 | 707,424 | | Work in process | 121,527 | 93,325 | | Raw materials (Wood) | 2,196,594 | 1,666,817 | | Operating supplies and packaging | 904,625 | 795,274 | | Spare parts and other | 1,005,012 | 931,052 | | Expected credit losses | (71,183) | (95,053) | | Total | 7,126,680 | 5,946,948 | 8.1 Roll-forward of Estimated Losses Estimated inventory losses decreased to R$71.18 million, primarily due to write-offs and reversals Roll-forward of Estimated Inventory Losses (in thousands of R$) | Item | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Opening balance | (95,053) | (105,989) | | Additions | (15,132) | (65,085) | | Reversals | 418 | 33,666 | | Write-offs | 38,584 | 42,355 | | Closing balance | (71,183) | (95,053) | 9 Recoverable Taxes Total recoverable taxes increased by 5.40% to R$2.38 billion, mainly due to PIS/COFINS and ICMS operations, with a decrease in the provision for loss on ICMS credits Recoverable Taxes Breakdown Total recoverable taxes increased by 5.40% to R$2.38 billion, mainly due to PIS/COFINS and ICMS operations, partially offset by a lower provision for ICMS credit losses Recoverable Taxes Breakdown (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | IRPJ/CSLL – prepayments and withheld taxes | 482,318 | 464,188 | | PIS/COFINS – on acquisitions of property, plant and equipment | 124,603 | 93,866 | | PIS/COFINS – operations | 740,609 | 699,717 | | PIS/COFINS – exclusions from ICMS | 435,676 | 443,210 | | ICMS – on acquisitions of property, plant and equipment | 425,342 | 432,793 | | ICMS – operations | 1,470,445 | 1,470,949 | | Reintegra program | 78,442 | 64,077 | | Other taxes and contributions | 57,855 | 45,821 | | Provision for loss on ICMS credits | (1,430,988) | (1,452,435) | | Total | 2,384,302 | 2,262,186 | 9.1 Roll-forward of Provision for Loss The provision for loss on ICMS credits decreased to R$1.43 billion, primarily due to reversals from the recovery of ICMS credits Roll-forward of Provision for Loss on ICMS Credits (in thousands of R$) | Item | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Opening balance | (1,452,435) | (1,103,807) | | Addition | (94,008) | (399,838) | | Write-off | 0 | 51,210 | | Reversal | 115,455 | 0 | | Closing balance | (1,430,988) | (1,452,435) | 10 Advances to Suppliers Advances to suppliers increased by 7.82% to R$2.54 billion, driven by forestry development programs and partnerships, with no changes in their characteristics Advances to Suppliers Breakdown Advances to suppliers increased by 7.82% to R$2.54 billion, driven by forestry development programs and partnerships, with no changes in their characteristics Advances to Suppliers (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Forestry development program and partnerships | 2,412,921 | 2,242,229 | | Advance to suppliers - others | 127,180 | 113,743 | | Total | 2,540,101 | 2,355,972 | - No changes in the characteristics of the advances to suppliers during the six-month period ended June 30, 2024[117] 11 Related Parties Transactions with related parties were conducted at specific prices, with an increase in assets and a significant decrease in liabilities, while management compensation rose due to long-term benefits 11.1 Balances Recognized in Assets and Liabilities and Amounts of Transactions During the Period Transactions with related parties were conducted at specific prices, resulting in increased assets and significantly decreased liabilities, primarily from reduced dividends and interest payable - Commercial and financial transactions with the controlling shareholder and Suzano Group companies were carried out at specific prices and conditions, in compliance with corporate governance practices[118] Related Party Balances and Transactions (in thousands of R$) | Category | Assets (06/30/2024) | Assets (12/31/2023) | Liabilities (06/30/2024) | Liabilities (12/31/2023) | Sales (purchases), net (06/30/2024) | Sales (purchases), net (06/30/2023) | | :------------------------------------ | :------------------ | :------------------ | :----------------------- | :----------------------- | :---------------------------------- | :---------------------------------- | | Transactions with majority shareholders | 6 | 24 | 0 | (619,579) | 22 | 22 | | Transactions with companies of the Suzano Group and other related parties | 78,267 | 50,297 | (5,810) | (1,023) | 84,957 | 108,083 | | Total | 78,273 | 50,321 | (5,810) | (620,602) | 84,979 | 108,105 | - No material changes in the terms of agreements or new contracts of a different nature were entered into with related parties during the period[119] 11.2 Management Compensation Total management compensation increased by 53.44% to R$64.67 million, primarily driven by a significant rise in long-term share-based benefits Management Compensation (in thousands of R$) | Category | 06/30/2024 | 06/30/2023 | Change (R$) | Change (%) | | :-------------------------- | :--------- | :--------- | :---------- | :--------- | | Short-term benefits | 35,405 | 29,740 | 5,665 | 19.05% | | Long-term benefits | 29,261 | 12,407 | 16,854 | 135.84% | | Total | 64,666 | 42,147 | 22,519 | 53.44% | - Long-term benefits include the stock option plan and phantom shares for executives and key management members[124] 12 Income and Social Contribution Taxes The company calculates income and social contribution taxes based on statutory rates, benefits from tax incentives, and monitors OECD Pillar Two rules, with deferred tax assets significantly increasing Income and Social Contribution Taxes Overview The company calculates income and social contribution taxes based on statutory rates, benefits from tax incentives, and monitors OECD Pillar Two rules, with no material impact in H1 2024 - Income tax and social contribution taxes are calculated at 15% plus an additional 10% on taxable income exceeding R$240 thousand for IRPJ, and 9% for CSLL[125] - Deferred income and social contribution taxes are recognized at net amounts in non-current assets or liabilities[127] - The Company benefits from tax incentives for partial reduction of income tax in SUDENE and SUDAM jurisdictions[134] - The Company is monitoring the adoption of OECD Pillar Two model rules in various jurisdictions, with no material impact identified in H1 2024[137][138] 12.1 Deferred Taxes Deferred tax assets significantly increased to R$4.42 billion, primarily due to exchange rate variations and derivative losses, with substantial accumulated tax losses carried forward Deferred Income and Social Contribution Taxes (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Tax loss | 1,086,797 | 1,209,968 | | Negative tax basis of social contribution | 416,088 | 457,030 | | Assets - temporary differences | 8,902,490 | 5,085,164 | | Liabilities - temporary differences | (5,999,580) | (6,218,326) | | Non-current assets | 4,418,401 | 545,213 | Accumulated Tax Losses and Social Contribution Tax Losses Carried Forward (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Tax loss carried forward | 4,347,188 | 4,839,872 | | Negative tax basis of social contribution carried forward | 4,623,200 | 5,078,111 | Roll-forward of Deferred Tax Assets (in thousands of R$) | Item | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Opening balance | 533,836 | 3,985,297 | | Exchange rate variation | 2,849,131 | (1,913,350) | | Derivative (gains) losses ("MtM") | 1,306,311 | (668,926) | | Closing balance | 4,405,805 | 533,836 | 12.2 Reconciliation of the Effects of Income Tax and Social Contribution on Profit or Loss The company recorded a R$3.40 billion income tax and social contribution benefit, a significant change from prior-year expense, due to net loss and tax effects on permanent differences Reconciliation of Income Tax and Social Contribution Effects (in thousands of R$) | Item | 06/30/2024 | 06/30/2023 | | :------------------------------------ | :--------- | :--------- | | Net income (loss) before taxes | (6,947,851) | 14,380,751 | | Income tax and social contribution benefit (expense) at statutory nominal rate of 34% | 2,362,269 | (4,889,455) | | Tax effect on permanent differences | 1,017,293 | 815,768 | | Income and social contribution benefits (expenses) on the period | 3,402,366 | (4,060,335) | 12.3 Tax Incentives The company benefits from income tax reduction incentives in SUDENE and SUDAM regions, with maturities extending up to 2032 - The Company benefits from a tax incentive for partial reduction of income tax obtained from operations in SUDENE and SUDAM areas[134] Tax Incentives Maturity | Area/Regions | Company | Maturity | | :------------------------------------ | :------ | :------- | | Northeast Development Superintendence ("SUDENE") | | | | Eunápolis (BA) | Veracel | 2025 | | Aracruz (ES) | Portocel | 2030 | | Aracruz (ES) | Suzano | 2031 | | Imperatriz (MA) | Suzano | 2032 | | Mucuri (BA) | Suzano | 2032 | | Superintendence of Amazon Development ("SUDAM") | | | | Belém (PA) | Suzano | 2025 | 12.4 OECD Pillar Two Model Rules The company monitors OECD Pillar Two rules for a 15% global minimum tax, with no material impact identified on interim financial information despite being subject to them in some jurisdictions - The OECD Pillar Two model rules aim for a global minimum effective tax rate of 15% on profits for multinational economic groups with consolidated revenue above EUR750 million[136][137] - The Company is subject to OECD Pillar Two model rules in some European jurisdictions (e.g., Austria) from 2024, but no material impact was identified on the unaudited condensed consolidated interim financial information[138] 13 Biological Assets Biological assets increased by 8.34% to R$19.80 billion, driven by additions and fair value adjustments, measured using a complex Level 3 model sensitive to key premises Biological Assets Overview Biological assets increased by 8.34% to R$19.80 billion, driven by additions and fair value adjustments, measured using a complex Level 3 model sensitive to key premises Roll-forward of Biological Assets (in thousands of R$) | Item | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Opening balance | 18,278,582 | 14,632,186 | | Additions | 3,459,209 | 5,777,952 | | Depletions | (2,360,381) | (3,680,997) | | Gain on fair value adjustments | 539,003 | 1,989,831 | | Closing balance | 19,801,748 | 18,278,582 | - The fair value of biological assets is calculated using a complex model under Level 3 of the IFRS 13 hierarchy, with assumptions regarding average annual growth rate (IMA), discount rate, and average gross selling price of eucalyptus being particularly sensitive[139][140][141][147] Measurement Premises for Biological Assets | Premise | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Planted useful area (hectare) | 1,150,075 | 1,094,611 | | Average annual growth (IMA) – m³/hectare/year | 39.11 | 37.92 | | Average gross sale price of eucalyptus – R$/m³ | 103.41 | 96.04 | | Discount rate (post-tax) | 8.60 % | 8.80 % | - The Company manages financial and climate risks related to agricultural activities preventively through meteorological monitoring and specialized research for pest and disease control[145] 14 Investments Total investments increased by 8.01% to R$656.74 million, primarily due to growth in associates and joint ventures, which reported a net loss for the period 14.1 Investments Breakdown Total investments increased by 8.01% to R$656.74 million, primarily due to an increase in investments in associates and joint ventures Investments Breakdown (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Investments in associates and joint ventures | 396,487 | 355,520 | | Goodwill | 228,887 | 228,887 | | Other investments evaluated at fair value through other comprehensive income | 31,364 | 23,606 | | Total | 656,738 | 608,013 | 14.2 Investments in Associates and Joint Ventures Investments in associates and joint ventures increased to R$396.49 million, with the company's share in their income shifting to a R$3.51 million loss Investments in Associates and Joint Ventures (in thousands of R$) | Entity | Carrying amount (06/30/2024) | Carrying amount (12/31/2023) | Company Participation in Income (expenses) for the period (06/30/2024) | Company Participation in Income (expenses) for the period (06/30/2023) | | :------------------------------------ | :--------------------------- | :--------------------------- | :----------------------------------------------------------------------- | :----------------------------------------------------------------------- | | Ensyn Corporation (Associate) | 284 | 387 | (170) | (4,304) | | Spinnova Plc (Associate) | 97,658 | 95,736 | (9,065) | (6,706) | | Biomas (Joint venture) | 4,962 | 2,797 | (2,001) | (175) | | Ibema Companhia Brasileira de Papel (Joint venture) | 175,742 | 156,703 | 19,040 | 21,524 | | F&E Technologies LLC (Joint venture) | 5,726 | 4,987 | 0 | 0 | | Woodspin Oy (Joint venture) | 112,115 | 94,910 | (11,318) | (9,688) | | Other investments evaluated at fair value through other comprehensive income | 31,364 | 23,606 | 0 | (232) | | Total | 427,851 | 379,126 | (3,514) | 419 | 15 Property, Plant and Equipment Property, plant and equipment increased by 4.62% to R$62.03 billion, driven by additions to work in progress for the Cerrado Project, with R$17.12 billion pledged as collateral Property, Plant and Equipment Roll-forward Property, plant and equipment increased by 4.62% to R$62.03 billion, driven by significant additions to work in progress for the Cerrado Project Property, Plant and Equipment Roll-forward (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Balance at period end | 62,025,794 | 59,289,069 | | Additions | 4,438,062 | 11,281,141 | | Depreciation | (1,628,879) | (3,029,130) | | Work in progress | 20,669,640 | 17,485,109 | | Total | 62,025,794 | 59,289,069 | - The addition of work in progress refers mainly to the Cerrado Project[151] - No impairment test was needed, and no impairment provision was recorded for property, plant and equipment[151] 15.1 Items Pledged as Collateral Property, plant and equipment totaling R$17.12 billion were pledged as collateral for loan transactions and legal proceedings, mainly the Três Lagoas and Imperatriz units - Property, plant and equipment items totaling R$17,119,831 thousand (R$16,332,447 thousand as of December 31, 2023) were pledged as collateral for loan transactions and legal proceedings, mainly the Três Lagoas and Imperatriz units[152] 15.2 Capitalized Expenses The company capitalized R$802.52 million in loan costs for the Cerrado Project's property, plant and equipment, at a weighted average interest rate of 10.55% p.a - The Company capitalized R$802,515 thousand (R$1,160,364 thousand as of December 31, 2023) in loan costs, mainly related to property, plant and equipment in progress for the Cerrado Project[153] - The weighted average interest rate utilized to determine the capitalized amount was 10.55% p.a. (10.98% p.a. as of December 31, 2023)[153] 16 Intangible Goodwill and indefinite-lived intangible assets remained stable at R$8.19 billion with no impairment, while limited-lived intangible assets decreased due to amortization 16.1 Goodwill and Intangible Assets with Indefinite Useful Lives Goodwill and indefinite-lived intangible assets remained stable at R$8.19 billion, primarily allocated to Pulp and Paper segments, with no impairment identified Goodwill and Intangible Assets with Indefinite Useful Lives (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Goodwill - Facepa | 119,332 | 119,332 | | Goodwill - Fibria | 7,897,051 | 7,897,051 | | Goodwill - MMC Brasil | 170,859 | 170,859 | | Other | 4,834 | 4,834 | | Total | 8,192,076 | 8,192,076 | - Goodwill is allocated to cash-generating units (CGUs) within the Pulp and Paper segments[157][231] - No event indicated the need to perform an impairment test or record any impairment provision for intangible assets during the six-month period ended June 30, 2024[157] 16.2 Intangible Assets with Limited Useful Lives Intangible assets with limited useful lives decreased to R$6.14 billion, primarily due to amortization Intangible Assets with Limited Useful Lives (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Opening balance | 6,557,009 | 7,173,183 | | Additions | 84,566 | 104,931 | | Amortization | (499,814) | (990,432) | | Closing balance | 6,141,761 | 6,557,009 | Intangible Assets with Limited Useful Lives by Type (in thousands of R$) | Type | Average rate % | 06/30/2024 | 12/31/2023 | | :-------------------------- | :------------- | :--------- | :--------- | | Non-competition agreements | 5.00 | 4,661 | 4,818 | | Port concessions | 4.30 | 524,708 | 537,179 | | Customer portfolio | 9.10 | 4,515,389 | 4,925,879 | | Software | 20.00 | 164,336 | 141,178 | 17 Trade Accounts Payable Trade accounts payable decreased by 9.21% to R$5.06 billion, mainly in foreign and local currency third-party payables, despite ongoing balances for the Cerrado Project Trade Accounts Payable Breakdown Trade accounts payable decreased by 9.21% to R$5.06 billion, mainly in foreign and local currency third-party payables, despite ongoing balances for the Cerrado Project Trade Accounts Payable Breakdown (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | In local currency (Third party) | 3,852,174 | 3,946,185 | | In local currency (Related party) | 5,810 | 1,023 | | In foreign currency (Third party) | 1,200,975 | 1,625,011 | | Total | 5,058,959 | 5,572,219 | - The balance includes R$338,953 thousand (R$281,350 thousand at December 31, 2023) under supplier finance arrangements[159] - Balances related to the Cerrado Project were R$529,230 thousand in local currency and R$487,093 thousand in foreign currency at June 30, 2024[160] 18 Loans, Financing and Debentures Total loans, financing, and debentures increased by 14.84% to R$88.62 billion, primarily in foreign currency, with significant fundraising and exchange rate variations, and no restrictive financial covenants 18.1 Breakdown by Type Total loans, financing, and debentures increased by 14.84% to R$88.62 billion, driven by foreign currency bonds, export credits, and local currency debentures Loans, Financing and Debentures Breakdown by Type (in thousands of R$) | Type | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | In foreign currency | | | | Bonds | 47,042,691 | 40,964,374 | | Export credits ("export prepayments") | 20,413,945 | 17,178,143 | | Assets financing | 440,511 | 282,123 | | ECA - Export Credit Agency | 697,881 | 0 | | IFC - International Finance Corporation | 3,300,411 | 2,872,130 | | In local currency | | | | BNDES (various types) | 4,491,057 | 4,356,575 | | Assets financing | 84,455 | 88,272 | | NCE ("Export credit notes") | 102,854 | 103,114 | | NCR ("Rural producer certificates") | 2,294,392 | 2,100,009 | | Debentures | 9,750,351 | 8,428,743 | | Total | 88,624,374 | 77,172,692 | 18.2 Breakdown by Maturity – Non-Current Non-current loans, financing, and debentures totaled R$81.37 billion, predominantly long-term with R$40.27 billion maturing from 2030 onwards, largely in foreign currency Non-Current Loans, Financing and Debentures by Maturity (in thousands of R$) | Maturity | In foreign currency | In local currency | Total | | :--------- | :------------------ | :---------------- | :---- | | 2025 | 2,328,416 | 218,034 | 2,546,450 | | 2026 | 7,943,448 | 445,508 | 8,388,956 | | 2027 | 8,570,242 | 241,509 | 8,811,751 | | 2028 | 7,317,824 | 984,070 | 8,301,894 | | 2029 | 12,848,811 | 202,037 | 13,050,848 | | 2030 onwards | 26,348,020 | 13,926,233 | 40,274,253 | | Total | 65,356,761 | 16,017,391 | 81,374,152 | 18.3 Roll-forward of Loans, Financing and Debentures Loans, financing, and debentures saw a net increase due to R$10.93 billion in fundraising and R$9.38 billion in exchange rate variations, partially offset by settlements Roll-forward of Loans, Financing and Debentures (in thousands of R$) | Item | 06/30/2024 | 12/31/2023 | | :------------------------------------ | :--------- | :--------- | | Opening balance | 77,172,692 | 74,574,591 | | Fundraising, net of issuance costs | 10,934,280 | 10,944,794 | | Interest accrued | 2,545,932 | 4,797,094 | | Monetary and exchange rate variation, net | 9,383,027 | (4,185,675) | | Settlement of principal | (8,921,182) | (4,296,447) | | Settlement of interest | (2,529,991) | (4,728,998) | | Amortization of fundraising costs | 39,616 | 67,333 | | Closing balance | 88,624,374 | 77,172,692 | 18.4 Breakdown by Currency The majority of the company's loans, financing, and debentures, totaling R$71.90 billion (81.13%), are denominated in US Dollars Loans, Financing and Debentures Breakdown by Currency (in thousands of R$) | Currency | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Brazilian Reais | 16,723,109 | 15,868,019 | | US Dollars | 71,901,265 | 61,304,673 | | Total | 88,624,374 | 77,172,692 | 18.5 Fundraising Costs Fundraising costs are amortized based on agreement terms, with the balance to be amortized decreasing to R$428.37 million Fundraising Costs (in thousands of R$) | Type | Cost | Amortization | Balance to be amortized (06/30/2024) | Balance to be amortized (12/31/2023) | | :-------------------------- | :--- | :----------- | :----------------------------------- | :----------------------------------- | | Bonds | 434,970 | 263,645 | 171,325 | 164,825 | | NCE | 125,222 | 123,051 | 2,171 | 2,696 | | Export credits ("export prepayments") | 219,946 | 150,074 | 69,872 | 52,162 | | Debentures | 159,675 | 31,278 | 128,397 | 102,235 | | BNDES | 63,588 | 54,522 | 9,066 | 9,854 | | ECA - Export Credit Agency | 1,320 | (3,969) | 5,289 | 0 | | IFC - International Finance Corporation | 41,943 | 179 | 41,764 | 38,911 | | Others | 18,147 | 17,661 | 486 | 598 | | Total | 1,064,811 | 636,441 | 428,370 | 371,281 | 18.6 Guarantees Some loan and financing agreements are secured by property, plant and equipment, and the company does not have contracts with restrictive financial covenants - Some loan and financing agreements have guarantees clauses, with property, plant and equipment offered as collateral (Note 15.1)[167] - The Company does not have contracts with restrictive financial clauses (financial covenants)[167] 18.7 Relevant Transactions Entered Into During the Period Suzano engaged in significant fundraising, including a US$780 million export prepayment, R$5.9 billion in debentures, and a US$125 million facility from EDC - Raised an export prepayment of US$780,000 thousand (R$3,897,036 thousand) at SOFR + 1.65% p.a., maturing in February 2029[168] - Issued a Rural Credit Note of R$200,000 thousand at 100% of CDI, maturing in March 2025[169] - Secured US$125,000 thousand (R$694,862 thousand) from EDC at SOFR + 1.74%, maturing in April 2031[170] - Issued simple, non-convertible debentures totaling R$5,900,000 thousand across three series with varying costs (CDI + 0.80% p.a., CDI + 1.00% p.a., IPCA + 6.11% p.a.) and maturities up to May 2036[171] - Obtained R$65,000 thousand from BNDES, indexed by TLP (5.56% p.a.) plus 1.75% p.a. fixed interest, maturing in December 2043[172] - Rolled over ACCs of US$100,000 thousand and US$35,000 thousand, and raised a new ACC of US$15,000 thousand, all indexed at fixed rates with maturities in 2025[173][174] 18.8 Significant Transactions Settled During the Period The company partially settled a US$620 million pre-export facility and early settled a R$4.93 billion debenture as part of its debt management strategy - Partially settled a pre-export facility of US$620,000 thousand (R$3,209,057 thousand), with the residual amount maintaining its original maturity in February 2026[175] - Early settled a debenture with Bradesco bank totaling R$4,926,631 thousand (principal and interest) as part of a debt rollover strategy[176] 19 Leases Right-of-use assets slightly decreased to R$5.15 billion due to depreciation, while lease liabilities increased by 5.70% to R$6.60 billion due to financial charges and exchange rate variations 19.1 Right of Use Right-of-use assets slightly decreased to R$5.15 billion due to depreciation and write-offs from contract cancellations, partially offset by additions Roll-forward of Right of Use Assets (in thousands of R$) | Category | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Balances at period end | 5,153,462 | 5,196,631 | | Additions/updates | 326,682 | 813,909 | | Depreciation | (366,991) | (707,707) | | Write-offs | (2,860) | (18,797) | - The amount of depreciation related to land is substantially reclassified to biological assets to make up the formation costs[177] 19.2 Lease Liabilities Lease liabilities increased by 5.70% to R$6.60 billion, mainly due to accrual of financial charges and exchange rate variations, partially offset by payments Lease Liabilities Breakdown by Nature (Present value, in thousands of R$) | Nature of agreement | Average rate - % p.a. | Maturity | Present value of liabilities | | :-------------------------- | :-------------------- | :------- | :--------------------------- | | Lands and farms | 12.27 | Dec/2051 | 3,801,227 | | Machinery and equipment | 11.19 | Apr/2035 | 265,062 | | Buildings | 10.75 | Sep/2031 | 120,910 | | Ships and boats | 11.25 | Feb/2039 | 2,411,937 | | Vehicles | 11.10 | Nov/2028 | 5,216 | | Total | | | 6,604,352 | Roll-forward of Lease Liabilities (in thousands of R$) | Item | 06/30/2024 | 12/31/2023 | | :-------------------------- | :--------- | :--------- | | Opening balance | 6,243,782 | 6,182,530 | | Additions | 326,682 | 813,909 | | Payments | (633,211) | (1,218,399) | | Accrual of financial charges | 340,454 | 664,651 | | Exchange rate variations | 329,505 | (180,112) | | Closing balance | 6,604,352 | 6,243,782 | 19.2.1 Amounts Recognized in the Statement of Income for the Period Expenses for short-term and low-value assets recognized in the income statement totaled R$3.95 million for the six months ended June 30, 2024 Lease Expenses Recognized in Income Statement (in thousands of R$) | Category | 06/30/2024 | 06/30/2023 | | :-------------------------- | :--------- | :--------- | | Expenses relating to short-term assets | 2,578 | 5,559 | | Expenses relating to low-value assets | 1,376 | 946 | | Total | 3,954 | 6,505 | 20 Provision for Judicial Liabilities Total provision for judicial liabilities remained stable at R$2.86 billion, covering various proceedings, with R$14.81 billion in identified contingencies with possible losses 20.1 Roll-forward and Changes in the Provisions for Probable Losses Based on the Nature of the Proceedings, Net of Judicial Deposits Total provision for judicial liabilities, net of deposits, remained stable at R$2.86 billion, reflecting ongoing legal proceedings across various categories Roll-forward of Provisions for Probable Losses (Net of Judicial Deposits, in thousands of R$) | Category | Tax and social security | Labor | Civil, environment and real estate | Contingent liabilities assumed | Total | | :------------------------------------ | :---------------------- | :---- | :------------------------------- | :----------------------------- | :---- | | Provision balance at the beginning of the period | 468,839 | 349,058 | 139,435 | 2,155,545 | 3,112,877 | | Payments | (9,347) | (40,768) | (5,871) | 0 | (55,986) | | Reversal | 0 | (35,232) | 0 | (6,013) | (41,245) | | Additions | 417 | 72,363 | 16,132 | 0 | 88,912 | | Monetary adjustment | 12,805 | 10,672 | 682 | 0 | 24,159 | | Provision balance at the end of the period | 314,092 | 267,345 | 131,859 | 2,149,532 | 2,862,828 | 20.1.1 Tax and Social Security The company had 33 tax and social security proceedings as of June 30, 2024, with provisions recorded for probable losses - As of June 30, 2024, the Company had **33