Suzano S.A.(SUZ) - 2022 Q4 - Annual Report

Financial Performance - Net sales revenue increased by 21.6%, or R$8,865.5 million, from R$40,965.4 million in 2021 to R$49,830.9 million in 2022, driven by a 24.2% increase in pulp prices and a 39.9% increase in paper prices in U.S. dollars[323][324] - Gross profit rose by 22.9%, or R$4,659.9 million, from R$20,349.8 million in 2021 to R$25,009.7 million in 2022, with a gross margin of 50.2% compared to 49.7% in 2021[330] - Operating profit before net financial income increased by 22.2%, or R$4,042.6 million, from R$18,180.2 million in 2021 to R$22,222.8 million in 2022, with an operating margin of 44.6%[335] - Net income for the year increased by 170.9%, or R$14,759.4 million, from R$8,635.5 million in 2021 to R$23,394.9 million in 2022[339] Costs and Expenses - Total cost of sales increased by 20.4%, or R$4,205.7 million, from R$20,615.6 million in 2021 to R$24,821.3 million in 2022, primarily due to higher input costs[329] - Selling expenses rose by 8.4%, or R$191.5 million, from R$2,291.7 million in 2021 to R$2,483.2 million in 2022, influenced by inflationary pressures on logistics costs[331] - General and administrative expenses increased by 8.4%, or R$131.9 million, from R$1,577.9 million in 2021 to R$1,709.8 million in 2022, mainly due to higher personnel expenses[332] Sales Prices - The average international net sales price of pulp increased by 24.2%, or US$148.1/ton, from US$613/ton in 2021 to US$761/ton in 2022[326] - The average international net paper sales price increased by 51.3%, or US$478.8/ton, from US$933.2/ton in 2021 to US$1,412.0/ton in 2022[328] Cash and Investments - As of December 31, 2022, the company's cash and cash equivalents were R$9,506.0 million, down from R$13,590.8 million in 2021, with 28% in reais and 72% in U.S. dollars[342] - The company reported net cash provided by operating activities of R$21,640.6 million for the year ended December 31, 2022, an increase of R$4,003.1 million compared to R$17,637.5 million in 2021[347] - Capital expenditures for the year ended December 31, 2022, totaled R$16,308.6 million, significantly higher than R$6,342.4 million in 2021, with R$7,367.1 million allocated to the Cerrado Project[350] - The approved capital expenditures budget for 2023 is R$18,494.8 million, reflecting increased investment in the Cerrado Project and other strategic initiatives[351] Debt and Financing - Total consolidated outstanding indebtedness as of December 31, 2022, was R$74,574.6 million, with R$3,335.0 million classified as current indebtedness[353] - The company has access to two Revolving Credit Facilities totaling US$1,275.0 million, with US$100.0 million available until February 2024 and US$1,175.0 million until February 2027[343] - The net cash used in investing activities for the year ended December 31, 2022, was R$17,015.8 million, compared to R$10,358.7 million in 2021[348] - Financing activities resulted in a net cash outflow of R$8,107.2 million for the year ended December 31, 2022, compared to R$1,573.9 million in 2021[349] Sustainability and Innovation - In 2022, the breeding team recommended new eucalyptus clones aiming to increase the gain in MAIcel (air dry ton of cellulose - adt/ha.year) above the current recommendation[398] - Approximately 2/3 of the breeding field trials were planted in the "Cerrado" region, supporting the identification of the best clones for future planting[399] - In 2022, Suzano submitted the first-ever dossier for commercial release of an Insect Resistant Eucalyptus, which effectively controls caterpillars, a key pest in the forest sector[402] - The new seedling protection collar technology is expected to save approximately 532 million liters of water for every 100,000 hectares planted[407] - In 2022, the Paper and Packaging R&D Team launched two new products: Mimmo Paperpack and Kraftliner, with Kraftliner responsible for 33% of total innovation sales[420] - Suzano Ventures was established with an initial outlay of US$ 70 million to invest in startups focused on bioeconomy solutions[417] - The company aims to enhance plantation productivity and sustainability through advanced biotechnology research, including gene editing and transformation[401] - In 2022, Suzano was recognized as one of the best companies in water resource management by the CDP, among 15,000 companies globally[407] Research and Development - The company has a total of 426 granted patents and patent applications, along with 54 protected varieties of eucalyptus[423] - In 2022, the company filed 2 new technology patents and identified 12 new Eucalyptus varieties for protection[424] - The Microfibrilated Cellulose (MFC) pilot plant in Finland started operations in 2021, with a demonstration plant producing textile filaments set to begin in 2023[413] Market Trends and Strategy - Key trends affecting sales include pulp purchase patterns by paper producers, pulp and paper prices, and global economic conditions[427] - The company is not reliant on third-party patents or licenses due to its investments in research and development[424]