Suzano S.A.(US:SUZ)2025-11-07 14:02Financial 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]