6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of February, 2022.

Commission File Number 001-38755

Suzano S.A.

(Exact name of registrant as specified in its charter)

SUZANO INC.

(Translation of Registrant’s Name into English)

Av. Professor Magalhaes Neto, 1,752

10th Floor, Rooms 1010 and 1011

Salvador, Brazil 41 810-012

(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F x       Form 40-F ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨

Enclosures:

Exhibit 99.1 – Earnings Release for Fourth Quarter 2021.

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: February 09, 2022

	SUZANO S.A.
By:	/s/ Marcelo Feriozzi Bacci
Name:	Marcelo Feriozzi Bacci
Title:	Chief Financial Officer and Investor Relations Director

3

EX-99.1

Exhibit 99.1

 

New quarterly EBITDA record contributes

for highest EBITDA in history in 2021

Leverage down to 2.4x, lowest level post-merger

São Paulo, February 9, 2022. Suzano S.A. (B3: SUZB3 | NYSE: SUZ), one of the world’s largest integrated pulp and paper producers, announces today its consolidated results for the 4^th quarter of 2021 (4Q21).

HIGHLIGHTS

· Pulp sales of 2,722 thousand tons (+2% vs. 4Q20).

· Paper sales of 371 thousand tons (+5% vs. 4Q20).

· Adjusted EBITDA¹ and Operating cash generation²: R$6.4 billion and R$4.8 billion, respectively.

· Adjusted EBITDA¹/ton from pulp of R$2,114/ton (+59% vs. 4Q20).

· Adjusted EBITDA¹/ton³ from paper of R$1,619/ton (+32% vs. 4Q20).

· Average net pulp price in export market: US$630/ton (+38% vs. 4Q20).

· Average net paper price³ of R$5,109/ton (+24% vs. 4Q20).

· Pulp cash cost ex-downtime of R$747/ton (+20% vs. 4Q20).

· Leverage down to 2.4 times in USD and 2.5 times in BRL.

Financial Data (R$ million)	4Q21			3Q21			Δ Q-o-Q			4Q20			Δ Y-o-Y			2021			2020			Δ Y-o-Y
Net Revenue		11,470			10,762			7	%		8,013			43	%		40,965			30,460			34	%
Adjusted EBITDA1		6,355			6,310			1	%		3,965			60	%		23,471			14,949			57	%
Adjusted EBITDA Margin1		55	%		59	%		-3 p.p.			49	%		6 p.p.			57	%		49	%		8 p.p.
Net Financial Result		(2,657	)		(7,765	)		-66	%		6,238			-			(9,347	)		(26,086	)		-64	%
Net Income		2,313			(959	)		-			5,914			-61	%		8,636			(10,715	)		-
Operating Cash Generation2		4,809			5,204			-8	%		2,981			61	%		18,819			11,543			63	%
Net Debt /Adjusted EBITDA1 (x) - R$		2.5 x			2.8 x			-0,3 x			4.3 x			-1.8 x			2.5 x			4.3 x			-1.8 x
Net Debt /Adjusted EBITDA1 (x) - US$		2.4 x			2.7 x			-0,3 x			4.2 x			-1.8 x			2.4 x			4.2 x			-1.8 x

Operational Data ('000 tons)	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y
Sales		3,093		3,010		3	%		3,017		3	%		11,880		12,000		-1	%
Pulp		2,722		2,673		2	%		2,663		2	%		10,586		10,823		-2	%
Paper3		371		336		10	%		354		5	%		1,294		1,177		10	%

¹Excluding non-recurring items. | ²Considers Adjusted EBITDA less sustaining capex (cash basis). | ³Considers the results of the Consumer Goods Unit.

 

 

The consolidated financial statements were prepared in accordance with the standards of the Securities and Exchange Commission of Brazil (CVM) and the Accounting Pronouncements Committee (CPC) and comply with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The operational and financial information is presented on a consolidated basis and in Brazilian real (R$). Note that the numbers may present discrepancies due to rounding. Non-financial data such as volume, quantity, average price and average quote in Brazilian real and U.S. dollar were not reviewed by independent auditors.

CONTENTS

EXECUTIVE SUMMARY	3
PULP BUSINESS PERFORMANCE	3
PULP SALES VOLUME AND REVENUE	3
PULP CASH COST	5
PULP SEGMENT EBITDA	7
OPERATING CASH FLOW FROM THE PULP SEGMENT	8
PAPER BUSINESS PERFORMANCE	9
PAPER SALES VOLUME AND REVENUE¹	9
OPERATING CASH FLOW FROM THE PAPER SEGMENT	12
FINANCIAL PERFORMANCE	12
NET REVENUE	12
CALENDAR OF SCHEDULED MAINTENANCE DOWNTIMES	13
COST OF GOODS SOLD	13
SELLING EXPENSES	13
GENERAL AND ADMINISTRATIVE EXPENSES	14
ADJUSTED EBITDA	14
FINANCIAL RESULT	15
DERIVATIVE OPERATIONS	16
NET INCOME (LOSS)	19
DEBT	19
CAPITAL EXPENDITURE	21
CERRADO PROJECT	21
OPERATING CASH GENERATION	22
FREE CASH FLOW	22
NET DEBT EVOLUTION (R$ million)	23
COVID-19	23
ESG	25
TOTAL OPERATIONAL EXPENDITURE - PULP	25
EVENTS SUBSEQUENT TO THE REPORTING PERIOD	25
CAPITAL MARKETS	26
FIXED INCOME	27
RATINGS	27
UPCOMING EVENTS	28
IR CONTACTS	28
APPENDICES	29
APPENDIX 1 - Operating Data	29
APPENDIX 2 – Consolidated Statement of Income and Goodwill Amortization	31
APPENDIX 3 – Consolidated Balance Sheet	32
APPENDIX 4 – Consolidated Statement of Cash Flow	33
APPENDIX 5 - EBITDA	34
APPENDIX 6 - Segmented Income Statement	36

Page 2 of 36

 

EXECUTIVE SUMMARY

The year 2021 presented the best results in our history, marked by important advances in our strategy. In a context of logistical restrictions in global chains and low availability of pulp in the market, the significant recovery in pulp prices and the strong sales volume were characteristic throughout the year, which supported a 59% growth in the EBITDA of this segment in 2021, despite pressure on the cash cost of production, largely affected by the global rise in commodity prices. In the paper segment, EBITDA was a record, driven by operational performance and a significant improvement in the business environment, despite higher costs.

With regard to financial management, throughout 2021 the Company reduced its net debt in USD by 15% and concluded the post-merger deleveraging cycle, ending the year with leverage of 2.4x in USD, measured by net debt/Adjusted EBITDA for the last twelve months. The significant drop in indebtedness associated with the increase in the liquidity position further strengthens Suzano's solid balance sheet for the new investment cycle related to the Cerrado Project, approved by the Board of Directors in October. The new plant will have a nominal capacity of 2.55 million tons, with an estimated start-up in the second half of 2024.

Regarding the ESG agenda, important advances continued to be made in the fourth quarter of the year, such as the Company's announcement of anticipating the carbon sequestration target of 40 million tons by 2025, previously scheduled for 2030. Still on this topic, Suzano actively participated in the 26th Conference of the United Nations on Climate Change in Glasgow, dedicating itself to contributing to discussions on various topics associated with the climate emergency. It is also worth mentioning the performance obtained in the CDP (Carbon Disclosure Project), in which Suzano advanced to an “A-“ grade in the 3 assessments (Water, Forest and Climate). In addition, Suzano was once again selected for the B3 Corporate Sustainability Index (ISE), which today includes 34 companies.

PULP BUSINESS PERFORMANCE

PULP SALES VOLUME AND REVENUE

The final quarter of the year witnessed strong global demand for pulp. In Europe and North America, demand for pulp was driven by solid performance by the paper segments. Tissue paper consumption followed the trend of recovery seen in 3Q21. The Printing and Writing segment remained buoyant on account of lower supply, since the ongoing global logistics crisis restricted imports, followed by an economic recovery by the demand. In China, after energy restrictions that affected the industry in September and October, paper production recovered, which, combined with the usual restocking ahead of the Chinese New Year and this year the Beijing Winter Olympics, reflected the recovery in prices since late November.

On the supply side, the increase in production resulting from new pulp projects, although below expectations, combined with the slowdown of the Chinese economy, had a negative effect on the price environment during the first half of the quarter. However, a scenario of unscheduled downtimes associated with even more challenging logistics chain contributed to a price recovery from the end of November. In Europe, the balance between supply and demand remained stable during the quarter. In this scenario, the PIX/FOEX indices for hardwood pulp decreased 13% in the Chinese market but remained stable at record-high levels in Europe compared to the previous quarter.

Moreover, the elevated gap between softwood and hardwood pulp prices continued, which encouraged the substitution of fibers. According to PIX/FOEX, the difference between softwood and hardwood pulp prices at the end of the quarter was US$120/t in Europe and US$179/t in China.

In this scenario, Suzano’s pulp sales totaled 2,722 thousand tons, up 2% from 3Q21 and 4Q20.

Page 3 of 36

 

Average net price in USD of pulp sold by Suzano was US$630/t, down 3% from 3Q21, while PIX/FOEX in China declined 13% during the period. Compared to 4Q20, the 38% increase was due to the upsurge in international pulp prices. Average net price in the export market was US$630/t (compared to US$654/t in 3Q21 and US$459/t in 4Q20).

 

Average net price in BRL was R$3,517/ton in 4Q21, increasing 3% from 3Q21, due to the 7% increase in average USD against BRL. Compared to the same period the previous year, average net price increased 43%, following the trend in international market prices.

Net revenue from pulp increased 5% from 3Q21, due to the appreciation of average USD against BRL (7%) and higher sales (+2%), partially offset by lower net price in USD (-3%). Compared to 4Q20, revenue increased 46% due to better price in USD (+38%), the 2% growth in sales volume and average USD appreciation against the BRL of 3%.

 

Page 4 of 36

 

PULP CASH COST

 

Cash cost excluding downtime in 4Q21 came to R$747/t, 5% higher than in 3Q21, due to: i) higher input costs, mainly on account of higher prices of chemicals (especially of caustic soda as a result of the increase in international prices and dioxide due to higher energy charges) and the impact of Brent energy prices (especially natural gas); and ii) the increase in wood costs on account of higher transport costs, largely caused by the hike in diesel prices. These effects were partially offset by better results from utilities due to the auction of additional energy offered to the electricity grid on account of the water crisis. Suzano benefited from its strategy in the energy market in a context of water crisis, with a greater impact on cash costs compared to the previous quarter.

Page 5 of 36

¹Excludes the impact of maintenance and administrative downtimes.

Cash cost excluding downtime in 4Q21 was 20% higher than in 4Q20, due to: i) the increase in input costs on account of higher energy prices (natural gas, and oil due to the rise in Brent prices), higher prices of chemicals (especially caustic soda due to the increase in international prices and chlorine dioxide due to the increase in energy costs) and higher expenses with packaging caused by the increase in steel prices; ii) higher wood costs resulting from higher diesel prices, which affected harvest and transportation; and iii) the increase in fixed costs due to the recognition of the impact of the COVID-19 pandemic, which was previously booked directly in COGS. These effects were partially offset by better results from utilities, as previously mentioned.

¹Excludes the impact of maintenance and administrative downtimes.

Page 6 of 36

 

Cash cost excluding downtime in 2021 was 14% higher than in 2020, due to higher costs of chemicals and energy inputs and wood, as well as fixed costs.

¹Based on cash cost excluding downtimes. Excludes energy sales.

PULP SEGMENT EBITDA

Pulp segment	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y
Adjusted EBITDA (R$ million)1		5,755		5,721		1	%		3,530		63	%		21,439		13,485		59	%
Sales volume (k ton)		2,722		2,673		2	%		2,663		2	%		10,586		10,785		-2	%
Pulp adjusted¹ EBITDA (R$/ton)		2,114		2,140		-1	%		1,326		59	%		2,025		1,250		62	%

¹Excludes non-recurring items.

Adjusted EBITDA from pulp remained stable in relation to 3Q21. The positive effects of higher average USD versus BRL (7%) and higher sales volume (2%) were offset by: i) lower average net price in USD (-3%); ii) higher cash COGS (higher cost of production, mainly due to the increase in commodity prices linked to raw materials, scheduled maintenance downtimes, higher volume and logistics costs, in turn due to FX and higher Brent); and iii) higher SG&A expenses, caused by the increase in selling expenses (due to higher Brent and logistics tariffs overseas, given the unfavorable scenario, exchange rate effect and higher sales volume) and in administrative expenses, which resulted from the increase in personnel expenses (variable compensation) and third-party services. The 1% decline in adjusted EBITDA per ton is due to the lower average net price, the increase in cash COGS and higher SG&A expenses, which were partially offset by the exchange rate effect.

Compared to 4Q20, the 63% increase in Adjusted EBITDA from pulp is mainly due to the 38% increase in average net price in USD, higher sales volume (+2%) and average USD appreciation vs. the BRL (+3%), partially offset by higher cash COGS (higher cost of production and increase in logistics costs, the latter linked to the increase in commodity prices – Brent and higher sales volume). Adjusted EBITDA per ton increased 59% on account of the price factor but was partially offset by the increase in cash COGS and the exchange rate effect.

Page 7 of 36

¹Excluding non-recurring items.

OPERATING CASH FLOW FROM THE PULP SEGMENT

Operating cash flow - Pulp (R$ million)	4Q21		3Q21		Δ Q-o-Q		4Q20		Δ Y-o-Y		2021		2020		Δ Y-o-Y
Adjusted EBITDA1	5,755		5,721		1	%	3,530		63	%	21,439		13,485		59	%
Maintenance Capex2	(1,417	)	(1,025	)	38	%	(894	)	59	%	(4,315	)	(3,124	)	38	%
Operating Cash Flow	4,338		4,696		-8	%	2,636		65	%	17,124		10,361		65	%

¹Excluding non-recurring items.

²Cash basis.

Page 8 of 36

 

Operating cash flow per ton in the pulp segment was 9% lower than in 3Q21, due to higher sustaining capex. Compared to 4Q20, the 61% increase is due to higher adjusted EBITDA per ton.

PAPER BUSINESS PERFORMANCE

The following data and analyses incorporate the joint results of the consumer goods and paper businesses.

PAPER SALES VOLUME AND REVENUE¹

The 2021 scenario demonstrated that the recovery in demand occurred in parallel with the evolution of vaccination that led to the return to schools, offices, in addition to other face-to-face activities. Additionally, due to logistical bottlenecks faced throughout the year, which caused restrictions in the supply of paper, there was pressure on logistical costs, as well as considerable increases in electricity and inputs. The combination of these factors led to increases in paper prices in the international and domestic markets.

According to data published by Brazil's Forestry Industry Association (IBÁ), demand for printing and writing in Brazil grew 6% compared to 4Q20. Comparing 2021 with 2020, paper demand for printing and writing increased 19% across Brazil.

It is estimated that in 4Q21, around 7% of total demand from the printing and writing segment was destined for sales to the cardboard packaging industry. However, in 2022, with the regularization of the supply of wood shavings in the market, there are uncertainties about the continuation of this use for the printing and writing paper line.

Without this application, domestic sales in the printing and writing segment in Brazil should have grown 8% in 2021 compared to 2020. In 4Q21 is expected to be stable in comparison with the 4Q20.

Demand for paperboard in Brazil grew 10% in 2021 compared to the previous year, while the comparison between 4Q21 and 4Q20, there was a 6% reduction, due to the comparison with a period of very high demand in 2020.

Consolidating both market segments (Suzano's accessible paper market), demand grew 16% in 2021 vs. 2020 and by 2% when comparing 4Q21 with the same period of the previous year.

Suzano's paper sales (printing and writing, paperboard and tissue) in the domestic market totaled 274 thousand tons in 4Q21, an increase of 15% from 3Q21 and 6% from 4Q20.

Paper sales in the international markets totaled 96 thousand tons, down 1% from 3Q21 but remaining stable in relation to 4Q20, and accounting for 26% of total sales in 4Q21.

Driven by the gradual economic recovery and favorable seasonality effects during the period in the domestic market, total paper sales in 4Q21 grew 10% in relation to 3Q21. In relation to 4Q20, total paper sales grew 5%.

Page 9 of 36

 

¹Includes the Consumer Goods Unit.

Average net price rose 3% from the previous quarter, marked by increases in the international market, despite the seasonality of the I&E segment, due to the greater mix destined to fulfill orders from the National Textbook Program (PNLD). In relation to 4Q20, the 24% increase was caused by price increases in the domestic and international markets across all segments.

Net revenue from paper¹ was R$1,894 million in 4Q21, an increase of 14% from 3Q21, resulting from the price increase and by higher sales volume. In relation to 4Q20, net revenue from paper grew 29% due to higher prices in both the domestic and international markets.

¹Includes the Consumer Goods Unit.

Page 10 of 36

PAPER SEGMENT EBITDA

Paper segment	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y
Adjusted EBITDA (R$ million)1		600		588		2	%		435		38	%		2,032		1,465		39	%
Sales volume (k ton)		371		336		10	%		354		5	%		1,294		1,177		10	%
Paper adjusted1 EBITDA (R$/ton)		1,619		1,748		-7	%		1,227		32	%		1,570		1,244		26	%

¹Excludes non-recurring items.

Adjusted EBITDA from paper increased 2% from 3Q21, mainly resulting from higher sales volume and price increases in international markets. Compared to 4Q20, adjusted EBITDA from paper increased 38%, mainly due to price increases across all product lines.

Adjusted EBITDA per ton declined 7%, mainly due to higher logistics and industrial costs, including the general downtime at the Suzano mill. This effect was partially offset by higher export market prices in 4Q21.

Page 11 of 36

 

OPERATING CASH FLOW FROM THE PAPER SEGMENT

Operating cash flow - Paper (R$ million)	4Q21			3Q21			Δ Q-o-Q			4Q20			Δ Y-o-Y			2021			2020			Δ Y-o-Y
Adjusted EBITDA1		600			588			2	%		435			38	%		2,032			1,465			39	%
Maintenance Capex2		(129	)		(80	)		61	%		(90	)		43	%		(336	)		(282	)		19	%
Operating Cash Flow		471			508			-7	%		345			37	%		1,696			1,183			43	%

¹Excludes non-recurring items.

²Cash basis.

Operating cash generation per ton in the paper segment was R$1,272/t in 4Q21, down 16% from 3Q21, due to higher Capex. In relation to 4Q20, the indicator was up 31%, driven by EBITDA growth.

FINANCIAL PERFORMANCE

NET REVENUE

Suzano’s net revenue in 4Q21 was R$11,470 million, 83% of which came from exports (vs. 83% in 3Q21 and 81% in 4Q20). Compared to 3Q21, the 7% growth in net revenue was due to the 7% appreciation of average USD versus BRL and higher sales volume (+3%), which was partially offset by the lower net average price of pulp. The 43% growth in consolidated net revenue compared to 4Q20 was driven by higher average net price of pulp in USD and of paper, the exchange rate effect (+3%) and growth in sales volume (+3%).

¹Does not include Portocel service revenue.

Page 12 of 36

 

CALENDAR OF SCHEDULED MAINTENANCE DOWNTIMES

¹Veracel is a joint operation between Suzano (50%) and Stora Enso (50%) with total annual capacity of 1,120 thousand tons.

²Includes integrated capacities and fluff.

COST OF GOODS SOLD

COGS (R$ million)	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y
COGS (Income statement)		5,693		5,300		7	%		4,884		17	%		20,616		18,966		9	%
Depreciation, depletion and amortization		1,568		1,482		6	%		1,531		2	%		5,988		5,773		4	%
Cash COGS		4,125		3,818		8	%		3,353		23	%		14,628		13,193		11	%
Sales volume		3,093		3,010		3	%		3,017		3	%		11,880		12,000		-1	%
Cash COGS/ton (R$/ton)		1,333		1,269		5	%		1,111		20	%		1,231		1,099		12	%

Cash COGS in 4Q21 totaled R$4,125 million, or R$1,333/ton. Compared to 3Q21, cash COGS increased 8%, chiefly due to: i) the higher cost of production, as mentioned earlier, including the greater impact from scheduled maintenance downtimes; ii) the increase in sales volume (+3%); (ii) the increase in average USD versus BRL; and iv) higher logistics costs on account of higher Brent prices. COGS per ton increased 5% due to the higher production and logistics costs (Brent), as well as the impact of downtimes, the exchange rate effect and logistics costs.

Compared to 3Q20, cash COGS increased 23%, chiefly due to the higher cash cost of production, higher Brent which affected logistics costs and higher sales volume (+3%). In relation to the same period last year, cash COGS per ton increased 20% due to the factors mentioned above.

SELLING EXPENSES

Selling expenses (R$ million)	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y
Selling expenses (Income Statement)		635		578		10	%		590		8	%		2,292		2,175		5	%
Depreciation, depletion and amortization		237		237		0	%		205		16	%		944		906		4	%
Cash selling expenses		398		341		17	%		385		3	%		1,348		1,269		6	%
Sales volume		3,093		3,010		3	%		3,017		3	%		11,880		12,000		-1	%
Cash selling expenses/ton (R$/ton)		129		113		14	%		128		1	%		114		106		8	%

Page 13 of 36

 

Cash selling expenses increased 17% in relation to 3Q21, mainly due to the increase in inland logistics expenses (Brent prices increase and higher logistics tariffs overseas, given the unfavorable scenario), increase in average USD against BRL (+7%) and growth in sales volume (+3%). Cash selling expenses per ton increased 14% mainly due to higher logistics expenses and the exchange rate effect, as mentioned above.

Compared to 4Q20, the 3% increase in cash selling expenses is mainly due to the increase in inland logistics expenses (Brent and higher logistics tariffs overseas, given the unfavorable scenario), higher sales volume (+3%) and appreciation of the average USD vs the BRL (+3%). Cash selling expenses per ton increased 1% due to the logistics effects mentioned above and the exchange rate effect.

GENERAL AND ADMINISTRATIVE EXPENSES

General and Administrative Expenses (R$ million)	4Q21	3Q21	Δ Q-o-Q		4Q20	Δ Y-o-Y		2021	2020	Δ Y-o-Y
General and Administrative Expenses	523	320	64	%	480	9	%	1,578	1,443	9	%
Depreciation, depletion and amortization	27	25	5	%	24	10	%	104	78	33	%
Cash general and administrative expenses	496	294	69	%	456	9	%	1,474	1,365	8	%
Sales volume	3,093	3,010	3	%	3,017	3	%	11,880	12,000	-1	%
Cash general and administrative expenses/t (R$/ton)	160	98	64	%	151	6	%	124	114	9	%

Compared to 3Q21, the 69% increase in cash general and administrative expenses is mainly due to higher personnel expenses (variable compensation) and third-party services. On a per-ton basis, these expenses increased 64% due to the same factors.

Compared to 4Q20, cash general and administrative expenses increased 9%, mainly due to higher expenses related to COVID-19 and to personnel expenses (despite the lower expenses with variable compensation). On a per-ton basis, the 6% increase is explained by the same factors.

Other operating income (expenses) amounted to an income of R$203 million in 4Q21, compared to R$19 million in 3Q21 and R$323 million in 4Q20. The increase in relation to 3Q21 is mainly due to the updated fair value of biological assets (which happens in the second and fourth quarters of each year). Compared to 4Q20, the decrease is mainly due to the above sales result and the lower impact of the updated fair value of biological assets, partially offset by the recognition of tax credits related to the right to exclude ICMS from the calculation basis of contributions to PIS and COFINS.

ADJUSTED EBITDA

Consolidated	4Q21		3Q21		Δ Q-o-Q		4Q20		Δ Y-o-Y		2021		2020		Δ Y-o-Y
Adjusted EBITDA (R$ million)1	6,355		6,310		1	%	3,965		60	%	23,471		14,949		57	%
Adjusted EBITDA1 Margin	55	%	59	%	-3 p.p.		49	%	6 p.p.		57	%	49	%	8 p.p.
Sales Volume (k ton)	3,093		3,010		3	%	3,017		3	%	11,880		11,962		-1	%
Consolidated Adjusted EBITDA1 (R$/ton)	2,055		2,097		-2	%	1,314		56	%	1,976		1,250		5	%

¹Excludes non-recurring items.

The 1% increase in Adjusted EBITDA in 4Q21 compared to 3Q21 is due to the 7% increase in average USD versus BRL and the growth in sales volume. These factors were partially offset by the increase in cash COGS per ton, the decline in average net price of pulp in USD and higher SG&A expenses, as mentioned earlier. Adjusted EBITDA per ton fell 2% due to the cost factor, lower price of pulp and higher SG&A expenses.

Compared to 4Q20, the 60% increase in Adjusted EBITDA was due to higher net average price of pulp in USD (+38%), average USD appreciation vs. the BRL (+3%) and sales growth, which was partially offset by the increase in cash COGS per ton. Adjusted EBITDA per ton increased 56% mainly due to the price factor and was partially offset by higher cash COGS per ton, as explained previously.

Page 14 of 36

 

FINANCIAL RESULT

Financial Result (R$ million)	4Q21		3Q21		Δ Q-o-Q		4Q20		Δ Y-o-Y		2021		2020		Δ Y-o-Y
Financial Expenses	(1,085	)	(1,213	)	-10	%	(974	)	11	%	(4,221	)	(4,459	)	-5	%
Interest on loans and financing (local currency)	(241	)	(180	)	34	%	(169	)	43	%	(699	)	(774	)	-10	%
Interest on loans and financing (foreign currency)	(673	)	(619	)	9	%	(594	)	13	%	(2,508	)	(2,904	)	-14	%
Capitalized interest1	14		4		238	%	1		-		19		11		75	%
Other financial expenses	(184	)	(418	)	-56	%	(212	)	-13	%	(1,033	)	(792	)	30	%
Financial Income	148		54		171	%	66		124	%	273		327		-17	%
Interest on financial investments	112		44		153	%	19		495	%	206		147		40	%
Other financial income	36		10		251	%	47		-24	%	67		181		-63	%
Monetary and Exchange Variations	(1,412	)	(4,078	)	-65	%	4,464		-		(3,801	)	(12,531	)	-70	%
Foreign exchange variations (Debt)	(1,722	)	(5,191	)	-67	%	4,850		-		(4,847	)	(13,365	)	-64	%
Other foreign exchange variations	310		1,113		-72	%	(387	)	-		1,046		835		25	%
Derivative income (loss), net2	(307	)	(2,529	)	-88	%	2,683		-		(1,597	)	(9,423	)	-83	%
Cash Flow hedge	(111	)	(1,077	)	-92	%	1,331		-		(717	)	(3,169	)	-77	%
Cerrado Project hedge	27		-		100	%	-		100	%	27		-		100	%
Debt hedge	(38	)	(1,303	)	-97	%	1,430		-		(511	)	(6,270	)	-92	%
Others3	(185	)	(149	)	24	%	(78	)	138	%	(396	)	17		-
Net Financial Result	(2,657	)	(7,765	)	-66	%	6,238		-		(9,347	)	(26,086	)	-64	%

¹ Capitalized interest due to work in progress.

²Variation in mark-to-market adjustment (4Q21: -R$6,452 million | 3Q21: -R$6,411 million), plus adjustments paid and received (4Q21 = -R$266 million).

³Includes commodity hedge and embedded derivatives.

Financial expenses in the fourth quarter were 10% lower than in 3Q21, mainly due to the reduction in other financial expenses, since the premium of R$227 million on the full repurchase of Senior Notes 2024 negatively affected the 3Q21 result. This reduction was partially offset by the increase in interest on loans in local and foreign currency, as a result of the increase in the CDI in the quarter (from 6.15% to 9.15%) and the issuance of US$500 million in Senior Notes 2028 that took place in September. In comparison to the 4Q20, the 11% increase can be explained by the effect of the increase in the CDI and IPCA indexes on interest on loans in local currency (CDI from 1.9% in 4Q20 to 7.6% in 4Q21 and IPCA from 0.8% in the fourth quarter of 2020 to 1.1% in 2021). The increase in the foreign currency interest line refers mainly to the issuances of Senior Notes 2028 (US$500 million) and Senior Notes 2032 (US$1 billion).

Financial income grew 171% and 124% in relation to 3Q21 and 4Q20, respectively, due to the increase in the Company’s cash position and higher CDI rates.

Inflation adjustment and exchange rate variation of debt had a negative impact of R$1,722 million on the Company’s financial result due to the 3% decline in BRL versus closing USD rate on the foreign currency portion. Note that the accounting impact of exchange variation on foreign currency debt will have a cash impact only on the respective maturities.

Derivative operations resulted in a loss of R$307 million in 4Q21, mainly due to the effect of weaker BRL on debt hedge and cash flow transactions, despite the positive impact caused by the variation in the Pre, Coupon and Libor curves of these operations and other derivatives (embedded derivatives and commodities). The mark-to-market adjustment of derivative instruments on December 31, 2021 was an expense of R$6,452 million, compared to an expense of R$6,411 million on September 30, 2021, representing a negative variation of R$41 million. Note that the impact of BRL depreciation on the derivatives portfolio generates a cash impact only upon the respective maturities. The net effect on cash, which refers to the maturity of derivative operations in the fourth quarter, was an expense of R$266 million (R$159 million related to debt hedge and R$107 million to operating and commodity hedge).

As a result of the above factors, net financial result in 4Q21, considering all financial expense and income lines, was an expense of R$2,657 million, compared to an expense of R$7,765 million in 3Q21 and an income of R$6,238 million in 4Q20.

Page 15 of 36

 

DERIVATIVE OPERATIONS

Suzano carries out derivative operations exclusively for hedging purposes. The following table reflects the position of derivative hedging instruments on December 31, 2021.

	Notional (US$ million)				Fair Value (R$ million)
Hedge1	Dec/2021		Sep/2021		Dec/2021			Sep/2021
Debt		6,489		6,493		(6,286	)		(6,407	)
Cash Flow		3,999		3,733		(222	)		(106	)
Cerrado project		525		0		27			-
Others2		590		602		28			102
Total		11,604		10,827		(6,452	)		(6,411	)

¹See note 4 of the 4Q21 Quarterly Financial Statements (ITR) for further details and fair value sensitivity analysis.

²Hedging program referred to capex in BRL of the Cerrado Project.

³Includes commodity hedge and embedded derivatives.

The Company’s foreign exchange exposure policy seeks to minimize the volatility of its cash generation and to ensure greater flexibility in cash flow management. Currently, the policy stipulates that surplus dollars may be partially hedged (at least 40% and up to 75% of exchange variation exposure over the next 18 months) using plain vanilla instruments such as Zero Cost Collars (ZCC) and Non-Deliverable Forwards (NDF).

Considering the foreign exchange exposure related to the capital investment in the Cerrado Project, given that approximately 67% of CAPEX is pegged to local currency, the Board of Directors approved, on October 28, 2021, a program for contracting additional specific hedge operations to protect from such exposure. The approved program is provided for in the Derivatives Management Policy available on the Investor Relations website, has a maximum amount (notional) of up to 1 billion dollars and a term of operations of up to 36 months. In order to provide transparency on the Cerrado Project's hedging program, as of 4Q21, the Company will begin to prominently disclose the respective contracted operations.

ZCC transactions establish minimum and maximum limits for the exchange rate that minimize adverse effects in the event of significant appreciation of the BRL. As such, if the exchange rate is within such limits, the Company neither pays nor receives any financial adjustments. This characteristic allows for capturing greater benefits from export revenue in a potential scenario of USD appreciation versus BRL within the range contracted. Therefore, in cases of extreme BRL appreciation, the Company is protected by the minimum limits, which are considered appropriate for the operation. However, this protection instrument also limits, temporarily and partially, potential gains in scenarios of extreme BRL depreciation when exchange rates exceed the maximum limits contracted.

On December 31, 2021, the outstanding notional value of operations involving forward USD sales through ZCCs related to Cash Flows (including those related to the Cerrado Project) was US$4,494 million, with an average forward rate ranging from R$5.56 to R$6.61 and maturities distributed between January 2022 and August 2024. On the same date, the outstanding notional value of operations involving forward USD sales through NDFs was US$30 million, whose maturities are distributed in February 2022 and with an average rate of R$5.42. Cash Flow and Cerrado Project hedge operations in 4Q21 resulted in a loss of R$84 million. The mark-to-market adjustment (fair value) of ZCC transactions was a loss of R$188 million and for NDFs was a loss of R$7 million.

The following table presents a sensitivity analysis of the cash impact that the Company could have on its Cash Flow hedge portfolio (ZCC and NDF) if the exchange rate remains the same as at the end of 4Q21 (R$/US$ = 5.58) in the coming quarters, as well as the projected cash impact for R$0.10 variations above the strike of call options defined in each quarter. Note that the figures presented in the table are the Company’s projections based on the end-of-period curves and could vary depending on market conditions.

Page 16 of 36

 

					Cash Adjustment (R$ million)
Maturity (up to)	Strike Range		Notional (US$ million)		Actual		R$ / US$ = 5.58 (4Q21)			Sensitivity at R$ 0.10 / US$ variation (+/-)1
Zero Cost Collars – Cash Flow
4Q21		-		-		5		-			-
1Q22		5.37 - 6.10		731		-		10			(73	)
2Q22		5.33 - 6.06		971		-		3			(97	)
3Q22		5.34 - 6.07		528		-		3			(53	)
4Q22		5.40 - 6.36		448		-		11			(45	)
1Q23		5.63 - 7.12		672		-		68			(67	)
2Q23		5.93 - 7.24		620		-		218			(62	)
Total		5.49 - 6.47		3,969		5		313			(397	)
NDF – Cash Flow
4Q21		-		-		-		-			-
1Q22		5.42		30		-		(5	)		(3	)
Total		5.42		30		-		(5	)		(3	)
Zero Cost Collars – Cerrado Project
4Q21		-		-		-		-			-
2Q23		5.93 - 7.39		97		-		33			(10	)
3Q23		6.00 - 7.60		205		-		87			(21	)
4Q23		6.12 - 7.74		144		-		78			(14	)
1Q24		6.30 - 7.91		36		-		26			(4	)
2Q24		6.37 - 8.05		34		-		27			(3	)
3Q24		6.35 - 8.34		9		-		7			(1	)
Total		6.07 - 7.66		525		-		258			(53	)

¹Note: sensitivity of adjustments for exchange rates above the strike.

To mitigate the effects of exchange and interest rate variations on its debt and its cash flows, the Company also uses currency and interest rate swaps. Swap contracts are entered into considering different interest rates and inflation indices in order to mitigate the mismatch between financial assets and liabilities.

On December 31, 2021, the Company had an outstanding amount (notional value) of US$6,489 million in swap contracts as shown in the table below. In 4Q21, the result of debt hedge transactions was a loss of R$38 million, mainly due to the depreciation of BRL versus the USD in the period. The mark-to-market adjustment (fair value) of these operations was a loss of R$6,286 million.

					Notional (US$ million)				Fair Value (R$ million)
Debt Hedge	Maturity (up to)		Currency		Dec/2021		Sep/2021		Dec/2021			Sep/2021
Swap (PRÉ x USD)		2024		USD		350		350		(761	)		(734	)
Swap (CDI x USD)		2026		USD		2,267		2,267		(5,231	)		(5,106	)
Swap (IPCA x USD)		2023		USD		121		121		(149	)		(142	)
Swap (LIBOR x USD)		2027		USD		3,600		3,600		(396	)		(681	)
Swap (IPCA x CDI)		2023		BRL		1511		155		250			256
Total						6,489		6,493		(6,286	)		(6,407	)

¹Translated at the closing exchange rate (5.58).

The following table presents a sensitivity analysis¹ of the cash impact that the Company could have on its debt hedge portfolio (swaps) if the exchange rate remains the same as at the end of 4Q21 (R$/US$ = 5.58) in the coming quarters, as well as the projected variation in cash impact for each R$0.10 variation on the same reference exchange rate (4Q21). Note that the figures presented in the table are the Company’s projections based on the end-of-period curves and could vary depending on market conditions.

Page 17 of 36

		Cash Adjustment (R$ million)
Maturity (up to)	Notional (US$ million)	Actual			R$ / US$ = 5.58 (4Q21)			Sensitivity at R$ 0.10 / US$ variation (+/-)1
4Q21	-		(159	)		-		-
2022	737		-			(786	)	(59)
2023	2,169		-			357		(48)
2024	1,443		-			(370	)	(45)
2025	1,268		-			(1,347	)	(90)
>2026	873		-			(1,421	)	(85)
Total	6,489		(159	)		(3,567	)	(327)

¹Sensitivity analysis considers variation only in the exchange rate (R$/US$), while other variables are presumed constant.

Other transactions involving the Company’s derivatives are related to the embedded derivative resulting from forestry partnerships and commodity hedges, as shown in the table.

				Notional (US$ million)				Fair Value (R$ million)				Cash adjustment (R$ million)
Other hedges	Maturity (up tp)		Index	Dec/2021		Sep/2021		Dec/2021		Sep/2021		Dec/2021			Sep/2021
Embedded derivative		2035	Fixed Dollar | US-CPI Dollar		590		602		28		102		-			-
Commodities		2021	Brent/VLSFO/Other		-		-		-		-		(112	)		4
Total					590		602		28		102		(112	)		4

Forestry partnership agreements and wood supply agreements signed on December 31, 2013 are denominated in USD per cubic meter of standing timber, adjusted by U.S. inflation measured by the Consumer Price Index (CPI), which is not related to inflation in the economic environment where the forests are located and, hence, constitutes an embedded derivative. This instrument, which is presented in the table above, consists of a swap contract with the short leg consisting of the variations in the US-CPI during the period of the agreements mentioned below. See note 4 of the 4Q21 Financial Statements for more details and for a sensitivity analysis of the fair value in case of a sharp rise in the U.S. CPI. On December 31, 2021, the outstanding (notional) value of the operation was US$590 million. The result of this swap in 4Q21 was a loss of R$74 million. The mark-to-market (fair value) adjustment of these operations generated a gain of R$28 million at the end of the quarter.

The Company is also exposed to the price of some commodities and, therefore, continually assesses the contracting of derivative financial instruments to mitigate such risks.

On December 31, 2021, the Company did not have any open commodity hedge transactions. The result of these operations in 4Q21 was a loss of R$112 million.

Page 18 of 36

 

NET INCOME (LOSS)

In 4Q21, the Company posted net income of R$2,313 million, compared to net loss of R$959 million in 3Q21 and net income of R$5,914 million in 4Q20. The variation in relation to 3Q21 was largely due to the positive financial result which, in turn, was caused by the lower negative effect of exchange rate variation on debt and mark-to-market adjustment of derivative operations. Compared to 4Q20, the decrease of R$3,601 million in the net result mainly reflects the decline in financial result, which was partially offset by better operating results.

As the Company recorded net income in 2021 in the amount of R$8,626 million, the amount of R$913 million corresponds to the minimum mandatory dividend. Additionally, BRL 87 million is attributed to the existing profit reserve, distributed “ad referendum” by the Board of Directors on January 7, 2022, totaling BRL 1 billion, at the rate of BRL 0.741168104 per share of the Company, considering the number of “ex-treasury” shares for the year ended December 31, 2021.

DEBT

Debt (R$ million)	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y
Local Currency		13,641		13,364		2	%		14,740		-7	%
Short Term		1,849		1,831		1	%		541		242	%
Long Term		11,791		11,534		2	%		14,199		-17	%
Foreign Currency		65,988		63,783		3	%		58,160		13	%
Short Term		1,806		455		297	%		1,503		20	%
Long Term		64,182		63,328		1	%		56,657		13	%
Gross Debt		79,629		77,148		3	%		72,900		9	%
(-) Cash		21,349		18,930		13	%		9,232		131	%
Net debt		58,280		58,218		0	%		63,668		-8	%
Net debt/Adjusted EBITDA1(x) - R$		2.5x		2.8x		-0.3x			4.3x		-1.8x
Net debt/Adjusted EBITDA1(x) - US$		2.4x		2.7x		-0.3x			4.2x		-1.8x

¹Excluding non-recurring items.

On December 31, 2021, gross debt stood at R$79.6 billion and was composed of 95% long-term maturities and 5% short-term maturities. Foreign currency debt corresponded to 83% of the Company's total debt at the end of the quarter. The percentage of gross debt denominated in foreign currency, considering the effect of debt hedge, was 97%. Gross debt increased 3% (R$2.5 billion) in relation to 3Q21, mainly due to the depreciation of BRL against USD.

Suzano contracts debt in foreign currency as a natural hedge, since net operating cash generation is mostly denominated in foreign currency (U.S. dollar) due to its predominant status as an exporter. This structural exposure allows the Company to match loans and financing payments in USD with receivable flows from sales.

Gross Debt Evolution (R$ million)

 

*Corresponding mainly to transaction costs (issue, funding etc.).

Page 19 of 36

 

On December 31, 2020, the average cost of debt in U.S. dollar was 4.3% p.a. (considering debt in BRL adjusted by the market swap curve), the same average cost registered on September 30, 2021. The average term of consolidated debt at the end of the quarter was 89 months vs. 90 months at the end of September 2021.

 

¹Considers the portion of debt with currency swaps. The original debt was 83% denominated in USD and 17% in BRL.

²Considers the portion of debt with currency swaps. The exposure of the original debt was: Fixed (US$) – 60%, Libor – 23%, CDI – 11%, Other (Fixed R$, IPCA, TJLP, others) – 5%.

Cash and cash equivalents on December 31, 2021 amounted to R$21.3 billion, 74% of which were invested in foreign currency fixed-income and short-term investments. The remaining 26% was invested in local currency, in government and fixed-income bonds, remunerated at a percentage of the DI rate.

At the end of 2021, the Company also had a stand-by credit facility of R$2.8 billion (US$0.5 billion in foreign currency) available through February 2024. This facility helps improve the company's liquidity position and can be withdrawn during times of uncertainty. As a result, the cash and equivalents of R$21.3 billion plus the facility described above amounted at December 31, 2021 to a readily available cash position of R$24.1 billion.

 

On December 31, 2021, net debt stood at R$58.3 billion (US$10.4 billion), compared to R$58.2 billion (US$10.7 billion) on September 30, 2021. Net debt in BRL did not vary significantly between the third and fourth quarters, but net debt in USD decreased on account of exchange rate variation and cash flow generation during the period.

Financial leverage, measured as the ratio of net debt to Adjusted EBITDA in BRL, was 2.5 times on December 31, 2021 (2.8 times in 3Q21). The same ratio in USD, a measure established in Suzano’s financial policy, was 2.4 times on December 31, 2021 (2.7 times in 3Q21).

Page 20 of 36

The breakdown of gross debt between trade and non-trade finance on December 31, 2021 is shown below:

	2022			2023			2024			2025			2026			2027 onward			Total
Trade Finance1		26	%		0	%		97	%		59	%		52	%		9	%		27	%
Non Trade Finance2		74	%		100	%		3	%		41	%		48	%		91	%		73	%

¹ECN, EPP

²Bonds, BNDES, CRA, Debentures, among others.

CAPITAL EXPENDITURE

In 4Q21, capital expenditure (cash basis) totaled R$2,220 million, up 45% and 89% from 3Q21 and 4Q20, respectively, chiefly due to higher maintenance expenses (mostly on forestry maintenance and industrial projects due to maintenance downtimes expected for early 2022), as well as higher investments in the Cerrado Project and in modernization projects.

Capex in 2021 remained in line with the guidance earlier announced by the Company. For 2022, the Management approved a Capital Budget of R$13.6 billion, with R$5.0 billion allocated to industrial and forest maintenance and R$7.3 billion to the Cerrado Project, among others.

Investiments (R$ million)	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y			Guidance 2022
Maintenance		1,546		1,105		40	%		984		57	%		4,652		3,406		37	%		5,036
Industrial maintenance		333		154		117	%		271		23	%		778		608		28	%		1,265
Forestry maintenance		1,164		919		27	%		686		70	%		3,777		2,716		39	%		3,753
Others		49		32		51	%		28		76	%		97		83		17	%		18
Expansion and modernization		114		49		132	%		80		43	%		219		242		-10	%		489
Land and forestry		133		77		72	%		70		91	%		444		365		21	%		604
Port terminals		68		107		-36	%		17		302	%		279		120		132	%		119
Others		11		0		-			-		-			11		-		-			92
Cerrado Project¹		348		196		78	%		22		-			739		91		712	%		7,276
Total		2,220		1,535		45	%		1,173		89	%		6,342		4,225		50	%		13,616

¹Some capital expenditure items have been reclassified to better reflect the expenses that went to the Cerrado Project.

CERRADO PROJECT

The Cerrado Project schedule continues as planned, closing the year 2021 with the execution “inside the fence” (which corresponds to industrial and infrastructure investments) reaching a physical advance of 3%, a percentage that coincides with the respective financial disbursement. In 4Q21, we highlight the contracting of the chemical plant, the conclusion of the negotiation with the company Rumo as planned for the outflow of production via Malha Norte, the progress of earthworks reaching 80% of execution, among others.

Page 21 of 36

OPERATING CASH GENERATION

Operating cash flow - Consolidated (R$ million)	4Q21			3Q21			Δ Q-o-Q			4Q20			Δ Y-o-Y			2021			2020			Δ Y-o-Y
Adjusted EBITDA1		6,355			6,310			1	%		3,965			60	%		23,471			14,949			57	%
Maintenance Capex2		(1,546	)		(1,105	)		40	%		(984	)		57	%		(4,652	)		(3,406	)		37	%
Operating Cash Flow		4,809			5,204			-8	%		2,981			61	%		18,819			11,543			63	%
Operating Cash Flow (R$/ton)		1,555			1,729			-10	%		988			57	%		1,584			965			64	%

¹Excludes non-recurring items.

²Cash basis.

Operating cash generation, measured by adjusted EBITDA less sustaining capex (cash basis), amounted to R$4.8 billion in 4Q21. The decline in operating cash generation per ton in relation to 3Q21 is due to the higher sustaining capex per ton and lower adjusted EBITDA per ton. The 57% increase in relation to 4Q20 is due to the growth in adjusted EBITDA, as mentioned earlier, partially offset by higher sustaining capex per ton.

 

FREE CASH FLOW

Free Cash Flow (R$ million)	4Q21			3Q21			Δ Q-o-Q			4Q20			Δ Y-o-Y			2021			2020			Δ Y-o-Y
Adjusted EBITDA		6,355			6,310			1	%		3,965			60	%		23,471			14,949			57	%
(-) Total Capex1		(2,219	)		(1,724	)		29	%		(1,710	)		30	%		(6,243	)		(4,898	)		27	%
(-) Leases contracts		(314	)		(222	)		41	%		(247	)		27	%		(1,012	)		(824	)		23	%
(+/-) D Working capital		(1,383	)		98			-			717			-			(2,376	)		2,264			-
(-) Net interest2		(275	)		(1,365	)		-80	%		(321	)		-14	%		(3,116	)		(3,436	)		-9	%
(-) Income taxes		(24	)		(11	)		110	%		(58	)		-59	%		(106	)		(188	)		-44	%
(-) Dividend payment		(7	)		0			-			0			-			(10	)		0			-
(-) Derivative cash adjustment		(266	)		(221	)		20	%		(1,318	)		-80	%		(1,921	)		(4,466	)		-57	%
Free cash flow		1,867			2,864			-35	%		1,027			82	%		8,687			3,401			155	%
(+) Capex ex-maintenance		690			499			38	%		259			166	%		1,530			784			95	%
(+) Dividend payment		7			0			-			0			-			10			0			-
Free cash flow – Adjusted3		2,564			3,363			-24	%		1,286			99	%		10,227			4,185			144	%

¹Accrual basis.

²Considers interest paid on debt, interest received on financial investments and premiums paid resulting from liability management operations.

³Free cash flow prior to dividend payments and capex ex-maintenance (accrual basis).

Page 22 of 36

Adjusted free cash flow considering the adjustment for derivatives stood at R$2,564 million in 4Q21, as against R$3,363 million in 3Q21 and R$1,286 million in 4Q20. Compared to the previous period, free cash flow fell 24% due to lower working capital and higher Capex. These effects were partially offset by the lower concentration of net interest payments. With regard to working capital, note that the decline, especially in accounts receivable (decrease in receivables discount operations volume and increase in volume sold), was partially offset by the suppliers item.

Compared to 4Q20, the 92% increase was caused by the 60% growth in adjusted EBITDA and lower payments resulting from derivative adjustments, partially offset by the reduction in working capital (also due to accounts receivable, also explained by the delta in receivables discount operations).

NET DEBT EVOLUTION (R$ million)

The net debt between December 2020 and December 2021 evolution occurred as follows:

  

¹Considers amounts related to derivative adjustments, payment of leases, payment of dividends, costs due to liability management, among other items.

²Net of exchange variations on cash and financial investments.

³Accrual basis.

COVID-19

With the onset of the COVID-19 pandemic, popularly known as the new coronavirus, Suzano adopted and has maintained preventive and mitigatory measures in compliance with the rules and policies established by Brazilian and international health authorities to minimize the impacts of the pandemic on the safety of people, society and its business.

The Company’s actions are based on three pillars: (1) People; (2) Society; (3) Business Continuity.

(1) People: To ensure the safety of its employees and contractors who work in its operations, Suzano adopted a series of measures to mitigate their exposure and/or mitigate the risks of exposure.

(2) Society: One of Suzano’s three culture drivers is “It's only good for us if it's good for the world.” Accordingly, from the onset of the pandemic till now, the Company has taken a series of measures to protect society, including:

· Donation of tissue paper, napkins and disposable diapers produced by it to needy regions.

· Acquisition of 159 ventilators and 1 million medical masks for donation to the federal and state governments.

· Participation in a joint effort with Positivo Tecnologia, Klabin, Flextronics and Embraer to support the Brazilian company Magnamed in manufacturing ventilators, which were delivered to the Brazilian government. Suzano invested R$9.6 million in this action in 2020.

· Construction of a field hospital in Teixeira de Freitas, Bahia, jointly with Veracel, which was delivered to the state government and inaugurated in July 2020.

Page 23 of 36

 

· Partnership with the vocational school Fatec in Capão Bonito to produce hand sanitizer.

· Forklifts lent to transport the donations received by the Red Cross.

· Maintenance of all direct jobs.

· Maintenance for 90 days (until the end of June 2020) the payment of 100% of the payroll expenses of employees of service providers whose operations were suspended because of the pandemic, in order to protect jobs.

· Creation of a support program for small suppliers, a social program to help small farmers sell their produce via a home delivery system in 38 communities assisted by Suzano’s Rural Land Development Program (“PDRT”) in five states, and a social program to produce 125,000 masks in local communities for donation in five states.

· Launch of a support program for small and midsized paper clients called “We’re Together” to ensure that these companies have the financial and managerial capacity to resume operations.

· Support for the State Government of Maranhão in setting up the Imperatriz Temporary Hospital, donating R$3 million.

· Supply of 280,000 m³ of oxygen to the State of Amazonas.

· Construction of a new treatment center for COVID-19 in São Paulo in partnership with Gerdau, BTG Pactual, Península Participações and through joint efforts with Hospital Israelita Albert Einstein and the Municipal Government of São Paulo.

· Donation of oxygen concentrators, acquired in a joint effort involving Suzano, Bradesco, BRF, B3, Embraer, Gerdau, Grupo Ultra, Itaú Unibanco, Magazine Luiza, Marfrig, Natura & Co and Unipar, to the Health Ministry, which is tasked with the logistics of distributing the devices.

· Donation of 86,000 m³ of oxygen to the city of Imperatriz in Maranhão and 1,300 m³ to Aracruz in Espírito Santo.

· Joint efforts to accelerate the vaccination program for the Brazilian population through participation in the "Unidos pela Vacina" group, with the donation of cold rooms and thermal boxes, to municipalities in Bahia and Espírito Santo.

· Donation of basic food baskets and kits of individual protection equipment (masks, alcohol, aprons, caps and gloves) to municipalities.

In 2021, donations made in support of social actions implemented by Suzano totaled R$25 million (see Note 30 to the Financial Statements - Result by Nature).

(3) Business continuity: to date, the Company is maintaining its operations normally and has set up a crisis management committee that continues to function.

The pulp and paper sector was recognized by the World Health Organization (WHO) and diverse countries as a producer of essential goods for society. Hence, to meet the responsibility arising from the essential nature of its business, Suzano took measures to ensure, to the maximum extent possible, that it maintains its operations normally and meets its clients’ requirements by increasing the level of wood and raw material inventories at plants and expanding its inventories of finished products, besides reaching out to its clients to minimize any risks of stockout at plants along the logistics chain and guarantee the sale of their products.

The current scenario arising from COVID-19 also implies higher credit risk, especially among its paper clients. Therefore, the Company has been monitoring this risk and implementing measures to mitigate it. To date, there have been no significant financial impacts.

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As previously disclosed throughout 2020, the Company temporarily shut down its paper production lines at the Mucuri and Rio Verde mills for 30 days from April 27, 2020 and May 1, 2020, respectively. However, normal operations resumed at these mills in July 2020 and have been maintained since then.

Lastly, it is important to mention that in light of the current scenario, the Company has taken and maintained intensive communication efforts to further increase interactions with its main stakeholders in order to ensure adequate transparency and flow of information with them in a timely manner and in alignment with the current social and economic situation. All key updates on its measures and activities in the context of COVID-19 are available on the Company’s Investor Relations website.

The Company has also created a webpage with information on all its actions related to COVID-19: https://www.suzanocontraocoronavirus.com.br.

ESG

The final quarter of 2021, similar to previous quarters, was one of important advances in Suzano's strategic agenda related to ESG.

Aware that effective measures in the short term are essential for the Company’s efforts to combat the climate emergency, Suzano announced in October the decision to anticipate our Commitment to Renew Life by removing 40 million tons of CO2 from the atmosphere, previously planned until 2030 for the year 2025. The anticipation of the target by five years is supported by the expansion of vegetation cover, through commercial plantations and areas destined for conservation, in previously degraded and anthropized areas, especially in the Cerrado areas.

Still on the climate issue, in November, the Company was present at COP26, in Glasgow, dedicating itself to actively contributing to various discussions associated with the climate emergency.

During the quarter, the company launched the Inclusive Sourcing Program, which involved over 500 suppliers. The program is designed to engage the company’s supply chain in adopting diversity and inclusion practices in order to increase the number of historically marginalized groups among the company’s outsourced employees. The program is aligned with the Company’s Diversity and Inclusion Commitment.

4Q21 also registered important recognitions, with highlights for Suzano in the SustainAbility Leadership Survey ranking and in the report “The State of Child and Business Rights 2021” promoted by the Global Child Forum. It is also worth mentioning the Company's progress in the 3 CDP questionnaires, by evolving its scores in the 3 questionnaires (Water, Forest and Climate) from “B” to “A-“. Finally, the Company was again selected for B3's Corporate Sustainability Index (ISE).

TOTAL OPERATIONAL EXPENDITURE - PULP

As disclosed through a Material Fact notice on March 24, 2021, the estimated total operating expenditure for 2024 is approximately R$1,400/t, and the trend for the indicator remains as planned, considering the exchange and inflation assumptions used.

EVENTS SUBSEQUENT TO THE REPORTING PERIOD

On February 8, 2022, the Company concluded the contracting of a new revolving credit facility (stand-by credit facility), increasing the total available in revolving credit lines from US$500 million to US$1,275 million. Of the total contracted amount, US$100 million is available until February 2024, with this remaining amount of the line already in force since February 2019, in the original amount of US$500 million. The additional amount of US$1,175 million is available until February 2027 and has the same financial costs as the current line until February 2024.

Suzano's Bylaws establish the minimum mandatory dividend equivalent to the lower of 25% of net income after the constitution of legal reserves for the year or 10% of Operating Cash Generation (GCO) of the respective fiscal year, with CGO being the result of Adjusted EBITDA deducted from maintenance capex. As the Company recorded net income in 2021 in the amount of R$8,626 million, the amount of R$913 million corresponds to the minimum mandatory dividend. Additionally, R$87 million is attributed to the existing profit reserve, distributed “ad referendum” by the Board of Directors on January 7, 2022, totaling BRL 1 billion, at the rate of BRL 0.741168104 per share of the Company, considering the number of “ex-treasury” shares for the year ended December 31, 2021.

Page 25 of 36

 

CAPITAL MARKETS

On December 31, 2021, Suzano’s stock was quoted at R$60.11/share (SUZB3) and US$10.80/share (SUZ). The Company’s stock is listed on the Novo Mercado, the listing segment of the São Paulo Stock Exchange (B3 – Brasil, Bolsa e Balcão) with the highest corporate governance standards, and on the New York Stock Exchange (NYSE) - Level II.

 

Source: Bloomberg.

Source: Bloomberg.

On December 31, 2021, the Company's share capital was represented by 1,361,263,584 common shares, of which 12,042,004 were held in Treasury. Suzano’s market capitalization stood at R$81.8 billion on December 31, 2021. Free float in 4Q21 corresponded to 53% of the total capital.

Page 26 of 36

 

Free Float distribution on 12/31/2021
(B3 + NYSE) Ownership structure on 12/31/2021

 

FIXED INCOME

	Unit		Dec/21		Sep/21		Dec20		Δ Q-o-Q			Δ Y-o-Y
Fibria 2025 - Price		USD/k		105.23		107.02		107.46		-1.7	%		-2.1	%
Fibria 2025 - Yield		%		2.21		1.79		2.06		23.6	%		7.2	%
Suzano 2026 - Price		USD/k		114.31		116.49		117.63		-1.9	%		-2.8	%
Suzano 2026 - Yield		%		2.40		2.10		2.33		13.9	%		2.8	%
Fibria 2027 - Price		USD/k		112.26		114.49		114.48		-1.9	%		-1.9	%
Fibria 2027 - Yield		%		2.87		2.55		2.87		12.4	%		0.0	%
Suzano 2028 - Price		USD/k		96.81		97.84		-		-1.1	%		-
Suzano 2028 - Yield		%		3.03		2.84		-		6.5	%		-
Suzano 2029 - Price		USD/k		116.01		118.12		120.44		-1.8	%		-3.7	%
Suzano 2029 - Yield		%		3.42		3.19		3.10		7.1	%		10.1	%
Suzano 2030 - Price		USD/k		110.07		111.69		113.78		-1.4	%		-3.3	%
Suzano 2030 - Yield		%		3.55		3.37		3.23		5.3	%		9.9	%
Suzano 2031 - Price		USD/k		102.00		103.28		106.68		-1.2	%		-4.4	%
Suzano 2031 - Yield		%		3.49		3.34		2.98		4.6	%		17.3	%
Suzano 2032 - Price		USD/k		97.14		96.96		-		0.2	%		-
Suzano 2032 - Yield		%		3.46		3.48		-		-0.4	%		-
Suzano 2047 - Price		USD/k		127.06		131.75		134.32		-3.6	%		-5.4	%
Suzano 2047 - Yield		%		5.08		4.82		4.71		5.4	%		8.0	%
Treasury 10 years		%		1.51		1.49		0.91		1.6	%		65.4	%

Note: Senior Notes issued with face value of 100 USD/k

RATINGS

Agency	National Scale	Global Scale	Outlook
Fitch Ratings	AAA	BBB-	Stable
Standard & Poor’s	br.AAA	BBB-	Stable
Moody’s	Aaa.br	Baa3	Stable

Page 27 of 36

 

UPCOMING EVENTS

Earnings Conference Call (4Q21)

Date: February 10, 2022 (Thursday)

Portuguese (simultaneous translation)	English
10:00 p.m. (Brasília)	10:00 a.m. (Brasília)
8:00 a.m. (New York)	8:00 a.m. (New York)
1:00 p.m. (London)	1:00 p.m. (London)
Tel.: +55 (11) 4090-1621	Tel.: +1 844 204 8942

Please connect 10 minutes before the conference call is scheduled to begin.

The conference call will be held in English and feature a presentation, with simultaneous webcast. The access links will be available on the Company’s Investor Relations website (www.suzano.com.br/ri).

If you are unable to participate, the webcast link will be available for future consultation on the Investor Relations website of Suzano S.A.

Suzano Day

Date: March 30, 2022 (Wednesday)

IR CONTACTS

Marcelo Bacci

Camila Nogueira

Larissa Barbosa

Luísa Puccini

Mariana Dutra

Roberto Costa

Tel.: +55 (11) 3503-9330

ri@suzano.com.br

www.suzano.com.br/ir

Page 28 of 36

APPENDICES

APPENDIX 1 - Operating Data

Revenue breakdown (R$ '000)	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y
Exports		9,474,662		8,937,959		6	%		6,489,970		46	%		34,246,037		25,492,642		34	%
Pulp		8,907,877		8,443,713		5	%		6,093,525		46	%		32,376,399		23,968,816		35	%
Paper		566,785		494,246		15	%		396,445		43	%		1,869,638		1,523,826		23	%
Domestic Market		1,995,309		1,823,896		9	%		1,523,006		31	%		6,719,394		4,967,635		35	%
Pulp		668,082		656,579		2	%		453,450		47	%		2,338,809		1,609,449		45	%
Paper		1,327,227		1,167,317		14	%		1,069,556		24	%		4,380,585		3,358,186		30	%
Total Net Revenue		11,469,971		10,761,855		7	%		8,012,976		43	%		40,965,431		30,460,277		34	%
Pulp		9,575,959		9,100,292		5	%		6,546,975		46	%		34,715,208		25,578,265		36	%
Paper		1,894,012		1,661,563		14	%		1,466,001		29	%		6,250,223		4,882,012		28	%

Sales volume (‘000)	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y
Exports		2,627,747		2,564,315		2	%		2,556,991		3	%		10,160,467		10,411,557		-2	%
Pulp		2,531,366		2,467,203		3	%		2,460,736		3	%		9,789,129		10,036,495		-2	%
Paper		96,381		97,112		-1	%		96,255		0	%		371,338		375,062		-1	%
Paperboard		8,350		7,984		5	%		10,078		-17	%		34,935		62,816		-44	%
Printing & Writing		87,319		87,177		0	%		83,130		5	%		328,436		303,568		8	%
Other paper1		712		1,951		-64	%		3,047		-77	%		7,967		8,678		-8	%
Domestic Market		465,396		445,227		5	%		460,135		1	%		1,719,617		1,588,440		8	%
Pulp		191,054		205,813		-7	%		201,908		-5	%		796,708		786,621		1	%
Paper		274,342		239,414		15	%		258,227		6	%		922,909		801,819		15	%
Paperboard		39,917		42,516		-6	%		44,916		-11	%		163,621		138,937		18	%
Printing & Writing		199,978		164,647		21	%		182,526		10	%		637,761		538,861		18	%
Other paper1		34,447		32,251		7	%		30,785		12	%		121,527		124,021		-2	%
Total Sales Volume		3,093,143		3,009,542		3	%		3,017,126		3	%		11,880,084		11,999,997		-1	%
Pulp		2,722,420		2,673,016		2	%		2,662,644		2	%		10,585,837		10,823,116		-2	%
Paper		370,723		336,526		10	%		354,482		5	%		1,294,247		1,176,881		10	%
Paperboard		48,267		50,500		-4	%		54,994		-12	%		198,556		201,753		-2	%
Printing & Writing		287,297		251,824		14	%		265,656		8	%		966,197		842,429		15	%
Other paper1		35,159		34,202		3	%		33,832		4	%		129,494		132,699		-2	%

Average net price (R$/ton)	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y
Exports		3,606		3,486		3	%		2,538		42	%		3,371		2,448		38	%
Pulp		3,519		3,422		3	%		2,476		42	%		3,307		2,388		38	%
Paper		5,881		5,089		16	%		4,119		43	%		5,035		4,063		24	%
Domestic Market		4,287		4,097		5	%		3,310		30	%		3,907		3,127		25	%
Pulp		3,497		3,190		10	%		2,246		56	%		2,936		2,046		43	%
Paper		4,838		4,876		-1	%		4,142		17	%		4,746		4,188		13	%
Total		3,708		3,576		4	%		2,656		40	%		3,448		2,538		36	%
Pulp		3,517		3,405		3	%		2,459		43	%		3,279		2,363		39	%
Paper		5,109		4,937		3	%		4,136		24	%		4,829		4,148		16	%

Page 29 of 36

 

Average net price (US$/ton)	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y
Exports		646		667		-3	%		470		37	%		625		474		32	%
Pulp		630		654		-4	%		459		37	%		613		463		32	%
Paper		1,053		973		8	%		763		38	%		933		787		18	%
Domestic Market		768		784		-2	%		613		25	%		724		606		19	%
Pulp		626		610		3	%		416		50	%		544		397		37	%
Paper		867		933		-7	%		767		13	%		880		812		8	%
Total		664		684		-3	%		492		35	%		639		492		30	%
Pulp		630		651		-3	%		455		38	%		608		458		33	%
Paper		915		944		-3	%		766		19	%		895		804		11	%

¹ Paper of other manufacturers sold by Suzano and tissue paper.

FX Rate R$/US$	4Q21		3Q21		Δ Q-o-Q			4Q20		Δ Y-o-Y			2021		2020		Δ Y-o-Y
Closing		5.58		5.44		-1	%		5.20		7	%		5.58		5.20		7	%
Average		5.58		5.23		7	%		5.40		3	%		5.40		5.16		5	%

Page 30 of 36

APPENDIX 2 – Consolidated Statement of Income and Goodwill Amortization

Income Statement (R$ ‘000)	4Q21			3Q21			Δ Q-o-Q			4Q20			Δ Y-o-Y			2021			2020			Δ Y-o-Y
Net Revenue		11,469,971			10,761,855			7	%		8,012,976			43	%		40,965,431			30,460,277			34	%
Cost of Goods Sold		(5,692,988	)		(5,299,911	)		7	%		(4,883,644	)		17	%		(20,615,588	)		(18,966,331	)		9	%
Gross Debt		5,776,983			5,461,944			6	%		3,129,332			85	%		20,349,843			11,493,946			77	%
Gross Margin		50.4	%		50.7	%		0 p,p,			39.1	%		11 p,p,			49.7	%		37.7	%		12 p,p,
Operating Expense/Income		(1,022,752	)		(849,402	)		20	%		(718,307	)		42	%		(2,169,652	)		(3,050,552	)		-29	%
Selling Expenses		(634,921	)		(578,101	)		10	%		(590,024	)		8	%		(2,291,722	)		(2,174,652	)		5	%
General and Administrative Expenses		(522,761	)		(319,590	)		64	%		(479,906	)		9	%		(1,577,909	)		(1,443,192	)		9	%
Other Operating Income (Expenses)		202,841			18,830			977	%		322,883			-37	%		1,648,067			531,150			210	%
Equity Equivalence		(67,911	)		29,459			-331	%		28,740			-336	%		51,912			36,142			44	%
EBIT		4,754,231			4,612,542			3	%		2,411,025			97	%		18,180,191			8,443,394			115	%
Depreciation, Amortization & Depletion		1,832,940			1,745,487			5	%		1,761,660			4	%		7,041,663			6,772,780			4	%
EBITDA		6,587,171			6,358,029			4	%		4,172,685			58	%		25,221,854			15,216,174			66	%
EBITDA Margin (%)		57.4	%		59.1	%		-2 p,p,			52,1	%		5 p,p,			61,6	%		49,9	%		12 p,p,
Adjusted EBITDA1		6,355,317			6,309,558			1	%		3,964,926			60	%		23,470,923			14,949,489			57	%
Adjusted EBITDA Margin1		55,4	%		58,6	%		-3 p,p,			49,5	%		6 p,p,			57,3	%		49,1	%		8 p,p,
Net Financial Result		(2,657,320	)		(7,765,377	)		-66	%		6,238,407			-143	%		(9,347,234	)		(26,085,523	)		-64	%
Financial Expenses		147,622			54,444			171	%		65,889			124	%		272,556			327,475			-17	%
Financial Revenues		(1,085,450	)		(1,212,759	)		-10	%		(974,494	)		11	%		(4,221,301	)		(4,459,425	)		-5	%
Exchange Rate Variation		(1,412,237	)		(4,077,782	)		-65	%		4,463,515			-132	%		(3,800,827	)		(12,530,891	)		-70	%
Net Proceeds Generated by Derivatives		(307,255	)		(2,529,280	)		-88	%		2,683,497			-111	%		(1,597,662	)		(9,422,682	)		-83	%
Earnings Before Taxes		2,096,911			(3,152,835	)		-167	%		8,649,432			-76	%		8,832,957			(17,642,129	)		-150	%
Income and Social Contribution Taxes		216,556			2,193,460			-90	%		(2,735,081	)		-108	%		(197,425	)		6,927,194			-103	%
Net Income (Loss)		2,313,467			(959,375	)		-341	%		5,914,351			-61	%		8,635,532			(10,714,935	)		-181	%
Net Margin		20,2	%		-8,9	%		29 p,p,			73,8	%		-54 p,p,			21,1	%		-35,2	%		56,3 p,p,

¹ Excluding non-recurring items and PPA effects.

Goodwill amortization - PPA (R$ ‘000)	4Q21		3Q21		Δ Q-o-Q		4Q20		Δ Y-o-Y
COGS	(144,122	)	(149,176	)	-3	%	(2,668	)	-
Selling Expenses	(207,925	)	(207,763	)	0	%	(206,310	)	1	%
General and administrative expenses	(2,732	)	(1,844	)	48	%	(1,191	)	129	%
Other operational revenues (expenses)	(50,207	)	(18,886	)	166	%	(5,380	)	833	%
Financial results	(4,722	)	14,397		-		20,756		-123	%

Page 31 of 36

APPENDIX 3 – Consolidated Balance Sheet

Ativo (R$ mil)	31/12/2021			30/09/2021			31/12/2020
Current Assets
Cash and cash equivalents		13,590,776			13,461,967			6,835,057
Financial investments		7,508,275			5,228,075			2,212,079
Trade accounts receivable		6,531,465			4,577,069			2,915,206
Inventories		4,637,485			4,652,459			4,009,335
Recoverable taxes		360,725			427,987			406,850
Derivative financial instruments		470,261			515,204			484,043
Advance to suppliers		59,564			39,327			43,162
Dividends receivable		6,604			-			7,633
Other assets		937,786			783.943			731,291
Non-current assets held for sale		-			-			313,338
Total Current Assets		34,102,941			29,686,031			17,957,994
Non-Current Assets
Financial investments		250.054			240.329			184.778
Recoverable taxes		1.269.164			1.219.207			834.575
Deferred taxes		8.729.929			8.505.573			8.677.002
Derivative financial instruments		971.879			753.791			857.377
Advance to suppliers		1.282.763			1.220.625			1.015.115
Judicial deposits		300,715			322.879			257.789
Other assets		296,844			237.742			235.341
Biological assets		12,248,732			11,807,705			11,161,210
Investments		524,066			518,977			359,071
Property, plant and equipment		38,169,703			38,027,466			39,156,890
Right of use on lease agreements		4,794,023			4,593,241			4,344,078
Intangible		16,034,339			16,249,726			16,759,528
Total Non-Current Assets		84,872,211			83,697,261			83,842,754
Total Assets		118,975,152			113,383,292			101,800,748
Liabilities and Equity (R$ ´000)		12/31/2021			09/30/2021			12/31/2020
Current Liabilities
Trade accounts payable		3,288,897			2,966,600			2,361,098
Loans, financing and debentures		3,655,537			2,286,040			2,043,386
Accounts payable for lease operations		623,282			623,136			620,177
Derivative financial instruments		1,563,459			1,619,081			1,991,118
Taxes payable		339,553			346,285			170,482
Payroll and charges		590,529			549,949			492,728
Liabilities for assets acquisitions and subsidiaries		99,040			91,828			101,515
Dividends payable		919,073			11,173			6,232
Advance from customers		103,656			92,567			25,171
Other liabilities		368,198			359,754			360,916
Total Current Liabilities		11,551,224			8.946.413			8.172.823
Non-Current Liabilities
Loans, financing and debentures		75,973,092			74,861,856			70,856,496
Accounts payable for lease operations		5,269,912			5,030,297			4,571,583
Derivative financial instruments		6,331,069			6,061,046			6,126,282
Liabilities for assets acquisitions and subsidiaries		306,912			301,893			400,713
Provision for judicial liabilities		3,232,612			3,273,411			3,255,955
Actuarial liabilities		675,158			795,090			785,045
Deferred taxes		-			-			570
Share-based compensation plans		166,998			206,961			195,135
Advance from customers		149,540			165,439			-
Other liabilities		143,505			122,040			98,768
Total Non-Current Liabilities		92,248,798			90,818,033			86,290,547
Shareholders’ Equity
Share capital		9,235,546			9,235,546			9,235,546
Capital reserves		15,455			14,244			10,612
Treasury shares		(218,265	)		(218,265	)		(218,265	)
Retained earnings reserves		3,927,824			-			-
Other reserves		2,114,907			1,988,711			2,129,944
Retained loss		-			2,498,255			(3,926,015	)
Controlling shareholders´		15,075,467			13,518,491			7,231,822
Non-controlling interest		99,663			100,355			105,556
Total Equity		15,175,130			13,618,846			7,231,822
Total Liabilities and Equity		118,975,152			113,383,292			101,800,748

Page 32 of 36

  

APPENDIX 4 – Consolidated Statement of Cash Flow

Cash Flow (R$ ‘000)	4Q21			4Q20			2021			2020
Operating Activities
Net income (loss) for the year		2,313,467			5,914,351			8,635,532			(10,714,935	)
Depreciation, depletion and amortization		1,797,814			1,693,458			6,879,132			6,565,441
Depreciation of right of use		52,356			59,967			203,670			186,768
Sublease of ships		(12,508	)		(12,520	)		(44,706	)		(35,841	)
Interest expense on lease liabilities		110,084			113,516			427,934			397,746
Result from sale and disposal of property, plant and equipment and biological assets, net		79,772			(9,868	)		(412,612	)		(8,372	)
Income from associates and joint ventures		67,911			(28,740	)		(51,912	)		(36,142	)
Exchange rate and monetary variations, net		1,412,237			(4,463,515	)		3,800,827			12,530,891
Interest expenses with financing, loans and debentures, net		914,766			763,490			3,207,278			3,286,254
Premium expenses with early settlements		-			-			260,289			391,390
Capitalized loan costs		(13,564	)		(745	)		(18,624	)		(10,636	)
Accrual of interest on marketable securities		(102,912	)		(12,261	)		(178,320	)		(94,868	)
Amortization of fundraising costs		16,969			29,225			107,239			101,741
Derivative losses, net		307,255			(2,683,497	)		1,597,662			9,422,682
Fair value adjustment of biological assets		(198,558	)		(292,751	)		(763,091	)		(466,484	)
Deferred income tax and social contribution		(265,148	)		2,658,454			(94,690	)		(7,109,120	)
Interest on actuarial liabilities		13,963			13,286			55,849			53,092
Provision for judicial liabilities, net		7,685			14,046			65,318			1,288
Provision (reversal) for allowance for doubtful accounts, net		(6,322	)		812			(637	)		6,022
Provision for inventory losses, net		41,019			94,393			73,574			65,675
Provision (reversal) for loss of ICMS credits, net		(130,605	)		11,082			(99,183	)		(82,293	)
Tax credits		(72,915	)		-			(441,880	)		-
Other		6,527			9,538			26,449			35,451
Decrease (increase) in assets		(1,835,066	)		374,383			(3,916,667	)		2,250,235
Trade accounts receivables		(1,873,041	)		(131,789	)		(3,393,787	)		884,451
Inventories		1,980			91,186			(654,757	)		651,203
Recoverable taxes		224,013			397,545			186,013			659,930
Other assets		(188,018	)		17,441			(54,136	)		54,651
Increase (decrease) in liabilities		451,972			342,744			1,540,994			13,424
Trade accounts payables		446,195			339,174			1,363,478			140,480
Taxes payable		15,616			(88,437	)		271,700			47,212
Payroll and charges		40,580			13,985			97,792			92,278
Other liabilities		(50,419	)		78,022			(191,976	)		(266,546	)
Decrease (increase) in assets		4,956,199			4,588,848			20,859,425			16,749,409
Payment of interest with financing, loans and debentures		(319,897	)		(361,788	)		(2,953,573	)		(3,244,949	)
Payment of premium with early settlements		-			1			(260,289	)		(378,381	)
Interest received from marketable securities		44,771			40,702			98,110			186,853
Payment of income taxes		(24,024	)		(58,200	)		(106,180	)		(188,296	)
Cash provided by operating activities		4,657,049			4,209,563			17,637,493			13,124,636
Investing activities
Additions to property, plant and equipment		(966,366	)		(633,946	)		(2,150,584	)		(1,503,255	)
Additions to intangible		(69,733	)		(881	)		(285,278	)		(2,307	)
Additions to biological assets		(1,182,650	)		(1,075,672	)		(3,807,608	)		(3,392,298	)
Proceeds from sale of property, plant and equipment		105,460			94,690			1,411,251			183,504
Capital increase		-			-			(51,816	)		-
Marketable securities, net		(2,202,358	)		85,948			(5,216,921	)		3,841,493
Advance for acquisition (receipt) of wood from operations with development		(64,338	)		47,815			(257,672	)		135,693
Dividends received		-			-			6,453			753
Acquisition of non-controlling interests		-			-			(6,516	)		-
Cash used in investing activities, net		(4,379,985	)		(1,482,046	)		(10,358,691	)		(736,417	)
Fluxos de Caixa das Atividades de Financiamentos
Proceeds from loans, financing and debentures		203,282			4,178,624			16,991,962			14,761,796
Payment of derivative transactions		(265,997	)		(1,318,184	)		(1,921,253	)		(4,465,640	)
Payment of loans, financing and debentures		(61,495	)		(5,340,666	)		(15,469,423	)		(19,092,810	)
Payment of leases		(314,435	)		(247,118	)		(1,012,137	)		(824,245	)
Payment of dividends		(7,361	)		-			(9,683	)		-
Sale of treasury shares to meet stock-based compensation plan		(2,622	)		(13,058	)		(153,357	)		(164,240	)
Cash provided (used) by financing activities		(448,628	)		(2,740,402	)		(1,573,891	)		(9,785,139	)
Exchange Variation on Cash and Cash Equivalents		300,373			(399,242	)		1,050,808			982,850
Increase (decrease) in cash and cash equivalents, net		128,809			(412,127	)		6,755,719			3,585,930
At the beginning for the year		13,461,967			7,247,184			6,835,057			3,249,127
At the end for the year		13,590,776			6,835,057			13,590,776			6,835,057
Increase (decrease) in cash and cash equivalents, net		128,809			(412,127	)		6,755,719			3,585,930

Page 33 of 36

 

APPENDIX 5 - EBITDA

(R$ '000, except where otherwise indicated)	4Q21			4Q20			2021			2020
Net income		2,313,467			5,914,351			8,635,532			(10,714,935	)
Net Financial Result		2,657,320			(6,238,407	)		9,347,234			26,085,523
Income and Social Contribution Taxes		(216,556	)		2,735,081			197,425			(6,927,194	)
EBIT		4,754,231			2,411,025			18,180,191			8,443,394
Depreciation, Amortization and Depletion		1,832,940			1,761,660			7,041,663			6,772,780
EBITDA1		6,587,171			4,172,685			25,221,854			15,216,174
EBITDA Margin		57.4	%		52.1	%		61.6	%		50.0	%
Social actions and operating expenses COVID-19		1,376			54,884			25,285			190,698
Fair Value Update - Biological Asset		(198,558	)		(292,751	)		(763,091	)		(466,484	)
Ibema goodwill write-off		-			-			125			-
Write-off of Goodwill on Acquisition of Assets		-			45,435			-			45,435
Write-off of intangibles		57,901			-			57,901			-
Tax credits - exclusion of ICMS in the PIS and COFINS calculation basis		(72,915	)		-			(441,880	)		-
Transaction expenses with Fibria		-			59			-			992
Demobilization of machinery and equipment - FACEPA		-			-			-			199
PPA Effect (Write-Off)		-			5,290			-			26,378
Closing of the Mucuri Project		-			(1,005	)		-			29,679
Equity		67,911			(28,740	)		(51,912	)		(36,142	)
Expenses with ancillary obligations and termination of contracts		-			(1,008	)		-			1,071
Write-off of advance for forestry development program		-			-			2,702			-
Provision - Civil Contingency		32,763			-			32,763			-
Provision - Tax on the transfer of real estate for the regularization of land acquired prior to 2015		-			-			-			10,529
Provision - Complement of ICMS provision		-			4,363			-			2,808
Provision - ICMS credit loss		(130,605	)		5,714			(98,683	)		(70,756	)
Reversal - Provision of development (Project Losango)		-			-			(9,138	)		-
Income from the sale and disposal of property, plant and equipment and biological assets		10,274			-			(505,003	)		(1,092	)
Adjusted EBITDA		6,355,317			3,964,926			23,470,923			14,949,489
Adjusted EBITDA Margin		55.4	%		49.5	%		57.3	%		49.1	%

¹ The Company's EBITDA is calculated in accordance with CVM Instruction 527 of October 4, 2012.

Page 34 of 36

APPENDIX 6 - Segmented Income Statement 

Segmented Financial Statement (R$ '000)	4Q21									4Q20
	Pulp			Paper		Non Segmented		Total Consolidated		Pulp			Paper		Non Segmented		Total Consolidated
Net Revenue		9,575,959		1,894,012		-		11,469,971			6,546,975		1,466,001		-		8,012,976
Cost of Goods Sold		(4,527,352	)	(1,165,636	)	-		(5,692,988	)		(3,915,873	)	(967,771	)	-		(4,883,644	)
Gross Profit		5,048,607		728,376		-		5,776,983			2,631,102		498,230		-		3,129,332
Gross Margin		52.7	%	38.5	%	-		50.4	%		40.2	%	34.0	%	-		39.1	%
Operating Expense/Income		(777,257	)	(245,495	)	-		(1,022,752	)		(594,303	)	(124,004	)	-		(718,307	)
Selling Expenses		(480,120	)	(154,801	)	-		(634,921	)		(467,110	)	(122,914	)	-		(590,024	)
General and Administrative Expenses		(368,906	)	(153,855	)	-		(522,761	)		(336,076	)	(143,830	)	-		(479,906	)
Other Operating Income (Expenses)		152,270		50,571		-		202,841			230,705		92,178		-		322,883
Equity Equivalence		(80,501	)	12,590		-		(67,911	)		(21,822	)	50,562		-		28,740
EBIT		4,271,350		482,881		-		4,754,231			2,036,799		374,226		-		2,411,025
Depreciation, Amortization & Depletion		1,665,820		167,120		-		1,832,940			1,596,972		164,688		-		1,761,660
EBITDA		5,937,170		650,001		-		6,587,171			3,633,771		538,914		-		4,172,685
EBITDA Margin		62.0	%	34.3	%	-		57.4	%		55.5	%	36.8	%	-		52.1	%
Adjusted EBITDA1		5,755,019		600,298		-		6,355,317			3,529,835		435,091		-		3,964,926
Adjusted EBITDA Margin1		60.1	%	31.7	%	-		55.4	%		53.9	%	29.7	%	-		49.5	%
Net Financial Result		-		-		(2,657,320	)	(2,657,320	)		-		-		6,238,407		6,238,407
Earnings Before Taxes		4,271,350		482,881		(2,657,320	)	2,096,911			2,036,799		374,226		6,238,407		8,649,432
Income and Social Contribution Taxes		-		-		216,556		216,556			-		-		(2,735,081	)	(2,735,081	)
Net Income (Loss)		4,271,350		482,881		(2,440,764	)	2,313,467			2,036,799		374,226		3,503,326		5,914,351
Net Margin		44.6	%	25.5	%	0.0	%	20.2	%		31.1	%	25.5	%	0.0	%	73.8	%

¹ Excluding non-recurring items and PPA effects.

Page 35 of 36

 

Segmented Financial Statement (R$ '000)	2021												2020
	Pulp			Paper			Non Segmented			Total Consolidated			Pulp			Paper			Non Segmented			Total Consolidated
Net Revenue		34,715,208			6,250,223			-			40,965,431			25,578,265			4,882,012			-			30,460,277
Cost of Goods Sold		(16,727,390	)		(3,888,198	)		-			(20,615,588	)		(15,754,930	)		(3,211,401	)		-			(18,966,331	)
Gross Profit		17,987,818			2,362,025			-			20,349,843			9,823,335			1,670,611			-			11,493,946
Gross Margin		51.8	%		37.8	%		-			49.7	%		38.4	%		34.2	%		-			37.7	%
Operating Expense/Income		(1,690,241	)		(479,411	)		-			(2,169,652	)		(2,409,483	)		(641,069	)		-			(3,050,552	)
Selling Expenses		(1,782,840	)		(508,882	)		-			(2,291,722	)		(1,770,036	)		(404,616	)		-			(2,174,652	)
General and Administrative Expenses		(1,129,597	)		(448,312	)		-			(1,577,909	)		(1,016,093	)		(427,099	)		-			(1,443,192	)
Other Operating Income (Expenses)		1,223,024			425,043			-			1,648,067			390,178			140,972			-			531,150
Equity Equivalence		(828	)		52,740			-			51,912			(13,532	)		49,674			-			36,142
EBIT		16,297,577			1,882,614			-			18,180,191			7,413,852			1,029,542			-			8,443,394
Depreciation, Amortization & Depletion		6,437,832			603,831			-			7,041,663			6,232,376			540,404			-			6,772,780
EBITDA		22,735,409			2,486,445			-			25,221,854			13,646,230			1,569,944			-			15,216,174
EBITDA Margin		65.5	%		39.8	%		-			61.6	%		53.4	%		32.2	%		-			50.0	%
Adjusted EBITDA1		21,438,604			2,032,319			-			23,470,923			13,484,920			1,464,569			-			14,949,489
Adjusted EBITDA Margin1		61.8	%		32.5	%		-			57.3	%		52.7	%		30.0	%		-			49.1	%
Net Financial Result		-			-			(9,347,234	)		(9,347,234	)		-			-			(26,085,523	)		(26,085,523	)
Earnings Before Taxes		16,297,577			1,882,614			(9,347,234	)		8,832,957			7,413,852			1,029,542			(26,085,523	)		(17,642,129	)
Income and Social Contribution Taxes		-			-			(197,425	)		(197,425	)		-			-			6,927,194			6,927,194
Net Income (Loss)		16,297,577			1,882,614			(9,544,659	)		8,635,532			7,413,852			1,029,542			(19,158,329	)		(10,714,935	)
Net Margin		46.9	%		30.1	%		0.0	%		21.1	%		29.0	%		21.1	%		0.0	%		-35.2	%

¹ Excluding non-recurring items and PPA effects.

Page 36 of 36