EARNINGS RELEASE

2Q22

Tight markets and improved operating performance provide

net debt stability within the investment cycle.

Historical record EBITDA/t.

São Paulo, July 27, 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 second quarter of 2022 (2Q22).

HIGHLIGHTS

  • Pulp sales of 2,663 thousand tons (+5% vs. 2Q21).
  • Paper sales3 of 324 thousand tons (+10% vs. 2Q21).
  • Adjusted EBITDA1 and Operating cash generation²: R$6.3 billion and R$5.1 billion, respectively.
  • Adjusted EBITDA¹/ton of pulp of R$2,103/ton (-3% vs. 2Q21).
  • Adjusted EBITDA1/ton3 of paper of R$2,167/ton (+44% vs. 2Q21).
  • Average net pulp price in export market: US$732/ton (+15% vs. 2Q21).
  • Average net paper price3 of R$6,200/ton (+31% vs. 2Q21).
  • Pulp cash cost ex-downtime of R$854/ton (+26% vs. 2Q21).
  • Leverage ratio in USD declines to 2.3 times and stable net debt in USD, despite the investment cycle.
  • Cerrado Project achieves 21% of physical progress and 15% of financial progress.

Financial Data (R$ million)

2Q22

1Q22

Q-o-Q

2Q21

Y-o-Y

LTM

2Q22

Net Revenue

11,520

9,743

18%

9,844

17%

43,494

Adjusted EBITDA¹

6,303

5,121

23%

5,942

6%

24,089

Adjusted EBITDA Margin¹

55%

53%

2 p.p.

60%

-6 p.p.

55%

Net Financial Result

(6,975)

12,935

9,743

(4,462)

Net Income

182

10,306

-98%

10,037

-98%

11,842

Operating Cash Generation²

5,055

3,890

30%

4,940

2%

18,959

Net Debt /Adjusted EBITDA¹ (x) – R$

2.3 x

2.1 x

0.2 x

3.1 x

-0.8 x

2.3 x

Net Debt /Adjusted EBITDA¹ (x) – US$

2.3 x

2.4 x

-0.1 x

3.3 x

-1.0 x

2.3 x

Operational Data (‘000 tons)

2Q22

1Q22

Q-o-Q

2Q21

Y-o-Y

LTM

2Q22

Sales

2,987

2,694

11%

2,833

5%

11,783

Pulp

2,663

2,382

12%

2,537

5%

10,439

Paper3

324

312

4%

296

10%

1,344

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

The consolidated quarterly information was prepared in accordance with the standards of the Securities and Exchange Commission of Brazil (CVM) and complies with the International Financial Accounting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The operating and financial information is presented on a consolidated basis and in Brazilian real (R$). Note that figures may present discrepancies due to rounding.

CONTENTS

EXECUTIVE SUMMARY ………………………………………………………………………………………………………………………………………

3

PULP BUSINESS PERFORMANCE……………………………………………………………………………………………………………………….

3

PULP SALES VOLUME AND REVENUE…………………………………………………………………………………………………..

3

PULP CASH COST ………………………………………………………………………………………………………………………………..

5

PULP SEGMENT EBITDA………………………………………………………………………………………………………………………

6

OPERATING CASH FLOW FROM THE PULP SEGMENT ………………………………………………………………………….

7

PAPER BUSINESS PERFORMANCE …………………………………………………………………………………………………………………..

8

PAPER SALES VOLUME AND REVENUE ………………………………………………………………………………………………..

8

PAPER SEGMENT EBITDA ……………………………………………………………………………………………………………………

9

OPERATING CASH FLOW FROM THE PAPER SEGMENT ……………………………………………………………………..

10

FINANCIAL PERFORMANCE ……………………………………………………………………………………………………………………………

11

NET REVENUE …………………………………………………………………………………………………………………………………..

11

CALENDAR OF SCHEDULED MAINTENANCE DOWNTIMES………………………………………………………………..

11

COST OF GOODS SOLD …………………………………………………………………………………………………………………….

12

SELLING EXPENSES ………………………………………………………………………………………………………………………….

12

GENERAL AND ADMINISTRATIVE EXPENSES……………………………………………………………………………………

13

ADJUSTED EBITDA …………………………………………………………………………………………………………………………..

13

FINANCIAL RESULT………………………………………………………………………………………………………………………….

14

DERIVATIVE OPERATIONS……………………………………………………………………………………………………………….

15

NET INCOME (LOSS) ………………………………………………………………………………………………………………………..

18

DEBT ………………………………………………………………………………………………………………………………………………..

18

CAPITAL EXPENDITURES………………………………………………………………………………………………………………….

20

CERRADO PROJECT…………………………………………………………………………………………………………………………..

21

OPERATING CASH GENERATION ………………………………………………………………………………………………………

21

FREE CASH FLOW……………………………………………………………………………………………………………………………..

22

EVOLUTION OF NET DEBT………………………………………………………………………………………………………………..

23

ESG…………………………………………………………………………………………………………………………………………………..

23

TOTAL OPERATIONAL EXPENDITURE – PULP……………………………………………………………………………………

24

CAPITAL MARKETS ………………………………………………………………………………………………………………………………………….

24

FIXED INCOME…………………………………………………………………………………………………………………………………………………

26

RATING ……………………………………………………………………………………………………………………………………………………………..

26

UPCOMING EVENTS …………………………………………………………………………………………………………………………………………

27

APPENDICES…………………………………………………………………………………………………………………………………………………….

28

APPENDIX 1 – Operating Data………………………………………………………………………………………………………….

28

APPENDIX 2 – Consolidated Statement of Income and Goodwill Amortization ………………………………

30

APPENDIX 3 – Consolidated Balance Sheet………………………………………………………………………………………

31

APPENDIX 4 – Consolidated Statement of Cash Flow ……………………………………………………………………..

32

APPENDIX 5 – EBITDA ……………………………………………………………………………………………………………………..

33

APPENDIX 6 – Segmented Income Statement…………………………………………………………………………………

34

APPENDIX 6 – Segmented Income Statement…………………………………………………………………………………

35

Forward-Looking Statements………………………………………………………………………………………………………….

36

Page 2 of 36

EXECUTIVE SUMMARY

The fundamentals of the pulp market remained favorable in the second quarter of 2022, marked by positive demand and several factors constraining pulp supply, sustaining a scenario of low availability in the chain and supporting continued implementation of price increases over the period. In this scenario, the Company delivered consistent operational performance with strong sales volume, due to the higher availability of production in a period less affected by scheduled maintenance downtimes. Pulp production cash cost remained pressured by commodity prices, which remained at high levels, but declined slightly in the quarter due to greater availability of industrial operations. In the paper segment, EBITDA set a new record, advancing 58% on the same period last year, driven by solid demand in in all market segments, which had a positive impact on the implementation of price increases. Consolidated adjusted EBITDA was a record for a second quarter (R$6.3 billion) and adjusted EBITDA/ton reached the highest level in the Company’s history.

In liability management, net debt in USD remained stable despite the ongoing investment cycle, while leverage in USD, measured by net debt/Adjusted EBITDA in the last 12 months, fell to 2.3 times. The result of cash flow hedge operations once again attested to the long-term consistency of the financial policy in managing foreign exchange risk, with positive mark-to-market and cash adjustments in cash flow (ZCC).

On its ESG agenda, in 2Q22, Suzano published its Annual Sustainability Report and Sustainability Center related to 2021, which jointly address the Company’s material aspects, as well as indicators and performance in frameworks such as GRI and TCFD, among others. Moreover, maintaining the good practice started in 2021, on June 23, the Company performed its second ESG Call, a multi-stakeholder event, focusing in this edition on the material topics Climate Change, Social Development and Biodiversity Conservation.

During the quarter, Suzano continued advancing on its strategic avenues. In June, in the scope of the avenue of being Best-in-Class in the Total Pulp Cost vision, it has performed the transactions related to Parkia and to the operation of Caravelas, whose areas became strategic after the merger with Fibria, seeking efficiency gains in its cost of capital. Also in June, under the scope of the strategic avenue of Advancing in the Links of the Chain, the Company announced plans to build a tissue paper and kitchen towel conversion plant in the city of Aracruz, with production capacity of 60,000 tons per year. Suzano plants to fund the investment of around R$600 million using ICMS tax credits it has in the state of Espírito Santo, which will depend on presenting the specific project and authorization by the applicable public authorities. Furthermore, on the avenue Expand Boldly into New Markets, we announced in the period the creation of Suzano Ventures, the Company’s Corporate Venture Capital, which will have US$70 million in funds available for investment in startups. Through the initiative, Suzano plans to accelerate its open innovation process and become a global platform to foster entrepreneurship involving solutions for the bioeconomy based on planted forests.

Lastly, the Cerrado Project remained on its physical (21%) and financial (15%) schedule, maintaining the expectations in terms of capex and startup date previously disclosed to the market.

PULP BUSINESS PERFORMANCE

PULP SALES VOLUME AND REVENUE

In the second quarter of the year, the market scenario continued to be marked by positive demand and a combination of various unexpected factors and logistics constraints that affected pulp supply and sustained higher hardwood pulp prices.

On the pulp demand side, the Tissue and Printing & Writing paper markets in the USA and Europe maintained solid levels supported by stronger internal demand and lower imported paper volumes. The Russia-Ukraine conflict continued to affect global input and energy prices; however, paper producers were able to pass through these increases to paper prices. In China, printing and writing paper were the segments most affected by the lockdown due to the zero-COVID policy, but solid demand for Tissue paper and paperboard was observed, the last one due to higher export volumes.

Page 3 of 36

Constraints also were observed on the supply side in the quarter, with a concentration of scheduled downtimes in the northern hemisphere and several unscheduled downtimes in all regions. The market also continues to face difficulties in hiring workers in highway and rail infrastructure in Europe and North America, which add pressure on the domestic logistics chain, which, combined with the still persistent crisis in the maritime logistics chain, contribute to the imbalance in global supply and demand.

In this context, average PIX/FOEX prices in the quarter for hardwood pulp increased 25% in the Chinese market and by 8% in Europe compared to the previous quarter.

Pulp Sales Volume (‘000 ton)

+5%

+12%

2,663

2,537

2,382

2,340

2,195

2,472

197

187

190

2Q21

1Q22

2Q22

Moreover, the maintenance of the difference between softwood and hardwood pulp prices continued to incentivize an important trend in substitution between fibers. According to PIX/FOEX, the difference between softwood and hardwood pulp prices at the end of the quarter was US$134/t in Europe and US$181/t in China.

In this scenario, Suzano’s pulp sales amounted to 2,663 thousand tons, increasing 12% and 5% in relation to 1Q22 and 2Q21, respectively. Meanwhile, the average net price in USD of the pulp sold by Suzano was US$726/t, an increase of 13% from 1Q22. In the export market, the average net price realized by the Company was US$ 732/t, an increase of 15% on the same basis of comparison.

The net average price in BRL was R$3,517/ton in 2Q22,

Brazilian Market Export Market increasing 6% and 7% from 1Q22 and 2Q21, respectively, due to the higher net average price in USD, despite the

appreciation in average BRL against USD (also of 6% and 7%, respectively).

Net revenue from pulp increased 19% and 13% from 1Q22 and 2Q21, respectively, due to the higher net average price in USD (+13% and +15%) and the higher sales volume (+12% and +5%), which were partially offset by the appreciation in average BRL against USD (6% and 7%).

Average Net Price (USD/t)

+15% +13%

Pulp Net Revenues (R$ million)

+13%

+19%

9,508

8,445

7,988

7,886

7,343

8,907

560

646

601

2Q21

1Q22

2Q22

Brazilian Market

Export Market

PULP CASH COST

Consolidated Pulp Cash Cost ex-maintenance

Pulp Cash Cost (R$/ton)

downtime (R$/ton)

+26%

-2%

+27%

-8%

957

881

90

27

696

16

868

854

868

854

680

680

2Q21

1Q22

2Q22

2Q21

1Q22

2Q22

Cash cost ex-downtimes

Downtimes effect

Cash cost excluding downtime in 2Q22 stood at R$854/t, decreasing 2% in relation to 1Q22, due to: i) the higher dilution of fixed costs due to operating efficiency gains; ii) the appreciation in BRL against USD (6%);

  1. the better result from utilities due to maintenance downtimes in 1Q22 and the improved operation of one of the turbogenerators, that reached full capacity in the period, resulting in a higher volume of energy sales; and , Wood cost increased mainly due to the impact from the longer average supply radius in the quarter and the increase in Brent price, which affects both operations of harvest and transportation. The increase in input costs was mainly due to higher chemical prices (especially caustic soda due to higher international prices – IHS, and the Brent price’s impact on energy sources (mainly natural gas).

Consolidated Pulp Cash Cost ex-maintenance (R$/ton)¹

868

854

12

(21)

20

(7)

312

(18)

332

401

158

(37)

Wood

Input

Fixed Cost

Energy

FX

2Q22

Wood Input Fixed Cost Energy FX

¹Excludes the impact of maintenance and administrative downtimes.

Cash cost excluding downtime in 2Q22 was 26% higher than in 2Q21, due to: i) the higher input costs, explained by higher prices for chemicals (especially caustic soda due to higher international prices – IHS and chlorine dioxide prices) and for energy (mainly natural gas due to the rise in Brent); ii) the higher wood cost, mainly due to increase in diesel prices and price increases by suppliers, affecting harvest and transportation operations, which were partially offset by the shorter average supply radius and lower share of third-partywood in the period; and iii) higher fixed costs due to higher costs with labor and maintenance.

Page 5 of 36

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Disclaimer

Suzano SA published this content on 27 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2022 21:47:08 UTC.

Publicnow 2022

All news about SUZANO S.A.

Sales 2022 45 504 M
8 783 M
8 783 M
Net income 2022 17 427 M
3 364 M
3 364 M
Net Debt 2022 52 962 M
10 222 M
10 222 M
P/E ratio 2022 3,64x
Yield 2022 3,64%
Capitalization 64 561 M
12 461 M
12 461 M
EV / Sales 2022 2,58x
EV / Sales 2023 2,91x
Nbr of Employees 35 000
Free-Float 54,1%



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Mean consensus OUTPERFORM
Number of Analysts 14
Last Close Price 48,29 BRL
Average target price 72,18 BRL
Spread / Average Target 49,5%


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