Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Suzano SA (SUZ, Financial) reported a strong EBITDA of BRL6.3 billion, showcasing the resilience of its business model.
- The company has successfully started the Cerrado project, which is expected to enhance its market relevance and cost competitiveness.
- Suzano SA (SUZ) is actively deleveraging, with net debt to EBITDA ratio now at 3.2 times, indicating financial strength.
- The company has announced a fifth share buyback program, demonstrating a commitment to returning value to shareholders.
- Suzano SA (SUZ) is strategically expanding into new markets with investments in Lenzing and Pactiv, aiming to understand and potentially scale in these geographies.
Negative Points
- International logistics challenges have impacted Suzano SA (SUZ)'s export volumes, particularly due to vessel delays and port conditions in Brazil.
- The company faces a potential increase in cash costs due to higher FX rates and the start-up of the Cerrado project.
- Pulp prices have declined significantly, creating an environment of lower prices that Suzano SA (SUZ) must navigate.
- The company is experiencing difficulties with pulp demand in China, as customers have reduced purchases due to squeezed margins.
- Despite strong performance, Suzano SA (SUZ) acknowledges the need to continuously monitor and adjust production based on market conditions and marginal costs.
Q & A Highlights
Q: What is Suzano's view on current pulp demand from China, considering recent price declines?
A: Leonardo Grimaldi, Suzano's representative, explained that customers are unlikely to skip purchases as pulp inventories are below normalized levels. The company recently adjusted prices to encourage market activity, and initial responses have been positive, with increased interest from customers.
Q: Can you elaborate on Suzano's recent acquisitions and their strategic importance?
A: Marcelo Bacci discussed the Lenzing acquisition, highlighting the potential for fiber substitution in the textile market and the opportunity to learn from a leading company. Regarding Pactiv, Fabio Almeida Oliveira noted the strategic positioning in the US market, with potential for fiber-to-fiber substitution in the future.
Q: How is Suzano managing its production strategy in light of current market conditions?
A: Marcelo Bacci stated that Suzano evaluates production based on marginal costs and prices, adjusting production levels accordingly. The company aims to maximize asset value and is prepared to adjust production if returns are not favorable.
Q: What are Suzano's plans for its tissue and packaging segments?
A: Beto Abreu clarified that tissue is not a focus for investment, while packaging is a growth area. Suzano aims to differentiate and scale its packaging business, focusing on creating long-term value rather than achieving a specific EBITDA percentage.
Q: How does Suzano plan to allocate capital, considering recent M&A activities and cash flow generation?
A: Beto Abreu emphasized the importance of disciplined capital allocation, focusing on assets that offer scale and differentiation. Marcelo Bacci added that Suzano prioritizes reducing debt and considers share buybacks and dividends based on market conditions and company valuation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
