Suzano, a global reference in the manufacture of bioproducts developed from the cultivation of eucalyptus, reported operating cash generation of R$3.9 billion in the 1Q21, which represents growth of 65% over 1Q20. The figure is the highest quarterly result since the creation of Suzano S.A., in January 2019, considering the company’s historical data and the proforma figures since the 3Q18.

The result in the period was supported by strong sales volume, higher international pulp prices, the favorable exchange rate for exports, and rigid control of production costs. In the 12 months to March 2021, operating cash generation came to R$13.1 billion, with the result contributing to the company’s decision to embark on a new expansion cycle.

Suzano is announcing a project to build a pulp plant in Ribas do Rio Pardo (MS/Brazil), with annual installed production capacity of 2.3 million tons. The new unit will require industrial investments of R$14.7 billion. The project is still subject to the fulfillment of certain conditions precedent.

Another important financial indicator, adjusted EBITDA, amounted to R$4.9 billion in 1Q21. The company’s cash generation, combined with its financial discipline, led Suzano’s financial leverage to decline from 4.3 times in December 2020 to 3.8 times in March 2021.

Pulp sales volume remained at strong levels, while paper sales volume reached pre-pandemic levels. Pulp sales in amounted to 2.7 million tons, while paper sales came to 291,000 tons.

In terms of the bottom line of the balance sheet, the effects from the variation in the end-of period price of the U.S. dollar against the Brazilian real led to a net loss of R$2.8 billion. The effect, which is noncash, is explained primarily by the effects on dollar-denominated debt when translated to Brazilian real. Given that this debt matures in the long term, a weaker Brazilian real is positive for Suzano over time since it increases its cash generation capacity.

“The results attest to Suzano’s competitiveness and cash generation capacity, which is currently drawing support from the ongoing recovery in international pulp prices. The progress made in deleveraging and the continuation of this trend were key factors in our announcement to build a new plant, which is one of the largest private-sector investments in Brazil,” said Walter Schalka, CEO of Suzano.

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