Suzano Investor Day 2024

Good morning hello everyone it's really great to have all of you here so thank you for coming to spend the the morning with us this is will be a a great chance and for me is my first suzan day to share with you and this is our agenda to share with you our strategy also the main initiatives that we are putting in place to implement this strategy and of course we will also Share with you our financial financial management so let me first show here our strategic Avenues and I'm sure that most of you are

already familiar with this slide but I'm showing here since today we have decide to focus on three of these strategic Avenues we will talk about our initiatives what we are doing and then after this project to keep reducing our cost what's the main initiatives that We're going to put in place to keep enhancing our competitive Advantage our competitive position in the business we will also share with you during the presentation I would say a very pragmatic balance of supply and demand and this is mainly for the M for the next five years and how this

will impact in our I'll say relevance how do we keep our relevance in the market Poop and know the other block which is related to how how do we will allocate our capital I have to say that to understand the capital location to understand the strategy of the capital location we must understand the competitive environment and what do we see in the competitive environment right now which have been changing in our view the first one is more integration in China the second element that we already See is not integration but consolidation and specialization in the

value change in the western part of the world I say Europe and us and finally the third one that we cannot forget that it's the announcement of new projects in Brazil we can discuss here the timeline of those but to be very honest doesn't matter in the next 5 10 years we will have more hard concentration production In South America so this is the competitive environment so although I would like to take this opportunity to reinforce that we will not imple Implement in our strategy any sizable movement in terms of inorganic growth in our business

we do not have in the pipeline in the C years any transformation deal so there's a lot of thing to do there's a lot to implement We are analyzing opportunities but we consider for instance that the recent deals that we made like Pine Bluff in us and also lensy in Europe are very I'll say healthy balance between what what we what we consider risk management and growing abroad so those are the three elements that we would like to address during the presentations that the management team will do Today and to start I would like to

invite Caroline that we cover safety and people Caroline is our vice president for people future communication and safety so I'll hand over to kolene thank you very much thank you B good morning everyone it's very a pleasure to be here with you today so can you share with me so I can the light so talking about safety first because our culture drivers our people Drive our culture and safety is very important to us I'm sorry guys let me people we are already benchmarked in safety in our industry in our Pope and paper industry and we

target to increase in 2030 to be Benchmark in the industry in general I also would like to talk about our commitment to leadership development H leadership development is very important to us I'm glad to share that our employees are very satisfied With their development and career opportunities and our numbers even grow in 2024 also when you talk about engagement and as you can see in the bottom of the page our levels of Engagement of our employees are very high and are even higher than the market average so also I would like to take advantage to

be here to being here with you today to talk about our approach in our people management area in our Internationalization we have two main focuses one value our local teams in their culture and second it's very important for us taking our leaders who knows our Excellence our operational excellence and take that to the locations of our asset of our locations abroad and last but not not least I also would like to talk about gender diversity with you we know that our industry are mainly uh have mainly um Mayo leaders and we are very committed With

leadership development and gender diversity in our leadership positions we have a Target to have 30% of women leaders in leadership position by next year as you can see our trends we are improving year after year and I would like to share with you two main actions that we are doing that are very powerful to have this positive Trends the first one is that all our bonus are linked to increasing women's in leadership position and second we have a very Strong program to accelerate women in also leadership leadership position so with that with that strategy that

people strategy that we are very proud of I would like to close my presentation and invite my dear colleague Carlos ano to be here with you thanks Carol and we are all very glad of those those achievements good morning everyone it's a pleasure I'm happy to be here again for one more susano Day we're going to start the best in class in total popcast chapter share with you our vision on what we believe to be the major challenges being faced by any Forest business any Forest operations in Brazil nowadays but not only that what we

at Susanna what we are doing to overcome all that all we are doing you know TN in a very challenging uh environment the first one is UK availability limited Availability and you guys we remember last year I began my presentation with a provocation will there be enough wood would has been and will remain a very scarce resource even more in the future to manage that to tackle that and in an effective way we are increasing our self-sufficiency we are reducing our exposure to the spot Market we are reducing our exposure to the spot Market labor

shortage that has been a growing issue in Brazil that has been a headache in some regions what we are doing we are in in mechanization we are investing in Automation in our civil culture practice logistic logistic has been a very important component of our wood cost very important and that has become even more important lately with all the labor All the equipment inflation what we are doing structurally structurally we are reducing our dis our radios between our Uka farms and our uh pop Mills reducing structurally our radios last but not least important climate impact climate

uncertainties climate change and that has been in the center of our operational agenda every Every suzan Forest operations colleague they start their working day with two goals in mind two goals what are you going to do to produce more wood per Hector what are you going to do to produce more wood per Hector and how we going to do that reducing the radius between our Uka farms and our MS I'll bring you a very recent and updated and actual example that reflects that climate change and more wika would perect All of us read all of

us heard about what has taken place in 2024 on Fires knowing that in advance using climate models we began prepare ourselves to that scenario earlier this year investing in people training in our fire brigades and combining all that with monitoring Tower uh uh uh control with satellite images and using a lot of digital of AI Intelligence we have had a remarkable year in 2024 in a very very challenging scenario we are able to reduce the impacted area by fires in almost 40% we need action on that we action that response time which is the time

between you know the moment that we hear about or identify the fire and we are dead you know to fire that only 30 minutes but this is what we are doing to protect our forest assets what we are Doing to generate more Uka wood per Hector we have a very solid a very robust plan that is in the heart of every single suzan Forest operation employee and we call that the billion forest or in Portuguese floresa be down and why is that every additional one cup meter per Hector per year that we generate bring us

a npv a net present value of 1 billion R I'm going to repeat that one cup K per Hector per year means a npv of 1 billion R and we have a very ambitious plan for the coming years we want to increase our Mai our yeld in a number between 7 and 133% by 2024 by 2034 how to do that improving operations improving civil culture and always always bringing new genetic material new clones that will grant us a higher productivity what is new here cutting ad technolog that we are Bringing to our forestry our forest

operations deploy cutting a technology we are moving for a model where we follow the forest growth by sampling we are moving that to a digital model now we have have a kind of Big Brother following our forest development we have a a kind of one line onetime management to follow the way that our forest is growing that will give us a early Response to address unexpect events so whenever we do we have an expect situation we can be faster earlier we can identify that and take actions to to fix it to manage that labor shortage

today we stand with a mechanization index in our civil culture practice in about 58% by 2030 we want to reach 85% once we do that we we're going to Reduce our labor intensity in about 40% we're going to reduce our labor intensity in our Civic culture activities in about 40% how to do it new equipment new technology I'm going to share with you a a very uh um nice update very nice event we are starting Geor reference each seedling of our forest so when we plant a new seedling we're going to be able to Geor

reference that Seedling so we're going to know exactly the XY position of that new tree this is a fantastic Improvement and uh we are using Susanna venture capital in that initiative we are using Susanna Venture Capital to speed up to work closer with the aexs that has been a remarkable achievement as well so this is a um technology on the mechanical side what is missing Here a lower radius so our expected number for 2024 is 1886 kilm and we want to bring that by late this decade early next one to around 150 that means ladies

and gentlemen almost half billion R per year when we bring the radius from 186 to 150 and we are doing that as I said before increasing our self-sufficiency so we are combining Again those two goals that I mentioned in the beginning of my presentation lower radios and growing self-sufficiency on the capex on the forest capex side over the last few years we have planted a lot we have planted to expand our forest bases we have planted to begin creating optional for our future we have planted more to create in some regions a buffer in case

we have to Deal with a more adverse weather scenario and in that chart you can see the difference between what we harvest in the the bottom line and what we plant in the upper line so 25 is going to be pretty much the same but as as you can see here from 26 onwards we'll be equalizing planted and harvest area meaning that we should expect a lower capex let me bring you a concrete Example that reflects all that and that example is mat where we have rias and Tra lagoas the the green curve is a

distribution curve for our forest planted more than three years ago the orange or the brown one are the forest that we planted in the last two or three years and as you can see here for those younger forests we already show an improvement a growth of our Mai in 15% We are increasing in M Gru our mi in 15% in those forests that we planted in the last two or three years we have established our structural Uka Farm bases fully established we began a fantastic operation with have our farest bases fully established and not only

that we have a a goal with a decreasing radius that we reach 65 kilm later this Decade we are bringing we are increasing our mechanization level in our civil culture in that area and as I said before we are bringing better and more productive genetic material wood cash cost q324 100 bases we are planning to bring that latest decade early next one with a reduction of around 35% with That I finished my presentation inviting my colleague Isis gadu who brightly LED our s project so IIs straight from hias for suan [Applause] day thank you Carlos

after after this warming introduction I'm sure that last year I request to present for you uh hi guys good morning my name is z galardo I'm a VI Executive Vice President industro engineer and energy and I lead uh the Sado Project uh the deliver of uh a project with a magnitude of sahu involves uh several types of complexity uh in not St to implement it on time and in it uh throughout the execution project execution period uh our global environment for example po at significant risks both in relation to the budget on the timeline uh

remember you uh the global Reality that I'm Heering uh we started our projects during the co 19 pandemic the war in Ukraine affect some of our suppliers and we had to face Logistics restrictions on the supply chain between other examples and we overcame all these challenges inside the fence there were also uh different challenge to be managed of course in this case most of Related uh with the scale of a project never before executed in the pop paper sector given that given that we are talking about the largest sing PP me in the world and

to provide you a better understanding what of what is means I share with you some Curiosities about SE product that represent the dimension of this execution we had over 45,000 workers during the execution of The project 45,000 different workers are accounting for over 56 million men hours worked inside the fence we use it enough to build more than eight ail Towers in the site and enough concrete to build almost five Manan stag and this are just a few examples of how complex is to manage a project of this size a proo of this Scale has

a estimated learning curve of 9 months as well I know in the third quarter for uh conference call we showed to the market that we had reached 8% of the learning curve at the end of the quarter exceeding the 71% forecast and now I bring more good news for our investors Hias continues to exceed our initial forecast for cost and quality for cost and quality therefore we are confident in stating of the completion of the learning curve will be rich with six months it means that at the end of January 25 we running our new

facility fully estabilished as we Planed this means that in 2025 we have a prod a production gain of 77,000 tons that you become sales in next year once again s suzan shows ability to successfully deliver complex projects and it's commitment to maximize value creation hias has two main pillars of competitiveness first explained by Carlos all read by Carlos and uh energy Sales uh let me share with you uh suzan's long-term uh energy strategy uh suzano has a surplus of approximately 108 megawatt average of energy in Ribas we decide to deliver part of this of the

Surplus to our chemical plants inside the fence ensuring lower and stable price of our inputs for a long term the second part 50 Megawatts is sold at to the regulat market at a excellent price under a long-term contract and finally the third part they remaining 55 megaw we kept for spot sale to the regulated market this combination will bring an excellent reduction cost trus hias competitiveness is our right guaranteed consider these assumptions of Brin and FX uh in the third quarter 24 cash c as a baseline uh we already see a 30% reduction of the

average Reus cash cost in 2025 main incoming phone lower input price higher higher energy sales and uh fix the cost delution when you reach the structural uh cash cost uh espe mainly in in the forest With 65 kilm average distance between Forest to the MU uh we after in two in 2032 after the first uh cycle of the force the MU will have a cash cost of approximately $100 per ton consider the act the current level of FX uh the cash cost in the pl will be even less than $100 per Tone now I I

I take this opportunity I know that part of you will be at the site tomorrow but on other parts know and share with you a small video about s product one 1 2 3 the future has begun now here before our very eyes it has just been born and it is already big very big as big as a hundred-year-old story that remains fresh and new starting and restarting futures for A Better Tomorrow full of Life and transformation in the part of the seado the idea was planted and the seed grew to bear fruit the largest

ever seen from the wetest Smile of a job well done to the largest yes the largest single line pulp Mill in the world 3 years ago we took our first steps we forged paths people from near far and everywhere joined hands in a shared commitment to make reality happen and today it is ready to bring the world the Grit and determination cultivated in each of us you don't have to go far to see the change the magnitude of the impact the growth the countless portraits of lives transformed by our arrival jobs new new businesses people

teaching many learning everything grew and took shape the city changed the state changed the world changed and today they count on our strength our capacity our Innovation we are ready more than ever filled with a desire to achieve we are grateful for so much professionalism Hands-On work and the camaraderie of those who believed alongside us and now see it happening after sowing courage and respect nurturing dedication and unity it's time to harvest A New Beginning 1 2 Three the future has already begun suzan we plant the [Music] future then uh just to reinforce uh consider

our distance between forest and M consider our uh strategy of energy Surplus in in the S consider suzan track record s of deliver complex projects consider our knowledge uh in the other 12 Mills that we have suzano is a difficult project to be Replicated it's a case of a unique project that to have opportunity to build and suzano invest decision s based on the view of demand how hard wood Pope in the world and to share our vision with you I invite my colleague Leo to present Leo the floor is [Applause] yours thank you Aris

good morning everyone good morning good evening for those who are following us virtually uh actually this project is is Amazing we have been there last week with a very big big group of our customers Global customers more than 50 of them from almost 20 countries and they have seen a the immensity of the forestry which Carlos mentioned the immensity of the industrial site and logistic Solutions it's it's just impressive and and they were very glad to be part of the suzano ecosystem and eager to buy more suzano pop so to during today presentations I'm Going

to tackle with you guys four main points first I'm going to review and update our s and D scenario for hardwood for the next 5 years then I'm going to go deep in terms of the opportunity that we have been sharing in fiber substitution with several additional examples to previous presentations third there will be some headwinds during this next 5 years and I'm going to share with you our view on those headwinds and last but not least There are there are upside risks to the snd fundamentals which I will also tackle during my presentation so

first starting with demand and with Organic demand we have a constructive view as Iris mentioned our view is that the market will grow roughly 5 million tons in terms of hard to demand in the next 5 years and this is mainly supported by three paper grades that grow at a ker of over 3% and that's for cter to continue growing at This rates which are paperboard tissue and specialty papers very interesting to see that as per our forecast by 2028 tissue will now exceed 50% in terms of hard to demand or the representation of it

under for hard to demand and Specialty grades which had a much lower representation a decade ago will exceed 20% being over or representing a bigger chunk uh in terms of demand than printing and writing grades looking at fiber to fiber we are mainly Analyzing what is the rhythm of advance of hardwood grades over softwood grades in this bleached chemical pop arena so we are updating the chart that we have showed last year we now reach 63% share on the beach chemical pop Market 63% but this is not the more important information what we have been

observing is the rhythm of this growth historically not too far ago hardwood would gain over softwood an average of5 or 6 percentage points every Year during this last three years this Rhythm or the speed of advanc over softhood has intensified and now averages 1.3 percentage points per year as you are seeing on the graph is this the new pattern or it would be even higher and at a bigger Pace than what we're observing to go even deeper into fiber to fiber we're going to share with you a complex slide so I'm going to first Explain

how it works for each one of the four paper grades which bring them man to pop and to Harvard pop we are bringing what is the current share of hardwood in the bleach chemical pop consumption so in this case for tissue they use or the producers globally use 66% hardwood and the remaining percentage softhood then we bring right next to it the region in the world that has the highest Utilization mix of hardwood and then the third bar the region of the world that has the lowest so that we can compare and at no means

we want to show or anchor that what you see here on the highest is where we we see the potential as you know in Brazil suzan and our customers in Brazil we produce absolutely every one of these grades with 100% eucalyptus hardwood pole so our view is much bigger than the higher limits that you see here sharing now all Paper grades we see that in some of those the region that's lagging compared to the region that's leading is almost double the difference or the percentage of hardwood compared to soft so the potential is very big

another way to analyze the potential is sens is giving a sensitivity analysis showing the following so here what we're doing is for each one of these grades if the Global share of hardwood increases 1 percentage point in 5 years meaning 2% a year one percentage point in five years what would be the consequent additional demand for hardwood pop so just to analyze tissue if the global uh in the global uh analysis if hardwood increases from 66 to 67% an additional Demand on top of the organic demand of 1.6 million tons will arise this is to

show the size of the opportunity the amazing opportunity that there is in terms of Fiber substitution another way to analyze this is looking at the supply side of softhood we have presented this graph last year now it's updated with full 23 and 24 numbers and what we do here is in blue we track all the new projects that were announced and that have gone live in terms of software in Orange are the announced permanent closures in that specific year and then these numbers Derive a net change which in the case of soft is negative it's

negative 3.2 million tons in The Last 5 Years which simply disappeared from the market this obviously is due to factors as you know as higher technical age of equipment availability of wood or lack of availability of wood and higher cost of their production sites consequently the price gap between the fibers are getting bigger and bigger with time today we're reaching a new Record which will incentivize further fiber substitution we could choose to sit down and wait change to happen it will happen we could choose to be passive to it weight but we have decided to

lead change and to be protagonists on this change and how did we do that we have created an ecosystem inside Susan to support our customers in this fiber transitioning Journey first part of this ecosystem is We have inside Susanna an education team which is available to be close to our customers and their technicians explaining more and more about the properties of our fiber and how to better utilize our fibers second and very important development and Technology services this is a team that is engaging in projects with customers that will help customers to increase levels of

hardwood by different Refining techniques by different uh blendings with their current or or or eventually even new pulp uh Supply alternative pulp Supply and also in terms of cost reduction and energy reduction and this same team is also supporting our customers to test first in Pilot plants and then in their industrial sites and then utilize the new products that we are bringing to our portfolio we have made operational on an industrial scale in 2024 two very Important products one is the yoka strong and the other one is the yoka PAC both of these products prodct

s have properties that are closer and closer to soft grades and will enhance and facilitate fiber transition last but not least application service every one of our International offices has an outpost technical customer service team and application engineering team to support our Customers on their weekly or even daily agendas in terms of testing and fiber substitution consequently engagement has been huge we tracked in the last year among our top customers by region how many of them are engaged already in specific projects with this team to Foster fiber substitution and levels are extremely high as you

see 60 70 80% depending on the region of the world however we see some headwinds to our model in the next 5 years and we Recognize these models or this headwinds sorry and these headwinds are coming from verticalization in China as B mention in his opening speech in this next three years there are a couple of projects that are being deployed or are expected to be deployed and these projects if we analyze it under a PO producers point of view have a negative an uncertain and a positive point of view the negative obviously is That

they're going to compete against our customers and as they are verticalized once they compete they are going to reduce eventually the operating rates of our customers and therefore reduce the demand of hardwood pop the uncertain always in China very hard to establish when is the uh in the crew when is the startup dates what is the learning curve and most important what are the operating rate levels of these projects that are presented here In full production capacities and the positive under again a PO produ point of view is that absolutely all of these projects will

be on the less quartile in terms of cost compared to their Global peers and competitors all of them today as we speak some of you know that one of the leading Chinese producers integrated with pop and paper which produces over 7 million tons of pop and paper today has completely ceased production complet Completely ceased production as we speak and this shows that eventually models of verticalized in high cost regions is not that successful even so we have factored that in our model this is our uh model uh for demand for 2028 again adding organic demand

adding a very conservative view on fibd fiber if you do calculations on any of the slides I shared with fibd fiber the the number is much bigger than this one this Is a very conservative view on fiber fiber that's why we we put an additional fiber fiber on the right and then also admitting that headwinds from verticalization will eat part of this additional demand for Pope therefore in our view we forecast 3 million tons of additional demand in the next 5 years on the supply side of the equation we added all the upcoming projects in

hardwood like he Susan Hias and we considered also the already known and and projects that we modeled in terms of conversions to other grades like suzan Lia which will be converted next year to fluff grades and based on that our expectation is that the supply side of the equation the supply addition the net Supply addition will be uh roughly 6 million tons during this next 5 years here are the main projects uh both in terms of new and upcoming volumes and As well conversions with that said when we compare and forecast the additional demand already

considering these headwinds and the addition of Supply we have a demand to capacity ratio which we open year by year which is a bit more challenging that it has been on the last one 2 3 years usually when this rates is below 90 91% we see more challenging markets and that's our forecast for this next 5 Years we're going to navigate a bit more challenging markets however as usual we do not include in our forecast the unplanned shutdowns or commercial shutdowns to market the permanent closures are indeed considered obviously but the unplanned unexpected down times

are not included and as you are seeing on the graph they have been increasing in size and volume with time just last week we got news of one of the major North American softwood Mills produces almost 1 million tons who are having mechanical problems and running at a much reduced operating rate and this has become more and more often in our Market uh during this past years to conclude my presentation as always we are bringing our view on the marginal cash cost for next year and why is that because we see marginal cash cost as

a very good uh fundamentals or or grounding for what eventually a price value can be H we have updated these Numbers together with one of the leading Consulting companies and our forecast is that that marginal cast cost in 2025 will be a bit lower than what it is this year roughly $560 per ton and sharing a different view on it at today's China Peaks price reported price price where the transactions in China are going on of far $546 there are in the world 3 million Tons of Market pulp hardwood Market pulp production which is underwater

3 million tons as we speak so obviously 3 million tons under water and that scenario which I presented on the last slide of consecutive years of a demand to capacity ratio below 91% is unsustainable markets should reule markets should rebalance with that said I will now like I' like to invite Fabio to share with us his view on the paper and packaging side of our business thank you thank you L thank you L uh good morning folks it's a pleasure to be here uh with you today let's change gears now and talk a little bit

uh about our business Downstream uh paper and packaging business unit this year uh it's a special year for suzan we're celebrating our 100th anniversary it's also a special year for Our business unit uh with the acquisition of the business that we just announced uh in October and I'm here today to talk to you about what we're doing to keep uh generating value for suzano in this business as you know that faces uh headwinds uh in terms of demand uh creation uh especially for print and writing uh paper grades so I brought here uh for you

first uh first slide uh we took a period of years from 2017 until today we Divided this in Pre pandemic pandemic and post pandemic uh you have our abort on here during these three uh periods of time and as you can see we have changed the poar or the level of Abid generation for for this business even though in that time period uh 30% of demand has shrunk in print and writing uh paper grades this is global uh print and right Global demand and also here in Brazil that you used to be a market that

it was growing and now has also demand which is Shrinking year over year so our business was capable of increasing the value that uh we bring to susano even though we have this uh uh headwinds in terms of uh demand how we're doing that that's what I'm going to be sharing with you today here we're doing that bringing the cost uh down of the business we are already very competitive but we working to be even more competitive over time we're doing by expanding our product portfolio moving into packaging rates I'm going to Be sharing with

you some of the initiatives that we're doing that uh in that aspect and we also working on our goto Market strategy uh you know part of that I'm going to be sharing with you what we are doing on top of what we already shared last year here so moving on uh I have a good example here what we do in terms of uh reducing the cost down of our business this is a project that we're doing now meam and we have project like that uh Going through other muls uh in the paper and packageing business

unit as well this is a project that we are re revisita all the energy uh efficiency of the m so we're investing 300 million in 18 months uh this project is going to generate a reduction in the cast cost not only of the meal but also for the entire business unit of 30 R per ton which is sizable for our business unit while also helping us with sustainability because this project is Going to reduce the emissions of 25,000 tons of CO2 equivalent in a given year so a double deep uh uh uh for for for

suzano with this project the second uh thing that I'd like to share with you is about our goto Market strategy you all know about uh susano Plus in our gold market that we have implemented here in Brazil where we advanc in the in the in the value chain selling to to smaller customers directly without any intermediary uh we are also uh what what We're doing now we're expanding that we call it suzano plus uh 3.0 to latan and also the United States uh where we approach more customers and while doing that we also increase the

profitability uh uh uh with the business model so in a in one year of that experiment we have already double the amount of customers that we have in lat and and also in the United States as can be seen here on the screen with more profitability per ton uh when uh supplying to these customers So next thing here it's about product portfolio as you can see here you know most of the products that we produce today is still in the pr and writing uh category and the prin and writing category folks the trend for demand

here it's a it's a negative uh you know in the next years that's not going to change we don't see also an acceleration of demand uh destruction here so it's kind it's it's it's kept a steady at this space uh for the next years while We see growth uh in the packaging uh uh uh grades uh in terms of demand for the next years so how can what can be done on in Susan that we we were very focused in print and writing in terms of you know how can we have more products into the

packaging segment which is uh growing first thing we're doing we took all our assets we're looking at the assets that we have today what can be done uh what can be be done without major Investments so we worked with R&D To develop products that we can put in our machine that occupy the SP the space of these machines uh today replacing uh the tail curve that we have in terms of profitability of print and writing products unquoted wood free that otherwise we would be exporting at a very low uh prices and uh having new products

come into into place that bring us higher uh profitability lower cost of production and one good example here is a craft liner a white top line craft Liner that introduced suzan in the container board uh Market uh it's a product that we have launched in the last two years uh it's very successful one we have very good feedback from customers in domestic market and also an export and we're growing we're selling about 50,000 tons of this product this year we have a very uh higher objective for next year uh in terms of growth for this

product and this product bring us a much higher profitability when compared To the unquoted wood free that uh we would be produced if we didn't have introduced this product to our portfolio a second uh uh thing that we have done you you know that we have acquired uh uh some Assets in the United States that help us to expand our product portfolio in packaging uh to almost 40% uh in the total of papers that uh suzan is producing so this is a first move uh and I'm going to be talking the next two two slides

more details about this move that We we have done so you you you you got a news uh acquisition price 80 million dollar uh this is an adjustment after the working capital adjustments on the price that uh we have been we announced about 100 Millions so with the acquisition of the Assets in Arkansas and North Carolina we acquired 420,000 tons of paper board integrated fully integrated with po production in the state of Arkansas and the state of Aransas folks is a state That has today a surplus of wood only 50 50% of the pine uh

grown forests in the state are being consumed uh uh uh so it has lots of potential in terms of uh you know future uh growth it's a good wood Basket in terms of quality of the wood now we can say we've been there for 70 for 70 days now so we we we're following a very cost competitive Uh Wood basket as well very strategically located uh logistic wise we have uh two rail uh uh systems that reach the Mill directly Inside the mill we have a barging system at the river that can be used and

we also have good uh Trucking connections that uh you know throughout the the United States with the acquisition uh we also uh received uh some seven extruders that allows us to offer products uh to to food service and also cup stock markets which are sizable in the United States we have now the largest uh um concentration of Extrusion capacity uh more than what we can produce in terms Of paper uh in the country as you know in this meal there are two paper Machines one is running the other one is Idol so uh we're going

to be discussing you know what we can do regarding this paper machine which is Idol and we have a very good product uh I've been there I I'm I've just moved to to to Arkansas I'm living there living the the daily uh life at the MU uh the quality of the product that we produced there is very good I I can assure you that and uh in Know Market which is growing as you can see here the demand for a growth uh it's positive in in the next years I'm going to share with you now

uh what we're we're going to do with these assets okay it's we have a three-phase plan that we shared with every single employee at the Mill we were well received uh uh we had a very smooth transition between paktive and Susan we were well receive for the people in The Mill and also in the communities around The mill and we share this plan in three phases the phases here are the difference between is just the time for for maturity uh we are working on the three phases as we speak in parallel phase number one phase

number one is the phase that we're going to be attacking uh uh all the issues that we have with the meal today the previous owner was looking uh towards more the converting piece of the business that they had they didn't pay much attention to to to the Infrastructure and how to run uh the paper and Pulp Mills uh so suzano as IIs my colleague Isis showed to you today we we very good in running paper and P meals we have a good track record so we're focusing right now in in increasing the operating stability of

the MU and having this mu uh more stable reducing cost and producing more products we also initiated uh a turnaround in the commercial contracts that we have with our customers so most Of the custom the contracts were expiring during this year so we took the opportunity to renegotiate uh the the these contracts at a better pricing rates and I'm gladly to share with you that we've been successful so far we negotiated 100% of these contracts with a better pricing that starts uh next year and uh we also looking at the ways of expanding our sales

into cup stock and Food Services moving a little bit away from uh liquid package board which Was uh you know the main uh Target for this mu up to now in the second phase uh we start looking at uh structural projects that will reduce uh substantially the cash cost that we have in the MU today uh we have a r mapped uh uh big list of projects that's going to be we're going to be executing the next two uh years uh we have projects enough products to be executed 2025 2026 that's going to help us

to increase the productivity bringing cash cost down and These are uh uh technological uh approach guys that we have been us in our Mills here in Brazil so uh uh things that are you know we're not talking about the complex uh things here just you know bolon projects with a a medium-sized CeX that we can apply and to to to reduce the uh the cost we also looking for ways to to increase the production of Pulp and also paper uh at these Mills and uh and we're going to be also experimenting with a fiber Toof

Fiber as Leonardo point out there's an opportunity here hardwood in this area is more expensive than softwood so it's a it's it's a different than what we are used to to to see here in in our market so there's an opportunity for us here to to apply our Pope there in in some of the recipes that we are producing in the products and also helping us to to look at opportunities for the paper machine number one which is Idol uh since 2021 and the last one uh the third phase here and that goes uh aligned

with what iris just mentioned uh we're going to be looking at feasibility studies to dramatically increase the amount of product that we produce at this meal pulp paper or pulp could be fluff pulp or could be uh paper grade PP uh based on on on the the preliminary information that we have from the meal about its competitiveness the wood basket energy uh we believe this is um uh you know There's feasibility for us in moving this project around and that comes into uh in alignment what what we are trying to do with paper and packaging

into the future this is our first step you know we didn't acquire this meal to keep it at at 420,000 tons we didn't move into the United States to keep our P packaging business at 420,000 tons we have a much higher ambition in order to grow uh uh the business there organically or in organically we want to Be a sizable player and what we have seen so far at this Ms in the in the last seven days gives us courage uh and confidence that uh uh there's a you know we could could be very optimistic

about uh the future just to finalize here uh these are the objects that we want you know increase production reduce uh fixed cost and variable cost and with that better uh price mix and margin I want to tell you that um as you saw you know the Acquisition price is a it's very low ticket uh very large area we're talking about 21 square kilometers the area of this mule is a very robust infrastructure so we have space to to grow there we're going to be everything that we're going to be doing it's according to the

plan that we had done prior to the acquisition so uh we didn't see any surprises in these first 70 days that uh uh forced us to change the plan so everything is moving according to the Plan the Capal the capex allocated for us to do this um phase one and phase to of this uh uh plan here it's a it's a capex which not Material uh in it's going to impact Susan so it's a it's a CeX which is it's a good size CeX and included in the plan that we have announced to the market

with that I want to invite my colleague uh Luis buano to talk to us about uh consumer uh [Applause] Goods thanks Fabio thanks Fabo and uh congratul ations for the improvements in the paper and packaging business good morning everyone I'm Lis Bueno responsible for the consumer goods Division and I'm going to share with you our our plan for for the future we have recently finished our synergies programs after the KC acquisition that we've done last year and the amount captured was far beyond our original estimates and this value is Widespread in different areas of the

company with those synergies and the combination of these two companies it enhanced our competitive advantage in the market as I'm going to share with you we've gained market share in the last year and increased our Market leadership with 24% market share highlights for the South and Southeast regions with higher growth that we had after this acquisition we also had a very good increase in the distribution Network we have now 94% weighted distribution this means that our products are present and sold in pretty much all of the major retailers in the country and no other company

in our industry has a weighted distribution this big the third point that I'm going to mention with with you is the cash cost that we had in the Muji meal the Muji was the meal that we acquired from KC and we were able to reduce the cash cost By 46% and I'm going to repeat that we're able to reduce the cash cost by 46% Within 6 months of the acquisition when we see those results it give us the confidence to keep investing and growing this business last year we introduced here the startup the the the

initial project for our 7 plant in narak Cruz the project is developing very well and we are here to announce that we're going to be able to Anticipate the startup for the fourth quarter of 25 this project has a 18% internal rate of return way above the Walk of the company with arac Cruz we will have seven plants spread out in the country and this National footprint of plants which no other company in our industry have will allow us to better serve our clients in terms of service level and also distribution costs and to be

able to see how it plays together let's watch a a quick Video suzan's Journey to becoming a leader in Brazil's tissue Market was Swift and built from a strategic blend of organic and inorganic growth we currently operate six Mills with distribution across the entire country we are building our seventh Mill in aracu ISU it will have a production capacity of 60,000 tons per year with production integrated into the pulp Mill facilitating susano's expansion in the South and Southeast markets the construction is progressing faster than projected and the start of operations initially scheduled for the first

quarter of 2026 has been brought forward to the fourth quarter of 2025 this way we will consolidate the scope of our national coverage with the bang unit serving the North Region the imperat mukuri and marakana units serving the Northeast and midwest regions in the kashuu and Moi units F The South and Southeast along with a new aracu unit together these units will produce 340,000 tons of products annually enhancing our footprint and enabling lower distribution costs and improved service levels compared to our competitors suzano we plant the future the combination of this National footprint of Mills

and the distribution Network that we were able to to to increase allows us now to focus on Product diversification we already have a very good portfolio but we want to focus and diversify into higher margin items as you can see here on the bottom of the slide also we have winning Brands like Navi Duram Max and clinics that we can grow even further those brands with product Innovation for next year we're going to Triple the amount of new lunches 25 compared to 24 and we're going to reduce the time to Market in Our Innovation process

so that's the major plan for 2025 and the years ahead and now there's another point which is very speci and I know you're eager to discuss which is financial management and capital allocation and for that I would like to invite our CFO Marcos to come on the [Applause] stage good morning everyone I'm marus suzan's new CFO and I like to focus my presentation On two main topics Capital location and our balance sheet strategy on Capital allocation I would like to reinforce that susano has a very solid track record on allocating capital in the past six

years since 2008 the company invested more than 80 billion hi in several different projects that generated value to shareholders I'll give you some examples to start with the Sado project we're investing more than 20 2 billion He and we expect an internal rate of return of 15% on that project and that considers po prices at $600 per ton and FX at $ 525 we also acquired on the buyback we also acquired 110 million shares in the past two years at an average cost of 50 High per share that yields a total shareholder return of above

20% talking about our strategy on allocating Capital whenever the management that you saw here presenting Proposes any transaction to the board we need to see three preconditions set the first condition and the most important one is that the project or the deal needs to add value so we should have an internal rate of return that is above our walk which is around 8.7% in he terms that's the most important and critical measure that we always follow second thing whenever we enter in a negotiation process we will have a very predefined maximum price that would Pay

for an asset that allows us to reduce what we called a deal mode risk which is the risk of overpaying for assets second thing is that we should maintain our investment grade in any transaction that we enter we see the cost of capital as a very important competitive Advantage for Susan and we would not like to risk that in the future as we are in an industry that is Very high Capital intensive and the last Point all of our projects and Deals needs to be aligned with our long-term strategy and our growth Avenues in terms

of our debt and liquidity strategy this is what are the main guidelines that you should monitor and that we should be uh looking for in the future first we would like to have an average maturity of our debt which is above 6 years of period or 70 months we also would like to have limited Obligations in the short term so maturing in the coming 36 months we' also like to have a very strong cash position to honor all of our maturities in the coming 24 months we also like to have an RCF or a revolving

credit facility to be a buffer for us if and in the case there is a stress scenario and of course we would not allow to have that Covenant we wouldn't like to have that and as you can see we are in compliance with all of those Guidelines and the result of that when we look to our the the chart on the right side of the slide is that we have a very well balanced bed debt amortization schedule with no concentration risk in the short term and with a very competitive cost of 4.9% in dollars for

our debt in addition to maintaining a very healthy cash position and also very solid balance sheet we also worked in the past three years to diversify our Funding sources so we issued $1.85 billion with IFC and Fina which are non-traditional uh sources of funding that reduces our Reliance on banks balance sheet also we raised more than $1.5 billion in non-traditional markets such as the Brazilian Market with local debentures and also the Chinese market with the panda bonds our strategy here is to explore new markets and new Instruments that will allow us to diversify our funding

sources and avoid the risk of the Windows of opportunities of the traditional Bond markets in the US for example when looking to our the leveraging case we see a very clear deleveraging trend for the company and we expect to reach the bottom of the range of our leverage policy which is between two to three time to three times uh without any uh investment Cycle also important as Betto mentioned we're not envisioning any transformation m&a that will change this Del leveraging path important to mention as well that in periods of tougher markets such as in 2019

and 2020 when po prices declined meaningfully the company put in place a contingency plan well organized to improve liquidity and to reduce leverage very quickly that plan included the sale of noncore assets sale of inventories and also freezing growth Copics we also believe that the compan is in the right path for Ratings Improvement when we talk to the rating agencies they tend to look at two main risks the business profile risk and the Financial Risk we believe that we are on the verge of improving in both metrics on the business profile we're improving as we

are diversifying more our Revenue stream as we mentioned through the Pine Bluff acquisition and also through the lensing acquisition we also improve our Business profile by enhancing our cost competitiveness with the projects mentioned here by Idis and also Carlos on the industrial and on the forestry front on the financial side we believe that we will reduce our risks by declining our net debt also declining our gross debt diversifying our funding sources as we're doing and eventually extending our debt maturities if we continue to do that we we believe that we will be in the right

track for Ratings upgrade in the future now given you a guidance for our total operational disbursement for 2027 of 1,900 he per ton the starting point of this guidance is how we are on total operational disbursement in the first 9 months of this year which is a little bit above 2 00 R per ton to get to our guidance by 2027 we have first to adjust and to factor in the inflation for the year 2025 which will add close to 70 highs to our cost also adjust for our new FX forecast for 2025 of 535

which adds another 12 High to our cost but we're seeing some positive head positive uh positive uh Dynamics for commodity prices which would eventually reduce our cost mainly on the brand Side by 30 hi per ton but most importantly to start with 2,200 hi which is our cost today and get to 100 1,900 by 2027 we have to rely mainly on Initiatives that are being done by the management and they were presented here mainly on the industrial the forestry side and on the cic side on the industrial side we have dilution of fixed costs mainly

because of Sado volumes on the forestry side we expect a meaningful reduction in our lugging distance which in the first month first n months of the year was closer to 190 kilm and we expect that to reach 150 kilm by 2027 and on the Copic side we will reduce that by lowering our third party usage or need for on the wood side now on my last slide just making and bringing the comparison between our current guidance for 2027 of 1,900 he per ton and our previous guidance of 1,750 which was issued in the beginning of

this year the main difference here is first we were adjusting and including the inflation for 2025 we're also forecast we we are Adjusting and including our new forecast for FX for 2025 which is 535 before we were at 5 and also we were a bit more conservative on the login distance we now have 150 kilometers for 2027 and before in the initial in the beginning of the year we were with 137 with that in mind I like now to pass the word to B for his closing remarks [Applause] [Music] Mar I will try to crop

up the presentations from the team we we saw Irish presentations related to thead project what we tried to show here it's that cost Management in the business that we are which is the commodity business is a is a endless Journey so we saw from Fab's presentation we saw from K's Presentation a lot of initiatives that we're going to keep implementing to further reduce cash CA in the future so this is part of a key element of our strategy every day look to the cost again we are in the commodity business is this is something that

we're going to pay a lot of attention every day the second one is the addressable market and let me go back to L's presentation for me the message L was Firstly we will not be passive in terms of uh fiber substitution we will push we will we will lead this process in the end of the day the customer value preposition that we used to deliver which was related to service to pricing to Lisk now we are adding a more sophisticated process which also include technology which also include technical support to help our customer to save

cost in their production Process and as we also just saw from marus presentation this is a business that despite the most challenging scenario we will keep generating cash so how to allocate that cash that we will be generating the next coming years marus just said the premise that we use to allocate the capital and what he also said which is important to reinforce that we want to Allocate the capital preserving the trend of our deleveraging process in our balance and finally everything that we just present to you today will be delivered from a management team

with a high track record in terms of consistent delivery and uh a pool of talent that we have in this company that is completely available and ready to deliver what we Mention here in Brazil and also abroad so having said that I would like to invite the whole team to come over so then we can go through the Q&A thank you very much sorry uh English English okay barcelos from Brisco BBI so thanks for the for the opportunity and congratulations for the event uh Betto it's it's great to see you so vocal in saying that

a sizable m&a is not part of Susanna strategy right so so from now on I mean which type of asset you can say uh uh that makes sense for susano right and and other than that I mean could you please provide your initial thoughts and and even assessments uh on your recent acquisition so more color on thetive assets or your understanding on the the pive assets and lensing right thank you yeah sure thank you ha thank you for the question firstly uh we have decide not to cover let's say on a deep way a Deeper

way the lensing project considering that differently from the practive asset which we acquire so we took over so Fabio is already living there in Aransas Fabio is living uh close to the mill so he's with the team it's very close to exactly what we have and uh so linday we just uh as you know uh had the two seats in the board so the vice chairman will be Carlos Carl will be the vice chairman sitting in the board of ly now will take the next uh Board seat in April uh later early next year so

it's uh we decide to understand deeper study better the let's say the company before uh bringing to discuss with you but uh we are very happy with what we have seen so far not only in ly but mainly impactive Fabio and the team it's uh it's doing doing a a very strong diagnos about commercial uh technical uh the way that we manage um procurement so we see really opportunities everywhere and it's Good to have the chance to bring to our portfolio the optionality of growing further in this segment in the US market so that's the

kind of uh of deal that as I mentioned before we see a very healthy balance between risk management and growing abro abroad so of course uh we we used to say that if you decide to participate in a specific segment uh we need to bring scale we need to uh Implement our skills our uh Capabilities in the ass extract value explore the Synergy and all always explore also fiber Toof fiber opportunities that's all the kind of things that we will always look when we decide to analyze an asset so I think uh there's a couple

of examples that show how we are moving forward in terms of capital location uh Marcus also uh mentioned that we will only move forward in this kind of movement it's if it generate the amount of value that we Expect in terms of premise for our business and uh we also are we also are investing a couple of projects here in Brazil which is also Capital location so we we saw from L presentation the investment that we are doing the consumer good business and uh by end of next year we're going to multiply by four our

fluff capacity in the country so which is also a good clue of things that we want to grow in the future good morning good morning everyone thank You so much suzano team for for the presentation I'm Leonardo K from btg Pak my first question is for uh for Marcus first Marcus congratulations on the on the new role uh it's great to see a former sside colleague become a CFO of a of such a great company thank you very much so congratulations yeah so so um to your point on the buyback um you uh you talked

about the the internal rate of return on the BuyBacks uh above 20% so just wanted to see how how this changes now with the recent Rebound in shares and how you're weighing dividends over over BuyBacks at this point in the cycle uh we saw the the big interest on Equity that you guys announced which was somewhat unexpected so I just wanted to give you uh the opportunity to give us a balance on on how you're viewing uh cash Returns the second Point um second question for Le um L uh it was interesting to see you

comment on the Softwood spread to hardwood right um the level is at a peak uh you're indicating that you think this is going to normalize a bit right given substitution and and a price effect which is which is natural historically has been natural um however ever at least to me given the amount of Supply additions in hardwood and the lack of Supply additions in softwood I'm just not sure exactly how this will normalize or if if this trend is going to continue to exacerbate uh to A higher level so if you can add a bit

to that point I think it would be very helpful thank you suzano team hi Le uh starting with the buyback and and dividend uh question uh we will always analyze uh the the returns of of the projects that we have in hand right so uh as you saw the buyback was had a very positive uh total shareholder return and then we did that at a very attractive entry price uh all of my colleagues here uh they have Also a lot of different projects to be analyzed and we would also see The Return of those potential

projects in the future I would say that uh so there will be a comparison and a competition between projects and the buyback is included in there okay so I think that's that's the way we think about the buyback and we have been as you saw very opportunistic in terms of pricing uh of the buyback in the past in terms of dividends as you know as well The company has a very strong track record of growth reinvesting close to 90% of its free cash flow into the business into new projects either projects or m&a so I

think that this Contin to be the mindset of the company of the board uh but again as we mentioned here and bring force it needs to add value to the company so in the future if we don't find enough projects that are adding or generate value to the company we could see higher dividends uh But so far as we have uh I I would say that we have a strong pipeline of projects that we're still discussing internally Le thank you for your question on on softhood and maybe I was not clear uh due to the

three factors that we are following which is wood availability technical age of softwood assets and the cost of this uh production this softwood production we feel and all our models forecast that this price Gap will keep Increasing for the future just like you also said you believe so at no means we believe it now has stabilized in 200 $220 in our view softwood will be a successful grade at a much lower production compared comparison to to harded grades will be used in nich products and therefore we will have a price premium a a bigger price

premium than it has today so that's that's our view hi hello yep morning everyone marel Farid from Goldman Sachs thanks for for The presentation happy birthday L um what a day to celebrate um I know I think I want to you know Leverage The on the expertise of the whole team bet to your your recent pass on the logistics side obviously Carlos um on the forest side as well obviously a lot of um attention and activity going on in matu right I mean Alo yourselves um Brussel just recent news reporting that they are really moving

ahead and eventually elor as well well um when you think about the Things we need for a new pop meal right Forest Logistics water um you know realistically how how you guys thinking about the competitiv scenario uh in the m d in the next 5 to 10 years I think battery laid out well that it doesn't matter really the timeline it appears that they will come so the question is you know how how um realis those those projects are are going to be um and I think Carlos I've mentioned you and and sorry but I

I think I mentioned you you I remember you mentioned before that cash is not King wood is King right uh sorry King gold King and gold right um and obviously all of that and and and plus um you know your views that Ood is going to continue to be king and and more expensive leads to believe that you know investments in their are are going to continue to to be important for suzan right so when you look at the CeX line on Forest land um it has been quite relevant running at above 2 billion high

So how should we think about that normaliz the number going forward as well um in in that context and you mentioned the the IR for some of the projects which is great I'm just missing what is the IR that you guys Target for some of the the key projects including the old investment as well which tends to be lower return but more strategic as well so how should we think about that sorry long question caros can if I can start here Uh masio we uh we don't have a very specific Target that we disclose in

terms of spread over uh the walk that we have for uh internal rate of returns we gave you a couple of examples here of returns unleveraged that we see uh even for the Sado project for the lia project from Fabio and also from hes on the tissue side they're all well above our cost of capital but we don't disclose this specific uh spread uh but as you as you saw here uh You can you can uh rest assur that uh the first level of Defense in terms of uh pro project activeness is this group here

so all projects are well discussed before we propose anything to the board and it needs to have a very decent return we also believe that we shouldn't have an specific spread that is the same for all projects because there are projects that could be uh with much more complexity that would require a higher uh spread there could be projects that Would be we would see more clear synergies just like the feber one with the feber merger that we eventually could see a lower spread because it was an more easy uh Target I would say that

in that sense so but that's what I can tell you regarding our the way we think about uh new projects mainly on the m&a and also projects in inside the company as well thank you Mar for question as I I have Said we have planted a lot quite a lot over the last few years numbers you know approaching 300,000 hectares and we have done that to expand our forest bases to serve our serado projects we we have done that to begin creating option alties in some regions I mean we're going to have more wood in

the coming years coming from those plantations and we do believe that the weather can surprise a lot in the coming years and with that in mind in some Regions we also planted more and in case we Face a more challenged scenario the wood is going to be there as I said wood is King W is gold we always looking at opportunity we have a forest business team you know walking around visiting properties visiting land assets and whenever we we find a one that fit in our forest strategy and by that I mean High Mai potential

and a a nice uh distance we we try to bring that To our portfolio but again just reinforce the main liever in our forest business has been and will be productivity and that's where we have been putting all our efforts we're investing a lot we are putting a lot in terms of Technology mechanical technology digital technology you know to increase Mii and I believe that you know we are in in the right path you know to achieve the numbers that we Showed here a growing productivity in the coming years regardless the weather scenario and this

is what the team has in mind we going to increase our Mii we're going to make we're going to increase our wood availability our UK wood availability regardless the scenario and to do that we need to have better and more resilient clients we need to go on improving our civil culture Precision agriculture in our business and we are improving our Operational procedures so combining that you know looking at that the assets the land asset that fit in our strategy with a growing productivity we believe that we're going to be very well positioned for the future

and as you well said M has been a very challenging area everybody there deals with labor shortage we have a suppliers we have equipment suppliers with labor suppliers with have service suppliers and that gentlemen ladies and Gentle that do not change and that's why I said it's all about productivity and again we are quite Happ we are quite pleased with our achievements increasing again our Mii in 15% in the last short three years masio let me let me try to answer your question conceptually when we talk about uh I'd say strategy and capital location and

I'd say competitive environment I think the first thing that we must take into account is that the Management team it's every day thinking about the competitive environment what's changing because that's a very important driver when we decide the strategy and we decide to allocate the capital so understanding very deeply the competitive environment here in Brazil and outside that's the first thing so our job is try to image to think how the market will look like in 5 10 years this time so the second thing is that we saw here during the presentation that let's Say

sayu it's done it's implemented was a great project so we have to look forward to keep looking again which is a endless Journey cash cost opportunity and we saw a lot of things related to Lisk as you mentioned we saw uh mechanization we saw many other project that we can keep looking for uh lower cost and regarding Brazil and regarding M I think we also have to take into account that we are that's not a a Level Playing Field situation we are operating Our court so this is Brazil we have uh a sizable business a

huge portfolio the scale so we have to take advantage of our strengths to face any kind of competition that will come because in the end of the day we should see in the future when we analyze the hardwood more production here from any other part of the world but this is again this is our quote we are playing at home so we have terminals we have logistic we have scale we don't know how to operate here uh we Have a port only son two terminal so we have a lot of uh competitive advantage that we

must keep any hands even more against any kind of competition that might come to M any other part of Brazil so has we see this hi hi hi Daniel Sasson from it BBA uh thank you so much for for the presentation um Marcus congratulations again on your new role it's probably the 10th time I congratulate you but the first in official event so let's keep Counting um being there in your U new role for a few weeks now um what do you think your most important challenges are I mean coming with fresh eyes do you

think there are some low hanging fruits in terms of in specific areas like asset liability management or derivatives or or or or rethinking your financial dividend policies uh what do you think uh you you you're GNA uh spend most of your time or maybe it's just a matter of ensuring that you're going to deliver a The leveraging process and then um um making sure that your stakeholders understand how serious you are about a discipline cap allocation so I'd love to hear your thoughts on that and Leo my second question thank you for your your thoughts

on the fiber to fiber substitution very interesting data that you brought here and building up on on the former question um regarding softw and hardwood this substitution I guess my question is Maybe if we go back three or five or 10 years the amount of of pop that you sold to uh FL of producers has not changed meaningfully right I mean the percentage of the representativeness this means that your volumes are growing kind of in line with the overall growth in in the fluff market for instance or fluff SL tissue sorry um what what do

you think is different or is going to be different in the next five years so that this substitution can Actually happen and you can gain shares and penetrate in customers that it's been so hard for you to to do over the past few years like packaging producers right because hardwood has been uh cheaper to produced for many years now that's why hardwood has been gaining share right so what has changed structurally in your view that would allow for this increase in penetration over the next Years thank you hi Danielle uh in terms of challenges First

I'm I'm not changing much what has been what was being done before right I think that's the first and easiest uh answer to say I think we have a very strong team not only sitting at this uh at the stage here but also uh on the other uh levels of the company so the the strategy of the company is also very well established but I would say the biggest challenge and also the biggest opportunity for the company in the future will be on the capital location Side that's where we could add a lot of value

to the company as it has been in the past years and I think this is not a a challenge for myself it's a shared challenge here amongst this group and also I believe that is a we have a couple of lines of defense for that so uh whenever we're discussing an m&a or a project I think that this executive committee here has very thorough discussions about that and it's a very rich discussion Sometimes tough but very rich uh after that we also have the financial Committee in which we have very experienced people to help us

on thinking about the risks and opportunities and then we also have the board to be let's say the third line of defense so I would say that the biggest challenge for for for sure is going to be on Capital location the company will be generating a lot of cash so there will be a lot of cash to be deployed and Uh making the right Investments considering the right returns at the right timing could make a big difference for the future of the company thank you for your question I could spend the next or the last

15 minutes of the Q&A talking about what changed but try to sum up first thing what changed is our customers uh perception and concern they are concerned obviously by seeing that net negative curve which I showed you if Their current softwood supplier will be there for their future and second concern obviously is their cost of production because at those uh levels of spreads between software and Hardware that keep scating and now exceeds $200 obviously they're less and less competitive so one of the big things is customers are extremely concerned in terms of availability and cost

of software second is we are uh moving forward in partnership with Fernando who's here to my right side and all of Susan's technology and R&D team with the development of new skus new products to our portfolio which are getting closer and closer and closer to softwood such as Elka strong and El pack as I mentioned so we're giving the customer the opportunity to have different blends with Susanna's traditional pop plus percentage of these specific popes which gets them closer and closer to what they need to maintain Or even increase the final product quality that they

have third is that equipment manufactures have been also looking at this trend and the new machines the new paper Machines are much more flexible than they were 20 30 40 years ago originally they were designed to an industry that had 80 90 100% share in softed as the industry changed as this land Cape changed as I showed and now hardwood represents almost 65% obviously the equipped manufacturers are up also adjusting and updating their machines to be more permissive to a different blend of products and last but not least in our case as I mentioned in

battle reinforc we will not be on the passenger seat we will be on the driving seat we will lead the change with this initiative that we launched one year and three months ago we are supporting our customers in multiple way education technology development refining cost Reduction launching and implementing of new products Outpost engineering teams application engineering teams all across the the our offices our Innovation Hub in China and several other examples as well just to complete here so uh hello everyone my name is Fernando I am vice president for sustainability and Innovation I did not

present any slide today but I'm glad to see that probably you have realized that Innovation and sustainability are in all in the heart Of all presentations that we have just uh uh shared with you so you we saw this in in uh theu project and new projects with a uh pop uh paper and packaging also in new business new consumer goods as well so and also in the force oh one point I think just I'd like to to add some color in this Leo's answer Daniel is if you compare suzan today with uh the previous

companies at that time we didn't have the options that we have in terms of different lines of of Production so as as Iris mentioned we have 12 13 Mills now and some of them are fully dedicated to pool production and we can use the difference that we have between the mills in order to specialize our products this is one point that's different that we didn't have this in the best second the options that we have today in terms using additives to increase to improve uh the the the MU process is totally different what what what

we had in the past so now We can use different additives different chemicals different Alternatives in order to change the hardwood the change the the the short fiber in order to go in the direction of the properties of the long fiber so we have opportunities that U to be very Frank we didn't have in the past so and now and uh above of everything we are as as L has just said we're all in in this strategy so this is a big big priority for us starting in the forest going to the uh pop Mills

and Of course working very close to our clients good morning everyone hi good morning everyone Kyo G from UBS thank you so much uh two questions here the first one going back to the to the theme on on internationalization right uh it was interesting to see that you guys shed a little more a little bit more light on the plans for uh organic expansion with the assets that you that you just Acquired and uh I wanted to hear a Little bit more on that strategy uh especially in front of how big can it get I

mean how far can you guys go with the organic expansion uh in the US and how does that compare uh with potential m&a I mean can you guys eventually uh let's put it this way abandon the idea of growing through m&a and going all in on the organic uh on the organic front uh what are the advantages of doing that potentially versus uh doing m& and how you guys see that uh that that that Question for uh for suzano going forward uh and the second one a little bit more into the short medium term but

uh on the commercial strategy L um I mean we're still seeing you guys with some some of your plans some of your capacity shut down 4% till the end of the year and still uh going to have a guidance for for 2025 but I wanted to know with with sahad ramping up even faster than initially expected I mean can we expect That you guys are going to have uh that capacity still offline for 2025 can we expect that you can uh even expand that program into other lines if obviously prices continue uh near current levels

and and just wanted to refresh a little bit more on your strategy uh when it comes to to supplying the market thank you so much thank thanks for for your question I'm going to take uh the first one here regarding internationalization so just Taking advantage of the question sharing with you a little bit more of uh info about uh this first 70 days that uh we are I think someone of you asked about a little bit more about caller about uh what we're doing there uh you know the transition has been smoothly uh so far

we were well received for the people there it's moving according to the plan that we had we see lots of opportunities this is very different from uh you know the traditional meals that we have here Uh in Brazil so it's an old meal with a very robust infrastructure uh uh that allows us to to you know to to have all these uh Alternatives that uh uh we we intend to have and and the right answer to your question is is that we're trying to raise as more Alternatives as possible uh to reach our objective our

objective is with internationalization that we want to be uh sizable and also generate value uh to Susan um so with this acquisition of the Pine Bluff and Wayville assets so the market for paperboard products in the United States is about 10 million tons we have uh now 5% of of of market share with uh you know our 420 500,000 tons there um and we we need to grow looking at a paper board we have zero in container board uh so we can grow it organically uh we do have option alties at the MU to do

that we have space uh we have a space in Pulp production we can bring bring pulp from Brazil that will add to the capacity of The pop and paper production at the meal I have a machine there which is down so we can produce a you know this machine was produced in lwc in the past we can convert this machine in order to produce other type of a packaging grates uh and we do have lots of space at the Mill with lots of wood available in the State uh in order to to add capacity as

I have shown here uh today we do not have a preference uh we work closely here with our finance team uh we don't have a Preference for organic or inorganic growth so we always discussing here which is the one that brings us uh you know the best U return on the investment for sure uh organic we have more control on the timeline uh in organic we don't have the control on the timeline because doesn't depend on us so uh we're working both strategies uh at the time we have routes for both uh one uh strategy

here we have more in our hands the other one it depends on on the other side uh but We're looking at uh at both things we don't have a preference um uh for each one but we want to be uh sizable uh uh and that's our objective here so we're going to grow Kyle thank you for your question H I would let Marcus answer the second part of it as you know and as we have been repeating this is not a commercial decision uh susano does not manage uh its portfolio or its its sales based

on the average cash cost of Susan rather Than by an event by event analysis done by our financial department uh based on the the marginal cost of that specific tone Vis AES the sales that uh me and my team are are generating or could generate for the company uh Marcus will tackle that uh our challenge our commercial challenge is uh huge for this next 3 four months ahead of us I'm not sure if that's clear to all of you despite being a public information for such a long time we keep uh we keep uh Managing

suzano at a very low inventory uh policy State since uh 2021 we we we learn how to do that the fact is the the inventories are very very low and we have to have a huge discipline to maintain our supply chain Insurance to our customers especially those customers where we have long-term commitments long-term contracts and depend most of the time even exclusively on suzan next year on the beginning of the year in the first quarter we have a Huge concentration of planned maintenance down times at suzan's Ms coincidentally all of the major susanu meals plus

rebas will stop in the first quarter and that will take out 300,000 tons of production and consequently sale availability for us in the first quarter so we have a huge challenge which is how do we guarantee the pace of our supply chains to all of these customers and how do we manage those other customers which we sell on a basis which is more let's Say transactional and certainly we're going to curtail our sales in several markets during this period due to this purpose so we are just in the planning mode for all of this uh

uh scenario which is a coincidence but it's it's true and we have to to to to prepare and plan ourselves to keep offering our customers uh the best we can in terms of Supply Assurance just to complimenting uh when we analyze uh the potential uh shutdown Par shut down of a specific capacity we're always comparing the marginal cost of production to the marginal uh tonnage that we're selling at the market uh as you probably know even inside every meal you could have different costs because of uh wood from third party or our own wood or

the wood is farther away that we're bringing so there is a bit of difference in terms of cost even inside one specific meal uh but Al also as you know uh we are the lowest cost producer In the industry uh whenever we're cutting a little bit of our capacity uh because it's not economical at some point in time we need to see also the outlook for prices uh to to take that decision uh whenever we're we're making that decision uh even before that a lot of other producers should have should have already made that decision

because as as L mentioned in his presentation a lot of a lot of uh production today is underwater at current price levels so It's a case by case uh analysis that we will do uh and sometimes it could make sense but only for marginal uh tonnage of our capacity there's a virtual question yeah okay K you go ahead please hi everyone thank you very much for the opportunity so uh my first question is on your capex guidance ultimately one of the things That here is what portion of that cap and what reflects you know very

opportunistic in in the long in particular this is in one the land and where frequently am so looking at how do youou sorry your line is breaking uh we couldn't we couldn't hear your question completely I don't know if you can uh Start again maybe if you don't mind CAO it's uh Marcus Let's uh the question is related to capex maybe we can go for a broader let's say answer so then we can move forward so Marx can you take it yeah Kyle uh I I considering uh if your question was related to copics uh

what we can say here is that uh again we updated our numbers on sustaining copics and I think that uh it's much More aligned with what we View for the future of a sustaining copics close to uh 8 billion hi 7.8 billion hi uh you saw that in the copics that we also have uh a meaningful amount that we're still investing in expanding our forest base which is completely aligned with what Kos mentioned about our reduction in our logging distance in the future and also reducing our dependence from third party wood uh and we believe

and also as Carlos mentioned that wood Is gold that we should continue to be investing in uh in forestries uh in land in order to build option alties for the company uh but moving forward and also in addition to that there are in our uh expansion uh copics there are a couple of projects that uh are related to improvements in our industrial area so there is this Lim project that uh Fabio mentioned in his presentation uh there is the hunis uh increasing in uh tissue Capacity that Louise mentioned as well uh there is this fluff

investment at Lia mu that were uh uh tripling almost quadrupling our our capacity of fluff in the future so uh it it it will be uh difficult to see uh copics returning to minimum minimum sustaining levels because we have a good pipeline of projects that all have decent returns well above our cost of capital in the future but for sure uh Copic levels should be much much lower than what we Saw in the previous three years because we were running the biggest project in the company's history which was Sado project okay H we have a

we have time for a final question H okay can you hear me okay uh thank you H Ang from JP Morgan I have only one so I'll be fast um I think uh all investors will agree um that they enjoy and they're happy that the message is very clear that no large transformation m&a is in the cards but we spent the good part of This year discussing this uh because at one point he was in the cart so my question to you is uh what has changed what did you learn in the process that led

you to come out here and make this commitment I think uh we don't have a change to be very honest hu the deals that I mention as good examples we deal that we're in the pipeline already so I would say that that was very clear the strategy uh that we have in place I would uh consider that a different Movement that we analyze early this year that was different for the strategy that was something that we saw a window we decide to analyze and then we go back okay so uh that's the that's the summary

of that thank you for for asking and I think uh we are out of time again I want to really say thank you for all of you to be here with us all of you to letting us uh changing and uh showing uh the strategy the initiatives To letting the the team here present yourselves everything that we are doing uh so again thank you very much for spending the morning with us today bye