Suzano S.A. (SUZ) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlighted strong financial performance with record pulp shipment volumes, increased EBITDA, and reduced cash costs. The new share buyback program and improved packaging business volumes further enhance shareholder value. Despite some uncertainties in CapEx guidance, the overall sentiment is positive, supported by optimistic market dynamics and strategic focus on deleveraging. The Q&A section reinforced confidence in market positioning and cost management, contributing to a positive outlook.
Key Financial Performance
Pulp Shipment Volume Record volumes in Q4 2025 due to operational excellence and supply chain efficiency.
Paper Business Volume Strong volume in Q4 2025, with improvements in Pine Bluff operations in the U.S.
Cash Costs In line with the plan for 2025, with improvements expected in 2026 due to competitiveness agenda.
Operational Cash Flow Strong in Q4 2025, demonstrating resilience and competitiveness despite lower price cycles.
Packaging Business Volume 21% year-over-year increase in U.S. operations in Q4 2025, driven by stable prices and favorable seasonality.
Paperboard Demand in Brazil 2% growth in Q4 2025 compared to the same period in 2024.
EBITDA for Paper and Packaging 10% increase in Q4 2025 due to improved performance in Suzano Packaging and higher volumes.
Pulp Price Performance $538 per tonne in Q4 2025, higher than the previous quarter, driven by increased demand in China and Asia.
Pulp EBITDA BRL 4.8 billion in Q4 2025, up 8% quarter-over-quarter due to higher volumes and better prices.
Cash Cost of Pulp Production BRL 778 per tonne in Q4 2025, the lowest since Q4 2021, driven by lower input costs and operational stability.
Free Cash Flow $400 million in Q4 2025, contributing to a reduction in net debt to $12.6 billion.
Net Debt $12.6 billion by the end of 2025, with leverage in dollar terms at 3.2x.
CapEx 2025 CapEx delivered in line with guidance; 2026 CapEx guidance reduced by nearly 20% year-over-year.
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Operating Highlights
Pine Bluff operation in U.S.: Continuous improvement and learning, showcasing management skills and competence outside Brazil.
Suzano Packaging in U.S.: Stable prices quarter-over-quarter and a solid 21% increase year-over-year.
China and Asia markets: Higher demand for hardwood pulp driven by increased paper and board production, with a 17% increase in Q4 2025 compared to Q4 2024.
Brazilian market: Print and write demand increased by 1% in Q4 2025 compared to the same period last year, with paperboard demand growing by 2%.
Operational cash flow: Strong operational cash flow and free cash flow despite lower price cycles, demonstrating resilience and competitiveness.
Cash cost performance: Achieved the lowest cash cost level since Q4 2021, driven by lower input costs, operational stability, and better wood quality.
Closure of Rio Verde mill: Decision to cease operations at the non-integrated mill, reallocating production to more competitive mills for a positive impact in 2026.
JV with K-C: Progressing as planned for closing in mid-2026, with liquidity considerations in place for the payment in Q3 2026.
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Risk or Challenges
Declining paper prices in export markets: Paper prices in export markets are declining, which could negatively impact revenue and profitability.
Oversupply in international markets: International markets are experiencing oversupply, particularly in the paper segment, which could lead to pricing pressures and reduced margins.
Influx of low-priced Asian papers in Latin America: Latin America is facing an influx of low-priced Asian papers, which could erode Suzano's market share and profitability in the region.
Closure of Rio Verde mill: The closure of the Rio Verde mill, while aimed at cost optimization, could lead to short-term operational disruptions and costs associated with reallocating production.
Higher natural gas prices in Q1: Winter conditions and higher-than-expected natural gas prices could increase operational costs for Suzano Packaging in Q1.
Planned maintenance downtimes in Q1 and Q2: Planned maintenance downtimes in Q1 and Q2 will reduce pulp production output by approximately 300,000 tonnes, potentially impacting revenue and customer service levels.
Low inventory levels: Record Q4 invoicing has led to very low inventory levels, which could strain logistics operations and affect service levels to customers.
Rising wood chip prices in Asia: Rising wood chip prices in Asia, driven by increased demand from Indonesia, China, and Japan, could increase production costs for Suzano.
Revocation of forestry permits in Indonesia: The revocation of forestry permits in Indonesia could disrupt the supply of hardwood pulp, potentially increasing Suzano's costs or limiting supply.
Delays in OQ 2 project start-up: Delays in the OQ 2 project start-up could affect market pulp capacity, potentially impacting Suzano's supply chain and market dynamics.
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Guidance & Outlook
TDO (Total Operational Disbursement): 2025 is considered an inflection point for TDO. A new trend in TDO is expected for 2026 and beyond, aligning with the agenda of increasing competitiveness.
Paper and Packaging Business Outlook: Sales volumes from Brazil and U.S. operations will be lower in Q1 2026 due to normal seasonality. Prices are expected to improve with phased implementation of price increases in Brazil and export markets. Suzano Packaging prices should remain stable in dollars due to pre-agreed contracts. Cost performance in Brazilian operations is expected to improve in Q1 2026 due to no planned downtimes. However, Suzano Packaging may face cost pressures in Q1 due to winter conditions and higher natural gas prices.
Closure of Rio Verde Mill: The closure of the Rio Verde mill, Suzano's only non-integrated mill, is expected to positively impact 2026 results by reallocating production to more competitive mills and adjusting the commercial strategy.
Pulp Business Outlook: Q1 and Q2 2026 will concentrate most of the planned maintenance downtime, resulting in lower output. Inventory buildup in Q1 is necessary to prepare for Q2 downtimes. Pulp availability will remain constrained in the coming months, with no allocation to spot markets. Positive short-term dynamics for hardwood pulp are expected due to supply-side constraints and increased demand in China.
Cash Cost Performance: The average cash production cost of pulp in 2026 is expected to be broadly in line with Q4 2025. A pressured Q1 2026 is anticipated due to planned maintenance and nonrecurring events, followed by a gradual decline in cash costs over the year.
CapEx Guidance: 2026 CapEx guidance is reduced by nearly 20% year-on-year, reflecting financial discipline.
JV with K-C: The joint venture with K-C is progressing as planned, with closing expected in mid-2026. Liquidity is sufficient to cover the payment in Q3 2026.
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Shareholder Return Plan
Dividend Payment: Last week, Suzano paid BRL 1.4 billion in dividends, equating to more than 2% of dividend yield.
Share Buyback Program Completion: Suzano concluded its fifth buyback program on February 9, acquiring 15 million shares.
New Share Buyback Program: Suzano announced a new buyback program to acquire up to 40 million shares over the next 18 months.
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Key Q&A
Q:What is the outlook for pulp demand and production in China, and are there any risks to the numbers presented during the Investor Day?
A:Leonardo Grimaldi explained that in 2025, 2 million tonnes of new pulp capacity in China would be offset by lower operating rates and other factors, resulting in a net zero effect on verticalization. For 2026, 2.8-3 million tonnes of capacity are expected, but most projects will start in late 2026, leading to stronger short-term dynamics for hardwood pulp.
Q:What are the trends for CapEx, especially looking ahead to 2027?
A:Marcos Assumpcao stated that while there are nonrecurring items in 2026 (e.g., SAP upgrades, Pangea Deal payments, and Cerrado investments), there is room for lower CapEx over time, but no specific guidance was provided.
Q:What is the company's approach to buyback execution and potential divestments?
A:Marcos Assumpcao emphasized that the focus remains on deleveraging the balance sheet, with buybacks being opportunistic based on variables like leverage, share price, and pulp price outlook. Divestments are not a major part of free cash flow expectations for 2026 and are focused on non-core assets, particularly forestry land.
Q:How does the company view the relationship between paper prices in China and pulp prices, and what is the outlook for hardwood and softwood pulp?
A:Leonardo Grimaldi noted that pulp prices often drive paper prices, not the other way around. The gap between hardwood and softwood pulp has narrowed, but the trend of using more hardwood pulp continues due to cost pressures on paper producers.
Q:What is the outlook for the U.S. packaging market, and how is the company positioned?
A:Fabio Almeida Oliveira explained that while the global packaging market faces oversupply and weak demand, Suzano's U.S. packaging business is insulated due to long-term contracts in the liquid packaging segment, which accounts for 80-85% of its production. The company expects stable demand and prices in this segment.
Q:What are the expectations for cost reductions in the pulp business in 2026?
A:Aires Galhardo stated that the company aims to maintain costs at the level achieved in Q4 2025 (BRL 778 per tonne) despite challenges in the first two quarters due to scheduled stoppages.
Q:What are the key developments that have changed the tone regarding the pulp market outlook?
A:Leonardo Grimaldi highlighted the revocation of forestry licenses in Indonesia, delaying OKI 2 to Q4 2026, and the need for APP to feed a new board machine, which tightens the supply side and changes market dynamics.
Q:What are the priorities for the Paper division in 2026?
A:João Fernandez de Abreu stated that the focus is on extracting value from past investments, including improving ROIC in the tissue business, generating cash in the U.S. paperboard business, and finalizing the K-C JV carve-out while starting value creation.
Q:Review of Unclear Management Responses
A:Management avoided providing specific guidance on CapEx trends beyond 2026, stating only that there is room for lower numbers but without committing to a figure. Additionally, while discussing buybacks and divestments, the responses lacked detailed timelines or specific asset plans.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Beto
China Asia
Executive VP
Indonesia
Investor Day
Ivory
Limeira mill
Limeira outage
Member
Paper Packaging
SCI
TDO
TOD
VP Pulp
adjustment BRL
buyback program
cash adjustment
chip price
competitiveness
downtime Limeira
end inventory
export market
hardwood pulp
hectare
highlight
implementation
improvement
inventory level
maintenance downtime
news supply
order intake
permit
portfolio FX
pulp capacity
record volume
tonne market
unit volume
wood chip
yesterday
SUZ Transcript
Suzano S.A. (SUZ) Q4 2025 Earnings Call Transcript
Positive2-11
The earnings call highlighted strong financial performance with record pulp shipment volumes, increased EBITDA, and reduced cash costs. The new share buyback program and improved packaging business volumes further enhance shareholder value. Despite some uncertainties in CapEx guidance, the overall sentiment is positive, supported by optimistic market dynamics and strategic focus on deleveraging. The Q&A section reinforced confidence in market positioning and cost management, contributing to a positive outlook.
Suzano S.A. (SUZ) Q3 2025 Earnings Call Transcript
Unknown11-8
The earnings call presents a mixed outlook. Positive elements include cost reductions from the Eldorado deal, optimism in the U.S. Packaging business, and strategic focus on growth in the U.S. paper market. However, concerns arise from increased production costs due to rising wood chip prices, an unsustainable pulp market scenario, and management's reluctance to provide clear financial guidance. The overall sentiment is balanced, with both positive and negative factors, leading to a neutral stock price prediction.
Suzano S.A. (NYSE:SUZ) Q1 2025 Earnings Call Transcript
Unknown5-10
The earnings call highlights several concerns: increased net debt and leverage, cash cost pressures, and oversupplied markets affecting demand. The cautious approach to share buybacks and stalled price negotiations further dampen sentiment. Although there is optimism about breakeven in U.S. operations, the lack of specific guidance and uncertainties in client negotiations weigh negatively. These factors suggest a negative outlook, particularly in the absence of positive catalysts like new partnerships or strong guidance.
Suzano S.A. (SUZ) Q1 2025 Earnings Call Transcript
Unknown5-9
The earnings call reveals mixed signals. Financial performance shows increased debt and cash costs, with challenges in supply chain and market demand. However, there are positive aspects like significant free cash flow and a strong financial result due to FX changes. Shareholder return plans are cautious, with a focus on deleveraging. The Q&A section highlights customer uncertainty impacting price increases and cautious capital discipline. Despite some optimism for future sales volumes and breakeven in U.S. operations, the lack of specific guidance and increased leverage suggests a neutral outlook.
SUZ Report
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