Suzano S.A.

Reported Q2 2026 pulp EBITDA was BRL 4.2 billion with a 48% margin. Cash costs excluding downtimes were BRL 843 per ton, up 5% sequentially. Pulp sales reached 2.9 million tons, and average export price was $601 per ton. Net debt declined to $12.8 billion from $13 billion in Q1 2026, while leverage increased to 3.4x from 3.3x due to lower last-12-month EBITDA. Management kept its full-year 2026 cash cost guidance at about BRL 800 per ton excluding downtimes, and said 85% of hedgeable oil exposure is covered in 2H26 and 35% in 2027; the FX hedge portfolio covers 57% of U.S. dollar exposure. The company also issued BRL 2.5 billion, or $500 million, in local instruments at an average tenure of nearly 11 years. Looking ahead, management expects stronger demand and sales in the second half, continued cash cost decline, and efficiency gains from Arbex.

Beto Abreu emphasized three priorities: strong operating performance and free cash flow, smooth integration of Arbex after the July 1 closing, and continued focus on lowering total operating disbursements and deleveraging. He said the Arbex governance and management team are already in place and reiterated that Suzano’s short-term priority is reducing leverage, not pursuing new M&A. His tone was confident and disciplined, with repeated emphasis on competitiveness, efficiency, and a stronger second half.

Marcos Assumpcao said the company generated positive free cash flow, reducing net debt to $12.8 billion from $13 billion, while leverage moved to 3.4x because of the contraction in trailing EBITDA. He highlighted hedging support: BRL 275 million of cost impact from higher oil-related prices was partly offset by nearly BRL 150 million from hedges, and FX hedges produced a BRL 480 million positive cash adjustment in Q2. He also noted a healthy U.S.-dollar debt cost of 5.1%, a 76-month amortization schedule, and BRL 2.5 billion of new local funding at a cost 60 basis points below the Brazilian benchmark. On capital allocation, he said deleveraging toward 2.5x is the main objective, supported by core cash generation, Arbex efficiency gains, and selective non-core land sales.

Analysts focused on whether Suzano can reach its BRL 800 per ton cash cost target and on the path to below 2.5x leverage. Management said the second-half cost decline should come from fewer downtimes, better fixed-cost dilution, and lower wood consumption from the Pangeia agreement, while leverage reduction should mainly come from operating free cash flow, Arbex efficiencies, and some divestments of non-core land plots. Questions also centered on capital allocation and M&A, and Beto said there is no M&A in the pipeline and deleveraging remains the priority before any more aggressive shareholder returns. On pulp, management was asked about China and pricing; Leo said August order intake looks strong, Chinese hardwood inventory is balanced, and current price levels are pressuring higher-cost producers, which he sees as supportive for the cycle.