Suzano SA Q2 2025 Earnings Call Highlights: Strategic Moves and Market Challenges

Suzano SA reported stronger sales volumes and lower costs in Q2 2025, with EBITDA growth from Brazilian operations. The company announced a strategic deal with El Dorado, expected to generate a 20% internal rate of return, and explored potential production increases at the Hiba's mill. Suzano successfully negotiated with US customers to pass on the 10% tariff on pulp exports, avoiding additional costs. However, the pulp market faced disruptions in China, and Suzano announced a 3.5% reduction in production over the next 12 months due to market conditions.

Suzano SA, the world's largest pulp producer, announced robust financial results for the second quarter of 2025 (2Q25). The company reported sales of 3.7 million tonnes of pulp and paper, an increase of 28% over the same period in 2024 (2Q24), primarily driven by the operational contributions of the new Ribas do Rio Pardo pulp mill [1].

Net revenue for the quarter totaled R$13.3 billion, a 16% increase compared to 2Q24. Suzano's adjusted EBITDA reached R$6.1 billion, and operating cash generation totaled R$4.1 billion. Net profit totaled R$5.0 billion, positively impacted by the accounting impact of US dollar denominated debt and hedging operations translating into Brazilian Real [1].

The company's CEO, Beto Abreu, commented, "We have just marked the first year of our new pulp mill in Ribas do Rio Pardo, whose strong operational performance has already strengthened our cost competitiveness. At the same time, we continued to execute on our long-term strategy of value-accretive growth, announcing our landmark joint venture with Kimberly-Clark. We will remain disciplined and focused on capturing the potential economic gains we believe exist in the new joint venture and on further enhancing our competitiveness in the coming years."

Suzano's net leverage in U.S. dollars ended the quarter at 3.1 times, and the cash cost of pulp production was R$832 per tonne (excluding downtime), indicating a downward trend in costs expected to become more significant in the second half of 2025 [1].

Despite the strong performance, Suzano faced market challenges. The company announced a 3.5% reduction in production over the next 12 months due to market conditions, particularly in China, where uncertainty over US President Donald Trump’s trade tariffs affected negotiations with clients [2].

Suzano successfully negotiated with US customers to pass on the 10% tariff on pulp exports, avoiding additional costs. Additionally, the company explored potential production increases at Hiba's mill and announced a strategic deal with El Dorado, expected to generate a 20% internal rate of return [3].

References:
[1] https://www.morningstar.com/news/business-wire/20250806382862/new-pulp-mill-boosts-suzanos-sales-and-revenue-in-the-second-quarter-of-2025
[2] https://www.bloomberg.com/news/articles/2025-08-07/brazil-s-suzano-cuts-pulp-production-on-uncertainty-over-tariffs
[3] https://www.investing.com/equities/suzano-papel-celulose