Eugenia Cavalheiro

Eugênia Cavalheiro from Morgan Stanley asked for a more detailed understanding of the expected levers for cost reductions in Suzano's pulp business for the year, beyond the previously disclosed overall level.

Answer

Aires Galhardo, Executive Officer of Pulp Operations, reiterated that the intention is to maintain the average cash cost for 2026 at roughly the Q4 2025 level (BRL 780 per ton). He mentioned that Q1 and Q2 will face pressure due to scheduled maintenance at Imperatriz, Mucuri, Veracell, Aracruz Line A, and Três Lagoas (two lines), but the trend is to reduce costs in subsequent quarters to achieve the year-end target.

Eugenia Cavalheiro asked about Suzano's growth opportunities in the US paper market and its profitability targets, inquiring about a reasonable profitability level for the company to achieve and its current distance from that goal.

Answer

Fabio Almeida de Oliveira, Executive VP, stated that Suzano is a small player in the US SBS market with significant growth room, focusing on diversifying into food service from liquid packaging board. He highlighted ongoing opportunities to improve costs and portfolio in the current facility. Joao Alberto Fernandez De Abreu, CEO, reinforced the focus on efficiency and extracting value from existing assets, confirming no further inorganic alternatives for the US in the short term.

Eugenia Cavalheiro inquired about the progress of fiber-to-fiber substitution from softwood to hardwood, given the wide price spread. She also asked about the company's stance on shareholder returns, including dividends and buybacks, amid its deleveraging process.

Answer

EVP of Pulp Commercial & Logistics, Leonardo Grimaldi, confirmed that the high price spread is accelerating the fiber-to-fiber trend, with hardwood expected to continue gaining market share. EVP of Finance & IR, Marcos Moreno Chagas Assumpção, stated that dividends will adhere to the existing policy, but the company has a lower appetite for share buybacks at present due to a strong focus on deleveraging.

Eugenia Cavalheiro requested more clarity on the 'higher return required for investments,' asking for a potential number. She also asked if management would consider a dividend policy tied to free cash flow generation, given the deleveraging strategy and the $3 billion in potential investments.

Answer

Beto Abreu, an executive, declined to provide a specific return hurdle, stating it is deal-dependent but must be higher to compensate for increased environmental risk. He also confirmed that the current dividend policy remains unchanged. Marcos Assumpcao, an executive, added that while there is no formal policy tied to FCF, the company has a history of returning excess cash to shareholders through extraordinary dividends and buybacks when generation is strong.