Business context and reporting period
Suzano S.A.’s Form 20-F is an audited annual report for the fiscal year ended December 31, 2021, prepared under IFRS. It covers the pulp, paper and tissue businesses. This is not a standalone fourth-quarter filing; the text does not provide a clear set of Q4-only financial results. Unless stated otherwise, figures below are in Brazilian reais (R$).
Suzano reported installed eucalyptus pulp capacity of 11.9 million tons per year and paper capacity of 1.4 million tons. It sold 10.6 million tons of market pulp and 1.3 million tons of paper during 2021.
Financial and operating highlights
| Metric | 2021 | 2020 |
|---|---|---|
| Net sales | R$40.97 billion | R$30.46 billion |
| Gross profit / margin | R$20.35 billion / 49.7% | R$11.49 billion / 37.7% |
| Operating profit / margin | R$18.18 billion / 44.4% | R$8.44 billion / 27.7% |
| Net income (loss) | R$8.64 billion | (R$10.71 billion) |
| EBITDA / Adjusted EBITDA | R$25.22 billion / R$23.47 billion | R$15.22 billion / R$14.95 billion |
| Cash provided by operating activities | R$17.64 billion | R$13.12 billion |
| Cash used in investing activities | R$10.36 billion | R$0.74 billion |
| Cash used in financing activities | R$1.57 billion | R$9.79 billion |
At year-end, cash and cash equivalents were R$13.59 billion and marketable securities totaled R$7.76 billion. Total loans, financing and debentures were R$79.63 billion, including R$3.66 billion current and R$75.97 billion non-current. Current assets exceeded current liabilities by R$22.55 billion; the current-asset-to-current-liability ratio was 3.0x. The filing states working capital was sufficient for present requirements. Gross debt less cash and marketable securities was approximately R$58.3 billion.
Capital expenditures on a cash basis were R$6.34 billion in 2021. Management’s approved 2022 capex budget was R$13.62 billion, excluding certain Espírito Santo ICMS-credit projects. The filing reports total liabilities of R$103.80 billion and equity of R$15.18 billion.
Material changes versus the prior comparable period
- Net sales rose 34.5%, mainly on higher pulp and paper prices and a weaker average real against the U.S. dollar; total sales volume declined about 1%.
- Pulp revenue increased 35.7% to R$34.72 billion, while pulp sales volume declined 2.2%. The average international pulp price rose 32% in U.S. dollars, from US$463 to US$613 per ton.
- Paper revenue increased 28.0% to R$6.25 billion, supported by higher prices and volume. Paper sales volume increased to 1.3 million tons.
- Cost of sales rose 8.7%, less than revenue growth; gross margin expanded by 12.0 percentage points.
- Suzano moved from a net loss to net income. Net financial expense improved to R$9.35 billion from R$26.09 billion, principally reflecting smaller foreign-exchange and derivative losses. The 2020 result included a substantial deferred tax benefit; the 2021 effective income-tax rate was 2.2%.
- Operating cash flow rose to R$17.64 billion. Cash and cash equivalents increased from R$6.84 billion to R$13.59 billion.
Outlook, management commentary, risks and unusual items
Management described strong global pulp demand in late 2021, with restocking and recovering paper production supporting prices, while new capacity, Chinese economic weakness and difficult logistics affected the market. Suzano stated that its operations had not been materially affected by COVID-19 as of the report, but noted continuing uncertainty around employee health, supply chains, customer credit and future restrictions.
The board approved the Cerrado pulp project in Mato Grosso do Sul, with planned annual capacity of 2.55 million tons and estimated total expenditure of R$19.3 billion. Management expected the mill to start operating in the second half of 2024. The project was expected to add renewable-energy capacity and expand structural competitiveness. A R$1.0 billion interim dividend was declared in January 2022 and paid after year-end; shareholders subsequently approved a further approximately R$0.8 billion distribution in April 2022.
- Debt and funding: Suzano had no financial covenants and reported compliance with other non-financial covenants. It had US$1.275 billion of undrawn revolving credit facilities at year-end, with maturities in 2024 and 2027. Debt is substantially exposed to U.S. dollars and some borrowings are linked to variable rates. LIBOR transition terms were still being negotiated.
- Market, currency and cost risks: pulp and paper prices are cyclical; results are sensitive to global demand, the real/U.S. dollar exchange rate, interest rates, inflation, freight and raw-material costs. The company did not have a year-end hedge position for logistics costs.
- Operational and climate risks: forest fires, drought, water scarcity, pests, disease, severe weather, operational outages and logistics disruptions could affect wood supply, production and costs. The company does not insure its planted forests against fire and certain other risks.
- Legal contingencies: provisions for judicial liabilities, net of judicial deposits, were R$3.23 billion. Additional claims assessed as reasonably possible totaled R$11.44 billion: R$7.54 billion tax, R$3.69 billion civil/environmental and R$0.21 billion labor. These possible-loss amounts were not provisioned.
- Unusual earnings items: 2021 other operating income included a R$441.9 million tax-credit gain related to excluding ICMS from the PIS/COFINS tax base, gains from asset sales and a R$763.1 million fair-value gain on biological assets. These items affect comparability and some are non-cash or non-recurring.
- Audit and controls: PwC issued an unqualified opinion on the IFRS financial statements and concluded internal control over financial reporting was effective. Critical audit matters included pulp-segment goodwill impairment, deferred-tax-asset recoverability, tax litigation provisions and biological-asset valuation.
Most important facts for investors to verify
- Review the audited financial statements and notes for the drivers of the R$19.35 billion year-over-year earnings swing, especially foreign-exchange and derivative results, tax effects and non-recurring operating gains.
- Confirm debt composition, currency and interest-rate exposures, liquidity availability, and the expected funding needs and execution schedule for the Cerrado project.
- Assess whether pulp prices, sales volumes, logistics costs and exchange rates support the 2021 margin improvement; the filing provides annual results, not a clear standalone Q4 financial comparison.
- Track the status and potential outcomes of the R$11.44 billion of reasonably possible legal claims, including significant tax and land-related matters.
- Monitor Cerrado project costs, timing and planned capacity, as well as sustainability-linked debt targets that could increase borrowing costs if missed.