Suzano reports operating cash generation of R$2.9 billion in 3Q20

Suzano, a global reference in the manufacture of bioproducts developed from the cultivation of eucalyptus, announces today its results for the third quarter of 2020 (3Q20). Suzano once again reported a solid cash generation leveraged by strong sales volume, despite the seasonally weaker quarter of the year, while reducing its net debt and leverage ratio.

Suzano's operating cash generation amounted to R$2.9 billion, advancing 88% over the 3Q19, supported mainly by the growth in adjusted EBITDA, to R$3.8 billion, which increased 58% compared to 3Q19.

Pulp sales came to 2.5 million tons, despite the seasonal contraction in global demand that typically occurs in the third quarter of 2020 due to summer's vacation in the North Hemisphere. Sales volume in the quarter was in line with production, which kept the company's inventories low and stable in relation to end-June. Meanwhile, paper sales volume came to 319,000 tons, demonstrating important recovery by reaching a level in line with 3Q19, before the pandemic. As a result, net revenue came to R$7.5 billion.

"The 3Q20 results confirmed the notable resilience of Suzano's operations. Despite the seasonally weaker quarter and the adverse global scenario, we remain one of the few companies with the capacity to generate cash, capture operational efficiency gains and reduce its leverage ratio," said Walter Schalka, CEO of Suzano.

Pulp cash cost (excluding downtimes) stood at R$600/ton, which is stable in relation to 2Q20 and down 8% from 3Q19.

Deleveraging was another quarterly highlight. The leverage ratio in US dollar fell from 4.7 times to 4.4 times. In Brazilian real, the decline was from 5.6 times to 5.1 times.

The depreciation in the Brazilian real about the US dollar, which on the one hand helps to boost net revenue due to the exporting nature of the business, while on the other hand affects the financial result due to the balance of dollar-denominated debt and hedge transactions, led Suzano to report a net loss of R$1.2 billion.

"The current scenario of a weaker Brazilian real continues to favor our operations. Although the weaker currency affects our financial result in the short-term due to the effects from currency translation on our dollar-denominated debt and because of our conservative financial policy, the net effect will always be positive for Suzano over time, by increasing our cash generation," said Marcelo Bacci, CFO and IRO of Suzano.

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