Q2 2026 Suzano SA Earnings Call

August 13, 2026

Speaker #3: Ladies and gentlemen, thank you for holding and welcome to Suzano's Conference Call to discuss the results of the second quarter of 2026. We would like to inform that all participants will be in a listen-only mode during the presentation that will be addressed by the CEO, Mr. Beto Abreu, and other executive officers.

Operator 2: Ladies and gentlemen, thank you for holding and welcome to Suzano's conference call to discuss the results of the second quarter of 2026. We would like to inform that all participants will be in a listen-only mode during the presentation that will be addressed by the CEO, Mr. Beto Abreu, and other executive officers. This call will be presented in English with simultaneous translation to Portuguese. To change the audio, you can press the globe icon on the lower right side of your Zoom screen and then choose the Enter the Portuguese Room. After that, you can select Mute Original Audio. Before proceeding, please be aware that any forward-looking statements are based on the beliefs and assumptions of Suzano's management and on information currently available to the company.

Operator: Ladies and gentlemen, thank you for holding and welcome to Suzano's conference call to discuss the results of the second quarter of 2026. We would like to inform that all participants will be in a listen-only mode during the presentation that will be addressed by the CEO, Mr. Beto Abreu, and other executive officers. This call will be presented in English with simultaneous translation to Portuguese. To change the audio, you can press the globe icon on the lower right side of your Zoom screen and then choose the Enter the Portuguese Room. After that, you can select Mute Original Audio. Before proceeding, please be aware that any forward-looking statements are based on the beliefs and assumptions of Suzano's management and on information currently available to the company.

Speaker #3: This call will be presented in English, with simultaneous translation to Portuguese. To change the audio, you can press the globe icon on the lower right side of your Zoom screen and then choose the "Enter the Portuguese Room." After that, you can select "Mute Original Audio." Before proceeding, please be aware that any forward-looking statements are based on the beliefs and assumptions of Suzano's management, and on information currently available to the company.

Speaker #3: They involve risks, uncertainties, and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur in the future.

Operator 2: They involve risks, uncertainties, and assumptions because they relate to the future events and therefore depend on circumstances that may or may not occur in the future. You should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Suzano and could cause results to differ materially from those expressed in such forward-looking statements. Now, I will turn the conference over to Mr. Beto Abreu. Please, you may begin your presentation.

Operator: They involve risks, uncertainties, and assumptions because they relate to the future events and therefore depend on circumstances that may or may not occur in the future. You should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Suzano and could cause results to differ materially from those expressed in such forward-looking statements. Now, I will turn the conference over to Mr. Beto Abreu. Please, you may begin your presentation.

Speaker #3: You should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Suzano and could cause results different materially from those expressed in such a forward-looking statement.

Speaker #3: Now, I will turn the conference over to Mr. Beto Abreu. Please, you may begin your presentation.

Speaker #4: Hi everyone. Thank you for attending our second quarter results call. I want to start with the highlights of the following three points. The first one: we reported solid operation results with a strong free cash flow.

Beto Abreu: Hi, everyone. Thank you for attending our second quarter result call. I want to start with the highlights of the following three points. The first one, we reported solid operation results with a strong free cash flow, once again showing resilience of the business even with the more volatile geopolitical conditions. The second point that I also would like to highlight is that on 1 July, we had the Abengoa closing, fully aligned with what we had previously expected in terms of timeline. The governance and the management team is already 100% in place, and now we will focus on the integration and on capturing efficient gains of this new organization. The third point, I also would like to say that Suzano will keep the focus on reducing the TOD, the total operational disbursement, and of course, on deleveraging the business.

Beto Abreu: Hi, everyone. Thank you for attending our second quarter result call. I want to start with the highlights of the following three points. The first one, we reported solid operation results with a strong free cash flow, once again showing resilience of the business even with the more volatile geopolitical conditions. The second point that I also would like to highlight is that on 1 July, we had the Arbex closing, fully aligned with what we had previously expected in terms of timeline. The governance and the management team is already 100% in place, and now we will focus on the integration and on capturing efficient gains of this new organization. The third point, I also would like to say that Suzano will keep the focus on reducing the TOD, the total operational disbursement, and of course, on deleveraging the business.

Speaker #4: Once again, showing resilience of the business even with a more volatile geopolitical conditions. The second point that I also would like to highlight is that on July 1st we had the RBACs closing, fully aligned with what we had previously expected.

Speaker #4: In terms of timeline, the governance and the management team is already 100% in place, and now we will focus on the integration and on capturing efficiency gains of this new organization.

Speaker #4: The third point I also would like to say that Suzano will keep the focus on reducing the TOD, the total operational disbursing, and of course on deleveraging the business.

Speaker #4: I also want to take the opportunity to say that today is the last call for Aires Galhardo, our vice president for the industry operation and also engineering.

Beto Abreu: I also want to take the opportunity to say that today is the last call for Aires Galhardo, our Vice-President for the industry operation and also engineering. Aires is leaving a legacy of major achievements of Suzano, and we all want to wish him every success in his next journey. Thank you very much, Aires. on the next call, we will already have Carlos Aníbal as the company's Industrial and Engineering Executive Vice-President. Carlos has been with us for 23 years already, has previously held the roles of Paper Business Vice-President, Commercial Vice-President, and also a Forestry Vice-President. So huge experience in many areas of the company, and he has been both a supplier and a customer to the industrial area. We wish him great success in this new cycle. Very welcome, Carlos.

Speaker #4: Aires is leaving a legacy of major achievements at Suzano, and we all want to wish him every success in his next journey. So thank you very much, Aires.

Speaker #4: On the next call, we will also have we already have Carlos Aníbal as the company's industrial and engineering executive vice president. Carlos has been with us for 23 years, already, has previously held the roles of paper business vice president, commercial vice president, and also a pharmacy vice president.

Speaker #4: So huge experience in many areas of the company. And he has been both a supplier and a customer to the industrial area. So we wish him great success in his new cycle.

Speaker #4: Very welcome, Carlos. Having said that, I will turn over to Fabio to talk about the paper business.

Beto Abreu: Having said that, I will turn over to Fabio to talk about the paper business.

Speaker #5: Thanks, Beto. Good morning, everyone. Please, let's turn to the next slide. Our second quarter performance reflects higher sales volumes and prices, as well as lower SG&A on a quarter-over-quarter basis.

Fabio Almeida de Oliveira: Thanks, Beto. Good morning, everyone. Please, let's turn to the next slide. Our Q2 performance reflect higher sales volumes and prices as well as lower SG&A on a quarter-over-quarter basis. These positive factors were offset by inflationary pressures on wood and oil-related products and logistics, as well as longer than expected ramp-up following our annual maintenance downtime in Pine Bluff mill. Looking at our addressable markets in Brazil, print and write demand, according to Ibá, remained stable in Q2 compared to the same period of last year. On a quarter-over-quarter basis, the 4% growth was driven by seasonality and higher demand for coated papers, benefiting from increased promotional and communication-related activity ahead of this year's elections. In such context, Suzano domestic print and write volumes grew 4% on a year-over-year basis and 10% on a quarter-over-quarter basis.

Speaker #5: This positive factors were offset by inflationary pressures on wood and oil-related products and logistics, as well as longer-than-expect ramp-up following our annual maintenance downtime in Pine Bluff Mill.

Speaker #5: Looking at our addressable markets in Brazil, print and write demand according to IBA remained stable in the second quarter compared to the same period of last year.

Speaker #5: On a quarter-over-quarter basis, the 4% growth was driven by seasonality and higher demand for coated papers, benefiting from increased promotion and communication-related activity ahead of this year's elections.

Speaker #5: On such context, Suzano's domestic print and write volumes grew 4% on a year-over-year basis and 10% on a quarter-over-quarter basis. And the export markets, print and write demand declined 4% year-over-year in the US and Europe, according to PPVC.

Fabio Almeida de Oliveira: In the export markets, print and write demand declined 4% year over year in the US and Europe, according to PPPC. Latin America showed stability, led by an increase in participation of Asian players in the region. Looking at paperboard. Demand in Brazil grew 8% in Q2 when compared to the same period of last year and grew 11% against Q1. We noticed some customer inventory build up in H1 ahead of the implementation of paperboard price increases. Against this backdrop, Suzano domestic paperboard volumes grew 11% on a year-over-year basis and 28% on a quarter-over-quarter basis. In the US, according to AF&PA's data, SBS shipments grew by 11% year over year, albeit at an operating rate around 82%, which is softer year over year and stable quarter over quarter.

Speaker #5: Latin America showed stability, led by an increase in participation of Asian players in the region. Now, looking at paperboard, demand in Brazil grew 8% in the second quarter when compared to the same period of last year, and grew 11% against the first quarter.

Speaker #5: We note some customer inventory build-up in the first half of the year, ahead of the implementation of paperboard price increases. Against this backdrop, Suzano's domestic paperboard volumes grew 11% on a year-over-year basis and 28% on a quarter-over-quarter basis.

Speaker #5: And the US, according to FP&A's data, SBS shipments grew by 11% year-over-year, albeit at an operating rate around 82%, which is softer year-over-year and stable quarter-over-quarter.

Speaker #5: Adjusted for the recent capacity closure of the Smurfit WestRock Latuk Mill, Clearwater's Cypress Bend capacity reduction, and the interruption of operations at the Nippon Dynawave facility, operating rates increased to 90% and should support better market dynamics in the second half of the year.

Fabio Almeida de Oliveira: Adjusted for recent capacity closure of its Smurfit Westrock La Tuque mill, Clearwater's Cypress Bend capacity reduction, and the interruption of operations at the Nippon Dynawave facility, operating rates increased to 90% and should support better market dynamics in the H2 of the year. Our Suzano Packaging sales volumes were quite stable on quarter-over-quarter and year-over-year basis. Turning to the EBITDA performance, our Brazilian operations improved 28% on a quarter-over-quarter basis, both higher volumes and better prices domestically and from our exports, despite unfavorable FX. Compared to Q2 2025, the EBITDA for our Brazilian operations declined 20% due to lower price export volumes and FX.

Speaker #5: Our Suzano packaging sales volumes were quite stable on quarter-over-quarter and year-over-year basis. Turning to the EBITDA performance, our Brazilian operations improved 28% on a quarter-over-quarter basis, with higher volumes and better prices domestically from our exports, despite unfavorable FX.

Speaker #5: Compared to second quarter 2025, the EBITDA from our Brazilian operations declined 20% due to lower prices, export volumes, and FX. Suzano's packaging EBITDA was impacted by the scheduled maintenance outage in May, and operational instability returning from the outage, as well as increased costs due to the ongoing Middle East conflict, especially in oil-related inputs, mainly resins and logistics.

Fabio Almeida de Oliveira: Suzano Packaging EBITDA was impacted by the scheduled maintenance outage in May and operational instability returning from the outage, as well as increased costs due to the ongoing Middle East conflict, especially in oil-related inputs, mainly resins and logistics. Looking ahead to Suzano's paper packaging business performance, sales volumes from our Brazilian operations tend to improve across both domestic and export markets, given historical seasonality for the quarter. In the US, we start Q3 with a strong order book with improvements in S&D dynamics. We remain focused on managing inflationary pressures related to the Middle East conflict, mainly in resin and logistics. Through initiatives already implemented or currently underway, we expect to mitigate most of these impacts going forward. Now I will hand over to Leo, who will be presenting our pulp business results.

Speaker #5: Looking ahead to Suzano's paper packaging business performance, sales volumes from our Brazilian operations tend to improve across both domestic and export markets, given historical seasonality for the quarter.

Speaker #5: In the US, we start Q3 with a strong order book, with improvements and supply and demand dynamics. We remain focused on managing inflationary pressures related to the Middle East conflict, mailing resin and logistics.

Speaker #5: Through initiatives already implemented or currently underway, we expect to mitigate most of these impacts going forward. Now, I will hand over to Leo, who will be presenting our pop business results.

Speaker #2: Thanks, Fabio, and good morning, everyone. Let me highlight the main developments in our pop business unit during Q2 2026 and share our outlook ahead.

[Company Representative] (Suzano): Thanks, Fabio, and good morning, everyone. Let me highlight the main developments in our pulp business unit during Q2 2026 and share our outlook ahead. Q2 was marked by different dynamics in pulp markets. In Europe and North America, pulp demand recurrently outperformed expectations, supported by stronger paper production due to war-related effects and inventory replenishments across the value chain as customers aim to get ahead of expected cost increases. These factors led to consistent month-over-month increases in pulp prices during the quarter. In China, the narrowing softwood/hardwood price spread and the high availability of softwood pulp at Chinese ports weighed on purchasing activity from paper producers. Despite solid paper production, higher wood costs impacted integrated local producers and a greater clarity around the delayed startup of OKI 2 mill.

Leonardo Grimaldi: Thanks, Fabio, and good morning, everyone. Let me highlight the main developments in our pulp business unit during Q2 2026 and share our outlook ahead. Q2 was marked by different dynamics in pulp markets. In Europe and North America, pulp demand recurrently outperformed expectations, supported by stronger paper production due to war-related effects and inventory replenishments across the value chain as customers aim to get ahead of expected cost increases. These factors led to consistent month-over-month increases in pulp prices during the quarter. In China, the narrowing softwood/hardwood price spread and the high availability of softwood pulp at Chinese ports weighed on purchasing activity from paper producers. Despite solid paper production, higher wood costs impacted integrated local producers and a greater clarity around the delayed startup of OKI 2 mill.

Speaker #2: Q2 was marked by different dynamics in pop markets. In Europe and North America, pop demand recurrently outperformed expectations, supported by stronger paper production, due to oil-related effects, and inventory replenishments across the value chain, as customers aim to get ahead of expected cost increases.

Speaker #2: These factors led to consistent, month-over-month increases in pop prices during the quarter. In China, the narrowing softened hardwood's price spread and the high availability of softwood pop at Chinese ports, weighed on purchasing activity from paper producers.

Speaker #2: Despite solid paper production, higher wood costs impacted integrated local producers, and there was greater clarity around the delayed startup of the OK2 Mill. This unfavorable backdrop, driven primarily by softwood dynamics, affected the broader pulp market and led to hardwood pulp price concessions towards quarter-end.

[Company Representative] (Suzano): This unfavorable backdrop, driven primarily by softer dynamics, affected the broader pulp market and led to hardwood pulp price concessions towards quarter end. Even at lower prices, customer purchasing activity remained subdued in June. At Suzano, our Q2 was marked by constrained production output due to a concentration of planned maintenance downtimes added to our ongoing reduced operating rate. As well as an inventory rebuilding toward minimum operation levels required to support our operations as previously discussed. As a result, our sales reached 2.9 million tons during Q2, lower compared to Q2 2025 and slightly above Q1 2026. Higher prices across all markets, combined with the recovery of delayed invoicing to China and Asia, drove our average export price to $601 per ton in the quarter.

Leonardo Grimaldi: This unfavorable backdrop, driven primarily by softer dynamics, affected the broader pulp market and led to hardwood pulp price concessions towards quarter end. Even at lower prices, customer purchasing activity remained subdued in June. At Suzano, our Q2 was marked by constrained production output due to a concentration of planned maintenance downtimes added to our ongoing reduced operating rate. As well as an inventory rebuilding toward minimum operation levels required to support our operations as previously discussed. As a result, our sales reached 2.9 million tons during Q2, lower compared to Q2 2025 and slightly above Q1 2026. Higher prices across all markets, combined with the recovery of delayed invoicing to China and Asia, drove our average export price to $601 per ton in the quarter.

Speaker #2: Even at lower prices, customer purchasing activity remained subdued in June. At Suzano, our Q2 was marked by constrained production output, due to a concentration of plain maintenance downtimes, added to our ongoing reduced operating rate.

Speaker #2: As well as an inventory rebuild toward minimum operational levels required to support our operations, as previously discussed. As a result, our sales reached 2.9 million tons during Q2, lower compared to Q2 '25 and slightly above Q1 '26.

Speaker #2: Higher prices across all markets, combined with the recovery of delayed invoicing to China and Asia, drove our average export price to $601 per ton in the quarter.

Speaker #2: Turning to the right side of the slide, the 4.2 billion in EBITDA, with a 48% margin, reflected higher prices in US dollars, partially offset by higher cash cogs and FX headwinds.

[Company Representative] (Suzano): Turning to the right side of the slide, the BRL 4.2 billion in EBITDA with a 48% margin reflected higher prices in USD, partially offset by higher cash costs and FX headwinds. Looking forward, I would like to share our view on the key factors influencing pulp market fundamentals. Market dynamics in July were quite similar to those observed at the end of Q2. Healthy demand in Europe and North America, but mounting pressure in Asia for the same reasons pointed out before. As hardwood pulp prices in China approach the mid $500 range, paper producers stepped up buying activity and our July order intake returned to healthy levels. In addition, our market intelligence team indicates that hardwood pulp inventory levels remain well-balanced, both at Chinese ports and on the hand of paper producers in China.

Leonardo Grimaldi: Turning to the right side of the slide, the BRL 4.2 billion in EBITDA with a 48% margin reflected higher prices in USD, partially offset by higher cash costs and FX headwinds. Looking forward, I would like to share our view on the key factors influencing pulp market fundamentals. Market dynamics in July were quite similar to those observed at the end of Q2. Healthy demand in Europe and North America, but mounting pressure in Asia for the same reasons pointed out before. As hardwood pulp prices in China approach the mid $500 range, paper producers stepped up buying activity and our July order intake returned to healthy levels. In addition, our market intelligence team indicates that hardwood pulp inventory levels remain well-balanced, both at Chinese ports and on the hand of paper producers in China.

Speaker #2: Now, looking forward, I would like to share our view on the key factors influencing pulp market fundamentals. Market dynamics in July were quite similar to those observed at the end of the second quarter: healthy demand in Europe and North America, but mounting pressure in Asia, for the same reasons pointed out before.

Speaker #2: As hardwood pulp prices in China approached the mid-$500 US dollar range, paper producers stepped up buying activity, and our July order intake returned to healthy levels.

Speaker #2: In addition, our market intelligence team indicates that hardwood pop inventory levels remained well-balanced, both at Chinese ports and on the hand of paper producers in China.

Speaker #2: As we move into August, we see a more constructive environment developing in Asia. Seasonal demand is expected to strengthen, hardwood pulp prices have moved below the cash cost of a number of Chinese producers, and a wider softwood/hardwood price spread has enhanced the competitiveness of hardwood grades.

[Company Representative] (Suzano): As we move into August, we see a more constructive environment developing in Asia. Seasonal demand is expected to strengthen. Hardwood pulp prices have moved below the cash cost of a number of Chinese producers and a wider softwood/hardwood price spread enhance the competitiveness of hardwood grades. Together, these factors should support higher order intake volumes in China and Asia, reinforcing our confidence in a stronger H2 of the year. Furthermore, the prospect of paper price increase announcements in Asia should provide additional tailwind for pulp demand in the coming months. While demand indicators are becoming more constructive, the supply side also presents potential upside risks to market fundamentals. At current CIF China price levels, a meaningful share of global pulp capacity remains under economic pressure.

Leonardo Grimaldi: As we move into August, we see a more constructive environment developing in Asia. Seasonal demand is expected to strengthen. Hardwood pulp prices have moved below the cash cost of a number of Chinese producers and a wider softwood/hardwood price spread enhance the competitiveness of hardwood grades. Together, these factors should support higher order intake volumes in China and Asia, reinforcing our confidence in a stronger H2 of the year. Furthermore, the prospect of paper price increase announcements in Asia should provide additional tailwind for pulp demand in the coming months. While demand indicators are becoming more constructive, the supply side also presents potential upside risks to market fundamentals. At current CIF China price levels, a meaningful share of global pulp capacity remains under economic pressure.

Speaker #2: Together, these factors should support higher order intake volumes in China and Asia, reinforcing our confidence in a stronger second half of the year. Furthermore, the prospect of paper price increase announcements in Asia should provide additional tailwind for pulp demand in the coming months.

Speaker #2: While demand indicators are becoming more constructive, the supply side also presents potential upside risks to market fundamentals. At current CIF China price levels, a meaningful share of global pop capacity remains under economic pressure.

Speaker #2: According to a well-known industry consultancy, their just updated numbers, approximately 17 million tons of softwood and 5 million tons of hardwood capacity are currently operating below cash cost levels at this China prices, representing close to 30% of global market pop production.

[Company Representative] (Suzano): According to a well-known industry consultancy, their just updated numbers, approximately 17 million tons of softwood and 5 million tons of hardwood capacity are currently operating below cash cost levels at these China prices, representing close to 30% of global market pulp production. Production curtailment announcements have reached the headlines during these past months, mostly in softwood pulp, but still insufficient to rebalance the market fundamentals. At the same time, industry profitability continues to be pressured by rising input costs, several of which are linked to ongoing geopolitical tensions. Still on the pulp supply side of the equation, a stronger El Niño season this year may increase the likelihood of weather-related disruptions in key producing regions.

Leonardo Grimaldi: According to a well-known industry consultancy, their just updated numbers, approximately 17 million tons of softwood and 5 million tons of hardwood capacity are currently operating below cash cost levels at these China prices, representing close to 30% of global market pulp production. Production curtailment announcements have reached the headlines during these past months, mostly in softwood pulp, but still insufficient to rebalance the market fundamentals. At the same time, industry profitability continues to be pressured by rising input costs, several of which are linked to ongoing geopolitical tensions. Still on the pulp supply side of the equation, a stronger El Niño season this year may increase the likelihood of weather-related disruptions in key producing regions.

Speaker #2: Production curtailments announcements have reached the headlines during this past months, mostly in softwood pop, but still insufficient to rebalance the market fundamentals. At the same time, industry profitability continues to be pressured by rising input costs several of which are linked to ongoing geopolitical tensions.

Speaker #2: Still on the pulp supply side of the equation, a stronger El Niño season this year may increase the likelihood of weather-related disruptions in key producing regions, with possible implications for wood availability and production costs.

[Company Representative] (Suzano): With possible implications for wood availability and production costs. Together with the recent forest license revocations in Indonesia, these factors could contribute to a tighter than expected S&D scenario in the short term. To conclude, I would like to reiterate that Suzano's unmatched business platform, supported by our best-in-class assets and unique end-to-end logistics capability, provide us the agility to respond quickly to any market conditions and capture commercial opportunities. With our inventory levels already aligned with our operational needs, we remain well-positioned to navigate the ongoing volatile global environment. With that said, I would now like to invite Aires to share our cash cost performance for the board.

Leonardo Grimaldi: With possible implications for wood availability and production costs. Together with the recent forest license revocations in Indonesia, these factors could contribute to a tighter than expected S&D scenario in the short term. To conclude, I would like to reiterate that Suzano's unmatched business platform, supported by our best-in-class assets and unique end-to-end logistics capability, provide us the agility to respond quickly to any market conditions and capture commercial opportunities. With our inventory levels already aligned with our operational needs, we remain well-positioned to navigate the ongoing volatile global environment. With that said, I would now like to invite Aires to share our cash cost performance for the board.

Speaker #2: Together with the recent forest license revocations in Indonesia, these factors could contribute to a tighter-than-expected S&D scenario in the short term. To conclude, I would like to reiterate that Suzano's unmatched business platform, supported by our best-in-class assets and a unique end-to-end logistics capability, provides us the agility to respond quickly to any market conditions and capture commercial opportunities.

Speaker #2: With our inventory levels already aligned with our operational needs, we remain well-positioned to navigate the ongoing volatile global environment. With that said, I will now like to invite Iris to share our cash cost performance for the quarter.

Speaker #3: Thank you, Al. Good morning, everyone. Cash cost, excluding all timing, was $843 per ton in the second quarter of 2026, broadly in line with our guidance.

Aires Galhardo: Thank you, Leo. Good morning, everyone. Cash cost, excluding downtime, reached BRL 804 per ton in Q2 2026, broadly in line with our guidance. The 5% sequential increase mainly reflected higher input costs, particularly natural gas, caustic soda, and chlorine dioxide, amid continued pressure from global commodity and energy markets from the conflict in the Middle East. Wood costs also increased quarter-on-quarter, mostly driven by longer freight rates and mill production mix. These effects were partially offset by stronger utilities results, supported by higher export volumes, favorable FX, and fixed cost dilution from higher production volumes. The conflict in the Middle East remained a factor affecting our year-over-year cost performance, contributing to higher chemical and energy price. Wood costs were pressured by higher logistics and harvesting activities driven by transportation mix, labor, and maintenance.

Speaker #3: The 5% sequential increase mainly reflects higher input costs, particularly for natural gas, caustic soda, and chlorine dioxide, amid continued pressure from global commodity and energy markets due to the conflict in the Middle East.

Speaker #3: Wood costs also increased the quarter-on-quarter, mostly driven by longer forest regions and mill production mix. This affects our partially offset by stronger utilities results, supported by a higher export volumes.

Speaker #3: Formal FX and fixed cost deletion from higher production volumes. The conflict in the Middle West remains a reflect factor affecting our year-over-year cost performance.

Speaker #3: Contributing to higher chemical and energy price. Wood costs were pressured by higher logistics and harvesting activities, driven by transportation mix labor and maintenance. This headwinds were partially offset by the same positive factors discussed in the quarter-over-quarter analysis, namely favorable FX effects and a stronger energy sales performance, in addition to the higher energy export volumes, energy price benefited from the excess energy auction-related to HIBAS mills, which became effective in January 26.

Aires Galhardo: These headwinds were partially offset by the same positive factors discussed in the quarter-over-quarter analysis, namely favorable FX effects and a stronger energy sales performance. In addition to the higher energy export volumes, energy price benefited from the excess energy auction related to Ribas mills, which became effective in January 2026. Beyond the information presented on this slide, I would like to provide some additional color on maintenance downtime costs. The BRL 129 per ton required in Q2 2026 mainly reflected a heavier maintenance schedule during the quarter, extending downtime at the Três Lagoas mill and the remaining impact of Ribas mill downtime that began in Q1 2026. Looking ahead, the company remains on track to deliver an average 2026 cash cost, excluding downtime, of approximately BRL 800 per ton.

Speaker #3: Beyond the information presented on the slide, I would like to provide some additional color on maintenance downtime costs. The $129 per ton required in the second quarter 26 mainly reflect a heavier maintenance schedule during the quarter.

Speaker #3: Extending downtime at the Trace Lagos mill and the remaining impact of HIBAS mill downtime that began in the first quarter 26. Looking ahead, the company remains on track to deliver a never 2026 cash cost excluding downtime of approximately $800 per ton.

Speaker #3: In line with its guidance and its closure assumptions, supported by the gradual cash cost decline in the coming quarters. With that said, I pass the word to Marcos to continue the presentation.

Aires Galhardo: In line with its guidance and disclosure assumptions, supported by the gradual cash cost decline and coming contracts. This said, I turn the word to Marcos to continue the presentation.

Speaker #2: Thank you, Iris, and good morning, everyone. I'll start on slide 7, explaining the impact of higher oil prices in our operations, and the effectiveness of our hedging strategy.

Marcos Moreno Chagas Assumpção: Thank you, Aires, and good morning, everyone. I will start on slide seven, explaining the impact of higher oil prices in our operations and the effectiveness of our hedging strategy. In Q2 2026, our costs increased by BRL 275 million due to higher oil-related prices, and we had a +BRL 150 million cash impact from our hedging portfolios, compensating nearly 60% of the negative impact. Looking ahead, we have 85% of coverage over our hedgeable exposure in H2 2026 and 35% in 2027. As a sensitivity, if Brent prices remain at today's level of $87 per barrel, Suzano would receive a +BRL 250 million cash adjustment over the upcoming 18 months. Moving to slide eight, I will show that our currency portfolio continues to protect our free cash flow.

Speaker #2: In second quarter 2026, our cost increased by $275 million due to higher oil-related prices, and we had a positive cash impact of nearly $150 million from our hedging portfolios.

Speaker #2: Compensating nearly 60% of the negative impact. Looking ahead, we have 85% of coverage over our hedgeable exposure in the second half of 2026, and 35% in 2027.

Speaker #2: As a sensitivity, if brent prices remain at today's level of $87 per barrel, Suzano would receive a positive cash adjustment of $250 million over the upcoming 18 months.

Speaker #2: Moving to slide 8, I'll ll show that our currency portfolio continues to protect our free cash flow. In the second quarter of 2026, we had a positive cash adjustment of $480 million from our FX hedges.

Marcos Moreno Chagas Assumpção: In Q2 2026, we had a positive cash adjustment of BRL 480 million from our FX hedges. Our portfolio of zero-cost collars remains solid at $4.6 billion, with an average put option of BRL 6.11 per dollar, covering 57% of our USD exposure. As a sensitivity, if the BRL remains at today's level of 5.19, Suzano will receive more than BRL 4 billion on positive cash adjustments in the upcoming 24 months. Moving to slide 9, our positive free cash flow in the quarter contributed to reduce our net debt from $13 billion in Q1 2026 to $12.8 billion in Q2. Our leverage ticked up from 3.3x in Q1 2026 to 3.4x in Q2, mainly explained by the contraction in our last 12 months EBITDA.

Speaker #2: Our portfolio of zero-cost callers remains solid at $4.6 billion with an average put option of $6.11 per dollar. Covering 57% of our US dollar exposure.

Speaker #2: As a sensitivity, if the BRL remains at today's level of $5.19, Suzano would receive more than $4 billion in positive cash adjustments in the upcoming 24 months.

Speaker #2: Moving to slide 9, our positive free cash flow in the quarter contributed to reduce our net debt from $13 billion in first quarter 2026 to $12.8 billion in the second quarter.

Speaker #2: Our leverage ticked up from 3.3 times in first quarter 2026 to 3.4 times in the second quarter. Namely explained by the contraction in our last 12-month EBITDA.

Speaker #2: Following the acquisition of Arbex in the third quarter, we will consolidate 100% of Arbex net debt and only one quarter of EBITDA. But we believe that the correct way of looking at this metric will be to consider the last 12-month EBITDA of Arbex.

Marcos Moreno Chagas Assumpção: Following the acquisition of Arbex in Q3, we will consolidate 100% of Arbex net debt and only one quarter of EBITDA. We believe that the correct way of looking at this metric will be to consider the last 12 months EBITDA of Arbex. We remain highly focused on executing our strategy to reduce Suzano's leverage following the conclusion of this transaction. Lastly, we maintain a very healthy cost of debt at 5.1% in US dollars with a comfortable amortization schedule of 76 months with limited amortizations in the short term. Important to mention that we continued our liability management effort in Q2 2026, and we issued BRL 2.5 billion or $500 million in local instruments with an average tenure of nearly 11 years and a final cost 60 basis points below the Brazilian benchmark rate for the same period.

Speaker #2: We remain highly focused on executing our strategy to reduce Suzano's leverage following the conclusion of this transaction. Lastly, we maintain a very healthy cost of debt at 5.1% in US dollars, with a comfortable amortization schedule of 76 months and limited amortizations in the short term.

Speaker #2: Important to mention that we continued our liability management effort in the second quarter 2026, and we issued $2.5 billion or $500 million in local instruments with an average tenor of nearly $11 years, and a final cost 60 basis points below the Brazilian benchmark rate for the same period.

Speaker #2: Now, I'd like to turn the call over to Beto for his final remarks.

Marcos Moreno Chagas Assumpção: Now I would like to turn the call to Beto for his final remarks.

Speaker #3: Thank you, Marcos. I want to highlight three main points looking forward. The first one is that we are still expecting higher demand in the second semester, and then stronger sales.

Beto Abreu: Thank you, Marcos. I want to highlight three main points looking forward. The first one is that we still expecting higher demand on the H2 and then stronger sales. That's the first point. The second one is that we are still confident that we will deliver the guidance, regarding the cash costs that we share with all of you. The third one is that we are already expecting efficiency gains from the Arbex operation in the H2, since the team is already in place. Having said that, I will open for questions.

Speaker #3: That's the first point. The second one is that we are still confident that we will deliver the guidance regarding the cash cost that we shared with all of you. And the third one is that we are already expecting efficiency gains from the Aracruz operation in the second semester.

Speaker #3: Since the team is already in place. So having said that, I will open for questions.

Speaker #1: We will now begin the Q&A session for investors and analysts. If you wish to ask a question, please click on raise hand. If your question has already been answered, you can leave the queue by clicking on put hand down.

Operator 2: We will now begin the Q&A session for investors and analysts. If you wish to ask a question, please click on Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. Our first question comes from Caio Ribeiro with Bank of America.

Operator: We will now begin the Q&A session for investors and analysts. If you wish to ask a question, please click on Raise Hand. If your question has already been answered, you can leave the queue by clicking on Put Hand Down. Our first question comes from Caio Ribeiro with Bank of America.

Speaker #1: Our first question comes from Caio Ribeiro with Bank of America.

Speaker #4: Good morning. Thank you for the opportunity. So my first question is on your cash cost guidance for the year, which you kept at $800 per ton. This points to a drop to levels below $800 per ton in the second half of the year, in order to achieve that.

Caio Ribeiro: Good morning. Thank you for the opportunity. My first question is on your cash cost guidance for the year, which you kept at BRL 800 per ton, which points to a drop to levels below BRL 800 per ton in the H2 of the year to achieve that. I know that you guys are confident on achieving that, but I just wanted to see if you can share some more color on the main components of that cash cost and the variables that should help you deliver that guidance. If you can give us also some color on the general trends that you are seeing for next year, how sticky some of those cost impacts from the conflict are, that would also be great. Secondly, a question on leverage.

Caio Ribeiro (Bank of America: Good morning. Thank you for the opportunity. My first question is on your cash cost guidance for the year, which you kept at BRL 800 per ton, which points to a drop to levels below BRL 800 per ton in the H2 of the year to achieve that. I know that you guys are confident on achieving that, but I just wanted to see if you can share some more color on the main components of that cash cost and the variables that should help you deliver that guidance. If you can give us also some color on the general trends that you are seeing for next year, how sticky some of those cost impacts from the conflict are, that would also be great. Secondly, a question on leverage.

Speaker #4: So I know that you guys are confident in achieving that, but I just wanted to see if you can share some more color on the main components right of that cash cost and the variables that should help you deliver that guidance.

Speaker #4: And if you can give us also some color on the general trends that you're seeing for next year, you know, how sticky some of those cost impacts from the conflict are, that would also be great.

Speaker #4: And then secondly, a question on leverage, right, with a company targeting to reach that level below 2.5 times that debt-to-BDI in 2027 to 2028, and you still have to consolidate the net debt from Arbex.

Caio Ribeiro: With the company targeting to reach that level below 2.5x net debt to EBITDA in 2027 to 2028, and you still have to consolidate the net debt from Arbex. Just wanted to see if you can share some color on the pathway towards achieving that level. If you believe at this point that it can be reached solely with free cash flow generation in the period, or to what extent you are incorporating divestments as part of that assumption to reach that level. That would also be very helpful. Thank you.

Caio Ribeiro (Bank of America: With the company targeting to reach that level below 2.5x net debt to EBITDA in 2027 to 2028, and you still have to consolidate the net debt from Arbex. Just wanted to see if you can share some color on the pathway towards achieving that level. If you believe at this point that it can be reached solely with free cash flow generation in the period, or to what extent you are incorporating divestments as part of that assumption to reach that level. That would also be very helpful. Thank you.

Speaker #4: Just wanted to see if you can share some color on the pathway towards achieving that level. If you believe at this point that it can be reached solely with free cash flow generation in the period, or to what extent you're incorporating divestments as part of that assumption to reach that level, that would also be very helpful.

Speaker #4: Thank you.

Speaker #2: Okay. I'll start. Hi, Caio. Thank you. I'll start with the leverage question. So the bulk of the free cash flow generation will continue to come from our main from our operations.

Marcos Moreno Chagas Assumpção: Okay, I will start. Hi, Caio. Thank you. I will start with the leverage question. The bulk of the free cash flow generation will continue to come from our operations. We expect to generate that from our business. As Beto mentioned, we also expect Arbex to contribute on our deleveraging process as they will be able to generate efficiency gains over the upcoming quarters, namely in 2027 and in 2028. On top of that, as we started mentioning in our last Suzano Day in December last year, we are also focused on a couple of divestments on non-core assets. We mentioned to you that we will have a strategy of selling land plots in Brazil that could be sold to a higher best use than only being used by planting forestry.

Speaker #2: So we expect to generate that from our business. As Beto mentioned, we also expect Arbex to contribute to our deleveraging process, as they will be able to generate efficiency gains over the upcoming quarters, namely in 2027 and 2028.

Speaker #2: And on top of that, as we started mentioning in our last Suzano day in December last year, we are also focused on a couple of divestments on non-core assets.

Speaker #2: We mentioned to you that we will have a strategy of selling land plots in Brazil that could be sold to a higher best use than being only being used by already started we started that in the last months and last quarters, and we expect that to also help on the deleveraging process going forward.

Marcos Moreno Chagas Assumpção: We already started that in the last months and last quarters, and we expect that to also help on the deleveraging process going forward.

Speaker #3: All right, Caio. Are you speaking here? For second semester, there are three main reasons to choose expecting a decrease in our cash cost. First of all, we don't have a significant downtimes at our facility that to increase our production, delaying putting the deletion of the fixed costs.

Aires Galhardo: Hi, Caio. Ari speaking here. For H2, there are three main reasons to us expecting a decrease in our cash cost. First of all, we do not have instant downtimes at our facilities that will increase our production, delaying the delivery of the fixed costs. The second one, these downtimes normally impact other costs in the analysis, because normally we bring to the general shutdowns and other maintenance that we have scheduled through the year. The third, most important factor, we expect a reduction of the consumption in the woods.

Speaker #3: The second one, these downtimes normally impact other costs than in the analysis, because they normally bring to the general shutdown some other maintenance that would have been scattered throughout the year.

Speaker #3: And the third, most important factor, we expect a reduction in consumption in the woods, especially because we've been totally in place with our geo with Pangea, that we presented at the end of last year.

Aires Galhardo: Especially because we have been totally in place our deal with Woodspin that we presented in the end of last year. It will take place in a good amount, and will reduce probably our ratios and our wood consumption in the coming years. There is another important fact. That is energy. Probably in a specific quarter, we have an increase of surplus and it will deliver a better result. For next year, I prefer Carlos be in place to say what we are waiting for coming year.

Speaker #3: It will take place in a good amount, and we will reduce probably our radius and our consumption wood consumption in the coming years. There is another important fact that's energy.

Speaker #3: Probably, in a specific quarter, we have an increase of surplus and deliver a better result. For next year, I prefer Carlos being in place to say what he is looking for in the coming year.

Speaker #4: Okay, that's very clear. Thank you, gentlemen.

Caio Ribeiro: Okay. That is very clear. Thank you, gentlemen.

Caio Ribeiro (Bank of America: Okay. That is very clear. Thank you, gentlemen.

Speaker #1: Our next question comes from Marcio Faridji with Goldman Sachs. You can open your microphone.

Operator 2: Our next question comes from Marcio Farid with Goldman Sachs. You can open your microphone.

Operator: Our next question comes from Marcio Farid with Goldman Sachs. You can open your microphone.

Speaker #3: Thank you. Morning, everyone. Well, first of all, Iris, I've been following your work since your favorite times. And very well done. Congrats on the great journey on Fibra and then on Suzano.

Marcio Farid: Well, first of all, Aires, I have been following your work since your Fibria times, and very well done. Congrats on the great journey on Fibria and then on Suzano. It has been truly remarkable, the operational deliveries you guys have delivered. So congrats and good luck on the next steps. I have a couple of questions. The first one on Arbex. I have seen many LinkedIn updates. Clearly, you have been moving fast in terms of putting the team together. I am sure by now you probably have an even better idea on what the company and the assets and the markets look like versus when you did the due diligence for the acquisition. So it would be great to hear your updates, early impressions, next steps, and your ongoing conviction on the delivery scale that can be expected. Secondly, maybe on the paper side.

Speaker #3: It's been truly remarkable—the operational delivery you guys have delivered. So, congrats and good luck on the next steps. Yeah, I have a couple of questions.

Speaker #3: The first one on Arbex. I've seen, you know, many LinkedIn updates. Clearly, you've been moving fast in terms of putting the team together. And I'm sure by now you probably have an even better idea on what the company and the assets and, you know, the markets look like versus when you did the due diligence for the acquisition.

Speaker #3: So would be great to hear, you know, your updates, early impressions, next steps, and your ongoing conviction on the delivery that can be expected and secondly, maybe on the paper side, you I think Fabio mentioned China imports have been hitting the market.

Marcio Farid: I think Fabio mentioned China imports have been hitting the market. We have been hearing about Chinese and Indonesian imports, being more harmful to the Brazilian market as well. So trying to understand if you can see actions being taken by the government in terms of tariffs and how you are positioned for that. Also, if you can comment on the US profitability side, that would be great as well. Thank you both.

Speaker #3: We've been hearing about, you know, Chinese and Indonesian imports being more harmful to the Brazilian market as well. So trying to understand if you can see actions being taken by the government in terms of tariffs and how you are positioned for that.

Speaker #3: And also, if you can comment on the US profitability side, that would be great as well. Thank you both.

Speaker #5: Hi, Marcio. This is Beto. Let me go over the Arbex, and then the team here will cover the other questions. I think three things that we should highlight on the Arbex: you're the first one.

Beto Abreu: Hi, Marcio. This is Beto. Let me go over the Arbex and then the team here will cover the other questions. I think three things that we should highlight on the Arbex deal. The first one is that the team, I will say the clean team, from Suzano and for Kimberly-Clark, have been working together during all this period of time, and they have delivered tremendous job in terms of carve out and also in terms of writing down all the value gain streams that we had in place. So, all the premises that we share, once we announce the deal, we want to confirm that they all are still in place. So we are now focused to deliver the premise that we also share with you. The second thing is that the governance also is working already.

Speaker #5: It's that the team outside the clean team from Suzano and for Kimberly-Clark have been working together during all this period of time, and they have delivered tremendous job in terms of carve-out and also in terms of writing down all the value gain streams that we had in place.

Speaker #5: So all the premises that we share once we announce the deal we want to confirm that they all still in place. So we are now focused to delivery.

Speaker #5: That is a premise that we also share with you. The second thing is that the governance is also already working. We have a board already in place with three members from Suzano and two from Kimberly-Clark.

Beto Abreu: We have a board already in place with three members from Suzano, two from Kimberly-Clark. They already had the first meeting. They already are working to implement the plan that we have approved. Secondly, we are very glad about the management team that we were able to put together with people from both companies and also hiring people from outside. We are confident that we have a very strong team to extract all the efficiencies that we share with you once we announce the deal. The team is very confident about what we are able to build with this initiative. Thank you. Let's take the hand over to Leo.

Speaker #5: They already had the first meeting they already are working to implement the plan that we have approved and secondly, we are very glad about the management team that we were able to put together with people from both companies and also hiring people from outside.

Speaker #5: So we are confident that we have a very strong team to extract all the efficiencies that we share with you once we announce the deal.

Speaker #5: So the team very confident about what we are able to build with this initiative. Thank you. So let's take the I'll hand over to Leo.

Speaker #2: No, it's Fabio here.

Fabio Almeida de Oliveira: No, it's Fabio here.

Speaker #5: To Fabio.

Beto Abreu: To Fabio.

Speaker #2: Marcio, thank you for your question. So let me take the first part about the Chinese imports. Yes, we have seen a big inflow of Chinese imports in the first half of the year.

Fabio Almeida de Oliveira: Marcio, thank you for your question. Let me take the first part about Chinese imports. Yes, we have seen a big inflow of Chinese imports in H1. This is mainly given the stronger BRL for most of the first part of the year and also lower freights that we have seen, especially in the beginning of the year. Things have changed a little bit. We have seen some price increases announced by Indonesian, Chinese paper producers. Also, we have seen rising freight costs, mainly with the Middle East conflict. Also, the Brazilian real has weakened a little bit. Let's see what happens in H2 with these adjustments. Through Ibá, the main players are discussing ways of protecting the domestic industry.

Speaker #2: This is mainly given the stronger real for the for most of the first part of the year and also lower freights that, you know, we have seen especially in the beginning of the year.

Speaker #2: Things have changed a little bit. We have seen some price increases announced by Indonesian and Chinese paper producers, and we have also seen rising freight costs, mainly due to the Middle East conflict.

Speaker #2: And also the Brazilian real has weakened a little bit. So let's see what happens in the second half of the year. With this adjustments, through EBA, you know, the main players are discussing ways of protecting the domestic industry.

Speaker #2: Looking at, you know, our import duties and see if we have a, you know, the right level of import duties in order to protect what we're doing.

Fabio Almeida de Oliveira: Looking at our import duties and see if we have the right level of import duties in order to protect what we are doing. We are discussing and discussing with the Brazilian government ways of protecting the national industry here. Your second question regarding US profitability. We have had a difficult Q2. Part of that was expected. We had a cold maintenance outage, which is first time that we have done that in Pine Bluff. It is the one that we turn off all the utilities at the mill. We had some difficulties bringing the mill back to operations. That affected our results in Q2. Also we have a delay in pricing protection.

Speaker #2: So we are discussing and discussing with the Brazilian government ways of protecting the national industry here. Your second question regarding US profitability, we have had, you know, difficult second quarter that was part of that was expected by the we had a cold maintenance outage, which is first time that we have done that in Pine Bluff.

Speaker #2: It's the one that we turn off all the utilities at the mill and so we have some difficulties bringing the mill back to operations.

Speaker #2: And that affect our results in the second quarter. And also we have a delay in pricing protection. We have 80% of our volume under contract and our contracts, they offer some inflation protection prices, but there's a lag of three months in between, you know, when the cost hit us and when we can increase price to customers.

Fabio Almeida de Oliveira: We have 80% of our volume under contract. Our contracts, they offer some inflation protection prices, but there is a lag of three months in between when the cost hit us and when we can increase price to customers. That Q2 was the lag period that we had higher costs and prices that will start rising now in Q3. We are optimistic about the H2 of the year. As I mentioned, there are some things happening in the market. Our main competitor had a major accident at the mill. It is still down, not operating. That is Nippon Dynawave. We have received a very strong orders book for the H2 of the year. We now need to produce well so that we can collect all these volumes that we have already in place here with us in terms of orders.

Speaker #2: So and that second quarter was the, you know, the lag period that we had higher costs and prices have started rising now in the third quarter.

Speaker #2: We are optimistic about the second half of the year as I mentioned. There's some things happening in the market. Our main competitor had a major accident at the mill.

Speaker #2: It's still down, not operating. That's Nippon Dynawave. And we have received a very strong order book for the second half of the year, so we now need to, you know, produce well.

Speaker #2: And so, we can have this to collect all these volumes that we already have in place here with us in terms of orders. So, we're very positive about the second half of the year.

Fabio Almeida de Oliveira: We are very positive about the H2 of the year. We have no major event in terms of maintenance planned for that period. We see the mill running much better now in August already. We are optimistic.

Speaker #2: We have no major event in terms of maintenance planned for that period. So and we see the mill running much better now in August already.

Speaker #2: So we're optimistic.

Speaker #3: Great. Thanks a lot, Beto. And Fabio, I'll turn it over.

Marcio Farid: Great. Thanks a lot, Beto and Fabio. I will turn it over.

Speaker #1: Our next question comes from Rafael Barcelos with the Disco BBI. Your microphone is open, sir.

Operator 2: Our next question comes from Rafael Barcellos with Bradesco BBI. Your microphone is open, sir.

Operator: Our next question comes from Rafael Barcellos with Bradesco BBI. Your microphone is open, sir.

Speaker #4: Good morning. Thanks for taking my questions and Iris. Thanks for the interactions over the past few years. Wishing you good luck and congrats on Nebo for the new position.

Rafael Barcellos: Good morning. Thanks for taking my questions. Aires, thanks for the interactions over the past few years. Wishing you good luck and congrats, Anibal, for the new position. First question on pulp market. Leo, your speech seemed a bit more constructive versus what we have been hearing over the past 1 or 2 months. I just wanted to hear your thoughts on how strong you believe demand will be in the end of August as we approach a stronger demand seasonality. If you are comfortable to call where we are in hardwood pulp as the bottom. Any other comments that you can provide on the cycle could be interesting as well. The second question, Beto, on capital allocation. The company still have some potential investments going forward. You have the right to increase your share in Lenzing, in Arbex.

Speaker #4: So first question on bulk market. So Leo, your speech seemed a bit more constructive versus what we have been hearing over the past one or two months.

Speaker #4: So I just wanted to, you know, hear your thoughts on how strong you believe demand will be at the end of August as we approach a period of stronger seasonal demand.

Speaker #4: And if you're comfortable to call, where we are and how did POPE as the bottom. And any other comments that you can provide on the cycle could be interesting as well.

Speaker #4: And the second question, Beto, on capital location. So the company still have some potential investments going forward, like you have the right to increase your share in lending in RBACs.

Speaker #4: You also have a buyback program open, and you have this priority now to deleverage. So I just wanted to hear your thoughts and your framework here on which areas you should prioritize.

Rafael Barcellos: You also have a buyback program opened, and you have this priority now to deleverage. I just wanted to hear your thoughts and your framework here on which areas you should prioritize. If you can consider any sort of asset sales to accelerate deleveraging, and your overall thoughts on how you are going to balance the buybacks, the potential investments, and this deleveraging process. Thank you.

Speaker #4: I mean, if you can consider any sort of asset sales to accelerate the leveraging and your overall thoughts on how you're going to balance the buybacks, the potential investments in these deleveraging process.

Speaker #4: Thank you.

Speaker #5: I have a good morning. Thank you for your question. Yes, indeed, we are a bit more constructive when it comes to volume allocations as we know second half of the year is suddenly higher than the first half of the year.

[Company Representative] (Suzano): Hi, Rafael. Good morning. Thank you for your question. Yes, indeed, we are a bit more constructive when it comes to volume allocations. As we know, H2 of the year is certainly higher than H1 of the year. During these first weeks of August, all interactions that we are having with our Asian customers, and Chinese customers obviously, are extremely positive. We expect that August order intake will exceed significantly our average order intake pattern. We are quite confident of that. We are also seeing now the first signs of integrated Chinese producers, mainly the higher cost ones, already coming to the table to start discussing a negotiation. That is always a big indication of higher volumes going forward. Regarding your question, if we see hardwood pulp reaching the bottom, obviously we cannot give forward-looking statements.

Leonardo Grimaldi: Hi, Rafael. Good morning. Thank you for your question. Yes, indeed, we are a bit more constructive when it comes to volume allocations. As we know, H2 of the year is certainly higher than H1 of the year. During these first weeks of August, all interactions that we are having with our Asian customers, and Chinese customers obviously, are extremely positive. We expect that August order intake will exceed significantly our average order intake pattern. We are quite confident of that. We are also seeing now the first signs of integrated Chinese producers, mainly the higher cost ones, already coming to the table to start discussing a negotiation. That is always a big indication of higher volumes going forward. Regarding your question, if we see hardwood pulp reaching the bottom, obviously we cannot give forward-looking statements.

Speaker #5: And during this first weeks of August, all interactions that we are having with our Asian customers and Chinese customers, obviously, are extremely positive. We expect that August order intake will exceed significantly our average order intake pattern.

Speaker #5: So we are quite confident of that. And we're also seeing now the first signs of integrated Chinese producers, mainly the higher-cost ones, already coming to the table to start discussions and negotiations.

Speaker #5: So that's always a big indication of higher volumes going forward. Regarding your question, if we see how did POPE reaching the bottom, obviously we cannot give forward-looking statements.

Speaker #5: But we are confident, as negotiations have started, that at current levels, or very close to them, we will see the industry moving in China and in Asia, and consecutively in Europe and North America as well.

Fabio Almeida de Oliveira: But we are confident, as negotiations have started, that at current levels or very close to them, we will see the industry moving in China and in Asia, and consecutively in Europe and North America as well. We are very confident of a strong H2 of the year.

Leonardo Grimaldi: But we are confident, as negotiations have started, that at current levels or very close to them, we will see the industry moving in China and in Asia, and consecutively in Europe and North America as well. We are very confident of a strong H2 of the year.

Speaker #5: So, we're very confident of a strong second half of the year.

Speaker #3: Hi, Rafael. Thank you for your question. To be very straightforward in terms of capital location, our priority it's really deleveraging. So this is where we're going to focus despite rights that we might have on those deals that you mentioned before.

Beto Abreu: Rafael, thank you for your question. To be very straightforward in terms of capital allocation, our priority, it is really deleveraging. This is where we are going to focus, despite rights that we might have on those deals that you mentioned before. This is also related to buyback. Again, the focus and the main priority of the company is deleveraging, and this is what we are going to focus on. Regarding asset sales, you know that we own nearly 1 million hectares in terms of land, and we have a very small part of that we call higher and best usage of the land that we might divest. Actually, we have started already. But besides that, there is no other important divestment process that we are taking into consideration at this time.

Speaker #3: And this is also related to buyback. Again, the focus and the main priority of the company is deleveraging and this is what we're going to focus on.

Speaker #3: Regarding asset sales, you know that we own nearly 1 million hectares in terms of land and we have a small part of that, very small part of that that we call higher and best usage of the land that we might divest.

Speaker #3: Actually, we had started already. But aside from that, there is no other important divestment process that we are taking into consideration at this time.

Speaker #4: Perfect. Thank you, Beto and Leo.

Rafael Barcellos: Perfect. Thank you, Beto and Leo.

Speaker #1: Our next question comes from Daniel Sasson with Itaú BBA. Your microphone is open, sir.

Operator 2: Our next question comes from Daniel Sasson with Itaú BBA. Your microphone is open, sir.

Operator: Our next question comes from Daniel Sasson with Itaú BBA. Your microphone is open, sir.

Speaker #5: Hi everyone. Thanks for the opportunity. Before we start, I'd also like to thank Iris for all the changes we've had over the years and your constant availability to engage with us.

Daniel Sasson: Hi, everyone. Thanks for the opportunity. Before we start, I would also like to thank Aires for all the changes we have had over the years, your constant availability to engage with us. It has really been a privilege to follow your journey, Aracruz, Araucaria, Fibria, and Suzano. So best of luck in your next steps. My first question, Marcos, you mentioned that you expect the internal free cash flow generation to be the main driver of your deleveraging path over the next few years, followed by some opportunities to divest some non-core assets and so on and so forth. At what time, or at what point do you believe the company can rethink about its formal policies, so as to maybe send a clear message to the market with regards to shareholders' returns? For instance, by changing its dividend policy.

Speaker #5: It's really been a privilege to follow your journey across Aracruz, Fibra, and Suzano. So best of luck in your next steps. My first question, Marcos, you mentioned that you expect the internal free cash flow generation to be the main driver of your deleveraging path over the next few years, followed by opportunistic by some opportunities to divest or non-core assets and so on and so forth.

Speaker #5: At what time or at what point do you believe the company can rethink about its formal policies so as to maybe stand a clearer message to the market in regards to shareholders' returns, for instance, by changing its dividend policy?

Speaker #5: Because I think that the main point of discussion we've had with investors in last night was the super strong free cash flow operating, free cash flow that is posted this quarter, right?

Daniel Sasson: Because I think that the main point of discussion we have had with investors since last night was the super strong free cash flow operating, free cash flow that you posted this quarter, right? Once this continues to materialize after the incorporation of Arbex, maybe you are going to start to be asked about capital allocation and so on and so forth. So I would like to understand how your official policies enter into this discussion. Then maybe my second question to Leo. If you could expand a little bit more, Leo. Of course, you cannot say whether you are close or not to the bottom of prices for this cycle, but if you could give us more information or more details about what you just said, that there are some high cost integrated Chinese producers maybe considering buying pulp from, buy market pulp, right?

Speaker #5: So once this continues to materialize after the incorporation of RBACs, maybe you're going to start to be asked about the capital location and so on and so forth.

Speaker #5: So I'd like to understand how your official policies enter into this discussion. And then maybe my second question to Leo, if you could expand a little bit more, Leo, of course it's you can't say whether you're close or not to the bottom of prices for this cycle, but if you could give us more information or more details about what you just said that there are some high-cost integrated Chinese producers maybe considering buying POPE from buying market POPE, right?

Speaker #5: What are your estimates in regards to the Chinese POPE production cost depending on if they use domestic wood or if they import wood chips from Vietnam, for instance?

Daniel Sasson: What are your estimates in regards to the Chinese pulp production cost, depending on if they use domestic wood versus the import wood chips from Vietnam, for instance, because we are seeing wood chip prices increasing across Southeast Asia in general now. So that would be really helpful. Thank you, everyone.

Speaker #5: Because we're seeing wood chip prices increasing across South Asia in general, right? So that would be really helpful. Thank you, everyone.

Speaker #2: Hi Daniel, thank you for your question. First, I'll say that we continue to be very focused on our strategy. So, the first point is, we will continue to never be satisfied in terms of how competitive we can be in our operations.

Marcos Moreno Chagas Assumpção: Hi, Daniel. Thank you for your question. First, I would say that we continue to be very focused on our strategy. So the first point is we will continue to be never satisfied in terms of how competitive we can be in our operations. So we are always looking for opportunities to improve our efficiency in all the value chain that we have. Starting from the forestry, actually from the nursery to the forestry, to the logistics on the commercial area, in the industrial area, so on and so forth. So this will be a top priority for us. And this, we believe that this will help and contribute to generate cash to reduce our leverage. Second point, as we mentioned, we will continue to extract value from our recent growth investment that we made, and the most relevant one is Arbex, for sure.

Leonardo Grimaldi: Hi, Daniel. Thank you for your question. First, I would say that we continue to be very focused on our strategy. So the first point is we will continue to be never satisfied in terms of how competitive we can be in our operations. So we are always looking for opportunities to improve our efficiency in all the value chain that we have. Starting from the forestry, actually from the nursery to the forestry, to the logistics on the commercial area, in the industrial area, so on and so forth. So this will be a top priority for us. And this, we believe that this will help and contribute to generate cash to reduce our leverage. Second point, as we mentioned, we will continue to extract value from our recent growth investment that we made, and the most relevant one is Arbex, for sure.

Speaker #2: So we're always looking for opportunities to improve our efficiency in all the value chain that we have, starting from the force. Actually, from the nursery to the forestry to the logistics on the commercial area, so on.

Speaker #2: And the industrial area, so on and so forth. So this will be a top priority for us. And this we believe that this will help and contribute to generate cash to reduce our leverage.

Speaker #2: Second point: as we mentioned, we will continue to extract value from our recent growth investments that we made. And the most relevant one is RBACs, for sure.

Speaker #2: And we are confident that we will be able to deliver the efficiency gains that we're expecting for that business. Last point, we should look for optionalities that we can have and that we can bring to the table as we have irreplicable asset base in our hands.

Marcos Moreno Chagas Assumpção: And we are confident that we will be able to deliver the efficiency gains that we are expecting for that business. Last point, we should look for optionalities that we can have and that we can bring to the table as we have a replicable asset base in our hands. We start that with the land plots, as we mentioned. But we could extrapolate that into other business that we have. Of course, whenever trying to extract value from our asset base, this could take some time. We mentioned to you before that we have very strong and competitive logistic assets that we have in Brazil, replicable as well, that we could extract value from that in the future, but could take more time.

Leonardo Grimaldi: And we are confident that we will be able to deliver the efficiency gains that we are expecting for that business. Last point, we should look for optionalities that we can have and that we can bring to the table as we have a replicable asset base in our hands. We start that with the land plots, as we mentioned. But we could extrapolate that into other business that we have. Of course, whenever trying to extract value from our asset base, this could take some time. We mentioned to you before that we have very strong and competitive logistic assets that we have in Brazil, replicable as well, that we could extract value from that in the future, but could take more time.

Speaker #2: And we started with the land plots as we mentioned. But we could extrapolate that into other business that we have. Of course, whenever trying to extract value from our asset base, this could take some time.

Speaker #2: We mentioned to you before that we have very strong and competitive logistic assets in Brazil. They are also replicable, so we could extract value from them in the future, but that could take more time.

Speaker #2: So for the short term, we are definitely focused on bringing the leverage to the level that we believe it's healthy for the company. 2.5 times.

Marcos Moreno Chagas Assumpção: So for the short term, we are definitely focused on bringing the leverage to the level that we believe is healthy for the company, 2.5 times. As we reach that, we will be able to decide on a more aggressive or not return to shareholders. So I would say that the main assumption behind considering a new return to shareholder will be focused on deleveraging the company to 2.5 times.

Leonardo Grimaldi: So for the short term, we are definitely focused on bringing the leverage to the level that we believe is healthy for the company, 2.5 times. As we reach that, we will be able to decide on a more aggressive or not return to shareholders. So I would say that the main assumption behind considering a new return to shareholder will be focused on deleveraging the company to 2.5 times.

Speaker #2: As we reach that, we will be able to decide on a more aggressive or not return to shareholders. So I would say that the main assumption behind considering a new return to shareholder would be focus on the leverage in the company to 2 and a half times.

Speaker #4: Super clear, Marcos. Thank you.

Daniel Sasson: Super clear, Marcos. Thank you.

[Company Representative] (Suzano): Hi, Daniel. This is Leo here. Thanks for your question. I am going to try to give color in other variables other than just wood to fundament why we see a constructive Q2 and, or H2 with several potential upsides in the model. First, with all our market intelligence team in China and all the work we do, our current estimate of average cash costs for pulp production in China ranges from USD 535 to USD 550. That is the average Chinese cash cost. So obviously older mills operate at a higher cash cost and newer mills at a lower cash cost. Prices, as you know, are very close to these levels and already breaching the cash costs of higher cost Chinese producers.

Leonardo Grimaldi: Hi, Daniel. This is Leo here. Thanks for your question. I am going to try to give color in other variables other than just wood to fundament why we see a constructive Q2 and, or H2 with several potential upsides in the model. First, with all our market intelligence team in China and all the work we do, our current estimate of average cash costs for pulp production in China ranges from USD 535 to USD 550. That is the average Chinese cash cost. So obviously older mills operate at a higher cash cost and newer mills at a lower cash cost. Prices, as you know, are very close to these levels and already breaching the cash costs of higher cost Chinese producers.

Speaker #5: Hi Daniel. This is Leo here and thanks for your question. I'm going to try to give a caller in other variables other than just wood to fundament why we see a constructive second quarter or second half of the year.

Speaker #5: We have several potential upsides in the model. First, with all our market intelligence team in China and all the work we do, our current estimate of average cash costs for POPE production in China ranges from $535 to $550.

Speaker #5: And that's the average Chinese cash cost. So, obviously, older mills operate at a higher cash cost and newer mills at a lower cash cost.

Speaker #5: So in prices, as you know, are very close to these levels. And already breaching the cash cost of higher cost Chinese producers. I'm not even talking about marginal cash cost because that's in our view around $630.

[Company Representative] (Suzano): I am not even talking about marginal cash cost, because that is, in our view, around $630. We really think that something has to go on this global pulp scenario, as I mentioned before. Continue to say it is completely unsustainable to see an industry operating with 30% of the total production underwater. This cannot be sustained for a longer time. A bigger evidence of that is the amount of unplanned downtimes and closures announcements that we have seen so far. I have always been saying that this is one of the drivers of change. That is not in our forecasting models. That happened and could happen in cycles like this. Just to exemplify, the unplanned downtimes and closures last year totaled roughly 1.7 million tons, adding softwood and hardwood.

Leonardo Grimaldi: I am not even talking about marginal cash cost, because that is, in our view, around $630. We really think that something has to go on this global pulp scenario, as I mentioned before. Continue to say it is completely unsustainable to see an industry operating with 30% of the total production underwater. This cannot be sustained for a longer time. A bigger evidence of that is the amount of unplanned downtimes and closures announcements that we have seen so far. I have always been saying that this is one of the drivers of change. That is not in our forecasting models. That happened and could happen in cycles like this. Just to exemplify, the unplanned downtimes and closures last year totaled roughly 1.7 million tons, adding softwood and hardwood.

Speaker #5: So we really think that something has to go on on this global POPE scenario, as I mentioned before, continue to say it's competing and sustainable to see an industry operating with 30% of the total production underwater.

Speaker #5: This is this cannot be sustained for a longer time. And bigger evidence of that is the amount of unplanned downtimes and closures announcements that we have seen so far.

Speaker #5: I have always been saying that this is one of the drivers of change that's not in our forecasting models. But that happened and could happen in cycles like this.

Speaker #5: So just to exemplify, the unplanned downtimes and closures last year totaled roughly 1.7 million tons, adding softwood and hardwood. And what we know up to today, with yesterday's announcement of Matsakimi, we are now reaching 2.5 million tons already.

[Company Representative] (Suzano): What we know up to today, with yesterday's announcement of Metsä Fibre Kemi, we are now reaching 2.5 million tons already. Again, that is just until yesterday. It is a 45% increase in unplanned downtimes and closures, up into August, right? That is almost 1 million tons of product that is now less available to markets, but in my view, still insufficient. We still need to see more closures for market to recover balance. Last but not least, it is important also to look at the inventory levels at Chinese ports. They are high, indeed, but they are reducing. We see a reduction from peak of roughly 300,000 tons. In our view, that is all softwood inventories being reduced. A few months ago, inventories of softwood represented 65% of what was available at ports, based on our market info and teams on the ground.

Leonardo Grimaldi: What we know up to today, with yesterday's announcement of Metsä Fibre Kemi, we are now reaching 2.5 million tons already. Again, that is just until yesterday. It is a 45% increase in unplanned downtimes and closures, up into August, right? That is almost 1 million tons of product that is now less available to markets, but in my view, still insufficient. We still need to see more closures for market to recover balance. Last but not least, it is important also to look at the inventory levels at Chinese ports. They are high, indeed, but they are reducing. We see a reduction from peak of roughly 300,000 tons. In our view, that is all softwood inventories being reduced. A few months ago, inventories of softwood represented 65% of what was available at ports, based on our market info and teams on the ground.

Speaker #5: And again, that's just until yesterday. So it's a 45% increase in unplanned downtimes and closures up into August, right? That's almost a million tons of product that's now less available to markets.

Speaker #5: But in my view, still insufficient. We still need to see more closures for market to recover balance. Last but not least, it's important also to look at the inventory levels at Chinese ports.

Speaker #5: They are high indeed, but they are reducing. We see a reduction from the peak of roughly 300,000 tons. In our view, that's all softwood inventories being reduced.

Speaker #5: A few months ago, inventories of softwood represented 65% of what was available at ports based on our market info and teams in the ground.

Speaker #5: Today, we see maybe a 50-50% buildup in terms of what is the Chinese stocks, meaning that if you make the calculations, hardwood is completely on balance.

[Company Representative] (Suzano): Today, we see maybe a 50/50 build up in terms of what is the Chinese stocks, meaning that if you make the calculations, hardwood is completely on balance. There is still an overstock in softwood grades, which we believe with this number of announcements of closures and expected future announcements to come under this economic scenario, which I mentioned, should again reshape and rebalance Chinese inventories and consequently the market as well.

Leonardo Grimaldi: Today, we see maybe a 50/50 build up in terms of what is the Chinese stocks, meaning that if you make the calculations, hardwood is completely on balance. There is still an overstock in softwood grades, which we believe with this number of announcements of closures and expected future announcements to come under this economic scenario, which I mentioned, should again reshape and rebalance Chinese inventories and consequently the market as well.

Speaker #5: But there's still an overstock in softwood grades, which we believe, with this number of announcements of closures and expected future announcements to come under this economic scenario, which I mentioned, should again reshape and rebalance Chinese inventories and, consequently, the market as well.

Speaker #4: Thank you, Leo.

Daniel Sasson: Thank you, Leo.

Speaker #1: Our next question comes from Hadoufu Angelic with J.P. Morgan. You can open your microphone.

Operator 2: Our next question comes from Rodolfo Angele with J.P. Morgan. You can open your microphone.

Operator: Our next question comes from Rodolfo Angele with J.P. Morgan. You can open your microphone.

Rodolfo Angele: Hi, good morning. I have a couple of questions. One is just to Marcos on working capital outlook. Just wanted to hear if you have any visibility on potentially freeing up some working capital, to help that process of deleveraging in the H2 of the year. The main question I have is for Beto on strategy. When we discuss the investment case for Suzano, one pushback that we constantly receive is, again, because of the past, and the fears of potential opportunistic M&A shifting the focus away from deleveraging and shareholder returns into more investments. I just wanted to make the question very vocally to you, so that we can, for sure, clarify even better how management sees M&A as in your toolkit of potential things to do and just how you look at it as a whole. That is it from me.

Speaker #6: Hi. Good morning. I have a couple of questions. One is just to Marcos on working capital outlook. Just wanted to hear if you have any visibility on potentially freeing up some working capital.

Speaker #6: To help that process of the leveraging in the second half of the year. The main question I have is for Beth on strategy. So when we discuss the investment case for Suzano, one pushback and that we constantly receive is, again, because of the past and the fears of potential opportunistic M&A shifting the focus away from the leveraging and shareholder returns.

Speaker #6: Into more investments. So I just wanted to make the question very vocally. To you, so that we can for sure clarify even better that how management sees M&A as in your toolkit of potential things to do and to just how you look at it as a whole.

Speaker #6: That's it from me. Thank you very much.

Rodolfo Angele: Thank you very much.

Speaker #2: Hi Hadofu. Thank you for your question. On working capital, definitely we have a very strong focus on improving that line. This is a target an internal target for the company.

Marcos Moreno Chagas Assumpção: Hi, Rodolfo. Thank you for your question. On working capital, definitely we have a very strong focus on improving that line. This is an internal target for the company, and it resounds on the never satisfied approach that we have. How can we be more effective and more efficient on our inventories? How can we be more efficient on our CapEx? So on and so forth. We will continue to look at this line with a very close eye and looking to capture opportunities. However, I would say that there are fluctuations in that line that are very frequent, right? In most of the accounts that are relevant. Accounts receivables, accounts payable, CapEx postponement, so on and so forth. It is very difficult to predict or to forecast anything on that line.

Leonardo Grimaldi: Hi, Rodolfo. Thank you for your question. On working capital, definitely we have a very strong focus on improving that line. This is an internal target for the company, and it resounds on the never satisfied approach that we have. How can we be more effective and more efficient on our inventories? How can we be more efficient on our CapEx? So on and so forth. We will continue to look at this line with a very close eye and looking to capture opportunities. However, I would say that there are fluctuations in that line that are very frequent, right? In most of the accounts that are relevant. Accounts receivables, accounts payable, CapEx postponement, so on and so forth. It is very difficult to predict or to forecast anything on that line.

Speaker #2: And it resounds on the never satisfied approach that we have. How can we be more effective and more efficient on our inventories? How can we be more efficient on our COPEX?

Speaker #2: So on and so forth. So we will continue to look at this line with a very close eye and looking to capture opportunities. However, I would say that there are fluctuations in that line that are a very frequent in most of the most in most of the accounts that are relevant.

Speaker #2: So accounts receivables, accounts payable, COPEX postponement, so on and so forth. So it's very difficult to predict or to forecast anything on that line.

Speaker #2: But you can bear in mind that this is a strong focus of the management at this point in time.

[Company Representative] (Suzano): But you can bear in mind that this is a strong focus of the management at this point in time.

Leonardo Grimaldi: But you can bear in mind that this is a strong focus of the management at this point in time.

Speaker #7: Hi, Hadofu. Thank you for your question. I have been saying that our strategy is currently very concentrated on what I'll call reshaping the level of competitiveness of our company.

Beto Abreu: Hi, Rodolfo. Thank you for your question. I have been saying that our strategy, it's very concentrated currently on, I'll call reshaping the level of competitiveness of our company. We still have a lot to do on that area in the next couple of years. The commercial team have been doing a great job and, well, we can call creating new demand through the Fiber-to-Fiber strategy. The potential of those initiatives is still in place and is still growing. As I said, on the very short term, the next 2, 3 years, deleveraging the business. There's no M&A in the pipeline at all.

Speaker #7: We still have a lot to do on that area in the next couple of years. The commercial team have been doing a great job.

Speaker #7: And, well, we can call creating new demand through the fiber-to-fiber strategy. The potential of those initiatives is still in place and is still growing.

Speaker #7: And as I said, in the very short term, over the next two to three years, we're focused on deleveraging the business. So there's no M&A in the pipeline at all.

Speaker #7: So this is what we're going to keep focused on, and this is what we want to do. Thank you, Rodolfo, for your question.

Beto Abreu: This is what we're going to keep focused, and this is what we want to do. Thank you, Rodolfo, for your question.

Speaker #6: Very clear. Thank you.

Rodolfo Angele: Very clear. Thank you.

Speaker #1: Our next question comes from Alfonso Salazar with Scotiabank. You can open your microphone, sir.

Operator 2: Our next question comes from Alfonso Salazar with Scotiabank. You can open a microphone, sir.

Operator: Our next question comes from Alfonso Salazar with Scotiabank. You can open a microphone, sir.

Speaker #5: Yes, thank you. The question that I have tries to bring together some of the comments that you made during the presentation: the fact that China is exporting more, and what you mentioned about the situation in China.

Alfonso Salazar: Yes, thank you. The question that I have tries to put together some of the comments that you have made during the presentation. The fact that China is exporting more, what you mentioned about the situation in China. We know that consumption in China has been very weak recently. Overall consumption, not only paper. This is something that more people are starting to think this is structural, not something cyclical, and at the same time, they are producing more. I am wondering if, at some point, as you consider what could happen if you start having over capacity and more supply in China, more exports, the need for more exports, as we have seen in many other industries. What grades and what markets you think could be more exposed? What would be the strategy?

Speaker #5: And we know that consumption in China has been very weak recently—overall consumption, not only paper. But this is something that more people are starting to think is structural, not something cyclical.

Speaker #5: And at the same time, they are producing more. So I'm wondering if, at some point, as you consider, what could happen if you start having overcapacity and more supply in China, more exports, the need for more exports, as we have seen in many other industries?

Speaker #5: What grades and what markets do you think could be more exposed? What would be the strategy? This is important, especially as you are getting more exposure to new markets through ARVEX.

Alfonso Salazar: Especially, this is important, especially as you are getting more exposure to new markets through Arbex. If you can comment on how this situation could unfold or what are your thoughts about what we are seeing today.

Speaker #5: So, if you can comment on how this situation could unfold, or what are your thoughts about what we are seeing today?

[Company Representative] (Suzano): This is Leo here. I am going to answer your question, but before that, I am going to get back to Daniel's question when he asked about the wood impact in China. Just to clarify, because I skipped that one. We are seeing today the Chinese industry using roughly 58% to 60% of their needs from local wood in China, and roughly 40%, 42% imported. The imported part of it, there is a price increase. As we all know, that ranges from $30 to $50 from end of last year. I think in two calls ago, I mentioned that this could be a probable impact related to the revocation of the Indonesian licenses and now Indonesia importing wood from Vietnam, which is what is happening. In China, there is also an uplift in prices compared to last year's prices of roughly $30 BDMT.

Leonardo Grimaldi: This is Leo here. I am going to answer your question, but before that, I am going to get back to Daniel's question when he asked about the wood impact in China. Just to clarify, because I skipped that one. We are seeing today the Chinese industry using roughly 58% to 60% of their needs from local wood in China, and roughly 40%, 42% imported. The imported part of it, there is a price increase. As we all know, that ranges from $30 to $50 from end of last year. I think in two calls ago, I mentioned that this could be a probable impact related to the revocation of the Indonesian licenses and now Indonesia importing wood from Vietnam, which is what is happening. In China, there is also an uplift in prices compared to last year's prices of roughly $30 BDMT.

Speaker #2: So this is Leo here. I'm going to answer your question. But before that, I missed just I'm going to get back to Daniel's question when he asked about the wood impact in China.

Speaker #2: And just to clarify because I skipped that one, so we are seeing today the Chinese industry using roughly 58 to 60 percent of their needs from local wood in China.

Speaker #2: And roughly 40, 42 percent imported. The imported part of it, there is a price increase. As we all know, that ranges from 30 to $50 from end of last year.

Speaker #2: And I think in two calls ago, I mentioned that this could be a probable impact related to the revocation of the Indonesian licenses, and now Indonesia is importing wood from Vietnam, which is what's happening.

Speaker #2: And in China, there's also an uplift in prices compared to early next last year's prices of roughly $30/BDMT, and we see a lot of volatility in the short term, very related to the typhoon season.

[Company Representative] (Suzano): We see a lot of volatility in the short term, very related to the typhoon season. There is a big correlation of wood prices in China and these weather-related events. So every time a typhoon occurs, and obviously the recurrence of those in a strong El Niño year is higher. We see peaks every once in a while. But all in all, if we consider the lowest part of this range of $30 BDMT increase, we are talking about $60 increase in the cash cost of the Chinese producers. If we consider the upper range of $50, that is a $100 per ton cash cost increase for Chinese integrated or pulp producers. That is our view on wood. Now going to Alfonso's question. This is a big dilemma, right, Alfonso? First of all, I would start by saying what I do not agree to.

Leonardo Grimaldi: We see a lot of volatility in the short term, very related to the typhoon season. There is a big correlation of wood prices in China and these weather-related events. So every time a typhoon occurs, and obviously the recurrence of those in a strong El Niño year is higher. We see peaks every once in a while. But all in all, if we consider the lowest part of this range of $30 BDMT increase, we are talking about $60 increase in the cash cost of the Chinese producers. If we consider the upper range of $50, that is a $100 per ton cash cost increase for Chinese integrated or pulp producers. That is our view on wood. Now going to Alfonso's question. This is a big dilemma, right, Alfonso? First of all, I would start by saying what I do not agree to.

Speaker #2: There's a big correlation between wood prices in China and this weather-related event. So, every time a typhoon occurs—and obviously the recurrence of those in a strong El Niño year is higher.

Speaker #2: So we see peaks every once in a while. But all in all, if we consider the lowest part of this range of a $30 BDMT increase, we're talking about a $60 increase in the cash cost of the Chinese producers.

Speaker #2: And if we consider the upper range of $50, that's a $100 per ton cash cost increase for Chinese integrated or pulp producers. So that's our view on wood.

Speaker #2: Now, going to Alfonso's question. This is a big dilemma, right, Alfonso? First of all, I would start by saying what I don't agree to.

[Company Representative] (Suzano): We do not agree that the consumption in China in paper grades is weak. We see, in most grades, packaging and tissue, double-digit growth, demand growth in China. So it is not our view that we are seeing a contraction of demand in that grade. Obviously, printing and writing grades still grow domestically. The demand for those still grow, but at a lower pace and not double digits. So we are not seeing at all, in any of these grades, a trend in paper grades that point out to a negative consumption trend. So it is a positive consumption trend in China, obviously excluding exports and adding imports to that. But yes, there is an overcapacity in the industry. This is not new. This is not 2026 information. This has been going on for many years or decades.

Leonardo Grimaldi: We do not agree that the consumption in China in paper grades is weak. We see, in most grades, packaging and tissue, double-digit growth, demand growth in China. So it is not our view that we are seeing a contraction of demand in that grade. Obviously, printing and writing grades still grow domestically. The demand for those still grow, but at a lower pace and not double digits. So we are not seeing at all, in any of these grades, a trend in paper grades that point out to a negative consumption trend. So it is a positive consumption trend in China, obviously excluding exports and adding imports to that. But yes, there is an overcapacity in the industry. This is not new. This is not 2026 information. This has been going on for many years or decades.

Speaker #2: We don't agree that the consumption in China in paper grades is weak. We see in most grades, packaging, and tissue double-digit growth. Demand growth in China so it is not our view that we're seeing a contraction of demand in that grades.

Speaker #2: Obviously, printing and writing grades still grow domestically. The demand for those still grow, but at a lower pace. And not double-digit. So we're not seeing at all in any of these grades a trend in paper grades that point out to a negative consumption trend.

Speaker #2: It is a positive consumption trend in China. Obviously, that is excluding exports and adding imports to that. But yes, there is an overcapacity in the industry.

Speaker #2: This is not new. This is not 2026 information. This has been going on for many years, or decades. But it's important to say that there are grades that are easier to be exported, which are more efficient in logistics.

[Company Representative] (Suzano): But it is important to say that there are grades that are easier to be exported, which are more efficient in logistics. I would say printing and writing and packaging grades. As you kind of correlated to Arbex, your question and tissue. Tissue, obviously, is a product that is much harder to be exported because logistics and the cost of logistics is a key component. So it is a product that usually you would reach efficiency closer to your production bases. So risk levels differ among different grades in terms of paper production.

Leonardo Grimaldi: But it is important to say that there are grades that are easier to be exported, which are more efficient in logistics. I would say printing and writing and packaging grades. As you kind of correlated to Arbex, your question and tissue. Tissue, obviously, is a product that is much harder to be exported because logistics and the cost of logistics is a key component. So it is a product that usually you would reach efficiency closer to your production bases. So risk levels differ among different grades in terms of paper production.

Speaker #2: I would say printing and writing and packaging grades. And as you kind of correlated to ARBEX your question and tissue, at tissue obviously is a product that's much harder to be exported because logistics and the cost of logistics is a key component so it's a product that usually you would reach efficiency closer to your production basis.

Speaker #2: So risk levels differ among different grades in terms of paper production.

Alfonso Salazar: That is very helpful. Thank you.

Speaker #5: That's very helpful. Thank you.

Operator 2: The Q&A section is over. We would like to hand the floor back to Mr. Beto Abreu for his closing remarks.

Operator: The Q&A section is over. We would like to hand the floor back to Mr. Beto Abreu for his closing remarks.

Speaker #1: The Q&A section is over. We would now like to hand the floor back to Mr. Beto Abreu for his closing remarks.

Beto Abreu: Thank you very much again, all, for our Q2 2026 results. I want to thank you, and if there is any further questions, please get in contact with our IR team. We will be keen to answer any further doubts. Thank you very much, and have a good day.

Speaker #4: Thank you very much again all for our second quarter 2026 results. I want to thank you and if there is any further question, please get in contact with our I team.

Speaker #4: We will be keen to answer any further questions now. So thank you very much, and have a good day.

Operator 2: This Suzano S.A. Q2 2026 conference call is concluded. The Investor Relations department is available to answer further questions you may have. Thank you and have a good day.

Operator: This Suzano S.A. Q2 2026 conference call is concluded. The Investor Relations department is available to answer further questions you may have. Thank you and have a good day.

Speaker #1: This concludes Zeno's SCR second quarter 2026 conference call. The investor relations department is available to answer any further questions you may have.

Speaker #1: Thank you. And have a good day.

Rodolfo Angele: Goodbye.

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