Suzano S.A.(SUZ) - 2023 Q2 - Quarterly Report

Financial Performance - Net sales for the second quarter of 2023 were $9.16 billion, a decrease of 20.5$11.52 billion in the same period of 2022[4]. - Gross profit for the second quarter of 2023 was $2.93 billion, down 45.7$5.40 billion in the second quarter of 2022[4]. - Operating profit before net financial income for the first half of 2023 was $7.37 billion, a decline of 7.5$7.98 billion in the first half of 2022[4]. - Net income for the second quarter of 2023 was $5.08 billion, compared to$0.18 billion in the same quarter of 2022, indicating a significant recovery[5]. - The company reported a basic earnings per share of $3.91 for the second quarter of 2023, compared to$0.13 in the second quarter of 2022[4]. - Net income for the period was $10,320,416, a decrease of 1.6$10,487,899 in the previous year[7]. - Cash generated from operations amounted to $11,806,760, slightly up from$11,738,969 in the prior year[7]. - The company reported a net income before taxes of R$14,380,751 for the six-month period ended June 30, 2023, compared to R$13,937,137 for the same period in 2022[145]. Assets and Liabilities - Total assets increased to $138.28 billion as of June 30, 2023, up from$133.20 billion at the end of 2022, representing a growth of approximately 3.3%[1][3]. - Total current liabilities increased to $14.85 billion as of June 30, 2023, from$14.49 billion at the end of 2022, reflecting a rise of approximately 2.4%[3]. - Total equity rose to $42.70 billion as of June 30, 2023, up from$33.17 billion at the end of 2022, marking an increase of about 28.7%[3]. - Loans, financing, and debentures increased to $74.53 billion as of June 30, 2023, from$74.57 billion at the end of 2022, indicating a slight decrease of 0.3%[3]. - The total liabilities for asset acquisitions and subsidiaries were $16,929, compared to$109 in the previous year[8]. - The total balance of trade accounts payable reached R$6,347,954 as of June 30, 2023, compared to R$6,206,570 at the end of 2022, reflecting increased operational activity[166]. Cash and Cash Equivalents - The company’s cash and cash equivalents increased to $11.86 billion as of June 30, 2023, compared to$9.51 billion at the end of 2022, a growth of approximately 24.7%[1]. - As of June 30, 2023, the company reported cash and cash equivalents of R$11,860,415 thousand, an increase from R$9,505,951 thousand as of December 31, 2022, representing a growth of approximately 24.8%[58]. - The balance at the end of the period for cash and cash equivalents was $11,860,415, up from$9,505,951 at the beginning of the period[8]. Investments and Acquisitions - The Company acquired MMC Brasil Indústria e Comércio Ltda for US$212.029 million (equivalent to R$1,072.657 million) on June 1, 2023[23]. - The Cerrado Project aims to build a pulp production mill with a capacity of 2,550,000 tons per year, with a total investment of R$22,200 million, expected to start operations in the second half of 2024[22]. - The company completed the acquisition of MMC Brasil Indústria e Comércio Ltda. on June 1, 2023, which is expected to enhance operational capabilities[159]. Risk Management - The company reported a conservative approach to financial risk management, with no significant changes in policies compared to the previous year[56]. - The company’s liquidity risk management strategy focuses on maintaining a strong cash position to meet financial commitments, with cash generated from operations primarily used for investments and debt service[62]. - The company has not identified any short-term or long-term risks related to supply chain interruptions due to the Russia-Ukraine conflict[24]. Environmental and Sustainability Initiatives - Suzano and five global companies launched Biomas to restore and protect native forests in Brazil, covering an area equivalent to Switzerland or the state of Rio de Janeiro over 20 years[108]. - The Horizonte de Carbono Project has validated 1.9 million tons of CO2e, with 1.7 million tons eligible for carbon credit issuance, although none have been issued yet[111]. - Woodspin, a joint venture with Spinnova, inaugurated a factory in Finland producing sustainable textile fiber from responsibly grown wood, marking a significant step in market development[113]. Financial Instruments and Derivatives - The fair value of outstanding derivatives as of June 30, 2023 is$3,261,071, a significant increase from $26,954 on December 31, 2022[99]. - The Company reported a fair value of derivative financial instruments at$5,479,787 for assets and $2,218,716 for liabilities as of June 30, 2023[104]. - The variation in fair values of derivatives is attributed to the appreciation of the Brazilian Real against the US Dollar and settlements during the period[97]. Tax and Legal Matters - The effective rate of income and social contribution tax expenses was 28.23$3,175,080, a decrease from R$3,440,154 at the beginning of the year[195]. - The company has 30 ongoing tax or social security administrative and judicial proceedings as of June 30, 2023, compared to 31 as of December 31, 2022[199].