Strong operating and financial performance: solid results and continuous transformation to support Suzano s constant evolution

Transcription

1 2Q17 Results Strong operating and financial performance: solid results and continuous transformation to support Suzano s constant evolution São Paulo, August 2, Suzano Papel e Celulose (B3: SUZB5), one of the largest integrated pulp and paper producers in Latin America, announces today its consolidated results for the second quarter of fiscal year 2017 (2Q17). MESSAGE FROM MANAGEMENT In the second quarter of 2017, the pulp segment continued to deliver solid results, driven mainly by strong and healthy demand from Asia. The commodity s positive fundamentals once again supported successive price increases in all regions. The weaker BRL also had a positive effect on industry profitability. The paper segment remained pressured by Brazil s caustic macroeconomic scenario. The Suzano Mais Program, which works to strengthen relations with agents at the end of the value chain, helped to enhance the profitability of the paper business. Suzano continues to focus intently on its structural competitiveness by optimizing its cost and expense structure. A highlight in the quarter was the performance of our pulp cash cost, which once again was the industry s lowest, reflecting the continued downward trend towards our target cash cost of R$570/ton² for 2018 and R$475/ton² for Another factor supporting the Company s strategy was its capital discipline, with the efforts in this area validated by the performance of Sustaining CAPEX/ton, which, supported by productivity gains, has continued to lag inflation. Our commitment to financial discipline was further bolstered by the reductions in gross debt and leverage ratio, which ended the quarter at 2.7 times Net Debt/Adjusted EBITDA. The Company s Net Debt, which is 100% denominated in U.S. dollar, has an average cost of 4.9% p.a. and average term of 62 months, which represents a solid financial profile. The Adjusted EBITDA³ of R$973/ton and strong Cash Generation 4 of R$766/ton represented other areas in which we outperformed the overall industry. The ROIC of 11.3% reflects the positive effects from exogenous factors (pulp price and exchange rate), as well as the disciplined control of costs and expenses. The Tissue project at the Mucuri Unit remains on schedule and on budget, with the production startup slated for the third quarter. Tissue will further expand Suzano's product portfolio to create sustainable value and maximize our asset base. We also were proud to announce, on July 31, another important milestone in Suzano's successful history: our plans to migrate to the Novo Mercado, the listing segment of the B3 Stock Exchange with the highest corporate governance requirements. This represents a major step forward that solidifies the commitment of Suzano and its controlling shareholders to the country, to the capital markets and to all its stakeholders. Following the proposal s approval by shareholders, the preferred shares will be converted at the ratio of 1:1 into common shares, which will enjoy full voting and tag-along rights. This advance reaffirms the controlling shareholders commitment to the long term and to cultivating the highest governance standards. It also shows how Suzano is preparing for new growth cycles. Meanwhile, the gain in trading liquidity further helps to position Suzano at the forefront of the movement to redesign the industry for the long term.

2 Financial Data (R$ million) 2T17 2T16 Δ Y-o-Y 1T17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Net Revenue 2,530 2, % 2, % 4,784 5, % Adjusted EBITDA 1 1, % % 2,004 2, % Adjusted EBITDA Margin % 38.6% 7.1 p.p. 37.6% 8.1 p.p. 41.9% 42.9% -1.0 p.p. Net Financial Result (678) % % (553) 1, % Net Income % % 649 2, % Operating Cash Generation % % 1,532 1, % Variation in Working Capital (223) % (43) 424.7% (266) % Cash Generation 687 1, % % 1,266 1, % Net Debt /Adjusted EBITDA 1 (x) 2.7 x 2.1 x 0.7 x 2.8 x -0.1 x 2.7 x 2.1 x 0.7 x Operational Data ('000 tons) 2T17 2T16 Δ Y-o-Y 1T17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Sales 1,188 1, % 1, % 2,369 2, % Pulp % % 1,832 1, % Paper % % % Production 1,215 1, % 1, % 2,363 2, % Pulp % % 1,805 1, % Paper % % % ¹ Consolidated Pulp Cash Cost ex-maintenance ² Amounts in R$ in fiscal year 2016 ³ Excluding non-recurring and/or non-cash items. 4 Operating Cash Flow corresponds to Adjusted EBITDA less sustaining capex. Page 2 of 27

3 The consolidated interim financial statements were prepared in accordance with the standards of the Securities and Exchange Commission of Brazil (CVM) and the Accounting Pronouncements Committee (CPC) and comply with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board (IASB). The operational and financial information is presented based on a consolidated basis and in Brazilian real (R$). Note that figures may present discrepancies due to rounding. Non-financial data, such as volume, quantity, average price and average quotes in Brazilian real and U.S. dollar, were not reviewed by our independent auditors. CONTENTS PULP BUSINESS PERFORMANCE... 4 PULP SALES VOLUME AND REVENUE... 4 PULP CASH COST... 5 PULP SEGMENT EBITDA... 6 PULP OPERATING CASH FLOW AND ROIC... 6 PAPER BUSINESS PERFORMANCE... 7 PAPER SALES VOLUME AND REVENUE... 7 PAPER SEGMENT EBITDA... 8 PAPER OPERATING CASH FLOW AND ROIC... 8 ECONOMIC AND FINANCIAL PERFORMANCE... 9 NET REVENUE... 9 PRODUCTION... 9 COST OF GOODS SOLD OPERATING EXPENSES ADJUSTED EBITDA FINANCIAL RESULT NET INCOME (LOSS) DEBT CAPITAL EXPENDITURE CASH FLOW AND ROIC CAPITAL MARKETS FIXED INCOME CREDIT RATING EVENTS EVENTS IN THE PERIOD SUBSEQUENT EVENTS UPCOMING EVENTS APPENDICES APPENDIX 1 Operating Data APPENDIX 2 Consolidated Statement of Income APPENDIX 3 Consolidated Balance Sheet APPENDIX 4 Consolidated Statement of Cash Flow APPENDIX 5 EBITDA APPENDIX 6 Segmented Statement of Income Corporate Information Forward-looking Statements IR Contacts Page 3 of 27

4 PULP BUSINESS PERFORMANCE PULP SALES VOLUME AND REVENUE Data from the Pulp and Paper Products Council (PPPC) show that pulp shipments in 2Q17 increased 1.8% compared to the same period last year, while eucalyptus shipments grew 5.7%. Suzano sold thousand tons of market pulp in 2Q17, which was 0.7% higher than in 2Q16 (+6.2 thousand tons) and 0.1% higher than in 1Q17 (+1.1 thousand tons). In 6M17, pulp shipments amounted to 25.0 million tons, increasing 4.0% from the year-ago period, while eucalyptus shipments came to 10.4 million tons (+7.1% vs. 6M16). Suzano s pulp sales in the six-month period came to 1.8 million tons, remaining relatively stable in relation to 6M16 (+0.9%). The level of pulp inventories reported by the PPPC ended June at 36 days, in line with the industry s seasonality. Pulp Sales Volume ('000 ton) +0.7% +0.9% +0.1% Q16 1Q17 2Q17 6M16 6M17 Domestic Market Exports The average net pulp price in USD in 2Q17 was US$577/ton, increasing US$71/ton from 1Q17 (+14.1%) and US$85/ton from 2Q16 (+17.3%). In 6M17, the price stood at US$542/ton, up US$35/ton (7.0%) from 6M16. The average net price in BRL in 2Q17 was R$1,853/ton, increasing 16.6% from 1Q17, reflecting the higher list price and the depreciation in the BRL against the USD. Compared to 2Q16, the average net price increased 7.4%, reflecting the higher pulp list price, which was partially offset by exchange variation. In 6M17, the average net price stood at R$1,721/ton, down 8.4% from 6M16, adversely affected by the stronger BRL Pulp Revenues (R$ million) +8.1% +16.8% Q16 1Q17 2Q17 6M16 6M17 Domestic Market Exports -7.6% Pulp Sales Revenue (2Q17) Asia 50% Europe 28% Brazil 8% North America 13% South/Central America 1% Page 4 of 27

5 PULP CASH COST The consolidated cash cost of market pulp production in 2Q17 was R$568/ton excluding downtime. In 6M17, the consolidated cash cost of market pulp production was R$576/ton excluding downtime and R$593/ton including downtime. Consolidated Pulp Cash Cost ex-maintence downtime (R$/ton) -10.7% -10.7% -3.0% Q16 1Q17 2Q17 6M16 6M17 Cash cost excluding downtime in 2Q17 decreased R$68/ton from 2Q16 (-10.7%), reflecting primarily the reduction in wood costs resulting from the shorter average radius in the supply of wood to mills. Consolidated Pulp Cash Cost ex-maintenance (R$/ton) (49) (11) 568 (9) R$68/ton 261 2Q16 Cash Cost Δ Wood Δ Chemicals Δ Fixed Cost 2Q17 Cash Cost Wood Chemicals Fixed Cost Consolidated cash cost of market pulp production in the last 12 months was R$589/ton excluding downtimes (vs. R$666/ton in LTM in 2Q16) and R$607/ton including downtimes (vs. R$686/ton in LTM to 2Q16). Consolidated Pulp Cash Cost ex-maintenance (R$/ton) (78) (2) R$77/ton 277 LTM 2Q16 Cash Cost Δ Wood Δ Chemicals Δ Fixed Cost LTM 2Q17 Cash Cost Wood Chemicals Fixed Cost Page 5 of 27

6 % 50% 40% 30% 20% 10% 00% -10% 2Q17 Earnings Release PULP SEGMENT EBITDA Pulp Business 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Adjusted EBITDA (R$ '000) 946, , % 661, % 1,608,264 1,622, % Sales Volume (ton) 916, , % 915, % 1,831,919 1,816, % Adjusted EBITDA (R$/ton) 1, % % % The performance of Adjusted EBITDA from pulp in 2Q17 compared to 2Q16 is explained by the increase in the pulp list price and the disciplined control of costs and expenses, with these factors partially neutralized by exchange variation. Compared to 1Q17, the increase in Adjusted EBITDA and margin is partially explained by the lower costs in the period and the appreciation in the commodity s price. In 6M17, Adjusted EBITDA was mainly affected by exchange variation, which was partially offset by the increase in pulp cash cost. Adjusted EBITDA (R$ million) and Adjusted EBITDA Margin (%) dof Pulp 55,7% 42,6% 45,5% 47,6% 51,0% Q16 1Q17 2Q17 6M16 6M17 PULP OPERATING CASH FLOW AND ROIC The profitability of the pulp segment was adversely affected by external factors (pulp price and exchange rate), despite the significant operational improvement that supported cost reductions. Pulp Business (R$ '000) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q LTM 2Q17 LTM 2Q16 Δ Y-o-Y Adjusted EBITDA 946, , % 661, % 2,731,477 3,798, % Sustaining Capex (208,028) (201,640) 3.2% (184,396) 12.8% (829,675) (947,951) -12.5% Operating Cash Flow 738, , % 477, % 1,901,802 2,850, % Cash Taxes 2 (4,175) (4,490) -7.0% Capital Employed 17,810,866 17,099, % Asset 18,535,322 17,434, % Passive 724, , % ROIC 1 (%) 10.7% 16.6% -6.0 p.p. 1 ROIC = (Operating Cash Generation Cash taxes) / Capital Employed (assets liabilities). 2 Income and Social Contribution taxes. Operational Cash Generation of Pulp per ton (R$/ton) +57.0% +54.5% Q16 1Q17 2Q17 6M16 6M17 Page 6 of 27

7 PAPER BUSINESS PERFORMANCE PAPER SALES VOLUME AND REVENUE According to the Forestry Industry Association (Ibá), Brazilian demand for Printing & Writing Paper and Paperboard (domestic industry sales + imports) grew 0.5% in 2Q17 compared to 2Q16. In the same comparison period, domestic sales contracted 5.8% while imports grew 41.9%. Compared to 1Q17, domestic demand grew 3.3%, while domestic sales fell 2.4% and imports advanced 38.2%. In 6M17, domestic demand for these papers contracted 0.9% from 6M16, while domestic sales decreased 4.2% and imports increased 20.7%. Suzano s paper sales in 2Q17 amounted to thousand tons, down 7.7% compared to 2Q16. The 2.8% increase compared to 1Q17 is explained by the industry s seasonality. In 6M17, sales volume was 537 thousand tons, 5.7% lower than in 6M16, affected by the reduction in paper production resulting from the higher production of fluff pulp on the flex machine. Paper Sales Volume ('000 ton) -7.7% -5.7% +2.8% Q16 1Q17 2Q17 6M16 6M17 Domestic Market Exports The average net paper price in the domestic market in 2Q17 stood at R$3,162/ton, representing decreases of 1.0% and 0.6% compared to 2Q16 and 1Q17, respectively. In 6M17, the price was R$3,171, up 2.1% on the year-ago period. The average net price in USD of exported paper in 2Q17 was US$888/ton, increasing 0.2% and 4.2% compared to 2Q16 and 1Q17, respectively. In BRL, the price of paper exports in 2Q17 decreased 8.2% from 2Q16 and increased 6.5% from 1Q17, which is explained by exchange variation in the period. In 6M16, the average price stood at US$872/ton, down 1.3% compared to 6M16. Paper Revenues (R$ million) -10.9% +4.0% % Q16 1Q17 2Q17 6M16 6M17 Domestic Market Exports Brazil; 68% Paper Sales Revenue (2Q17) North America; 9% South/Central America, 17% Others; 6% Page 7 of 27

8 % 30% 20% 10% 00% -10% -20% -30% -40% -50% 2Q17 Earnings Release PAPER SEGMENT EBITDA Paper Business 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Adjusted EBITDA (R$ '000) 192, , % 185, % 378, , % Sales Volume (ton) 271, , % 264, % 536, , % Adjusted EBITDA (R$/ton) 709 1, % % 705 1, % The performance of paper Adjusted EBITDA in 2Q17 compared to 2Q16 is mainly explained by the reduction in the exported paper price due to exchange variation and by lower sales volume in the period. Compared to 1Q17, the growth in Adjusted EBITDA is basically explained by the increases in the price and volume of paper exports. In 6M17, Adjusted EBITDA was mainly affected by the lower sales volume and by exchange variation, which affected revenue from exports. Adjusted EBITDA (R$ million) and Adjusted EBITDA Margin (%) of Paper 32,0% 34,1% 23,2% 23,2% 23,2% Q16 1Q17 2Q17 6M16 6M17 PAPER OPERATING CASH FLOW AND ROIC The profitability of the paper segment was adversely affected by the lower sales volume and by the effects from exchange variation on paper exports. Paper Business (R$ '000) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q LTM 2Q17 LTM 2Q16 Δ Y-o-Y Adjusted EBITDA 192, , % 185, % 924,589 1,140, % Sustaining Capex (38,361) (42,183) -9.1% (41,086) -6.6% (189,382) (182,776) 3.6% Operating Cash Flow 154, , % 144, % 735, , % Cash Taxes 2 (7,754) (8,338) -7.0% Capital Employed 5,580,406 6,426, % Asset 6,168,596 7,048, % Passive 588, , % ROIC 1 (%) 13.0% 14.8% -1.7 p.p. 1 ROIC = (Operating Cash Generation Cash taxes) / Capital Employed (assets liabilities). 2 Income and Social Contribution taxes. Operational Cash Generation of Paper per ton (R$/ton) -34.7% -39.5% +4.0% Q16 1Q17 2Q17 6M16 6M17 Page 8 of 27

9 ECONOMIC AND FINANCIAL PERFORMANCE NET REVENUE Suzano s net revenue amounted to R$2,529.9 million in 2Q17. Pulp and paper total sales in the quarter stood at 1,188.5 thousand tons, increasing 0.7% from 1Q17 and decreasing 1.4% from 2Q16. In 6M17, net revenue came to R$4,783.8 million, with 2,368.5 thousand tons of paper and pulp sold. Net Revenue (R$ million) +1,1% +12,2% -8,2% Q16 1Q17 2Q17 6M16 6M17 Domestic Market Exports Pulp 67% Net Revenue Breakdown (2Q17) Other paper 1% Printing & Writing 26% Paperboard 6% The performance of consolidated net revenue versus 1Q17 is explained mainly by the higher hardwood pulp list price in USD (average FOEX in Europe in 2Q17 of US$783 vs. US$680 in 1Q17) and by the weaker BRL. Compared to 2Q16, net revenue growth was supported mainly by the increase in the hardwood pulp list price in USD (average FOEX in Europe in 2Q16 of US$693, partially offset by exchange variation). In 6M17, the contraction in net revenue was due to the BRL appreciation, which was partially offset by the higher paper price in the domestic market. PRODUCTION Production ('000 tons) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Market Pulp % % 1,805 1, % Paper % % % Total 1,215 1, % 1, % 2,363 2, % The reduction in paper production in 6M17 reflects the production of fluff pulp on the flex machine. During 2Q17, no scheduled downtimes were carried out at the Company s units. The schedule for 3Q17 includes a general downtime at the Imperatriz Unit and completion of the unit s debottlenecking project. Unit Imperatriz (Maranhão) Mucuri - Line 1 (Bahia) Mucuri - Line 2 (Bahia) Suzano (São Paulo) Limeira (São Paulo) Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 no downtime no downtime no downtime no downtime Page 9 of 27

10 COST OF GOODS SOLD Cost of goods sold (COGS) in 2Q17 amounted to R$1,513.4 million or R$1,273/ton, decreasing 8.7% and 4.1% from 2Q16 and 1Q17, respectively. In 6M17, average unit COGS was R$1,300/ton, decreasing 5.3% from 6M16 and lagging inflation in the period (3.0%). COGS (R$ '000) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Pulp 920,630 1,071, % 973, % 1,894,358 2,125, % Paper 592, , % 592, % 1,185,549 1,148, % Consolidated 1,513,364 1,680, % 1,566, % 3,079,908 3,274, % COGS (R$/ton) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Pulp 1,004 1, % 1, % 1,034 1, % Paper 2,180 2, % 2, % 2,209 2, % Consolidated 1,273 1, % 1, % 1,300 1, % OPERATING EXPENSES Expenses (R$ '000) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Selling Expenses 94, , % 100, % 195, , % General and Administrative Expenses 120, , % 111, % 232, , % Total Expenses 215, , % 212, % 427, , % Total Expenses/Sales Volume (R$/ton) % % % Total selling and administrative expenses amounted to R$181/ton in 2Q17, increasing 5.8% and 0.6% from 2Q16 and 1Q17, respectively. Compared to 2Q16, selling expenses decreased 7.4%, reflecting the lower sales volume and the reversal of the allowance for sales losses. Compared to 1Q17, selling expenses decreased 6.2%, supported by lower personnel expenses. In relation to 2Q16, the increase of 15.9% in general and administrative expenses is explained almost entirely by the increase in variable compensation. In the comparison with 1Q17, general and administrative expenses increased 8.1% due to salary increases based on meritocracy. In 6M17, selling and administrative expenses as a ratio of sales volume sold stood at R$180/ton (+5.9% from 6M16). ADJUSTED EBITDA Adjusted EBITDA in 2Q17 compared to 2Q16 was affected mainly by the appreciation in the pulp list price, which was partially neutralized by the stronger BRL. Compared to 1Q17, Adjusted EBITDA benefitted from the higher pulp list price and weaker BRL. The 10.4% reduction in Adjusted EBITDA in 6M17 is explained by the BRL appreciation against the USD, which was partially offset by the higher pulp list price Page 10 of 27

11 ,0% 45,0% 40,0% 35,0% 30,0% 25,0% 20,0% 15,0% 10,0% 5,0% 0,0% 2Q17 Earnings Release Adjusted EBITDA (R$ million) and Adjusted EBITDA Margin (%) 45,7% 42,9% 41,9% 38,6% 37,6% -19,6% -10,4% -36,5% Q16 1Q17 2Q17 6M16 6M17 Adjusted EBITDA Adjusted EBITDA Margin FINANCIAL RESULT Financial Result (R$ '000) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Financial Expenses (278,630) (288,711) -3.5% (282,163) -1.3% (560,793) (571,531) -1.9% Interest on loans and financing (local currency) (105,079) (152,955) -31.3% (124,949) -15.9% (230,028) (294,173) -21.8% Interest on loans and financing (foreign currency) (130,375) (104,613) 24.6% (122,252) 6.6% (252,627) (214,714) 17.7% Capitalized interest 1 2,046 - n.a. 1, % 3,519 - n.a. Other financial expenses (45,222) (31,143) 45.2% (36,435) 24.1% (81,657) (62,644) 30.3% Financial Income 83,611 78, % 98, % 182, , % Interest on financial investments 78,817 71, % 91, % 170, , % Other financial income 4,794 7, % 6, % 11,769 17, % Monetary and Exchange Variations (348,746) 752, % 170, % (177,905) 1,450, % Foreign exchange variations (Debt) (372,288) 893, % 252, % (119,367) 1,782, % Other foreign exchange variations 23,542 (141,118) % (82,080) % (58,538) (331,964) -82.4% Derivative income (loss), net 2 (134,152) 230, % 137, % 3, , % NDF 11,110 2, % (56) % 11,054 4, % Zero-Cost Collars (104,309) 201, % 89, % (15,095) 416, % Foreign-Currency Debt Hedge (40,047) 12, % 45, % 5,686 86, % Other 3 (906) 14, % 2, % 2,024 (17,378) % Net Financial Result (677,917) 772, % 125, % (552,743) 1,496, % 1 Capitalized interest due to construction in progress (debottlenecking in Imperatriz Unit (Maranhão state), tissue project, among others). 2 Variation in mark-to-market adjustment. 3 Other includes currency swap operations, LIBOR and commodities. Compared to 1Q17, financial expenses decreased by 1.3% in 2Q17. The reduction in gross debt was offset by the costs with the prepayment of certain contracts. Compared to 2Q16, the R$10 million reduction reflects the lower interest rates in Brazil, the higher gross debt and the increase in LIBOR. In 6M17, the lower financial expenses reflect the reduction in the basic interest rate in Brazil, which was partially offset by the higher gross debt and the increase in LIBOR. Meanwhile, financial income reflects the variation in the cash position in the comparison periods. Page 11 of 27

12 Monetary and exchange variation generated a negative effect of R$348.8 million in the quarter due to foreign exchange variation, with a negative accounting effect from the mark-to-market adjustments of the portion of debt in foreign currency, with cash effects limited to debt maturities or amortizations. At June 30, 2017, the value of the principal of operations involving forward dollar sales through Zero Cost Collars (ZCC) was US$1,175 million, whose maturities are distributed from July 2017 to October 2018 and were contracted in a range from R$3.00 to R$4.59. The current volatility in the BRL/USD exchange rate makes this the most adequate strategy for protecting the Company's cash flow. If, upon maturity, the exchange rate is within the contracted range, there are no cash inflows or outflows for Suzano. The loss of R$104.3 million in 2Q17 is composed of a cash impact of R$6.3 million and a noncash impact of negative R$110.6 million related to the pricing of operations using the Black model. Suzano calibrates its debt profile based on its proportion of dollarized cash generation in order to obtain a natural hedge. The currency hedge positions for debt obligations generated a loss of R$40.0 million. The Company also uses swap contracts to exchange currency and interest rates to mitigate the effects from these variations on its cash flow. The Company posted a net financial expense of R$677.9 million in 2Q17, compared to net financial income of R$125.2 million in 1Q17 and net financial income of R$772.8 million in 2Q16. In 6M17, the net financial expense amounted to R$552.7 million, compared to net financial income of R$1,496.6 million in 6M16. NET INCOME (LOSS) The Company posted net income of R$198.5 million in 2Q17, compared to net income of R$954.3 million in 2Q16 and a net income of R$450.1 million in 1Q17. In 6M17, net income amounted to R$648.7 million. DEBT Gross debt on June 30, 2017 stood at R$13.6 billion, composed of 85.4% long-term maturities and 14.6% short-term maturities and with 69.9% denominated in foreign currency and 30.1% in local currency. The percentage of debt denominated in foreign currency, considering the adjustment for derivatives, was 79.3%. Net debt on June 30, 2017 stood at R$10.0 billion (US$3.0 billion), compared to R$9.7 billion (US$3.1 billion) on March 31, Foreign-denominated net debt was dollarized on June 30, Debt (R$ '000) 06/30/ /30/2016 Δ Y-o-Y 03/31/2017 Δ Q-o-Q Local Currency 4,110,856 4,626, % 4,494, % Short Term 755, , % 722, % Long Term 3,354,965 3,936, % 3,772, % Foreign Currency 9,531,570 8,175, % 9,320, % Short Term 1,239,730 1,113, % 509, % Long Term 8,291,840 7,062, % 8,811, % Gross Debt 13,642,426 12,802, % 13,815, % (-) Cash 3,630,769 2,610, % 4,068, % Net Debt 10,011,657 10,191, % 9,746, % Net Debt/Adjusted EBITDA 1 (x) 2.7x 2.1x 0.7x 2.8x -0.1x 1 Excludes nonrecurring and/or noncash items. Suzano contacts debt in foreign currency as natural hedge, since net operating cash generation is denominated in foreign currency. This structural exposure allows it to contract export financing in USD to match financing payments with receivable flows from sales. Suzano has a conservative risk management policy that prioritizes cash generation. That means that we seek to match the dollar inflows that we receive from our exports with debt payments contracted in U.S. dollar. The Page 12 of 27

13 surplus dollars can be partially hedged (up to 75% of foreign exchange exposure over the next 18 months) using plain vanilla instruments matching with dollar inflows. Suzano actively and expressly demonstrates its commitment to deleverage sustainably and to adopt adequate and efficient structures and costs for its market positioning and operating and managerial capacity. Gross Debt Evolution (R$ million) ( 840 ) Gross Debt on Mar/17 Loans Interest Accrual Foreign Exchange Variation Principal and Interest Payment Others Gross Debt on Jun/17 Amortization Schedule (R$ million) Cash 6M onward Foreign Currency Local Currency At June 30, 2017, the net debt/adjusted EBITDA ratio stood at 2.7 times, compared to 2.8 times on March 31, The decline in the ratio reflects the higher EBITDA in the period. Net Debt (R$ and US$ million) Net Debt / Adjusted EBITDA in R$ and US$ (x) 2,1 2,4 2,6 2,8 2,4 2,7 2,9 2,9 2,7 2,7 2Q16 3Q16 4Q16 1Q17 2Q17 R$ US$ 2Q16 3Q16 4Q16 1Q17 2Q17 R$ US$ In June 2017, the average cost of debt was 9.5% p.a. in BRL, or 93.9% of CDI (vs. 10.9% p.a., or 89.8% of CDI, in March 2017) and 4.9% p.a. in USD (compared to March 2017). The average term of consolidated debt ended the quarter stable at 62 months. Page 13 of 27

14 Index Exposure on 06/30/2017 Type Expousure on 06/30/2017 Libor; 30% Fixed (US$); 37% Export financing; 30% Bond; 35% Basket of Currencies; 2% Fixed (R$); 5% TJLP; 3% CDI; 23% Others; 2% Import financing; 7% BNDES; 7% Agribusiness Receivables Certificates; 19% CAPITAL EXPENDITURE Capex (R$ '000) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Sustaining 246, , % 225, % 471, , % Industrial Maintenance 46,532 46, % 56, % 103, , % Forestry Maintenance 199, , % 168, % 368, , % Structural Competitiveness and Adjacent Business 112,084 92, % 122, % 234, , % Other 29,570 31, % 16, % 45, , % Total 388, , % 364, % 752, , % Capital expenditure amounted to R$388.0 million in 2Q17, of which R$246.4 million was invested in industrial and forest maintenance. Investments in Structural Competitiveness and Adjacent Businesses projects amounted to R$112.1 million and were allocated mainly to the debottlenecking project at the Imperatriz Unit (Maranhão state) and to the Tissue and Lignin projects. Investments in retrofitting the Wastewater Treatment Plant at the Mucuri Unit (Bahia state) and other projects amounted to R$29.6 million. For 2017, capex is estimated at R$1.8 billion, of which R$1.1 billion corresponds to sustaining capex and R$700 million to concluding the Adjacent Businesses and Structural Competitiveness projects. CASH FLOW AND ROIC (R$ '000) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Adjusted EBITDA 1,156, , % 847, % 2,003,916 2,236, % Sustaining Capex (246,388) (243,823) 1.1% (225,482) 9.3% (471,871) (610,932) -22.8% Operating Cash Flow 910, , % 621, % 1,532,045 1,625, % Variation in Working Capital (223,041) 323, % (42,512) 424.7% (265,553) 192, % Cash Flow 687,137 1,047, % 579, % 1,266,492 1,818, % Suzano s operating cash generation (Adjusted EBITDA - Sustaining Capex) amounted to R$910.2 million in 2Q17 and R$1.5 billion in 6M17. The variation in the quarterly comparison with 2Q16 is explained by the higher Adjusted EBITDA in the period. Cash generation, including the variation in working capital, came to R$687.1 million in 2Q17 and R$1.3 billion in 6M17. Page 14 of 27

15 Operational Cash Generation per ton (R$/ton) +27.6% +45.3% -5.1% Q16 1Q17 2Q17 6M16 6M17 Consolidated ROIC stood at 11.3%, down 4.8 p.p. compared to the 12 months to 2Q16, mainly due to the lower profitability of the pulp segment, which was affected by external factors (pulp prices and exchange rate), despite the significant operational improvements, with reductions in costs and expenses. The paper segment also posted lower profitability due to the lower export margin. Consolidated ROIC (R$ '000) LTM 2Q17 LTM 2Q16 Δ Y-o-Y Operating Cash Flow 2,654,168 3,808, % Cash taxes² (11,930) (12,828) -7.0% Capital Employed 23,391,272 23,525, % Asset 24,703,918 24,482, % Passive 1,312, , % ROIC 1 (%) 11.3% 16.1% -4.8 p.p. 1 ROIC = (Operating Cash Generation Cash taxes) / Capital Employed (assets liabilities). 2 Income and Social Contribution taxes. Page 15 of 27

16 Q17 Earnings Release CAPITAL MARKETS On June 30, 2017, Suzano preferred stock (SUZB5) was quoted at R$ 14.22/share. The Company s stock is listed on the Level 1 corporate governance segment. 140 Stock Performance SUZB5 +26% Ibovespa + 22% IBrX % Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Source: Bloomberg. Liquidity Q16 3Q16 4Q16 1Q17 2Q17 Avg. Daily Volume (R$ million) Number of Trades (Daily) Source: Bloomberg. On June 30, 2017, the Company s capital stock was represented by 371,145,071 common shares (SUZB3) and 734,681,074 preferred shares (SUZB5 and SUZB6), for a total of 1,105,826,145 shares traded on B3 Stock Exchange, of which 13,833,126 were treasury shares (6,786,194 common shares and 7,046,932 preferred shares). Suzano s market capitalization stood at R$ 14.3 billion on June 30, In 2Q17, the freefloat stood at 42.0% of the total capital. Free Float Distribution on 06/30/2017 Local 34% Individual Investors 6% Foreign 66% Institutional Investors 94% Page 16 of 27

17 Free Float Distribution on 06/30/2017 * Latin America excluding Brazil. FIXED INCOME Unit Jun/16 Mar/17 Jun/17 Suzano Price USD/k Suzano Yield % Suzano Price USD/k Suzano Yield % Suzano Price USD/k Suzano Yield % Treasury 10 years % CREDIT RATING Agency National Scale Global Scale Outlook Fitch Ratings AA+ (bra) BB+ Positive Standard & Poor s AA+ (bra) BB+ Stable Moody s Aaa.br Ba1 Negative Page 17 of 27

18 EVENTS EVENTS IN THE PERIOD Change in the number of the Company s shares The Extraordinary Shareholders' Meeting held on April 28, 2017 approved: (i) the cancelation of 1,912,532 class B preferred shares issued by the Company and held in treasury, as previously approved by the Board of Directors in the meeting held on January 31, 2017; and (ii) the conversion of 3,461 common shares issued by the Company into 3,461 class A preferred shares issued by the Company, pursuant to Article 10 of the Company s Bylaws, which will entitle their holders to the same rights as the class A preferred shares issued by the Company currently existing. The cancelation of class B preferred shares and the conversion of common shares into class A preferred shares will not result in any change in the capital stock of Suzano, which still amounts to R$ 6,241,753,032.16, but which henceforward will be divided into 1,105,826,145 shares without par value, of which 371,145,071 are common shares, 734,652,787 are class A preferred shares and 28,287 are class B preferred shares, all registered, book-entry and without par value. The respective amendments already have been made to Article 5 of the Company's Bylaws. The Minutes of the Board of Directors Meeting and the Minutes of the Extraordinary Shareholders' Meeting are available on the website of the CVM and on the Company s IR website ( Approval of indebtedness policy and increase of the limit for foreign currency exposure The Meeting of the Board of Directors, held on May 3, 2017, approved the Company's indebtedness policy, which establishes that the Company will strive to maintain a ratio of Net Debt to Adjusted EBITDA of less than 3.0 times, although it may, during certain periods of its investment cycle, temporarily reach a maximum ratio of 3.5 times. In the event of a temporary breach of the ratio limit due to abrupt variations in exogenous factors, a temporary limit of 4.0 times may be adopted for up to two quarters. If the ratio of Net Debt to Adjusted EBITDA were to surpass such limits, the Executive Officers will be responsible for drafting a Contingency Plan that includes the corrective measures required for reestablishing compliance. In addition, to reduce the volatility of Suzano s cash flow and give more flexibility in cash flow management, it was increased the limit to hedge contracting from 40% to 75% of the currency exposure for the subsequent 18 months, as defined by the mismatch between dollars inflows and outflows. The policies are available on the Company s IR website ( Dividend Payment On May 10, 2017, the Company paid dividends approved on the Annual and Extraordinary Shareholders Meeting held on April 28th, 2017, the total amount of R$ 370,828, (three hundred and seventy million, eight hundred and twenty eight thousand, two hundred and fifty six Brazilian Reais and eighty four cents). The Notice to the Shareholders is available on the Company s IR website ( Clarifications on CVM/BOVESPA Inquiries On June 19, 2017, the Company clarified that, despite the news report published in the O Estado de São Paulo newspaper, there was no event that envisaged a notice to the market or the disclosure of material fact. However, as already announced to the market through the document in the Category: Notice to the Market, Type: Presentations to Analysts/Market Agents, Subject Corporate Presentation, on page 19, which was input in the Empresas.NET system on November 17, 2015, at 6:09 p.m. (Brasília), one of the strategic pillars of the Company is the reshaping of the industry, which includes, among other initiatives, preparing the Company for possible merger and acquisition (M&A) and industry consolidation moves. As one of the market leaders, the Company constantly evaluates and prepares itself for M&A and consolidation possibilities. The Notice to the Market is available on the website of the CVM and on the Company s IR website ( SUBSEQUENT EVENTS Organizational Structure On July 5, 2017, the Company announced to its shareholders and the general market that it is undergoing an organizational restructuring to ensure that its new businesses have the structures needed to maximize profits. In alignment with the strategic pillars, that guide and prioritize Suzano efforts, the new organizational structure is composed by ten departments that will report directly to our Chief Executive Officer, Walter Schalka. The Notice to the Market is available on the website of the CVM and on the Company s IR website ( Page 18 of 27

19 Proposed migration to the Brazillian "Novo Mercado" On July 31, 2017, the Company announced to its shareholders and the general market that the Company s Board of Directors, in a meeting held on the date hereof, approved the submission of a proposal for the migration of the Company to the Novo Mercado segment of B3 S.A. Brasil, Bolsa, Balcão ( B3 ), and consequent admission for trading of the stock issued by the Company on this listing segment ( Migration ), for prior approval by BNDES Participações S.A. BNDESPAR, pursuant to Clause III of the Shareholders Agreement of the Company, entered into on May 30, 2011 and filed at its registered office ( Shareholders Agreement ). The Material Fact is available on the website of the CVM and on the Company s IR website ( UPCOMING EVENTS Earnings Conference Call (2Q17) Data: August 3, 2017 (Thursday) Portuguese 10:30 a.m. (Brasília) 9:30 a.m. (New York time) 2:30 p.m. (London time) Phone: +55 (11) or (11) English (simultaneous translation) 10:30 a.m. (Brasília) 9:30 a.m. (New York time) 2:30 p.m. (London time) Phone: +1 (786) (access code: Suzano) Please connect 10 minutes before the conference call is scheduled to begin. The conference call will feature a slide presentation and be transmitted simultaneously via webcast. The access links will be available on the Company s Investor Relations website ( If you are unable to participate, the webcast link will be available for future consultation on the Company s Investor Relations website. Page 19 of 27

20 APPENDICES APPENDIX 1 Operating Data Revenue breakdown (R$ '000) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Exports 1,821,048 1,694, % 1,529, % 3,350,956 3,625, % Pulp 1,558,835 1,376, % 1,304, % 2,862,978 3,002, % Paper 262, , % 225, % 487, , % Domestic Market 708, , % 723, % 1,432,821 1,585, % Pulp 139, , % 150, % 289, , % Paper 569, , % 573, % 1,143,210 1,176, % Total Net Revenue 2,529,870 2,503, % 2,253, % 4,783,777 5,211, % Pulp 1,698,150 1,570, % 1,454, % 3,152,589 3,412, % Paper 831, , % 799, % 1,631,188 1,799, % Sales volume (tons) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Exports 918, , % 892, % 1,810,758 1,794, % Pulp 826, , % 808, % 1,634,664 1,604, % Paper 91, , % 84, % 176, , % Paperboard 16,779 19, % 13, % 30,036 35, % Printing & Writing 75,081 82, % 70, % 146, , % Domestic Market 270, , % 287, % 557, , % Pulp 90, , % 107, % 197, , % Paper 180, , % 180, % 360, , % Paperboard 28,132 28, % 30, % 58,274 58, % Printing & Writing 144, , % 144, % 288, , % Other paper 1 7,148 5, % 6, % 13,359 10, % Total sales volume 1,188,477 1,205, % 1,180, % 2,368,512 2,385, % Pulp 916, , % 915, % 1,831,919 1,816, % Paper 271, , % 264, % 536, , % Paperboard 44,911 47, % 43, % 88,309 93, % Printing & Writing 219, , % 215, % 434, , % Other paper 1 7,148 5, % 6, % 13,359 10, % Average net price (R$/ton) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Exports 1,983 1, % 1, % 1,851 2, % Pulp 1,886 1, % 1, % 1,751 1, % Paper 2,854 3, % 2, % 2,771 3, % Domestic Market 2,624 2, % 2, % 2,569 2, % Pulp 1,548 1, % 1, % 1,468 1, % Paper 3,162 3, % 3, % 3,171 3, % Total 2,129 2, % 1, % 2,020 2, % Pulp 1,853 1, % 1, % 1,721 1, % Paper 3,058 3, % 3, % 3,040 3, % 1 Paper from other manufacturers sold by the distributor. Page 20 of 27

21 APPENDIX 2 Consolidated Statement of Income Financial Statement (R$ '000) 2Q17 2Q16 Δ Y-o-Y 1Q17 Δ Q-o-Q 6M17 6M16 Δ Y-o-Y Net Revenue 2,529,870 2,503, % 2,253, % 4,783,778 5,211, % Cost of Goods Sold (1,513,364) (1,680,576) -9.9% (1,566,544) -3.4% (3,079,908) (3,274,142) -5.9% Gross Profit 1,016, , % 687, % 1,703,870 1,937, % Gross Margin 40.2% 32.9% 7.3 p.p. 30.5% 9.7 p.p. 35.6% 37.2% -1.6 p.p. Operating Expense/Income (208,188) (220,483) -5.6% (218,677) -4.8% (426,865) (423,843) 0.7% Selling Expenses (94,418) (101,935) -7.4% (100,624) -6.2% (195,042) (205,403) -5.0% General and Administrative Expenses (120,691) (104,143) 15.9% (111,597) 8.1% (232,288) (200,805) 15.7% Other Operating Income (Expenses) 2,917 (13,181) % (7,274) % (4,357) (13,562) -67.9% Equity Equivalence 4,004 (1,224) % % 4,822 (4,073) % EBIT 808, , % 468, % 1,277,005 1,513, % Depreciation, Amortization & Depletion 332, , % 365, % 698, , % EBITDA 1,140, , % 834, % 1,975,348 2,211, % EBITDA Margin (%) 45.1% 37.8% 7.3 p.p. 37.0% 8.1 p.p. 41.3% 42.4% -1.1 p.p. Adjusted EBITDA 1 1,156, , % 847, % 2,003,915 2,236, % Adjusted EBITDA Margin % 38.6% 7.1 p.p. 37.6% 8.1 p.p. 41.9% 42.9% -1.0 p.p. Net Financial Result (677,917) 772, % 125, % (552,743) 1,496, % Financial Expenses 83,611 78, % 98, % 182, , % Financial Revenues (278,630) (288,711) -3.5% (282,163) -1.3% (560,793) (571,531) -1.9% Exchange Rate Variation (348,746) 752, % 170, % (177,905) 1,450, % Net Proceeds Generated by Derivatives (134,152) 230, % 137, % 3, , % Earnings Before Taxes 130,401 1,375, % 593, % 724,262 3,010, % Income and Social Contribution Taxes 68,143 (420,900) % (143,714) % (75,571) (931,462) -91.9% Net Income (Loss) 198, , % 450, % 648,691 2,078, % Net Margin 7.8% 38.1% p.p. 20.0% p.p. 13.6% 39.9% 1 Excluding non-recurring and/or non-cash items p.p. Page 21 of 27

22 APPENDIX 3 Consolidated Balance Sheet Assets (R$ '000) 06/30/ /31/ /31/ /30/ /06/2016 Current Assets Cash and Cash Equivalent 1,001,883 1,005,344 1,614,697 2,068,607 1,319,504 Financial Investments 2,628,886 3,063,318 2,080,615 2,117,091 1,291,326 Accounts Receivable 1,891,698 1,628,501 1,622,171 1,495,474 1,566,048 Inventories 1,336,768 1,253,428 1,313,143 1,461,418 1,368,679 Recoverable Taxes 415, , , , ,316 Prepaid Expenses 51,823 27,697 34,555 46,666 56,163 Other Current Assets 339, , , , ,854 Total Current Assets 7,665,278 8,106,774 8,029,506 8,204,881 6,735,890 Non-Current Assets Other Accounts Receivable 784, , , , ,447 Biological Assets 4,228,301 4,141,518 4,072,528 4,333,494 4,267,075 Investments 5,716 1, ,831 3,927 Property, Plant and Equipment 16,172,254 16,153,481 16,235,280 16,180,944 16,216,828 Intangible Assets 208, , , , ,006 Total Non-Current Assets 21,399,090 21,324,739 21,369,807 21,604,765 21,641,283 Total Assets 29,064,368 29,431,513 29,399,313 29,809,646 28,377,173 Liabilities and Equity (R$ '000) 06/30/ /31/ /31/ /30/ /06/2016 Current Liabilities Accounts Payable 614, , , , ,718 Loans and Financing 1,995,621 1,231,670 1,594,720 1,627,827 1,803,563 Tax Liabilities 147,489 92,015 78,175 78, ,339 Salaries and Payroll Taxes 177, , , , ,364 Other Payable 673,846 1,207,158 1,409, , ,063 Total Current Liabilities 3,609,013 3,192,892 3,829,874 3,141,591 3,159,047 Non-Current Liabilities Loans and Financing 11,646,806 12,583,785 12,418,059 12,573,926 10,998,723 Deferred Taxes 1,548,263 1,673,221 1,559,096 1,833,360 1,813,311 Provision 649, , , , ,072 Other Liabilities 783, , , , ,644 Total Non-Current Liabilities 14,627,863 15,637,252 15,425,945 15,660,890 14,253,750 Shareholders Equity Share Capital 6,241,753 6,241,753 6,241,753 6,241,753 6,241,753 Capital Reserve 197, , ,714 78,817 78,006 Treasury shares (241,006) (258,113) (273,665) (273,665) (273,665) Profit Reserve 1,657,125 1,657,125 1,657, , ,137 Equity Valuation Adjustment 2,308,364 2,296,749 2,314,567 2,383,498 2,407,493 Retained Earnings/Accumulated Losses 15,090 16,590-38,809 25,660 Retained Earnings/Losses of the period 648, ,147-2,131,815 2,078,991 Total Equity 10,827,492 10,601,369 10,143,494 11,007,164 10,964,375 Total Liabilities and Equity 29,064,368 29,431,513 29,399,313 29,809,646 28,377,173 Page 22 of 27

23 APPENDIX 4 Consolidated Statement of Cash Flow Cash Flow Statement (R$ '000)) 2Q17 2Q16 6M17 6M16 Cash flow from operating activities Net income/(loss) for the period 198, , ,691 2,078,991 Depreciation, depletion and amortization 332, , , ,314 Income from sale of fixed and biological assets (740) (299) (4,128) (413) Equity pick-up in subsidiaries and affiliates (4,004) 1,224 (4,822) 4,073 Exchange and monetary variations, net 228,284 (1,023,074) (31,868) (1,619,575) Interest expenses, net 196, , , ,573 Derivative (gains)/losses, net 134,152 (230,196) (3,669) (489,875) Fair value adjustment of biological assets 25,268-25,268 - Expenses (income) from deferred income and social contribution taxes (124,957) 354,127 (10,833) 775,422 Interest on actuarial liabilities 9,506 8,574 19,012 17,149 Addition to (reversal of) provision for contingencies 8,868 (1,559) 17,092 (3,498) Provision (reversal) for share-based payments 12,155 1,420 18,756 (449) Addition to allowance for doubtful accounts, net 5,105 6,578 8,609 7,364 Addition to/(reversal of) provision for discounts - loyalty program 20, (15,876) (55,812) Provision/(reversal) for inventory losses and write-offs 1,131 4,254 1,705 4,974 Provision for losses and write-off with fixed and biological assets ,301 3,923 19,720 Other provisions (44,980) 18,829 (22,702) 36,608 Decrease/(increase) in accounts receivable (188,625) 199,164 (198,285) 37,242 (Increase)/reduction in inventories (85,839) 17,032 (28,357) (67,536) (Increase)/decrease in recoverable taxes (22,942) 126,679 (26,683) 182,449 (Increase)/decrease in other current and non-current assets 232,822 (13,788) 330,593 24,958 Increase/(decrease) in trade accounts payable 117,796 (62,918) 85,902 (47,661) Increase/(decrease) in other current and non-current liabilities 118, , , ,024 Payment of interest (261,169) (404,285) (507,637) (595,547) Payment of other taxes and contributions (126,912) (161,614) (265,931) (257,380) Payment of income and social contribution taxes (34,650) (24,019) (52,836) (34,255) Net cash from operating activities 747, ,510 1,248,126 1,357,860 Cash flow from investing activities Financial investments 482,326 (153,668) (430,037) (292,507) Additions to fixed assets, intangible assets and biological assets (470,743) (353,570) (824,102) (709,065) Proceeds from asset divestment 1,038 2,427 9,547 3,042 Net cash used in investment activities 12,621 (504,811) (1,244,592) (998,530) Cash flow from financing activities Funding 76,591 2,053,487 1,085,960 2,708,994 Settlement of derivative operations 65,379 (24,345) 162,333 (57,943) Payment of loans (585,756) (2,124,747) (1,528,449) (2,797,284) Payment of dividends (370,739) (299,926) (370,739) (299,926) Dividends (acquisition) of own shares - - 8,514 8,514 Net cash provided by (used in) financing activities (814,525) (395,531) (642,381) (437,645) Exchange variation on cash and cash equivalents 50,960 (14,753) 26,033 (79,427) Increase (reduction) in cash and cash equivalents (3,461) (378,585) (612,814) (157,742) Cash and cash equivalents at the beginning of the period - 1,698,089 1,614,697 1,477,246 Cash and cash equivalents at the end of the period (3,461) 1,319,504 1,001,883 1,319,504 Statement of the increase (reduction) in cash (3,461) (378,585) (612,814) (157,742) Page 23 of 27

24 APPENDIX 5 EBITDA (R$ '000, except where otherwise indicated) 2Q17 2Q16 6M17 6M16 Net Income 198, , ,691 2,078,991 Net Financial Result 677,917 (772,814) 552,743 (1,496,628) Income and Social Contribution Taxes (68,143) 420,900 75, ,462 EBIT 808, ,419 1,277,005 1,513,825 Depreciation, Amortization and Depletion 332, , , ,314 EBITDA 1 1,140, ,744 1,975,348 2,211,140 EBITDA Margin 45.1% 37.8% 41.3% 42.4% Adjustment of the fair value of biological assets 25,268-25,268 - Franchises with claims in the period - 2,960-2,960 Provision for losses with fixed assets, intangible and taxes - 16,130 1,157 19,953 Fire in the warehouse of Itaqui (3,004) Land conflict agreement ,779 - Equity Equivalence (4,004) 1,224 (4,822) 4,073 Others (5,631) 260 (4,814) 1,440 Adjusted EBITDA 1,156, ,318 2,003,915 2,236,562 Adjusted EBITDA Margin 45.7% 38.6% 41.9% 42.9% 1 Company's EBITDA calculated according to CVM Instruction # 527, as of October, 04th, Reconciliation of Consolidated EBITDA (R$ '000) 2Q17 2Q16 6M17 6M16 EBITDA 1,140, ,744 1,975,348 2,211,140 Depreciation, Amortization and Depletion (332,615) (344,325) (698,343) (697,314) Operating Results before Financial Results and Taxes 2 808, ,419 1,277,005 1,513,826 2 Accounting measurement released on the Consolidated Financial Statements. Page 24 of 27