Suzano Papel e Celulose S.A.

Transcription

1 1Q18 Results Quarterly Information (ITR) at March 31, 2018 with Independent Auditor s Report. Suzano Papel e Celulose S.A.

2 Quarterly Information March 31, 2018 Record-high Operating Cash Generation¹ for the quarter of R$1.3 billion São Paulo, April 26 th, Suzano Pulp and Paper (B3: SUZB3), one of the largest integrated pulp and paper producers in Latin America, announces today its consolidated results for the first quarter of 2018 (1Q18). 1Q18 HIGHLIGHTS Strong Results: Adjusted EBITDA² of R$1.5 billion and ROIC of 17.4% Solid performance in the pulp segment: Adjusted EBITDA²/ton of R$ 1,467/ton (+ 103% vs. 1Q17) Lower cash costs in LTM: R$573/ton, down 5.3% from LTM 1Q17 Implementation of price increase and recovery of paper segment: Adjusted EBITDA²/ton of R$ 855/ton (+22% vs. 1Q17) Investments: announcement of the combination with Fibria s assets Tissue: integration of operations with Facepa and segmented results as from 2 nd half of 2018 Financial Solidity: reduction in net debt, with leverage ratio of 1.7x Net Debt/ Adjusted EBITDA (in BRL and USD) Credit rating: upgraded to Investment Grade by Standard & Poor's and reaffirmation of Investment Grade by Fitch Ratings Financial Data (R$ million) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Net Revenue 2,999 2, % 3, % Adjusted EBITDA 2 1, % 1, % Adjusted EBITDA Margin % 37.6% 13.4 p.p. 45.4% 5.6 p.p. Net Financial Result (157) % (736) -78.6% Net Income % % Operating Cash Generation 1 1, % 1, % Net Debt /Adjusted EBITDA² (x) 1.7 x 2.8 x -1.1 x 2.1 x -0.3 x Operational Data ('000 tons) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Sales 1,160 1, % 1, % Pulp % % Paper % % Production 1,213 1, % 1, % Pulp % % Paper % % 1 Operating cash generation corresponds to Adjusted EBITDA less Sustaining CAPEX. 2 Excludes non-recurring items. Page 2 of 88

3 Quarterly Information March 31, 2018 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. Nonfinancial data, such as volume, quantity, average price and average quotes in Brazilian real and U.S. dollar, were not reviewed by our independent auditors. CONTENS PULP BUSINESS PERFORMANCE... 4 PULP SALES VOLUME AND REVENUE... 4 PULP CASH COST... 5 PULP SEGMENT EBITDA... 6 PULP OPERATING CASH GENERATION AND ROIC... 7 PAPER BUSINESS PERFORMANCE... 8 PAPER SALES VOLUME AND REVENUE... 8 PAPER EBITDA... 9 PAPER OPERATING CASH FLOW AND ROIC FINANCIAL PERFORMANCE...10 NET REVENUE PRODUCTION COST OF GOODS SOLD OPERATING EXPENSES ADJUSTED EBITDA FINANCIAL INCOME AND EXPENSES NET INCOME (LOSS) INDEBTEDNESS INVESTMENTS CASH FLOW AND ROIC DIVIDENDS CAPITAL MARKETS...17 FIXED INCOME...18 RATING...18 EVENTS...19 EVENTS IN THE PERIOD UPCOMING EVENTS IR CONTACTS...21 APPENDICES...22 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...28 FORWARD-LOOKING STATEMENTS...29 Page 3 of 88

4 Quarterly Information March 31, 2018 PULP BUSINESS PERFORMANCE PULP SALES VOLUME AND REVENUE Data from the World 20 Report of the Pulp and Paper Products Council (PPPC) show that, in 1Q18, global pulp shipments remained stable (+0.3%) as compared with the 1Q17. Meanwhile, global eucalyptus pulp shipments grew 5.6%. Suzano sold thousand tons of market pulp in 1Q18, which was 4.3% lower than in 1Q17 and 8.1% lower than the sales volume recorded in 4Q17. The level of pulp inventories reported by the PPPC ended February at 36 days. Pulp Sales Volume ('000 ton) % Q17 4Q17 1Q18 Domestic Market Exports The average net pulp price in USD in 1Q18 was US$ 731/ton, increasing US$ 52/ton (+7.7%) from 4Q17 and US$ 226/ton (+44.7%) from 1Q17. The higher net pulp price is mainly due to the industry s positive and solid fundamentals. The average net price in BRL in 1Q18 was R$ 2,373/ton, increasing 7.6% and 49.4% compared to 4Q17 and 1Q17, respectively, driven mainly by the higher list price for pulp. Net revenue from pulp sales decreased 1.1% in 1Q18 compared to 4Q17, reflecting the lower sales volume resulting from the partial rebuilding of the Company s inventories. Page 4 of 88

5 Quarterly Information March 31, Pulp Revenues (R$ million) Q17 4Q17 1Q18 - Domestic Market Exports Pulp Sales Revenue (1Q18) Asia 48% Brazil 9% Europe 30% North America 14% PULP CASH COST The consolidated cash cost of market pulp production in 1Q18 was R$ 587/ton excluding downtimes and R$ 604/ton including downtimes. Pulp Cash Cost ex-maintence downtime (R$/ton) Q17 4Q17 1Q18 LTM 1Q17 LTM 1Q18 Cash cost remained practically stable in 1Q18 compared to 1Q17 (+0.3%), due to the higher consumption of raw materials, which was offset by the shorter average supply radius and the reduction in fixed costs. Page 5 of 88

6 Quarterly Information March 31, 2018 Pulp Cash Cost ex-maintenance (R$/ton) (14) (9) R$2/t 258 1Q17 Cash Cost Δ Wood Δ Chemicals Δ Fixed Cost 1Q18 Cash Cost¹ Wood Chemicals Fixed Cost cash cost of market pulp production in the last 12 months was R$ 573/ton excluding downtime (vs. R$ 605/ton in LTM 1Q17) and R$ 595/ton including downtime (vs. R$ 634/ton in LTM 1Q17). Pulp Cash Cost ex-maintenance (R$/ton) (31) 573 (2) LTM 1Q17 Cash Cost Δ Wood Δ Chemicals Δ Fixed Cost LTM 1Q18 Cash Cost¹ Wood Chemicals Fixed Cost 1 In line with the market and for comparison purposes, the methodology for calculating the cash cost has been changed and does not consider the depletion of wood of third-party suppliers. PULP SEGMENT EBITDA Pulp Business 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q LTM 1Q18 LTM 1Q17 Δ Y-o-Y Adjusted EBITDA (R$ '000) 1,285, , % 1,164, % 4,299,067 2,453, % Sales Volume (ton) 876, , % 953, % 3,575,512 3,539, % Adjusted EBITDA (R$/ton) 1, % 1, % 1, % The performance of Adjusted EBITDA from pulp in the above periods reflects primarily the higher pulp list price. Page 6 of 88

7 ,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% -10,0% Suzano Papel e Celulose S.A. Quarterly Information March 31, 2018 Adjusted EBITDA (R$ million) and Adjusted EBITDA Margin (%) dof Pulp 61,9% 55,5% 57,2% 45,5% 42,6% Q17 4Q17 1Q18 LTM 1Q17 LTM 1Q18 PULP OPERATING CASH GENERATION AND ROIC The profitability of the pulp business was leveraged by the pulp price, however, the result was partially influenced by exchange variation. Pulp Business (R$ '000) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q LTM 1Q18 LTM 1Q17 Δ Y-o-Y Adjusted EBITDA 1,285, , % 1,164, % 4,299,070 2,453, % Sustaining Capex (213,801) (184,396) 15.9% (266,910) -19.9% (919,777) (823,288) 11.7% Operating Cash Flow 1,071, , % 897, % 3,379,292 1,630, % Cash Taxes 2 (32,475) (4,231) 667.6% Monetization of ICMS 25,820 - n.a. Capital Employed 17,967,607 17,375, % Asset 18,635,853 18,212, % Liabilities 668, , % ROIC 1 (%) 18.8% 9.4% 9.4 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) % +29.9% % Q17 4Q17 1Q18 LTM 1Q17 LTM 1Q18 Page 7 of 88

8 Quarterly Information March 31, 2018 PAPER BUSINESS PERFORMANCE PAPER SALES VOLUME AND REVENUE According to the Forestry Industry Association (Ibá), domestic sales of Printing & Writing paper and Paperboard advanced 2.4% in 1Q18 compared to 1Q17, while imports grew 15.8%. Suzano s paper sales amounted to thousand tons in 1Q18, in line with production in the quarter. Compared to 4Q17, Suzano s paper sales decreased 15.0%, reflecting the seasonality of the business. Paper Sales Volume ('000 ton) +7.3% -15.0% Q17 4Q17 1Q18 Domestic Market Exports The average net paper price in the domestic market in 1Q18 stood at R$ 3,340/ton, representing increases of R$ 150/ton (4.7%) and R$ 160/ton (5.0%) compared to 4Q17 and 1Q17, respectively. In USD, the average net pulp price in 1Q18 was US$ 945/ton, representing increases of US$ 38/ton (4.2%) and US$ 92/ton (10.8%) from 4Q17 and 1Q17, respectively. In BRL, the price of paper exports in 1Q18 was R$ 3,065/ton, representing increases of 4.1% from 4Q17 and 14.4% from 1Q17, which is explained by exchange variation in the period. Page 8 of 88

9 ,0% 30,0% 20,0% 10,0% 0,0% -10,0% -20,0% -30,0% -40,0% -50,0% Suzano Papel e Celulose S.A. Quarterly Information March 31, 2018 Paper Revenues (R$ million) % Q17 4Q17 1Q18 Domestic Market Exports Paper Sales Revenue (1Q18) Brazil; 68% North America; 4% South/ Central America; 19% Others; 9% PAPER EBITDA Paper Business 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q LTM 1Q18 LTM 1Q17 Δ Y-o-Y Adjusted EBITDA (R$ '000) 242, , % 260, % 979,605 1,030, % Sales Volume (ton) 284, , % 334, % 1,199,824 1,185, % Adjusted EBITDA (R$/ton) % % % The performance of Adjusted EBITDA from paper in 1Q18 compared to 1Q17 is explained by the price increases successfully implemented in the domestic and international markets. Compared to 4Q17, this performance was mainly affected by higher expenses given the lower sales volume. Note that the paper business is incorporating all the results from the consumer goods business (with the exception of Facepa), which is still in the ramp-up phase. Adjusted EBITDA (R$ million) and Adjusted EBITDA Margin (%) of Paper 23,2% 25,0% 26,3% 28,0% 26,1% Q17 4Q17 1Q18 LTM 1Q17 LTM 1Q18 Page 9 of 88

10 Quarterly Information March 31, 2018 PAPER OPERATING CASH FLOW AND ROIC The profitability of the paper business was adversely affected by the increase in costs and expenses generated primarily by the consumer goods business (with the exception of Facepa), which is still in the ramp-up phase. Paper Business (R$ '000) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q LTM 1Q18 LTM 1Q17 Δ Y-o-Y Adjusted EBITDA 242, , % 260, % 979,605 1,030, % Sustaining Capex (49,818) (41,086) 21.3% (80,847) -38.4% (218,130) (193,204) 12.9% Operating Cash Flow 193, , % 179, % 761, , % Cash Taxes 2 (4,202) (7,857) -46.5% Monetization of ICMS 73,787 - n.a. Capital Employed 6,261,351 5,707, % Asset 6,941,492 6,189, % Liabilities 680, , % ROIC 1 (%) 13.3% 14.5% -1.3 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$/ton) +24.5% +26.4% -10.1% Q17 4Q17 1Q18 LTM 1Q17 LTM 1Q18 FINANCIAL PERFORMANCE NET REVENUE Suzano s net revenue in 1Q18 amounted to R$ 2,998.9 million. Pulp and paper shipments in the quarter amounted to 1,160.1 thousand tons, decreasing by 9.9% from 4Q17 and by 1.7% from 4Q17. Net Revenue (R$ million) Pulp 69% Net Revenue Breakdown (1Q18) Printing & Writing 24% 1Q17 4Q17 1Q18 Domestic Market Exports Other paper 1% Paperboard 6% Page 10 of 88

11 Quarterly Information March 31, 2018 The performance of consolidated net revenue in relation to 4Q17 is explained mainly by the lower pulp and paper sales volume, which was partially offset by the higher hardwood pulp list price in USD (average FOEX in Europe in 1Q18 of US$ 1,009 vs. US$ 941 in 4Q17). Compared to 1Q17, net revenue growth was supported mainly by the higher hardwood pulp list price in USD (average FOEX in Europe in 1Q18 of US$ 693 vs. US$ 680 in 1Q17) and by the higher price of paper sold in both the export and local markets. PRODUCTION Production ('000 tons) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Market Pulp % % Paper % % Total 1,213 1, % 1, % In 1Q18, a scheduled maintenance downtime was carried out at the Limeira Unit in São Paulo, which adversely affected pulp and paper production volumes in the quarterly comparisons. Fábrica Imperatriz (MA) Mucuri - Line 1 (BA) Mucuri - Line 2 (BA) Suzano (SP) Limeira (SP) Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 no downtime no downtime no downtime no downtime COST OF GOODS SOLD Average unit cost of goods sold (COGS) in 1Q18 was R$ 1,367.1/ton, increasing 3.0% from 1Q17 and in line with period inflation (2.3%). Compared to 4Q17, COGS decreased 3.2%, while net revenue decreased 4.6%, according the lower sales volumes in the period. COGS (R$ '000) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Pulp 963, % 1,096, % Paper 622, % 722, % 1,585,926 1,566, % 1,818, % COGS (R$/ton) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Pulp 1,099 1, % 1, % Paper 2,192 2, % 2, % 1,367 1, % 1, % OPERATING EXPENSES Expenses (R$ '000) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Selling Expenses 121, , % 128, % General and Administrative Expenses 147, , % 172, % Total Expenses 269, , % 301, % Total Expenses/Sales Volume (R$/ton) % % Page 11 of 88

12 Quarterly Information March 31, 2018 Total selling and administrative expenses amounted to R$ 232/ton in 1Q18, increasing 29.1% in comparison with 1Q17 and remaining practically stable in comparison with 4Q17. Compared to 1Q17, sales expenses increased by 21.2%, reflecting an increase of approximately R$ 9 million in the consumer goods business, in addition, the higher logistics expenditures in the domestic market and with rents. In comparison with 4Q17, despite the increase of approximately R$ 4 million in the consumer goods business, sales expenses decreased by 4.9% due to lower logistics costs due to lower sales volume. General and administrative expenses increased 32.0% from 1Q17, explained by higher expenses with labor and compensation based on net income. In comparison with 4Q17, expenses decreased 14.8%, due to lower expenses with provisioning for variable compensation and the long-term incentive programs (LTIP), as well as the lower provisioning for labor claims and consulting. ADJUSTED EBITDA 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q LTM 1Q18 LTM 1Q17 Δ Y-o-Y Adjusted EBITDA (R$ '000) 1,528, , % 1,425, % 5,295,833 3,483, % EBITDA Margin (%) 51.0% 37.6% 13.4 p.p. 45.4% 5.6 p.p. 47.0% 37.0% 10.1 p.p. Sales Volume (ton) 1,160,078 1,180, % 1,287, % 4,775,336 4,725, % Adjusted EBITDA (R$/ton) 1, % 1, % 1, % Adjusted EBITDA in 1Q18 compared to 1Q17 was affected mainly by the higher pulp list price, the weaker BRL and the higher paper prices in the domestic and export market. In comparison with 4Q17, Adjusted EBITDA was affected mainly by the higher pulp list price and the higher paper prices in the domestic and international markets. FINANCIAL INCOME AND EXPENSES Financial Result (R$ '000) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Financial Expenses (234,273) (282,163) -17.0% (342,459) -31.6% Interest on loans and financing (local currency) (59,458) (125,261) -52.5% (65,418) -9.1% Interest on loans and financing (foreign currency) (115,868) (121,940) -5.0% (226,947) -48.9% Capitalized interest , % 1, % Other financial expenses (59,251) (36,435) 62.6% (52,080) 13.8% Financial Income 36,726 98, % 57, % Interest on financial investments 33,082 91, % 48, % Other financial income 3,644 6, % 8, % Monetary and Exchange Variations (28,406) 170, % (342,350) -91.7% Foreign exchange variations (Debt) (37,911) 252, % (402,905) -90.6% Other foreign exchange variations 9,505 (82,080) % 60, % Derivative income (loss), net 2 68, , % (108,134) % NDF - (56) % - n.a. Zero-Cost Collars 24,937 89, % (57,439) % Foreign-Currency Debt Hedge 43,500 45, % (49,984) % Other , % (711) % Net Financial Result (157,350) 125, % (735,779) -78.6% 1 Capitalized interest due to construction in progress. Page 12 of 88

13 Quarterly Information March 31, Variation in mark-to-market adjustment plus adjustments paid and received. 3 Other includes LIBOR operations. Financial expenses decreased by 31.6% in 1Q18 compared to 4Q17, due to the repurchase of the 2021 Bonds carried out in 4Q17 and by the financial expense of the financing lines commitment for the settlement of the operation with Fibria, which represented R$ 25.8 million. Without the impact of the commitment, the reduction of financial expenses in 1Q18 vs. 4Q17 would be 39.1%. Compared to 1Q17, the 17.0% reduction reflects the lower basic interest rate in Brazil, the prepayment of certain contracts, the increase in LIBOR. Financial income in 1Q18 compared to 4Q17 was adversely affected by the lower basic interest rate in Brazil. Monetary and exchange variation generated a negative effect of R$ 28.4 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 March 31 st, 2018, the value of the principal of operations involving forward dollar sales through Zero Cost Collars (ZCC) was US$ 1,870 million, whose maturities are distributed from April 2018 to October 2019 and were contracted in a range from R$ 3.00 to R$ 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 gain of R$ 25 million in 1Q18 is composed of a positive cash impact of R$10 million and a positive non-cash impact of R$ 15 million related to the pricing of operations under 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 gain of R$44 million. The Company also uses swap contracts to exchange currency and interest rates to mitigate the effects from these variations on its cash flow. The Company posted a net financial expense of R$ million in 1Q18, compared to the net financial income of R$ million in 1Q17 and the net financial expense of R$ million in 4Q17. NET INCOME (LOSS) The Company posted net income of R$ 813 million in 1Q18, compared to net income of R$ 358 million in 4Q17 and net income of R$ 450 million in 1Q17 INDEBTEDNESS Debt (R$ '000) 03/31/ /31/2017 Δ Y-o-Y 12/31/2017 Δ Q-o-Q Local Currency 3,608,021 4,494, % 3,575, % Short Term 636, , % 600, % Long Term 2,971,844 3,772, % 2,974, % Foreign Currency 9,038,085 9,320, % 8,616, % Short Term 796, , % 1,514, % Long Term 8,241,289 8,811, % 7,102, % Gross Debt 12,646,106 13,815, % 12,191, % (-) Cash 3,392,005 4,068, % 2,708, % Net Debt 9,254,101 9,746, % 9,483, % Net Debt/Adjusted EBITDA 1 (x) 1.7x 2.8x -1.1x 2.1x -0.3x 1 Excludes nonrecurring items. Page 13 of 88

14 Quarterly Information March 31, 2018 Gross debt stood at R$ 12.6 billion on March 31 st, 2018, composed of 88.7% long-term maturities and 11.3% short-term maturities, and with 71.5% denominated in foreign currency and 28.5% in local currency. The percentage of gross debt denominated in foreign currency, considering the adjustment for derivatives, was 94.2%. Net debt stood at R$ 9.3 billion (US$ 2.8 billion) on March 31 st, 2018, compared to R$ 9.5 billion (US$ 2.9 billion) on December 31 st, Net debt in foreign currency, considering the adjustment with derivatives, accounted for 112.5% of total net debt on March 31 st, Suzano contracts debt in foreign currency as a 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 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) ( ) Gross Debt on Dec/17 Loans Interest Accrual Foreign Exchange Variation Principal and Interest Payment Others Gross Debt on Mar/18 Amortization Schedule (R$ million) Cash 9M onward Foreign Currency Local Currency The Net Debt/Adjusted EBITDA ratio was 1.7 times, compared to 2.1 times on December 31 th, The decline in the ratio reflects the higher EBITDA in the period. Page 14 of 88

15 Quarterly Information March 31, 2018 Net Debt (R$ and US$ million) Net Debt / Adjusted EBITDA in R$ and US$ (x) ,8 2,9 2,7 2,7 2,3 2,3 2,1 2,0 1,7 1,7 1Q17 2Q17 3Q17 4Q17 1Q18 R$ US$ 1Q17 2Q17 3Q17 4Q17 1Q18 R$ US$ In March 2018, the average cost of debt in USD was 4.6% p.a. (debt in BRL adjusted by the market swap curve). The average cost of debt was 6.5% p.a. in BRL, or 101.0% of the CDI (vs. 6.9% p.a. or 99.6% of CDI in December 2017) and 5.0% p.a. in USD (vs. 5.1% p.a. in December 2017). The average term of consolidated debt ended the quarter at 85 months (vs. 84 months in December 2017). Type Expousure on 03/31/2018 Index Exposure on 03/31/2018 Export financing; 28% Bond; 37% Libor; 33% Fixed (US$); 37% Basket of Currencies; 1% Others; 2% Import financing; 7% BNDES; 4% Agribusiness Receivables Certificates; 21% Fixed (R$); 4% TJLP; 2% CDI; 23% INVESTMENTS Investments amounted to R$ million in 1Q18, of which R$ million was invested in industrial and forest maintenance. Investments in Structural Competitiveness and Adjacent Businesses projects amounted to R$ million and were mainly allocated to the Tissue (Maranhão and Bahia) and Lignin projects. Investments in the acquisition of Facepa (R$ million), among other items, amounted to R$ million. For 2018, capex is estimated at R$ 2.4 billion, of which R$ 1.2 billion corresponds to Sustaining Capex and R$1.2 billion to the Adjacent Businesses and Structural Competitiveness projects Capex (R$ '000) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q LTM 1Q18 LTM 1Q17 Δ Y-o-Y Sustaining 263, , % 347, % 1,137,908 1,016, % Industrial Maintenance 54,779 56, % 106, % 271, , % Forestry Maintenance 208, , % 240, % 866, , % Structural Competitiveness and Adjacent Business 110, , % 122, % 477, , % Other 334,671 16, % 23, % 484, , % Total 708, , % 494, % 2,099,502 2,379, % Page 15 of 88

16 Quarterly Information March 31, 2018 CASH FLOW AND ROIC (R$ '000) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q LTM 1Q18 LTM 1Q17 Δ Y-o-Y Adjusted EBITDA 1,528, , % 1,425, % 5,295,832 3,483, % Sustaining Capex (263,619) (225,482) 16.9% (347,757) -24.2% (1,137,908) (1,016,492) 11.9% Operating Cash Flow 1,264, , % 1,077, % 4,157,925 2,467, % Suzano s operating cash generation (Adjusted EBITDA less Sustaining Capex) amounted to R$ 1.3 billion in 1Q18 and R$ 4.2 billion in the last 12 months. The variation in the comparison periods is explained by the higher pulp list price and by the higher paper price in the international and domestic markets. Operational Cash Generation per ton (R$/ton) Q17 4Q17 1Q18 LTM 1Q17 LTM 1Q18 ROIC equaled 17.4%. The 6.8 p.p. increase compared to LTM 1Q17 is explained by the higher profitability of the pulp segment, given the commodity s higher price. The paper segment had a negative effect on profitability, which is explained by the higher costs associated with the tissue business. ROIC (R$ '000) LTM 1Q18 LTM 1Q17 Δ Y-o-Y Operating Cash Flow 4,157,927 2,467, % Cash taxes² (36,677) (12,088) 203.4% Monetization of ICMS 99,607 - n.a. Capital Employed 24,228,958 23,082, % Asset 25,577,345 24,401, % Liabilities 1,348,387 1,318, % ROIC 1 (%) 17.4% 10.6% 6.8 p.p. 1 ROIC = (Operating Cash Generation Cash taxes) / Capital Employed (assets liabilities). DIVIDENDS ² Income and Social Contribution taxes. Suzano s Bylaws establish that, for the purposes of the minimum mandatory dividend, the lowest of the following amounts should be considered: (i) 25% of net income for the fiscal year; or (ii) 10% of Operating Cash Generation for the fiscal year. The Annual Shareholders Meeting held on April 26, 2018 approved the payment of dividends in the aggregate amount of R$ million, corresponding to R$ per common share, which represents payment of the mandatory dividend, already deducting from the aggregate amount of dividends the amounts distributed in the form of interest on shareholders equity that were approved in the Board of Directors Meeting held on November 24 th, 2017, which were prepaid on December 11 th, Page 16 of 88

17 Suzano Papel e Celulose S.A. Quarterly Information March 31, 2018 CAPITAL MARKETS On March 31 st, 2018, Suzano preferred stock (SUZB3) was quoted at R$33.36/share. The Company s stock is listed on the Novo Mercado, the listing segment of the São Paulo Exchange (B3) with the highest corporate governance standards. Stock Performance SUZB3 +152% Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Source: Bloomberg. IBrX % Ibovespa + 31% Liquidity Q17 2Q17 3Q17 4Q17 1Q18 Avg. Daily Volume (R$ million) Number of Trades (Daily) Source: Bloomberg. On March 31 st, 2018, the Company s capital stock was represented by 1,105,826,145 common shares (SUZB3) traded on the B3, of which 12,042,004 were treasury shares. Suzano s market capitalization stood at R$ 36.7 billion on March 31 st, In 1Q18, the free-float stood at 42.4% of the total capital. Free-float Distribution on 03/31/2018 Local 37% Individual Investors 4% Foreign 63% Institutional Investors 96% Page 17 of 88

18 Quarterly Information March 31, 2018 Free-float Distribution on 03/31/2018 * América Latina ex-brasil. FIXED INCOME Unit Mar/17 Dec/17 Mar/18 Suzano Price USD/k Suzano Yield % Suzano Price USD/k Suzano Yield % Suzano Price USD/k Suzano Yield % Treasury 10 years % RATING Agency National Scale Global Scale Outlook Fitch Ratings AAA BBB- Stable Standard & Poor s braaa BBB- Stable Moody s Aaa.br Ba1 Negative Page 18 of 88

19 Quarterly Information March 31, 2018 EVENTS EVENTS IN THE PERIOD Acquisition of land and forests in the state of São Paulo On February 5 th, 2018, the Company informed its shareholders and the general market that it had entered into an Agreement for the Purchase of Forestry Assets, Purchase of Rural Properties, Purchase Option and Other Covenants, with Conditions Precedent, with Duratex S.A. ( Duratex ), through itself or its affiliated companies, under which it: (i) acquired approximately nine thousand and five hundred (9,500) hectares of rural land and one million and two hundred thousand cubic meters (1,200,000 m³) of forests, which reflects the production potential of the forests existing and already implemented in the areas acquired, which are located in the central region of the state of São Paulo, for R$ million; and (ii) acquired an option to purchase approximately twenty thousand (20,000) hectares of rural properties in the same region and five million and six hundred thousand (5,600,000) cubic meters of forests, which reflects the production potential of the forests existing and already implemented in the areas that are subject to the option, for the price of R$ million, with the option being exercisable, at the sole discretion of Suzano, through July 2 nd, The Material Fact notice is available on the CVM website and on the Company s IR website ( Syndicated pre-export financing transaction On February 8 th, 2018, the Company announced to its shareholders and the general market that, as part of its ongoing liability management program, Suzano Pulp and Paper Europe S.A., a wholly-owned subsidiary of Suzano, entered into, on said date, a syndicated pre-export financing transaction in the amount of seven hundred fifty million U.S. dollars (US$ 750,000,000.00), with a term of five (5) years and grace period of three (3) years, with the Company and Suzano Trading Ltd., also a subsidiary of Suzano, as guarantors of the transaction. The Notice to the Market is available on the website of the CVM and on the Company s IR website ( Media news report On February 19 th, 2018, the Company informed its shareholders and the general market that it constantly evaluates opportunities with the potential to create value for its shareholders and its business and, in this context, had recently begun preliminary conversations with representatives of the controlling shareholders of Fibria Celulose S.A. about a possible deal involving the companies, with no defined format or structure. The Notice to the Market is available on the website of the CVM and on the Company s IR website ( Acquisition of PCH Mucuri On February 19 th, 2018, the Company announced to its shareholders and the general market that, after fulfillment of all conditions precedent and after approval was obtained from the applicable government authorities, the transaction with Queiroz Galvão Energia S.A. for the acquisition of all shares issued by Mucuri Energética S.A. was completed. Mucuri Energética S.A. owns a small hydroelectric plant located in the cities of Carlos Chagas and Pavão. The Notice to the Market is available on the website of the CVM and on the Company s IR website ( Media news report On February 22 nd, 2018, the Company announced to its shareholders and the general market that it ratified the Notice to the Market dated February 19, 2018, in response to Official Letter 210/2018-SAE, affirming that the recent conversations with representatives of the controlling shareholders of Fibria Celulose S.A. on a potential deal involving the companies did not have a defined format or structure. In the announcement, the Company noted that it consulted its controlling shareholders, who also confirmed that there was no fact or event to be disclosed at that time. The Notice to the Market is available on the website of the CVM and on the Company s IR website ( Completion of acquisition of tissue producer FACEPA On March 1 st, 2018, the Company announced to its shareholders and the general market that, after fulfillment of all conditions precedent and after approval was obtained from the applicable government authorities, on said date, the direct and indirect acquisition of approximately 92.84% of the total capital and 99.99% of the voting capital of FACEPA - Fábrica de Papel da Amazônia S.A. ( FACEPA ) was completed. Page 19 of 88

20 Quarterly Information March 31, 2018 The Notice to the Market is available on the website of the CVM and on the Company s IR website ( Clarifications of CVM/B3 queries on media news report On March 9 th, 2018, the Company announced to its shareholders and the general market that it reiterated to its shareholders and the general market, complementing the Notices to the Market dated February 19 and 22, 2018, that negotiations were ongoing between the Company and the controlling shareholders of Fibria Celulose S.A. ( Fibria ) involving a potential transaction between the Company and Fibria. However, there were still pending issues involving the deal and its conditions, including financial and structural issues, for which reason it was not possible to validate the veracity of the information disclosed by the newspaper Valor Econômico and by the internet portal InfoMoney. The Material Fact notice is available on the CVM website and on the Company s IR website ( Transaction with Fibria On March 16 th, 2018, the Company informed the market that on March 15 th, 2018, Suzano Holding S.A., jointly with the other controlling shareholders of the Company (collectively, the Controlling Shareholders of the Company ), entered into, with the controlling shareholders of Fibria Celulose S.A. ( Fibria and, jointly with Suzano, the Companies ), Votorantim S.A. and BNDES Participações S.A. BNDESPAR ( BNDESPAR ) (collectively the Controlling Shareholders of Fibria ) and with Suzano as intervening consenting party, a Voting Commitment and Assumption of Obligations, whereby the Controlling Shareholders of the Company and the Controlling Shareholders of Fibria agreed to exercise their voting rights to combine the operations and shareholder bases of the Company and of Fibria ( Voting Commitment ), through a corporate restructuring ( Transaction ). The Material Fact notice is available on the CVM website and on the Company s IR website ( Clarifications on CVM/B3 queries on media news report On March 19 th, 2018, the Company reiterated to its shareholders and the general market that, in compliance with Official Letter 432/2018-SAE ( Official Letter ), it respectfully provided clarifications on the information contained in the news report published by the agency Broadcast, on March 16, 2018, entitled Sinergias entre Suzano e Fibria serão muito expressivas [Synergies between Suzano and Fibria are very high], stating that the synergies between these two companies would be very high, in an amount between R$8 billion and R$10 billion. The Notice to the Market is available on the website of the CVM and on the Company s IR website ( UPCOMING EVENTS Earnings Conference Call (1Q18) Date: April 27, 2018 (Friday) Portuguese (with simultaneous translation) 11 a.m. (Brasilia time) 10 a.m. (New York time) 3 p.m. (London time) Tel: +55 (11) or (11) English 11 a.m. (Brasilia time) 10 a.m. (New York time) 3 p.m. (London time) Tel: +1 (646) (access code: Suzano) Page 20 of 88

21 Quarterly Information March 31, 2018 Please connect 10 minutes before the conference call is scheduled to begin. The conference call will be held in English, 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. IR CONTACTS Marcelo Bacci Rafael Mastrocola Danielle Cheade Fernanda Brienza Matheus Chiderolli Tel: +55 (11) ri@suzano.com.br Page 21 of 88

22 Quarterly Information March 31, 2018 APPENDICES APPENDIX 1 Operating Data Revenue breakdown (R$ '000) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Exports 2,192,050 1,529, % 2,211, % Pulp 1,899,779 1,304, % 1,927, % Paper 292, , % 284, % Domestic Market 806, , % 930, % Pulp 176, , % 172, % Paper 630, , % 758, % Total Net Revenue 2,998,859 2,253, % 3,142, % Pulp 2,076,326 1,454, % 2,099, % Paper 922, , % 1,043, % 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Sales volume (tons) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Exports 890, , % 959, % Pulp 795, , % 863, % Paper 95,353 84, % 96, % Paperboard 14,332 13, % 19, % Printing & Writing 81,021 70, % 77, % Domestic Market 269, , % 327, % Pulp 81, , % 89, % Paper 188, , % 237, % Paperboard 30,021 30, % 31, % Printing & Writing 148, , % 187, % Other paper 1 10,303 6, % 19, % Total sales volume 1,160,078 1,180, % 1,287, % Pulp 876, , % 953, % Paper 284, , % 334, % Paperboard 44,353 43, % 50, % Printing & Writing 229, , % 265, % Other paper 1 10,303 6, % 19, % Average net price (R$/ton) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Exports 2,462 1, % 2, % Pulp 2,390 1, % 2, % Paper 3,065 2, % 2, % Domestic Market 2,992 2, % 2, % Pulp 2,179 1, % 1, % Paper 3,340 3, % 3, % Total 2,585 1, % 2, % Pulp 2,370 1, % 2, % Paper 3,248 3, % 3, % 1 Paper from other manufacturers sold by the distributor and tissue paper. Page 22 of 88

23 Quarterly Information March 31, 2018 APPENDIX 2 Statement of Income Financial Statement (R$ '000) 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q 1Q18 1Q17 Δ Y-o-Y 4Q17 Δ Q-o-Q Net Revenue 2,998,859 2,253, % 3,142, % Cost of Goods Sold (1,585,926) (1,566,544) 1.2% (1,818,606) -12.8% Gross Profit 1,412, , % 1,323, % Gross Margin 47.1% 30.5% 16.6 p.p. 42.1% 5.0 p.p. Operating Expense/Income (279,230) (218,677) 27.7% (152,123) 83.6% Selling Expenses (121,957) (100,624) 21.2% (128,284) -4.9% General and Administrative Expenses (147,353) (111,597) 32.0% (172,879) -14.8% Other Operating Income (Expenses) (9,867) (7,274) 35.6% 147, % Equity Equivalence (53) % 1, % EBIT 1,133, , % 1,171, % Depreciation, Amortization & Depletion 384, , % 355, % EBITDA 1,518, , % 1,527, % EBITDA Margin (%) 50,6% 37,0% 13.6 p.p. 48,6% 2.0 p.p. Adjusted EBITDA 1 1,528, , % 1,425, % Adjusted EBITDA Margin % 37.6% 13.4 p.p. 45.4% 5.6 p.p. Net Financial Result (157,350) 125, % (735,777) -78.6% Financial Expenses 36,726 98, % 57, % Financial Revenues (234,273) (282,163) -17.0% (342,460) -31.6% Exchange Rate Variation (28,406) 170, % (342,348) -91.7% Net Proceeds Generated by Derivatives 68, , % (108,134) % Earnings Before Taxes 976, , % 435, % Income and Social Contribution Taxes (163,226) (143,714) 13.6% (77,948) 109.4% Net Income (Loss) 813, , % 357, % Net Margin 27.1% 20.0% 7.1 p.p. 11.4% 15.7 p.p. 1 Excluding non-recurring items. Page 23 of 88

24 Quarterly Information March 31, 2018 APPENDIX 3 Balance Sheet Assets (R$ '000) 03/31/ /31/ /30/ /30/ /31/2017 Current Assets Cash and Cash Equivalent 2,000,336 1,076,833 1,439,776 1,001,883 1,005,344 Financial Investments 1,391,669 1,631,505 2,410,173 2,628,886 3,063,318 Accounts Receivable 2,389,398 2,303,810 1,862,202 1,891,698 1,628,501 Inventories 1,321,436 1,207,961 1,408,791 1,336,768 1,253,428 Recoverable Taxes 320, , , , ,869 Prepaid Expenses 182,593 37,016 52,317 51,823 27,697 Other Current Assets 278, , , , ,617 Total Current Assets 7,883,658 6,796,875 7,995,362 7,665,278 8,106,774 Non-Current Assets Other Accounts Receivable 816, , , , ,499 Biological Assets 4,579,097 4,548,897 4,248,989 4,228,301 4,141,518 Investments 6,712 6,764 5,706 5,716 1,713 Property, Plant and Equipment 16,415,548 16,211,228 16,195,420 16,172,254 16,153,481 Intangible Assets 375, , , , ,528 Total Non-Current Assets 22,192,679 21,726,107 21,448,009 21,399,090 21,324,739 Total Assets 30,076,337 28,522,982 29,443,371 29,064,368 29,431,513 Liabilities and Equity (R$ '000) 03/31/ /31/ /30/ /30/ /31/2017 Current Liabilities Accounts Payable 600, , , , ,997 Loans and Financing 1,432,974 2,115,067 1,785,368 1,995,621 1,231,670 Tax Liabilities 185, , , ,489 92,015 Salaries and Payroll Taxes 154, , , , ,052 Other Payable 696, , , ,846 1,207,158 Total Current Liabilities 3,070,814 3,708,363 3,414,218 3,609,013 3,192,892 Non-Current Liabilities Loans and Financing 11,213,131 10,076,789 11,347,543 11,646,806 12,583,785 Deferred Taxes 1,857,237 1,789,960 1,775,084 1,548,263 1,673,221 Provision 726, , , , ,836 Other Liabilities 742, , , , ,410 Total Non-Current Liabilities 14,539,210 13,193,065 14,423,079 14,627,863 15,637,252 Shareholders Equity Share Capital 6,241,753 6,241,753 6,241,753 6,241,753 6,241,753 Capital Reserve 380, , , , ,118 Treasury shares (218,265) (241,088) (241,006) (241,006) (258,113) Profit Reserve 2,927,760 2,927,760 1,657,125 1,657,125 1,657,125 Equity Valuation Adjustment 2,295,927 2,298,328 2,273,885 2,308,364 2,296,749 Retained Earnings/Accumulated Losses 16,675-26,913 15,090 16,590 Retained Earnings/Losses of the period 813,127-1,449, , ,147 Total Equity 12,457,541 11,621,554 11,606,074 10,827,492 10,601,369 Non-controlling shareholders interests 8, Page 24 of 88

25 Quarterly Information March 31, 2018 Total Liabilities and Equity 30,076,337 28,522,982 29,443,371 29,064,368 29,431,513 Page 25 of 88

26 Quarterly Information March 31, 2018 APPENDIX 4 Statement of Cash Flow Cash Flow Statement (R$ '000) 1Q18 1Q17 Cash flow from operating activities Net income/(loss) for the period 813, ,147 Depreciation, depletion and amortization 384, ,728 Income from sale of fixed and biological assets 506 (3,388) Equity pick-up in subsidiaries and affiliates 53 (818) Exchange and monetary variations, net 16,653 (260,152) Interest expenses, net 160, ,520 Derivative (gains)/losses, net (68,603) (137,821) Expenses (income) from deferred income and social contribution taxes 65, ,125 Interest on actuarial liabilities 8,617 9,506 Provision/ (reversal) for contingencies 233 8,224 Provision/ (reversal) for share-based payments 19,262 6,601 Addition to allowance for doubtful accounts, net 6,292 3,504 Provision/ (reversal) for discounts - loyalty program (16,617) (36,565) Provision/ (reversal) for inventory losses and write-offs (3,045) 573 Provision for losses and write-off with fixed and biological assets 8,982 3,154 Other provisions /(reversals) (7,383) 22,278 Increase / (decrease) in accounts receivable (14,239) (9,660) Decrease/ (increase) in inventories (88,286) 57,482 Decrease/ (increase) in recoverable taxes 1,241 (3,741) Increase / (decrease) in other current and non-current assets (231,073) 97,771 Decrease / (increase) in trade accounts payable (10,903) (31,894) Increase/(decrease) in other current and non-current liabilities 220,729 68,742 Payment of interest (194,402) (246,468) Payment of other taxes and contributions (154,481) (139,019) Payment of income and social contribution taxes (11,045) (18,186) Net cash from operating activities 906, ,643 Cash flow from investing activities Financial investments 265,000 (912,363) Cash from the acquisition of subsidiaries 21,436 - Acquisition of subsidiaries (309,872) - Additions to fixed assets, intangible assets and biological assets (349,003) (353,359) Proceeds from asset divestment 15,043 8,509 Net cash used in investment activities (357,396) (1,257,213) Cash flow from financing activities Funding 2,476,082 1,009,369 Settlement of derivative operations 13,036 96,954 Payment of loans (2,134,630) (942,693) Dividends (acquisition) of own shares 8,514 8,514 Net cash provided by (used in) financing activities 363, ,144 Exchange variation on cash and cash equivalents 11,202 (24,927) Increase (reduction) in cash and cash equivalents 923,503 (609,353) Cash and cash equivalents at the beginning of the period 1,076,833 1,614,697 Page 26 of 88

27 Quarterly Information March 31, 2018 Cash and cash equivalents at the end of the period 2,000,336 1,005,344 Statement of the increase (reduction) in cash 923,503 (609,353) APPENDIX 5 EBITDA (R$ '000, except where otherwise indicated) 1Q18 1Q17 Net Income 813, ,147 Net Financial Result 157,350 (125,174) Income and Social Contribution Taxes 163, ,714 EBIT 1,133, ,687 Depreciation, Amortization and Depletion 384, ,728 EBITDA 1 1,518, ,415 EBITDA Margin 50.6% 37.0% Provision (Reversion) for losses with fixed assets, write-offs, taxes 7,366 1,157 Expenses with Fibria's Transaction 1,539 - Land conflict agreement 11,779 Equity Equivalence 53 (818) Others Adjusted EBITDA 1,528, ,349 Adjusted EBITDA Margin 51.0% 37.6% 1 The Company's EBITDA is calculated in accordance with CVM Instruction 527 of October 4, Page 27 of 88

28 Quarterly Information March 31, 2018 APPENDIX 6 Segmented Statement of Income Financial Statement (R$ '000) 1Q18 1Q17 Pulp Paper Non Segmented Total Pulp Paper Non Segmented Total Net Revenue 2,076, ,533-2,998,859 1,454, ,469-2,253,908 Cost of Goods Sold (963,168) (622,758) - (1,585,926) (973,728) (592,817) - (1,566,545) Gross Profit 1,113, ,775-1,412, , , ,363 Gross Margin 53.6% 32.5% 47.1% 33.1% 25.8% 30.5% Operating Expense/Income (109,329) (169,901) - (279,230) (93,892) (124,784) - (218,677) Selling Expenses (47,831) (74,127) - (121,957) (40,400) (60,224) - (100,624) General and Administrative Expenses (50,697) (96,656) - (147,353) (39,059) (72,538) - (111,597) Other Operating Income (Expenses) (10,801) (9,867) (14,433) 7,159 - (7,274) Equity Equivalence - (53) - (53) EBIT 1,003, ,873-1,133, ,818 81, ,686 Depreciation, Amortization & Depletion 274, , , , , ,730 EBITDA 1,278, ,619-1,518, , , ,416 EBITDA Margin (%) 61.6% 26.1% 50.6% 44.7% 23.1% 37.0% Adjusted EBITDA 1 1,285, ,993-1,528, , , ,350 Adjusted EBITDA Margin % 26.3% 51.0% 45.5% 23.2% 37.6% Net Financial Result - - (157,350) (157,350) , ,174 Earnings Before Taxes 1,003, ,873 (157,350) 976, ,818 81, , ,860 Income and Social Contribution Taxes - - (163,226) (163,226) - - (143,714) (143,714) Net Income (Loss) 1,003, ,873 (320,576) 813, ,818 81,868 (18,540) 450,146 Net Margin 48.3% 14.1% 27.1% 26.6% 10.2% 20.0% 1 Excluding non-recurring items. Corporate Information Page 28 of 88

29 Quarterly Information March 31, 2018 Suzano Pulp and Paper, which reported net revenue of R$10.5 billion in 2017, is one of the largest vertically integrated producers of paper and eucalyptus pulp in Latin America, with annual production capacity of 3.6 million tons of market pulp and 1.2 million tons of paper. Suzano Pulp and Paper offers a broad range of pulp and paper products for the domestic and export markets: (i) eucalyptus pulp; (ii) hardwood fluff pulp; (iii) uncoated printing and writing paper; (iv) coated printing and writing paper; (v) paperboard; and (vi) tissue paper. Forward-looking Statements This release may contain forward-looking statements. Such statements are subject to known and unknown risks and uncertainties that could cause the expectations expressed not to materialize or to differ substantially from the expected results. These risks include changes in future demand for the Company s products, changes in factors affecting domestic and international product prices, changes in the cost structure, changes in the seasonal patterns of markets, changes in prices charged by competitors, foreign exchange variations, changes in the political or economic situation of Brazil, and changes in emerging and international markets. The forward-looking statements were not reviewed by our independent auditors Page 29 of 88

30 Quarterly Information March 31, 2018 Balance Sheets Parent Company Assets Note 3/31/ /31/2017 3/31/ /31/2017 Current assets Cash and cash equivalents 5 723, ,701 2,000,336 1,076,833 Financial investments 6 1,339,977 1,579,981 1,391,669 1,631,505 Trade accounts receivable 7 3,381,506 2,579,919 2,389,398 2,303,810 Inventories 8 986, ,358 1,321,436 1,207,961 Recoverable taxes 9 258, , , ,426 Derivative financial instruments 4 95,539 77,090 95,539 77,090 Advances to suppliers 10 29,136 15,911 62,619 49,235 Receivables from subsidiaries 11 2,989 2, Other assets 130, , , ,480 6,947,691 6,058,228 7,872,781 6,785,340 Non-current assets held for sale 15 10,877 11,535 10,877 11,535 Total current assets 6,958,568 6,069,763 7,883,658 6,796,875 Non-current assets Recoverable taxes 9 262, , , ,757 Deferred taxes ,618 2,606 Derivative financial instruments 4 65,812 56,820 65,812 56,820 Advances to suppliers , , , ,555 Judicial deposits , , , ,613 Receivables from land expropriation 17 60,975 60,975 60,975 60,975 Other assets 26,439 26,072 63,342 31, , , , ,792 Biological assets 13 4,736,153 4,700,344 4,579,097 4,548,897 Investments 14 1,292, ,003 6,712 6,764 Property, plant and equipment 15 15,807,512 15,881,105 16,415,548 16,211,228 Intangible assets , , , ,426 21,943,325 21,462,786 21,376,384 20,955,315 Total non-current assets 22,711,167 22,220,072 22,192,679 21,726,107 Total assets 29,669,735 28,289,835 30,076,337 28,522,982 The accompanying notes are an integral part of this quarterly information. Page 30 of 88

31 Quarterly Information March 31, 2018 Balance Sheets Parent Company Liabilities Note 3/31/ /31/2017 3/31/ /31/2017 Current liabilities Trade accounts payables , , , ,476 Loans and financing 19 1,364,441 1,329,753 1,432,974 2,115,067 Derivative financial instruments 4 22,973 23,819 22,973 23,819 Taxes payable 138,418 85, , ,847 Payroll and charges 141, , , ,467 Debits payable to related parties 11 61, , Accounts payable for assets acquisitions 24 84,074 76,781 90,618 83,155 Dividends payable , , , ,550 Advance from customers 80,907 86,409 91,991 92,545 Other liabilities 205, , , ,437 Total current liabilities 2,846,443 3,495,535 3,070,814 3,708,363 Non-current liabilities Loans and financing 19 3,995,180 4,111,295 11,213,131 10,076,789 Derivative financial instruments 4 76, ,077 76, ,077 Debits payable to related parties 11 7,137,307 5,973, Accounts payables for assets acquisitions , , , ,831 Provision for contingencies , , , ,069 Employee benefits , , , ,263 Deferred taxes 12 1,782,755 1,711,254 1,857,237 1,789,960 Share-based payments 23 51,455 36,539 51,455 38,320 Provision for losses of investments in subsidiaries , , Other liabilities 12,756 12, ,258 12,756 Total non-current liabilities 14,365,751 13,172,746 14,539,210 13,193,065 Total liabilities 17,212,194 16,668,281 17,610,024 16,901,428 Equity Share capital 6,241,753 6,241,753 6,241,753 6,241,753 Share capital reserves 380, , , ,801 Treasury shares (218,265) (241,088) (218,265) (241,088) Profits reserve 2,927,760 2,927,760 2,927,760 2,927,760 Equity valuation adjustment 2,295,927 2,298,328 2,295,927 2,298,328 Net income for the period 829, ,802 - Total equity 25 12,457,541 11,621,554 12,457,541 11,621,554 Non-controlling interest - - 8,772 - Total equity and liabilities 29,669,735 28,289,835 30,076,337 28,522,982 The accompanying notes are an integral part of this quarterly information. Page 31 of 88

32 Quarterly Information March 31, 2018 Statement of Income for the Period Parent Company Note 3/31/2018 3/31/2017 3/31/2018 3/31/2017 Net sales revenue 27 2,783,540 2,020,609 2,998,859 2,253,908 Cost of sales 29 (1,426,041) (1,388,840) (1,585,926) (1,566,544) Gross profit 1,357, ,769 1,412, ,364 Operating income (expenses) Selling expenses 29 (236,024) (208,668) (121,957) (100,624) General and administrative expenses 29 (135,735) (103,639) (147,353) (111,597) Equity in earnings of associates , ,901 (53) 818 Other operating income (expenses), net 29 (10,611) 4,798 (9,867) (7,274) Operating profit before net financial income (expenses) 1,097, ,161 1,133, ,687 Net financial income (expenses) 26 Financial income 100, , , ,337 Financial expenses (221,249) (274,443) (262,679) (282,163) Net income before taxes 977, , , ,861 Income taxes 12 Current (94,547) (26,544) (97,776) (29,589) Deferred (69,405) (114,125) (65,450) (114,125) Net income for the period 813, , , ,147 Net earnings per share for the period 25.5 Basic - Common Diluted - Common The accompanying notes are an integral part of this quarterly information. Page 32 of 88

33 Quarterly Information March 31, 2018 Statement of Comprehensive Income Parent Company Note 3/31/2018 3/31/2017 3/31/2018 3/31/2017 Net income for the period 813, , , ,147 Other comprehensive income (loss) 14,274 (1,228) 14,274 (1,228) Exchange variation on conversion of financial statements of foreign subsidiaries 14 14,274 (1,228) 14,274 (1,228) Total comprehensive income 827, , , ,919 The accompanying notes are an integral part of this quarterly information. Page 33 of 88

34 Quarterly Information March 31, 2018 Statement of Changes in Equity Capital reserves Profit reserve Note Share Capital Tax incentives Stock options granted Share insurance costs Treasury stock Legal reserve Reserve for capital increase Special statutory reserve Equity valuation adjustment Retained earnings Total Noncontrolling interest Total equity Balances on December 31, ,241, ,402 19,754 (15,442) (273,665) 316,526 1,223, ,639 2,314,567-10,143,494-10,143,494 Total comprehensive income (loss) Net income for the period ,807,433 1,807,433-1,807,433 Actuarial gain net of deferred taxes ,754-2,754-2,754 Exchange variation on conversion of financial statements and on foreign subsidiaries ,006-38,006-38,006 Equity transactions with shareholders: Stock options granted - - 1, ,521-1,521 Sale of shares in treasury to meet stock-based compensation plan , ,514-8,514 Treasury stock acquired (82) (82) - (82) Payment of interest on equity (199,835) (199,835) - (199,835) Reversal of time-barred dividends Internal changes in equity: Partial realization of equity valuation adjustment, net of deferred taxes (56,999) 56, Cancellation of class B preferred shares , (17,107) Reserve for tax incentives Sudene-reduction of 75% - 196, (196,604) Transfer between reserves ,372 1,062, ,024 - (1,270,635) Exercise of stock option - - (7,038) - 7, Minimum mandatory dividends payable (180,280) (180,280) - (180,280) Balances on December 31, ,241, ,006 14,237 (15,442) (241,088) 406,898 2,286, ,663 2,298,328-11,621,554-11,621,554 Total comprehensive income (loss) Net income for the period , , ,127 Exchange variation on conversion of financial statements and on foreign subsidiaries ,274-14,274-14,274 Equity transactions with shareholders: Stock options granted Sale of shares in treasury to meet stock-based compensation plan , ,514-8,514 Initial non-controlling interest ,772 8,772 Internal changes in equity: Partial realization of equity valuation adjustment, net of deferred taxes (16,675) 16, Exercise of stock option - - (14,309) - 14, Balances on March 31, ,241, ,006 - (15,442) (218,265) 406,898 2,286, ,663 2,295, ,802 12,457,541 8,772 12,466,313 The accompanying notes are an integral part of this quarterly information. Page 34 of 88

35 Quarterly Information March 31, 2018 Statement of Cash Flows Cash and cash equivalents from operating activities Note Parent Company 3/31/2018 3/31/2017 3/31/2018 3/31/2017 Net income for the period 813, , , ,147 Adjustment to reconcile net income (loss) to cash and cash equivalents from operating activities 508, , , ,469 Depreciation, depletion and amortization 382, , , ,728 Income from sale of property, plant and equipment and biological assets (3,388) 506 (3,388) Equity pick-up in subsidiaries and affiliates 14 (122,402) (126,901) 53 (818) Exchange and monetary variations, net 59,593 (249,993) 16,653 (260,152) Interest expenses, net 157, , , ,520 Derivative gains, net 26 (68,603) (134,946) (68,603) (137,821) Expenses from deferred income and social contribution taxes 12 69, ,125 65, ,125 Interest on actuarial liabilities 22 8,617 9,506 8,617 9,506 Provision for contingencies , ,224 Addition to provision for share-based payments 23 19,262 6,601 19,262 6,601 Allowance for doubtful accounts, net 7 4,743 2,028 6,292 3,504 Reversal of/(addition to) provision for discounts - loyalty program (604) 646 (16,617) (36,565) Provision for (reversal of) inventory losses and write-offs 8 (3,045) 573 (3,045) 573 Provision for losses and write-off with property, plant and equipment and biological assets 29 8, ,982 3,154 Other provisions (7,636) 3,920 (7,384) 22,278 Increase (reduction) in assets Related parties 469, , Accounts receivables (793,487) 460,003 (14,239) (9,660) Inventories (57,394) 36,444 (88,286) 57,482 Recoverable taxes 4, ,241 (3,741) Other current and non-current assets (54,362) (42,017) (231,073) 97,771 Increase (reduction) in liabilities Trade payables (16,559) (55,981) (10,903) (31,894) Other current and non-current liabilities 161,458 47, ,729 68,742 Cash provided by (used in) operations (286,337) 1,327,340 (122,531) 178,700 Payment of interest (181,136) (196,084) (194,402) (246,468) Payment of other taxes and contributions (110,512) (129,751) (154,481) (139,019) Payment of income and social contribution taxes (6,250) (15,575) (11,045) (18,186) Net cash provided by operating activities 737,134 1,606, , ,643 Cash flows and cash equivalents from investing activities Cash from acquisition of subsidiaries ,436 - Additions to property, plant and equipment 15 (140,964) (152,542) (142,226) (152,960) Additions to intangible assets (57) (76) (57) (76) Additions to biological assets 13 (212,329) (205,988) (206,720) (200,323) Proceeds from asset divestment 15,043 8,509 15,043 8,509 Financial investments, net 264,350 (913,817) 265,000 (912,363) Acquisition of subsidiaries (309,872) - (309,872) - Net cash used in investing activities (383,829) (1,263,914) (357,396) (1,257,213) Cash flow and cash equivalents from financing activities Funding 19 46,383 58,849 2,476,082 1,009,369 Settlement of derivative operations 4 13,036 78,499 13,036 96,954 Payment of loans 19 (188,150) (849,226) (2,134,630) (942,693) Dividends from own shares 8,514 8,514 8,514 8,514 Net cash (used in) provided by financing activities (120,217) (703,364) 363, ,144 Exchange variation on cash and cash equivalents ,202 (24,927) Increase (reduction) in cash and cash equivalents 233,088 (361,058) 923,503 (609,353) Cash and cash equivalents at the beginning of the period 5 490, ,056 1,076,833 1,614,697 Cash and cash equivalents at the end of the period 5 723, ,998 2,000,336 1,005,344 Statement of the increase (reduction) in cash and cash equivalents 233,088 (361,058) 923,503 (609,353) The accompanying notes are an integral part of this quarterly information. Page 35 of 88

36 Quarterly Information March 31, 2018 Statement of Value Added Note Parent Company 3/31/2018 3/31/2017 3/31/2018 3/31/2017 Income Sale of goods, products and services 27 3,055,013 2,273,807 3,273,068 2,509,463 Other income (expenses), net 15,866 9,258 16,609 (2,815) Income from construction of own assets 130, , , ,726 Allowance for doubtful accounts, net 7 (4,743) (2,028) (6,292) (3,504) 3,196,764 2,406,763 3,414,013 2,628,870 Input acquired from third parties Cost of products and goods sold and services rendered (1,083,325) (956,688) (1,083,326) (956,688) Supplies, electricity, outsourced services and others (319,094) (438,251) (376,068) (523,511) (1,402,419) (1,394,939) (1,459,394) (1,480,199) Gross added value 1,794,345 1,011,824 1,954,619 1,148,671 Depreciation, amortization and depletion (382,247) (363,216) (384,938) (365,728) Net added value produced by the Company 1,412, ,608 1,569, ,943 Added value received through transfers Equity pick-up in subsidiaries and affiliates , ,901 (53) 818 Financial income 150, , ,985 53, , , ,932 53,885 Distribution of value added 1,685, ,234 1,702, ,828 Personnel 293, , , ,275 Direct compensation 236, , , ,106 Benefits 45,676 40,615 46,312 41,271 F.G.T.S. (Government Severance Indemnity Fund for Employees) 10,899 9,898 10,899 9,898 Taxes, fees and contributions 286, , , ,755 Federal 243, , , ,730 State 42,085 (15,102) 36,228 (21,218) Municipal 1,153 1,371 1,153 1,243 Value distributed to providers of capital 292,136 (10,622) 312,001 (53,349) Interest 271,232 (28,930) 290,334 (72,107) Rentals 20,904 18,308 21,667 18,758 Value distributed to shareholders 813, , , ,147 Retained earnings in the period 813, , , ,147 Distribution of value added 1,685, ,234 1,702, ,828 The accompanying notes are an integral part of this quarterly information. Page 36 of 88