Suzano S.A.

Ladies and gentlemen, thank you for holding and welcome to Suzano's conference call to discuss the results for the fourth quarter of 2022. We would like to inform that all participants will be in a leasing only mode during the presentation that will be addressed by the CEO, Mr. Walter Schalke and other executive officers. After the company's remarks are completed, there will be a question and answer session when further restrictions will be given. Should any participant need assistance during this call, please press star zero to reach the operator. Before proceeding, please be aware that any forward-looking statements are based on the beliefs and assumptions of Suzano's management and on information currently available to the company. They involve risks, uncertainties and assumptions. because they relate to future events and therefore depend on circumstances that may or may not occur in the future. You should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Suzano and could cause results to differ materially from those expressed in such overlooking statements. Now I would like to turn the floor Over to the company's CEO. Please, Mr. Walter Schauke, you may proceed.

Good morning. Welcome, everyone, to the year result meeting that we are presenting here. We have with us here a large part of our C-level that would be able to answer your further questions in the end of the presentation here. I'm very pleased today to announce and to present to you the best ever results of our company. We are very pleased with several developments that we had with you that I'm going to share right now. In the operational side, we have flat volumes on the paper and a poll. Despite the fact that we have additional annual shutdowns and a retrofit in our Araclus plan. This keeps us with inventory levels below our optimal operational levels. Leo is going to share more information with you regarding this point. The combination of good volumes in terms of sales. and Better Prices lead us to a situation that we had the best EBITDA ever in the company with 28.2 billion reais. When operational cash generation of 22.6 billion reais. Despite the fact that we have short-term impact on our cash cost, Due to inflation on commodities and other things and other services that Aires is going to share with you additional information. Our financial situation, it's a very strong balance sheet. We have a potential liquidity of 6 billion reais right now. Our net debt is at 10.9 billion reais. With several initiatives that we had this year, we had a minor increase from 10.4 to 10.9 billion reais. And Batch is going to share with you additional information on that. Our leverage is at two times Nadado Revida right now. And we have been performance our capex once again, one additional year in line with our guidance. We are very pleased with that. We are a highly intensive capital company and we need to perform on our cap. I'm very pleased as well to announce our best ever results on safety performance as well and a major improvement on our cultural development. mainly showing that we are preparing the company for our future. We are not only think on the short-term results, but we are preparing our future. In the end of the presentation, I'm going to share with you how we have been performing on all the strategic avenues that we announced to you. Now I'm going to pass the floor to Fabio who is going to share the information regarding our paper and packaging division.

Thanks, Walter, and good morning, everyone. Let's turn to the next page of the presentation. We're glad to announce that with solid results on the fourth quarter, we wrap 2022 as the best year ever for the paper and packaging business unit. Demand for print and writing papers and carton board has been strong in the domestic market, led by seasonal customer demand in paper packaging and editorial segments. In the international markets, demand, although solid in the quarter, has shown some signs of cooling down, with much improved supply chain leading to end of inventory replenishing in all major markets we serve. On the domestic market, according to IBA, print and write demand slipped 2.2% in the quarter when compared to fourth quarter 2021. This decrease is due to strong comparison period last year and the reduction of print and writing papers sold into the container board segment. which has been minimum at the end of 2022. When you look at full figures for the year, print and write demand remain at the same levels of 2021, a positive indicator, giving strong reading in 2021. Robust performance of the publishing sector, office and school paper segments sustained the demand, supported by the rebuild of previous depleted inventories, a trend that was particularly strong in the quarter. For paper board, IBAS public data on demand shows a strong 11% increase versus fourth quarter of 2021, with a continuous consumption of essential goods and strong seasonality at this time of the year with holiday shopping. Consolidating 2022, there is a 3% increase in demand, sustaining the post-pandemic growth trend. On the international markets, as I already mentioned, supply imbalances are fading, and demand has returned to its historical trend, albeit still sustained at favorable price trends. Susano's sales volumes in Q4 were 2% higher than the previous quarter, and 10% below when compared to the fourth quarter last year. The decrease in sales volume when compared to Q4 2021 is explained by our decision to operate with lower inventory levels in order to serve market demand, which diluted sales volumes throughout the year. When you look for annual volume, 2022 sales were at the same level as 2021, and domestic sales represent 70% of our total sales. Our average net price during the quarter was 2% higher than our average price in Q3 and 40% higher than the same quarter last year. By looking year-over-year, our average net price increased 36%. As a result of revenue management and operation stability, our EBITDA has reached 810 million reais, a 47% increase on a year-over-year basis. On a quarter-over-quarter comparison, the EBITDA performance was mainly impacted by G&A costs, as explained in our earnings release. If we look at the annual EBITDA of 2022, there is a sound 50% increase when compared to 2021. During the year of 2021, we have grown the sales of our innovation pipeline by almost 2x, delivered on our target set in our last 200-day event. We have also surpassed the milestone of 43,000 customers directly served by Susano, strengthening our Susano optimized business model by achieving record numbers in sales throughout our e-commerce platform. Looking ahead, in terms of demand, we expect to see marks returning to their secular trends for print and write papers and continue to grow above historical trends for paper boards. We expect more challenged market conditions in international markets with a shrinking demand for print and write papers and more availability of supply. Domestic market seems more balanced and should be more resilient. It's worth mentioning that the structural competitiveness of Suzano paper package business provides a solid ground to navigate on the foreseen market dynamic. Cost inflation during the last two years has altered the marginal cost of paper producers. And moving forward, we should expect prices to remain higher than historical levels in most markets. Now, I'll turn over to Leo, who will be presenting our pool business results.

Thank you, Fabio, and good morning, everyone. So let's please move to page five of our presentation so that we can address the results of our pool business unit for 2022, which was also a record year for Suzano's pool business unit. as well as sharing with you the results for Q4-22. As you can note on the upper left graph, our 2022 sales volume was much aligned with our 2021 sales volumes. Our sales volumes during the fourth quarter was quite strong, also in line with the preceding quarter and with the fourth Q21, consequently keeping our inventories still below optimum operational levels. This sales performance was supported by a timely recovery of shipments and invoicing to Asian customers, for which we have now re-established previous service-level commitments. During this past quarter, demand for paper segments in Europe performed differently among themselves. While tissue was quite strong and resilient, printing and writing, as well as some specialty grades, mostly related to the labor markets, faced lower order intake. We have noticed, however, improvements in the demand of decor paper by the end of Q4. In China, low paper producers margins, a reestablishment of logistic lead times, and a negative sentiment due to the uncertainty on how the growing COVID infection rates could affect consumption going forward, despite a positive or positive messages from greater opening of the Chinese market, Reflected in order entry at below normalized levels. Due to this prevailing scenario, we have decided to adjust our prices in Asia for December order intake, which has stimulated our customers to reestablish purchases of pulp as hardwood inventories in China were quite balanced. Now coming back to the slide, our average price for 2022 was 25% higher than 2021's average price in U.S. dollar terms. And during the Q4 2022, our prices for export markets further increased to $831 per ton. Our EBITDA for 2022 totaled R$25.1 billion, which is a new record for our whole business unit, posting a 17% increase compared to 2021. The fourth Q22 EBITDA performance was mainly driven by higher prices and strong invoicing performance, as I have already addressed, which led us to a 61% EBITDA margin despite cost pressures. Now, looking forward, I would like to highlight the following points. In China, post-Chinese New Year, we have noticed quite an optimism from our customers, with improving confidence levels and a general expectation that consumer confidence and spending will accelerate in the short term. Order intake in January was higher than November-December 22 levels, and in February they have further improved, trending quite close to historic levels. In Europe, we expect that the distributors and customers stocking for printing, writing, and specialty grades should be over soon, consequently recovering purchases of paper. In the European tissue segment, we continue to see quite stable and resilient markets with positive downstream demand. In North America, focusing on tissue as other paper grades are mostly integrated, most major producers are reporting to be running at healthy production rates. Looking now at the supply side of the equation, we still haven't noticed additional volumes from upcoming projects being marketed as we speak, and we expect that these new capacities will reach markets gradually, and possibly more significantly towards the second half of the year. When we add the full annual impact of decreasing birch hardwood availability in Europe, we foresee a healthier S&D scenario in the short term. Also, increasing viscose prices are stimulating flex-dissolving pulp producers to swing back their production toward this pulp rate. It is our view that unexpected downtimes will continue to put additional pressure on supply due to technical age of pulp producers, weather-related events, strikes, as well as increasing cost pressure and availability of wood in several regions of the world. Looking at 2023 as a whole, we see organic demand for hardwood pulp growing close to a million tons, which should be further increased by a restocking movement in Asia once prices get closer to marginal costs, and also supported by fiber substitutions favoring hardwood grades as well as single-use plastic substitutions. Despite our positive view on the short-term fundamentals, we sense that our consumers' and customers' behaviors are anticipating the sentiment of future projects which have been influencing price curves. It is worth mentioning that inflation on production costs during these past two years, mainly driven by higher wood costs, have changed significantly the set points of decision-making of higher-cost producers, which should anchor different price levels when compared to previous cycles. With that said, I would now like to invite Aires to address with you the cash cost performance that we had during the last quarter.

Thank you, Léo. Good morning, everyone. I'm moving to the next slide. Looking forward to the 2022 cash cost performance X down times, as we were already seeing on previous quarters, A new and higher level was established most due to the exogenous impact of commodity price on wood and input costs throughout the year, pressuring along over R$100 over 2021 basis. The higher scheduled maintenance downtimes and labor costs also took a toll on fixed costs in the period. Nevertheless, the operational performance in 2022 was outstanding from the second quarter and on, with all meals reaching technical records and operational rates established in chemical consumptions. Now, looking specifically for the 40-quarter over 30-quarter also external times, Although some commodities, mostly branch, have provided some relief on the cash production costs, there was an increase of 6% through the several factors, being the most important related to some one-off events in the industrial plants, impacting specific conceptions of energy and chemicals. On wood costs, a greater third-part harvest operations Freight tariffs and a higher average from force to mill distance explains the hit. Addressing now the fixed cost increase, the pressure comes from labor costs and lower production volume, in turn due to higher down times in our cruise unit, impact fixed cost deletion. Looking forward to the fourth quarter 2023, cash production cost X down times, We see a flourished performance over 4.25 in 2022, with a potential and gradual reduction in the cash cost prediction throughout the year, especially if the commodities perform better than our sections. In other words, different from the dynamic observed in 2022, we see a more stable cash production cost performance in 2023, Considering the current operational plan. Moving to the next slide, the Cerrado project continues to evolve as planned in both the physical and the financial timelines. So that you can have a more complete view of the physical progress of the project, we have made available a short video that shows the evolution of the project. The link is in the presentation or in the IR website. Now I pass the floor to Marcelo Botti to continue the presentation.

Thank you, Aires. Let's move to page 8, where we see that our net debt moved from $10.4 to $10.9 billion during the year of 2022, especially because of the advance dividend payment that we made in December regarding 2023. And despite the $3.2 billion that we made in CAPEX and the $400 million in sharp buybacks. That allowed us to reach the lowest leverage ratio that we had since the Fibria merger in 2019 at two times. Our liquidity position continues to be extremely positive and comfortable with $6 billion, including $3.3 billion in cash. The level of maturities that we have for 2023 and 2024 is extremely low. And our debt is 95% at fixed rate with an average cost of 4.7% a year. That puts us in a very robust position in terms of financial stability. Moving to page 9, we show that we continue to advance in our FX hedging policy, taking advantage of the BRL volatility. We now have in operational hedges close to $6 billion in notional, with an average put of $5.58 billion. and another $1.8 billion of hedges related to the Cerrado project with an average put of 578. If the real continues at the current level, we can expect to have significant positive adjustment in cash in 23 and 24. Moving to the following page, we demonstrate the significant cash returns that we had last year. We paid 4.2 billion reais in dividends. and we bought 40 million shares in our buyback programs with a total of close to $400 million. We have just announced that 93% of the shares that we bought will be canceled and that represents 37 million shares. Finally, moving to page 11, we update our guidance in terms of 2027 operational disbursement. The number that was 1,669 reais per ton in 2021 reached 2,022 reais in 2022. And we show here that we expect a significant reduction in the next five years, moving that number from 2022 to 1,750 reais in 2027. That movement will be achieved with the contribution from more normalized commodity prices, the effect of the maturation of the competitiveness projects that we have in our portfolio, both on the industrial and the forestry side, and also the contribution of the Cerrado project that will come on stream with the lower than average total cost of production. With that, I'll turn back to Walter for his final considerations.

Thank you, Marcelo. I think we are sharing with you one outstanding year in results of the company on the last year. And I'm going to share on the last slide with you several activities that we have on every single strategic avenue in the last year. On the first one that be best in class in the total cost vision, we have been working to increase and to buy extra land for us through the acquisitions of Parque and Carabelas. We have been going through the retrofit Aracus, and this year we are going to have the retrofit of Jacareí. We have a new terminal in our port, Itaqui port that would allow us to be even more competitive on that specific area. We have been maintaining our relevance on the global markets and we have been working to increase our land bank with several acquisitions preparing the largest CAPEX program sustaining an expansion CAPEX program on our forest division. We had last year more than 260,000 hectares of additional area that we plant. And we have been going through the largest single-line capex in the world right now, the Serrado project. As Iris mentioned to you, we are on time and on budget. We have been advancing in the supply chain. And we have the potential acquisition of Kimberly Clark that we are waiting as a precedent condition for the antitrust regulator, CADE, to approve that. and we announced a new, a potential new project in our Aracruz plant. We have been working on new markets to expand our addressable markets. We have the operations of Woodspin and Spinova that we commissioned in the, sorry, beginning of this year and we have started starting up the MFSCO mills in Europe and in Limera There will create a lot of value in the textile market for us in the near future. We have the new CVC, the Suzano Ventures activity, and we have been working on innovation through different areas. On plastic substitution, that is one of our main targets. But we have been working as well on sustainability. We have been improving our ESG ratings on different entities. We have been launching the biomas that would be a major plan of regenerating and preserving natural forests in different biomas in Brazil. And we have been advancing on diversity and inclusion as well. We are very happy with the developments that we did and very excited for our near future. With now, I'm going to turn to the Q&A session where all of our C-levels are going to answer.

Excuse me, ladies and gentlemen. The floor is now open for questions. If you have a question, please press star 1. Our first question comes from Caio Ribeiro with Bank of America.

Good morning, everyone. Thank you for the opportunity. So my first question here is on the cash cost inflation in the industry. Clearly, there's been a lot of changes in the cash cost curve in the past years, particularly the wood cost component, which is a major cost component. I mean, that appears to be experiencing pressure from a number of different factors. So I just wanted to see if you could comment on some of the factors that you see impacting wood costs in the industry, whether you see these as more structural or cyclical, and where you see the cost support in the industry today for hardwood. And then secondly, linked to this question, given this wood cost inflation, which we see is in part related to the higher competition for forestry assets, particularly in La Salle, where there's a number of different coal projects under development. I'm just curious to see whether you believe that there's still competitive forestry assets to continue to support expansions of 1.5, 2 million tons or above projects or whether you believe that we could be nearing that point where that lower availability of forestry assets could start limiting expansions in the industry. Thank you.

Good morning, this is Carlos. Thank you for your question. On the wood inflation, that can be explained mostly by the brand, the diesel, that has gone up over the last two years. And the second component has to do with a higher logistics cost. A higher price for the major equipment like trucks and other forest machines. Those are the two major companies that can explain a higher wood cost.

Thank you, Caio, for a question. Here's Walter answering about the second point that you raised. We have been working on tracking all the potential new areas that we have For Forest in South America And our vision is that we do not have availability of wood for a short-term project in the region I cannot tell you That is not available for the future. We are seeing, for example, one of the Chilean companies announcing a new project in Mato Grosso do Sul for the year 2028. That would be possible to happen, but we do not believe any other project or any project coming on stream between 25, 24, there is going to be our project, and 28. We believe that we are not going to see new projects coming on stream due to the lack of wood. And it's very important, as I have been mentioned to you, that wood costs have been going up at a very high speed. The new projects now will face higher capex, since the inflation that we are seeing right now, higher interest rates that we are seeing for funding this project, and lower wood availability. That would become more difficult to see new projects coming on stream.

Perfect. Thanks a lot, gentlemen.

Our next question comes from Daniel Sasson with Itaú BBA.

Hi, everyone. Good morning. Congratulations on the results last year. My first question is related to the CAPEX for the Cerrado project. I mean, given the updated figures that it provided for your total operating disbursement by 2027 and the, you know, increase that came mostly on the back of higher spending on forestry and in subculture, do you think that we can expect an increase in the total capex for the Cerrado project as well at some point in the future that those 19 billion reais could be revised? Is it a fair assumption? And my second question, I mean, given that you did post very strong results, that your average maturity schedule for your debt is very long, that your cost of debt is low and fixed, and that you are already at two times now that it is done, do you think that you could take to the board of directors already any new projects after Cerrado? or do you think that the correct timing for doing such an activity would be after the project is up and running so we should see something only by the second half of 2024 in terms of new capital allocation decisions? Those would be the first two questions from my side. Thank you, guys.

Thank you, Daniel. This is Marcelo speaking. In relation to the Cerrado CapEx, the number for 2023 is given and it's incorporated in our 2023 guidance. We don't expect any major deviation from the initial number other than the normal monetary correction that we see in some countries. So that's why we keep the guidance of on time and on budget. The effects that we're going to see in the future in sustaining CAPEX are incorporated in our total disbursement costs that we just announced, but that has nothing to do with the initial CAPEX of the project. It's more related to the sustaining CAPEX that we're going to have afterwards. In terms of capital allocation and new projects, this is a challenging year for us in terms of capital allocation because we have A major CapEx program already announced of 18.5 billion reais. and we have some uncertainties in relation to cash generation given the curve that we see in toll prices right now. So it is not the right timing to announce new projects but a more severe correction in the market will probably bring opportunities for companies that have a robust financial situation like ourselves and we're going to be following that very closely and bringing new potential alternatives to the board when it's the case.

Thank you, Bachi. Very clear.

Our next question comes from Tiago Lofiego with Bradesco BVI.

Thank you, gentlemen. Congratulations on the all-time high results in 2022. Walter, I have a question which is similar to the one that Bachi just answered, but just looking five years out, right, as you As the Cerrado startup approaches and then, you know, looking beyond that, five years out, what's your idea in terms of capital location when we think about the different business lines and potential strategies? So, for instance, increasing integration through, you know, packaging, paper packaging M&A outside of Brazil or, I don't know, converting lines to dissolving wood pulp. So, What are maybe the big potential ideas that we could see coming up after this Ejado project? Or maybe dividends are going to be the new norm, right? Higher dividends. And then the second question to Leo. Leo, you mentioned, correct me if I'm wrong, but I heard you mention that restocking will happen as prices approach marginal costs. So do you think we could see that restocking move happening already this year or maybe this is more of a 2024 story? And then how does your own project, Cerrado, play a role in this, you know, restocking, potential restocking move? There's a lot of, you know, there's a psychological factor there, I would say. So just, you know, just want to hear your views on that. Thank you.

Thank you, Thiago, for your question. I think it's very clear our policy that we have been reinvesting 90% of the cash flow generation of the company into our future. The company will complete the 100th anniversary next year, and we have been investing on different scenarios of Brazil for the last many decades. I think it's very clear to us that we have the five different strategic avenues. Of course, I'm not going to comment any kind of future project without discussion and approval of our board, but we can face organic or inorganic opportunities in the future, depending on the scenario that we are going to face. I think you mentioned many of the alternatives that we have. We have the integration into paper and packaging, into tissue with higher volumes, with new areas to be invested to address new addressable markets. We have been working on the textile market, on the biofuels. We will look for opportunities to increase our efficiency. Then we have several areas. and the base of everything is our competitiveness and our differentiation. We want always to have scale and differentiation and we are going to pursue these basic precedent conditions for us in the future.

Thiago, this is Leo now. I'm answering your question about restocking and eventually how Cerrado can play a role in that. As I mentioned in my speech, we believe that organic growth in terms of demand this year will be close to 1 million tons in terms of hardwood consumption, and that's very much aligned with most consultants to our business's view as well. and we believe that once prices start falling closer and reaching closer to this higher cash cost of marginal producers, decisions will be made mainly from Asian producers in terms of either reducing their production rates or stopping their production levels and then buying and also our customers restocking a bit based on their current inventory levels, which we consider quite balanced. We tried to make a calculation on how much that could impact the market. And if you consider that in order to support China's paper production, on average 1.8 million tons market pulp is consumed in China. and of that 1.2 million tons are hardwood. Every 15 days top buildup would add an additional 600,000 tons demand for pulp over the 1 million tons of organic growth which I have mentioned to you and also during my speech. We don't expect Cerrado to play a role in this decision making for 2023. as it's very much specifically related to decision points or set points that will be made based on this higher cash cost of marginal cost producers mainly in Asia.

Thank you, Leo. If I may here, what's your view on the marginal cost in the market right now? You had been mentioning $600 per ton recently. Does that still hold? And if you could repeat the rationale of the 600,000 tons, I would appreciate it. Thank you.

Okay, so first, starting with the last part, the rationale of the 600,000 tons, the China paper production, the China paper industry requires a furnace of 1.8 to 2 million tons a month of chemical pulp in order for them to be operating at capacity, at the current capacity levels. of this 1.8 to 2 million tons, 1.2 million tons are hardwood. So every month, roughly and on average, 1.2 million tons are imported or consumed of hardwood market pulp in China. So if we consider a 15-day stock buildup, that would mean an additional 600,000 tons of hardwood considering this monthly consumption of 1.2. Now coming into our view on marginal cash costs, As we have been pointing since early last year, cost inflation for pool producers have changed significantly the cost levels. And we forecast that the cash cost for marginal cost producers is indeed around $600, varying from $580 to $610, $615, depending on the base scenario that we use. This all obviously on a CIF China base. And our view is quite consistent with this number. We don't see a lot of variation because, as we all know, wood is the main variable in the pulp cash cost. And we expect that availability for wood will still be limited, mainly on this or for this Asian producers. And prices will maintain the high price points that they are being traded at today.

Very clear. Thank you, Leo. Thank you, Baltic.

Our next question comes from Rafael Barcelos with Santander.

Good morning, and thanks for taking my question. My first question is about pulp supply availability. So, dissolving pulp prices have increased in recent months, so my question is, do you believe that mills could move production back to dissolving pulp in the coming months, and how much hardwood pulp could be removed from the market if this movement really materializes? And my second question It's about pool affordability. I mean, how do you see pool affordability in China now, particularly considering that, you know, pool prices have fallen by more than $100 over the past few months and consumer effects has also helped with this equation. So is pool affordability still a concern among market participants? Thank you.

Rafael, this is Leo again here to answer both of your questions. First on the dissolving flex capacity. What we have been seeing is that these rules prices are trending up since the beginning of the year, and that is in these two months. Thanks for watching! Thank you very much. Regarding portability, as I mentioned, we don't see in the short term fundamentals for such movements that have been taking place. Therefore, we believe that most of this is already anticipation of future developments. Thank you very much. February were higher than January levels, very close to already historic levels, and we expect that during the next weeks the order intake will be already reaching normalized levels.

Okay, thank you.

Our next question comes from Marcio Farigi with Goldman Sachs.

Thank you. Good morning, everyone. A couple of questions on my side, please. The first one on the paper side, Fabio, if you can comment on how you're seeing this, and especially in Europe as well, which is kind of the benchmark for graphic papers. Obviously, very good couple of years. It feels like we are seeing some sort of normalization now in terms of prices and volumes. Can we please have some visibility on that? And then maybe to Iris or Anibal, Carlos, you briefly mentioned about the wood inflation costs in Brazil and the reasons behind it. Can we talk a little bit about supply-demand conditions for land and different regions? I mean, an overall view of how you're seeing the wood market perform in Brazil and how it has changed, especially in the past two to three years in line of growing competition for land and for forest land. Thank you very much. You know, when they do, then there's a chance that we might see those prices going down to marginal cost. My question is, what do you think would prevent prices from going there in this cycle? What are the pockets of strength on the market you're seeing today or expect to see in the next few months? Thank you.

Marcio, good morning. This is Carlos. Thank you for your question. We do recognize a growing competition for land and wood in some specific regions, and that has meant higher wood prices. So that is really happening in some specific regions. As we speak, we still have some ongoing discussions and negotiations related to forest assets And for the benefit of our shareholders, we cannot, at least as we speak, we cannot share much information about that. Once we conclude our program, we can come back to this point.

Marcio, it's Fabio here. Thanks for your question on the paper side. We see different behaviors in markets, in different markets. As you know, China is coming out of Chinese New Year, so activity there is improving. We see a higher consumption and operating rates from most of the paper mills. Leo was talking about linked with our higher consumption of pulp in the past weeks that we have seen. And you're right. In Europe and in North America, we have seen a little bit of cooling down. This is in reflect of higher stock levels in the chain. As you know, during the past few years, we have had some supply chain constraints. Thank you very much. A few weeks to normalize, a few weeks to normalize. We don't see prices moving downwards. Prices are quite stable in Europe and in North America at quite a good level, as you may see from the consultant companies and the markets. And this is due to higher cash costs in these regions as well with inflation that has happened in the past few years. So we have seen prices being resilient in these major markets, although stocks are at higher levels with destocking waiting to happen in the next month or so.

To close the answers to your question addressing the positive view, right? What could possibly prevent prices from falling down to marginal costs? I think we can split the answer into first looking at demand. Obviously, we observe a lot more optimism in China. We also observe a lot of economic stimulus plans now on province levels, which can generate further demand and also link to paper products and packaging products. And also better than expected, European consumption pulls this stocking movement that's going on and that can last some more weeks ahead of us. So this could bring a positive surprise in terms of demand. I would say that the most impactful will be actually how China performs once all this optimism and stimulus plans come into play. On the supply side, what can prevent prices from going there? First are new delays and time to market of projects, which have not been unusual as we have seen on the last months and quarters, right? So it's very unclear for us really and actually when we're going to see a good quality pulp being offered to markets and then how that's going to be ramped up. And as I mentioned, up to now, we have seen absolutely no offers from this new and players or capacity coming on board And second, which is very important and I always like to highlight that, is the impact that unplanned downtimes have been taking in our sector, right? We have seen since 2020 numbers that are almost threefold what they were on the historic basis. And we expect that this will continue to happen. This will continue to be ongoing on our markets, due mainly to the fact that Thank you very much. and the unforecasted or exogenous factors such as weather-related, war-related, lack of wood, strikes, which will also, in our view, continue to be accounting for unexpected losses in the market. We just saw recently a study of one of the main consulting store businesses, and by mid-February, the current unexpected downtimes was already up to 350,000 tons. So it seems to be the same high run rates that we have seen in the previous three years.

Marcel, if I may, let me just reinforce some remarks previously made by Walter. So we have progressed quite well in establishing our land bank needed to reach our forestry basis later in the coming years. So that was a great achievement for 2022. Also important to remind you all that we're going to have in Cerrado Average radius between the forest and the mill below 65 kilometers. That is great, a great number. And also, as Walter said initially, 2022 was a record year in terms of forest plantation. And we expect 2023 to be another year, a record year as we are moving fast with our plantation program.

Thanks, Eduardo. Great details. Thanks.

Our next question comes from Ios Ispias with Morgan Stanley.

Thank you for taking my questions and I really appreciate all the details you have been giving. I just want to ask, when do you expect the Kimberly-Clock deal to close? I guess you don't foresee any issues from Cardi giving how fragmented the market is in Brazil. And elaborating on that, do you plan to... Thank you very much, Jens, for your question. It's Walter answering here. We do not have any kind of forecast when CAGI is going to approve

And of course we are not going to comment on inorganic growth That could be a possibility as well.

Okay, perfect. Thank you. Let me just do a quick follow-up on the total operational disbursement just to clarify. I think you gave a lot of details there on slide 11, but I just wanted to make sure you're not considering any inflation beyond 2023, correct?

That's correct. The number is in 2023 currency.

Okay, perfect. Thank you so much.

Since there are no more questions, I would like to turn the floor over to the company's CEO for final considerations. Please, Mr. Walter Schalka, you may proceed.

I'd like everyone to be part of this session. I think Suzano is very committed with our future. I'd just like to reinforce to you our three pillars of our culture, that we have been working, there is people that are inspiring, transforming, that it's creating and sharing value with all stakeholders, and it's only good for us if it's good for the world. I think we have been performing well on the last many years. and we are humble enough to understand that we need to keep improving our operations, to keep touching consumers, all the other stakeholders for our future. Thank you very much for joining us. I hope you have a very nice week.

Thank you. Susana's fourth quarter results conference call is finished. Have a nice day.