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 2025. We would like to inform that all participants will be in listen-only mode during the presentation that will be addressed by the CEO, Mr. Beto Abreu, and other executive officers. This call will be presented in English with simultaneous translation to Portuguese. To change the audio, you can press the globe icon on the lower right side of your Zoom screen, and then choose to enter the Portuguese room. After that, you can select Mute Original Audio. Before proceeding, please be aware that any forward look 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 CSUNO and could cause results to differ maturely from those expressed in such forward-looking statements. Now, I will turn the conference over to Mr. Beto Abreu. Please, you may begin your presentation.

Thank you and welcome everyone for our fourth quarter result call. I would like to cover mainly three highlights related to our results in the fourth quarter and also our results for 2025. Let me start highlighting the strong shipment in poop during the fourth quarter. This is record volumes for Suzano and it's absolutely related to our supply chain team on the operational excellence side. So, flawless execution in our process So the team here is very glad of what the supply chain team was able to deliver. On the paper business unit, we also had a strong volume. But the point that I would like to highlight here is the continuous improvement of the Pine Bluff operation in the US. We have been doing a great job over there, learning a lot and showing how our measurement skills and competence can add value from assets also outside Brazil. We are learning a lot of things that for sure will be used during our KC operation in the future. On the side of cost, Cash costs came absolutely in line with the plan. On the other side, I would like to ask you to pay attention to the DTO. Sorry, the TDO of Suzano. I would consider 2025 as an inflection point. So what we can expect for 2026 and for the coming years is a new trend. in terms of TDO, and this is absolutely in line with our agenda of increasing and improving our level of competitiveness. We also saw a strong operational cash flow in the first quarter, and also free cash flow. Even on the lower price, I'll say, cycle, And for me, the message here is the level of resilience of our business. Resilience and competitiveness. So this is a business that's going to be even stronger in the future in terms of competitiveness to face any kind of business environment. So that's the summary for me for the first quarter. Volume, cost. and the capacity of the business to generate cash in any kind of business scenario. Having said that, I would like to hand over to Fabio that will cover the paper and packaging business.

Thanks, Beto, and good morning, everyone. Please, let's turn to the next page on the presentation. During the fourth quarter of 2025, our paper and packaging business unit delivers strong volumes from its operations in Brazil and also in the U.S., paper bowl seasonality helped to lift volumes in the quarter, while we continue to see paper prices declining in export markets. In the US, Susano packaging continued to be a positive highlight with stable prices quarter over quarter and a solid 21% increase year over year. During the quarter, we also had our annual maintenance downtimes for both Susano and Mena. Despite the outage in Limeira, during the outage in Limeira, we finalized important upgrades at the mill, which will improve cash cost competitiveness, as explained in our last seasonal data. Looking at our market in Brazil, print and write demand, according to Ibarra, increased by 1% in the first two months of the fourth quarter, compared to the same period of last year, led by uncoated paper demand due to seasonality. Demand for cut-sized and coated paper remained relatively stable year over year. International markets remained weak, with declining demand and oversupply. Latin America demand has been more resilient when compared to the US and Europe, but the region has seen an income of inflows of Asian papers at very low prices. Now looking at paper board, demand in Brazil grew 2% in the first two months of the Q4, compared to the same period of last year, also showing the same improvement versus last quarter. In the US market, according to FP&A data, SPS shipments on the fourth quarter were stable quarter-over-quarter and year-over-year, but production was up 2% with the ramp-up of new capacity. New capacity has put pressure in operating rates, mainly in folding box and food service market segments, while liquid packaging board remains more insulated. Looking now at EBITDA performance, the 10% increase over Q4 was driven by the ongoing turnaround of Suzano packaging, which we believe improved EBITDA quarter-over-quarter in a year-over-year. Our EBITDA for our Brazilian operations took a hit from lower prices and FX, despite higher volumes in the quarter on a year-over-year and quarter-over-quarter basis. The maintenance downtimes performed at Suzano limited meals were on time and on budget, but also had an impact on our costs. Looking ahead to Suzano's paper in package business performance, sales volumes from our Brazil and US operations will be lower in Q1 compared to last quarter, following the normal seasonality of the period. We also expect prices to improve with the phased implementation of the pricing increases we have announced in Brazil and export markets. Price for Suzano package should remain stable in dollars, since the majority of our volumes are under contract with pre-agreed prices. On the cost performance, since there are no planned downtimes in Q1, we expected improvement in our cash costs in our Brazilian operations. For Suzano Packaging, we continued to work to reduce our cash costs, but we could see some pressure in Q1 due to winter conditions in the region and much higher natural gas prices than expected. As a final note, I would like to share that in January we made the decision to cease our paper operations at our Rio Verde mill. This small site was our only non-integrated mill and was producing around 50,000 tons of paper annually. This mill had the highest cash force in our asset portfolio, and with its closure, we expect a positive impact to our 2026 results by relocating its products to the more competitive Suzano and Limeira mills and adjusting our commercial strategy. Now, I'll hand it over to Leo, who will present our Pope business results.

Thanks, Fabio, and good morning, everyone. Let's now turn to our pulp business unit, where I'd like to highlight the key developments from the fourth quarter of 2025. This past quarter was marked by price recovery in all markets, due mainly to a higher demand of hardwood pulp in China and Asia in general, as well as a more pressured cost base for wood in Asia, consequently increasing cash costs of those producers as anticipated in our Investors' Day. In China, paper and board production, according to SEI, posted a 17% increase in Q4-25 when compared to Q4-24, and a full-year analysis presents another positive year, with 3% growth in paper and board production, and with highlights to every board, which posted 8% growth in tissue, with a 6% growth in 2025. This has reflected in a higher demand of pulp, having pulp imports grown 1.7 million tons in 2025, according to Chinese customs statistics, of which 1.4 million tons of hardwood pulp. Purchases of hardwood pulp have been further incentivized by softwood fiber substitution trend, and also by players in the textile markets increasing their purchases of paper-grade pulp, mostly hardwood. Our order intake during the quarter was above expectations, meaning that despite a very strong quarter in terms of invoicing, we are still carrying backlogs of deliveries to markets where we invoice directly out of Brazil, like China, Southeast Asia, and the Middle East. Looking at our price performance in Q4 25, the $538 per ton that you see on the slide, although higher than previous quarter, is a backward-looking figure. Market prices are already above that level, as you know, but our reported prices in Q4 was impacted by invoicing backlogs. All incoming orders during the quarter and in all regions in the world were captured at a higher price set point, fully aligned with our price increase announcements, with a strong month-after-month order intake, a trend that is still ongoing. We sold record volumes in Q4, and above our production output during the period, meaning bringing year-end inventories to very low levels and placing pressure on our logistics operations as inventories fell below optimum operational levels. Looking at the right side of the slide, the R$4.8 billion in EBITDA, up 8% quarter over quarter, was supported by higher volumes and better prices in U.S. dollar terms. Now, looking forward, I would like to highlight the following points. In China, following a strong production pace of paper and board producers in Q4-25, January has posted upbeat figures, according to SEI, even slightly above the strongest production month in 2025, which was December, and 27% higher when compared to January 25th. Importantly, this increase has not led to paper inventories build up at paper producers compared to the past month's levels. And just to connect that to pulp demand as an example, these figures translate into an additional consumption of 250,000 tons of pulp compared to Gen 25, just for Chinese tissue producers. Also in January, order intake from our customers continued quite strong with full implementation of the announced price increase. Our announced price increase were also implemented in all Western markets. As the year began, news on the supply side of the equation have positively affected short and mid-term price perspectives. First, news about the Indonesian government revoking forestry permits, covering an area of over 1 million hectares, including plantations for industrial uses, such as pulp and paper, on top of the 500,000 hectares that had that permit revoked during 2025. This brings two tailwinds to pulp markets, as Indonesia currently produces over 4.5 million tons of market-hardwood pulp, of which 3.5 are exported to China. One of them is that a key pulp producer has promptly announced an immediate and unexpected curtailment of 150,000 tons of market pulp for February and March combined. Another is that, according to our market intelligence analysis, Indonesians are likely intensifying their wood chip purchases, mostly from Vietnam, placing upward pressure on wood chip prices. This would affect not only Indonesian costs, but also Chinese and Japanese coal producers who are major off-takers of Vietnamese wood chips. Even before the developments in Indonesia, we had been observing rising imported wood chip prices into China, which, as I have shared in our last Investors Day, represents roughly 50% of the wood furnished for Chinese pulp and paper industry. Separately from that, and very important, APP has announced the delay of the OQ2 project startup from early Q2 to mid Q4 2026. As this was the only market pulp capacity addition considered for 2026, now no incremental market pulp capacity is expected to reach markets this year. The addition of positive paper production figures in China, with their gradual price increases in tissue and ivory board grades, added to unforeseen use on the supply side of the equation, results in a positive short-term dynamic for hardwood pulp way better than we had expected for the beginning of the year we don't believe that this trend is short-lived and we expect that it should continue post-february for susanna q1 and q2 26 concentrate most of our planned maintenance downtime program for the year as you saw on our previous earnings release therefore We now need to ensure the proper inventory build-up in Q1, after the record Q4-25 invoicing performance, focus on recovering our global inventories to optimum operational levels, which will reflect in improved logistics efficiency and also service levels to our customers. We also need to specially prepare our inventories for Q2, when our plane maintenance downtimes will peak, resulting in almost 300,000 tons of lower output compared to Q2 25 according to our production plan. This requires ensuring that our inventories are strategically positioned to serve contracted customers in line with their agreed inventory policies. As a consequence, we have lower pulp availability to be sold to customers who purchase directly out of Brazilian ports, such as China, Asia markets, Middle East, and Africa, meaning that our volumes will remain constrained in the coming months and with zero allocation to spot markets and customers. To finish my presentation, I would also like to call your attention to the fact that, despite price increase implementations during recent months, and taking the latest China PIX indexes as a reference, just yesterday night, updates from Hawking Wright presents that an equivalent to approximately 7 million tons of bleach chemical pulp are currently loss-making, and this is still clearly unsustainable. With that said, I would now like to invite Aris to address our cash cost performance during the past quarter.

Thank you, Léo. Good morning, everyone. And move it to the cash cost slide. We closed the fourth quarter confirming the cost path we had anticipated at the beginning of last year, reaching the lowest level of 2025 with a cash cost of 778 reais per ton. Compared with the 3525, the 3% reduction was mainly driven by lower input costs, supported by stronger operational stability across our mills, and by lower prices for key energy and chemical items, such as natural gas and culture soda. Fixed costs also declined, driven by lower labor costs, while wood costs benefited from a shorter average radius and better wood quality, which in turn reduced the specific consumption in the pulp production. In addition, higher energy export volumes and more appreciated effects contributed positively to cash cost performance in the period. Fourth quarter 25 marks our best cash cost performance since 2021, with the lowest nominal level since fourth quarter 21, and even better performance in real terms, as it represents the lowest level since fourth quarter 21. For 2026, we expected the average cash production costs of both should be broadly in line with before quarter 25. The partner should mirror 2025, meaning a more pressure first quarter versus fourth quarter 2025 due to planned maintenance and no recurring events such as two turbines overhauled, followed by a gradual decline in cash costs over the course of the year. Moving on to the next slide, as I recently shared with you at our latest Investor Day, SUSANA is implementing a comprehensive multi-year program to improve its competitiveness, with a clear focus on reducing what we call Total Operational Disbursement, or TOD. As you can see on the slide, The 2025 TLD rated R$2,060 per ton, improving from year-over-year base and reinforcing the downward trend toward our 2025 guidance, also shared with you with the market at our investor last December, our investor day last December. Now, I turn the floor over to Marcos, who will continue the presentation.

Thank you, Iris, and good morning, everyone. Moving to the next slide, I will start commenting about the positive free cash flow generation of $400 million in 4Q 2025, even in a scenario of pressured poll prices. This cash flow generation contributed to reduce our net debt to $12.6 billion by the end of 2025. And as a result, our leverage in dollar terms declined to 3.2 times. On liability management, I would like to emphasize that last week we renewed our revolving credit facility with 20 banks, and the result of that was that we upsized the line from $1.3 billion to $1.8 billion, and we were also able to reduce the cost of this new line. Moving to the next slide, I would like to highlight our financial discipline by three key metrics. First, we delivered our 2025 CAPEX in line with our guidance. Second, we are reducing our 2026 CAPEX guidance by nearly 20% year-on-year. And third, we are maintaining a very healthy portfolio of FX hedges. By December 2025, we had a $6.2 billion portfolio with an interval of 5.83%, to 6.73 reais per dollar. So, as we pointed in this big orange box, the expected cash adjustments for our zero-cost callers portfolio, if the FX remains at 550, which was the level at the closing of 2025, we would receive positive cash adjustments of 2.7 billion reais. If BRL remains at 520, for example, which was close to the level of yesterday's closing, our adjustment would surpass 4 billion reais in the upcoming 24 months. Now, moving to the last slide, I'd like to update you with our shareholder remuneration program. Last week, we paid 1.4 billion reais in dividends, which equates to more than 2% of dividend yield. We also concluded our fifth buyback program on February 9th, in which we acquired 15 million shares, and we announced yesterday a new buyback program to acquire up to 40 million shares in the upcoming 18 months. Now, I would like to turn it over to Beto for his final remarks.

Thank you, Marco. As we just hear, I think a couple of things to to clarify when we look ahead from Leo's presentation, what we what we saw is a more constrictive business environment for 2026. And this is was related to clear and concrete events that somehow has changed the supply and demand balance on the on the cash IDs also had a chance to share the level of ambition that he has for the cash cost during 2026. We also expect the same level of trend when we look for the TOD. We still see opportunities on the sustaining CAPEX and also on this logistic infrastructure and cost. And this will also allow us to keep reducing our net debit in line with our deleverage objective for the business. And I also would like to highlight that our JV with KC is progressing absolutely as planned for closing in mid-2026. The level of liquidity that we have today is also considering the payment in the third quarter for our JV. So having said that, I will hand over to the group to hear all the questions for the Q&A. Thank you very much.

We will now begin the Q&A section for investors and analysts. If you wish to ask a question, please click on raise hand. If your question has already been answered, you can leave the queue by clicking on put hand down. Our first question is from Mr. Rodolfo Angeli from JP Morgan. Mr. Rodolfo, the floor is yours.

Thanks, everyone. I have two questions for you. First, I think, you know, the main discussions with investors have been on what Leo has discussed in his remarks. So I just wanted to dig a little bit deeper on that front. Aside from all the topics that you mentioned, Leo, can you talk a little bit more about what do you see in China? that paper demand is strong, but I would like to hear a bit more of what do you see on the pulp side, any updates, any change in the trend that we were seeing of increased production out of China, any risks to the numbers that you presented on the investor day of close to 6 million tons of a distance, so that's my first question. My second question is to Marcus. I think the message from Bert was very clear on the trends on the cost side. But I wanted to hear from you a little bit on CapEx, especially if you look ahead, not for this year, but the trends, especially into 27. We believe there's a case for lowering CapEx through time. You know, we don't need a hard number, but, you know, if you could comment on at least the trend, that would be great. Thank you very much.

Okay. We'll go for... Thank you for your question. This is Leo here answering regarding Pope. And just to review, right, in our Investor's Day, we give a five-year roadmap of what we're seeing in terms of further verticalization or upstream verticalization in China, despite not disclosing the year-over-year numbers. But I will do that here for 2025 and 2026 just to make my answer clear. In 2025, all our very detailed mapping of upstream verticalization in China pointed out to roughly 2 million tons of new pulp capacity coming to market. And that 2 million tons were almost all, if not all, compensated by a lower operate rates of these mules at the beginning, plus the chain mean effect, negative effect when you compare their shutdown in 25 compared to 24, and also to the fact that several integrated pulp to paper players and buyers have swapped hardwood pulp volumes, especially in Q3 when pulp prices reached the minimum. So we saw a net zero effect of verticalization in 2025, and that explains why we see a very positive import of hardwood and growth of over 1.7 million tons, or 1.4 million tons, sorry, into China, as I mentioned in my opening speech. For 2026, we have mapped closely a new addition of upstream verticalization. The number is a bit even bigger than in 2025. It's roughly 2.8 to 3 million tons of capacity. But different than last year, all of these projects with the inception of one are starting or supposed to start in Q4 2026. And one starts in Q3 2026. So we should see no effect of that in the beginning of the year. and maybe in that end of very most end of 2026 if nothing is delayed so that's very much concentrated in the latest part of the year that's why we see the even stronger stronger fundamentals for for the short-term dynamics in hardwood thank you for your question regarding topics uh yes you know there are a lot of moving parts on topics including inflation for sure

But we see a couple of non-recurring items that we will have to pay on our CAPEX in 2026. To give you a couple of examples, first we have our SAP upgrading version. We also have the Pangea deal that we did, which was the wood swap with Eldorado, which had a payment in the first quarter of 2026. We even had an additional investment at Cerrado regarding the bonus for the productivity that we had over the initial 12 months of the project. And we also had the spillover payments from a couple of industrial projects that we concluded in the second half of 2025. so uh considering all of those non-recurring items let's say there is room for us to to see uh a lower number on topics uh but uh would not like to give you that as a guidance okay perfect thank you very much

Our next question is from Mr. Caio Ribeiro from Bank of America. Mr. Caio Ribeiro your microphone is open.

Great. Thank you. Good morning. Thank you for the opportunity. So my first question is on buyback execution. I'm just wondering if you could talk a little bit about the mentality and the process that goes behind deciding whether to execute the buyback or not, particularly as you look at the previous program execution versus the new one that was announced. Looking at the past program, I'm wondering if the M&A transactions that were announced by the company impacted the magnitude or pace of execution of the buyback program. And going forward, as the company focuses on absorbing those assets acquired and assuming that no more M&A is carried out, does it make sense to execute a higher portion of the new buyback program or fully execute it? And then my second question is on potential divestments. I just wanted to see if you could share a little bit more color on how this divestment lever could be used to accelerate the deleveraging progress of the company, what assets you could consider as potential divestments and what the timing would be, and if there is a targeted leverage level for the company. Thank you.

Okay, Caio, remember that at our Suzano Day, we mentioned that we have an ambition to reduce our net debt to $11 billion. Okay, that's the most important priority here for the company. So, connecting your question on the buybacks, the focus of the company remains only leveraging its balance sheet, but we try to be very opportunistic on our buyback program. There are a lot of variables that we look when we are doing the buybacks, when we are more active on the buybacks, including leverage, but also our view for the share price, our views for full price outlook in the short term, our view for the currency outlook as well. So there are a lot of variables that we consider, and we try to be as opportunistic as possible in order to create value for shareholders. Regarding divestments, as we mentioned also in the Susana Day, this is a very small portion of the free cash flow expectations for 2026. This is just like a changing mentality for the company, looking for opportunities that are not core business for the company and eventually divesting. The most, the opportunity that we see are mainly on the forestry business in which we could do the high best use of the land sometimes you're using a land for our forestry plantations but that land is probably more valued for other crops or for other businesses and they could eventually transform that into cash by by converting that land into other uh into other businesses so i would say that this is the the most likely event that we would see in terms of divestment. And this, as I mentioned, is not a relevant portion of our free cash flow generation expectations for 2026.

Caio, I just want to complement what Marcos just said. The leverage plan for the company, it's not related to any divestment. The leverage will come from the operational side. That's our plan here. If there's any specific opportunity in terms of generating value for the shareholder with a specific asset, this is something that we will consider.

That's well understood. Thank you, Marcos and Beto.

Our next question is from Mr. Mauricio Farid from Goldman Sachs. Your microphone is open.

Thank you very much. Good morning, everyone. Two questions on my side. Maybe the first one to Leo. Leo, a very clear message on the pulp markets. Maybe the missing link there is paper prices in China, which have either been under historical laws or have not performed as good as pulp. So maybe the question is, does it matter at all, right? Obviously, the upstream and downstream markets have their own supply-demand elements. They tend to correlate to each other, but Does it matter that paper prices are not moving? Are you confident that they are going to be moving? Does it matter at all for, you know, the pull price direction from here? And how do you see the relationship between hardwood and softwood at this point? Because the gap has narrowed quite significantly with hardwood performing a lot better, right? Just trying to understand, you know, those two topics are also important to try and build the pull up view as well. And secondly, to Fabio. Fabio, obviously, great momentum on the U.S. packaging side. And obviously, internally, it seems that you are progressing quite well in terms of operational efficiency and also renegotiating some of the contracts with suppliers and clients as well. We look at your global peers and especially the major, the largest ones in Europe and the U.S., After Ernie's quarter, they pointed to quite negative outlook, especially on the demand side as well, in the case of Europe with competition with imports. So just trying to understand how do we make that up? I mean, can you... you know perform well in this current market market environment if you have any comments in terms of what you're seeing for your specific products in the u.s obviously a more protected region as well so if you can comment a little bit uh on the broader market view as well and the progress around the west packaging business that would be great thank you marcio thank you for your question on the pope side and how that correlates to to paper prices in china as well as software

First part of the question, we see obviously the main line that drives our business is tissue, and we see quite on average margins as we speak. We saw the beginning of a price recovery for those grades, but we track that with the current fiber mix that they're using. And obviously, as they are also focusing on this fiber transitioning agenda, moving a bigger part of their purchases to hardware that also helps offset their cost structure and in most cases and in several times of the cycle or in most times of the cycles we see full prices pushing paper prices and not the other way around so And obviously, the margins and the prices of paper in China are one of the factors that we use in our decision making process, but not the only one that we use to decide what we're going to do. And also just in line with that, we have been supportive in a way. Our last price moves were at the lower range, let's say closer to $20 a month price increases with time, and that has obviously also the objective to give time to our paper customers to adjust their prices in market. But again, that's not the only variable that we take into consideration. Your question on the hardwood-softwood gap, obviously everyone noticed that we were trending at above $200 in China, and now this number is closer to $100. in other regions in the world is over $100, but I'd use the $100 as a reference. As we have more and more customers engaging with the fiber-to-fiber agenda and understanding how to better blend and use hardwood pulp, I think that what we see today is paper producers everywhere in the world having a lot of pressure in their margins, and everyone will try to capture margin despite the gap is $170, $150, or $200. Their agenda is of a much bigger knowledge in terms of how to utilize hardware. And I believe that this trend is not stopping, despite if the gap is lower or higher.

Marcio, this is Fabio. Thank you for your question. I will address, you know, your question about packaging market. You're right. Global packaging market is undergoing a major challenge, you know, with lots of oversupply. in most of the grades of packaging papers and also some weak demand, especially in Europe. In US, I don't think demand is the main issue here. What's happening, the market is kind of insulated with the tariffs. What's happened is that we have a new capacity that come to market, you know, this year and also last year. And this is causing some imbalance in the supply-demand curve. and operating rates for sbs has gone down so when you look at the major results for the players that have announced their their results you know there's some concerns about this imbalance and impact on prices But this has happened mainly on the open market for SVS, which is folding box board and also food service market. We are kind of insulated from that. You know that our production here at Suzano Packaging, 80%, 85% of that goes into liquid packaging in a market in which we have a very large market share. and we are we have a two to three year contract with our major customers uh in that uh 80 to 85 percent of our exposure we are protected you know demand is quite stable our prices are are covered and protected under our contract and only 15 20 that we sell to the market that's the type of thought you know uh that's the type of uh pressure that we feel momentaneously from the market But we're confident that there's still some cost that we can take out of our operation here. And the resilience of the liquid packaging market in 80% of our business is going to help us to surface well during these tough market conditions here. The U.S. markets have probably adjusted themselves in terms of supply and demand imbalances. And we have started to see some capacity closures as well. So I expect operating rates to come back to normal in the near future.

Great, thanks a lot Fabio and El.

Our next question is from Mr. Daniel Sasson from Itaú BBA. Mr. Daniel, the floor is yours.

Hi, everyone. Thank you so much for the opportunity. Congrats on the results. My first question is related to the cost front. As you mentioned, I do want to have a better performance on average in 2026 versus 2025, but you're already running at 5% below the average of 2025 in the 4Q. I know it's not a straight line, but if you could compare your current performance at the margin with your total disbursement operation guidance, or maybe let us quantify a little bit this sort of improvement that you expect in 2026, if the 4Q25 is a good proxy. I think that would help us think about the evolution from now until your guidance in 2027. And my second question, Leo, it was great to hear you say that the order intakes that you've received so far this year have had prices above the average of the 4Q for all regions. But can you please comment a little bit if you're seeing any changes at the margin over the past few weeks, maybe? My question is more related to the decline in resale prices that we've seen or the fact that you guys are trying to increase prices by $10 per tonne. this time around and not by $20 per ton as you had been doing since the end of last year. I mean, are you seeing any weaknesses signs at all? And if you could comment a little bit about the current wood price or wood cost for Chinese producers in China. the domestic wood and the import wood chips, mainly from Vietnam, which have also shown a slight decline in prices, or in that case costs for Chinese producers, that would be great. Thank you.

Daniel, thanks for your question. As I mentioned, we intend to work on leverage of 2026 roughly in the level that we operate in the fourth quarter, 2025, when we close $778 per ton. If you consider averaging in the year 2025 of $817 per ton, it's close to 5% in reduction. But, of course, we have a challenge in the first two quarters, especially because our stoppage that we have is cattle. In the first quarter, we have Impera Trees, Peabody Leopard, Veracell, and Heracruz Line A that put a lot of pressure on our costs, especially because of Reba's performance that we're bringing our costs below. And in the second quarter, we have Tres Vagolas, two lines that put pressure in the same way. Then our trend is approximately what we had last year when we start on the first quarter with a higher probably cash cost when we compare with the fourth quarter. But our trend to reduce in the coming quarters, close the effort in the same level that we achieved in the fourth quarter, 2025.

Okay, Griff. Daniel, this is Leo here. I'm going to answer several questions on football together. First, just to rephrase, I mentioned that our order intake in Q4, all months of Q4, had prices higher than our Q4 delivered and endorsed prices. And obviously, January follows the same trend. So even today, What we were able to capture month over month in Q4 had price set points higher than the $538 price that you saw in our release. In terms of how we're seeing the market going forward, Already talking a bit about February, as I mentioned, January is quite strong. We see no changes at all. Despite this calendar of the Chinese New Year, where our customers will be leaving for holidays on this weekend and probably returning closer to Feb 23rd, 24th, Prior to leaving, all of our customers have confirmed purchasing intentions or numbers. We are just finalizing the details, and most will be finalized indeed after the Chinese New Year. We didn't see absolutely no customer in China and in Asia skipping their purchases or what they expect to purchase in February, meaning that we see no changes in this trend. habit or pattern that we have been observing for the last several months. Our decision of not pushing a higher price increase in February was much more related to the calendar of the month, because as most of negotiations will be concluded in a very short time period due to the return of the holidays, We didn't want to be opening any spread of negotiation with customers, so our increase of February is unnegotiable. We will implement it at all costs. Resale, your question on resale. We believe that this should react post-Chinese New Year. Today's trending roughly $10 to $15 below the imported fixed prices references. and and and our certainty comes to the fact that we also as i have mentioned in previous calls we also are always tracking and selling in our customer portfolio in china integrated open paper producers and also traders who are big markers of price in the resale markets and i can confirm to you today that already all major traders in China have purchased volumes at higher set points than the resale prices that you see on screen. So we have an expectation that we should see some reaction on this index post Chinese New Year. Now on wood cost. Wood costs, we saw on the end of last year an increase on the wood cost base for China, increasing their cash costs, as we have commented and talked about during Susan's Investor's Day. On the end of the year, in early 26, we saw different movements. We saw imported wood uh cheap prices increasing at a range of 12 to 15 percent while chinese would falling at a range of 12 10 to 12 percent and if you consider that the chinese industry uses half half imported and local i would say that today our view is that this would cost are quite stable to what we had on the end of last year the higher cost basis that we saw at the end of last year imported wood compensating the bit lower cost of Chinese wood. This precedes all the news on the floods and revocations of licenses in Indonesia. Just to make it clear, Vietnam, which is a major supplier of wood chips to the region, 70% of that wood chip goes to China, roughly 25%, 23% goes to Japan, and currently 7% goes to Indonesia. And our market intelligence analysis showed that with this latest revocation of lands, and we correlate that to the pulp and paper industry, we believe that Indonesia will push for a higher demand that their needs could reach almost 20 percent of these available wood chips from vietnam so you can imagine the pressure that will put on the markets on the wood chip markets going forward so our expectations is that especially this imported base will have a higher cost point looking forward super clearly clear thank you uh leo and iris

Our next question is from Mr. Rafael Barcelos from Bradesco BB. Mr. Rafael, your microphone is open.

Hello, thank you. Congratulations for the results and thanks for taking my questions. The first question is just like a follow-up and a wrap-up on these discussions on the pop market. Rima, sorry, one more question. But just to wrap up everything you have just said during the call, I mean, there was a clear positive tone, particularly when we compare with our last interactions, right? So I just wanted to understand what was the key development that has made you change the tone? I mean, if you can just wrap up and just comment, I mean, what was the key development that has made you change the tone? And secondly, Beto, I mean, when we look at the paper division, there were like three important developments in 2025, right? I mean, there was the acquisition of KC, the first positive EBITDA in your paper board assets in the US, and the new tissue mill in Brazil. So, that said, I mean, what do you believe should be the highlights for the division in 2026?

Okay, good. So, Rafa, let me share with you what made us change the tone from our last interactions. First is the intensification of the revoking of forestry licenses in Indonesia, now affecting directly the pulp and paper industry. At the end of last year, when we had summed up almost 500,000 tons of hectares with license revoked, We didn't correlate any of that directly to the pulp and paper industry. Now that's not more the case. So that is one major factor happening and already affecting directly one of the key producers and an immediate curtailment of 150,000 tons in two months only. of market pulp and how that can affect all the wood dynamics as i mentioned in my last answer to daniel second and major and change is the delay of oki from april to the fourth quarter last this year meaning that in terms of full comings into market we should see no new volumes in 2026 this is a major change it's also important it's not only that is ok also started or app also started a board machine is expected to start this board machine over a million tons in indonesia now in march meaning that the plan was, as we understand, to be integrated with OK2. But now, as OK2 was delayed, you have a double effect of less market pulp in the markets, or no additional supply of market pulps in 2026. At the same time, they're going to need to feed up this new machine, and our expectation is they're going to need roughly 350,000 tons of pulp in 2026. meaning that their system should be even tighter to to run 2026 so i would say that the major changes have been really on the supply side of the equation and just to sum up and wrap up this has changed market dynamics completely and on a very fast moving pace as i mentioned in my opening speech thank you lil

Regarding the questions for 2026, what do we expect from KC paper business in U.S. and also the tissue after the investment that we made in Aracruz? As you mentioned, on the tissue side, we are expecting to increase the level of return of the business. Firstly, we were able to deliver another project on time and on budget. That was the case of Ragi. She's in Aracus. And we expect to now, in 2026, extract the right level of value that we expect from this investment. So in the end of the day, we expect to have a better ROIC in this business with a lower cash cost and higher volume. On the Pine Bluff business in the U.S., I want to highlight again the great turnaround that the local team were able to implement. We have now a positive EBITDA, differently from the asset that we have received it. but we are looking to generate cash with the business. So it's still a journey in this process of not only generating positive EBITDA, but, of course, generating cash with the business. So that's what we expect for 2026 is keep moving forward on this direction of having assets that can generate value for the shareholder. On the KC perspective, JV, I think there are two main elements that we must consider for 2026. One, of course, is the carve-out, is finalize the carve-out in all countries on time. So that's not a simple process. It's complex considering the amount of countries that we have. We are on track, but there's still a lot to do. So finalizing this process on time is absolutely key. So keep working very close, the two clean teams, to make sure that we will deliver this on time. On the other side, we also have the value creation stream. So making sure that we have all the details regarding, let's say, delivers that we must deliver, considering the beginning of this operation to start generating value as soon as we can is also the second priority. So, by the way, we are glad on how the both team are working together in this process. And but for 2026, We would like to see value being created in the JV in the beginning and the carve-out being finalized on time. So, again, I think the bottom line of everything is what I have been saying, which is 2026, we must extract value from the investment that we have made in the past.

Okay. Thanks a lot.

Our next question is from Ms. Eugenia Cavaliro from Morgan Stanley. Your microphone is open.

Hi, everyone. Good morning. Thank you for taking my question. If possible, I would like to understand better where do you expect the cost reductions in the pulp business to come from? I mean, you already disclosed a bit the level that you expect for the year, but just to understand what are the levers for that cost reduction. Thank you.

Hi. We have some drive for this year. We are not hoping for coming years, just until the TGO. that we present in our last investor day. And for this year, our intention is to work in the same level that we closed the fourth part of 2025. Roughly R$708 per ton. That's the idea for the average of 2026.

The Q&A session is over. We would like to hand the floor back to Mr. Beto Abril for his final remarks.

Thank you very much for everyone. Thank you for the questions. If you still have any doubts, as you know, our RI team is always available. So, thank you very much and see you in the next call. Bye.

The Suzano SCA fourth quarter of 2025 conference call is concluded. The Investor Relations Department is available to answer further questions you may have. Thank you and have a good day.