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EM LATAM CREDIT: Suzano Earnings Release 2024 (SUZANO; Baa3pos/BBB-/BBB-)

EM LATAM CREDIT
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Neutral for spreads
• One of the top global pulp producers, Brazil based Suzano reported strong sales and adjusted EBITDA, but net income was reduced by extraordinary derivative hedge losses. Benchmark 2032 bond spreads have tightened the past three months, ranging from T+ 135–160bps, last at T+140.
• Suzano management has been focused on deleveraging. According to the company, Net debt/adjusted EBITDA in USD fell from 3.1x to 2.9x thanks to strong EBITDA growth of 31% y/y. Net revenue grew 16% and cash costs fell 7% sequentially.
• The company doesn’t envision any large, transformational merger or acquisition and capex is expected to diminish allowing for more free cash flow generation to pay down debt. Maintenance capex fell 23% sequentially and operating cash flow rose 10%.

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Neutral for spreads
• One of the top global pulp producers, Brazil based Suzano reported strong sales and adjusted EBITDA, but net income was reduced by extraordinary derivative hedge losses. Benchmark 2032 bond spreads have tightened the past three months, ranging from T+ 135–160bps, last at T+140.
• Suzano management has been focused on deleveraging. According to the company, Net debt/adjusted EBITDA in USD fell from 3.1x to 2.9x thanks to strong EBITDA growth of 31% y/y. Net revenue grew 16% and cash costs fell 7% sequentially.
• The company doesn’t envision any large, transformational merger or acquisition and capex is expected to diminish allowing for more free cash flow generation to pay down debt. Maintenance capex fell 23% sequentially and operating cash flow rose 10%.