Operator: Ladies and gentlemen, thank you for holding and welcome to Suzano’s Conference Call to discuss the results for the Fourth Quarter of 2021. We would like to inform that all participants will be in a listen-only mode during the presentation that will be addressed by the CEO, Mr. Walter Schalka and other Executive Officers. After the company’s remarks are completed there will be a question-and-answer session when further instructions will be given. [Operator Instructions] 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 forward-looking statements. Now I would like to turn the floor over to the Company's CEO. Please Mr. Walter Schalka, you may proceed.

Walter Schalka: Good morning everyone. It is a great pleasure to have you here with us to discuss the fourth quarter results and annual results of Suzano. I'm very pleased to have with us today the major part of our see [ph] levels and please if you want to have any kind of questions, please be prepared to give it to all of us. I would like to share with you that I'm very proud of the results of 2021 of Suzano. I would like to thank here publicly all of our 16,000 employees and our leadership that delivered an all time high results of our history.

And not only that, we are preparing the company for the future as well. We had extremely good volumes on both the last year. Paper has the outstanding results as Fab is going to share with us. We are able to deliver almost R$23.5 billion of EBITDA last year and that was extremely positive and could allow us to reduce our net debt from $12.3 billion to $10.4 billion last year, almost $1.9 billion reduction. We did have impact on inflation and then our cash cost was impacted from our budget and from the previous year, but we are preparing the company for the future.

We have extremely good position on liquidity at this point of time and our leverage right now is 2.4 times net debt over EBITDA. More important than the results that we had is that we are preparing the company for the next coming years. As you may know, we have five different strategic avenues and we are pursuing all of them. We are on a structural basis continued to reduce our cost for the next coming years. We've had retrofit in some of our plants with the new projects they had, and in addition to that, with extremely important development on the forest side on the reduction on the average wages from the forest to the plant.

We have continued to keep our relevance on the pulp market with our new projects ahead. Aires is going to share with us about this project, information about this project. We continue to have vertical integration as part of our strategy, the fluff market have been performing extremely well. We have been working on the consumer goods that have been doing well and the paper did all time results last year, as Fab is going to share. Our perception, we have been working our ability is critical for us and then we have the new addressable markets for the future.

We are delivering new opportunities. One example is the spinoff that last year had their IPO with extremely good acceptance of the market. And we continue to play a very important leading sustainability role for the future and cardboard markets will become even more important for the future. Now, I'm going to pass it to Christina, that is going to share our views about ESG in the last year and for the coming years. Cristina

Gil White: Thank you, Walter.

Good morning, everybody. 2021 was a year of continuity and ambition elevation. On the environmental front, we are again pioneers in unique and breakthrough major conservation goals. We established biodiversity corridors goals and to our knowledge, we are the only company with a target of such nature. On the climate change front, which is so essential to our business strategy, we are raising our own bar.

We adhered to the science based target initiative and the Business Ambition for 1.5 degrees. And very importantly, recognizing the imminence of climate change, we anticipated our carbon removal target from 2030 to 2025. On social, we're cognizant of the role that companies can play in equalizing society, and Suzano has given a central place to diversity and inclusion. In that sense, we are aiming to have at least 50% of racial and/or gender diversity in the final hiring stages aligned with our long-term commitments. I am very proud to share that diversity and inclusion is a target for 100% of the people in leadership positions, impacting their variable compensation.

Again, this shows Suzano can be a trendsetter. In our shared value approach, and increasing scope of our community impact, we made very significant progress in the achievement of our long-term poverty reduction goal. In addition, Suzano's programs and projects had a domino effect of doubling income generation. Sustainable companies have good governance and progress on this front is a necessary lever and catalyzer for progress on the environmental and social pillars. In that sense, we gave formality to practices that were already occurring, as you can see on this slide, far more responsibility for ESG and risk management, mandatory throughout the performance, evaluation of board members, and minimum attendance.

Finally, I would like to highlight the celebration of worthy achievements of Suzano from last year. Good signals how we have increased embeddedness of sustainability in our business strategy and operation as well as our evolution and transparency. We raised $3.1 billion in sustainability linked bonds and sustainability linked loans. This has been tied to greenhouse gas emissions, intensity reduction, the reduction of our industrial water use, and diversity and inclusion targets, specifically increasing women in leadership positions. There's now places as of December of 2021, our debt linked to ESG at almost 40% of the company's total debt.

Suzano also had in June our first ESG call, a quantum leap to enhance engagement with our stakeholders. And finally, on the ESG indexes and ratings, I want to highlight and celebrate that Suzano reached an A minus in all three carbon disclosure project questioners; water, climate, and force. We will come in from the B score. So that's on the sustainability front and now we're going to speak of our paper business, so over to you Fabio Almeida.

Fabio Almeida: Thanks, Christina, and good morning everyone.

The paper and packaging business unit has delivered a solid performance in the fourth quarter of 2021, despite operational constraints and inflationary headwinds, closing 2021 with a record EBITDA for the business mix. Demand for paper grade products has been strong in the domestic and international markets served by Suzano. Supported by solid demand, restrictions on the supply side going through logistics bottlenecks, and the need to recompose margins due to raw materials, energy and logistics inflation, our paper price have risen in all markets and across all paper rates. According to EBA, print and write demand in Brazil has grown 6% in the fourth quarter of 2021 when compared to the same period of 2020. For the full year, demand has grown 19% boosted by the easing of pandemic controls and the usage of offset paper for packaging purposes.

Paperboard demand has shrunk 6.3% in the fourth quarter on a year-over-year basis, given the strong compares year of 2020 when the market was rebuilding [indiscernible]. For the year, demand for paperboard grew 10% above historical trends. We have also seen solid demand for paper products in Latin America, North America and Europe. On such context, our Q4 sales volumes were 4.3% higher than 2020 and in line with the pre-pandemic levels. Domestic sales represented 72% of our total sales in the quarter, a 5% increase compared to the same quarter of 2020.

On a quarter-over-quarter basis, our domestic sales improved 16% in volume due to better seasonality and the continued strong demand for packaging papers. Our net price during the quarter was 4% higher than our average price in Q3, 2021 and 25% higher than Q4 2020. During the period, Suzano has successfully implemented the previous announced price increases for product lines and markets. We have also announced new price increases during Q4 which will be implemented over the next month. As a result of strong volumes and prices, revenue management and operational stability, our EBITDA has reached a new all time high of 552 million in the quarter, a 35% increase compared to the fourth quarter 2020 and a 44% increase on a year-over-year basis.

Looking ahead our major short term challenges remain minimized and [indiscernible], pressure of inflation and overcoming the continuous logistics disruptions. Regarding our continuous thoughts in operational efficiency, we also strengthened our unique go to market strategy, reaching even more customers with our e-commerce platform, which already accounts for 24% of our total revenues, and 64% when considered medium and small sized customers. As an important milestone, sales of new products by Suzano grew about 10 times when compared to full year 2021 with full year 2020, aligned with our [indiscernible] our addressable market and offer more sustainable packaging solutions to our customers and end users. Now I will turn over to Leo, who will be presenting our Pulp business results.

Leonardo Grimaldi: Thanks, Fabio, and good morning, everyone.

Let's please move to Page 6 of our presentation. The results of our pulp business were again strong in the fourth quarter 2021, by robust sales volumes despite all logistic challenges. Price realization during the best quarters, combined with strong sales performance during the year, made this reach the record EBITDA for our pulp business unit since merger. As you will note on the top graph, our sales performance totaled 2.7 million tons in the fourth quarter 2021, exceeding our sales volume in Q3 2021 and also in Q4 2020. I would like to emphasize that the great job of our sales and operational teams were determinants to reach such sales volumes, and as important, maintaining our service levels to our customers despite all supply chain bottlenecks and our inventories which remain quite tight.

The fourth quarter was marked by significant tightening of the supply-demand balance as a consequence of not only supply chain constraints all over the world, and of paper producers' low pulp and paper inventories, but also as a consequence of pulp demand, which has exceeded our expectations across all paper grades in Europe and North America, and also in China, where demand for hardwood pulp from our customers has stopped historic levels, but still not enough to rebuild their inventories, their own inventories to comfortable levels. The tightening of the S&D balance, combined with inflation on input and manufacturing costs for pulp producers globally, and even more intensely on higher cash cost mills have set a new threshold for marginal cost producers, favoring the pricing momentum, which we started to see in China and Southeast Asia during the second half of the past quarter. According to Europe Pulp Association, the pulp inventories at European ports closed the quarter at 1.1 million tons, 12% below the third quarter 2021, and more than 20% below historic monthly averages since 2018 and placed challenges to paper and paperboard producers who are running at high operating rates. In China, according to SEI [ph] Consultants, and the pulp inventories at ports fell to 1.6 million tons which is a 15% reduction compared to November, almost 300,000 tons reduction in just one quarter and 12% reduction compared to the third quarter 20 21. Our average price for export markets for the quarter has reached $630 per ton, a 3% reduction versus our Q3 prices, which is a combination of stable prices in Europe and Americans with lower invoice prices in Asia during the quarter.

Currency depreciation has brought a positive effect on our prices in real, which increased 3% during the quarter. Our consolidated 2021 price of $613 per ton was 32% higher than our 2020 price, or 30% higher when we analyze in real terms. Now looking at our EBITDA our performance, we have reached a new all time high during the quarter, bringing our 2021 EBITDA to a record of R$21.4 billion with a 62% EBITDA margin, as mentioned favoured by increasing prices and FX and solid sales volumes despite higher production costs. Now looking forward, I would like to bring your attention to the following points. By analyzing the Brazilian Exports and Develop [ph] Ministry statistics for hardwood pulp exports in 2021, it is possible to note that exports to China were reduced by almost 800,000 tons during the year, 800,000 tons, which were mainly reverted to the European market.

Most of this reduction in shipments was concentrated in the third and fourth quarters for which the impact is yet not fully reflected in China's pulp availability and inventories. There is also a concentration of maintenance downtimes in the first quarter, which added to all unplanned downtimes, some of which supply chain related impact, impacting raw materials should result in unexpected curtailments in bleach chemical pulp that will exceed 1 million tons in just one quarter. As a consequence of current price gaps between different regions of the world, we believe that most of these supply shocks will continue to be felt in China. Additionally, price differentials which which favor fluff pulp and favor dissolving pulp should keep all flex capacity directed towards these grades. As the supply curtailments that I have mentioned should be even more intensified by the challenging logistics scenario globally, we expect that the supply and demand fundamentals will continue to be quite favorable and supportive during the next months.

With that said, I would now like to invite Aires to present our cash cost performance for the quarter.

Aires Galhardo: Thank you, Leo. Good morning everyone. Moving on to Slide 7, the fourth quarter 2021 cash cost performance, both quarter-over-quarter and year-over-year continued to be impacted by commodity inflation, especially [indiscernible], which in turn mainly affects input costs and the wood costs on harvesting and transportation activities. Some chemicals and stock price also took a toll again on our performance.

As you can see, the impact of commodity price alone accounted for 86% of total cash cost pressure in the last quarter, and more than 6% on the 2021 performance. It is also worth mentioning that the quarter-over-quarter cash costs increase of 5% was in line with our forecast. Our strategy in the energy market in the context of water crisis late last year resulted in a high benefit on the cash costs compared to previous quarter, partially offsetting the exogenous headwinds already mentioned. For the coming quarter, commodity impacts continue to be challenged. Range recently reached the highest price levels since 2014 and so will continue to impact the input costs and fuels.

In such context, we foresee pulp cash cost ex-downtimes moving north could achieve a high single digit or a low double digit in the first quarter, reaching its peak for 2022. The first quarter will also be marked by a large number of scheduled maintenance downtimes at our mills, which will represent approximately R$85 factor impact on total cash production costs. Before turning to Marcelo Bacci, who will continue the presentation, and I would like to emphasize that Suzano keeps focused on the modernization projects in its mills to improve it even more the structural complexities on the longer run.

Marcelo Bacci: Marcelo, the floor is yours. Thank you, Aires and good morning, everyone.

Moving to Page 8, we show that the Q4 was another period of very strong cash generation and as a consequence of further deleveraging of our company. We have now reached a nominal net debt of $10.4 billion, which is $1.8 billion below the number of one year ago, and that caused the leverage reduction from 4.2 to 2.4 times during the year, which is very significant. We have been able to reduce then our net debt not only by $1.8 billion, but by 1.8 times EBITDA during the year. It's a remarkable performance. Our debt amortization schedule is very light for the coming three years and we have now enhanced even more our liquidity position with the new revolving credit facility that was increased by -- from $500 million to $1.27 billion that we recently announced.

Moving to Page 9, we see our hedging portfolio. We've been taking advantage of the currency markets to improve continuously the quality of our portfolio. We now have an average for the normal portfolio of cash flow hedges we have an average put for 5.49 and an average call of 6.47 covering 70% of the gap, the currency gap we have for the coming 18 months. In addition to that, we have started building a longer book of hedges for the Cerrado Project that already has about $500 million in notional [ph] with an average put of 6 or 7 and an average call of 7.66. This portfolio gives us a lot of protection, very relevant protection against the potential appreciation of the currency.

Moving to Page 10, we show that we closed 2021 with a CapEx figure of R$6.3 billion were in line with the guidance we've been given to the market. We reaffirm CapEx program of R$13.6 billion for 2022, of which R$7.3 billion are related to the Cerrado Project and that is specifically the next topic that Aires will cover for us.

Aires Galhardo: Thank you, Marcelo. Although facing an adverse global scenario of COVID-19 pandemic, and unprecedented supply chain disruptions in the last decade, Cerrado Project is advancing as planned, being on time and on budget. The picture on Slide 11 shows the new site started in the end of fourth quarter 2021.

As important milestones in the quarter, we can highlight the progress of 8% of site work effort, which are crucial for the subsequent works in the rainy season. The conclusion of negotiations for a new chemical plant is noted, and the agreements with whom to transport the future pulp volumes through [indiscernible] to transport. Walter?

Walter Schalka: Well, I'd like to leave the major takeaways to you that is in the last page of the presentation. I think that despite COVID situation, despite inflation and supply chain challenges that we had last year, we have noted one outstanding performance in every single part of our operations, achieving record results and a very strong balance sheet for the future, preparing for our major investment program that we have ahead of us. But we have as well, a major improvement on ESG, a major improvement on our value creation to our shareholders, just remembering that we convert that to equity in $1.8 billion as Marcelo mentioned.

That means almost $1.5 per share on conversion debt to equity. In addition to that, we have the project of Cerrado that is on time and on budget, and they will deliver major value creation to our shareholders as well. Then our perception is that we are addressing all the five different strategic avenues on a very positive way. Before we start the Q&A session, I'd like to invite everyone to be joining us on March 13, to our Annual Suzano Day that is going to be in a few weeks from now on March 30. So that's open invitation for you to join us on this session.

Now let's go for the Q&A session.

Operator: Thank you. [Operator Instructions] The first question comes from Rafael Barcellos with Santander.

Rafael Barcellos: Hello everyone, thanks for taking my questions. My first question is about pulp prices, I mean could you please comment on the implementation of the $50 price hike and also for February orders? And other than that, what do you expect in terms of demand after the Chinese New Year? And my second question is about your strategic view on Suzano's operations.

I mean, some printing and writing producers have been shifting production to packaging grades, so do you think Suzano could do something similar with its paper division? And other than that, on the pulp division side, do you think Suzano could shift some hardwood pulp production to niche markets like fluff or even sold in [ph] pulp and of course, I mean, here I'm talking about the good news that you have higher cash cost, right? Thank you.

Walter Schalka: Rafael, good morning. Thank you for your questions. I'm going to start with the one related to pulp prices, before coming into February because obviously as we're still in the middle of the month, we cannot disclose our effectiveness to date. I would like to just to reinforce what went on in January as we have closed this month.

In January we had maintained our prices stable in North America in the Americas and in Europe. And in China, our price increase of $30 was completely implemented with no discounts whatsoever. As you know, we have announced now for February $50 increase for Asia all of the Asian market, $30 in Europe and $40 in North America. We are very confident of a successful implementation due to all the S&D favorable scenario which I have mentioned in my opening speech. In terms of demand in China, post Chinese New Year, we see the following.

First of all, this is usually a big season for paper and board demand, a lot of activity, a lot of publishing and scholastic activity which demands paper and board products. We have seen that the paper and board stocks are decreasing. We still do not have the January numbers, but the December numbers was that the closing figures in China was that the final paper and board stocks were 6% lower than the third quarter 21. So the socks are quite low of paper and boards as well. Our customers are reporting that downstream demand is quite healthy.

We see that the COVID control actions in China are being more flexible, and that the opening of other South Eastern Asian economies should support better demand and exports from China. Actually export from China of paper and board have been increasing directly in paper and board itself and also indirectly in finished products from China and we have seen a positive demand so far. And just to recap, all consulting companies are seeing a positive year in China right, tissue with a 4% growth and board with an impressive 7% growth compared to last year.

Fabio Almeida: Thank you very much, Rafael for your question. I'm going to take the second question as related our paper business for the future and the conversion of potential conversion of machines.

We do believe that the printing and writing market will continue to have the secular decline in the coming years and this will create one more balanced situation. We have right now a very tight market, global market at this point of time. Since we had a lot of conversions and we have some improvements on the demand as well, then we are very pleased that the market is very tight at this point of time. We are serving our customers and performing our agreements on a very proper way. In other hand, we are not considering to convert any of our facilities or plants to other grades of paper.

We have been growing in the fluff market. We are very pleased with the development that we are doing. I would like just to remember, you that 12 years ago, the project was just a PowerPoint and right now we are performing extremely well. We are working at full capacity. We have several customers on all of the continents right now.

We have large customers moving from long fiber to short fiber or combined fibres as well, that is very positive, and we are discussing internally what would be the next step that we are going to do in the fluff market. Thank you.

Rafael Barcellos: Okay, thank you.

Operator: The next question comes from Daniel Sasson with Itau BBA.

Daniel Sasson: Good morning, everyone.

Thanks for the opportunity. My first question is, if you have any updates on the certification process of carbon credits. You mentioned last year that it had identified projects that could translate into close to 20 million tons of CO2 certified equivalent credits. So, I’d like to understand how this process is developing? And my second question maybe to Aires, if you could comment a bit on your view for your cash cost performance in 2022 versus the 4Q 2021 level. Is there more pressure from raw materials coming from overall inflation, that will best suit your results or do you think that most of that is behind and we could see relatively stable cash costs going forward? Thank you.

Walter Schalka: Thank you, Daniel. I’m glad to take your first question related with the carbon global market. I think it’s very clear to us that this is going to be the way of financing the decarbonization of the world. We are going to see that through a cap-and-trade system worldwide, that carbon price will go up in the next coming years and this will allow the companies that would be making additionalities in terms of reductions on their carbon emissions or carbon sequestration that could be -- allow them to make some kind of monetization of these credits. We have been going through a certification of our credits on one side and waiting for the new law in Brazil that allow the negotiations of this.

We hope that this is going to happen and during this year and this would create a new opportunity to our shareholders to monetize this is so important value on carbon credits in the coming years. Now I'm going to pass to Aires.

Aires Galhardo: Hi Daniel. Thank you for your question. We believe that we are experiencing in the cash costs a cycle momentum, especially with the lag of commodity price.

Probably all of our first quarter will be the worst of the cycle to be affected mainly by grants that the substance and the highest levels from last 10 years. We have a large number of scheduled downtimes in this year and we believe that after the first quarter, especially in the fields, we’ll experience some reduction that will turn our cash costs to normal levels slowly, but in a continuous way until end of this year.

Daniel Sasson: Okay, thanks a lot.

Operator: The next question comes from Leonardo Correa with BTG Pactual.

Leonardo Correa: Yes, good morning, everyone.

Thank you. My first question is on the supply picture for pulp this year. There seems to be a big divide in the market on expectations. Some think there will be major oversupply coming from all these additions and what we've been hearing that the margin has been several data points and news items which have been corroborating a thesis of slower supply, a series of maintenance, stoppages, strikes. So, I just wanted to hear from you, what your expectations are for supply, especially in the light of some of the issues, right, regarding logistics globally in supply chain, so wanted you to focus more on the supply picture? And the second question is a bit more specific, so sorry about that, but for Bacci to help us out.

I mean, looking through the cash flow numbers, right, Suzano has two cash flow drags right, which aren’t new, but could potentially be shifting over the next quarter, right? First on the derivatives right Bacci? I mean the company was criticized by the policy over the past years and of course things didn't play out accordingly, given the currency movements, the sharp currency movements and the losses. We're now at a level where, I mean potentially the BRL could be appreciating going forward. There already is a pretty significant interest rate differential here in Brazil versus abroad. So how do you see these expenses, these derivative expenses going forward? I mean do you see a potential reversal over the next quarters? And I'm also referring to the number specifically on leases, right? I mean I noticed that these numbers have been increasing over the past couple of quarters, so just wanted to hear your thoughts on that as well. Thank you.

Aires Galhardo: Hi Leo, good morning. Thank you for your question. I’m going to take the supply side and part of it. Obviously in the short term the S&G is very, very tight and supportive, but even looking at the full year 2022, which I think relates to your question and obviously, we will have to follow the dynamics and fundamentals and how they play out during the next month, but I would like to highlight two main points. First of all, all the project delays which were recently announced that is favourable, and when we coupled that with the logistic constraints, we will see a reflection of a slower time to market of new pulp and this will make that the volumes that will be coming in will be more gradual and more balanced.

When we add to that or when we add on top of that, all the increasing unexpected downtimes as you're properly laid down in your question, some of which are supply chain related impacting raw materials to pulp producers, and that’s still going on, our analysis of the supply and demand for 2022, shows a much improved S&G scenario. And actually most market consultancies have already revised their numbers and now are reporting operating rates for 2022, which vary between 90% and 92%. And as we all know, this indicates a quite healthy and supportive S&G scenario. On top of that there are few points that we always like to add, which are not factored into all of this forecast, for most of this forecast which are, hardwood is gaining share on top of softwood and most recently also gaining share from recycled fibres and recycled grades. The price gap between dissolving pulp and fluff and we'll obviously make flex capacity to be utilized on these grades.

And last but not least, several ongoing projects with print owners to develop sustainable alternatives to single use plastics or other less sustainable materials and this will all add and increase the demand of hardwood and of bleach chemical pulp as well.

Marcelo Bacci: Hello, this Marcelo speaking. On the derivative side you know that we have a policy that is well known by the market and that we’ve been applying consistently over the years. We now have a portfolio of about $4 billion of cash flow hedges covering the next 18 months. And as I showed in the numbers is protecting us very well from potential appreciation of the currency.

We don't take any bets or any views on the currency. We just apply consistently the policy. And of course if the real continues to appreciate, we will have reasonable protection because at the end of the day a more appreciated currency is negative for the company and the function of the hedging portfolio is to give a protection which is always going to be partial against that. On the leases side, the number of lease payments is increasing over time for two reasons. One is that we are improving and increasing the size of our forestry base and part of that is on leased land, and also we've been increasing the number ships or the vessels that we lease for our own use as dedicated vessels.

So this is improving the quality of our operations, both on the forestry and on the shipping side. And, of course, the cost for that is in the form of lease payments that is increasing over time.

Leonardo Correa: Perfect, thank you.

Operator: The next question comes from Thiago Lofiego with Bradesco BBI.

Thiago Lofiego: Thank you.

Good morning, everyone. A couple of questions here. The first one to Grimaldi. Grimaldi, if you could comment specifically on the dissolving wood pulp market, so you mentioned the spreads are pretty high versus hardwood pulp and other pulp rates. So do you see any sawing mills that have not yet shifted to the dissolving pulp market that might shift in the near term? That's more of a general question.

And within that same question, specifically about Brazil, do you think this is likely to shift to dissolving wood pulp in the near term, I just would like to hear your views there? The second question to Bacci, Bacci the receivables, accounts receivables were pretty high in the fourth quarter. So should we expect that access to be fully reversed now in the first quarter, just to understand the dynamics there? Thank you.

Leonardo Grimaldi: Hi Thiago, good morning and thank you, for your questions. On the dissolving side, what we see is the following. There is close to 7 million ton, 7.5 million ton capacity of dissolving pulp in the world of which roughly 28%, 38% is max capacity.

At this time, with this big gap in prices that exceed $303. We believe obviously we're not completely sure of that, because we cannot -- we don't have that in terms of what our competition is doing. But we believe that most of this flex capacity is being used as dissolving pulp and not as paper grade pulp. Regarding your question of ourselves, we unfortunately cannot answer that. All our information is the public information, which is exactly the same one that you have.

So I will not be able to help you much in that sense.

Marcelo Bacci: Thiago, on the receivables side, we have, as you know, with all the turmoil on the logistics, we have the normal concentration of sales at the end of the quarter and that created the situation where the normal sale of receivables that we do was delayed. So at this point, we have done that already, but that caused an increase, temporary increase of receivables at the end of the quarter.

Thiago Lofiego: Okay, thank you Grimaldi, thank you Bacci.

Operator: The next question comes from Carlos De Alba with Morgan Stanley.

Carlos

De Alba: Yes, good morning, everyone. Thank you very much for the presentation. Just a few questions on my end, also looking at the results, SG&A increased more than what we were expecting, but also looking at the prior quarters, it was also higher year-on-year, and quarter-on-quarter. So what should we expect there in terms of going forward the level of -- a more normalized level of results? And then coming back to the market, paper prices increased in the fourth quarter, as was said before, and you expect these increases to be implemented in the coming quarters, I think I understood that. So could you maybe give us more color as to why the lag between the announcement and the price implementation? And if you could remind us the level of prices and for what products you increased those? And then finally, sorry for squeezing a third quarter there, Bacci is there any pattern or concentration of capital spending in a particular semester or quarter in the year? That will be quite useful.

Thank you.

Marcelo Bacci: Carlos, thank you for your questions. On the SG&A side we have two effects during the fourth quarter, is normally when we adjust our provision for variable compensation, then of course we have to before because we don't know the performance of the year. So as we approach the end of the year, we increased that provision and the same happened at the end of 2020. So when you compare to the previous quarter, you have basically the difference of this additional provision.

On a year-over-year basis we have inflationary effects that were partially compensated by efficiency, but there was some effect. And looking forward, we expect these inflationary pressures to continue, but we are working to compensate that with more efficiency. On the CapEx side, we normally have some concentration in the first quarter, but this year with the Cerrado project, we will probably have a more stable performance of CapEx over the year lower specific concentrations.

Fabio Almeida: Carlos, it's Fabio here. Thanks for your question.

Regarding paper price, yes our paper prices have risen 9% in dollar terms in our export markets in the fourth quarter, and we're quite stable in the domestic market, mainly due to such seasonality. As you know, we have a large volume of that goes to the federal books program and we sell that in reals and its long term contracts, so and that was the reason that in the fourth quarter in the domestic market prices were stable. As regarding your questions about price announcements, we have announced a price increase for coated wood free for the domestic market 35% increase, which we believe will be implemented installments during the next months because we have contracts, long term contracts and we need to wait for the term of these contracts in order for the price to kick in. And we have also increased prices in North America by 9% effective March 2022. Carlos

De Alba: Thank you very much, all the best.

Operator: The next question comes from Marcio Farid with Goldman Sachs.

Marcio Farid: Well, thanks. Good morning, everyone. I have a couple of follow ups, first of all on the supply chain bottlenecks. I'm quite surprised to see Suzano being delivering strong volumes in [indiscernible] supposed to be very challenging, so that probably proves that your supply chain is more reliable than most.

So I just wanted to understand if you can expect that to continue over the next few quarters? And if you're seeing any signs of improvement in terms of supply chain the needs and supply risk in the short term, just thinking about pulp logistics and international shipping as well. And the second question, now, you did mention obviously China's momentum has been quite strong. One of the things that has been noticed is that paper prices in China hardly reacting to the very high inflationary cost environment that we have not only in China but also chemicals logistics and fuels and other things. But, so just trying to understand, how do we see paper price momentum, price momentum in China picking up in the next few quarters versus your comments on low inventories and very high demand for the region? Thanks.

Leonardo Grimaldi: Okay, Marcio, good morning.

This is Leo here and thanks for your question. The line was not that clear. So if I don't answer it's completely you have been not clear. On the supply chain side, we actually see the situation getting worse in this first quarter of the year due to a lot of COVID contaminations in ship crews and also in port congestions throughout the world. So we see this tightening and actually making the whole situation even more challenging.

At this time, we don't see sensible improvements, at least until the first half of 2022, which actually could easily remain until the end of the year and still maintain this pulp availability quite pressured as it is today. There's also a factor of supply chain that we are following very closely which is the truck and rail car situation in several regions like Europe, U.S. and especially Canada, where we are tracking local strikes and that obviously can impact further supply of wood and raw material to pulp producers and tighten even further the market. COVID is also impacting the Chinese ports. Today the Chinese ports are operating at closed loops and no one comes in or out, and there are a limited number of pilots who are those who bring the vessels to berth and this is all delaying unloading operations in anywhere from 7 to 15 days.

So the situation is quite grave at the moment. We are struggling to maintain our high service levels to our customers. I believe your second question was related to pricing and the margins of the paper producers in China and the inflationary pressure. So this is actually the KPI, yes so this is actually one of the KPIs that we're monitoring closely their margins and what's going on there. We saw price increases going on at the end of last year, and the tentative in three Chinese New Year.

And our sources say that with Chinese New Year, the RMB200 price increase was implemented roughly to 60% to 70%. But there is a strong belief that as we are now in a strong peak season that that increase will now all implemented until the end of the month of February. Actually, our customers are already reporting plan to have further price increases for the next months, and which we all believe is very reasonable, because today the sentiments in the Chinese markets is that there is no room or no room at all to speculate against rising pulp and raw material costs. So prices have to come up to support this rising pulp and raw material costs that I have mentioned. It's also important to say that we track this margin and that margin reached, or not actually margin, but the spread between their prices and pulp prices they reach a lowest gap in mid 2021 and they have been recovering ever since.

And today, printing, writing board and tissue all are trending over average historical values. And just as a reference, this gap, that's one of the ways to look at margin between tissue prices and pulp prices have increased 300% since mid year 2021. So the whole chain is much more healthy than it was a couple of quarters ago.

Marcio Farid: Perfect, thanks a lot.

Operator: The next question comes from Caio Ribeiro with Bank of America.

Caio Ribeiro: Yes, hi. Good morning, everyone. Thank you for the opportunity. So going back to the pulp price hikes, just wanted to see how likely another pulp price hike in China for March is in your view? And also, on this topic, in the recent past, we've seen papermakers in China struggling to recompose margins, in moments where pulp prices are rising very fast and we saw that last year. And I know you mentioned that paper makers are hiking prices and there are expectations of further paper price hikes ahead, but would you wait for those prices to move up and for the implementation to be successful before announcing another full price hike? And then secondly, going back to pulp cash costs per ton, I just wanted to see if longer term, whether that target that you had by 2024 of R$560 per ton, whether you consider that to be still achievable? Thank you.

Leonardo Grimaldi: Yes Caio, and good morning. Thanks for a question. This is Leonardo here. The first part of it is related to future prices. We obviously cannot come into much details, as this interferes with our commercial strategy and tactics for the coming months.

But what we can say is that the short term or the supply and demand fundamentals, at least for the next months are quite supportive. And if we look at the resale prices, and also the prices that the Chinese and Asian producers are selling on their markets, we note a more than $100 gap over imported locally just pulp price. This is also indicative of what can come on place. As you relate to customers, paper and board customers, we compose the margins. As I mentioned on the previous question, this is one of the key variables that we track and follow.

We want to make sure that the whole chain is healthy and so that's supported, but I cannot comment to more details as obviously this is part of our commercial strategy and how we evaluate the levels, timing of future increases.

Marcelo Bacci: Hi Caio, thanks for the question. As we have done annually, we break things off our total service operation costs our next Annual Day at the end of March.

Caio Ribeiro: Okay, fair enough, thank you.

Walter Schalka: Just to complement the answer, it's very important that we have been working on the structural long term reduction on our costs, it's several actions as planned retrofits and increase on our land base and our forest activities close to our plants, and these allow us to have lower costs in the future.

On the short term, we have this impact on inflation and we are going to give more transparency to you during the March 30 Suzano Day.

Caio Ribeiro: Perfect, thank you all.

Operator: The next question comes from Cadu Schmidt with UBS.

Cadu Schmidt: Good morning, everyone. Thanks for the opportunity.

I have a question to level, can you please comment on the overall level of pulp inventories at the end of the year? You said that inventories declined on a quarterly basis and according to our calculations, inventories are down to the lowest level since 2018. So I just wanted to check if you can see this may be leading to a weaker sales performance in this say in the coming quarters, especially with the amount of maintenance downtimes happening at the moment? Thank you very much.

Leonardo Grimaldi: Thanks Cadu. Thanks for the one and only question, so thanks very much. Yes so just to revise what I said in my speech, we have obviously seen and this is public information that European stocks were down at the end of the year according to European Pulp Association at 1.1 million tonnes, we think this is below optimum.

And especially in this challenging supply chain situation that we see in Europe with slower discharge and then also internal logistics situation in the market while all producers are running at very high operating rates. So and just an additional information, which is I think will add further color to my answer, our market sources just couple, just one day ago, anticipated that there will be, there should be further inventory reductions in January. And we are tracking or they are tracking and have been reporting to us what's going on in Italian ports, which is a good presentation of what's going on in Europe. And the expectation is of a new 6% reduction of stocks by at the end of January, when the January numbers are public. So even more and even further reduction in January.

When we look at China, we saw the 1.6 million tons stock for the closing of the year and the reports are now already official. And there's even a new reduction for January, a new 5% reduction. So stocks are coming down another 100,000 tons and will reach 1.5 or have reached 1.5 million tons. We are tracking what's going on on the ports and the level of activity on Chinese ports. And then it doesn't seem to be a lot of vessels coming in at this time, which is related to what I mentioned in terms of the medic numbers and the reduction of the exports from South America into China.

So our forecast -- our expectations is that all this supply scenario will be so tight that the stocks will be low or lower coming forward and not recovering at least on the couple next months. And with all the additional paper and board and tissue capacity, which was added into China, our view is that a healthy level of stock to support all this production is much closer to 2 million tons than to 1.5 million tons. So we think that this brings the market to a very tight S&D situation.

Cadu Schmidt: Great, thanks Leo. Can you comment on Suzano's own inventory position and how do they compare to historic levels?

Leonardo Grimaldi: Yes we, we have obviously our inventory position.

We cannot give a lot of guidance because that reflects our commercial policy. But what we have been saying and I think it's quite clear from our sales performance, versus our production numbers, which despite and we are not reporting you know our capacities is that our stocks are operating at very low levels. We are keeping the stocks at low levels and supporting long term and long commitment customers and maintaining our service levels there. So our stocks are quite low at this time and below optimum operational levels.

Cadu Schmidt: Great, thanks a lot.

Operator: As there are no questions, I would like to turn the floor over to the company CEO for the final considerations. Please Mr. Walter Schalka, you may proceed.

Walter Schalka: I would like to thank all of you to join us on this session. I think it was very interesting discussion that we had.

I would like just to relate to your -- our vision of the future. We are impacting not only the 2 billion customers that we have every single month with our targets, but we are in fact in the society as a whole with 8 billion people working on the dimension of two major issues that we have in our society, that is how we are going to address the climate change on one side, how we are going to address the inequalities and diversity and inclusion that is quite necessary. I'm very pleased that we have been evolving on our numbers and we are going to share this information to you at the right time on all of our targets, the SG targets for the future. And we have been developing the company and preparing the company for the future as well. We have creating value to our shareholders, but we are sharing value with all the stakeholders and that's very positive as well as part of our culture and we continue to do this.

Our vision is that on a very humble position Suzano is very well prepared for the future, but we continue to develop our activities. We continue to move and transform the company and a better company that could impact positively the society. Thank you very much for joining us and have a very happy day. Thank you very much.

Operator: Suzano fourth quarter results conference call is finished.

Have a nice day.