suzano s.a. senior vice president€¦ · suzano's cash flow is largely dependent on pulp...

CORPORATES

CREDIT OPINION24 June 2020

Update

RATINGS

Suzano S.A.Domicile Salvador, Bahia, Brazil

Long Term Rating Ba1

Type LT Corporate FamilyRatings - Dom Curr

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Barbara Mattos, CFA +55.11.3043.7357Senior Vice [email protected]

Marianna Waltz, CFA +55.11.3043.7309MD-Corporate [email protected]

CLIENT SERVICES

Americas 1-212-553-1653

Asia Pacific 852-3551-3077

Japan 81-3-5408-4100

EMEA 44-20-7772-5454

Suzano S.A.Update to credit analysis

SummarySuzano S.A.'s (Suzano) Ba1 ratings reflect the company's leading position as the largestproducer of market pulp in the world, as well as in the Brazilian printing and writing paper,paperboard and tissue sectors. The company benefits from its low-cost position and highlevel of vertical integration with substantial self-sufficiency in wood fiber and energy;the proximity of its pulp mills to its own forests and port facilities; and long-term supplyagreements, which support stable sales volume with good geographic diversification.

The ratings also reflect Suzano's conservative approach to liquidity and risk management, butare constrained by the volatile nature of the pulp industry, which represents around 80% ofthe company's consolidated revenue. Lower pulp prices and the depreciation of the Brazilianreal (local currency in Brazil) are straining leverage, another rating constraint. Suzano's ratingsare also constrained by the foreign-currency country ceiling of Brazil (Ba2 stable) at Ba1.

Exhibit 1

Suzano will gradually deleverage despite pulp markets headwinds, supported by low cash cost,sinergies and lower capital spendingMoody's-adjusted leverage

5.4x

3.3x

3.8x

2.7x

5.2x

6.3x

7.3x

4.3x

3.3x

2.8x

1.5x

3.0x

4.5x

6.0x

7.5x

9.0x

2014 2015 2016 2017 2018 2019 LTM 1Q20 2020f 2021f 2022f

All figures are calculated using Moody’s estimates and standard adjustments. Figures from 2016 to 2018 reflect Suzano Papel eCelulose S.A., while figures for 2019, LTM Q1 2020 and Moody's Forecast reflect Suzano S.A. (incorporating Fibria Celulose S.A.).Source: Moody's Financial Metrics™

http://www.surveygizmo.com/s3/1133212/Rate-this-research?pubid=PBC_1228071

https://www.moodys.com/credit-ratings/Suzano-Papel-e-Celulose-SA-credit-rating-600011720

https://www.moodys.com/credit-ratings/Brazil-Government-of-credit-rating-114650

MOODY'S INVESTORS SERVICE CORPORATES

Credit strengths

» Competitive production cost and highly integrated business model, which support healthy margins

» Good client, product and geographic diversification

» Prudent financial management and solid liquidity

» Largest bleached eucalyptus kraft pulp (BEKP) producer worldwide (11 million tons)

Credit challenges

» Strained leverage and interest coverage metrics, reflecting the M&A transaction completed in early 2019

» Weak fundamentals in pulp markets, which, if prolonged, may delay deleveraging

» Exposure to the volatile nature of the pulp industry (about 80% of Suzano's revenue)

Rating outlookThe stable outlook reflects our expectation that the company's credit metrics will improve through 2021. Despite the higher debt levelsSuzano has incurred to fund the acquisition of Fibria, we expect the company to reduce its leverage gradually through the next 12-18months and to capture synergies from the combined operations of Suzano and Fibria.

Factors that could lead to an upgradeAn upgrade of Suzano's ratings would require the maintenance of strong credit metrics, market presence and diversification, as well assolid liquidity and positive free cash flow (FCF) generation on a sustained basis.

Quantitatively, a positive action would also require:

» leverage, measured as total adjusted gross debt/EBITDA, to be below 3.0x

» interest coverage, expressed as adjusted EBITDA/interest expense, to remain above 5.0x on a sustained basis

Factors that could lead to a downgradeSignificant changes in market conditions, in particular for hardwood pulp, which may lead to weaker-than-expected cash flow forSuzano and the combined operations, could strain its rating.

The ratings could also be downgraded if:

» adjusted leverage remains above 4.0x for a prolonged period

» interest coverage falls below 3.5x, without prospects for improving

» the company's liquidity deteriorates, becoming insufficient to cover near-term debt service requirements

» there is a downgrade of Brazil's sovereign rating

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 24 June 2020 Suzano S.A.: Update to credit analysis


Key indicators

Exhibit 2

Suzano S.A.

US Millions Dec-15 Dec-16 Dec-17 Dec-18 Dec-19

LTM

(Mar-20)

Next 12-18

Monhts

Revenue 3,119$ 2,849$ 3,295$ 3,701$ 6,607$ 6,665$ 7,507$

EBITDA Margin % 47% 40% 46% 54% 42% 41% 52%

RCF / Debt 23% 19% 21% 12% 9% 8% 18%

(RCF - CAPEX) / Debt 12% 3% 6% 6% 1% 2% 12%

Debt / EBITDA 3.3x 3.8x 2.7x 5.2x 6.3x 7.3x 3.3x

EBITDA / Interest Expense 3.8x 3.4x 4.0x 4.7x 2.6x 2.6x 5.5x

All figures and ratios are calculated using Moody’s estimates and standard adjustments. Moody's Forecasts (f) or Projections (proj.) are Moody's opinion and do not represent the views ofthe issuer. Periods are Financial Year-End unless indicated. LTM = Last 12 Months.Projected BEK prices and BRL per USD, $558/ton and BRL5.14/$Source: Moody’s Financial Metrics™

ProfileHeadquartered in Salvador, Brazil, Suzano S.A. (Suzano) is the world's largest producer of bleached eucalyptus kraft pulp (BEKP), with anannual production capacity of 11 million tons, and is also a leading company in the Brazilian printing and writing paper, paperboard andtissue market. In the 12 months ended March 2020, the company generated BRL27 billion (about $6.7 billion) in revenues.

Exhibit 3

Revenue breakdown12 months ended March 2020

Exhibit 4

EBITDA breakdown by segment12 months ended March 2020

Paper, 18%

Pulp, 82%

DomesticMarket, 19%

Exports, 81%

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1

By Product By End Market

Source: Suzano S.A.

Pulp, 86%

Paper, 14%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

By Product

Source: Suzano S.A.

Detailed credit considerationsCoronavirus outbreak will strain demand for pulp and wood productsLatin American pulp producers will experience difficult market conditions in 2020 as the coronavirus outbreak spreads globally,straining pulp demand while prices are already low. Even so, the coronavirus outbreak has supported high operating rates for tissue andpackaging producers, offering at least a short-term offset to the severe decline in printing and writing products. Global pulp demandwill remain stressed in 2020 based on weaker printing and writing consumption, which already faced a secular decline in demandbefore the coronavirus crisis, and demand for tissue and packaging will return to pre-crisis levels.

Meanwhile, local-currency depreciation in Latin America, particularly in Brazil, will benefit local producers’ costs and cash flow. LatinAmerica’s paper and forest products industry has not had major disruptions in operations during the coronavirus pandemic, with mostgovernments deeming the industry essential in most of the countries, including for large producers such as Brazil and Chile.



Sustainable business model with competitive production costs supporting healthy marginsWith the acquisition of Fibria in January 2019, Suzano became the largest hardwood pulp producer globally, with 11 million tons ofannual pulp production capacity and 1.40 million tons of paper, which are spread over 12 plants in Brazil. Besides, its highly integratedsupply chain relies on three pulp export ports and 12 fully dedicated vessels.

The high level of vertical integration of Suzano's operations results in efficient cost control and historically strong operating margins,as illustrated by its adjusted EBITDA margin in the 40%-55% range since 2015, which compares favorably with that of most globalpeers. Besides, the company benefits from its technologically updated plants, the proximity of its BEKP mills to the forests and to portterminals for export (156 kilometer structural average radius), and its complete self-sufficiency in electricity (surplus of 90 megawatthour - Mwh). Finally, Suzano also has a high-quality asset base, with 1.3 million hectares of planted forestry.

The pulp segment represented 82% of net revenue and 86% of EBITDA in the 12 months ended March 2020, while the paper segmentaccounted for the remaining 18% and 14%, respectively. With regard to geographic diversification of the pulp segment, Asia andEurope are the main markets, accounting for 80% of the revenue in the first quarter of 2020, followed by North America (11%) andBrazil (7%). About 81% of the total revenue was generated from exports in the 12 months ended March 2020, which reduces thecompany's exposure to Brazil's economic performance.

Suzano's pulp volume is sold primarily to tissue paper (60%) and special paper (19%) producers, the segments we believe will continueto benefit from resilient demand in the long run and higher growth potential because of expanding consumption in emerging markets,including Brazil. The company has further diversified into tissue, and now has an annual production capacity of 170,000 tons and aconversation capacity of 60,000 tons.

In Brazil, Suzano benefits from its leading market positions in the different paper segments in which it operates, in part because of itsefficient distribution network and long-standing relationship with clients. Suzano is the market leader in the paperboard, and printingand writing paper sectors in Brazil, with market shares of 22% and 45% in Q1 2020, respectively.

We expect a further decline in cash costs, driven by synergies from the combination with Fibria, the lower share of third-party woodin the production process, smaller distances from forests to mills, higher scale of operations and energy surpluses. Suzano expectsoperational synergies of BRL1,100 million-BRL1,200 million per year (90% in 2020), largely coming from the forest operations. Suzanoalso expects deduction of BRL2 billion on tax base annually.

Suzano's ability to control input costs is crucial to mitigate the risk of operating in a commodity market and represents a distinctadvantage over its competitors. The Brazilian pulp producers benefit from shorter eucalyptus harvest periods (seven years) and higherland productivity (40 cubic meters per hectare per year on average) than those of the European producers (12-15 years and 10-12 cubicmeters per hectare per year, respectively). Such efficiency has translated into one of the lowest production cash costs in the industry, ofaround $133 (ex-downtime) per ton of BEKP in Q1 2020.

In the paper segment, Suzano has a distribution model that allows for disintermediation in the paper supply chain and enables thecompany to work closer to final customers, providing greater ability to control costs, as well as to increase and diversify its portfolio ofclients and strengthen the brand in the domestic and foreign markets.

Results largely dependent on pulp prices, foreign exchange and the Brazilian economySuzano's cash flow is largely dependent on pulp prices. We observed strong pulp price correction starting in late 2018 through early2020, but we expect prices to recover gradually in late 2020 and in 2021. Demand will soften as a result of lower global economicgrowth, especially affected by the coronavirus outbreak globally.

Suzano's results are also exposed to foreign-exchange volatility because most of its revenue (about 80%) is generated through exports,while only about 20% of its costs and 27% of its operating costs are denominated in US dollars. The company estimates that eachBRL0.10 depreciation in the local currency increases its EBITDA by around BRL500 million and operational cash generation by BRL600million.

While local currency depreciation will strengthen Suzano's cash flow, it will strain its leverage metrics. Suzano’s total adjusted debt/EBITDA increased to 7.3x in the 12 months ended March 2020, an increase in leverage that mostly reflects the significant impact of the



currency depreciation on its total debt. Suzano’s total reported debt increased to BRL75.8 billion ($14.2 billion) as of the end of March2020, up from BRL63.6 billion as of the end of December 2019; about BRL13.2 billion of the March 2020 debt figure reflected currencydepreciation.

We expect Suzano to deleverage more substantially by year-end 2021, with adjusted leverage trending toward 4.0x, based on higheraverage prices and a foreign-exchange benefit strengthening cash flow generation.

Challenges faced in the Brazilian economy could pose some risks to Suzano's paper operations because about 69% of sales in thissegment are geared to the domestic market. Volume growth will be limited by the persistently timid economic activity, but thecompany has been able to control costs, strengthen brand and market position, and implement price increases above inflation despitethe weak economic environment in Brazil over the past few years.

ESG considerationsSuzano is majority-owned and controlled by the Feffer family, which holds 45.4% of its outstanding voting shares, and the remaining53.2% of shares are free float (11% held by Banco Nacional de Desenvolvimento Econômico e Social (BNDES) and 5.5% byVotorantim) and 1% held in treasury. Representatives of the Feffer family are not involved in the company's daily management andhave three seats on the board of directors. The board has ten members in total, and among them, seven are independent members,professionals with good reputation as first-tier executives at large companies.

Exhibit 5

Shareholder structure

Tresuary1%

BNDESPAR11%

Votorantim S.A.5%

Other Shareholders37%

Controlling Shareholders46%

Source: Suzano S.A.

Suzano has just one class of shares (ordinary with voting rights), which are traded on the Bovespa and The New York Stock Exchange(NYSE) American Depositary Receipt (ADR) level III. The company is in compliance with the Sarbanes-Oxley corporate governancestandards and is part of the Novo Mercado, Bovespa's highest level of corporate governance. Suzano's good corporate governanceis also reflected in the existence of five committees (Management and Finance, Sustainability, Innovation and Strategy, Talent andCompensation and Audit) supporting the board of directors, in addition to an independent fiscal council that includes one accountingspecialist nominated by the minority shareholders. Also, the company's risk management is considered efficient, based on existingfinancial policies. The overall good level of financial and operational disclosure is credit positive.

As a manufacturing company, Suzano faces environmental risks, such as air and water emissions, and social risks, such as labor relationsand health and safety issues. The company has established expertise in complying with these risks, and has incorporated procedures toaddress them in their operational planning and business models. Suzano has specific targets, which include the following: on climatechange: reduce emissions by 15% until 2030 and remove an additional 40 million tons of carbon emissions from the atmosphere until2030; on water: increase water availability to 100% of critical watersheds (forests) and reduce water withdrawal by 15% in industrialprocesses; on energy: increase renewable energy exports by 50% until 2030; and reduce industrial waste sent to landfill by 10% until2030. Suzano also has a target to replace plastics and petroleum derivatives for 10 million ton of products from renewable sources until2030.



The company continuously seeks to produce pulp and paper with a minimum environmental impact. Suzano's forest base is certified byISO 14001, Forest Stewardship Council (FSC) and Program for the Endorsement of Forest Certification (PEFC).

The overall Social Risk score for the global paper and forest products industry is moderate since the potential credit effects associatedwith social risks for most companies in this industry are manageable. Suzano faces limited social risks in its operations. The companyfocuses on education, diversity and inclusion, aiming at having 30% of representation of minority groups (women/black) in leadershiproles, 100% of accessibility for people with disabilities, and 100% inclusive environment and zero prejudice, as well as on enhancingeducation by 40% in the company’s areas of influence. Suzano also has specific social targets, including the mitigation of incomeinequality for 200,000 people over the poverty threshold in its areas of influence by 2030, and to enhance the basic educationdevelopment index by 40% in all priority municipalities until 2030.

Liquidity analysisSuzano has been able to maintain strong liquidity based on the large cash position of BRL9.6 billion plus BRL1.0 billion in fully availablecommitted credit facility as of the end of Q1 2020. On March 30, 2020, Suzano announced the withdrawal of $500 million from oneof its revolver credit facilities. Despite the high debt burden, Suzano has a comfortable debt amortization schedule, with enough cashto cover all debt maturities through 2022.

Suzano is constantly working on liability management strategies to enhance liquidity and reduce refinancing risks. The companyentered an $850 million, six-year export prepayment agreement in Q1 2020, using proceeds to prepay a $750 million syndicatedexport prepayment agreement due in February 2023. In addition, Suzano redeemed the $189.6 million in its outstanding 2021 seniorunsecured notes. Suzano will also capture synergies from its combined operations, as well as a significant reduction in capital spendingto about BRL4.0 billion in 2020, down from BRL5.8 billion in 2019.

Exhibit 6

Debt amortization scheduleAs of March 2020, in BRL million

12,338

1,000

6,330

692

4,394

11,551

9,423 10,032

33,358

Cash 2020 2021 2022 2023 2024 2025 2026 onward

Cash & Equivalents Available credit facilities Debt

Source: Suzano S.A.

Suzano has clear financial policies that set maximum leverage at 3.0x net debt/EBITDA, or up to 3.5x in periods of expansion, andtemporarily up to 4.0x for two consecutive quarters. Additionally, the company publicly announced its long-term target to reduce netdebt to $10 billion from $12.7 billion.

The company also has flexibility in its capital investment and dividend payout. The dividend policy allows it to distribute dividends ofup to 25% of net income, the maximum under Brazilian law, or 10% of operating cash flow, which gives it some flexibility over cashoutflows. Suzano has cut its capital spending guidance for 2020 to BRL4.2 billion, having already cut its original BRL6.4 billion guidancefrom 2019 to BRL5.8 billion. In terms of alternative sources of liquidity to fund its operations in Brazil, Suzano has 1.3 million hectaresin planted and certified forests; Suzano sold about BRL400 million worth of its forest holdings in 2019.



Methodology and scorecardSuzano's scorecard-indicated outcome under our Paper and Forest Products Industry rating methodology maps to Ba1. Prospectively,the indicated outcome from the scorecard maps to Baa3, reflecting improvement in profitability and leverage and coverage ratios.

Exhibit 7

Rating factorsSuzano S.A.

Paper and Forest Products Industry Grid [1][2]

Factor 1 : Scale (10%) Measure Score Measure Score

a) Revenue (USD Billion) $6.7 Baa $5 - $15 Baa

Factor 2 : Business Profile (30%)

a) Product Line Diversification Ba Ba Ba Ba

b) Geographic and Operational Diversification B B B B

c) Market Position, Cyclicality and Growth Potential Baa Baa Baa Baa

Factor 3 : Profitability and Efficiency (15%)

a) EBITDA Margin 40.8% A 45% - 60% Aa

b) Fiber and Energy Flexibility and Cost A A A A

Factor 4 : Leverage and Coverage (30%)

a) RCF / Debt 8.0% B 10% - 20% Ba

b) (RCF - CAPEX) / Debt 1.9% B 5% - 12% Ba

c) Debt / EBITDA 7.3x Caa 3x - 4.5x Ba

d) EBITDA / Interest 2.6x B 4x - 7x Ba

Factor 5 : Financial Policy (15%)

a) Financial Policy Baa Baa Baa Baa

Rating:

Indicated Outcome before Notching Adjustments Ba1 Baa3

Notching Adjustments 0.0 0 0.0

a) Scorecard-Indicated Outcome Ba1 Baa3

b) Actual Rating Assigned Ba1 Ba1

Current

LTM 3/31/2020

Moody's 12-18 Month Forward View

As of 6/11/2020 [3]

[1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.[2] As of 3/31/2020(L).[3] This represents Moody's forward view, not the view of the issuer, and unless noted in the text, does not incorporate significant acquisitions and divestitures.Source: Moody's Financial Metrics™



Appendix

Exhibit 8

Peer comparisonSuzano S.A

(in US millions)

FYE

Dec-18

FYE

Dec-19

LTM

Mar-20

FYE

Dec-18

FYE

Dec-19

LTM

Mar-20

FYE

Dec-18

FYE

Dec-19

LTM

Mar-20

FYE

Dec-17

FYE

Dec-18

FYE

Dec-19

FYE

Dec-18

FYE

Dec-19

LTM

Mar-20

Revenue $3,701 $6,607 $6,665 $5,955 $5,329 $5,068 $6,274 $5,670 $5,569 $1,048 $1,273 $1,085 $12,379 $11,462 $10,926

Operating Profit $1,434 $1,520 $1,356 $1,351 $437 $275 $1,367 $640 $506 $460 $685 $429 $2,192 $1,511 $1,406

EBITDA $2,007 $2,762 $2,719 $1,817 $1,051 $887 $1,871 $1,152 $1,034 $628 $813 $545 $2,677 $2,038 $1,929

Total Debt $9,766 $16,956 $15,645 $4,553 $6,050 $5,973 $4,074 $4,137 $4,817 $2,752 $2,164 $1,856 $1,939 $2,072 $2,179

Cash & Cash Equiv. $6,576 $2,337 $1,843 $1,076 $1,560 $1,155 $968 $615 $1,260 $114 $158 $209 $1,015 $1,724 $1,602

EBIT / Int. Exp. 3.6x 1.5x 1.4x 6.5x 2.0x 1.3x 6.1x 3.2x 2.5x 1.7x 2.9x 2.1x 26.5x 24.6x 25.2x

Debt / EBITDA 5.2x 6.3x 7.3x 2.5x 5.8x 6.7x 2.2x 3.6x 4.7x 4.6x 2.8x 3.5x 0.7x 1.0x 1.1x

RCF / Net Debt 38.2% 10.4% 9.1% 31.3% 12.0% 8.4% 36.4% 18.4% 14.7% 11.1% 30.5% 16.5% 117.8% 285.8% 152.9%

FCF / Debt 6.7% 2.1% 3.4% 3.1% -14.0% -19.8% 8.9% -2.9% -0.8% 5.3% 21.1% 11.3% 25.9% 39.5% 23.2%

Suzano S.A. Celulosa Arauco y Constituci Empresas CMPC S.A. Eldorado Brasil Celulose S.A UPM-Kymmene

Ba1 Stable Baa3 Stable Baa3 Stable B2 Stable Baa1 Stable

All figures & ratios calculated using Moody’s estimates & standard adjustments. FYE = Financial Year-End. LTM = Last 12 Months. RUR* = Ratings under Review, where UPG = for upgradeand DNG = for downgrade.Source: Moody’s Financial Metrics™

Exhibit 9

Moody's-adjusted debt breakdownSuzano S.A.

(in US Millions)

FYE

Dec-15

FYE

Dec-16

FYE

Dec-17

FYE

Dec-18

FYE

Dec-19

LTM Ending

Mar-20

As Reported Debt3,770.6 4,305.4 3,675.5 9,220.8 16,821.6 15,522.5

Operating Leases 59.1 68.6 75.9 289.5 0.0 0.0

Non-Standard Adjustments 208.5 213.5 176.7 256.1 134.6 122.2

Moody's-Adjusted Debt 4,038.2 4,587.5 3,928.0 9,766.3 16,956.3 15,644.7

All figures are calculated using Moody’s estimates and standard adjustments. Figures from 2015 to 2018 reflect Suzano Papel e Celulose S.A., and figures for 2019 and LTM Q1 2020 reflectSuzano S.A. (incorporating Fibria Celulose S.A.).Source: Moody’s Financial Metrics™

Exhibit 10

Moody's-adjusted EBITDA breakdownSuzano S.A.

(in US Millions)FYE

Dec-15

FYE

Dec-16

FYE

Dec-17

FYE

Dec-18

FYE

Dec-19

LTM Ending

Mar-20

As Reported EBITDA 401.5 1,438.7 1,525.0 891.6 1,147.6 -3,417.1

Operating Leases 23.8 21.4 26.3 30.9 0.0 0.0

Unusual 1,048.0 -324.4 -17.8 1,086.5 1,619.9 6,140.6

Non-Standard Adjustments 0.0 2.1 -1.8 -2.1 -5.0 -4.6

Moody's-Adjusted EBITDA 1,473.2 1,137.9 1,531.7 2,006.9 2,762.4 2,718.9



http://www.moodys.com/


Exhibit 11

Suzano S.A.Historical Moody's-adjusted financial data

(In USD million) 2016 2017 2018 2019 LTM 1Q20

INCOME STATEMENT

Revenue 2,849 3,295 3,701 6,607 6,665

EBITDA 1,138 1,532 2,007 2,762 2,719

EBIT 711 1,067 1,560 1,636 1,455

BALANCE SHEET

Cash & Cash Equivalents 1,135 816 6,576 2,337 1,843

Total Debt 4,587 3,928 9,766 16,956 15,645

CASH FLOW

Capex = Capital Expenditures 688 580 681 1,400 1,205

Dividends 86 179 58 154 148

Retained Cash Flow 806 843 1,301 1,557 1,587

RCF / Debt 18.7% 20.6% 12.5% 9.0% 8.0%

Free Cash Flow (FCF) 109 225 698 370 677

FCF / Debt 2.5% 5.5% 6.7% 2.1% 3.4%

PROFITABILITY

% Change in Sales (YoY) -3.3% 6.5% 27.7% 93.6% 69.1%

SG&A % of Sales 8.1% 8.7% 10.2% 8.3% 8.0%

EBIT Margin % 25.0% 32.4% 42.2% 24.8% 21.8%

EBITDA Margin % 39.9% 46.5% 54.2% 41.8% 40.8%

INTEREST COVERAGE

EBIT / Interest Expense 2.1x 2.8x 3.6x 1.5x 1.4x

EBITDA / Interest Expense 3.4x 4.0x 4.7x 2.6x 2.6x

(EBITDA - CAPEX) / Interest Expense 1.3x 2.5x 3.1x 1.3x 1.5x

LEVERAGE

Debt / EBITDA 3.8x 2.7x 5.2x 6.3x 7.3x

Debt / (EBITDA - CAPEX) 9.6x 4.3x 7.9x 12.7x 13.1x

Avg.Assets / Avg.Equity 3.0x 2.7x 3.5x 5.1x 8.3x




Ratings

Exhibit 12

Category Moody's RatingSUZANO S.A.

Outlook StableCorporate Family Rating -Dom Curr Ba1Senior Unsecured -Dom Curr Ba1NSR Corporate Family Rating Aaa.brNSR Senior Unsecured Aaa.br

FIBRIA OVERSEAS FINANCE LIMITED

Outlook StableBkd Senior Unsecured Ba1

Source: Moody's Investors Service



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MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS, AND PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESSAND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS OR PUBLICATIONS WHEN MAKING AN INVESTMENTDECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BYLAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHERTRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANYFORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM ISDEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.

All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as wellas other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information ituses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However,MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for anyindirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use anysuch information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses ordamages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of aparticular credit rating assigned by MOODY’S.

To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatorylosses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for theavoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents,representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.

NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDITRATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.

Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (includingcorporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating,agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and Moody’sinvestors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regardingcertain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publiclyreported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance —Director and Shareholder Affiliation Policy.”

Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s InvestorsService Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intendedto be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, yourepresent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly orindirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as tothe creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.

Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’sOverseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a NationallyRecognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by anentity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registeredwith the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.

MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferredstock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and servicesrendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.

MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

REPORT NUMBER 1228071


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