Your biggest buyer is China. Your greatest perspectives are in the US. Its largest acquisition in almost a decade is focused on Europe. The Brazilian Giant of Cellulose and Paper Suzano () is globalizing while navigating commercial tensions between geopolitical powers.
The company reaps raw materials from its eucalyptus that enter the manufacture of everything, from books to toilet paper, and claims to play a role in life of 2 billion people worldwide. Its executives say they have a plan to navigate this tumultuous period of global trade, one that can serve as a script for other companies that seek not only to survive but profit.
Suzano’s strategy, in essence, is to extend its ties in all directions. In the US, it made minor acquisitions after its failed offer of $ 15 billion to buy the International Paper last year. In China, it is transferring some shopping operations to Shanghai to find more local suppliers and recently issued its first titles called Yuan. And last week, he acquired a participation in Kimberly-Clark’s global role paper in a $ 3.4 billion agreement that will increase Suzano’s presence in Europe.
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“We are agnostic when it comes to geography,” said CEO João Alberto Abreu in an interview on Thursday. “We evaluate and study, but there is no geography that we consider out of boundaries.”
Although Abreu acknowledges that the series of tariffs released by Donald Trump can undermine global growth, his attitude exemplifies as entrepreneurs and policy makers in the largest economy in Latin America to see the trade war.
Commodities power that exports from soy to orange juice and iron ore, Brazil is in a unique position to continue exploring both US and China markets, with President Luiz Inacio Lula da Silva stating that he does not want to choose one side.
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This feeling is shared by David Feffer, president of Suzano and grandson of the late Leon Feffer, an Ukrainian immigrant who founded the company in 1924. Although David succeeded his father Max as CEO in 2001, he decided to professionalize management two years later – an uncommon movement in dominant family corporate culture in Brazil.
Suzano’s strategy did not immediately conquer investors, who are focused on the fall in global cellulose prices, partly linked to the trade war. The results of the first quarter were below the analysts estimates, with smaller shipments than expected. But the shares rose more than 6% with the news of the agreement with Kimberly-Clark, reducing the accumulated losses in the year to 14%.
While US prices should rise due to tariffs, Suzano failed to increase overall prices as long as expected. Cellulose prices in the main market, China, even recently fell, said BTG Pactual analysts led by Leonardo Correa in a report last month. This weakening helped contain the performance of Suzano’s actions compared to the Ibovespa index, Brazil’s reference.
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Still, the company’s value creation potential is higher than the currently reflected in the stock price, according to XP Inc. analyst, Lucas Laghi. “In the world of commodities, this is still the action we like best,” he said.
The profit before interest, taxes, depreciation and amortization of Suzano exceeded 23.8 billion reais (US $ 4.2 billion) by 2024, an increase of more than 30% over the previous year. Analysts project 4% growth this year, even with the price of cellulose, and an increase of 16% by 2026.
Seventeen of the 18 analysts accompanied by Bloomberg Recommend the purchase of shares, and the target price consensual foresees 41% return in the next 12 months, the eleventh best among companies listed in Brazil.
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“We see no change in Suzano’s strategy,” said S&P Global Ratings analyst Luisa Vilhena. “And I don’t think there should be, given the size of the company and its ability to generate cash even with low prices of cellulose.”
Executives attribute Suzano’s failure to close an agreement with the International Paper to refusal to pay too much for the American company. They left this experience focused on defending their main market against competitors while seeking minor opportunities.
For Feffer, this became a three -word mantra: decentralizing, internationalizing and verticalizing. This is true for both China and the US.
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Suzano maintains strong commercial ties with Asian power and is focused on maintaining good relations with Chinese clients to defend their territory, while competitors such as the Arauco Y celulosa Chilean are planning to start new factories.
“There are people coming to set up factories in Brazil,” said Abreu. Suzano’s goal is to continue “with 30% market share and being a leader in pulp production costs.”
US buyers represent about 20% of Suzano’s pulp volumes. The loss of International Paper led the company to seek other operations in the country. She explored an agreement with Clearwater Paper Corp. And he considered buying assets from Rand-Whitney Group, a paper-controlled paper company and packaging. In the end, he acquired a factory in Arkansas and an extrusion unit in North Carolina of Pactiv Evergreen last July.
Diversifying is critical to pulp and paper companies, as demographic and economic trends weigh on demand in China, according to Rabobank analyst Andres Padilla. “You have to maintain this good opening with everyone not to depend on just one block,” he said. Brazilian players like Suzano “have the opportunity to keep channels open and strengthen the commercial ties that already exist.”
The company also expects to change the supply chain, convincing paper producers in North America and Europe to buy more from the cheaper wooden pulp it produces in Brazil. But it is no easy task, as many cardboard producers have their own cellulose production and do not depend on external suppliers.
Suzano’s advantage is that it has some of the lower cost factories in the world, which maintains its profitable operations even in low price periods. Soft wood fiber, produced mainly in the northern hemisphere, has higher production costs and is getting more expensive in relation to hard wood. This convinced some American producers to move from one product to another, especially in the Tissue paper segment, according to Patrick Cavanagh, economist at the commodity price agency Fastmarkets.
And Suzano considered this market change between fiber in its last business. “The opportunity to replace fiber is a synergy that only we have when evaluating certain assets,” said Abreu.
With the joint venture From Kimberly-Clark, for example, Suzano sees space to speed up the change to hard wood in Europe. Although factories need technological investment for this, the process can be accelerated after Suzano assumes control of assets.
At the center of Suzano’s strategy are their eucalyptus plantations. Commercial plantations are harvested every seven years and then replanted. About 1.2 million young trees are planted every day. By comparison, some high -cost cellulose producers in the northern hemisphere have less control over wood they use and depend on the purchase of chips or other sawmill waste.
“What effectively makes the production of advantageous cellulose in Brazil is forest technology,” said Marcello Collares, vice president for the development of forest products for Latin America at the market intelligence agency ResourceWise.
But the trade war can open other doors for Suzano as well. If Trump tensions persist, American pulp producers can avoid the Chinese market due to possible retaliatory tariffs imposed by Beijing, leaving more room for Suzano. And if tariffs prevent the role of Chinese packaging compete with American products, the new Brazilian company’s new factory in the US will be a right shot.
The acquisition of Kimberly-Clark assets will bring a temporary break in the search for US acquisitions. Although the company closely observed the reorganization of US companies in search of business that give it greater access to the local market, Abreu said the focus over the next two to three years will be to optimize his new assets.
Asked about the future of business in North America, the CEO said: “We have an operation there that does not have the scale we consider ideal, but we are not in a hurry.”
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