By Brazil Stock Guide — Suzano (B3: SUZB3; NYSE: SUZ), one of the world’s largest pulp producers, reported a net profit of R$2.08 billion ($385 million) in the third quarter of 2026, up 6% from a year earlier, supported by the consolidation of Arbex, its joint venture with Kimberly-Clark, and higher international pulp prices. Net revenue surged 36% to R$16.52 billion, while adjusted EBITDA rose 9% to R$5.67 billion.
Despite the growth, operating profitability weakened. Suzano’s adjusted EBITDA margin narrowed to 34% from 43% a year earlier, reflecting a shift in its business mix and rising production costs. The company also raised its full-year pulp production cost forecast on Thursday, November 5, from R$800 to approximately R$825 per metric ton.
The consolidation of Arbex, completed on July 1, was a major driver of revenue growth. Although Suzano owns 51% of the joint venture, it consolidates 100% of its financial statements. The consumer products division, which includes toilet paper and other tissue products, generated R$5.02 billion in revenue, a sevenfold increase from the third quarter of 2025. Arbex contributed R$694 million in adjusted EBITDA, helping lift the division’s total to R$803 million.
In Suzano’s core market pulp business, sales totaled 3.19 million metric tons, down 1% year over year, while average net selling prices in international markets rose 13% to $591 per ton. The division’s adjusted EBITDA increased 5% to R$4.81 billion. According to Suzano, China’s pulp market showed signs of recovery during the quarter, supported by declining inventories at Chinese ports and higher production costs for domestic manufacturers.
Performance was weaker in paper and packaging. Adjusted EBITDA in the segment fell 48% to R$277 million, weighed down by operational difficulties at the company’s Pine Bluff mill in the United States and higher logistics expenses. Sales volumes remained broadly unchanged at 374,000 metric tons.
Financial results also supported earnings. Suzano recorded net financial income of R$1.15 billion, compared with R$1.05 billion a year earlier. Derivatives generated a positive accounting result of R$2.5 billion, largely reflecting mark-to-market gains on financial hedging instruments. The net cash settlement of derivatives amounted to R$368 million during the quarter, highlighting the distinction between accounting gains and realized cash flows.
Debt Rises Following Arbex Acquisition
Suzano’s net debt reached $14.7 billion at the end of September, up 15% from the previous quarter. The increase primarily reflected a $1.3 billion payment for its stake in Arbex and the consolidation of approximately $900 million in existing net debt at the joint venture.
Net leverage, measured as net debt to adjusted EBITDA in U.S. dollars, increased to 3.7 times from 3.4 times in June. On a pro forma basis, incorporating Arbex’s adjusted EBITDA over the preceding 12 months, leverage stood at 3.4 times.
In a separate regulatory filing released alongside its quarterly earnings, Suzano said it expects to end 2026 with net debt below $14 billion, assuming a year-end exchange rate of R$5.40 per dollar.
The company maintained its previously announced targets of $11 billion in net debt and leverage below 2.5 times, which it expects to achieve during 2027 and 2028. However, those longer-term targets do not incorporate the impact of the Arbex acquisition.
Higher Oil Prices Push Up Cost Forecast
Suzano also revised its forecast for average cash pulp production costs in 2026, excluding scheduled maintenance shutdowns, from R$800 to R$825 per metric ton, an increase of approximately 3.1%.
The revision reflects the impact of the conflict in the Middle East on energy and input prices, as well as updated foreign exchange assumptions. Suzano raised its Brent crude oil assumption to $94 per barrel from $84 and increased its projected average exchange rate for the year to R$5.20 per dollar from R$5.07.
During the third quarter, cash pulp production costs excluding maintenance downtime reached R$825 per metric ton, up 3% from a year earlier but down 2% from the second quarter.
Operating cash generation totaled R$3.84 billion, an increase of 12% year over year. Adjusted free cash flow rose 25% to R$2.63 billion, while reported free cash flow turned negative at R$3.03 billion, reflecting cash outflows associated with the Arbex acquisition.
The results underscore Suzano’s growing geographic and product diversification, but also the higher leverage accompanying its international expansion. Recovering pulp prices and contributions from newly consolidated businesses are supporting operating earnings, while cost pressures, narrowing margins and increased debt remain key issues for investors to monitor in the coming quarters.
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