suzano papel e celulose s.a.ir.suzano.com.br/enu/6958/636217.pdf · suzano papel e celulose s.a....

Suzano Papel e Celulose S.A.

Unaudited Condensed Consolidated Interim Financial Information as of June 30, 2018

and independent auditor’s report.


Unaudited condensed consolidated interim financial information as of June 30, 2018

(In thousands of R$, unless otherwise stated)

Adjusted EBITDA¹ in 2Q18 of R$1,449/ton, leading the industry

São Paulo, August 9, 2018. Suzano Papel e Celulose (B3: SUZB3), one of the largest integrated pulp and paper producers in Latin America, announces today its consolidated results for the second quarter of 2018 (2Q18).

MAIN HIGHLIGHTS

• Operating Cash Generation2 and Adjusted EBITDA² set new records in the quarter: R$1.28 billion and R$1.57 billion, respectively.

• Strong performance in the pulp segment, supported by the effect from exchange variation: adjusted EBITDA1/ton of R$1,646/ton (+59.4% on 2Q17).

• Marginal increase in cash cost in LTM: R$593/ton, 0.8% higher than in LTM to 2Q17.

• Solid results and new increases in paper prices in both the domestic and international markets: adjusted EBITDA1/ton of R$892/ton (+25.8% on 2Q17).

• Truck drivers' strike: production loss of approximately 80,000 tons of market pulp and of approximately 25,000 tons of paper in 2Q18, which adversely affected sales.

• Investments: conclusion of the acquisition of around 9,500 hectares in rural areas and 1,200,000 m³ of wood in São Paulo state from Duratex S.A.

• Transaction with Fibria: authorization granted without restrictions by Federal Trade Commission (U.S. antitrust agency, case formally filed at CADE (Brazil) and SAMR (China) and pre-filing in European Union and Turkey, issuance of declaration of effectiveness by the Securities Exchange Commission of the United States of America.

• Financing of Fibria Transaction: 6th debentures issue (R$4.7 billion | US$1.3 billion) and reduction of financial commitment to US$4,4 billion.

Financial Data (R$ million) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Net Revenue 3,204 2,530 26.6% 2,999 6.8% 6,203 4,784 29.7%

Adjusted EBITDA¹ 1,573 1,157 36.0% 1,528 2.9% 3,101 2,004 54.7%

Adjusted EBITDA Margin¹ 49.1% 45.7% 3.4 p.p. 51.0% -1.9 p.p. 50.0% 41.9% 8.1 p.p.

Net Financial Result (3,970) (678) 485.6% (157) 2422.8% (4,127) (553) 646.6%

Net Income (1,849) 199 -1031.3% 813 -327.4% (1,036) 649 -259.7%

Operating Cash Generation² 1,279 910 40.5% 1,265 1.1% 2,543 1,532 66.0%

Net Debt /Adjusted EBITDA¹ (x) 1.7 x 2.7 x -1.0 x 1.7 x 0.0 x 1.7 x 2.7 x -1.0 x

Operational Data ('000 tons) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Sales 1,085 1,188 -8.7% 1,160 -6.4% 2,245 2,369 -5.2%

Pulp 802 917 -12.5% 876 -8.5% 1,678 1,832 -8.4%

Paper 284 272 4.3% 284 -0.2% 568 537 5.8%

Production 1,134 1,215 -6.7% 1,215 -6.7% 2,349 2,363 -0.6%

Pulp 821 931 -11.9% 920 -10.8% 1,741 1,805 -3.6%

Paper 313 283 10.5% 295 6.1% 608 558 9.1%

¹ Excludes non-recurring items. | ² Operating Cash Flow corresponds to Adjusted EBITDA less sustaining capex. | ³ Considers results of Consumer Goods Unit.




The consolidated interim financial statements were prepared in accordance with the standards of the Securities and Exchange Commission of Brazil (CVM) and the Accounting Pronouncements Committee (CPC) and comply with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standard Board (IASB). The operational and financial information is presented based on a consolidated basis and in Brazilian real (R$). Note that figures may present discrepancies due to rounding. Non-financial data, such as volume, quantity, average price and average quotes in Brazilian real and U.S. dollar, were not reviewed by our independent auditors.

PULP BUSINESS PERFORMANCE PULP SALES VOLUME AND REVENUE

Data from the World 20 Report of the Pulp and Paper Products Council (PPPC) show that, in 2Q18, global pulp shipments grew 3.3% on the same period last year. Meanwhile, global eucalyptus pulp shipments grew 3.4%. Suzano sold 801.8 thousand tons of market pulp in 2Q18, 8.5% less than in 1Q18 and 12.1% less than in 2Q17 due to downtime at Mucuri Unit (line 1) and the truck drivers’ strike. In 6M18, the industry’s pulp shipments amounted to 25.4 million tons, up 1.9% on the year-ago period, while eucalyptus shipments came to 10.8 million tons, increasing 4.5% on 6M17. Pulp sales came to 1.7 million tons in the first half of the year, down 8.4% on 6M17, reflecting the partial rebuilding of the Company’s inventories. The level of global pulp inventories reported by the PPPC ended June at 35 days.

The average net pulp price in USD in 2Q18 was US$745/ton, increasing US$14/ton (+1.9%) from 1Q18 and US$168/ton (+29.2%) from 2Q17. In 6M18, the price stood at US$737/ton, increasing US$195/ton (+36.0%) from 6M17. The higher net pulp price is mainly explained by the positive and solid fundamentals of the international pulp industry. The average net price in BRL in 2Q18 was R$2,688/ton, increasing 13.3% and 45.0% compared to 1Q18 and 2Q17, respectively, supported mainly by the higher list price for pulp and by the depreciation in the BRL against the USD. In 6M18, the net price stood at R$2,524/ton, increasing 46.6% from 6M17, reflecting the weaker BRL and the consecutive increases in the pulp list price in US dollar.

90 81 66 197 147827 795 736

1.635 1.531917 876 802

1.832 1.678

2Q17 1Q18 2Q18 6M17 6M18

Pulp Sales Volume ('000 ton)

Domestic Market Exports

139 177 154 290 3311.559 1.900 2.001 2.863

3.9011.6982.076 2.155

3.153

4.232

2Q17 1Q18 2Q18 6M17 6M18

Pulp Revenues (R$ million)


Europe37%

Asia40%

Brazil7%

North America

16%

South/Central America

0,4%

Pulp Sales Revenue (2Q18)

+3.8%

+34.2% +26.9%

-12.5%

-8.4%

-8.5%




PULP CASH COST

The consolidated cash cost of market pulp production in 2Q18 was R$630/ton excluding downtimes and R$683/ton including downtimes.

Consolidated cash cost of market pulp production in the last 12 months was R$593/ton excluding downtime (vs. R$589/ton in LTM 2Q17) and R$629/ton including downtime (vs. R$607/ton in LTM 2Q17).

Cash cost in 2Q18 rose by R$63/ton compared to 2Q17 (+11.0%), mainly reflecting the increases in input costs and fixed costs caused by the lower produced volume.

1 In line with market practices and for comparison purposes, the methodology for calculating cash cost was changed in 1Q18 and does not consider the depletion of the standing timber of third parties.

568 587 630 589 593

2Q17 1Q18 2Q18 LTM 2Q17 LTM 2Q18

Consolidated Pulp Cash Cost ex-maintence downtime (R$/ton)

277

(13)

264

182

14

196

129

4

133

589 593

LTM 2Q17Cash Cost

Δ Wood Δ Chemicals Δ Fixed Cost LTM 2Q18Cash Cost¹

Consolidated Pulp Cash Cost ex-maintenance (R$/ton)

Wood Chemicals Fixed Cost

261

4

265

178

46

223

129

13

142

568630

2Q17Cash Cost

Δ Wood Δ Chemicals Δ Fixed Cost 2Q18Cash Cost¹

Consolidated Pulp Cash Cost ex-maintenance (R$/ton)

Wood Chemicals Fixed Cost

+0.8% +7.4%

+11.0%

+R$63/ton

+R$5/ton




PULP SEGMENT EBITDA

Pulp Business 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q LTM 2Q18 LTM 2Q17 Δ Y-o-Y

Adjusted EBITDA (R$ '000) 1,319,798 946,576 39.4% 1,285,290 2.7% 4,672,289 2,731,478 71.1%

Sales Volume (ton) 801,751 916,529 -12.5% 876,037 -8.5% 3,460,733 3,545,829 -2.4%

Adjusted EBITDA (R$/ton) 1,646 1,033 59.4% 1,467 12.2% 1,350 770 75.3%

The performance of Adjusted EBITDA from pulp in the above periods reflects primarily the higher pulp list price and the effect from exchange variation in the period.

PULP OPERATING CASH GENERATION AND ROIC

The profitability of the pulp business was leveraged by the pulp price and by the effect from exchange variation in the period.

Pulp Business (R$ '000) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q LTM 2Q18 LTM 2Q17 Δ Y-o-Y

Adjusted EBITDA 1,319,798 946,576 39.4% 1,285,290 2.7% 4,672,289 2,731,478 71.1%

Sustaining Capex (246,419) (208,028) 18.5% (213,801) 15.3% (958,169) (829,675) 15.5%

Operating Cash Flow 1,073,378 738,549 45.3% 1,071,489 0.2% 3,714,120 1,901,802 95.3%

Cash Taxes2 (66,950) (4,175) 1503.4%

Monetization of ICMS 24,637 - n.a.

Capital Employed 18,246,021 17,782,371 2.6%

Asset 18,927,168 18,506,827 2.3%

Liabilities 681,147 724,456 -6.0%

ROIC1 (%) 20.1% 10.7% 9.5 p.p.

1 ROIC = (Operating Cash Generation – Cash taxes) / Capital Employed (assets – liabilities). | 2 Income and Social Contribution taxes.

947 1.285 1.320

2.731

4.672

55,7%61,9% 60,3%

46,4%

58,4%

-10,0%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

-500

500

1.500

2.500

3.500

4.500

5.500

2Q17 1Q18 2Q18 LTM 2Q17 LTM 2Q18

Adjusted EBITDA (R$ million) and Adjusted EBITDA Margin (%) dof Pulp

8061.223 1.339

5361.073

2Q17 1Q18 2Q18 LTM 2Q17 LTM 2Q18

Operational Cash Generation of Pulp per ton (R$/ton)

+9.5% +100.1%

+66.1%




PAPER BUSINESS PERFORMANCE PAPER SALES VOLUME AND REVENUE

According to the Forestry Industry Association (Ibá), domestic sales of Printing & Writing paper and Paperboard declined 1.3% in 2Q18 compared to the same period of 2017, while imports fell 13.3%. In 6M18, sales by local producers grew 0.5% from 6M17, while imports contracted 1.1%. Suzano’s paper sales amounted to 283.6 thousand tons in 2Q18. Due to truck drivers’ strike the sales volume was in line compared to 1Q18. Compared to 2Q17, sales advanced 4.3%, driven primarily by tissue paper sales volume and the incorporation of the volumes from Facepa. In the year to date, sales volume came to 567.7 thousand tons, advancing 5.8% on 6M17.

The average net paper price in the domestic market in 2Q18 stood at R$3,755/ton, representing increases of R$415/ton (12.4%) and R$593/ton (18.7%) compared to 1Q18 and 2Q17, respectively, in line with the upward trend in prices in the global market. In 6M18, the average net paper price in the domestic market stood at R$3,552/ton, up 12.0% on the year-ago period. In USD, the average net paper price in the export market in 2Q18 was US$989/ton, representing increases of US$44/ton (4.7%) and US$101/ton (11.4%) from 1Q18 and 2Q17, respectively. In BRL, the average net paper price in the export market in 2Q18 was R$3,567/ton, representing increases of 16.4% and 25.0% from 1Q18 and 2Q17, respectively, explained by the effect from exchange variation in the period. In 6M18, the average net paper price in the export market stood at US$965/ton, up 10.7% from 6M17.

180 189 196361 38592 95 87

176 183

272 284 284

537 568

2Q17 1Q18 2Q18 6M17 6M18

Paper Sales Volume ('000 ton)


570 630 7371.143 1.368262 292 311

488603

832 923 1.049

1.6311.971

2Q17 1Q18 2Q18 6M17 6M18

Paper Revenues (R$ million)


Others; 9%

Brazil; 70%

North America;

4%

South/ Central

America; 16%

Paper Sales Revenue (2Q18)

+13.7%

+26.1% +20.8%

+4.3%

+5.8%

-0.2%




PAPER EBITDA

Paper Business 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q LTM 2Q18 LTM 2Q17 Δ Y-o-Y

Adjusted EBITDA (R$ '000) 252,932 192,831 31.2% 242,993 4.1% 1,039,706 924,591 12.5%

Sales Volume (ton) 283,610 271,948 4.3% 284,041 -0.2% 1,211,521 1,163,156 4.2%

Adjusted EBITDA (R$/ton) 892 709 25.8% 855 4.2% 858 795 8.0%

The performance of Adjusted EBITDA from paper in 2Q18 compared to 2Q17 is explained by the price increases successfully implemented in the domestic and international markets. Note that the paper business is incorporating the results from the consumer goods business, which is still in the ramp-up phase.

PAPER OPERATING CASH FLOW AND ROIC

The profitability of the paper business benefitted from higher paper prices in the domestic and export markets, which were offset by the higher costs and expenses generated primarily by the consumer goods business, which is still in the ramp-up phase.

Paper Business (R$ '000) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q LTM 2Q18 LTM 2Q17 Δ Y-o-Y

Adjusted EBITDA 252,932 192,831 31.2% 242,993 4.1% 1,039,707 924,591 12.5%

Sustaining Capex (47,517) (38,361) 23.9% (49,818) -4.6% (227,287) (189,382) 20.0%

Operating Cash Flow 205,415 154,470 33.0% 193,176 6.3% 812,420 735,209 10.5%

Cash Taxes2 (8,138) (7,754) 4.9%



Asset 7,292,306 6,196,674 17.7%

Liabilities 771,362 588,190 31.1%

ROIC1 (%) 13.7% 13.0% 0.7 p.p.

1 ROIC = (Operating Cash Generation – Cash taxes) / Capital Employed (assets – liabilities). | 2 Income and Social Contribution taxes.

193 243 253

925 1.040

23,2% 26,3% 24,1% 25,9% 26,2%

-50,0%

-40,0%

-30,0%

-20,0%

-10,0%

0,0%

10,0%

20,0%

30,0%

40,0%

0

200

400

600

800

1.000

1.200

1.400

2Q17 1Q18 2Q18 LTM 2Q17 LTM 2Q18

Adjusted EBITDA (R$ million) and Adjusted EBITDA Margin (%) of Paper

568 680 724 632 671

2Q17 1Q18 2Q18 LTM 2Q17 LTM 2Q18

Operational Cash Generation of Paper per ton (R$/ton)

+6.5% + 6.1%

+ 27.5%




ECONOMIC AND FINANCIAL PERFORMANCE NET REVENUE

Suzano’s net revenue in 2Q18 amounted to R$3,203.8 million. Pulp and paper sales in the quarter amounted to 1,085.4 thousand tons, decreasing by 6.4% from 1Q18 and by 8.7% from 2Q17. In 6M18, net revenue came to R$6,202.7 million, with 2,245.4 thousand tons of paper and pulp sold.

Despite the lower volume sold in 2Q18, the performance of consolidated net revenue (6.8%) compared to 1Q18 is explained mainly by the effect from exchange variation in the period. Compared to 2Q17, net revenue growth was driven by the higher pulp price in USD (average FOEX in Europe in 2Q18 of US$1,044 vs. US$783 in 2Q17), by the higher paper price in USD and in BRL and by the effect from exchange variation. The net revenue growth in 6M18 compared to 6M17 reflects the weaker BRL and the higher pulp list price. PRODUCTION

Production ('000 tons) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Market Pulp 821 931 -11.9% 920 -10.8% 1,741 1,805 -3.6%

Paper 313 283 10.5% 295 6.1% 608 558 9.1%

Total 1,134 1,215 -6.7% 1,215 -6.7% 2,349 2,363 -0.6%

In 2Q18, Line 1 of the Mucuri Unit (Bahia) underwent scheduled maintenance downtime, which affected pulp and paper production volumes in relation to prior quarters. During the quarter, the Company registered a total production loss of approximately 80 thousand tons of market pulp and approximately 25 thousand tons of paper during the truck driver's strike, when mills were shut down or operating at reduced capacity. No downtimes are scheduled for the Company’s Units in 3Q18.

Unit 2017 2018 2019

1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19

Imperatriz (MA) no downtime

Mucuri - Line 1 (BA)

Mucuri - Line 2 (BA) no downtime

Suzano (SP) no downtime

Limeira (SP) no downtime

709 807 892 1.433 1.6981.821 2.192 2.312

3.3514.5042.530 2.999 3.204

4.784

6.203

2Q17 1Q18 2Q18 6M17 6M18

Net Revenue (R$ million)


Pulp67%

Printing & Writing

23%

Paperboard5%

Other Paper5%

Net Revenue Breakdown (2Q18)

+6.8%

+26.6% +29.7%




COST OF GOODS SOLD

Cost of goods sold (COGS) in 2Q18 amounted to R$1,678.6 million or R$1,546.6/ton. Compared to 2Q17 and 1Q18, COGS increased by 10.9% and 5.8% respectively, reflecting the lower sales volume in the period. In 6M18, COGS came to R$3,265 million, 6.0% higher than in 6M17, also due to the lower sales volume in the period.

COGS (R$ '000) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Pulp 980,974 920,630 6.6% 963,168 1.8% 1,944,142 1,894,359 2.6%

Paper 697,598 592,733 17.7% 622,758 12.0% 1,320,356 1,185,549 11.4%

Consolidated 1,678,574 1,513,364 10.9% 1,585,926 5.8% 3,264,500 3,079,908 6.0%

COGS (R$/ton) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Pulp 1,224 1,004 21.8% 1,099 11.3% 1,159 1,034 12.1%

Paper 2,460 2,180 12.9% 2,192 12.2% 2,326 2,209 5.3%

Consolidated 1,547 1,273 21.5% 1,367 13.1% 1,420 1,300 9.2%

OPERATING EXPENSES

Expenses (R$ '000) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Selling Expenses 150,305 94,418 59.2% 121,957 23.2% 272,262 195,042 39.6%

General and Administrative Expenses 203,667 120,691 68.8% 147,353 38.2% 351,020 232,288 51.1%

Total Expenses 353,972 215,109 64.6% 269,310 31.4% 623,282 427,330 45.9%

Total Expenses/Sales Volume (R$/ton) 326 181 80.2% 232 40.5% 278 180 53.8%

Total selling and administrative expenses stood at R$326/ton in 2Q18, representing increases of 80.2% in relation to 2Q17 and of 40.5% in relation to 1Q18. Compared to 2Q17, selling expenses increased by 59.2% or R$55.9 million, reflecting the additional expenses with structuring the consumer goods business of approximately R$31 million and the higher expenses with logistics in the domestic market due to hikes in freight costs after the truck drivers’ strike. Compared to 1Q18, the consumer goods business accounted for an increase of approximately R$22 million. The increases in general and administrative expenses compared to both 2Q17 (+68.8%) and 1Q18 (+38.2%) are explained by the higher expenses with profitability-based compensation due to higher stock prices (approximately R$50 million) and by the expenses with the consumer goods structure, especially after the incorporation of Facepa and the expenses with the Fibria transaction (approximately R$16 million). ADJUSTED EBITDA

Consolidated 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q LTM 2Q18 LTM 2Q17 Δ Y-o-Y

Adjusted EBITDA (R$ '000) 1,572,729 1,156,566 36.0% 1,528,283 2.9% 4,139,266 3,673,227 12.7%

EBITDA Margin (%) 49.1% 45.7% 3.4 p.p. 51.0% -1.9 p.p. 66.7% 76.8% -10.1 p.p.

Sales Volume (ton) 1,085,360 1,188,477 -8.7% 1,160,078 -6.4% 3,586,895 4,708,985 -23.8%

Adjusted EBITDA (R$/ton) 1,449 973 48.9% 1,317 10.0% 1,154 780 47.9%




The growth in Adjusted EBITDA in 2Q18 compared to the above periods was driven primarily by the higher pulp list price, the weaker BRL and the higher paper prices in the domestic market. FINANCIAL INCOME AND EXPENSES

Resultado Financeiro (R$ mil)

2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Financial Expenses (325,521) (278,630) 16.8% (234,273) 38.9% (559,794) (560,793) -0.2%

Interest on loans and financing (local currency)

(61,163) (105,834) -42.2% (59,458) 2.9% (120,621) (230,968) -47.8%

Interest on loans and financing (foreign currency)

(127,764) (122,192) 4.6% (115,868) 10.3% (243,632) (237,990) 2.4%

Capitalized interest1 232 2,046 -88.7% 304 -23.7% 536 3,519 -84.8%

Other financial expenses

(136,826) (52,649) 159.9% (59,251) 130.9% (196,077) (95,354) 105.6%

Financial Income 45,007 83,611 -46.2% 36,726 22.5% 81,733 182,286 -55.2%

Interest on financial investments

40,788 78,817 -48.2% 33,082 23.3% 73,870 170,517 -56.7%

Other financial income 4,219 4,794 -12.0% 3,644 15.8% 7,863 11,769 -33.2%

Monetary and Exchange Variations

(1,139,051) (348,746) 226.6% (28,406) 3909.9% (1,167,457) (177,905) 556.2%

Foreign exchange variations (Debt)

(1,471,701) (372,288) 295.3% (37,911) 3782.0% (1,509,612) (119,367) 1164.7%

Other foreign exchange variations

332,650 23,542 1313.0% 9,505 3399.7% 342,155 (58,538) -684.5%

Derivative income (loss), net2

(2,550,067) (134,152) 1800.9% 68,603 -3817.1% (2,481,464) 3,669 -67733.2%

NDF (1,144,478) 11,110 -10401.3% - n.a. (1,144,478) 11,054 -10453.5%

Zero-Cost Collars (825,852) (104,309) 691.7% 24,937 -3411.8% (800,915) (15,095) 5205.8%

Foreign-Currency Debt Hedge

(579,698) (40,047) 1347.5% 43,500 -1432.6% (536,198) 5,686 -9530.1%

Other3 (39) (906) -95.7% 166 -123.7% 127 2,024 -93.7%

Net Financial Result (3,969,632) (677,917) 485.6% (157,350) 2422.8% (4,126,982) (552,743) 646.6%

1 Capitalized interest due to construction in progress.

2 Variation in mark-to-market adjustment plus adjustments paid and received, considering the end-of-month exchange rate (R$/US$3.8558 on 6/30/2018).

3 Other includes LIBOR operations.

Financial expenses increased by 38.9% in 2Q18 compared to 1Q18, explained by the effects from exchange variation in the period and by the expenses with the commitment for financing facilities worth US$9.2 billion made available for the business combination with Fibria. The 16.8% increase compared to 2Q17 reflects the lower interest rates in Brazil and the financial expenses with said commitment. Financial income in 2Q18 compared to 1Q18 was adversely affected by the lower interest rates in Brazil. Inflation adjustment and exchange variation generated a loss of R$2,550 million in the quarter due to the effect from foreign exchange variation, with a negative accounting effect from the mark-to-market adjustments of the portion of liabilities denominated in foreign currency, with cash effects limited to maturities or amortizations of liabilities. The Company posted a net financial expense of R$3,969.6 million in 2Q18, compared to the net financial expense of R$157.4 million in 1Q18 and the net financial expense of R$677.9 million in 2Q17.




DERIVATIVE TRANSACTIONS

Suzano carries out derivatives transactions exclusively for hedging purposes. The Company’s currency exposure policy seeks to minimize the volatility of its cash generation and to impart greater flexibility to cash flow management. The policy currently stipulates that surplus dollars may be partially hedged (up to 75% of exchange variation exposure over the next 18 months) using plain vanilla instruments (Zero Cost Dollar and NDF) and matched with dollar inflows. Zero Cost Dollar transactions minimize the adverse effects from slight variations in exchange rates. The instrument protects an exchange variation range that is favorable to cash flow, within which the Company does not pay or receive the adjustment. In addition to protecting the Company in such scenarios, this characteristic makes it possible to capture higher benefits on export revenue in any scenarios of U.S. dollar appreciation. The Company constantly monitors the market and analyzes the attractiveness at any given time of fully or partially reversing the transaction. At June 30, 2018, the value of the principal of operations involving forward dollar sales through Zero Cost Collars (ZCC) was US$2,315 million, whose maturities are distributed from April 2018 to October 2019 and were contracted in a range from R$3.00 to R$4.58.The current scenario of volatility in the BRL/USD exchange rate makes this the most adequate strategy for protecting the Company's cash flow.

Cash Flow Hedge Maturity Avarege Strike

Put Avarege Strike

Call Notional (million)

Zero-Cost Collars 3Q18 3.12 3.96 USD 295







Total USD 2,315

The Company also uses currency and interest rate swaps to mitigate the effects from exchange and interest rate variations on the balance of its debt and on its cash flow. Contracts swapping different interest rates and inflation indexes may be entered into as a way to mitigate the mismatch between financial assets and liabilities. At June 30, 2018, the Company held US$815.3 million in swaps of CDI for a fixed rate in USD. In 2Q18, derivative transactions posted a loss of R$793 million.

Debt Hedge Maturity Receive Pay Notional (million)

Swap 4Q20

Brazilian Real CDI

US Dollar Fixed USD 815

Total USD 815

In addition to hedge operations for cash flow and debt, we carried out new hedge operations for the transaction with Fibria. All derivative instruments to hedge the transaction are plain vanilla, as approved by the Company’s Derivatives Policy. At June 30, 2018, the value of the principal of operations involving forward dollar sales through NDFs was US$3,500 million, with average forward rate of R$3.64, whose maturities are distributed from April 2019 to November 2019, as well as ZCCs, whose value of the principal was US$1,250 million, with maturities




distributed from May 2019 to October 2019 and contracted in a range from R$3.50 to R$4.16. At June 30, 2018, the Company held US$1,250 million in swaps of CDI for a fixed rate in USD.

Fibria’s Operation - Hedge Maturity Strike Range / Avarega Foward /

Index Notional (million)

Zero-Cost Collars 2Q19 3.50 – 4.02 USD 200



NDF 2Q19 3.80 USD 900

NDF 3Q19 3.60 USD 2.200

NDF 4Q19 3.54 USD 400

Swap 2Q26 Brazilian Real CDI - US Dollar Fixed USD 1,250

Total USD 6,050

TRANSACTION WITH FIBRIA

On March 15, 2018, the Company announced a transaction with Fibria worth R$29.0 billion (US$8.8 billion, at the exchange rate on the day) and informed that it already had credit facilities worth US$9.2 billion to cover the cash needs of the transaction, whose disbursement is subject, among other conditions, to the consummation of the Transaction. The guaranteed financing is divided into two tranches: the first (term loan) in the amount of US$2.3 billion with term of six years and the second (bridge loan) in the amount of US$6.9 billion with term of three years. In 2Q18, the Company carried out its 6th debentures issue (R$4.7 billion | US$1.25 billion) and, given the strong cash generation in the period and the guaranteed term loan (US$2.3 billion), as of June 30, 2018, the amount to be disbursed under the bridge loan was R$17.8 billion (US$4.6 billion).

Cash Flow2.315

Debt815

Fibria's Transaction

6.050

Derivatives Notional 06/30/2018(US$ million)

US$ 9,180(exchangfe rateR$3.5961/US$,

considering swaps)

Cash Flow Hedge-365

Debt Hedge-438

Fibria’s Operation -

Hedge-1.747

Results - 06/30/2018(R$ million)

(R$ 2,550)




¹ Cash tranche: each Fibria’s share will receive R$52.50, to be adjusted from 03/15/2018 until signing to closing. | ² Commitment: US$ 2,3 billion, exchange rate on 06/30/2018 (R$3.8558/US$).

NET INCOME (LOSS)

The Company posted a net loss of R$1,849.0 million in 2Q18, compared to the net income of R$813.1 million in 1Q18 and the net income of R$198.5 million in 2Q17. INDEBTEDNESS

On June 30, 2018, gross debt stood at R$18.0 billion (90.6% long-term maturities and 9.4% short-term maturities), with 55.6% denominated in foreign currency and 44.4% in local currency. The percentage of gross debt denominated in foreign currency, considering the adjustment for derivatives, was 96.3%. Net debt stood at R$9.9 billion (US$2.6 billion) on June 30, 2018, compared to R$9.3 billion (US$2.8 billion) on March 31, 2018.

Debt (R$ '000) 06/30/2018 06/30/2017 Δ Y-o-Y 03/31/2018 Δ Q-o-Q

Local Currency 7,979,130 4,110,856 94.1% 3,608,021 121.1%

Short Term 1,142,945 755,891 51.2% 636,178 79.7%

Long Term 6,836,184 3,354,965 103.8% 2,971,844 130.0%

Foreign Currency 9,983,341 9,531,570 4.7% 9,038,085 10.5%

Short Term 551,469 1,239,730 (55.5%) 796,796 (30.8%)

Long Term 9,431,872 8,291,840 13.7% 8,241,289 14.4%

Gross Debt 17,962,471 13,642,426 31.7% 12,646,106 42.0%

(-) Cash 8,027,522 3,630,769 121.1% 3,392,005 136.7%

Net Debt 9,934,949 10,011,657 (0.8%) 9,254,101 7.4%

Net Debt/Adjusted EBITDA1 (x) 1.7x 2.7x (1.0x) 1.7x 0.0x

1 Excludes nonrecurring items.

Suzano contracts debt in foreign currency as natural hedge, since net operating cash generation is denominated in foreign currency. This structural exposure allows it to contract export financing in USD to match financing payments with receivable flows from sales. Suzano actively and expressly demonstrates its commitment to deleverage sustainably and to adopt adequate and efficient structures and costs for its market positioning and operating and managerial capacity.




The ratio of net debt to Adjusted EBITDA in BRL stood at 1.7x on June 30, 2018, stable in relation to March 31, 2018. In USD, the ratio of net debt to Adjusted EBITDA was 1.5x on June 30, 2018, compared to 1.7x on March 31, 2018. The reduction in the ratio in USD is explained by the effect from exchange variation in the period.

In June 2018, the average cost of debt in USD was 4.6% p.a. (debt in BRL adjusted by the market swap curve). The average term of consolidated debt ended the quarter at 90 months (vs. 85 months in March 2018).

12.192

7.471 80 355

1.426

( 3.545 ) ( 17 )

17.962

Gross Debt onDez/17

Loans Addition fromacquisition ofsubsidiaries

InterestAccrual

ForeignExchangeVariation

Principal andInterestPayment

Others Gross Debt onJun/18

Gross Debt Evolution (R$ million)

1.233 372 4222.446

1.401

4.971

6.795

9191.799 137

64

4.802

8.028

630 1.291

2.222 2.582

1.465

9.773

Cash 6M18 2019 2020 2021 2022 2023 onward

Amortization Schedule (R$ million)

Foreign Currency Local Currency

10.012 9.283 9.484 9.254 9.935

3.026 2.930 2.867 2.784 2.577

2Q17 3Q17 4Q17 1Q18 2Q18

Net Debt(R$ and US$ million)

R$ US$

2,7 2,3 2,1 1,7 1,7

2,7 2,3 2,0 1,7 1,5

2Q17 3Q17 4Q17 1Q18 2Q18

Net Debt / Adjusted EBITDA in R$ and US$ (x)

R$ US$




INVESTMENTS

Capital expenditure amounted to R$1,282.0 million in the year to date, R$557.6 million of which was invested in industrial and forest maintenance. Expenditures on the Structural Competitiveness and Adjacent Businesses projects came to R$610.5 million, which primarily consisted of the acquisition of Facepa (R$267.9 million), the acquisition of land and forests from Duratex (R$150.3 million) and the Tissue (Maranhão and Bahia states) and Lignin projects. For 2018, capex is estimated at R$2.8 billion, of which R$1.2 billion corresponds to sustaining capex and R$1.6 billion to the Adjacent Businesses and Structural Competitiveness projects.

Capex (R$ '000) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Sustaining 293,937 246,388 19.3% 263,619 11.5% 557,555 471,871 18.2%

Industrial Maintenance 68,780 46,532 47.8% 54,779 25.6% 123,559 103,381 19.5%

Forestry Maintenance 225,156 199,856 12.7% 208,840 7.8% 433,996 368,490 17.8%

Structural Competitiveness and Adjacent Business

232,373 112,084 107.3% 378,169 -38.6% 610,541 234,782 160.0%

Other 47,148 29,570 59.4% 66,795 -29.4% 113,943 45,617 149.8%

Total 573,457 388,042 47.8% 708,582 -19.1% 1,282,040 752,270 70.4%

CASH FLOW AND ROIC

(R$ '000) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q LTM 2Q18 LTM 2Q17 Δ Y-o-Y

Adjusted EBITDA 1,572,729 1,156,566 36.0% 1,528,283 2.9% 5,711,995 3,673,228 55.5%

Sustaining Capex (293,937) (246,388) 19.3% (263,619) 11.5% (1,185,456) (1,019,057) 16.3%

Operating Cash Flow 1,278,792 910,178 40.5% 1,264,664 1.1% 4,526,539 2,654,171 70.5%

Suzano’s operating cash generation (Adjusted EBITDA less sustaining capex) amounted to R$1.3 billion in 2Q18 and R$4.5 billion in the last 12 months. The variations in the comparison periods are explained by the depreciation in the BRL against the USD, the higher pulp list price, the higher paper price in the international and domestic markets and the consolidation of Facepa’s results as from 2Q18. Losses in market pulp and paper production and sales volumes caused by the truck drivers’ strike adversely affected operational cash generation and ROIC.

Export financing; 20%

Bond; 31%

Debenture; 26%

Agribusiness Receivables

Certificates; 13%

Import financing; 5%

BNDES; 3%Others; 2%

Type Expousure on 06/30/2018

Libor; 24%

Fixed (US$); 31%

CDI; 41%

TJLP; 1%Fixed (R$); 2%

Basket of Currencies; 1%

Index Exposure on 06/30/2018




Consolidated ROIC stood at 18.4%. The 7.1 p.p. increase compared to the 12 months to 2Q17 is explained by the higher profitability of the pulp segment due to depreciation in the BRL against the USD, the higher pulp price and the successful implementation of paper price increases in the international and domestic markets. The consumer goods business unit (Tissue) adversely affected profitability, since it is still in the ramp-up phase.

Consolidated ROIC (R$ '000) LTM 2Q18 LTM 2Q17 Δ Y-o-Y

Operating Cash Flow 4,526,541 2,654,170 70.5%

Cash taxes² (75,088) (11,930) 529.4%



Asset 26,219,474 24,703,500 6.1%

Liabilities 1,452,510 1,312,646 10.7%

ROIC1 (%) 18.4% 11.3% 7.1 p.p.

1 ROIC = (Operating Cash Generation – Cash taxes) / Capital Employed (assets – liabilities).

² Income and Social Contribution taxes.

7661.090 1.178

564969

2Q17 1Q18 2Q18 LTM 2Q17 LTM 2Q18

Operational Cash Generation per ton (R$/ton)

+8.1% +71.9%

+53.8%




CAPITAL MARKETS On June 30, 2018, Suzano’s common stock (SUZB3) was quoted at R$44.97/share. The Company’s stock is listed on the Novo Mercado, the listing segment of the São Paulo Exchange (B3) with the highest corporate governance standards.

Source: Bloomberg.

Source: Bloomberg.

On June 30, 2018, the Company’s capital stock was represented by 1,105,826,145 common shares (SUZB3) traded on the B3, of which 12,042,004 were treasury shares. Suzano’s market capitalization was R$49.7 billion on June 30, 2018. In 2Q18, the free-float stood at 42.5% of the total capital.

Free-Float Distribution on 06/30/2018

0

50

100

150

200

250

300

350

400

Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18

Stock Performance

Ibovespa+16%

IBrX-50+16%

SUZB3+215%

59 62 71

137

211

12.296 9.840 12.034 15.717 17.561

-60.000

-50.000

-40.000

-30.000

-20.000

-10.000

0

10.000

20.000

0

50

100

150

200

250

300

2Q17 3Q17 4Q17 1Q18 2Q18

Liquidity

Avg. Daily Volume (R$ million) Number of Trades (Daily)

Local35%

Foreign65% Institutional Investors

96%

Individual Investors4%




Free-Float Distribution on 06/30/2018

* Latin America excluding Brazil.

FIXED INCOME

Unit Jun/17 Mar/18 Jun/18

Suzano 2021 - Price USD/k 105.9 105.3 104.1

Suzano 2021 - Yield % 4.0 3.9 4.3


Suzano 2026 - Yield % 5.3 5.0 5.4


Suzano 2047 - Yield % 6.9 6.0 6.8

Treasury 10 years % 2.3 2.7 2.9

RATING

Agency National Scale Global Scale Outlook

Fitch Ratings AAA BBB- Stable

Standard & Poor’s brAAA BBB- Stable

Moody’s Aaa.br Ba1 Stable




EVENTS EVENTS IN THE PERIOD

The Material Fact notices and the Notices to the Market mentioned below are available on the website of the Securities and Exchange Commission of Brazil (CVM) and on the Company’s IR website (www.suzano.com.br/ri). Conclusion of the acquisition of land and forests in the State of São Paulo On April 27, 2018, the Company informed its shareholders and the market that, complementing the Material Fact notice published on February 5, 2018, it had concluded the acquisition of approximately nine thousand five hundred hectares (9,500 ha) of rural areas and one million, two hundred thousand cubic meters (1,200,000 m³) of forests from Duratex. Truck drivers’ strike On May 24, 2018, the Company informed to its shareholders and the general market that the production and distribution of its products had been adversely affected by the truck drivers’ strike in Brazil. The Company emphasized it was taking all measures necessary to minimize any impacts from this situation. Shutdown of operations On May 28, 2018, pursuant to CVM Instruction 358, of January 3, 2002, as amended, and complementing the Notice to the Market disclosed on May 24, 2018, the Company informed its shareholders and the market that, despite adopting all measures to minimize the effects from the truck drivers' strike, Suzano had been forced to shut down its operations due to such event. Resignation of member of the Board of Directors On May 28, 2018, the Company informed its shareholders and the general market that Mr. Marco Antonio Bologna had tendered his resignation as a member of the Board of Directors and the Audit Committee of the Company. His letter of resignation was considered and accepted by Suzano’s Board of Directors. For the time being, the outgoing Director will not be replaced, with Suzano’s Board of Directors formed by eight (8) members, who were elected at the Annual Shareholders’ Meeting of the Company held on April 26, 2018. Amendment to the Calendar of Corporate Events On May 28, 2018, in response to Official Letter/CVM/SEP/nº02/2018 issued by the Securities and Exchange Commission of Brazil (CVM), dated February 28, 2018, the Company informed its shareholders and the general market that it had amended its Annual Calendar of Corporate Events 2018, to bring forward, to May 28, 2018, the date for the filing of its Reference Form, which previously was scheduled for May 30, 2018.

Authorization from U.S. antitrust authority On June 1, 2018, the Company informed its shareholders and the general market that it had received a notification from the Federal Trade Commission (FTC), the antitrust authority of the United States, of the early conclusion of the analysis of the transaction between Suzano and Fibria, which constitutes an authorization without restrictions for the transaction in the United States of America. Gradual resumption of operations On June 1, 2018, the Company informed its shareholders and the general market that, on May 31, 2018, it had started to gradually resume operations at all of its industrial plants, including the distribution and invoicing of its products.

Production Loss On June 7, 2018, the Company informed its shareholders and the general market that it had a total production loss of approximately 80 thousand tons of market pulp and approximately 25 thousand tons of paper during the truck driver's strike, when units were shut down or operating partially. 6th Debentures Issue On June 26, 2018, the Company informed its shareholders and the general market that, complementing the Material Fact notice published on March 16, 2018, its Board of Directors had approved, in connection with the

http://www.suzano.com.br/ri

http://ri.suzano.com.br/services/_pub/siteri-1/redirect.asp?grupo=6841&idioma=ptb&arquivo=615099.04.27_Comunicado20ao20Mercado_Fechamento20Duratex_PT.pdf&tipo=ipe&protocolo_atual=615099

http://ri.suzano.com.br/services/_pub/siteri-1/redirect.asp?grupo=6864&idioma=ptb&arquivo=625506.05.24_Comunicado20ao20Mercado_Greve20dos20Caminhoneiros_PT.pdf&tipo=ipe&protocolo_atual=625506

http://ri.suzano.com.br/services/_pub/siteri-1/redirect.asp?grupo=6867&idioma=ptb&arquivo=625783.pdf&tipo=ipe&protocolo_atual=625783

http://ri.suzano.com.br/services/_pub/siteri-1/redirect.asp?grupo=6873&idioma=ptb&arquivo=625880.05.28_Comunicado20ao20Mercado_RenFAncia20Conselheiro_PT.pdf&tipo=ipe&protocolo_atual=625880

http://ri.suzano.com.br/services/_pub/siteri-1/redirect.asp?grupo=6875&idioma=ptb&arquivo=625884.05.28_Comunicado20ao20Mercado_CalendE1rio_PT.pdf&tipo=ipe&protocolo_atual=625884






transaction to combine the shareholder bases of the Company and Fibria Celulose S.A. through a corporate reorganization as disclosed in such Material Fact notice, the 6th issue of debentures of the Company, in the amount of R$4,681,100,000.00, with a maturity of eight years, yield of 112.5% of the CDI rate and issue date of June 29, 2018. SUBSEQUENT EVENTS

The Material Fact notice mentioned below is available on the website of CVM and on the Company’s IR website (www.suzano.com.br/ri).

Acquisition of land and forests in the State of São Paulo On July 2, 2018, the Company informed its shareholders and the general market that exercised the option to acquire around twenty thousand (20,000) hectares of rural areas and five million, six hundred thousand cubic meters (5,600,000 m³) of Duratex’s forests, for R$749.4 million, adjusted in accordance with the Contract. Protocol and Justification of Merger On July 26, 2018, the Company informed its shareholders and the general market that the Board of Directors of Suzano, among other matters, approved the execution of the Merger Agreement (“Merger Agreement”) between Suzano, Fibria Celulose S.A. (“Fibria”), and Eucalipto Holding S.A. (“Holding”), which establishes the terms and conditions of the corporate restructuring that will enable the combination of the operations and shareholding bases of Suzano and Fibria, which is the object of the Commitment to Vote and Assumption of Obligations signed on March 15, 2018 and announced by the Company through a Material Fact notice on March 16, 2018 (“Operation”). Auction of Itaqui Port (State of MA) On July 27, 2018, the Company informed its shareholders and the general market that the bid submitted by it in connection with Auction 03/2018 conducted Brazil’s National Water Transport Agency (“ANTAQ”) received the best classification. Export Credit Note On July 31, 2018, the Company informed its shareholders and the general market that it obtained financing from Banco Safra S.A. through the issue of an Export Credit Note (“NCE”), in the total amount of seven hundred seventy million, six hundred thousand reais Reduction of Financial Commitment On July 31, 2018, the Company informed its shareholders and the general market that it approved, in connection with the transaction aimed at combining the operations and shareholder bases of the Company and Fibria Celulose S.A. (“Fibria”) through a corporate restructuring process, as per the terms disclosed in said Material Fact notice (“Operation”), the reduction from six billion, nine hundred million (US$ 6,900,000,000.00) to four billion, four hundred million (US$ 4,400,000,000.00) of the existing firm financial commitment with certain international financial institutions to finance the cash portion of the Operation, whose disbursement is subject, among other conditions, to the consummation of the Operation. Declaration of Effectiveness by the Securities Exchange Commission of the United States of America On August 9, 2018, the Company informed its shareholders and the general market that the declaration of effectiveness was issued by the Securities Exchange Commission of the United States of America (SEC) for the registration statement filed by Suzano with SEC for purposes of calling and holding and approval the Extraordinary Shareholders’ Meetings of Suzano and of Fibria, to be held at first call on September 13, 2018, as provided for in the Call Notices published on this date, of the proposed corporate reorganization for the combination of operations and shareholders bases of Suzano and of Fibria, which was the object of the Voting Agreement and Other Obligations entered into on March 15, 2018 disclosed by the Companies through Material Facts published on March 16, 2018, pursuant to the terms and conditions of the protocol and justification entered into by and between the managers of Suzano, Fibria and Eucalipto Holding S.A., approved by the Boards of Directors of Suzano and Fibria during the meetings held on July 26, 2018 and disclosed by the Companies on the same date.

http://www.suzano.com.br/ri


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http://ri.suzano.com.br/services/_pub/siteri-1/redirect.asp?grupo=6928&idioma=enu&arquivo=2018%2007%2027_Fato%20Relevante_Leilo%20Porto_EN.pdf&tipo=arquivo&protocolo_atual=

http://ri.suzano.com.br/services/_pub/siteri-1/redirect.asp?grupo=6932&idioma=enu&arquivo=2018%2007%2031_Fato%20Relevante_Commitment%20EN.pdf&tipo=arquivo&protocolo_atual=




APPENDICES APPENDIX 1 – Operating Data

Revenue breakdown (R$ '000) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Exports 2.312.191 1.821.048 27,0% 2.192.050 5,5% 4.504.241 3.350.956 34,4%

Pulp 2.001.072 1.558.835 28,4% 1.899.779 5,3% 3.900.851 2.862.978 36,3%

Paper 311.119 262.213 18,7% 292.271 6,4% 603.390 487.978 23,7%

Domestic Market 891.602 708.822 25,8% 806.809 10,5% 1.698.412 1.432.821 18,5%

Pulp 154.107 139.315 10,6% 176.547 -12,7% 330.654 289.611 14,2%

Paper 737.496 569.507 29,5% 630.262 17,0% 1.367.757 1.143.210 19,6%

Total Net Revenue 3.203.793 2.529.870 26,6% 2.998.859 6,8% 6.202.653 4.783.777 29,7%

Pulp 2.155.179 1.698.150 26,9% 2.076.326 3,8% 4.231.505 3.152.589 34,2%

Paper 1.048.615 831.720 26,1% 922.533 13,7% 1.971.147 1.631.188 20,8%

Sales volume (tons) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Exports 823.272 918.389 -10,4% 890.383 -7,5% 1.713.655 1.810.758 -5,4%

Pulp 736.056 826.529 -10,9% 795.030 -7,4% 1.531.086 1.634.664 -6,3%

Paper 87.215 91.861 -5,1% 95.353 -8,5% 182.568 176.094 3,7%

Paperboard 12.279 16.779 -26,8% 14.332 -14,3% 26.611 30.036 -11,4%

Printing & Writing 74.936 75.081 -0,2% 81.021 -7,5% 155.957 146.058 6,8%

Domestic Market 262.089 270.088 -3,0% 269.694 -2,8% 531.783 557.755 -4,7%

Pulp 65.694 90.000 -27,0% 81.007 -18,9% 146.701 197.254 -25,6%

Paper 196.394 180.088 9,1% 188.688 4,1% 385.082 360.500 6,8%

Paperboard 30.139 28.132 7,1% 30.021 0,4% 60.160 58.274 3,2%


Other paper1 22.798 7.148 218,9% 10.303 121,3% 33.101 13.359 147,8%

Total sales volume 1.085.360 1.188.477 -8,7% 1.160.078 -6,4% 2.245.438 2.368.512 -5,2%

Pulp 801.751 916.529 -12,5% 876.037 -8,5% 1.677.787 1.831.919 -8,4%

Paper 283.610 271.948 4,3% 284.041 -0,2% 567.651 536.594 5,8%

Paperboard 42.418 44.911 -5,6% 44.353 -4,4% 86.771 88.309 -1,7%


Other paper1 22.798 7.148 218,9% 10.303 121,3% 33.101 13.359 147,8%

Average net price (R$/ton) 2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Exports 2.809 1.983 41,6% 2.462 14,1% 2.628 1.851 42,0%

Pulp 2.719 1.886 44,1% 2.390 13,8% 2.548 1.751 45,5%

Paper 3.567 2.854 25,0% 3.065 16,4% 3.305 2.771 19,3%

Domestic Market 3.402 2.624 29,6% 2.992 13,7% 3.194 2.569 24,3%

Pulp 2.346 1.548 51,5% 2.179 7,6% 2.254 1.468 53,5%

Paper 3.755 3.162 18,7% 3.340 12,4% 3.552 3.171 12,0%

Total 2.952 2.129 38,7% 2.585 14,2% 2.762 2.020 36,8%

Pulp 2.688 1.853 45,1% 2.370 13,4% 2.522 1.721 46,6%

Paper 3.697 3.058 20,9% 3.248 13,8% 3.472 3.040 14,2%

1 Paper from other manufacturers sold by the distributor and tissue paper.




APPENDIX 2 – Consolidated Statement of Income

Consolidated Financial Statement (R$ '000)

2Q18 2Q17 Δ Y-o-Y 1Q18 Δ Q-o-Q 6M18 6M17 Δ Y-o-Y

Net Revenue 3.203.795 2.529.870 26,6% 2.998.859 6,8% 6.202.654 4.783.778 29,7%

Cost of Goods Sold (1.678.574) (1.513.364) 10,9% (1.585.926) 5,8% (3.264.500) (3.079.908) 6,0%

Gross Profit 1.525.221 1.016.506 50,0% 1.412.933 7,9% 2.938.154 1.703.870 72,4%

Gross Margin 47,6% 40,2% 7,4 p.p. 47,1% 0,5 p.p. 47,4% 35,6% 11,8 p.p.

Operating Expense/Income (354.713) (208.188) 70,4% (279.230) 27,0% (633.943) (426.865) 48,5%

Selling Expenses (150.305) (94.418) 59,2% (121.957) 23,2% (272.262) (195.042) 39,6%

General and Administrative Expenses

(203.667) (120.691) 68,8% (147.353) 38,2% (351.020) (232.288) 51,1%

Other Operating Income (Expenses)

(673) 2.917 -123,1% (9.867) -93,2% (10.540) (4.357) 141,9%

Equity Equivalence (68) 4.004 -101,7% (53) 28,3% (121) 4.822 -102,5%

EBIT 1.170.508 808.318 44,8% 1.133.703 3,2% 2.304.211 1.277.005 80,4%

Depreciation, Amortization & Depletion

374.932 332.615 12,7% 384.938 -2,6% 759.870 698.343 8,8%

EBITDA 1.545.440 1.140.933 35,5% 1.518.641 1,8% 3.064.081 1.975.348 55,1%

EBITDA Margin (%) 48,2% 45,1% 3,1 p.p. 50,6% -2,4 p.p. 49,4% 41,3% 8,1 p.p.

Adjusted EBITDA1 1.572.729 1.156.566 36,0% 1.528.283 2,9% 3.101.011 2.003.916 54,7%

Adjusted EBITDA Margin1 49,1% 45,7% 3,4 p.p. 51,0% -1,9 p.p. 50,0% 41,9% 8,1 p.p.

Net Financial Result (3.969.632) (677.917) 485,6% (157.350) 2422,8% (4.126.982) (552.743) 646,6%

Financial Expenses 45.007 83.611 -46,2% 36.726 22,5% 81.733 182.286 -55,2%

Financial Revenues (325.521) (278.630) 16,8% (234.273) 38,9% (559.794) (560.793) -0,2%

Exchange Rate Variation (1.139.051) (348.746) 226,6% (28.406) 3909,9% (1.167.457) (177.905) 556,2%

Net Proceeds Generated by Derivatives

(2.550.067) (134.152) 1800,9% 68.603 -3817,1% (2.481.464) 3.669 -67733,3%

Earnings Before Taxes (2.799.124) 130.401 -2246,6% 976.353 -386,7% (1.822.771) 724.262 -351,7%

Income and Social Contribution Taxes

950.153 68.143 1294,4% (163.226) -682,1% 786.927 (75.571) -1141,3%

Net Income (Loss) (1.848.971) 198.544 -1031,3% 813.127 -327,4% (1.035.844) 648.691 -259,7%

Net Margin -57,7% 7,8% -65,6 p.p. 27,1% -84,8 p.p. -16,7% 13,6% -30,3 p.p.

1 Excluding non-recurring items.




APPENDIX 3 – Consolidated Balance Sheet

Assets (R$ '000) 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017

Current Assets

Cash and Cash Equivalent 3.624.737 2.000.336 1.076.833 1.439.776 1.001.883

Financial Investments 4.402.785 1.391.669 1.631.505 2.410.173 2.628.886

Accounts Receivable 2.325.251 2.389.398 2.303.810 1.862.202 1.891.698

Inventories 1.477.406 1.321.436 1.207.961 1.408.791 1.336.768

Recoverable Taxes 365.551 320.038 306.140 423.523 415.056

Prepaid Expenses 132.027 182.593 37.016 52.317 51.823

Other Current Assets 451.108 278.188 233.610 398.580 339.164

Total Current Assets 12.778.865 7.883.658 6.796.875 7.995.362 7.665.278

Non-Current Assets

Other Accounts Receivable 1.022.984 816.295 770.792 793.692 784.042

Biological Assets 4.697.542 4.579.097 4.548.897 4.248.989 4.228.301

Investments 6.643 6.712 6.764 5.706 5.716

Property, Plant and Equipment 16.648.885 16.415.548 16.211.228 16.195.420 16.172.254

Intangible Assets 389.624 375.027 188.426 204.202 208.777

Total Non-Current Assets 22.765.678 22.192.679 21.726.107 21.448.009 21.399.090

Total Assets 35.544.543 30.076.337 28.522.982 29.443.371 29.064.368

Liabilities and Equity (R$ '000) 06/30/2018 03/31/2018 12/31/2017 09/30/2017 06/30/2017

Current Liabilities

Accounts Payable 646.969 600.564 610.476 641.537 614.587

Loans and Financing 1.694.415 1.432.974 2.115.067 1.785.368 1.995.621

Tax Liabilities 281.530 185.541 125.847 199.090 147.489

Salaries and Payroll Taxes 204.016 154.829 196.467 194.926 177.470

Other Payable 1.277.304 696.906 660.506 593.297 673.846

Total Current Liabilities 4.104.234 3.070.814 3.708.363 3.414.218 3.609.013

Non-Current Liabilities

Loans and Financing 16.268.057 11.213.131 10.076.789 11.347.543 11.646.806

Deferred Taxes 682.040 1.857.237 1.789.960 1.775.084 1.548.263

Provision 797.148 726.336 706.652 675.062 649.041

Other Liabilities 2.981.611 742.506 619.664 625.390 783.753

Total Non-Current Liabilities 20.728.856 14.539.210 13.193.065 14.423.079 14.627.863

Shareholders’ Equity

Share Capital 6.241.753 6.241.753 6.241.753 6.241.753 6.241.753

Capital Reserve 380.563 380.564 394.801 197.837 197.475

Treasury shares (218.265) (218.265) (241.088) (241.006) (241.006)

Profit Reserve 2.897.784 2.927.760 2.927.760 1.657.125 1.657.125

Equity Valuation Adjustment 2.395.646 2.295.927 2.298.328 2.273.885 2.308.364

Retained Earnings/Accumulated Losses 41.868 16.675 - 26.913 15.090

Retained Earnings/Losses of the period (1.036.430) 813.127 - 1.449.567 648.691

Total Equity 10.702.919 12.457.541 11.621.554 11.606.074 10.827.492

Non-controlling shareholders interests 8.534 8.772 - - -

Total Liabilities and Equity 35.544.543 30.076.337 28.522.982 29.443.371 29.064.368




APPENDIX 4 – Consolidated Statement of Cash Flow

Cash Flow Statement (R$ '000) 2Q18 2Q17 6M18 6M17

Cash flow from operating activities

Net income/(loss) for the period (1.848.971) 198.544 (1.035.844) 648.691

Depreciation, depletion and amortization 374.932 332.615 759.870 698.343

Income from sale of fixed and biological assets 4.573 (740) 5.079 (4.128)

Equity pick-up in subsidiaries and affiliates 68 (4.004) 121 (4.822)

Exchange and monetary variations, net 1.302.367 319.673 1.319.020 59.521

Interest expenses, net 168.368 196.353 329.057 376.873

Derivative gains, net 2.550.067 134.152 2.481.464 (3.669)

Expenses from deferred income and social contribution taxes (1.175.250) (124.958) (1.109.800) (10.833)

Interest on actuarial liabilities 8.617 9.506 17.234 19.012

Provision/ (reversal) for contingencies 27.727 8.868 27.960 17.092

Provision/ (reversal) for share-based payments 57.395 12.155 76.657 18.756

Addition to allowance for doubtful accounts, net (1.369) 5.105 4.923 8.609

Provision/ (reversal) for discounts - loyalty program 27.903 20.689 11.286 (15.876)

Provision/ (reversal) for inventory losses and write-offs 21.418 1.132 18.373 1.705

Provision for losses and write-off with fixed and biological assets 3.317 769 12.299 3.923

Fair value adjustment of biological assets (5.954) 25.268 (5.954) 25.268

Other provisions /(reversals) (7.248) (44.980) (14.631) (22.702)

Increase / (decrease) in accounts receivable 59.661 (280.014) 45.422 (289.674)

Decrease/ (increase) in inventories (177.958) (85.839) (266.244) (28.357)

Decrease/ (increase) in recoverable taxes (6.999) (22.942) (5.758) (26.683)

Increase / (decrease) in other current and non-current assets 39.370 232.822 (191.703) 330.593

Decrease / (increase) in trade accounts payable 2.576 117.796 (8.327) 85.902

Increase/(decrease) in other current and non-current liabilities 130.161 (264.870) 350.890 (196.128)

Taxes payable 402.361 433.560 402.361 433.560

Payment of interest (175.720) (261.169) (370.122) (507.637)

Payment of other taxes and contributions (84.171) (126.912) (238.652) (265.931)

Payment of income and social contribution taxes (53.035) (34.650) (64.080) (52.836)

Net cash from operating activities 1.644.206 797.929 2.550.901 1.298.572

Cash flow from investing activities

Financial investments (2.981.934) 482.326 (2.716.934) (430.037)

Cash from the acquisition of subsidiaries - - 21.436 -

Acquisition of subsidiaries (6.032) - (315.904) -

Additions to fixed assets, intangible assets and biological assets (749.620) (470.743) (1.098.623) (824.102)

Proceeds from asset divestment 16.822 1.038 31.865 9.547

Net cash (used in) / provided by investment activities (3.720.764) 12.621 (4.078.160) (1.244.592)

Cash flow from financing activities

Funding 5.015.119 76.591 7.491.201 1.085.960

Settlement of derivative operations (182.398) 65.379 (169.362) 162.333

Payment of loans (1.079.938) (585.756) (3.214.568) (1.528.449)

Payment of dividends (210.205) (370.739) (210.205) (370.739)

Dividends (acquisition) of own shares - - 8.514 8.514

Payment of debts with acquisition of assets (3.071) (50.446) (3.071) (50.446)

Net cash (used in) / provided by financing activities 3.539.507 (864.971) 3.902.509 (692.827)

Exchange variation on cash and cash equivalents 161.452 50.960 172.654 26.033

Increase (reduction) in cash and cash equivalents 1.624.401 (3.461) 2.547.904 (612.814)

Cash and cash equivalents at the beginning of the period 2.000.336 1.005.344 1.076.833 1.614.697

Cash and cash equivalents at the end of the period 3.624.737 1.001.883 3.624.737 1.001.883

Statement of the increase (reduction) in cash 1.624.401 (3.461) 2.547.904 (612.814)




APPENDIX 5 – EBITDA

(R$ '000, except where otherwise indicated) 2Q18 2Q17 6M18 6M17

Net Income (1.848.971) 198.544 (1.035.844) 648.691

Net Financial Result 3.969.632 677.917 4.126.982 552.743

Income and Social Contribution Taxes (950.153) (68.143) (786.927) 75.571

EBIT 1.170.508 808.318 2.304.211 1.277.005

Depreciation, Amortization and Depletion 374.932 332.615 759.870 698.343

EBITDA1 1.545.440 1.140.933 3.064.081 1.975.348

EBITDA Margin 48,2% 45,1% 49,4% 41,3%

Write-downs of inventories. 17.092 - 17.092 -

Expenses with Fibria's transaction 16.248 - 17.787 -

Equity equivalence 68 (4.004) 121 (4.822)

Adjustment of the fair value of biological assets (5.954) 25.268 (5.954) 25.268

Provision (Reversion) for losses with fixed assets, write-offs, taxes - - 7.366 1.157

Land conflict agreement - - - 11.779

Others (165) (5.631) 518 (4.814)

Adjusted EBITDA 1.572.729 1.156.566 3.101.011 2.003.916

Adjusted EBITDA Margin 49,1% 45,7% 50,0% 41,9%

1 The Company's EBITDA is calculated in accordance with CVM Instruction 527 of October 4, 2012.




APPENDIX 6 – Segmented Statement of Income

Financial Statement (R$ '000) 2Q18 2Q17

Pulp Paper Non

Segmented Total

Consolidated Pulp Paper

Non Segmented

Total Consolidated

Net Revenue 2.155.179 1.048.615 - 3.203.793 1.698.150 831.720 - 2.529.870

Cost of Goods Sold (980.974) (697.598) - (1.678.572) (920.630) (592.733) - (1.513.364)

Gross Profit 1.174.205 351.017 - 1.525.222 777.519 238.986 - 1.016.506

Gross Margin 54,5% 33,5% 47,6% 45,8% 28,7% 40,2%

Operating Expense/Income (122.660) (232.054) - (354.714) (78.443) (146.904) 17.159 (208.188)

Selling Expenses (55.256) (95.049) - (150.305) (34.731) (59.687) - (94.418)


(67.495) (136.173) - (203.668) (42.242) (78.449) - (120.691)

Other Operating Income (Expenses) 91 (764) - (673) (1.470) (12.772) 17.159 2.917

Equity Equivalence - (68) - (68) - 4.004 - 4.004

EBIT 1.051.545 118.962 - 1.170.508 699.076 92.082 17.159 808.318


263.145 111.788 - 374.932 240.626 91.990 - 332.615

EBITDA 1.314.690 230.818 - 1.545.508 939.702 180.068 17.159 1.136.929

EBITDA Margin (%) 61,0% 22,0% 48,2% 55,3% 21,7% 44,9%

Adjusted EBITDA1 1.319.798 252.932 - 1.572.729 946.576 192.831 17.159 1.156.566

Adjusted EBITDA Margin1 61,2% 24,1% 49,1% 55,7% 23,2% 45,7%

Net Financial Result - - (3.969.632) (3.969.632) - - (677.917) (677.917)

Earnings Before Taxes 1.051.545 118.962 (3.969.632) (2.799.124) 699.076 92.082 (660.758) 130.401


- - 950.153 950.153 - - 68.143 68.143

Net Income (Loss) 1.051.545 118.962 (3.019.479) (1.848.971) 699.076 92.082 (592.615) 198.544

Net Margin 48,8% 11,3% -57,7% 41,2% 11,1% #DIV/0! 7,8%






Financial Statement (R$ '000) 6M18 6M17

Pulp Paper Non

Segmented Total

Consolidated Pulp Paper

Non Segmented

Total Consolidated

Net Revenue 4.231.505 1.971.148 - 6.202.653 3.152.589 1.631.189 - 4.783.778

Cost of Goods Sold (1.944.142) (1.320.356) - (3.264.498) (1.894.358) (1.185.550) - (3.079.908)

Gross Profit 2.287.364 650.792 - 2.938.155 1.258.231 445.639 - 1.703.870

Gross Margin 54,1% 33,0% 47,4% 39,9% 27,3% 0,0% 35,6%

Operating Expense/Income (231.988) (401.956) - (633.944) (172.336) (271.688) 17.159 (426.865)

Selling Expenses (103.087) (169.175) - (272.262) (75.132) (119.911) - (195.042)


(118.191) (232.830) - (351.021) (81.301) (150.987) - (232.288)

Other Operating Income (Expenses) (10.710) 170 - (10.540) (15.903) (5.613) 17.159 (4.357)

Equity Equivalence - (121) - (121) - 4.822 - 4.822

EBIT 2.055.375 248.836 - 2.304.211 1.085.895 173.951 17.159 1.277.005


537.337 222.534 - 759.871 503.808 194.535 - 698.343

EBITDA 2.592.712 471.491 - 3.064.203 1.589.703 363.664 17.159 1.970.526

EBITDA Margin (%) 61,3% 23,9% 49,4% 50,4% 22,3% 0,0% 41,2%

Adjusted EBITDA1 2.605.088 495.925 - 3.101.013 1.608.264 378.492 17.159 2.003.915

Adjusted EBITDA Margin1 61,6% 25,2% 50,0% 51,0% 23,2% 0,0% 41,9%

Net Financial Result - - (4.126.982) (4.126.982) - - (552.743) (552.743)

Earnings Before Taxes 2.055.375 248.836 (4.126.982) (1.822.771) 1.085.895 173.951 (535.584) 724.262


- - 786.927 786.927 - - (75.571) (75.571)

Net Income (Loss) 2.055.375 248.836 (3.340.055) (1.035.844) 1.085.895 173.951 (611.155) 648.691

Net Margin 48,6% 12,6% -16,7% 34,4% 10,7% 0,0% 13,6%




Corporate Information Suzano Pulp and Paper, which reported net revenue of R$10.5 billion in 2017, is one of the largest vertically integrated producers of paper and eucalyptus pulp in Latin America, with annual production capacity of 3.6 million tons of market pulp and 1.2 million tons of paper. Suzano Pulp and Paper offers a broad range of pulp and paper products for the domestic and export markets: (i) eucalyptus pulp;(ii) hardwood fluff pulp;(iii) uncoated printing and writing paper;(iv) coated printing and writing paper;(v) paperboard;and (vi) tissue paper. Forward-looking Statements This release may contain forward-looking statements. Such statements are subject to known and unknown risks and uncertainties that could cause the expectations expressed not to materialize or to differ substantially from the expected results. These risks include changes in future demand for the Company’s products, changes in factors affecting domestic and international product prices, changes in the cost structure, changes in the seasonal patterns of markets, changes in prices charged by competitors, foreign exchange variations, changes in the political or economic situation of Brazil, and changes in emerging and international markets. The forward-looking statements were not reviewed by our independent auditors.




Balance Sheet

The accompanying notes are an integral part of this unaudited condensed consolidated interim financial information.

Assets Note 6/30/2018 12/31/2017 6/30/2018 12/31/2017

Restated

(Note 2.4)

Restated

(Note 2.4)

Current assets

Cash and cash equivalents 5 2,353,258 490,701 3,624,737 1,076,833

Financial investments 6 4,343,915 1,579,981 4,402,785 1,631,505

Trade accounts receivable 7 3,136,952 2,579,919 2,325,251 2,303,810

Inventories 8 1,116,006 902,015 1,477,406 1,183,567

Recoverable taxes 9 295,849 263,945 365,551 306,426

Derivative financial instruments 4 246,716 77,090 246,716 77,090

Advances to suppliers 10 95,433 53,124 96,726 86,499

Receivable from subsidiaries 11 - 2,369 - -

Other assets 135,167 109,084 233,646 119,610

11,723,296 6,058,228 12,772,818 6,785,340

Non-current assets held for sale 15 6,047 11,535 6,047 11,535

Total current assets 11,729,343 6,069,763 12,778,865 6,796,875

Non-current assets

Recoverable taxes 9 199,612 283,757 199,999 283,757

Deferred taxes 12 - - 3,037 2,606


Advances to suppliers 10 243,124 221,555 243,124 221,555

Judicial deposits 22.5 112,164 108,107 120,693 113,613

Receivables from land expropriation 17 61,938 60,975 61,938 60,975

Other assets 22,760 26,072 64,725 31,466

969,066 757,286 1,022,984 770,792

Biological assets 13 4,860,662 4,700,344 4,697,542 4,548,897

Investments 14 1,423,284 768,003 6,643 6,764

Property, plant and equipment 15 16,042,910 15,881,105 16,648,885 16,211,228

Intangible assets 16 101,715 113,334 389,624 188,426

22,428,571 21,462,786 21,742,694 20,955,315

Total non-current assets 23,397,637 22,220,072 22,765,678 21,726,107

Total assets 35,126,980 28,289,835 35,544,543 28,522,982

ConsolidatedParent Company




Balance Sheet


Liabilities Note 6/30/2018 12/31/2017 6/30/2018 12/31/2017

Restated

(Note 2.4)

Restated

(Note 2.4)

Current liabilities

Trade accounts payables 18 607,341 581,810 646,969 610,476

Loans and financing 19 1,529,247 1,329,753 1,694,415 2,115,067


Taxes payable 231,498 85,537 281,530 125,847

Payroll and charges 191,658 189,793 204,016 196,467

Payables to related parties 11 156,036 760,366 - -

Liabilities from asset acquisitions 25 250,555 76,781 257,264 83,155

Dividends payable 320 180,550 2,037 180,550

Advance from customers 30,292 86,409 64,508 92,545

Other liabilities 217,395 180,717 350,414 280,437

Total current liabilities 3,817,423 3,495,535 4,104,234 3,708,363

Non-current liabilities


Debentures 21 4,661,013 - 4,661,013 -

Derivative financial instruments 4 2,279,192 104,077 2,279,192 104,077

Payables to related parties 11 8,279,661 5,973,085 - -

Liabilities from asset acquisitions 25 548,669 460,467 587,608 502,831

Provision for contingencies 22 322,405 310,153 330,905 317,069

Employee benefits 23 356,604 351,263 356,604 351,263

Deferred taxes 12 607,505 1,711,254 682,040 1,789,960

Share-based compensation plans 24 108,312 36,539 109,639 38,320

Provision for investment losses in subsidairies 14 179,479 101,857 - -

Other liabilities 12,756 12,756 114,811 12,756

Total non-current liabilities 20,606,638 13,172,746 20,728,856 13,193,065

Total liabilities 24,424,061 16,668,281 24,833,090 16,901,428

Equity

Share capital 6,241,753 6,241,753 6,241,753 6,241,753

Capital reserves 380,564 394,801 380,564 394,801

Treasury shares (218,265) (241,088) (218,265) (241,088)

Profits reserve 2,897,783 2,927,760 2,897,783 2,927,760

Other reserves 2,395,646 2,298,328 2,395,646 2,298,328

Retained (loss) (994,562) - (994,562) -

Total equity 26 10,702,919 11,621,554 10,702,919 11,621,554

Non-controlling interest 8,534 -

Total equity and liabilities 35,126,980 28,289,835 35,544,543 28,522,982

ConsolidatedParent Company




Statement of Income for the Fiscal Period


Note 2Q18 2Q17 6M18 6M17

Net sales revenue 28 2,937,407 2,271,831 5,720,947 4,292,440

Cost of sales 30 (1,437,114) (1,318,931) (2,863,155) (2,707,771)

Gross profit 1,500,293 952,900 2,857,792 1,584,669

Operating income (expenses)

Selling expenses 30 (254,102) (214,276) (490,126) (422,944)

General and administrative expenses 30 (177,113) (109,277) (312,848) (212,916)

Equity in earnings of associates 14 (39,887) 163,438 82,515 290,339

Other operating income (expenses), net 30 (5,384) (2,146) (15,995) 2,652

Operating profit before net financial income (expenses) 1,023,807 790,639 2,121,338 1,241,800

Net financial income (expenses) 27

Financial income 38,952 81,331 71,146 178,488

Financial expenses (3,869,574) (743,845) (4,022,220) (701,347)

Net income (loss) before taxes (2,806,815) 128,125 (1,829,736) 718,941

Income taxes 12

Current (217,991) (54,539) (312,538) (81,083)

Deferred 1,175,249 124,958 1,105,844 10,833

Net income (loss) for the period (1,849,557) 198,544 (1,036,430) 648,691

Basic earnings (loss) per share 26.5

Basic Common (1.69097) 0.18182 (0.94807) 0.59436

Diluted Common (1.69097) 0.18162 (0.94807) 0.59371

Parent Company

Note 2Q18 2Q17 6M18 6M17

Net sales revenue 28 3,203,795 2,529,870 6,202,654 4,783,778

Cost of sales 30 (1,678,574) (1,513,364) (3,264,500) (3,079,908)

Gross profit 1,525,221 1,016,506 2,938,154 1,703,870

Operating income (expenses)

Selling expenses 30 (150,305) (94,418) (272,262) (195,042)

General and administrative expenses 30 (203,667) (120,691) (351,020) (232,288)

Equity in earnings of associates 14 (68) 4,004 (121) 4,822

Other operating income (expenses), net 30 (673) 2,917 (10,540) (4,357)

Operating profit before net financial income (expenses) 1,170,508 808,318 2,304,211 1,277,005

Net financial income (expenses) 27




Income taxes 12

Current (225,096) (56,815) (322,872) (86,404)

Deferred 1,175,249 124,958 1,109,799 10,833


Net income (loss) for the period attributable to controlling shareholders (1,849,557) 198,544 (1,036,430) 648,691

Net income (loss) for the period attributable to non-controlling shareholders 586 - 586 -

Basic earnings (loss) per share 26.5

Basic Common (1.69097) 0.18182 (0.94807) 0.59436

Diluted Common (1.69097) 0.18162 (0.94807) 0.59371

Consolidated




Statement of Comprehensive Income


Note 2Q18 2Q17 6M18 6M17


124,912 27,222 139,186 25,994

14 124,912 27,222 139,186 25,994

Total comprehensive income (loss) (1,724,645) 225,766 (897,244) 674,685

Other comprehensive income (loss)

Exchange variation on conversion of financial statements and on foreign investments

Parent Company

Items that may be subsequently reclassified to profit or loss

Note 2Q18 2Q17 6M18 6M17


124,912 27,222 139,186 25,994

14 124,912 27,222 139,186 25,994

Total comprehensive income (loss) (1,724,059) 225,766 (896,658) 674,685

Result of the period attributable to controlling shareholders (1,724,645) 225,766 (897,244) 674,685

Result of the period attributable to non-controlling shareholders 586 586

Other comprehensive income (loss)

Exchange variation on conversion of financial statements and on foreign investments

Consolidated

Items that may be subsequently reclassified to profit or loss

Suzano Papel e Celulose S.A. Unaudited condensed consolidated interim financial information as of June 30, 2018


Statement of Changes in Equity


NoteShare

Capital

Tax

incentives

Stock

options

granted

Share

issuance

costs

Treasury

shares

Legal

reserve

Reserve for

capital

increase

Special

statutory

reserve

Other reservesRetained

earningsTotal

Non-

controlling

interest

Total equity

Balances on December 31, 2016 6,241,753 199,402 19,754 (15,442) (273,665) 316,526 1,223,960 116,639 2,314,567 - 10,143,494 - 10,143,494

Total comprehensive income (loss)

Net income for the period - - - - - - - - - 648,691 648,691 - 648,691

Exchange variation on conversion of financial statements of foreign subsidiaries - - - - - - - - 25,994 - 25,994 - 25,994

Equity transactions with shareholders:

Stock options granted - - 799 - - - - - - - 799 - 799

Sale of treasury shares to meet share-based compensation plans - - - - 8,514 - - - - - 8,514 - 8,514

Internal changes in equity:

Partial realization of adjustment of deemed cost of assets, net of deferred taxes - - - - - - - - (32,197) 32,197 - - -

Cancelation of treasury 26.3 - - - - 17,107 - - - - (17,107) - - -

Issue of treasury shares to employees - - (7,038) - 7,038 - - - - - - - -

Balances on June 30, 2017 6,241,753 199,402 13,515 (15,442) (241,006) 316,526 1,223,960 116,639 2,308,364 663,781 10,827,492 - 10,827,492

Balances on December 31, 2017 26 6,241,753 396,006 14,237 (15,442) (241,088) 406,898 2,286,199 234,663 2,298,328 - 11,621,554 - 11,621,554

Total comprehensive income (loss)

Net income (loss) for the period - - - - - - - - - (1,036,430) (1,036,430) 586 (1,035,844)

Exchange variation on conversion of financial statements of foreign subsidiaries - - - - - - - - 139,186 - 139,186 - 139,186

Equity transactions with shareholders:

Stock options granted - - 72 - - - - - - - 72 - 72

Sale of treasury shares to meet share-based compensation plan - - - - 8,514 - - - - - 8,514 - 8,514

Initial non-controlling interest - - - - - - - - - - - 7,948 7,948

Internal changes in equity:

Partial realization of adjustment of deemed cost of assets, net of deferred taxes - - - - - - - - (41,868) 41,868 - - -

Issue of treasury shares to employees - - (14,309) - 14,309 - - - - - - - -

Dividends - - - - - - (29,977) - - - (29,977) - (29,977)

Balances on June 30, 2018 26 6,241,753 396,006 - (15,442) (218,265) 406,898 2,256,222 234,663 2,395,646 (994,562) 10,702,919 8,534 10,711,453

Capital reserves Profits reserve




Statement of Cash Flows


6/30/2018 6/30/2017 6/30/2018 6/30/2017

Cash and cash equivalents from operating activities


3,904,282 897,612 3,932,959 1,167,072

Depreciation, depletion and amortization 750,340 693,171 759,870 698,343

Income (loss) from sale of property, plant and equipment and biological

assets30 5,079 (4,128) 5,079 (4,128)

Equity in earnings (loss) of unconsolidated companies 14 (82,515) (290,339) 121 (4,822)

Exchange and monetary variations, net 1,390,127 81,890 1,319,020 59,521

Interest expenses, net 329,766 369,558 329,057 376,873

Derivative gains (losses), net 27 2,481,464 (794) 2,481,464 (3,669)

Fair value of biological assets 13 (5,954) 25,268 (5,954) 25,268

Deferred taxes 12 (1,105,844) (10,833) (1,109,799) (10,833)

Interest on employee benefits 23 17,234 19,012 17,234 19,012

Provision for contingencies 22 26,541 18,725 27,960 17,092

Share-based compensation plans 24 75,358 18,756 76,657 18,756

Allowance for doubtful accounts, net 7 7,134 7,069 4,923 8,609

Reversal of/(addition to) provision for discounts 33 (1,267) 11,286 (15,876)

Provision for (reversal of) inventory losses and write-offs 8 18,373 1,705 18,373 1,705

Provision for losses (impairment) and write-off with fixed and biological

assets30 12,299 1,077 12,299 3,923

Other provisions (15,153) (31,258) (14,631) (22,702)

Related parties (515,286) 388,862 - -

Trade accounts receivables 93,523 80,565 45,422 (289,674)

Inventories (208,952) (24,350) (266,244) (28,357)

Recoverable taxes 5,306 (21,704) (5,758) (26,683)

Other current and non-current assets (102,237) (66,892) (191,703) 330,593

Trade accounts payables 21,894 14,518 (8,327) 85,902

Taxes payable 386,192 403,227 402,361 433,560

Other current and non-current liabilities 197,101 (225,173) 350,890 (196,128)

(122,459) 549,053 326,641 309,213

Payment of interest (352,161) (449,217) (370,122) (507,637)

Other taxes and contributions paid (227,309) (246,978) (238,652) (265,931)

Income taxes paid (58,058) (48,305) (64,080) (52,836)

2,107,865 1,350,856 2,550,902 1,298,572

Cash from acquisition of subsidiaries - - 21,436 -

Additions to property, plant and equipment 15 (602,961) (374,657) (607,366) (375,572)

Additions to intangible assets (57) (2,564) (57) (2,564)

Additions to biological assets 13 (502,874) (457,295) (491,201) (445,966)

Proceeds from sale of assets 31,865 9,547 31,865 9,547

Additions (reduction) in financial investments, net (2,711,319) (434,396) (2,716,934) (430,037)

Acquisition of subsidiaries (315,904) - (315,904) -

(4,101,250) (1,259,365) (4,078,161) (1,244,592)

Proceeds from loans and financing 19 4,767,089 93,500 7,491,201 1,085,960

Payment of derivative transactions 4 (169,362) 143,878 (169,362) 162,333

Payment of loans and financings 19 (1,032,409) (1,430,856) (3,214,568) (1,528,449)

Payment of dividends (210,205) (370,739) (210,205) (370,739)

Sale of treasury shares to meet stock-based compesation plan 8,514 8,514 8,514 8,514

Liabilities for asset acquisitions - - (3,071) (50,446)

Proceeds from loans from related parties 492,315 879,011 - -

3,855,942 (676,692) 3,902,509 (692,827)

Exchange variation on cash and cash equivalents - - 172,654 26,033

Increase (reduction) in cash and cash equivalents 1,862,557 (585,201) 2,547,904 (612,814)

Cash and cash equivalents at the beginning of the period 5 490,701 841,056 1,076,833 1,614,697

Cash and cash equivalents at the end of the period 5 2,353,258 255,855 3,624,737 1,001,883

Statement of the increase (reduction) in cash and cash equivalents 1,862,557 (585,201) 2,547,904 (612,814)

Net cash provided by (used in) financing activities

Parent Company ConsolidatedNote

Increase (decrease) in liabilities

Cash provided by (used in) operating activities

Cash provided by (used in) investing activities

Cash provided by (used in) financing activities

Adjustment to reconcile net income (loss) to cash and cash

equivalents from operating activities

Decrease (increase) in assets

Net cash provided by operating activities

Net cash used in operating activities




Statement of Value Added


6/30/2018 6/30/2017 6/30/2018 6/30/2017

Income

Sale of goods, products and services 28 6,270,399 4,800,576 6,758,317 5,297,197

Other income (expenses), net 53,111 15,683 53,222 8,674

Income from construction of own assets 506,094 314,279 506,094 314,279

Allowance for estimated losses with doubtful accounts, net 7 (7,134) (7,069) (4,923) (8,609)

6,822,470 5,123,469 7,312,710 5,611,541

Input acquired from third parties

Cost of products and goods sold and services rendered (2,111,521) (2,096,772) (2,131,799) (2,096,772)

Supplies, electricity, outsourced services and others (1,027,859) (732,815) (1,062,905) (911,389)

(3,139,380) (2,829,587) (3,194,704) (3,008,161)

Gross added value 3,683,090 2,293,882 4,118,006 2,603,380

Depreciation, amortization and depletion (750,340) (693,171) (759,870) (698,343)

Net added value produced by the Company 2,932,750 1,600,711 3,358,136 1,905,037

Added value received through transfers

Equity in the earnings of unconsolidated companies 14 82,515 290,339 (121) 4,822


790,107 702,818 774,590 247,535

Distribution of value added 3,722,857 2,303,529 4,132,726 2,152,572

Personnel 622,729 507,998 673,192 517,267

Direct compensation 508,414 407,552 545,392 415,455

Benefits 92,101 80,352 96,871 81,718

F.G.T.S. (Government Severance Indemnity Fund for Employees) 22,214 20,094 30,929 20,094

Taxes, fees and contributions (573,705) 175,917 (461,020) 154,704

Federal (646,870) 202,244 (609,500) 194,660

State 70,316 (29,162) 145,631 (42,665)

Municipal 2,849 2,835 2,849 2,709

Value distributed to providers of capital 4,710,263 970,923 4,956,398 831,910

Interest 4,658,667 935,338 4,901,694 795,456

Rentals 51,596 35,585 54,704 36,454

Value distributed to shareholders (1,036,430) 648,691 (1,035,844) 648,691

Retained earnings (losses) in the period (1,036,430) 648,691 (1,035,844) 648,691

3,722,857 2,303,529 4,132,726 2,152,572 Distribution of value added

NoteParent Company Consolidated


Notes to the unaudited condensed consolidated interim financial information as of June 30, 2018


1 Company Information Suzano Papel e Celulose S.A., hereinafter referred to as the “Suzano”, together with its subsidiaries hereinafter referred to as “Company”, with registered office in the city of Salvador, state of Bahia, Brazil, is a corporation whose shares (SUZB3) are traded on B3 S.A. – Brasil, Bolsa, Balcão (“B3”). Suzano has five (5) industrial units in Brazil: one each in Bahia and Maranhão and three in São Paulo. These industrial units produce hardwood pulp from eucalyptus, paper (coated paper, paperboard, uncoated paper and cut size paper) and jumbo rolls of sanitary paper (consumer goods - tissue) to serve the domestic and international markets, in addition to generating energy for the Company’s consumption and selling surplus energy to third parties. Pulp, paper and consumer gods are sold in the international market directly by Suzano, as well as through its subsidiaries in Argentina, the United States and Switzerland and its sales offices in China and England. The Company's corporate purpose also includes the commercial operation of eucalyptus forest for its own use and for sale to third parties, the operation of port terminals, and the holding of interest, as partner or shareholder, in any other company or project. The Company is controlled by Suzano Holding S.A., through a Voting Agreement whereby it holds 50.04% of the common shares of its share capital. The issue of this unaudited condensed consolidated interim financial information was approved by the Company’s Board of Directors on August 9, 2018.

1.1 Major events in the six-month period ended June 30, 2018

a) Operational events

i) Issue of Debentures On June 29, 2018, the Company issued R$4,681,100 in non-convertible debentures of the 6th issue, in a single series, maturing in June 2026 with interest rate of 112.50% of the Interbank Deposit Certificate (“CDI”) rate. The net proceeds will be fully used to pay the cash installment for the acquisition of all common shares of Fibria (Note 1.1.b) i)). For the entire volume object of the issue, the Company contracted the respective hedge at a cost of 5.74% p.a. in U.S. dollars. ii) Truck drivers' strike In May 2018, the general strike of truck drivers across Brazil interrupted the transportation of goods and products throughout the country for a few days, resulting in shortage of fuels and other products, and causing a temporary suspension of production in most industries. Despite the efforts to minimize the adverse impact of the strike, the Company’s production operations were suspended for a few days, resulting in the production loss of approximately 80,000 tons of pulp and approximately 25,000 tons of paper. As of June 1, 2018, Suzano’s industrial operations were gradually resumed.




iii) Acquisition of land and forests in the state of São Paulo

On February 5, 2018, Suzano entered into an Agreement for the Purchase of Forestry Assets, Purchase of Rural Properties, Purchase Option and Other Covenants, with Conditions Precedent, with Duratex S.A. (“Duratex”), through its affiliates, under which: (i) it acquired around nine thousand and five hundred (9,500) hectares of rural land and one million and two hundred thousand cubic meters (1,200,000 m³) of forests, which reflects the potential of production of existing and already implemented forests in the areas acquired, in the central region of the state of São Paulo, for R$308.1 million; and (ii) it acquired an option to purchase approximately twenty thousand (20,000) hectares of rural properties in the same region and five million and six hundred thousand (5,600,000) cubic meters of forests, which reflects the potential of production of existing and already implemented forests in the properties subject-matter of the portion, for the price of R$749.4 million, which option was exercised by Suzano on July 2, 2018, as mentioned in Note 32 (i). Financial settlement took place as follows: 1st tranche: (i) R$150,300 on the closing date of the contract; (i) R$7,500 given in payment on the closing date of the contract; and (iii) R$150,300 to be paid by December 20, 2018, restated at the Broad Consumer Price Index (“IPCA”), totaling R$308,100. 2nd tranche: (i) R$347,700 on the closing date of the contract; and (iii) R$347,700 to be paid by July 2, 2019, restated at the IPCA index, totaling R$749,400. On April 4, 2018, Brazil's antitrust authority CADE approved the acquisition of land and forests in the state of São Paulo from Duratex without restrictions. iv) Export prepayment facility On February 8, 2018, the Company contracted, through its wholly owned subsidiary Suzano Pulp and Paper Europe S.A. (“Suzano Europe”), an export prepayment facility, structured in a syndicated form, amounting to US$750 million, with final maturity of 5 years and grace period of 3 years, which has Suzano and Suzano Trading Ltd. (“Suzano Trading”), another subsidiary of Suzano, as guarantors. The proceeds will be used to settle the export prepayment transaction contracted on May 14, 2015, in the amount of US$600 million and to finance export operations. The new operation reduces borrowing cost in U.S. dollar, extending the average debt term and eliminates financial covenants. b) Corporate events i) Voting Commitment and assumption of obligations On March 15, 2018, Suzano Holding S.A., jointly with other controlling shareholders of the Company (collectively, the “Controlling Shareholders of the Company”), entered into with the controlling shareholders of Fibria Celulose S.A. (“Fibria” and, jointly with Suzano, the “Companies”), Votorantim S.A. and BNDES Participações S.A. – BNDESPAR




(“BNDESPAR”) (collectively the “Controlling Shareholders of Fibria”), with Suzano as intervening consenting party, a Commitment to Vote and Assumption of Obligations, whereby the Controlling Shareholders of the Company and the Controlling Shareholders of Fibria agreed to exercise their voting rights to combine the operations and shareholding base of the Company and of Fibria, through corporate restructuring. A corporate restructuring will be submitted to the shareholders of the Companies, which will result in the following: a) the ownership, by Suzano, of all the shares issued by Fibria; and (b) in the receipt by the shareholders of Fibria, for each common share issued by Fibria, of (i) fifty-two reais and fifty centavos (R$52.50), restated at the variation of the CDI rate from March 15, 2018 to the effective payment date, to be paid in a single installment on the date of consummation of the operation; and (ii) 0.4611 common shares of Suzano, to be delivered on the date of consummation of the operation. Shareholders of Fibria holding American Depositary Shares (“ADS”) will be entitled to receive Suzano ADS, observing the same exchange ratio. To do so, Suzano will adopt measures to (i) register the operation (or its exemption, as applicable) with the U.S. Securities and Exchange Commission; and (ii) list the ADSs of Suzano in the same listing segment with the New York Stock Exchange where Fibria’s ADS are currently listed. Once the operation is consummated, the shares and ADSs issued by Fibria will no longer be traded on B3 S.A. and the New York Stock Exchange, respectively. In accordance with the Voting Commitment, if any restrictions imposed by antitrust authorities in Brazil and/or other countries are too burdensome, Suzano may choose not to consummate the operation, upon payment to Fibria of a break-up fee equivalent to R$750 million. The break-up fee may entail certain other conditions of non-consummation of the operation, as expressly envisaged in the Voting Commitment. In connection with the transaction and with its effectiveness subject to its consummation, on March 15, 2018, the Controlling Shareholders of the Company entered into an Agreement for Voting and Other Covenants with BNDES (“BNDESPAR Voting Agreement”), establishing certain governance commitments, financial and environmental policies of the Company, and limiting the transfer of shares in the Company held by its Controlling Shareholders. Suzano secured firm commitments from certain international financial institutions to contract financing facilities, in the total amount of US$9.2 billion, whose disbursement is conditioned, among other things, on the consummation of the operation. Proceeds from said financing will be used to finance a part of the installment in cash and combined exports of the companies. On June 1, 2018, the Company was informed by the Federal Trade Commission, the U.S. antitrust authority, of the early conclusion of the analysis of the operation between Suzano and Fibria, which constitutes an authorization - without restrictions - for the transaction in the United States of America. Consummation of the operation is still subject to typical conditions for operations of this nature, including approval by antitrust authorities in Brazil, China, the European Union and other countries that may wish to examine the transaction.




ii) Acquisition of company in Tissue segment (Facepa) On January 19, 2018, Brazil's antitrust agency CADE approved without restrictions the acquisition of around 92.84% of the total capital of Facepa – Fábrica de Papel da Amazônia (“Facepa”) by Suzano. On March 1, 2018, once all the conditions precedent were implemented and all the approvals obtained from competent government authorities, the direct and indirect acquisition of approximately 92.84% of the total capital and 99.99% of the common capital of Facepa was concluded. Suzano acquired 100% of the control of AGFA - Comércio, Administração e Participações Ltda. (“AGFA”), which holds 28.8% of Facepa, and directly acquired 64.0% from the controlling shareholders of Facepa, thus totaling 92.8%. AGFA is a company with no commercial operation and whose balance sheet basically includes the investment in Facepa. With the acquisition, in addition to Facepa’s units in Belém (PA) and Fortaleza (CE), the Company already operates its own sanitary paper units in Mucuri (BA) and Imperatriz (MA). The amount paid for the acquisition was R$267,876, made on the date of the acquisition and a contingent amount of R$40,000, which is conditioned on the non-materialization of indemnifiable losses by the sellers, totaling R$307,876. Since Facepa was recently acquired, the Purchase Allocation Price is still being determined and hence the complete disclosure related to the business combination will be concluded by the end of the year. iii) Acquisition of company in the energy segment (PCH Mucuri) On February 19, 2018, after the fulfillment of all the conditions precedent and after approval was obtained from competent government authorities, the operation with Queiroz Galvão Energia S.A. for the acquisition of all the shares issued by Mucuri Energética S.A. (“PCH Mucuri” or “PCH”) was concluded. PCH Mucuri owns a small hydroelectric plant located in the cities of Carlos Chagas and Pavão, in the state of Minas Gerais. The total amount paid was R$48,027. The Company recorded R$102,054 under other non-current liabilities until the conclusion of the allocation of the price paid, slated to be concluded by the end of this fiscal year.

2 Presentation of the unaudited condensed consolidated interim financial information

2.1 Preparation basis and presentation The parent company and consolidated condensed interim financial information was prepared and is presented in accordance with technical pronouncement CPC 21 (R1) Interim Statements and the international standard IAS 34 Interim Financial Reporting.




The interim information was prepared using the historical cost as the basis of value, except for certain financial assets and liabilities and biological assets that are measured at fair value. The Company affirms that all the information relevant to its interim information is reported and that it corresponds to that used by the Management for its administration.

2.1.1 Consolidated Interim Financial Information

The unaudited condensed consolidated interim financial information was prepared based on the information provided by Suzano and its subsidiaries on the reference date, as well as in accordance with consistent accounting practices and policies, except for Facepa, whose reference date is May 31, 2018, but whose information does not have significant impact on consolidated result. The subsidiaries are consolidated as from the date of ownership control up to the date control ceases to exist. In the case of joint control (joint venture) with other companies, these investments are measured by the equity method for both the individual and consolidated interim financial information. In the consolidation process, the balances in the balance sheet and income statement accounts corresponding to the transactions carried out with subsidiaries are eliminated, as well as the unrealized gains and losses and the investments in these subsidiaries and their respective equity accounting results. Companies included in the Company’s consolidated interim financial information:

(a) See Note 1.1 b) iii).

(b) See Note 1.1 b) iii).

2.2 Statement of Value Added (“DVA”) The Company prepared the individual and consolidated Statement of Value Added as part of the interim financial information, as required by the Brazilian corporate law and the accounting practices adopted in Brazil, in accordance with the criteria defined in Technical Pronouncement CPC 09 – Statement of Value Added. IFRS standards do not

Investee Nature of the main operation Type of interest 6/30/2018 12/31/2017

AGFA - Comério, Administração e Participações Ltda. ("AGFA") (a) Investment in Facepa Direct 100% -

Asapir Produção Florestal e Comércio Ltda ("Asapir") Loan agreement Joint venture 50% 50%

Comercial e Agrícola Paineiras Ltda ("Paineiras") Land lease Direct 100% 100%

Eucalipto Holding S.A. ("Eucalipto") Holding company Direct 100% -

Facepa - Fábrica de papel da Amazônia S.A. ("Facepa") (a) Production and sale of tissue paper Direct/Indirect 92.8% -

FuturaGene Ltd ("Futuragene") Biotechnology research and development Indirect 100% 100%

Mucuri Energética S.A. ("PCH Mucuri") (b) Energy generation and distribution Direct 100% -

Ondurman Empreendimentos Imobiliários Ltda ("Ondurman") Land lease Direct 100% 100%

Paineiras Logística e Transporte Ltda ("Paineiras Logística") Commissioning of road transport Direct 100% 100%

Stenfar S.A. Indll. Coml. Imp. Y. Exp. ("Stenfar") Sale of paper and IT materials Direct/Indirect 100% 100%

Sun Paper and Board Limited ("Sun Paper") Shared expenses Direct 100% 100%

Suzano Áustria GmbH ("Suzano Áustria") Capital raising Direct 100% 100%

Suzano Luxembourg ("Suzano Luxemburgo") Not operational Direct 100% -

Suzano Pulp and Paper America Inc ("Suzano América") Sale of pulp and paper Direct 100% 100%

Suzano Pulp and Paper Europe S.A. ("Suzano Europa") Sale of pulp and paper Direct 100% 100%

Suzano Trading Ltd ("Suzano Trading") Sale of pulp and paper Direct 100% 100%

Interest in capital (%)




require the DVA, therefore, they are considered as supplemental information, without prejudice to the interim financial information.

2.3 Functional currency and presentation currency The items included in the interim financial information of each of the Company’s subsidiaries are measured using the currency of the main economic environment in which the subsidiary operates (the “functional currency”). The individual and consolidated interim financial information is presented in Brazilian real, which is Suzano’s functional currency, and Company’s presentation currency. The functional currency used when translating the interim financial information of foreign subsidiaries is the following:

2.4 Restatement of comparison figures The financial statements on December 31, 2017, presented for comparison purposes, were adjusted for improved presentation and comparison with the information for the period ended June 30, 2018. The reclassifications within Current Asset items did not alter the total of this group or the total amount recorded under Assets. The following amounts were reclassified: i) R$24,343 and R$23,394 at the Parent Company and Consolidated, respectively, reclassified from Advances to suppliers for acquisition of services and materials, previously recorded under Inventories, to Advances to Suppliers; ii) R$12,870 at the Parent Company and Consolidated, from Other Receivables, related to advances for wood purchases, to Advances to Suppliers.

3 Accounting Policies The interim financial information was prepared using accounting practices consistent with those used in the preparation of the annual financial statements at December 31, 2017, except for the application of the new accounting standards as of January 1, 2018,

Suzano Trading Cayman Islands

Suzano Luxemburgo Luxembourg

Suzano América Untied States

Suzano Áustria Austria

FuturaGene

Sun Paper

Suzano Europa Switzerland Swiss franc

Stenfar Argentina Argentine peso

Subsidiary Country Functional currency

U.S. dollar

United Kingdom Pound sterling




as described below. However, despite the application, there was no material impact on the interim financial information, as previously mentioned in the financial statements as of December 31, 2017. This information should be considered jointly with the annual financial statements.

3.1 Accounting Policies Adopted

3.1.1 Financial Instruments – IFRS 9 IFRS 9 replaces the provisions of IAS 39 in relation to the recognition, classification and measurement of financial assets and financial liabilities, derecognition of financial instruments, impairment of financial assets and hedge accounting. The Company opted for the modified transition method whose comparative figures have not been restated. The adoption of IFRS 9 Financial Instruments from January 1, 2018 resulted in changes in accounting policies. However, considering the assessment made by Company, there was no material impact or adjustment resulting from adoption of the new standard as of January 1, 2018. (i) Classification and measurement The Company classifies its financial assets in the following categories: (a) amortized cost and (b) at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired as explained below: (a) Amortized cost Financial assets are held by the Company: (i) to receive their contractual cash flow and not sale for profit or loss; and (ii) when their contractual terms give rise, on specified dates, to cash flows of payments of principal and interest on the principal amount outstanding. These include the balance of cash and cash equivalents and trade accounts receivable. Any changes are recognized in the income statement under "Financial income" or "Financial expenses", depending on the result. (b) Financial assets at fair value through profit or loss They represent the balance of financial investments and derivative financial instruments. Any changes are recognized in the income statement under "Financial income" or "Financial expenses", depending on the result. (ii) Impairment of financial assets The Company revised its impairment methodology under IFRS 9. On January 1, 2018, the Company started to apply IFRS 9 to measure the expected credit losses that use an allowance for expected losses for all accounts receivable. The total impact of the change in impairment methodology on January 1, 2018 was not material.

3.1.2 Revenue recognition – IFRS 15




The Company adopted IFRS 15 - Revenue from Contracts with Customers as of January 1, 2018, which resulted in changes in accounting policies, opting for the modified transition method, whose comparative figures have not been restated. The Company recognizes revenues from contracts with customers from the transfer of control of the products to the customers, represented by the ability to determine the use of the products and obtain substantially all the remaining benefits from the products. The Company follows the conceptual framework of the standard, based on the five-step model: (i) identification of contracts with customers; (ii) identification of performance obligations under contracts; (iii) determining the transaction price; (iv) allocation of the transaction price to the performance obligation provided for in the contracts; and (v) recognition of revenue when the performance obligation is fulfilled. The transaction is confirmed based on the parameters provided by the corresponding International Commercial Terms (Incoterms) and credit confirmation for the completion of the transaction. The revenue is recognized when a performance obligation is fulfilled by transferring a promised good or service to a costumer (which is when the costumer acquires control over such good or service). a) Sale of products The recognition of revenue for domestic and export sales of pulp and paper is based on the following principles: (i) Domestic market - sales are mainly credit sales. Revenue is recognized when the customer receives the product, whether at the freight company's premises or at its own premises, at which point the benefits of ownership are transferred and the performance obligation is fulfilled. (ii) Export market - export orders are normally fulfilled by third party warehouses located near strategic markets; sales are mainly credit sales. Revenue is recognized in accordance with the Incoterm parameters used.

3.2 New standards, revisions and interpretations not yet in force The International Accounting Standards Board (IASB) issued and approved the following accounting standards/interpretations that are not yet effective and the Company did not early adopt them for the preparation of this interim financial information. The Management evaluated or is evaluating and measuring the impacts of adopting the following standards/interpretations: i) IFRS 16 – Leases – It replaces IAS 17 and essentially requires that lessees recognize future payments in their liabilities and the right to use a leased item in assets for practically all lease agreements. Therefore, financial lease and operating lease agreements receive similar accounting treatment, although certain short-term leases or those for small amounts are outside the scope of this standard. This standard will be effective as of January 1, 2019.




The Company, based on preliminary assessments, believes that the biggest impact produced by this standard is related to the recognition in the balance sheet of the lease agreements of land used to plant eucalyptus forests, with terms of up to 3 cycles of forest formation, around 21 years (Note 20.2)), but for the reporting date, the Company was still analyzing these and other lease agreements, as well as the transition criterion to be adopted to implement the new Standard. ii) IFRIC 23 Uncertainty over Income Tax Treatments – Clarifies the accounting of tax positions that have not yet been accepted by tax authorities. Both IAS 12/CPC 32 Income Taxes and the new interpretation IFRIC 23 apply only to Income Tax and Social Contribution. IFRIC 23 does not introduce new disclosures, but reinforces the need to comply with certain reporting requirements on (i) judgments made; (ii) assumptions or other estimates used; and (iii) potential impact of uncertainties that are not reflected in the financial statements. This standard will be effective as of January 1, 2019. The Company is assessing the changes introduced by this new interpretation and, based on preliminary analyses made until the closing of this interim financial information, does not expect any material impact on its interim financial information.

4 Financial Instruments and Risks 4.1 Management of financial risks

a) Overview

In the six-month period ended June 30, 2018, there were no significant changes in the financial risk management policies and procedures compared to those reported in Note 4 to the financial statements of December 31, 2017.

The main financial risk factors considered by Management are:

• Liquidity risk;

• Credit risk;

• Currency risk;

• Interest rate risks; The Company does not adopt hedge accounting. Therefore, all results (gains and losses) from derivative operations (settled and outstanding) are fully recognized in the Parent company and Consolidated statements of income of the periods, as presented in Note 27. b) Measurement All operations with financial instruments are recognized in the Company's interim financial information, as shown below. As a result of the adoption of IFRS 9, no material change in the measurement of financial instruments methodology applied for the prior year.




(a) New financing obtained through subsidiaries.

c) Fair value versus book value The comparison between the fair value and carrying value of outstanding financial instruments, at their amortized cost, is shown below:

Note 6/30/2018 12/31/2017 6/30/2018 12/31/20172

Assets

At fair value through profit or loss


Derivative financial instruments 4.3 576,184 133,910 576,184 133,910

At amortized costs



10,410,309 4,784,511 10,928,957 5,146,058

Liabilities

At amortized cost

Trade accounts payable 18 607,341 581,810 646,969 610,476


Payable to related parties (a) 8,423,261 6,722,399 - -

Debentures 21 4,661,013 - 4,661,013 -

Liabilities for asset acquisition 25 799,224 537,248 844,872 585,986

At fair value through profit or loss

Derivative financial instruments 4.5 2,882,273 127,896 2,882,273 127,896

22,153,401 13,410,401 22,336,586 13,516,214

Parent Company Consolidated

Book Value Fair Value Book Value Fair Value

Assets

Cash and cash equivalents 3,624,737 3,624,737 1,076,833 1,076,833

Financial investments 4,402,785 4,402,785 1,631,505 1,631,505

Trade accounts receivable 2,325,251 2,325,251 2,303,810 2,303,810

Derivative financial instruments (current and non-current) 576,184 576,184 133,910 133,910

10,928,957 10,928,957 5,146,058 5,146,058

Liabilities

Trade accounts payables 646,969 646,969 610,476 610,476

Loans and financing (current and non-current) 13,301,459 15,229,164 12,191,856 13,755,352

Debentures 4,661,013 5,022,313 - -

Liabilities for asset acquisition (current and non-current) 844,872 791,572 585,986 564,292

Derivative financial instruments (current and non-current) 2,882,273 2,882,273 127,896 127,896

22,336,586 24,572,291 13,516,214 15,058,016

Consolidated

6/30/2018 12/31/2017




4.2 Liquidity risk

The following are the remaining contractual maturities of financial liabilities at the reporting date. The following amounts are cash flows, are undiscounted and include contractual interest payments and exchange variation, and therefore may not be reconciled with the amounts disclosed in the balance sheet.

ConsolidatedTotal Book

Value

Total Future

Value

Up to 1

year

1 - 2

years

2 - 5

years

More than 5

years

Liabilities

Trade accounts payables 646,969 646,969 646,969 - - -

Loans and financing 13,301,459 20,431,631 3,074,526 1,859,498 6,965,752 8,531,855

Debentures 4,661,013 9,251,290 177,082 730,379 1,939,374 6,404,455

Liabilities for asset acquisitions 844,872 971,423 254,513 102,468 325,332 289,110

Derivative financial instruments 2,882,273 2,930,368 732,362 1,953,638 244,368 -

Other accounts payable 465,225 465,225 350,414 114,811 - -

22,801,811 34,696,906 5,235,866 4,760,794 9,474,826 15,225,420

Total Book

Value

Total Future

Value

Up to 1

year

1 - 2

years

2 - 5

years

More than 5

years

Liabilities

Trade accounts payables 610,476 610,476 610,476 - - -

Loans and financing 12,191,856 15,897,299 2,704,902 2,686,542 4,930,467 5,575,388

Liabilities for asset acquisitions 585,986 713,723 95,284 9,698 187,686 421,055

Derivative financial instruments 127,896 97,412 24,092 63,971 9,349 -

Other accounts payable 293,193 293,193 280,437 12,756 - -

13,809,407 17,612,103 3,715,191 2,772,967 5,127,502 5,996,443

12/31/2017

6/30/2018




4.3 Credit risk The book value of financial assets representing the exposure to credit risk on the date of the interim financial information was as follows:

The Counterparties, primarily financial institutions with whom the Company conducts transactions classified under cash and cash equivalents, financial investments and derivative financial instruments, are rated by the rating agencies Fitch Ratings, Standard & Poor’s and Moody’s. The risk rating is as follows:

(a) We use the Brazilian Risk Rating and the rating is given by rating agencies Fitch

Ratings, Standard & Poor’s and Moody’s.

Note 6/30/2018 12/31/2017 6/30/2018 12/31/2017

Assets




Derivative financial instruments 576,184 133,910 576,184 133,910

10,410,309 4,784,511 10,928,957 5,146,058


Risk rating (a) 6/30/2018 12/31/2017 6/30/2018 12/31/2017

AAA 4,819,505 2,168,810 - 65,510

AA+ 2,972,007 169,881 560,344 51,231

AA 83,427 207,925 - 3,143

AA- 102,977 113,623 15,840 14,026

A 46,501 45,753 - -

A- 3,090 2,330 - -

BB 15 16 - -

8,027,522 2,708,338 576,184 133,910

Consolidated

Cash and cash equivalents

and financial investmentsDerivative financial instruments




The risk rating of trade accounts receivable is as follows:

(a) Not past due and overdue up to 30 days (b) Overdue between 30 and 90 days (c) Overdue more than 90 days and renegotiated by the client or with security interest

The amounts do not consider the Estimated Loss with Doubtful Accounts (“PECLD”) of R$38,602 and R$38,740 on June 30, 2018 and December 31, 2017, respectively.

4.4 Market risk

4.4.1. Exchange rate risk The following table shows the net exposure of assets and liabilities in foreign currency, primarily the U.S. dollar:

Sensitivity analysis – foreign exchange exposure For market risk analysis, the Company uses scenarios to jointly evaluate the long and short positions in foreign currency, and the possible effects on its results. The probable

6/30/2018 12/31/2017

Low Risk (a)2,289,437 2,268,675

Average Risk (b)15,526 21,016

High Risk (c) 58,890 52,859

2,363,853 2,342,550

Consolidated

6/30/2018 12/31/2017

Assets

Cash and cash equivalents 1,249,071 585,541

Trade accounts receivable 1,616,245 1,544,749

Derivative financial instruments 576,184 133,910

3,441,500 2,264,200

Liabilities

Trade accounts payables (83,410) (36,018)

Loans and financing (9,983,341) (8,616,807)

Liabilities for asset acquisitions (378,302) (332,193)

Derivative financial instruments (2,881,899) (126,781)

(13,326,952) (9,111,799)

Liability exposure, net (9,885,452) (6,847,599)

Consolidated




scenario represents the amounts already booked, as they reflect the translation into Brazilian reais on the base date of the balance sheet. The other scenarios were created considering the depreciation of the Brazilian real against the U.S. dollar at the rates of 25% and 50%. This analysis assumes that all other variables, particularly interest rates, remain constant, and the following table presents the potential impacts on the results assuming these scenarios:

(a) For the notional values of derivatives, see Note 4.5

4.4.2 Interest rate risk Fluctuations in interest rates could result in increase or decrease in costs of new financing and operations already contracted. The Company constantly seeks alternatives to use financial instruments in order to avoid negative impacts on its cash flows. Sensitivity analysis – exposure to interest rates For market risk analysis, the Company uses scenarios to evaluate the sensitivity that variations in operations impacted by the rates: Interbank Deposit Rate (“CDI”), Long Term Interest Rate (“TJLP”) and the London Interbank Offered Rate (“LIBOR”) may have on its results. The probable scenario represents the amounts already booked, as they reflect the best estimate of the Management. This analysis assumes that all other variables, particularly exchange rates, remain constant. The other scenarios were developed considering appreciation of 25% and 50% in the market interest rates. The following table shows the potential impacts on the results:

ConsolidatedProbable

Possible Increase

( ∆ 25%)

Remote Increase

( ∆ 50%)

Cash and cash equivalents 1,249,071 312,268 624,536

Trade accounts receivable 1,616,245 404,061 808,122

Trade accounts payables (83,410) (20,853) (41,705)

Loans and financing (9,983,341) (2,495,836) (4,991,671)

Liabilities from asset acquisitions (378,302) (94,575) (189,151)

Derivatives Non Deliverable Forward ("NDF") (a) (1,144,479) (3,245,790) (6,491,579)

Derivatives Swap (a) (549,208) 814,148 1,619,714

Derivatives Options (a) (612,028) (2,625,455) (5,726,436)

(9,885,452) (6,952,032) (14,388,170)

Effect on Income

6/30/2018




4.5 Derivative financial instruments The Company determines the fair value of derivative contracts and recognizes that these amounts may differ from the amounts realized in the event of early settlement. The amounts reported by the Company are based on an estimate and using data provided by a third party, calculated by an external advisor, which are reviewed by Management.

Consolidated Probable

Possible

Increase

( ∆ 25%)

Remote

Increase

( ∆ 50%)

Interbank deposit certificate ("CDI")

Cash and cash equivalents 2,375,666 39,437 79,487

Financial investments 4,402,785 73,088 147,313

Loans and financing (2,653,769) (212,977) (257,716)

Debentures (4,661,013) (374,068) (452,646)

Derivative Swap (1,161,237) (3,604,002) (6,082,951)

(1,697,568) (4,078,522) (6,566,513)

Long-term interest rate ("TJLP")

Loans and financing (232,821) (3,929) (7,858)

(232,821) (3,929) (7,858)

London InterBank Offered Rate ("LIBOR")

Loans and financing (4,267,234) (20,088) (40,176)

Derivative Swap (374) 301 602

(4,267,608) (19,787) (39,574)

Effect on Income and Equity

6/30/2018




a) Outstanding derivatives by type of contract

On June 30, 2018 and December 31, 2017, the consolidated positions of outstanding derivatives are presented below:

Fair value does not represent an obligation for immediate disbursement or cash receipt, given that such effect will only occur on the dates of contractual fulfillment or on the

Consolidated 6/30/2018 12/31/2017 6/30/2018 12/31/2017

Cash flow

Exchange hedge

Zero-cost collar (R$ vs. US$) 2,315,000 1,485,000 (323,940) 25,822

Fixed Swap (US$) vs. CDI - 50,000 - 5,356

Fixed Swap CDI vs. US$ - 50,000 - (2,485)

Subtotal 2,315,000 1,585,000 (323,940) 28,693

Debt hedge

Exchange hedge

Swap CDI vs. Fixed (US$) 801,772 291,725 (407,094) (21,562)

Subtotal 801,772 291,725 (407,094) (21,562)

Interest hedge

Swap Libor vs. Fixed (US$) 13,492 19,841 (374) (1,117)

Subtotal 13,492 19,841 (374) (1,117)

Fibria's operation

Exchange hedge

Zero cost dollar (R$ x US$) 1,300,000 - (288,088) -

NDF (R$ x US$) 3,500,000 - (1,144,479) -

Subtotal 4,800,000 - (1,432,567) -

Debt hedge

Exchange hedge 1,250,000 - (142,115) -

Swap CDI vs. Fixed (US$) 1,250,000 - (142,115) -

Total in derivatives 9,180,264 1,896,566 (2,306,089) 6,014

Accounting classification

Current assets 246,716 77,090

Non-current assets 329,468 56,820

Current liabilities (603,081) (23,819)

Non-current liabilities (2,279,192) (104,077)

(2,306,089) 6,014

Notional value in US$ Fair value




maturity of each transaction, when the result will be determined, depending on the case and market conditions on agreed dates. Contracts outstanding on June 30, 2018 are over-the-counter operations without any margin or early settlement clause imposed due to mark-to-market variations. As mentioned in Note 1.1 b) i) related to the corporate restructuring with Fibria, the Company obtained firm commitments from international financial institutions to obtain funding in the amount of US$9.2 billion, to be disbursed subject to, among other conditions, the consummation of the operation. The proceeds from these financing facilities will be used to settle the cash portion of the transaction, denominated in Brazilian real (R$). To mitigate the exchange rate risk between the origin of the proceeds in U.S. dollar and the commitment in Brazilian real, the Company increased the position of exchange rate hedge instruments in the period. As the business under acquisition is usually precified in dollars and the guaranteed credit line obtained is also in dollars, management strategy was to hedge the final consideration to be paid in dollars, entering into derivative contracts. The results with these derivatives are as follows: (i) Zero-cost collar (R$ vs US$) in the amount of US$ 1.3 billion (notional in US$) representing R$ 288,088 at fair value; (ii) NDF (R$ vs US$) in the amount of US$ 3.5 billion (notional in US$) representing R$ 1,144,479 at fair value; and (iii) Swap CDI vs Fixed (US$) in the amount of US$ 1.25 billion (notional in US$) representing R$ 142,115 at fair value, totaling an accumulated financial loss with derivatives of R$ 1,574,682 for the period. b) Fair value by maturity date

Derivatives mature as follows:

Maturity of derivatives 6/30/2018 12/31/2017

2018 3,034 53,270

2019 (1,649,286) (16,064)

2020 (123,877) (31,192)

2021 225,453 -

2022 206,666 -

2023 165,722 -

2024 139,506 -

2025 (584,603) -

2026 (688,704) -

(2,306,089) 6,014

Net Fair value




c) Long and short position of outstanding derivatives

On June 30, 2018 and December 31, 2017, the consolidated positions of outstanding derivatives are presented below:

Consolidated Currency 6/30/2018 12/31/2017 6/30/2018 12/31/2017

Debt hedge

Assets

Swap CDI vs. Fixed (US$) R$ 7,331,688 950,000 139,556 22,525

Swap Libor vs. Fixed (US$) US$ 13,492 19,841 52,138 65,517

Subtotal 191,694 88,042

Liabilities

Swap CDI vs. Fixed (US$) US$ 2,051,772 291,725 (688,764) (44,087)

Swap Libor vs. Fixed (US$) US$ 13,492 19,841 (52,512) (66,634)

Subtotal (741,276) (110,721)

Total swap agreements (549,582) (22,679)

Cash flow

Zero-cost collar (US$ vs. R$) US$ 3,615,000 1,485,000 (612,028) 25,822

Swap Fixed (US$) vs. CDI US$ - 50,000 - 5,356

NDF (R$ x US$) US$ 3,500,000 - (1,144,479) -

Swap CDI x Fixed (US$) US$ - 50,000 - (2,485)

Subtotal (1,756,507) 28,693

Total in derivatives (2,306,089) 6,014

Notional value Fair value




d) Settled derivatives

In the period ended June 30, 2018 and 2017, the consolidated positions of settled derivatives were as follows:

(a) In the period ended June 30, 2018 there was a payment of the derivative premium, in the amount of R$ 173,230 and on June 30, 2017 the was a receipt of R$ 93,494, related to unhedged options and therefore not presented in the table above

4.6 Capital management

The main objective of Company’s capital management is to ensure and maintain a solid credit rating, in addition to mitigating risks that may affect capital availability in business development. The Company monitors constantly significant indicators, such as: i) consolidated financial leverage ratio, which is the ratio of total net debt to its adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (“EBITDA”); and ii) management of contractual financial covenants, maintaining a safety margin so as not to breach these covenants. Management prioritizes new loans denominated in the same currency of its main cash generation source, in order to obtain a natural hedge in the

Consolidated 2Q18 2Q17 6M18 6M17

Cash flow

Exchange hedge

Zero-cost collar (R$ vs. US$) - - 10,165 -

NDF (R$ vs. US$) - 11,110 - 11,110

NDF (MXN vs. US$) - (11) - 39

Subtotal - 11,099 10,165 11,149

Commodity hedge

Bunker (oil) - - - 2,631

Subtotal - - - 2,631

Debt hedge

Exchange hedge

Swap CDI vs. Fixed (US$) (8,553) 49,588 (5,682) 49,588

Swap Fixed (US$) vs. CDI - - - (8,809)

Subtotal (8,553) 49,588 (5,682) 40,779

Interest hedge

Swap LIBOR vs. Fixed (US$) (615) (1,544) (615) (1,544)

Swap Coupon vs. Fixed (US$) - - - 15,824

Subtotal (615) (1,544) (615) 14,280

Total in derivatives (a)(9,168) 59,143 3,868 68,839

Cash paid / Received amount




long term for its cash flow. The Company manages its capital structure and makes adjustments based on changes in economic conditions.

4.7 Fair value hierarchy The financial instruments and other interim financial information items assessed at fair value are presented in accordance with the levels defined below:

• Level 1 – Prices quoted (unadjusted) in active markets for identical assets or liabilities;

• Level 2 – Data other than the prices quoted in active markets included in Level 1 that are observable for the asset or liability, either directly (i.e. prices) or indirectly (i.e. derived from prices); and

• Level 3 – Inputs for assets or liabilities that are not based on observable market variables (unobservable inputs).

6/30/2018 12/31/2017 6/30/2018 12/31/2017

Loans and financing 4,780,289 5,441,048 13,301,459 12,191,856

Debentures 4,661,013 - 4,661,013 -

(-) Cash and financial investments (6,697,173) (2,070,682) (8,027,522) (2,708,338)

Net debt 2,744,129 3,370,366 9,934,950 9,483,518

Shareholder's equity controlling 10,702,919 11,621,554 10,702,919 11,621,554

Shareholder's equity non-controlling - - 8,534 -

Shareholder's equity and net debt 13,447,048 14,991,920 20,646,403 21,105,072





(a) Changes in fair value of biological assets are shown in Note 13.

4.8 Guarantees The Company has as guarantee letters of credit and credit insurance policies. On June 30, 2018, consolidated accounts receivable operations pegged to exports amount to US$408 million, equivalent to R$1,575,894 on that date (US$429 million, equivalent to R$1,421,446 on December 31, 2017).

5 Cash and Cash Equivalents

Consolidated Fair value Level 1 Level 2 Level 3

Assets

Financial investments 4,402,785 - 4,402,785 -

Derivative financial instruments 576,184 - 576,184 -

Biological assets (a) 4,697,542 - - 4,697,542

9,676,511 - 4,978,969 4,697,542

Liabilities

Derivative financial instruments 2,882,273 - 2,882,273 -

2,882,273 - 2,882,273 -

Consolidated Fair value Level 1 Level 2 Level 3

Financial Investments 1,631,505 - 1,631,505 -


Biological assets (a) 4,548,897 - - 4,548,897

6,314,312 - 1,765,415 4,548,897

Liabilities


127,896 - 127,896 -

12/31/2017

6/30/2018




Financial investments in local currency are low risk and highly liquid, and correspond to investments indexed to the Interbank Deposit Certificate ("CDI"). On June 30, 2018, the interest rates on financial investments ranged from 60% to 110% of the CDI rate (on December 31, 2017, the interest rates on financial investments ranged from 94% to 110% of the CDI rate).

6 Financial Investments

(a) Investment funds invest in fixed income instruments, diversified between private institution bonds and government bonds, and are remunerated at a rate between 93.87% and 103.05%, of the CDI rate at June 30, 2018. Investment portfolios are frequently monitored by the Company for the purpose of ensuring compliance with the investment policy, which seeks low risk and high liquidity of securities. The risk classification of these assets is presented on Note 4.3 (b) Bank Deposit Certificates (“CDBs”) were remunerated on average at 102.32% of the CDI on June 30, 2018 (102.48% on December 31, 2017).

6/30/2018 12/31/2017 6/30/2018 12/31/2017

Cash and banks

Local currency 21,675 18,533 27,208 19,124

Foreign currency - - 1,249,071 583,604

21,675 18,533 1,276,279 602,728

Financial investments

Local currency 2,331,583 472,168 2,348,458 472,168

Foreign currency - - - 1,937

2,331,583 472,168 2,348,458 474,105

2,353,258 490,701 3,624,737 1,076,833


6/30/2018 12/31/2017 6/30/2018 12/31/2017

Financial assets measured at fair value through

profit or loss held for trading

Investment funds (a)4,247,558 1,542,068 4,306,428 1,593,066

Bank Deposit Certificates ("CDB") (b)96,357 37,913 96,357 38,439

4,343,915 1,579,981 4,402,785 1,631,505





7 Trade Accounts Receivables

7.1 Breakdown of balances

(a) In 2017 the Company created the Receivables Investment Fund (“FIDC”), that is a vehicle with the

purpose with of acquiring credit rights originated from sales made by Suzano to facilitate credit to

certain clients. FIDC is an investment fund that acquires receivables and securities representing credit

rights. The FIDC has duration of two years and may be renewed under certain conditions. The

Company has a co-obligation and retains substantial credit risk. Accordingly it recorded accounts

receivable of R$21,641 and liabilities of R$20,908, net of transaction costs (Note 19).

(b) See Note 11.

7.2 Past due securities

6/30/2018 12/31/2017 6/30/2018 12/31/2017

Domestic customers

Third parties 637,671 739,858 693,671 741,558

Receivables Investment Fund ("FIDC") (a) 21,641 25,825 21,641 25,825

Subsidiaries (b) 30,220 - - -

Related parties (b) 32,131 28,652 32,131 28,652

Foreign customers

Third parties 54,141 45,572 1,616,410 1,546,515

Subsidiaries (b) 2,399,014 1,775,848 - -

Allowance for doubtful accounts (37,866) (35,836) (38,602) (38,740)

3,136,952 2,579,919 2,325,251 2,303,810


6/30/2018 12/31/2017 6/30/2018 12/31/2017

Past due:

Up to 30 days 30,034 38,270 121,131 67,239

From 31 and 60 days 8,858 9,418 11,073 16,066

From 61 and 90 days 4,574 3,825 4,453 3,949

From 91 and 120 days 3,605 2,949 3,504 2,831

From 121 and 180 days 2,072 9,959 2,731 9,423

Over 180 days 45,865 36,402 52,655 39,905

95,008 100,823 195,547 139,413

% Total overdue receivables 3% 4% 8% 6%





7.3 Changes in allowance for doubtful accounts

The Company has guarantees for overdue securities in its commercial transactions, through credit insurance policies, letters of credit and collateral. Part of these guarantees is equivalent to the need to recognize allowance for doubtful accounts, in accordance with the credit policy (Note 4.3).

8 Inventories

As of June 30, 2018, inventories are net of estimated losses in the amounts of R$ 40,447 (December 31, 2017, R $ 51,911).

8.1 Changes in estimated losses

2Q18 2Q17 6M18 6M17

Balance at beginning of the period (38,231) (32,259) (35,836) (35,309)

Credits accrued in the period (3,032) (7,250) (8,509) (9,288)

Credits recovered in the period 641 2,209 1,375 2,219

Credits definitively written-off from position 2,756 12,145 5,104 17,223

Balance at end of the period (37,866) (25,155) (37,866) (25,155)

2Q18 2Q17 6M18 6M17


Credits accrued in the period (1,522) (7,375) (8,548) (9,475)

Credits recovered in the period 2,891 2,270 3,625 2,280

Credits definitively written-off from position 2,573 12,145 5,262 17,223

Exchange variation (1,757) 10 (201) -


Consolidated

Parent Company

6/30/2018 12/31/2017 6/30/2018 12/31/2017

Restated

(Note 2.4)

Restated

(Note 2.4)

Finished goods

Pulp

Domestic 137,907 81,829 137,907 81,829

Foreign - - 263,118 198,380

Paper

Domestic 252,231 196,944 252,231 196,944

Foreign - - 58,688 67,146

Consumer Goods

Domestic 9,547 6,376 35,865 6,376

Work in process 62,146 63,797 62,146 63,797

Raw materials 458,430 388,383 458,430 388,383

Spare Parts 195,745 164,686 209,021 180,712

1,116,006 902,015 1,477,406 1,183,567





Additions to and reversals of estimated losses and direct write-offs are recognized under profit or loss, in cost of goods sold. In the six-month periods ended June 30, 2018 and 2017, direct write-offs were recorded in the amounts of R$15,897 and R$1,954, respectively.

No inventory items were given as collateral for or guarantee of liabilities for the fiscal years presented.

2Q18 2Q17 6M18 6M17


Estimated loss (580) (12) (3,337) (12)

Estimated loss reversal 67 42 861 261

Write-off inventories 4,710 - 13,940 -


Parent Company and Consolidated




9 Recoverable Taxes

(a) Social Integration Program (“PIS”) / Social Security Funding Contribution (“COFINS”) - Credits whose realization is linked to the depreciation period of the corresponding asset.

(b) Value-added Tax on Sales and Services (“ICMS”): Credits from the entry of goods destined for

property, plant and equipment are recognized at the ratio of 1/48 from the entry and on a monthly basis, as per the bookkeeping of ICMS Control on Property, Plant and Equipment (“CIAP”).

(c) ICMS credits accrued due to the volume of exports and credit generated in operations of entry of

products. Credits are concentrated in the states of Bahia and Maranhão, where the Company realizes the credits through “Transfer of Accrued Credit” (sale of credits to third parties), after approval from the State Ministry of Finance. Credits are also being realized through consumption in its consumer goods (tissue) operations in the domestic market that are already operational in Bahia and Maranhão.

(d) Special Regime of Tax Refunds for Export Companies ("Reintegra"). Reintegra is a program that

aims to refund the residual costs of taxes paid throughout the exportation chain to taxpayers, in order to make them more competitive in international markets.

(e) Provision for discount on sales to third parties of accrued credit mentioned in item "c” above

6/30/2018 12/31/2017 6/30/2018 12/31/2017

Withholding tax and prepaid income tax and social contribution 41,218 50,239 54,658 58,823

PIS and COFINS - on acquisition of fixed assets (a) 57,099 58,767 57,486 58,767

PIS and COFINS - other operations 54,373 54,360 55,566 55,515

ICMS - on acquisition of fixed assets (b) 72,700 71,603 72,700 71,603

ICMS - other operations (c) 228,774 250,006 269,262 280,384

Reintegra Program (d) 47,759 71,376 47,759 71,376

Other taxes and contributions 5,573 1,934 20,154 4,298

Provision for the impairment of ICMS credits (e) (12,035) (10,583) (12,035) (10,583)

495,461 547,702 565,550 590,183

Current assets 295,849 263,945 365,551 306,426

Non-current assets 199,612 283,757 199,999 283,757





10 Advance to Suppliers

10.1 Forestry development program On June 30, 2018, the balance of advances of funds and inputs for timber development at the Parent Company and Consolidated amounted to R$232,843 (R$237,466 on December 31, 2017), classified in the balance sheet according to the expected realization, among current and non-current liabilities.

10.2 Advance for the purchase of finished product On June 30, 2018, the Company did not have any outstanding balance related advances for purchase of finished product through its subsidiary Suzano Trading (R$33,324 on December 31, 2017).

10.3 Advances to suppliers On June 30, 2018, the amount of advances to suppliers for the acquisition of inputs, services and standing timber from third parties amounted to R$105,714 and R$107,007, at the Parent Company and Consolidated, respectively (R$3,889 and R$37,264 on December 31, 2017).

11 Related Parties

Related parties Type of operation

Bexma Comercial Ltda. ("Bexma") Administrative expenses

Bizma Investimentos Ltda. ("Bizma") Management of investment funds

Central Distribuidora de Papéis Ltda. ("Central") Sale of paper

Ibema Cia Brasileira de Papel ("Ibema") Sale of paper

Instituto Ecofuturo - Futuro para o Desenvolvimento Sustentável ("Ecofuturo") Social services

IPLF Holding S.A. ("IPLF") Shared corporate costs and expenses

Lazam MDS Corretora e Adm. Seguros S.A. ("Lazam-MDS") Insurance advisory and consulting

Mabex Representações e Participações Ltda. ("Mabex") Aircraft services (freight)

Nemonorte Imóveis e Participações Ltda. ("Nemonorte") Real estate advisory

Suzano Holding S.A. ("Holding") Grant of suretyship and administrative costs




11.1 Balance sheets on June 30, 2018.

Non-current

Item of balance sheet

With subsidiaries

Suzano Trading 2,347,789 (b) - - - 32,089 (a) - 3,623,024 (a)

Suzano Europa 59 - - - - - -

Suzano Austria - - - - 111,511 (a) - 4,656,637 (a)

Paineiras - - - - 439 - -

Paineiras Logística - - - - 6,814 - -

Stenfar 51,166 (b) - - - 603 - -

Ondurman - - - - - - -

Futuragene - 61 - - - - -

Sun Paper - - - - 4,580 - -

Facepa 30,220 (b) - - - - - -

2,429,234 61 - - 156,036 - 8,279,661

With related parties

Holding - 12 - - 126 - -

IPLF - - - - - - -

Nemonorte - 1 - 1 - - -

Bexma - 2 - - - - -

Lazam - MDS - - - - - - -

Ecofuturo - 1 - 875 - - -

Ibema - 32,053 (b) - 1,270 - - -

Bizma - 1 - - - - -

- 32,070 - 2,146 126 - -

2,429,234 32,131 - 2,146 156,162 - 8,279,661

ASSETS LIABILITIES

Trade

receivables -

subsidiaries

Trade

receivables -

related parties

Receivables -

related parties

Current Current

Trade payablesPayables -

related parties

Loans and

financing

Payables -

related parties




11.2 Balance sheets on December 31, 2017.

11.3 11.3 Transactions in the three and six – month period ended June 30, 2018 and 2017.

Non-current


With subsidiaries

Suzano Trading 1,732,080 (b) - - - 661,643 (a) - 1,978,014 (a)

Suzano Europa 49 - - - - - -

Suzano Austria - - - - 90,946 (a) - 3,995,071 (a)

Paineiras - - - - - - -

Paineiras Logística - - 2,369 - 2,749 - -

Stenfar 43,719 (b) - - - 1,001 - -

Ondurman - - - - - - -

Amulya - - - - - - -

Futuragene - 20 - - - - -

Sun Paper - - - - 4,027 - -

1,775,848 20 2,369 - 760,366 - 5,973,085


Holding - - - - 141 - -

IPLF - - - - - - -

Central - - - - - - -

Nemonorte - - - - - - -

Mabex - - - - - - -

Bexma - - - - - - -

Lazam - MDS - - - - - - -

Ecofuturo - 4 - 45 - - -

Ibema - 28,628 (b) - 6,954 - - -

- 28,632 - 6,999 141 - -

1,775,848 28,652 2,369 6,999 760,507 - 5,973,085

ASSETS LIABILITIES

Current

Trade payablesPayables -

related parties

Loans and

financing

Payables -

related parties

Trade

receivables -

subsidiaries

Trade

receivables -

related parties

Receivables -

related parties

Current


With subsidiaries

Suzano Trading 2,048,382 (b) (535,457) 1,783,999 69,428 3,964,819 (b) (580,825) 3,031,562 (b) (86,272)

Suzano Europa 18 - - - 71 - - -

Suzano Austria - (721,560) 134,944 (17,196) - (801,014) 134,944 (68,045)

Paineiras - (1,934) - (1,252) - (3,527) - (2,504)

Paineiras Logística - (63,909) - (67,890) - (121,412) - (125,238)

Stenfar 21,898 (b) (267) 27,613 (b) 38 45,954 (b) (465) 49,860 (b) (196)

Ondurman - (3,956) - (4,005) - (7,909) - (8,010)

Amulya - - - (2,930) - - - (5,769)

Futuragene 85 (9) 251 - 197 (9) 266 -

Sun Paper - (386) - - - (556) - -

Facepa 28,744 - - - 28,744 (b) - - -

2,099,127 (1,327,477) 1,946,807 (23,807) 4,039,785 (1,515,717) 3,216,632 (296,034)


Holding 16 (3,024) 334 (3,548) 35 (6,058) 342 (7,150)

IPLF 2 - - (8) 2 - - (8)

Central - - - 2,895 - - (4,056) 2,895

Nemonorte - (125) - (829) - - - (887)

Mabex - - - (199) - (125) - (207)

Bexma 3 - - - 6 - - -

Lazam - MDS - - - (159) - (31) - (248)

Ecofuturo - (875) - (1,017) 2 (1,750) - (1,897)

Ibema 8,974 (b) - 16,599 (b) - 56,575 (b) - 28,947 (b) -

Bizma 3 - - - 13 - - -

8,998 (4,024) 16,933 (2,865) 56,633 (7,964) 25,233 (7,502)

2,108,125 (1,331,501) 16,932 (2,865) 4,096,418 (1,523,681) 3,241,865 (303,536)

2Q18 2Q17

Expenses Income Expenses

Income Statement Income Statement

Income Expenses Income Expenses Income

6M18 6M17




(a) New loans through subsidiaries (Note 19 (d)); (b) Pulp and paper sales operations.

11.4 Management compensation

For the periods ended June 30, 2018 and 2017, expenses related to the compensation of key management personnel, which include the Board of Directors, Fiscal Council and Board of Executive Officers, in addition to certain executives, recognized in the statement of income for the period, are presented as follows:

Short-term benefits include fixed compensation (salaries and fees, vacation, mandatory bonus and “13th salary” bonus), and payroll charges (company share of contributions to social security – INSS) and variable compensation such as profit sharing, bonus and benefits (company car, health plan, meal voucher, grocery voucher, life insurance and private pension plan). Long-term benefits include the stock option plan and phantom shares for executives and key members of the Management, in accordance with the specific regulations (Note 24).

2Q18 2Q17 6M18 6M17 2Q18 2Q17 6M18 6M17

Short-term benefits

Salary or compensation 10,408 8,118 18,944 13,701 10,772 8,118 19,499 13,701

Direct and indirect benefits 599 609 1,392 1,141 623 609 1,438 1,141

Bonus 6,565 5,572 10,289 10,935 6,641 5,572 10,429 10,935

17,572 14,299 30,625 25,777 18,036 14,299 31,366 25,777

Long-term benefits

Share-based compensation 18,434 1,873 50,199 27,241 18,380 1,873 50,199 27,241

18,434 1,873 50,199 27,241 18,380 1,873 50,199 27,241

36,006 16,172 80,824 53,018 36,416 16,172 81,565 53,018





12 Current and Deferred Taxes

The Company, based on expected generation of future taxable income as determined

by a technical study approved by Management, recognized deferred tax assets over

temporary differences, income and social contribution tax loss carryforwards, which do

not expire.

Deferred income and social contribution taxes are originated as follows:

The income tax loss carryforward, negative basis of social contribution and accelerated depreciation are only achieved by the Income Tax (IRPJ). The breakdown of accumulated tax losses and social contribution tax loss carryforwards is shown below:

The projected realization of deferred taxes was prepared based on the Management’s

best estimates and on projected results. However, since there are diverse assumptions

over which the Company has no control, such as inflation indices, exchange volatility,

international market prices and other economic uncertainties in Brazil, future results may

materially differ from those considered in this projection. The projected realization are

presented below:

6/30/2018 12/31/2017 6/30/2018 12/31/2017

Income tax loss carryforward 435,489 572,356 438,526 575,248

Social contribution tax loss carryforward 6,627 29,830 6,627 29,830

Provision for tax, civil and labor liabilities 100,558 103,631 100,558 103,631

Temporary differences provision (operational and others) 240,094 203,831 240,094 203,831

Exchange variation losses (net) - payable on a cash basis for tax purposes538,658 82,793 538,658 82,793

Losses on derivatives 784,070 29,943 784,070 29,943

Other temporary differences 149,625 109,789 149,625 109,503

Non-current assets 2,255,121 1,132,173 2,258,158 1,134,779

Tax benefit of goodwill - goodwill not amortized for accounting purposes 11,612 10,063 11,612 10,063

Property, plant and equipment - deemed cost adjustment 1,499,187 1,525,281 1,573,938 1,603,987

Biological assets - fair value 135,657 90,461 135,657 90,461

Tax accelerated depreciation 1,190,784 1,183,115 1,190,784 1,183,115

Gains on derivatives - 31,988 - 31,988

Other temporary differences 25,386 2,519 25,170 2,519

Non-current liabilities 2,862,626 2,843,427 2,937,161 2,922,133

Total non-current assets, net - - 3,037 2,606

Total non-current liabilities, net 607,505 1,711,254 682,040 1,789,960


6/30/2018 12/31/2017 6/30/2018 12/31/2017

Tax loss carryforward 1,741,956 2,289,425 1,754,104 2,300,993

Social contribution tax loss carryforward 73,632 331,445 73,632 331,445





12.1 Reconciliation of the effects of income tax and social contribution on profit or loss

Year

July to December 2018 775,153

In 2019 834,518

In 2020 212,758

In 2021 197,605

In 2022 121,736

In 2023 10,067

2024 to 2027 106,321

2,258,158

6/30/2018

Consolidated

2Q18 2Q17 6M18 6M17


Income and social contribution expenses at statutory nominal rate - 34% 954,317 (43,563) 622,110 (244,440)

Tax effect on permanent differences:

Tax incentive - Reduction SUDENE (a) - 38,828 95,065 57,925

Equity method (13,562) 69,750 28,055 107,691

Credit related to Reintegra program 14,051 9,801 26,675 17,965

Higher taxation on foreign subsidiaries - (4,553) - (7,805)

Other 2,452 156 21,401 (1,586)

957,258 70,419 793,306 (70,250)

Income tax

Current (136,324) (22,084) (179,561) (34,996)

Deferred 844,230 84,231 792,477 (1,192)

707,906 62,147 612,916 (36,188)

Social Contribution

Current (81,667) (32,455) (132,977) (46,087)

Deferred 331,019 40,727 313,367 12,025

249,352 8,272 180,390 (34,062)

Income tax and social contribution benefits (expenses) in the periods 957,258 70,419 793,306 (70,250)

Effective rate of income and social contribution tax expenses 34.1% -55.0% 43.4% 9.8%

Parent Company




(a) Refers to the benefit of reducing 75% of the income tax, based on Profits from exploration on the units

Mucuri (BA) and Imperatriz (MA).

(b) Refers mainly to the difference between the nominal rate used by the Company and that used by its

subsidiaries in Brazil and abroad.

2Q18 2Q17 6M18 6M17


Income and social contribution expenses at statutory nominal rate - 34% 951,702 (44,336) 619,742 (246,249)

Tax effect on permanent differences:

Tax incentive - Reduction SUDENE (a) - 38,828 95,065 57,925

Equity method (23) 16,154 (41) 9,800

Difference in taxation - subsidiaries (b) 2,111 60,505 57,271 93,328

Credit related to Reintegra program 14,051 9,801 26,675 17,965

Higher taxation on foreigh subsidiaries - (4,553) - (7,805)

Other (17,688) (8,256) (11,785) (535)

950,153 68,143 786,927 (75,571)

Income tax

Current (141,562) (23,935) (187,558) (39,507)

Deferred 842,369 84,231 793,523 (1,192)

700,807 60,296 605,965 (40,699)

Social Contribution

Current (83,534) (32,880) (135,314) (46,897)

Deferred 332,880 40,727 316,276 12,025

249,346 7,847 180,962 (34,872)

Income tax and social contribution benefits (expenses) in the periods 950,153 68,143 786,927 (75,571)

Effective rate of income and social contribution tax expenses 33.9% -52.3% 43.2% 10.4%

Consolidated




13 Biological Assets The changes in the balances of biological assets in the respective periods are shown below:

(a) Refers to the formation and acquisition of forests, of which R$405,946 of forest formation and R$96,928

of forest acquisition at the Parent Company (December 31, 2017, R$798,578 and R$136,414, respectively);

(b) The gain reported in 2017 is mainly due to the gross wood price in the regions of Maranhão and Pará

and the maintenance of other assumptions;

The Company’s biological assets are mainly made of eucalyptus forest for reforestation used to supply wood to pulp and paper mills and are located in the states of São Paulo, Bahia, Espírito Santo, Maranhão, Minas Gerais, Pará, Piauí and Tocantins. Permanent preservation and legal reserve areas were not included in the calculation of fair value due to its nature. The fair value of eucalyptus forests is determined semiannually through the income approach method by using the Discounted Cash Flow method.


Balances on December 31, 2016 4,198,382 4,072,528

Additions (a) 934,992 912,368

Depletion for the year (551,135) (551,135)

Gain on adjustment to fair value (b) 192,504 192,504

Disposal of forests (28,030) (28,030)

Other write-offs (46,369) (49,338)


Additions (a) 502,874 491,201

Depletion for the period (329,535) (329,535)

Gain on adjustment of fair value 5,954 5,954

Disposal of forests (13,474) (13,474)

Other write-offs (5,501) (5,501)

Balances on June 30, 2018 4,860,662 4,697,542




14 Investments

(a) See Note 1.1 b) ii) and iii).

(b) Includes unrealized profit from intercompany transactions and estimated investment losses.

(c) Shared control with 50% consolidation.

The financial information of subsidiaries and joint ventures is shown below:

(a) Adjusted shareholders' equity considers the difference between the amount of the consideration transferred and the net assets acquired, at the measurement of fair value.

(b) Adjusted equity considers the elimination of unrealized profits.

AGFA Amulya EUCA FacepaMucuri

EnergéticaOndurman Paineiras

Paineiras

LogísticaStenfar Sun Paper

Suzano

America

Suzano

Áustria

Suzano

Europa

Suzano

Luxemburgo

Suzano

Trading Asapir (c) Ibema Total

Provision for losses on December 31, 2016 - (15,173) - - - (66,715) - - - - (19,554) (2,087) - - - - - (103,529)

Investment on December 31, 2016 - - - - - - 172,605 1,938 19,872 4,535 - - 1,416 - 29,802 2,042 873 233,083

Equity method - 9,279 - - - (7,921) (14,495) (1,504) (426) (382) (7,282) 3,332 (6,305) - 512,558 (55) 5,872 492,671

Exchange variation in investees - - - - - - (437) - (3,935) 469 748 153 3,756 - 37,123 129 - 38,006

Acquisition of shares - - - - - - - - - - - - - - - - 21 21

Capital increase - 43,000 - - - - - - - - - - - - - - - 43,000

Merger of subsidiary - (37,106) - - - - - - - - - - - - - - - (37,106)

Provision for losses on December 31, 2017 - - - - - (74,636) - - - - (26,088) - (1,133) - - - - (101,857)

Investment on December 31, 2017 - - - - - - 157,673 434 15,511 4,622 - 1,398 - - 579,483 2,116 6,766 768,003

Equity in the earnings of unconsolidated companies 2,304 - - 4,583 2,402 (3,548) 2,885 1,352 (10,058) (220) (6,826) (899) (85,821) - 179,623 (3,141) (121) 82,515

Exchange variation in investees - - - - - - (537) - (4,832) 635 7,703 232 10,871 10 123,733 1,371 - 139,186

Acquisition of subsidiaries (a) 95,506 - 1 212,370 48,027 - - - - - - - - - - - - 355,904

Capital increase in subsidiaries - - - - - - - - - - - - - 54 - - - 54

Provision for losses on December 31, 2018 (b) - - - - - (78,184) - - - - (25,212) - (76,083) - - - - (179,479)

Investment on June 30, 2018 (b) 97,810 - 1 216,953 50,430 - 160,021 1,786 621 5,037 - 731 - 64 882,839 346 6,645 1,423,284

SubsidiariesJoint Ventures

AGFA FacepaMucuri

EnergéticaOndurman Paineiras

Paineiras

LogísticaStenfar Sun Paper

Suzano

America

Suzano

Áustria

Suzano

Europa

Suzano

Luxemburgo

Suzano

Trading Stenfar Futuragene Facepa Asapir Ibema

100% 64.04% 100% 100% 100% 100% 90% 100% 100% 100% 100% 100% 100% 10% 100% 28.8% 50% 49.9%

34,922 187,460 218,360 92,328 275,709 12,486 88,997 5,363 391,086 4,776,221 4,345,237 64 7,022,908 88,997 67,538 187,460 11,668 333,450

- 68,229 65,877 46,187 76,220 10,700 78,586 325 335,583 4,775,490 4,262,859 - 6,132,463 78,586 40,139 68,229 10,976 332,036

34,922 (a) 119,231 (a) 152,483 (a) (78,184) (b) 160,021 (b) 1,786 1,662 (b) 5,038 (25,211) (b) 731 (76,084) (b) 64 882,839 (b) 10,411 27,399 119,231 (a) 692 1,414

2,304 8,140 2,402 5,169 5,844 1,351 (10,894) (220) 2,639 (899) 600 - 187,085 (10,894) (19,673) 8,140 (6,282) 371

Subsidiaries Indirect subsidiaries Joint ventures




15 Property, Plant and Equipment

Total

Annual average depreciation rate 3.46% 5.40% 17.65% - - -

Cost

Balances on December 31, 2016 2,681,691 15,335,813 289,431 4,008,345 390,671 22,705,951

Transfers 141,161 485,182 3,297 3,920 (633,560) -

Transfers between other assets (b) (4,500) 4,434 (7,035) - (8,705) (15,806)

Additions 4,500 104,402 5,895 1,739 731,740 848,276

Write-offs (a) (9,463) (95,277) (13,520) (10,561) (4,697) (133,518)

Merger AMYA (d) - - - 25,793 - 25,793

Interest capitalization - - - - 8,286 8,286

Balances on December 31, 2017 2,813,389 15,834,554 278,068 4,029,236 483,735 (c) 23,438,982

Transfers 56,407 193,525 7,790 2,522 (260,244) -

Transfers between other assets (b) 4,500 931 988 - 71 6,490

Additions - 54,861 3,090 2 543,922 601,875

Write-offs (a) (6,713) (56,510) (1,015) (15,940) - (80,178)


Balances on June 30, 2018 2,867,583 16,027,361 288,921 4,015,820 768,570 (c) 23,968,255

Depreciation

Balances on December 31, 2016 (761,724) (5,904,324) (175,704) - - (6,841,752)

Transfers 8 270 (278) - - -

Write-offs (a) 3,172 64,536 13,140 - - 80,848

Depreciation (70,037) (700,416) (26,520) - - (796,973)


Transfers 7 17 (24) - - -

Write-offs (a) 1,069 53,860 177 - - 55,106

Depreciation (37,287) (371,498) (13,789) - - (422,574)

Balances on June 30, 2018 (864,792) (6,857,555) (202,998) - - (7,925,345)

Net



Parent Company

BuildingsMachinery and

equipmentOther assets

Land and

farms

Work in

progress




(a) In addition to disposals, write-offs include obsolescence and scrapping;

(b) Includes transfers between the lines of inventory, intangible assets and non-current assets for sale, of which: (i) semi trucks – R$6,047 and commercial property (on December 31, 2017, semi trucks were R$7,035 and commercial property was R$4,500).

(c) The balance of construction in progress comes from investments made in line with its strategy to

maximize return to shareholders, of which: (i) adjacent business – R$113,435; (ii) structural competitiveness – R$584,958; and (iii) other investments – R$75,277 (December 31, 2017, (i) adjacent business – R$134,299; (ii) structural competitiveness – R$264,606; (iii) other investments – R$84,830).

(d) The subsidiary Amulya Empreendimentos Imobiliários Ltda. (“AMYA”) was fully merged on August 31,

2017.

Machinery and equipment include amounts recognized as financial lease outlined in Note 20.1. On June 30, 2018, the Company did not identify any event that indicated impairment of assets.

15.1 Assets given as collateral On June 30, 2018, assets given as collateral in loan operations and lawsuits amounted to R$11,593,193 (R$11,571,632 on December 31, 2017).

Total

Annual average depreciation rate 3.46% 5.40% 17.65% - - -

Cost

Balances on December 31, 2016 2,683,827 15,345,570 299,131 4,368,577 390,671 23,087,775

Transfers 141,161 485,182 3,297 3,920 (633,560) -

Transfers between other assets (b) (4,500) 4,434 (7,035) - (8,705) (15,806)

Additions 4,648 106,422 6,527 2,257 731,740 851,594

Write-offs (a) (9,463) (95,277) (13,525) (26,162) (4,697) (149,124)



Transfers 56,407 193,525 7,790 2,522 (260,244) -

Transfers between other assets (b) 4,500 931 988 - 71 6,490

Additions 200 57,679 3,554 516 544,331 606,280

New business acquisition 196,800 188,236 8,454 25,586 4,691 423,767

Write-offs (a) (7,713) (56,547) (1,015) (16,378) - (81,653)



Depreciation


Transfers 8 270 (278) - - -

Write-offs (a) 3,172 64,536 13,145 - - 80,853

Depreciation (70,315) (701,822) (27,719) - - (799,856)


Transfers 6 18 (24) - - -

Write-offs (a) 1,248 53,860 177 - - 55,285

Depreciation (39,453) (375,286) (14,521) - - (429,260)

New business depreciation (37,436) (100,394) (6,508) (144,338)

Balances on June 30, 2018 (905,456) (6,967,761) (216,594) - - (8,089,811)

Net



Consolidated

BuildingsMachinery and

equipmentOther assets

Land and

farms

Work in

progress




15.2 Capitalized expenses

In the six-month period ended June 30, 2018, interests were capitalized in the amount of R$1,086 referring to the investments in adjacent business and structural competitiveness (December 31, 2017 the amount of R$8,286 referring to the same investments). The amount considers acquisitions net of investments at the average rate of 0.73% per month.

16 Intangible Assets

16.1 Goodwill

(a) Company acquired in the first quarter of 2018, currently undergoing the allocation of the purchase price (Note

1.1 b) ii)).

16.2 Intangible assets with indefinite useful life On June 30, 2018 and December 31, 2017, the amount related to other intangible assets with indefinite useful life was R$1,196.

16.3 Intangible assets with determined useful life

6/30/2018 12/31/2017 6/30/2018 12/31/2017

Vale Florestar S.A. 45,435 45,435 45,435 45,435

Paineiras Logística 10 10 10 10

Facepa (a)- - 204,111 -

45,445 45,445 249,556 45,445





17 Receivables from land expropriation

In the six-month period ended June 30, 2018, there was no change in the nature and opinion of the Management and the legal advisors regarding the information reported on December 31, 2107. On June 30, 2018 the amount receivable from land expropriation was R$61,938 (R$60,975 on December 31, 2017).

18 Trade accounts payable

19 Loans and Financing

Consolidated Parent Company

Useful life (years) 10 5 18.8

Acquisition cost 1,635 120,718 196,023 318,376 144,933

Accumulated amortization (920) (49,533) (94,976) (145,429) (73,069)

Balances on December 31, 2016 715 71,185 101,047 172,947 71,864

Acquisitions - 8,054 - 8,054 8,054

Foreign currency translation adjustment - - 1,284 1,284 -

Amortization (105) (21,825) (8,339) (30,268) (21,930)

Write-offs - - (18,937) (18,937) -

Transfers and others - 8,705 - 8,705 8,705

Book balance 610 66,119 75,055 141,785 66,693


Accumulated amortization (1,025) (71,358) (103,315) (175,698) (95,000)

Balances on December 31, 2017 610 66,119 75,055 141,785 66,693

Acquisitions - 57 - 57 57

Acquisition PCH/FACEPA 17 749 - 766 -

Foreign currency translation adjustment - - 12,016 12,016 -

Amortization (50) (11,556) (3,599) (15,206) (11,605)

Amortization PCH/FACEPA (13) (462) - (475) -

Transfers and others - (71) - (71) (71)

Book balance 564 54,836 83,472 138,872 55,074


Accumulated amortization (1,088) (83,376) (106,914) (191,378) (106,605)

Balances on June 30, 2018 564 54,836 83,472 138,872 55,074

Total Trademarks and

patentsSoftware R&D Agreements Total

6/30/2018 12/31/2017 6/30/2018 12/31/2017

Domestic suppliers 548,207 567,306 563,559 574,458

Foreign suppliers 59,134 14,504 83,410 36,018

607,341 581,810 646,969 610,476





(a) If the Long-term Interest Rate (“TJLP”) exceeds 6% p.a., the exceeding portion is included within the principal

and subject to interest.

(b) Loans and financing are secured, depending on the agreement, by i) plant mortgages; ii) rural properties; iii) fiduciary sale of the asset being financed; iv) guarantee from shareholders, and (v) bank guarantee.

(c) In order to fund the import of equipment’s for the pulp production in the unit located in Maranhão, Suzano

obtained financing in the approximate amount of US$535 million, maturing in up to 9.5 years, guaranteed by the Export Credit Agencies Finnvera and EKN (“Export Credit Agency”). These agreements establish covenants related to the maintenance of certain leverage levels, which are verified for compliance twice a year (June and December). Until this moment, the Company complied with all covenants established in the agreements.

(d) In the last quarter of 2017, Suzano, through its subsidiary Suzano Trading, repurchased Senior Notes in the

amount of (i) US$456 million and, through Suzano Áustria, re-tapped the issues of Senior Notes in the amount of US$200 million, maturing on July 14, 2026, with interest corresponding to 4.62% p.a., to be paid semiannually, in January and July; and (ii) US$200 million, maturing on March 16, 2047, with interest corresponding to 6.30% p.a., to be paid semiannually, in March and September. Additionally, in March 2017, Suzano Áustria, issued US$300 million in Senior Notes due on March 16, 2047, with semiannual interest payments of 7.00% p.a. and final return for investors of 7.38% p.a.

Annual average

interest rate

on 6/30/2018

Property, plant and equipment:

BNDES - Finem (a) (b) Fixed rate /TJLP 7.16% 2019 to 2030 286,075 311,836 363,863 339,798

BNDES - Finem (b) Currency basket / US$ 6.99% 2019 to 2022 175,849 165,125 175,849 165,125

BNDES - Finame (a) Fixed rate /TJLP 5.37% 2018 to 2024 3,845 4,708 3,845 4,708

FNE - BNB (b) Fixed rate 6.35% 2024 to 2026 231,989 244,452 231,989 244,452

FINEP (b) Fixed rate 4.00% 2020 16,717 20,577 16,717 20,577

Financial lease CDI/US$ 2018 to 2022 20,582 19,686 20,582 19,686

Export Credit Agency - ECA (b) (c) US$/LIBOR 3.45% 2022 903,584 864,761 903,583 864,761

1,638,641 1,631,145 1,716,428 1,659,107

Working capital:

f

Export financing US$/LIBOR 5,72% 2021 to 2022 466,088 844,388 466,088 844,388

Export credit note CDI 6.39% 2018 to 2020 2,653,279 2,907,200 2,653,279 2,907,200

Senior Notes (d) US$/Fixed rate 6.22% 2021 to 2047 - - 5,519,698 4,730,800

Trade notes discount-Vendor 2018 1,179 33,363 1,179 33,363

Syndicated Loan (e) US$/LIBOR 3,24% 2023 - - 2,890,107 1,986,691

Fund of Investments in Receivables (f) 2018 20,908 24,665 20,908 24,665

Other 2018 to 2025 194 287 33,772 5,642

3,141,648 3,809,903 11,585,031 10,532,749

4,780,289 5,441,048 13,301,459 12,191,856

Current Portion (includes interest payments) 1,529,247 1,329,753 1,694,415 2,115,067

Non-current portion 3,251,042 4,111,295 11,607,044 10,076,789

Non-current loans and financing mature as follows:

2019 218,424 1,236,638 226,466 2,122,767

2020 2,206,683 2,160,696 2,221,529 2,599,279

2021 556,321 494,345 2,582,181 1,121,216

2022 167,310 119,750 1,465,199 123,745

2023 49,300 49,164 365,732 53,160

2024 30,172 30,089 39,204 34,084

2025 onwards 22,832 20,613 4,706,733 4,022,538

3,251,042 4,111,295 11,607,044 10,076,789


12/31/2017Index Maturity 6/30/2018 12/31/2017 6/30/2018




(e) In February 2018, the Company, through its subsidiary Suzano Europa, contracted a syndicated loan in the amount of US$750 million, with payment of quarterly interest and amortization of the principal between February 2021 and February 2023 (Note 1.1 a) iv)).

(f) See note 7.1.

Certain financing agreements have financial and non-financial covenants. Financial covenants establish some maximum levels of leverage, normally expressed as a ratio of Net Debt to Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), with which the Company was compliant on the date of these interim financial statements. Non-financial covenants establish the maximum level of assignment of receivables, guarantees to third parties and sale of operating assets, with which the Company is also in compliance.

19.1 Changes in loans and financing



Funding 242,740 2,561,954

Exchange variation (7,754) 81,849

Settlement of principal (2,927,471) (4,533,736)

Settlement of interest (565,514) (1,025,117)

Interest expenses and other costs 551,614 1,041,995

Transaction costs and other costs (2,683) 52,132


Funding 85,989 2,810,101

Addition from acquisition of subsidiaries - 79,928

Exchange variation 280,269 1,426,315

Settlement of principal (1,032,409) (3,214,568)

Settlement of interest (158,846) (330,860)

Interest expenses and other costs 164,330 355,263

Transaction costs and other costs (92) (16,576)

Balances on June 30, 2018 4,780,289 13,301,459




19.2 Transaction costs and premiums of securities issues

The cost of funding in foreign currency is amortized on the contractual dates based on the effective interest rate and the currency of origin, and is translated into Brazilian reais for reporting purposes.

19.3 Guarantees for loans and financings Some loan and financing contracts have clauses of guarantee of the financed equipment itself or other fixed assets indicated by the Company (Note 15.1).

20 Lease

20.1 Financial lease agreements The amounts booked as property, plant and equipment, net of depreciation, and the present value of mandatory installments of the agreement (financing) corresponding to these assets are stated below:

Consolidated

6/30/2018 12/31/2017

Senior Notes 94,796 (64,753) 30,043 27,280

NCE 67,846 (51,958) 15,888 23,076

Import (ECA) 101,811 (80,799) 21,012 26,386

Syndicated Loan 39,369 (24,390) 14,979 6,479

Debentures 20,087 - 20,087 -

Other 5,666 (3,818) 1,848 2,424

Total 329,575 (225,718) 103,857 85,645

Nature Total cost AmortizationBalance to be amortized




20.2 Operating lease agreements Operating lease payments are recognized as operating expenses in the Company’s income statement.

(a) General Market Price Index calculated by the Getulio Vargas Foundation. (b) Broad Consumer Price Index. (c) Brazilian Institute of Geography and Statistics. (d) General Price Index – Domestic Availability.

The minimum payments of maturing operating were as follows:

20.3 Other commitments

6/30/2018 12/31/2017

Machinery and equipment 108,160 108,160

(-) Accumulated depreciation (100,385) (99,452)

Property, plant and equipment, net 7,775 8,708

Present value of mandatory installments (financing):

Less than 1 year 5,489 4,632

From 1 to 5 years 15,093 15,054

Total present value of mandatory installments (financing) 20,582 19,686

Financial charges to be recognized in the future 2,120 2,770

Total mandatory installments at the expiration of agreements 22,702 22,456


Administrative offices and deposits 1 to 1,163 IGP-M(a) and IPCA(b)/IBGE(c) 4/12/2018 to 1/27/2024

Call center and licenses 1 to 127 IGP-DI(d) 9/30/2018

Land 181,52 to 2,047 IGP-M, IPCA/IBGE and others 7/1/2018 to 10/19/2045

Description Monthly

installment

amount

Index Maturity

6/30/2018

Less than 1 year 133,838

From 1 year to 3 years 281,362

From 3 years to 5 years 252,537

More than 5 years 659,273

Total installments due 1,327,010




In the normal course of its operations, the Company enters into contracts and commercial commitments to guarantee better operating conditions to expand its business. The most relevant are: i) Contracts for future sale of finished products, backed by performance sale operations

recorded in the short term. The amounts are initially recognized in "advances from customers” and are recorded in the income statement as these products are delivered. On June 30, 2018, there were no amounts outstanding for agreements for future sale of finished products recorded under “Advances from Customers” (R$63,201 on December 31, 2017).




21 Debentures

21.1 Debentures of the 6th Issue The debentures 6th issuance occurred on June 29, 2018, in a single series, with a nominal unit value of R$ 1. The Debentures will not be convertible into shares issued by the Company (Note 1.1 a) i)).

22 Provision for Contingencies 22.1 Changes in provisions for contingencies

22.2 Tax and Social Security Suits and Proceedings On June 30, 2018, the Company was a defendant in 384 administrative proceedings as well as tax and social security lawsuits in which the disputed matters related to diverse taxes such as IRPJ/Social Contribution (“CSLL”), PIS, COFINS, Tax on Industrialized Products (“IPI”), social security contributions, Rural Property Tax (“ITR”), State Value-Added Tax (“ICMS”), Tax on Services (“ISS”) and Urban Property Tax (“IPTU”), whose amounts are provisioned for when the likelihood of loss is deemed probable by the Company’s external legal counsel and the Management.

Annual rate

Parent Company and Consolidated 6/30/2018 Index of interest Due date

Issue Series

Issuance

amount Non-current

6th Single 4,681,100 4,661,013 CDI 112.50% 6/29/2026

4,661,013

Balance on

12/31/2017

New lawsuits

due to

acquisition of

subsidiaries

New lawsuits ReversalsInflation

adjustment

Settlement of

lawsuits

Balance on

6/30/2018

Tax and social security 268,654 - 21,343 (1,034) 3,405 (13,939) 278,429

Labor 38,117 - 8,796 (2,562) 7,191 (11,138) 40,404

Civil 3,382 - - (2) 192 - 3,572

310,153 - 30,139 (3,598) 10,788 (25,077) 322,405

Balance on

12/31/2017

New lawsuits

due to

acquisition of

subsidiaries

New lawsuits ReversalsInflation

adjustment

Settlement of

lawsuits

Balance on

6/30/2018

Tax and social security 273,324 - 21,343 (1,034) 2,152 (13,939) 281,846

Labor 40,363 1,900 10,256 (2,613) 7,373 (11,802) 45,477

Civil 3,382 - 10 (2) 192 - 3,582

317,069 1,900 31,609 (3,649) 9,717 (25,741) 330,905

Consolidated

Parent Company




In relation to the dues recorded under “installment payment using tax losses” of the REFIS Tax Amnesty Program introduced by Law 11,941/2009, after the effective consolidation by Brazil’s Revenue Service regarding the amount of tax loss indicated for settlement of interest and fines for late payment and others of the dues included in the program, the Company fully paid the installments related to the principal and isolated fines of said dues, therefore fully settling said installment payment. With the issue of Provisional Decree 783/2017, later passed into Law 13,496/2017, which introduced the Special Program for Payment of Overdue Taxes (PERT), due to benefits of reduction in the interest, fines and legal charges, the Company opted to migrate some debts covered by REFIS – Law 11,941/2009, not consolidated yet, and include other debts whose loss is deemed probable in said Installment Payment Program. These debts are recorded in provision amounting to R$ 4,356 on June 30, 2018, already deducting from this amount any legal deductions and amounts paid in advance to the Federal Revenue Service of Brazil, whose consolidation still depends on the regulatory act to be issued by the respective Public Authority.

22.3 Labor claims On June 30, 2018, the Company was a defendant in 3,511 labor claims. In general, labor claims are related primarily to matters frequently contested by employees in agribusiness companies, such as certain wages and/or severance payments, in addition to suits filed by outsourced employees of the Company.

22.4 Civil claims On June 30, 2018, the Company is a defendant in approximately 438 civil claims. Civil proceedings are related primarily to payment of damages, such as those resulting from contractual obligations, traffic-related injuries, possessory actions, environmental claims and others.

22.5 Judicial deposits On June 30, 2018, the Company has judicial deposits of R$120,693, of which R$76,529 refer to labor lawsuits, R$42,664 refer to tax and social security lawsuits and R$1,500 refer to civil lawsuits (on December 31, 2017, the amount of R$113,613, of which R$69,599 refer to labor lawsuits and R$44,014 refer to tax and social security lawsuits).

22.6 Lawsuits with possible tax contingencies The Company is involved in tax, civil and labor lawsuits, as they involve risks with a possible likelihood of loss (not probable), according to Management and its legal counsel, which are not recorded in the Company’s books.




The Company is a defendant in tax and social security lawsuits whose likelihood of loss is deemed possible, in the amount of R$1,040,066, for which no provision is recorded. Of this amount, R$832,923 refers to a tax-deficiency notice of PIS and COFINS, from 2007 to 2013, which was not considered yet in the lower court by the Federal Revenue Service of Brazil. The other tax and social security lawsuits are related to a variety of taxes such as social security, IRPJ, ITR, ICMS, Withholding Income Tax (“IRRF”), PIS and COFINS, mainly due to differences in the interpretation of the applicable tax rules and information provided in ancillary obligations.

23 Employee Benefits

23.1 Defined benefits plans The Company guarantees coverage of healthcare costs for former employees who retired by 2003 (until 1998 for former employees of Ripasa, current Limeira unit), as well as their spouses for life and dependents while they are minors. For other group of former employees, who exceptionally, according to the Company’s criteria and resolution or according with rights related to the compliance with pertinent legislation, the Company ensures the healthcare program. The Company offers life insurance benefit provided to retirees.

23.2 Changes in actuarial liabilities

6/30/2018 12/31/2017 6/30/2018 12/31/2017

Tax and social security 1,040,066 1,026,950 1,040,066 1,026,950

Labor 22,332 14,268 22,332 14,268

Civil 102,877 23,666 102,942 23,666

1,165,275 1,064,884 1,165,340 1,064,884


Opening balance on December 31, 2016 339,009

Interest on actuarial liability 38,022

Actuarial loss (4,173)

Benefits paid in the period (21,595)

Opening balance on December 31, 2017 351,263

Interest on actuarial liability 17,234

Benefits paid in the period (11,893)

Closing balance on June 30, 2018 356,604





24 Share-Based Compensation Plans On June 30, 2018, the Company had two share-based compensation plans: i) Paying in Phantom Shares Plan (“Phantom Shares (“PS”)) and ii) Share Appreciation Rights (“SAR”), both paid in domestic currency. These plans did not undergo any changes in their characteristics and measurement criteria since the financial statements of December 31, 2017.

24.1 Phantom Stock Option Plan

(a) For share options exercised and those exercised due to termination of employment, the average price on June 30, 2018 and December 31, 2017 was R$30.38 and R$19.84, respectively.

6/30/2018 12/31/2017

Shares (No.) Shares (No.)

Available at the beginning of the period 5,055,519 3,048,991

Granted during the period 1,415,476 3,035,488

Exercised (a) (215,967) (695,532)

Exercised due to dismissal (a) (51,007) (161,270)

Abandoned / prescribed due to dismissal (73,294) (172,158)

Available at the end of the period 6,130,727 5,055,519




24.2 Common stock option plan

24.3 Balance sheet and income statement balances The amounts corresponding to the services received and recognized in the financial statements are presented below:

25 Liabilities from Asset Acquisitions

(a) Refers to accounts payable related to the acquisition of land, farms, reforestation and houses built in

Maranhão, restated at the IPCA inflation index. (b) In August 2014, Suzano acquired the majority shareholder VFFIP of Vale Florestar S.A. for R$528,941 with a

down payment of R$44,998 and outstanding balance due up to August 2029. The monthly settlements are subject to interest and restated at the variation of the U.S. dollar exchange rate, and partially restated at the variation of the IPCA inflation index.

ProgramGranted

seriesGrant date

1st

exercise

date

2nd exercise

date and

expiration

Price on

the grant

date

Granted

shares

Exercised

shares

Total in

effect on

6/30/2018

Series I 01/18/2013 01/18/2015 04/18/2015 3.53 1,800,000 1,800,000 -

Series II 01/18/2013 01/18/2016 04/18/2016 3.71 1,800,000 1,800,000 -

Series III 01/18/2013 01/18/2018 04/18/2018 3.91 1,800,000 1,800,000 -

Series IV 01/18/2013 01/18/2019 04/18/2019 3.96 1,800,000 1,800,000 -

Series V 01/18/2013 01/18/2020 04/18/2020 3.99 1,800,000 1,800,000 -

9,000,000 9,000,000 -

Program 3

Total

6/30/2018 12/31/2017 2Q18 2Q17 6M18 6M17

Non-current liabilities

Provision for phantom stock plan 109,639 38,320 (57,395) (11,797) (76,585) (17,956)

Equity

Stock option reserve - 14,237 - (358) (72) (800)

Total general and administrative expenses

from share-based transactions (57,395) (12,155) (76,657) (18,756)

Consolidated

Liabilities and equity Result

6/30/2018 12/31/2017 6/30/2018 12/31/2017

Land acquisition

Land acquiried from third parties (a) 55,811 53,321 101,459 102,059

Vale Florestar Fundo de Investimento em Participações (“VFFIP”) (b)551,896 483,927 551,896 483,927

Duratex (c)151,233 - 151,233 -

Acquisition of subsidiaries

Fábrica de Papel da Amazônia (“FACEPA”) (d)40,284 - 40,284 -

799,224 537,248 844,872 585,986

Total current liabilities 250,555 76,781 257,264 83,155

Total non-current liabilities 548,669 460,467 587,608 502,831





(c) Refers to accounts payable related to the acquisition of rural properties and forests (biological assets), with the balance of R$150,300 restated at the IPCA rate with maturity in December 2018.

(d) Acquired in March 2018, for the amount of R$307,876, upon payment of R$267,876 and the remaining

R$40,000, restated at the Broad Consumer Price Index (“IPCA”), adjusted by any losses incurred through the payment date, in accordance with the agreement, with maturities in March 2023 and March 2028 (Note 1.1 b) ii)).

26 Equity 26.1 Share capital On June 30, 2018, the share capital of Suzano is R$6,241,753, divided into 1,105,826,145 registered, book-entry common shares without par value. The composition of the share capital is presented below:

By resolution of the Board of Directors, the capital may be increased, irrespective of any amendment to the Bylaws, up to the limit of 780,120 thousand common shares, all exclusively book-entry shares. On June 30, 2018, SUZB3 common shares ended the period quoted at R$44.97 (R$18.69 on December 31, 2017).

26.2 Reserves

Profit reserve The Reserve for Capital Increase is composed of 90% of the remaining balance of net income for the year, after dividends and legal reserve, and aims to ensure the Company adequate operational conditions. The Special Statutory Reserve includes the remaining 10% of the remaining balance of net income for the year and aims to ensure the distribution of dividends.

Number (%)

Suzano Holding S.A. 367,612,234 33.24

Controlling Shareholders 185,693,440 16.80

Subtotal 553,305,674 50.04

Management 70,024,485 6.33

Treasury 12,042,004 1.09

BNDESPAR 75,909,985 6.86

Mondrian Investment Partners 72,878,900 6.59

Other shareholders 321,665,097 29.09

Total 1,105,826,145 100.00

ShareholderCommon Shares




Capital reserve The Capital Reserve is composed of the balances of the tax incentive reserve, the stock option reserve, the treasury shares the and the costs directly attributable to the Share Offering, which are primarily composed of the expenses with the fees and commissions charged by legal counsel, consultants and auditors.

26.3 Treasury shares

(a) Treasury shares used to meet the share-based compensation plan. (b) On September 29, 2017, the Company approved the proposal for migration to the Novo Mercado of B3 S.A.

– Brasil, Bolsa, Balcão (“B3”) and the consequent conversion of all preferred shares issued by the Company into common shares at the ratio of one (1) preferred share, class “A” or class “B”, for one (1) common share

(c) On April 28, 2017, the Annual and Extraordinary Shareholders Meeting approved the cancellation of

1,912,532 class B preferred shares.

(d) Repurchase of shares related to rights of withdrawal exercised by shareholders who did not join the conversion of preferred shares into common shares.

26.4 Other reserves

Average

price per Common Pref. A Pref. B Total R$ (R$)

Balance on 12/31/2016 6,786,194 8,846,932 1,912,532 17,545,658 273,665 15.60

Shares sold (a) - (1,800,000) - (1,800,000) (15,552) 8.64

Shares transferred (b) 7,055,810 (7,055,810) - - - -

Shares canceled (c) - - (1,912,532) (1,912,532) (17,107) 8.94

Repurchase of shares (d) - 8,878 - 8,878 82 9.24

Balance on 12/31/2017 13,842,004 - - 13,842,004 241,088 17.42

Shares sold (a) (1,800,000) - - (1,800,000) (22,823) 12.68

Balance on 6/30/2018 12,042,004 - - 12,042,004 218,265 18.13

Number of shares

Conversion of

debentures -

5th issue

Actuarial

gains/losses(a)

Exchange

variation/

Conversion

reserves

Deemed cost (a) Total

Balances on December 31, 2016 (45,745) (55,503) (11,384) 2,427,199 2,314,567

Actuarial gains net of deferred income and social contribution taxes - 2,754 - - 2,754

Gains from translation of operations abroad - - 38,006 - 38,006

Partial realization of the adjustment to attributed cost of assets, net

of deferred income and social contribution taxes- - - (56,999) (56,999)

Balances on December 31, 2017 (45,745) (52,749) 26,622 2,370,200 2,298,328

Gains from conversion of operations abroad - - 139,186 - 139,186

Partial realization of the cost adjustment attributed to assets,

net of deferred income and social contribution taxes- - - (41,868) (41,868)

Balances on June 30, 2018 (45,745) (52,749) 165,808 2,328,332 2,395,646




(a) Amount net of the effects of deferred income and social contribution taxes.

26.5 Earnings (losses) per share Basic Basic earnings per share is calculated by dividing the profit attributable to the Company’s shareholders by the weighted average common shares issued during the year, excluding the common shares acquired by the Company and held as treasury shares. As described in item b) of Note 26.3, in November 2017, the Company migrated to the Novo Mercado segment. Thus, all preferred shares were converted into common shares at the ratio of one preferred share for one common share; Considering that there was no change in share capital, with mere conversion of preferred shares, for the purposes of calculation and presentation of earnings per share, this conversion was made retrospectively.

Diluted Diluted earnings per share is calculated by adjusting the weighted average of outstanding common shares assuming the conversion of all common shares that would cause dilution.

26.6 Dividends

The minimum dividends for each fiscal year should be equivalent to the lowest of the following: (i) twenty-five percent (25%) of the net income from the year adjusted according to article 202 of the Brazilian Corporations Law; or (ii) ten percent (10%) of the Company’s cash generation in the respective fiscal year.

2Q18 2Q17 6M18 6M17

(Loss) earnings attributable to shareholders (1,849,557) 198,544 (1,036,430) 648,691

Weighted average number of shares in the period 1,105,826 1,105,826 1,105,826 1,106,777

Weighted average treasury shares (12,042) (13,833) (12,629) (15,371)

Weighted average number of outstanding shares 1,093,784 1,091,993 1,093,197 1,091,406

Total basic (loss) earnings per common share (1.69097) 0.18182 (0.94807) 0.59436

2Q18 2Q17 6M18 6M17

(Loss) earnings attributable to shareholders (1,849,557) 198,544 (1,036,430) 648,691

Weighted average number of shares outstanding 1,093,784 1,091,993 1,093,197 1,091,406

Adjustment by stock options - 1,192 - 1,192

Weighted average number of shares (diluted) 1,093,784 1,093,185 1,093,197 1,092,598

Total diluted (loss) earnings per common share (1.69097) 0.18162 (0.94807) 0.59371




On December 31, 2017, the Company calculated dividends as follows:

Item V of CVM Resolution 207 of December 13, 1996 establishes that: “Interest paid or credited may be calculated only towards the minimum dividend set forth in article 202 of Federal Law 6,404/76 at the amount net of withholding income tax.” The Company, in compliance with article 26, item c) of its Bylaws and CVM Resolution 207, revised the proposed amount of dividends for the fiscal year ended December 31, 2017 and calculated such dividends as follows:

Based on the calculation above, the amount of R$351,513 was considered as minimum mandatory dividends for fiscal year 2017, of which the net amount of R$169,860 was paid as interest on equity, with the balance of R$181,653 outstanding to be paid. The difference of R$1,373 between the amount previously disclosed on December 31, 2017 and the minimum dividend calculated in accordance with article 26, c), item ii) of the Bylaws of the Company

12/31/2017

Net income for the year 1,807,433

Accrual of legal reserve - 5% (90,372)

Accrual of tax incentive reserve (196,604)

Dividend calculation base 1,520,457

Minimum mandatory dividends - 25% 380,115

Dividends paid in advance as interest on own

capital(199,835)

180,280

Net Income under statuary book for the year 1,807,433 Net Income under statuary book for the year 1,807,433

(-) Financial income (379,049)

Net Income Allocation: (+) Financial expenses 1,397,889

Legal Reserve 5% - Art. 31, "a" of the Bylaws and Art. 193 of Federal

Law 6,404/76 90,372 (+) Depreciation/Amortization/Depletion 1,402,778

Tax Incentive Reserve (Profit from Exploration) Art. 19 of Decree

1,598/77 196,604 (+) IRPJ / CSLL 431,632

EBITDA 4,660,683

Dividend distribution base 1,520,458 (-) Fair Value of Biological Assets (192,504)

(+) Other non-recurring adjustments 146,720

Proposed dividends 380,115 Adjusted EBITDA* 4,614,899

Interest on own capital 199,835

(-) Withholding Income Tax on interest on own capital (29,975) (-) Sustaining CAPEX (1,099,771)

Minimum mandatory dividends payable 210,255 Operating Cash Generation - GCO 3,515,128

Dividends - Art 26, "c" of the Bylaws 351,513

Interest on equity 199,835

(29,975)

Minimum mandatory dividends payable 181,653

Article 26, c), i) Article 26, c), ii)

(-) Withholding Income Tax on

interest on own capital




was deemed immaterial by the Management and therefore the financial statements for the fiscal year ended December 31, 2017 will not be restated. Even though the minimum mandatory dividend amounted to R$351,513, Management submitted for approval of the Annual Shareholders Meeting held on April 26, 2018, which approved it, the proposal for total dividends related to fiscal year 2017 of R$380,115, which was paid on December 11, 2017 via interest on equity the amount of R$ 199,835 and on May 9, 2018 the remaining balance.

27 Net Financial Result

2Q18 2Q17 6M18 6M17

Income from financial investments 36,891 77,367 67,609 167,555

Other financial income 2,061 3,964 3,537 10,139

Total financial income 38,952 81,331 71,146 177,694

Loan interest expenses (83,281) (137,580) (163,794) (307,639)

Intercompany loan interest expenses (103,530) (86,282) (191,612) (154,417)

Other interest expenses (24,251) (29,540) (43,719) (50,530)

Other financial expenses (7,018) (16,454) (14,587) (31,713)

Total financial expenses (218,080) (269,856) (413,712) (544,299)

Monetary and exchange variations on loans and financing (1,426,568) (400,994) (1,471,110) (161,148)

Monetary and exchange variations on other assets and liabilities 325,141 61,157 344,066 4,100

Monetary and exchange variation, net (1,101,427) (339,837) (1,127,044) (157,048)

Derivative gain (loss) (2,550,067) (134,152) (2,481,464) 794



Financial result, net (3,830,622) (662,514) (3,951,074) (522,859)

Parent Company

2Q18 2Q17 6M18 6M17

Income from financial investments 40,788 78,817 73,870 170,517

Other financial income 4,219 4,794 7,863 11,769

Total financial income 45,007 83,611 81,733 182,286

Loan interest expenses (188,695) (225,983) (363,715) (465,439)

Other interest expenses (32,324) (32,427) (54,340) (56,489)

Other financial expenses (104,502) (20,220) (141,739) (38,865)

Total financial expenses (325,521) (278,630) (559,794) (560,793)

Monetary and exchange variations on loans and financing (1,471,701) (372,288) (1,509,612) (119,367)

Monetary and exchange variations on other assets and liabilities 332,650 23,542 342,155 (58,538)

Monetary and exchange variation, net (1,139,051) (348,746) (1,167,457) (177,905)

Derivative gain (loss) (2,550,067) (134,152) (2,481,464) 3,669



Financial result, net (3,969,632) (677,917) (4,126,982) (552,743)

Consolidated




28 Net Sales Revenue

Gross sales 3,221,817 2,540,782 6,300,203 4,834,014

Deductions

Taxes on sales (277,980) (254,938) (549,452) (508,136)

Present value adjustment (938) (1,775) (1,943) (3,718)

Returns and cancelations (4,079) (9,221) (24,699) (25,082)

Discounts and rebates (1,413) (3,017) (3,162) (4,638)

Net sales revenue 2,937,407 2,271,831 5,720,947 4,292,440

Parent Company

2Q18 2Q17 6M18 6M17

Gross sales 3,508,393 2,802,947 6,811,279 5,332,155

Deductions

Taxes on sales (281,456) (257,864) (555,663) (513,419)

Present value adjustment (938) (1,775) (1,943) (3,718)

Returns and cancelations (20,791) (10,422) (47,858) (26,603)

Discounts and rebates (1,413) (3,016) (3,161) (4,638)

Net sales revenue 3,203,795 2,529,870 6,202,654 4,783,778

Consolidated

2Q18 2Q17 6M18 6M17




The table below shows the breakdown of consolidated net revenue by foreign and domestic markets, specifying the countries where sales in the export market are more significant:

Net

revenue

% Total net

revenue

Net

revenue

% Total net

revenue

Domestic market (Brazil) 891,602 28% 708,821 28%

Foreign market 2,312,193 72% 1,821,049 72%

China 449,269 14% 476,534 19%

United States 337,485 11% 278,345 11%

Hong Kong 322,960 10% 338,465 13%

France 242,467 8% 115,660 5%

Germany 143,225 4% 90,974 4%

Italy 114,546 4% 61,924 2%

Turkey 104,581 3% 47,827 2%

United Kingdom 79,153 3% 44,045 2%

South Korea 55,295 2% 18,741 1%

Spain 45,951 1% 30,243 1%

Argentina 42,897 1% 39,821 1%

Egypt 39,695 1% - -

Peru 35,267 1% 34,360 1%

Other countries 299,402 9% 244,110 10%

Total net revenue 3,203,795 100% 2,529,870 100%

Consolidated

2Q18 2Q17




Net

revenue

% Total net

revenue

Net

revenue

% Total net

revenue

Domestic market (Brazil) 1,698,412 27% 1,432,822 30%

Foreign market 4,504,242 73% 3,350,956 70%

China 970,802 16% 880,150 18%

United States 622,751 10% 540,279 11%

Hong Kong 734,451 12% 590,216 12%

France 453,401 7% 131,225 3%

Germany 255,870 4% 161,082 3%

Italy 217,618 4% 111,934 3%

Turkey 176,401 3% 73,080 2%

United Kingdom 129,095 3% 85,773 2%

South Korea 81,114 1% 41,221 1%

Spain 85,772 1% 48,045 1%

Argentina 81,945 1% 71,516 1%

Egypt 64,638 1% 56,134 1%

Peru 78,364 1% - 0%

Other countries 552,020 9% 560,301 12%

Total net revenue 6,202,654 100% 4,783,778 100%

6M18

Consolidated

6M17




29 Information by Segment and Geographic Areas

29.1 Criteria for identifying operating segments

The Company evaluates the performance of its business segments through the operating result. The information presented under “Not Segmented” is related to income statement and balance sheet items not directly attributed to the pulp and paper segments, such as, net financial result and income and social contribution taxes expenses, in addition to the balance sheet classification items of assets and liabilities. The operating segments defined by Management are as follows:

i) Pulp: comprises production and sale of hardwood eucalyptus pulp and fluff pulp mainly to supply the foreign market, with any surplus sold in the domestic market.

ii) Paper: comprises production and sale of paper to meet the demands of both

domestic and foreign markets. Consumer goods (tissue) sales are classified under this segment due to its immateriality.




29.2 Information on operating segments

Consolidated

Pulp PaperNot

segmented Total

Net sales revenue 2,155,181 1,048,615 - 3,203,795

Domestic market (Brazil) 154,107 737,496 - 891,602

Foreign market 2,001,074 311,119 - 2,312,193

Asia 859,196 22,416 - 881,612

Europe 787,500 62,019 - 849,519

North America 345,307 43,025 - 388,332

South and Central America 9,071 171,832 - 180,903

Africa - 11,827 - 11,827

Cost of sales (980,976) (697,598) - (1,678,574)

Gross profit 1,174,204 351,017 - 1,525,221

Gross margin (%) 54.5% 33.5% - 47.6%

Operating income (expenses) (122,658) (232,055) - (354,713)

Selling expenses (55,255) (95,049) - (150,305)

General and administrative expenses (67,494) (136,173) - (203,667)

Other operating income (expenses), net 91 (764) - (673)

Equity pick-up - (68) - (68)

Operating profit before net financial income (expense) 1,051,546 118,962 - 1,170,508

Operating margin (%) 48.8% 11.3% - 36.5%

Financial result, net - - (3,969,632) (3,969,632)

Income (loss) before taxes 1,051,546 118,962 (3,969,632) (2,799,124)

Income taxes - - 950,153 950,153

Net income (loss) for the period 1,051,546 118,962 (3,019,479) (1,848,971)

Profit margin for the period (%) 48.8% 11.3% - -57.7%


Products sold (in tons) 801,750 283,610 - 1,085,360

Foreign market 736,056 87,215 - 823,271


2Q18




Consolidated

Pulp PaperNot

segmented Total

Net sales revenue 1,698,151 831,719 - 2,529,870


Foreign market 1,558,836 262,213 - 1,821,049

Asia 843,748 10,001 - 853,749

Europe 475,757 31,713 - 507,470

North America 215,695 73,430 - 289,125


Africa - 5,646 - 5,646

Cost of sales (920,631) (592,733) - (1,513,364)

Gross profit 777,520 238,986 - 1,016,506

Gross margin (%) 45.8% 28.7% - 40.2%

Operating income (expenses) (78,443) (146,904) 17,159 (208,188)



Other operating income (expenses), net (1,470) (12,772) 17,159 2,917

Equity pick-up - 4,004 - 4,004

Operating profit before net financial income (expense) 699,077 92,082 17,159 808,318


Financial result, net (677,917) (677,917)

Income (loss) before taxes 699,077 92,082 (660,758) 130,401

Income taxes - - 68,143 68,143

Net income (loss) for the period 699,077 92,082 (592,615) 198,544

Profit margin for the period (%) 41.2% 11.1% - 7.8%

Depreciation, depletion and amortization 240,626 91,989 - 332,615

Products sold (in tons) 916,529 271,948 - 1,188,477

Foreign market 826,529 91,860 - 918,389


2Q17




Consolidated

Pulp PaperNot

segmented Total


Domestic market (Brazil) 330,654 1,367,758 - 1,698,412

Foreign market 3,900,852 603,390 - 4,504,242

Asia 1,849,024 44,058 - 1,893,082

Europe 1,402,026 114,059 - 1,516,085

North America 631,738 76,763 - 708,501


Africa - 20,122 - 20,122

Cost of sales (1,944,144) (1,320,356) - (3,264,500)

Gross profit 2,287,362 650,792 - 2,938,154

Gross margin (%) 54.1% 33.0% - 47.4%

Operating income (expenses) (231,986) (401,957) - (633,943)



Other operating income (expenses), net (10,710) 170 - (10,540)

Equity pick-up - (121) - (121)

Operating profit before net financial income (expense) 2,055,376 248,835 - 2,304,211


Financial result, net - - (4,126,982) (4,126,982)

Income (loss) before taxes 2,055,376 248,835 (4,126,982) (1,822,771)

Income taxes - - 786,927 786,927

Net income (loss) for the period 2,055,376 248,835 (3,340,055) (1,035,844)

Profit (loss) margin for the period (%) 48.6% 12.6% - -16.7%


Total assets (a) 18,927,168 7,292,306 9,325,069 35,544,543

Total liabilities (a) 681,147 742,204 23,409,739 24,833,090

Equity of controlling shareholders (a) - - 10,702,919 10,702,919

Equity of non-controlling shareholders (a) - - 8,534 8,534

Total equity (a) - - 10,711,453 10,711,453

Products sold (in tons) 1,677,787 567,651 - 2,245,438

Foreign market 1,531,086 182,569 - 1,713,655


6M18




(a) The Company’s evaluation based on operating segments is only made for assets and liabilities comprising

the measurement of Return on Invested Capital (“ROIC”), since this is used in the decision-making process.

Consolidated

Pulp PaperNot

segmented Total


Domestic market (Brazil) 289,611 1,143,211 - 1,432,822

Foreign market 2,862,978 487,978 - 3,350,956

Asia 1,507,497 18,069 - 1,525,566

Europe 892,365 60,177 - 952,542

North America 419,603 133,158 - 552,761


Africa 7,022 16,806 - 23,828

Cost of sales (1,894,358) (1,185,550) - (3,079,908)

Gross profit 1,258,231 445,639 - 1,703,870

Gross margin (%) 39.9% 27.3% - 35.6%

Operating income (expenses) (172,336) (271,688) 17,159 (426,865)



Other operating income (expenses), net (15,903) (5,613) 17,159 (4,357)

Equity pick-up - 4,822 - 4,822

Operating profit before net financial income (expense) 1,085,895 173,951 17,159 1,277,005


Financial result, net - - (552,743) (552,743)

Income (loss) before taxes 1,085,895 173,951 (535,584) 724,262

Income taxes - - (75,571) (75,571)

Net income (loss) for the period 1,085,895 173,951 (611,155) 648,691

Profit (loss) margin for the period (%) 34.4% 10.7% - 13.6%

Depreciation, depletion and amortization 503,808 194,535 - 698,343

Total assets (a) 18,535,322 6,168,596 4,360,450 29,064,368

Total liabilities (a) 724,456 588,190 16,924,230 18,236,876

Equity of controlling shareholders (a) - - 10,827,492 10,827,492

Equity of non-controlling shareholders (a) - - - -

Total equity (a) - - 10,827,492 10,827,492

Products sold (in tons) 1,831,919 536,593 - 2,368,512

Foreign market 1,634,664 176,093 - 1,810,757


6M17




29.3 Net paper sales by product

The following table shows the breakdown of consolidated net sales by product.

(a) Revenue from fluff pulp is immaterial (around 1% of total net sales) and, therefore, was included in market pulp sales. (b) Tissue is a recently launched product and its revenues represent less than 1% of total net sales. Therefore, it was included in the sales of printing and writing paper.

30 Expenses by Nature

Products 2Q18 2Q17 6M18 6M17

Market pulp (a) 2,155,181 1,698,150 4,231,506 3,152,589

Printing and writing paper (b) 864,249 648,524 1,599,489 1,277,256

Paperboard 170,591 158,788 337,301 309,376

Other 13,774 24,408 34,358 44,557

Total net sales 3,203,795 2,529,870 6,202,654 4,783,778

Consolidated

2Q18 2Q17 6M18 6M17

Cost of sales

Personnel expenses (146,999) (134,916) (290,163) (265,518)

Variable cost (711,640) (703,692) (1,453,164) (1,368,904)

Logistics cost (72,353) (61,051) (153,125) (130,201)

Depreciation, depletion and amortization (359,207) (321,685) (732,774) (676,754)

Other costs (146,915) (97,587) (233,929) (266,394)

(1,437,114) (1,318,931) (2,863,155) (2,707,771)

Selling expenses


Services (19,066) (19,352) (32,048) (29,850)

Logistics cost (192,220) (165,084) (376,589) (328,155)

Depreciation and amortization (941) (819) (1,819) (1,662)

Other expenses (a)(20,431) (11,228) (39,295) (28,153)

(254,102) (214,276) (490,126) (422,944)

Administrative expenses


Services (35,954) (21,353) (59,582) (41,700)

Depreciation and amortization (7,945) (7,451) (15,747) (14,755)

Other expenses (b) (17,040) (14,686) (32,313) (27,881)

(177,113) (109,277) (312,848) (212,916)

Other operating (expenses) income

Result from disposal of other products (1,421) (353) (3,242) 1,521

Result from disposal of fixed and biological assets (d) (4,573) 740 (5,079) 4,128

Provision for loss and write-off of fixed and biological assets (c) (3,317) (769) (12,299) (1,077)

Land conflict agreement - - - -

Amortization of intangible assets - - - -

Gain (loss) from restatement of fair value of biological assets 5,954 (25,268) 5,954 (25,268)

Credits received from court settlements - 20,231 - 20,231

Tax recovery 47 - 152 -

Land lease with subsidiaries - (2,929) - (5,768)

Receipt of royalties 199 - 428 -

Other operating income (expenses), net (2,273) 6,202 (1,909) 8,885

(5,384) (2,146) (15,995) 2,652

Parent Company




(a) Includes allowance for doubtful accounts, insurance, materials (use and consumption), expenses with travel,

accommodation, participation in trade fairs and events.

(b) Includes corporate expenses, insurance, materials (use and consumption), social projects and donations, expenses with travel and accommodation.

(c) On June 30, 2018, the amount refers to R$9,936 of write-offs related to losses and damages with biological

assets, and R$2,363 with property, plant and equipment (June 30, 2017, the amount refers to R$1,521 of write-offs related to losses and damages with biological assets and R$2,402 with property, plant and equipment).

On June 30, 2018, the amount refers to R$2,478, resulting from the sale of biological assets, and R$2,601 from

the sale of property, plant and equipment.

2Q18 2Q17 6M18 6M17

Cost of sales


Variable cost (766,289) (700,631) (1,490,061) (1,378,974)

Logistics cost (247,028) (235,156) (488,263) (463,000)

Depreciation, depletion and amortization (365,118) (323,838) (740,939) (680,948)

Other costs (144,458) (118,823) (246,392) (291,468)

(1,678,574) (1,513,364) (3,264,500) (3,079,908)

Selling expenses


Services (23,752) (9,130) (38,222) (17,874)

Logistics cost (71,338) (43,928) (131,051) (96,751)

Depreciation and amortization (1,173) (940) (2,143) (1,881)

Other expenses (a)(20,035) (13,810) (37,894) (26,535)

(150,305) (94,418) (272,262) (195,042)

Administrative expenses


Services (45,300) (24,605) (71,994) (47,144)

Depreciation and amortization (8,641) (7,837) (16,788) (15,514)

Other expenses (b) (19,727) (19,207) (37,505) (35,289)

(203,667) (120,691) (351,020) (232,288)

Other operating (expenses) income

Result from disposal of other products 1,994 2,718 1,867 6,072

Result from disposal of fixed and biological assets (d) (4,573) 740 (5,079) 4,128

Provision for loss and write-off of fixed and biological assets (c) (3,317) (769) (12,299) (3,923)

Land conflict agreement - - - (11,779)

Amortization of intangible assets (1,872) (2,089) (3,556) (4,133)

Gain (loss) from restatement of fair value of biological assets 5,954 (25,268) 5,954 (25,268)

Credits received from court settlements - 20,231 - 20,231

Tax recovery 47 - 336 -

Land lease with subsidiaries - - - -

Receipt of royalties 199 - 428 -

Other operating income (expenses), net 895 7,354 1,809 10,315

(673) 2,917 (10,540) (4,357)

Consolidated




31 Complementary cash flow information of non-cash transactions

32 Events after the reporting period (i) Acquisition of land from Duratex On July 2, 2018, Suzano exercised the option to acquire around twenty thousand (20,000) hectares of rural property and five million, six hundred thousand cubic meters (5,600,000 m³) of forests, for R$749.4 million, adjusted in accordance with the Contract signed on February 5, 2018 (Note 1.1.a) iii)). The operation object of the agreement has already been approved by the competent regulatory bodies. (ii) Approval of the Protocol and Justification On July 26, 2018, Suzano's Board of Directors and Fiscal Council approved, among other matters, the conclusion of the Protocol and Justification between Suzano, Fibria Celulose SA and Eucalipto Holding SA, which establishes the terms and conditions of the corporate reorganization that will allow the combination of the operations and shareholding bases of Suzano and Fibria, object of the Commitment of Voting and Assumption of Obligations celebrated on March 15, 2018 and disclosed through the Company's Relevant Fact of March 16, 2018 (Note 1.1 b) i)). The transaction, the consummation of which remains subject to usual conditions already disclosed, including the approval by the competition authorities in Brazil and abroad, will be submitted to the approval of Suzano shareholders at an extraordinary general meeting to be duly convened and held. (iii) Auction of the Port of Itaqui (MA) On July 27, 2018, the Company participated in the public auction nº 03/2018, promoted by National Agency for Waterway Transportation (“ANTAQ”), a regulatory agency, to lease public areas and infrastructure for handling and storage of general paper and pulp. The Company presented the winning proposal for the concession of the 53,545 square meters area in the Port of Itaqui (MA). The new terminal project, estimated by ANTAQ at R$ 215 million, represents another step in the investment cycle carried out by the Company. The initial concession of the site is 25 years. (iv) Capitation of resources

6/30/2018 6/30/2017

Offsets of other taxes payable (139,146) (174,642)

Exchange variation on investees 139,186 25,994





On July 31, 2018, the Company capitalized funds with Safra Bank SA in the form of an Export Credit Note in the amount of R$ 770,600, maturing in July 2026 with an interest rate of 0.99 % per annum plus CDI, which will be paid semi-annually. The net proceeds will be fully used to finance the Company's exports. For all the volume of this caption, the Company has already contracted the corresponding hedge with a cost of 5.71% per annum plus exchange variation. (v) Reduction of financial commitment On July 31, 2018, the Company announced that it approved, in connection with the transaction aimed at combining the operations and shareholding bases of the Company and Fibria (Note 1.1 b) i) through a corporate reorganization in accordance with the terms disclosed, the reduction from US$ 9.2 billion to US$ 6.7 billion of the firm financial commitment with certain international financial institutions to finance the cash portion of the transaction, the disbursement of which is conditioned, among other conditions, to the consummation of the transaction.




Report on review of quarterly information To the Board of Directors and Shareholders Suzano Papel e Celulose S.A. Introduction We have reviewed the accompanying parent company and unaudited condensed consolidated interim financial information of Suzano Papel e Celulose S.A. ("Company"), included in the Quarterly Information Form (ITR) for the quarter ended June 30, 2018, comprising the balance sheet at that date and the statements of income and comprehensive income for the quarter and six-month period then ended, and the statements of changes in equity and cash flows for the six-month period then ended, and a summary of significant accounting policies and other explanatory information. Management is responsible for the preparation of the parent company and unaudited condensed consolidated interim financial information in accordance with the accounting standard CPC 21, Interim Financial Reporting, of the Brazilian Accounting Pronouncements Committee (CPC) and International Accounting Standard (IAS) 34, Interim Financial Reporting issued by the International Accounting Standards Board (IASB), as well as the presentation of this information in accordance with the standards issued by the Brazilian Securities Commission (CVM), applicable to the preparation of the Quarterly Information (ITR). Our responsibility is to express a conclusion on this interim financial information based on our review. Scope of review We conducted our review in accordance with Brazilian and International Standards on Reviews of Interim Financial Information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Brazilian and International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the interim information Based on our review, nothing has come to our attention that causes us to believe that the accompanying parent company and unaudited condensed consolidated interim financial information included in the quarterly information referred to above has not been prepared, in all material respects, in accordance with CPC 21 and IAS 34, applicable to the preparation of the Quarterly Information, and presented in accordance with the standards issued by the Brazilian Securities Commission (CVM).

Emphasis of matter We draw attention to Note 1.1 (b) (i) to this Quarterly information (ITR), which states that the Company signed Voting Agreement and Obligation Undertaking with the goal of combining the Company's operations with Fibria Celulose S.A. The closing of the transaction is subject to certain conditions, including approval by antitrust-related authorities in Brazil and abroad. Our opinion is not qualified in respect of this matter.




Other matters Statements of value added We have also reviewed the parent company and unaudited condensed consolidated statements of value added for the six-month period ended June 30, 2018. These statements are the responsibility of the Company's management, and are required to be presented in accordance with standards issued by the Brazilian Securities Commission (CVM) applicable to the preparation of Quarterly Information (ITR) and are considered supplementary information under IFRS, which do not require the presentation of the statement of value added. These statements have been submitted to the same review procedures described above and, based on our review, nothing has come to our attention that causes us to believe that they have not been prepared, in all material respects, in a manner consistent with the parent company and unaudited condensed consolidated interim financial information taken as a whole.

São Paulo, August 09, 2018 PricewaterhouseCoopers Auditores Independentes CRC 2SP000160/O-5 Tadeu Cendón Ferreira Contador CRC 1SP188352/O-5

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