Its biggest buyer is China. Its biggest prospects are in the US. Its biggest acquisition in nearly a decade is focused on Europe. Brazilian pulp and paper giant Suzano SA is going global as it navigates trade tensions between geopolitical heavyweights.
The company harvests raw materials from its eucalyptus groves that go into making everything from books to toilet paper, and claims to play a role in the lives of 2 billion people worldwide. Its executives say they have a plan to navigate this tumultuous time in global commerce, one that could provide a playbook for other companies looking not only to survive but to profit.
Suzano's strategy, at its heart, is to extend its ties in all directions. In the US, it’s made small acquisitions after its failed $15 billion bid to buy International Paper Co. last year. In China, it’s moving some procurement operations to Shanghai to find more local suppliers and recently issued its first yuan-denominated bonds. And last week, it snapped up a stake in Kimberly-Clark Corp.’s global tissue business in a $3.4 billion deal that will boost Suzano's presence in Europe.
"We're agnostic when it comes to geography,” Chief Executive Officer João Alberto Abreu said Thursday in an interview. “We evaluate and study, but there's no geography we consider off-limits.”
While Abreu concedes the barrage of tariffs launched by Donald Trump risks denting global growth, his opportunistic attitude epitomizes how business owners and policymakers in Latin America’s largest economy view the trade war. A commodities powerhouse that exports everything from soybeans to orange juice and iron ore, Brazil is in a unique position to continue tapping both the US and Chinese markets, with President Luiz Inacio Lula da Silva saying he has no desire to pick a side.
That sentiment is shared by David Feffer, Suzano's chairman and grandson of the late Leon Feffer, the Ukrainian immigrant who founded the company in 1924. Though David succeeded his father Max as CEO in 2001, he decided to professionalize the management two years later — an unusual move in Brazil’s family dominant corporate culture.
Suzano's strategy didn’t immediately win over investors, who are focused on a slump in global pulp prices tied in part to the trade war. First-quarter results missed analyst estimates, with shipments lower than expected. But shares surged more than 6% on news of the Kimberly-Clark deal, paring year-to-date losses to 14%.
While prices in the US are set to climb on tariffs, Suzano failed to raise overall prices as much as expected. Pulp prices in the top market, China, even fell recently, analysts at BTG Pactual led by Leonardo Correa said in a report last month. That softening helped suppress Suzano's share performance compared to Brazil’s benchmark Ibovespa index.
Still, the company's potential value creation is higher than what's currently reflected in the share price, according to XP Inc. analyst Lucas Laghi. “In the commodities world, this is still the stock we like the most,” he said.
Suzano's earnings before interest, taxes, depreciation and amortization topped 23.8 billion reais ($4.2 billion) in 2024, up more than 30% from the previous year. Analysts are projecting 4% growth this year, even with the pulp price decline, and a 16% increase in 2026. Seventeen of the 18 analysts tracked by Bloomberg recommend buying the shares, and their consensus price target calls for a 41% return over the next 12 months, eleventh-best among Brazil-listed companies.
"We don't see any change in Suzano's strategy,” said S&P Global Ratings analyst Luisa Vilhena. “And I don’t think there should be, given the company's size and ability to generate cash even at low pulp prices.”
Executives chalk Suzano's failure to reach a deal with International Paper up to their refusal to spend too much for the US company. They’ve come out of that experience with a focus on defending their core market from competitors while keeping an eye out for smaller opportunities. For Feffer, it’s turned into a three-word mantra: decentralize, internationalize and verticalize.
That applies to both China and the US. Suzano has long had strong commercial ties with the Asian powerhouse and is focused on maintaining good relationships with Chinese clients to defend its territory as competitors like Celulosa Arauco y Constitucion SA of Chile plan to start new mills.
"There are people coming to set up factories in Brazil,” Abreu said. Suzano's goal is to continue “having a 30% market share and being the leader in pulp production costs.”
US buyers, meanwhile, represent about 20% of Suzano's pulp volumes. Missing out on International Paper sent the company on a quest for other stateside operations. It explored a deal with Clearwater Paper Corp. and weighed buying assets from Rand-Whitney Group LLC, a paper and packaging company controlled by Kraft Group LLC. In the end, it acquired an Arkansas mill and North Carolina extrusion facility from Pactiv Evergreen Inc. last July.
Diversifying is key for pulp and paper companies as demographic and economic trends weigh on demand in China, according to Rabobank analyst Andres Padilla. “You have to maintain this good openness with everyone so as not to depend on just one bloc,” he said. Brazilian players like Suzano “have the opportunity to keep channels open and strengthen the commercial ties that already exist.”
The company also hopes to shift the supply chain by convincing paper producers in North America and Europe to buy more of the cheaper hardwood pulp it makes in Brazil. But it’s no easy task as many producers in the cartonboard segment have onsite pulp production and don’t depend on outside suppliers.
But Suzano's advantage lies in the fact that it owns some of the lowest-cost mills in the world, meaning its operations remain profitable during periods of price weakness. The softwood fiber produced mainly in the Northern Hemisphere has higher production costs and is becoming more expensive relative to hardwood.
That's convinced some US paper producers to shift from one product to the other, mostly in the tissue segment, according to Patrick Cavanagh, an economist at commodity price reporting agency Fastmarkets. And Suzano weighed the market shift between fibers in its latest deals. “The opportunity to replace fiber is a synergy that only we have when evaluating certain assets,” Abreu said.
With its Kimberly-Clark joint venture, for example, Suzano sees room to speed the shift to hardwood in Europe. While mills need technological investment for that to happen, that process could be accelerated after Suzano takes control of the assets.
At the core of Suzano's strategy are its eucalyptus farms. The commercial plantations are harvested every seven years and then replanted. About 1.2 million young trees are planted every day. By comparison, some of the high-cost Northern Hemisphere pulp producers have less control over the wood they use and depend on sourcing chips or other sawmill residues.
"What effectively makes pulp production advantageous in Brazil is the forestry technology,” said Marcello Collares, vice president for Latin America forest-product business development at market intelligence agency ResourceWise.
But the trade war could open other doors for Suzano, too. Should Trump tensions persist, US pulp producers may steer clear of the Chinese market due to potential retaliatory levies imposed by Beijing, leaving more room for Suzano. And if tariffs keep Chinese packaging paper from competing with American products, the Brazilian company’s new US mill will prove a well-aimed shot.
Snapping up Kimberly-Clark’s assets will bring a temporary halt to its acquisition hunt in the US. While the company had been watching closely as companies there reorganize with an eye to deals that would give it greater stateside market access, Abreu said the focus over the next two to three years will be on streamlining its new assets.
Asked about the future of its North American business, the CEO said: “We have an operation there that doesn’t yet have the scale we consider ideal, but we’re not in a rush.”
Source: bloomberg
