Aug 13, 2026 earnings call — Pulp strength, Arbex closing, cost and deleveraging focus
Pulp sales 2.9 million tons and pulp EBITDA BRL 4.2 billion with a 48% margin.
Revenue $2.2B (est $2.3B) · EPS $0.28 (est $0.26)
Key quotes
"In Europe and North America, pulp demand recurrently outperformed expectations, supported by stronger paper production due to war-related effects and inventory replenishments across the value chain as customers aim to get ahead of expected cost increases."
"The second point that I also would like to highlight is that on July 1, we had the Arbex closing, fully aligned with what we have previously expected in terms of time line."
"In second quarter 2026, our costs increased by BRL 275 million due to higher oil-related prices. And we had a positive cash impact of nearly BRL 150 million from our hedging portfolios, compensating nearly 60% of the negative impact."
Analyst Q&A 6
cash cost drivers and debt plan
Q (Caio Ribeiro · BofA): Analyst asked what will drive the BRL 800/tonne cash cost target in H2 and how sticky cost impacts from the conflict may be next year. He also asked the path to reach below 2.5x debt/EBITDA in 2027-28 and whether that relies on free cash flow or divestments.
A: Management said most free cash flow will come from operations and Arbex efficiencies will help deleveraging. They are also selling noncore land plots already to aid debt reduction. For cash costs, they listed higher production (fewer downtimes), lower wood consumption via the Pangeia deal, and occasional energy surplus as drivers for H2.
"So the bulk of the free cash flow generation will continue to come from our operations." — Marcos Assumpcao
Arbex update, imports and U.S. profit
Q (Marcio Farid Filho · Goldman Sachs): Analyst asked for an update on Arbex now that integration has started and whether management still believes the original value case. He also asked about Chinese and Indonesian imports, possible government protection, and U.S. profitability.
A: Management said the carve-out work and value streams are intact, governance is set with a board and a joint management team to deliver efficiencies. They noted a big inflow of Chinese imports in H1 driven by a stronger real and lower freight, and industry talks via IBA about import duties. For the U.S., they had a difficult Q2 due to a cold maintenance outage and a pricing lag, but see strong orders and better operations into H2.
"We have seen a big inflow of Chinese imports in the first half of the year." — Fabio Almeida Oliveira
pulp demand outlook and capital allocation
Q (Rafael Barcellos · Bradesco BBI): Analyst asked if demand will be stronger into late August and whether hardwood pulp is at the bottom. He also asked how the company will balance buybacks, potential investments (Lenzing, Arbex), and deleveraging.
A: Management said they are constructive on volumes and expect August orders to exceed the normal pattern, with early signs Chinese integrated producers are negotiating. They confirmed the company priority is deleveraging, with buybacks secondary; they have begun small land divestments but no major asset sales planned now.
"We expect that August order intake will exceed significantly our average order intake pattern." — Leonardo Grimaldi
dividend policy timing and China costs
Q (Daniel Sasson · Itau BBA): Analyst asked when the company might change formal policies on shareholder returns like dividends given strong free cash flow. He also asked for detail on Chinese pulp production costs and wood import impacts.
A: Management said they focus first on improving competitiveness and extracting value from recent investments like Arbex, and they will prioritize reaching 2.5x leverage before deciding on returning more cash to shareholders. They gave a Chinese cash-cost range of $540 or $535 to $550, noted marginal cash cost near $630, and highlighted large unplanned downtimes (roughly 1.7 million tons last year, now about 2.5 million tons) and falling port inventories as supportive of a market recovery.
"As we reach that, we will be able to decide on a more aggressive or not return to shareholders." — Marcos Assumpcao
working capital and M&A stance
Q (Rodolfo De Angele · JPMorgan): Analyst asked whether management can free working capital to help deleveraging in H2 and pressed management to clarify how they view M&A versus focusing on deleveraging and shareholder returns.
A: Management said improving working capital is a strong internal focus, but the line can fluctuate and is hard to forecast. They said the strategy is focused on reshaping competitiveness and driving demand via fiber-to-fiber initiatives, with deleveraging the priority for the next 2–3 years and no M&A in the pipeline.
"I have been saying that our strategy, it's very concentrated currently on, I'll call reshaping the level of competitiveness of our company." — João Fernandez de Abreu (CEO)
China overcapacity and market exposure
Q (Alfonso Salazar · Scotiabank): Analyst asked how structural excess capacity and higher Chinese exports could affect grades and markets, and how Arbex exposure factors into that risk.
A: Management disagreed that Chinese paper consumption is weak; they said packaging and tissue show double-digit demand growth while printing/writing grows slower. They noted overcapacity exists, that printing and packaging grades are easier to export and thus more exposed, and that tissue is harder to export so less exposed; risk differs by grade.
"We don't agree that the consumption in China in paper grades is weak." — Leonardo Grimaldi