Suzano: 2014 investment will be $ 1.75 billion, down 33%

Suzano Papel e Celulose plans to invest R $ 1.75 billion in 2014, amount 33% lower than the $ 2.62 billion worth contributed last year. According to the President of the company, Walter Schalka, about $ 600 million of that amount refer to the project of the new pulp mill of Maranhão, which came into operation on 30 December.
Julio Bittencourt/Value
Completed project disbursements, investment standardised in maintenance of Suzano should revolve around R $ 1 billion per year.
With regard to the new pulp mill, Suzano reported that investments in the industrial project, previously estimated at $ 2.3 billion, were 4.4% above this value, reaching about $ 2.4 billion. "This reflects in part the Exchange and elsewhere the cost with labor," explained Schalka, during the morning results conference this Friday.
In spite of a part of the investment in Maranhão have "slipped" to 2014, as well as project-related disbursements, the expectation of the Suzano's direction is that cash flow is positive in 2014. "We will work to gradually reduce leverage, as the factory of Maranhão begins to generate cash," he added. "The focus is on reducing the leverage".
The Executive said that the company is looking at "opportunities" for expansion of its forestry base both in Maranhão and Bahia, but gave no details of possible negotiations which are in progress.
Increased cellulose
Suzano has found it difficult to apply the price increase announced for the short-fiber pulp from January, according to Schalka. That month, the reference price of Suzano spent $ 820 per tonne in Europe, $ 720 a ton in China and $ 880 ton in North America.
"There are difficulties to implement these prices and the Foex [Finnish consulting price index Foex] is stable for about 90 days," said the Executive. "The global supply grows, with the entry into operation of the Suzano plant in Maranhao and other units."
In his assessment, it is unlikely that pulp prices find space for a high significant in this scenario of increased global supply. "We are facing difficulties to implement the prices, but we're going to get better levels. Today's prices not paying the shareholder accordingly. "
In this sense, he stressed Schalka, Suzano does not rule out resorting to administrative stops (or market) of pulp mills, in order to retrieve business margins. Last year, the company suspended production temporarily at two plants under paper — Embu and Rio Verde — with the aim of improving margins, especially in the export of paper. The initiative was successful.
Transgenic eucalyptus to FuturaGene, biotech company that is owned by Suzano Papel e Celulose, submitted on January 16 to the national technical biosafety Commission (CTNBio) an application for approval of planting and commercial use of transgenic eucalyptus.
According to Schalka, the testing issues by FuturaGene with genetically modified organisms showed a productivity gain of 20% compared to traditional eucalyptus clone.
Asked about the estimated deadlines, Schalka said there is no way to draw a timeline, once the process is in the hands of the CNTBio. The Executive said, however, that the company intends to start planting genetically modified eucalyptus in São Paulo, from the moment there is approval of the activities.