Oct. 18, 2006 (Press Release) - Suzano Papel e Celulose, one of Latin America's largest integrated producers of pulp and paper, announces consolidated results for the third quarter of 2006 (3Q06) today.

Starting this quarter, our consolidated results will be released including our 50% holding in Ripasa. Our year-on-year comparisons will be based on the proportional holding in Ripasa in each period. A section covering pro-forma results was included, with comparisons based on a 50% holding in Ripasa in each period.

Key points:

• New pulp price increase of US$ 20 per ton announced for every market is expected to bring pulp prices US$ 680/ ton CIF Northern Europe by November 2006.
• Record Ebitda: US$138 million, including sales of Ripasa's products
• Mucuri Project: assembly of plant already started in line with expected financial and physical schedule
• Share liquidity significantly improved after conclusion of Ripasa restructuring: daily average increased from R$ 3.2 million in 2Q06 to R$ 6.2 million in 3Q06.
• Suzano now sells Ripasa products, including the Ripax® cut size paper brand.

International market prices for pulp increased once again in the third quarter of 2006, continuing their upward cycle, influenced by a strong moment for demand - with market pulp demand growing by 5% in the first eight months of 2006 when comparing with the same period in 2005 and BEKP demand growing by 15% in the same period, and by discipline in supply. Several major world producers carried out their maintenance stoppages this quarter, which was also positive for the market. The market scenario for pulp leads us to take a positive view for the fourth quarter and further ahead, but important new projects will be beginning to come into operation, which could affect the pulp price. At the beginning of October the price of eucalyptus pulp CIF Northern Europe was US$660/ ton and November prices were announced at US$ 680 /ton.

Financial Results: Suzano Papel e Celulose with proportional consolidation of Ripasa

Ebitda 3Q06 vs. 3Q05

3Q06 Ebitda was R$ 299.1 million, 25.3% higher than in 3Q05. Ebitda margin on net sales was 35.8%, vs. 31.6% in 3Q05.

Main positive effects on Ebitda in this quarter:

(i) Higher stake in Ripasa.

(ii) Higher volume of paper and pulp sold.

(iii) 7.7% reduction in unit COGS, to R$ 1,138/ ton.

(iv) Higher sales of paper to domestic market.

Factors offsetting these effects were:

(i) Domestic market average prices 7.7% lower, led by the strengthening of the Real and sales of the lower-added-value products manufactured by Ripasa reflecting in a reduction of approximately 10.8% in the domestic paper prices.

(ii) Increase in administrative and selling expenses, mainly reflecting the larger stake in Ripasa in this quarter's result.

Ebitda: 3Q06 vs. 2Q06

3Q06 Ebitda was 13.7% higher than in 2Q06, and Ebitda margin 2.4% higher - up from 33.4% in 2Q06, to 35.8%.

The main positive effects causing the increase in Ebitda margin and Ebitda were:

(i) Increased sales volume, especially of papers in the domestic market.

(ii) Higher average export price, partially offsetting the effect of lower domestic market prices.

These effects were partially offset by:

(i) Higher selling expenses reflecting higher volumes sold.

(ii) Lower average domestic paper prices, mainly reflecting start of sales of Ripasa's lower-added-value paper products.

Net income: 3Q06 vs. 3Q05

As well as the operational factors affecting Ebitda, the following factors affected net income, which at R$ 98.0 million in 3Q06 was lower than the net profit of R$ 153.2 million in 3Q05:

(i) Monetary and exchange rate variation expense of R$ 14.2 million in 3Q06, vs. revenue of R$ 77.2 million in 3Q05.

(ii) Lower income tax expense: R$ 24.8 million in 3Q06, vs. R$ 42.2 million in 3Q05.

(iii) Higher net financial expenses: R$ 53.7 million in 3Q06, vs. R$ 31.0 million in 3Q05.

Net income: 3Q06 vs. 2Q06

Lower net income in 3Q06 than 2Q06 mainly reflects the negative affect of the movement in the exchange rate, compared with the strengthening of the Real in 2Q06. The main factors are:

(i) Monetary and FX variation of R$ 14.2 million in 3Q06, vs. revenue of R$ 4.4 million in 2Q06.

(ii) Provision for income tax and Social Contribution of R$ 24.8 million in 3Q06, compared with provision of R$ 27.4 million in 2Q06.

(iii) Net financial expenses of R$ 53.7 million in 3Q06, vs. net financial expense of R$ 49.0 million in 2Q06.

Suzano Papel e Celulose is one of the largest integrated producers of paper and eucalyptus pulp in Latin America, with pulp production capacity of 1.1 million tons/year and paper production capacity of 820 thousand tons/year. It offers a broad range of pulp and paper products to the Brazilian and international markets, and has leadership positions in key segments of the Brazilian markets. It has four principal product lines: (i) eucalyptus pulp; (ii) uncoated woodfree printing and writing paper; (iii) coated woodfree printing and writing paper; and (iv) paperboard. Suzano Papel e Celulose has 50% of the controlling interest in Ripasa S.A Celulose e Papel ("Ripasa"), which produces pulp, printing and writing paper, specialty papers, paperboard and cardboards. Ripasa reported net sales of R$ 1.4 billion in 2004 from sales of 612,000 tons of products. It has four industrial units in São Paulo State and forest areas totaling 86,400 hectares.

SOURCE: Suzano Papel e Celulose