corporate presentation (october)
TRANSCRIPT
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Corporate PresentationOctober 2014
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Disclaimer
The information contained in this presentation may include statements whichconstitute forward-looking statements, within the meaning of Section 27A of the U.S.Securities Act of 1933, as amended, and Section 21E of the U.S. Securities ExchangeAct of 1934, as amended. Such forward-looking statements involve a certain degree ofrisk and uncertainty with respect to business, financial, trend, strategy and otherforecasts, and are based on assumptions, data or methods that, although consideredreasonable by the company at the time, may turn out to be incorrect or imprecise, ormay not be possible to realize. The company gives no assurance that expectationsdisclosed in this presentation will be confirmed. Prospective investors are cautionedthat any such forward-looking statements are not guarantees of future performanceand involve risks and uncertainties, and that actual results may differ materially fromthose in the forward-looking statements, due to a variety of factors, including, but notlimited to, the risks of international business and other risks referred to in thecompany’s filings with the CVM and SEC. The company does not undertake, andspecifically disclaims any obligation to update any forward-looking statements, whichspeak only for the date on which they are made.
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The Company
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Shareholder Structure
(1) Position as of January 31, 2014. Under the shareholders' agreement between BNDESPar and Votorantim Industrial, BNDESPar must hold at least 11% of the total capital between Oct/12 and Oct/2014.
VotorantimIndustrial S.A.
29.42%
BNDESParticipações
30.38%(1)
FreeFloat
40.20%(2)
29%
71%
NYSE
Average Daily Trading Volume (LTM): US$ 32 million
BM&FBOVESPA
HIGHLIGHTS
Listed on Novo Mercado, highest level of Corporate Governance at BM&FBovespa:
• Only 1 class of shares →100% voting rights
• 100% tag along rights (Brazilian corporate law establishes 80%)
• Board of Directors with minimum 20% independent members
• Financial Statements in International Standards – IFRS
• Adoption of Arbitration Chamber
Policies approved by the Board of Directors
• Liability and liquidity management
• Market risk Management
• Risk Management
• Corporate governance
• Information disclosure
• Stock trading
Listed in the most important sustainability indexes
Level III
(2) Free Float 40.14% + Treasury 0.06%
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A Winning Player
Pulp capacity million tons 5,300
Net revenues R$ billion 7.1
Total area (1) thousand hectares 962
Planted area(1) thousand hectares 555
Net Debt R$ billion 6.7
Net Debt/EBITDA (in Dollars)(2) X 2.4
Net Debt/EBITDA (in Reais) X 2.3
Source: Fibria(1) Including 50% of Veracel, excluding forest partnership areas and excluding the forest base linked to the sale of forest assets in Southern Bahia State and Losango. (2) For covenants purposes, the Net Debt/EBITDA ratio is calculated in Dollars.
Port Terminal Pulp Unit
Três Lagoas
Santos
AracruzPortocel
Caravelas
BelmonteVeracel
Jacareí
Superior Asset Combination Main Figures – 2Q14 LTM
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Fibria’s Units Industrial Capacity
Três Lagoas – Mato Grosso do Sul – 1,300 thousand t/year Jacareí – São Paulo – 1,100 thousand t/year
Aracruz – Espírito Santo – 2,340 thousand t/year Veracel – Bahia – 560 thousand t/year *
* Veracel is a joint venture between Fibria (50%) and Stora Enso (50%) and the total capacity is 1,120 thousand ton/year
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Fibria’s Strategy
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Leadership Position
(1) Fiber Consumption, Recycled Fiber and Pulp: RISI | Market Pulp, Hardwood and Eucalyptus: PPPC Special Research Note - November 2013(2) Hawkins Wright – Outlook for Market Pulp, August 2014
Market Pulp Capacity Ranking 2014(2) (000t)
- 1.000 2.000 3.000 4.000 5.000 6.000
Canfor
ENCE
Eldorado
Resolute
Domtar
Mercer
Sodra
Ilim
IP
Weyerhaeuser
Metsa Group
Paper Excellence
Stora Enso
UPM-Kymmene
CMPC
Georgia Pacific
Suzano
Arauco
APRIL
Fibria
Bleached Softwood Kraft Pulp (BSKP)
Bleached Hardwood Kraft Pulp (BHKP)
Unbleached Kraft Pulp (UKP)
Mechanical
5,300
Recycled Fiber 234 million t
49% 51%
60%
18% 82%
58% 42%
40%
35% 65%
29%71%
Fiber Consumption403 million t
Pulp 169 million t
Chemical139 million t
Mechanical31 million t
Integrated Mills 84 million t
Market Pulp 55 million t
Hardwood28 million t
Other Eucalyptus Pulp producers:
13 million t
Softwood/Other 27 million t
Acacia/Other 10 million t
Eucalyptus18 million t
Industry Outlook(1)
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Fibria’s Commercial Strategy
Source: Fibria – 2Q14 LTM
• Differentiation: Customized pulp products to specific paper grades
• Sole supplier to key customers
• Long term contracts
• Competitive logistics set up
Miami
Nyon Lustenal
Hong Kong
São Paulo
Fibria’s Sales Distribution
Fibria ‘s Offices
N.America
26%
L.America
9%
Europe
39%
Asia
26%
Fibria’s Pulp End Use
Tissue51%
Printing & Writing
31%
Speciatilies19%
Forest
OutboundLogistics
Pulp mill
PortClient
Low forest to mill average distance
Easy access to the most efficienttransportation network:
rail, barging and road
Portocel: specialized port for the pulp and paper industry
Integrated logistics solutions
Efficient Logistics Setup
Sea Freight
Door to Door Operations
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Pulp and Paper Market
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Paper Consumption
(1) Source: RISI
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Developed Markets Emerging Markets
CAGR 1996 – 2006Developed Markets: + 1.7%Emerging Markets : + 6.0%
85,291
117,611
15,548
37,474
P&W Consumption (000 tons)(1)
Tissue Consumption (000 tons)(1)
114,507
CAGR 2007 – 2016Developed Markets: - 4.0%Emerging Markets : + 4.1%
CAGR 1996 – 2006Developed Markets: + 2.4%Emerging Markets : + 6.9%
CAGR 2007 – 2016Developed Markets: + 1.4%Emerging Markets : + 6.7%
26,877
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Developed Markets Emerging Markets
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Million tons 1998 2008 2018Growth
1998-2008
Growth
2008-2018
Hardwood 15.0 24.5 32.8 63% 34%
Eucalyptus 6.0 14.2 23.4 137% 63%
Softwood 17.6 21.6 24.8 23% 15%
Market Pulp 32.6 46.1 57.1
Source: PPPC
Global Market Pulp Demand
2013 - 2018 CAGR:Hardwood: +2.8%Softwood: +0.7%
Hardwood demand will continue to increase at faster pace than Softwood
Hardwood (BHKP) vs. Softwood (BSKP) (000 ton) Demand growth rate
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
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98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
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Hardwood Softwood
(1) Source: Hawkins Wright , Poyry and Fibria Analysis(2) Partially integrated.
BH
KP
pri
ces
-ci
fEu
rop
e (U
S$/t
on
)
Gre
enfi
eld
cap
acit
y (0
00
to
n)
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1,8
2,0
0
100
200
300
400
500
600
700
800
900
1.000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Montes del Plata
Valdivia
APP Hainan
VeracelNuevaAldea
SantaFé
Mucuri
FrayBentos
KerinciPL3
Três Lagoas
Rizhao
APP Guangxi
ChenmingZhanjiang
Eldorado
Maranhão
Guaíba II
OjiNantong
APP South Sumatra (2)
Klabin
Gross capacity addition should not be counted as the only factorinfluencing pulp price volatility….(1)
List Price bottoming at US$650/t in 2011 and US$724/t in 2014
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Capacity closures DO happen…
Source: PPPC and Fibria
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-910
-85
-1,260
-1,180
-540-500
-105
-1,085-1,030
-1400
-1200
-1000
-800
-600
-400
-200
0
2006 2007 2008 2009 2010 2011 2012 2013 2014-2015 Eas of Sep14
Closures of Hardwood Capacity Worldwide(000 ton)
Total Cash Cost of BHKP delivered to Europe (US$/t)
Source: Hawkins Wright (Outlook for Market Pulp, July 2014) | Fibria’s 2Q14 considering a FX of R$/US$2.23.Gray bar include cash expenses as Interest, CAPEX, SG&A and Taxes.
Capacity(k tons):
660 595 1,775 585 565 355 1,005 2,410 1,960 1,095 7,450 = 31,930330 3,680 4,165
2Q14 net price:
US$ 562/t
Positive WorkingCapital: US$44/t
5,300
SG&A
Capex
Interest
531 493 490 457408 444 420 442 424
340 322 344 315258 251
4870 43 69
122 35 86 40 43
42 55 49 68113
70
50
141
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Cash Cost (US$/t) Delivery (US$/t)
628614 603
Interest
Total delivered cash cost will also have an influence on bottom prices
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Tissue Market
(1) Source: RISI
Kg/capita
Per Capita Consumption of Tissue by Region, 2013(1)
Growth Potential
0
5
10
15
20
25
30
35
1991 1996 2001 2006 2009 2010 2011 2012 2013
N.America W.Europe E.Europe L.America Middle East
Japan China Asia FE Oceania Africa
LTM Growth of +4.2%
Million tons
World Tissue Consumption, 1991-2013(1)
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15 15
12
76
5
1
0
5
10
15
20
25
30
N.America
WestEurope
Japan Oceania EastEurope
LatAm China Africa
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Pulp Projects Backlog
Main Projects
Project Country Capacity Timing Status
CMPC Guaíba II Brazil 1.3 Mt 2Q2015 Confirmed
Klabin Paraná Brazil 1.5 Mt* 2Q2016 Confirmed
APP South Sumatra Indonesia 1.5 Mt – 2.0 Mt 4Q2016 Confirmed
Fibria Três Lagoas II Brazil 1.75 Mt - Unconfirmed
• Minimum required return for new projects
• Closures due to increasing costs worldwide, reduction of maintenance capex (higher technical age of recovery boilers) and exchange rates
• Fiber substitution: Softwood x Hardwood and Recycled x Virgin Fiber
Main Questions About Capacity
Even though there is an extensive pulp projects backlog, there are important question marks regarding new projects
* 1.1 million tonnes of hardwood and 400 thousand tonnes of softwood
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Financial Highlights
39% 41%
35%
647679
594
2Q13 1Q14 2Q14
2Q14 Results
Cash Production Cost (R$/t)
1,669 1,6421,694
2Q13 1Q14 2Q14
1,291 1,277 1,271 1,269 1,188 1,334
2Q13 1Q14 2Q14
Production Sales
488 524
486 546 549 559
2Q13 1Q14 2Q14
Cash cost ex-maintenance downtimes Cash Cost
Pulp Production and Sales (‘000 t) Net Revenue (R$ million)
EBITDA (R$ million) and EBITDA Margin (%)
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Debt Amortization Schedule at
Jun/2014(R$ Million)
Debt Profile
Liquidity 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Others ACC/ACE ECN BNDES Bond Pre-payment
Cash R$1 billion
Revolver
Average Term
From: 52 months | to: 54 months
Average Cost
From: 3.8% | to: 3.7%
Cost of Debt Foreign Currency (% p.a.)
Debt by Currency
5%
95%
Local Currency
Foreign Currency
4.7%
3.8%
Jun/13 Jun/14
Gross Debt (million) x Leverage
14,985
8,4578,606
3,840
6.3
3.6
4.8
3.42.8 2.3
Debt (R$) Debt (US$) Leverage (x)
Interest (million) x Cost of Debt
946
528473
230
6.35.9
5.55.2
4.6
3.8
Interest (R$) Interest (US$) Cost of Debt (%)
Free Cash Flow Increase
Interest Reduction
Cost of Debt Reduction
This dynamics creates a virtuous
cycle
2009 2010 2011 2012 2013 Jun/14 2009 2010 2011 2012 2013 2Q14LTM
Indebtedness
22
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Net Result (R$ million) – 2Q14
Bonds repurchase will provide annual savings of US$ 63 million in interest payments.
(1) Includes other exchange rate and monetary variations.
(1)
594
1.494
631
900
223 (154)(86)
(487)
(308)
(51)
AdjustedEBITDA
BEFIEX / Otheropex
Ebitda FX Debt /MtM hedge
Bondsrepurchase
Net interest Deprec.,amortiz.and
depletion
Taxes Others Net Income∆
BEFIEX
BEFIEX
FXDebt
MtMhedge
∆ ∆
