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1
FIBRIA APP IS AVAILABLE FOR DOWNLOAD AT APPLE STORE AND GOOGLE PLAY
WELCOME TO THE 3RD FIBRIA INVESTOR TOUR
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2
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DISCLAIMER
3
The information contained in this presentation may include statements which constitute
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 Exchange Act of 1934, as amended.
Such forward-looking statements involve a certain degree of risk and uncertainty with respectto business, financial, trend, strategy and other forecasts, and are based on assumptions, dataor methods that, although considered reasonable by the company at the time, may turn out tobe incorrect or imprecise, or may not be possible to realize.
The company gives no assurance that expectations disclosed in this presentation will beconfirmed.
Prospective investors are cautioned that any such forward-looking statements are notguarantees of future performance and involve risks and uncertainties, and that actual resultsmay differ materially from those in the forward-looking statements, due to a variety of factors,including, but not limited to, the risks of international business and other risks referred to in thecompanys filings with the CVM and SEC.
The company does not undertake, and specifically disclaims any obligation to update anyforward-looking statements, which speak only for the date on which they are made.
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Fibrias Team
4
Marcelo Castelli, CEO
Aires Galhardo, ForestryGuilherme Cavalcanti, CFO & IRO
Henri Philippe, Comercial & International Logistics
Paulo Silveira, Industrial & Engineering
Executive Officers
Paulo Gaia, General Manager
Industrial Operations
Caio Zanardo, General ManagerForestry Operations
Andr Gonalves - General ManagerCamila NogueiraRoberto Costa
Raimundo Guimares
Investor Relations
Geraldo Magella - ManagerPatricia BahryNanci Contarini
Corporate Communication
Technology Center
Fernando Bertolucci, General ManagerCesar Bonine, ManagerGabriel Dehon, ManagerPaulo Pavan, ManagerRobert Sartorio, Manager
Accounting
Arvelino Cassaro, Manager
Treasury
Marcelo Habibe, General ManagerDavid Alegre, Manager
Governance, Risks and Compliance
Everson Bassinelo, General Manager
M&A
Vinicius Nonino, Officer
Supply Chain
Wellington Giacomin, Officer
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AGENDA
5
08:30 a.m.Registration
09:00 a.m.Financial Strategy |Guilherme Cavalcanti
09:45 a.m.Operational Risk Management Industrial - Fibria Case|FM Global
10:30 a.m.Forestry Capex | Aires Galhardo
11:15 a.m.Climate Change | Fernando Bertolucci
12:00 p.m.Q&A
01:40 p.m.Lunch
02:50 p.m.Departure for the Igarat watershed (1:40h)
04:30 p.m.Arrival and visit to the Igarat watershed
06:00 p.m.Departure for So Paulo
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Financial StrategyGuilherme Cavalcanti - CFO
6
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THE MATURITY OF SYNERGIES CAPTURED SINCE FIBRIASCREATION IMPROVED ITS OPERATING INDICATORS
7
PRODUCTION VOLUME (000 t)BEST PRACTICES AND OPERATING STABILITY
CASH COST (R$/ton)
SG&A (R$ million)STRUCTURE AND PROCESS SIMPLIFICATION
EBITDA (R$ million) - EBITDA MARGIN (%)
4,600
5,0545,184
5,299 5,271 5,253
2009* 2010* 2011 2012 2013 2Q14 LTM
432 448 471 473505 519
656 624 596549 545
2009* 2010* 2011 2012 2013 2Q14 LTM
Historical Value Inflation Effect**
593 594 605 584648 645
900826 766 678 699
2009* 2010* 2011 2012 2013 2Q14 LTM
Historical Value Inflation Effect**
1,522
2,526
1,9642,253
2,796 2,857
2009* 2010* 2011 2012 2013 2Q14 LTM
29%
40%34% 36%
40% 40%
* Excludes Conpacel | ** Inflation effect calculated by the IPCA (Consumer Price Index)
+14% -21%
-28%
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NO EXPOSURE TO THE RISK OF ELECTRICITY SHORTAGES,IN SPITE OF WHICH THE COMPANY HAVE BENEFITEDFROM THE SALE OF SURPLUS ENERGY
8
Utilities results boosted by energy sales(2Q14: R$ 36/t I 1Q14: R$ 18/t I 2Q13: R$ 14/t)
546
559
14
13
54
(27) 4
2Q13 Maintenancedowntimes
Wood FX Maintenance Utilities Others 2Q14
LTM inflation(IPCA): 6.5%
LTM averageFX: 7.9%
+ 2.2%
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STRONG FLEXIBILITY AND STRUCTURAL ENERGYGENERATION SURPLUS OF 60 MW
9RB: Recovery Boiler (Total: 7) | PB: Power Boiler (Total: 6) | TG: Turbo Generator (Total: 13)
Aracruz
RB
RB
RB
PB
PB
TG
TG
TG
TG
TG
TG
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CAPITAL STRUCTUREFIBRIA HAS THE LOWEST LEVERAGE RATIO AMONG ITS LATINAMERICAN PEERS
10
Net Debt/EBITDA (x)(1)
Fibria Arauco CMPC Klabin Suzano
S&P BB+/Positive BBB-/Stable BBB-/Stable BBB-/Stable BB/Negative
Moodys Ba1/Positive Baa3/Negative Baa3/Negative - Ba2/Stable
Fitch BBB-/Stable BBB/Stable BBB+/Stable BBB-/Stable BB-/Positive
(1) Fibrias historical data in BRL. | (2) Market consensus.
2.4 2.3 2.4
4.84.5
4.0
1.7 1.7
2.6
2.9 3.1
3.83.6 3.7
3.2
14.813.2
11.7
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 2014
Fibria Suzano Klabin CMPC Arauco Eldorado
2
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CONTINUATION OF THE LIABILITY MANAGEMENT PLAN,ALSO FOCUSING ON IMPROVING MATURITIES
11
December 2013
June 2014
Cost of debt: 3.8%
Average maturity: 52 months
Land Deal
Bond buyback: Fibria 2020,2021 and VOTO IV
Fibria 2024 issuance
Bank loans renegotiations
Lower cost of debt
Smoother debt amortizationschedule
NPV of all initiatives:US$270 million
1,064
384 530750 554 634
2,020
1,341
-
410
450 299
506422 128
149
1001,473
834 829
1,255
976 762
2,168
1,441
264
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Cost of debt: 4.6%
Average maturity: 52 months
Local CurrencyForeign Currency
Local CurrencyForeign Currency
855
314 451831 778 790
371 31811
1,302
213
459 318
524437
133
174 135
37 6
1,068
773 769
1,3551,215
923
545453
48 6
1,302
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
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BUT THE INITIATIVES HAVE NOT FINISHED, THERE ARECERTAIN ONGOING NEGOTIATIONS THAT WILL IMPROVEFIBRIAS DEBT PROFILE EVEN FURTHER
12
Revolver
Liquidity 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Others ACC/ACE ECN BNDES Bond Pre-payment
Cash
R$1 billion
Average Term
From: 52 months | to: 54 months
Average Cost
From: 3.8% | to: 3.7%
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A CONSISTENT AND DISCIPLINED APPROACH FOCUSEDON REDUCING DEBT AND ITS COST
13
Gross Debt (R$ million) x Leverage Interest (R$ 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)
946
528473
230
6.3 5.95.5
5.24.6
3.8
Interest (R$) Interest (US$) Cost of Debt (%)
Free Cash FlowIncrease
Reduction ininterest
Reduction inCost of Debt
This creates avirtuous cycle
2009 2010 2011 2012 2013 Jun/14 2009 2010 2011 2012 2013 2Q14LTM
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NEW ISSUANCE BETTER PRICED THANINVESTMENT GRADE ISSUERS
14
As of Sep 01, 2014
Rating Maturity Volume T-Spread Coupon
Fibria Ba1 / BBB- / BB+ 2024 US$ 600 MM 275 bps 5.25%
Braskem Baa3/BBB-/BBB- 2024 US$ 500 MM 340 bps 6.45%
Petrobras Baa1/BBB/BBB 2024 US$ 2.5 bi 350 bps 6.28%
BNDES Baa2/BBB-/ 2024 US$ 500 MM 362 bps 6.32%
Klabin BBB-/BBB- 2024 US$ 500 MM 269 bps 5.25%
Odebrecht Baa3/BBB/BBB 2029 US$ 500 MM 263 bps 5.25%
Secondary Market
Rating Maturity Volume T-Spread Yield
Fibria Ba1 / BBB- / BB+ 2024 US$ 600 MM 277 bps 5.158%
Braskem Baa3/BBB-/BBB- 2024 US$ 500 MM 300 bps 5.353%
Klabin BBB-/BBB- 2024 US$ 500 MM 287 bps 5.289%
Odebrecht Baa3/BBB-/BBB 2029 US$ 500 MM 251 bps 5.103%
Petrobras Baa1/BBB/BBB 2024 US$ 2.5 bi 254 bps 4.908%
Gerdau Baa3/BBB-/BBB- 2023 US$ 750 MM 260 bps 4.873%
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GROSS CAPACITY ADDITION SHOULD NOT BE REGARDEDAS THE ONLY FACTOR INFLUENCING PULP PRICEVOLATILITY(1)
15
List Price bottoming at US$650/t in 2011 and US$726/t in 2014
B
HKPprices-c
ifEurope(
US$/ton
)
Green
fie
ldcapac
ity(
000ton
)
(1) Source: Hawkins Wright , Poyry and Fibria Analysis. Pulp price estimates according to Hawkins Wright (Jul/2014) and Brian McClay (Jul/14)(2) Partially integrated production
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
Valdivia
APPHainan
VeracelNueva Aldea
Santa F
Mucuri
Fray
Bentos
Kerinci
PL3
Trs
Lagoas
Rizhao
APP Guangxi
Chenming
Zhanjiang
EldoradoMontes
del Plata
Maranho
Guaba II
APP South
Sumatra(2)
Klabin
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CAPACITY CLOSURES DO HAPPEN
16
Closures of Hardwood Capacity Worldwide (000 ton)
-910
-85
-1,260
-1,180
-540 -500
-105
-1,085-1,030
2006 2007 2008 2009 2010 2011 2012 2013 2014-2016 Eas of
Aug14
Source: PPPC and Fibria
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LOWEST VOLATILITY AMONG COMMODITIES
17
Commodities Historical Volatility (US$)(1)
38%
32%30%
26% 25%
21%
26%
7%
Sugar Iron Ore WTI CrudeOil
Soy LME Metals Ibovespa Cattle FOEX PIXBHKP
(1) Since 2009
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562
844810
751791
752
FX AND PULP PRICE EXPLAIN 80% OF FIBRIASEBITDA MARGIN
18
1,522
2,526
1,964
2,253
2,796 2,857
2009 (1) 2010 (1) 2011 (1) 2012 2013 2Q14 LTM
29%
40%34% 36%
40% 40%
EBITDA(R$ million)
EBITDAMargin
Average PriceFOEX (US$/t)
2.001.76 1.67
1.952.16
2.30
Exchange RateAverage (R$/US$)
Each 10% depreciation of the Real increases EBITDA by 24%
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FIBRIA DELIVERS ONE OF THE INDUSTRYSHIGHEST EBITDA/T AND FCF/T
19
Free cash flow - 2Q14 LTM (R$ Million)
2,857
1,125(1,409)
(386)
111
(20) (28)
Adjusted EBITDA Capex Interest(paid/received) Working Capital Taxes Others Free Cash Flow
Free Cash Flow per ton - 2Q14 LTM (R$/ton)
544
214(268) (74)
21
(4) (5)
Adjusted EBITDA Capex Interest(paid/received)
Working Capital Taxes Others Free Cash Flow
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AMONG THE INDUSTRYS LOWEST CASH COSTPRODUCERS
20Source: Hawkins Wright (Outlook for Market Pulp, July 2014) | Fibrias 2Q14 considering a FX of R$/US$2.23.Gray bar includes cash expenses as Interest, CAPEX, SG&A and Taxes (Source: RISI and Fibria).
531 493 490 457408 444 420 442 424
340 322 344 315258 251
4870 43
69 122 35 86 40 43
42 55 49 68113
70
50
141
20
Cash Cost (US$/t) Delivery (US$/t)
628 614 6032Q14 net priceUS$ 559/t
Positive WorkingCapital: US$44/t
SG&A
Capex
Interest
Interest
Capacity(k tons):
660 595 1,775 585 565 355 1,005 2,410 1,960 1,095 7,450 = 31,930330 3,680 4,165 5,300
Total Cash Cost of BHKP delivered to Europe (US$/t)
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EXCHANGE RATE DRIVERS
21
International Market
Recovery of the US economy.
Carry-trade: Selic (11% p.a.) versus Fed Funds (0.25% p.a.)+ Brazilian Central Bank Swaps.
Domestic Market
Balance of payments: current account deficit financedby capital account.
Deterioration of the public accounts: reduction in theprimary surplus.
Crisis in Argentina: reduction in Brazilian exports.
Decline in industrial production
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BRL DEPRECIATION IS A MARKET CONSENSUS THAT CANBE CONFIRMED THROUGH THE BROADER SPREADBETWEEN FX CALL/PUT OPTIONS
22
Put x Call x Spot
1,50
2,00
2,50
3,00
3,50
4,00
Jan/12 Oct/12 Dec/12 Feb/13 Apr/13 Jun/13 Aug/13 Oct/13 Dec/13 Apr/14 Jun/14 Aug/14
Put option Call Option BRL spot
NDF notional reduction and increase in zero cost collar operations followed by a BRL depreciation
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REAL EXCHANGE RATE HAS NOT REFLECTED DOMESTIC/FOREIGN INFLATION DIFFERENTIAL OVER TIME(Base 100 = Jan 2002)
23
217
94
0
30
60
90
120
150
180
210
240
jan
/02
abr/
02
jul/02
ou
t/02
jan
/03
abr/
03
jul/03
ou
t/03
jan
/04
abr/
04
jul/04
ou
t/04
jan
/05
abr/
05
jul/05
ou
t/05
jan
/06
abr/
06
jul/06
ou
t/06
jan
/07
abr/
07
jul/07
ou
t/07
jan
/08
abr/
08
jul/08
ou
t/08
jan
/2009
abr/
09
jul/09
ou
t/09
jan
/10
abr/
10
jul/10
ou
t/10
jan
/11
abr/
11
jul/11
ou
t/11
jan
/12
abr/
12
jul/12
ou
t/12
jan
/13
abr/
13
jul/13
ou
t/13
jan
/14
abr/
14
jul/14
IPCA BRL/USD
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FIBRIA HAS THE SIMPLEST AND MOSTTRANSPARENT CALL IN THE INDUSTRY
24
Negative Neutral Positive
Pulp supply
Closures/conversions
Inefficient capacities in China
Demand
Mature markets
China
Pulp price
Brazil GDP
Energy crisis
FX
Capex inflation
Cost inflation
Rating
Corporate Governance
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ROE and ROIC
25
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RETURNS MAY CONCEALMISLEADING INFORMATION, SOMEOF WHICH WE WILL TRY TO ADDRESS
When dealing with return metrics like ROEand ROIC, it is advisable to be aware of thefollowing:
26
Brazilian and US peers are not comparable:
- USGAAP does not call for revaluation of biological assets;
Within the commodity sector, there are differences relatedto the accounting treatment of certain information underIFRS (e.g. biological assets in the mining sector vs forestryproducts);
- IAS 41 states that biological assets should be measured atthe fair value;
Business combination (IFRS 3) had an additional impacton companies that have undertaken M&A transactionssince 2009Fibria's Case.
- IFRS 3 considers the fair value of the assets acquired.
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WHEN LOOKING AT BLOOMBERG, ROE DUPONTANALYSIS SAYS THAT....
Net Margin
48.9%
9.6%
-14.8%-11.3% -10.1%
7.3%
2009 2010 2011 2012 20132014LTM
Net Margin = Net profit / Net revenues
Asset Turnover
23.2%
20.1% 20.1%
22.0%
25.2%
27.0%
2009 2010 2011 2012 20132014LTM
Asset Turnover = Net revenues / Average Assets
Total Leverage
2.14
2.05
1.941.89
1.851.78
2009 2010 2011 2012 20132014LTM
Total Leverage = Average Assets/ AverageEquity
ROE
24.4%
4.0%
-5.8% -4.7% -4.7%
3.5%
2009 2010 2011 2012 2013
2014LTM
ROE = Net Profit / Average Equity
27
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WHY SHOULD YOU NOT USE NETPROFIT OR OPERATION PROFIT AS APROXY FOR FIBRIAS ROE AND ROIC?
There were others, but the mainaccounting/non-cash items that led Fibria topresent net loss in recent years are:
28
FX translation of dollar denominated debt at BRLfinancial statements
Depreciation, depletion and amortization
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IMPACT OF THE FX VARIATION ON NET INCOME(ACCOUNTING ONLY) HAS DRIVEN THE NET LOSS IN THE LASTFEW YEARSSince the Company is not subject to any material refinancing risk, the exchange ratevariation on dollar denominated debt has an even minor relevance
29
R$ million 2010 2011 2012 2013 2014LTM1
Operating Profit 1,589 730 937 1,535 1,584
Net Financial Result (364) (1,869) (1,696) (2,054) (1,064)
Foreign Exchange Variation - Debt 331 (1,036) (804) (910) 5
Bond Repurchases/Other (261) (176) (247) (429) (579)
Interest (732) (660) (683) (576) (528)
Net Income (Loss) 529 (868) (698) (698) 522
2010 2011 2012 2013 Jun/14
Year End Exchange Rate 1.67 1.88 2.04 2.34 2.20
1 - As of June 30, 2014
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CAPEX (INDUSTRIAL AND FORESTRY) VS. DEPRECIATION,DEPLETION AND AMORTIZATION
30
1,416
1,078
1,2871,409
1,884 1,848 1,862 1,863
2011 2012 2013 2Q14LTM
CAPEX Depreciation, Depletion and Amortization
(R$ MILLION)
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CAPEX (INDUSTRIAL AND FORESTRY) VS. DEPRECIATION,DEPLETION AND AMORTIZATION(R$ MILLION)
31
1.416
1.078
1,2871.409
1.884 1.848 1,862 1.863
2011 2012 2013 UDM 2Q14
CAPEX Depreciation, Depletion and Amortization
Industrial: R$330 million
Forestry: R$957 million
In the following slides we will show the main factors behind the reconciliation of thecapex and depreciation, depletion and amortization in the 2013 income statement
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FORESTRY CAPEX VS. DEPLETIONR$ million (2013)
32
957631
580
(65)
165
102(20)
329
97
66893975
Forestry Capex2013(1)
Expansion(2) Sustaining ForestryCapex 2013
Fair value - IAS 41(Biological Asset)(3)
Other Total Depletion2013(3)
Forestrymanagement
Forestrypurchase
ForestryPartnership
HistoricalDepletion
IAS 41 andIFRS 3Depletion
ForestryPartnershipDepletion
1. Includes Forestry Partnership - According to notes 18 and 22 (Additions2013 Financial Statements)
2. According to 4Q13 Earnings Release Capital Expenditures
3. According to note 18 and 22 (2013 Financial Statements)
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INDUSTRIAL CAPEX VS. DEPRECIATION/AMORTIZATIONR$ million (2013)
33
1. According to note 19 (2013 Financial Statements)
2. According to 4Q13 Earnings Release (Capital Expenditures)
3. According to 2013 cash cost breakdown14% for maintenance
330322
908
(8)
380
19017
Industrial Capex2013(1)
Expansion(2) Sustaining Capex2013
MaintenanceOPEX(3)
IFRS 3 Depreciation Other Total Depreciation/Amortization 2013
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WHY SHOULD YOU NOT USE NET INCOME OR OPERATINGPROFIT FOR THE ROE AND ROIC CALCULATION?
34
We recommend using a proxy for the net income or operating profit that
eliminates the already mentioned non-cash items, resulting in a metric that wouldcapture a cash approach
ROEAdj. EbitdaTotal Capex
InterestTaxes
Shareholders Equity
ROICAdj. EbitdaTotal Capex
InterestTaxes
Invested Capital
Worth mentioning that any capital gains from land sales would be captured by operatingprofit (EBIT), so when using Adj. EBITDA Capex, we are not capturing the return on landsale, as in the case of Parkia deal in 2013 (capital gain before taxes: R$ 800 million)
Land sold to Parkia represented 38% ofFibrias own land in December, 2013.
Invested Capital = Account receivable + Inventories + current liabilities + fixed assets + Biological Assets
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SUBSTITUTING NET INCOME AND ADJUSTING EQUITY TOGIVE A CASH-BASED RETURN ON EQUITY
35
Adj. EBITDACAPEXInterestTaxes(R$ million)
-558
918
121
640
1,020 1,042
2009 2010 2011 2012 2013 2014 LTM
Including capital
gains from the land
sale in 2013, ROE
for that year would
have been 15%
Shareholders Equity (R$ million)
8,109 10,571 10,880 10,417 10,035 10,254
2.5204.669 4.089 3.760 3.447 3.213
2009 2010 2011 2012 2013 2014 LTM
Shareholder Equity Before IFRS IFRS 3
ROE = (Adj. EbitdaCAPEXInterest - Taxes) / Equity before IFRS
-6.9%
8.7%
1.1%
6.1%
10.2% 10.2%
2009 2010 2011 2012 2013 2014 LTM
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CASH ROE, BEFORE IFRS
36
ROE = Net Income / EquityROE = (Adj. EbitdaCAPEXInterest - Taxes) /
Equity before IFRS
24.4%
4.0%
-5.8%-4.7% -4.7%
3.5%
2009 2010 2011 2012 2013LTM2014
-6.9%
8.7%
1.1%
6.1%
10.2% 10.2%
2009 2010 2011 2012 2013LTM2014
S S O O C
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...AND THE SAME APPLIES TO THE ROIC
37
Invested Capital = Account receivable+ Inventories + current liabilities + fixed
assets + Biological Assets
37
Adj. EBITDACAPEXInterestTaxes(R$ million)
Invested Capital (R$ million)
-558
918
121
640
1,020 1,042
2009 2010 2011 2012 2013 2014LTM
Including capital
gains from the land
sale in 2013, ROIC
for that year would
have been 11%
ROIC = (Adj. EbitdaCAPEXInterest - Taxes) /Capital Employed before IFRS
-2.9%
5.1%
0.8%
4.2%
7.2% 7.3%
2009 2010 2011 2012 2013 2014LTM
19,21617,951 15,227 15,068 14,106 14,265
2,133 2,0361,940 1,833 1,573 1,532
1,512 1,263
931 874 693 695
2009 2010 2011 2012 2013 2014 LTM
Invested Capital Before IFRS IFRS 3 IAS 41
CLOSING REMARKS
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CLOSING REMARKS
38
Net income should be considered as a reference for dividend purposesonly, not for return metrics;
Most of the difference between capex and depreciation/depletionexplained by accounting factors generated by IFRS;
Positive evolution of Fibrias ROE and ROIC in recent years.
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Operational Risk ManagementThe FM Global approach
FM GLOBAL BY THE NUMBERS
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FM GLOBAL BY THE NUMBERS
40
~3,000 total clients
310 clients in Brazil
178 years
31 years in Brazil
US$ 5.6 Bn premium p.a.
US$ 10.3 Bn surplus
AA Fitch
A+ AM Best
THE FM GLOBAL DIFFERENCE
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THE FM GLOBAL DIFFERENCE
41
ENGINEERING1800 field engineers
Singlefocus onProperty
MutualOwnership
Membershipcredits
Administrationand Claims
RESEARCH CAMPUS FM GLOBAL
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RESEARCH CAMPUS - FM GLOBAL
42
NORTH AND SOUTH AMERICA MARKET SHARE
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NORTH AND SOUTH AMERICA MARKET SHARE
4343
Pulp Capacity Recovery Units Paper Capacity
69%
FM Global Others
65%
FM Global Others
64%
FM Global Others
WHAT DO THESE COMPANIES HAVE IN COMMON?
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WHAT DO THESE COMPANIES HAVE IN COMMON?
44
A CLEARLY DEFINED PATH TO HPR
http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=Fs7oJMZVMNQJaM&tbnid=6wNTPtqNTPcvRM:&ved=0CAUQjRw&url=http://www.logostage.com/logo/vale/&ei=FhvfUcj6Lsm2yAGQ5oCICw&bvm=bv.48705608,d.ZGU&psig=AFQjCNE9WAHqX1ckZpOQUwOOASAE-vxcVw&ust=1373662354030904http://www.google.com/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=Fs7oJMZVMNQJaM&tbnid=6wNTPtqNTPcvRM:&ved=0CAUQjRw&url=http://www.logostage.com/logo/vale/&ei=FhvfUcj6Lsm2yAGQ5oCICw&bvm=bv.48705608,d.ZGU&psig=AFQjCNE9WAHqX1ckZpOQUwOOASAE-vxcVw&ust=1373662354030904http://www.google.com/url?sa=i&rct=j&q=cemex&source=images&cd=&cad=rja&docid=L49E1jCLSCgS-M&tbnid=_4jwcPlrlB9jjM:&ved=0CAUQjRw&url=https://mexicoinstitute.wordpress.com/tag/cemex/&ei=1eh3UcCGNPPy0QGy7oDwBw&bvm=bv.45645796,d.dmQ&psig=AFQjCNHftAsQtA66xaPW-rr3gLpfh9gyZQ&ust=1366899280412188http://www.google.com/url?sa=i&rct=j&q=cemex&source=images&cd=&cad=rja&docid=L49E1jCLSCgS-M&tbnid=_4jwcPlrlB9jjM:&ved=0CAUQjRw&url=https://mexicoinstitute.wordpress.com/tag/cemex/&ei=1eh3UcCGNPPy0QGy7oDwBw&bvm=bv.45645796,d.dmQ&psig=AFQjCNHftAsQtA66xaPW-rr3gLpfh9gyZQ&ust=1366899280412188 -
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A CLEARLY DEFINED PATH TO HPR
45
1. Process commitment
2. Management interest
3. Investment commitment
4. Engineering support
5. Continuous improvement
FM GLOBAL RELATIONSHIP TENURE (IN YEARS)
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FM GLOBAL RELATIONSHIP TENURE (IN YEARS)
127
123
113
111
90
76
65
12
31%
25%
20%
24%
0 - 5 years 5 -10 years 10 -15 years > 20 years
FM Global Client Average
46
HPR HIGHLY PROTECTED RISK
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HPRHIGHLY PROTECTED RISK
47
PREVENTION HPRPROTECTION
CAPACITY
US$ 15 million HPR location: US$1 billion
RISK POTENTIAL
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RISK POTENTIAL
48
Initial risk
Magnitude($)
Pro
ba
bility
Maximum Foreseeable Loss
(MFL)
Prevention
Protection
HPR
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49
Production
Time
$
$
Normal Activities
Loss
Disruption
Production
Adequate protection(HPR)
HPR BENEFIT
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HPR BENEFIT
50
0,81,5
5,1
22,0
Average Loss Cost (US$ million) Average days to resume production
HPR Non HPR
Source: FM Global clients history 2000 - 2010
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51
And if there is a loss?
PULP AND PAPER LOSSES BY PERIL
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PULP AND PAPER LOSSESBY PERIL
52Source: Loss history 10 years | FM Global clients
35%
22%
12%
9%
8%
8%6%
Mechanical breakdown
Fire
Natural Catastrophe
Other
Collapse
Pressude vessel
Electrical failure
ib i d Gl b l hi
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Fibria and FM Global partnership
ACCOMPLISHMENTS
12 Years of Partnership
275 Recommendations completed252 Field Engineering Visits
10 Visits per year with Fibrias Management
52
MEMBERSHIP CREDIT ($USD MILLION)
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MEMBERSHIP CREDIT ($USD MILLION)
54
237
316355
380420
465
2001 2004 2007 2010 2013 2014
Fibria
MembershipCredit
$ 2,440,000
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55
How close is Fibria to being fully HPR?
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56
HPR BENEFITS
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HPR BENEFITS
57
Maintain strong revenue streams
Superior risk management
Reduce production volatility
Promote operational stability
Meet customer needs and reliability
Preserve reputation
PROTECT FINANCIAL RESULTS
IMPROVE COMPETITIVENESS
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FORESTRY CAPEXAires Galhardo Forestry Operations
58
CAPITAL EXPENDITURE
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CAPITAL EXPENDITURE
59
Maintenance
FertilizerPesticides Forestry protectionSoil preparationSeedling
159%
224%
35%
44%
53%
63%
72%
Planting orsprouding
Harvestingand
logistics
Opex
The information contained herein is for the exclusive use of Fibria Celulose SA, and may not be transferred without authorization from the Company.
Base date: July, 2014. I t does not include depreciation.
CAPITAL EXPENDITURE
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CAPITAL EXPENDITURE
60
Maintenance
FertilizerPesticides Forestry protectionSoil preparationSeedling
159%
224%
35%
44%
53%
63%
72%
Planting orsprouding
Harvestingand
logistics
Opex
The information contained herein is for the exclusive use of Fibria Celulose SA, and may not be transferred without authorization from the Company.
Base date: July, 2014. I t does not include depreciation.
FIBRIA INFLATION
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FIBRIA INFLATIONFOCUS ON ALWAYS REMAINING BELOW THEIPCA/INCAF
61
Index 2007=100
100
120
140
160
2007 2008 2009 2010 2011 2012 2013 2014 RF
Labor
Fertilizers
Pesticides
Fuel
etc
INCAF - Brazilian Wood Cost Index
FIBRIA - Fibria Wood Cost Index
IPCA - Brazilian Inflation
MAINTENANCE CAPEX
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MAINTENANCE CAPEX(R$ MILLION)
1,416
1,078
1,208
1,520
2011 2012 3Q13 LTM Land Deal:Rural
Partnership
Non recurringwood
purchase
Inflation FX Rate Modernization Others 2014E
62
NON RECURRING WOOD IMPACTS ON CASH
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O CU G OO C S O C SCOST AND CAPEX
63
The wood impact should take 2-2.5 years when then it willbecome again to normal levels
Aracruz Unit:
Non recurring increase in third party wood due to:1) Limited investments in 2008-2009 due to financial crisis2) Higher volumes of matured wood from partnership program3) Physiological disturbance in southern Bahia (controlled impact)
Trs Lagoas Unit:
Increase in higher mill to forest distance under partnership programcontracts in Mato Grosso do Sul, in order to supply the original start-upof Trs Lagoas II (2014).
Jacare Unit:
2-year increase in partnership program in So Paulo.
WOOD PURCHASING
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0%
5%
10%15%
20%
25%
30%
35%
40%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
In 2008/2009, in an effort to reduce costs, weemphasized the cutting of our own wood and
stopped purchasing contracted forest fostering wood.
35% of third party wood supply in 2015
This percentage will start reducing in 2016 reachinga long-term third party wood rate of 8%
MAINTENANCE CAPEX
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(R$ MILLION)
1,416
1,078
1,208
1,520
2011 2012 3Q13 LTM Land Deal:Rural
Partnership
Non recurringwood
purchase
Inflation FX Rate Modernization Others 2014E
65
FORESTRY CAPEXFIBRIA STRATEGY TO SEEK
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OUT BASE PARTNERSHIPS FOR WOOD SUPPLY
66
0,0
0,5
1,0
1,5
2011 2012 2013 RF2014
R$million
Operating Cost Wood Purchases/Leasing Parkia Roads Sustaining Other
OPERATING COSTS
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STABILITY THROUGH IMPROVED MANAGEMENTAND INNOVATION
67
Effective investment per
hectare remains in line with
the strategy of controlling
inflation
R$/ha
1,006 960 9951,052
100.0% 95.4% 98.9% 104.6%
2011 2012 2013 RF2014
R$/ton
96 94 98 101
FOREST OF THE FUTURE
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2014 ACHIEVEMENT OF 83% OF THE CUMULATIVE CURVE
68
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A NEW OUTLOOKA NEW MANAGEMENT MODEL
69
NEW SELF-PROPELLED PESTICIDE APPLICATION
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TECHNOLOGY
70
30% of area cleaning operatingcost in Bahia
85 % machines for this operation
62 % of personnel in thisoperation
Annual CAPEX savings of R$ 4.6 million
NPV - R$ 35.6 million
COMBINED ACTIVITIES
http://localhost/var/www/apps/conversion/tmp/scratch_4/IMG_4659.MOVhttp://localhost/var/www/apps/conversion/tmp/scratch_4/IMG_4659.MOV -
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OPTIMIZATION OF THE MAINTENANCE AND LOGISTICSSUPPORT STRUCTURE
71
Tillage FertilizationBasin
IrrigationPre-
emergent
Annual CAPEX Savings R$ 1.8 millionNPV - R$ 16 million
SUSTAINING FORESTRY
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72
This account also peaked in these years due to the replacement of machinesat Trs Lagoas
In an effort to reduce the impact, we introduced the Skidder model in 2014,reducing the fleet from 5 Clambuncks to 3 Skidders
4.18
2.64
75
120
Before After
Cost (R$/m) Productivity (m/h)
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73
FIBRIA FORESTRY IMPLEMENT PROJECT(FFIP)
FIBRIA FORESTRY IMPLEMENT PROJECT (FFIP)
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REQUIRED PATENT
74
Reduce the structural weight of the implement by 15%
Increase the volumetric capacity of the cargo box by 10%, through the use of
differentiated materials
Savings of R$2.80/m
54.649.7
56.562.1
Conventional FFIP
#trips/month/truck Cargo box/truck
ALIGNMENT
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75
Average Projected Annual Increase at 7 years,
base Commercial Volume with Bark
MAI7 INV: MAI InventoryLast measurementprojects
Only plantations over 2 years old aremeasured (< 2012)
Tip
Bark
Stump
Parameters (references):
MAI7tot (cc)*: 100%
MAI7com (cc)*: 95%
MAI7com (sc)**: 84%
Bark: 11 12%
Forecast Chart
Analyzed Variable
Age years)
MAI: Mean Annual Increment Pulp Planting*With bark ** Without bark
FIBRIA MAI
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76
40
33
36
39
42
45
FIBRIA MAI7
2007 2008 2009 2010 2011 2012 average
mcc/ha
.year
Harvest Year
MANAGEMENT OF COMPLEXITY WITH
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COMPETITIVE DIFFERENTIAL
77
Integrated Strategic Planning
UNsMax value
FIbriaM&A
GAP/Surpluswood
SupplyStrategy
ForestryManagemen
t
FOCUS ON STAKEHOLDERS
Digestor
FOCUS ON THE CLIENT
What / when toharvest?
What / when andhow to transport ?
Where / what typeof management to
adopt?Clones/IMACEL
Road Plan
Supply Plan Harvest PlanTransport
PlanSilviculture
PlanNursery Plan
Long
Mid
Short
LONG TERM PLANNINGB d f k t d i
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78
3 production units
27,000 plots of land
500,000 hectares of planted
area
3 transport modes +
transhipment of wood (hubs
and deposits)
Base Multipurpose Forestry Matrix
Proof of IMACCEL gains
Enhancement of land flows
Insertion of biomass module and the possibility of sending wood to thebiomass unit
Maximize the
Companys value
Minimize CAPEX
Minimize OPEX
Partnership with
companies
Management
recommendation
Acquisitions and
divestments
Operational strategy
definition
New businesses
analysis
Be prepared for market dynamics
WE REMAIN CONFIDENT IN MAINTAININGO S COS S O O
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FORESTRY COSTS BELOW INFLATION
79
FORESTRY HARVEST LOGISTICS
Increase operationalproductivity through new
technology
Forestry Nano-PlanningUsing spatial variability in our
favor to maximize theproductivity of each site
Use of larger marchines Lighter trucks withgreater load capacity
Maintain operational
excellence
OPERATIONAL PROCESSES
The next phase of the Forest of the Future will be proposed for 2015 to 2018
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CLIMATE CHANGE AND ITS EFFECTS ON EUCALYPTUSPLANTATIONS: Turning adversity into a competitive advantage
Fernando BertolucciTechnology Center
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Climate ChangeAn overview
The Fibria ApproachDimensions of analysis, resources and tools
Impacts of climate change oneucalyptus plantations
Actions to improve adaptation andthe mitigation of risks
81
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Climate ChangeAn overview
The Fibria ApproachDimensions of analysis, resources and tools
Impacts of climate change oneucalyptus plantations
Actions to improve adaptation andthe mitigation of risks
82
CLIMATE CHANGE - an overview
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Main Observed Indicators of a Changing Global Climate
Northern Hemisphere Spring Snow CoverA
Figuras IPCC 2013
Artic Summer Sea Ice ExtentB
Change in Global Average Upper Heat ContentC Global Average Sea Level ChangeD
84
CLIMATE CHANGE - an overview
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Simulation: average of several models for different scenarios by 2100
IPCC 2013 Pictures
Changes in average temperature in relation to current
Changes in average rainfall in relation to current
Least drastic scenario Most drastic scenario
85
CLIMATE CHANGE - an overview
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Global warming isan unequivocal
fact:
the surface of the earthhas been successivelywarmer over the pastthree decades than it
has during any decadesince 1850
Concentrations ofCO2 have
increased 40%since pre-industrial
times
There is a clearhuman impact on
the climate
86
CLIMATE CHANGE - an overview
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86
The impacts are clear: Ex. Mountain Pine Beetle
A necessary condition for naturalpest (larvae) control: -30Ctemperature for at least fivecalendar days
Milder winters, previouslyuncommon:
Expansion of pests
Epidemics, unprecedenteddamage
Area affected (USA/CANADA):over 20 million ha.
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87
HOW HAS FIBRIA
APPROACHEDTHIS ISSUE?
UNDERSTANDING THE BASICS
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88
Physiological Processes Robust Databases
UNDERSTANDING THE BASICS
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89
Phenotype (F) Genotype (G) Environment (A) GxE
SP
MS
ES and BA
Open-air laboratories ($$)
Sensors and equipment Specialized field teams Partnerships with Universities
and Research Institutes
23,000 planting blocks:
Very diverse environments Different growth potentials Specific needs
MONITORING
STUDIES
DIMENSIONS OF ANALYSIS
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90
TREE(TECHS)
PLANTATION(FLUX TOWERS)
LANDSCAPE(WATERSHEDS)
Different Scales
RESOURCES AND TOOLS USED - TREE LEVEL
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91
TECHS: Tolerance of Eucalyptus Clones to Hydric and Thermal Stress25 COMPANIES / 8 UNIVERSITIES
CONNECTION BETWEEN FORESTRY, ECOPHYSIOLOGY AND BREEDING
7 climate types
Annual rainfall: 800 to 2600mm
EXCLUSION OF RAIN:+ variability
RESOURCES AND TOOLS USED - TREE LEVEL
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92
Stomatalconductance
Measurementsphotosynthesis
Respiration
Gas exchange
Leaf waterpotential
Sap flow
Leaf areaindex
Leaf area index
Leaf and treetranspiration
RESOURCES AND TOOLS USED
PLANTATION LEVEL
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93
PLANTATION LEVEL
Flow towers
Second-by-second measurements of climate andplant growth
Balances of carbon, water and energy, as well asthe efficient use of these resources #
Modeling the processes that control growth
# Eddy-covariance methodology
RESOURCES AND TOOLS USED
LANDSCAPE LEVEL
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94
LANDSCAPE LEVEL
Watershed Studies (validated):
Monitoring of the main components of the water, carbon and nutrient cycles
RunoffWater tableRainwater interception
RESOURCES AND TOOLS USED: SUMMARY
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95
Flow Towers (Eucalyptus, Cerrado, Grassland)6
Intensely Monitored Watersheds7
Fibria Autmatic Weather Stations55
APPLYING EXPERTISE
VALUE ADDED TO BUSINESS
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96
VALUE ADDED TO BUSINESS
MODELING
Adaptado de PMS Instrument Company
Humidity
TemperatureRadiation
Wind
Transpiration
Leaf area
Photosynthesis
Growth
Nutrition
Humidity
FertilityTexture
Temperature
Soil type
Environmentalconditions
Gross primaryproduction
LAI
CO2
Interceptedlight
Photosynthesis
Light interception
T, VPD,
H2O, N
Net primaryproduction
Respiration
Climateand soil
condition
Stem RootsLeaves
FROM UNDERSTANDING PHENOMENA TO
GROWTH MODELS (SIMULATIONS)
3-PG
Physiological Principles Predicting Growth
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Climate ChangeAn overview
The Fibria ApproachDimensions of analysis, resources and tools
Impacts of climate change oneucalyptus plantations
Actions to improve adaptation andthe mitigation of risks
97
IMPACTS OF CLIMATE CHANGE
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98
Changes in weather patterns
Variation in rainfall patterns in Esprito Santo (1968 to 2010)
500
600
700
800
900
1000
1100
1200
13001400
1500
1600
1700
1800
1900
2000
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
rainfall (mm)
Reduced rainfall and increased amplitude (extreme weather)
IMPACTS OF CLIMATE CHANGE
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99
Reduced rainfall vs. forest productivity
Productivity Simulation
Historical Average 2003 (dry year)
CLIMATE CHANGE IMPACTS
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100
The impact of increased CO2
Several Studies
Ex.:
The Hawkesbury Forest Experiment
University of Western Sydney (Australia)
Effects of increased atmospheric CO2 on plants:
Stimulation of photosynthetic activityincreasedcarbohydrates, accelerating the growth of the crowns andstems, leading to greater productivity.
Reduction in stomatal conductanceless use of water
positive impact on the amount of water that flows into riversand streams, as well as recharging the water table.
CLIMATE CHANGE IMPACTS
i f i i
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101
Compensation for the increase in CO2
HISTORICAL PRODUCTIVITY PRODUCTIVITY 2030 PRODUCTIVITY 2050
Meteorological and eco-physiologicalmodels (simulations) indicate potential productivity
gains in areas currently used by Fibria
Note: 3 global models (HAD, CSIRO, PCM); change in precipitation, VPD and temperature, 4 IPCC scenarios (A1, B1, A2, B2)
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Climate ChangeAn overview
The Fibria ApproachDimensions of analysis, resources and tools
Impacts of climate change oneucalyptus plantations
Actions to improve adaptation andthe mitigation of risks
102
ADAPTATION AND RISK MITIGATION ACTIONS
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103
Areas with environmental restrictions, especially with limitations on the availabilityof water, will be needed to meet the future demand for wood (a global issue)
In this context, considering its 20 years of research into the issue, Fibria hasintensified its actions to adapt to this new situation, turning a potential probleminto an opportunity to generate a competitive advantage
ADAPTATION AND RISK MITIGATION ACTIONS
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104
1 2
3 4
5 6
Detailed soil and climaticclassification and
mapping of all of ourplanting areas
Evaluation of traditionalgenetic material(urograndis) under waterstress - clonal tests andexperiments in climatic extremes
Introduction of specieswith a tolerance to waterstress
Environmental changesimulations andevaluations of the risks ofEucalyptus pests anddiseases
Mapping andmonitoring of exoticpests and disease
Genetic transformation ofEucalyptus for greatertolerance to climaticextremes
ADAPTATION AND RISK MITIGATION ACTIONS
E CLONAL TEST IN MONTEZUMA MG (650 f i f ll ) 5
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105
Ex.: CLONAL TEST IN MONTEZUMA MG (650 mm of rainfall per year)5years old
Clone A Clone D
Clone IMA4m3/ha.yr
A 43.6
B 40.3
C 39.7
D 39.5
E 38.1
F 37.3
G 37.1
H 34.8
FINAL MESSAGE: THE POSSIBILITIES FOR OUR FUTURE
A NEW BALANCE DEPENDS ON RESPECT FOR NATURAL RESOURCES
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A NEW BALANCE DEPENDS ON RESPECT FOR NATURAL RESOURCES
Technological Level x Wood productivity (m3
/ha.year)
0
10
20
30
40
50
60
70
Historical Actual Potential
DEFINING FACTORSClimate
(water, temperature,sunlight and CO2)
LIMITING FACTORSSoil, nutrients,genotypes,
management
REDUCING FACTORSWeeds,
Pestsand diseases 20 YEARS OF
KNOWLEDGE:
Predictability:anticipating the future
Mitigation of limitingfactors
Produce more with lessWoodproductivity(m3/ha.year)
Technological Level
MANY OF THESE RESULTS CAME FROM OUROPEN-AIR LAB
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THE WATERSHED PROJECT (since early 90s)
Plant Ecophysiology
Hydrogeology
Meteorology
Water Balance
Carbon Allocation
Soil Erosion
Flora
Fauna
Forest modelling
Integrating scientific areas of study!
WATERSHED PROJECT
Main Objectives
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Develop forestry management techniques and practices to increase forestproductivity and reduce possible environmental impacts
Answer controversial questions about Fibria's Eucalyptus plantations involvingdifferent stakeholders
Develop and enhance process-based models to predict and estimate forest
growth taking into account environmental factors
Promote environmental education and sustainable conscious of surroundingcommunities
Maintain operational licenses and certifications
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Main Objectives
WATERSHED PROJECT
Main Objectives
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Total area = 150 ha
Previous land use: pasture
Natural vegetation: Atlantic rainforest
Climate: tropical summer wet season and winter dry season.
Current land use:
E. grandis x E. urophylla hybrids (5th cycle) (65% of the land) with two plantation ages
Rainforest regenerating (30%)
Roads (5%)
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Main Objectives
WATERSHED PROJECT
Site Map and Tour
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Site Map and Tour
WATERTABLE
TREETRANSPIRATION
SOILEROSION
CARBONBALANCE
SOILEROSION
1
2
3
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Fibria Investor Tour
September 16, 2014
D
DIP: Deinked Pulp. Paper pulp produced by deinkingof recovered paper.
GLOSSARYB
BCP: Bleached chemical pulp (includes bleached kraft pulp and all sulphite pulp,
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g
H
Hardwood pulp: is based on short fibre wood species with broad leaves, typicallyeucalyptus, birch aspen and mixed hardwoods. The hardwoods are simply harderthan the softwoods because the fibres are shorter. Shorter fibre makes for densercellulose fibres, but also for weaker cellulose. Thus, hardwood is well suited for
copy paper, while softwood is required for lightweight printing papers and strongpackaging papers. Among the bleached market kraft pulps, 55% is softwood pulpand 45% is hardwood pulp.
L
LBKP: Leaf bleached kraft pulp,also known as BHKP.
M
Mechanically processed pulp: (also known as "high-yield" pulp) is characterized bythe fact that a very high percentage (normally in the range of 85 to 95 percent) ofthe original wood components are retained in the final product. The mechanicalprocesses include groundwood, refiner mechanical, thermo mechanical and
chemi-thermomechanical. They are products with high bulk, opacity andabsorbency, some qualities that are particularly advantageous in certain useappl ications, l ike in the production of newsprint and in publication grades ofprinting and writing paper. Dissolving pulp is highly puri fied chemical pulp ofspecial quality, with a very high alpha-cellulose content (usually 90% or more),intended primarily for conversion into chemical derivatives of cellulose and usedmainly in the manufacture of viscose staple fibre, solvent spin fibre an filament.These pulps are always bleached. They are used principal ly as the source ofcel lulose in the manufacture of such products as manmade fibers, plastics ,lacquers, rayon, acetate and explosives. Pulp is produced for internalconsumption (integrated pulp) or for external sales (market pulp). Of the totalglobal capacity of 215mn tonnes/year, 48mn tonnes (about 255) are market pulp.For statistical purposes, all pulp which crosses an international border is defined asmarket pulp, even if i t i s being transferred between mills belonging to a singlecompany. Bleached chemical pulp (BCP, most of it bleached kraft pulp or BKP) isthe main pulp type and accounts for nearly 90% of al l market pulp capaci ty(42.5mn tonnes/year). The integrated capacity of bleached kraft pulp is about53mn tonnes, bringing the total global capacity of bleach kraft to roughly 95mntonnes per year . Pulp can be categori zed according to what type of woodspecies is used, or more specifically, the length of the wood fibres. Softwood pulpis based on long fibre wood species. These are typically trees with needles, suchas pine and spruce. Pine is the main raw material for chemical softwood pulp,while spruce is excellent for the production of mechanical pulps used inpublication papers.
(including unbleached sulphite). Also known as "white pulp".BCTMP: Bleachedchemi-thermomechanical pulp (Market BCTMP is produced mainly in Canadaand New Zealand).
BEKP: Bleached eucalyptus kraft pulp (Market BEKP is produced mainly in LatinAmerica and Iberia. Some is also produced in Norway and Thailand).
BHKP: Bleached hardwood kraft pulp (all grades, including BEKP, birch, SMHW,NMHW).
Birch: Bleached birch kraft pulp. Birch is the principal hardwood grade producedin the Nordic countries. Some is also produced in Canada, although for statisticalpurposes Canadian birch is categorized as northern mixed hardwood - NMHW.
BKP: Bleached kraft pulp (includes all softwood and hardwood kraft pulp.)
BSKP: Bleached softwood kraft pulp (all grades).
BSP: Bleached sulphite pulp.
c
Chemically processed pulp: which accounts for approximately 55% of totalglobal pulp production, can be broken down further into sulphate pulp (kraftpulp) or sulphite pulp. The name "kraft" is derived from the German word for"strong". The method involves cooking (digesting) wood chips in an alkal inesolution for several hours during which time the chemicals attack the lignin in thewood. The dissolved lignin is later removed leaving behind the cellulose fibres.Sulphite is an old and obsolete production process, and most of the chemicalpulp today is produced through the sulphate production process. Chemical pulpcan be further categorized into bleached and unbleached. Unbleached Kraftpulp i s dark brown in color, so before i t can be used in many papermakingapplications it must undergo a series of bleaching processes.
CMP: Chemi-mechanical pulp. It is the pulp of ligno-cellulose materials, that are
previously treated with chemical reagents, obtained by defibration at anatmospheric pressure.
CTMP: Chemi-thermomechanical pulp. A category of pulp which is produced bya process in which wood chips are treated with chemicals prior to heating andrefining. Unbleached CTMP is mainly used in integrated paper mills. BleachedCTMP,dried and sold as market pulp, has grown significantly in importance and isnow widely used in the production of many grades of paper, including woodfreepapers.
GLOSSARYN
NBKP: Needle bleached kraft pulp, also known as BSKP.
T
TCF: Totally chlorine free. Pulp bleached without the use of any chlorine or
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NBSK: Northern bleached softwood kraft pulp, the industry's benchmark grade ofpulp. Market NBSK is produced mainly in Canada and the Nordic countries.Some NBSK is also produced in north-western USA and in Russia .
NMHW: Northern mixed hardwood (kraft) pulp. Sometimes known as NBHK,northern bleached hardwood kraft.
P
Pulp: is the main raw material used in the production of virgin-fibre paper andpaperboard. Fibres are long structures, formed by a microscopic size plant cell,not wide butlong, hollow and with wallsthat vary in width.
Pulpwood: i s wood used to produce pulp that i s used in the manufacture oflumber or plywood. Paper can also be produced using non-wood fibres, l ikestraw, bagasse or bamboo. Recycled paper and paperboard uses recoveredpaper and board instead of virgin fibre. Pulp can be classified by the productionprocess used to separate the three main components of the wood: cellulose,water and lignin. Lignin acts as the cementing agent in wood, binding thecel lulose fibres together. This process can be chemical (wood cooked withchemicals), mechanical (wood ground withphysical force), or a combination.
R
RMP: Refiner Pulp. Pulp produced by subjecting wood chips and/or residues toatmospheric or open-discharge refining.
S
Semi-chemical pulp: High-yield pulp produced by a mild chemical treatment ofthe raw material followed by a mechanical defibrating operation, where thelignin is onlypartially removed.
SGW: Stone Groundwood Pulp. Pulp produced by grinding wood logs or bolts(usually 4 feet in length) into relatively short fibres.
SMHW: Southern mixed hardwood (kraft) pulp (produced exclusively in thesouthern United States .)
Sources: Celulose Online,Bracelpa, PPPC and Merrill Lynch.
Semi-chemical pulp: High-yield pulp produced by a mild chemical treatment ofthe raw material followed by a mechanical defibrating operation, where thelignin is onlypartially removed
chlorinated chemical compounds.
TMP: Thermomechanical Pulp. A high-yield pulp produced by a process in whichwood particles are softened by pre-heating under pressure prior to a pressurizedrefining stage. TMP is generally used at mills producing newsprint and mechanicalprinting papers. Many older mills have replaced their groundwood and sulphitepulping operations withTMP.
U
UKP: Unbleached kraft pulp.
USP: Unbleached sulphite pulp.