hsbc iv latam natural resources conference
TRANSCRIPT
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HSBC IV LatAm Natural Resources ConferenceFebruary, 2015
FIBRIA APP WITH THIS PRESENTATION IS AVAILABLE FOR DOWNLOAD AT APPLE STORE AND GOOGLE PLAY.
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2
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 Exchange
Act of 1934, as amended. Such forward-looking statements involve a certain degree of
risk and uncertainty with respect to business, financial, trend, strategy and other
forecasts, and are based on assumptions, data or methods that, although considered
reasonable by the company at the time, may turn out to be incorrect or imprecise, or
may not be possible to realize. The company gives no assurance that expectations
disclosed in this presentation will be confirmed. Prospective investors are cautioned
that any such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, and that actual results may 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 the
companys filings with the CVM and SEC. The company does not undertake, and
specifically disclaims any obligation to update any forward-looking statements, which
speak only for the date on which they are made.
Disclaimer
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3
Company Overview1Pulp and Paper Market2
Financial and Operational Highlights3
Agenda
Final Remarks
4
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Company Overview
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5
A Winning Player
Port Terminal Pulp Unit
Trs Lagoas
Santos
AracruzPortocel
Caravelas
BelmonteVeracel
Jacare
Superior Asset Combination Main Figures 3Q14 LTM
Pulp capacity million tons 5,300
Net revenues R$ billion 7.1
Total Forest Base(1) thousand hectares 961
Planted area(1) thousand hectares 560
Net Debt R$ billion 7.6
Net Debt/EBITDA (in Dollars)(2) X 2.4
Net Debt/EBITDA (in Reais) X 2.7
Source: Fibria
(1) Including 50% of Veracel, excluding forest partnership areas and forest bases linked to the sales of Losango and forest assets in Southern Bahia State.(2) For covenants purposes, the Net Debt/EBITDA ratio is calculated in Dollars.
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6
Fibrias Units Industrial Capacity
* 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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7
Worldwide presence
Strong global customer base
Long-term relationships
Focus on customers with stable business
Customized pulp products and services
Sound forestry and industrial R&D
Focus on less volatile end-use markets such as tissue
Efficient logistics set up
Low dependence on volatile markets such as China
Low credit risk
100% certified pulp (FSC and PEFC/Cerflor)
Sales Mix by End Use - Fibria
Sales Mix by Region - Fibria
Europe
40%
N.
America
27%
Asia
23%
Other10%
Region - 4Q14
Tissue
56% Printing &
Writing
25%
Specialties
19%
End Use - 4Q14
Highlights
30%20%
29% 29% 24%18%
26% 26% 30% 22%28% 31% 30%
19% 22%26% 27%
37%46%
46% 41%
35% 44%
43% 41% 36%42%
43% 35% 36%46% 42%
39% 40%
22% 25%14% 20%
31% 28%20% 23% 25% 26%
21% 26% 26% 26% 27% 25% 23%
11% 9% 11% 10% 10% 10% 11% 10% 9% 10% 8% 8% 8% 9% 9% 10% 10%
4Q101Q112Q11 3Q114Q111Q12 2Q123Q124Q12 1Q132Q133Q13 4Q131Q142Q14 3Q144Q14
North America Europe Asia Other
Fibrias Commercial Strategy
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8
(1) Controlling group(2) Free Float 40.14% + Treasury 0.06%
VotorantimIndustrial S.A.
(1)
29.42%
BNDESParticipaes (1)
30.38%
FreeFloat (2)
40.20%
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 StandardsIFRS
Adoption of Arbitration Chamber
SEC Registered ADR Level III program
Indebtedness and Liquidity
Market Risk Management
Risk Management
Corporate Governance
Related Parties Transactions
Anti-Corruption
Information Disclosure
Securities Trading
Antitrust
Genetically Modified Eucalyptus
Fiscal
Council
Board of
Directors
20% independentmembers
Role of CEO andchairman is split
Personnel andRemuneration
Committee
StatutoryAudit
Committee
Finance
Committee
Sustainability
Committee
Innovation
Committee
General
Meeting
Listed on Novo Mercado, highest CG level at BM&FBovespa: Policies approved by the Board of Directors:
Shareholder Structure and Corporate Governance
30%independent
members
100%independent
members
50% independent
members
45% independent
members-
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9Pulp and Paper Market
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As a result we had better prices than expected
Consultants: Hawkins Wright, RISI and Brian McClay (published in the end 2012 for 2013 prices)
BHKP Delivered to Europe (USD/t)
765
772
767
784
772
788
814
795
770
791
740
750
760
770
780
790
800
810
820
1Q13 2Q13 3Q13 4Q13 Annual 2013
Consultants average for 2013 Realized PIX/FOEX price
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and also better prices than initially projected
BHKP Delivered to Europe (USD/t)
782
737
696
718
733
768
752
729
734
746
640
660
680
700
720
740
760
780
800
1Q14 2Q14 3Q14 4Q14 Annual 2014
Consultants average for 2014 Realized PIX/FOEX price
Consultants: Hawkins Wright, RISI and Brian McClay (published in the end 2013 for 2014 prices)
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Then, what about 2015?
1005
-315
-65
115
85
30
200
750
265
750
400
BEKP demand growth**
Net
Possible closures*
Ence Huelva
April Rizhao
Sappi Cloquet
Old Town (Expera)
Portucel Cacia
Eldorado
CMPC Guaiba II
Oji Nantong
Montes del Plata
Suzano Maranho
-400 to -800
1,415 to 1,815
Expected scenario for 2015 in Dec14 Realized scenario in 2015
?
BHKP CAPACITY CHANGES
*Based on annual closures average (400,000 to 800,000 t/yr)**Source: PPPC Outlook for Eucalyptus Market Pulp September 2014
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Shipments of Eucalyptus Pulp (1)
(1) Source: PPPC World 20 December/2014
Global Market BEKP Demand
Paper Capacity increase in China
(1) Source: PPPC World 20 December/2014
2013 2014 2015 Total
FORECAST REALIZEDPREVIOUS
FORECAST
LAST
FORECAST
PREVIOUS
FORECAST
LAST
FORECASTPREVIOUS LATEST
Woodfree -25 199 - 256 550 760 525 1,215
Tissue 1,184 833 1,518 1,390 903 727 3,605 2,950
Cartonboard 2,428 2,128 1,300 2,100 300 380 4,028 4,608
Total 3,587 3,160 2,818 3,746 1,753 1,867 8,158 8,773
Source: Fibria and Independent Consultants
2014 vs. 2013
+1,734 kt
+92 kt
+386kt+717 kt
+537 kt
11%
5%
6%
20%13%
Total North
America
Western
Europe
China Others
0
10
20
30
40
50
60
05 06 07 08 09 10 11 12 13 14
Days of Supply
Dec/14: 36 days
Nov./14: 38 days | Dec./13: 38 days
Producer Inventories Hardwood (1)
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Global Market Pulp Demand
Demand growth rate
Hardwood (BHKP) vs. Softwood (BSKP) (000 ton)
Hardwood demand will continue to increase at a faster pace than Softwood
Source: PPPC
Source: PPPC. Excludes Sulphite and UKP market pulp.
NBSK vs. BHKP - Prices(1)
(1) Source: FOEX |Average spread in the last 5 years.
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Hardwood Softwood
2013 - 2018 CAGR:
Hardwood: +2.8%
Softwood: +0.7%
000 ton 1998 2008 2018Growth1998-2008
Growth2008-2018
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
Paper Production Runnability with BHKP
Source: RISI conference, August 2014.
400
500
600
700
800
900
1000
1100
0
50
100
150
200
Spread Average spread BHKP NBSK
Average spread:
US$ 109
Spread Dec./14:
US$ 191
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Technical Age and Scale in the Market Pulp IndustryFurther closures are expected due to lack of adequate investments in the industry
Hardwood (BHKP) Market Pulp Softwood (BSKP) Market Pulp
STRONGWeighted average
technical age 12.3 years
Weighted average
capacity 1,277,000 t/a
Aracruz
Trs Lago as
Veracel
Jacare
0
500
1.000
1.500
2.000
2.500
3.000
051015202530
PM Capacity, 1000 t/a
Technical Age, years
WEAK
STRONGWeighted average
technical age 21 years
Weighted average
capacity 527,000 t/a
North American Pulp Mills Other Pulp Mills Closures Grade Switch On & Off
WEAK0
500
1.000
1.500
2.000
2.500
3.000
0102030
PM Capacity, 1000 t/a
Technical Age, years
More than 7.7 million tons of capacity above 25 years and with annual capacity below 500,000 t/y.
Old
Town
Ence
Huelva
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Source: PPPC and Fibria
Closures of Hardwood Capacity Worldwide
(000 ton)
Capacity closures DO happen
-910
-85
-1,260
-1,180
-540-500
-105
-1,085
-830
2006 2007 2008 2009 2010 2011 2012 2013 2014-2016 Eas of Dec.14
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Total Cash Cost of BHKP delivered to Europe (US$/t)
Source: Hawkins Wright (Outlook for Market Pulp, September 2014) | Fibrias 4Q14 considering a FX of R$/US$2.54. | Brazil ex-Fibria 3Q14 considering FX of R$/US$2.27.
Gray bar includes cash expenses as Interest, CAPEX, SG&A and Taxes (Source: RISI and Fibria).
4Q14 net price:
US$ 552/t
W/K
Among the industrys lowest cash cost producers
498 508 456 468 420 404 424 424 406342 315 311 297
235186
71 46
69 41 86 12134 38 41
4855 38 67
111
6151
119
39
Cash Cost (US$/t) Delivery (US$/t)
SG&A
Capex
Interest
Income Tax
Interest
Capacity
(k tons):1,775 660 595 570 1,570 1,045 2,415 335 625 340 7,450 = 31,3853,745 1,010 3,950 5,300
G i ddi i h ld b d h l f
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Gross capacity addition should not be counted as the only factor
influencing pulp price volatility.(1)
List Price bottoming at US$650/t in 2011 and US$724/t in 2014
Capac
ity(000
ton)
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1,8
2,0
0
100
200
300
400
500
600
700
800
900
1.000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Valdivia
APP
Hainan
Veracel Nueva Aldea
Santa F
Mucuri
Fray
Bentos
Kerinci
PL3
Trs
Lagoas
Rizhao
APP Guangxi
Chenming
Zhanjiang
EldoradoMontes
del Plata
Maranho
Guaba II
APP South
Sumatra(2)
Klabin
Oji
Nantong
BHKP
prices-CIFEurope
(US$/ton)
(1) Source: Hawkins Wright , Poyry and Fibria Analysis. Pulp price estimates according to Hawkins Wright (Dec/14), Brian McClay (Jan/14) and RISI (Dec/14)
(2) Partially integrated production
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Lowest volatility among commodities
Change Dec./2014 vs. Dec./2013(3)
35%
21%
29%26%
23% 23%
15%
7%
Sugar Iron Ore WTI Crude
Oil
Soy LME Metals Ibovespa Cattle FOEX PIX
BHKP
Commodities Historical Volatility (US$)(1)
(1) Since 2009 | (2) Except Iron Ore (Average of: Vale, Rio Tinto and BHP) and LME Metals | (3) December, 31st
Sugar Iron Ore Crude Oil SoyLME
Metals
Ibovespa Cattle Pulp BHKP
Commoditiy Spot Price -12% -47% -46% -22% - - 21% -3%
S&P Sector Index(2) -12% -34% -43% -21% -8% -3% 21% -
FIBR3|FBR - - - - - - - 18% | 4%
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Financial and Operational Highlights
No exposure to eletricity shortage risks in spite of which the
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No exposure to eletricity shortage risks, in spite of which the
company has benefited from the sale of its surplus energy
466 472
26
8
( 22 ) ( 7 ) 1
4Q13 Wood FX Utilities Energy
Consumption
Others 4Q14
+ 1.3%
Improved results boosted by energy sales and operational efficiency.
(Utilities: 4Q14: R$37/t I 3Q14: R$34/t I 4Q13: R$16/t)
C h P d ti C t l i f 3 7% th t
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Fibria Cash Production Cost (1) (R$/ton)
Consistently
controlling the
production
cash cost at alevel below
the inflation
pace.
26
Cash Production Cost saw a annual increase of 3.7% over the past
6 years
432 448
471 473
505 519
2009 (2) 2010 (2) 2011 2012 2013 2014
CAGR: + 3.7%
(1) Constant Currency (2) Excludes Conpacel
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2,791
3,530
163
851
(112)
(696)
(504)
(380)
(1,874)
141(54)
Adjusted
EBITDA
Befiex Other non-
reccuring exp.
/non-cash
EBITDA FX Debt /
Hedge
Early prepaid
debt
Net Interest Deprec.,
amortiz.and
depletion
Taxes Others Net Income
Hedge
FX Debt
Non-recurring
effects(1) Includes other exchange rate/monetary variations and other financial income/expenses.
Net Results (R$ million) 2014
27
(1)
Mandatory dividends of R$37 million.
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Free Cash Flow (1) 2014
28
R$ million
(1)
2,791
636989
( 1.591 )( 411 ) ( 136 ) ( 29 ) 12
353
Adjusted
EBITDA
Capex Interest
(paid/received)
Working
Capital
Taxes Others Free Cash Flow 4Q14 receivables Free Cash Flow
(Pro-forma)
Higher sales volume (+107 kt);
Change in cliente mix, with lower receivables forfaiting transactions;
FX effect.
Modernization (trucks);
R&D;
TLS 2 (feasibility study).
2014
Capex includes investment in modernization and higher % of third-party wood, decreasing as from 2016;
Debt service reduction;
Potencial improvement on working capital (customers and suppliers).
2015
(1) Does not include: asset sales, expenses on bonds repurchase and tax credits from the BEFIEX program.
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FX and Pulp Price explain 80% of Fibrias EBITDA Margin
(1) Excludes Conpacel | (2) 2014 year end market consensus | (3) According to Focus Report (Brazilian Central Bank Jan. 23rd
, 2014) | (4) According to Poyry full cost estimate - includes Manufacturing+ Delivered costs to Rotterdam + Depreciation + ROCE of 9%
Each 10% depreciation of the Real increases EBITDA by approx. R$600 million
1,522
2,526
1,964 2,253
2,796 2,791
2009 (1) 2010 (1) 2011 2012 2013 2014 2015
2.001.76
1.671.95
2.102.29 2.72
(3)
Exchange Rate
Average (R$/US$)
EBITDA Margin
EBITDA (R$ million)
29%40% 34% 36% 40% 38%
Marginal producer cost
(US$/t)(4)
Fibria net pulp price
(US$/t) Market
Consensus
456
670639
581610 572 564
660627
676657
680 676
912
1,1791,067 1,133
1,281 1,310
1,534
Fibria net pulp price
(R$/t)
Capital Structure: Fibria has achieved the lowest leverage ratio among
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30
Net Debt/EBITDA (x)(1)
Fibria Arauco CMPC Klabin Suzano
S&P BB+/Positive BBB-/Stable BBB+/Negative BBB-/Negative BB/Stable
Moodys Ba1/Positive Baa3/Stable Baa3/Negative - Ba2/Stable
Fitch BBB-/Stable BBB/Stable BBB+/Stable BBB-/Negative BB/Stable
(1) Fibrias historical data in BRL. | (2) Market consensus.
Capital Structure: Fibria has achieved the lowest leverage ratio among
its Latin American peers
2.4 2.3
2.72.6
4.84.5 4.5
4.2
1.7 1.7
2.4
2.72.9 3.13.1
3.73.6 3.7 3.6
14.813.2
11.711.1
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 2014
Fibria Suzano Klabin CMPC Arauco Eldorado
2
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31
Indebtdeness
31
2.82.7 2.7
2.62.5
2.49,773
8,574 8,327
4,172 3,498 3,135
Dec/13 Sep/14 Dec/14
R$ US$
7,8497,313 7,549
3,351 2,984 2,842
Dec/13 Sep/14 Dec/14
R$ US$
Net Debt/EBITDA (US$)
Debt Amortization Schedule (US$ Million) Average Tenor (months) and Cost of Debt* in US$ (% p.a.)
293
600
893
363
223
364
459
632
375
93
223
600
Liquidity 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Pre-payment BNDES ECN ACC/ACE Voto IV Bonds
(cash)
(revolver)
5255 55
Dec/13 Sep/14 Dec/14
Interest (US$)
- 25%
Net Debt/EBITDA (R$)
(*) Considering the portion of debtin reais fully adjusted by the market swap curves at the end of
each period..
4.3
3.7
3.4
Net Debt (Million)
61
50 44
Total Debt and Interest Expenses (Million)
A consistent and disciplined approach focused on reducing debt
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A consistent and disciplined approach focused on reducing debt
and its cost
Debt (US$ million) x Leverage (US$) Interest (US$ million) x Cost of Debt (US$)
Free Cash FlowIncrease
InterestReduction
Cost of DebtReduction
This dynamics
creates a virtuouscycle
8.6
3.1
6.3
2.8
2009 2010 2011 2012 2013 2014
Gross Debt Net Debt
7.5
4.1 4.23.3
2.6 2.5473
414 408350
268200
2009 2010 2011 2012 2013 2014
6.3 5.95.5
5.2 4.63.4*
(*) Considering the portion of debtin reais fully adjusted by the market swap curves of Dec. 31, 2014.
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New issuance better priced than Investment Grade issuers
Rating Maturity Volume T-Spread Coupon X Book
Fibria Ba1 / BBB- / BB+ 2024 US$600 mn 275 bps 5.25% 11.5x
Braskem Baa3/BBB-/BBB- 2024 US$500 mn 340 bps 6.45% 11.0x
Petrobras Baa1/BBB/BBB 2024 US$2.5 bn 350 bps 6.28% 3.3x
Klabin BBB-/BBB- 2024 US$500 mn 269 bps 5.25% 6.0x
Samarco BBB-/BBB 2024 US$500 mn 288 bps 5.375% 3.6x
Rating Maturity Volume G-Spread Yield
Fibria Ba1 / BBB- / BB+ 2024 US$600 mn 343 bps 5.146%
Braskem Baa3/BBB-/BBB- 2024 US$500 mn 473 bps 6.430%
Klabin BBB-/BBB- 2024 US$500 mn 379 bps 5.512%
Odebrecht Baa3/BBB-/BBB 2023 US$800 mn(1) 459 bps 5.225%
Petrobras Baa1/BBB/BBB 2024 US$2.5 bn 535 bps 7.060%
Gerdau Baa3/BBB-/BBB- 2023 US$750 mn 386 bps 5.508%
Samarco BBB-/BBB 2024 US$ 500 mn 453 bps 6.278%
(1)
Outstanding: US$102 mn
Secondary Market - As of Jan. 29, 2015
Issuance
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and performing better than Investment Grade issuers
150
200
250
300
350
400
450
500
550
30/9 5/10 10/10 15/10 20/10 25/10 30/10 4/11 9/11 14/11 19/11 24/11 29/11 4/12 9/12 14/12 19/12 24/12 29/12 3/1 8/1 13/1 18/1 23/1
GS
pread
Fibria 2024 Bras kem 2024 Klabin 202 4 Odebrecht 2023 Petrobras 2024 Gerdau 2023 Samarco 2024 Votorantim 2024 BRF 2024
Source: Bloomberg - Jan. 23, 2015.
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Fibria has the simplest and most transparent call in the industry
Negative Neutral Positive
Pulp supply
Closures/conversions
Inefficient capacities in China
Demand
Fiber and grade substitution
Tissue China
Pulp price
Brazil GDP
Energy crisis
FX
Capex inflation
Cost inflation
Rating
Tax
Corporate Governance
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36Final Remarks
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37
Max Value Project Zero base budgeting
Each expense and capex
need to be explained, not
only the additional ones
Budget developed primarily based on input
consumption indicators
Only one discussion cycle, initially based on
budgetary guidelines
Individual discussion for each expenditure package,
including Sustaining CAPEX and OPEX
Discussion details based on the materiality of the
expense within the package
Robust basis increasing the visibility of the rationale
for the proposed budget amounts
Zero Base Budgeting encourages a questioning and
challenging attitude of the status quo
The assumption for the new process is that the budget for next year is zero.
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38
Max Value Project Zero base budgeting
33%
100%
43%
23%
Forestry Industrial Logistics/Other Total
15%
30%
50%
65%
75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2015 2016 2017 2018 2019
Note: (1) Technical Limit potential reflecting 2013 conditions; (2) Coverage of expenses with established Technical Limits (e.g. 374/3233=12%).Source: Fibria, ZBB team analysis.
Value achievement share by category NPV expected curve
Approx. R$1.5 billion NPV
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39
Max Value Project A hidden asset value
Market Price of own Land as of Sep/14:
R$3.9 billion
Fibrias
Owned Land
Ha
(000)
Book Value
R$/ha
Market Value
R$/ha
Total 491 2,535 7,964
Land sold in 2013 The Parkia Deal:
- 206k ha;
- Up to R$1.65 billion (~R$8k per ha).
Book Value of own Land as of Sep/14:
R$1.2 billionMarket Price of own Land as of Dec/14:
R$3.9 billion
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Max Value Project Turning areas per hectare into square meter
The targeted area represents only 0.6% of the land owned by Fibria;
Real estate thinking: minimum value creation of R$500 million NPV.
b k l f h h ld h l d l
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41
PULP
- Growth with discipline
- Best portfolio of projects
BIO-ENERGY
- Complementary to pulp
- Ensyn
INDUSTRY
CONSOLIDATION ?
OTHER OPPORTUNITIES
- Portocel
- Land and forest
PotentialGrowth
Prospects
Fibria is seeking value creation for its shareholders with capital discipline
The maturity of synergies captured since Fibrias creation improved its
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593 593 605 584648 651
900826
766678 699
2009* 2010* 2011 2012 2013 2014
4,600
5,0545,184
5,299 5,271 5,274
2009* 2010* 2011 2012 2013 2014
The maturity of synergies captured since b a s creation improved its
operating indicators
+15%
PRODUCTION VOLUME (000 t)BEST PRACTICES AND OPERATING STABILITY
Historical Value Inflation Effect**
-21%
CASH COST (R$/ton)
Historical Value Inflation Effect**
-21%
SG&A (R$ million)STRUCTURE AND PROCESS SIMPLIFICATION
1,522
2,5261,964
2,253
2,796 2,791
2009* 2010* 2011 2012 2013 2014
29%
40%34% 36%
40% 39%
EBITDA (R$ million) - EBITDA MARGIN (%)
* Excludes Conpacel | ** IPCA index considered to calculate the inflation effect.
432 448471 473 505
519
656 624 596549 545
2009* 2010* 2011 2012 2013 2014
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Fib i t t t
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Fibrias tax structure
Tax benefits (R$)
Fiscal - annual adjustment
Benefit Amount Maturity
Goodwill(Aracruzacquisition)
Annual tax deduction:R$89 million (tax)
Remaining Balance Dec/14:R$1.1 billion (base)
2018
Forestry Capex inMato Grosso doSul state
2014 tax deduction related todepletion: R$37 million
Undefined
Tax loss carry forward and tax credits
Benefit Amount
Tax losscarryforward
Balance up to Dec. 14: R$451million (base)
Accumulated taxcredits
Balance Dec./2014:- PIS/COFINS: R$570 million
- Withholding tax (IR and CSLL):R$681 million
- Befiex: R$455 million
- Reintegra: R$37 million
Tax payment (cash basis)
2009 2010 2011 2012 2013 2014
R$ 7 million R$ 16 million R$ 4 million R$ 15 million R$ 31 million R$ 29 million
Due to productivity gains in its forests, Fibria had the opportunity to
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explore this new ownership model
MAI* Pulp:(adt/ha/year)
10.6 10.9
12.1
15.0 15.0 15.0 15.0 15.0
2010 2015 2020 2025 2030 2035 2040 2045
FIBRIAS GAINS IN IMACEL DUE TO INVESTMENTS IN BIOTECHNOLOGY (TONS OF PULP/HA/YEAR)
2012 field trials = 11.9
Conservative assumption
*MAI: Mean annual increment
Actions: Genetic improvement
Excellence in forestry management
Superior industrial efficiency
L d hi iti
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Leadership position
(1) Fiber Consumption, Recycled Fiber and Pulp: RISI | Market Pulp, Hardwood and Eucalyptus: PPPC Special Research Note - May 2014
Recycled Fiber
234 million t
49% 51%
60%
18% 82%
58% 42%
40%
35% 65%
29%71%
Fiber Consumption
403 million t
Pulp
169 million t
Chemical
139 million t
Mechanical
31 million t
Integrated Mills
84 million t
Market Pulp
56 million t
Hardwood
29 million t
Other Eucalyptus
Pulp producers:
13 million t
Softwood/Other
27 million t
Acacia/Other
10 million t
Eucalyptus
19 million t
Industry Outlook(1)
Supply structural changes puts pressure on the industry
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Supply structural changes puts pressure on the industry
MARKET PULP CAPACITY RANKING 2014 (000T) MAIN PROJECTS
Project Country Capacity Timing Fiber Status
CMPC Guaba II Brazil 1.3 Mt 2Q2015 BEKP Confirmed
Klabin Paran Brazil 1.5 Mt 2Q2016BEKP/
BSKP/FluffConfirmed
APP South Sumatra Indonesia 2.0 Mt 1Q2017 BHKP Confirmed
Fibria Trs Lagoas II Brazil 1.75 Mt - BEKP Unconfirmed
COST CURVE EVOLUTION
USD/Adt,2013costlevel
Cumulative Capacity Million t/a
Cost position
of marginal
producer
Source: Hawkins Wright , Poyry and Fibria Analysis (as of Dec. 2014).
0 2000 4000 6000
ENCE
Canfor
Resolute Forest
Sodra
IP
Domtar
Mercer
Eldorado
IlimWeyerhaeuser
Stora Enso
Metsa Group
Paper Excellence
Georgia Pacific
UPM-Kymmene
CMPC
Suzano
AraucoAPRIL
Fibria
Bleached Softwood Kraft Pulp (BSKP)
Bleached Hardwood Kraft Pulp (BHKP)
Unbleached Kraft Pulp (UKP)
Mechanical Pulp (MP)
Benefiting From Chinas Growth
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World Tissue Consumption, 1991-2013 (3)
Per Capita Consumption of Tissue by World Region (3)China's Share of Market Pulp (2)
24
15 15
12
7 65
1
N.
America
West
Europe
Japan Oceania East
Europe
LatAm China Africa
9 11 1316
26
1721 20
23
79 10
12
22
1620 19
2110
1012
14
21
17
2223
23
2005 2006 2007 2008 2009 2010 2011 2012 2013 11M2014
Eucalyptus Hardwood Total
7.468
3.082
1.869 2.085
226 151 55
7.914
3.792
1.9581.592
144 41 14
BHKP Total Latin
America
Indonesia Others* USA Canada Western
Europe
11M2013 11M2014Latin America is the
leading exporter of BHKP
to China, accounting to
approximately 48% ofChina's total imports in
11M2014.
(Kg/capita/year)
(million t)(000s t) (kg/person/year)
Between 2005 and 2013,
the Chinese market share
of eucalyptus shipments
increased by 14 p.p.
(total market pulp: + p.p.)
* includes Russia, China, Thailand and New Zealand.
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 FEOceania Africa
LTM Growth
Rate +4.2%
Benefiting From China s Growth
Chinas Hardwood Imports of BHKP by Country (1)
(1) PPPC Pulp China
(2) PPPC W20. Coverage for chemical market pulp is 80% of world capacity(3) RISI
(In percentage)
23
2125
Global Paper Consumption
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Global Paper Consumption
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
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 2006
Developed 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 2016
Developed Markets: - 4.0%
Emerging Markets : + 4.1%
CAGR 1996 2006
Developed Markets: + 2.4%
Emerging Markets : + 6.9%
CAGR 2007 2016
Developed Markets: + 1.4%
Emerging Markets : + 6.7%
26,877