RISI International Containerboard Conference Cristiano Teixeira

N o v e m b e r , 2 0 1 6

Latin America: Macroeconomic Scenario

GDP (%)4.9

3.2 3.01.3 ‐0.1

‐0.5

1.5 2.1 2.6 2.7

2011 2012 20182017 2019 202020162013 2014 2015

CAGR 2,4% CAGR 1,7%

Source: IMF, World Bank  Including Mexico

Inflation (%)5.2 4.6 4.6 4.9 5.5 5.7

4.3 4.1 3.9 3.7

20202018 2019201320122011 2017201620152014

CAGR 5,0% CAGR 4,3%

20 countries

Population633 million

35% medium class

Unemployment 6% (2015)

LATAM: Containerboard apparent consumption

Others 13%

Ecuador5%

Colombia5%

Chile

5%

Argentina8%

Mexico29%

Brazil35%

thousand metric tons14,073

26%

20202019

13,445

34%

6%

26%

34%

2018

12,915

34%

6%6%

27%

33%

2015

12,300

35%

6%

26%

33%

2014

11,971

35%

5%

26%

34%

26%

34%

2017

12,508

34%

6%

27%

33%

2016

12,261

34%

6%

34%

34%

Recycled MediumSemichemical Medium

Recycled LinerboardKraftlinertotal capacity

Consumption per Country

Source: Risi Latin America Pulp & Paper Forecast 2016

151 

349 

72 100 

150 

195 226 

81

84

87

90

93

0

100

200

300

400

20202019

88.6%

thou

sand

metric

tons

2018

87.2%

2017

86.1%

2016

85.3%

2015

85.7%

2014

86.3%

90.3%

Capacity Growth (L)Operating Rate (R)

Demand is predicted to grow at a faster pace than supply from 2017 onward

Recycled containerboard capacity will increase 650 thousand tonnes from 2016 to 2020 and reach 9,1 million tonnes

Containerboard Capacity Growth andOperating Rates in LATAM

Source: Risi Latin America Pulp & Paper Forecast 2016

Main Latin America Containerboard CapacityExpansions 2015-2020 (thousand metric tons)

349 172

571

1,092

2015 2016‐2017 2018‐2020 Total in 6 years

Recycled:Klabin (BR) +125 Bragagnolo (BR) +72Propasa (MX) +100

Virgen:WestRock (BR) +35

Recycled:Irani (BR) +26SKG (MX) +100Fernandez (BR) +100NOA (AR) +110

Recycled:Irani (BR) +135

Source: Risi Latin America Pulp & Paper Forecast 2016

Virgen:Obera (AR) +350

Latin American countries are net importers of containerboard, with the exception of Brazil

Net Imports 3.243

2.8232.882

2.783

2014 2015 2016 2017 2018 2019

23% 23%

23%23%

24%

24%

2.898

3.045

(thousand tonnes)

TOP 5 IMPORTERS

156

Argentina 275

313

168

1.075

Ecuador

Mexico

Colombia

Chile

(thousand tonnes)

35% USA

Net imports Import Share

55% USA

51% BR

BrazilContainerboard and Corrugated Packaging

Brazil: Macroeconomic Scenario

Positive Outlook for 2017

GDP (%)4.9 3.2 3.0 1.3 ‐0.1

‐3.2

1.3 2.3 2.5 2.5

2020201920182017201620152014201320122011

Inflation (%)

6.5 5.8 5.9 6.4

10.77.0

5.1 4.7 4.5 4.5

20192018 202020152014 201720162011 20132012

Source: BCB and IMF

Industry-6%2016

+1.1%2017

Retail-5%2016

+1.3%2017

CAGR 2.4% CAGR 1.1% CAGR 7.1% CAGR 5.1%

Brazil: Containerboard capacity

Total Capacity 20155.1 million metric tons

40% 42%

SemichemicalTestliner

17%

Kraftliner

1%

Recycled Medium

Top 5 producers (thousand metric tons)

Kraftliner + Semichemical

Testliner + RecycledMedium

WestRock

Trombini

Cocelpa

IP

819

87

Klabin

435

183

70

Fernandez 235

SKG 276

Irani 161

Artivinco 162

Klabin 235

Source: Risi Capacity Report 2016

Containerboard production and apparent consumption

(thousand metric tons)

Kraftliner operating rate was90% in 2014 and remained nearthis level in 2015

For 2016 the forecast is to bringthe operating rates down to88%

The economic recovery shouldelevate levels back up to 95% bythe end of the forecast

5,0105,1725,1125,097

2019

4,776

2016

5,0975,222

4,317

2014

4,505

4,280 4,100

4,657

4,290

2017

4,455

2015

4,585

4,422

4,554

4,174

2018

Apparent ConsumptionProductionCapacity

Source: Risi Latin America Pulp & Paper Forecast 2016

Brazilian containerboard exportslarge presence in the international Kraftliner Market driven by fiberhigh productivity

Sep Oct

25.6

Aug DecNovJul

27.7

Jun

23.1

May

30.5

Apr

28.4

Mar

27.2

Feb

23.6

Jan

27.329.430.0 29.3

33.9

2016 forecast2015 2016(thousand metric tons)

302

2016exp

+11%

336

2015

Source: Risi

Braz

il

Sout

h A

mer

ica*

Sout

heas

t Asia

Moz

ambi

que

Oce

ania

USA

Cen

tral a

nd

East

ern

Euro

pe

Wes

tern

Eur

ope

Russ

ia

Scan

din

avia

Balti

c C

ount

ries

Can

ada

Productivity and average rotation of planted trees in Brazil versus other significant players

Source: Ibá and Pöyry 2016

EucalyptusPinus

Rotation in years Eucalyptus Rotation in years Pinus *Exceto Brasil

12

198214

574

Jan‐15 Jan‐16 Sep‐16Jan‐14 May‐14 Sep‐15Sep‐14 May‐16May‐15

438447

132 92

303

OCC IIFluting

% in 2016 (US$)

115%45%

OCC II and Fluting Prices

(US$/metric ton)

Source: Anguti

13

67%

33%

Composition in corrugated boxes

58.4% 64.0% 65.6% 65.2% 65.5%

41.6% 36.0% 34.5% 34.8% 34.5%

100%

20142013201220112010

RecycledVirgen

(2015 – %)

OCC recuperation in Brazil: 79%

Paper Consumption in Production of Corrugated Board

Source: ABPO

2006 2007 2011

542.6

2010 20142009

531.9

2008 2013

515.2516.2

2012

516.7515.8

530.5

‐6%

2005 2015

531.2

515.2512.0

523.2stabilization

Source: ABPO

g/m2

Corrugated Box basis weight

3%N 10%

N.E.

49%S.E.

31%S

7%MIDWEST

90companies

US$ 3 billion

Total Revenue in 2015

+ 25,000Direct jobs

142Actives corrugators

Corrugated Packaging in Brazil

Source: ABPO 2015

width(m)

29 69 

44 

>2.21.6‐2.2< 1.6

million metric tons

billion m²3.3 6.5

16

CAGR 2009‐2017

ABPO +1.9

GDP +1.5

‐0.30.7

1.8

3.6

1.1

‐2.8

‐1.2

1.63

7.5

3.9

1.93

0.1

‐3.1

1.3

11,0

2010 2011 2012 2013 2014 2015‐2,8

2016e2009 2017e

GDPABPO

Corrugated Packaging in Brazil and GDP (% annual)

Source: ABPO and Brazil Central Bank

17

jul‐16jan‐16jul‐15jan‐15jul‐14jan‐14jul‐13jan‐13jul‐12jan‐12

39.2%

27.2%

33.7%

21.7%

20.8%

18.0%12.7%

6.7%

4.1%0.0%

ABPO IPCA (BR price index)

ABPO Total Revenue per m² accumulated variation

Source: ABPO e IBGE

Brazilian crisis

26 25

45 47

7779

2 65

5

5

3

2014 2015

(in %)

food products

Horticulture & fruitspoultry

tobaccos

others

drugs,perfumes,cosmeticschemicals

Total food57%

Total food60%

Distribution per Industrial Category

Source: ABPO

Klabin

WestRock*

Outros

IP

Irani

Trombini

Penha

Smurfit Kappa

Ibéria

Adami

17%

8%

7%

6%

6%

5%4%4%

3%

39%

MARKET SHARE - 2015

Source: ABPO*Estimated

17%

8%

7%

6%

6%

5%

4%

4%

3%

39%

Thank you