corporate presentation (october)
TRANSCRIPT
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Corporate PresentationOctober 2015
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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) Controlling group(2) Free Float 40.31% + Treasury 0.06%
VotorantimIndustrial S.A.
(1)
29,42%
BNDESParticipações (1)
29,08%
FreeFloat (2)
41,50%
• 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
• 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
• Dividend
Fiscal Council
Board of Directors
20% independent
members
Role of CEO and
chairman is split
Personnel and Remuneration
Committee
Statutory Audit
Committee
Finance Committee
Sustainability Committee
Innovation Committee
General Meeting
Listed on Novo Mercado, highest level at BM&FBovespa: Policies approved by the Board of Directors:
30%
independent
members
100%
independent
members
50% independent members
45% independent members
-
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A Winning Player
Port Terminal Pulp Unit
Três Lagoas
Santos
AracruzPortocel
Caravelas
BelmonteVeracel
Jacareí
Superior Asset Combination Main Figures – 3Q15 LTM
Pulp capacity million tons 5,268
Net revenues R$ billion 9,097
Total Forest Base(1) thousand hectares 967
Planted area(1) thousand hectares 539
Net Debt R$ billion 9,578
Net Debt/EBITDA (in Dollars)(2) X 1.58
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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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 Global 100 Report December 2014(2) Hawkins Wright – Outlook for Market Pulp, December 2014
Market Pulp Capacity Ranking 2014(2) (000t)
5,300
Recycled Fiber 238 million t
46% 54%
59%
18% 82%
59% 41%
41%
33% 67%
26%74%
Fiber Consumption406 million t
Pulp 168 million t
Chemical138 million t
Mechanical30 million t
Integrated Mills 82 million t
Market Pulp 56 million t
Hardwood30 million t
Other Eucalyptus Pulp producers:
15 million t
Softwood/Other 26 million t
Acacia/Other 10 million t
Eucalyptus20 million t
Industry Outlook(1)
0 2000 4000 6000
ENCE
Canfor
Resolute Forest
Sodra
IP
Domtar
Mercer
Eldorado
Ilim
Weyerhaeuser
Stora Enso
Metsa Group
Paper Excellence
Georgia Pacific
UPM-Kymmene
CMPC
Suzano
Arauco
APRIL
Fibria
Bleached Softwood Kraft Pulp (BSKP)
Bleached Hardwood Kraft Pulp (BHKP)
Unbleached Kraft Pulp (UKP)
Mechanical Pulp (MP)
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Fibria’s Commercial Strategy
Source: Fibria – 3Q15
• Differentiation: Customized pulp products to specific paper grades
• Sole supplier to key customers
• Long term contracts
• Competitive logistics set up
Miami
Lustenau
Hong Kong
São Paulo
Fibria’s Sales Distribution
Fibria ‘s Offices
N.America
25%
L.America
8%
Europe
42%
Asia
25%
Fibria’s Pulp End Use
Tissue50%
Printing & Writing
36%
Speciatilies14%
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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Source: PPPC
Global Market Pulp Demand
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
40.000
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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
18
20
19
Hardwood Softwood
2014 - 2019 CAGR:Hardwood: +2.5%Softwood: +0.8% 000 ton 1999 2009 2019
Growth
1999-
2009
Growth
2009-
2019
Hardwood 16.3 24.8 33.6 52% 35%
Eucalyptus 6.0 15.9 23.9 165% 50%
Softwood 19.0 21.4 24.8 13% 16%
Market Pulp 35.3 46.2 58.5
Gross capacity addition should not be counted as the only factorinfluencing pulp price volatility….(1)
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List Price bottoming at US$650/t in 2011 and US$724/t in 2014
(1) Source: Hawkins Wright , Poyry and Fibria Analysis. Pulp price estimates according to Hawkins Wright (Apr/15), Brian McClay (May/15) and RISI (Dec/14)(2) Partially integrated production
Cap
acit
y (0
00
to
n)
BH
KP
pri
ces
-C
IF E
uro
pe
(U
S$/t
on
)
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 Fé
Mucuri
FrayBentos
KerinciPL3
Três Lagoas
Rizhao
APP Guangxi
ChenmingZhanjiang
EldoradoMontes del Plata
Maranhão
Guaíba II
APP South Sumatra(2)
Klabin
OjiNantong
Horizonte II
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
-445
-750
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015-2017 E(1)
(1) As of April 2015
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Tissue Market
(1) Source: RISI
Kg/capita/year
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)
24
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
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 4Q2017 Confirmed
• 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
1,0701,213
1,400
1,259
2,127
Avg. Net Pulp Price (R$/t)
58 56 56
5053
1,296 1,322 1,347 1,345
1,2751,2441,268 1,301
1,372
1,298
3Q11 3Q12 3Q13 3Q14 3Q15
Production Sales
3Q15 Results
Net Revenue – 3Q15
By region By end-use
42%
25%
25%
8%
Europe
North America
Asia
LatAm
(128)
(79)(99)
(59)
1Q15 2Q15 3Q15 4Q15
(1) ABTCP and Fibria
Pulp Sales (000 t) and Inventories (in days) Pulp Net Revenues and Average Net Pulp Price
1,3311,538
1,821 1,727
2,761
3Q11 3Q12 3Q13 3Q14 3Q15
Pulp Net Revenues (R$ million)
BHKP Schedule Maintenance Downtimes - Brasil (000 t)(1)
50%
36%
14%
TissuePrinting
&Writing
Specialties
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Indebtedness
Debt (US$ million) x Leverage (US$) Interest (US$ million) x Cost of Debt (US$)
Free Cash Flow Increase
Interest Reduction
Cost of Debt Reduction
These dynamics creates a virtuous
cycle
(*) Considering the portion of debt in reais fully adjusted by the market swap curves of September. 30, 2015.
8.6
3.2
6.3
2.4
2009 2010 2011 2012 2013 2014 Sep/15
Gross Debt Net Debt
7.29
4.11 4.253.32
2.60 2.41
1.58
473414 408
350
268200
149
2009 2010 2011 2012 2013 2014 LTM3Q15
6.35.9
5.55.2
4.6
3.4 3.3(1)
Debt Profile
Debt Amortization Schedule (US$ million)
Cost of Debt – Foreign Currency (% p.a.)
742
494
1.236
104204
320
472
810
297 317
25 4
600
Liquidity 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Pre-payment BNDES ECN ACC/ACE Voto IV Bond Others
(cash*)
(revolver)
* Includes MtM of hedging transactions.
Cash on hand: US$994 million
Debt by Currency
4.0 %3.6%
Sep/14 Sep/15
5%
95%
Local Currency
Foreign Currency
22
Net Results (R$ million) – 3Q15
22
1.551
(601)(2.202) 515 (362) (95)
(484)
(34)(209)
719
AdjustedEBITDA
Exchangevariationon debt
Otherexchangevariation
MtMhedge
Hedgesettlement
NetInterest
Deprec.,amortiz. and
depletion
IncomeTaxes
Others Net Income(Loss)
deffered
swapZCC
(1)
current
3T15 3T15
(1) Includes non-recurring expenses/non-cash and other financial income/expenses.
