Corporate Presentation (April)
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1 Corporate Presentation April 2015
Transcript of Corporate Presentation (April)
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Corporate PresentationApril 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 40.14% + Treasury 0.06%
VotorantimIndustrial S.A.
(1)
29.42%
BNDESParticipações (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 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
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
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 excluding the forest base linked to the sale of forest assets in Southern Bahia State and Losango. (2) For covenants purposes, the Net Debt/EBITDA ratio is calculated in Dollars.
Port Terminal Pulp Unit
Três Lagoas
Santos
AracruzPortocel
Caravelas
BelmonteVeracel
Jacareí
Superior Asset Combination Main Figures – 4Q14 LTM
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Fibria’s Units Industrial Capacity
Três Lagoas – Mato Grosso do Sul – 1,300 thousand t/year Jacareí – São Paulo – 1,100 thousand t/year
Aracruz – Espírito Santo – 2,340 thousand t/year Veracel – Bahia – 560 thousand t/year *
* Veracel is a joint venture between Fibria (50%) and Stora Enso (50%) and the total capacity is 1,120 thousand ton/year
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Fibria’s Strategy
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Leadership Position
(1) Fiber Consumption, Recycled Fiber and Pulp: RISI | Market Pulp, Hardwood and Eucalyptus: PPPC 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 – 2014
• 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
24%
L.America
10%
Europe
41%
Asia
25%
Fibria’s Pulp End Use
Tissue51%
Printing & Writing
31%
Speciatilies18%
Forest
OutboundLogistics
Pulp mill
PortClient
Low forest to mill average distance
Easy access to the most efficienttransportation network:
rail, barging and road
Portocel: specialized port for the pulp and paper industry
Integrated logistics solutions
Efficient Logistics Setup
Sea Freight
Door to Door Operations
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Pulp and Paper Market
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Paper Consumption
(1) Source: RISI
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Developed Markets Emerging Markets
CAGR 1996 – 2006Developed Markets: + 1.7%Emerging Markets : + 6.0%
85,291
117,611
15,548
37,474
P&W Consumption (000 tons)(1)
Tissue Consumption (000 tons)(1)
114,507
CAGR 2007 – 2016Developed Markets: - 4.0%Emerging Markets : + 4.1%
CAGR 1996 – 2006Developed Markets: + 2.4%Emerging Markets : + 6.9%
CAGR 2007 – 2016Developed Markets: + 1.4%Emerging Markets : + 6.7%
26,877
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Developed Markets Emerging Markets
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Million tons 1998 2008 2018Growth
1998-2008
Growth
2008-2018
Hardwood 15.0 24.5 32.8 63% 34%
Eucalyptus 6.0 14.2 23.4 137% 63%
Softwood 17.6 21.6 24.8 23% 15%
Market Pulp 32.6 46.1 57.1
Source: PPPC
Global Market Pulp Demand
2013 - 2018 CAGR:Hardwood: +2.8%Softwood: +0.7%
Hardwood demand will continue to increase at faster pace than Softwood
Hardwood (BHKP) vs. Softwood (BSKP) (000 ton) Demand growth rate
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
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98
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99
20
00
20
01
20
02
20
03
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20
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Hardwood Softwood
Gross capacity addition should not be counted as the only factorinfluencing pulp price volatility….(1)
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Cap
acit
y (0
00
to
n)
BH
KP
pri
ces
-C
IF E
uro
pe
(US$
/to
n)
List Price bottoming at US$650/t in 2011 and US$724/t in 2014
(1) Source: Hawkins Wright , Poyry and Fibria Analysis. Pulp price estimates according to Hawkins Wright (Dec/14), Brian McClay (Jan/14) and RISI (Dec/14)(2) Partially integrated production
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1,8
2,0
0
100
200
300
400
500
600
700
800
900
1.000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Valdivia
APP Hainan
Veracel Nueva Aldea
Santa Fé
Mucuri
FrayBentos
KerinciPL3
Três Lagoas
Rizhao
APP Guangxi
ChenmingZhanjiang
EldoradoMontes del Plata
Maranhão
Guaíba II
APP South Sumatra(2)
Klabin
OjiNantong
Capacity closures DO happen…
Source: PPPC and Fibria
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Closures of Hardwood Capacity Worldwide(000 ton)
-910
-85
-1,260
-1,180
-540-500
-105
-1,085
-830
2006 2007 2008 2009 2010 2011 2012 2013 2014-2016 E
as of Dec.14
Total delivered cash cost will also have an influence on bottom prices
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Total Cash Cost of BHKP delivered to Europe (US$/t)
Source: Hawkins Wright (Outlook for Market Pulp, December 2014) | Fibria’s 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
498 508456 468
420 404 424 424 406
342315 311 297
235186
71 46
69 4186 121
34 3841
4855
38 67
111
61
51
119
39
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Cash Cost (US$/t) Delivery (US$/t)
SG&A
Capex
Interest
Income Tax
Interest
Capacity(k tons):
1,775 705 580 570 1,660 1,055 2,315 335 545 330 7,480 = 31,4053,790 1,015 3,950 5,300
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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)
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15 15
12
76
5
1
0
5
10
15
20
25
30
N.America
WestEurope
Japan Oceania EastEurope
LatAm China Africa
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Pulp Projects Backlog
Main Projects
Project Country Capacity Timing Status
CMPC Guaíba II Brazil 1.3 Mt 2Q2015 Confirmed
Klabin Paraná Brazil 1.5 Mt* 2Q2016 Confirmed
APP South Sumatra Indonesia 1.5 Mt – 2.0 Mt 4Q2016 Confirmed
Fibria Três Lagoas II Brazil 1.75 Mt - Unconfirmed
• Minimum required return for new projects
• Closures due to increasing costs worldwide, reduction of maintenance capex (higher technical age of recovery boilers) and exchange rates
• Fiber substitution: Softwood x Hardwood and Recycled x Virgin Fiber
Main Questions About Capacity
Even though there is an extensive pulp projects backlog, there are important question marks regarding new projects
* 1.1 million tonnes of hardwood and 400 thousand tonnes of softwood
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Financial Highlights
4Q14 Results
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Cash Production Cost (R$/t)
Pulp Production and Sales (‘000 t) Net Revenue (R$ million)
EBITDA (R$ million) and EBITDA Margin (%)
1.958
1.746
2.001
4Q13 3Q14 4Q14
466 478 472 466 502 472
4Q13 3Q14 4Q14
Cash cost ex-scheduled downtimes Cash cost
823
613
906
4Q13 3Q14 4Q14
42%
35%
45%
1.3581.345
1.381
1.441
1.372
1.410
4Q13 3Q14 4Q14
Production Sales
Indebtedness
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Debt (US$ million) x Leverage (US$) Interest (US$ million) x Cost of Debt (US$)
Free Cash Flow Increase
Interest Reduction
Cost of Debt Reduction
This dynamics creates a virtuous
cycle
8.6
3.1
6.3
2.8
2009 2010 2011 2012 2013 2014
Gross Debt Net Debt
7.5
4.1 4.23.3
2.6 2.7473
414 408350
268200
2009 2010 2011 2012 2013 2014
6.3 5.95.5
5.2 4.63.4
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Debt Amortization Schedule at
Dec/2014(US$ Million)
Debt Profile
Average Term: 55 months
Average Cost: 3.4% p.y.
Cost of Debt Foreign Currency (% p.a.)
Debt by Currency
7%
93%
Local Currency
Foreign Currency
4.6%
3.4%
Dec/13 Dec/14
293
600
893
363
223
364
459
632
375
9322 3
600
Liquidez 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Pré-pagto. BNDES NCE ACC/ACE Voto IV Bond
(caixa)
(revolver)
2,791
3,530
163
851
(112)
(696)
(504)
(380)
(1,874)
141 (54)
AdjustedEBITDA
Befiex Other non-reccuring exp.
/non-cash
EBITDA FX Debt /Hedge
Early prepaiddebt
Net Interest Deprec., amortiz.and
depletion
Taxes Others Net Income
Hedge
∆
FX Debt∆
Non-recurringeffects
(1) Includes other exchange rate/monetary variations and other financial income/expenses.
Net Results (R$ million) – 2014
(1)
Mandatory dividends of R$37 million.
