Corporate Presentation (November)
Transcript of Corporate Presentation (November)
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Corporate PresentationNovember 2014
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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 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, ormay 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 thecompanys 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.
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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%
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
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:
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 7.0
Total Forest Base(1) thousand hectares 970
Planted area(1) thousand hectares 562
Net Debt R$ billion 7.3
Net Debt/EBITDA (in Dollars)(2) X 2.5
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
Trs Lagoas
Santos
AracruzPortocel
Caravelas
BelmonteVeracel
Jacare
Superior Asset Combination Main Figures 3Q14 LTM
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Fibrias Units Industrial Capacity
Trs Lagoas Mato Grosso do Sul 1,300 thousand t/year Jacare So Paulo 1,100 thousand t/year
Aracruz Esprito 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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Leadership Position
(1) Fiber Consumption, Recycled Fiber and Pulp: RISI | Market Pulp, Hardwood and Eucalyptus: PPPC Special Research Note - November 2013(2) Hawkins Wright Outlook for Market Pulp, August 2014
Market Pulp Capacity Ranking 2014(2) (000t)
- 1.000 2.000 3.000 4.000 5.000 6.000
Canfor
ENCE
Eldorado
Resolute
Domtar
Mercer
Sodra
Ilim
IP
Weyerhaeuser
Metsa Group
Paper Excellence
Stora Enso
UPM-Kymmene
CMPC
Georgia Pacific
Suzano
Arauco
APRIL
Fibria
Bleached Softwood Kraft Pulp (BSKP)
Bleached Hardwood Kraft Pulp (BHKP)
Unbleached Kraft Pulp (UKP)
Mechanical
5,300
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
Chemical139 million t
Mechanical31 million t
Integrated Mills
84 million t
Market Pulp
55 million t
Hardwood
28 million t
Other Eucalyptus
Pulp producers:
13 million t
Softwood/Other
27 million t
Acacia/Other
10 million t
Eucalyptus
18 million t
Industry Outlook(1)
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Fibrias Commercial Strategy
Source: Fibria 3Q14 LTM
Differentiation: Customized pulp products to specific paper grades
Sole supplier to key customers
Long term contracts
Competitive logistics set up
Miami
Lustenau
Hong Kong
So Paulo
Fibrias Sales Distribution
Fibria s Offices
N.America
25%
L.America
9%
Europe
40%
Asia
26%
Fibrias Pulp End Use
Tissue51%
Printing &
Writing
30%
Speciatilies
19%
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Forest
Outbound
Logistics
Pulp mill
PortClient
Low forest to mill average distance
Easy access to the most efficient
transportation 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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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 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
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
1998-2008Growth
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
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
Hardwood Softwood
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Gross capacity addition should not be counted as the only factor
influencing pulp price volatility.(1)
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List Price bottoming at US$650/t in 2011 and US$724/t in 2014
Capacity(000
ton)
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1,8
2,0
0
100
200
300
400
500
600
700
800
900
1.000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Valdivia
APP
Hainan
Veracel Nueva Aldea
Santa F
Mucuri
Fray
Bentos
Kerinci
PL3
Trs
Lagoas
Rizhao
APP Guangxi
Chenming
Zhanjiang
Eldorado Montes
del Plata
Maranho
Guaba II
APP South
Sumatra(2)
Klabin
BHKP
prices-CIFEurope
(US$/ton)
(1) Source: Hawkins Wright , Poyry and Fibria Analysis. Pulp price estimates according to Hawkins Wright (Sep/14), Brian McClay(Nov/14) and RISI (Nov/14)(2) Partially integrated production
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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 Eas of Oct14
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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$/t)
3Q14 net price:
US$ 554/t
Positive Working
Capital: US$5/t
SG&A
Capex
Interest
498 508 456 468 420 404 424 424 406342 315 311 297
235 221
71 46
69 41 86 12134 38 41
4855 38 67
11166
54
142
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Custo Caixa (US$/t) Entrega (US$/t)
Income Tax1
Interest
Capacity
(k tons):1,775 660 595 570 1,570 1,045 2,415 335 625 340 7,450 = 31,3853,745 1,010 3,950 5,300
Source: Hawkins Wright (Outlook for Market Pulp, September 2014) | Fibrias 3Q14 considering a FX of R$/US$2.27.
Gray bar includes cash expenses as Interest, CAPEX, SG&A and Taxes (Source: RISI and Fibria).
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Tissue Market
(1) Source: RISI
Kg/capita
Per Capita Consumption of Tissue by Region, 2013(1)
Growth
Potential
0
5
10
15
20
25
30
35
1991 1996 2001 2006 2009 2010 2011 2012 2013
N.America W.Europe E.Europe L.America Middle East
Japan China Asia FE Oceania Africa
LTM Growth of
+4.2%
Million tons
World Tissue Consumption, 1991-2013(1)
24
1515
12
76
5
1
0
5
10
15
20
25
30
N.
America
West
Europe
Japan Oceania East
Europe
LatAm China Africa
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Pulp Projects Backlog
Main Projects
Project Country Capacity Timing Status
CMPC Guaba II Brazil 1.3 Mt 2Q2015 Confirmed
Klabin Paran Brazil 1.5 Mt* 2Q2016 Confirmed
APP South Sumatra Indonesia 1.5 Mt 2.0 Mt 4Q2016 Confirmed
Fibria Trs Lagoas II Brazil 1.75 Mt - Unconfirmed
Minimum required return for new projects
Closures due to increasing costs worldwide, reduction of maintenance capex (higher technical age of recovery boilers) andexchange rates
Fiber substitution: Softwood x Hardwood and Recycled x Virgin Fiber
Main Questions About Capacity
Even though there is an extensive pulp projects backlog, there are important question marks regarding
new projects
* 1.1 million tonnes of hardwood and 400 thousand tonnes of softwood
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Financial Highlights
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3Q14 Results
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Cash Production Cost (R$/t)
Pulp Production and Sales (000 t) Net Revenue (R$ million)
EBITDA (R$ million) and EBITDA Margin (%)
1.347
1.271
1.3451.301
1.334
1.372
3Q13 2Q14 3Q14
Production Sales
1.841
1.694 1.746
3Q13 2Q14 3Q14
482 486 478501
559502
3Q13 2Q14 3Q14
Cash cost ex-scheduled downtimes Cash cost
762
594 613
3Q13 2Q14 3Q14
41%35% 35%
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Indebtedness
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Debt (US$ million) x Leverage (US$) Interest (US$ million) x Cost of Debt (US$)
Free Cash FlowIncrease
InterestReduction
Cost of DebtReduction
This dynamicscreates a virtuous
cycle
8.6
3.5
6.3
3.0
2009 2010 2011 2012 2013 Sept/2014
Gross Debt Net Debt
7.5
4.1 4.23.3
2.6 2.5473
414 408350
268217
2009 2010 2011 2012 2013 LTM 3T14
6.3 5.95.5
5.2 4.6 3.7
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Debt
Amortization
Schedule atSep/2014
(R$ Million)
Debt Profile
Average Term: 55 months
Average Cost: 3.7% p.y.
Cost of Debt
Foreign Currency (% p.a.)Debt by Currency
7%
93%
Local Currency
Foreign Currency
4.5%4.0%
Sep/13 Sep/14
1.261
1.536
2.797
560
888 842
1.353 1.2581.041
616511
49 6
1.449
Liquidity 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Pre-payment BNDES ECN ACC/ACE Voto IV Bonds
(cash)
(revolver)
Early redemption
bond 2019
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Net Result (R$ million) 3Q14
613562
(359)13
(91)
(475)
(51)
(799)
339
92
AdjustedEBITDA
Non-recurringeffects/
non-cash
EBITDA FX Debt /MtM hedge
MtMoperational
hedge
Net interest Deprec.,amortiz. and
depletion
Taxes Other Net Profit(Loss)
MtMDebt
hedge
FX Debt
Differed
(1) Includes other exchange rate/monetary variations and other financial income/expenses.
(1)
Current
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Investor Relations
E-mail: [email protected]
Phone: +55 11 2138-4565
Website: www.fibria.com.br/ir