4th Annual Ita? BBA LatAm Fixed Income Conference

4th Annual Latam Fixed Income Conference
March, 2016

Disclaimer

The information contained in this presentation may include statements which
constitute 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
company’s 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.

2

1 Company Overview
2 Pulp and Paper Market
3 Financial and Operational Highlights
4 Expansion Project – Horizonte 2
5 Dividends
6 Cost reduction initiatives
Agenda

3

Company Overview
4

A Winning Player
Superior Asset Combination

Belmonte
Veracel
Caravelas
Portocel
Aracruz

Main Figures – 2015

Pulp capacity

million tons

5.300

Net revenues

US$ billion

3.021

Total Forest Base(1)

thousand hectares

969

Planted area(1)

thousand hectares

568

US$ billion

2.821

X

1.78

Net Debt
Net Debt/EBITDA (in Dollars)(2)

Três Lagoas
Jacareí
Santos

Port Terminal

Pulp Unit

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.

5

Fibria’s 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

6

Fibria’s Commercial Strategy
Sales Mix by End Use - Fibria
End Use - 4Q15

Region - 4Q15
N.
America
29%

Europe
42%

Highlights

Tissue
50%

Printing &
Writing

35%
Asia
20%

LatAm
9%

Specialties

15%

Net Revenues by Region - Fibria
10%

9%

10%

22%

25%

26%

30%

22%

26%

42%

37%

43%

8%
21%

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

9%

8%

10%

9%

10%

10%

10%

9%

8%

9%



Low dependence on volatile markets such as China

25%

26%

26%

27%

24%

23%

26%

26%

25%

20%



Low credit risk
100% certified pulp (FSC and PEFC/Cerflor)

19%

23%

27%

27%

17%



31%

24%

25%

29%

31%

35%

36%

46%

42%

39%

40%

47%

42%

42%

42%

29%

43%



3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

Europe

North America

Asia

Other

7

Pulp Supply Agreement: Puma Project
Puma Project
► Pulp volumes:
► Minimum of 900 kt of hardwood for the first 4 years
► 75% of 900 kt for the fifth year (phase out 1)
► 50% of 900 kt for the sixth year (phase out 2)
► Selling price based on the average net price charged by
Fibria at the Port of Paranaguá (FOB Paranaguá)
► Sales destination: Globally, except for South America
► Operational startup: Mar/2016
► Agreement benefits:

Logistics and commercial
structure synergies;

Logistics and commercial
optimization and synergies;

Ensure sales volumes;

Support customers’ growth and
enhance customers’ needs;

Ensure pulp market access with
Klabin brand.

Potential development of new customers.

Mutual value creation, with better servicing for both Companies customer’s base
8

Pulp and Paper Market
9

The “better than expected scenario” has become a reality again in
2015…
BHKP CAPACITY CHANGES
EXPECTED SCENARIO FOR 2015 IN DEC’14
Suzano Maranhão

750
265

Oji Nantong

Portucel Cacia

85

Sappi Cloquet
April Rizhao
Ence Huelva
Possible closures*
Net
BEKP demand growth**

500
200

Eldorado

30

Old Town (Expera)

265

CMPC Guaiba II

200

Eldorado

750

Montes del Plata
Oji Nantong

750

CMPC Guaiba II

400

Suzano Maranhão

400

Montes del Plata

REALIZED SCENARIO IN 2015

Portucel Cacia

30

Old Town (Expera)

40
40

Ence Navia

115

115

Sappi Cloquet

-65

April Rizhao

-315

Ence Huelva

-400 to -800

Unexpected Downtimes
1,415 to 1,815

1,095

*Based on annual closures average (400,000 to 800,000 t/yr)
**Source: PPPC Outlook for Eucalyptus Market Pulp December 2014

-190
-315
-400

Net
BEKP demand growth**

Indonesia, China,
Uruguay and Brazil

1,450
1,232

**Source: PPPC Market Pulp World 20

10

… and so has been the price scenario
BHKP Delivered to Europe (USD/t)
804

802
784

781

750

738

735
726

721
709

1Q15

2Q15

3Q15

Consultants average at the end previous year

4Q15

Annual 2015

Realized PIX/FOEX price

Consultants: Hawkins Wright, RISI and Brian McClay (published in the end 2014 for 2015 prices)

11

Better worldwide macroeconomics are the key drivers… But the
special focus is on Europe
Real GDP % Annual Growth

7.7 7.7

7.3

6.9

6.3

3.5
3.4 3.3 3.4
3.1

0.9

2.4 2.4 2.4

2.2

1.5 1.7

1.5

-0,3
-0.8
World

Euro Area
2012

USA
2013

2014

2015

China

2016

Source: International Monetary Fund, World Economic Outlook Database, January 2016

12

But the special focus is on Europe
Hardwood and Eucalyptus Shipments (000 t and % annual growth)

400

6.0%
5.0%

3.8%
3.3%

200

0
-0.3%

-0.8%

-0.8%

-0.6%

-200
2012

2013

2014

BHKP

2015

BEKP

Source: PPPC World 20

13

So, what can we expect for 2016?
BHKP CAPACITY CHANGES
EXPECTED SCENARIO FOR 2016 IN NOV’15

Altri Celbi

Woodland

Old Town (Expera)
-90

APRIL Kerinci

-120

Possible closures*

APP South Sumatra

-40

-55

-400 to -800

930

1,200

*Based on annual closures average (400,000 to 800,000 t/yr)
**Source: PPPC Outlook for Eucalyptus Market Pulp May 2015 (930kt) and
Fibria’s estimates

-40
-90

Verso Wickliffe

-55

Possible closures*
385 to 785

180

Woodland

APRIL Kerinci

Net
BEKP demand growth**

30

Altri Celbi

30

Verso Wickliffe

660

Klabin

660

Klabin

800

CMPC Guaiba II

800

CMPC Guaiba II

Old Town (Expera)

FIBRIA’S EXPECTED SCENARIO FOR 2016

-120
-200

Net

1,165

BEKP demand growth**

1,200

Positive Supply/Demand Balance!
14

Global Market BEKP Demand
Shipments of Eucalyptus Pulp
2014 vs. 2013(1)

2015 vs. 2014(2)

11%
7%

1,734 kt

20%
6%
5%

386 kt

717 kt

1,232 kt

14%

13%
5%
537 kt

5%

90 kt

330 kt

611 kt

4%
201 kt

92 kt

Total
(1)

North
America

Western
Europe

China

Total

Others

Source: PPPC World 20 – December/2014
January/2015

(2)

North
America

Western
Europe

China

Others

Source: PPPC World 20 – December/2015

Paper Capacity increase in China
2014

2015

2016

FORECAST

REALIZED

PREVIOUS
FORECAST

LATEST
FORECAST

LATEST
FORECAST

Woodfree

256

256

760

980

1,000

Tissue

1,390

1,278

1,365

965

568

Cartonboard

2,100

1,326

730

900

630

Total

3,746

2,860

2,855

2,845

2,198

Source: Fibria and Independent Consultants

15

Technical Age and Scale in the Pulp Industry
Further closures are expected due to lack of adequate investments in the industry…
Hardwood (BHKP) Producers – Integrated and Market
Pulp Mills

Softwood (BSKP) Producers – Integrated and Market
Pulp Mills

PM Capacity, 1000 t/a
1000

STRONG

Aracruz

Weighted average
technical age 21 years

900

Weighted average
technical age 12.3 years

2000

PM Capacity, 1000 t/a
STRONG

800
700

1500
Veracel
Weighted average
capacity 1,350,000 t/a

600

Jacareí
Três Lagoas

500

1000

400
300

500

Weighted average
capacity 534,000 t/a

200
100

0
30

WEAK

25

0

20
15
10
Technical age, years

5

0

North American Pulp Mills

30

WEAK

25

20
15
10
Technical age, years

5

0

Other Pulp Mills

More than 6.6 million tons of capacity above 25 years and with annual capacity below 500,000 t/y.

16

Capacity closures DO happen

Closures of Hardwood Capacity Worldwide
(000 ton)
-85

-105
-315
-540

-445

-500

-580

-910
-1,085
-1,180
-1,260
2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016-2017 E (1)

Source: PPPC and Fibria
(1)

As of January 2016 | 2016: -40kt Old Town (USA), -90kt Woodland (USA), -55kt Verso Wickliffe (USA), -120 April Kerinci (Indonesia) | 2017: -275kt Arauco Valdivia (Chile)

17

Even more competitive cash production cost w/ H2
BHKP (US$/t)
BHKP
capacity
(000’ t)

2,075

1,170

1,035

2,290

3,700

4,795

15,270

Total: 30,335

BHKP (US$/t)

538
70

501
87

418
97

468

414
321

China

USA

Canada

372
24

348

Iberia

344
49

295

Indonesia

Cash Cost (US$/t)

315
50

265

Chile/Uruguay

228

379
26
21
83

Working Capital
Interest
Capex

4

49

36
47

Income Tax
SG&A

179

163

144

Brazil

Fibria 2015

Fibria w/ H2

Delivery CIF Europe

Source: Hawkins Wright (Price Forecast January 2016) and Fibria’s 4Q15 Earnings Release - FX considered by the consultant at R$/US$3.80. H2 cash cost
was estimated according to weighted average cost, after mill balance, converted at R$3.80. Includes energy sales.

18

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
1.000

2,0
Horizonte II

BHKP prices - CIF Europe (US$/ton)

800

Rizhao

Maranhão

Três
Lagoas

700
APP
Hainan

600
500

400

APP South
Sumatra(2)

Eldorado

Santa Fé

Valdivia

1,6
1,4

Montes
del Plata Guaíba II

Fray
Bentos
Mucuri
Veracel Nueva Aldea

1,8

1,2

Klabin

1,0
Chenming
Zhanjiang

Kerinci
PL3

Capacity (000 ton)

900

0,8

APP Guangxi

300

0,6

Oji
Nantong

200

0,4

100

0,2

0

0,0
2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

(1) Source: Hawkins Wright , Poyry and Fibria Analysis. Pulp price estimates according to Hawkins Wright (Dec/15), Brian McClay (Feb/16) and RISI (Feb/16)
(2) Partially integrated production.

19

In the last 15 years, pulp volatility has been just 8%...why?

BHKP - FOEX Europe (base 100)

160

CPI (base 100)

120

80

40

► Market price closer to producer’s marginal cost
► The marginal cost producers are based in Europe and North America

► Flattish industry cost curve
► Higher flexibility to adjust supply side during imbalanced market
► Lower dependency on Asian market (~25%) compared to hard commodities (70%+)
► Market end users are linked to consumer goods, such as tissue
► Incipient pulp price futures market and low liquidity
Source: Bloomberg – March 22th, 2016

Mar-16

Oct-15

May-15

Dec-14

Jul-14

Feb-14

Sep-13

Apr-13

Nov-12

Jun-12

Jan-12

Aug-11

Mar-11

Oct-10

May-10

Dec-09

Jul-09

Feb-09

Sep-08

Apr-08

Nov-07

Jun-07

Jan-07

Aug-06

Oct-05

Mar-06

May-05

Dec-04

Jul-04

Feb-04

Sep-03

Apr-03

Nov-02

Jan-02

Jun-02

Aug-01

Mar-01

Oct-00

May-00

Dec-99

0

Lowest volatility among commodities

100 = January 1, 2012
198

113
76
68

Iron Ore

Soy Bean

Crude Oil

Sugar

BHKP - FOEX Europe

Mar-16

Jan-16

Nov-15

Sep-15

Jul-15

May-15

Mar-15

Jan-15

Nov-14

Sep-14

Jul-14

May-14

Mar-14

Jan-14

Nov-13

Sep-13

Jul-13

May-13

Mar-13

Jan-13

Nov-12

Sep-12

Jul-12

May-12

Mar-12

41
40
Jan-12

225
215
205
195
185
175
165
155
145
135
125
115
105
95
85
75
65
55
45
35
25

Exchange Rate (R$/US$)

Low volatility of hardwood pulp price, even though
new capacities have come on stream during the period.
Source: Bloomberg – March 24, 2016

21

The only commodity with lower volatility than FX

Historical Volatility of Commodities (US$)
37%

35%

34%
27%

25%

26%

25%

24%
16%

14%
6%

WTI
Crude Oil

Sugar

Nickel

Copper

Soy

Iron Ore Ibovespa

LME
Metals

Cattle

FX

FOEX PIX
BHKP

Since 2009

22

Financial and Operational Highlights
23

Each 5% depreciation of the Real increases EBITDA by around
R$420m and FCF by R$550m
2016 E

Exchange Rate
Average (R$/US$)

2.00

1.76

670
Fibria net pulp price
(US$/t)

Fibria net pulp price
(R$/t)

1.67

1.95

2.16

2.35

639

581

610

572

456

912

1,179

1,067

1,133

1,311

1,344

3.33

582

1,951

3.99(1)

554(2)
2,210

53%
EBITDA Margin

40%
29%

34%

36%

40%

39%
1,560

1,488
1,173

1,153

2011

2012

1,295

1,185

2013

2014

815

EBITDA (US$ million)

2009

2010

2015

(1) According to Focus Report (Brazilian Central Bank – March 24, 2016) I (2) 2016 market consensus

24

Cash Production Cost (US$/t) – 4Q15

186

4Q14

11
171

Inflation

(56)

6

FX

Lower
energy price

10

Maintenance
downtime

11

Non recurring
wood

148

3

(14)

Non recurring
energy
consumption

Cash cost
4Q15

Total non
recurring

(10)

Maintenance
downtime

4Q15 recurring
cash cost
ex-downtime

Management initiatives gains partially offset the inflation impact

25

Cash Production Cost in dollars saw a decrease over the past 7 years

Fibria Cash Production Cost(1) (US$/ton)

264

281
242

231

234

220
186

2009 (2) 2010 (2)

2011

2012

2013

2014

Consistently
controlling the
cash
production
cost

2015

(1) Constant Currency (2) Excludes Conpacel

26

Net Results (US$ million) – 2015

1,600

(909)
(249)

(101)

107
-0,227

Adjusted
EBITDA

∆ FX Debt

∆ MtM
Hedge

Net Interest

178

(567)

155

Deprec.,
amortiz.and
depletion

Taxes

Others (1)

Net Income

Non-recurring
effects
(1)

Includes other exchange rate/monetary variations, other financial income/expenses and other operating income/expenses.

Dividend proposal of US$90 million, representing 84% of net income.
27

Free Cash Flow
US$ million
329

317
225

194
125
29

84

77

113

111

53

51

103

130

112

4

-7
-77

-256
2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15

EBITDA Margin
34%

33%

28%

30%

37%

37%

41%

39%

39%

41%

42%

41%

35%

35%

45%

50%

50%

56%

54%

1.80

1.77

1.96

2.03

2.06

2.00

2.07

2.29

2.27

2.37

2.23

2.27

2.55

2.87

3.07

3.54

3.84

Average FX
1.60

1.63

(1) Before expansion capex

28

Free Cash Flow(1) – 2015
US$ million

1,600

(484)

859

(89)

(151)

(23)

6

636
( 223 )
(3)

Adjusted
EBITDA

(1)
(2)
(3)

Capex
(ex-H2 project &
land deal)

Net
Interest

Working
Capital

Taxes

Others

FCF
(ex-H2 project &
land deal)

Capex
H2 &
land deal

FCF

Not considering dividend payments, capex related to the Horizonte 2 Project and the land acquisition in December 2015.
Not considering dividend payments.
Includes other financial results.

29

ROE and ROIC (US$)
ROE = Adjusted EBIT(1)/ Equity before IAS 41(2)

ROIC = Adjusted EBIT(3)/ Invested Capital before IAS 41(2)

32.0%
29.2%
25.1%
22.8%

9.2%
4.8%

2011
Average
FX

1.67

6.9%

5.7%

6.2%

2012

2013

2014

2015

Annualized
4Q15 US$

1.95

2.16

2.35

3.34

3.84

8.0%

3.9%

3.4%

Average
FX

2011

2012

2013

2014

2015

1.67

1.95

2.16

2.35

3.34

Annualized
4Q15 US$

3.84

(1) Adjusted EBITDA – CAPEX – Net Interest – Taxes
(2) International accounting standards for biological assets.
(3) Adjusted EBITDA – CAPEX – Taxes

30

30

Capital Structure: Fibria has achieved the lowest leverage ratio among
its Latin American peers
Net Debt/EBITDA (x)(1)

6.3

4.2

3.2
3.0
2.7
2.1
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15
Fibria

S&P
Moody’s
Fitch
(1)

Suzano

Klabin

CMPC

Arauco

Eldorado

Fibria

Arauco

CMPC

Klabin

Suzano

BBB-/Stable

BBB-/Stable

BBB-/Stable

BBB-/Negative

BB+/Stable

Ba1/Negative

Baa3/Stable

Baa3/Stable

-

Ba2/Positive

BBB-/Stable

BBB/Stable

BBB+/Stable

BBB-/Stable

BB/Positive

Fibria’s historical data in BRL.

31

One of the best performances among Brazilian corporate issuers(1)

801

818

Gerdau

Petrobras

630

381

399

401

Brazil

Fibria

BRF

(1) G-spread on March 24, 2016

445

450

463

Suzano

Globopar

Klabin

517

537

Embraer

Braskem

Vale

32

.5

Strong credit quality
Interest expense, leverage and average cost of debt in US$

Historical G-spread (bps)

7.29

6.3

5.9

5.5
5.2

4.11

1.400

4.6

4.25

3.4

3.32

3.3(1)

1.000

2.60
473

414

408

1.200

2.41
350

800
1.78

268
200

141

600
400
200

2009

2010

2011

5.2
4.6
Leverage(x)

2012

2013

Cost
debt
(%)
Costofof
debt

3.4

2014

2015

2010

Interest Expense
(US$ million)

2011
Fibria 2020

2012

2013

Fibria 2021

2014

2015

Fibria 2024

3.3(1)

BBB-

BBB-

Ba1

33

Expansion Project – Horizonte 2
34

What is the importance of growth for Fibria?

Competitiveness

Commercial
positioning

Long-term growth
potential

•

Wider fixed costs dilution

•

Cost curve position improvement

•

Greater bargaining power with suppliers

•

Follow the growth of strategic customers

•

Developing new customers

•

Distribution to new geographic markets

•

Efficiency and competitiveness gains in logistics

•

Higher quality in customer service

•

Greater ability to capture new expansion market windows

•

Strong M&A position

35

Why expand Três Lagoas?
ESTIMATED BHKP CAPACITY RANKING 2017 (000T)
•

Brownfield Project, synergies with current
operations

•

Modern plant, prepared for potential
expansion

•

Availability of wood and low average
distance from forest to mill

•

Forest based on the optionality concept and
prioritizing lease and partnership models

•

Additional energy surplus of 120 MWh

Start-up: 4Q2017
Capacity: 1.85 million tons

7,950

Fibria
CMPC
RGE/APRIL
Suzano
APP
Eldorado
UPM
Stora Enso
Arauco
Cenibra
ENCE
Altri
IP
Marubeni
Mitsubishi
Oji
Mondi
Nippon Paper
Verso
Resolute
Georgia-Pacific
Portucel Soporcel
Lwart
Pulp Mill Holding
Domtar
Klabin
Others
0

2000

4000

6000

8000

Current Capacity

New Capacity – Klabin Agreement

New Capacity

New Capacity – Horizonte II Project

Source: Poyry and Fibria Analysis (as of May 2015)

36

Pulp sales destination: Fibria growing where the market grows

37%
43%
19%

25%

36%
24%

8%

8%

Total sales volume distribution
after H2 start up(2)
Current net revenue distribution(1)

(1) Considers 4Q15 last twelve months. | (2) Includes Klabin’s sales volume

37

Schedule

Purchase of the
industrial plants

Beginning of
infrastructure and
purchase of the TGs

Beginning of
construction

Negotiations with
concession holders and
Port of Santos tendering

Beginning of forest
machinery deliveries

Updated video

Beginning of
harvest

Beginning of
assembly

Definition of outbound
logistics formats

Initial hiring of harvest
workers

Startup

Utilities clearance
and commissioning

L1 interconnections
during maintenance
downtime

Hiring of operational
team

2Q15

3Q15

2015

4Q15

1Q16

2Q16

3Q16

2016

4Q16

1Q17

2Q17

3Q17

4Q17

2017
38

H2 Project will have the forest base ready for the start-up

Forestry base required:
H1:

120,000 ha

H2:

174,000 ha

Total:

294,000 ha

39

Forestry Logistics
Low average distance from forest to mill

FOREST

MILL

95 km

H1 + H2 consolidated

40

Outbound logistics
Fibria has logistical alternatives on a competitive basis

Data Collection / Preliminary
Analysis





Ports
Highways
Railroads
Waterways

Analysis
 Logistics Costs
 Opex - Rates
 Capex
 Qualitative
 Modal conditions

Mato Grosso
Brasilia

Goiás
Mato
Grosso do
Sul

41

Expansion CAPEX update
From US$2.5 bi to US$2.2 bi
CAPEX (US$ billion)

Timetable
60%

2%

2.5
0.05

26%

0.65

2.2
0.20

9%

0.32

19%

33%

72%

72%

3%

3%
Original

BRL

EUR

Revised

USD and others

2015

2016

2017

2018

1%
2019 and
thereafter

FX and inflation partially offset by the negotiation with suppliers
42

Funding
Cost and maturity:

Average Cost (US$ p.a)

4Q15

H2

3.3%

2.0%

2.8%

6.3

5.0

Average Maturity (years) 4.3

4Q15 + H2

Amortization Schedule – 4Q15 Proforma with TLS II – US$ million
1.113

721

668
581
482
275

274
140

Capex H2:

2016

2017

1,350

668

2018

2019

BNDES

(1) Considering swap transactions.

2020

Bond

2021

PPE

NCE

2022

ACC/ACE

126

115

2023

CRA

2024

ECA

Outros

2025

FDCO

103

2026

45

13

2027

2028

Total

| (2) Debt FX 3Q15: 3.9729 / FX considering new funding for the TLS II Project: 3.90

43

Funding – Sources(1)(2)

R$ 8.7 billion

BNDES

CRA

FDCO

ECAs

Banks

WK release

Total

Even with expansion capex at current levels of FX, leverage ratios can
continue to decrease

(1) Cash on hand above minimum cash balance at end of Dec-2015
(2) Working capital to be released in 2016 and 2017 in commercial deal with Klabin

44

Rating agencies understand that the Project will not jeopardize
Fibria’s credit metrics

“We expect Fibria to continue benefiting from higher operating cash flows which
would allow it to enlarge its Três Lagoas industrial complex while keeping its debt at
reasonable levels for a low investment-grade rating”

“Fitch’s base case, which assumes that the company builds a new pulp mill (Três
Lagoas II) starting in 2015 and uses net pulp prices of between USD575 and USD675
per ton during the construction period, results in net leverage reaching 3.5x(1). Net
leverage would quickly decline to around 2.5x(1) once the mill becomes operational
in the second half of 2017”

(1) According to rating agency methodology

45

Project financials at a glance

UNIT

R$

US$

Pulp production/year

k tons

1,850

1,850

Expansion capex(1)

$ billion

8.7

2.2

Expansion capex(1)

$/t

4,702

1,204

Sustaining capex(2)

$/t

193

49

Cash cost(3)

$/t

341

87

MWh

120

120

Energy surplus

(1) Includes chemical leasing and investments in order to increase capacity to 1,850 kt/year.
(2) Estimated sustaining capex in perpetuity considering capacity of 1,850 kt/year.
(3) Estimated weighted average cost, after mill balance. Includes energy sales.

46

We don’t think that such competitiveness is easily replicable, since the
scenario is becoming more complex…
 Land

 Public funding constraints

 Infrastructure/Logistics

 Governance standards

 Certified wood availability

 Cost of capital

 Environmental requirements

 Credit rating

Although some potential
brownfields are listed,
there are significant
challenges.

Dividends
48

Policies approved by the Board of Directors

►Indebtedness and Liquidity
►Market Risk Management
►Risk Management

►Corporate Governance
►Related Parties

Transactions
►Anti-Corruption
►Information Disclosure
►Securities Trading
►Antitrust
►Genetically Modified Eucalyptus
►Dividend Policy
►Sustainability

49

Approval of Dividend Policy
Commitment to Corporate Governance best practices.

► Proposed dividends based on cash generation, taking into consideration
the company’s strategic planning and in line with its policies, notably the
Indebtness and Risk Management policies.
► Preserving Investment Grade.

Extraordinary dividend if Policy criteria are met.

50

Dividends
2015
April 28, 2015

May 14, 2015

OGM: Dividend
Dividend Payment of
distribution approval: US$49 million
minimum compulsory
+ additional

Oct. 22, 2015

Dividend Policy
Approval

Nov. 30, 2015

Dec. 9, 2015

Dec. 17, 2015

EGM: Interim Dividend Dividend Payment of Dividend
US$532 million
distribution
Payment Approval
proposal of US$78
million(2)
approved by the
Board of Directors

Dividend yield as of Dec, 31, 2015 = 7.5% (R$) | 8.3% (US$)
Dividend yield as of Dec, 31, 2014 = 11.6% (R$) | 8.7% (US$)

2016
April 27, 2016

Mid-May, 2016

OGM to approve
Dividend payment of
dividend distribution
US$80 million.
of US$80 million(1)
(1.1% of dividend yield
as of Dec, 31, 2015).

(1) Considering March 7, 2016 FX – R$/US$3.7714

Mid-November, 2016

Extraordinary
dividend
appraisal

Mid-December, 2016

Extraordinary
dividend payment
(if approved)

51

Dividends vs. Leverage

2,50

2.500,0

2,30

2.000
1,95

2,00

2.000,0
1,78

1,50

1.500,0

1,58

1,00

1.000,0

0,50

500,0

148
0,00

0

1T15

0

2T15
Dividends (R$ million)

3T15

0,0

4T15

Leverage (x)

52

Historical Dividend Yield(1)

Considering
Market Cap
as of
December,
31st, 2015

(1) Source: Bloomberg – Financial Analysis - Multiples

53

Best dividend yields of 2015 among Brazilian corporate issuers
Dividends per
share (R$)

Dividend Yield
(%)

Cesp

4.85

20.78

Fibria

3.88

11.60

Santander BR

0.46

9.81

Qualicorp

1.89

7.02

MRV

0.39

5.55

BBSeguridade

1.68

5.53

TelefBrasil

2.73

5.32

Natura

1.48

4.67

Braskem

0.61

4.64

CSN

0.41

4.48

Source: Economática – the dividend yield calculation considers share price at the beginning of 2015

54

Fibria is able to create value for its shareholders with capital discipline

FREE CASH FLOW

BIO-ENERGY AND

PULP

INDUSTRY
CONSOLIDATION ?



Growth with discipline



Best portfolio of projects

OTHER OPPORTUNITIES

DIVIDENDS



Complementary to pulp



Portocel



Land and forest

WITHOUT JEOPARDIZING CREDIT
METRICS
55

Cost reduction initiatives
56

Structural Competitiveness

1. Third-party wood reduction

NPV: US$0.4 billion

2. Forestry operations productivity

NPV: US$0.6 billion

3. Industrial

NPV: US$0.1 billion
Total : US$1.1 billion

57

1. Third-party wood reduction
Wood supply recovering to normal condition

►

Peaking in 2016;

►

Returning to 2012’s levels by the end of 2017;

►

NPV of R$1.4 billion from peak to normalized level.

100%

Third-party wood decrease will benefit
opex and capex

80%

60%

40%

Estimated level for

2015

20%

0%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
10

1. Third-party wood reduction

Losango
► Most part of the standing wood was already paid

► Despite the higher forest to mill distance, the wood from Losango is less expensive than the
available wood from around Espírito Santo and Bahia States

► Positive impact over industrial costs due to better productivity

11

2. Forestry operations productivity
Structural change improving competitiveness

CLASSIFYING THE FOREST BASE BY CATEGORIES
45%
40%

40%

36%
33%

35%
30%
25%
20%

20%

20%
15%

15%
10%

10%

10%

10%
6%

5%
0%
01 - Diamond

02 - Gold

03 - Silver

Current effective area

04 - Bronze

05 - Lead

Future effective area

The distribution costs by classes helps us to apply resources
in order to optimize wood production
12

2. Forestry operations productivity
Identifying opportunities based on these combinations

Possible Restrictions

Declivity
0: Higher than 35°
1: Btw 24°and 35°
2: Btw 0° and 24°

Conservation
Areas
CAs(1)

0: Within
1: Within EPA(2) and
EBZ(3)
2: Out of EPAs and
EBZ

Municipal
Restrictions
0: Total restrictions
1: Partial restrictions
2: No restrictions

Possible Impediments

EPA Altitude

Urban Zones

0: Higher than
1800m
1: Lower than
1800m

0: Urban Zones
1: Outside urban
areas

Remnants of
native
vegetation
0: Remnants areas
1: Outside remnants
areas

Possible combinations
X 0, 1 and 2, removed;
(1)
(2)
(3)

Conservation Areas
Envionmental Protection Areas
Environmental Buffer Zones

 4 e 8, high potential
13

2. Forestry operations productivity
Cost and Capex KPI’s were also included in this geo-model

Silviculture

Harvest

Roads
Transportation

14

2. Forestry operations productivity
Harvest
Mixed Harvest Mechanization (Hilly areas)

PROJECT DESCRIPTION (JACAREÍ UNIT)
►
►
►

Mixed cutting operation with high
demand for MO and high risk to safety;
Harvest limitations in areas above
24 degrees;
Increase annual capacity to harvest in
areas up to 35 degrees , previously "locked up" by
harvesting capacity of manual staff;

►
►
►

NPV: R$71 million
Capex: R$5 million
Operational since Aug 2015

15

2. Forestry operations productivity
Transportation
PIFF
Woodchip transportation

Timber transportation

PROJECT DESCRIPTION (ARACRUZ, JACAREÍ AND TRÊS LAGOAS UNITS)
►
►
►

Freight cost reduction;
Increased load box for timber/woodchip
transport
Use of lightweight steel;

►
►
►
►

Operational risk reduction (flipping);
Investment: R$33 million
NPV: R$139 million
Startup: 2015 / 2016

16

2. Forestry operations productivity
Transportation
Maritime Wood Shipping Project

PROJECT DESCRIPTION (ARACRUZ UNIT)
► Capex and Opex reduction;

► Capex: R$38 million

► Increase in cargo handling due to increase in

► NPV: R$95 million

stack height volume

► Startup: Jan/2017

► Reduction in heavy truck road traffic
17

2. Structural change in forestry operations productivity
•

Structural cost reduction of R$170 million per year (Capex + Opex) in 2020;

•

NPV of approximately R$2 billion

•

Seek opportunities for purchase / lease of more attractive areas, divest from unattractive land/forest, as well as the implementation of
technologies that will lead us to the structural cost

NPV Expected Curve
100%

100%

90%

80%

70%

60%

50%

40%
20%

30%
10%

0%
2015

2016

2017

2018

2019

2020

18

3. Industrial: maintenance downtimes schedule change

2014
1Q14

2Q14

3Q14

2015
4Q14

1Q15

2Q15

3Q15

2016
4Q15

1Q16

2Q16

3Q16

2017
4Q16

1Q17

2Q17

3Q17

2018
4Q17

1Q18

2Q18

3Q18

4Q18

Mills
Aracruz A

No maintenance downtime

Aracruz B

No maintenance downtime

Aracruz C
Jacareí

No maintenance downtime

Três Lagoas

No maintenance downtime

Veracel

No maintenance downtime

12 months

15 months

► Regulatory Standard 13 (Boiler and Pressure Vessel Inspection) extended the maximum period between
recovery boiler inspections from 12 to 15 months.
► Fibria was the first company to use the extended period benefit
► NPV: R$385 million

19

3. Industrial: Biological Sludge Dryer
Biological Sludge Dryness Process
Operational Flow – Conditioning and biological sludge burn
Sludge drying and burn in biomass boiler

•00

Effluent+Sludge
Aeration Tank

Sludge Dryer
Biological
Sludge Tank

•00

Biomass
Boiler

Biomass Pile

PROJECT DESCRIPTION (JACAREÍ UNIT)
► Variable cost reduction associated
with the disposal of sludge operations
in external landfill

► Capex: R$18 million
► NPV: R$100 million
► Startup: Dec./2016

20

Back up
69

Fibria’s tax structure

TAX BENEFITS (1)
Fiscal - annual adjustment
Benefit

Tax loss carry forward and tax credits
Amount

Goodwill
(Aracruz
acquisition)

Forestry Capex
in Mato Grosso
do Sul state

Maturity

Benefit

Amount

Tax loss
carryforward

Annual tax deduction:
US$23 million (tax)
Remaining Balance Sept/15:
US$ 0.213 billion (base)

2015 tax deduction related
to depletion: US$9.4 million

Balance up to Dec./15: US$33
million (base)

2018

Balance Dec./15:
- PIS/COFINS: US$186 million
Accumulated tax
credits

Undefined

- Withholding tax (IR and CSLL):
R$195 million
- Befiex: US$91 million
- Reintegra: US$23 million

TAX PAYMENT (cash basis)

(2)

2010

2011

2012

2013

2014

2015

US$ 9 million

US$ 2 million

US$ 8 million

US$ 14 million

US$ 12 million

US$ 23 million

(1) Considering FX 3.9048 | (2) Considering average FX for the period.

70

Leadership Position
Industry Outlook(1)
Fiber Consumption
412 million t

59%

41%

Recycled Fiber
242 million t

Pulp
169 million t

18%

82%

Mechanical
30 million t

Chemical
140 million t

59%

41%

Integrated Mills
83 million t

Market Pulp
57 million t

54%

46%
Softwood/Other
26 million t

Hardwood
31 million t

30%

70%

Acacia/Other
9 million t

Eucalyptus
21 million t

75%
Other Eucalyptus
Pulp producers:
16 million t

25%

(1) Fiber Consumption, Recycled Fiber and Pulp: RISI | Market Pulp, Hardwood and Eucalyptus: PPPC Global 100 Report December 2015

71

Global Market Pulp Demand
Hardwood demand will continue to increase at a faster pace than Softwood
Hardwood (BHKP) vs. Softwood (BSKP) (000 ton)

Demand growth rate

40.000
35.000

000 ton

1999

2009

2019

Growth
19992009

Growth
20092019

Hardwood

16.3

24.8

33.8

52%

36%

Eucalyptus

6.0

15.9

24.1

165%

52%

Softwood

19.0

21.4

24.9

13%

16%

Market Pulp

35.3

46.2

58.7

30%

27%

30.000
25.000
20.000
15.000

2014 - 2019 CAGR:
Hardwood: +2.5%
Softwood: +0.8%

10.000
5.000

Hardwood

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

0

Softwood

Source: PPPC report (Sept. 2015)

Source: PPPC reports. Excludes Sulphite and UKP market pulp (Sept./15)

Paper Production – Runnability with BHKP

Source: RISI conference, August 2014.

72

Benefiting From China’s Growth
China’s Hardwood Imports of BHKP by Country (1)
(‘000s t)

8.724

World Tissue Consumption, 1991-2013 (3)
(million t)

Latin America is the
leading exporter of BHKP
to China, accounting to
approximately 53% of
China's total imports in
2015.

9.185

2014

4.301

2015

4.898

LTM Growth
Rate +4.2%

30
25
20
15

2.1542.041

BHKP Total

(kg/person/year)

35

10

2.029 1.849

Latin
Indonesia Others(2)
America (1)

166 201

59 189

USA

Canada

5
15

8

Western
Europe

0

1991 1996 2001 2006 2009 2010 2011 2012 2013
N.America
Middle East
Oceania

(1) includes South Africa and New Zealand. | (2) Includes China, Japan, Malaysia, Russia, Thailand and Vietnam.

China's Share of Market Pulp (2)
30%
25%

Between 2005 and 2015,
the Chinese market share
of eucalyptus shipments
increased by 20 p.p. (total
market pulp: + p.p.)

(million t)

10%

10%

12%

22%

21%

23%

23%

25%
12

14%
6
4

5%

2

0%

0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Hardwood

(Kg/capita/year)

Total

24

10

10%

Eucalyptus

L.America
Asia FE

14
24%

8

15%

E.Europe
China

Per Capita Consumption of Tissue by World Region (3)

17%

20%

W.Europe
Japan
Africa

% Compared to the global Market Pulp

15

15
12
7

6

5
1

N.
West Japan Oceania East LatAm
America Europe
Europe

China

Africa

(1) PPPC – Pulp China – Flash Report – December 2015
(2) PPPC – W20. Coverage for chemical market pulp is 80% of world capacity
(3) RISI

73

Growth rate Chinese GDP vs. Eucalyptus Shipments to China
(Sept-09 = base 100)
250

180

200

150

100

76
50

-

China GDP

Eucalyptus Shipments

Source: Bloomberg and PPPC.

74

Commodities Differentiation
China GDP breakdown
8%

4%

4%

3%

3%

2%

2%

2%

2%

2%

2%

44%

47%

48%

48%

48%

48%

48%

46%

47%

45%

45%

49%

49%

48%

49%

49%

50%

50%

52%

51%

53%

53%

2008A

2009A

2010A

2011A

2012A

2013A

2014A

2015E

2016E

2017E

2018E

Consumption

Investment

Net Exports

China commodity demand - basis 100
Corn

Soybeans

Wheat

Crude oil

Iron ore

Sugar

BHKP
248
201
194
172
152
124
115

100
2008A

2009A

2010A

2011A

2012A

2013A

2014A

2015E

2016E

2017E

2018E

Source: Itaú Macroeconomic Department and PPPC – Oct/15

75

Global Paper Consumption
CAGR 1996 – 2006
Developed Markets: + 1.7%
Emerging Markets : + 6.0%

117,611

CAGR 2007 – 2016
Developed Markets: - 4.0%
Emerging Markets : + 4.1%

114,507

85,291

P&W
Consumption
(000 tons)(1)

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 2007 – 2016
Developed Markets: + 1.4%
Emerging Markets : + 6.7%

CAGR 1996 – 2006
Developed Markets: + 2.4%
Emerging Markets : + 6.9%

37,474

26,877

15,548

Tissue
Consumption
(000 tons)(1)

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

Source: RISI

76

Global Market BEKP Demand
Shipments of Eucalyptus Pulp
CAGR 2012-2015

8%

(1)

19%

Source: PPPC World 20 – January/2015

3,787kt

3%

1,980 kt

6%

7%
387 kt

Total
(1)

North America

758 kt

662 kt

Western Europe

China

Others

Source: PPPC World 20 – December/2015

77