Meeting with investors - Santander August 2014

Transcription

1 Meeting with investors - Santander August 2014

2 2 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.

3 1 Company 2 Pulp 3 Financial 4 Final Overview and Paper Market and Operational Highlights Remarks Agenda 3

4 Company Overview 4

5 A Winning Player Superior Asset Combination Main Figures 2Q14 LTM Pulp capacity million tons Net revenues R$ billion 7.1 Total Forest Base (1) thousand hectares 962 Três Lagoas Belmonte Veracel Caravelas Portocel Aracruz Jacareí Santos Planted area (1) thousand hectares 555 Net Debt R$ billion 6.7 Net Debt/EBITDA (in Dollars) (2) X 2.4 Net Debt/EBITDA (in Reais) X 2.3 Port Terminal Pulp Unit 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. 5

6 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

7 7 Fibria s Commercial Strategy Sales Mix by End Use - Fibria Highlights Region - 2Q14 Europe 42% Other 9% N. America 22% Asia 27% Tissue 49% Sales Mix by Region - Fibria End Use - 2Q14 Specialty 18% Printing & Writing 33% 11% 9% 11% 10% 10% 10% 11% 10% 9% 10% 8% 8% 8% 9% 9% 22% 25% 14% 20% 31% 28% 20% 23% 25% 26% 21% 26% 26% 26% 27% 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 Low dependence on volatile markets such as China Low credit risk 100% certified pulp (FSC and PEFC/Cerflor) 37% 46% 46% 41% 35% 44% 43% 41% 36% 42% 43% 35% 36% 46% 42% 30% 20% 29% 29% 24% 18% 26% 26% 30% 22% 28% 31% 30% 19% 22% 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 North America Europe Asia Other

8 8 Shareholder Structure and Corporate Governance Votorantim Industrial S.A. (1) 29.42% BNDES Participações (1) 30.38% Free Float (2) 40.20% Fiscal Council General Meeting Board of Directors 20% independent members Role of CEO and chairman is split Finance Committee Statutory Audit Committee Innovation Committee Sustainability Committee Personnel and Remuneration Committee Listed on Novo Mercado, highest CG level at BM&FBovespa: 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 with ADRs Policies approved by the Board of Directors: Indebtedness and liquidity Market risk management Risk management Corporate governance Information disclosure Stock trading (1) Controlling group (2) Free Float 40.14% + Treasury 0.06%

9 Acknowledgments: Governance, Transparency, Profitability & Sustainability Valor 1000 Company of the year, among all industries, according to Valor Econômico. XVII ANEFAC-FIPECAFI - SERASA EXPERIAN Prize Fibria is among the most transparent public companies in Brazil, recognized for the quality of its 2012 financial statements. International Recognition by Corporate Governance Report Fibria is one of the 5 Brazilian companies nominees to the Best Corporate Governance Award from London. The Best Companies to the Shareholders Prize of Capital Aberto Magazine Fibria was elected as 2 nd place. The prize highlights the business profitability, share profitability, liquidity, corporate governance and sustainability Institutional Investor Latam Ranking - P&P Sector Fibria was ranked for the forth consecutive year (2010, 2011, 2012 and 2013). In 2013 Fibria was ranked in four categories: CEO, CFO, IR Team and IR Professional Época Negócios 360º Fibria was elected as 1st place in the pulp & paper sector in the corporate governance and future's vision categories DJSI World and DJSI Emerging Markets CDP Brasil 100 Climate Change 2013 Report Fibria was selected as one of the 10 best companies in transparency. The only one in the pulp & paper sector. RobecoSAM - Sustainability Investing Magazine Selected to Dow Jones World and Emerging Markets Sustainability Indices for 2013/14 as the industry leader of Forestry Resources and Paper sector. Fibria is the only Latin America company selected by RobecoSAM (responsible for DJSI) as one of the 10 worldwide leaders in SRI magazine s The 10 Game Changers Changing the industry through sustainability. 9

10 Pulp and Paper Market 10

11 11 Today, according to public information, there will be a 11% increase of the pulp market capacity between 2014 and 2016 SOFTWOOD (1) 25.5 MT + HARDWOOD (1) = 31.1 MT MARKET PULP (1) 56.6 MT (2) : New capacities: 0.7 mt Announced Closures: (0.35) mt Net: 0.35 mt (3) : New capacities: 6.0 mt Announced Closures: (0.63) mt Net: 5.4 mt : New capacities: 6.7 mt Announced Closures: (1.0) mt Net: 5.7 mt (1) Source: PPPC Special Research Note May 2014 does not include Sulphite and UKP (2) Projects included: Paper Excellence (70kt); UPM Kymi (170kt); Klabin (200kt); Sodra Värö (275kt) Closures: Birla AV Terrace Bay (350kt) (3) Projects included: Maranhão (1.5mt); Montes del Plata (1.3 mt); Oji Nantong (700kt); Eldorado (200kt); CMPC Guaíba II (1.3 mt); Klabin Ortigueira (1.0mt) Closures: April Rizhao (130kt); Arauco Valdivia (300kt); Old Town (200kt).

12 jul/08 dez/08 mai/09 out/09 mar/10 ago/10 jan/11 jun/11 nov/11 abr/12 set/12 fev/13 jul/13 dez/13 mai/ Global Pulp Market Demand Hardwood demand will continue to increase at a faster pace than Softwood Hardwood (BHKP) vs. Softwood (BSKP) (000 ton) CAGR: Hardwood: +2.8% Softwood: +0.7% Demand growth rate 000 ton Growth Growth Hardwood % 34% Eucalyptus % 63% Softwood % 15% Hardwood Softwood Market Pulp Source: PPPC Source: PPPC Shipments of Eucalyptus Pulp (1) NBSK vs. BHKP - Prices (1) +6.3% 476kt 6M2014 vs. 6M ,2% -2.9% 101kt +22.3% 346kt Spread Jul/14: US$ 194 Avg. Spread: US$ kt Total North America Western Europe China Spread Avg. Spread BHKP NBSK (1) Source: PPPC World 20 June/2014 (1) Source: FOEX Average spread in the last 5 years. 12

13 USD/Adt, 2013 cost level Supply structural changes puts pressure on the industry MARKET PULP CAPACITY RANKING 2013 (000T) MAIN PROJECTS Fibria APRIL Arauco CMPC Georgia Pacific UPM-Kymmene Paper Excellence Metsa Group Suzano Stora Enso Sodra Weyerhaeuser IP Ilim Mercer Domtar Resolute Forest Eldorado ENCE Canfor Source: Hawkins Wright, Poyry and Fibria Analysis Bleached Softwood Kraft Pulp (BSKP) Bleached Hardwood Kraft Pulp (BHKP) Unbleached Kraft Pulp (UKP) Mechanical Project Country Capacity Timing Fiber Status Arauco / Stora Uruguay 1.3Mt 2Q2014 BEKP Confirmed CMPC Guaíba II Brazil 1.3 Mt 2Q2015 BEKP Confirmed Klabin Paraná Brazil 1.5 Mt 2Q2016 BEKP/ BSKP/Fluff Confirmed APP South Sumatra Indonesia 2.0 Mt 4Q2016 BHKP Confirmed Fibria Três Lagoas II Brazil 1.75 Mt - BEKP Unconfirmed COST CURVE EVOLUTION Cumulative Capacity Million t/a Cost position of marginal producer 13

14 BHKP prices - cif Europe (US$/ton) Gross capacity addition should not be counted as the only factor influencing pulp price volatility Greenfield capacity (000 ton) , , APP Hainan Veracel Nueva Aldea Fray Bentos Mucuri Três Lagoas Rizhao Eldorado Maranhão Montes del Plata Guaíba II 1,6 1,4 1,2 1, Valdivia Santa Fé Kerinci PL3 APP Guangxi Chenming Zhanjiang 0,8 0, , , ,0 Source: Hawkins Wright, Poyry and Fibria Analysis 14

15 15 Capacity closures DO happen 0 Closures of Hardwood Capacity Worldwide 000 ton E Source: PPPC and Fibria

16 Technical Age and Scale in the Market Pulp Industry Further closures are expected due to lack of adequate investments in the industry 16 Hardwood (BHKP) Market Pulp Softwood (BSKP) Market Pulp PM Capacity, 1000 t/a Weighted average technical age 14.2 years 2013/IQ STRONG PM Capacity, 1000 t/a Weighted average technical age 21.2 years 2013/IQ STRONG Aracruz Weighted average capacity t/a Jacareí Três Lagoas Veracel Weighted average capacity t/a WEAK Technical Age, years WEAK Technical Age, years 5 0 North American Pulp Mills Other Pulp Mills Closures Grade Switch On & Off

17 17 and when other expenses are plugged, we see no one but Fibria is generating positive free cash flow in the industry Capacity (k tons): , ,005 2,410 1, ,095 3,680 4,165 12,750 = 31, FOEX Total Cash Cost of BHKP delivered to Europe (US$/t) Interest CAPEX Tax/Others = 4 SG&A Net price Working Capital = +9 Cash Cost (US$/t) Delivery (US$/t) Source: Hawkins Wright (Outlook for Market Pulp, March2014) Fibria s 2Q14 LTM considering a FX of R$/US$2.29.

18 Source: Fibria and Independent Consultants 18 China: Paper capacities expansion continues to go on Ktons E 2015E Total P&W (woodfree) ,111 Tissue 1,029 1, ,331 Cartonboard 2,128 1, ,958 Total 3,542 3,631 1,227 8,400 China corresponds to 2/3 of global tissue capacity expansion

19 Benefiting From China s Growth China s Hardwood Imports of BHKP by Country (1) ( 000s t) BHKP Total Latin America 6M2013 6M * includes Russia, China, Thailand and New Zealand Latin America is the leading exporter of BHKP to China, accounting to approximately 46% of China's total imports in 6M Other* Indonesia USA Canada Western Europe (million t) World Tissue Consumption, (3) LTM Growth Rate +4.2% (kg/person/year) N.America W.Europe E.Europe L.America Middle East Japan China Asia FE Oceania Africa China's Share of Market Pulp (2) Between 2005 and 2013, the Chinese market share of eucalyptus shipments increased by 14 p.p. (total market pulp: + p.p.) Eucaplyptus Hardwood Total (1) PPPC Pulp China (2) PPPC W20. Coverage for chemical market pulp is 80% of world capacity (3) RISI (In percentage) 23 Per Capita Consumption of Tissue by World Region (3) (Kg/capita/year) N. West America Europe 12 Japan Oceania 7 East Europe 6 5 LatAm China Africa 1 19

20 20 Internal Consumption and Urbanization China s private consumption vs. exports (CNY trillion and annual % change) (1) Chinese Urbanization Driver of Long-Term Growth (UN Population Projections, Millions) (2) Shift from exports to private consumption; Positive effects on households income and rising standards of living. Sources: (1) the Economist. (2) RISI China Pulp Market Study.

21 Financial and Operational Highlights 21

22 2Q14 Results Pulp Production and Sales ( 000 t) Net Revenue (R$ million) Q13 1Q14 2Q14 Production Sales Cash Production Cost (R$/t) 2Q13 1Q14 2Q14 EBITDA (R$ million) and EBITDA Margin (%) % 41% 35% Q13 1Q14 2Q14 Cash cost ex-maintenance downtimes Cash Cost 2Q13 1Q14 2Q

23 23 The maturity of synergies captured since Fibria s creation improved its operating indicators PRODUCTION VOLUME (000 t) BEST PRACTICES AND OPERATING STABILITY +14% CASH COST (R$/ton) -21% ,054 5,184 5,299 5, , * 2010* Q14 LTM SG&A (R$ million) STRUCTURE AND PROCESS SIMPLIFICATION 2009* 2010* Q14 LTM Historical Value Inflation Effect** EBITDA (R$ million) - EBITDA MARGIN (%) -28% % 1,522 40% 2,526 34% 36% 1,964 2,253 40% 40% 2, * 2010* Q14 LTM Historical Value Inflation Effect** 2009* 2010* Q14 LTM * Excludes Conpacel ** IPCA index considered to calculate the inflation effect

24 24 Indebtedness Net Debt (Million) Net Debt/EBITDA (R$) Net Debt/EBITDA (US$) Total Debt and Interest Expenses (Million) Interest (R$) Jun/13 Mar/14 Jun/14 R$ US$ Debt Amortization Schedule (R$ million) Jun/13 Mar/14 Jun/14 R$ US$ Average Tenor (months) and Cost of US$ Debt (%p.a.) 3,243 1,467 (revolver) 1,068 1,776 (cash) ,355 1, , Liquidez Pre-payment BNDES ECN ACC/ACE Voto IV Bonds Jun/13 Mar/14 Jun/14

25 25 Fibria delivered the most significant leverage reduction in the LTM 7.2 Net Debt/EBITDA (x) (1) , , ,3 1.7 Sep/09 Dec/09 Mar/10 Jun/10 Sep/10 Dec/10 Mar/11 Jun/11 Sep/11 Dec/11 Mar/12 Jun/12 Sep/12 Dec/12 Mar/13 Jun/13 Sep/13 Dec/13 Mar/14 jun/14 Ratings Fibria Arauco¹ CMPC Klabin Suzano S&P BB+/Positive BBB-/Stable BBB-/Stable BBB-/Stable BB/Negative Moody s Ba1/Positive Baa3/Negative Baa3/Negative - Ba2/Stable Fitch BBB-/Stable BBB/Stable BBB+/Stable BBB-/Stable BB-/Positive (1) Fibria s historical data in BRL.

26 Interest expense and cost on foreign currency debt Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Fonte: Fibria e Bloomberg 26

27 27 Fibria delivers one of the highest EBITDA/t and FCF/t of the industry Free cash flow generation (1) - 2Q14 LTM (R$ Million) (1,409) (386) 111 (20) (28) Adjusted EBITDA Capex Interest (paid/received) Working Capital Taxes Others Free Cash Flow ¹ Does not include asset sales, expenses on bonds repurchase, expenses related to the REFIS on subsidiaries profits abroad and tax credits from the BEFIEX program. Free Cash Flow per ton - 2Q14 LTM (R$/ton) 543 (268) (73) 21 (4) (5) 214 Adjusted EBITDA Capex Interest (paid/received) Working Capital Taxes Others Free Cash Flow

28 FX and Pulp Price explain 80% of Fibria s EBITDA Margin 2.00 Exchange Rate Average (R$/US$) Average Price FOEX (US$/t) EBITDA Margin 29% 40% 34% 36% 40% 40% EBITDA (R$ million) 2,526 1,964 2,253 2, , (1) 2010 (1) 2011 (1) Q14 LTM (1) Excludes Conpacel 28

29 29 Maintenance CAPEX (R$ Million) 1,520 1,416 1,287 1,078 Approx. 18% increase Land Deal: Rural Partnership Non recurring wood purchase Inflation FX Rate Modernization Others 2014E

30 (1) Excludes Conpacel 30 Cash Production Cost saw an increase of 17% over the past 5 years Cash Production Cost (1) (R$/ton) CAGR: + 4% 2014 Cash Production Cost: 505 Target to have the cash cost increase below inflation Wood costs will represent the main impact Non recurring increase mainly due to third party wood Operating excellence actions focused on keeping cash cost below inflation 2009 (2) 2010 (2) In 2015 the wood impact will be structurally eliminated

31 Cash Production Cost (R$/t) 2Q (27) 4 2Q13 Maintenance downtimes Wood FX Maintenance Utilities Others 2Q % Utilities results boosted by energy sales. (2Q14: R$ 36/t I 1Q14: R$ 18/t I 2Q13: R$ 14/t) 31 31

32 Final Remarks 32

33 33 Fibria is seeking value creation for its shareholders with capital discipline PULP - Growth with discipline - Best portfolio of projects INDUSTRY CONSOLIDATION? Potential Growth Prospects BIO-ENERGY - Complementary to pulp - Ensyn OTHER OPPORTUNITIES - Portocel - Land and forest

34 34 Key Highlights Sound credit profile, with decreasing leverage ratios Market leader with a highly profitable operation and cash cost below industry average Highly experienced and qualified management team Highly recognized and awarded by industry specialists

35 Back up 35

36 36 Fibria 2024 New Bond Issuance Fibria 2024 Principal: US$ 600 millon Issuance Date: May/2014 Coupon: 5.25% a.a. Bookbuilding: 11.5x Spread over T10Y: bps - SEC registered; - IG document; Highlights - Stretch Debt maturities; - Fibria 2021 early redemption of US$430 million (78% of the total). Remaining outstanding : US$118 million. Issuance US$ 600 million - For liability management purposes only; - Savings of US$ 5.5 MM in interest per year.

37 37 Hedge Hedging Strategy Debt Hedge: - Swap operations (currency and rate) - Maturity aligned with original debt - No margin call Operating Hedge: - Net FX exposure protection in US$ in up to 18 months - Current strategy: Zero Cost Collar - No leverage - No margin call - 06/30/2014 data: - Notional: US$ 925 million - 41% of protected net exposure - Maturity: up to 10 months Governance Hedging Policy approved by the Board of Directors and available at the Investor Relations website. Periodical follow up of the hedge portfolio by the Finance Committee Maximum % of exposed operational flow is defined according to the FX risk management policy. Governance, Risk and Compliance (GRC) Team: - Report to CEO - Responsible for monitoring policies compliance - Independent from Treasury ZeroCostCollar x NDF Payoff All Fibria operations are registered at CETIP

38 38 Fibria s tax structure Fiscal - annual adjustment Tax benefits (R$) Tax loss carry forward and tax credits Benefit Amount Maturity Goodwill (Aracruz acquisition) Forestry Capex in Mato Grosso do Sul state Annual tax deduction: ~R$89 million (tax) Remaining Balance Jun/14: R$1,228 million (base) 2014 s tax deduction related to depletion: R$ 12,4 million (tax) 2018 Undefined Benefit Tax loss carryforward Accumulated tax credits Amount Balance up to Jun./14: R$385 million (base) Balance Jun./2014: -PIS/COFINS: R$535 million - withholding tax (IR and CSLL): R$242 million - Befiex : R$ 897,6 million Actual tax payment (cash basis) R$7 million R$16 million R$4 million R$15 million R$31 million

39 Liquidity Events: delivered as promised Net Debt/EBITDA (x) R$ Dec/11 Mar/12 Jun/12 Sep/12 Dec/12 Mar/13 Jun/13 Sep/13 Dec/13 Mar/14 Jun/14 Sources (R$ Million) Uses (R$ Million) 1,268 5,715 Available REFIS 1,403 1, Bond prepayment , Bond prepayment 1,361 EQUITY OFFERING FOREST SALE 2012 (1) FCF 2012 LAND DEAL FCF 2013 TOTAL 1, Bond prepayment (1) Losango and forestry assets and land in the south of Bahia State 39

40 Due to productivity gains in its forests, Fibria had the opportunity to explore this new ownership model 40 FIBRIA S GAINS IN IMACEL DUE TO INVESTMENTS IN BIOTECHNOLOGY (TONS OF PULP/HA/YEAR) MAI* Pulp: (adt/ha/year) Conservative assumption 2012 field trials = *MAI: Mean annual increment Actions: Genetic improvement Excellence in forestry management Superior industrial efficiency

41 41 Leadership position Industry Outlook (1) Fiber Consumption 403 million t 58% 42% Recycled Fiber 234 million t Pulp 169 million t 18% 82% Mechanical 31 million t Chemical 139 million t 60% Integrated Mills 84 million t 40% Market Pulp 56 million t 49% 51% Softwood/Other 27 million t Hardwood 29 million t 35% 65% Acacia/Other 10 million t Eucalyptus 19 million t 71% Other Eucalyptus Pulp producers: 13 million t 29% (1) Fiber Consumption, Recycled Fiber and Pulp: RISI Market Pulp, Hardwood and Eucalyptus: PPPC Special Research Note - May 2014

42 Global Paper Consumption CAGR Developed Markets: + 1.7% Emerging Markets : + 6.0% 117,611 CAGR Developed Markets: - 4.0% Emerging Markets : + 4.1% 114,507 85,291 P&W Consumption (000 tons) (1) Developed Markets Emerging Markets CAGR Developed Markets: + 2.4% Emerging Markets : + 6.9% 26,877 CAGR Developed Markets: + 1.4% Emerging Markets : + 6.7% 37,474 15,548 Tissue Consumption (000 tons) (1) Developed Markets Emerging Markets Source: RISI 42