Santander Pulp & Paper Day May 25 th, 2016

Transcription

1 Santander Pulp & Paper Day May 25 th, 2016

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 Company Overview Pulp and Paper Market Financial and Operational Highlights Expansion Project Horizonte 2 Dividends Cost reduction initiatives and industry statistics Agenda 3

4 Company Overview 4

5 A Winning Player Superior Asset Combination Main Figures 1Q16 LTM Pulp capacity million tons Net revenues US$ billion Total Forest Base (1) thousand hectares 969 Belmonte Veracel Caravelas Portocel Aracruz Planted area (1) thousand hectares 568 Net Debt US$ billion Net Debt/EBITDA (in Dollars) (2) X 1.86 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; As of December 31, (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 - 1Q16 Europe 46% LatAm 12% N. America 17% Asia 25% Net Revenues by Region - Fibria End Use - 1Q16 Tissue 48% Specialties 14% Printing & Writing 38% 10% 9% 10% 8% 9% 8% 10% 9% 10% 10% 10% 9% 8% 9% 12% 22% 25% 26% 21% 25% 26% 26% 27% 24% 23% 26% 26% 25% 20% 25% 26% 30% 22% 29% 31% 31% 19% 23% 27% 27% 17% 24% 25% 29% 17% 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) 42% 37% 43% 43% 35% 36% 46% 42% 39% 40% 47% 42% 42% 42% 46% 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Europe North America Asia Other

8 8 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; Ensure sales volumes; Ensure pulp market access with Klabin brand. Logistics and commercial optimization and synergies; Support customers growth and enhance customers needs; Potential development of new customers. Mutual value creation, with better servicing for both Companies customer s base

9 Pulp and Paper Market 9

10 The better than expected scenario has become a reality again in BHKP CAPACITY CHANGES EXPECTED SCENARIO FOR 2015 IN DEC 14 REALIZED SCENARIO IN 2015 Suzano Maranhão Montes del Plata Suzano Maranhão Montes del Plata Oji Nantong CMPC Guaiba II Eldorado Portucel Cacia Old Town (Expera) Sappi Cloquet April Rizhao Ence Huelva Possible closures* Net to ,415 to 1,815 Oji Nantong CMPC Guaiba II Eldorado Portucel Cacia Old Town (Expera) Ence Navia Sappi Cloquet April Rizhao Ence Huelva Unexpected Downtimes Net Indonesia, China, Uruguay and Brazil 1,450 BEKP demand growth** 1,095 BEKP demand growth** 1,232 *Based on annual closures average (400,000 to 800,000 t/yr) **Source: PPPC Outlook for Eucalyptus Market Pulp December 2014 **Source: PPPC Market Pulp World 20

11 11 and so has been the price scenario BHKP Delivered to Europe (USD/t) Q15 2Q15 3Q15 4Q15 Annual 2015 Consultants average at the end previous year Realized PIX/FOEX price Consultants: Hawkins Wright, RISI and Brian McClay (published in the end 2014 for 2015 prices)

12 Better worldwide macroeconomics are the key drivers But the special focus is on Europe 12 Real GDP % Annual Growth ,3 World Euro Area USA China Source: International Monetary Fund, World Economic Outlook Database, January 2016

13 13 But the special focus is on Europe Hardwood and Eucalyptus Shipments (000 t and % annual growth) % 3.8% 5.0% 3.3% % -0.8% -0.8% -0.6% BHKP BEKP Source: PPPC World 20

14 14 So, what can we expect for 2016? BHKP CAPACITY CHANGES EXPECTED SCENARIO FOR 2016 IN NOV 15 FIBRIA S EXPECTED SCENARIO FOR 2016 CMPC Guaiba II 800 CMPC Guaiba II 800 Klabin 660 Klabin 660 Altri Celbi Old Town (Expera) Woodland Verso Wickliffe APRIL Kerinci Altri Celbi APP South Sumatra Old Town (Expera) Woodland Verso Wickliffe APRIL Kerinci Possible closures* -400 to -800 Possible closures* -200 Net 385 to 785 Net 1,165 BEKP demand growth** 930 1,200 BEKP demand growth** 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 Positive Supply/Demand Balance!

15 Global Market BEKP Demand Shipments of Eucalyptus Pulp 7% 2M16 vs. 2M15 (1) 6% 3M16 vs. 3MQ15 (2) 3% 128kt Total 216kt 8% 40kt 26% 64kt North America 6% 84kt (1) (1) Source: PPPC World Global January/2015 February/2016 6% 114kt Western Europe BHKP 10% BEKP -1% 1% 1% 4% -7kt 12kt 11kt 26kt China Others 1% 100kt Total 285kt -7% 2% -57kt 7kt North America (2) Source: PPPC Global 100 March/2016 1% 32kt 4% 73kt Western Europe BHKP BEKP 7% 153kt China 13% 202kt 1% 0.2% -28kt 3kt Others Paper Capacity increase in China FORECAST REALIZED PREVIOUS FORECAST LATEST FORECAST LATEST FORECAST Woodfree ,000 Tissue 1,390 1,278 1, Cartonboard 2,100 1, Total 3,746 2,860 2,855 2,845 2,198 Source: Fibria and Independent Consultants 15

16 Technical Age and Scale in the Pulp Industry Further closures are expected due to lack of adequate investments in the industry 16 Hardwood (BHKP) Producers Integrated and Market Pulp Mills Softwood (BSKP) Producers Integrated and Market Pulp Mills 2000 PM Capacity, 1000 t/a Aracruz Weighted average technical age 12.3 years STRONG PM Capacity, 1000 t/a Weighted average technical age 21 years STRONG Weighted average capacity 1,350,000 t/a Jacareí Veracel Três Lagoas Weighted average capacity 534,000 t/a 0 30 WEAK Technical age, years WEAK Technical age, years 5 0 North American Pulp Mills Other Pulp Mills More than 6.6 million tons of capacity above 25 years and with annual capacity below 500,000 t/y.

17 Capacity closures DO happen Closures of Hardwood Capacity Worldwide (000 ton) ,260-1,180-1, E (1) Source: PPPC and Fibria (1) As of January : -40kt Old Town (USA), -90kt Woodland (USA), -55kt Verso Wickliffe (USA), -120 April Kerinci (Indonesia) 2017: -275kt Arauco Valdivia (Chile) 17

18 Even more competitive cash production cost w/ H2 BHKP (US$/t) BHKP capacity (000 t) 1,130 2,075 1,095 2,290 3,420 4,915 15,275 Total: 30,200 BHKP (US$/t) Working Capital Interest Capex Income Tax SG&A 152 USA China Canada Iberia Indonesia Chile/Uruguay Brazil Fibria 1Q16 LTM Fibria w/ H Cash Cost (US$/t) Delivery CIF Europe Source: Hawkins Wright (Price Forecast April 2016) and Fibria s 1Q16 Earnings Release - FX considered by the consultant at R$/US$3.54. H2 cash cost was estimated according to weighted average cost, after mill balance, converted at R$/US$3.54. Includes energy sales. 18

19 BHKP prices - CIF Europe (US$/ton) Capacity (000 ton) 19 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 ,0 900 Eldorado Horizonte II 1,8 800 Rizhao Maranhão APP South Sumatra (2) 1, APP Hainan Fray Bentos Mucuri Veracel Nueva Aldea Três Lagoas Montes del Plata Guaíba II Klabin 1,4 1,2 1, Valdivia Santa Fé Kerinci PL3 APP Guangxi Chenming Zhanjiang Oji Nantong 0,8 0, , , ,0 (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.

20 Dec-99 May-00 Oct-00 Mar-01 Aug-01 Jan-02 Jun-02 Nov-02 Apr-03 Sep-03 Feb-04 Jul-04 Dec-04 May-05 Oct-05 Mar-06 Aug-06 Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09 Jul-09 Dec-09 May-10 Oct-10 Mar-11 Aug-11 Jan-12 Jun-12 Nov-12 Apr-13 Sep-13 Feb-14 Jul-14 Dec-14 May-15 Oct-15 Mar-16 In the last 15 years, pulp volatility has been just 8%...why? 160 BHKP - FOEX Europe (base 100) CPI (base 100) 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 May 10 th, 2016

21 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Lowest volatility among commodities = January 1, Iron Ore Soy Bean Crude Oil Sugar BHKP - FOEX Europe Exchange Rate (R$/US$) Low volatility of hardwood pulp price, even though new capacities have come on stream during the period. Source: Bloomberg May 10 th,

22 The only commodity with lower volatility than FX Historical Volatility of Commodities (US$) 37% 35% 34% 27% 27% 25% 25% 24% 16% 14% 6% WTI Crude Oil Sugar Nickel Copper Iron Ore Soy Ibovespa LME Metals Cattle FX BHKP Since January 1, 2009 up to May 10 th,

23 Financial and Operational Highlights 23

24 Each 5% depreciation of the Real increases EBITDA by around R$420m and FCF by R$550m Exchange Rate Average (R$/US$) (1) Fibria net pulp price (US$/t) (2) Fibria net pulp price (R$/t) 912 1,179 1,067 1,133 1,311 1,344 1,951 2,071 1,956 53% 53% EBITDA Margin 29% 40% 1,488 34% 36% 1,173 1,153 40% 39% 1,295 1,185 1,560 1, EBITDA (US$ million) Q16 LTM 2016 (e) (1) According to Focus Report (Brazilian Central Bank May 6 th, 2016) I (2) 2016 market consensus 24

25 Current Zero Cost Collars 2T16 3T16 4T16 1T17 2T17 3T17 4T17 1T18 2T18 ZCC (Notional em USD MM) Forward* 3,57 3,64 3,73 3,82 3,90 3,98 4,06 4,14 4,21 Put 3,25 3,31 3,36 3,52 3,57 3,64 3,67 3,62 3,64 Call 7,04 6,30 6,62 5,80 6,22 7,17 7,12 5,50 5,73 Notional (Total): US$ 1,395 million *média da curva forward da última semana (16-20/Mai/16) 25

26 26 Cash Production Cost (US$/t) LTM 1Q (47) (6) 179 (19) 160 1Q15 Inflation FX Lower energy price Maintenance downtime Non recurring wood Non recurring energy and chemicals consumption Cash cost 1Q16 before management initiatives Management initiatives Cash cost 1Q16 Total nonrecurring Recurring cash cost 1Q16 Management initiatives gains partially offset the inflation impact

27 Cash Production Cost in dollars saw a decrease over the past 7 years Fibria Cash Production Cost (1) (US$/ton) Consistently controlling the cash production cost 2009 (2) 2010 (2) Q16 LTM (1) Constant Currency (2) Excludes Conpacel 27

28 28 Net Results (US$ million) 1Q (24) (114) 322 deferred current (188) (41) 251 Adjusted EBITDA FX Debt MtM Hedge Net Interest Deprec., amortiz.and depletion (1) Taxes Others Net Income Non-recurring effects (1) Includes other Exchange rate/monetary variations, other financial income/expenses and other operating income/expenses.

29 Free Cash Flow (1) US$ million Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 EBITDA Margin 34% 33% 28% 30% 37% 37% 41% 39% 39% 41% 42% 41% 35% 35% 45% 50% 50% 56% 54% 52% Average FX (1) Before expansion capex 29

30 30 Free Cash Flow (1) 1Q16 LTM US$ million 1,555 (498) ( 78 ) ( 93 ) ( 20 ) ( 3 ) 863 (460) 403 Adjusted EBITDA Capex (ex-h2 project & land deal) Net Interest Working Capital Taxes Others FCF (ex-h2 project & land deal) Capex H2 & land deal FCF (1) Not considering dividend payments, capex related to the Horizonte 2 Project and the land acquisition in December Considers 1Q16 average FX (2) Not considering dividend payments. (3) Includes other financial results. (4) Considering the market cap. on March 31, 2015 corresponding to R$23.3 billion (US$7.3 billion).

31 31 ROE and ROIC (R$) ROE = Adjusted EBIT (1) / Equity before IAS 41 (2) ROIC = Adjusted EBIT (3) / Invested Capital before IAS 41 (2) 25.1% 25.3% 22.8% 23.4% 3.4% 5.7% 6.2% 6.9% 9.2% 8.0% Q Q16 Average FX (R$/US$) Average Net Price (US$) FX Net Price Average (R$/US$) Average (US$) (1) Adjusted EBITDA CAPEX Net Interest Taxes (2) International accounting standards for biological assets. (3) Adjusted EBITDA CAPEX Taxes

32 Capital Structure: Fibria has achieved the lowest leverage ratio among its Latin American peers Net Debt/EBITDA (x) (1) Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 Fibria Suzano Klabin CMPC Arauco Eldorado 1.9 Fibria Arauco CMPC Klabin Suzano S&P BBB-/Stable BBB-/Stable BBB-/Stable BBB-/Negative BB+/Stable Moody s Ba1/Negative Baa3/Stable Baa3/Stable - Ba2/Positive Fitch BBB-/Stable BBB/Stable BBB+/Stable BBB-/Stable BB/Positive (1) Fibria s historical data in BRL. 32

33 (1) G-spread on May 12 th, One of the best performances among Brazilian corporate issuers (1) BRFOODS BRAZIL FIBRIA EMBRAER GLOPAR KLABIN SUZANO BRASKEM VALE GERDAU PETROBRAS

34 34 Strong credit quality Interest expense, leverage and average cost of debt in US$ Historical G-spread (bps) Q16 LTM 5.2 Leverage(x) 4.6 Cost of of debt debt (%) (1) Interest Expense (US$ million) Fibria 2020 Fibria 2021 Fibria 2024 BBB- BBB- Ba1

35 35 Fibria is able to create value for its shareholders with capital discipline FREE CASH FLOW BIO-ENERGY AND INDUSTRY CONSOLIDATION? PULP Growth with discipline Best portfolio of projects DIVIDENDS OTHER OPPORTUNITIES Complementary to pulp Portocel Land and forest WITHOUT JEOPARDIZING CREDIT METRICS

36 BACK UP 36

37 Expansion Project Horizonte 2 37

38 38 What is the importance of growth for Fibria? Wider fixed costs dilution Competitiveness Cost curve position improvement Greater bargaining power with suppliers Follow the growth of strategic customers Commercial positioning Developing new customers Distribution to new geographic markets Efficiency and competitiveness gains in logistics Higher quality in customer service Long-term growth potential Greater ability to capture new expansion market windows Strong M&A position

39 39 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 Fibria 8,050 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 Current Capacity New Capacity New Capacity Klabin Agreement New Capacity Horizonte II Project Source: Poyry and Fibria Analysis (as of May 2015)

40 40 Pulp sales destination: Fibria growing where the market grows 37% 43% 19% 24% 36% 24% 8% 9% Total sales volume distribution after H2 start up (2) Current net revenue distribution (1) (1) Considers 1Q16 last twelve months. (2) Includes Klabin s sales volume

41 41 Schedule Purchase of the industrial plants Updated video Beginning of forest machinery deliveries Beginning of infrastructure and purchase of the TGs Beginning of construction Beginning of assembly Beginning of harvest Startup Negotiations with concession holders and Port of Santos tendering Definition of outbound logistics formats Initial hiring of harvest workers L1 interconnections during maintenance downtime Utilities clearance and commissioning Hiring of operational team 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q

42 42 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

43 Forestry Logistics Low average distance from forest to mill 43 FOREST MILL 95 km H1 + H2 consolidated

44 Outbound logistics Fibria has logistical alternatives on a competitive basis 44 Data Collection / Preliminary Analysis Ports Highways Railroads Waterways Analysis Logistics Costs Opex - Rates Capex Qualitative Modal conditions Mato Grosso Goiás Brasilia Mato Grosso do Sul

45 Expansion CAPEX update From US$2.5 bi to US$2.2 bi 45 CAPEX (US$ billion) Timetable 60% 2% 26% % % 33% 72% 72% 3% 3% 1% Original Revised BRL EUR USD and others and thereafter FX and inflation partially offset by the negotiation with suppliers

46 Funding Cost and maturity: 1Q16 H2 1Q16 + H2 Average Cost (US$ p.a) (1) 3.4% 2.2% 3.0% Average Maturity (years) Amortization Schedule (2) 1Q16 Proforma with TLS II US$ million BNDES Bond PPE NCE ACC/ACE CRA ECA Outros FDCO Total (1) Considering swap transactions. (2) Debt FX 1Q16: 3,5589 / FX considering new funding for the TLS II Project: 3,

47 47 Funding Sources R$ 8.7 billion BNDES CRA FDCO ECAs Banks WK release(1) Total (1) Working capital to be released in 2016 and 2017 in commercial deals with Klabin and shipping agreements

48 Rating agencies understand that the Project will not jeopardize Fibria s credit metrics 48 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

49 Project financials at a glance UNIT R$ US$ Pulp production/year k tons 1,850 1,850 Expansion capex (1) $ billion Expansion capex (1) $/t 4,702 1,204 Sustaining capex (2) $/t Cash cost (3) $/t Energy surplus MWh Project approval FX R$/US$ All in cash cost (estimated range) (4) $/t Pulp price (5) $/t Free Cash Flow (estimated) $/t Payback period (estimated) years (1) Includes chemical leasing and investments in order to increase capacity to 1,850 kt/year. (2) Estimated sustaining capex in perpetuity considering capacity of 1,850 kt/year. (3) Estimated weighted average cost, after mill balance. Includes energy sales. (4) Range considering production cash cost of US$ 87/t (Dec, 31 FX ) (5) 2016 market consensus 49

50 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 Environmental requirements Cost of capital Credit rating Although some potential brownfields are listed, there are significant challenges.

51 Dividends 51

52 52 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

53 53 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.

54 (1) Considering March 7, 2016 FX R$/US$ Dividends 2015 April 28, 2015 May 14, 2015 Oct. 22, 2015 Nov. 30, 2015 Dec. 9, 2015 Dec. 17, 2015 OGM: Dividend distribution approval: minimum compulsory + additional Dividend Payment of US$49 million Dividend Policy Approval EGM: Interim Dividend Payment Approval Dividend yield as of Dec, 31, 2015 = 7.5% (R$) 8.3% (US$) Dividend yield as of Dec, 31, 2014 = 11.6% (R$) 8.7% (US$) Dividend Payment of US$532 million Dividend distribution proposal of US$78 million (2) approved by the Board of Directors 2016 April 27, 2016 Mid-May, 2016 Mid-November, 2016 Mid-December, 2016 OGM approved dividend distribution of US$80 million (1) (1.1% of dividend yield as of Dec, 31, 2015). Dividend payment of US$80 million. Extraordinary dividend appraisal Extraordinary dividend payment (if approved)

55 55 Dividends vs. Leverage 2, , , , ,00 0, ,00 1Q15 2Q15 3Q15 4Q15 1Q16 Dividends (R$ million) Leverage (x)

56 Historical Dividend Yield (1) Considering Market Cap as of December, 31st, 2015 (1) Source: Bloomberg Financial Analysis - Multiples 56

57 Best dividend yields of 2015 among Brazilian corporate issuers Dividends per share (R$) Dividend Yield (%) Cesp Fibria Santander BR Qualicorp MRV BBSeguridade TelefBrasil Natura Braskem CSN Source: Economática the dividend yield calculation considers share price at the beginning of

58 Cost reduction initiatives and industry statistics 58

59 59 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

60 59 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 andcapex 80% 60% 40% Estimated level for % 0%

61 1. Third-party wood reduction 60 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

62 61 2. Forestry operations productivity Structural change improving competitiveness CLASSIFYING THE FOREST BASE BY CATEGORIES 45% 40% 35% 36% 40% 33% 30% 25% 20% 15% 10% 5% 10% 10% 20% 20% 15% 10% 6% 0% 01 - Diamond 02 - Gold 03 - Silver 04 - Bronze 05 - Lead Current effective area Future effective area The distribution costs by classes help us to apply resources in order to optimize wood production

63 62 2. Forestry operations productivity Identifying opportunities based on these combinations Possible Restrictions Possible Impediments Declivity 0: Higher than 35 1: Btw 24 and 35 2: Btw 0 and 24 Conservation Areas 0: Within CAs (1) 1: Within EPA (2) and EBZ (3) 2: Out of EPAs and EBZ Municipal Restrictions 0: Total restrictions 1: Partial restrictions 2: No restrictions EPA Altitude 0: Higher than 1800m 1: Lower than 1800m Urban Zones 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) Conservation Areas (2) Envionmental Protection Areas (3) Environmental Buffer Zones 4 e 8, high potential

64 63 2. Forestry operations productivity Cost and Capex KPIs were also included in this geo-model Silviculture Harvest Roads Transportation

65 64 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

66 65 2. Forestry operations productivity Transportation PIFF Timber transportation Woodchip 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

67 66 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

68 67 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% 90% 100% 80% 70% 60% 50% 40% 30% 20% 0% 10%

69 68 3. Industrial: maintenance downtimes schedule change 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

70 69 3. Industrial: Biological Sludge Dryer Biological Sludge Dryness Process Operational Flow Conditioning and biological sludge burn Sludge drying and burn in biomass boiler Effluent+Sludge Aeration 00Tank Biological Sludge Tank Sludge Dryer Biomass 00 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

71 (1) Considering FX (2) Considering average FX for the period (3) The company also has Reintegra credit, which impacts COGS US$ 26 million 71 Fibria s tax structure Description and Amount Maturity (a) Operating income (-)(b) Goodwill (Aracruz acquisition) As stated in the income statement - Annual tax deduction: US$ 23 million (tax) - Remaining Balance mar/16: US$ billion (base) 2018 (-)(c) Forestry Capex in MS state (net) (+/-)(d) Exchange variation (cash) 2016 tax deduction related to depletion: US$ 5.7 million Undefined (+/-)(e) Other Tax base before compensations (f) (-) Tax loss carryforward (a) + (b) + (c) + (d) + (e) - Up to 30% of tax base before compensations - Balance up to mar/16: US$ 50 million (base) Undefined (g) Tax base Tax base before compensations tax loss carryforward (f) (h) Income tax Tax base (g) * 34% (i) (-) Federal tax credits (3) Cash Tax Balance mar/2016: -PIS/COFINS: US$ 168 million -Advanced tax payment (IR and CSLL): US$ 240 million Income Tax (h) tax credits (i) Undefined TAX PAYMENT (cash basis) Q16 US$ 9 million US$ 2 million US$ 8 million US$ 14 million US$ 12 million US$ 23 million US$ 1 million

72 Leadership Position Industry Outlook (1) Fiber Consumption 412 million t Recycled Fiber 242 million t 59% 41% Pulp 169 million t 18% 82% Mechanical 30 million t Chemical 140 million t 59% Integrated Mills 83 million t 41% Market Pulp 57 million t 46% 54% 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

73 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 CAGR: Hardwood: +2.5% Softwood: +0.8% 000 ton Growth Growth Hardwood % 36% Eucalyptus % 52% Softwood % 16% Source: PPPC report (Sept. 2015) Hardwood Softwood Market Pulp % 27% Source: PPPC reports. Excludes Sulphite and UKP market pulp (Sept./15) Paper Production Runnability with BHKP Source: RISI conference, August

74 Benefiting From China s Growth China s Hardwood Imports of BHKP by Country (1) ( 000s t) BHKP Total Latin America (1) 1Q15 1Q Latin America is the leading exporter of BHKP to China, accounting to approximately 55% of China's total imports in 1Q Indonesia Others(2) USA Canada Western Europe (1) includes South Africa and New Zealand. (2) Includes China, Japan, Malaysia, Russia, Thailand and Vietnam. (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 30% 25% 20% 15% 10% 5% 0% Between 2005 and 2015, the Chinese market share of eucalyptus shipments increased by 20 p.p. (total market pulp: + p.p.) 10% 10% China's Share of Market Pulp (2) 12% 14% 21% 17% 22% 23% 23% 24% (million t) 14 25% 12 Eucalyptus Hardwood Total % Compared to the global Market Pulp (1) PPPC Pulp China Flash Report March 2016 (2) PPPC W20. Coverage for chemical market pulp is 80% of world capacity (3) RISI 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 74

75 75 Growth rate Chinese GDP vs. Eucalyptus Shipments to China (Sept-09 = base 100) China GDP Eucalyptus Shipments Source: Bloomberg and PPPC.

76 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 A 2009A 2010A 2011A 2012A 2013A 2014A 2015E 2016E 2017E 2018E Source: Itaú Macroeconomic Department and PPPC Oct/

77 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 77

78 78 Global Market BEKP Demand Shipments of Eucalyptus Pulp CAGR % (1) Source: PPPC World 20 January/ % 3,787kt 7% 3% 1,980 kt 6% 387 kt 662 kt 758 kt Total North America Western Europe China Others (1) Source: PPPC World 20 December/2015