Bradesco - 2nd Annual Brazil Investment Forum April, 2015 FIBRIA APP WITH THIS PRESENTATION IS AVAILABLE FOR DOWNLOAD AT APPLE STORE AND GOOGLE PLAY.

Transcription

1 Bradesco - 2nd Annual Brazil Investment Forum April, 2015 FIBRIA APP WITH THIS PRESENTATION IS AVAILABLE FOR DOWNLOAD AT APPLE STORE AND GOOGLE PLAY.

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 4Q14 LTM Pulp capacity million tons 5,300 Net revenues R$ billion 7.1 Total Forest Base (1) thousand hectares 968 Três Lagoas Belmonte Veracel Caravelas Portocel Aracruz Jacareí Santos Planted area (1) thousand hectares 561 Net Debt R$ billion 7.6 Net Debt/EBITDA (in Dollars) (2) X 2.4 Net Debt/EBITDA (in Reais) X 2.7 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

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 - 4Q14 Europe 40% Other 10% N. America 27% Asia 23% Sales Mix by Region - Fibria End Use - 4Q14 Tissue 56% Printing & Writing 25% Specialties 19% 11% 9% 11% 10% 10% 10% 11% 10% 9% 10% 8% 8% 8% 9% 9% 10% 10% 22% 25% 14% 20% 31% 28% 20% 23% 25% 26% 21% 26% 26% 26% 27% 25% 23% 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% 39% 40% 30% 20% 29% 29% 24% 18% 26% 26% 30% 22% 28% 31% 30% 19% 22% 26% 27% 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 North America Europe Asia Other

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 Personnel and Remuneration Committee Sustainability Committee Innovation Committee 30% independent members 100% independent members 50% independent members 45% independent members - Listed on Novo Mercado, highest 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 ADR Level III program (1) Controlling group (2) Free Float 40.14% + Treasury 0.06% 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 8

9 Pulp and Paper Market 9

10 In 2013, we stressed the difference between the expected scenario and the realized one... BHKP CAPACITY CHANGES Expected scenario for 2013 in Nov 2012 Realized scenario in 2013 Eldorado 1,275 Eldorado 1,270 Suzano Maranhão Montes del Plata DELAYED UPM Fray Bentos 100 Sappi Cloquet -155 Sappi Cloquet -155 Jari -410 Jari -410 Cellulose du Maroc Sodra Tofte Unexpected Closures Net 1,585 Net 605 BEKP demand growth* 1,080 BEKP demand growth* 1,310 *Source: PPPC Outlook for Eucalyptus Market Pulp November 2012 *Source: PPPC Outlook for Eucalyptus Market Pulp September

11 As a result we had better prices than expected BHKP Delivered to Europe (USD/t) Q13 2Q13 3Q13 4Q13 Annual 2013 Consultants average for 2013 Realized PIX/FOEX price Consultants: Hawkins Wright, RISI and Brian McClay (published in the end 2012 for 2013 prices) 11

12 The better than expected scenario happened again last year... BHKP CAPACITY CHANGES Expected scenario for 2014 in Dec 13 Realized scenario in 2014 Eldorado 230 Eldorado 230 Suzano Maranhão 1,275 Suzano Maranhão 1,100 Montes del Plata 830 Montes del Plata 550 Oji Nantong* 560 Oji Nantong* 235 UPM 100 Sappi Cloquet -115 Sappi Cloquet -70 Sodra Tofte -120 Sodra Tofte -120 APRIL Rizhao Old Town Ence Huelva More unexpected mill closures Net 2,660 Net 1,770 BEKP demand growth** 1,380 BEKP demand growth 1,734 *Partly integrated to existing PM **Source: PPPC Outlook for Eucalyptus Market Pulp November 2013 *Approved license only for 500,000 t/y 12

13 13 and also better prices than initially projected BHKP Delivered to Europe (USD/t) Q14 2Q14 3Q14 4Q14 Annual 2014 Consultants average for 2014 Realized PIX/FOEX price Consultants: Hawkins Wright, RISI and Brian McClay (published in the end 2013 for 2014 prices)

14 Then, what about 2015? BHKP CAPACITY CHANGES Expected scenario for 2015 in Dec 14 Realized scenario in 2015 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 BEKP demand growth** to ,415 to 1, ? *Based on annual closures average (400,000 to 800,000 t/yr) **Source: PPPC Outlook for Eucalyptus Market Pulp September

15 Global Market BEKP Demand Shipments of Eucalyptus Pulp 11% 2014 vs (1) 2M2015 vs. 2M2014 (2) 1,734 kt 16% Total 5% 92 kt North America 6% 386kt Western Europe 20% 717 kt China 13% 537 kt Others 378kt Total 29% 2% 58kt North America 21kt Western Europe 44% 214kt China 13% 83kt Others (1) Source: PPPC World 20 January/2015 December/2014 (2) Source: PPPC World 20 February/2015 Paper Capacity increase in China Total FORECAST REALIZED PREVIOUS FORECAST LATEST FORECAST PREVIOUS FORECAST LATEST FORECAST PREVIOUS LATEST Woodfree ,215 Tissue 1, ,518 1, ,605 2,950 Cartonboard 2,428 2,128 1,300 2, ,028 4,608 Total 3,587 3,160 2,818 3,746 1,753 1,867 8,158 8,773 Source: Fibria and Independent Consultants 15

16 Global Market Pulp Demand Hardwood demand will continue to increase at a faster pace than Softwood Hardwood (BHKP) vs. Softwood (BSKP) (000 ton) Paper Production Runnability with BHKP CAGR: Hardwood: +2.8% Softwood: +0.7% Source: PPPC Hardwood Demand growth rate Softwood Source: RISI conference, August NBSK vs. BHKP - Prices (1) 000 ton Growth Growth Spread Fev./15: US$ Hardwood % 34% Eucalyptus % 63% Softwood % 15% Average spread: US$ Market Pulp Spread Average spread BHKP NBSK Source: PPPC. Excludes Sulphite and UKP market pulp. (1) Source: FOEX Average spread in the last 5 years. 16

17 Technical Age and Scale in the Market Pulp Industry Further closures are expected due to lack of adequate investments in the industry 17 Hardwood (BHKP) Market Pulp Softwood (BSKP) Market Pulp PM Capacity, 1000 t/a Weighted average technical age 12.3 years STRONG PM Capacity, 1000 t/a Weighted average technical age 21 years STRONG Aracruz Weighted average capacity 1,277,000 t/a Jacareí Três Lagoas Old Town Ence Huelva Veracel Weighted average capacity 527,000 t/a 0 30 WEAK 20 Technical Age, years WEAK Technical Age, years 5 0 North American Pulp Mills Other Pulp Mills Closures Grade Switch On & Off More than 7.7 million tons of capacity above 25 years and with annual capacity below 500,000 t/y.

18 18 Capacity closures DO happen Closures of Hardwood Capacity Worldwide (000 ton) ,260-1,180-1, E as of Dec.14 Source: PPPC and Fibria

19 Among the industry s lowest cash cost producers Total Cash Cost of BHKP delivered to Europe (US$/t) Capacity (k tons): 1, ,660 1,055 2, , ,015 3,950 7,480 5,300 = 31,405 Interest 4Q14 net price: US$ 552/t W/K Interest Capex Income Tax SG&A Cash Cost (US$/t) Delivery (US$/t) Source: Hawkins Wright (Outlook for Market Pulp, December 2014) Fibria s 4Q14 considering a FX of R$/US$2.54. Brazil ex-fibria 3Q14 considering FX of R$/US$2.27. Gray bar includes cash expenses as Interest, CAPEX, SG&A and Taxes (Source: RISI and Fibria). 19

20 BHKP prices - CIF Europe (US$/ton) Capacity (000 ton) 20 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 APP South Sumatra (2) 2,0 1, APP Hainan Fray Bentos Mucuri Veracel Nueva Aldea Rizhao Três Lagoas Maranhão Eldorado Montes del Plata Guaíba II Klabin 1,6 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/14), Brian McClay (Jan/14) and RISI (Dec/14) (2) Partially integrated production

21 21 Lowest volatility among commodities Commodities Historical Volatility (US$) (1) 35% 30% 26% 23% 23% 21% 15% 6% Sugar WTI Crude Oil Soy LME Metals Ibovespa Iron Ore Cattle FOEX PIX BHKP Change Fev/2015 vs. Fev/2014 (3) Sugar Iron Ore Crude Oil Soy LME Metals Ibovespa Cattle Pulp BHKP Commoditiy Spot Price -20% -47% -51% -26% - - 5% -2% S&P Sector Index (2) -24% -45% -50% -26% -11% 8% 5% - FIBR3 FBR % 19% (1) Since 2009 (2) Except Iron Ore (Average of: Vale, Rio Tinto and BHP) and LME Metals (3) As of Feb., 27 th

22 Financial and Operational Highlights 22

23 No exposure to eletricity shortage risks, in spite of which the company has benefited from the sale of its surplus energy ( 22 ) ( 7 ) Q13 Wood FX Utilities Energy Consumption Others 4Q % Improved results boosted by energy sales and operational efficiency. (Utilities: 4Q14: R$37/t I 3Q14: R$34/t I 4Q13: R$16/t)

24 Cash Production Cost saw a annual increase of 3.7% over the past 6 years Fibria Cash Production Cost (1) (R$/ton) CAGR: + 3.7% Consistently controlling the production cash cost at a level below the inflation pace (2) 2010 (2) (1) Constant Currency (2) Excludes Conpacel 24

25 25 Net Results (R$ million) ,791 (112) 3,530 Hedge FX Debt 851 (696) (504) (380) (1,874) 141 (54) 163 Adjusted EBITDA Befiex Other nonreccuring exp. /non-cash EBITDA FX Debt / Hedge Early prepaid debt Net Interest Deprec., amortiz.and depletion Taxes Others (1) Net Income Non-recurring effects (1) Includes other exchange rate/monetary variations and other financial income/expenses. Mandatory dividends of R$37 million.

26 Free Cash Flow (1) 2014 R$ million 2,791 (1,591) (411) (136) (29) Adjusted EBITDA Capex Interest (paid/received) Working Capital (1) Taxes Others Free Cash Flow 4Q14 receivables Free Cash Flow (Pro-forma) 2014 Modernization (trucks); R&D; TLS 2 (feasibility study). Higher sales volume (+107 kt); Change in cliente mix, with lower receivables forfaiting transactions; FX effect Capex includes investment in modernization and higher % of third-party wood, decreasing as from 2016; Debt service reduction; Potencial improvement on working capital (customers and suppliers). (1) Does not include: asset sales, expenses on bonds repurchase and tax credits from the BEFIEX program. 26

27 FX and Pulp Price explain 80% of Fibria s EBITDA Margin Each 10% depreciation of the Real increases EBITDA by approx. R$600 million Exchange Rate Average (R$/US$) Fibria net pulp price (US$/t) Fibria net pulp price (R$/t) Marginal producer cost (US$/t) (4) , ,067 1, ,709 1,281 1, Market Consensus EBITDA Margin 29% 40% 34% 36% 40% 39% EBITDA (R$ million) 1,522 2,526 1,964 2,253 2,796 2, (1) 2010 (1) (1) Excludes Conpacel (2) 2014 year end market consensus (3) According to Focus Report (Brazilian Central Bank Mar. 2nd, 2015) (4) According to Poyry full cost estimate - includes Manufacturing + Delivered costs to Rotterdam + Depreciation + ROCE of 9% 27

28 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 Fibria Suzano Klabin CMPC Arauco Eldorado Fibria Arauco CMPC Klabin Suzano S&P BB+/Positive BBB-/Stable BBB+/Negative BBB-/Negative BB/Stable Moody s Ba1/Positive Baa3/Stable Baa3/Negative - Ba2/Stable Fitch BBB-/Stable BBB/Stable BBB+/Stable BBB-/Negative BB/Stable (1) Fibria s historical data in BRL. 28

29 29 Indebtdeness Net Debt (Million) Total Debt and Interest Expenses (Million) 2.6 7, Net Debt/EBITDA (R$) Net Debt/EBITDA (US$) ,313 7, ,773 Interest (US$) ,574 8,327-25% 3,351 2,984 2,842 4,172 3,498 3,135 Dec/13 Sep/14 Dec/14 R$ US$ Debt Amortization Schedule (US$ Million) Dec/13 Sep/14 Dec/14 R$ US$ Average Tenor (months) and Cost of Debt * in US$ (% p.a.) (revolver) (cash) 22 3 Liquidity Pre-payment BNDES ECN ACC/ACE Voto IV Bonds Dec/13 Sep/14 Dec/14 (*) Considering the portion of debt in reais fully adjusted by the market swap curves at the end of each period..

30 A consistent and disciplined approach focused on reducing debt and its cost Debt (US$ million) x Leverage (US$) Interest (US$ million) x Cost of Debt (US$) * Gross Debt Net Debt Interest Reduction Free Cash Flow Increase Cost of Debt Reduction This dynamics creates a virtuous cycle (*) Considering the portion of debt in reais fully adjusted by the market swap curves of Dec. 31,

31 31 New issuance better priced than Investment Grade issuers Fibria 2024 Principal: US$ 600 million Issuance Date: May/2014 Coupon: 5.25% a.a. Bookbuilding: 11.5x Spread over T10Y: bps - SEC registered; - IG Documentation; Highlights - Stretch Debt maturities; - Fibria 2021 early redemption of US$430 million (78% of the total). Rating Maturity Volume T-Spread Coupon Fibria Ba1 / BBB- / BB US$ 600 MM 275 bps 5.25% Braskem Baa3/BBB-/BBB US$ 500 MM 340 bps 6.45% Petrobras Baa1/BBB/BBB 2024 US$ 2,5 bi 350 bps 6.28% BNDES Baa2/BBB-/ 2024 US$ 500 MM 362 bps 6.32% Klabin BBB-/BBB US$ 500 MM 269 bps 5.25% Odebrecht Baa3/BBB/BBB 2029 US$ 500 MM 263 bps 5.25% Data as of Aug 07, 2014:

32 and performing better than Investment Grade issuers 232 Brazil Investment Grade Secondary G-Spread to Maturity (bps) (1) LatAm Investment Grade Loans Spread over Libor (bps) (1) COPEC Ecopetrol Raizen Fibria Colbun Braskem Molymet TGI (O&G) Avg. Term 4 years 5 years 4 years 5 years 6 years 5 years 5 years 5 years (1) As of March

33 Fibria has a low correlation with Brazil 800 G-Spread (bps) (1) Bonds Correlation (1) 700 0,9 0,8 0, , , ,6 100 Fibria 24 vs. Petrobras 24 Fibria 24 vs. Brazil 25 Fibria 24 vs. CDS Brazil Fibria 2024 Braskem 2024 Klabin 2024 Odebrecht 2023 Petrobras 2024 Gerdau 2024 Samarco 2024 Brazil 2025 Correlation since May 2014 Correlation since Jan 2015 (1) Source: Bloomberg as of March

34 34 Fibria has the simplest and most transparent call in the industry Pulp supply Closures/conversions Inefficient capacities in China Demand Fiber and grade substitution Tissue China Pulp price Brazil GDP Energy crisis FX Capex inflation Cost inflation Rating Tax Corporate Governance Negative Neutral Positive

35 Final Remarks 35

36 36 Max Value Project Zero base budgeting Budget developed primarily based on input consumption indicators Only one discussion cycle, initially based on budgetary guidelines Individual discussion for each expenditure package, including Sustaining CAPEX and OPEX Discussion details based on the materiality of the expense within the package Robust basis increasing the visibility of the rationale for the proposed budget amounts Zero Base Budgeting encourages a questioning and challenging attitude of the status quo

37 Max Value Project Zero base budgeting Value achievement share by category NPV expected curve 23% 100% 80% 70% 65% 75% 43% 60% 50% 50% 33% 40% 30% 20% 15% 30% 10% Forestry Industrial Logistics/Other Total 0% Approx. R$1.5 billion NPV Note: (1) Technical Limit potential reflecting 2013 conditions; (2) Coverage of expenses with established Technical Limits (e.g. 374/3233=12%). Source: Fibria, ZBB team analysis. 37

38 38 Max Value Project A hidden asset value Book Value of own Land as of Sep/14: R$1.2 billion Market Price of own Land as of Dec/14: Sep/14: R$3.9 billion Fibria s Ha Book Value Market Value Owned Land ( 000) R$/ha R$/ha Total 491 2,535 7,964 Land sold in 2013 The Parkia Deal: - 206k ha; - Up to R$1.65 billion (~R$8k per ha).

39 39 Max Value Project Turning areas per hectare into square meter The targeted area represents only 0.6% of the land owned by Fibria; Real estate thinking: minimum value creation of R$500 million NPV.

40 40 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

41 41 The maturity of synergies captured since Fibria s creation improved its operating indicators PRODUCTION VOLUME (000 t) BEST PRACTICES AND OPERATING STABILITY +15% CASH COST (R$/ton) -21% 5,054 5,184 5,299 5,271 5, , * 2010* SG&A (R$ million) STRUCTURE AND PROCESS SIMPLIFICATION 2009* 2010* Historical Value Inflation Effect** EBITDA (R$ million) - EBITDA MARGIN (%) -21% % 40% 2,526 34% 36% 1,964 2,253 40% 39% 2,796 2,791 1, * 2010* * 2010* Historical Value Inflation Effect** * Excludes Conpacel ** IPCA index considered to calculate the inflation effect.

42 Back up 42

43 43 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 Dec/14: R$1.1 billion (base) 2014 tax deduction related to depletion: R$37 million 2018 Undefined Benefit Tax loss carryforward Accumulated tax credits Amount Balance up to Dec. 14: R$451 million (base) Balance Dec./2014: - PIS/COFINS: R$570 million - Withholding tax (IR and CSLL): R$681 million - Befiex: R$455 million - Reintegra: R$37 million Tax payment (cash basis) R$ 7 million R$ 16 million R$ 4 million R$ 15 million R$ 31 million R$ 29 million

44 Due to productivity gains in its forests, Fibria had the opportunity to explore this new ownership model 44 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

45 45 Leadership position Industry Outlook (1) Fiber Consumption 406 million t 59% 41% Recycled Fiber 238 million t Pulp 168 million t 18% 82% Mechanical 30 million t Chemical 138 million t 59% Integrated Mills 82 million t 41% Market Pulp 56 million t 46% 54% Softwood/Other 26 million t Hardwood 30 million t 33% 67% Acacia/Other 10 million t Eucalyptus 20 million t 74% Other Eucalyptus Pulp producers: 15 million t 26% (1) Fiber Consumption, Recycled Fiber and Pulp: RISI Market Pulp, Hardwood and Eucalyptus: PPPC Global 100 Report December 2014

46 USD/Adt, 2013 cost level Supply structural changes puts pressure on the industry MARKET PULP CAPACITY RANKING 2014 (000T) MAIN PROJECTS Fibria APRIL Arauco Suzano CMPC UPM-Kymmene Georgia Pacific Paper Excellence Metsa Group Stora Enso Weyerhaeuser Ilim Eldorado Mercer Domtar IP Sodra Resolute Forest Canfor ENCE Project Country Capacity Timing Fiber Status 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 1Q2017 BHKP Confirmed Fibria Três Lagoas II Brazil 1.75 Mt - BEKP Unconfirmed COST CURVE EVOLUTION Cost position of marginal producer Bleached Softwood Kraft Pulp (BSKP) Bleached Hardwood Kraft Pulp (BHKP) Unbleached Kraft Pulp (UKP) Mechanical Pulp (MP) Cumulative Capacity Million t/a Source: Hawkins Wright, Poyry and Fibria Analysis (as of Dec. 2014). 46

47 Benefiting From China s Growth China s Hardwood Imports of BHKP by Country (1) ( 000s t) BHKP Total Latin America Jan/2014 Jan/ * includes Russia, China, Thailand and New Zealand. Latin America is the leading exporter of BHKP to China, accounting to approximately 42% of China's total imports in Jan/ Indonesia Others* 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 25% 20% 15% 10% 5% 0% Between 2005 and 2014, the Chinese market share of eucalyptus shipments increased by 19 p.p. (total market pulp: + p.p.) 10% 10% China's Share of Market Pulp (2) 12% 14% 21% 17% 22% (million t) 23% 23% 23% Eucalyptus Hardwood Total % Compared to the global Market Pulp (1) PPPC Pulp China Flash Report January 2015 (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 47

48 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 48