Deutsche Bank GEMs Conference

Transcription

1 Deutsche Bank GEMs Conference September 5 6 th,

2 Disclaimer The information contained in this presentation may include statements which constitute forwardlooking 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 forwardlooking 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 forwardlooking statements, which speak only for the date on which they are made. 2

3 The Company 3

4 Shareholder Structure Votorantim Industrial S.A. BNDESPar Free Float 29.42% (1) 40.20% (2) Level III NYSE 26% EQUITY OFFERING (April 2012) - 86 million shares issued - Unit price: R$15.83/share or US$8.43/ADR - VID and BNDESPar maintained their previous stake in the company Bovespa 74% Average Daily Trading Volume (LTM): US$ 30 million (1) Position as of July 31, BNDESPar has 21% linked to a Shareholder s Agreement with Votorantim Industrial S.A. during the first 3 years (until October 2012) and 11% during the following 2 years (from October 2012 to October 2014). (2) Free Float 40.14% + Treasury 0.06% 4

5 Improved Corporate Governance Highlights Board and Committees Listed on Novo Mercado, highest level of Corporate Governance at BM&FBovespa Shareholders Meeting 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 Fiscal Council Board of Directors 9 Members: 20% Independent Chairman CEO Adoption of Arbitration Chamber Listed in the NYSE Level III Listed in the most important sustainability indexes Board Advisory Committees (1) Policies approved by the Board of Directors Liability and liquidity management Executive Officers Audit and Risks Personnel and Remuneration Finance Sustainability Innovation Market risks Corporate governance Information disclosure Stock trading (1) Members performance assessed by independent consulting firm 5

6 A Winning Player Superior Asset Combination Main Figures 2Q12 LTM Pulp capacity million tons 5.25 Net revenues R$ billion 5.6 Total area thousand ha 1,066 Belmonte Veracel Caravelas Portocel Aracruz Planting area (1) thousand ha 603 Net Debt R$ billion 8.5 Net Debt/EBITDA (in Dollars) (2) X 4.2 Três Lagoas Net Debt/EBITDA (in Reais) X 4.7 Jacareí Santos Port Terminal Pulp Unit Source: Fibria (1) As of June 30, 2012, including 50% of Veracel, excluding forest partnership areas (114 thousand ha) and excluding the forest base linked to the sale of forest assets in Southern Bahia State (2) For covenants purposes, the Net Debt/EBITDA ratio is calculated in Dollars. 6

7 Fibria s Strategy 7

8 Clear Leadership Position Industry Outlook (1) Market Pulp Capacity Ranking 2012 (2) (000t) Recycled Fiber 228 million t Paper & Board 402 million t 57% 43% Mechanical 34 million t Pulp 174 million t 20% 80% 63% Integrated Mills 87 million t Chemical 140 million t Softwood/Other 26 million t 37% Market Pulp 53 million t 50% 50% Acacia/Other 10 million t Hardwood 27 million t 37% 63% 70% Other Eucalyptus Pulp producers: 12 million t Eucalyptus 17 million t 30% Fibria APRIL Arauco Georgia Pacific CMPC Sodra Suzano Paper Excellence Weyerhaeuser UPM-Kymmene Stora Enso Domtar Ilim IP Mercer ENCE West Fraser Canfor Metsa Fibre Cenibra 5,250 Bleached Softwood Kraft Pulp (BSKP) Bleached Hardwood Kraft Pulp (BHKP) Unbleached Kraft Pulp (UKP) Mechanical (1) Paper&Board, Recycled Fiber and Pulp: RISI Market Pulp, Hardwood and Eucalyptus: PPPC Special Research Note Feb 2012 considers 2011 demand (2) Hawkins Wright Outlook for Market Pulp, July

9 Cash Cost (US$/t) Relevant Market Share and Competitive Position in the Cost Curve Fibria s Market Share (1) Average Cash Cost of BHKP delivered to Europe (2) (US$/t) 10% 19% Mill Cash Delivery SG&A Maintenance Capex Financial Expenses Total Market Pulp: 52.6 million t Total Hardwood Market Pulp: 26.7 million t 0 30% Hardwood Cash Cost (US$/t) vs Capacity (mt) Total Eucalyptus Market Pulp: 17.2 million t (1) PPPC Special Research Note Feb 2012 considers 2011 demand (2) Source: Mill Cash and Delivery: Hawkins Wright March 2012 Report SG&A, Maintenance Capex and Financial Expenses: Fibria s estimates Fibria 2Q12 figures Low Cost producers: 15mt 6.0 mt of HW market pulp with total delivered cash cost above US$500/t tons 9

10 May-98 Dec-98 Jul-99 Jan-00 Aug-00 Mar-01 Oct-01 May-02 Dec-02 Jun-03 Jan-04 Aug-04 Mar-05 Oct-05 May-06 Nov-06 Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 May-98 Dec-98 Jul-99 Jan-00 Aug-00 Mar-01 Oct-01 May-02 Dec-02 Jun-03 Jan-04 Aug-04 Mar-05 Oct-05 May-06 Nov-06 Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 Apr-10 Nov-10 Jun-11 Jan-12 Aug-12 Pulp Price Historical Pulp Price FOEX BHKP Europe (US$/t) Historical Pulp Price FOEX BHKP Europe (R$/t) US$763/t Aug 28 th R$ 1,540/t Aug 28 th months 5 months months 3 months 500 Average : R$1,289/t

11 Expected Return (% pa) FX and Pulp Price in US$ explain 80% of Fibria s EBITDA margin Pulp price historical volatility (1) of 9% the lowest among all commodities 100% 80% 60% BHKP Correlation (USD) LME Nickel 3MO($) LME Copper 3MO($) LME Steel Billett 3M WTI Crude Future Sep 12 Ibovespa CRB Index FOEX PIX BHKP price 40% 20% 0% -20% 3,9% 0,6% 3,5% 8,0% 5,4% -8,4% -4,4% 20,7% 11,0% Vol Anual 37% 26% 41% 27% 45% 17% 9% -40% -60% -80% Considering pulp price in US$, a low correlation with hard commodities and traditional assets is observed. With a low correlation the inclusion of BHKP in the portfolio expands the efficient frontier of a commodities portfolio (2). (1) Since May 1998 (2) Considering the expected return of a portfolio comprised of: DJ, Ibovespa Index, Oil, Copper, Niquel, Libor 3M in US Dollar and BHKP. (3) R multiple regression of 80% 14% 12% 10% 8% 6% 4% 2% 0% -100% Libor 3M USD LME Niquel LME Copper Oil WTI CRB Index Bovespa Index Efficient Frontier (1) with and without BHKP -2% 5% 10% 15% 20% 25% 30% 35% Volatility (% pa) Com With BHKP Dow Jones Ind. Index CPI US Sem Without BHKP BHKP IPCA BR 11

12 Exchange Rates and Inflation Affect the Cost Structure Exchange Rate Currencies Evolution versus Dollar (Jan 03 = 100) Real: 106% Canadian Dollar: 50% Chilean Peso: 27% Rupia: 1% Cost Structure Global producers have been impacted by: Wood: cost of land and minimum wage growth above inflation Chemicals / energy / water: global demand for commodities add pressure on main raw materials On top of that, Brazilian producers have also been impacted by: Freight: low governmental investment in infra-structure (ports, roads, etc) and higher oil prices Labor: cost in Brazil in dollar terms is higher than in some developed countries 12

13 Global Presence Fibria s Commercial Strategy Differentiation: Customized pulp products to specific paper grades Sole supplier to key customers Long term contracts Competitive logistics set up 26% N.America Miami Nyon 43 % Europe Csomád 20 % Asia Hong Kong 11 % L.America São Paulo Source: Fibria 2Q12 Fibria Sales Distribution Fibria Offices 13

14 Door to Door Operations and an efficient and integrated logistics guarantee a competitive cost structure Pulp mill Outbound Logistics Forest Integrated logistics solutions Low forest to mill average distance Easy access to the most efficient transportation network: rail, barging and road Efficient Logistics Setup Portocel: specialized port for the pulp and paper industry Client Port Sea Freight 14

15 Focus on Premium-End Uses Fibria's Pulp End Use Europe 34% 27% 39% 29% North America 1% 6% 15% 56% Asia 93% 56% Tissue Specialties Printing & Writing Source: Fibria 2Q12 23% 21% 15

16 Innovation and Competitiveness 16

17 Enhanced Forestry Techniques Current Elite Clone 2 years old New Elite Clone 2 years old 17

18 Forest Competitiveness Fibria: Forest Competitiveness Genetic and Technological Development at Fibria years years 8 6 years 7-8 years 7-15 years years years Brazil (eucalyptus) Indonesia S.Africa Chile Portugal / Spain Harvesting Cycle (avg. years) Yield (m3/ha/year) USA / Canada Finland / Sweden 70's 80's 90's 00's Next decade (expected) Air Dry Ton / ha / year Source: ABRAF, STCP, Poyry and Fibria. Note: Pulp trees differ depending on the country: Indonesia acacia, S.Africa tropical and temperate eucalyptus, Chile temperate eucalyptus, Portugal/Spain temperate eucalyptus, USA/Canada aspen, Finland/Sweden betula. 18

19 Pulp and Paper Market 19

20 Paper Consumption P&W Consumption ( 000 tons) (1) Tissue Consumption ( 000 tons) (1) CAGR: +1.9% 109,791 76,499 CAGR: +3.8% 31,766 15,548 (1) Source: RISI 20

21 N. America W. Europe Japan Oceania L. America E. Europe China N&M East Asia Far East Africa Tissue Market Per Capita Consumption of Tissue by Region, 2010 (1) World Tissue Consumption, (1) ,5 15,6 14,6 11,2 Kg/capita Huge potential growth Average Growth Rate +3.8%a.a. Million tons 5 0 5,6 4,4 3,6 3,0 0,7 0, N.America W.Europe E.Europe L.America NME Japan China Asia FE Oceania Africa (1) Source: RISI 21

22 Market Pulp Demand Hardwood demand will continue to increase at faster pace than Softwood Hardwood (BHKP) vs Softwood (BSKP) ( 000 tons) BHKP vs BEKP vs BSKP Demand Growth (1996 = 100) CAGR: Hardwood: +2.3% Softwood: +1.0% Eucalyptus: +4.6% % % % BHKP BSKP BEKP BHKP BEKP BSKP BHKP: Bleached Hardwood Kraft Pulp BSKP: Bleached Softwood Kraft Pulp BEKP: Bleached Eucalyptus Kraft Pulp Source: PPPC 22

23 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 days Commodity Price Index (CRB) Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 Oct-11 Nov-11 Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Industry Outlook Market pulp: world demand growth (%) China: Eucalyptus pulp shipments ('000 t) 1% 7M2012 x 7M2011 5% 18% 458 Average 305 ktons Average 193 ktons Average 251 ktons Average 221 ktons % -5% -7% Total North America Europe Latin America Japan China Source: PPPC World 20 Total Chemical Market Pulp World pulp producers' average days of supply Source: PPPC Global 100 World Printing & Writing Report European Price (BHKP) x Commodity Index (CRB) US$920/t Dec-08 Aug-09 May-10 Feb-11 Nov-11 Aug-12 CRB BHKP List Price Source: PPPC World 20 23

24 Demand/Capacity Ratio versus BHK Europe List Price Ratio % 98% 96% 94% 93% 92% 90% 88% 86% 96% 86% 93% 94% 89% 92% 91% 88% 95% 91% Capacity Growth Peak 2000 to 2003 = 24% 2007 and 2008 = 20% Capacity Growth Forecast 2012 to 2016 = 15% or 4.6 million/ton 90% 91% 90% 94% 93% 95% 91% 86% Price US$ % % % % % D/C Ratio -1-yr BHK Europe List Price US$ 24

25 Pulp Projects Backlog Even though there is an extensive pulp projects backlog, there are important question marks regarding new projects Main Questions About Capacity Minimum required return for new projects Closures due to increasing costs worldwide, reduction of maintenance capex (higher technical age of recovery boilers) and exchange rates Fiber substitution: Softwood x Hardwood and Recycled x Virgin Fiber Main Projects Project Country Capacity Timing Status Eldorado Brazil 1.5 Mt 4Q2012 Confirmed Arauco / Stora Uruguay 1.3 Mt 2Q2013 Confirmed Suzano Brazil 1.5 Mt 4Q2013 Confirmed Fibria Três Lagoas II Brazil 1.5 Mt 3Q2014 Unconfirmed CMPC Guaíba II Brazil 1.5 Mt 4Q2014 Unconfirmed Klabin Paraná Brazil ~1.0 Mt 2015 Unconfirmed APP South Sumatra Indonesia 1.5 Mt 2.0 Mt 2015/16 Unconfirmed Suzano Piauí Brazil 1.5 Mt 2Q2016 Unconfirmed Cenibra Belo Oriente II Brazil 800 kt 2016 Unconfirmed 25

26 FOEX (US$/t) x Net Increases/Closures x Delivered Cash Cost Net Closures* BHKP Europe List Price US$ Canada East delivered cash cost (US$) Source: Hawkins Wright * Net closures: Canada, USA and Western Europe 26

27 Technical Age and Scale in the Market Pulp Industry Further closures are expected due to lack of adequate investments in the industry... Hardwood (BHKP) Market Pulp Sotfwood (BSKP) Market Pulp Source: Poÿry North American Pulp Mills Other Pulp Pulp Mills 27

28 China 28

29 China China s Market Share of Market Pulp (%) (1) % 21% 26% Latin America is the main market pulp supplier to China % 15% 16% 19% 18% 26% 20% 26% 26% % 15% 17% 24% M 2012 Eucaplyptus ('000 t) Hardwood ('000 t) (1) Source: PPPC Global 100 Report 29

30 China: a Major Player P&W Grades Expansion in China (000 tons) Increasing Tissue Consumption with Wealth Distribution +4.8 million tons until million tons until ,986 14,600 13,600 (%) of population not poor (McKinsey) (RHS) ,587 12,600 11,600 29, ,600 28,782 9,600 8,600 27,200 7,600 6,600 5,600 Production (LHS) Consumption (LHS) 50 4,600 3,600 2, Source: RISI and McKinsey, PPPC Chinese Market Pulp Demand. 1,

31 Financial Highlights 31

32 Highlights Operating Result Liquidity Events Recovery of the pulp price EBITDA at R$550 million and 37% margin Year-on-year cash cost reduction of R$7/t (excluding downtimes) Conclusion of the Equity Offering (without secondary lot) + R$1,361 mn Forestry assets and land + R$235 mn (1) in Southern Bahia State R$1,596 mn Liability Management Covenant renegotiation: maximum leverage at 4.5x in U.S. dollars as of June 30, 2012 to maturity Changes in the calculation method of the Net Debt/EBITDA indicator from Real to U.S. dollar Tender offer for US$514 million of Senior Notes due 2020 (impact on 3Q12) and annual interest savings of approx R$80 million Upgraded rating outlook S&P from BB/Stable to BB/Positive in July (1) Fibria received R$200 million in advance on June 29 and the remaining R$35 million are scheduled for payment on November 14, contingent upon the conclusion of due diligence and the conclusion of the transaction 32

33 2Q12 Results EBITDA (R$ million) and EBITDA Margin (%) Pulp Production and Sales 34% % % 550 1,271 1,230 1,332 1,313 1,275 1,265 1H12 x 1H11: Production: +1% Sales: +4% 2Q11 1Q12 2Q12 2Q11 1Q12 2Q12 production (000 t) sales (000 t) Cash Cost without downtimes (R$/t) Pulp sales (%) % (R$7/t) Inflation: +4.9% Operating excellence more than offset inflation on cost North America 26% Mix per Region Other 11% Europe 43% Specialties 15% Printig&W riting 29% End Use Tissue 56% Asia 20% 2Q11 1Q12 2Q12 33

34 Debt Profile Debt Amortization Schedule (R$ billion) Jun/12 Short term debt pro forma (1) : 10% Senior Notes Reclassification Q12 Debt by Currency 2Q12 Debt by Index Average Maturity (years) Avg. Cost of Foreign Debt (%) 7% 6% 93% 68% 24% 2% Local Foreing Libor Other Fixed TJLP 4Q09 2Q12 pro Forma* 4Q09 2Q12 pro forma* * Considering the Tender Offer for the 2020 Notes which totaled US$514mn and was concluded in July 34

35 Free Cash Flow 1H2012 Net Income (loss) x Free Cash Flow (R$ million) Income (Losses) Depreciation, Amortization and Depletion Debt Exchange Variation Hedge MTM Income Tax/Social Contribution Other* Adjusted EBITDA Capex/Adv for wood purchase Working Capital/Tax Paid/received interest Free Cash Flow * Considers interest on loans and the fair value of the biological assets, among others. 35

36 Liability Management 6.5 Net Debt/EBITDA (x) in Reais Net Debt/EBITDA (x) in Dollars* From June on, net debt/ebitda ratio for covenant purposes are calculated in US Dollars Net Debt (R$ MM) Q11 2Q11 3Q11 4Q11 1Q12 2Q12 Average LTM End of Period FX Rate (R$/US$) *From June on, net debt/ebitda ratio for covenant purposes are calculated in US Dollars and the limit is 4.5x 36

37 Cash Flow Sources and Uses Sources and Uses (R$ million) 1 st Half of 2012 Pro Forma (1) 2,664 2,664 Other (2) Working Capital Asset Sale (3) Derivatives Interest Paid/Received Capex Tender offer for US$ 514 mm of Fibria % a.a. Operating Cash Flow Cash Debt service reduction of approx R$80 mm/year Tax Net Borrowings Other liquidity events: Losango forest base Equity Offering (3) 1,344 1, Notes Tender Offer (1) Other non core assets Sources Uses (1) Considering the Tender Offer for the 2020 Notes which totaled US$514mn and was concluded in July (2) Other: FX variation on cash position (3) Asset Sale: advance payment received on June 29, 2012 Equity Offering: net amount 37

38 Hedging Policy and Strategy Hedging Strategy Derivatives Notional (1) (US$ mn) Main goals: Minimum cash: protect our short-term debt amortization + cash conversion cycle -36% Avoid EBITDA margin reduction below a set level Guidelines: No leverage Hedging Policy Limits per counterpart Derivative instrument linked to the effective exposure Maximum hedging limits: Currency: up to 75% of the 12 month exposure All contracts registered in DTC % of exposure hedged 3Q11 4Q11 1Q12 2Q12 3Q12E 56% 53% 54% 44% 27% Macroeconomic fundamentals indicate a floor for FX R$2.00 In this context, Fibria reviewed its Hedging Strategy to become more exposed to the Dollar Non deliverable forward and Dollar option notional reduced by 14% in 2Q12 (1) Includes Non Deliverable Forwards and US Dollar Option 38

39 Liquidity Events Event Amount Conclusion Date Status Conpacel and KSR Asset Sale R$1,500 mn Jan-Feb 2011 Piracicaba Asset Sale R$ 567 mn Sep 2011 Equity Offering R$1,361 mn Apr 2012 Forest and Land asset sale (1) R$ 235 mn Jun 2012 Total R$ 3,663 mn - Additional liquidity events (2) (1) R$ 200 million received on June 29, Outstanding balance to be received until Nov 14 subject to due diligence. (2) Losango asset sale 39

40 Investor Relations Phone: +55 (11) Website: 40