September Morgan Stanley - Global Natural Resources Conference

Transcription

1 September 2013 Morgan Stanley - Global Natural Resources Conference

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 speakonlyforthedateonwhichtheyaremade. 2

3 1 Financial 2 Pulp 3 Questions Highlights and Paper Market & Answers Agenda

4 Financial Highlights

5 2Q13 Results Pulp Production and Sales ( 000 t) Net Revenue (R$ million) 1,275 1,263 1,291 1,265 1,186 1,269 1,491 1, % 1,669 2Q12 1Q13 2Q13 Production Sales Cash Cost (R$/t) 2Q12 1Q13 2Q13 EBITDA (R$ million) and EBITDA Margin (%) % 39% 39% Q12 1Q13 2Q13 Cash cost ex-maintenance downtimes Cash cost 2Q12 1Q13 2Q13 5

6 USD appreciation increased debt and leverage in Reais, but with no cash impact Net Debt (Million) Net Debt/EBITDA (R$) Net Debt/EBITDA (US$) Debt cost in US$ (% p.a) 11,882 5,878 Gross Debt (Million) ,898 9,936 4,915 4,485 24% reduction in gross debt in US$ in twelve months 8,462 4,186 7,516 FX impact R$ 650 million 8,253 3,732 3,725 Jun/12 Mar/13 Jun/13 R$ US$ Closing FX (R$/US$) Jun/12 Mar/13 Jun/13 R$ US$ % Debt Amortization Schedule (R$ million) Jun/13 2,212 1,643 1,141 1, Bond BNDES Multilateral agencies and other Pre-Payment Trade Finance 6

7 Positive Free Cash Flow and High Single Digit Yields FCF Yield 7% 7% FCF (R$ million) Q13 LTM As previously announced, Fibria resumed part of its receivable discount operations, which positively impacted the free cash flow in the 2Q13. 7

8 Fibria delivers one of the highest EBITDA/t and FCF/t of the industry 1,247 LTM 2Q13 Results (R$/ton) (648) (109) (5) 485 (220) (102) 36 Free Cash Flow per ton (16) 183 (1) Net revenues COGS/Freight SG&A Others EBITDA (2) CAPEX Interest Working (3) Taxes/Others LTM 2Q2013 Capital (1) On a cash basis, does not include depreciation, amortization and depletion (2) Includes advance to forest partner program (3) IR/CS and other 8

9 FX and Pulp Price explain 80% of Fibria s EBITDA Margin Exchange Rate Average (R$/US$) Average Price FOEX (US$/t) EBITDA Margin 28% 40% 34% 36% 39% EBITDA (R$ million) 1,697 2,526 1,964 2,253 2, Q13 LTM 9

10 Pulp vs Other Commodities Commodities Historical Volatility BHKP Correlation (USD) 50% 45% 40% 35% 30% 25% 20% 15% 10% 38% 32% 30% 26% 25% 21% 16% 8% 50% 40% 30% 20% 10% 0% -10% 10% 0% -2% 14% 0% 2% -3% -6% -5% 5% 0% Sugar Iron Ore WTI Crude Oil Soy LME Metals Ibovespa Cattle FOEX PIX BHKP -20% Ibovespa LME Metals WTI Iron Ore Sugar Soy Cattle CPI Brazil CPI US Crude Oil Pulp price has the lowest historical volatility (1) among all commodities. 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). Expected Return(% p.a.) Efficient Frontier (1) with and w/o BHKP 30% 25% 20% 15% 10% 5% 0% 5% 10% 15% 20% 25% Com Without Minério Pulp de Ferro (1) Since 2009 (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% Volatilidade (% a.a.) Com With BHKP pulp e Minério and others de Ferro 10

11 Fibria delivered the most significant leverage reduction in the LTM Net Debt/EBITDA (x) 5, (2) 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/ E(1) Ratings Fibria Arauco CMPC Klabin Suzano S&P BB+/Stable BBB-/Stable BBB/Negative BBB-/Stable BB/Negative Moody s Ba1/Positive Baa3/Negative Baa3/Negative - Ba2/Stable Fitch BB+/Positive BBB/Stable BBB+/Stable BBB-/Stable BB-/Stable (1) 2013 year end market consensus (2) 2013 projection by Citibank. 11

12 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 12

13 Consolidation is needed, however, challenges are large Global Market Pulp Capacity (1) (000t) Challenges for Consolidation Fibria APRIL Arauco Georgia Pacific CMPC UPM-Kymmene Sodra Suzano Paper Excellence Weyerhaeuser Stora Enso Domtar Ilim IP Mercer Metsa Fibre Eldorado West Fraser ENCE Canfor 5,300 Bleached Softwood Kraft Pulp (BSKP) Bleached Hardwood Kraft Pulp (BHKP) Unbleached Kraft Pulp (UKP) Mechanical Dependent upon strategic motivation and timing of parties Relative valuations Governance issues, level of control, etc Culture/ management challenges Indebtedness level of industry players (1) Hawkins Wright Outlook for Market Pulp, January

14 Fibria has the best portfolio of brownfield projects Três Lagoas II: Decision: 2014 Start-up: 2016 Capacity: 1.5 million tons Forest base: 40k hectares of surplus Veracel II Aracruz s Expansion Três Lagoas Belmonte Veracel Caravelas Portocel Aracruz Jacareí Santos Port Terminal Pulp Unit 14

15 Additional Source of Growth Portocel I Portocel II 15

16 Opportunities to Enhance Returns New alternatives for biomass residues / lignin New Forest Model Biofuels and Bioproducts 16

17 Pulp and Paper Market

18 Pulp projects, net of closures, will add less than 10% of global capacity between 2013 and 2015, less than in other basic materials sectors SOFTWOOD (1) 25.0 MT + HARDWOOD (1) = 30.1 MT MARKET PULP (1) 55.1 MT (2) : New capacities: 0.5 mt Announced Closures: (0.8) mt Net: (0.3) mt (3) : New capacities: 5.8 mt Announced Closures: (1.2) mt Net: 4.6 mt : New capacities: 6.3 mt Announced Closures: (2.0) mt Net: 4.3 mt (1) Source: PPPC Special Research Note May 2013 does not include Sulphiteand UKP (2) Projects included:ilim Group (490kt) Closures: Resolute Forest (75kt) ; Domtar (125kt) ; Rayonier (280kt); Birla (350kt) (3) Projects included: Eldorado (1.5 mt); Montes del Plata (1.3 mt); Maranhão(1.5 mt); GuaíbaII (1.5 mt) Closures: Jari(410kt); Sappi Cloquet(270kt); Double A (85kt); SodraTofte(180kt); IlimGroup (100kt); April Rizhao(130kt) 18

19 Capacity closures DO happen Closures of Hardwood Capacity Worldwide 000 ton E Source: PPPC and Fibria 19

20 Gross capacity addition should not be counted as the only factor influencing pulp price volatility , ,8 BHKP prices -cifeurope (US$/ton) Valdivia APP Hainan Veracel Nueva Aldea Santa Fé Fray Bentos Mucuri Kerinci PL3 Três Lagoas Rizhao APP Guangxi Chenming Zhanjiang Eldorado Maranhão Montes del Plata Guaíba II 1,6 1,4 1,2 1,0 0,8 0,6 0,4 Greenfield capacity (000 ton) 100 0, ,0 Source: Hawkins Wright 20

21 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 Softwood (BSKP) Market Pulp Capacity, 1000 t/a Weighted average technical age 14.2 years 2013/Q1 STRONG Capacity, 1000 t/a Weighted average technical age 21.2 years 2013/Q1 STRONG Weighted average capacity t/a Weighted average capacity t/a 0 30 WEAK Technical Age, years WEAK Technical Age, years 5 0 North American Pulp Mills Other Pulp Mills North American Pulp Mills Other Pulp Mills Source: Poÿry 21

22 Fibria: Competitive Position on the Cost Curve Capacity (k tons): 1,130 1, , ,430 3,320 3, ,385 = 29, Total Cash Cost of BHKP delivered to Europe (US$/t) Cash Cost (US$/t) Delivery (US$/t) Source: Hawkins Wright (Outlook for Market Pulp, July 2013) Fibria sltm 2Q13 cash costs divided by the FX used for HW report R$/US$

23 Paper Capacity Expansion in China New capacities in China will generate additional demand for market pulp Ktons E 2014E Total P&W (woodfree) ,180 Tissue 1,540 1,180 1,321 4,041 Cartonboard 2,210 2,528 1,300 6,038 Source: Fibria and Independent Consultants 23

24 Strong internal consumption will drive tissue demand in China Per Capita Consumption of Tissue by Region, 2012 (1) World Tissue Consumption, (1) 24.3 Kg/capita Average Growth Rate +3.5%a.a. Million tons Growth Potential N. America W. Europe Japan Oceania E. Europe L. America China N&M East Asia Far East Africa N.America W.Europe E.Europe L.America Middle East Japan China Asia FE Oceania Africa (1) Source: RISI 24

25 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. Improve the lives of Chinese citizens: increasing minimum wages at 13% p.a. Sources: (1) the Economist. (2) RISI China Pulp Market Study. 25

26 Chinese consumption has still a lot of space to grow China is a larger driver of various global indicators (China as % ofglobal) Source: Deustche Bank,. 26

27 Different from other commodities, China accounts for 26% of hardwood demand compared to around 60% in other basic materials sectors China s Market Share of Market Pulp Shipments (%) (1) % 21% 26% 26% Latin America is the main supplier of pulp to China % 15% 16% 19% 18% 26% 20% 26% 25% % 15% 17% Eucalyptus ('000 t) Hardwood ('000 t) (1) Source: PPPC Global 100 Report

28 Fibria s Commercial Strategy Fibria s Pulp End Use 2012 Fibria s Historical Sales Distribution -% of sales volume Europe North America 21% 51% 2% 4% 28% 94% Asia 2Q103Q104Q101Q112Q113Q114Q111Q122Q123Q124Q121Q132Q13 North America Europe Asia Others 32% 22% 46% Fibria is exposed to the least volatile consumer markets (tissue) which brings stability to sales volume. Tissue Printing & Writing Specialties Fibria has a low dependence on China (less than 20% of total sales volume). 28

29 Questions & Answers

30 Investor Relations Phone: Website: THANK YOU

31 Back up

32 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 32

33 Inventories Hardwood Market Pulp Producers Inventories (days of supply) Hardwood Market Pulp Producers Inventories (000 tons) Jun/13: 41 days Jul/12: 43 days Jul/13: 46 days Jul/13 x Jun/13: +7,9% or +181kt Source: PPPC World 20 March 2013 Source: Fibria s estimates based on PPPC s methodology Hardwood European Pulp Consumers Inventories (days of supply) Hardwood European Pulp Consumers Inventories (000 tons) BHKP': Jun/13 x May/13: -6.5% or -24kt Jun 13: 19 days BHKP BHKP Source: Utipulp Source: Utipulp 33

34 Inventories (1) Closing Stocks (k tons) Total Shipments (k tons) 3-month daily average (k tons) Inventories (days) Feb-13 Mar-13 Apr-13 May-13 Jun-13Jul-13 (2) Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Inventories Calculation = closing stocks average daily shipments in the last 3 months (1) Source: PPPC Global World 20 June Report. (2) Fibria s estimates. 34

35 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: +2.3% Softwood: +1.0% 000 ton Growth Growth Hardwood % 27% Eucalyptus % 67% Softwood % 7% Market Pulp Hardwood Softwood Source: PPPC 35