NDR RJ - Corporate Presentation. November, 2017

Transcription

1 NDR RJ - Corporate Presentation November, 2017

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 2017 Outlook CAPEX and Cash Cost Expansion Project Horizonte 2 Back up

4 Company Overview 4

5 (1) Controlling group (2) Free Float 41.33% + Treasury 0.16% 5 Shareholder Structure and Corporate Governance Votorantim S.A. (1) 29.42% BNDES Participações (1) 29.08% Free Float (2) 41.33% 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 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

6 A Winning Player Superior Asset Combination Main Figures 3Q17 LTM Pulp capacity (1) million tons Net revenues US$ billion Total Forest Base (2) thousand hectares 1,056 Belmonte Veracel Caravelas Portocel Aracruz Planted area (2) thousand hectares 633 Net Debt US$ billion Net Debt/EBITDA (in Dollars) (3) X 3.28 Três Lagoas I and II Jacareí Santos Port Terminal Pulp Unit Source: Fibria (1) Includes Horizonte 2 pulp capacity. (2) 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, (3) For covenants purposes, the Net Debt/EBITDA ratio is calculated in Dollars. 6

7 (1) Veracel is a joint operation between Fibria (50%) and Stora Enso (50%) and the total capacity is 1,120 thousand ton/year 7 Fibria s Units Industrial Capacity Três Lagoas Mato Grosso do Sul 3,250 thousand t/year 1

8 8 Fibria s Commercial Strategy Sales Mix by Region and by End Use - Fibria Highlights Region 3Q17 North America 20% Europe 34% Latin America 9% Asia 36% End Use 3Q17 Tissue 53% Specialties 17% Printing & Writing 30% 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 Net Revenues by Region - Fibria 9% 10% 9% 10% 10% 24% 25% 24% 32% 37% 28% 24% 24% 22% 20% Focus on less volatile end-use markets such as tissue Lower dependence on volatile markets such as China Efficient logistics set up Low counterparty credit risk 100% certified pulp (FSC and PEFC/Cerflor) 39% 41% 43% 36% 33% Q17 LTM Europe North America Asia LatAm

9 Leadership Position Industry Outlook (1) Fiber Consumption 414 million t Recycled Fiber 244 million t 59% 41% Pulp 170 million t 18% 82% Mechanical 28 million t Chemical 142 million t 59% Integrated Mills 83 million t 41% Market Pulp 59 million t 46% 54% Softwood/Other 27 million t Hardwood 32 million t 33% 67% Acacia/Other 9 million t Eucalyptus 23 million t 77% Other Eucalyptus Pulp producers: 17 million t 23% (1) Fiber Consumption, Recycled Fiber and Pulp: RISI Market Pulp, Hardwood and Eucalyptus: PPPC SRN May

10 10 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) Klabin s sales volume (kt) 2Q16 3Q16 4Q Q17 2Q17 3Q 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 customers base

11 Pulp and Paper Market 11

12 Source: PPPC Global Global growth has ONLY been relying on China BHKP DEMAND (KT AND % CHANGE, Y-O-Y) % 19.0% 5.5% -0.2% Global NA WE China % 5.2% 5.2% 2.0% Global NA WE China % 6.2% 3.7% -3.5% Global NA WE China % 20.2% -4.4% -2.6% Global NA WE China

13 (1) Fibria s estimates (2) Kerinci integration to P&W Rizhao conversion to DP and 20,000 tons of temporary downtime Jiangmen integration to P&W 13 SO WHAT CAN WE EXPECT IN 2017? ( 000 t) BHKP CAPACITY CHANGES FIBRIA EXPECTED SCENARIO FOR 2017 AT END OF 2016 FIBRIA EXPECTED SCENARIO FOR 2017, TODAY: Klabin APP OKI Fibria TLS II Metsa APRIL Kerinci APRIL Rizhao Taiwan P&P Resolute Calhoun ,000 Klabin APP OKI Fibria TLS II Metsa APRIL Kerinci APRIL Rizhao APRIL Jiangmen Taiwan P&P Resolute Calhoun , APRIL -1,080 (2) Navigator Cacia Unexpected Closures, Unexpected Closures, Conversions and Downtime CMPC Unexpected Closures, Conversions Unexpected and Downtime Closures, Net 800 Net -20 BEKP demand growth¹ 1,350 BEKP demand growth¹ 1,350 OKI s output in 2017 fully offset by APRIL s conversions/integrations

14 14 WE EXPECT A COMBINATION OF THE FOLLOWING FACTORS Not only, a good «BEKP Demand/Net Capacity increase» ratio: 1.75, which is well above the last 3 years But also, a more WIDESPREAD demand between the regions! USA: a recovery of the demand for Eucalyptus mainly triggered by a few local HW closures (temporarily or not) Europe: a recovery of the HW demand due to increasing competitiveness of the European papermakers Euro devaluation... US$/Euro parity!? US$ strengthening / loss of competitiveness of local pulp producers (integrated or not) China: an on-going increase of the demand for Eucalyptus Pulp New paper capacities: 2.3 million tons/y of which: Tissue = 600 kton/y UWF = 400 Kton/y On-going substitution of non wood fibers and old pulp mills

15 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Jan-14 Apr-14 Jun-14 Aug-14 Oct-14 Dec-14 Feb-15 Apr-15 Jun-15 Aug-15 Oct-15 Dec-15 Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 Apr-17 Jun-17 Aug-17 Global Market BEKP Demand Shipments of Hardwood and Eucalyptus Pulp 9M17 vs. 9M16 (1) BHKP downtimes ( 000 t) (3) 4% 775 kt Total 5% 9% kt 5% kt 397 0% 76 kt -2% -2% kt 0 kt North America -132 kt -82 kt BHKP Western Europe BEKP 12% China 7% 8% 324 kt Other 294 kt 4Q17 3Q17 2Q17 1Q Unescheduled Scheduled Total: mt CAGR BEKP (2) Hardwood inventories in days (1) 12% 2,073 kt Total 6% 109 kt North America 5% 351 kt Western Europe 29% 1,275 kt China 7% 338 kt Others Avg=40 43 (1) Source: PPPC W20 Sep/2017 (2) Source: PPPC Global 100 December/2016 (3) Source: ABTCP, RISI and Fibria 15

16 Source: Poyry 16 Technical Age and Scale in the Pulp Industry Further closures are expected due to lack of adequate investments in the industry Hardwood (BHKP) Producers Integrated and Market Pulp Mills PM Capacity, 1000 t/a Aracruz Weighted average technical age 12.3 years Três Lagoas STRONG Softwood (BSKP) Producers Integrated and Market Pulp Mills PM Capacity, 1000 t/a Weighted average technical age 21 years STRONG Weighted average capacity 1,350,000 t/a Jacareí Veracel 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 Market Pulp Capacity Worldwide (000 ton) ,260-1,180-1,085-1,410 (1) Source: Poyry, PPPC, RISI and Public information. Closures do not include temporary movements. (approx. 850 kt in 2017) Potential Additional Conversions (1) Closures/conversion/integration 2016: -25 kt Guangdong Dingfeng, -30 kt Verso Wickliffe, -200 kt APRIL Kenrinci, -80 kt Taiwan P&P, -110 kt Woodland, -20 kt BILT, -205 kt IP. (2) Closures/conversion/integration 2017 (-1,155 kt): -55 kt Taiwan P&P, -40 kt Resolute Calhoum, -250 kt APRIL RIZHAO, -390 kt APRIL Kenrinci, -420 kt APRIL Jiangmen (-255 kt): -60 kt Navigator, -125 kt Mondi, -70 kt APRIL RIZHAO. (2) 17

18 More Competitive Cash Cost with H2 BHKP (US$/t) BHKP capacity ( 000 t) 1,140 1,875 1,100 2,285 4,795 3,830 16,265 TOTAL: 31, US$75 Interest Capex Income tax SG&A USA China Canada Iberia Chile/Uruguay Indonesia Brazil Fibria 3Q17 LTM Fibria w/ H proforma Fibria w/ H2 Structural proforma Cash Production Cost (US$/t) Delivery CIF Europe WC benefit =($52/t) Assuming WC release = 0 Sources: Hawkins Wright (Production Costs September 2017) and Fibria s 3Q17 Earnings Release. FX considered at R$/US$ = 3.12 (also assumed by Hawkins Wright). Fibria with Horizonte 2 (H2) cash production cost was estimated according to weighted average cost, after mill balance, converted at R$/US$ = Includes energy sales. Pro-forma figures are in real terms (considering IPCA inflation up to 2018). 18

19 New Capacity Investment Pipeline No major new capacity announced after OKI and H2 projects ,5 Pulp prices - CIF Europe (US$/ton) (2) Valdivia APP Hainan Mucuri Veracel Nueva Aldea Santa Fé Fray Bentos Kerinci PL3 Rizhao Três Lagoas APP Guangxi Chenming Zhanjiang Eldorado Maranhão APP South Sumatra Montes (1) Guaíba II del Plata Oji Nantong Klabin Horizonte Metsa ,5 1 0,5 Capacity Additions ( 000 ton) (2) ,400 kt 5,250 kt BHKP BHKP adjusted by CPI (1) Partially integrated production. (2) Sources: Hawkins Wright, Poyry and Fibria Analysis. Pulp price estimates according to RISI (Oct/17)

20 Apr-00 Jul-00 Oct-00 Jan-01 Apr-01 Jul-01 Oct-01 Jan-02 Apr-02 Jul-02 Oct-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 Nov-11 Feb-12 May-12 Aug-12 Nov-12 Feb-13 May-13 Aug-13 Nov-13 Feb-14 May-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Source: Bloomberg Oct 24 st, 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 compared to hard commodities Market end users are linked to consumer goods, such as tissue Incipient pulp price futures market and low liquidity

21 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Lowest volatility among commodities¹ = January 1, Iron Ore Soy Bean Crude Oil Sugar BHKP - FOEX Europe Exchange Rate (R$/US$) 36% 34% 34% Historical Volatility of Commodities (US$) 2 Lower than FX 28% 26% 25% 24% 23% 17% 14% 6% WTI Crude Oil Sugar Nickel Iron Ore Copper Soy Ibovespa LME Metals Cattle FX BHKP Low volatility of hardwood pulp price, even though new capacities have come on stream during the period. (1) Bloomberg up to Oct 25 st, 2017 (2) Since January 1, 2009 up to Oct 25 th,

22 Financial and Operational Highlights 22

23 Each 5% depreciation of the Real increases EBITDA by around R$454m and FCF by R$540m (1) 2017 and 2018 according to Focus Report (Brazilian Central Bank Oct 20, 2017) (2) 2017 and 2018 according market consensus (3) Not considering the effect of Klabin sales 23 Exchange Rate Average¹ (R$/US$) Fibria net pulp price² (US$/t) Fibria net pulp price (R$/t) ,179 1,067 1,133 1,311 1, ,951 1,731 1, ,864 1,857 EBITDA Margin³ 29% % 1,488 34% 36% 1,173 1,153 40% 39% 1,295 1,185 53% 1,560 43% 42% 40% ,073 1,178 44% EBITDA (US$ million) Q17 LTM 2017² 2018²

24 24 Cash Production Cost (R$/t) 3Q17 3Q17 vs 3Q16 Ex-downtimes -2% 638 (14) (2) (38) Q16 Scheduled downtime 3T16 w/o downtimes Inflation Price effect over inflation (chemicals and energy) FX Energy sales Other 3Q17 Utilities result: 2Q16: R$ 4/t 1Q17: R$ 9/t 2Q17: R$ 27/t Cash Production Cost (R$/t) Cash production cost ex-downtimes (R$/t) % (34) 2 (19) 3-8% 610 3Q16 2Q17 3Q17 Downtimes impact Cash production cost ex-downtimes Avg distance (km): 2Q17 Wood Inflation/FX Energy sales Other 3Q

25 (1) Excludes Conpacel 25 Cash Production Cost in dollars Fibria s Cash Production Cost (1) (USD/ton) Consistently controlling the cash production cost But lately, it has been influenced by non-recurring effects: Average FX (BRL/USD) Q17 LTM Wood Energy price Input consumption

26 26 Net Results (US$ million) 3Q (149) 1,256 (538) (394) (156) 743 Adjusted EBITDA Δ FX debt Δ MtM hedge Net interest Deprec., amortiz. and depletion Income taxes Others Net income (1) Non-recurring effects (1) Includes other Exchange rate/monetary variations, other financial income/expense and other operating income/expenses.

27 Free Cash Flow (1) - 3Q17 and LTM (US$ million) 1,256 3Q17 (519) (209) 32 (9) Adjusted EBITDA Capex (ex-h2 e logistics projects) Net interest Working capital Income Taxes Other FCL 3,775 UDM 3Q17 (2,100) (706) 648 (43) 2 1,576 Adjusted EBITDA Capex (ex-h2 e logistics projects) Net interest Working capital(2) Income Taxes Other FCL (1) Not considering Horizonte 2 capex (3Q17: R$772 mn LTM: R$3,323 mn), pulp logistics projects (3Q17: R$14 mn) LTM: R$36 mn) and dividends (LTM: R$397 mn). (2) Mainly related to working capital release from Klabin s agreement 27

28 3Q17 Indebtedness Gross debt and cash position (million) Net debt (million) and leverage 18,788 19,051 H2 CRA Gross debt 5,679 6,014 H2 CRA H2 CRA H2 CRA Cash position 6,184 6,813 CRA 1,869 CRA 2,151 Net debt/ebitda (R$) Net debt/ebitda (US$) ,604 12,238 3,810 3,863 Jun/17 R$ US$ Sep/17 Jun/17 R$ US$ Sep/17 Jun/17 R$ US$ Sep/17 Interest expense/revenue (US$ million) and interest coverage Cost of debt in US$ (1) and debt maturity UDM Q Interest gross expense Interest on financial investments 4.6 Interest Cost coverage of debt (x) 4.6 (2) 3Q16 2Q17 3Q17 Average Cost of cost debt in US$ (% p.a.) Average maturity (in months) (1) (1) Considering the portion of debt in reais fully adjusted by the market swap curves at the end of each period (2) LTM 3.4 EBITDA/LTM net 3.3 interest (1) 28

29 Agribusiness Credit Receivable Certificates (CRAs) CRA accounted for 25% of the total debt The largest CRA issuer in Brazil (R$ 4,915 million; Av. cost 98%) %CDI 106% 104% 102% 100% Av. interest rate of financial investments (1) R$ 941 million 98% 96% 94% 92% R$ 675 million Tenor: 6 y Oct, 15 R$ 880 million Tenor: 7 y Jun, 16 R$ 470 million Tenor: 7 y Jun, 16 R$ 374 million Tenor: 7 y Aug, 16 R$ 326 million Tenor: 4 y Aug, 16 R$ 1,250 million Tenor: 7 y Dec, 16 R$ 757 million Tenor: 5 y Sep, 17 R$ 184 million Tenor: 6 y Sep, 17 90% 88% 86% 84% 82% R$ 675 million- (15/oct) R$ 880 million- 1 tranche (16/jun) R$ 470 million- 2 tranche (16/jun) R$ 374 million- 1 tranche (16/aug) R$ 326 million - 2 tranche (16/aug) R$ 1,250 million- (16/dec) (1) Refer to note 7 cash and cash equivalents in 3Q17 Financial Statements 29

30 Robust Liquidity USD million 30, 2017) Liquidity (1) and debt amortization schedule (US$ million) Revolver 2, Pre-payment BNDES NCE Bonds Finnvera CRA and other Cash on hand (1) 2, Liquidity H2 Capex (2) : (1) Not including US$101 million related to MtM of hedging transactions. (2) Financial execution of US$1,688 million (cash) capex up to Sep/2017. FX (R$/US$) Funding Horizonte 2 (US$ billion) 3Q Q Q Q M excess cash Horizonte 2 Project US$2.2 bi Pre-payment CRA BNDES FDCO ECA Working capital (4) Total Funds withdrawn until Sep. 30, Contracted funds to be withdrawn (3) Capex to be executed (cash) related to Horizonte 2 project. (4) Related to the agreement with Klabin 30

31 WAIVER ON 4.5X COVENANT WAS EARLY NEGOTIATED Horizonte 2 start-up in 3Q17 boosts EBITDA and FCF generation (1) As stated on the Liquidity and Indebtedness Policy and Shareholders Agreement 31 Initiatives for Leveraging Management Net debt / Ebitda (USD) H2 Start-up US$854 MM initiatives mapped US$220 MM implemented during the expansion cycle. Working capital release Actual (in US$) Covenant level ,24 Waiver x Indebtness limits (1) 2.0x 2.5x 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q Leverage guidelines Range of 2.0x to 2.5x net debt/ebitda Maximum 3.5x net debt/ebitda during expansion cycles Highlights Covenants only triggered if Fibria loses the Investment Grade by 2 of the 3 rating agencies During the most critical periods of expansion, 4.5x covenant was waived

32 (1) Fibria s historical data in BRL. The period in bold represents companies expansion capex execution. 32 Net Debt/EBITDA (R$) (1) 8.1 Dividends paid during expansion projects: Fibria R$ 2,840 MM Suzano R$ 222 MM Puma 6.3 Klabin R$ 741 MM Maranhão Horizonte Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Fibria Suzano Klabin Eldorado Lowest leverage peak during the largest expansion project in LatAm with the lowest cash production cost and lowest cost of funding

33 (1) G-spread on Oct 20 st, One of the best performances among Brazilian corporate issuers (1) Historical G-spread (bps) Rating Outlook BBB- Negative BBB- Stable Fibria % Fibria % Fibria % Fibria % Issuance with maturity in 2024 Issuance with maturity in

34 ROE and ROIC (R$) ROE = Adjusted EBIT (1) / Equity before IAS 41 (2) and ROIC = Adjusted EBIT (3) / Invested Capital before IAS 41 (2) ROE ROIC 30.5% 25.1% 22.7% 3.4% 4.7% 5.7% 6.1% 6.2% 5.6% 15.6% 9.8% 6.9% 7.5% 6.3% 11.0% 13.2% Average FX (R$/US$) Q17 LTM Fibria after H (pro-forma) (6) Fibria after H2 Structural (proforma) (6) 3.38 (4) 3.38 (4) Average Net Pulp Price (US$) (5) 541 (5) (1) Adjusted EBITDA CAPEX Net Interest Taxes (2) International accounting standards for biological assets. (3) Adjusted EBITDA CAPEX Taxes (4) FX for H2 cash cost and sustaining capex (5) Actual Fibria s net realized pulp price average last 3 years (6) Considers the cost structure presented on slide 36 and balance sheet 2Q17 (invested capital and equity) 34

35 2017 OUTLOOK CAPEX AND CASH COST 35

36 Fibria CAPEX 2017 BRL million 3, ,213 2, Industry Forestry 415 1, CAPEX Maintenance Logistics Projects Modernization H2 (2) Others 2017 CAPEX Total Guidance USD 620 mn (1) USD1,609 mn (1) (1) Converted at 2017 average FX - BRL/USD 3.24, according to Focus Report (Brazilian Central Bank Jun 16th, 2017) (2) Includes R&D, IT, Health Safety and Environmental expenses 36

37 Structural CAPEX BRL million 2,055 2,068 1,662 USD 632 M (1) USD 608 M (1) USD 489 M (1) 2017 (2) Guidance Modernization Non-recurring wood purchase Forestry equipments Non-recurring projects Turbogenerator overhaul Structural capex H2 sustaining capex Structural capex with H2 (1) Converted at 2017 average FX - BRL/USD According to Focus Report (Brazilian Central Bank Jun 16th, 2016) (2) November/2016 estimate. Includes modernization expenses 37

38 Cash Cost BRL/USD (26) (19) (2) (1) (3) 155 LTM 3Q16 Horizonte 2 Project Wood cost reduction Bleaching line B Maritime wood shipping project Others 2021 FX Sensitivity FX Cash cost (US$/t)

39 Expansion Project Horizonte 2 39

40 40 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

41 HORIZONTE 2 PROJECT Site Overview Start-up brought forward: about 2 months ahead of schedule Expansion Capex of US$2,193 million (US$1,124/t) Inside the fence (1) Capex of US$ 947/t Energy Surplus 130 MWh Cash production cost US$116/t (@R$/US$3.38) (1) Industrial capex

42 6,677 Nominal Capacity ( 000 t) 7,955 8,050 8,150 8,150 8, ,755 1,850 1,950 1,950 1, ,300 5,300 5,300 5,300 5,300 5, ESTIMATED MARKET BHKP CAPACITY RANKING 2017 (000T) Fibria 8,150 APP Suzano April CMPC UPM Eldorado Arauco Stora Enso Cenibra Ence Altri Mondi Marubeni Ilim Nippon Oji Metsä Navigator Woodland Georgia Pacific Verso Resolute Lwarcel International Paper Klabin Soedra Domtar Klabin's Puma Project ('000 t)(1)¹ Horizonte 2 ('000 t)¹ Current Production ('000 t) Current Capacity New Capacity New Capacity Klabin Agreement New Capacity Horizonte II Project Source: RISI, Hawkins Wright, PPPC and Fibria (Nov 2016) (1) The volumes in 2017 and 2018 will depend on the learning curve of the plants. The agreement with Klabin may be renewed by mutual consent. 42

43 Pulp sales destination: Fibria growing where the market grows 34% 33% 18% 20% 40% 37% 8% 10% Current net revenue distribution (1) Total sales volume distribution after H2 start up (2) (1) Considers 3Q17 last twelve months. (2) Includes Klabin s sales volume 43

44 Horizonte 2 Forestry Base Forestry base secured as planned TOTAL TRÊS LAGOAS UNIT FOREST BASE: 308,000 ha HORIZONTE 1 FOREST BASE: 121,000 ha HORIZONTE 2 FOREST BASE: 187,000 ha ALREADY PLANTED (87%): 162,000 ha Average distance from forest to mill H1 + H2 up to 100 km 44

45 Logistics Integrated logistics - outbound and shipping 45 Mato Grosso Goiás Brasília Mato Grosso do Sul Railway export corridor with high reliability and capacity Less transit time from mill to the Port of Santos Higher productivity per train With T32, Fibria becomes the pulp player with the highest storage capacity in Port of Santos Port Terminal 32

46 Logistics The most advanced rolling stock on the most efficient railway 46

47 HORIZONTE 2 CAPEX Disbursement flexibility and reduction from 2015 (1) As of September , (478) (453) (184) 56 6, ,345 5,536 Executed 1,809 To be disbursed Initial budget (May 2015) Capacity increase Contingencies Savings Indirect costs Change of scope Updated (in real terms) Payment negotiation Inflation FX August 2017 Budget US$2.8 bn US$2.2 bn R$/US$=2.80 R$/US$=3.35 Cash Capex (R$ million) (1) To be disbursed Executed Breakdown by currency , % 4% Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 75% US$ million BRL EUR USD

48 Horizonte 2 project assumptions Unit R$ US$ Avg previous projects (7) Expansion capex (1) $ billion Expansion capex (1) $/t 3,767 1,124 Inside the fence capex $/t 3, Sustaining capex (2) $/t Cash production cost (3) $/t All in cash cost (estimated) (4)(6) $/t Pulp price (5) $/t Free cash flow (estimated) (6) $/t Payback period (estimated) years (1) Includes chemical leasing 3.35). Previous peers projects multiplied by 1,950,000 tons to make the information comparable. (2) Estimated sustaining capex in after mill balance 3.38). (3) Estimated weighted average cost, after mill balance. Includes energy sales 3.38). Figures are in real terms (considering inflation up to 2018). (4) Cash cost + freight + SG&A + Sustaining Capex + Interest + taxes 3.38) Assuming working capital = 0. (5) Actual Fibria s net realized pulp price average last 3 years. (6) Note: All in cash cost and free cash flow figures assumes working capital = 0, delivered to Europe and is based on the estimations already presented in Fibria s previous public materials. (7) According to RISI, considering the average of the BHKP projects since 2009 in Latam the average excludes H2 figures. 48

49 Pulp price (US$/t) Free cash flow H2 Project (US$/t) FCF/t from net pulp price (US$/t) (1) FCF/t (2) sensibility to net pulp price and FX FCF (US$/t) Last 3 yrs Fibria's pulp price Cash cost Freight delivery to Europe and SG&A EBITDA Sustaining capex Interest Income tax Perpetuity after tax FCF shield 400 1,50 2,50 3,50 4,50 5,50 FX (R$/US$) (1) 3.38 and assuming working capital = 0. (2) Size of the bubble = FCL/t in US$ 49

50 H2 cash production cost decrease Accumulated benefit per year (US$/t) Why so low? 90% 100% US$116/t cash cost (1) Wood competitiveness (distance forest-mill): Current Fibria: 328 km Structural Fibria: ~166 km H1+H2: up to 100 km Energy surplus: Current Fibria: ~70 MW Structural Fibria: 200 MW H2: 130 MW Synergies with Line 1 fixed cost dilution Automated nursery 12% High technology and scale (1)

51 51 Final Remarks Economies of scale Synergies with current operations Wood availability and low distance from forest to mill Fibria s total energy surplus to be increased by 130 MWh Cash cost competitiveness Meet customers demand growth Attractive returns even in adverse scenarios of pulp price and BRL Solid financial profile

52 Prod Real/Nominal A winning strategy So far, better than expected 1º 2º 3º 4º 5º 6º 7º 8º 9º 10º 11º 12º 13º 14º 15º 16º 17º 18º 19º 20º 21º 22º 23º 24º 25º 26º 27º 28º 29º 30º 31º 32º 33º 34º 35º 36º 37º 38º 39º 52 Production (tons) Real Schedule (status: 09/30/2017) 124 th tons 81 th tons +53 % Digester feeding Actual 1858 Expected Aug. 23 Learning Curve (30 days) Sep. 30 0% 0% 0% 25% 22% 14% 5% 30% 20%42% 42% 30% 63% 73% 64% 59% 57% 62% 36% 58% 67% 59% 54% 83% 85% 84% 72% 72% Start-up H1-03/30/09 H2-08/23/17 24% 47% 1º 2º 3º 4º 5º 6º 7º 8º 9º 10º 11º 12º 13º 14º 15º 16º 17º 18º 19º 20º 21º 22º 23º 24º 25º 26º 27º 28º 29º 30º

53 BACK UP 53

54 51 Forestry operations productivity Transportation Maritime Wood Shipping Project PROJECT DESCRIPTION (ARACRUZ UNIT) Capex and Opex reduction; Increase in cargo handling due to increase in stack height volume Reduction in heavy truck road traffic Capex: R$ 54 million (accomplished in 2016) Start-up: Sep/2017 Saving OPEX: R$ 24 million/year

55 Third-party wood ¹ (%) Third-party wood reduction Non-recurring impacts starting to decrease % Planting 34% 63% 73% 67% 68% 75% 72% 84% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Average distance from forest to mill Third-party wood Average distance from forest to mill ¹ (km) Third party wood increase from previous forecast due to recent rain shortage at Aracruz Unit forest base and optimization of Três Lagoas forest base The average distance will drop sharply generating an Opex reduction NPV from peak to normalized level (2) : CAPEX: BRL1.5 billion (USD 0.5 billion) OPEX: BRL 1.0 billion (USD 0.3 billion) (1) Does not include Veracel but considers H2 Project forest base (2) BRL/USD3.30. Total NPV: BRL2.5 Bn or USD0.8 Bn 52

56 Third-party wood reduction 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 53

57 54 Industrial: maintenance downtimes schedule change Mills Aracruz A Aracruz B 1Q16 2Q16 3Q17 4Q17 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 No maintenance downtime No maintenance downtime Aracruz C Jacareí No maintenance downtime Três Lagoas 1 No maintenance downtime Três Lagoas 2 Veracel No maintenance downtime 12 months 15 months 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

58 Source: RISI conference, August Global Market Pulp Demand Hardwood demand will continue to increase at a faster pace than Softwood Hardwood (BHKP) vs. Softwood (BSKP) (000 ton) CAGR: Hardwood: +3.04% Softwood: +1.24% Demand growth rate 000 ton Growth Growth Hardwood % 42% Eucalyptus % 58% Softwood % 16% Source: PPPC report (May 2017) Hardwood Softwood Market Pulp % 30% Source: PPPC reports. Excludes Sulphite and UKP market pulp (Nov./16) Paper Production Runnability with BHKP

59 Benefiting From China s Growth ( 000s t) 6,773 6,019 BHKP Total China s Hardwood Imports of BHKP by Country (1) 3,787 3,319 Latin America (1) 7M16 1,480 1,145 1,304 7M17 1, Latin America is the leading exporter of BHKP to China, accounting to approximately 56% of China's total imports in 7M 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) Annual Growth Rate +3.7% N.America W.Europe E.Europe Japan China Asia FE Middle East LatAm Africa Oceania 30% 25% 20% 15% 10% 5% 0% 10% 10% 12% 14% China's Share of Market Pulp (2) 21% 17% 22% 23% 23% 24% 25% (million t) 16 26% 14 Eucalyptus Hardwood Total % Compared to the global Market Pulp (1) PPPC Pulp China Flash Report Jul/2017 (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) 24,9 15,9 15,3 N. West America Europe 11,2 Japan Oceania 6,0 6,2 5,6 East Europe 0,6 LatAm China Africa 59

60 Growth rate Chinese GDP vs. Eucalyptus Shipments to China (Sept-09 = base 100) China GDP Eucalyptus Shipments Source: Bloomberg and PPPC W20 report (Aug/2017) 60

61 E 2018E 2019E 2020E E 2018E 2019E 2020E Global Paper Consumption CAGR Developed Markets: - 2.1% Emerging Markets : + 5.6% CAGR Developed Markets: - 3.1% Emerging Markets : + 0.9% 103, , ,758 99,977 P&W Consumption (000 tons) (1) Developed Markets CAGR Developed Markets: + 1.5% Emerging Markets : + 6.6% Emerging Markets CAGR Developed Markets: + 1.4% Emerging Markets : + 5.9% 41,712 30,357 20,979 Tissue Consumption (000 tons) (1) Developed Markets Emerging Markets Source: RISI 61

62 mai-10 jun-10 jul-10 ago-10 set-10 out-10 nov-10 dez-10 jan-11 fev-11 mar-11 mai-11 jun-11 jul-11 ago-11 set-11 out-11 nov-11 dez-11 jan-12 fev-12 mar-12 abr-12 jun-12 jul-12 ago-12 set-12 out-12 nov-12 dez-12 jan-13 fev-13 mar-13 abr-13 mai-13 jul-13 ago-13 set-13 out-13 nov-13 dez-13 jan-14 fev-14 mar-14 abr-14 mai-14 jun-14 ago-14 set-14 out-14 nov-14 dez-14 jan-15 fev-15 mar-15 abr-15 mai-15 jun-15 jul-15 set-15 out-15 nov-15 dez-15 jan-16 fev-16 mar-16 abr-16 mai-16 jun-16 jul-16 ago-16 out-16 nov-16 dez-16 jan-17 fev-17 mar-17 abr-17 mai-17 jun-17 jul-17 ago-17 set-17 BHKP prices - CIF China (US$/ton) Shipments (000 ton) Benefiting From China s Growth Source: PPPC Global 100 August 2017 ( 000s t) China: Eucalyptus pulp shipments 900 BHKP Price Shipments average: 250 ktons 2011 Average 379 ktons 2012 Average 370 ktons 2013 Average 439 ktons 2014 Average 504 ktons 2015 Average 531 ktons 2016 Average 612 ktons 2017 Average 689 ktons 62

63 Source: Pöyry. USD/Adt, 2013 cost level 63 Global BHKP Market Pulp Supply Cost Curve COST CURVE EVOLUTION Cost position of marginal producer Cumulative Capacity Million t/a

64 Tightening plantation wood and chip supply could add to the cash cost of Asian pulp mills Source: Pöyry. USD/Adt, 2013 cost level 64 Cumulative Capacity Million t/a

65 Growth in Asia is empowered by urbanization and increasing disposable income Source: Pöyry. 65

66 Source: Pöyry. 66 The share of non-wood pulp will decline

67 Current Zero Cost Collars ZCC ¹ Q2017 1Q2018 2Q2018 3Q2018 4Q2018 Strike Put Strike Call FWD Nocional Strike Put Strike Call FWD 4Q2017 US$ 360 MM Q2018 US$ 502 MM Q2018 US$ 544 MM Q2018 US$ 460 MM Q2018 US$ 415 MM Total US$ 2,281 MM (1) As of Oct 24,

68 68 Hedge Hedging Strategy Governance Debt Hedge: Maturity aligned with original debt (until 2023) No margin call No threshold Swap operations (currency and rate) Operating Hedge: Net FX exposure protection in US$ up to Dec/18 No leverage No margin call No threshold Current strategy: 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 cash flow is defined according to the FX risk management policy. Governance, Risk and Compliance (GRC) Department: Independent report to CEO and to the Statutory Auditing Committee Responsible for monitoring policies compliance Independent from Treasury Department Zero Cost Collar (protecting a minimum EBITDA margin) All Fibria operations are registered at CETIP

69 69 Initiatives for Leverage Management Initiatives expected to be implemented in the short term Initiatives under analysis Amount (USD million) Net Debt/EBITDA reduction (x) Amount (USD million) Net Debt/EBITDA reduction (x) Working Capital Release x Accounts receivable (customers) x Accounts payable (suppliers) x Capex x Accounts payable (suppliers) x Others x Total x Forestry x Capex H x Total x Total: USD 721 million (0.68x)

70 EVOLUTION OF CURRENCIES FX devaluation is expected 110% 105% 100% 95% 90% set-16 Sep/16 Dec/16 dez-16 mar-17 Mar/17 Jun/17 jun-17 Sep/17 set-17 Dec/17 dez-17 mar-18 Mar/18 jun-18 Jun/18 set-18 Sep/18 Real Euro CAD Peso Chilean Chileno peso RMB Rupia Peso Uruguayan Uruguaio peso Bloomberg Forecast ** Bloomberg Forecast (Sep 5, 2017) 70 70

71 Free cash flow (1) Positive quarterly FCF in the last 5 years, even during appreciated FX USD million Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 EBITDA Margin 37% 37% 41% 39% 39% 41% 42% 41% 35% 35% 45% 50% 50% 56% 54% 52% 43% 43% 36% 37% 45% 49% Average FX (1) Excluding H2 Project, dividends, pulp logistics and land purchase effects. 71

72 (1) Considering FX (2) Considering average FX for the period 72 Fibria s tax structure Description and Amount¹ Maturity (a) Operating income As stated in the income statement (-)(b) Goodwill (Aracruz acquisition) - Annual tax deduction: US$ 28 million (tax) - Remaining Balance Sep/17: US$ billion (base) 2018 (-)(c) Forestry Capex in MS state (net) (+/-)(d) Exchange variation (cash) 2017 tax deduction related to depletion: US$ 27.9 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 Sep/17: US$ 769 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 Cash Tax Balance Sep/2017: - PIS/COFINS: US$ 236 million - Withholding tax (IR and CSLL): US$ 391 million - Reintegra: US$ 52 million Income Tax (h) tax credits (i) Undefined TAX PAYMENT 2 (cash basis) Q17 US$ 9 million US$ 2 million US$ 8 million US$ 14 million US$ 12 million US$ 23 million US$ 36 million US$ 8 million

73 73 Dividends 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 April 28, 2017 May 18, 2017 Mid-November, 2017 Mid-December, 2017 GSM to approved dividend distribution (approved R$393 million) Dividend payment of R$ 393 million Extraordinary dividend appraisal Extraordinary dividend payment (if approved)