Corporate Presentation November, 2016

Transcription

1 Corporate Presentation November, 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 Shareholder Structure and Corporate Governance Votorantim S.A. (1) 29.42% BNDES Participações (1) 29.08% Free Float (2) 41.50% Fiscal Council General Meeting Board of Directors 20% independent members Role of CEO and chairman is split Finance Committee Statutory Audit Committee Personnel and Remuneratio n 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 NEW (1) Controlling group (2) Free Float 41.44% + Treasury 0.06% 5

6 A Winning Player Superior Asset Combination Main Figures 3Q16 LTM Pulp capacity (1) million tons Net revenues US$ billion Total Forest Base (2) thousand hectares 969 Belmonte Veracel Caravelas Portocel Aracruz Planted area (2) thousand hectares 568 Net Debt US$ billion Net Debt/EBITDA (in Dollars) (3) X 2.64 Três Lagoas Unit and Horizonte 2 Project Jacareí Santos Port Terminal Pulp Unit Source: Fibria (1) Volume does not include Horizonte 2 project 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 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 7

8 8 Fibria s Commercial Strategy Sales Mix by Region and by End Use - Fibria Highlights Region 9M16 Europe 39% N. America 20% LatAm 11% Asia 30% Net Revenues by Region - Fibria 24% 25% 24% 28% 24% 24% End Use - 9M16 Tissue 52% Printing & Writing Specialties 19% 9% 10% 9% 11% 29% 30% 20% 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 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% 39% M16 Europe North America Asia LatAm

9 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

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) 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

11 Pulp and Paper Market 11

12 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

13 13 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)

14 Better worldwide macroeconomics are the key drivers But the special focus is on Europe 14 Real GDP % Annual Growth ,3-0.8 World Euro Area USA China Source: International Monetary Fund, World Economic Outlook Database, July 2016

15 15 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

16 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 Jul-16 Sep-16 Global Market BEKP Demand Shipments of Eucalyptus Pulp 105% 100% 95% 90% 85% 80% 75% 70% Operating Rate (shipments to capacity) - Hardwood (1) 97% Min. = 78% 3% 676 kt 6% 1,004 kt 9M16 vs. 9M15 (1) -5% 1% -2% -3% Total North America Western Europe 11% 788 kt China 20% 966 kt 3% 4% Others (1) Source: PPPC Global 100 September/2016 (1) Source: PPPC Global September/2016 BHKP BEKP 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 16

17 17 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 600 Altri Celbi 30 Altri Celbi 30 Old Town (Expera) -40 APP South Sumatra 0 Woodland Verso Wickliffe APRIL Kerinci Possible closures* to -800 Woodland APRIL Kerinci Unexpected Downtime Net 385 to 785 Net 1,090 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!

18 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 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 Veracel Weighted average capacity 1,350,000 t/a Jacareí 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. Source: Poyry 18

19 Capacity closures DO happen Closures of Hardwood Market Pulp Capacity Worldwide (000 ton) ,260-1,180-1,085 Potential Additional Conversions (1) Source: PPPC. RISI and Public information as of November, 1 st (1) Realized closures: as of September : -90kt Woodland (USA), -100kt April Kerinci (Indonesia) 2017: Resolute Calhoun: -40kt, -400kt April Kerinci (Indonesia), -80kt Taiwan P&P 2017/2018: -275kt Arauco Valdivia (Chile) Closures do not include temporary movements. Unexpected downtimes this year totaled 130kt (not included in the chart above). 19

20 Competitive Cash Production Cost BHKP (US$/t) BHKP capacity (000 t) 1,130 1,105 2,075 2,290 4,915 3,420 15,275 Total: 30,210 BHKP (US$/t) WC=($31/t) Interest Capex Income tax SG&A USA China Canada Iberia Indonesia Chile/Uruguay Brazil Fibria 9M16 Estimated Fibria w/ H Cash Cost (US$/t) Delivery CIF Europe Source: Hawkins Wright (Price Forecast August 2016) and Fibria s 3Q16 Earnings Release -FX considered by the consultant at R$/US$ = Fibria with Horizonte 2 (H2) cash cost was estimated according to weighted average cost, after mill balance, converted at R$/US$=3.19. Includes energy sales. Income tax figure in 2021 considers the current 9M16 tax payment (Tax Shield). 20

21 Gross capacity addition should not be counted as the only factor influencing pulp price volatility. (1) Pulp prices - CIF Europe (US$/ton) Capacity Additions (000 ton) th : US$155/t (3) 2, Rizhao Horizonte Valdivia APP Fray Hainan Bentos Mucuri Veracel Nueva Aldea Santa Fé Kerinci PL3 Três Lagoas APP Guangxi Chenming Zhanjiang Eldorado Maranhão Montes Guaíba II del Plata Oji Nantong Klabin APP South Sumatra (2) 1,5 1 0, BHKP BSKP (1) Source: Hawkins Wright, Poyry and Fibria Analysis. Pulp price estimates according to Hawkins Wright (Apr/16), Brian McClay (Jun/16) and RISI (Apr/16) (2) Partially integrated production. (3) Source: Bloomberg

22 Dec-99 Apr-00 Aug-00 Dec-00 Apr-01 Aug-01 Dec-01 Apr-02 Aug-02 Nov-02 Mar-03 Jul-03 Nov-03 Mar-04 Jul-04 Nov-04 Mar-05 Jul-05 Nov-05 Mar-06 Jul-06 Nov-06 Mar-07 Jul-07 Nov-07 Mar-08 Jun-08 Oct-08 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-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 November 15 th, 2016

23 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 Lowest volatility among commodities = January 1, Iron Ore Soy Bean Crude Oil Sugar BHKP - FOEX Europe Exchange Rate (R$/US$) 37% 35% 34% Historical Volatility of Commodities (US$) 2 Lower than FX 27% 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. Source: Bloomberg November 18 th, Since January 1, 2009 up to November 18 th,

24 Financial and Operational Highlights 24

25 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$/t) 912 1,179 1,067 1,133 1,311 1,344 1,951 1,911 1,742 EBITDA Margin 29% 40% 1,488 34% 36% 1,173 1,153 40% 39% 1,295 1,185 53% 1,560 48% 1, EBITDA (US$ million) Q16 LTM 2016 (e) (1) According to Focus Report (Brazilian Central Bank November 11 th, 2016) I (2) 2016 market consensus 25

26 26 Cash Production Cost (R$/t) 3Q16-4% Ex-downtime 624 3Q15 2Q16 3Q16 Operational stability Wood FX Cash Production Cost (R$/t) 3Q16 LTM X (55) ( 10 ) ( 7 ) 6 4 3Q15 Maintenance downtimes Wood Utilities Chemicals and energy FX Materials and Services Others 3Q16-3.2%

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 Net Results (US$ million) 9M (85) 827 (395) deferred 493 current (394) 494 (144) Adjusted EBITDA FX Debt MtM hedge Net Interest Deprec., amortiz. and depletion Taxes Others (1) Net Income Non-recurring effects (1) Includes other Exchange rate/monetary variations, other financial income/expenses and other operating income/expenses. 28

29 29 Free Cash Flow 3Q16 (1) (US$ million) 234 Klabin Effect ( 21 ) ( 0 ) 124 Adjusted EBITDA ( 172 ) Capex (ex-h2 project and pulp logistics) ( 18 ) 101 (2) Net interest Working capital Income tax Others FCF (1) Does not consider Horizonte 2 Project and pulp logistics projects. (2) Includes other financial results.

30 30 ROE and ROIC (R$) ROE = Adjusted EBIT (1) / Equity before IAS 41 (2) ROIC = Adjusted EBIT (3) / Invested Capital before IAS 41 (2) 25.1% 22.8% 16.1% 15.6% 3.4% 5.7% 6.2% 6.9% 9.2% 8.0% Q16 UDM T16 UDM Average FX (R$/US$) Average Net Pulp Price (US$) Average FX (R$/US$) Average Net Pulp Price (US$) (1) Adjusted EBITDA CAPEX Net Interest Taxes (2) International accounting standards for biological assets. (3) Adjusted EBITDA CAPEX Taxes

31 Indebtdeness Gross Debt and Cash Position (R$ million) 12,526 12,705 14, ,983 3,572 Sep/15 Jun/16 Sep/16 Gross debt Cash Net Debt (Million) and Leverage Net Debt/EBITDA (R$) Net Debt/EBITDA (US$) ,578 9,722 10,620 2,411 3,029 3,272 Sep/15 Jun/16 Sep/16 R$ US$ Interest Expense/Income (US$ million) and Cost of Debt in US$ (1) Q16 LTM 4.6 Cost Averageof cost debt in US$ (% p.a.) Interest Expense (Gross) (1) Considering the portion 3.4 of debt in 3.3 reais (1) fully adjusted by the market swap curves at the end of each period. Interest on Financial Investments 31

32 Liquidity Liquidity (1) and Debt Amortization Schedule (US$ billion) Revolver Cash (1) Pre-Payment ECN Voto IV Finnvera BNDES ACC/ACE Bonds CRA & Other Liquidity Capex H2 (2) : (1) Not including US$1 million related to MtM of hedging transactions. (2) Financial execution of US$857 million capex until September 30th, Considering FX R$/US$ = Horizonte 2 Funding (US$ billion) 3Q Q ,2-4Q16 0,5-2Q ,2 4Q ,2-4Q16 0,1-1Q17 0, Horizonte 2 Project US$ 2.3 bi Excess of US$ 0.1 bi Export Pre-Payment CRA BNDES (4) FDCO ECA Working capital Funds withdrawn until September 30th, Contracted funds to be withdraw. release Klabin Total (3) H2 Capex to be executed as of 3Q2016 (4) R$ 423 million disbursed in Oct 18th

33 Capital Structure: Fibria has achieved the lowest leverage ratio among its Latin American peers Net Debt/EBITDA (x) (1) Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Fibria Suzano Klabin CMPC Arauco Eldorado Fibria Arauco CMPC Klabin Suzano S&P BBB-/Negative BBB-/Stable BBB-/Stable BB+/Stable BB+/Stable Moody s Ba1/Negative Baa3/Stable Baa3/Stable - Ba2/Stable Fitch BBB-/Stable BBB/Stable BBB+/Stable BBB-/Negative BB+/Positive (1) Fibria s historical data in BRL. 33

34 (1) G-spread on November 17 th, One of the best performances among Brazilian corporate issuers (1) Historical G-spread (bps) Rating BBB- BBB- Outlook Negative Stable Fibria % Fibria % Fibria % 1, BRAZIL BRFOODS GLOPAR EMBRAER VALE FIBRIA KLABIN BRASKEM SUZANO GERDAU PETROBRAS ELDORADO

35 CAPEX

36 2016 Capex Reduction 2016 Total Capex (R$ billion) 8.2 R$2.0 billion reduction Pulp 0.7 Logistics 6.2 (0.6) 0.1 Horizonte (1.4) 4.0 Maintenance and others Reported on Jan. 31, 2016 Current 71% of capex reduction on pulp logistics projects 26% of capex reduction on Horizonte 2 project 36

37 37 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

38 BACK UP 38

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 41 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 130 MWh Start-up: 4Q2017 Capacity: 1.95 million tons Fibria 8,150 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)

42 42 Pulp sales destination: Fibria growing where the market grows 37% 40% 19% 23% 36% 27% 8% 10% Total sales volume distribution after H2 start up (2) Current net revenue distribution (1) (1) Considers 3Q16 last twelve months. (2) Includes Klabin s sales volume

43 43 Fibria s production volumes Current Production ('000 t) Klabin's Puma Project('000 t)(1) Horizonte 2 ('000 t)(1) 7,940 8,050 8,150 8,150 8, ,740 1,850 1,950 1,950 1,950 5,188 5,231 5,184 5,299 5,259 5,274 5, ,300 5,300 5,300 5,300 5, (1) The volumes in 2016, 2017 and 2018 will depend on the learning curve of the plants. The agreement with Klabin may be renewed by mutual consent.

44 Horizonte 2 project site overview Production capacity increase to 1.95 million t/year Startup in the beginning of 4Q 2017 Ahead of schedule and below budget 60% physically complete Startup Capex (R$ billion) (1) Acc. execution upto 9M16 To be executed until 2018 Total % financial execution (1) Capex disbursement (cash). 44

45 45 Forestry Base Forestry base required: H1: 120,000 ha H2: 187,000 ha Total: 307,000 ha Average distance from forest to mill H1 + H2 -> up to 100 km (1st cycle) 2nd cycle average distance should decrease due to less need for 3rd party wood

46 46 Logistics Mato Grosso Mato Grosso do Sul Goiás Brasilia Port Terminal 32

47 Capex Flexibility in the Timetable, without changing the startup date 47 Total Capex (R$ billion) R$ 1.2 billion Capex timetable (R$ billion) % % 3.1 3% 0.2 3% 0.2 Previous forecast Current forecast US$ 2.4 bi (1) US$ 2.3 bi (1) (1) FX = 3.56 R$/US$ on previous forecast. FX = 3.33 R$/US$ on current forecast.

48 Funding Cost and maturity 3Q16 H2 2Q16 + H2 Average Cost (US$ p.a) (1) 3.3% 2.6% 3.1% Average Maturity (years) Amortization Schedule (2) 3Q16 Proforma with TLS II US$ million Pre-Payment BNDES ECN Voto IV Bonds Finnvera CRA & Other (1) Considering swap curves. (2) FX considering new funding for the TLS II Project:

49 Horizonte 2 project assumptions UNIT R$ US$ Pulp production/year k tons 1,950 1,950 Expansion capex (1) $ billion Expansion capex (1) $/t 3,854 1,159 Sustaining capex (2) $/t Cash production cost (3) $/t Energy surplus MWh Project approval FX R$/US$ All in cash cost (estimated range) (4) $/t Net 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 1,950 kt/year (FX@3.30). (2) Estimated sustaining capex in perpetuity 3.30). (3) Estimated weighted average cost, after mill balance. Includes energy sales (4) Cash cost + freight + SG&A + Sustaining Capex + Interest + taxes 3.30) (5) 2016 market consensus. 49

50 50 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

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 3,00 2, , , , ,00 0, ,00 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 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$0.7 billion 2. Forestry operations productivity NPV: US$0.6 billion 3. Industrial NPV: US$0.1 billion Total : US$1.4 billion

60 Third-party wood (%) Third-party wood reduction % Planting 34% 63% 73% 67% 68% 75% 67% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% CHALLENGES 788 BENEFITS Average distance from forest to mill (km) Average distance from forest to mill Third-party wood 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: R$1.3 billion (USD 0.4 million) OPEX: R$0.9 billion (USD 0.3 million) Total NPV: R$2.2 Bi or USD 0.7 Bi (1) Does not include Veracel but considers H2 Project forest base (2) R$/USD

61 63 1. 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

62 64 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 65 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 66 2. Forestry operations productivity Cost and Capex KPIs were also included in this geo-model Silviculture Harvest Roads Transportation

65 67 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 68 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 69 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 70 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 71 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 72 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 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

72 Benefiting From China s Growth China s Hardwood Imports of BHKP by Country (1) ( 000s t) BHKP Total Latin America (1) 9M15 9M Latin America is the leading exporter of BHKP to China, accounting to approximately 55% of China's total imports in 9M 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% (kg/person/year) N.America W.Europe E.Europe Japan China Asia FE Middle East LatAm Africa Oceania 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 September 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 11 Japan Oceania 6 6 East Europe 5 LatAm China Africa 1 72

73 73 Growth rate Chinese GDP vs. Eucalyptus Shipments to China (Sept-09 = base 100) China GDP Eucalyptus Shipments Source: Bloomberg and PPPC W20 report.

74 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/

75 E 2016E 2017E 2018E 2019E 2020E E 2016E 2017E 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 75

76 76 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

77 mai-10 jun-10 jul-10 ago-10 set-10 out-10 out-10 nov-10 dez-10 jan-11 fev-11 mar-11 abr-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 mai-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 jun-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 jul-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 ago-15 set-15 out-15 nov-15 dez-15 jan-16 fev-16 mar-16 abr-16 mai-16 jun-16 jul-16 jul-16 ago-16 set-16 out-16 BHKP prices - CIF China (US$/ton) Shipments (000 ton) Benefiting From China s Growth Source: PPPC Global 100 ( 000s t) China: Eucalyptus pulp shipments average: 250 ktons 2011 Average 379 ktons 2012 Average 370 ktons 2013 Average 439 ktons 2014 Average 504 ktons 2015 Average 538 ktons 2016 Average 619 ktons 77

78 USD/Adt, 2013 cost level Global BHKP Market Pulp Supply Cost Curve COST CURVE EVOLUTION Cost position of marginal producer Cumulative Capacity Million t/a Source: Pöyry. 78

79 Tightening plantation wood and chip supply could add to the cash cost of Asian pulp mills Source: Pöyry. 79

80 Current Zero Cost Collars 4T16 1T17 2T17 3T17 4T17 1T18 2T18 3T18 Notional (USD MM) Fwd (BRL/USD) 3,30 3,39 3,47 3,55 3,62 3,69 3,76 3,83 Put 3,36 3,40 3,45 3,40 3,56 3,62 3,62 3,70 Call 6,62 5,38 5,70 5,96 6,60 5,50 5,77 5,67 Notional (Total): US$ 1,475 million *forward curve Sept/

81 Free Cash Flow (1) US$ million Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 EBITDA Margin 33% 28% 30% 37% 37% 41% 39% 39% 41% 4'2% 41% 35% 35% 45% 50% 50% 56% 54% 52% 43% 43% Average FX (1) Before expansion capex 81

82 (1) Considering FX (2) Considering average FX for the period 82 Fibria s tax structure Description and Amount Maturity (a) Operating income As stated in the income statement (-)(b) Goodwill (Aracruz acquisition) - Annual tax deduction: US$ 27 million (tax) - Remaining Balance Sept/16: US$ billion (base) 2018 (-)(c) Forestry Capex in MS state (net) (+/-)(d) Exchange variation (cash) 2016 tax deduction related to depletion: US$ 21 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 Sept/16: US$ 382 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 June/2016: -PIS/COFINS: US$ 218 million -Advanced tax payment (IR and CSLL): US$ 315 million - Reintegra: US$ 26 million Income Tax (h) tax credits (i) Undefined TAX PAYMENT (2) (cash basis) M16 US$ 9 million US$ 2 million US$ 8 million US$ 14 million US$ 12 million US$ 23 million US$ 28 million