PWC 20 th Annual Forest and Paper Industry Conference

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Transcription:

PWC 20 th Annual Forest and Paper Industry Conference José Luciano Penido, CEO May, 2007 1

Shareholder Structure % of Total Capital Stock (1) Pro forma Votorantim Group 52% of total 100% of ON Free Float 48% of total 100% of PN 73% are foreign investors ADTV 1Q07 US$10m @NYSE US$8m @ Bovespa Listed on NYSE and Bovespa Aracruz 12.4% of total 28% of ON Americana (ex-ripasa) 50% interest Tres Lagoas Project 100% of total (1) Total outstanding shares: 204,145,507 (105,702,452 ON / 98,443,055 PN) 2

Votorantim Group Venture 5% Chemicals 1% Others 3% Agribusiness 4% Sales breakdown US$13 billion - 2006 Cement 18% Metals 29% Strategic Goals: - Keep a leading market position in its core businesses - Growth as a main driver for value creation - Internationalization and reduction of Brazil risk exposure - Reach an important level of foreign hard currency cash flow Energy 4% Finance 26% Pulp and Paper 10% - 32% annual revenue growth in the past 5 years - Exports of over US$2 billion in 2006 - Net debt* of approximately US$3 billion in 2006 $4.0 $1.4 $7.8 $6.4 $5.1 $1.9 $2.2 $2.5 $13.3 $3.7 2002 2003 2004 2005 2006 * Net debt industrial only Source: Votorantim Group, VCP Net Revenues EBITDA 3

2020 Outlook 2006 US$ 1.1billion Sales 2020 US$ 4 billion Sales Drivers: How:. Major pulp player. Regional leadership in value-added papers. Cost efficiency in commodity papers. Expansion of forest base. Pulp complex in Três Lagoas (MS). Pulp complex in the South (RS). Existing paper capacity Total pulp (market and integrated) 6 million tons CAGR 14%p.a. (2006-2020) Paper 0.5 million tons Commitment to capital discipline: Minimum wacc+3% 4

Consistent Historical Growth Sales US$m EBITDA US$m 654 692 12% CAGR 17% p.a. 940 13% 1,155 13% 1,424 9% 12% 1,786 18% 12% 1,684 19% 12% 269 269 15% CAGR 15% p.a. 407 16% 488 513 6% 15% 17% 682 15% 14% 615 20% 16% 100% 88% 87% 87% 79% 70% 69% 100% 85% 84% 85% 77% 71% 64% 2001 2002 2003 2004 2005 2006 1Q07 (annualized) VCP ( as is ) 12% ARA 50% adjusted Ripasa (1) 2001 2002 2003 2004 2005 2006 1Q07 (annualized) VCP ( as is ) 12% ARA 50% adjusted Ripasa (1) Total Assets US$m CAGR 9% p.a. 3,731 4,404 3,870 (2) 2,321 1,918 2,468 2,644 2001 2002 2003 2004 2005 2006 1Q07 Source: VCP, Company reports (1) Adjusted figures which combine Ripasa s performance plus the additional value of margins gained at VCP. (2) Excludes the asset of Três Lagoas pulp mill under construction of US$1.6 billion. 5

Near Future: Growth in Pulp, Eyes on Paper 3,970 CAGR 2006-2012 16%pa total P&P sales 24%pa only mkt pulp 2,770 3,500 905 334 1,175 607 1,459 1,493 1,612 1,570 844 867 942 1,070 2,300 571 568 615 626 670 500 470 470 2002 2003 2004 2005 2006 2007E Pro-forma 2009 Pro-forma 2011/2012 37% pulp 63% paper 58% pulp 42% paper 69% pulp 31% paper 82% pulp 18% paper 88% pulp 12% paper Pulp debottlenecking Três Lagoas pulp project Losango Project (RS) * Includes the paper sales from KSR Market Pulp (sales) - kt P&W and Special papers (sales)* - kt Consolidation of Americana Swap of Luiz Antonio Sale of Mogi Expansion of special papers in Piracicaba Other effects due to paper repositioning 6

Pulp Demand Eucalyptus and China on the spotlight Demand 2007-2011 World total 2% BSKP 1% BEKP 7% BHKP other 0% Other 1% World Pulp Demand (50 million tons - 2006) BHKP Other 24% Latin America 4% BEKP 20% Other 13% China 17% Europe 39% BSKP 43% Asia ex-china/other 22% North America 18% Source: Hawkings Wright, VCP 7

Pulp Supply Strong currency (C$ and Eur) and high energy costs have led to costs and price increases New capacity additions, shortage of wood and environmental issues have led to capacity shutdowns We expect capacity closures to continue with approximately 1mt per year coming out of the market until 2010 Major expansion projects 2006-2010 (Kton/year) Chile Arauco / Nueva Aldea 3Q 2006 850 Chile CMPC / Santa Fé 4Q 2006 800 Brazil Suzano / Mucuri 4Q 2007 1000 Uruguay Botnia / Fray Bentos 4Q 2007 1000 Brazil Cenibra 2008 240 Brazil Aracruz / Barra do Riacho 1Q 2008 200 Brazil VCP / Tres Lagoas 2009 1100 Spain Ence 2007-2009 260 Indonesia APP 2007-2010 900 Source: VCP, Hawkings Wright 8

Pulp Prices $1.000 $900 $800 $700 $600 $500 $400 $300 $200 Source: VCP, Hawkings Wright Jan/95 Aug/95 Mar/96 Oct/96 Supply Cost curve Softwood May/97 Dec/97 Jul/98 Feb/99 Sep/99 Apr/00 Nov/00 Jun/01 Jan/02 Aug/02 Mar/03 BEKP Supply Cost curve Hardwood Oct/03 May/04 Dec/04 Jul/05 NBSK Feb/06 Sep/06 Apr/07 $780 $680 9

A Structural Change World BSK Cash Cost Curve (US$/Metric Tonne, Not Delivered) World BHK Cash Cost Curve (US$/Metric Tonne, Not Delivered) 700 650 Estimated Net NBSK Price, Northern Europe Delivered Cash Cost, Eastern Canada 700 650 Estimated Net NBHK Price, Northern Europe Delivered Cash Cost, Eastern Canada 600 600 550 550 500 500 450 450 400 400 350 350 300 00 01 02 03 04 05 06 300 00 01 02 03 04 05 06 Source: RISI 10

Capacities Ranking Market Pulp kt 0 500 1 000 1 500 2 000 2 500 3 000 Aracruz Arauco Sodra Weyerhaeuser April Canfor Stora Enso APP International Paper Koch Cellulose West Fraser Ilim Pulp Mercer Tembec Domtar Metsa Botnia Ence Bowater VCP CMPC Source: Hawkings Wright Top 10=35% Top 20=59% 2006 BSKP BHKP UKP Mechanical Aracruz Arauco APP VCP Sodra April Weyerhaeuser Suzano (Bahia Sul) CMPC Stora Enso Canfor International Paper Ilim Pulp Koch Cellulose Mercer Metsa Botnia Ence West Fraser Cenibra Domtar Top 10=40% Top 20=65% 0 500 1 000 1 500 2 000 2 500 3 000 3 500 Projeto Botnia Losango 2011 BSKP BHKP UKP Mechanical 11

Financial Performance EBITDA (US$m) and EBITDA Margin (%) EPS & ROE 487 492 (3) 23% 25% 23% 17% 19% 18% 269 229 340 414 394 10% 17% 17% 41% 38% 42% 41% 35% 37% 36% 20% 22% 20% 18% 14% 12% 14% 16% $0.52 $1.30 $1.00 $0.83 $1.27 $1.58 $1.46 $1.82 $2.02 2001 2002 2003 2004 2005 (2) 2006 1Q07 (annualized) 1999 2000 2001 2002 (1) 2003 2004 2005 (2) 2006 1Q07 (4) (annualized) EBITDA US$ million VCP EBITDA margin (%) EBITDA margin Europe (%) Source: VCP, Reuters, Company reports (1) Adjusted for the impairment of Aracruz (2) Adjusted for non-cash and non-recurring provisions (3) Includes 50% consolidation of Americana (4) Adjusted for the non-cash and non-recurring net effect of asset exchange of US$651 million EPS = Net profit USGAAP / total outstanding shares ROE = Net profit / Average shareholder s equity 12

Corporate Governance evolution $22 $20 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 Avg cost of debt in US$ Spread over Libor % 3.1% 3.2% 2.3% 1.9% 1.7% 1.0% 3.0% VCP ADR Ibovespa 0.7% 2000 2001 2002 2003 2004 2005 2006 2007 NYSE ADR III USGAAP & BRGAAP Quarterly results Acquisition of 12.4% stake in Aracruz Level I: BOVESPA Corporate governance Fiscal Committee CVM 358/02 EDGAR filing IBF project Dividend policy (60% FCF) Sarbanes Oxley Secondary share offering BNDES (US$285m) Stock split Ratio 1ADR:1PN Stock liquidity Ethics Committee Audit Committee Acquisition of Ripasa ISE member (Sustainability index Bovespa) Competitive financing costs, 7yrs Investment Grade Quarterly Result Guidance Liability management Sustainability report (GRI) Buyback Program SOX Certified 20F-Form filing in January 2007 13

Reducing the risks of the business Certified forests FSC / Cerflor Ecoefficiency Votorantim Adoption of the GRI principles GRI - Global Reporting Initiatives is an international organization that develops and distributes guidelines for sustainability reports in economic, social and environmental areas Poupança Florestal: breaking the paradigm Social inclusion program through the agroforestry development 14

Thank You! This release contains forward-looking statements relating to the prospects of the business, estimates for operating and financial results and those related to growth prospects of VCP. These are merely projections and, as such, are based exclusively on the expectations of VCP s management concerning the future of the business and its continued access to capital to fund the Company s business plan. Such forward-looking statements depend, substantially, on changes in market conditions, government regulations, competitive pressures, the performance of the Brazilian economy and the industry among other factors and risks disclosed in VCP s filed disclosure documents and are, therefore, subject to change without prior notice. 15