March 2014 BofAML 2014 Brazil 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 speak only for the date on which they are made.
1 2 3 Financial Highlights Pulp and Paper Market Final Remarks Agenda
Financial Highlights
5 4Q13 Results Pulp Production and Sales ( 000 t) Net Revenue (R$ million) 1,510 1,370 1,441 1,347 1,301 1,358 1,853 1,841 Record 1,958 4Q12 3Q13 4Q13 Production Sales Production Cash Cost (R$/t) 4Q12 3Q13 4Q13 EBITDA (R$ million) and EBITDA Margin (%) +5% 41% 41% 42% 446 501 466 753 762 Record 823 4Q12 3Q13 4Q13 4Q12 3Q13 4Q13
Indebtness Net Debt (Million) Gross Debt (Million) Net Debt/EBITDA (R$) Net Debt/EBITDA (US$) 3.4 3.0 3.3 2.9 7,745 8,240 2.8 2.6 7,849 2.5 2.3 6,946 10,768 9,487 9,773-21% - 34% 3,790 3,695 3,351 2,965 5,269 4,254 4,172 3,482 Dec/12 Sep/13 Dec/13 R$ US$ Dec/13 (Pro forma) Dec/12 Sep/13 Dec/13 R$ US$ After Bond 2020 Repurchase Cash 4,298 1,924 Debt Amortization Schedule (R$ million) Dec./13 (1) 2,169 Land sale (2) Revolver 903 1,471 1,474 834 830 1,256 976 762 1,441 26 5 Liquidity 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 (1) Does not consider the reclassification of the bond 2020 to the short term. (2) Pending payment related to the land sale. Pre-Payment BNDES ECN Trade Finance (ST) Finnvera Bond
7 Fibria delivered the most significant leverage reduction in the LTM Net Debt/EBITDA (x) 3.9 3.6 2.9 3.2 4.2 4.8 5.2 4.7 4.5 4.7 4.7 5.0 5.1 5.1 3.7 3.4 3.3 3.1 3.0 3.1 2.9 3.0 2.4 5.2 3.8 2.8 2.8 2.6 Sep/10 Dec/10 Mar/11 Jun/11 Sep/11 Dec/11 Mar/12 Jun/12 Sep/12 Dec/12 Mar/13 Jun/13 Sep/13 Dec/13 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 BBB-/Stable BBB/Stable BBB+/Stable BBB-/Stable BB-/Positive (1) 2013 projection by Citibank.
8 Net Results (R$ million) 4Q13 810 Debt Hedge Debt exchange variation Excluding the non-recurring effects, profit would reached approximately R$ 323 million at 4Q13. 823 (444) (5) (118) (506) Refis (185) (713) (32) Adjusted EBITDA Rev. (Exp.) Debt Exchange non-recurring / Variation / non-cash MtM Hedge Debt MtM Operational Hedge Net Interest Depreciation, amortization and depletion IR/CS Other (1) Net Profit (Loss) Non-recurring impacts (1) Include non-recurring expenses /non-cash, other exchange and currency variation and other financial incomes and expenditures.
9 Free cash flow generation (1) (R$ million) - 2013 2,796 (1,287) 289 (31) (41) 1,268 (458) Adjusted EBITDA Capex Net Interest Working Capital IR/CS Other Free Cash Flow (1) Does not include: the capital gain on assets sales, Bonds repurchases and the tax payment (REFIS) over profit earnings abroad. Discipline of Capex, execution according to 2013 guidance.
10 Positive Free Cash Flow (1) (R$ million) 2011: R$ -333 million 2012: R$ 836 million 2013: R$ 1,268 million 746 399 230 221 57 157 167 234 122-149 -12-402 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 FX(R$/US$) Average 1.67 1.59 1.64 1.80 1.77 1.96 2.03 2.06 2.00 2.07 2.28 2.28 (1) Does not include: the capital gain on assets sales, Bonds repurchases and the tax payment (REFIS) over profit earnings abroad.
11 Fibria delivers one of the highest EBITDA/t and FCF/t of the industry 538 2013 Results (R$/ton) Free Cash Flow per ton (248) (-88) 56 (6) (8) 244 Adjusted EBITDA Capex Net Interest Working Capital IR/CS Other Free Cash Flow
(1) Excludes Conpacel 12 FX and Pulp Price explain 80% of Fibria s EBITDA Margin Exchange Rate Average (R$/US$) 2.00 1.76 1.67 1.95 2.16 Average Price FOEX (US$/t) 844 810 751 791 562 EBITDA Margin 29% 40% 34% 36% 40% EBITDA (R$ million) 2,526 1,964 2,253 2,796 1,522 2009 (1) 2010 (1) 2011 (1) 2012 2013
Expected Return (% p.a.) Pulp vs Other Commodities Commodities Historical Volatility BHKP Correlation (USD) 50% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% 38% Sugar 32% 30% Iron Ore WTI Crude Oil 26% 25% Soy LME Metals 21% 16% 8% Ibovespa Cattle FOEX PIX BHKP 40% 30% 20% 10% 0% -10% -20% 10% Ibovespa 0% LME Metals -2% 14% 0% 2% -3% -6% -5% 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$, a low correlation with hard commodities and traditional assets is observed. 30% 25% 20% 15% Efficient Frontier (1) with and w/o BHKP With a low correlation the inclusion of BHKP in the portfolio expands the efficient frontier of a commodities portfolio (2). 10% 5% 0% 5% 10% 15% 20% 25% Com Without Minério Pulp de Ferro (1) Since 2009 (2) Considering the expected return of a portfolio comprised of: DJ, Ibovespa Index, Oil, Copper, Niquel, Libor 3M in US Dollar and BHKP. Volatility (% a.a.) Com With BHKP pulp e Minério and others de Ferro 13
14 Maintenance CAPEX (R$ Million) 1,520 1,416 1,287 1,078 Approx. 18% increase 2011 2012 2013 Land Deal: Rural Partnership Non recurring wood purchase Inflation FX Rate Modernization Others 2014E
Cash Production Cost saw an increase of 17% over the past 5 years Cash Production Cost (1) (R$/ton) CAGR: + 17% 2014 Cash Production Cost: Inflation in the period : IPCA: +31% Fibria s Cash Cost: +17% 432 448 471 473 505 Target to have the cash cost increase below inflation Wood costs will represent the main impact Non recurring increase mainly due to third party wood Operating excellence actions focused on keeping cash cost below inflation 2009 (2) 2010 (2) 2011 2012 2013 In 2015 the wood impact will be structurally eliminated (1) Constant Currency (2) Excludes Conpacel 15
16 Fibria s tax structure Fiscal - annual adjustment Tax benefits (R$ million) Tax loss carry forward and tax credits Benefit Amount Maturity Goodwill (Aracruz acquisition) Forestry Capex in Mato Grosso do Sul state Annual tax deduction: ~R$85 million Remaining Balance Dec./13: R$ 1,35 billion (base) 2013 s tax deduction related to depletion: R$29 million 2018 Undefined Benefit Tax loss carryforward Accumulated tax credits Amount Balance up to Dec./13: R$507 million (base) Balance Dec./2013: -PIS/COFINS: R$542 million - withholding tax (IR and CSLL): R$226 million Actual tax payment (cash basis) 2009 2010 2011 2012 2013 R$ 7 million R$ 16 million R$ 4 million R$ 15 million R$ 31 million
17 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
Pulp and Paper Market
19 Today, according to public information, there will be a 9% increase of the market pulp capacity between 2013 and 2015 SOFTWOOD (1) 25.0 MT + HARDWOOD (1) = 30.3 MT MARKET PULP (1) 55.3 MT 2013-2015 (2) : New capacities: 0.5 mt Announced Closures: (0.7) mt Net: (0.2) mt 2013-2015 (3) : New capacities: 6.4 mt Announced Closures: (1.3) mt Net: 5.1 mt 2013-2015: New capacities: 6.9 mt Announced Closures: (2.0) mt Net: 4.9 mt (1) Source: PPPC Special Research Note November 2013 does not include Sulphite and UKP (2) Projects included: Ilim Group (490kt) Closures: Resolute Forest (75kt) ; Domtar (125kt) ; Rayonier (280kt); Sodra Tofte (240kt) (3) Projects included: Eldorado (1.5 mt); UPM Fray Bentos (100kt); Maranhão (1.5mt); Montes del Plata (1.3 mt); Oji Nantong (700kt); Guaíba II (1.3 mt) Closures: Jari (410kt); Cellulose du Maroc (140kt); Ilim Group (100kt); Double A (85kt); Sappi Cloquet (270kt); Sodra Tofte (180kt); April Rizhao (130kt)
jan-08 mai-08 set-08 jan-09 mai-09 set-09 jan-10 mai-10 set-10 jan-11 mai-11 set-11 jan-12 mai-12 set-12 jan-13 mai-13 set-13 Pulp Market Shipments of Eucalyptus Pulp (1) Producer Stocks Hardwood (1) 2013 vs. 2012 23% 60 50 40 Daily production 39 days 6% 12% 30 20 10 +844kt +196kt -37kt -1% +674kt Total North America Western Europe China 0 05 06 07 08 09 10 11 12 13 Nov/13: 40 days Dec/12: 35 days (1) Source: PPPC World 20 December/2013 NBSK vs. BHKP - Prices (1) (1) Source: PPPC World 20 December/2013 Sales Distribuition 2013 - Fibria 250 200 150 100 50 0 Spread Dez/13: US$ 136 Average Spread: US$ 88 1,100 1,000 900 800 700 600 500 400 Europe 39% Per region North America 28% Asia 25% Per end use Tissue 53% Printing & Writing 29% Gap NBSK/BHKP Average Spread NBSK BHKP Others 9% Specialty 17% (1) Source: FOEX 20
USD/Adt, 2013 cost level Supply structural changes puts pressure on the industry MARKET PULP CAPACITY RANKING 2013 (000T) MAIN PROJECTS Fibria APRIL Arauco CMPC Georgia Pacific UPM-Kymmene Paper Excellence Metsa Group Suzano Stora Enso Sodra Weyerhaeuser IP Ilim Mercer Domtar Resolute Forest Eldorado ENCE Canfor Project Country Capacity Timing Fiber Status Arauco / Stora Uruguay 1.3Mt 1Q2014 BEKP Confirmed CMPC Guaíba II Brazil 1.3 Mt 2Q2015 BEKP Confirmed Klabin Paraná Brazil 1.5 Mt 2Q2016 BEKP/ BSKP/Fluff Confirmed Fibria Três Lagoas II Brazil 1.75 Mt - BEKP Unconfirmed APP South Sumatra Indonesia 1.5 Mt -2.0 Mt COST CURVE EVOLUTION - BHKP Unconfirmed 0 2000 4000 6000 Celulose Branqueada Fibra Longa (BSKP) Celulose Branqueada Fibra Curta (BHKP) Celulose Não Branqueada (UKP) Cumulative Capacity Million t/a Cost position of marginal producer Source: Hawkins Wright, Poyry and Fibria Analysis 21
22 Capacity closures DO happen 0-200 Closures of Hardwood Capacity Worldwide 000 ton -85-105 -400-600 -540-500 -800-1000 -910-1200 -1400-1180 -1200-1260 2006 2007 2008 2009 2010 2011 2012 2013-2015E Source: PPPC and Fibria
BHKP prices - cif Europe (US$/ton) Greenfield capacity (000 ton) Gross capacity addition should not be counted as the only factor influencing pulp price volatility 1,000 2.0 900 1.8 800 700 600 APP Hainan Fray Bentos Três Lagoas Rizhao Eldorado Maranhão Montes del Plata Guaíba II 1.6 1.4 1.2 500 Veracel Nueva Aldea Mucuri 1.0 400 300 Valdivia Santa Fé Kerinci PL3 APP Guangxi Chenming Zhanjiang 0.8 0.6 200 0.4 100 0.2 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0 Source: Hawkins Wright 23
Technical Age and Scale in the Market Pulp Industry Further closures are expected due to lack of adequate investments in the industry Hardwood (BHKP) Market Pulp Softwood (BSKP) Market Pulp 3,000 PM Capacity, 1000 t/a Weighted average technical age 14.2 years 2013/IQ STRONG 3,000 PM Capacity, 1000 t/a Weighted average technical age 21.2 years 2013/IQ STRONG 2,500 2,500 Aracruz 2,000 2,000 1,500 Weighted average capacity 1184 000 t/a Jacareí Três Lagoas 1,500 1,000 Veracel 1,000 Weighted average capacity 503 000 t/a 500 500 0 30 25 20 15 10 Technical Age, years 5 0 0 30 WEAK 25 20 15 10 Technical Age, years 5 0 North American Pulp Mills Other Pulp Mills Closures Grade Switch On & Off Source: Poÿry & Fibria 24
25 Total delivered cash cost will also have an influence on bottom prices Capacidade (k tons): 1.125 660 1.700 570 355 565 690 2.045 2.430 365 945 3625 3755 11.385 = 30.300 Total Cash Cost of BHKP delivered to Europe (US$/t) 592 58 134 76 55 52 57 81 97 458 532 498 487 484 475 449 426 41 403 62 56 359 324 71 59 88 308 301 262 546 26 41 115 6 55 69 234 Working Capital Interest CAPEX Others SG&A Cash Cost (US$/t) Delivery (US$/t) Source: Hawkins Wright (Outlook for Market Pulp, December 2013) Fibria s 2013 considering a FX of R$/US$2.16.
China: Paper capacities expansion continues to go on Ktons 2012 2013 2014E 2015E Total P&W (woodfree) 720-25 0 550 1,245 Tissue 1,540 1,184 1,518 903 5,145 Cartonboard 2,210 2,428 1,300 300 6,238 Total 4,470 3,587 2,818 1,753 12,628 China corresponds to 2/3 of global tissue capacity expansion Source: Fibria and Independent Consultants 26
N. America W. Europe Japan Oceania E. Europe L. America China N&M East Asia Far East Africa 27 Strong internal consumption will drive tissue demand in China Per Capita Consumption of Tissue by Region, 2012 (1) World Tissue Consumption, 1991-2012 (1) 24.3 Kg/capita 35 30 25 Average Growth Rate +3.5% p.a. Million tons 14.8 14.6 Growth Potential 20 15 11.1 10 6.3 6.1 4.4 2.2 0.8 0.6 5 0 1991 1996 2001 2006 2009 2010 2011 2012 N.America W.Europe E.Europe L.America Middle East Japan China Asia FE Oceania Africa (1) Source: RISI
28 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. Sources: (1) the Economist. (2) RISI China Pulp Market Study.
29 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) 8,000 6,000 25% 21% 26% 26% Latin America is the main supplier of pulp to China 4,000 14% 15% 16% 19% 18% 26% 20% 26% 25% 2,000 12% 15% 17% 0 2005 2006 2007 2008 2009 2010 2011 2012 Eucalyptus ('000 t) Hardwood ('000 t) (1) Source: PPPC Global 100 Report 2012
30 Fibria s Commercial Strategy Fibria s Pulp End Use 2013 Fibria s Historical Sales Distribution - % of sales volume Europe North America 20% 47% 1% 3% 33% 96% Asia 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 North America Europe Asia Others 35% 21% 44% Fibria s sales delivered 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).
Final Remarks
32 Acknowledgments in Governance, Transparency and Profitability Valor 1000 Company of the year, among all industries, according to Valor Econômico. XVII ANEFAC-FIPECAFI - SERASA EXPERIAN Prize Fibria is among the most transparent public companies in Brazil, recognized for the quality of its 2012 financial statements. International Recognition by Corporate Governance Report Fibria is one of the 5 Brazilian companies nominees to the Best Corporate Governance Award from London. The Best Companies to the Shareholders Prize of Capital Aberto Magazine Fibria was elected as 2 nd place. The prize highlights the business profitability, share profitability, liquidity, corporate governance and sustainability. Época Negócios 360º Fibria was elected as 1st place in the pulp & paper sector in the corporate governance and future's vision categories 2013 Institutional Investor Latam Ranking - P&P Sector Fibria was ranked for the forth consecutive year (2010, 2011, 2012 and 2013). In 2013 Fibria was ranked in four categories: CEO, CFO, IR Team and IR Professional CDP Brasil 100 Climate Change 2013 Report Fibria was selected as one of the 10 best companies in transparency. The only one in the pulp & paper sector.
33 Acknowledgments in Sustainability DJSI World and DJSI Emerging Markets Selected to Dow Jones World and Emerging Markets Sustainability Indices for 2013/14 as the industry leader of Forestry Resources and Paper sector. RobecoSAM - Sustainability Investing Magazine Fibria is the only Latin America company selected by RobecoSAM (responsible for DJSI) as one of the 10 worldwide leaders in SRI magazine s The 10 Game Changers Changing the industry through sustainability. ISE Corporate Sustainability Index (Bovespa) Fibria was selected again to ISE, the corporate sustainability Index of BM&F Bovespa.
Investor Relations E-mail: ir@fibria.com.br Phone: +55 11 2138-4565 Website: www.fibria.com.br/ir THANK YOU
Back up
Global Paper Consumption CAGR 1996 2006 Developed Markets: + 1.7% Emerging Markets : + 6.0% 117,611 CAGR 2007 2016 Developed Markets: - 4.0% Emerging Markets : + 4.1% 114,507 85,291 P&W Consumption (000 tons) (1) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Developed Markets Emerging Markets CAGR 1996 2006 Developed Markets: + 2.4% Emerging Markets : + 6.9% 26,877 CAGR 2007 2016 Developed Markets: + 1.4% Emerging Markets : + 6.7% 37,474 15,548 Tissue Consumption (000 tons) (1) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Developed Markets Emerging Markets Source: RISI 36
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 37 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 2011-2016 CAGR: Hardwood: +2.3% Softwood: +1.0% 000 ton 1996 2006 2016 Growth 1996-2006 Growth 2007-2016 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Hardwood 14.3 22.4 29.9 56% 27% Eucalyptus 5.4 11.1 21.4 106% 67% Softwood 16.4 22.0 24.1 35% 7% Market Pulp 30.8 44.4 54.0 Hardwood Softwood Source: PPPC
38 Pg. Slide Pg. Slide 4 Financial Highlights 5 4Q13 Results 6 Indebtness 7 Fibria delivered the most significant leverage reduction in the LTM 8 Net Results (R$ million) 4Q13 9 Free cash flow generation(1) (R$ million) - 2013 10 Positive Free Cash Flow (1) (R$ million) Fibria delivers one of the highest EBITDA/t and FCF/t of the 11 industry 12 FX and Pulp Price explain 80% of Fibria s EBITDA Margin 13 Pulp vs Other Commodities 14 Maintenance CAPEX (R$ Million) 15 Cash Production Cost saw an increase of 17% over the past 5 years 16 Fibria s tax structure 17 Fibria is seeking value creation for its shareholders with capital 18 Pulp and Paper Market 19 Today, according to public information, there will be a 9% increase of the market pulp capacity between 2013 and 2015 20 Pulp Market 21 Supply structural changes puts pressure on the industry 22 Capacity closures DO happen 23 Gross capacity addition should not be counted as the only factor influencing pulp price volatility 24 Technical Age and Scale in the Market Pulp Industry 25 Total delivered cash cost will also have an influence on bottom prices 26 China: Paper capacities expansion continues to go on 27 Strong internal consumption will drive tissue demand in China 28 Internal Consumption and Urbanization Different from other commodities, China accounts for 26% of 29 hardwood demand compared to around 60% in other basic materials sectors 30 Fibria s Commercial Strategy 31 Final Remarks 32 Acknowledgments in Governance, Transparency and Profitability 34 Acknowledgments in Sustainability 35 Back up 36 Global Paper Consumption 37 Global Market Pulp Demand