Corporate Presentation September, 2011 1
Disclaimer The information contained in this presentation may include statements which constitute forwardlooking 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 forwardlooking 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 forwardlooking statements, which speak only for the date on which they are made. 2
The Company 3
VCP and Aracruz Merged to Create Fibria Shareholder Structure Votorantim Industrial S.A. BNDESPar Free Float 29.34% 30.42 (1) 40.24% (2) NYSE 40% Bovespa 60% Average Daily Trading Volume (LTM): US$ 45 million (1) Position as of August 31, 2011. BNDESPar has 21% linked to a Shareholder s Agreement with Votorantim Industrial S.A. during the first 3 years and 10.9% during the following 2 years. (2) Free Float 40.17% + Treasury 0.07% 4
Improved Corporate Governance Improved Corporate Governance Board and Committees Listed on Novo Mercado, highest level of Corporate Governance at BM&F Bovespa Shareholders Meeting Only 1 class of shares 100% vo ng rights 100% tag along rights (Brazilian corporate law establishes 80%) Board of Directors with minimum 20% independent members Financial Statements in International Standards IFRS Fiscal Council Board of Directors 9 Members: 20% Independent Chairman CEO Adoption of Arbitration Chamber Listed in the most important sustainability indexes Board Advisory Committees (1) Policies approved by the Board of Directors Liability and liquidity management Market risks Corporate governance Executive Officers Audit and Risks Personnel and Remuneration Finance Sustainability Information disclosure Stock trading (1) Members performance assessed by independent consulting firm 5
A Winning Player Superior Asset Combination Main Figures (1) Pulp capacity million tons 5.25 Paper capacity million tons 0.16 Net revenues R$ billion 6.2 Três Lagoas Belmonte Veracel Caravelas Portocel Aracruz Piracicaba Jacareí Santos Total area thousand ha 1,062 (2) Planted area thousand ha 599 (2) Net Debt R$ billion 7.9 Net Debt/EBITDA X 3.2 Port Terminal Pulp Unit Paper Unit Source: Fibria (1) Last Twelve Months as of 2Q11. (2) As of June 30, 2011, including 50% of Veracel and excluding forest partnership areas (124 thousand ha). 6
Modern Plants Lead to a Competitive Position in the Cost Curve Três Lagoas Mato Grosso do Sul 1.3 million t/year Jacareí São Paulo 1.1 million t/year Aracruz Espírito Santo 2.3 million t/year Veracel Bahia 1.1 million t/year 7 7
Fibria s Strategy 8
Clear Leadership Position Industry Outlook (1) Market Pulp Capacity Ranking 2010 (2) (000t) Recycled Fiber 224 million t Paper & Board 392 million t 57% 43% Mechanical 33 million t Pulp 167 million t 20% 80% 66% Integrated Mills 85 million t Chemical 134 million t Softwood/Other 22 million t 34% Market Pulp 46 million t 46% 54% Acacia/Other 8million t Hardwood 24 million t 36% 64% 69% Other Eucalyptus Pulp producers: 11 million t Eucalyptus 16 million t 31% Fibria APRIL Arauco APP Georgia Pacific CMPC Sodra Stora Enso Weyerhaeuser Suzano Botnia/M-real UPM-Kymmene Domtar Ilim Mercer IP ENCE West Fraser Canfor Cenibra 5,250 Bleached Softwood Kraft Pulp (BSKP) Bleached Hardwood Kraft Pulp (BHKP) Unbleached Kraft Pulp (UKP) Mechanical 0 1000 2000 3000 4000 5000 6000 (1) RISI and PPPC: considers 2010 demand (2) Hawkins Wright January 2011 9 9
Relevant Market Share and Competitive Position in the Cost Curve Fibria smarket Share (1) Average Cash Cost of BHKP (2) (US$/t) Mill Cash Cost Delivery Cost 11% 22% 586 549 540 104 54 55 482 495 485 519 509 497 454 95 47 52 37 424 462 445 417 371 352 65 329 322 73 53 55 306 279 276 267 Total Market Pulp: 48.5 million t Total Hardwood Market Pulp: 25 million t 31% Hardwood Cash Cost (US$/t) vs Capacity ('000 t) 800 700 10 million t Total Eucalyptus Market Pulp: 17 million t Cash cost (US$/t) 600 500 400 300 200 Bleached hardwood kraft 100 (1) PPPC Global 100: Market Share estimated considering 2010 demand (2) Source: Hawkins Wright as of April 2011 and Fibria 1Q11 0 5000 10000 15000 20000 25000 30000 Capacity ('000s t) 10
Exchange Rates and Inflation Affect the Cost Structure Exchange Rate Currencies Evolution versus Dollar (Index: Jan 03 = 100) 230 210 Real:116% 190 170 150 Canadian Dollar: 59% Chilean Peso: 52% 130 110 90 Rupia: 4% 70 50 Inflation Wood: cost of land and minimum wage growth above inflation Freight: low governmental investment in infra-structure (ports, roads, etc) and higher oil prices Chemicals / energy / water: global demand for commodities add pressure on main raw materials Labor: cost in Brazil in dollar terms is higher than in some developed countries 11
Global Presence Fibria s Commercial Strategy Differentiation: Customized pulp products to specific paper grades Sole supplier to key customers focused on eucalyptus pulp to the tissue market The top 10 customers represent, on average, 70% of sales Speciali ties 19% End-Use 2Q11 Over 20 years of relationshipwith many of the main clients Global contracts P&W 23% Tissue 58% 29 % N.America Miami Nyon 46 % Europe Csomád 14 % Asia Hong Kong 11 % L.America São Paulo Source: Fibria 2Q11 Fibria Sales Distribution Fibria Offices 12
Focus on Premium End-Uses Fibria'sPulp Destination Market Pulp Destination 2010-2025 Demand Growth (CAGR) Source: Fibria 2Q11 Earnings Results, PPPC, RISI and Fibria 13
Innovation and Competitiveness 14
Enhanced Forestry Techniques Current Elite Clone 2 yearsold New Elite Clone 2 yearsold 15
Forest Competitiveness Fibria : Forest Competitiveness Genetic and Technological Development at Fibria 45 14 30-40 years 11 25 25 25 10 15 15-25 years 8 6 years 7-8 years 7-15 years 10-12 years 12-15 years 8 5 6 Brazil (eucalyptus) Indonesia S.Africa Chile Portugal / Spain Harvesting Cycle (avg. years) Yield (m3/ha/year) USA / Canada Finland / Sweden 70's 80's 90's 00's Next decade (expected) Air Dry Ton / ha / year Source: ABRAF, STCP, Poyry and Fibria. Note: Pulp trees differ depending on the country: Indonesia acacia, S.Africa tropical and temperate eucalyptus, Chile temperate eucalyptus, Portugal/Spain temperate eucalyptus, USA/Canada aspen, Finland/Sweden betula. 16
State of the Art Facilities Average mill capacity ( 000 tons) 2,500 Fibria (Aracruz) 2,000 1,500 1,000 Indonesia Fibria (Jacareí) Fibria (Três Lagoas) Fibria (Veracel 50%) 500 Russia USA Japan Portugal Canada Other Brazilian pulp mills Sweden Finland France/ Spain Chile South Africa China 40 30 20 10 Technical age of the equipment (years) Source: PÖYRY 17 17
Três Lagoas II andveracel II Três Lagoas II Veracel II Social and environmental license granted on Aug 18 th Forestry Base : -Total area: 230,000 ha - Planted area: 150,000 ha Status: Três Lagoas I surplus: 30,000 ha of effective planting Forestry Base: -Total area: 220,000 ha - Planted area: 120,000 ha Environmental Licensing in progress Negotiation between partners in satisfactory progress Leasing: 70,000 ha of effective planting Change on the forestry base model: leased areas increased to 70% Start up: 2014 18
Pulp and Paper Market 19
Industry Outlook World chemical market pulp shipments to capacity World Printing&Writing paper shipments to capacity 96% 92% 93%95% 95% 96% 90% 92% 90% 89% 86% 87% 88% 83% 102% 98% 92% 87% 87% 101% 94% 92% 88% 87% 82% 83% 82% 81% 89% 88% 88% 88% 87% 88% 86% 84% 82% 91% 91% 90% 88% 88% 87% 87%87% 86% 85% 85% 82% Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Fev-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Fev-11 Mar-11 Apr-11 Jun-11 Source: PPPC World 20 Total Chemical Market Pulp Source: PPPC Global 100 World Printing & Writing Report World pulp producers' average days of supply World pulp consumers' days of supply 50 35 40 39 30 30 25 20 20 10 15 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11 Jul-11 days days 19 20 Source: PPPC World 20 Source: Utipulp
Industry Outlook Market pulp: world demand growth (%) China: Eucalyptus pulp shipments ('000 t) 4% 7M2011 x 7M2010 1% 3% 30% 458 Average Average 305 ktons 192 ktons 368 318 Average 307 300 310 323 332 193 ktons 311 256 238 233 299247 242 229 202 219 224 222 198 152 198 163 153 141 152 161 125 138 100-4% -3% Total North America Europe Latin America Japan China Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov-10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Source: PPPC World 20 Chemical Market Pulp European List Price (BHKP) x Commodity Index (CRB) Source: PPPC World 20 (1) Average does not consider December 2008 data Announced list pulp price Commodity Price Index (CRB) 650 550 450 350 250 US$840/t US$920/t 1.000 900 800 700 600 500 400 300 European List Price (US$/t) BHKP List price (as of Sep/2011): North America: US$900/t Europe: US$820/t Asia: US$730/t Aug-08 Nov-08 Feb-09 May-09 Aug-09 Nov-09 Feb-10 May-10 Aug-10 Nov-10 Feb-11 May-11 Aug-11 CRB BHKP List Price Source: CRB (Commodity Research Bureau) Bloomberg BHKP: FOEX Source: Fibria 21
Balanced Market Scenario for the Next 2 years Forecast % Annual growth Million tons 2009 2010 2011 2012 2010/2012 BSK Supply 23.5 23.8 25.0 25.3 3.2% '000 tons Demand 21.4 22.3 23.0 23.3 2.1% Ratio 91% 93% 92% 92% BHK Supply 28.1 28.6 30.0 30.6 2.9% Demand 24.8 25.0 26.5 27.4 4.7% Ratio 88% 87% 88% 90% BEKP Supply 17.0 17.6 18.8 19.6 5.4% Demand 15.9 15.9 17.1 18.3 7.4% Ratio 93% 90% 91% 94% Source: PPPC and Fibria 22
Financial Highlights 23
2Q11 Performance Key Indicators Pulp Sales Mix 2Q11 1Q11 2Q10 2Q11 vs 1Q11 2Q11 vs 2Q10 Pulp Production ( 000 t) 1,271 1,319 1,164-4% 9% 2Q10 1Q11 2Q11 Pulp Sales ( 000 t) 1,230 1,259 1,214-2% 1% 11% 9% 11% Paper Production ( 000 t) 31 29 31 9% 2% Paper Sales ( 000 t) 31 36 29-15% 5% 24% 38% 25% 46% 14% 46% Net Revenue (R$ million) 1,459 1,548 1,628-6% -10% Pro Forma EBITDA (R$ million) 490 607 672-19% -27% EBITDA Margin (%) 34% 39% 41% -5 p.p. -7 p.p. Financial Income (R$ million) 277 11 (310) - - Net Income (R$ million) 215 389 130-45% 66% 27% 20% 29% Europe North America Asia Brazil/Others Cash Cost without downtimes(r$/t) EBITDA (R$ million) and EBITDA Margin (%) 448 446 462 41% 39% 672 607 34% 490 2Q10 1Q11 2Q11 2Q10 1Q11 2Q11 24
Competitiveness Project Actions for increased operating efficiency Action 2011 2012 2013 2011 Capex reduction of R$201 million Pulp Production ('000 t) Production gain: +9% 1,271 Newbleaching line of Plant A Aracruz Unit 1,164 Higher operating stability Optimization of wood transportation by barges Aracruz Unit Energy Matrix Jacareí Unit Global Sourcing Rail Extension Três Lagoas Unit 2Q10 448 2Q11 Cash Cost without downtimes (R$/t) 462 +3% (lower than Brazilian inflation: +6.5%) Long-term international logistics contract (STX) Future Forestry Project 2Q10 2Q11 25
Capex 2011 Capex Reduction (R$ million) 2011E Current Industrial Expansion 68 Forest Expansion 243 Subtotal Expansion 311 Safety/Environment 75 Forestry Renewal 602 Maintenance, IT, R&D and Modernization 356 Subtotal Maintenance 1,033 50% Veracel/Conpacel 96 Total Fibria 1,440 R$ 201 million reduction 26
Debt Debt Indicators (R$ million) 2Q11 1Q11 2Q10 2Q11 vs 1Q11 2Q11 vs 2Q10 Gross Debt 10,448 10,256 13,209 2% -21% Short Term Debt(%) 16% 14% 12% 4.7 Net Debt/ EBITDA (2) (x) Cash (1) 2,496 2,297 2,364 9% 6% 3.2 Net Debt 7,952 7,959 10,846 0% -27% (1) Includes the fair value of the derivatives. 2Q10 1Q11 2Q11 2.9 2Q10 1Q11 2Q11 (2) LTM EBITDA includes the results from Conpacel and KSR Debt Amortization Schedule (R$ billion) Debt by currency and instrument (%) Short term debt: 5.1 14% oftotal debt 16% 6.6 Debt by Currency Debt by Instrument 44% 1.9 1.0 0.9 0.8 1.3 0.6 1.8 1.2 0.8 0.6 84% 7% 4% 23% 16% 6% 2011 2012 2013 2014 2015 2016-2021 Jun/10 Jun/2011 Domestic Foreign Bonds BNDES Former Aracruz Shareholders Pre-Payment NCE Others 27
Liability Management Promises delivered, now more ahead to go Net Debt/EBITDA (x) 7.8 7.2 7.2 6.5 5.6 Net Debt (R$ bi) 15.7 13.2 13.1 4.7 11.0 10.9 10.8 3.9 10.2 9.9 3.6 2.9 3.2 7.9 7.9 Commitment to investment grade level 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Saleof Guaíba US$ 1.4bn Fibria 19 Bond: US$ 1.0bn 9.25% 10NC5 Export pre-payment facilities: US$ 1.175bn Fibria 20 Bond: US$ 750MM 7.5% 10NC5 Exchange Bond Fibria 19: 94% to Fibria 20 Operational cash generation Derivatives debt settlement: US$ 2.6bn Debt: lower cost longer tenor Sale of Conpacel/KSR R$1.5bn Fibria 21 Bond Fibria 21: US$ 750MM 6.75% 10NC5 US$ 500MM Revolving facility + US$ 300MM EPP Covenants: 4.0x YE2011 Tight cost and CAPEXcontrol 2011 Capex reduced by R$201 million Piracicaba Unit: indicative price of US$ 313MM 28
Market Perception Yield (%) 9,7 9,2 Fibria'2019 Fibria'2020 Fibria'2021 8,7 8,2 7,7 7,2 6,7 6,2 5,7 5,2 7 Fibria'2021 6,8 6,6 80bps 6,4 6,2 6 5,8 5,6 5,4 5,2 Fibria 2021 Moody s Fitch S&P Rating Ba1/positive BB+/stable BB/stable 29
Historical Ratings S&P Moodys Aracruz VCP (2007-08) / Fibria (2009-10) Aracruz VCP (2007-08) / Fibria (2009-10) 2005 BBB- N.A. 2005 Baa3 N.A. 2006 BBB- N.A. 2006 Baa3 N.A. 2007 BBB- BBB 2007 Baa2 Baa3 2008 BBB BBB 2008 Baa2 Baa3 2009 BB BB 2009 Ba2 Ba1 2010 N.A. BB 2010 N.A. Ba1 2011 N.A. BB 2011 N.A. Ba1 Last Report Date: February 2011 / Rating: BB / Outlook: Positive Last Report Date: February 2011 / Rating: Ba1 / Outlook: Positive 30
Fibria in Summary ROI above WACC Larger scale Global and strong market positioning Innovation HIGHER SHAREHOLDER RETURNS Growth Solid financial performance Sustainability Low cost structure 31
Investor Relations E-mail: ir@fibria.com.br Phone: +55 (11) 2138-4565 Website: www.fibria.com.br/ir 32
Backup 33
China China s Hardwood Imports of BHKPby Country (1) China P&W Capacity Changes 2011-2013 (2) 6,0 5,0 4,0 3,0 2,0 1,0 0,0 5,0 3,1 BHKP Total 2,3 1,1 1,1 1,0 1,0 Latin America 2010 6M 2011 * includes Russia, China, Thailand and New Zealand 10.000 8.000 6.000 4.000 2.000 0,7 0,4 0,1 0,2 0,2 0,0 Others* Indonesia USA Canada Western Europe China's Share of Market Pulp (1) 10% 9% 7% 11% 9% 10% 10% 13% (Million tons) 12% 12% 16% 14% 22% 26% 21% 16% 17% 17% 17% 17% 20% Company / Mill Effective Date '000 t Shandong Huatai Paper Jan 2011 800 Nine Dragons Jul 2011 450 Zhumadian Baiyun Paper Apr 2011 250 China Metalurgical Meili Paper Mar 2011 300 Sun Paper Ju 2011 350 Shandong Chenming Aug 2011 800 Shandong Chenming Q3 2011 450 April Q4 2011 450 Others 2011 810 Guangxi Tianyi Paper Mar 2012 130 Hengfeng Paper Sep 2012 125 April Q1 2013 450 Chengton Group 2013 600 Total P&W capacity changes in China 6,200 2011 = 4.7 mt 2012/2013 = 1.5mt 0 2005 2006 2007 2008 2009 2010 7M 2011 Eucaplyptus Hardwood Total (1) PPPC (2) Source: TerraChoice Monthly Report Aug 2011 34
Tissue Market Per Capita Consumption of Tissue by Region, 2010 (1) World Tissue Consumption, 1991-2010 (1) 25 20 15 10 23,5 15,6 14,6 Kg/capita 11,2 Huge potential growth 35 30 25 20 15 Average Growth Rate +3.8%a.a. Million tons 5 0 N. America W. Europe Japan Oceania 5,6 L. America 4,4 E. Europe 3,6 China 3,0 N&M East 0,7 0,5 Asia Far East Africa 10 5 0 1991 1996 2001 2006 2009 2010 N.America W.Europe E.Europe L.America NME Japan China Asia FE Oceania Africa (1) RISI 35