bank of america merrill lynch - calgems conference

7/28/2019 Bank of America Merrill Lynch - CalGEMS Conference

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Bank of America Merrill Lynch CalGEMS ConferenceJun 2013


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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 ExchangeAct 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 expectationsdisclosed 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 thecompanys 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.

Disclaimer

2


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Agenda

Financial Highlights

1Pulp and Paper Market2

Questions & Answers3


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Financial Highlights


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30%

41% 39%

377

753

565

1Q12 4Q12 1Q13

1Q13 Results

5

EBITDA (R$ million) and EBITDA Margin (%)Cash Cost (R$/t)

Pulp Production and Sales (000 t) Net Revenue (R$ million)

1,274

1,853

1,449

1Q12 4Q12 1Q13

- Cash cost ex-

downtimes: +4%

- LTM inflation:

+6.6%

+9 p.p

+14%

1,332 1,3701,2631,313

1,510

1,186

1Q12 4Q12 1Q13

Production Sales

444 446 463455 446507

1Q12 4Q12 1Q13

Cash cost ex-maintenance downtimes Cash cost

+4%


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Debt

Debt Amortization Schedule (R$ million)

671

1,068725 677

994807

648

2,871

1,437

2013 2014 2015 2016 2017 2018 2019 2020 2021

Bond Pre-payment BNDES ECN Export Credit/Others

Net Debt (R$ million) and Leverage (x)

Gross Debt (R$ million)

Closing FX

(R$/US$)

11,03110,768

9,898

1Q12 4Q12 1Q13

-19%

Aprox R$ 2 billion

gross debt

reduction since1Q12.

5.24.7

4.5

3.43.1

4.8

4.2 4.2

3.3

3.1

Net Debt/EBITDA (R$) (x)

Net Debt/EBITDA (US$) (x)

8,965

8,462 8,557

7,7457,516

1Q12 2Q12 3Q12 4Q12 1Q13

2.042.02 2.031.82 2.01

6

After Cash

Tender

US$486 mm

After Cash Tender US$486 mm


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Positive Free Cash Flow and High Single Digit Yields

836

782

2012 1Q13 LTM

FCF Yield

7

7% 6%

As announced in our quarterly reports, Fibria resumed part of its receivable discount operations in May/13. It

will positively impact the 2Q13 results.

FCF (R$ million)


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1,153

421

156

(623)(109)

(201)(97)

44

(10)

Net

Revenues

COGS/Freight SG&A EBITDA CAPEX Interest Working

Capital

Taxes/Others 2012

(1) On a cash basis, does not include depreciation, amortization and depletion (2) Includes advance to forest partner program | (3) IR/CS and other

(2)

8

Free Cash Flow

per ton

Cash Cost:

R$ 473/ton

Fibria delivers one of the highest EBITDA/t and FCF/t of the industry

(1) (3)

2012 Results (R$/ton)


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562

844 810751 773

FX and Pulp Price explain 80% of Fibrias EBITDA Margin(1)

9

Average Price

FOEX (US$/t)

Exchange Rate

Average (R$/US$) (1)

EBITDA Margin

EBITDA (R$ million)

2.00

1.61 1.671.95 2.01

28%

40%

34%

36%38%

1,697

2,526

1,9642,253

2,440

2009 2010 2011 2012 1Q13 LTM

(1) R multiple regression of 80%


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0%

5%

10%

15%

20%

25%

30%

5% 10% 15% 20% 25%

Return(%

p.a.)

Volatility (% a.a.)

Efficient Frontier (1) with and without BHKP

Com Minrio de Ferro Com BHKP e Minrio de Ferro(1) Source: Bloomberg and Fibrias estimates | 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.

Without Pulp With pulp and others

Pulp vs Other Commodities

10%

0% -2%

14%

0%

2%

-3%-6% -5%

-20%

-10%

0%

10%

20%

30%

40%

50%

Ibovespa LME

Metals

WTI

Crude Oil

Iron Ore Sugar Soy Cattle CPI Brazil CPI US

38%

32%30%

26% 25%

21%16%

8%

0%

5%

10%

15%

20%25%

30%

35%

40%

45%

50%

Sugar Iron Ore WTI Crude

Oil

Soy LME

Metals

Ibovespa Cattle FOEX PIX

BHKP

Pulp price has the lowest historical volatility among all

commodities (1).

Considering pulp price in US$, a low correlation with

hard commodities and traditional assets is observed.

With a low correlation the inclusion of BHKP in the

portfolio expands the efficient frontier of a commodities

portfolio(2).

Commodities Historical Volatility(1) BHKP Pulp Price (US$) Correlation(2)

10


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Fibria delivered the most significant leverage reduction in the LTM

Net Debt/EBITDA (x)

5.6

4.7

3.9 3.6

2.9

3.2

4.2

4.8

5.2

4.7

4.5

3.4

3.1 2.7(1)

5.7

5.06.0(1)

2.21.9(1)

3.4 3.4(1)

4.3 4.6(1)(2)

Mar/10 Jun/10 Sep/10 Dec/10 Mar/11 Jun/11 Sep/11 Dec/11 Mar/12 Jun/12 Sep/12 Dec/12 Mar/13 2013E

Fibria Arauco CMPC Klabin Suzano

S&P BB+/Stable BBB-/Stable BBB/Negative BBB-/Stable BB/Negative

Moodys Ba1/Stable Baa3/Negative Baa3/Negative - Ba2/Stable

Fitch BB+/Positive BBB/Stable BBB+/Stable BBB-/Stable BB-/Stable

(1) 2013 year end market consensus

(2) 2013 projection by Citibank.

Ratings

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PULP

- Growth with discipline

- Best portfolio of projects

BIO-ENERGY

- Complementary to pulp

- Ensyn

INDUSTRY

CONSOLIDATION ?

OTHER OPPORTUNITIES

- Portocel

- Land and forest

Potential

GrowthProspects

12

Fibria is seeking value creation for its shareholders with capital discipline


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Consolidation is needed, however, challenges are large

Global Market Pulp Capacity(2) (000t)

0 1000 2000 3000 4000 5000 6000

Canfor

ENCE

West FraserEldorado

Metsa Fibre

Mercer

IP

Ilim

Domtar

Stora Enso

Weyerhaeuser

Paper Excellence

Suzano

Sodra

UPM-Kymmene

CMPCGeorgia Pacific

Arauco

APRIL

Fibria

Bleached Softwood Kraft Pulp (BSKP)

Bleached Hardwood Kraft Pulp (BHKP)

Unbleached Kraft Pulp (UKP)

Mechanical

5,300

Challenges for Consolidation

Dependent upon strategic motivation andtiming of parties

Relative valuations

Governance issues, level of control, etc

Culture/ management challenges

Indebtedness level of industry players

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Fibria has the best portfolio of brownfield projects

Trs Lagoas II:

Decision: 2014

Start-up: 2016

Capacity: 1.5 million tons

Forest base: 40k hectares of surplus

Veracel II

Aracruzs Expansion

Port Terminal Pulp Unit

Trs Lagoas

Santos

AracruzPortocel

Caravelas

Belmonte

Veracel

Jacare

14


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Additional Source of Growth

Portocel I Portocel II

15


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Opportunities to Enhance Returns

16

New alternatives for biomass residues / lignin

Biofuels and Bioproducts

New Forest

Model


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Pulp and Paper Market


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18

Pulp projects, net of closures, will add less than 10% of global capacity

between 2013 and 2015, less than in other basic materials sectors

(1) Source: PPPC Special Research Note Feb 2013 does not include Sulphite and UKP

(2) Projects included:Ilim Group (490kt) | Closures: Resolute Forest (75kt) ; Domtar (125kt) ; Rayonier (280kt); Birla (350kt)

(3) Projects included: Eldorado (1.5 mt); Montes del Plata (1.3 mt); Maranho (1.5 mt); Guaba II (1.5 mt) | Closures: Jari (410kt); Sappi Cloquet (270kt); Double A (85kt); Sodra Tofte (180kt); Ilim Group (100kt);April Rizhao (130kt)

SOFTWOOD(1)

25.0 MT

HARDWOOD(1)

30.1 MT

MARKET PULP(1)

55.1 MT

+ =

2013-2015(3):

New capacities: 5.8 mt

Announced Closures: (1.2) mt

Net: 4.6 mt

2013-2015(2):



Net: (0.3) mt

2013-2015:



Net: 4.3 mt


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Technical Age and Scale in the Market Pulp IndustryFurther closures are expected due to lack of adequate investments in the industry

North American Pulp Mills Other Pulp Pulp Mills

Hardwood (BHKP) Market Pulp Softwood (BSKP) Market Pulp

North American Pulp Mills Other Pulp Pulp Mills

Source: Pory

19


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Fibria: Competitive Position on the Cost Curve

Total Cash Costof BHKP

delivered to

Europe

(US$/t)

432

498

421459 439

382

328 320 314

271254

11942

86 45 36

36

47 65 52

6970

Cash Cost (US$/t) Delivery (US$/t)

Source: Hawkins Wright (Outlook for Market Pulp, May 2013) | Fibrias 1Q13 cash cost divided by FX considered in the report R$/US$2.0096

551

324

20


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21

Source: Fibria and Independent Consultants

Paper Capacity Expansion in China

New capacities in China will generate additional demand for market pulp

Ktons 2012 2013E 2014E Total

P&W (woodfree) 900 - 460 1,360

Tissue 1,540 1,120 1,164 3,824

Cartonboard 2,000 2,500 1,750 6,250


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Strong internal consumption will drive tissue demand in China

24.3

14.8 14.6

11.1

6.3 6.14.4

2.20.8 0.6

N.America

W.Europe

Japan

Oceania

E.Europe

L.America

China

N&M

East

AsiaFarEast

Africa

Kg/capita

Per Capita Consumption of Tissue by Region, 2012(1)

Growth

Potential

Growth

Potential

0

5

10

15

20

25

30

35

1991 1996 2001 2006 2009 2010 2011 2012

N.America W.Europe E.Europe L.America Middle East

Japan China Asia FE Oceania Africa

Average

Growth Rate

+3.5%a.a.

Average

Growth Rate

+3.5%a.a.

Million tons

World Tissue Consumption, 1991-2012(1)

22

(1) Source: RISI


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Different from other commodities, China accounts for 26% of

hardwood demand compared to 60%-75% in other basic materials sectors

12%15%

17%

19%

26%

20%

26% 25%

14%15%

16%

18%

25%

21%

26%26%

0

2.000

4.000

6.000

8.000

2005 2006 2007 2008 2009 2010 2011 2012

Eucaplyptus ('000 t) Hardwood ('000 t)

Latin America isthe main

supplier of pulp

to China

(1) Source: PPPC Global 100 Report 2012

Chinas Market Share of Market Pulp Shipments (%)(1)

23


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Fibrias Commercial Strategy

24

51%

28%

21%

Fibrias Pulp End Use 2012 Fibrias Historical Sales Distribution - % of sales volume

Europe

94%

4%

2%

22%

46%

32%

North America

Asia

SpecialtiesTissue Printing & Writing

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13

North America Europe Asia Others

Fibria is exposed to the least volatile consumermarkets (tissue) which brings stability to sales

volume.

Fibria has a low dependence on China (less than

20% of total sales volume).


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Inventories

25

Hardwood Market Pulp Producers Inventories (days of supply) Hardwood Market Pulp Producers Inventories (000 tons)

Hardwood European Pulp Consumers Inventories (days of supply) Hardwood European Pulp Consumers Inventories (000 tons)

Mar/13: 41 days

Apr/12: 34 daysApr/13 x Mar/13: -2% or -40kt

Apr13:

20 days

Apr/13:

38 days

Source: PPPC World 20 March 2013 Source: Fibrias estimates based on PPPCs methodology

Source: Utipulp Source: Utipulp

15

25

35

45

55

65

05 06 07 08 09 10 11 12 13

0

500

1000

1500

2000

2500

3000

05 06 07 08 09 10 11 12 13

0

100

200

300

400

500

600

05 06 07 08 09 10 11 12 13

BHKP': Apr/13 x Mar/13: + 2% or + 8.4kt

0

5

10

15

20

25

30

05 06 07 08 09 10 11 12 13


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5857 56

55

58

Dec-12 Jan-13 Feb-13 Mar-13 Apr-13

35

41 41 4138

Inventories(1)

(1) Source: PPPC Global World 20 March Report and (2) Fibrias estimates.

Closing Stocks (k tons)

26

1998

2297 2290

22292189


1993

1488 15961827

1713


-402)

Inventories (days)

Inventories Calculation = closing stocks

average daily shipments in the last 3 months

Total Shipments (k tons) 3-month daily average (k tons)


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Questions & Answers


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THANK YOU

Investor Relations

E-mail: [email protected]

Phone: +55 11 2138-4565

Website: www.fibria.com.br/ir


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Back up


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Global Paper Consumption

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

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 2006Developed Markets: + 1.7%

Emerging Markets : + 6.0%

85,291

117,611

15,548

37,474

P&W

Consumption

(000 tons)(1)

Tissue

Consumption

(000 tons)(1)

114,507

CAGR 2007 2016Developed Markets: - 4.0%


CAGR 1996 2006

Developed Markets: + 2.4%


CAGR 2007 2016Developed Markets: + 1.4%


26,877

30

Source: RISI


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Global Market Pulp Demand

000 ton 1996 2006 2016Growth1996-2006

Growth2007-2016

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

Demand growth rateHardwood (BHKP) vs. Softwood (BSKP) (000 ton)

0

5.000

10.000

15.000

20.000

25.000

30.000

35.000

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

Hardwood Softwood

Hardwood demand will continue to increase at a faster pace than Softwood

2011 - 2016 CAGR:

Hardwood: +2.3%

Softwood: +1.0%

31

Source: PPPC


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Gross capacity addition should not be counted as the only factor

influencing pulp price volatility

Source: Hawkins Wright

0,0

0,2

0,4

0,6

0,8

1,0

1,2

1,4

1,6

1,8

2,0

0

100

200

300

400

500

600

700

800

900

1.000

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

BHKPprices

-cifEurope(US$/

ton)

Greenfieldcapacity(000ton)

Valdivia

APP

Hainan

VeracelNueva Aldea

Santa F

Mucuri

Fray

Bentos

Kerinci

PL3

Trs

Lagoas

Rizhao

APP Guangxi

Chenming

Zhanjiang

Eldorado

Montes delPlata

MaranhoGuaba II

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