deutsche bank's 10th annual paper
TRANSCRIPT
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DB's 10th Annual Paper & Forest ConferenceFebruary 2014
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The information contained in this presentation may include statements whichconstitute 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
companys 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
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FibriasStrategy
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A Winning Player
Source: Fibria
(1) Including 50% of Veracel, excluding forest partnership areas as well as the forest base linked to the sale of forest assets in
Southern Bahia State and Losango.
Pulp capacity million tons 5.3
Net revenues R$ billion 6.9
Total Forest base (1) thousand hectares 962
Planted area(1) thousand hectares 557
Net Debt R$ billion 7.8
Net Debt/EBITDA (USD) X 2.6
2013 FCF R$ billion 1.3
Superior Asset Combination Main Figures2013
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OPERATING EXCELLENCE LIABILITY MANAGEMENT GROWTH WITH DISCIPLINE
Cost control
Efficiency projectsaiming at reducing
Fibriascash cost
Operating stability
Capex discipline
Liquidity events
Gross debt reduction
Cost of debt reduction
Leverage reduction
Ready for organicgrowth (licenses andbasic engineering)
Continuous investmentin forest for capacitygrowth
Industrial project at theright moment for valuecreation
Since the beginning, Fibriasstrategy has focused on:
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593 593 605 584 648
2009* 2010* 2011 2012 2013
4,600
5,0545,184
5,299 5,259
2009* 2010* 2011 2012 2013
The maturity of synergies captured since Fibriascreation
improved its operating indicators
* Excludes Conpacel | ** IPCA index considered to calculate the inflation effect
+14%
432 448 471473 505
2009* 2010* 2011 2012 2013Historical Value Inflation Effect**
-13%578 556 534 507
Historical Value Inflation Effect**
-18%
793 737687 626
29%
40%34% 36%
40%
1,522
2,526
1,9642,253
2,796
2009* 2010* 2011 2012 2013
Production Volume (000 t)
Best Practices and Operating Stability Cash Cost (R$/ton)
EBITDA(R$ million) EBITDA MARGIN(%)SG&A (R$ million)
Structure and process simplification
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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
PotentialGrowth
Prospects
8
Fibria is seeking value creation for its shareholders with capital
discipline
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Supply structural changes puts pressure on the industry
9
MARKET PULP CAPACITY RANKING 2013(000T) MAIN PROJECTS
Project Country Capacity Timing Fiber Status
Arauco / Stora Uruguay 1.3Mt 1Q2014 BEKP Confirmed
CMPC Guaba II Brazil 1.3 Mt 2Q2015 BEKP Confirmed
Klabin Paran Brazil 1.5 Mt 2Q2016BEKP/
BSKP/FluffConfirmed
Fibria Trs Lagoas II Brazil 1.5 Mt - BEKP Unconfirmed
APP South Sumatra Indonesia1.5 Mt -2.0
Mt- BHKP Unconfirmed
COST CURVE EVOLUTION
USD/Adt,2013co
stlevel
Cumulative Capacity Million t/a
Cost position
of marginal
producer
Source: Hawkins Wright , Poyry and Fibria Analysis
0 2000 4000 6000
Canfor
ENCE
Eldorado
Resolute Forest
Domtar
Mercer
Ilim
IP
Weyerhaeuser
Sodra
Stora Enso
Suzano
Metsa Group
Paper Excellence
UPM-Kymmene
Georgia Pacific
CMPC
Arauco
APRIL
Fibria
Celulose Branqueada Fibra Longa
(BSKP)Celulose Branqueada Fibra Curta
(BHKP)Celulose No Branqueada (UKP)
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Indebtness
Net Debt (Million)
3.4 3.02.8
3.3 2.9 2.6
10,7689,487 9,773
5,2694,254 4,172
Dec/12 Sep/13 Dec/13
R$ US$
Debt Amortization Schedule (R$ million)Dec./13(1)
Gross Debt (Million)
7,7458,240 7,849
6,946
3,790 3,695 3,3512,965
Dec/12 Sep/13 Dec/13
R$ US$
Net Debt/EBITDA (US$)Net Debt/EBITDA (R$)
Dec/13(Pro forma)
2.5
2.3
After
Bond 2020
Repurchase
3,482
- 21%- 34%
1,471
903
1,924
4,298
1,474
834 8301,256
976762
2,169
1,441
26 5
Liquidity 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Pre-Payment BNDES ECN Trade Finance (ST) Finnvera Bond
Revolver
Land
sale (2)
Cash
(1) Does not consider the reclassification of the bond 2020 to the short term.(2) Pending payment related to the land sale.
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Fibria delivered the most significant leverage reduction in 2013
Net Debt/EBITDA (x)
3.93.6
2.9
3.2
4.2
4.85.2
4.7
4.53.4
3.1
3.33.0 2.8
4.74.7 5.0 5.1 5.1 5.2
2.42.6
2.9 3.0
3.2
3.7
3.1
4.1(1)
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
Fibria Arauco CMPC Klabin Suzano
S&P BB+/Stable BBB-/Stable BBB/Negative BBB-/Stable BB/Negative
Moodys Ba1/Positive Baa3/Negative Baa3/Negative - Ba2/Stable
Fitch BBB-/Stable BBB/Stable BBB+/Stable BBB-/Stable BB-/Positive
(1) 2013 projection by Citibank.
Ratings
12
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Positive Free Cash Flow (1)(R$ million)
13
2013: R$ 1,268 million
230
-402
-149-12
221 57 157
399
167234
122
746
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
1.641.59Average 1.80 1.77 2.03 2.06 2.282.071.96 2.00
FX(R$/US$)
2.281.67
2012: R$ 836 million2011: R$ -333 million
(1) Does not include: the capital gain on assets sales, Bonds repurchases and the tax payment (REFIS) over profit earnings abroad.
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538
244
(248) (88)
56
(6) (8)
Adjusted EBITDA Capex Net Interest Working
Capital
IR/CS Other Free Cash Flow
14
Free Cash Flowper ton
Fibria delivers one of the highest EBITDA/t and FCF/t of the industry
2013 Results (R$/ton)
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2.001.76 1.67
1.952.16
562
844 810751 791
FX and Pulp Price explain 80% of FibriasEBITDA Margin
15
Average Price
FOEX (US$/t)
Exchange Rate
Average (R$/US$)
EBITDA Margin
EBITDA (R$ million)
29%
40%
34% 36%40%
1,522
2,526
1,9642,253
2,796
2009 (1) 2010 (1) 2011 (1) 2012 2013
(1) Excludes Conpacel
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Cash Production Cost saw an increase of 17% over the past 5 years
Cash Production Cost (1) (R$/ton)
432448
471 473
505
2009 (2) 2010 (2) 2011 2012 2013
CAGR: + 17%
Inflation in the period :
IPCA: +31%
FibriasCash Cost:
+17%
2014 Cash Production Cost:
Wood costs will represent the main
impact
Non recurring increase mainly due to
third party wood
Operating excellence actions focused
on keeping cash cost below inflation
In 2015 the wood impact will be
structurally eliminated
(1) Constant Currency (2) Excludes Conpacel
Target to have the cash cost increase
below inflation
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Maintenance CAPEX (R$ Million)
1,416
1,078
1,287
2011 2012 2013 Land Deal:Rural
Partnership
Non recurringwood
purchase
Inflation FX Rate Modernization Others 2014E
Approx.
18% increase
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Fibriastax structure
Tax benefits (R$ million)
Fiscal - annual adjustment
Benefit Amount Maturity
Goodwill(Aracruzacquisition)
Annual tax deduction ~~R$85 million
Remaining Balance Dec/13:R$ 1,35 billion (base)
2018
Forestry Capex inMato Grosso doSul state
2013s tax deduction relatedto depletion: R$29 million
Undefined
Tax loss carry forward and tax credits
Benefit Amount Uses
Tax losscarryforward (1)
Balance up to Dec.12:R$928 million
- Refis: R$ 494 million-Land Deal: R$ 218million- Other R$129 million- Remaining balance:R$ 87 million
Balance from Jan.13 toDec.13: R$ 3 million
- Land Deal: R$ 581million
Accumulatedtax credits
Balance Dec. 2013:Short Term: R$ 171 millionLong Term: R$ 588 million
Mainly:- PIS/COFINS- withholding tax (IR
and CSLL)
Federal taxes
Tax payment (cash basis)
18
2009 2010 2011 2012 2013
R$ 7 million R$ 16 million R$ 4 million R$ 15 million R$ 31 million
(1) The estimate of capital gain of the land deal is R$ 799 million
Remaining balance of
tax credits of R$ 87
million
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Pulp and Paper Market
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Today, according to public information, there will be a 9%
increase of the market pulp capacity between 2013 and 2015
(1) Source: PPPC Special Research Note November 2013does 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); Maranho (1.5mt); Montes del Plata (1.3 mt); Oji Nantong (700kt); Guaba 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)
SOFTWOOD(1)
25.0 MT
HARDWOOD(1)
30.3 MT
MARKET PULP(1)
55.3 MT+ =
2013-2015(3):
New capacities: 6.4 mt
Announced Closures: (1.3) mt
Net: 5.1 mt
2013-2015(2):
New capacities: 0.5 mt
Announced Closures: (0.7) mt
Net: (0.2) mt
2013-2015:
New capacities: 6.9 mt
Announced Closures: (2.0) mt
Net: 4.9 mt
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-250
0 0 0
-490-285
-910
-85
-555
-1615
-850
-500
-100
-1085
200
500
850
1575
535
1190
1945
2920
390
1790 1740
420
17301600
-2000
-1500
-1000
-500
0
500
1000
1500
2000
2500
3000
3500
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Closures New capacity
Hardwood (BHKP) Market Pulp Capacity Changes(1)BHKP Net Capacity Changes (1) and
PIX/FOEX BHKP in Europe(2)
* 2000: average price starts on 02/May/2000 | 2013: average price(1) (2)
-50
500
850
1575
45
9051035
2835
-165
175
890
-80
1630
515
0
100
200
300
400
500
600
700
800
900
-500
0
500
1000
1500
2000
2500
3000
20
00*
2
001
2
002
2
003
2
004
2
005
2
006
2
007
2
008
2
009
2
010
2
011
2
012
2
013
Net capacity changes PIX/FOEX Europe
No real good correlation between net capacity increases and prices
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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
Hardwood (BHKP) Market Pulp Softwood (BSKP) Market Pulp
Source: Pory & Fibria
22
0
500
1,000
1,500
2,000
2,500
3,000
051015202530
PM Capacity, 1000 t/a
Technical Age, years
STRONG
2013/IQ
Weighted average
technical age 14.2 years
Weighted average
capacity 1184 000 t/a
Aracruz
Trs L ago as
Veracel
Jacare
0
500
1,000
1,500
2,000
2,500
3,000
051015202530
PM Capacity, 1000 t/a
Technical Age, years
WEAK
STRONGWeighted average
technical age 21.2 years
Weighted average
capacity 503 000 t/a
2013/IQ
North American Pulp Mills Other Pulp Mills Closures Grade Switch On & Off
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Total delivered cash cost will also have an influence on bottom prices
23
Total Cash Costof BHKP
delivered to
Europe
(US$/t)
458 532 498 487 484
475 449 426 403359 324
301
308262
234
13458 76
55 52 57 81 97
4162
56 71 5988 69
556
115
4126
Cash Cost (US$/t) Delivery (US$/t)
Source: Hawkins Wright (Outlook for Market Pulp, December 2013) | Fibrias2013 considering a FX of R$/US$2.16.
592546
SG&A
Others
CAPEX
Interest
Working Capital
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China: Paper capacities expansion continues to go on
China corresponds to 2/3 of global tissue capacity expansion
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
Source: Fibria and Independent Consultants
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(1)Source: PPPC World 20December/2013
6%
12%
-1%
23%
Total North America Western Europe China
+844kt
-37kt
+674kt+196kt
2013 vs. 2012
Shipments of Eucalyptus Pulp (1)
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FibriasCommercial Strategy
26
47%
33%
20%
FibriasPulp End Use2013 FibriasHistorical Sales Distribution - % of sales volume
Europe
96%
3%
1%
21%
44%
35%
North America
Asia
SpecialtiesTissue Printing & Writing
3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13
North America Europe Asia Others
Fibriassales delivered to the least volatile
consumer markets (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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Final Remarks
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Fibria was elected as 1st place inthe pulp & paper sector in thecorporate governance andfuture's vision categories
Fibria is one of the 5 Braziliancompanies nominees to the BestCorporate GovernanceAward from London.
Acknowledgments in Governance, Transparency and Profitability
28
Company of the year,among all industries,according to ValorEconmico.
Valor 1000
XVII ANEFAC-FIPECAFI - SERASAEXPERIAN Prize
Fibria is among the mosttransparent publiccompanies in Brazil,
recognized for thequality of its 2012financial statements.
Fibria was ranked for the forthconsecutive year (2010, 2011,2012 and 2013).
In 2013 Fibria was ranked in fourcategories: CEO, CFO, IR Teamand IR Professional
2013 Institutional Investor LatamRanking - P&P Sector
Fibria was selected as one ofthe 10 best companies intransparency.The only one in
the pulp & papersector.
CDP Brasil 100 ClimateChange 2013 Report
poca Negcios 360
International Recognition byCorporate Governance Report
Fibria was elected as 2ndplace.The prize highlights thebusiness profitability,share profitability,liquidity, corporategovernance and sustainability.
The Best Companies to the Shareholders
Prize of Capital Aberto Magazine
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Fibria is the only Latin America company selectedby RobecoSAM(responsible for DJSI) as one of the10 worldwide leaders in SRI magazines The 10Game Changers Changing the industry throughsustainability.
RobecoSAM - Sustainability Investing Magazine
Selected to Dow Jones World and EmergingMarkets SustainabilityIndices for 2013/14 as theindustry leader of Forestry Resources and Papersector.
DJSI World and DSJI Emerging Markets
Acknowledgments in Sustainability
Fibria was selected again to ISE, the corporatesustainability Index of BM&F Bovespa.
ISE Corporate Sustainability Index (Bovespa)
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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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1,370 1,347 1,358
1,510
1,3011,441
4Q12 3Q13 4Q13Production Sales
4Q13 Results
32
EBITDA (R$ million) and EBITDA Margin (%)Production Cash Cost (R$/t)
Pulp Production and Sales (000 t) Net Revenue (R$ million)
1,853 1,8411,958
4Q12 3Q13 4Q13
Record
446
501
466
4Q12 3Q13 4Q13
+5% 41% 41% 42%
753 762
823
4Q12 3Q13 4Q13
Record
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Net Results (R$ million)4Q13
823 (444)
(185)
810
(5)(118)
(506)
(713) (32)
Adjusted
EBITDA
Rev. (Exp.)
non-recurring /
non-cash
Debt Exchange
Variation /
MtM Hedge
Debt
MtM
Operational
Hedge
Net Interest Depreciation,
amortization
and depletion
IR/CS Other Net Profit (Loss)
Non-recurring impacts
(1) Include non-recurring expenses /non-cash, other exchange and currency variation and other financial incomes and expenditures.
(1)
Refis
Debt HedgeDebt exchange variation
Excluding the non-recurring
effects , profit would
reached approximately R$323 million at 4Q13.