Comunicado ao Mercado sobre Reuni
Transcript of Comunicado ao Mercado sobre Reuni
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Financial Highlights
Guilherme Cavalcanti - CFO
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Focus on Investment Grade
Main Achievements
US$ 1.4 billion debt reduction in twelve months
Net debt/EBITDA ratio in US$ of 3.0x, the lowest level since Fibrias creation Cost of debt in US$ reduced to 4.7% p.a. (Jun/12: 5.4% p.a)
Free cash flow in the LTM totaled R$956 million, 7% FCF yield
Working Capital Improvements
Hedging Strategy All rating agencies at one notch below Investment Grade:
Outlook upgrade by Fitch (Feb/2013) and Moodys (Sep/2013)
Rating upgrade from BB/Positive to BB+/Stable by S&P (Mar/2013)
Selected as sector leader in Dow Jones Sustainability Indices
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1,247
485
183
(648)
(109) (5)
(220)
(102)
36
(16)
Netrevenues
COGS/Freight
SG&A Others EBITDA CAPEX Interest WorkingCapital
Taxes/Others
LTM 2Q2013
(1) On a cash basis, does not include depreciation, amortization and depletion (2) Includes advance to forest partner program (3) IR/CS and other
(2)
FCF Yield 7%
(1) (3)
LTM 2Q13 Results (R$/ton)
Fibria delivers one of the highest EBITDA/t andFCF/t of the industry
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Acknowledgements
4
Company of the year,among all industries,according to ValorEconmico.
In the Pulp and Paper Sector:1st place in Value Generation1st place in Net Revenue
Valor 1000
XVII ANEFAC-FIPECAFI - SERASAEXPERIAN Prize
Fibria is among the mosttransparent publiccompanies (with revenueof up to R$5 billions) inBrazil; recognized for the
quality of its 2012financial statements.
Fibria was ranked for the forthconsecutive year (2010, 2011,2012 and 2013).
In 2013 Fibria was ranked infour categories: CEO, CFO, IRTeam and IR Professional
2013 Institutional Investor LatamRanking - P&P Sector
Fibria was chosen byRobecoSAM as one of the 10Game Changers of tomorrowamong all the industriesworldwide analyzed at DowJones Sustainability Index.Fibrias case was published inthe Sustainability InvestingMagazine.
Sustainability Investing
Fibria was elected by pocaNegcios 360 as 1st place inthe pulp & paper sector in thecorporate governance andfuture's vision categories.
poca Negcios 360
Fibria is one of the 5Brazilian companiesnominees to the BestCorporate GovernanceAward from London.
International Recognition byCorporate Governance Report
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Share Performance
5
-
50
100
150
200
250
Fibria Ibovespa
Base: 100 Source: Bloomberg
+2%
+118%
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MARKET PULPENTERING A NEW AGE OF COMPETITION
2ND FIBRIA INVESTOR TOURTrs Lagoas, MS, October 2, 2013
Joo CordeiroPyry Management Consulting
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COPYRIGHTPYRY
KEY QUESTIONS
02 OCT 2013
What has fundamentally changed in thebusiness of market pulp during the lastfour decades ?
How to compete in the future given theevolving dynamics of markets, clientsand competitors ?
How to innovate and create competitiveadvantage while coping with risingoperating costs ?
FIBRIA INVESTOR TOUR 7
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COPYRIGHTPYRY
WE ARE WITNESSING A MAJOR STRUCTURAL SHIFT
0
100
200
300
400
500Million tons
Mature
Emerging
Structural Shift:
Mature markets
Graphic paper sunset Diminishing availability of RCF
Emerging Markets
More Packaging & Hygiene More Specialties Graphic papers ?
Global Paper and Board Demand 1980-2025
Graphic
Papers
*RCF: recycled fibreSource: Pyry
02 OCT 2013FIBRIA INVESTOR TOUR 9
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COPYRIGHTPYRY
CHINA IN THE DRIVING SEAT OF FIBRE DEMAND
0
50
100
150
200
250
1996 2000 2004 2008 2012
1.8%/a
13.2%/a
China
0
15
30
45
60
75
1996 2000 2004 2008 2012
0.7%/a
15.1%/a
Recycled Fibre
Demand
China
Market Pulp
Demand
Rest of the WorldRest of the World
CAGR CAGR
Million tons Million tons
Source: Pyry
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COPYRIGHTPYRY
WHILE THE SHARE OF MARKET PULP INCREASES.
02 OCT 2013FIBRIA INVESTOR TOUR 11
20
30
40
1995 2000 2005 2010 2015 2020 2025
%
Share of Market Pulp*
* share of market pulp out of total wood pulps
Total Share of BHKP
1995 38 13 34%
2015 65 32 49%
2025 78 42 54%
Global Market Pulp Demandmillion tons
Source: Pyry
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COPYRIGHTPYRY
WHAT HAVE BEEN THE MAIN CHANGES
IN MARKET PULP BUSINESS DURING THE LAST 40 YEARS
02 OCT 2013FIBRIA INVESTOR TOUR
WoodQuality & Cost
Technology andMill Size
and what is the future impact on Brazilian business ?
LouderClient Voice
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COPYRIGHTPYRY
CAPITAL AND WOOD COST INTENSITY
02 OCT 2013FIBRIA INVESTOR TOUR
Kraft Pulp Mill Capex Wood Cost
0%
5%
10%
15%
20%
25%
1974 1986 2002 2006 2013
Pulp Price Assumed in Feasibility Study = 100%
Savings from economies-of-scale were offset but higher wood costs ?
Source: Pyry
13
0
1.000
2.000
3.000
4.000
1974 1986 2002 2006 2013
USD/ADt (real 2013)
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SIZE STILL MATTERS !
-500
-250
0
250
500
750
1.000
1.250
5.0 % 6.0 % 7.0 % 8.0 % 9.0 % 10.0 % 11.0 % 12.0 % 13.0 %
IRR
WACC (%)
NetPresentValue
USD million
750 000 t/a
1.5 M t/a
1.3 M t/a
1.0 M t/a
ILLUSTRATIVE
02 OCT 2013FIBRIA INVESTOR TOUR
Illustrative NPV Sensitivity to WACC and Mill Size
Source: Pyry
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COPYRIGHTPYRY02 OCT 2013
FIBRIA INVESTOR TOUR
WHY WOOD COSTS ARE RISING ? 1979
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10
2030
40
50
60
7080
90
100
110
120
02 OCT 2013FIBRIA INVESTOR TOUR
THE END OF CHEAP WOOD ?
Development of hardwood pulpwood cost delivered at mill
USD/msob, real terms 2012
Source: Pyry
16
Finland Birch
Brazil Euca
US South Mixed HW
Note: Deflator used for real prices US WPI
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COPYRIGHTPYRY
WAR AGAINST WOOD COST INFLATION !
02 OCT 2013FIBRIA INVESTOR TOUR
Real cost increase of:
Labour Land
Fertilizer Herbicides Fuel etc
What are the main causes of rising wood costs ?
Index 2000=100
100
200
300
400
2000 2003 2006 2009 2012
INCAF
IPCA
Brazilian Wood Cost Index
Brazilian inflation
Source: Pyry
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FOREST PRODUCTIVITYARE WE REACHING A CEILING?
02 OCT 2013FIBRIA INVESTOR TOUR
1970s 2010s
m3/ha.aPlantation Forest Productivity in Brazil
Source: Pyry
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GENETICS
KEY ASSET FOR FUTURE DIFFERENTIATION
02 OCT 2013FIBRIA INVESTOR TOUR 19
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COPYRIGHTPYRY02 OCT 2013
FIBRIA INVESTOR TOUR 20
NEW COMPETITION ON ASIA?
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COPYRIGHTPYRY
0
200
400
600
800
1 000
1 200
1 400
1 600
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34
THE WORLD IS FLAT
Global BHKP Supply Cost Curve
Cummulative Capacity Million t/a
1991
1996
2001 20062012
Cost positionof marginal
producer
The model has been copied by manythe result is this !
Source: Pyry
02 OCT 2013FIBRIA INVESTOR TOUR 21
USD/ADt,2013costlevel
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COPYRIGHTPYRY
BRAZILIAN MILLS HAVE AN ADVANTAGE
OVER CHINESE FOR DELIVERIES TO CHINA
Cash cost competitiveness of market BHKP mills delivered to Hong Kong
02 OCT 2013FIBRIA INVESTOR TOUR
0
200
400
600
800
1000
1200
0 1000 2000 3000 4000 5000 6000 7000 8000
USD/ADt 2013/II
BEKP net price in China
Cumulative Production Capacity 1000 ADt/a
Brazilian mills
Chinese mills
Source: Pyry
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INCREASING SHARE OF BRAZILIAN MARKET PULP
02 OCT 2013FIBRIA INVESTOR TOUR
There is room to further consolidate the market pulp business !
Eldorado
Mercer Int
Domtar
Weyerhaeuser
Mets Group
UPM
APP
Suzano
Georgia-Pacific
CMPC
Stora Enso
International PaperArauco
RGM/APRIL
Fibria
Top Bleached Kraft
Pulp Producers in 2013
Brazilian Share of Global
Bleached Kraft Market Pulp
0
15
30
1980 1990 2000 2013
%
BHKP
BSKP+BHKP
BHKP
BSKP
Source: Pyry
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COPYRIGHTPYRY
NEW COMPETITION ON ASIA ?
02 OCT 2013FIBRIA INVESTOR TOUR
0
5
10
15
20
25
Integrated Market
Up to 2025, more than 30 million tons including integrated and market pulp.
0
5
10
15
20
25
Brazil China Rest of Asia
BHKP
BCMTP
Planned
Decided
Million tons Million tons
MainlyMarket
MainlyIntegrated Many
Plans
Source: Pyry
Announced BHKP and BCTMP capacity changes in Asia and in Brazil
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COPYRIGHTPYRY
BUT SOME CAPACITY GETS CLOSEDEVERY YEAR
FIBRIA INVESTOR TOUR
Not everyone remembers that on average some 3 million tons
of bleached kraft pulp gets closed every year !
-6,0
-5,0
-4,0
-3,0
-2,0
-1,0
0,0
2000 2002 2004 2006 2008 2010 2012
Million tons
02 OCT 2013
Global Annual Closures and Integration ofBleached Kraft Pulp Capacity
Source: Pyry
BHKP Market
BHKP Integrated
BSKP Market
BSKP Integrated
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COPYRIGHTPYRY
AN EYE ON THE FUTURE
BIO-BASED FUELS, CHEMICALS AND NEW MATERIALS
02 OCT 2013FIBRIA INVESTOR TOUR 26
Sugar
platform
Oil & Fats
platform
Bioplastics
Surfactants
Lubricants
Solvents
Bio-based
fuels &
chemicals
Coca Colas plant bottle Disposable plates & cupsAutomotive interior
Detergents Healthcare & cosmetics Industrial cleaners
Marine oils Chainsaw lubricants Drilling fluids
Paint & coatings Inks De-icing agents
e.g tall oil rosins,ethylene, lactic acid,propylene glycol,propanediol, farnesene,succinic acid, butanediol
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COPYRIGHTPYRY
ENTERING A NEW AGE OF COMPETITION
02 OCT 2013FIBRIA INVESTOR TOUR
Are we ready to
reinvent ourIndustry?
Mill sizes will continue to increase.
Declared war on wood cost inflation.
Facing emerging competition from withinBrazil and from South East Asia.
More differentiation and innovationthrough intensive R&D from forest to product.
Develop Fit-for-client product andservice portfolio in order to differentiate
Taking an active role on consolidation whilebringing investment discipline to the industry.
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COPYRIGHTPYRY 2802 OCT 2013FIBRIA INVESTOR TOUR
Questions ?
Mr. Joo [email protected]
It is not the strongest of the species that survives, nor the most
intelligent, but the one most responsive to change.
Charles Darwin
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Competitive Strategy
Marcelo Castelli - CEO
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Th t it f i t d i Fib i
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STRUCTURE AND PROCESS SIMPLIFICATION
SG&A (R$ million)EBITDA (R$ million) - EBITDA MARGIN (%)
TARGET TO FULLY ABSORB INFLATION
CASH COST (R$/ton)
BEST PRACTICES AND OPERATING STABILITY
PRODUCTION VOLUME (000 t)
The maturity of synergies captured since Fibriascreation improved its operating indicators
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Historical Value Inflation Effect**
* Excludes Conpacel | ** IPCA index considered to calculate the inflation effect
4,600
5,0545,184 5,299 5,246
2009* 2010* 2011 2012 2Q13 LTM
432 448 471 473497
578 556 534 507
2009* 2010* 2011 2012 2Q13 LTM
+14% -14%
Historical Value Inflation Effect**
-24%
593 594 605 584 605
793 737 687626
2009* 2010* 2011 2012 2Q13 LTM
1,522
2,526
1,9642,253
2,53729%
40%34% 36%
39%
2009* 2010* 2011 2012 2Q13 LTM
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* From June 30, 2012 on, net debt/EBITDA ratio for covenant purposes are calculated in US Dollars and the limit is 4.5x** 2013 year end market consensus
and reduced its debt.
6.5
3.6
4.8
3.4 3.1 3.32.7
7.1
3.8
4.23.3 3.1 3.0
Net Debt/EBITDA (x) R$
Net Debt/EBITDA (x) US$*
MarketConsensus
11.0
9.8 9.5
7.7 7.58.3
2009 2010 2011 2012 1Q13 2Q13 2013**
NET DEBT (R$ BILLION)
FX RATE (R$/US$)
1.67
1.76
1.74
2.00Average LTM
End of Period 1.87
1.67
1.95
2.04
2.01
2.00
2.22
2.07
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2.24
2.13
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The demand for pulp reaches historical levels,driven by eucalyptus pulp
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GLOBAL DEMAND FOR PULP (IN MT) ACCUMULATED GROWTH IN THEDEMAND FOR PULP (1991 - 2012)
29 3031 33
35 35 36 38 3841 41 42
44 4648 49
51 53 52 5254
56 57
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Softwood Eucalyptus pulp
Other types of hardwood Other
68%
89%
13%
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Softwood Eucalyptus pulp
Other types of hardwood Other
Source: Hawkings Wright, Analysis of Fibrias Strategy Department
379%
89%
68%
13%
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Source: RISI, LCA, Analysis of Fibrias Strategy Department
Growth prospects for the paper industry remainpositive in almost every grade
GDPTISSUE NEWSPRINT PACKAGINGP&W
GLOBAL
Oceania
Africa
Latin America
Asia (ex-China)
China
Europe
North America -2.9%
-1.9%
2.6%
1.2%
2.7%
3.6%
-0.5%
0.3%
1.4%
3.2%
8.8%
3.1%
4.8%
5.4%
2.3%
4.2%
-4.7%
-3.6%
-1.8%
-1.1%
0.7%
1.6%
-3.7%
2.3 %
1.1%
1.6%
4.4%
3.5%
3.4%
4.3%
0.6%
2.9% 3.7%
4.7%
6.6%
4.6%
1.4%
3.4%
3.0%
2.5%
CAGR OF DEMAND BY REGION AND TYPE OF PAPER2012 - 2022
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Fragmented industry with new ongoing projects
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MARKET PULP CAPACITY RANKING 2013 (1) (000T)MAIN PROJECTS
0 2000 4000 6000
Canfor
ENCEWest Fraser
Eldorado
Metsa Fibre
Mercer
IP
Ilim
Domtar
Stora Enso
WeyerhaeuserPaper Excellence
Suzano
Sodra
UPM-Kymmene
CMPC
Georgia Pacific
Arauco
APRIL
Fibria
Bleached Softwood Kraft Pulp (BSKP)
Bleached Hardwood Kraft Pulp (BHKP)
Unbleached Kraft Pulp (UKP)
Mechanical
Project Country Capacity Timing Fiber Status
Suzano Brazil 1.5 Mt 4Q2013 BEKP Confirmed
Arauco / Stora Uruguay 1.3Mt 1Q2014 BEKP Confirmed
CMPC Guaba II Brazil 1.3 Mt 2Q2015 BEKP Confirmed
Klabin Paran Brazil 1.5 Mt(2) 2Q2016BEKP/
BSKP/FluffUnconfirmed
Fibria Trs Lagoas IIBrazil 1.5 Mt - BEKP Unconfirmed
APP South Sumatra Indonesia1.5 Mt -2.0 Mt
- BHKP Unconfirmed
MAIN QUESTIONS ABOUT CAPACITY
Minimum required return for new projects
Closures due to increasing costs, higher technicalage of recovery boilers and exchange rates
Fiber substitution: Softwood x Hardwood andRecycled x Virgin Fiber
(1) Hawkins WrightOutlook for Market Pulp, January 2013
(2) About 1.0 Mt refers to hardwood market pulp
I dditi th l f j t t
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450
700 700900
780
11001300
1500
2000
2.7%
3.8%
3.4%
4.3%
3.5%
4.7%5.2% 5.5%
6.5%
2000 2002 2004 2005 2006 2007 2009 2013 2017
In addition, the scale of new projects represents astronger impact on the industrys operating rate
37Source: Analysis of Fibrias Strategy
EVOLUTION OF AVERAGE SCALE OF HARDWOOD PROJECTS (KT) AND % OVER DEMAND
Main Projects HW % over Total Demand
Gi th i Fib i i di if i it
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Given the scenario, Fibria is diversifying its sourcesof value creation.
Drivers of continuous improvement and innovation Continuous search for operating excellence and cost control initiatives
Forestry biotechnology
Development of customized products - fit for client
Actions to reduce employed capital
Growth initiatives
Complementary actions in the Value Chain
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Fib i ti l t t i t
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Fibrias operational strategies tocompetitiveness and growth
IncrementalInnovations
TechnologicallyAdvancedWorkforce
Control ofInternalInflation
Stabilityfor Cost andProductivity
Performance
SpecificProjects
for Cost Reduction
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R lt f i t t i d ti f
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Results of winner strategies and perspectives fornear future
Technically Advanced Workforce I9 Program Quantitative Ideas (n) Raw Materials Internal Inflation (%)
Operating Stability (%) Production (t/day, full year 354d) Cash Cost (R$/t)
90.5
91.892.5
2010 2011 2012 NEAR FUT
14.28
14.6414.92
2010 2011 2012 NEAR FUT
6.4 6.36.9
2010 2011 2012 NEAR FUT
448
471 473
2010* 2011 2012 NEAR FUT
182 170 165
2010 2011 2012 NEAR FUT
STABLESTABLE
NPV Captured = Mi R$350Reward = Mi R$2.6 Engineers: 80% are Pulp Specialists
Operators:60% are Pulp Technician
Maintenance:70% Specific Training
Qualifications:Continuous Program
Products Development: AP Product, EucaStrong, High Kappa, Low Brightness are improved or new products
Aracruz + Trs Lagoas +
Jacare + 50% Veracel
Average official Inflation6.1% per year
>90 % Excellence
>87 % Good>84 % Regular
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O ti St bilit b d t d ti
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Jacare Production t/dSep 2013
Operating Stability based on nonstop productionBright September!!
Trs Lagoas Production t/dSep 2013
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Veracel Production t/dSep 2013 Aracruz Production t/dSep 2013
OS = 97,4 % OS = 97,5 %
OS = 96,4 % OS = 92,6 %
The biggest
Stability&
Production
of the year
S ifi j t f t d ti ( l )
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ARACRUZWarm up D0 Stage at Mill C
Specific projects for cost reduction (examples)
Objectives (Investment = R$2.4 Million):Increase Kappa number Dig CCAT reductionIncrease Tensile Index of Line C pulp
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Potential Gains:Cash Cost Unit = - 0.62 R$/tCash Cost Fibria = - 0.31 R$/tStart-up: May/2014
Bleaching Line C
S ifi j t f t d ti ( l )
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Specific projects for cost reduction (examples)
JACAREImprovements at Fiber Line C
Objectives (Investment = R$6.2 Million):Reduction of 3 kg/t of Chlorine Dioxide as TAC
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Potential Gains:Cash Cost Unit = - 2.90 R$/tCash Cost Fibria =- 0.68 R$/t
Start-up: Aug/2014 and Sep/2015
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UAVs Unmanned Aerial Vehicle (DRONE)
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UAVsUnmanned Aerial Vehicle (DRONE)
3 years of developmentOperational Scale Oct/2013
Productivity increase up to 700 ha/h
Forest view from above
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UAVs Unmanned Aerial Vehicle (DRONE)
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UAVsUnmanned Aerial Vehicle (DRONE)
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UAVs Unmanned Aerial Vehicle (DRONE)
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SURVIVAL REPORTCOPPICINGMAPPING
UAVsUnmanned Aerial Vehicle (DRONE)
PRODUCTS
Survival
Weeds Management
Validation of Coppice
Cartographic survey
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Harvester + Forwarder With Winch
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Harvester + Forwarder With Winch
Mooring system of forest machines intheir own trees from the edge of the field
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Harvester + Forwarder With Winch
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Harvester + Forwarder With Winch
+ 20% mechanized area (JAC)
~ 450 thousand m wood
CAPEX: R$7 million (2013/2014)
Cash Cost Fibria: ~ - 0.80 R$/adt
Cash Cost Jacare: ~ - 4.00 R$/adt
NPV 66 millionAnnual Saving R$ 5 million
90 % Mechanized70 % Mechanized
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Hook Up System
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Hook Up System
"Hook up system" is a kit to optimize the flow of hydraulic oil from the base machine
to the head (74 machines)
Reduction in diesel consumption
Improved performance of the assembly.
Source: colheita ARA 52
Hook Up System
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LITERS PER HOUR
Hook Up System
22.6
19.8
Before After
Payback at the first monthAnnual savings R$ 1 million
- 12.4%
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Productivity gains
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Productivity gains
MAI* Pulp:(adt/ha/year)
10.6 10.912.1
15.0 15.0 15.0 15.0 15.0
2010 2015 2020 2025 2030 2035 2040 2045
Expected results in the new forests planted in Fibrias own forests, adopting classical breeding +molecular markers technologies.
FIBRIAS GAINS IN IMACEL DUE TO INVESTMENTS IN BIOTECHNOLOGY (TONS OF PULP/HA/YEAR)
2012 field trials = 11.9
Conservative assumption
*MAI: Mean annual increment
How: Genetic improvement; forestry management; industrial yield.
Benefits: Availability of land for other purposes; increase in competitiveness; higher return to
shareholders and to the society as a whole.
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Innovation in the Core Business
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Innovation in the Core Business
The Technology Center (CT) operates within all company units and is directly involved with Fibriasmain operations, from the production of seedlings to the development of new products andservices.
The product portfolio is fully aligned with Fibrias strategy and is managed by a system based onthe Stage and Gate methodology.
In 2013, projects are distributed in the following dimensions:
Operating excellence
Differentiation through disruptive technologies
Business sustainability (social and environmental development)
New businesses
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Redirecting the innovation focus
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Redirecting the innovation focus
29%
47%
6%
18%
Business sustainability Disruptive technologies
New businesses Operating excellence
35%41% 47%
52%36%
18%
13% 23%29%
6%
2011 2012 2013
Disruptive technologies Operating excellence
Business sustainability New businesses
34%
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2013
Biotechnology: Plant Propagation
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Biotechnology: Plant Propagation
Clone multiplication in laboratory: BIOUNITS
Successful Case 2013 XIII ANPEI Conference on Technological Innovation
Increase by 40 times in the clone multiplication rate
38% decrease in the seedling production time (cycle)
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Forest Biotechnology:
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Forest Biotechnology:Genetic Transformation of Elite Clones
The Genetic Transformation of the elite clones is a technological rupture held by Fibria.
77 ha of field experiments already installed: focus on the technological bio-safetyassessment.
Fibria does not have commercial crops with transgenic eucalyptus.
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Product Development
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Product Development
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Fiber differentiation
through chemicalboosting
Fiber differentiation
through forest and/orprocess tunning
Pulp application
engineering:Capabilities & Know-how
DRIVERS
1. Papermaking performance improvement2. Paper performance improvement
3. Share increase by displacing RF, SWKP and/or other HWKP
Fiber Differentiation
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Fiber Differentiation
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TensileD
evelopment
Drainability through refining
NSK Avg EU/NA
EUCASTRONG
BEKP
Bulk
Tensile
NSK Avg EU/NA
EUCASTRONG
BEKP
Bulk
Tensile
Becames PossibleEucastrong
TypicalBehavior
Pulp Application Combination of
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BEKP refined as usual
Pulp Application Combination ofCapability and Know-How
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Fibriahas protocols and commercial equipment dedicated to assist and to recommendoptimized refining strategies.
BEKP refined at ULIR(1)
Source: Fibria and Eucalyptus Pulp for Tissue Making: A winning design, Tissue World 2009 Nice, France - Fernando S. Lafraya, AFINA Consulting(1) Ultra Low Intensity Refining
Fibrias BEKP Expertise:
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Fibria s BEKP Expertise:Anticipating Market Movements
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Technologies had allowed the increase of BEKP up to 70%in NA premium bath tissue!
0%
20%
40%
60%
80%
1960s 1970s 1980s 1990s 2000s 2010
Participation
in
theF
urnish
Premium Bath 2-Ply
HW HW (euc) %
SW (BSK) % Broke %
Source: Fisher International, Inc. January 2011
(other) %
There are various options to reduce capital
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p pexpenditures in Fibrias value chain
POTENTIAL ACTIONS TO REDUCE EMPLOYED CAPITAL
LAND
Sales of areas with high real estate potential
Real estate land funds
FOREST
Creation of planting funds, defining purchase options for wood(new and current areas)
INDUSTRY AND LOGISTICS
Outsourcing of non-core production phases and logistics assets
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Fibria is preparing for its organic expansion, based
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p p g g pon a model that creates different growth options
STRATEGY FOR POTENTIAL ORGANIC EXPANSION
1. Maintain forest formation through: Implementation of new areas Renting Partnership with TIMOs Reinvestment of resources from assets divestments
2. Obtain licensing for all potential expansions
3. Continuous investigation of new low cost areas
Usage of wood fororganic growth
Wood sales in themarket or usage in new
businesses
Usage of areasin M&A events
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Horizonte II Projecta way to growing!
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j y g g
3 WoodPreparation
Lines 17,200 m3/d
1 Digester5,100 Adt/d
1 Fiber Line4,750 Adt/d
2 Drying Machines
2 x 2,500 Adt/d4 Baling Lines
TRS LAGOAS LINE II
1 Effluent Treatment132,000 m3/d
1 Water Treatment144,000 m3//d
1 Recovery Boiler6,800 TSS/d
3 Turbogenerator3x 80 MW
1 Lime Kiln1,200 t/d
1 Evaporation1,600 t/h H2O
1 Caustisizing15,000 m3WL/d
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Electric Power Export tripled with Line II
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p pLow CO2 Emission Matrix
LINE I + IP PM1
90 MWRB1
RB2
PB1
PB2
TG1
TG2
TG3
TG4
TG5
81,5 MW
81,5MW
80 MW
80 MW
80 MW
Escelsa
Export50 MW
GreenMatrix
MultipleFuel
Sources
Licor
85%
Gas7%
Biom8%
Total LI + LIIExport
150 MW
10 MW
LINE II + IP PM2
104 MW
Export
100 MW
LKLegend:TG - Turbo GeneratorPB - Power BoilerRB - Recovery BoilerLK - Lime Kiln
Stean Power
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Fibria is prepared to grow
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p p g
Installation License: L I n. 84/2011 revalidated to 2017
Authorized Capacity: 1,750,000ADtB/year (4,794 tpd)
Total Capacity: 3,050,000 ADtB/year (8,616 tpd)
Other Authorizations:
Co-generation: 259,5 MW
Expansion & New Capacity of Landfill: 204,800 + 750,000 m3
Production of Soil Corrective from Residues: 31,000 t/year
Burns of Secondary Mud from ETE in Biomass Power Boiler
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Growth from consolidation present challenges,
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p gbut benefits are undisputed
CHALLENGES
Strategic motivation and timing of the otherparty
Relative valuation
Governance, control issues
Debt level of players
BENEFITS
Huge potential synergies
Market and client portfolio consolidation
Rationalization of pipeline of new project
GROWTH FROM CONSOLIDATION IS KEY DRIVER FORVALUE CREATION
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Complementary actions include assessing
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opportunities in biotechnology and in the logisticschain
Value drivers to improve on the current situation
Growth Initiatives
Complementary actions in the value chain Opportunities in the Bio-market Actions in the Logistics Chain
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The value chain of the Forestry Industry has
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LAND
opportunities to be explored
VALUE CHAIN OF THE FORESTRY INDUSTRY
FOREST FINAL USES
Land
What is the best finaluse for investments
in land?
What is the bestfinal use for
wood ? FurnitureInd.
Charcoal
Pulp
Standingtimber
Power
MDF, particleboard
Pellets
Biofuels
OtherBusinesses
Sale to thirdparties
Bio-Products
Paper
Lease land
Wind power
Forestry
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Aware of these opportunities, Fibria has beeninvestigating a series of technologies
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investigating a series of technologies
TechnologicalMaturity
Economic Attractiveness
Technology A
Technology B
Technology E
Technology F
Pyrolysis
Technology D
Prior i ty 1
P-Oil
Prior i ty 2
RelativeMarket Size
Source: Fibria Bio-Strategy Project
Economic Attractiveness
Technology Fibria
PyrolysisEffective participation: Ensyn
investment
Gasification On going studies
PelletizationLittle attractive under current
conditions
Cellulosic Ethanol On going studies
Bio-chemicals On going studies
Bio-polymers On going studies
Lignoboost Pilot equipment
Carbon Fiber Strategic partnership
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Conceptual LayoutBio-Oil Plant
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Fibria can add value by taking advantages of
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the opportunities in the logistics chain
OPPORTUNITIES IN THE LOGISTICS CHAIN
Taking advantage of Portocels opportunities (current operations and expansion)
PORTOCEL I PORTOCEL II
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