Deutsche Bank Global Emerging Markets Conference
September 15-17, 2010 – New York
1
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 forwardlooking statements, which speak only for the date on which they are made.
2
Agenda
The Company
4
Market Positioning
8
Pulp and Paper Market
15
2Q10 Financials
22
Synergies
26
Corporate Restructuring
28
3
The Company
4
VCP and Aracruz merged to create Fibria
Shareholder Structure
Votorantim
Industrial S.A.
BNDESPar
30.42%1
29.34%
Treasury
0.07%
Free Float
40.17%
NYSE
"FBR"
42%
BOVESPA
"FIBR3"
58%
50.0%
50.0%
Average Trading Volume (2Q10):
US$68 million / day
Veracel
1
Conpacel
Position as of August 31, 2010. 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.
5
Improved Corporate Governance
Migration to BMF&Bovespa's
Policies approved by the
Novo Mercado Listing Segment:
Board of Directors:
- 100% tag along rights
- Corporate Governance
- Independent members in the Board
- Information Disclosure
- One class of share: 1 share = 1 vote
- Stocks Trading
Listed in the Most Important
Sustainability Indexes:
DJSI / ISE
Adoption of International
Accounting Practices
Accessibility to Management
by Financial Communities
Investor Relations Awards:
- Top 5 in Financial Disclosure (Latam)
- Top 5 in Best Corporate Sustainability
6
Improved Corporate Governance
Board and Committees
Shareholder
Meeting
9 Members: 20% Independent
Fiscal Council
Board of
Directors
Chairman: José Luciano Penido
CEO: Carlos Aguiar
Board
Advisory
Committees
Audit and Risks
Executive
Officers
Personnel and Remuneration
Finance
Sustainability
7
Market Positioning
8
Creation of a Winning Player
Superior Asset Combination
Competitive Strengths
Pulp Mill
Paper Mill
Port Terminal
Leadership in Market
Pulp
Scale and Integrated
Operations
Low Production
Cost DNA
Unique Forestry
Management:
Advanced Forestry
Techniques and
Short Harvest Cycle
Strong / Reliable
Customer Base
Forest to Port
Integration Trough
Efficient Logistics
Modern Industrial
Plants
Belmonte
Veracel
Caravelas
Portocel
Três Lagoas
Conpacel
•
•
•
•
•
1 Data
Piracicaba
Jacareí
Santos
Aracruz
Pulp production capacity: 5.4 million t / year
Paper production capacity: 358 thousand t / year
Total area: 1.0 million ha1|Eucalyptus plantation: 585 thousand ha1
4 pulp plants; 2 paper plants and operation of 3 port terminals
High yield in eucalyptus production (avg 45 m3/ha/year) and certified forests
– Short harvest cycle: 6 years vs. 25-70 years in Scandinavia
as of June 30, 2010. Does not include partnership program which represents 125 thousand ha.
9
Unique Brownfield Potential Growth
Planned Capacity Increase
Modern Plants
Aracruz
Capacity: 2.300
Technical age: 9
Best sites for additional capacity ('000 t)
Average Plant Capacity
(‘000 t)
Aracruz IV
2.500
5.300
1.500
2.000
Três Lagoas
Capacity: 1.300
Technical age : 0
Losango I
1.500
1.500
Jacareí
Capacity: 1.100
Technical age : 5
Indonesia
1.000
Três Lagoas II
Uruguay
1.500
Brazil
500
Russia
USA
Portugal
Canada
Sweden
Japan
40
30
Veracel II(1)
Chile
Finland
France
Spain
20
South
Africa
750
China
10
Technical age of equipment (years)
Fibria's Pulp Capacity 1979 - 2009 CAGR: 3.6%
Veracel (1)
Capacity: 550
Technical age : 3
Brownfield
Brownfield
Greenfield
Brownfield
…Expansion…
(1)
Fibria’s 50% stake at Veracel
Source: Fibria
10
Fibria has the best sites ready to duplicate capacity
Capacity expansion ('000 t)
Status of expansion projects
Três Lagoas II
1,500
10,650
Capacity: 1.5 million tons
1,500
1,500
-
Losango
750
5,400
Forest base:
Aracruz IV
-TLS I surplus: 30,000 ha
Need: 150,000 ha
Três Lagoas II
- Leasing: 45,000 ha in 2010
Veracel II
Social-environmental licensing process initiated
Feasibility study to start in 2011
Startup slated for 2014
Fibria 2010
Brownfield
Brownfield
Greenfield
Brownfield
Fibria 2025
Veracel II
Capacity: 1.5 million tons
Negotiations with partner in progress
11
Leadership in the Global Market Pulp Sector
Market Share1
Pulp Production Capacity
2009 ('000 t)
1st
3%
5,400
Fibria
Arauco
11%
~ Twice
the size
APRIL
CMPC
Sodra
Botnia
Tembec
Suzano
Total Pulp:
188 million t
Weyerhaeuser
APP
Total Market Pulp:
48.5 million t
Canfor
Domtar
IP
Ilim
22%
Georgia Pacific
ENCE
Bleached Hardwood Kraft Pulp (BHKP)
Mercer
Bleached Softwood Kraft Pulp (BSKP)
32%
Unbleached Kraft Pulp (UKP)
West Fraser
Mechanical
Cenibra
Stora Enso
0
1.000
2.000
3.000
4.000
5.000
6.000
Total Hardwood Pulp:
25 million t
Source: PÖYRY, 2007 / As for Market Pulp: Pulp and Paper Products Council (PPPC) 2009 and Fibria.
1 Market Share estimated considering 2009 nominal capacity
Total Eucalyptus Pulp:
17 million t
12
Low Production Cash Cost DNA
Cash Cost1 – US$/t
475
468
437
225
320
199
436
152
Hardwood Cash Cost (US$/t) vs Capacity ('000 t)
423
416
US$/ton
600
393
113
238
161
296
266
255
2502
151
155
118
133
243
238
284
310
178
155
232
500
Iberia
400
300
178
250
133
104
95
200
100
0
Iberia
Wood
1
Source: Hawkins Wright Estimate 2Q10
2
Fibria 2Q10 Cash cost without downtimes
Others
0
2.000
4.000
6.000
8.000
10.000
12.000
Capacity ('000 t)
13
Long Term Relationship With Key Clients
Global Footprint
Uses of Fibria’s Pulp – 2Q10
Supplies customized pulp products to specific paper grades
Sole supplier to key customers focused on eucalyptus pulp to the tissue market
Specialty
Top 10 main customers represent on average 65% of sales
21%
Tissue
26%
53%
P&W
Europe
38%
Switzerland
Hungary
North America
27%
Asia
24%
Beijing
Miami
Hong Kong
Sales
Destination1
Brazil
11%
Headquarters
Subsidiaries
Representative offices
NY004GAK_1.wor
NY004GAK_1.wor
1
Sales destination as of 2Q10.
14
Pulp and Paper Market
15
Shipments to Capacity Ratios and Inventories
World market pulp shipments to capacity
96%
94%
92%
95%
92%
90%91%
89%89%89%
88%
86%
85%
85%
85%
79%80%80%
78%
76%
Jul-10
10
Jun-10
10
May-10
10
Apr-10
10
Mar-10
10
Feb-10
10
Dec-09
09
Nov-09
09
Oct-09
09
Sep-09
09
Jul-09
09
Jun-09
09
Apr-09
09
May-09
09
Mar-09
09
Jan-09
09
Dec-08
08
Oct-08
08
Nov-08
08
Sep-08
08
Jul-08
08
Aug-08
08
Jul-10
-10
Jun-10
-10
Apr-10
-10
May-10
10
Mar-10
-10
Feb-10
-10
Jan-10
-10
Dec-09
-09
Nov-09
-09
Oct-09
-09
Sep-09
-09
Aug-09
-09
Jul-09
-09
Jun-09
-09
Apr-09
-09
May-09
09
Mar-09
-09
Jan-09
-09
Feb-09
-09
Feb-09
09
79%
79%
Dec-08
-08
Oct-08
-08
84%
82%
82%83%
81%
Nov-08
-08
Sep-08
-08
89%
88%
88%
86%
85%
89%
88%88%
87%
86%
Source: PPPC Global 100 – Chemical Market Pulp
Source: PPPC Global 100 – P&W
World pulp producers' average days of supply
World pulp consumers' days of supply
50
35
40
30
29
30
20
days
days
25
20
20
Source: PPPC Global 100 – Total Chemical Pulp Producers' stock
Source: PPPC Global 100 – Total Chemical Pulp Consumers' stock
Jul-10
Dec-09
May-09
Oct-08
Mar-08
Aug-07
Jan-07
Jun-06
Nov-05
Apr-05
Jul-10
Dec-09
May-09
Oct-08
Mar-08
Aug-07
Jan-07
Jun-06
15
Nov-05
10
Apr-05
Jul-08
-08
91%
82%
78%
Aug-08
-08
92%
90%
Aug-09
09
82%
95%
93%
Jan-10
10
90%
88%
93%
92%
90%
World P&W paper shipments to capacity
16
Industry Outlook
China: Eucalyptus pulp shipments ('000 t)
Average
347 ktons
Jul-10
Jul
251
235
203
191
Mar-10
Mar
Jan-10
Jan
Dec-09
Dec
Oct-09
Oct
Nov-09
Nov
Sep-09
Sep
Jul-09
Jul
Aug-09
Aug
Jun-09
Jun
Apr-09
Apr
May-09
May
Mar-09
Mar
Jan-09
Jan
Feb-09
Feb
Dec-08
Dec
Out-08
Out
Nov-08
Nov
Sep-08
Sep
Jul-08
Jul
-27%
China
Japan
Aug
Aug-08
Latin America
Jun-08
Jun
Europe
May-08
May
North America
276 267
210
196 204
161
151
128
Jun-10
Jun
296
268
264
0%
355 350363
331
340
293
280
266
356
Average
240 ktons
Total
Average
233 ktons
412
10%
Feb-10
Feb
9%
518
495
15%
Apr-10
Apr
18%
May-10
May
Market pulp: world demand growth (%)
7M2010 x 7M2009
Source: PPPC Global 100 – World Chemical Market Pulp
Source: PPPC Global 100
1.000
US$920/t
900
US$840/t
800
450
700
600
350
500
400
Jul-10
Aug-10
May-10
Jan-10
Mar-10
Nov-09
Sep-09
Jul-09
May-09
Jan-09
CRB
Mar-09
Nov-08
Jul-08
Sep-08
Mar-08
300
May-08
250
European List Price (US$/t) – BHKP
550
Jan-08
Commodity Price Index (CRB)
European List Price (BHKP) x Commodity Index (CRB)
Announced list pulp price
List price (as of September/2010):
•
•
•
North America: US$900/t
Europe: US$870/t
Asia: US$800/t
BHKP List Price
Source: CRB (Commodity Research Bureau) – Bloomberg | BHKP: FOEX
Source: Fibria
17
Pulp Supply x Demand Balance Expected to Remain Tight
Expected Supply x Demand Balance1 – Market Pulp BHKP (million t)
30.1
0.2
1.4
USA
2% p.a.
1.6
0.3
28.3
1.3
0.3
0.6
Others
2% p.a.
Rizhao
(3Q10/2011)
Europe
Fibria
TLS (2010)
5% p.a.
24.8
JBS
Eldorado
(4Q12)
-0.1
28.0
Others2
Asia
4.5% p.a.
2009 BHKP
2009
BHKP
Demand
Demand
Asia
+3.5 MT
+2.1 MT
Demand
Supply
Europe
USA
Others
2012 BHKP 2012 BHKP
2012
BHKP 2009 BHKP
Demand
Supply
Demand
Demand
Asia
Europe
USA
Others
2009 BHKP
2012
BHKP
Supply
Demand
OR3:
94%
OR3:
89%
1
Source: PPPC / Fibria
changes
3 OR: Operating rate
2 Capacity
18
P&W Capacity Changes
P&W paper capacity withdrawals 2009-20101
China: P&W paper capacity changes 2009-20131
Company / Mill
Effective Date
'000 t
Puyang Longfeng
Jan 2009
350
Feb 2009
150
Company
Region/Date
'000 t
M Real
Europe/2009
320
Tralin, Gaotang
International Paper
Europe/2009
250
MCC Yinhe Paper
Jul 2009
200
Others
Europe/2009
455
Yeuyang Paper
Oct 2009
200
International Paper
North America/2009
200
Fujian Nanping Paper
Oct 2009
200
Yeuyang Paper
2010
200
Others
North America/2009
230
Fujian Nanping
March 2010
100
Stora Enso
Europe/2010
210
Sun Paper/IP
March 2010
350
Sappi
Europe/2010
220
Guangxi Yongkai Sugar
April 2010
200
Others
Europe/2010
80
APP, Hainan Island
May 2010
1,200
Domtar
North America/2010
415
Lee&Man
1H 2010
200
International Paper
North America/2010
340
Jiangsu Oji Paper
Q32010
400
Others
North America/2010
280
Shandong Huatai
late 2010
150
December 2010
200
2011
200
China Metalurgical Meili Paper
Q1 2011
300
Shandong Huatai Paper
Q1 2011
500
Shandong Chenming
Q1 2011
1,250
Guangxi Huajin Group
late 2011
340
Sun Paper
Q1 2011
300
Nine Dragons
late 2011
450
April
early 2012
450
April
early 2013
450
2009 = 1.5 million t
Total P&W capacity withdrawals in Europe
and North America
1
Source: TerraChoice July 2010
3,000
2010 = 1.5 million t
2009 = 1.1 million t
2010 = 3.1 million t
Guangxi Jindaxing
Guangxi Yongkai Sugar
Total P&W capacity changes in China
8,400
2011 = 3.3 million t
2012-13 = 0.9 million t
19
China’s Presence in the Market Pulp Sector
China's Hardwood imports of BHKP by country1
China's share of market pulp (%)2
Pulp Shipments (‘000) and Market Share (%)
10.000
7.000
6.000
2008
+59%
2009 Growth
Eucaplyptus
Hardwood
Total
21%
8.000
‘000 t
4.000
6.000
14%
12%
3.000
22%
26%
10%
+107%
4.000
10%
2.000
12%
+2%
1.000
2.000
+51%
+12%
+117%
+38%
+151%
9%
+142% +2%
2005
Brazil is the leading exporter of BHKP to
China, accounting to approximately 41% of
China's total imports in 2009.
1
Source: Hawkins Wright
7%
11%
9%
10%
13%
16%
0
Thailand
Others
USA
Canada
Uruguay
Russia
Chile
Indonesia
Brazil
0
BHKP Total
‘000 t
5.000
2006
2007
2008
2009
Between 2005 and 2009, the Chinese market
share of eucalyptus shipments increased by
17 p.p. (total market pulp: +11 p.p.)
2
Source: PPPC – W20. Coverage for chemical market pulp is 80% of world capacity.
20
Benefiting From China’s Growth
Per Capita Consumption of Tissue by World Region2
China Paper&Board Production and Consumption1
in million tons
kg/person/yr
Kg / capita
120
70
30
100
60
25
50
80
20
40
15
60
30
10
40
20
20
10
0
0
1999
2000
2001
2002
2003
Consumption
2004
2005
Production
2006
2007
2008
5
0
North
America
2009
West
Europe
Japan
Oceania
LatAm
East
Europe
China
Africa
Per Capita
Chinese consumption of high quality tissue paper has a huge potential upside, as GDP per capita
increases.
1
Source: China Paper Association.
2
Source: RISI
21
2Q10 Financials
22
2Q10 Performance
Key figures
Pulp sales mix
2Q10
1Q10
2Q09
2Q10
vs1Q10
2Q10
vs2Q09
Pulp Production (1000t)
1,208
1,314
1,334
-8%
-9%
Pulp Sales (1000t)
1,253
1,322
1,349
-5%
-7%
Paper Producton (1000t)
79
77
94
3%
-16%
Paper sales (1000t)
87
83
104
6%
-16%
1,809
1,675
1,471
8%
23%
Adjusted EBITDA (R$ million)
730
637
389
15%
87%
EBITDA Margin (%)
40%
38%
26%
2 p.p.
14 p.p.
Financial Income (R$ million)
(315)
(341)
1.369
-
-
130
9
920
1,341%
-86%
2Q09
9%
Net Income (R$ million)
Cash cost (R$/t)
11%
11%
21%
27%
27%
24%
23%
37%
32%
Net Revenue (R$ million)
2Q10
1Q10
38%
39%
North America
Europe
Asia
Brazil/Others
EBITDA (R$ million) and EBITDA Margin (%)
38%
40%
499
730
26%
449
637
440
418
389
1Q10
Source: Fibria
2Q10 2Q10 w/o
downtimes
2010E
2Q09
1Q10
2Q10
23
Debt
Debt indicators
(R$ million)
2Q10
1Q10
2Q09
2Q10 vs
1Q10
Average maturity(1) (months)
2Q10 vs
2T09
62
Gross Debt
13,209
13,540
16,145
-2%
-18%
Net Debt / EBITDA(2) (x)
70
7.2
47
5.6
Cash
Net Debt
2,364
2,684
2,953
-12%
-20%
10,846
10,856
13,192
-
-18%
4.7
2Q09
(1)Does
1Q10
(2)Last
not include the debt to former Aracruz shareholders
Debt amortization schedule (R$ billion)
Mar-10
Jun-10
12 months EBITDA
Debt by currency and type
5.1
Short-term debt:
4.6
Jun-09
2Q10
Gross debt by currency
Gross debt by type
from 34% in Jun/09
to16% in Jun/10
3%6%
14%
2.1
1.6
1.9
1.4
1.1
1.9
1.7 1.8
1.7
1.3
71%
1.1 1.2
0.9
37%
29%
13%
27%
2009
2010
2011
2012
2013
2014
2015
2016-2020
Foreign
Jun-09
1
Jun-10
2
Local
Pre-payment
Bonds
Former Aracruz shareholders
BNDES
NCE
Others
1
Amortization schedule as of Jun/2009
2 Amortization schedule as of Jun/2010
24
Financial Turnaround
Liability Management
Achievements
2Q09
2Q10
Access to Capital Markets
Amount
Leverage (Net Debt / EBITDA)
7.2x
4.7x
Eurobond Fibria 2019 @ 9.25% p.a.
US$ 1 bi
7.1% p.a.
6.0% p.a.
Eurobond Fibria 2020 @ 7.5% p.a.
US$ 750 mi
47
70
Pre Export Payment @ 3month Libor + 4.00% p.a.(tranche 1)
US$ 750 mi
43%
16%
Pre Export Payment @ 3month Libor + 4.25% p.a. (tranche 2)
US$ 425 mi
Derivatives debt
US$ 2.6 bi
-
Pre Export Payment @ 3month Libor + 2.8% p.a.
US$ 600 mi
Net Debt
R$ 13.2 bi
R$ 10.8 bi
Cost of Foreign Debt
Average Maturity (months)
Collateral Debt (% of total debt)
25
Synergies
26
Synergies
Net Present Value of the synergies (R$ billion)
4,5
4,3
2Q10 status:
108% of the
projected curve
4,2
Others
Supply Chain
3,4
2%
- Reduction of shipping cost
2.0
2,3
0.5
21%
- Optimization of logistics
Tax
Industrial
27%
11%
1.4
SG&A
16%
- Cost reduction of
chemicals and energy
- Production increase
23%
Forestry
0.5
dec/09
- Reduction of forestry costs
2Q10
dec/10
2011
Accumulated
2012
2013
2014
- Best practices in R&D
Estimated
27
Corporate Restructuring
28
Corporate Restructuring
Event
Date
Acquisition by VCP of additional 28% of Aracruz common shares
Jan 20, 2009
VCP Capital Increase
Apr 14, 2009
VCP conversion of prefered into common shares
Jun 12, 2009
Tender Offer for Aracruz common shareholders
Jul 02, 2009
Incorporation proposal for the 0.1347 ratio
Aug 24, 2009
Merger of Aracruz shares into VCP approval
Aug 24, 2009
Shareholderes Agreement - VID and BNDES
Oct 29, 2009
End of withdrawal rights period
Nov 12, 2009
End of Aracruz trading
Nov 17, 2009
Fibria trading start (Bovespa: FIBR3 / NYSE: FBR)
Nov 18, 2009
Approval of the merger of Aracruz into Fibria
Dec 22, 2009
Migration to Novo Mercado listing segment at BM&FBovespa
May 20, 2010
29
Investor Relations Team:
Phone: +55 11 2138-4565
João Elek – IRO
Email: ir@fibria.com.br
André Gonçalves – General Manager
Fernanda Naveiro Vaz
Anna Laura Linkewitsch
Roberto Costa
30
30