PULP AND PAPER 3Q15 Results Presentation
Disclaimer The statements in this presentation constitute projections or forward-looking statements. Such statements are subject to known and unknown risks and uncertainties that could cause the expectations expressed to not materialize or the actual results to differ materially from the expected results. These risks include changes in future demand for the Company’s products, changes in factors that affect domestic and international product prices, changes in cost structures, changes in the seasonality of markets, pricing actions by competitors, foreign currency fluctuations and changes in the political and economic environments in Brazil, in emerging markets or internationally. 2
Agenda 1. Results 2. Strategy 3
Record figures in 3Q15… OPERATING CASH GENERATION¹ LTM² (R$ billion) 3.0 2.2 1.9 1.5 1.3 1.2 1.2 1.1 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Note: (1) Operating cash generation in the last 12 months considers Adjusted EBITDA less sustain CAPEX (2) Last 12 months Record-high Adjusted EBITDA of R$1.48 billion in 3Q15, margin of 49% Lowest level of SG&A expenses as a ratio of net revenue: 7.4% in 3Q15 New round of liability management Net debt/Adjusted EBITDA ratio of 3.0x Interim dividends of R$120 million 4
Pulp production and sales… Production (‘000 tons) Sales (‘000 tons) 3,454 3,456 3,139 2,969 903 926 979 948 1,245 1,224 1,200 1,132 2,551 2,530 315 2,161 340 335 2,022 328 929 889 860 804 3Q14 3Q15 9M14 9M15 3Q14 3Q15 9M14 9M15 Pulp Paper Pulp Paper Low global BHKP inventories Increase in paper exports Growing pulp demand Brazil’s paper demand: -14% yoy Production resumed at line 1 of Mucuri mill Dumping taxes to be revised in January/16 after downtime ... are record-high in the quarter 5
Cash cost still impacted by wood supply in Mucuri mill… Consolidated Cash Cost Ex-Maintenance Downtime (R$ / ton) 56 668 (14) 626 2Q15 Wood Other 3Q15 60% 580 560 560 504 51% 40% 540 520 20% 500 37% 480 0% 460 2Q15 3Q15 Average distance of market wood in Mucuri (Km) Market wood in Mucuri (%) … trending towards gradual recovery in 2016 6
R esults improved through… COGS LTM¹ (R$/ton) Net Revenue LTM¹ (R$ million) 9,692 Inflation on: : +9.1% .1% 8,686 +1.8% .8% 8,012 1.316 1,293 1,285 1,284 7,265 1,265 6,748 Sep/14 Dec/14 Mar/15 Jun/15 Sep/15 Sep/14 Dec/14 Mar/15 Jun/15 Sep/15 Adjusted EBITDA Margin LTM 1 (%) SG&A / Net Revenue LTM¹ (%) 43.3% 9.8% 9.5% 38.4% 36.1% 9.0% 8.8% 33.8% 32.1% 8.5% Sep/14 Dec/14 Mar/15 Jun/15 Sep/15 Sep/14 Dec/14 Mar/15 Jun/15 Sep/15 ...discipline of costs and expenses 7 Note: (1) last twelve months
Improving results even when excluding… Adjusted EBITDA LTM (R$ million) Increase se of +233% 4,194 3,333 2,895 2,452 2,169 2,057 1,944 1,781 1,631 1,459 1,349 1,260 DEC/12 MAR/13 JUN/13 SEP/13 DEC/13 MAR/14 JUN/14 SEP/14 DEC/14 MAR/15 JUN/15 SEP/15 Adjusted EBITDA LTM (US$ million) Increase se of +115% 1,378 1,233 1,154 1,036 950 899 863 820 772 715 670 641 DEC/12 MAR/13 JUN/13 SEP/13 DEC/13 MAR/14 JUN/14 SEP/14 DEC/14 MAR/15 JUN/15 SEP/15 ...the FX variable 8
Investments in structural competitiveness… Capex (R$ billion) 1.8 Retrofitting 1.3 0.7 Sustain 0.5 1.1 0.8 9M15 2015e Suzano Digester: Completed in 2Q15 Limeira Digester: 4Q15 Energy Efficiency Programs: To be concluded in 4Q15 Retrofitting of Harvesting Equipment: Conclusion in 4Q15 Forest Logistics (light-duty trucks): 4Q15 Biomass Boiler in Limeira: 1Q16 Fluff: Start-up in December/15 ...with high returns and low risk 9
Debt reduction... Net Debt/ Adjusted EBITDA (x) Average Cost of Debt (%) 5.2x 4.8x 4.1x Dec/13 94.4% 3.7x 4.8% 3.0x 2.3x Dec/14 91.2% 4.7% Sep/15 84.2% Dec/13 Dec/14 Sep/15 4.0% BRL USD BRL USD Note: Debt in BRL as a percentage of CDI Liability Management surpasses R$4 billion in 2015 and enables reduction in cost of debt ...allows strategy to go forward 10
Agenda 1. Results 2. Strategy 11
Strategy to maximize return on assets... STRUCTURAL COMPETITIVENESS Maximizing returns on our assets and cash generation Benchmark in operating efficiency ADJACENT BUSINESSES Increase profitability through innovative, paradigm-shifting businesses RESHAPING OF THE INDUSTRY Decrease the industry’s return variability ...and increase value to shareholders 12
Strategy to maximize return on assets... STRUCTURAL COMPETITIVENESS ADJACENT BUSINESSES RESHAPING OF THE INDUSTRY ...and increase value to shareholders 13
Project 5.1... Capacity of 5.1 million tons in 2018 Industrial investment in Imperatriz and Mucuri mills Forestry basis expansion and average distance reduction Lower cash cost : lower chemicals consumption and fixed cost dilution Total estimated capex: R$1.14 billion with estimated IRR of 47% 2016e: R$510 million 2017e: R$585 million 2018e: R$45 million Project conclusion scheduled for 4Q17 with gradual increase in capacity ...brings us closer to optimum structural cost 14
Strategy to maximize return on assets... STRUCTURAL COMPETITIVENESS ADJACENT BUSINESSES RESHAPING OF THE INDUSTRY ...and increase value to shareholders 15
Tissue: operating and logistics competitiveness… Production of jumbo rolls for companies in the industry and/or finished product Priority in establishing industrial partnership with our clients Faster market growth in Brazil’s North/Northeast regions Structural and definitive solution to monetize ICMS tax credits Modern and integrated plants in Imperatriz and Mucuri Production capacity of 60k tons in each unit Total estimated capex: R$425 million with IRR of 81% 2016e: R$275 million 2017e: R$100 million 2018e: R$50 million Start up: 3Q17 in Imperatriz and 4Q17 in Mucuri ...adding value to pulp 16
BETTER EVERYDA Y STRONG AND KIND 17
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