Disclaimer Certain statements in this presentation may constitute forward-looking statements. Such statements are subject to known and unknown risks and uncertainties that could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. These risks include changes in customer demand for the Company’s products, changes in raw material costs, seasonal fluctuations in customer orders, pricing actions by competitors, significant changes in the applicable rates of exchange of the Brazilian real against the US dollar, and general changes in the economic environment in Brazil, emerging markets or internationally. 2
Agenda 4 Corporate Overview 12 Forestry Business Unit 19 Pulp Business Unit 27 Paper Business Unit 35 Results 42 New Growth Cycle 3
Corporate Overview
Suzano Pulp and Paper Ownership and Management • Second largest eucalyptus pulp Defined controlling group producer in the world and one of • Reputation the top 10 market pulp producers. • Long term vision • Leader in the regional paper market • Certified plantations and products. Capital markets • New growth cycle: from 2.8 to 7.2 • Management performance assessment million tons per year of paper and • Transparency pulp. • Funding for growth • Pulp production costs: one of the lowest in the world. • Solid business structure abroad. Professional • Capital markets presence: free management float of 46%. • Capital discipline • Rapid decision-making process 5
Diversified products and markets Balanced and complementary portfolio Papers (61% of net revenue) Market pulp Printing and Writing (48% of net revenue) Paperboard (39% of net rev.) Uncoated Coated (13% of net rev.) (41% of net rev.) (8% of net rev.) 2 nd largest 2 nd in Brazil 1 st in Brazil 1 st in Brazil eucalyptus pulp Market share: 26% Market share: 22% Market share: 27% producer in the world R$ 4.0 billion in net revenue 58% in exports / 42% in domestic market Note: Market share figures include paper imports. Last twelve months until September, 2009. 6
Sustainable growth Suzano’s production capacity has increased by 130% 7,150 in the last five years. The Company is prepared for a New unit 1,700 and Mucuri new growth cycle that will increase its capacity to 7.2 expansion million tons per year of pulp and paper. 1,300 Piauí Unit 1,300 Maranhão Unit 2,850 2,750 1,920 1,720 1,750 1,750 1,650 1,485 820 1,240 1,200 640 570 456 425 1,080 1,100 1,100 1,100 1,100 915 775 784 2003 2004 2005 2006 2007 2008 2009 New growth cycle Paper Pulp Note: The effective capacities will depend on the learning curves. 7
Corporate structure BD committees Management Board of Directors (BD) Sustainability and The Business Units model 9 members (4 independent) Strategy provides performance and returns assessments in each Audit business CEO SP Operations Forestry BU Pulp BU Paper BU SP Strategy, BU: Business Unit Corporate Dev. and IR Objectives: SP Finance • Greater focus on customers SP Human • Improved accountability Resources • Development of leaders SP: Service Providers 8
Management model Alignment of Interests Operational Excellence • Executives compensation based on • Six Sigma EVA metrics • Routine management • Higher variable portion in total • Matrix budgeting compensation Corporate Risk Management Strategic Planning • COSO 1 methodology • Focused on Value Based • Corporate governance structure Management (VBM) • Innovation and R&D based on committees – direct report • Sustainability to the directors and Board. Awards and Certifications ¹Internal control methodology of the Committee of Sponsoring Organizations of the Treadway Commission 9 .
Sustainability Triple Bottom Line – GRI approach Financial and Economic • Growing scale and revenues • Improving margins and returns • Solid cash flow generation Social • Focus on education: Environment – Public libraries • FSC – forest management and custody – Public schools remodeling chain management – Educational programs • CCX e WBCSD member • ECOFUTURO (Parque das Neblinas) (with ECOFUTURO) FSC – Forest Stewardship Council CCX – Chicago Climate Exchange WBCSD - World Business Council for Sustainable Development 10
Growth platform Consolidated presence in the New growth Consolidated Competitive main pulp cycle with management assets with markets and competitive structure and leader in the global scale projects model regional paper market Qualified team that combines diversity and focus on execution 11
Forestry Business Unit
Forestry competitiveness Forest yield (m³ /ha/year) 44 Brazil: high productivity, 30 forestry technology, low 20 production costs and 1 available areas for expansion Eucalyptus Acacia Eucalyptus Pinus Suzano globulus Forest Planted Planted Planted Native Harvest cycle 7 8 12 80 (years) Indonesia, Spain, Canada, Malaysia Portugal, Finland Main producers Brazil and Chile and and Vietnam Uruguay Sweden 13
Evolution with state-of-the-art technology Forest yield evolution (m³/ha/year) Technology innovation Monoprogeny planting Biotechnology Clones • More wood/ ha Soils and nutrition 44 Classic • More pulp/ m 3 improvement • Higher quality 31 29 • Less planting areas 21 • Lower costs 1960 1970 1991 1998 2008 Productivity (admt¹/ha/year) Biotechnology Classic improvement 11 5.5 100% 1980 2008 ¹admt: air dried metric ton 14
Lands and forests Own land (tsd ha) State Forests Total Planted average São Paulo 89 49 distance: 74 Km BA and ES 216 125 Minas Gerais 57 22 Maranhão 197 40 Forests Conpacel¹ (SP) 51 36 average distance: Total SPC³ 610 272 211 Km Independent - 92 farmers 3 Plants Ports Forests Total preservation area: 252 tsd ha 2 ¹ Conpacel: corresponds to 50% of former Ripasa’s areas. ² Does not include infrastructure and available land for planting. ³ Does not include new sites announced, except for land acquired from Vale. Suzano’s production is based on 100% renewable eucalyptus planted forests. Preserved native forest area of approximately 40% of own land. 15
DNA Suzano: pioneering and innovation Forest yield Maranhão Soil and climate conditions similar to Australia’s (m³/ha/year) facilitated the development of superior clones in 40 Brazil (innovation and R&D) 35 25 10 E.camaldulensis 1980 1990 2000 2013 E.pellita E.brassiana 1980 1990 2000 16
New forest frontiers Land use in Brazil 1% 2% North and Northeast: new expansion 11% frontiers in eucalyptus’ plantations in 2% 1% Brazil. Suzano presents technological and Planted forests still positioning advantage. represent a small part 20% of the available area in 63% Brazil. Growth cycles Planted Forest Native Forest Cattle Sugarcane Last frontier: Semiarid (2010’s and 20’s): North and Northeast region Corn Soybean Other 1980’s and Source: IBGE,2007 90’s: ES and South Planted forests in Brazil (area) Planted areas (MM ha) BA 8.1 6.6 5.6 8 5.2 4 3.6 4.3 2 2.3 2.0 1.9 2000’s: Middle - 1960’s and 70’s: 1 west and farthest South and 2005 2008 2030 South Southeast Pinus Eucalyptus regions Source: BRACELPA / FAO / FBU 17
Forestry Business Unit priorities Explore new Consolidate Focus on cost Long term view business operations in reductions, in research and opportunities the Northeast wood logistics development and related to the region: states and operational forestry forestry base of Maranhão and Suzano’s technology excellence and Piauí competences 18
Pulp Business Unit
Overview of the pulp and paper production chain 185 51% Minerals 8% 8% Recycled 362 391 Global production of 8% Total fiber needed 177 49% paper and paperboard Virgin fiber 391 50 127 28% 72% Market pulp Integrated pulp Printing and Writing (13% of total fibers) Paperboard Million Tons Tissue Production 2008 (MM ton) Corrugated Newsprint Others Market pulp still represents the smaller part of the fiber used for paper production. New paper capacities are being installed near to consumer markets, while cash cost drives implementation of new pulp capacities. Source: Poyry, 2008 20
Pulp demand growth drivers Global paper demand growth (2008-15) of 2.2% per year: Chinese and Latin American markets, including Brazil, outperform global growth rate. Paper demand growth (2008-15) 391 4.5% 3.5% 3.3% 2.2% Printing and Writing 1.7% 115 Million Tons Paperboard 45 27 Tissue -0.2% Corrugated North Europe Latin Brazil China Global Newsprint 204 America America 2008-15 Others Annual growth per paper segment 2008 1.8% P&W 3.2% Tissue P&W: printing and writing Source: Poyry, 2008 21
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