RI SI I nternational Containerboard Conference Cristiano Teixeira - PowerPoint PPT Presentation

RI SI I nternational Containerboard Conference Cristiano Teixeira N o v e m b e r , 2 0 1 6

Latin America: Macroeconomic Scenario 20 Po pula tio n Une mplo yme nt 633 million 6% (2015) c o untrie s 35% me dium c la ss GDP (%) I nfla tio n (%) 4.9 5.7 5.5 5.2 4.9 4.6 4.6 3.2 3.0 4.3 2.7 2.6 4.1 3.9 2.1 3.7 1.5 1.3 ‐ 0.1 ‐ 0.5 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 CAGR 2,4% CAGR 1,7% CAGR 5,0% CAGR 4,3% Source: IMF, World Bank Including Mexico

LATAM: Containerboard apparent consumption tho usa nd me tric to ns Co nsumptio n pe r Co untry 14,073 Bra zil 13,445 12,915 12,508 12,300 12,261 35% 11,971 34% 34% 34% 33% 33% 33% 34% 26% 26% Othe rs 13% 26% 26% 27% 27% 26% 6% 6% 6% 6% 6% 6% 5% 29% 5% Me xic o 5% E c ua do r 34% 34% 34% 35% 34% 35% 34% 5% Co lo mb ia 8% Chile 2014 2015 2016 2017 2018 2019 2020 Arg e ntina to ta l c a pa c ity Se mic he mic a l Me dium K ra ftline r Re c yc le d Me dium Re c yc le d L ine rb o a rd Source: Risi Latin America Pulp & Paper Forecast 2016

Containerboard Capacity Growth and Operating Rates in LATAM 400 93 349 Demand is predicted to grow at 90.3% a faster pace than supply from thousand metric tons 300 90 2017 onward 88.6% 226 87.2% 195 86.3% 200 87 86.1% Recycled containerboard 85.7% 150 85.3% capacity will increase 650 100 thousand tonnes from 2016 to 100 84 72 151 2020 and reach 9,1 million tonnes 0 81 2014 2015 2016 2017 2018 2019 2020 Ope ra ting Ra te (R) Ca pa c ity Gro wth (L ) Source: Risi Latin America Pulp & Paper Forecast 2016

Main Latin America Containerboard Capacity Expansions 2015-2020 (thousand metric tons) Re c yc le d: I ra ni (BR) +135 Re c yc le d: Virg e n: K la b in (BR) +125 1,092 Ob e ra (AR) +350 Bra g a g no lo (BR) +72 Re c yc le d: Pro pa sa (MX) +100 I ra ni (BR) +26 SK G (MX) +100 571 Virg e n: F e rna nde z (BR) +100 We stRo c k (BR) +35 NOA (AR) +110 349 172 2015 2016 ‐ 2017 2018 ‐ 2020 Total in 6 years Source: Risi Latin America Pulp & Paper Forecast 2016

Latin American countries are net importers of containerboard, with the exception of Brazil Ne t I mpo rts 3.243 TOP 5 IMPORTERS (thousand tonnes) 24% Brazil 3.045 1.075 35% USA Me xic o 2.898 2.882 Containerboard and Corrugated Packaging 313 2.823 E c ua do r 55% USA 24% 2.783 23% 275 51% BR Arg e ntina 23% 23% 23% 168 Chile (thousand tonnes) 156 Co lo mb ia 2014 2015 2016 2017 2018 2019 Net imports Import Share

Brazil: Macroeconomic Scenario GDP (%) I nfla tio n (%) 4.9 10.7 3.0 3.2 2.5 2.5 2.3 1.3 1.3 7.0 ‐ 0.1 6.5 6.4 5.8 5.9 5.1 4.7 4.5 4.5 ‐ 3.2 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 CAGR 2.4% CAGR 1.1% CAGR 7.1% CAGR 5.1% I ndustry Re ta il Positive Outlook -6% +1.1% -5% +1.3% for 2017 2016 2017 2016 2017 Source: BCB and IMF

Brazil: Containerboard capacity T op 5 pr oduc e r s (thousand me tr ic tons) T o ta l Ca pa c ity 2015 5.1 million metric tons Kr aftline r+ T e stline r+ R e c yc le d Se mic he mic al Me dium Re c yc le d Klabin Klabin 819 819 K ra ftline r SKG SK 276 276 Me dium 40% 42% WestRock We 435 435 Fern rnan andez 235 235 IP IP 183 183 Klabin Klabin 235 235 1% Trombini Tr 87 87 Artivinco Artiv 162 162 17% Se mic he mic a l T e stline r Coce Cocelp lpa 70 70 Irani Ir ani 161 161 Source: Risi Capacity Report 2016

Containerboard production and apparent consumption 5,222 5,172 5,112 5,097 5,097 5,010 4,776 Kraftliner operating rate was 4,657 4,585 4,554 4,505 90% in 2014 and remained near 4,455 this level in 2015 For 2016 the forecast is to bring the operating rates down to 4,422 4,280 4,317 4,100 4,174 4,290 88% The economic recovery should elevate levels back up to 95% by the end of the forecast 2014 2015 2016 2017 2018 2019 Ca pa c ity Pro duc tio n Appa re nt Co nsumptio n (tho usa nd me tric to ns) Source: Risi Latin America Pulp & Paper Forecast 2016

Brazilian containerboard exports la rg e pre se nc e in the inte rna tio na l K ra ftline r Ma rke t drive n b y fib e r hig h pro duc tivity 33.9 30.5 30.0 29.3 29.4 28.4 27.7 27.3 27.2 25.6 23.1 23.6 2015 302 +11% 2016exp 336 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec (tho usa nd me tric to ns) 2015 2016 2016 fo re c a st Source: Risi

Productivity and average rotation of planted trees in Brazil versus other significant players Ce ntra l a nd Ba ltic Co untrie s Bra zil So uth Ame ric a * So uthe a st Asia uro pe Sc a ndina via USA uro pe Ca na da Mo za mb iq ue Oc e a nia Russia We ste rn E a ste rn E Eucalyptus Pinus E Rotation in years Eucalyptus Rotation in years Pinus *Exceto Brasil Source: Ibá and Pöyry 2016

OCC II and Fluting Prices (US$/ me tric to n) 574 4 3 8 % in 2016 (US$) 447 OCC II 115% Fluting 45% 303 214 198 132 92 Jan ‐ 14 May ‐ 14 Sep ‐ 14 Jan ‐ 15 May ‐ 15 Sep ‐ 15 Jan ‐ 16 May ‐ 16 Sep ‐ 16 12 Source: Anguti

Paper Consumption in Production of Corrugated Board (2015 – %) Co mpo sitio n in c o rrug a te d b o xe s 100% 33% 34.5% 34.8% 34.5% 36.0% 41.6% 65.6% 65.2% 65.5% 64.0% 58.4% 67% 2010 2011 2012 2013 2014 Virgen Recycled OCC recuperation in Brazil: 79% 13 Source: ABPO

Corrugated Box basis weight g/m 2 ‐ 6% 542.6 531.9 531.2 530.5 sta b iliza tio n 523.2 516.7 516.2 515.8 515.2 515.2 512.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: ABPO

Corrugated Packaging in Brazil + 25,000 90 Direct jobs companies 3% N 10% million 3.3 6.5 billion N.E. metric m² 7% tons MI DW EST 49% US$ 3 billion S.E. Total Revenue in 2015 31% 69 S 142 44 29 width (m) Actives corrugators < 1.6 1.6 ‐ 2.2 >2.2 Source: ABPO 2015

Corrugated Packaging in Brazil and GDP (% annual) 11,0 7.5 ABPO GDP 3.6 3.9 CAGR 3 3 1.8 2009 ‐ 2017 1.6 1.1 1.9 1.3 ABPO +1.9 0.7 0.1 ‐ 0.3 ‐ 1.2 GDP +1.5 ‐ 2.8 ‐ 3.1 ‐ 2,8 2009 2010 2011 2012 2013 2014 2015 2016e 2017e 16 Source: ABPO and Brazil Central Bank

ABPO Total Revenue per m² accumulated variation Brazilian crisis 39.2% 33.7% 27.2% 20.8% 21.7% 18.0% 12.7% 6.7% 0.0% 4.1% jan ‐ 12 jul ‐ 12 jan ‐ 13 jul ‐ 13 jan ‐ 14 jul ‐ 14 jan ‐ 15 jul ‐ 15 jan ‐ 16 jul ‐ 16 ABPO I PCA ( BR price index) 17 Source: ABPO e IBGE

2014 2015 Distribution per Industrial Category T o ta l fo o d T o ta l fo o d 57% 60% 45 47 food pr oduc ts c he mic als 9 7 dr ugs,pe r fume s,c osme tic s 5 5 7 7 Hor tic ultur e & fr uits 5 6 3 poultr y 2 tobac c os 26 25 (in %) othe r s Source: ABPO

MARKET SHARE - 2015 17% Klabin 17% 8% WestRock* 7% IP 39% 6% Irani 8% 6% Trombini 5% Penha 7% 4% Adami 4% Smurfit Kappa 3% 6% Ibéria 39% Outros 3% 6% 4% 4% 5% *Estimated Source: ABPO

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