Fibria Investor Day. May 11, 2011

Transcription

1 Fibria Investor Day May 11, 2011

2 AGENDA Fibria s Strategy Market, Sales and Logistics Innovation and Competitiveness Forestry Operations Industrial Operations Sustainability Human Resources Corporate Governance and Financial Highlights Q&A Session 2

3 Carlos Aguiar CEO 3

4 Fibria s 2025 Vision 2009 Recent Past 1Q11 (1) The Present 2025 Vision The Future Pulp capacity million tons Paper capacity million tons Net revenues R$ billion Planted area thousand ha 585 (2) 572 (3) - Net Debt R$ billion Net Debt/EBITDA X Commitment to investment grade rating (1) Last Twelve Months as of 1Q11. Excludes Conpacel and KSR, except for the calculation of the Net Debt /EBITDA. (2) As of December 31, 2009, including 50% of Veracel and 50% of Conpacel and excluding forest partnership areas (129 thousand ha). (3) As of March 31, 2011, including 50% of Veracel and excluding forest partnership areas (124 thousand ha). 4

5 Fibria s driving forces Industry Characteristics Winner Characteristics 3D Concept Capital intensive Fragmented Customers and suppliers consolidated Heavy dependence on logistics Bio-assets Low cost High productivity Scale Reliable customer base Efficient logistics R&D, Bio-developments Distance Density Developments 5

6 Fibria s Strategy 6

7 Clear leadership position Fibria s Market Share (1) Market Pulp Capacity Ranking 2010 All Fibers (kt) (2) 11% 22% Total Market Pulp: 50 MM t Total Hardwood Pulp: 25 MM t 32% Total Eucalyptus Pulp: 16 MM t (1) PPPC: considers 2010 demand (2) PÖYRY as of FY

8 ... And competitive position in the cost curve Bleached Hardwood Kraft Pulp Average Delivered Cash Cost cif Europe (USD/t) Canada Sweden France / Belgium USA China Finland Iberia / Norway Mill cash cost Delivery cost Indonesia Chile Brazil Fibria Source: Hawkins Wright as of April 2011 and Fibria 1Q11 8

9 Improved financials Net Revenues (R$ million) EBITDA (R$ million) and EBITDA Margin (%) 7,050 2,749 2,536 6,320 1,697 39% 40% 6,000 28% Q11 LTM Q11 LTM Avg BEKP list price (Europe) US$/t Net Debt (R$ million) and Net Debt/EBITDA Average Debt Maturity (months) 11, ,852 7, Q11 LTM Q11 LTM Source: Fibria /1Q11 excludes Conpacel and KSR, except for the calculation of the Net Debt /EBITDA. 9

10 Balanced market scenario for the next 2 years Chemical Market Pulp Supply and Demand by Grade Forecast % Annual growth Million tons /2012 BSK Supply % '000 tons Demand % Ratio 91% 93% 92% 91% BHK Supply % Demand % Ratio 88% 87% 89% 91% BEKP Supply % Demand % Ratio 93% 90% 91% 94% Source: PPPC and Fibria 10

11 Paper demand expected to grow at a rate of 3.1%p.a. Paper Demand Forecast by grade MM Tissue P&W Newsprint Containerboard Others (¹) (1) Others = Small Packages, Specialties Source: RISI 11

12 Demand for1.8 million tons of market pulp each year Pulp Market CAGR: 2.5% or 1.8 million tons Supply Source: RISI 12

13 Despite positive momentum, there are many challenges Industry Lack of discipline in investments Increasing scale of new pulp projects Consolidation of clients and suppliers Costs Land prices, labor, wood, chemicals, energy and logistics Sustainability Increasing demand from international community towards social and environmental practices 13

14 Exchange rates and inflation affect the cost structure Exchange Rate Currencies Evolution versus Dollar (Jan 03 Base 100) 110% 55% 53% -7% Inflation Wood: cost of land and minimum wage growth above inflation Freight: low governmental investment in infra-structure (ports, roads, etc) and higher oil prices Chemicals / energy / water: global demand for commodities add pressure on main raw materials Labor: cost in Brazil in dollar terms is higher than in some developed countries 14

15 Wood: a future bottleneck for industry growth Increasing demand from international community towards planted forests and certification (FSC, CERFLOR, PEFC) Increasing areas affected by diseases in North America Rigorous licensing process European renewable energy targets generate more demand for biomass Secure wood supply at a competitive basis. 15

16 Strategic solutions to face challenges and opportunities Strategic Solutions 2025 Vision Market consolidation Disciplined growth Operational excellence Financial performance New forest usages Sustain leadership and preferred supplier position Prioritize total shareholder return Maintain low cost structure Commitment to investment grade rating Optimized usage of forest base 16

17 Market, Sales & Logistics 17

18 Commercial strategy Differentiation Quality of products and services Market Segmentation Focus on high value added segments, with consistent growth Consolidated Customer Base Large accounts (~ 60% of sales to the top 10 clients) 18

19 Focus on premium end-uses Fibria's Pulp Destination Market Pulp Destination Demand Growth P&W 29% 43% 1% Tissue 49% 24% 4% Specialties 22% 14% 3% Newsprint -0.1% Containerboard 8% 5% Others 11% 3% Source: Fibria Q1/2011 Earnings Results, PPPC, RISI and Fibria 19

20 Global presence 26 % N.America Miami Nyon 41 % Europe Csomád 23 % Asia Hong Kong Beijing 10 % L.America São Paulo Fibria Sales Distribution Fibria Offices Source: Fibria 1Q11 LTM 20

21 Innovative shipping model Change of current model: from buying space to time charter Long-term shipping contract with STX: 25 years Enhanced service reliability to our customer base Protect Fibria against volatile shipping costs Maintain Fibria's competitiveness for deliveries in all major regions Potential shared back haul cargo business Portocel Port of Santos 21

22 Innovation and Competitiveness 22

23 The beginning, innovation for survival & model definition Establishment of land usage model Introduction of eucalyptus species, sources and families Seedling selection for adaptability, disease tolerance, productivity and wood quality Pioneering clonal propagation in commercial scale From first plantations... to 2011! 23

24 Land usage model Neighbor Native forest FIBRIA 24

25 Forestry innovation has been our differential Forest Genetics Biotechnology Forest Management 25

26 Enhanced forestry techniques Current Elite Clone 2 years old New Elite Clone 2 years old 26

27 Value creation Air Dry Tons of Pulp / ha / Year Source: Fibria and Poyry 27

28 Focus on customer product development Understanding/ optimizing eucalyptus fiber properties Opacity Smoothness Softness Bulk/Stiffness 28

29 Application of our forest competences to new business alternatives The Biorefinery Concept Pulp Mill- Traditional Wood Chips Fiberline Power Stream Chemicals Market Pulp Planted Forest Wood Residues, Bark, etc. Power Unit Electricity New Business Biorefinery Biofuels and Chemicals 29

30 Forestry Operations 30

31 Land & forest base (1) Total Area: 1,030,000 ha Belmonte Veracel Caravelas Eucalyptus plantation: 572,000 ha Portocel Aracruz Native reserve area: Other uses (2) : 391,000 ha 67,000 ha Três Lagoas Piracicaba Jacareí Santos Partnership planted area: 124,000 ha 1 As of March 31, 2011, including 50% of Veracel 2 Roads and infra-structure Port Terminal Pulp Mill Paper Mill 31

32 Automated silviculture control systems 32

33 Imaging & planning digital model 33

34 Full mechanized logging operation 34

35 Vehicle for forestry quality control Unmanned aerial vehicle (UAV) used for capturing images of the forests UAV control cockpit operated from remote base of up to 15 km away from the station Area m 2 Counting trees tree survival guarantee to maximize productivity Tree failures map 35

36 Sustainable forest management Biodiversity Protection Ecosystem Services Wildlife Conservation Assess, monitor and study of biodiversity Environmental recommendations to minimize operations impact Protection of endangered species Partnership with NGOs, universities and governments Optimize soil usage Balance use of inputs Restoration of conservation areas Mosaic landscapes Three private natural heritage reserves to conserve endangered species Support to wildlife conservation programs Environmental education programs 36

37 Industrial Operations 37

38 Fibria s pulp mills capacities Três Lagoas Mato Grosso do Sul 1.3 million t/year Jacareí São Paulo 1.1 million t/year Aracruz Espírito Santo 2.3 million t/year Veracel Bahia 1.1 million t/year (50% JV) 38

39 State of the art facilities Average mill capacity ( 000 tons) 2,500 Fibria (Aracruz) 2,000 1,500 1,000 Indonesia Fibria (Jacareí) Fibria (Três Lagoas) Fibria (Veracel 50%) 500 Russia USA Japan Portugal Canada Other Brazilian pulp mills Sweden Finland France/ Spain Chile South Africa Technical age of the equipment (years) Source: PÖYRY 39

40 Três Lagoas II and Veracel II Três Lagoas II Veracel II Forest Base need Total area : 230,000 ha Planted area: 150,000 ha Forest Base need Total area : 220,000 ha Planted area: 120,000 ha Status Leasing: 70,000 ha of planted area Três Lagoas I surplus: 30,000 ha Status Under negotiations with partner Start up

41 Sustainability 41

42 Sustainability goals Relationship with Local Communities Presence in 252 municipalities Indigenous communities Landless workers movements Forest Partnership Programs Approximately 4,000 contracts with farmers (124 thousand ha) Goal to achieve a balanced package of environmental, economic and social benefits to Fibria, partners and society Certification of all Forest Areas Goal to obtain FSC and PEFC certifications in all forestry bases (currently all our forestry bases have one or both certifications) 42

43 Partnership program to enhance value creation and community relationships Wheat Sunflowers Cattle Watermelons 43

44 Sustainability and forestry certifications Sustainability Advisory Committee representing shareholders, executive management and stakeholders Presence at Sustainability Indexes DJSI and ISE Emphasis on dialogue to build partnership and trust with the stakeholders Maintain all forest areas under certification Carbon footprint certification at all production units, from silviculture up to delivery to Fibria s customer 44

45 Human Resources FOTO 45

46 Fibria s culture to face challenges Culture Lean organization Operational excellence and superior performance Hands-on approach to ownership Transparency Health and safety are priorities Global outlook Succession Plan Balanced preference for internal promotion Marcelo Castelli has been appointed as Chief Executive Officer, effective July 1st, 2011 Core intellectual capital protected Attraction and Retention Employer of choice in the industry segment Total compensation goal: 3rd quartile Meritocracy Synergy bonus as a strategy to retain talent Training / Development Partnership with top universities for MBA programs Continuous technical training for operational teams Benchmark: visiting customers and competitors at global level 46

47 Corporate Governance and Financial Highlights 47

48 Recent improvements confirm commitment to governance Listed on Novo Mercado, highest level of Corporate Governance at BM&F Bovespa Only 1 class of shares 100% voting rights 100% tag along rights (Brazilian corporate law establishes 80%) Board of Directors with minimum 20% independent members Financial Statements in International Standards IFRS Adoption of Arbitration Chamber Policies approved by the Board of Directors Liability and liquidity management Market risks Corporate governance Information disclosure Stock trading 48

49 Fibria s shareholder structure Votorantim Industrial S.A. 29% BNDESPar 30% Free Float 41% BOVESPA "FIBR3" 60% NYSE "FBR" 40% 49

50 Fibria s governance structure Shareholders Meeting Board of Directors Fiscal Council Board Advisory Committees Executive Officers 50

51 Financial highlights Net Revenues (R$ million) Fibria s Margin vs. Macroeconomic Fundamentals 6,000 7,050 6,320 Average Price BEKP Europe (US$/t) Exchange Rate Average (R$/US$) EBITDA Margin EBITDA (R$ million) Q11 LTM Source: Fibria 1Q11 excludes Conpacel and KSR. 51

52 Liability management Net Debt/ Ebitda (x) Promises delivered, now more ahead to go Net Debt (R$ bi) Commitment to investment grade level Sale of Guaíba US$ 1.4 bn Fibria 19 bond: US$ 1 bn 9.25% 10NC5 Export pre-payment facilities: US$ bn Fibria 20 bond: US$ 750 MM 7.5% 10NC5 Exchange Bond Fibria 19: 94% to Fibria 20 Operational cash generation Derivatives debt settlement: US$2.6 bn Debt: lower cost longer tenor Sale of Conpacel/KSR R$1.5 bn Fibria 21 bond Fibria 21: US$ 750 MM 6.75% 10NC5 Revolving credit facility Covenants Tight cost control New Liquidity events 52

53 Indebteness and Liquidity Management policy approved by the Board of Directors Objective Further strengthen the Company s commitment to achieve and sustain Investment Grade level Highlights Leverage target: Net/Debt to EBITDA: 2.0 x to 2.5 x Leverage cap: 3.5x even during the peak of the expansion cycle Maintain the necessary liquidity to meet its operational and short term financial obligations Goals Access to competitive sources of funding Attract a broader and more diversified investor base Reduce the Company s cost of capital Policy available at Fibria s website at 53

54 Fibria in summary ROI above WACC Larger scale Global and strong market positioning Innovation HIGHER TOTAL SHAREHOLDER RETURNS Growth Solid financial performance Sustainability Low cost structure 54

55 Thankyou! Investor Relations Team Website: Tel.: +55 (11)