Institutional Presentation 4Q17 1

Transcription

1 Institutional Presentation 4Q17 1

2 Disclaimer The statements in this presentation constitute forwardlooking 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 forwardlooking 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.

3 Agenda 1. Overview 2. Industry 3. Competitiveness 4. Strategy 5. Operating and Financial Highlights 3

4 1. Overview 4

5 Suzano With over 90 years of operations, the Company produces pulp, paper and tissue Market Cap¹ Total Forest Base Market Pulp Capacity² Paper Capacity Adjusted EBITDA³ Net Debt R$ 20.7 billion 1.2 million ha 3.6 million tonnes 1.2 million tonnes R$ 4,615 million R$ 9,484 million 34% 30% Net Revenues R$ 10.5bn³ 70% 66% Exports Domestic Pulp Paper Net Debt/EBITDA 2.1x Pulp Market Pulp Eucafluff Paper Printing & Writing (Coated and Uncoated) Paperboard Consumer Goods Tissue Data from 12/31/2017 ¹ SUZB3: R$ Excluding Fluff 3 Last twelve months ended on 12/31/2017

6 Production Capacity Suzano is the second largest eucalyptus pulp producer and the fifth largest market pulp producer in the world. Suzano has also a leading position in the Paperboard and Printing & Writing segments in Brazil. Unit Capacity ( 000 ton) Integrated Pulp Market Pulp Fluff Printing & Writing Paper Paperboard Consumer Goods Tissue Adjacent Business Lignin Imperatriz Mucuri Limeira ² Suzano ¹ 350¹ 200 Rio Verde 50 Total ¹ 1.050¹ ¹ Flexibility to produce either Fluff or Printing and Writing paper ² Lignin start up in 2018

7 Robust Asset Base Competitiveness Suzano s forestry competitiveness allows its operation in different regions with adequate yields Forest Areas 1 States of Maranhão, Pará, Tocantins and Piauí Total Area 1 : 730k ha Planted Area 2 : 258k ha Average Structural Distance: 184 km States of Bahia, Espírito Santo and Minas Gerais 2 Total Area 1 : 279k ha Planted Area 2 : 196k ha Average Structural Distance: 74 km Port State of São Paulo Distribution Center Commercial Office Forest Assets Production Plants Imperatriz (State of Maranhão) Mucuri (State of Bahia) Rio Verde (State of São Paulo) Suzano (State of São Paulo) Limeira (State of São Paulo) 4 Cerflor ¹ Consider own and leased area ² Consider own, leased and thirdparties areas 5 3 1,203k ha of total area 587k ha of planted area Total Area 1 : 193k ha Planted Area 2 : 132k ha Average Structural Distance: 190 km Commercial Presence 15 states in Brazil: 8 Regional Commercial Offices 4 Regional Distribution Centers 16 Local Distribution Centers Plus commercial offices in USA, China, UK, Switzerland and Argentina.

8 Corporate Governance Members of the Board are wellknown in the Brazilian Corporate landscape and are supported by the committees on the decision making Board of Directors Management Committee Sustainability and Strategy Committee Audit Committee Nine members, five independent David Feffer President Dependent Claudio Thomaz Lobo Sonder Vice President Dependent Daniel Feffer Vice President Dependent Jorge Feffer Board Member Dependent Antonio de Souza Corrêa Meyer Board Member Independent Marco Antonio Bologna Board Member Independent Maria Priscilla Rodini Vanzetti Machado Board Member Independent Nildemar Secches Board Member Independent Rodrigo Kede de Freitas Lima Board Member Independent

9 Novo Mercado Liquidity gains contribute even more to position Suzano as protagonist in the reshaping of the industry in the long term Equal political and economic rights: 1 share = 1 vote and 100% tag along Nonpremium migration reinforces the commitment of controlling shareholders to the capital market and other stakeholders Creates conditions to continue improving and innovating Materialization of the commitment to cultivate the highest governance standards Liquidity gains contribute even more to position Suzano as protagonist in the reshaping of the industry in the long term Note: Novo Mercado is the highest corporate governance segment of the Brazilian Stock Exchange (B3).

10 Shareholder Structure and Stock Performance As of November, the Company's shares became part of the Novo Mercado, the highest level of corporate governance of Brazilian Stock Exchange (B3) BNDES 7% Mondrian 7% Other 29% Daily Trade Numbers SUZB3 Daily Financial Volume SUZB3 (R$ million) Controlling Shareholders 56% Treasury 1% Free Float 43% 65% Foreign / 35% National 11,441 9,840 12, Q16 3Q17 4Q17 4Q16 3Q17 4Q17 Stock Performance SUZB3 Base 100: (Dec/16 Dec/17) SUZB3 +32% Ibovespa + 27% IBrX50 +27% Dec16 Jan17 Feb17 Mar17 Apr17 May17 Jun17 Jul17 Aug17 Sep17 Oct17 Nov17 Dec17 Source: Bloomberg

11 2. Industry 11

12 Pulp Industry Pulp Market is driven by paper consumption Paper Consumption by Region (%) Fiber Consumption (million tonnes) Total Fiber Consumption Europe 22% North America 18% Other 6% Asia 46% Latin America 7% Virgin Fiber 182 Recycled 245 Nonwood, Mechanical Pulp and Integrated Pulp Market Pulp Excludes Dissolving Pulp and Fluff Source: Poyry (2017), Hawkins Wright (Dec/2017) and internal analysis 12

13 Estimated demand growth until 2030 (%p.a.) Paper Demand Demand for pulp driven by tissue and paperboard consumption Estimated paper demand: 490MM/ton in Tissue Containerboard Paperboard Uncoated Mechanical Uncoated Woodfree Packaging Other Average growth of 1.3% p.a Coated Mechanical Newsprint Coated Woodfree Share on total fiber consumption in 2016 (%) Source: Poyry (2017)

14 3. Competitiveness 14

15 Other Asia Sweden Bel/France Brazil Indonesia Chile/Uruguay Iberia East Europe Finland Canada Japan US China Chile East Europe Sweden Other World Finland Other Europe US Coastal BC Int. West Canada Japan East Canada East Canada Pulp Competitiveness Seven year cycle of the eucalyptus forest in Brazil and higher productivity ensures lower costs Cash Cost CIF / Europe (US$/tonne) 800 Hardwood Softwood FX of R$3.28/US$ Source: Hawkins Wright (Dec/17)

16 Pulp Competitiveness The competitiveness of the eucalyptus fiber leads to the growth compared to other fibers Fiber volume (million tonnes) CAGR BEKP: +6.5% p.a. Other BHKP: 1.6% p.a. CAGR BEKP: +2.3% p.a. Other BHKP: +2.2% p.a e 2018e 2019e 2020e BEKP¹ Other BHKP² BSKP³ Source: Hawkins Wright (Dec/17) 1 Bleached Eucalyptus Kraft Pulp 2 Bleached Hardwood Kraft Pulp 3 Bleached Softwood Kraft Pulp

17 Paper Competitiveness Suzano is an integrated paper producer, which leads to a higher contribution margin per ton Paper Market is less volatile Paper Margin Inputs and Variable Costs Integrated Pulp Margin Pulp Cost Leadership position in Printing & Writing Segment in Brazil Leadership position in Paperboard Segment

18 Federal Taxes Competitiveness Suzano's assets leads to a fiscal situation which allows low cash disbursement for income and social contribution taxes Tax Benefits 75% of income tax reduction: Maranhão unit until 2024 Bahia unit: Line 1 until 2024 Line 2 until 2018 Tax Credits Tax loss carry forward: R$2.3 billion Total of federal tax credits to be used: R$190 million Data accumulated up to 12/31/2017.

19 4. Strategy 19

20 Strategy to maximize the return on invested capital Structural Competitiveness o Anticipated return improvement as result of cost reduction initiatives coupled with disciplined investments to achieve optimal cost o Investment in retrofitting and debottlenecking should reduce cash costs per ton by 21% by 2022 Adjacent Business o Investments in adjacent businesses such as FuturaGene (biotech), Fluff, Lignin and Tissue, leveraging on Company s current capabilities, to improve margins by offering highvalue added products Reshaping of the Industry o Transformational changes in the industry should lead to higher returns o Suzano uniquely positioned to have an active role with its vertically integrated operation, stablished commercial relationships and consolidation capacity, among other opportunities

21 Structural Competitiveness Structural Competitiveness Commercial Price discipline and expansion of client base (Suzano Mais) Logistics Integrated logistics with synergy gains Industry Structural efficiency through retrofitting and debottlenecking Forestry Average distance reduction and standardization and insourcing harvesting Maximize the return on assets and cash generation ¹ 2016 nominal value Cash Cost (R$/ton) Target ¹ ¹ Debottlenecking and Average Forest Distance Reduction

22 Adjacent Business Adjacent Businesses Tissue Fluff Lignin FuturaGene o Integrated production o Production of jumbo rolls and final products o o First company in the world to produce fluff from hardwood Flexibility to produce either fluff or printing and writing paper o Replacement of petroleumbased chemicals o o First genetically modified clone approved by CTNBio for commercial purposes Potential to increase productivity by nearly 20%

23 Tissue Adjacent Business Competitiveness on production and logistics adds value to pulp Global Demand (million tonnes) Operational Integrated production and control of more than 90% of cash cost Logistic Production close to the North and Northeast markets in Brazil e 2025e Brazilian Demand (million tonnes) Market Potential Fastest growing segment in Brazil, 5% p.a. in 2015 (RISI) Tax Strategy Structural solution for monetization of ICMS credits e 2025e Source: RISI Modern and integrated mills in Imperatriz and Mucuri Production capacity of 60k tonnes in each unit Start up: Sep/17 in Mucuri and Nov/17 in Imperatriz Production of jumbo rolls (2017) and final products (from 2018) Acquisition of FACEPA

24 Adjacent Business Eucafluff Suzano is the first Company in the world to produce fluff from hardwood o Up to 70% softwood substitution for feminine hygiene products and up to 30% for diapers o Rewet quality and reduction of energy costs o Capacity: up to 100 k tonnes/year Demand (million tonnes) Products Breakdown (%) Femine Hygiene Products 24% Other 12% e 2020e Incontinence Products 26% Diapers 38% Source: RISI

25 Adjacent Business Lignin Replacement of petroleumbased chemicals from renewable source Capacity: 20k tonnes per year Lignin Production Process Lignin Capex: R$100 million Start Up: 2018 Fiber Mill: Limeira Lignin Energy Evaporation Recovery Boiler Lime Kiln Black Liquor Digester Chemicals Main applications: Wood Wood Chips Bleaching Pulp/ Paper Cement Additives Phenolic Resins Rubber Components

26 Adjacent Business FuturaGene First genetically modified clone approved by CTNBio for commercial purposes Lower Forest Formation Cost Biotechnology is on the right side of Sustainability Less chemical expenditure Higher carbon sequestration Less Land Utilization

27 Transformation changes in the industry should lead to higher returns Reshaping of the Industry Consolidation Suzano is strengthening its balance sheet to be an active player in the reshaping of the industry Verticalization Internationalization

28 5. Operational and Financial Highlights 28

29 Pulp Segment Pulp Production ( 000 tonnes) Pulp Sales ( 000 tonnes) 3,473 3,541 3,530 3, Q16 3Q17 4Q Q16 3Q17 4Q Pulp Revenue Breakdown 2017 Europe 29% Pulp Sales Volume per Segment 2017 Tissue 62% Asia 47% Brazil 9% North America 14% Central/South America 1% Specialty 14% Packaging 7% Other 2% Printing & Writing 15%

30 Pulp Segment Cash Cost (R$/ton) Cash Cost Target ¹ ¹ Pulp EBITDA (R$/ton) Operational Cash Flow (R$/ton) 678 1,088 1, , Q16 3Q17 4Q Q16 3Q17 4Q ¹ 2016 nominal value.

31 Other 5% Paper Segment Paper Production ( 000 tonnes) 1,182 1,157 Paper Sales ( 000 tonnes) 1,196 1, Q16 3Q17 4Q Q16 3Q17 4Q Brazil Export Paper Revenue Breakdown 2017 Brazil 71% North America 7% Central/South America 18%

32 Paper Segment Paper EBITDA (R$/ton) Q16 3Q17 4Q Operational Cash Flow (R$/ton) Q16 3Q17 4Q

33 Consolidated Results Operating Cash Flow¹ (R$ million) Adjusted EBITDA (R$ million) 3,515 3, % 45.7% 45.4% 39.5% 43.9% 3,906 4, , ,186 1,425 4Q16 3Q17 4Q ROIC (%) Avg Europe FOEX , , Avg China FOEX Avg R$/US$ 11.9% 13.0% 14.5% LTM 4T16 LTM 3Q17 LTM 4T17 ¹ Operating Cash Flow = Adjusted EBITDA Sustaining Capex LTM: Last Twelve Month

34 Debt Leverage at an adequate level Net Debt (R$ and US$ billion) and Leverage (x) 4.1x 2.7x 2.4x 2.7x 2.9x 2.9x 2.7x 2.3x 3.7x 2.3x 2.3x 2.1x 2.4x 2.6x 2.8x 2.7x 2.3x 2.3x 2.1x 2.0x Dec/14 Dec/15 Mar/16 Jun/16 Sep/16 Dec/16 Mar/17 Jun/17 Sep/17 Dec/17 Net Debt (R$) Net Debt/Adjusted EBITDA (R$) Net Debt (US$) Net Debt/Adjusted EBITDA (US$)

35 Debt Profile Competitive debt profile and cost of debt Gross Debt: R$12.2 billion Net Debt / Adjusted EBITDA: 2.1x Average debt maturity of 84 months Average Cost of Debt: 4.3% p.a. (in USD) (considering market swap curve) Type Exposure Amortization (R$ million) Certificates of Agribusiness Receivables 21% BNDES 4% Import Financing 7% Other 3% 2,708 2,146 2,115 2, ,599 1,802 1,121 4, Bond 39% Export Financing 26% ,510 1, , Caixa onward Foreign Currency Local Currency Data from 12/31/2017.

36 Rating Suzano is on track to achieve Investment Grade Suzano s Ratings Evolution BB+/BBB BBB/BBB BBB/BBB BB+/BB+ BB+ S&P / Fitch BB/ BB BB+/BB BB /BB Sovereign Klabin Arauco Fibria CMPC Suzano Standard & Poors BB+ BBB BBB BBB BB+ Moody's Baa3 Ba1 Baa3 Ba1 Fitch Ratings BB+ BBB BBB BBB BBB Net Debt / Adjusted EBITDA LTM 4.1x 2.9x 2.5x 3.1x 2.1x 1 Last twelve months ending on 31/12/2017 in R$. ² Last twelve months ending on 09/30/2017 in US$. Klabin¹ Arauco² Fibria¹ CMPC² Suzano¹

37 1. Capex 2017/2018 Capital discipline and capex flexibility Major Projects in 2017: Debottlenecking of Imperatriz Capex (R$ bilhões) Tissue production e 2018e Sustain Structural Competitiveness and Adjacent Businesses Acquisition of Facepa 0.3 Acquisition of land and forests 0.3 Total

38 1. Perspectivas 2017 Suzano in a better shape Cost Discipline Industrial Cost Reduction: Retrofitting and Debottlenecking Wood Cost Reduction: Optimization of forest base and average distance reduction Products Portfolio Portfolio of products allows less volatility High value added products Suzano Mais Financial Discipline Robust Balance Sheet Competitive cost of debt Healthy level of leverage Tax Incentive Capital Discipline Capex Flexibility Projects on time on budget 38

39 Investor Relations