Institutional Presentation
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
01 Corporate Overview 02 Strategy 03 Pulp & Paper Industry 04 Results
Corporate Overview Suzano is a forestry-based company, publicly traded, controlled by Suzano Holding. Suzano operates in the pulp and paper businesses Forestry Competitive Advantages Low wood cost High productivity of our forests Low average distance Biotechnology Eucalyptus cycle: 7 years Pulp Low production costs Certified products Energy self-sufficient Diversified markets Commercial strategy Paper Regional leader Vertically integrated operations Distribution Forests Ports Mills Capital Structure (April/15) 53% Controlling Group Maranhão Limeira Suzano Embu Rio Verde 45% Free Float 2% Market Value: R$ 16.7 billion Santos Treasury Itaqui Port Mucuri Portocel Vitória 4
Production Capacity Production Capacity ( 000 tons) 4,210 4,710 2,850 1,750 3,210 3,210 3,210 1,920 1,920 1,920 2,920 3,420 1,100 1,290 1,290 1,290 1,290 1,290 2010 2011 2012 2013 2014 2015 Paper Pulp ( 000 ton) Pulp Paper Unit Integrated Market Pulp Fluff Uncoated Coated Paperboard Maranhão - 1,500 - - - - Mucuri 200 1,540-250 - - Suzano 460 40 100* 270* 90* 200 Limeira 310 340-280 100 - Rio Verde - - - 50 - - Embu - - - - - 50 Total 970 3,420 100* 850* 190* 250 *Note: Flexibility to produce Fluff or Printing and Writing paper from 2016 on. 5
Diversified and Complementing Product Portfolio Suzano s products portfolio is made of market pulp, paperboard, uncoated paper and coated paper Net Revenues 62% Exports / 38% Domestic Market R$ 8.0 billion Market Pulp 2 nd eucalyptus market pulp producer Paper 58% 42% Paperboard Printing and Writing Uncoated Coated Note: Figures of last 12 months ending on 3/31/2015. Other paper represented 1% of net revenue on the period. 6
Positioning on Pulp Segment In 2015, the market pulp capacity¹ totalizes 63 million tons. The top 20 biggest producers represent 73% of the market Pulp Production Capacity Top 20¹ (million ton) Fibria APRIL Arauco CMPC² Suzano Stora Enso UPM-Kymmene Georgia Pacific Ilim Metsa Group Weyerhaeuser Paper Excelence Eldorado Mercer Domtar IP Sodra Resolute FP Cenibra Canfor 2.5 2.5 2.3 2.0 1.8 1.8 1.8 1.7 1.6 1.5 1.4 1.4 1.3 1.2 1.1 3.9 3.8 3.6 3.4 5.3 Total: 46 million tons¹ Eucalyptus Pulp Production Capacity (million ton) Fibria Suzano CMPC ² Eldorado Arauco Stora Enso UPM-Kymmene Cenibra Ence Altri Outros Brasil Portucel Mondi Lwarcel Faruki 0.4 0.3 0.3 0.1 0.8 0.4 0.9 1.2 1.2 1.2 1.7 1.5 2.9 3.4 Total: 22 million tons 5.3 1 Includes Sotfwood, Hardwood, Unbleached and Sulphite; excludes mechanical pulp / ² Guaiba 2 total capacity Source: Hawkins Wright (Apr/15) and Suzano 7
Forestry Assets Suzano s investment in R&D over many years allows the Company to expand its forestry assets to the northeast region of Brazil 2015 Total area (k ha)¹ 1,061 Total planted area (k ha)² 522 Own planted area (k ha)¹ 436 Forest Partnership Program (k ha) 87 Own Preserved Area (k ha)¹ 463 Average Distance in Bahia (km)² 73 Average Distance in São Paulo (km)² 212 Average Distance in Maranhão (km)² 150 Base 3/31/2015 1 Own and leased areas 2 Figures consider own, leased and third-parties areas 2015 Annual planting (k ha) 85 Nursery in Mucuri Planted seedlings / day (k) 276 Note: Both own and leased land can suffer variation up to 5% quarter over quarter. The total amount can differ due to rounding. 8
Sustainability Certifications Our responsible socioenvironmental management results in competitive advantages as the Forest Stewardship Council certification. Biodiversity We invest in technology, environmental monitoring and encourage the rational use of natural resources to minimize the impacts of our activities. Socioenvironmental Responsability We have tools aimed at strengthening the relationship with stakeholders. Also, we develop projects focused on income generation and education in the communities. 9
01 Corporate Overview 02 Strategy 03 Pulp & Paper Industry 04 Results
Strategy Focus Deleveraging Structural Competitiveness Adjacent Business 11
Structural Competitiveness Forestry Industrial Average distance reduction - Short term: wood and land swap - Medium term: forestry precision - Long term: biotechnology Clone improvement Standardization and insourcing harvesting Structural Efficiency Gain Investment in retrofitting Small projects, high returns Logistics Commercial Integrated logistics with synergy gains New logistic modes Road transportation with autonomous drivers Price discipline Optimization of regional and customer mix Expansion of client base Maximize the return on assets and cash generation 12
01 Corporate Overview 02 Strategy 03 Pulp & Paper Industry 04 Results
World Paper Supply and Demand by Region World paper demand is estimated to grow +1.7% p.a. from 2014 to 2019, driven by emerging economies, while supply is projected to grow +1.6% p.a. during the period Paper Global Demand (million tons) 385 83 77 18 158 413 422 77 77 74 74 22 23 186 193 458 74 73 26 223 25 28 29 32 23 25 27 30 2009 2013 2014 2019e Paper Global Supply (million tons) 388 91 91 16 156 414 423 86 86 89 90 19 19 184 191 458 83 89 23 220 19 13 21 14 22 15 25 18 2009 2013 2014 2019e North America Western Europe Eastern Europe Asia Latin America Others* CAGR Demand 2009-2013 2014e - 2019e North America -1.8% -0.7% Western Europe -0.9% -0.4% Eastern Europe +4.1% +2.9% Asia +4.1% +2.9% Latin America +3.0% +2.3% Others* +2.7% +2.7% Total +1.7% +1.7% CAGR Supply 2009-2013 2014e - 2019e North America -1.4% -0.6% Western Europe -0.5% -0.2% Eastern Europe +3.7% +3.5% Asia +4.2% +2.9% Latin America +2.6% +2.7% Others* +2.7% +3.6% Total +1.6% +1.6% Note: *Others includes Middle East and Africa Source: Poyry (2013) 14
World Paper Supply and Demand by Segment World paper demand growth is driven by tissue and paperboard segments Paper Global Demand (million tons) 385 110 27 45 35 413 422 111 111 31 32 50 52 35 35 458 113 38 59 36 135 154 160 183 34 31 31 29 2009 2013 2014 2019e Paper Global Supply (million tons) 388 112 27 46 33 414 423 111 112 31 32 51 52 34 35 458 113 38 59 36 135 155 160 183 34 32 31 29 2009 2013 2014 2019e Printing & Writing Tissue Paperboard Specialties Others* Newsprint CAGR Demand 2009-2013 2014-2019e Printing & Writing +0.2% +0.4% Tissue +3.5% +3.2% Paperboard +2.7% +2.4% Specialties +0.3% +0.5% Others* +3.3% +2.7% Newsprint -1.8% -1.2% Total +1.7% +1.7% CAGR Supply 2009 2013 2014-2019e Printing & Writing -0.1% +0.3% Tissue +3.5% +3.2% Paperboard +2.3% +2.3% Specialties +1.0% +0.6% Others* +3.4% +2.7% Newsprint -1.9% -1.2% Total +1.6% +1.6% Note: *Others Includes corrugated and sackkraft paper, products with little or no virgin fiber consumption Source: Poyry (2013) 15
USA Canada Sweden Norway Macau Switzerland Finland Hong Kong Denmark Austria Germany UK Iceland Chile Mexico Uruguay Argentina Brazil Colombia China India Per-capita Consumption of Tissue Demand for tissue is impacted by cultural factors, the economic growth (GDP) and the development of the country (urbanization). The share of this segment in total paper demand should increase driven by higher demand in emerging countries Per-capita Consumption of Tissue (Kg/person/year) 24 21 20 20 19 19 18 18 18 18 17 16 16 11 8 8 7 5 5 4 0.1 Source: World Tissue Business Outlook RISI (2013) 16
World Market Pulp Supply and Demand Expectations of a scenario marked by supply and demand in balance. The growth in market pulp demand is driven by pulp consumption in Asia, which has invested in nonintegrated paper mills. Supply growth is driven by Latin America, the most competitive region for pulp production Market Pulp Global Demand (million tons) 50 7 18 3 20 67 58 60 6 6 6 18 18 18 5 4 4 27 29 35 2 3 3 4 2010 2014 2015e 2020e Market Pulp Global Supply (million tons) 52 15 14 15 59 60 16 16 14 15 18 19 67 8 9 9 12 1 1 1 1 2010 2014 2015e 2020e 16 15 23 North America Europe Latin America Asia Others* CAGR Demand 2009 2014 2015e 2020e North America -2.6% -1.8% Europe +0.2% +0.0% Asia +8.2% +4.1% Latin America +4.4% +2.7% Others* +5.8% +2.9% Total +3.8% +2.2% CAGR Supply 2009 2013 2014-2019e North America +1.0% +0.1% Europe +1.7% +1.2% Asia +4.2% +4.7% Latin America +5.7% +3.4% Others* +1.5% +0.3% Total +3.0% +2.2% Note: *Others includes Middle East, Oceania and Africa Source: Poyry (2013) 17
Million ton Million ton Pulp Consumption Globally, market pulp represents 14% of fiber consumption for paper production 57% 252 Total fiber consumption 5 442 431 43% Recycled Virgin fiber 191 69% Non-wood, Mechanical Pulp and Integrated Pulp 31% 131 60 Paper Production Market Pulp 431 60 112 54 34 232 2015 Printing & Writing Paperboard Tissue Corrugated Newsprint Others 23 10 2 26 2015 BEKP 1 BHKP 2 Others 4 BSKP 3 1 Bleached Eucalyptus Kraft Pulp 2 Bleached Hardwood Kraft Pulp 3 Bleached Softwood Kraft Pulp 4 Includes Unbleached Kraft Pulp and sulphite 5 excludes dissolving pulp and fluff Source: Poyry (2013) and PPPC (Apr/2015) 18
Volume by Fiber Type (MM ton) Competitiveness of Eucalyptus Pulp BEKP competitiveness leads to fiber substitution CAGR BEKP: +8.2% p.a. Others BHKP: -2.1% p.a. CAGR BEKP: +3.2% p.a. Others BHKP: +2.4% p.a. 35 30 25 20 15 10 5 60 62 63 64 66 67 59 57 53 55 49 50 50 50 50 24 25 25 26 26 26 27 27 27 27 23 23 23 22 22 22 25 25 26 24 23 17 18 22 16 16 19 14 13 11 12 11 10 9 9 10 10 10 10 10 10 10 10 11 11 4 3 3 3 3 3 3 2 2 2 2 2 2 2 2 70 60 50 40 30 20 10 Total Market Volume (MM ton) 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e2016e2017e2018e2019e2020e Market Pulp¹ BEKP² Other BHKP³ BSKP Others ¹ Market Pulp: Excludes Mechanical Pulp ² Bleached Eucalyptus Kraft Pulp ³ Others Bleached Hardwood Kraft Pulp 4 Bleached Softwood Kraft Pulp 5 Includes sulphite and unbleached pulp Source: Poyry (2013) and PPPC (Apr/2015) 4 5 0 19
Sweden Russia Brazil Chile/Uruguay Iberia Indonesia Finland Japan Other Asia USA China Eastern Europe Chile Finland Sweden Other Europe Other West Canada East Canada Japan BC Coast Cash Cost in Pulp Production New pulp projects are located in low-cost regions, most of them in South America Cash Cost CIF / Europa (US$/ton) 501 467 517 438 386 379 505 586 589 252 519 528 558 452 484 360 361 369 411 451 295 257 561 Hardwood Bel/Fra Canada Softwood 19.6 Mt 13.0 Mt 11.5 Mt 14.3 Mt Low Cost High Cost Low Cost High Cost *Others includes New Zeland, Argentina, China and South Africa Source: Hawkins Wright (Apr/15) 20 20
Forestry Competitiveness in Brazil Brazil presents competitive advantages to support continuous increase of its global forestry standing 38 Hardwood Productivity (m 3 /ha/year) 31 25 22 20 19 18 15 12 6 6 Competitive Advantages - Brazil Availability of productive land Excellent soil and climate conditions Short harvesting cycle for planted forests Opportunity to recover degraded areas Brazil China Indonesia Australia Chile New Zealand South Africa USA Portugal Finland Sweden Low establishments and maintenance costs Source: ABRAF 2014. Pulp Productivity 10.5 adtm 5.5 1 /ha/year adtm/ha/year +100% 1980 2014 Biotechnology More wood / hectare More pulp / m³ Superior quality Smaller area Decreasing costs / m³ Source: Suzano 21
Euca Fluff Up to 70% softwood substitution for feminine hygiene and up to 30% for diapers Cost reduction for clients Annual Capacity: up to 100 kton Capex: approximately R$30 million Start-up: December/2015 Unit: Suzano Flexibility to produce fluff or printing and writing paper according to current production capacity First company in the world to produce fluff from hardwood 22
01 Corporate Overview 02 Strategy 03 Pulp & Paper Industry 04 Results
Operating Result Pulp Business Presence in main international markets and strategic relationship with clients with 80% of total sales through long-term contracts Pulp Production ( 000 tons) Pulp Sales Volume ( 000 tons) 2,982 3,176 2,850 3,242 504 1,876 1,932 1,847 1,895 478 412 415 1,435 1,480 2,373 2,738 Domestic Market Export 2012 2013 2014 LTM* 2012 2013 2014 LTM* Pulp Sales Volume per Region Pulp Sales per Segment LTM* Europe 29% Asia 43% North America 11% South/ Central America 1% Brazil 16% LTM* Tissue 54% Specials 18% Other 6% P&W 15% Packaging 7% Note: Last twelve months ending on 3/31/2015. 24
Operating Result Paper Business Operational excellence in paper: product portfolio and revenue management, optimization of assets, and strengthening of distribution channel Paper Production ( 000 tons) Paper Sales Volume ( 000 tons) 1,311 1,293 1,301 1,286 1,347 1,312 1,322 1,292 895 904 934 908 452 408 389 383 Domestic Market Export 2012 2013 2014 LTM* Paper Sales Volume per Region LTM* Brazil 70% North America 11% Europe 4% Other 2% South/ Central America 14% 2012 2013 2014 LTM* Suzano s Strategy Consolidation of the leadership position in the domestic market Improvement in sales mix between the domestic and export markets Unique model of joint operations with the distribution channel in Latin America Note: Last twelve months ending on 3/31/2015. 25
Financial Result Cost reduction even with inflation Net Revenue (R$ million) 7,265 8,012 Consolidated Cash Cost* (R$/ton) 5,192 3,004 5,689 3,111 3,413 3,404 563 580 536 527 2,188 2,577 3,851 4,608 Average R$/US$ 2012 2013 2014 LTM* 1.95 2.16 2.35 2.48 Pulp Paper 2012 2013 2014 LTM* Consolidated Cash Cost* (R$/ton) COGS (R$/ton) 587 7 (58) (9) 527 3.6% -1.8% -1.5% 1,261 1,307 1,284 1,265 - R$ 60/ton 2014** Wood Raw Fixed Cost Materials *Ex-maintenance downtime ** Last twelve months ending on 3/31/2014 Note: Last twelve months ending on 3/31/2015. LTM Inflation 2012 2013 2014 LTM* +5.9% +6.2% +3.8% 26
Financial Result Continuous focus on increasing operational results Sales Expenses / Net Revenue LTM* (%) Adm. Expenses / Net Revenue LTM* (%) 7.8% 4.8% 4.4% 6.6% 4.1% 4.0% 5.4% 5.1% 2012 2013 2014 LTM* 2012 2013 2014 LTM* Adjusted EBITDA/ton LTM* (R$/ton) 555 588 639 Adjusted EBITDA and Adjusted EBITDA Margin LTM* (R$ million) (%) 31.3% 33.8% 36.1% 24.3% 2,895 2,452 395 1,260 1,781 2012 2013 2014 LTM* 2012 2013 2014 LTM* Note: Last twelve months ending on 03/31/2015. Adjusted EBITDA Adjusted EBITDA Margin 27
Debt on 3/31/2015 Gross debt of R$15.3 billion and net debt of R$11.4 billion, with average maturity of 3.8 years Average Debt Cost (%) Amortization (R$ million) Dec/12 Dec/13 Dec/14 5.5% 4.8% 4.7% 125.0% 94.4% 91.2% 3,868 1,662 1,734 1,648 2,088 2,694 5,471 Mar/15 4.7% 90.8% Cash Position 9M15 2016 2017 2018 2019 2020 onward R$ US$ Debt in BRL as a percentage of CDI Debt Profile and Index Exposure Net Debt / Adjusted EBITDA (x) Local Currency 41% Short Term 14% Basket of Currencies 4% Fixed (R$) 5% Fixed (US$) 35% 5.1x 5.2x 4.1x 3.9x Foreign Currency* 59% Long Term 86% TJL P CDI 24% Libor 20% 2012 2013 2014 3/31/2015 *The debt percentage in foreign currency, considering derivative adjustment, was 61%. 28
2015 CAPEX Competitiveness projects ongoing Capex (R$ billion) Digester at Suzano Unit 0.39 1.52 Insourcing and equipment modernization 1.05 0.05 0.03 Reduction in forest average distance Energy efficiency programs Small projects, high returns Sustain Vale Florestar Euca Fluff Retrofitting 2015e EBITDA gain: ~R$ 95 million/year as of 2015 29
Operational Cash Generation Maximizing operational cash generation Operational Cash Generation LTM* (R$ million) 2,895 (1,027) (150) 1,718 Value to shareholder Adjusted EBITDA Sustain Working Capital Operational Cash Generation *Last twelve months ending on 3/31/2015. 30
Stock Performance Daily Trade Number - SUZB5 (Trade number) Daily Financial Volume SUZB5 (R$ million) 6,574 8,990 11,279 12,043 25 37 44 54 2012 2013 2014 LTM* 2012 2013 2014 LTM* *Last twelve months ending on 3/31/2015. Stock Performance - SUZB5 (100 basis: Mar/14 Mar/15) 200 180 160 140 120 100 IBrX-50 +2% 80 Ibovespa +1% 60 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 SUZB5 +79% Source: Bloomberg 31
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