BTG Pactual Pulp & Paper Day
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 Pulp Market 02 Suzano s Pulp 03 Pictures
Million ton Pulp and Paper Production Chain Market pulp accounts for 15% of total fibers for paper production. Production (MM ton) 51% 194 380 Recycled 69% 128 Total fiber consumption 49% 186 Integrated pulp Minerals 8% Global production of paper 414 Virgin fiber 31% Market pulp 5 58 414 111 51 31 221 Printing & Writing Paperboard Tissue Corrugated Newsprint Others 58 4 19 9 2 23 Mechanical Pulp BEKP 1 BHKP 2 Others 4 BSKP 3 2013e 2013e 1 Bleached Eucalyptus Kraft Pulp 2 Bleached Hardwood Kraft Pulp 3 Bleached Softwood Kraft Pulp 4 Included Unbleached Kraft Pulp and sulfite 5 Includes Mechanical Pulp Source: Poyry (2013) and PPPC (Fev/13) 4
Pulp Demand Growth Drivers Historically there is a high correlation between GDP and paper consumption North America 226 kg/ha/year Europe Western: 185 kg/ha/year Eastern: 47 kg/ha/year Asia 1 19 kg/ha/year USA 233 kg/ha/year GDP per capita: US$ 48 k China 68 kg/ha/year GDP per capita: US$ 5 k India 9 kg/ha/year GDP per capita: US$ 1 k Latin America 44 kg/ha/year Brazil 47 kg/ha/year GDP per capita: US$ 13 k 1 Excluding China and Japan Source: 2010 paper consumption data from Poyry (nov/2011) and 2011 GDP per capita information from World Bank (fev/2013) 5
Volume by fiber type (MM ton) Pulp Demand The competitiveness of eucalyptus fiber favors the replacement. CAGR BEKP: +6.7%p.a Others BHKP: -1.7 %p.a. CAGR BEKP: +6.4% p.a. Others BHKP: -4.3%p.a. 35 70 30 25 20 15 10 5 54 52 22 23 11 13 11 8 8 56 58 58 59 60 61 62 52 53 54 23 23 23 23 24 24 24 22 21 22 23 22 21 20 19 14 16 17 18 16 10 9 9 10 10 9 9 9 8 8 6 7 7 7 7 7 7 7 7 7 60 50 40 30 20 10 Total Market Volume (MM ton) 0 2006 2007 2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e 2017e 0 1 2 3 4 Market Pulp BEKP Others BHKP BSKP Other 5 1 Market Pulp: includes mechanical pulp 2 Bleached Eucalyptus Kraft Pulp 3 Other Bleached Hardwood Kraft Pulp 4 Bleached Softwood Kraft Pulp 5 Others: includes UKP, Sulphite and Mechanical Pulp Source: PPPC (February/2013) 6
Brazil Indonesia Africa Russia Chile Iberia Finland Other Asia France Canada Sweden Japan USA Russia China Chile Finland USA Other Sweden Japan France West Canada BC Coast East Canada Brazilian Competitiveness Suzano is in the lowest cash cost region Cash Cost CIF / Europe (US$/ton) 379 392 555 552 569 556 504 544 506 481 424 658 365 379 397 417 518 449 515 539 544 592 642 647 Hardwood Softwood 22.6 MM ton 8.0 MM ton 16.3 MM ton 9.6 MM ton Low Cost High Cost Low Cost High Cost Source: Hawkins Wright (March/13) *Other includes New Zealand, Argentina, China and South Africa. 7
Pulp Global Consumption Demand for paper is forecasted to grow 1.9% p.a. until 2017. Paper Demand (million ton) Paper Demand Increase (million ton) 395 404 413 CAGR +1.9% p.a. 445 413 24 3 3 (2) 4 445 2011 2012 2013e 2017e Paper Demand by Segment 2017e 2013e Asia Latin America Europe North America Other 2017e CAGR 13e-17e Total Volume Fins Sanitários +3.5% a.a. 4.6 Mt Papelcartão +2.8% a.a. 5.8 Mt Especiais +0.6% a.a. 0.8 Mt I & E +0.5% a.a. 2.2 Mt Outros +2.4% a.a 18.3 Mt Growth in paper demand is driven by consumption growth in emerging markets Consumption of tissue grows even in developed countries, regions where P&W paper consumption is declining Eucalyptus pulp is highly suitable for manufacturing papers for sanitary purposes Source: Poyry (2013) 8
Pulp and Paper Start-ups Paper capacities start-up are being implemented, mainly in Asia, to meet demand driven by significant paper consumption growth in the region. Start-ups, Clousures, Conversions and Restarts until 2014 (million ton) Start-ups Closures, Conversions and Restarts Total Paper +4.6-0.6 +4.0 Printing & Writing +1.1-0.6 +0.5 Tissue +3.5 - +3.5 Market Pulp +4.5 1-1.8² +2.7 BSKP BHKP Others* +0.6 +3.8 - -0.4-0.9-0.5 +0.3 +3.0-0.5 *Includes Mechanical Pulp, Sulphite and Unbleached Net new capacity until 2014 (million ton) Closure of uncompetitive pulp capacity 4.0 New tissue machines in Asia will demand Tissue 3.5 2.8 eucalyptus market pulp Balanced market in 2013: the stronger paper demand, mainly in Asia, absorbs the supply from P & W 0.5 new pulp capacity Paper Pulp (1) Figure considers 0.4 Mton of expansion and 4,1 Mton projects under construction and start-ups until 2014: Montes Del Plata, Suzano Maranhão Unit, Ilim, Stora Enso Beihai and Oji (2) Figure includes 1.8 million tons of capacity closure and conversions and 0.04 million ton of capacity restarts Source: Hawkins Wright Outlook (Dec/12) and Capacity Changes table (Feb/2013) 9
Absorption capacity of Pulp start-ups New capacities, Closures, Conversions and Restarts in 2013 and 2014 New Paper Capacities New Paper Capacities per Segment 3.5 Mt Tissue Considering 70% of consumption of virgin fiber Virgin Fiber consumption 2.5 Mt 4.0 Mt 0.5 Mt P&W Considering 70% of consumption of virgin fiber 0.2 Mt New Pulp Capacities Oji (+440Kt) Ilim (+490Kt) Montes del Plata (+1300Kt) Suzano (+1500Kt) Stora Enso (+400Kt) Others(+355Kt) New Pulp Capacities 2.7 Mt 2.7 Mt Virgin fiber additional demand Pulp Closures Jari (-420Kt) Domtar (-120Kt) Cloquet (-450Kt) Others(-810Kt) Balance: Supply / Demand 10
01 Pulp Market 02 Suzano s Pulp 03 Pictures
Corporate Overview Suzano is a forestry-based company, publicly traded, controlled by Suzano Holding. Suzano operates in the pulp and paper businesses. Carajás Railroad Itaqui Port Structural competitive advantages Pulp production costs: one of the lowest in the world Leader in the regional paper market Certified plantations and products Organic growth in pulp New business: biotechnology Forests Ports Mills Railroad Maranhão Norte e Sul Railroad Limeira Suzano Embu Rio Verde Piauí Santos Mucuri Portocel Vitória Market cap: R$8.6 billion on 03/31/13 Capital Structure (March/13) 42% Free Float 56% Controlling Group 2% Treasury 12
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. 2013 Total area (k ha) 1 825 Total planted area (k ha) 2 440 Own planted area (k ha) 1 354 Forest Partnership Program (k ha) 86 Own Preserved Area (k ha) 1 322 MA MA, PI and TO Total: 392 k ha Planted: 105 k ha PI Average Distance in Bahia (km) 2 73 TO Average Distance in São Paulo (km) 2 237 BA Base 03/31/2013 1 Own and leased areas 2 Figures consider own, leased and third-parties areas SP MG ES BA, ES and MG Total: 245 k ha Planted: 132 k ha 2013 Annual planting (k ha) 53 Planted seedlings / day (k) 219 SP Total: 187 k ha Planted: 117 k ha Note: Both own and leased land can suffer variation up to 5% quarter over quarter. The total amount can differ due to rounding. 13
Maranhão Unit Project Overview PARÁ TOCANTINS GOIÁS DF CR São Luís MARANHÃO Imperatriz NSR PIAUÍ MINAS GERAIS Teresina BAHIA ESPÍRITO SANTO Cidelândia Imperatriz Porto Franco CEARÁ PERNAMBUCO SERGIPE PARAÍBA ALAGOAS RIO GRANDE DO NORTE Maranhão Mill Carajás Railway - CR Norte Sul Railway - NSR Forestry Note: Cidelândia refers to the plantations in forestry assets acquired from Vale 25 year research history in the region ᅳ Annual nursery capacity near the site of 15 million of seedlings ᅳ Competitive cost of land Long-term timber supply: ~70% self-sourced from Suzano own forest Industrial Scheduled start up for 4Q13 1.5 million ton/year eucalyptus market pulp ᅳ 100MW excess energy available for sale State-of-the-art technology and top tier equipment suppliers contracted Capacitar Project Logistics Outbound local logistics based on railways Export through a port located in the city of São Luís, state of Maranhão Strategically located for pulp distribution to the North American and European markets Management Professional management with vast project execution experience 14
Pulp Assets Sustainable and organic growth: Presence in main international markets and strategic relationship with clients. Sales Volume ( 000 ton) Pulp Sales Destinations LTM 1,607 1,808 1,847 1,840 Brazil 22% 1,310 1,445 1,435 1,435 North America 9% Latin America 2% 32% Europe 297 363 412 405 2010 2011 2012 LTM Asia 35% Domestic Market Exports Technical support at each international office: China, Switzerland and USA Pulp Sales per Segment LTM 80% of total sales through long-term contracts Printing & Writing 23% Over 130 active clients Long-term strategic partnerships with clients: Logistics Technology Pre- and post-sale technical assistance Others 1% Packaging 8% 42% Tissue Focus on value-added strategic segments Special 26% Note: Figures of last 12 months ending on 03/31/2013. 15
Production Capacity Suzano s production capacity has increased by 70% in the last 6 years. The start up of Maranhão Unit will increase its capacity to 4.7 MM ton/year of pulp and paper. Production Capacity ( 000 ton) Maranhão Unit 4,710 2,750 2,850 2,850 3,210 3,210 3,420 1,920 1,920 1,920 1,720 1,650 1,750 1,750 1,485 1,240 640 820 570 456 784 915 1,080 1,100 1,100 1,100 1,100 1,290 1,290 1,290 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e Paper Market Pulp 16
Maranhão Unit Dec/11 Mar/13 Earth moving Concluded Concluded Overall physical construction 11% 79% Engineering 49% 97% Dec/11 Procurement 7% 98% Infrastructure construction 34% 95% Civil works 0% 88% Suppliers contracted 70% Concluded Eletromechanical assembly People working on the construction of Maranhão Unit 0% 31% 1,800 people 12,000 people Mar/13 17
01 Pulp Market 02 Suzano s Pulp 03 Pictures
Pulp Bale 19
Maranhão Unit (April/2013) Overview 20
Maranhão Unit (April/2013) Log Transporter from the wood yard 21
Maranhão Unit (April/2013) Fiber Lines 22
Maranhão Unit (April/2013) Drying 23
Maranhão Unit (April/2013) Turbo generators and Boiler 24
Maranhão Unit (April/2013) Caustification and Lime Kilns 25
Maranhão Unit (April/2013) Water Treatment 26
Maranhão Unit (April/2013) Effluent Treatment 27
Maranhão Unit (April/2013) Cooling Towers 28
Maranhão Unit (April/2013) Control Room and Labs 29
Investor Relations Investor Relations www.suzano.com.br/ir ri@suzano.com.br