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 Competitive Advantages Forestry 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 (December/14) 53% Controlling Group Maranhão Limeira Suzano Embu Rio Verde Santos 45% Free Float 2% Market Cap: R$12.5 billion Piauí Treasury Itaqui Port Mucuri Portocel Vitória 4
Production Capacity Production Capacity ( 000 tons) 4,210 4,710 2,850 1,750 3,210 3,210 3,210 1,920 1,920 1,920 2,920 3,420 1,100 1,290 1,290 1,290 1,290 1,290 2010 2011 2012 2013 2014 2015 Paper Pulp ( 000 ton) Pulp Paper Unit Integrated Market Pulp Fluff Uncoated Coated Paperboard Maranhão - 1,500 - - - - Mucuri 200 1,540-250 - - Suzano 460 40 100* 270* 90* 200 Limeira 310 340-280 100 - Rio Verde - - - 50 - - Embu - - - - - 50 Total 970 3,420 100* 850* 190* 250 *Note: Flexibility to produce Fluff or Printing and Writing paper 5
Diversified and Complementing Product Portfolio Suzano s products portfolio is made of market pulp, paperboard, uncoated paper and coated paper Net Revenues 58% Exports / 42% Domestic Market R$ 7.3 billion Market Pulp 2 nd eucalyptus market pulp producer Paper 53% 47% Paperboard Printing and Writing 10% 36% Uncoated Coated 27% 8% Note: Figures of last 12 months ending on 12/31/2014. Other paper represented 1% of net revenue on the period. 6
Positioning on Pulp Segment In 2014, the market pulp capacity 1 totalizes 61 million tons. The top 20 biggest producers represent 73% of the market. Pulp Production Capacity Top 20¹ (million ton) Eucalyptus Pulp Production Capacity (million ton) Fibria APRIL Arauco Suzano CMPC UPM-Kymmene Stora Enso Georgia Pacific Ilim Metsa Group Weyerhaeuser Paper Excelence Eldorado Mercer Domtar IP Sodra Resolute FP Canfor Ence 2.5 2.4 2.3 2.3 2.0 1.8 1.8 1.8 1.7 1.6 1.5 1.4 1.4 1.4 1.1 0.9 3.9 3.8 3.4 5.3 Total: 44 million tons¹ Fibria Suzano CMPC Eldorado Arauco Stora Enso UPM-Kymmene Cenibra Ence Altri Other Brazil Mondi Portucel Lwarcel Faruki 0.3 0.3 0.3 0.1 0.8 0.4 0.9 1.2 1.2 1.2 1.8 1.7 1.5 3.4 Total: 20 million tons 5.3 1 Includes Sotfwood, Hardwood, Unbleached and Sulphite Fonte: Hawkins Wright (dec/14) and Suzano 7
Positioning on Paper Segment Leadership on Brazilian paper market Brazilian Paper Demand 2014 - ( 000 ton) Paperboard 588 8% 92% Coated 48% 52% 558 Uncoated 6% Suzano Imports 94% Other Producers 1,363 National Producers Imports Source: Brazil's Forestry Industry Association Ibá (data considers the Common Mercosul Nomenclature - NCM - for the products manufactured by Suzano) 8
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 2014 Total area (k ha) 1 1,060 Total planted area (k ha) 2 520 Own planted area (k ha) 1 434 Forest Partnership Program (k ha) 86 MA Own Preserved Area (k ha) 1 460 Average Distance in Bahia (km) 2 73 TO PI Average Distance in São Paulo (km) 2 212 BA Average Distance in Maranhão (km) 2 150 Base 12/31/2014 1 Own and leased areas 2 Figures consider own, leased and third-parties areas Nursery in Mucuri SP MG ES 2014 Annual planting (k ha) 64 Planted seedlings / day (k) 221 Note: Both own and leased land can suffer variation up to 5% quarter over quarter. The total amount can differ due to rounding. The areas of SER Project were incorporated into Suzano s areas. 9
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. 10
01 Corporate Overview 02 Strategy 03 Pulp & Paper Industry 04 Results
Strategy Focus Deleveraging Structural Competitiveness 12
Structural Competitiveness Forestry Industrial Average distance reduction - Short term: wood and land swap - Medium term: forestry precision - Long term: biotechnology Clone improvement Standartization 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 13
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) 15
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) 16
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) 17
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) 66 57 59 6 50 6 6 18 7 18 18 5 18 4 4 3 34 26 27 19 2 2 2 3 2009 2013 2014 2019e Market Pulp Global Supply (million tons) 52 16 14 13 58 59 16 16 14 14 17 18 66 16 15 22 7 0 9 0 9 0 11 0 2009 2013 2014 2019e North America Europe Latin America Asia Others* CAGR Demand 2009 2013 2014-2019e North America -3.8% -1.7% Europe -0.3% +0.2% Asia +7.8% +4.4% Latin America +5.5% +3.3% Others* +6.3% +3.5% Total +3.2% +2.4% CAGR Supply 2009 2013 2014-2019e North America +0.4% +0.1% Europe +1.3% +1.0% Asia +4.5% +4.2% Latin America +6.9% +3.9% Others* +1.7% +0.1% Total +2.9% +2.2% Note: *Others includes Middle East and Africa Source: Poyry (2013) 18
Million ton Million ton Pulp and Paper Production Chain Globally, market pulp represents 14% of fiber consumption for paper production 56% 244 Total fiber consumption 5 433 44% Recycled 189 69% Non-wood, Mechanical Pulp and Integrated Pulp 130 423 Virgin fiber 31% 59 Paper Production Market Pulp 423 59 112 52 32 226 Printing & Writing Paperboard Tissue Corrugated Newsprint Others 21 10 2 25 BEKP 1 BHKP 2 Others 4 BSKP 3 2014 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 (Sep/14) 2014 19
Volume by Fiber Type (Million ton) Competitiveness of Eucalyptus Pulp BEKP competitiveness leads to fiber substitution CAGR BEKP: +7.2%p.a Others BHKP: -2.1%p.a. CAGR BEKP: +4.5% p.a. Others BHKP: +0.5%p.a. 35 30 25 20 15 10 5 66 60 62 63 64 59 53 55 57 27 27 49 50 50 50 50 25 25 26 26 26 23 24 23 23 22 22 22 26 25 25 24 23 17 18 21 16 16 19 14 13 12 12 11 10 9 9 10 10 10 10 10 10 10 10 10 4 3 3 3 3 3 3 2 2 2 2 2 2 2 70 60 50 40 30 20 10 Total Market Volume (million ton) 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016e 2017e 2018e 2019e 1 2 3 4 5 Market Pulp BEKP Others BHKP BSKP Others 0 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 (Dec/2014) 20
Russia Brazil Chile/Uruguay Africa Indonesia Finland Iberia Bel/Fra Sweden Japan Other Asia USA Canada China Eastern Europe Chile Finland Sweden Other USA Other Europe Japan West Canada East Canada BC Coast Cash Cost in Pulp Production New pulp projects are located in low-cost regions, most of them in South America. Brazil is the main destination for global investments Cash Cost CIF / Europa (US$/ton) 379 437 510 512 504 450 520 524 590 555 618 647 301 341 378 395 437 519 533 307 422 513 520 532 612 Hardwood Softwood 25.1 MM ton 6.3 MM ton 19.4 MM ton *Others includes New Zeland, Argentina, China and South Africa Source: Hawkins Wright (Dec/14) 6.5 MM ton Low Cost High Cost Low Cost High Cost 21 21
Forestry Competitiveness in Brazil Brazil presents competitive advantages to support continuous increase of its global forestry standing Hardwood Productivity (m 3 /ha/year) Competitive Advantages - Brazil 38 31 25 22 20 19 18 15 12 6 6 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 22
Euca Fluff Up to 70% softwood substitution for tampons and up to 30% for diapers Cost reduction for clients Annual Capacity: up to 100 kton Capex: approximately R$30 million Start-up: December/2015 Unit: Suzano Flexibility to produce fluff or printing and writing paper according to current production capacity First company in the world to produce fluff from hardwood 23
01 Corporate Overview 02 Strategy 03 Pulp & Paper Industry 04 Results
Operating Result Pulp Business Presence in main international markets and strategic relationship with clients with 80% of total sales through long-term contracts Pulp Production ( 000 tons) 2,982 Pulp Sales Volume ( 000 tons) 2,850 478 1,824 1,876 1,932 1,808 1,847 1,895 363 412 415 2,373 1,445 1,435 1,480 Domestic Market Export 2011 2012 2013 2014 2011 2012 2013 2014 Pulp Sales Volume per Region 2014 Asia 41% North America 11% Pulp Sales per Segment 2014 Special 18% Others 5% P & W 15% South / Central America 1% Europe 30% Packaging 7% Brazil 17% Tissue 55% 25
Operating Result Paper Business Operational excellence in paper: product portfolio and revenue management, optimization of assets, and strengthening of distribution channel Paper Production ( 000 tons) 1,287 1,311 1,293 1,301 Paper Sales Volume ( 000 tons) 1,335 1,347 1,312 1,322 803 895 904 934 Domestic Market 532 452 408 389 Export 2011 2012 2013 2014 2011 2012 2013 2014 Brazil 71% Paper Sales Volume per Region 2014 South / Central America 14% Others 1% North America 11% Europe 3% Suzano s Strategy Consolidation of the leadership position in the domestic market Improvement in sales mix between the domestic and export markets Unique model of joint operations with the distribution channel in Latin America 26
Financial Result Cost reduction even with inflation of 6.2% Net Revenue (R$ million) 7,265 Consolidated Cash Cost* (R$/ton) 4,848 5,192 5,689 3,413 540 563 580 536 2,835 3,004 3,111 2,013 2,188 2,577 3,851 Average R$/US$ 2011 2012 2013 2014 1.67 1.95 2.16 2.35 Pulp Paper 2011 2012 2013 2014 Consolidated Cash Cost* (R$/ton) COGS (R$/ton) 580 12 1 536 5.1% 3.6% -1.8% (57) 1,200 1,261 1,307 1,284 - R$ 45/ton 2013 Wood Chemicals Fixed Cost 2014 *Ex-maintenance downtime 2011 2012 2013 2014 Inflation +5.7% +5.9% +6.2% 27
Financial Result Continuous focus on increasing operational results Sales Expenses / Net Revenue (%) 5.1% 4.8% 4.4% 4.1% Adm. Expenses / Net Revenue (%) 7.8 % 6.9% 6.6% 5.4% 2011 2012 2013 2014 2011 2012 2013 2014 Adjusted EBITDA/ton (R$/ton) Adjusted EBITDA and Adjusted EBITDA Margin (R$ million) (%) 555 588 31.3% 33.8% 363 395 23.5% 24.3% 2,452 1,141 1,260 1,781 2011 2012 2013 2014 2011 2012 2013 2014 Adjusted EBITDA Adjusted EBITDA Margin 28
Debt on 12/31/2014 Gross Debt: R$13,761 million Amortization (R$ million) Net Debt: R$10,074 million 3,686 Average Cost of Debt: 2,503 3,029 In BRL: 10.5% p.a. or 91.2% of CDI In USD: 4.7% p.a. 1,795 1,468 1,462 1,825 1,679 Average Debt Maturity: 3.95 years Cash Position 2015 2016 2017 2018 2019 2020 2021 onward Debt Profile and Index Exposure Net Debt / Adjusted EBITDA (x) Local Currency 45% Short Term 13% CDI 27% TJLP 13% Fixed (R$) 6% 4.8x 5.1x 5.2x 4.1x Foreign Currency* 55% Long Term 87% * The debt percentage in foreign currency, considering derivative adjustment, was 57%. Libor 18% Fixed (US$) 33% Basket of Currencies 3% 2011 2012 2013 2014 29
CAPEX 2015 Competitiveness Project Capex (R$ billion) Digester at Suzano unit Insourcing and equipment modernization Reduction in average supply radius in SP 1.05 0.05 0.03 0.39 1.52 Energy efficiency program Small projects, high returns Maintenance Vale Florestar Euca Fluff Competitiveness Projects Capex 2015e EBITDA Gain: ~R$ 95 million/year as of 2015 29
Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Stock Performance Daily Trade Number - SUZB5 (Trade number) 11,279 Daily Financial Volume SUZB5 (R$ million) 6,574 8,990 37 44 2,894 13 25 2011 2012 2013 2014 2011 2012 2013 2014 Stock Performance - SUZB5 (100 basis: Jun/12 - Dec/14) 260 SUZB5 +192% 210 160 110 60 IBrX-50 +4% Ibovespa -8% Source: Bloomberg 30
Investor Relations www.suzano.com.br/ir ri@suzano.com.br 31