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Ensyn
Marcelo Castelli Chief Executive Officer
Agenda
OPERATING EXCELLENCE
LIABILITY MANAGEMENT
Cost control Capex discipline Working capital improvement Free cash flow generation
Liquidity events and FCF of R$ 2.6 billion Gross debt reduction Cost of debt reduction Leverage reduction Rating outlook revised by S&P to BB/Positive
Unit
Certification
Industrial Capacity
2.3 million t/year 1.3 million t/year 1.1 million t/year 0.5 million t/year (50% JV)
Base date: 2012. Includes 50% of Veracel and excludes forest partnership areas and forest base linked to the sale of forest assets in Southern Bahia and Losango.
6
Forestry planning is a long-term process in which the environment has a significant impact on the biological asset
MANAGEMENT BASIS
3
WEATHER
MGT
Forestry Strategy MAI*
PROGNOSIS
Historical Data
A B C
TREE
SITE
Year
Clonal Selection
1
Qualitative
2
Year
FORESTRY CYCLE
1
Planting or Sprouting
6
Harvesting
FINAL INVENTORY
Sample 60%
*MAI: Mean annual increment 7
15.0
2010
*MAI: Mean annual increment
2015
2020
2025
Expected results in the new forests planted in Fibrias own forests, adopting classical breeding + molecular markers technologies.
9
Increasing Production
Cost Reduction
10
Aracruz Revit A
New Bleaching Line Mill A Cash Cost Impact Reduction of R$ 4.1 / ton at Fibria Increase production by debottlenecking Start up: April, 2011
Bleaching Line
11
509
448
495
471 473
432
2009*
2010*
2011
3Q12 LTM
2009*
2010*
Historical Value
2011
3Q12 LTM
Inflation Effect**
718 593
675 594
29%
34%
33%
636
2,526
605
605
1,522
1,964
1,890
2009*
Historical Value
2010*
2011
3Q12 LTM
2009*
2010*
2011
3Q12 LTM
Inflation Effect**
1,416
991(2)
13%
49%
38%
Inflation and FX Rate Nonrecurring increase of forestry renovation at Aracruz Unit Industrial maintenance (seasonal effects)
2010
2011
CAPEX
3Q12 LTM
2013E
2014E
2015E
2016E
Forest Partnership
R$/ton 196
273
220
(1) Includes advance for wood purchase in partnership programs. (2) Excludes Conpacel.
13
Potential Fertilization
Automated Control-Precision
14
Aerial Fertilization
15
Curve of capture: expected savings due to projects included in Forest of the Future
OPEX Harvesting
Expected saving
2011
0,5%
>2014
82,7%
100,0%
6,4%
66,7%
CAPEX Silviculture
Expected saving
40,8%
2011
0,9%
>2014
11,9%
7,5%
2011
2012
2013
2014
2015
16
29.42%
30.38%(1)
40.20%(2)
HIGHLIGHTS
Listed on Novo Mercado, highest level of Corporate Governance at BM&FBovespa:
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
(1) Position as of October 31, 2012. BNDESPar has 21% linked to a Shareholders Agreement with Votorantim Industrial S.A. during the first 3 years (until October 2012) and 11% during the following 2 years (from October 2012 to October 2014). (2) Free Float 40.14% + Treasury 0.06%
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Main goals:
Minimum cash: protect our short-term debt amortization + cash conversion cycle Avoid EBITDA margin reduction below a set level
1,230 1,084 923 791 433
3Q11
% of exposure hedged
4Q11
53%
1Q12
54%
2Q12
44%
3Q12
18%
56%
Macroeconomic fundamentals indicate a floor for FX rate @ R$2.00 In this context, Fibria reviewed its Hedging Strategy to become more exposed to the Dollar
19
R$ Million
436 615 235 1,361 2,211 2,647
EQUITY OFFERING
FOREST SALE*
LOSANGO SALE
SUBTOTAL
FCF 9M12
TOTAL
(812)
EBITDA
CAPEX*
TAX
WORKING CAPITAL
Leverage Reduction
Net Debt/EBITDA (x) US$*
3.1 2.9
3.4 3.2
4.2 3.8
4.8 4.2
5.2 4.8
4.7 4.2
4.5 4.2
3.5** 3.4**
Market Consensus
11.0
9.5
9.5
9.0
8.5
8.6
2009
2010
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12**
Almost R$1 billion net debt reduction despite the 9.5% FX impact (3Q12 vs. 3Q11) on the dollar denominated debt (> 90% of total debt)
FX Rate(R$/US$)
Average LTM End of Period 2.00 1.74 1.76 1.67 1.73 1.63 1.69 1.56 1.65 1.85 1.67 1.88 1.70 1.82 1.96 2.02 2.02 2.03
*From June 30 2012 on, net debt/EBITDA ratio for covenant purposes are calculated in US Dollars and the limit is 4.5x ** Market consensus comprising 12 estimates from financial institutions 22
3,270
Debt by Currency
Debt by Type
7%
6% 17%
5%
5.5% 5.2%
75 65
93%
Local Currency Foreign Currency Bond BNDES Others
45%
27%
Pre-Payment NCE
3Q11
3Q12
3Q11
3Q12
23
117,611
114,507
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Developed Markets
Emerging Markets
37,250
199619971998199920002001200220032004200520062007200820092010201120122013201420152016
Developed Markets
(1) Source: RISI
Emerging Markets
25
000 ton
1996
2006
2016
Growth 20072016
27%
Harwood
14.3
22.4
29.9
Eucalyptus
5.4
11.1
21.4
106%
67%
16.4 30.8
22.0 44.4
24.1 54.0
35%
7%
Hardwood
Softwood
Source: PPPC 26
Developed Markets
2012 160 180 2013 360 352
17% Total 2% 3%
3,982 3,951
-4%
-4% -9%
Printing&Writing (million t)
Emerging Markets 2012
Hawkins Wright Brian McClay PPPC 2,835 2,478 1,260
Total
Total
China
2013
680 347 1,180
2013
50 -490 -140 1,165 -20 -275
250
200
150
100
50
28
Gross capacity addition should not be counted as the only factor influencing pulp price volatility
1000 900
Eldorado
Maranho
jan/03
jan/04
jan/05
jan/06
jan/07
jan/08
jan/09
jan/10
jan/11
jan/12
jan/13
jan/14
-85
-105
-500 -540
-755 -910
-1180 -1260
2008 2009 2010 2011 2012 2013E
637 66 23 548
627 20 15 592
624 80 27 517
596 552 103 68 425 39 68 445 550 108 40 402 546 95 47 404 518 98 50 370
Interest
CAPEX
Source: Total Delivered Cash Cost, includes SG&A: Hawkins Wright (Outlook for Market Pulp, July 2012) and Fibria 3Q12 Interest and Capex: RISI (World Pulp & Recovered Paper 5-year Forecast, August 2012) Companies financial information: Canada Canfor, Fibrek and Domtar) |Spain Ence
31
32
Tissue
26%
N.America
41%
Europe
Tissue
Csomd
23%
Asia
P&W Specialties
98% 0% 2%
Hong Kong
10%
L.America
43% 56% 1%
Ensyn
Marcelo Castelli Chief Executive Officer
Fibrias continuous investigation on bioenergy identified Ensyn as the most promising opportunity for partnership
Priority 1
Technological Maturity
P-Oil
Priority 2
Technology E Technology F
The biooil produced by Ensyn is flexible enough to use in various markets with significant potential
RAW MATERIAL Flexibility in the use of raw materials Non-food raw materials
RTP(2) PROCESS
Commercially proven technology Non-catalytic process with high conversion to fuels Solid intellectual property CAPEX per unit lower than those of competitors RTP equipment engineering & supply, with process guarantees, by Envergent Technologies (1)
Planted Forests
Forest Residues
Sawmill Residues
Agricultural Residues
2013-2014
(1) Envergent is a JV between Ensyn and UOP, a Honeywell company, the worlds leading supplier of refinery technology. | (2) RTP: Rapid Thermal Processing TM Source: Ensyn and Fibria Analysis 36
Ensyn estimates for returns on RTP Units in Canada and United States are very attractive
CASH MARGIN (USD/BOE)
Maximum Margin with Incentives
239
139
C-RINs Value
194
Base margin
55 45
Production Cost
100
RFO Market Value
~750 BOE per day = 230 k BOE/year = 22 millions of gallons per year
45% 22%
Without C-RINs 50% of C-RINs 100% of C-RINs
Fibrias investment on Ensyn capital is a move that opens a strategic option to Fibria
EQUITY INVESTMENT ONLY Entry in the company capital with IPO estimated for 2013 Potential equity appreciation EQUITY + JV INVESTMENT Maintains upside of the potential equity appreciation Allows structuring of JV in Brazil with exclusivity (*) JV IN BRAZIL ONLY Constitution of nonexclusive JV in Brazil to operate RTP plants with biomass provided by Fibria
Access to technology
* By the exclusivity agreement signed, exclusivity rights held by Ensyn to build and operate RTP plants in Brazil for certain applications will be fully transferred to the JV.
38
In sum, the partnership with Ensyn presents a solid and promising business model
PRODUCT
Renewable fuel production from non-food biomass High returns with low investment per unit. Potential for gains with regulatory incentives Technology protected and commercially proven, with two industrial units in operation Major market potential in North America and worldwide Relationships with major industry players: UOP, Chevron, others Major expansion plan both in North America and other regions (Asia, South America) Strategic alliance based on competencies with potential to create a relevant biofuel business in the future
ECONOMIC MODEL
TECHNOLOGY
JV IN BRAZIL
Source: Ensyn and Fibria Analysis
39
THANK YOU
Investor Relations
E-mail: ir@fibria.com.br Phone: +55 11 2138-4565 Website: www.fibria.com.br/ir