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HSBC IV LatAm Natural Resources ConferenceFebruary, 2015
FIBRIA APP WITH THIS PRESENTATION IS AVAILABLE FOR DOWNLOAD AT APPLE STORE AND GOOGLE PLAY.
2
The information contained in this presentation may include statements whichconstitute forward-looking statements, within the meaning of Section 27A of the U.S.Securities Act of 1933, as amended, and Section 21E of the U.S. Securities ExchangeAct of 1934, as amended. Such forward-looking statements involve a certain degree ofrisk and uncertainty with respect to business, financial, trend, strategy and otherforecasts, and are based on assumptions, data or methods that, although consideredreasonable by the company at the time, may turn out to be incorrect or imprecise, ormay not be possible to realize. The company gives no assurance that expectationsdisclosed in this presentation will be confirmed. Prospective investors are cautionedthat any such forward-looking statements are not guarantees of future performanceand involve risks and uncertainties, and that actual results may differ materially fromthose in the forward-looking statements, due to a variety of factors, including, but notlimited to, the risks of international business and other risks referred to in thecompany’s filings with the CVM and SEC. The company does not undertake, andspecifically disclaims any obligation to update any forward-looking statements, whichspeak only for the date on which they are made.
Disclaimer
3
Company Overview1Pulp and Paper Market2Financial and Operational Highlights3
Agenda
Final Remarks4
5
A Winning Player
Port Terminal Pulp Unit
Três Lagoas
Santos
AracruzPortocel
Caravelas
BelmonteVeracel
Jacareí
Superior Asset Combination Main Figures – 3Q14 LTM
Pulp capacity million tons 5,300
Net revenues R$ billion 7.1
Total Forest Base(1) thousand hectares 961
Planted area(1) thousand hectares 560
Net Debt R$ billion 7.6
Net Debt/EBITDA (in Dollars)(2) X 2.4
Net Debt/EBITDA (in Reais) X 2.7
Source: Fibria(1) Including 50% of Veracel, excluding forest partnership areas and forest bases linked to the sales of Losango and forest assets in Southern Bahia State. (2) For covenants purposes, the Net Debt/EBITDA ratio is calculated in Dollars.
6
Fibria’s Units Industrial Capacity
* Veracel is a joint venture between Fibria (50%) and Stora Enso (50%) and the total capacity is 1,120 thousand ton/year
7
Worldwide presence
Strong global customer base
Long-term relationships
Focus on customers with stable business
Customized pulp products and services
Sound forestry and industrial R&D
Focus on less volatile end-use markets such as tissue
Efficient logistics set up
Low dependence on volatile markets such as China
Low credit risk
100% certified pulp (FSC and PEFC/Cerflor)
Sales Mix by End Use - Fibria
Sales Mix by Region - Fibria
Europe40%
N. America
27%
Asia23%
Other10%
Region - 4Q14
Tissue56% Printing &
Writing25%
Specialties19%
End Use - 4Q14
Highlights
30%20%
29% 29% 24% 18%26% 26% 30%
22% 28% 31% 30%19% 22% 26% 27%
37%46%
46% 41%
35% 44%43% 41% 36%
42%43% 35% 36%
46% 42% 39% 40%
22% 25%14% 20%
31% 28% 20% 23% 25% 26%21% 26% 26% 26% 27% 25% 23%
11% 9% 11% 10% 10% 10% 11% 10% 9% 10% 8% 8% 8% 9% 9% 10% 10%
4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14
North America Europe Asia Other
Fibria’s Commercial Strategy
8
(1) Controlling group(2) Free Float 40.14% + Treasury 0.06%
Votorantim Industrial S.A.
(1)
29.42%
BNDESParticipações (1)
30.38%
FreeFloat (2)
40.20%
• 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
• SEC Registered ADR Level III program
• Indebtedness and Liquidity
• Market Risk Management
• Risk Management
• Corporate Governance
• Related Parties Transactions
• Anti-Corruption
• Information Disclosure
• Securities Trading
• Antitrust
• Genetically Modified Eucalyptus
Fiscal Council
Board of Directors
20% independent
members
Role of CEO and
chairman is split
Personnel and Remuneration
Committee
Statutory Audit
Committee
Finance Committee
Sustainability Committee
Innovation Committee
General Meeting
Listed on Novo Mercado, highest CG level at BM&FBovespa: Policies approved by the Board of Directors:
Shareholder Structure and Corporate Governance
30%
independent
members
100%
independent
members
50% independent members
45% independent members
-
12
As a result we had better prices than expected
Consultants: Hawkins Wright, RISI and Brian McClay (published in the end 2012 for 2013 prices)
BHKP Delivered to Europe (USD/t)
765
772
767
784
772
788
814
795
770
791
740
750
760
770
780
790
800
810
820
1Q13 2Q13 3Q13 4Q13 Annual 2013
Consultants average for 2013 Realized PIX/FOEX price
15
… and also better prices than initially projected
BHKP Delivered to Europe (USD/t)
782
737
696
718
733
768
752
729734
746
640
660
680
700
720
740
760
780
800
1Q14 2Q14 3Q14 4Q14 Annual 2014
Consultants average for 2014 Realized PIX/FOEX price
Consultants: Hawkins Wright, RISI and Brian McClay (published in the end 2013 for 2014 prices)
16
Then, what about 2015?
1005
-315
-65
115
85
30
200
750
265
750
400
BEKP demand growth**
Net
Possible closures*
Ence Huelva
April Rizhao
Sappi Cloquet
Old Town (Expera)
Portucel Cacia
Eldorado
CMPC Guaiba II
Oji Nantong
Montes del Plata
Suzano Maranhão
-400 to -800
1,415 to 1,815
Expected scenario for 2015 in Dec’14 Realized scenario in 2015
?
BHKP CAPACITY CHANGES
*Based on annual closures average (400,000 to 800,000 t/yr)**Source: PPPC Outlook for Eucalyptus Market Pulp September 2014
17
Shipments of Eucalyptus Pulp (1)
(1) Source: PPPC World 20 – December/2014
Global Market BEKP Demand
Paper Capacity increase in China
(1) Source: PPPC World 20 – December/2014
2013 2014 2015 Total
FORECAST REALIZEDPREVIOUS FORECAST
LAST FORECAST
PREVIOUS FORECAST
LAST FORECAST
PREVIOUS LATEST
Woodfree -25 199 - 256 550 760 525 1,215
Tissue 1,184 833 1,518 1,390 903 727 3,605 2,950
Cartonboard 2,428 2,128 1,300 2,100 300 380 4,028 4,608
Total 3,587 3,160 2,818 3,746 1,753 1,867 8,158 8,773
Source: Fibria and Independent Consultants
2014 vs. 2013
+1,734 kt
+92 kt
+386kt+717 kt +537 kt
11%
5%
6%
20%13%
Total NorthAmerica
WesternEurope
China Others
0
10
20
30
40
50
60
05 06 07 08 09 10 11 12 13 14
Days of Supply
Dec/14: 36 days
Nov./14: 38 days | Dec./13: 38 days
Producer Inventories – Hardwood (1)
18
Global Market Pulp Demand
Demand growth rate
Hardwood (BHKP) vs. Softwood (BSKP) (000 ton)
Hardwood demand will continue to increase at a faster pace than Softwood
Source: PPPC
Source: PPPC. Excludes Sulphite and UKP market pulp.
NBSK vs. BHKP - Prices(1)
(1) Source: FOEX |Average spread in the last 5 years.
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
Hardwood Softwood
2013 - 2018 CAGR:Hardwood: +2.8%Softwood: +0.7%
000 ton 1998 2008 2018
Growth
1998-
2008
Growth
2008-
2018
Hardwood 15.0 24.5 32.8 63% 34%
Eucalyptus 6.0 14.2 23.4 137% 63%
Softwood 17.6 21.6 24.8 23% 15%
Market Pulp 32.6 46.1 57.1
Paper Production – Runnability with BHKP
Source: RISI conference, August 2014.
400
500
600
700
800
900
1000
1100
0
50
100
150
200
Spread Average spread BHKP NBSK
Average spread: US$ 109
Spread Dec./14: US$ 191
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Technical Age and Scale in the Market Pulp IndustryFurther closures are expected due to lack of adequate investments in the industry…
Hardwood (BHKP) Market Pulp Softwood (BSKP) Market Pulp
STRONGWeighted average
technical age 12.3 years
Weighted average
capacity 1,277,000 t/a
Aracruz
Três Lagoas
Veracel
Jacareí
0
500
1.000
1.500
2.000
2.500
3.000
051015202530
PM Capacity, 1000 t/a
Technical Age, years
WEAK
STRONGWeighted average
technical age 21 years
Weighted average
capacity 527,000 t/a
North American Pulp Mills Other Pulp Mills Closures Grade Switch On & Off
WEAK0
500
1.000
1.500
2.000
2.500
3.000
0102030
PM Capacity, 1000 t/a
Technical Age, years
More than 7.7 million tons of capacity above 25 years and with annual capacity below 500,000 t/y.
Old Town
EnceHuelva
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Source: PPPC and Fibria
Closures of Hardwood Capacity Worldwide(000 ton)
Capacity closures DO happen
-910
-85
-1,260
-1,180
-540-500
-105
-1,085
-830
2006 2007 2008 2009 2010 2011 2012 2013 2014-2016 E
as of Dec.14
21
Total Cash Cost of BHKP delivered to Europe (US$/t)
Source: Hawkins Wright (Outlook for Market Pulp, September 2014) | Fibria’s 4Q14 considering a FX of R$/US$2.54. | “Brazil ex-Fibria” 3Q14 considering FX of R$/US$2.27.Gray bar includes cash expenses as Interest, CAPEX, SG&A and Taxes (Source: RISI and Fibria).
4Q14 net price:
US$ 552/t
W/K
Among the industry’s lowest cash cost producers
498 508456 468
420 404 424 424 406342 315 311 297
235186
71 4669 41
86 12134 38 41
4855 38 67
111
61
51
119
39
Cash Cost (US$/t) Delivery (US$/t)
SG&A
Capex
Interest
Income Tax
Interest
Capacity(k tons):
1,775 660 595 570 1,570 1,045 2,415 335 625 340 7,450 = 31,3853,745 1,010 3,950 5,300
22
Gross capacity addition should not be counted as the only factorinfluencing pulp price volatility….(1)
List Price bottoming at US$650/t in 2011 and US$724/t in 2014
Cap
acit
y (0
00
to
n)
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1,8
2,0
0
100
200
300
400
500
600
700
800
900
1.000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Valdivia
APP Hainan
Veracel Nueva Aldea
Santa Fé
Mucuri
FrayBentos
KerinciPL3
Três Lagoas
Rizhao
APP Guangxi
ChenmingZhanjiang
EldoradoMontes del Plata
Maranhão
Guaíba II
APP South Sumatra(2)
Klabin
OjiNantong
BH
KP
pri
ces
-C
IF E
uro
pe
(U
S$/t
on
)
(1) Source: Hawkins Wright , Poyry and Fibria Analysis. Pulp price estimates according to Hawkins Wright (Dec/14), Brian McClay (Jan/14) and RISI (Dec/14)(2) Partially integrated production
23
Lowest volatility among commodities
Change Dec./2014 vs. Dec./2013(3)
35%
21%
29%26%
23% 23%
15%
7%
Sugar Iron Ore WTI Crude
Oil
Soy LME Metals Ibovespa Cattle FOEX PIX
BHKP
Commodities Historical Volatility (US$)(1)
(1) Since 2009 | (2) Except Iron Ore (Average of: Vale, Rio Tinto and BHP) and LME Metals | (3) December, 31st
Sugar Iron Ore Crude Oil SoyLME
Metals Ibovespa Cattle Pulp BHKP
Commoditiy Spot Price -12% -47% -46% -22% - - 21% -3%
S&P Sector Index(2) -12% -34% -43% -21% -8% -3% 21% -
FIBR3|FBR - - - - - - - 18% | 4%
25
No exposure to eletricity shortage risks, in spite of which thecompany has benefited from the sale of its surplus energy
466 472
26
8 ( 22 ) ( 7 ) 1
4Q13 Wood FX Utilities EnergyConsumption
Others 4Q14
+ 1.3%
Improved results boosted by energy sales and operational efficiency.
(Utilities: 4Q14: R$37/t I 3Q14: R$34/t I 4Q13: R$16/t)
Fibria Cash Production Cost (1) (R$/ton)
Consistently controlling the
production cash cost at a level below the inflation
pace.
26
Cash Production Cost saw a annual increase of 3.7% over the past 6 years
432448
471 473505 519
2009 (2) 2010 (2) 2011 2012 2013 2014
CAGR: + 3.7%
(1) Constant Currency (2) Excludes Conpacel
27
2,791
3,530
163
851
(112)
(696)
(504)
(380)
(1,874)
141 (54)
AdjustedEBITDA
Befiex Other non-reccuring exp.
/non-cash
EBITDA FX Debt /Hedge
Early prepaiddebt
Net Interest Deprec., amortiz.and
depletion
Taxes Others Net Income
Hedge
∆
FX Debt∆
Non-recurringeffects
(1) Includes other exchange rate/monetary variations and other financial income/expenses.
Net Results (R$ million) – 2014
27
(1)
Mandatory dividends of R$37 million.
28
Free Cash Flow (1) – 2014
28
R$ million
(1)
2,791
636 989
( 1.591 )( 411 ) ( 136 ) ( 29 ) 12
353
AdjustedEBITDA
Capex Interest(paid/received)
Working Capital
Taxes Others Free Cash Flow 4Q14 receivables Free Cash Flow(Pro-forma)
Higher sales volume (+107 kt);
Change in cliente mix, with lower receivables forfaiting transactions;
FX effect.
Modernization (trucks);
R&D;
TLS 2 (feasibility study).
2014
Capex includes investment in modernization and higher % of third-party wood, decreasing as from 2016;
Debt service reduction;
Potencial improvement on working capital (customers and suppliers).
2015
(1) Does not include: asset sales, expenses on bonds repurchase and tax credits from the BEFIEX program.
29
FX and Pulp Price explain 80% of Fibria’s EBITDA Margin
(1) Excludes Conpacel | (2) 2014 year end market consensus | (3) According to Focus Report (Brazilian Central Bank – Jan. 23rd, 2014) | (4) According to Poyry – full cost estimate - includes Manufacturing + Delivered costs to Rotterdam + Depreciation + ROCE of 9%
Each 10% depreciation of the Real increases EBITDA by approx. R$600 million
1,522
2,526
1,964 2,253
2,796 2,791
2009 (1) 2010 (1) 2011 2012 2013 2014 2015
2.00 1.76
1.67 1.95
2.10 2.29 2.72(3)
Exchange Rate Average (R$/US$)
EBITDA Margin
EBITDA (R$ million)
29%40% 34% 36% 40% 38%
Marginal producer cost(US$/t)(4)
Fibria net pulp price(US$/t) Market
Consensus
456
670 639 581
610 572 564
660 627
676 657
680 676
912
1,1791,067 1,133
1,281 1,310 1,534
Fibria net pulp price(R$/t)
30
Net Debt/EBITDA (x)(1)
Fibria Arauco CMPC Klabin Suzano
S&P BB+/Positive BBB-/Stable BBB+/Negative BBB-/Negative BB/Stable
Moody’s Ba1/Positive Baa3/Stable Baa3/Negative - Ba2/Stable
Fitch BBB-/Stable BBB/Stable BBB+/Stable BBB-/Negative BB/Stable
(1) Fibria’s historical data in BRL. | (2) Market consensus.
Capital Structure: Fibria has achieved the lowest leverage ratio among its Latin American peers
2.4 2.3
2.72.6
4.84.5 4.5
4.2
1.7 1.7
2.4
2.72.93.1
3.13.7
3.6 3.7 3.6
14.813.2
11.711.1
4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 2014
Fibria Suzano Klabin CMPC Arauco Eldorado
2
31
Indebtdeness
31
2.82.7 2.7
2.62.5
2.49,773
8,574 8,327
4,172 3,498 3,135
Dec/13 Sep/14 Dec/14
R$ US$
7,8497,313 7,549
3,351 2,984 2,842
Dec/13 Sep/14 Dec/14R$ US$
Net Debt/EBITDA (US$)
Debt Amortization Schedule (US$ Million) Average Tenor (months) and Cost of Debt* in US$ (% p.a.)
293
600
893
363
223
364
459
632
375
9322 3
600
Liquidity 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Pre-payment BNDES ECN ACC/ACE Voto IV Bonds
(cash)
(revolver)
5255 55
Dec/13 Sep/14 Dec/14
Interest (US$)
- 25%
Net Debt/EBITDA (R$)
(*) Considering the portion of debt in reais fully adjusted by the market swap curves at the end ofeach period..
4.3
3.73.4
Net Debt (Million)
6150
44
Total Debt and Interest Expenses (Million)
32
A consistent and disciplined approach focused on reducing debt and its cost
Debt (US$ million) x Leverage (US$) Interest (US$ million) x Cost of Debt (US$)
Free Cash Flow Increase
Interest Reduction
Cost of Debt Reduction
This dynamics creates a virtuous
cycle
8.6
3.1
6.3
2.8
2009 2010 2011 2012 2013 2014
Gross Debt Net Debt
7.5
4.1 4.23.3
2.6 2.5473
414 408350
268200
2009 2010 2011 2012 2013 2014
6.3 5.95.5
5.2 4.63.4*
(*) Considering the portion of debt in reais fully adjusted by the market swap curves of Dec. 31, 2014.
33
New issuance better priced than Investment Grade issuers
Rating Maturity Volume T-Spread Coupon X Book
Fibria Ba1 / BBB- / BB+ 2024 US$600 mn 275 bps 5.25% 11.5x
Braskem Baa3/BBB-/BBB- 2024 US$500 mn 340 bps 6.45% 11.0x
Petrobras Baa1/BBB/BBB 2024 US$2.5 bn 350 bps 6.28% 3.3x
Klabin BBB-/BBB- 2024 US$500 mn 269 bps 5.25% 6.0x
Samarco BBB-/BBB 2024 US$500 mn 288 bps 5.375% 3.6x
Rating Maturity Volume G-Spread Yield
Fibria Ba1 / BBB- / BB+ 2024 US$600 mn 343 bps 5.146%
Braskem Baa3/BBB-/BBB- 2024 US$500 mn 473 bps 6.430%
Klabin BBB-/BBB- 2024 US$500 mn 379 bps 5.512%
Odebrecht Baa3/BBB-/BBB 2023 US$800 mn(1) 459 bps 5.225%
Petrobras Baa1/BBB/BBB 2024 US$2.5 bn 535 bps 7.060%
Gerdau Baa3/BBB-/BBB- 2023 US$750 mn 386 bps 5.508%
Samarco BBB-/BBB 2024 US$ 500 mn 453 bps 6.278%
(1) Outstanding: US$102 mn
Secondary Market - As of Jan. 29, 2015
Issuance
34
…and performing better than Investment Grade issuers
150
200
250
300
350
400
450
500
550
30/9 5/10 10/10 15/10 20/10 25/10 30/10 4/11 9/11 14/11 19/11 24/11 29/11 4/12 9/12 14/12 19/12 24/12 29/12 3/1 8/1 13/1 18/1 23/1
G S
pre
ad
Fibria 2024 Braskem 2024 Klabin 2024 Odebrecht 2023 Petrobras 2024 Gerdau 2023 Samarco 2024 Votorantim 2024 BRF 2024
Source: Bloomberg - Jan. 23, 2015.
35
Fibria has the simplest and most transparent call in the industry
Negative Neutral Positive
Pulp supply ✔
Closures/conversions ✔
Inefficient capacities in China ✔
Demand ✔
‣ Fiber and grade substitution ✔
‣ Tissue ✔
‣China ✔
Pulp price ✔
Brazil GDP ✔
Energy crisis ✔
FX ✔
Capex inflation ✔
Cost inflation ✔
Rating ✔
Tax ✔
Corporate Governance ✔
37
Max Value Project – Zero base budgeting
Each expense and capex
need to be explained, not
only the additional ones
▶ Budget developed primarily based on input consumption indicators
▶ Only one discussion cycle, initially based onbudgetary guidelines
▶ Individual discussion for each expenditure package, including Sustaining CAPEX and OPEX
▶ Discussion details based on the materiality of theexpense within the package
▶ Robust basis increasing the visibility of the rationale for the proposed budget amounts
Zero Base Budgeting encourages a questioning andchallenging attitude of the status quo
The assumption for the new process is that the budget for next year is zero.
38
Max Value Project – Zero base budgeting
33%
100%
43%
23%
Forestry Industrial Logistics/Other Total
15%
30%
50%
65%
75%
0%
10%
20%
30%
40%
50%
60%
70%
80%
2015 2016 2017 2018 2019
Note: (1) Technical Limit potential reflecting 2013 conditions; (2) Coverage of expenses with established Technical Limits (e.g. 374/3233=12%).Source: Fibria, ZBB team analysis.
Value achievement share by category NPV expected curve
Approx. R$1.5 billion NPV
39
Max Value Project – A hidden asset value
Market Price of own Land as of Sep/14:R$3.9 billion
Fibria’s
Owned Land
Ha
(‘000)
Book Value
R$/ha
Market Value
R$/ha
Total 491 2,535 7,964
Land sold in 2013 – The Parkia Deal:- 206k ha;- Up to R$1.65 billion (~R$8k per ha).
Book Value of own Land as of Sep/14: R$1.2 billion
Market Price of own Land as of Dec/14:R$3.9 billion
40
Max Value Project – Turning areas per hectare into square meter
• The targeted area represents only 0.6% of the land owned by Fibria;
• Real estate thinking: minimum value creation of R$500 million NPV.
41
PULP
- Growth with discipline
- Best portfolio of projects
BIO-ENERGY
- Complementary to pulp
- Ensyn
INDUSTRY
CONSOLIDATION ?
OTHER OPPORTUNITIES
- Portocel
- Land and forest
Potential Growth
Prospects
Fibria is seeking value creation for its shareholders with capital discipline
42
593 593 605 584648 651
900826
766678 699
2009* 2010* 2011 2012 2013 2014
4,600
5,0545,184
5,299 5,271 5,274
2009* 2010* 2011 2012 2013 2014
The maturity of synergies captured since Fibria’s creation improved its operating indicators…
+15%
PRODUCTION VOLUME (000 t)BEST PRACTICES AND OPERATING STABILITY
Historical Value Inflation Effect**
-21%
CASH COST (R$/ton)
Historical Value Inflation Effect**
-21%
SG&A (R$ million)STRUCTURE AND PROCESS SIMPLIFICATION
1,522
2,526
1,964 2,253
2,796 2,791
2009* 2010* 2011 2012 2013 2014
29%
40%34% 36%
40% 39%
EBITDA (R$ million) - EBITDA MARGIN (%)
* Excludes Conpacel | ** IPCA index considered to calculate the inflation effect.
432 448 471 473 505 519
656 624 596549 545
2009* 2010* 2011 2012 2013 2014
44
Fibria’s tax structure
Tax benefits (R$)
Fiscal - annual adjustment
Benefit Amount Maturity
Goodwill
(Aracruz
acquisition)
Annual tax deduction:
R$89 million (tax)
Remaining Balance Dec/14:
R$1.1 billion (base)
2018
Forestry Capex in
Mato Grosso do
Sul state
2014 tax deduction related to
depletion: R$37 millionUndefined
Tax loss carry forward and tax credits
Benefit Amount
Tax loss
carryforward
Balance up to Dec. 14: R$451
million (base)
Accumulated tax
credits
Balance Dec./2014:
- PIS/COFINS: R$570 million
- Withholding tax (IR and CSLL):
R$681 million
- Befiex: R$455 million
- Reintegra: R$37 million
Tax payment (cash basis)
2009 2010 2011 2012 2013 2014
R$ 7 million R$ 16 million R$ 4 million R$ 15 million R$ 31 million R$ 29 million
45
Due to productivity gains in its forests, Fibria had the opportunity to explore this new ownership model
MAI* Pulp: (adt/ha/year)
10.6 10.9
12.1
15.0 15.0 15.0 15.0 15.0
2010 2015 2020 2025 2030 2035 2040 2045
FIBRIA’S GAINS IN IMACEL DUE TO INVESTMENTS IN BIOTECHNOLOGY (TONS OF PULP/HA/YEAR)
2012 field trials = 11.9
Conservative assumption
*MAI: Mean annual increment
Actions: • Genetic improvement• Excellence in forestry management• Superior industrial efficiency
46
Leadership position
(1) Fiber Consumption, Recycled Fiber and Pulp: RISI | Market Pulp, Hardwood and Eucalyptus: PPPC Special Research Note - May 2014
Recycled Fiber 234 million t
49% 51%
60%
18% 82%
58% 42%
40%
35% 65%
29%71%
Fiber Consumption403 million t
Pulp 169 million t
Chemical139 million t
Mechanical31 million t
Integrated Mills 84 million t
Market Pulp 56 million t
Hardwood29 million t
Other Eucalyptus Pulp producers:
13 million t
Softwood/Other 27 million t
Acacia/Other 10 million t
Eucalyptus19 million t
Industry Outlook(1)
47
Supply structural changes puts pressure on the industry
MARKET PULP CAPACITY RANKING 2014 (000T) MAIN PROJECTS
Project Country Capacity Timing Fiber Status
CMPC Guaíba II Brazil 1.3 Mt 2Q2015 BEKP Confirmed
Klabin Paraná Brazil 1.5 Mt 2Q2016BEKP/
BSKP/FluffConfirmed
APP South Sumatra Indonesia 2.0 Mt 1Q2017 BHKP Confirmed
Fibria Três Lagoas II Brazil 1.75 Mt - BEKP Unconfirmed
COST CURVE EVOLUTION
USD
/Ad
t, 2
01
3 c
ost
leve
l
Cumulative Capacity Million t/a
Cost position of marginal
producer
Source: Hawkins Wright , Poyry and Fibria Analysis (as of Dec. 2014).
0 2000 4000 6000
ENCE
Canfor
Resolute Forest
Sodra
IP
Domtar
Mercer
Eldorado
Ilim
Weyerhaeuser
Stora Enso
Metsa Group
Paper Excellence
Georgia Pacific
UPM-Kymmene
CMPC
Suzano
Arauco
APRIL
Fibria
Bleached Softwood Kraft Pulp (BSKP)
Bleached Hardwood Kraft Pulp (BHKP)
Unbleached Kraft Pulp (UKP)
Mechanical Pulp (MP)
48
World Tissue Consumption, 1991-2013 (3)
Per Capita Consumption of Tissue by World Region (3)China's Share of Market Pulp (2)
24
15 15
12
7 65
1
N.America
WestEurope
Japan Oceania EastEurope
LatAm China Africa
9 11 1316
26
1721 20
23
79 10
12
22
1620 19
2110
1012
14
21
17
2223 23
2005 2006 2007 2008 2009 2010 2011 2012 2013 11M2014
Eucalyptus Hardwood Total
7.468
3.082
1.869 2.085
226 151 55
7.914
3.792
1.9581.592
144 41 14
BHKP Total LatinAmerica
Indonesia Others* USA Canada WesternEurope
11M2013 11M2014Latin America is the leading exporter of BHKP to China, accounting to approximately 48% of China's total imports in 11M2014.
(Kg/capita/year)
(million t)(‘000s t) (kg/person/year)
Between 2005 and 2013, the Chinese market share of eucalyptus shipments increased by 14 p.p. (total market pulp: + p.p.)
* includes Russia, China, Thailand and New Zealand.
0
5
10
15
20
25
30
35
1991 1996 2001 2006 2009 2010 2011 2012 2013N.America W.Europe E.Europe L.AmericaMiddle East Japan China Asia FEOceania Africa
LTM Growth Rate +4.2%
Benefiting From China’s Growth
China’s Hardwood Imports of BHKP by Country (1)
(1) PPPC – Pulp China(2) PPPC – W20. Coverage for chemical market pulp is 80% of world capacity (3) RISI
(In percentage)
23
2125
49
Global Paper Consumption
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
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
CAGR 1996 – 2006Developed Markets: + 1.7%Emerging Markets : + 6.0%
85,291
117,611
15,548
37,474
P&W Consumption (000 tons)(1)
Tissue Consumption (000 tons)(1)
114,507
CAGR 2007 – 2016Developed Markets: - 4.0%Emerging Markets : + 4.1%
CAGR 1996 – 2006Developed Markets: + 2.4%Emerging Markets : + 6.9%
CAGR 2007 – 2016Developed Markets: + 1.4%Emerging Markets : + 6.7%
26,877
Source: RISI