2Q 2Q15 15 Res esults ults Pr Pres esentati entation on 0 - - PowerPoint PPT Presentation

2Q 2Q15 15 Res esults ults Pr Pres esentati entation

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Disc sclai laime mer

Certain statements in this presentation may constitute projections or forward-looking statements. Such statements are subject to known and unknown risks and uncertainties that could cause the expectations expressed to not materialize or the actual results to differ materially from the expected results. These risks include changes in future demand for the Company’s products, changes in factors that affect domestic and international product prices, changes in cost structures, changes in the seasonality of markets, pricing actions by competitors, foreign currency fluctuations and changes in the political and economic environments in Brazil, in emerging markets or internationally.

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Stron

• ng cash generation

ation in the year r and in the last t twelve ve months.. ths... 3,333 (1,158) 2,077 (98)

Operational Cash Generation LTM¹ (R$ million)

• Operational cash generation is the adequate metric to

evaluate the industry due to high sustain capex

• Suzano’s main driver for variable remuneration
• Goal: adequate ROIC for shareholders

Note: (1) last twelve months ended on 6/30/2015

Adjusted EBITDA Sustain Capex Working Capital Operational Cash Generation

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... . allowed wed gross ss debt reductio ction with deleve vera raging ing accele lerati ration

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Net Debt/Adjusted EBITDA (x)

• Debt reduction
• Gross debt: R$13.9 billion vs R$15.3 billion in March/15
• Cash: R$2.9 billion vs R$3.9 billion in March/15
• Net debt: R$11.0 billion vs R$11.4 billion in March/15
• Debt cost reduction
• BRL: 89.9% of CDI¹ vs 90.8% in March/15
• USD: 4.0% p.a. vs 4.7% p.a. in March/15
• Continuity of the Liability Management process

5.1x 1x 5.0x 0x 5.1x 1x 5.1x 1x 5.2x 2x 4.8x 8x 4.5x 5x 4.5x 5x 4.1x 1x 3.9x 9x 3.3x 3x 4.9x 9x 5.0x 0x 4.7x 7x 4.8x 8x 4.8x 8x 4.8x 8x 4.7x 7x 4.2x 2x 3.7x 7x 3.1x 1x 2.9x 9x

Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15

BRL USD

Note: (1) Brazilian Interbank Deposit Future

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An And furth further develop velopment of

• f the li

liabil ility ity ma manageme ment pr progra

• gram,

m, with ith acc access ess to to new new fi fina nanc ncin ing so source urces at at competitive etitive costs ts

Funding ding Amount unt Cost Term Syndicate ndicated Loan Loan USD 600 million ion Libor

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2% p.a. 5 years rs CRA¹ BRL 675 million ion 101%DI DI² 4 years rs Total BRL 2.5 billi lion

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• Pre-payment of debt in the total amount of R$3.3 billion
• Financial expenses reduction of around R$70 million/year
• Continuous search for alternatives to reduce cost and/or lengthen

debt maturity profile

Note: (1) Certificates of Agribusiness Receivables

(²) Brazilian Interbank Deposit Future

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32.7% 32.1% 33.8% 36.1% 38.4% Reco ecord rd-hi high adj djuste usted EBI EBITDA, TDA, but but wi with th

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perati ration

• nal

perfo erforman rmance be below low po poten tenti tial al, and and imp impacte acted by by non non- recurrin rring items 2,057 2,169 2,452 2,895

Jun/14 Sep/14 Dec/14 Mar/15

3,333

Jun/15

• 2Q15 record-high adjusted EBITDA: R$959 million, margin of 40.2%
• EBITDA around R$60 million below potential:
• Longer maintenance downtime at Suzano Unit due to the start

up of the new digester operation, with learning curve

• Lower energy revenues
• Adjustment of the long-term incentive plan and the allowance

for doubtful debt Adjusted EBITDA LTM (R$ million) and Adjusted EBITDA Margin (%)

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Stron

• ng pulp demand

d support rted d impleme ementa ntati tion

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price e incre rease ase

Pulp Production (‘000 tons) Pulp Sales (‘000 tons)

2,982 3,226 2Q15 2014 2014 2Q14 LTM1 755 804 2,850 3,351 2Q15 2014 2014 2Q14 LTM1 696 805

• 2Q15 Production: +7% vs 2Q14 (+49k tons)
• 2Q15 Sales Volume: +16% vs 2Q14 (+109k tons)
• Inventory reduction

Note: (1) last twelve months ended on 6/30/2015

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Paper r demand nd in domestic stic market ket pressu ssured red by macro roeco economi

• mic

c scenari ario

Paper Production (‘000 tons) Paper Sales (‘000 tons)

• Production decreased due to scheduled maintenance downtimes and learning

curve of new digester at Suzano Unit

• Lower domestic market sales volume: -6% vs 2Q14
• Domestic market average net price:+5% vs 2Q14 and flat vs 1Q15

1,301 1,261 2Q15 2014 2014 2Q14 LTM1 330 305 1,322 1,282 2Q15 2014 2014 2Q14 LTM1 319 310

Note: (1) last twelve months ended on 6/30/2015

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Despite ite the impact ct on cash cost t due to mainten tenan ance ce downtimes times and non-re recurring curring items. s... .. 591 594 6M14 6M15

Wood Chemica icals ls FC FC

17 (9) (5)

• Wood cost increase
• Advance purchase of third party wood to supply the Mucuri mill
• Average distance increase at Maranhão mill
• Lower revenue from energy sales
• Price difference in energy submarkets in April and May
• Lower energy generation at Mucuri due to the overhaul of the

turbogenerator

• Higher chemicals consumption upon resuming operations after

downtimes Cash Cost1

1 (R$/ton)

565 626 2Q14 2Q15

Wood Chemica icals ls FC FC

27 22 12

Note: (1) Ex-maintenance downtime

Cash Cost1

1 (R$/ton)

9 Mar/15

6,289 289

Jun/14

6,748

Sep/14

7,265

Dec/14 Mar/15 Jun/14 Sep/14 Dec/14

1,265 5.1%

Mar/15

6.1% 1%

Jun/14

5.7%

Sep/14

5.4%

Dec/14 Mar/15 Jun/14 Sep/14 Dec/14

... ...Su Suza zano no conti tinu nues s to focus us on costs ts and and expenses nses discip iplin ine

2.48 2.29 2.35 2.29

4.0% 4.3% 3% 4.2% 4.1% 8,012 1,328 328 1,293 1,284

Jun/15

2.69

Jun/15

1,285 285 4.8% 8%

Jun/15 Jun/15

4.0% 0% 8,686 686 Net Revenues LTM¹ (R$ million) COGS LTM TM¹ (R$/ton)

• Adm. Expenses / Net Revenue LTM ¹ (%)

Sales Expenses / Net Revenue LTM TM 1

1 (%) Note: (1) last twelve months

R$/US$ average

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Investments estments in in retrofittin rofitting reduce ce structu uctura ral costs ts

• 2015 estimated capex: between R$1.7 and R$1.8 billion
• Additional retrofitting projects with high levels of return

approved in 2Q15

• Purchase of wood with returns much higher than cost of

capital Capex (R$ million)

Sustai tain Retrofittin rofitting 6M15 Capex Capex 589 341 945 15 Others ers

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45% 45% 49% 49% 54% 54% 62% 62%

98 98 112 112 267 267 298 298

30% 40% 50% 60% 70% 80%

Advance nce third rd party y wood purchases ses will allow forest st yield d increa ease se and wood mix to return rn to normal al levels s at Mucuri uri mill 563 580

2012 2013

Wood Chemicals FC

39 (17) (5)

536

2014

12 (57) 1

594

6M15

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Cash Cost Ex Ex-Maintenance Downtime(R$/ton)

Third-party wood average distance at Mucuri (Km) Third party wood mix at Mucuri (%)

• Cash Cost in the period: +R$ 31/ton (+5.5% vs inflation of +18.1%)
• Wood cost: +R$84/ton
• Other costs: -R$53/ton
• Higher wood cost concentrated at Mucuri mill:

2012 2013 2014 6M15

Wood Chemicals FC Wood Chemicals FC

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Lignin Lignin: : technologica cal l frontie tier r in the pulp industry stry

Wood Wood Chip ips Bleach chin ing Pulp lp/ Paper Digeste ster Evaporati ration Reco cove very y Boil iler Lime Kiln ln

Lignin Production Process

Lignin

Chemicals

Energ ergy Fiber ber Lignin gnin

• Replacement of petroleum-based chemicals for a

renewable source

• Main applications:

Black Liquor Cement Additives Phenolic Resins Rubber Components

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Investment estment in Lignin: n: adjacency cency to extract ract higher r value e from m forestry estry assets ets

• Capacity: 20k tons per year at Limeira
• Suzano potential of approximately 185k

5k tons

• Estimated implementation time: 22 months

hs

• Estimated Capex: R$70 million

ion

• 70% financed through innovation lines, at competit

petitive ive costs

• Attrac

active tive return: : 3x higher than energy sales Lignin nin Equivalent uivalent Energy gy 1 ton 2 2 MWh

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