Fixed d Incom ome Pres esent entat ation on July ly 2016 1 - - PowerPoint PPT Presentation

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Fixed d Incom

• me

Pres esent entat ation

• n

July ly 2016

Discla sclaimer imer

The statements in this presentation 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.

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1.

• 1. Company

any Over ervie view

• 2. Strategy
• 3. Pulp and Paper Market
• 4. Financial and Operational

Highlights

Agenda enda

4

• Suz

Suzano no Papel e Ce Celul lulose is is a forestry based publ ublic icly ly he held company ny, controlled by Suzano Holding.

• With

ith over 90 90 years of

• f operatio

ions, the Company produces market pulp (paper grade and fluff) and paper, which portfolio is composed by coated and uncoated printing & writing paper and paperboard.

• It is also the

he second la largest euca caly lyptus pulp lp produce ucer and the he fift ifth la largest marke ket pulp produce ucer in in the he world (Source: Hawkins Wright).

• Suzano has a le

leadin ing positi ition in all segments in which it

• perates in the Brazil

ilia ian Paper Indus ndustry.

Geog

• grap

raphi hic c Foot

• tprint

print Financial nancial and d Operat ration ional al Highlights hlights1 Suzano at a Glance nce

(R$MM), unless otherwise stated 2013 2014 2015 1Q16, LTM Net Revenues 5,689 7,265 10,224 10,785 Gross Profit 1,498 1,909 4,040 4,396 Gross Margin 26.3% 26.3% 39.5% 40.8% Adjusted EBITDA 1,781 2,452 4,594 4,931

• Adj. EBITDA Margin

31.3% 33.8% 44.9% 45.7% Net Debt 9,187 10,074 12,263 11,237 N.Debt/Adj.EBITDA LTM 5.2x 4.1x 2.7x 2.3x Production Volume (million tonnes) 3.225 4.283 4.582 4.689

Comp mpany any Overview view

Competi mpetitiv tive Advanta ntages es

Forestry

 Shorter Eucalyptus

cycle: 7 years

 Biotechnology:

approved eucalyptus GMO with 20% yield increase

Pulp

 Low production

costs

 Certified products  Energy self-sufficient  Diversified markets

Paper

 Regional leader  Vertically integrated

industrial operations

 Own distribution Note: Figures as of 1Q16, LTM Santos Vitória Itaqui Mill Forest Port Portocel Distribution Center Commercial Office 5 industrial plants:

• Imperatriz, MA – Pulp
• Rio Verde, SP – Paper
• Mucuri, BA – Pulp/Paper
• Limeira, SP – Pulp/Paper
• Suzano, SP – Pulp/Paper

Commercial presence in 15 states in Brazil:

• 8 Regional Commercial

Offices

• 4 Regional Distribution

Centers

• 16 Local Distribution

Centers Plus comercial offices in USA, China, UK, Switzerland and Argentina. Highlights ts

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Corpor porate ate Go Gover ernanc nance

Board of Directors, Management, Committees and Policies

Controlling Group

Feffer Family

Treasury 56% 56% 2% 2% Free Float 42% Market Value: R$ 14.1 billion Capital Stru ructure (Mar/2016)

Board of Direct ectors Sustainability and Strategy Committee Audit Committee Management Committee

Eight members, four r independ ndent nt Board of Directors will be mandated until 2018 Annua ual Share reho hold lders rs’ Meeting Management will be mandated until 2017 7 Annua ual Share reho holders rs’ Meeting

Members of the Board are well-known in the Brazilian Corporate landscape and are supported by the committees on the decision making process Board d of Director

• r,

, Committees s and d Manage geme ment We have corporate policies that improve our business management practices, compliance with laws and regulations, and broaden our relationship with capital

• markets. All policies were approved by our Board of
• Directors. Below is the list of policies:
• Corporate Governance Policy
• Risk Management Policy
• Internal Controls Policy
• Anti-Corruption Policy
• Disclosure Policy
• Security Trading Policy

Policies

CEO CEO Pulp and Paper Business Unit Human Resources CFO / IR COO Forestry Business Unit

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States of

• f Mara

ranhão ão, Pará rá, Tocantin ins s and Piauí: í:

• T
• tal¹: 635 k ha
• Planted²: 217 k ha
• Average Structural

Distance: 150km States of

• f Bahia,

a, Espíri írito

• Santo and Minas

s Gerai ais: s:

• T
• tal¹: 271 k ha
• Planted²: 201 k ha
• Average Structural

Distance: 75km São Paulo

• State:
• T
• tal¹: 188 k ha
• Planted²: 132 k ha
• Average Structural

Distance: 220km

Data on 03/31/2016 ¹ Own and leased area ² Figures consider own, leased and third-parties areas Note: Both own and leased land can suffer variation up to 5% quarter over

• quarter. The total amount can differ due to rounding.

Check out on http://info.fsc.org/ the certificate area.

1,094 4 k ha

• f total

l area 550 k ha

• f plan

anted ted ar area ea 70% targe get t of own forestr estry y suppl pply y in the e long g run

Forestr estry Assets ets

Suzano’s forestry competitiveness allows its operation in different regions with adequate yields

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61% 39% 65% 35% Exports Domestic Pulp Paper Net Revenues s R$ 10.8bn bn1 Pulp

Note: Figures as of 1Q16, LTM

Pr Product duct Portfolio tfolio

Production and sales optimization to maximize assets return

Paperboa board

Uncoated Coated

Printing g & Writing

Suzano is the world’s second largest eucalyptus market pulp producer and South America’s largest distributor of paper and printing products.

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• 1. Company Overview

2.

• 2. Str

trategy tegy

• 3. Pulp and Paper Market
• 4. Financial and Operational

Highlights

Agenda enda

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Le Leverage verage Go Goal l Achieved hieved

Operati ation

• nal

al Cash Generat ation

• n(1) (R$ billion) and Lever

erage age (x Adjusted EBITDA) Record high operational cash generation in LTM2 Consistent results allow Suzano to advance in the strategy

1,1 1,5 3,4 3,7 5,0x 3,7x 2,3x 2,3x 5,2x 4,1x 2,7x 2,3x dez/13 dez/14 dez/15 mar/16 Operational Cash Generation (R$ million) Net Debt / Adjusted EBITDA (x, US$) Net Debt / Adjusted EBITDA (x, R$)

Note: 1 – Operational Cash Generation means the difference between Adjusted EBITDA and Sustaining Capex 2 - Last twelve months ended on 03/31/2016

(1)

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... and generate more value to shareholders Strategy to maximize the return on invested capital...

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4,8 4,9 5,1 2016 2017e 7e 2018e

Pulp and Paper Capacity city

(Million tonnes)

Pr Project ject 5.1 .1

Indust strial rial investment (modernization) in Imperatriz and Mucuri mills Capacity of 5.1 millio lion tonnes nnes in 2018 Forest est base se increase and average distance reduction Cash cost st reduct uction ion: lower inputs consumption and fixed cost dilution T

• tal estimated Capex: R$ 1.14

4 billion llion1; estimated IRR of 47% Investment in retrofitting and debottlenecking to reach the optimal structural cost

US$18 186/ 6/tonne in 4Q15 US$15 150/ 0/tonne in 2018 US$12 125/ 5/tonne in 2021 - 2022

Note: 1 – Estimated Capex for 2017 and 2018 is R$585 million and R$45 million, respectively 2 – Exchange rate of R$3.80/US$ used in the analysis

Expected ed Cash Cost2

(US$/tonnes – Assuming an exchange rate of R$3.80/US$)

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First genetically modified clone

approved by Brazilian Biosafety Authority for

commercial purposes Potential to increase productivity

by nearly 20% First company in the world to use

hardwood to produce fluff Up to 70% softwood substitution for

feminine hygiene and up to 30%

for diapers Replacement of petrochemicals with

renewable source

It is used in several high value-

added applications Jumbo rolls production for companies in

the tissue segment and/or

finished product

Operational and logistics

competitiveness Monetization of ICMS credits

Innovation

Fu Futura raGen Gene Fluff ff Tiss ssue Lign gnin in

Adjacent acent Business inesses es

Investiments in high profitability and scalability projects that innovate and break paradigms

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• 1. Company Overview
• 2. Strategy

3.

• 3. Pulp and Paper

r Marke rket

• 4. Financial and Operational

Highlights

Agenda enda

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Source: Poyry (2015)

Gl Globa bal l Paper per Consum nsumption ption

North America 19% Europe 23% Asia 45% Latin America 7% Other 6%

Demand for pulp driven by tissue and paperboard consumption

Consumpt mptio ion by by Regio ion

(%)

4 2 1 3

• 3
• 1
• 2

20 40 60 80 100

Share on total fiber consumption in 2014 (%)

Newsprint Uncoated Mechanical Coated Mechanical Uncoated Woodfree Coated Woodfree Tissue Containerboard Paperboard Packaging Other

Estimated demand growth until 2030 (%p.a.) Market ket Pulp lp Global l Deman mand (million tonnes)

3 4 4 4 8 8 8 8 20 19 19 19 23 30 31 35 54 60 62 67 2010 2015 2016e 2020e

Asia Europe North Americ ica Latin America ica

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Demand for tissue is impacted by economic growth, urbanization and culture

Ti Tissue ue Consum nsumption ption

USA Canada Macau Hong Kong Switszerland Sweden Austria Finland Germany UK Island Chile Uruguay Mexico Argentina Brasil Colombia China India

• 2
• 20%

0% 0% 20% 40 40% 60% 80% 100% 5 10 10 15 15 20 20 25 25 Per-capi pita consu sumpti mption

• n growth (2013 – 2030)

Per-capi pita consu sumpti mption

• n (Kg/pe

person son/year)

Per-ca capit ita Tissue Consumpt mptio ion

(Kg/person/year)

Source: World Tissue Business Outlook – RISI (2014)

Suzano has pulp market share relevance in the regions with the highest growth potential

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The new pulp projects are in the low-cost regions, mostly in Brazil

Pu Pulp Cash sh Cost

Hardw dwood

• od

Softwood

• d

800 400 East Europe Bel/France Japan Other Asia Iberic Pen. Sweden Brazil Finland USA Chile/Urugauy Indonesia Other world East Europe West Canada USA Other Europe Finland Sweden China Japan East Canada Chile Canada CB Coast

*Others includes New Zeland, Argentina, China and South Africa FX of R$3,54/US$ Source: Hawkins Wright (Apr/16)

Cash Cost Cost CIF / Europ

• pe

(US$/tonne)

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Br Brazilia ilian Paper er Industr ustry

Suzano has a leading position in all segments in which it operates

0,6 1,8 6,3 Paperboard Printing & Writing Total Domestic Sales Imports

Source: Forestry Industry Association (IBA) * Last Twelve months ended on 03/31/2016

35% 27%

Suzano

• Market

rket Share

86% 14% 85% 15% 92%

Brazil zilian ian Paper Deman and in LTM*

(million tonne)

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• 1. Company Overview
• 2. Strategy
• 3. Pulp and Paper Market

4.

• 4. Financial

ancial and Operatio rational nal Highlig hlights hts

Agenda enda

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Oper erating ating Results ults

Pulp lp Busin ines ess: Presence in the main international markets and strategic relationship with clients Paper per Busin iness: Operational excellence in paper: product portfolio and revenue management,

• ptimization of assets, and strengthening of distribution channel

Pulp lp and Pap aper er Production ction

(k tonne)

Pulp lp and Pap aper er Sale les Volu lume me

(k tonne)

Pulp lp and Pap aper er Revenue enue Breakd eakdown wn

1Q 16, LTM

Pulp lp Sale les Volu lume me per Segment ment

1Q 16, LTM

Pulp Domesti stic Market Export Paper Domesti stic Market Export

1.480 408 2.373 389 2.835 403 2.920 406 415 904 478 934 456 827 421 840 1.895 1.312 2.850 1.322 3.291 1.230 3.340 1.246

1.932 2.982 3.373 3.489 1.293 1.301 1.209 1.200 2013 2014 2015 1Q16, LTM* Pulp Paper Packaging 8% Tissue 57% Specialty 18% Other 2% Printing & Writing 15%

2013 2014 2015 1Q 16, LTM

Asia; 40% Europe; 33% Europe; 4% North America; 14% North America; 10% South/Central America; 1% South/Central America; 18% Brazil; 12% Brazil; 64% Others; 4% Pulp Paper

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1.307 1.284 1.368 1.393 2013 2014 2015 1Q16, LTM*

Cost performance bellow inflation

Net t Revenu enue

(R$ million)

2.577 3.851 6.603 7.021 3.111 3.413 3.621 3.765 5.689 7.264 10.224 10.785 2013 2014 2015 1Q 16, LTM*

Average age R$/US$ 3.59 2.16 2.35 3.33

Pulp Paper

• 1.8%

+6.5% +1.8%

COGS GS

(R$/tonne)

Inflat ation

• n

Consolid lidated ted Pulp lp Cash Cost*

(R$/tonne)

580 536 642 664 2013 2014 2015 1Q16, LTM*

Financi ancial al Resu sults ts

*Ex-maintenance downtime

Infla lati tion: +19% +14,5%

+5.9% +6.4% 4% +2.6%

10% linked to USD

SG&A

(R$/tonne)

196 166 191 193 2013 2014 2015 1Q 16, LTM

Infla latio tion: +19%

• 1,5%

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Opera eratio tional Cash Genera eratio tion in 1Q16, 16, LTM TM (R$MM)

4,9 3,7 1,2 Adjusted EBITDA Sustaining Capex Operational Cash Generation

Financi ancial al Resu sults ts

Suzano has posted the highest operational cash generation in the industry

Histo toric ic Opera eratio tional Cash Flow (R$MM)

1,1 1,5 1,9 2,2 3,0 3,5 3,7 Dec-13 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 31,3% 33,8% 44,9% 45,7%

Adju justed ted EBIT ITDA

(R$/tonne)

Adju justed ted EBIT ITDA and Adju justed ted EBIT ITDA Mar argin in

(R$ million) (%)

555 588 1.016 1.075 2013 2014 2015 1Q 16, LTM* Adjusted EBITDA Adjusted EBITDA Margin 1.781 2.452 4.594 4.931 2013 2014 2015 1Q 16, LTM*

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Adequate debt profile and competitive cost of debt

Currency cy Breakdown

• wn

(% of Net Debt)

Debt Maturit ity Profil ile

(R$ billion)

Debt Pr Profi file le

BRL 25% USD 75%

Averag age Cost Cost of

• f Debt

(%)

Secured1 vs. Unsecured ed Debt

(%)

Secured 25% Unsecured 75% 4,1% 4,7% 4,8% 83,5% of CDI 90,8% of CDI 91,8% of CDI Mar/16 Mar/15 Mar/14 BRL USD

Note: 1 – Most of the secured indebtness is linked to project financing from BNDES, ECAs and others

2,8 2,0 1,3 2,4 3,9 1,2 2,9 0,2 Cash Position 9M16 2017 2018 2019 2020 2021 2022

• nward

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Estimated timated CAPE PEX X for 2016: 6:

R$ 2.4 billion 2016 16 CAPEX PEX

Nota: 1 Estimated Capex for 2017 and 2018 is R$585 million and R$45 million, respectively 2 Estimated Capex for 2017 and 2018 is R$100 million and R$50 million, respectively

1,1 0,51 0,10 0,28 0,38 2,4 Sustaining Capex Project 5.1 (1) Others Tissue (2) Others Total Capex (2016) Sustaining Capex Structural Competitiviness Adjacent Business

Discretionary Capex = R$ 1.3 billion

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Net Debt / / Adjusted ed EBIT ITDA LTM1 (US$) Suzano is on track to achieve Investment Grade

Klabin CMPC Arauco co Suzano no Fibria ia Standard & Poors BB+ BBB- BBB- BB+ BB+ BBB- Moody's

• Baa3

Ba2 Ba1 Fitch Ratings BBB- BBB+ BBB BB+ BB+ BBB-

Rati ting ng

1Last twelve months ending on 12/31/2015. *Last twelve months ending on 09/30/2015

5,4x 3,2x 2,9x 2,3x 1,8x Klabin CMPC Arauco* Suzano Fibria

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Suzano zano Susta stainab inable le Initiativ iatives es

Suzano aims closely to integrate its economic

• bjectives

with environmental and social responsibility, and to sustainably develop its forestry resources and pulp production technologies.

Expenditures related to sustainably managing forests that comply with international and national standards for sustainable forestry such as FSC, Cerflor (PEFC) or equivalent certification. 1 1 - SUSTA STAIN INABL ABLE E FORES ESTRY TRY Expenditures related to restoration of degraded land into natural forests 2 2 - FORES EST RESTORA TORATION TION Expenditures related to projects that maintain or develop conservation areas, and protect native animal

• r plant species or habitats

3 3 – BIODIV ODIVERSI ERSITY TY CONSE SERV RVATION TION Development and installation of technologies and systems that improve the quality of treated wastewater, or increase water efficiency through reduced consumption and water reuse. 4 4 - WATER ER MANA ANAGEM EMENT ENT Expenditures related to projects that increase energy efficiency, including reduction of fossil fuel consumption 5 5 - ENERG RGY EFFICIENCY FICIENCY Expenditures related to projects that reduce greenhouse gas emissions (GHG) through the substitution

• f fossil fuels with renewable sources and/or the generation of energy from renewable sources

6 6 - RENEW EWABLE BLE ENERG ERGY

Susta tain inable le Initia itiatives tives

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www.suzano.com.br/ir ri@suzano.com.br

Inves vestor tor Relations ations