Fixed d Incom ome Pres esent entat ation on 4Q17 17 1 - - PowerPoint PPT Presentation

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Fixed d Incom

• me

Pres esent entat ation

• n

4Q17 17

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• 1. Company Overview
• 2. Investment Highlights
• 3. Operating and Financial Highlights

Agenda enda

3

Section

• n 1

Comp mpany any Overview view

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, paperboard and tissue.

• It is also the

he second la largest euc ucaly lyptus us pul ulp produce ucer and the he 5th

th

largest marke ket pulp ulp produc ucer in in the world ld.

• Suzano has a le

leadin ing positi ition in all segments in which it

• perates in the Brazil

ilia ian Paper Indus ndustry.

Financial and Operation

• nal High

ghligh ghts Company Overview

Comp mpany any Overview view

Competitive Advantage ges

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  Stronger relationship

with the end of the value chain (Suzano Mais go to market program)

Pulp lp Production and sales optimization to maximize assets return

Source: Hawkins Wright and Company information . ¹ Excludes non-recurring and/or non-cash items

Paperb rboard rd

Coated Uncoated

Printi nting ng & Writin iting

70 70% 30 30% 66 66% 33 33% Exports Domestic Pulp Paper

Net Reve venue nues s R$ 10.5bn bn

(R$ million

• n), unless otherwise stated

2014 2015 2016 201 2017 Net Revenues 7,265 10,224 9,882 10,521 Gross Profit 1,909 4,040 3,311 4,071 Gross Margin 26.3% 39.5% 33.5% 38.7% Adjusted EBITDA1 2,452 4,594 3,906 4,615

• Adj. EBITDA Margin

33.8% 44.9% 39.5% 43.9% Net Debt 10,326 12,469 10,317 9,484 Net Debt/Adj. EBITDA 4.2x 2.7x 2.6x 2.1x Production Volume (thousand tons) 4,283 4,582 4,655 4,698

Produ duct Portfol

• lio

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Str trategy ategy to to ma maxi ximiz mize e th the e return turn on inves veste ted d capita ital

• Antic

ticipate ated d ret return rn impr prove veme ment nt as res resul ult of cost t re reduc ductio tion n initia tiative tives coupl upled with th discipline ned investm vestments ts to achieve ve optim timal al cost

• Inve

vestme tment nt in ret retrofi fittin ting and debot bottlene neckin cking shoul uld re reduce duce cash costs ts per r ton n by 21 21%1 by 2022 22

• Inve

vestme tment nts in adjace cent nt busine nesses such h as Futur turaGe Gene (biot

• tech

ch), , Fluf uff, , Ligni nin n and Tissue, ue, leve verag raging on Comp mpany any’s curr rrent nt capabi bilitie ties, , to improve ve margi rgins ns by offer fering ng high gh-va value added pro roduc ducts ts

• Transfo

ransforma matio tional nal chang anges in the he indus ustr try should lead d to higher gher re retu turns ns

• Suzan

ano uniqu quely y position tioned to have ve an active tive ro role with th its vertica cally y inte tegra grate ted d operati ation, , stablishe hed d comm mmercia cial re relati ationshi hips ps and cons nsolidat ation capacity city, , among ng othe her

• ppor
• rtu

tuni nities

¹ The pulp cash cost was R$ 599/ton in the last 12 months ended on 12/31/2017.

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Section

• n 2

Inves vestment tment Highl ghligh ights ts

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Inves vestment tment Highl ghligh ights ts

• Conservative Capital Structure and Strong Cash Generation
• Cost Efficient Operations and Disciplined Investments

to Improve Cash Generation

• Robust Asset Base with Unmatched Long T

erm Competitive Advantages

• Best-Practices in Governance
• Leading Position in the Industry

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Conser nservative vative Capit ital al Str tructur ucture e and Str trong

• ng

Cash h Ge Gene nerati ation

• n

Note: ¹ Operational Cash Generation calculated as the difference between Adjusted EBITDA and Sustaining Capex

2 Excludes non-recurring and/or non-cash items

Sustaining Capex Adjusted EBITDA2 0.67 1.78 2.45 1.00 1.11 4.59 1.16 3.91

3,9 3,9 3,2 3,2 2,9

5,2x 4,2x 2,7x 2,6x 2,1x

• 5
• 3
• 1

1 3 5 0,0 5,0 10,0 15,0 20,0 25,0 30,0

2013 2014 2015 2016 2017

Net Debt (R$) Net Debt (US$) Net Debt / Adjusted EBITDA (R$)

Continuou

• us

leverage ge reduction

• n allows
• ws

Suzano to be prepared d for the future Operating g improv

• veme

ments s translated d into

• robust cash

sh flow generation

• n

Net Debt and Leverage ge Operation

• nal Cash

sh Genera ration

• n1

(R$ billion) (R$ and US$ billion)

1.1 4.6

1,1 1,5 3,5 2,7 3,5

2013 2014 2015 2016 2017

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High gher r production

• n and

d sales s volume Increasi sing g utilization

• n of own forest

st portfol

• lio

Reduced operation

• nal costs

Lo Long g T erm rm Comm mmitment itment to to Oper erational ational Imp mprovements

• vements

Cost Saving Initiatives ves COGS

(R$/ton)

Inflation: +21.1% Cost per tonne significantly below inflation

Ongoi going g initiatives s to lead Suzano

• towards

ds more profitabl ble operation

• ns

Higher production and sales volume increased the dilution of fixed costs Decline in the share of third party wood purchases Shorter distances between the forest and mills contributed to reduce operational costs

SG&A &A

(R$/ton)

∆: +4.8 .8% ∆: +20.5 .5%

Industrial investment (modernization) to debottleneck

1

Forest base increase and average distance reduction

2

Cost reduction

• n initiatives

s focuse sed d on operating g efficiency coupl pled d with discipl plined inves vestments to achieve optimal cost in 2021 2021e-2022 2022e Lower inputs consumption and fixed cost dilution

3

Cash sh Cost (R$/ton)

¹ 2016 nominal valus.

1.283 1.368 1.391 1.345

2014 2015 2016 2017

166 191 177 200

2014 2015 2016 2017

642 623 623 599 599 570 475 2015 2016 2017 2018¹ 2021-2022¹

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Robust st As Asset et Base e wit ith Unma matched tched Long T erm rm Co Comp mpetitiv etitive e Ad Adva vantages tages

1,203 3 k h ha

• f tota

tal l area ea 587 k h ha

• f plan

anted ted area ea

Commercial presence in 15 states in Brazil:

• 8 Regional Commercial Offices
• 4 Regional Distribution Centers
• 16 Local Distribution Centers

Plus commercial offices in USA, China, UK, Switzerland and Argentina.

Highlig lights

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

Total Area1: 730k ha Planted Area2: 258k ha Average Structural Distance: 184 km State tes s of Maranh anhão ão, , Pará, , Tocanti antins s and Piauí uí Market Pulp: 1,650k tonnes Tissue: 60k tonnes Imperatri eratriz z (State ate of Mara ranh nhão ão)

Notes 1. Figures consider own and leased area 2. Figures consider own, leased and third-parties areas

• 3. Start up in 2018
• 4. Flexibility to produce either Fluff or Printing and Writing paper

Forest Assets Port Distribution Center Commercial Office Total Area1: 279k ha Planted Area2: 196k ha Average Structural Distance: 74 km State tes s of Bahia, a, Espírit rito Santo to and Minas nas Gera rais Total Area1: 193k ha Planted Area2: 132k ha Average Structural Distance: 190 km State te of São Paulo Printing & Writing Paper: 50k tonnes Rio Verde (State tate of São Paulo ) Market Pulp: 1,540k tonnes Integrated Pulp: 200k tonnes Printing & Writing Paper: 250k tonnes Tissue: 60k tonnes Muc ucuri ri (State ate of Bahia) a) Market Pulp: 350k tonnes Integrated Pulp: 300k tonnes Printing & WritingPaper: 390k tonnes Lignin: 20k tonnes3 Lime meira ra (Sta tate te of São Paul ulo ) Market Pulp: 70k tonnes Integrated Pulp: 460k tonnes Printing & Writing Paper: 360k tonnes5 Paperboard: 200k tonnes Eucafluff: 100k tonnes4 Suzano ano (State ate of São Paul ulo ) Santos Vitória Itaqui Portocel

1 2 3 4 6 5 7 8 Product ction Plants Fores est Areas as

1 2 3 4 5 6 7 8

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Soli lid d Le Leadi ading ng Positi ition

• n in th

the e Industr ustry

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

¹ Considers the total installed capacity as reported in the Companies’ public filings and investor relations, including of operations to be initiated. ² Data from September/2017 (PPPC). BEKP: Bleached Eucaliptus Kraft Pulp. ³ Source: Forestry Industry Association (IBA).

Suzano’s Position

• ning

g in the Indu dust stry Brazilian Pulp p Producti tion

• n (2)

Brazilian Paper Demand Pulp p Production

• n Capacity – T
• p 20

20 (1) Printing g & Writing Paperboa board

(tho housan usand tons) ns) (tho housan usand tons) ns)

With an installed capacity of 4.9 MM tons per year(1), and sales volume of 4.8 MM tons of pulp & paper, Suzano is a leading player in the Brazilian pulp & paper market

• 2nd largest Eucalyptus Pulp player in the world

in terms of installed capacity

• Supplies 34.9% and 20.1% of the Brazilian

demand for printing & writing paper, and paperboard, respectively

(million ton) n)

Brazilian Companies

1.543 1.498 292 350

1.835 1.848

2016 2017 Domestic Sales Imports 505 526 35 45

540 571

2016 2017 Domestic Sales Imports

20.133 20.960

2016 2017

7,3 3,8 3,7 3,7 3,6 3,3 2,8 2,7 2,7 2,5 2,5 2,0 1,8 1,8 1,7 1,7 1,5 1,5 1,4 1,3

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Section

• n 3

Oper erating ating and Financi ancial al Highl ghligh ights ts

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Paper Produ duction

• n

Oper erating ating Results ults

Pulp Busin iness ss: Presence in the main international markets and strategic relationships with clients Paper Busine ness: ss: Operational excellence in paper: product portfolio and revenue management, optimization of assets, and strengthening of distribution channels

Pulp p Production

• n

Pulp p Sales s Volume me Paper Sales s Volume Paper Revenue Breakdown

• wn

Pulp p Revenue Breakdow

• wn

(2017 17)

Pulp p Sales s Volume me per Segment

(2017 17) (2017 17)

Pulp p Busi siness ss Paper Busi siness ss

(tho housan usand tons ns) (tho housan usand tons ns) (tho housan usand tons ns) (tho housan usand tons ns)

2.982 3.373 3.473 3.541

2014 2015 2016 2017 2.373 2.835 3.117 3.241 478 456 413 374 2.850 3.291

3.530 3.615

2014 2015 2016 2017

Export Brazil

Asia 47% Europe 29% North America 14% South America/Central 1% Brazil 9% Packaging 7% Tissue 61% Specialty 14% Printing & Writing 15% Other 2% North America 7% Central/South America 17% Other 5% Brazil 71%

1.301 1.209 1.182 1.157

2014 2015 2016 2017

389 403 362 374 934 827 834 806 1.322 1.230 1.196 1.180

2014 2015 2016 2017

Export Domestic Market

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Suzano has posted strong operational cash generation

Average age R$/US$

Financi ancial al Resul sults ts

Net Revenue Adjusted EBITD TDA

(R$ million) n)

Operati tion

• nal Cash

sh Genera rati tion

• n 2017

Hist stori ric Operati tiona

• nal Cash Flow

(R$ million) n) (R$ billion)

3.851 6.603 6.558 6.892 3.413 3.621 3.324 3.629 7.264 10.224 9.882 10.521 2014 2015 2016 2017 Pulp Paper 2.452 4.595 3.906 4.615 2014 2015 2016 2017 588 1.016 827 962 Adjusted EBITDA (R$ million) Adjusted EBITDA/ton (R$/ton) 4.615 3.515 (1.100) Adjusted EBITDA Sustain Capex Operational Cash Flow 1,5 3,5 2,7 3,5 2014 2015 2016 2017

3.49 49 2.35 3.33 3.19

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Financi ancial al Resul sults ts by Bu Busin siness ess

Pulp lp Busin iness Paper er Busin iness

Revenue diversification translated into lower volatility of results

Adjusted EBITD TDA A (R$/ton

• n)

Operation

• nal Cash

sh Flow (R$/ton

• n)

Adjusted EBITD TDA A (R$/ton

• n)

Operati tion

• nal Cash

sh Flow (R$/ton ton)

1.109 778 1.017 2015 2016 2017 833 506 770 2015 2016 2017 768 970 781 2015 2016 2017 604 803 604 2015 2016 2017

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Solid Debt Position and Focus on Deleverage

Suzano zano’s s Debt t Pr Profil file

By Type Secured vs. Unsecured

(12,8 ,8%) %)

Net Debt

(R$ billion)

Gross ss Debt

(R$ billion)

(7,8 ,8%) %)

2014 2015 2016 2017 Indebted edness ess Gross Debt (R$ billion) 14.02 14.9 14.0 12.2 Net Debt (R$ billion) 10.32 12.5 10.3 9.5 Short Term Debt 13.0% 12.4% 11.4% 17.3% Ratio ios Net Debt / Adjusted EBITDA (R$) 4.2x 2.7x 2.6x 2.1x Net Debt / Adjusted EBITDA (US$) 3.7x 2.3x 2.9x 2.0x Average Cost BRL 91%CDI 84%CDI 87%CDI 100%CDI Average Cost USD 4.7% 4.2% 4.7% 5.1% Average Term (months) 47 40 42 84 Interest Coverage 2.3x 3.8x 3.6x 4,0x

Debt Breakdown

• wn

Debt Maturi rity Profile

(% of Gross ss Deb ebt) t) (By curr rren ency in R$ billion)1

Debt Overview Gross ss Debt and d Net Debt

(R$ billion)

1 FX USD/BRL of 3.25 on 31/12/2017.

Bond 39% Certificates of Agribusiness Receivables 21% BNDES 4% Import Financing 7% Other 3% Export Financing 26% Secured; 13% Unsecured; 87%

14,0 12,2 Dec-16 Dec-17 10,3 9,5 Dec-16 Dec-17

562 1.510 1.203 797 994 81 4.002 2.146 605 920 1.802 127 42 108 2.708 2.115 2.123 2.599 1.121 124 4.111 Cash 2018 2019 2020 2021 2022 2023

• wnard

USD BRL

71% 29%

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Net Debt / Adjusted EBITDA A LTM

Klabin abin Arau auco co Fibria ia CMPC Suzano zano Standard & Poors BB+ BBB- BBB- BBB- BB+ (Positive) Fitch Ratings BB+ BBB BBB- BBB BBB- (Stable)

Rati tings ngs Overview view

¹ Last twelve months ending on 12/31/2017 in R$. | ¹ Last twelve months ending on 09/30/2017 in US$.

BB+ BB+ BB/ BB- BB+/BB BB BB+/BB BBB- BBB BBB-/BB BBB- BBB BBB/BB BBB BB+/ +/BB+ BB+ BB BB- /BB

2010 2012 2015 2017

Sovereign

S&P / Fitch

Suzano no´s Ratings ngs Evolu lution ion

4,4x 3,3x 3,2x 3,1x 2,1x

Klabin¹ Arauco² Fibria¹ CMPC² Suzano¹

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CAPEX PEX

18

¹ Estimated CAPEX

2018¹

Sustain Structural Competitiveness and Adjacent Business 2.4 1.2 1.2

R$ billion

T

• tal

2017

1.8 0.7 1.1

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ROIC

It is the most appropriate metric to measure the industry returns, which is capital intensive

ROIC = (Adjusted EBITDA – Sustaining CAPEX – Tax cash account) /Capital Employed

9,3% 11,8% 15,6% 12,0% 5,2% 15,7% 10,5% 15,2% 6,4% 14,7% 11,9% 14,5%

2014 2015 2016 2017 Paper Pulp T

• tal

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Bo Bonds nds da Suzano zano

5.000 10.000 15.000 20.000 25.000 09/nov/16 09/dez/16 09/jan/17 09/fev/17 09/mar/17 09/abr/17 09/mai/17 09/jun/17 09/jul/17 09/ago/17 09/set/17 09/out/17 09/nov/17 09/dez/17 09/jan/18 0,00 1,00 2,00 3,00 4,00 5,00 6,00 7,00

Suzano 2026 2026

Volume (USD MM) Yield (%)

5.000 10.000 15.000 20.000 25.000 14/mar/17 14/abr/17 14/mai/17 14/jun/17 14/jul/17 14/ago/17 14/set/17 14/out/17 14/nov/17 14/dez/17 14/jan/18 0,00 1,00 2,00 3,00 4,00 5,00 6,00 7,00 8,00 9,00

Suzano 2047

Volume (USD MM) Yield (%)

Bond d 2047 7 Perform rmance Bond d 2026 Perform rmance

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

Inves vestor tor Relations ations