Presentation 1
Disclaimer Certain statements in this presentation may 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.
Agenda 04 Corporate Overview and Growth Cycle 17 Forestry Business Unit 23 Pulp Business Unit 30 Paper Business Unit 36 Results
Corporate Overview Suzano Transnordestina Itaqui Port “Carajás” • 2 nd largest eucalyptus pulp producer in the world Pecém Port Railroad • Top10 market pulp producers Maranhão Piauí • Pulp production costs: one of the lowest in the “Norte e Sul” world Railroad • Leader in the regional paper market Mucuri Forests • Certified plantations and products Plants Limeira Portocel Ports • Organic Growth in pulp: Suzano Vitória Railroad Embu Rio Verde +3 MM/ton/year Santos • New businesses: biotechnology and wood pellets for energy • Market cap: R$ 6.0 billion on 12/31/10 Capital Structure (12/31/10) Free Float Controlling 45% Group 52% Treasury 3% 4
Corporate Overview Organizational Structure The Business Units model provides performance and return assessments in each business Management Board of Directors (BD) Sustainability and 9 members (4 independent) Strategy Audit CEO, IR and Strategy BD Commitees SP Operations Forestry BU Pulp BU Paper BU SP Corporate Dev. BU: Business Units SP Finance SP Human Resources SP: Service Providers 5
Corporate Overview and Management Products and Diversified Markets Net Revenue 58% Exports / 42% Domestic Market R$ 4.5 billion Market Pulp Paper 2 nd eucalyptus market pulp producer 55% 45% Paperboard Printing and Writing 1 st in Brazil with 26% market share 42% 13% Uncoated Coated 2 nd in Brazil with 27% 1 st in Brazil with 19% market share market share 7% 35% Note: Figures of last 12 months ending on 12/31/2010 The market share data includes paper imports 6
Corporate Overview Timeline 1924 until 1940 1950 1960 until 1990 2000 2024 Beginning of First investment in Growth and diversification in the Consolidation as one of the Suzano 2024 operations in the the pulp sector pulp and paper businesses largest Brazilian Groups paper industry 2008 Acquisition of Ripasa (50%) 2010 2007 Start up of Bahia Sul Acquisition of Suzano mill New Growth Cycle Beginning of paper exports to Europe Start up of the first paper mill 2004 2005 1982 1992 Pioneerism in eucalyptus plantation 1960 Acquisition of FuturaGene, PLC. 1975 Merger with Leon Feffer Bahia Sul starts paper trading activities 1956 Start up of Line 2 Suzano Renewable at Mucuri Launch of Report 1955 Energy Acquisition of Indústrias de Papel Rio Verde’s control Adoption of Bovespa’s 1939 Level I corporate governance standards Acquisition of and Professional 50% of Conpacel 1924 Management and KSR. 7 7
Growth Cycle Suzano’s Strategy Constant increases in forestry productivity guarantees competitiveness in the pulp business and enables new business opportunities in Biotechnology and Renewable Energy Forestry Competency Operational Organic Wood pellets Biotechnology excellence in growth paper in pulp 8
Growth Cycle Growth Strategy Suzano reviewed its strategy and presents innovative growth plans supported by its competencies and forestry know-how Organic Growth in Pulp Investimento em Biotecnologia Investment in Renewable Energy Energia Renovável Biotechnology 9
Growth Cycle Organic Growth in Pulp Suzano’s production capacity has increased by 130% in the last 5 years. The Company is prepared for a new growth cycle that will increase its capacity to 6.0 MM ton/year of pulp and paper by 2014 Piauí Unit Maranhão Unit 6.010 4.610 3.210 3.210 4.720 2.850 2.850 2.750 3.320 1.920 1.920 1.920 1.720 1.485 1.750 1.750 1.650 1.240 820 640 570 456 1.290 1.290 1.290 1.290 1.100 1.100 1.100 1.100 1.080 915 784 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Paper Pulp Mucuri Unit and new pulp line: analysis of the global economy and pulp market outlook for definition of the implementation schedule and start up . 10
Growth Cycle Pulp Organic Growth Maranhão Piauí Maranhão Projects Required planted area 154 tsd ha 170 tsd ha • Market pulp production capacity: 1.5 MM ton/year Forestry capex US$ 575 US$ 710 (total estimated) million million • Estimated industrial capex: Forestry capex US$ 214 US$ 193 US$ 2.3 billion (total fulfilled) million million • Funding : Start up (estimative) 2013 2014 ~ 80% debt (competitive costs) and remainder cash 68% own land 70% own land flow generation Wood supply 32% third 30% third • BNDES : R$ 2.7 billion , 12-year maturity and parties parties 3-year grace period • Mandatory convertible debentures : R$ 1.2 billion • Agreements for the acquisition of key equipments: Metso and Siemens Competitive Advantages • 100 MW energy surplus for sale • Logistics guaranteed by long term contracts Draft of Piauí’s nursery Draft of the MA / PI mill • Projects’ updates with better returns Investment decision on Piauí Project expected • for 1S12. Tax incentives 11
Growth Cycle FuturaGene • Acquisition concluded in July/2010 Biotechnology is on the right • Pioneer in biotechnology research and development side of Sustainability • Sustainable technologies Innovation • Environmentally oriented to meet growing demand for fiber and • Less land utilization biomass • Less water consumption • Techniques for higher forestry productivity • Less chemical expenditure • R&D forestry synergies: competitive main factor in the pulp and • Higher carbon sequestration paper markets 12
Growth Cycle Suzano Renewable Energy Suzano Renewable Energy – 1 st fase Wood pellets for energy, produced from • 3 units: 1 MM ton/year each renewable energy-oriented forests • Capex: US$ 800 million • World leader • Initial focus on the European market • Analysis of the clones portfolio: special clone selection Experiments • Dedicated plantation (more plants per hectare) with • Higher yield “Energetic • Harvest in 2 to 3 years Forests” • High lignin content – high calorific value since 2008 • Unuseful for pulp production • Experimental “energetic” stewardship in Northeast 13
Growth Cycle Renewable Energy Business Rationale • Competencies linked to the forestry business Internal View Transfer of Suzano’s pulp • Successful experiments with energetic forest competitivity to the renewable energy • Excellence in industrial projects ’ management and relations with market suppliers Know How • Global focus in energy from renewable sources and emission reduction Time-to-market : start up 2013 Market View Reliance • European challenges linked with future supply and 2020 targets Environmental and social “ Footprint ” • Need for structured pellets suppliers and long-term contracts Fossel fuels Independence from Environmental Renewable sources ’ cost reduction volatility and costs imported oil / gas concerns (emission reduction) 14
Growth Cycle Project Update Concluded Steps Ongoing Steps • • Conceptual engineer Commercial agreements: negotiation • Technology definition of final contracts with clients with suppliers - MoUs for 3.1 mm/ton/year • • Chemical properties Search and negotiation of lands • aligned with the European market Understandings with State governments • • Forestry Base: harvesting tests Discussions with ship-owners and • Dedicated team logistics providers • Funding: definition of the capital structure 15
Agenda 04 Corporate View and Growth Cycle 17 Forestry Business Unit 23 Pulp Business Unit 30 Paper Business Unit 36 Results
Forestry Business Unit Forestry Assets The Forestry Business Unit (FBU) guarantees to Suzano 100% eucalyptus wood supply from renewable planted forests 2010 Areas’ Chart FBU in Numbers 2010 MA, PI and TO Total area (tsd ha) 722 Total: 307 tsd ha Planted: 75 tsd ha Planted area (tsd ha) 324 Annual planting (tsd ha) 76 Planted seedlings / day (tsd) 438 Harvested trees / day (tsd) 122 BA, ES and MG Total: 225 tsd ha Annual harvest (million m³) 10.8 Planted: 130 tsd ha Loaded trucks / year 201 Forests (tsd units) average distance: Preserved Area (tsd ha) SP 256 75 Km Total: 190 tsd ha Forests Planted: 119 tsd ha average distance: Suzano has developed forestry stewardship expertise and a complete genetic base for 246 Km various scenarios due to its presence in different places with temperature, climate, precipitation, soil, and relief variations. 17
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