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 15 Forestry Business Unit 21 Pulp Business Unit 28 Paper Business Unit 34 Results
Corporate Overview Suzano Transnordestina Itaqui Port “Carajás” • 2 nd largest eucalyptus pulp producer in the world Pecém Port Railroad • 8 th largest market pulp producer in the world Maranhão Piauí • Pulp production costs: one of the lowest in the “Norte e Sul” Railroad world Mucuri Forests • Leader in the regional paper market Plants Limeira • Certified plantations and products Portocel Ports Suzano Vitória • Organic Growth in pulp: Railroad Embu Rio Verde Santos +3 MM/ton/year • New businesses: biotechnology and wood pellets for energy • Market cap: R$3.4 billion on 9/30/11 Capital Structure (9/30/11) Free Float 43% Controlling Group 54% 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 and Strategy BD Commitees SP Operations Forestry BU Pulp BU Paper BU SP Corporate Dev. BU: Business Units SP Finance and IR SP Human Resources SP: Service Providers 5
Corporate Overview and Management Products and Diversified Markets Net Revenue 55% Exports / 45% Domestic Market R$4.7 billion Market Pulp Paper 2 nd eucalyptus market pulp producer 57% 43% Paperboard Printing and Writing 1 st in Brazil with 26% market share 42% 13% Uncoated Coated 2 nd in Brazil with 31% 1 st in Brazil with 21% market share market share 7% 35% Note: Figures of last 12 months ending on 9/30/2011. Other paper represented 2% of net revenue on the period. 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 starts Bahia Sul 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 Organic Growth in Pulp Suzano’s production capacity has increased by 130% in the last 6 years. The Company is prepared for a new growth cycle that will increase its capacity to 6.2 MM ton/year of pulp and paper by 2016 Piauí Unit Maranhão 6.210 Unit 4.710 4.710 4.710 3.210 3.210 4.920 2.850 2.850 2.750 3.420 3.420 3.420 1.920 1.720 1.920 1.920 1.485 1.750 1.750 1.650 1.240 820 640 570 456 1.290 1.290 1.290 1.290 1.290 1.290 1.080 1.100 1.100 1.100 1.100 915 784 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014e 2015e 2016e Paper Pulp Note: Investment decision on Piauí Project expected for 1H14. 9
Investment Plan Funding is settled for construction of the Maranhão Unit • Market pulp production capacity: Maranhão Unit 1.5 MM ton/year Required planted area 154 tsd ha • Funding : Forestry capex (total estimated) US$575 million • BNDES : R$2.7 billion , 12-year maturity and 3- Industrial capex (total estimated) 1 US$2.3 billion year grace period • debentures : R$1.2 Start up (estimate) 2013 Mandatory convertible billion 68% own land 32% Wood supply • imported equipment third parties Funding for the supported by foreign credit agencies (ECA’s Note: 1 Considers exchange rate of R$ 1.80/US$ among others) Competitive Advantages • Cash flow generation • 100 MW energy surplus for sale • Logistics guaranteed by long term contracts • Agreements for the acquisition of key equipment: • Metso and Siemens State of the art technology 2009 2010 9M11 2011e (R$ million) Forestry 193 159 148 249 Industrial 0 4 547 905 Total 193 162 696 1,154 10 Draft of the Maranhão mill
Piauí Unit Decision to purchase Piauí’s industrial equipment postponed until 1H14 2008 2009 2010 2011e (R$ million) Forestry 3 162 91 165 Industrial 0 0 0 7 Total 3 162 91 172 • Most modern nursery in the world: 30 million seedlings/year • 35 forest partnership contracts in the region: 6 thousand ha • Long term railroad contracts guarantee production transportation (Transnordestina) • Start-up: 1H16 • 100 MW of additional energy to be sold Plan of Piauí’s nursery Nursery Nursery 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 Project update : • 3 units: 1 MM ton/year each • Protocol signed with Maranhão government • Estimated start-up: 2014 • Advanced negotiation of final contracts with clients • Pre operational capex: ~US$800 million • Engineering with Promon and Stolberg − 2011e capex: ~ R$170 million (Canadian) − Equipment purchase estimated for 1Q12 • Specific clones selected • Funding: definition of the capital structure • Dedicated plantation (Energy Forests) • World leader • Dedicated team • Initial focus on the European market • Dedicated plantation (Energy Forests) • Higher yield • Harvest in 2 to 3 years • High lignin content – high calorific value Experiments • Unuseful for pulp production with “Energetic Wood pellets for energy, produced from renewable energy-oriented forests Forests” since 2008 13
Agenda 04 Corporate View and Growth Cycle 15 Forestry Business Unit 21 Pulp Business Unit 28 Paper Business Unit 34 Results
Forestry Business Unit Forestry Assets The Forestry Business Unit (FBU) guarantees to Suzano 100% eucalyptus wood supply from renewable planted forests FUB in numbers 1 2011* 2011 Areas‟ Chart Total area (tsd ha) 771 MA, PI and TO Planted area (tsd ha) 341 Total: 357 tsd ha Planted: 92 tsd ha Preserved Area (tsd ha) 282 Data on 6/30/2011 1 Area considers own and leased land FUB in numbers 2010 Annual planting (tsd ha) 76 BA, ES and MG Total: 226 tsd ha Planted seedlings / day (tsd) 438 Planted: 131 mil ha Harvested trees / day (tsd) 122 Forests average Annual harvest (million m³) 10.8 distance: SP 75 Km Loaded trucks / year Total: 188 mil ha 201 (tsd units) Forests Planted: 118 mil 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. 15
Forestry Business Unit Forestry Competitivity in Brazil Brazil presents competitive advantages to support continuous increase of its global forestry standing Competitive Advantages • Availability of productive land Hardwood Productivity (m³/ha/year) • Excellent soil and climate conditions 44 41 • Short harvesting cycle for planted forests • Opportunity to recovery degraded areas 25 25 • Low establishments and maintenance costs 20 13 • Continuously growing consumer market 6 4 Suzano’s Brazil Chile Australia South Portugal USA Finland Eucalyptus Africa Source: ABRAF, BRACELPA, Poyry , Adapted by STCP Consulting • Logistics Challenges • Tax Structure • Cost of Capital • Education Level • Exchange Rate 16
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