Pulp and forest Presentation on Altri 2012 Disclaimer All data - - PowerPoint PPT Presentation

Pulp and forest

Presentation on Altri

2012

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Disclaimer

All data contained in this presentation may contain confidential and/or privileged information, and it is exclusively intended for its addressees. Unauthorized copy, reproduction or distribution is strictly prohibited. This presentation is provided “as is” without any express or implied warranty. The information here in is provided for general purposes only and do not constitute professional advice. This presentation may contain forward-looking information and statements that could, ultimately, prove inaccurate, due to unexpected risks and uncertainties. All data referred in this document must be reported to the document’s date. Although every reasonable effort is made to present current and accurate information, Altri makes no guarantees of any

• kind. The company declines any responsibility to update, revise or correct any
• f the information hereby contained.

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Altri’s overview Business development Growth strategy Market info and data Appendix

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• Pulp and forest Portuguese listed company
• Low exposure to Portugal (90% of pulp exported)
• One of the most efficient European pulp producers
• Ramp up to produce over 900K tones/year
• 3 mills in Portugal
• 84K ha of forest under management in Portugal

– Full FSC and PEFC Certification – 30% self sufficiency rate

• Forest based renewable energy

– Power production through the cogen process – #1 biomass player in Portugal: 62 MWh in operation

Company profile

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Altri’s overview Business development Growth strategy Market info and data Appendix

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Strategic approach: forest integration

Wood fibres

Cooked and bleached for pulp

Lignin

Burned to produce electrical energy from cogeneration

Bark, leafs & forest residues

Burned to produce electrical power

Pulp production process Biomass power production

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3 pulp mills in Portugal

Celbi (acquired in 2006)

– Bleached Eucalyptus Kraft Pulp – Learning curve concluded – 600K tones/year operational in 2011

Caima (acquired in 1998)

– Bleached Eucalyptus Sulphite Pulp – 110K tones/year of market pulp – DP conversion underway

Celtejo (acquired in 2005)

– BEKP or NBSK – 140K tone/year of market pulp in 2011 – Concluded the learning curve of bleached eucalyptus kraft pulp process

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Forest management

84K ha under management in Portugal

– 30% self sufficiency rate in 2010 – Mainly focused on eucalyptus globulus

Strategic location

– High yield locations – 10/12 years growing age – 10 m3 per ha per year

Focus on R&D

– Over 40 years of experience – Genetic improvements obtained through traditional breeding – Specific consumption below 3m3 wood/ton of pulp

Forest certifications for the whole area under management

– FSC – PEFC

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World economy exposure

– 91% of total production exported – Strategic focus on Europe

• #1 market in demand
• Lower freight cost

– Small exposure to the Chinese market

Main end uses

– Tissue – Printing and writing – Specialties

Increasing exposure to tissue

– Fastest growing paper market – Extra demand in Portugal

Pulp sales: main markets

Breakdown 2011

Main markets

Europe 84% Asia; 7% Portugal; 9% Tissue 40% Packaging 4% Specialties 21% Other 6% Printing & writing 29%

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Cogen in the pulp mills

Pulp mills are self sufficient in power Cogen involves burning the black liquor at the recovery boiler, generating electrical power

– Sold to the grid in their entirely at a “green” tariff

Energy needs

– all the power needed is acquired from the public grid at the regular tariff

Economics

– 62.9 M€ sold in 2011 – 32.0 M€ acquired in 2011

Cogen scheme

Digester

Wood Pulp Black liquor

Recovery boiler

Water Superheated steam Green liquor

Turbine & generator

Electrical power Steam

Mill uses Public grid

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Biomass power production

50% joint venture with EDP

– 62 MW in operation – #1 biomass player in Portugal – Consolidated on Altri’s accounts through equity method

Tariff

– 106€/MWh updated yearly on recorded inflation – Feed in tariff granted for 25 years

Financial highlights 2011

– Turnover: 44,0 M€ – EBITDA: 14.5 M€ – EBITDA margin of 33% – Net profit: 1,7 M€

Celbi 27.9 MW

In operation

Caima 12.8 MW

In operation

Celtejo 12.8 MW

In operation

Mortágua 1 8.6 MW

In operation

Gondomar 27.9 MW

In study

Cabeceiras 12.8 MW In study Mortágua 2 27.9 MW In study

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Altri’s overview Business development Growth strategy Market info and data Appendix

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Increasing cash flow generation

Global pulp market

– Sustainable BEKP price at high levels – Sustainable demand growth

Altri: increasing capacity and efficiency

– Over 900K tones per year in 2012E – High EBITDA margin: 29% in 3Q12 – Cost control and efficiency driven projects – Strategic focus on European clients to

• ptimize freight costs

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Global pulp market

Global hardwood demand grew 5% (CAGR) between 1990 – 2011 European hardwood demand grew 3% (CAGR) between 1990 – 2011

– From 4,8 Mton in 1990 to 9,4 Mton in 2011 (+4,5 Mton) – Mkt share decreased from 50% in 1990 to 35% in 2011

Chinese demand grew 18% (CAGR) between 2000 – 2011

– From 1,1 Mton in 2000 to 7,1 Mton in 2011 (+6,0 Mton) – Mkt share grew from 7% in 2000 to 27% em 2011

Organic growth in Europe Strong exogenous growth driven by Chinese demand

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Source: Hawkins Wright Price

100 200 300 400 500 600 700 800 900 1000

Euro USD

BEKP list price in Europe (1990 to date)

Global pulp market

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Source: Hawkins Wright

0% 2% 4% 6% 8% 10% 12%

1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Global historical hardwood demand growth (% year on year)

Global pulp market

%

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Source: Hawkins Wright

European and Chinese hardwood demand growth (% year on year)

Global pulp market

Western Europe China Million ton

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Source: Hawkins Wright

Global pulp market

Region 2005 2006 2007 2008 2009 2010 2011 2012E CARG Canada 1.750 1.765 1.770 1.680 1.500 1.270 1.235 1.025

• 7,4%

USA 2.480 2.245 2.245 2.190 2.230 2.180 2.090 2.150

• 2,0%

Nordic Europe 1.580 1.755 1.545 1.385 1.055 930 1.025 1.000

• 6,3%

Western Europe 2.870 2.945 2.950 3.015 2.945 2.880 2.940 3.025 0,8% Eastern Europe 625 695 695 820 820 820 830 830 4,1% LatAm 6.900 7.760 9.550 11.285 12.425 13.065 13.155 13.570 10,1% Oceania 50 50 50 50 50 60 50 50 0,0% Japan 530 530 620 620 620 680 680 680 3,6% Asia/Africa 5.320 4.880 4.780 5.480 6.085 5.635 6.320 6.335 2,5% TOTAL 22.105 22.625 24.205 26.525 27.730 27.520 28.325 28.665 3,8%

% change +2,4% +7,0% +9,6% +4,5%

• 0,8%

+2,9% +1,2%

Supply increased 3,8% (CAGR) between 2005 – 2011

– Mainly LatAm (10% per year, on average) – Decrease in Northern Hemisphere – From High Cost location to Low Cost location

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Source: Hawkins Wright

Price reaction to new hardwood capacity 2005 – 2011

Global pulp market

Euro

100 200 300 400 500 600 700 800

2006: + 520K ton

+ 930 euca

• 410 Asian hardwood

2007: + 1.695K ton

+ 1.785 euca

• 90 Asian hardwood

2008: + 2.510K ton

+ 1,800 euca + 710 Asian hardwood

2010: + 280K ton

+ 575 euca

• 295 Asian hardwood

2009: + 1.830K ton

+ 1.270 euca + 560 Asian hardwood

2011: + 930K ton

+ 85 euca + 845 Asian hardwood

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Optimization underway in Celbi mill

– Doubling capacity to 600K ton of BEKP concluded in 2H09 – Debottlenecking projects to increase capacity up to 700K ton with minor CAPEX (below 10 M€/year) – Strong focus on cost management – Reducing wood consumption per ton – Reducing total amount of fixed costs (-3,5M€) – Reducing cash cost per ton

– Absolute decrease in fixed costs – Dilution (per ton) due to extra capacity

Altri: Increasing capacity & efficiency

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BEKP focus in Celtejo mill

– 141K ton produced in 2011 (swing between NBSK and BEKP) – Strategic focus on BEKP from 2012 onwards – Capacity increase through debottlenecking projects up to a technical limit of 200K ton – Low annual CAPEX needs (4M€/year)

DP project in Caima mill

– 107K ton of BEKP produced in 2011 – Chemical cooking process (sulphite) enables an efficient conversion into dissolving pulp – No major technical and process changes. Low CAPEX needs (5M€/year) – 100K ton of low cost/ton DP from 2013 onwards

Altri: Increasing capacity & efficiency

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Evolution of nominal pulp production capacity in Altri

Thousand tones

Caima mill Celtejo mill Celbi mill

115

115

2005

255

115 140

3ºT05

560

115 140 315

2007

787

114 133 540

2010

847

107 599

2011

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Altri: Increasing capacity & efficiency

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Cash costs CIF per ton Q1 2012 estimates

USD per ton of pulp

Altri: Increasing capacity & efficiency

USD/ton

Source: Hawkins Wright & Altri Var costs Fixed costs Freights and marketing

Celbi 2013E

In line with lowest cost producers

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Conclusion

Pulp market has proven resilient over the last 20 years

– Average pulp price around 500€/ton, with a positive linear trend – Global demand around 5%, being China the driving force behind extra growth – Hardwood pulp has been gaining market share over softwood – Between 2005-2011 new 6,2 million tones of hardwood market pulp (Euca and Asian hardwood) had almost no impact on prices

Altri is one of the most efficient pulp producers

– Key strategic issue: low cash cost per ton – Major expansion projects concluded and learning curve finalized – New debottlenecking projects, with low CAPEX needs, will increase production,

• ptimize efficiency and target new high value market niches

– Location in Portugal but strong exposure to global economy

Focus on shareholders’ value

– Cash flow generation – Net debt reduction

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Altri’s overview Business development Growth strategy Market info and data Appendix

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Global pulp demand 2005/2010 Global pulp demand by region 2005/2010

Global pulp industry overview

Bleached softwood Bleached hardwood Sulphite UKP TOTAL PULP 21 750 21 070 1 245 2 350 46 415 2005 2006 22 085 22 400 1 220 2 375 48 080 2007 + 3,5% + 6,3%

• 0.5%

+ 2,6% + 4.8% Var % 11/10 22 530 23 555 1 185 2 285 49 555 2008 21 605 24 500 1 050 1 930 49 085 21 355 24 800 1 000 1 875 49 030 2009 North America West Europe East Europe LatAm China Japan

• S. Corea

Other Asia Africa Oceania TOTAL 2005 8 390 17 360 1 695 2 070 6 470 2 690 2 680 4 070 585 405 46 415 2006 8 660 17 690 1 790 2 240 6 900 2 750 2 555 4 515 595 385 48 080 2007 8 890 17 970 1 975 2 455 7 750 2 590 2 555 4 350 605 415 49 555 2008 8 135 17 460 1 870 2 620 8 650 2 460 2 400 4 375 715 400 49 085 2009 7 215 15 595 1 740 2 850 11 615 2 060 2 360 4 685 545 350 49 015 Va% 11/10

• 3.6%
• 3.1%
• 2.4%
• 2.8%

+ 30.6% + 3.1%

• 5.5%

+ 3.9% + 5.6% + 1.5% + 4.8% 22 255 25 130 1 070 1 760 50 185 2010 2010 7 680 16 730 1 875 3 180 10 460 2 265 2 525 4 565 535 330 50 185 23 005 26 715 1 065 1 805 52 590 2011 2010 7 410 16 205 1 830 3 090 13 660 2 335 2 385 4 775 565 335 52 590 Source: PPPC

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Global pulp industry overview

Global pulp supply 2005/2010 Global pulp supply by region 2005/2010

Bleached softwood Bleached hardwood Sulphite UKP TOTAL PULP 23 280 22 730 1 345 2 445 49 800 2005 2006 22 870 23 590 1 300 2 475 50 235 2007 + 4,9% + 4.4% + 1.8% + 9.2% + 4.8% Var % 11/10 23 880 25 960 1 245 2 490 53 575 2008 24 285 28 600 1 145 2 180 56 210 23 470 28 115 1 100 2 140 54 825 2009 North America West Europe East Europe LatAm China Japan

• S. Corea

Other Asia Africa Oceania TOTAL 2005 18 070 12 050 3 065 9 180 575 1 025 440 4 120 690 585 49 800 2006 17 165 12 150 3 085 10 180 780 1 110 440 4 050 635 585 50 235 2007 17 635 12 335 3 110 12 540 875 1 140 440 4 240 650 610 53 575 2008 17 520 12 380 2 990 14 800 970 1 240 440 4 610 655 605 56 210 2009 15 905 11 875 2 995 15 935 835 1 155 450 4 380 690 605 54 825 Va% 11/10 + 2.3% + 3.0% + 2.1% + 8.2% + 55.1% + 1.2%

• 28.1%
• 2.5%

+ 7.1% + 0.0% + 4.8% 23 855 28 540 1 140 1 855 55 390 2010 2010 16 245 11 910 3 075 15 580 1 370 1 230 445 4 425 495 615 55 390 Source: PPPC 25 035 29 810 1 160 2 025 58 030 2011 2011 16 620 12 265 3 140 16 855 2 125 1 245 320 4 315 530 615 58 030

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Altri’s overview Business development Growth strategy Market info and data Appendix

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Business structure and shareholders

* Joint venture with EDP

Celbi Pulp mill EDP Bioeléctrica Biomass

50%* 99.58% 100%

Celtejo Pulp mill

100%

Caima Pulp mill

Major shareholders

205.132 million shares Management 42% Free-Float 58%

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3Q12 quarter indicators

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3Q12 balance sheet