RI SI I nternational Containerboard Conference Cristiano Teixeira - - PowerPoint PPT Presentation

RI SI I nternational Containerboard Conference Cristiano Teixeira

N o v e m b e r , 2 0 1 6

Latin America: Macroeconomic Scenario

GDP (%)

4.9 3.2 3.0 1.3 ‐0.1 ‐0.5 1.5 2.1 2.6 2.7 2011 2012 2018 2017 2019 2020 2016 2013 2014 2015

CAGR 2,4% CAGR 1,7%

Source: IMF, World Bank Including Mexico

I nfla tio n (%)

5.2 4.6 4.6 4.9 5.5 5.7 4.3 4.1 3.9 3.7 2020 2018 2019 2013 2012 2011 2017 2016 2015 2014

CAGR 5,0% CAGR 4,3%

20

c o untrie s Po pula tio n

633 million

35% me dium c la ss

Une mplo yme nt

6% (2015)

LATAM: Containerboard apparent consumption

Othe rs 13% E c ua do r

5%

Co lo mb ia

5%

Chile

5%

Arg e ntina

8%

Me xic o

29%

Bra zil

35%

tho usa nd me tric to ns

14,073 26% 2020 2019 13,445 34% 6% 26% 34% 2018 12,915 34% 6% 6% 27% 33% 2015 12,300 35% 6% 26% 33% 2014 11,971 35% 5% 26% 34% 26% 34% 2017 12,508 34% 6% 27% 33% 2016 12,261 34% 6% 34% 34%

Re c yc le d Me dium Se mic he mic a l Me dium Re c yc le d L ine rb o a rd K ra ftline r to ta l c a pa c ity

Co nsumptio n pe r Co untry

Source: Risi Latin America Pulp & Paper Forecast 2016

151 349 72 100 150 195 226 81 84 87 90 93 100 200 300 400 2020 2019 88.6%

thousand metric tons

2018 87.2% 2017 86.1% 2016 85.3% 2015 85.7% 2014 86.3% 90.3%

Ca pa c ity Gro wth (L ) Ope ra ting Ra te (R)

Demand is predicted to grow at a faster pace than supply from 2017 onward Recycled containerboard capacity will increase 650 thousand tonnes from 2016 to 2020 and reach 9,1 million tonnes

Containerboard Capacity Growth and Operating Rates in LATAM

Source: Risi Latin America Pulp & Paper Forecast 2016

Main Latin America Containerboard Capacity Expansions 2015-2020 (thousand metric tons)

349 172 571 1,092

2015 2016‐2017 2018‐2020 Total in 6 years

Re c yc le d: K la b in (BR) +125 Bra g a g no lo (BR) +72 Pro pa sa (MX) +100 Virg e n: We stRo c k (BR) +35 Re c yc le d: I ra ni (BR) +26 SK G (MX) +100 F e rna nde z (BR) +100 NOA (AR) +110 Re c yc le d: I ra ni (BR) +135

Source: Risi Latin America Pulp & Paper Forecast 2016

Virg e n: Ob e ra (AR) +350

Latin American countries are net importers of containerboard, with the exception of Brazil

Ne t I mpo rts

3.243 2.823 2.882 2.783 2014 2015 2016 2017 2018 2019 23% 23% 23% 23% 24% 24% 2.898 3.045

(thousand tonnes)

TOP 5 IMPORTERS

156

Arg e ntina

275 313 168 1.075

E c ua do r Me xic o Co lo mb ia Chile

(thousand tonnes) 35% USA

Net imports Import Share

55% USA 51% BR

Brazil

Containerboard and Corrugated Packaging

Brazil: Macroeconomic Scenario

Positive Outlook for 2017

GDP (%)

4.9 3.2 3.0 1.3 ‐0.1 ‐3.2 1.3 2.3 2.5 2.5 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011

I nfla tio n (%)

6.5 5.8 5.9 6.4 10.7 7.0 5.1 4.7 4.5 4.5 2019 2018 2020 2015 2014 2017 2016 2011 2013 2012

Source: BCB and IMF

I ndustry

• 6%

2016

+1.1%

2017 Re ta il

• 5%

2016

+1.3%

2017

CAGR 2.4% CAGR 1.1% CAGR 7.1% CAGR 5.1%

Brazil: Containerboard capacity

T

• ta l Ca pa c ity 2015

5.1 million metric tons

40% 42%

Se mic he mic a l T e stline r

17%

K ra ftline r

1%

Re c yc le d Me dium

T

• p 5 pr
• duc e r

s (thousand me tr ic tons)

Kr aftline r+ Se mic he mic al T e stline r+ R e c yc le d Me dium

We WestRock Tr Trombini Coce Cocelp lpa IP IP 819 819 87 87 Klabin Klabin 435 435 183 183 70 70 Fern rnan andez 235 235 SK SKG 276 276 Ir Irani ani 161 161 Artiv Artivinco 162 162 Klabin Klabin 235 235

Source: Risi Capacity Report 2016

Containerboard production and apparent consumption

(tho usa nd me tric to ns)

Kraftliner operating rate was 90% in 2014 and remained near this level in 2015 For 2016 the forecast is to bring the operating rates down to 88% The economic recovery should elevate levels back up to 95% by the end of the forecast 5,010 5,172 5,112 5,097

2019

4,776

2016

5,097 5,222 4,317

2014

4,505 4,280 4,100 4,657 4,290

2017

4,455

2015

4,585 4,422 4,554 4,174

2018

Appa re nt Co nsumptio n Pro duc tio n Ca pa c ity

Source: Risi Latin America Pulp & Paper Forecast 2016

Brazilian containerboard exports

la rg e pre se nc e in the inte rna tio na l K ra ftline r Ma rke t drive n b y fib e r hig h pro duc tivity

Sep Oct 25.6 Aug Dec Nov Jul 27.7 Jun 23.1 May 30.5 Apr 28.4 Mar 27.2 Feb 23.6 Jan 27.3 29.4 30.0 29.3 33.9

2016 fo re c a st 2015 2016

(tho usa nd me tric to ns)

302 2016exp +11% 336 2015

Source: Risi

Bra zil So uth Ame ric a * So uthe a st Asia Mo za mb iq ue Oc e a nia USA Ce ntra l a nd E a ste rn E uro pe We ste rn E uro pe Russia Sc a ndina via Ba ltic Co untrie s Ca na da

Productivity and average rotation of planted trees in Brazil versus other significant players

Source: Ibá and Pöyry 2016

Eucalyptus Pinus Rotation in years Eucalyptus Rotation in years Pinus

*Exceto Brasil

12

198

214 574

Jan‐15 Jan‐16 Sep‐16 Jan‐14 May‐14 Sep‐15 Sep‐14 May‐16 May‐15

4 3 8

447 132 92 303

OCC II Fluting

% in 2016 (US$)

115% 45%

OCC II and Fluting Prices

(US$/ me tric to n)

Source: Anguti

13

67% 33%

Co mpo sitio n in c o rrug a te d b o xe s

58.4% 64.0% 65.6% 65.2% 65.5% 41.6% 36.0% 34.5% 34.8% 34.5%

100%

2014 2013 2012 2011 2010

Recycled Virgen

(2015 – %) OCC recuperation in Brazil: 79%

Paper Consumption in Production of Corrugated Board

Source: ABPO

2006 2007 2011

542.6

2010 2014 2009

531.9

2008 2013

515.2 516.2

2012

516.7 515.8 530.5

‐6%

2005 2015

531.2 515.2 512.0 523.2

sta b iliza tio n

Source: ABPO

g/m2

Corrugated Box basis weight

3%

N

10%

N.E.

49%

S.E.

31%

S

7%

MI DW EST

90

companies US$ 3 billion

Total Revenue in 2015

+ 25,000

Direct jobs

142

Actives corrugators

Corrugated Packaging in Brazil

Source: ABPO 2015

width (m) 29 69 44 >2.2 1.6‐2.2 < 1.6

million metric tons billion m²

3.3 6.5

16

CAGR 2009‐2017

ABPO +1.9 GDP +1.5

‐0.3 0.7 1.8 3.6 1.1 ‐2.8 ‐1.2 1.6 3 7.5 3.9 1.9 3 0.1 ‐3.1 1.3 11,0 2010 2011 2012 2013 2014 2015 ‐2,8 2016e 2009 2017e

GDP ABPO

Corrugated Packaging in Brazil and GDP (% annual)

Source: ABPO and Brazil Central Bank

17

jul‐16 jan‐16 jul‐15 jan‐15 jul‐14 jan‐14 jul‐13 jan‐13 jul‐12 jan‐12 39.2% 27.2% 33.7% 21.7% 20.8% 18.0% 12.7% 6.7% 4.1% 0.0%

ABPO I PCA ( BR price index)

ABPO Total Revenue per m² accumulated variation

Source: ABPO e IBGE

Brazilian crisis

26 25 45 47 7 7 7 9 2 6 5 5 5 3

2014 2015

(in %) food pr

• duc ts

Hor tic ultur e & fr uits poultr y tobac c os

• the r

s dr ugs,pe r fume s,c osme tic s c he mic als

T

• ta l fo o d

57% T

• ta l fo o d

60%

Distribution per Industrial Category

Source: ABPO

Klabin WestRock* Outros IP Irani Trombini Penha Smurfit Kappa Ibéria Adami

17% 8% 7% 6% 6% 5% 4% 4% 3% 39%

MARKET SHARE - 2015

Source: ABPO

*Estimated

17% 8% 7% 6% 6% 5% 4% 4% 3% 39%

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