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Bank of America Merrill Lynch 2013 Brazil ConferenceMarch 2013
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The information contained in this presentation may include statements which
constitute forward-looking statements, within the meaning of Section 27A of the U.S.
Securities Act of 1933, as amended, and Section 21E of the U.S. Securities ExchangeAct of 1934, as amended. Such forward-looking statements involve a certain degree of
risk and uncertainty with respect to business, financial, trend, strategy and other
forecasts, and are based on assumptions, data or methods that, although considered
reasonable by the company at the time, may turn out to be incorrect or imprecise, or
may not be possible to realize. The company gives no assurance that expectationsdisclosed in this presentation will be confirmed. Prospective investors are cautioned
that any such forward-looking statements are not guarantees of future performance
and involve risks and uncertainties, and that actual results may differ materially from
those in the forward-looking statements, due to a variety of factors, including, but not
limited to, the risks of international business and other risks referred to in thecompanys filings with the CVM and SEC. The company does not undertake, and
specifically disclaims any obligation to update any forward-looking statements, which
speak only for the date on which they are made.
Disclaimer
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Agenda
Fibria's Strategy1
Pulp and Paper Market2
Questions & Answers
4
Closing Remarks3
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Fibrias Strategy
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OPERATING
EXCELLENCE
Cost control
Capex discipline
Working capitalimprovement
Free cash flow generation
Productivity gains
LIABILITY
MANAGEMENT
Liquidity events and FCF of R$
2.9 billion in 2012
Gross debt reduction
Cost of debt reduction
Leverage reduction
Rating revised to BB+/Positive
by Fitch (Feb/13) and
BB+/Stable by S&P (Mar/13)
Asset light
GROWTH
OPPORTUNITIES
Pulp: growth with discipline
Industry Consolidation
Bio-Energy
Other Opportunities
(Portocel/Land and Forest)
Fibrias Strategy
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40%
34%36%
6
Operating Excellence
Better results achieved by efficiency improvement
5,054 5,1845,299
4,9095,141
5,357
2010* 2011 2012
594 605 584
2010* 2011 2012
686646
Historical Value Inflation Effect**
* Excludes Conpacel | ** IPCA index considered to calculate the inflation effect
PRODUCTION AND SALES VOLUME (000 t)
SG&A (R$ million)
448 471 473
2010* 2011 2012
518503
Historical Value Inflation Effect**
CASH COST (R$/ton)
2,526
1,9642,253
2010* 2011* 2012
EBITDA (R$ million) AND EBITDA MARGIN (%)
Production Sales
4Q12 EBITDA:
R$ 753 mn
41% margin
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Liability Management
Net debt at the lowest level since Fibrias creation and leverage reduced to 3.4x
6.5
3.6 2.9 3.2
4.24.8 5.2 4.7 4.5
3.4
7.1
3.83.1 3.4
3.8
4.24.8
4.2 4.23.3
11.0 9.8
8.08.0
9.5 9.59.0 8.5 8.6
7.7
2009 2010 Mar/11 Jun/11 Sep/11 Dec/11 Mar/12 Jun/12 Sep/12 Dec/12
US$
5.0
*From June 30, 2012 on, net debt/EBITDA ratio for covenant purposes are calculated in US Dollars and the limit is 4.5x
FX Rate(R$/US$)
- Dec/12 vs Dec/11:
R$1.8 billion net
debt reduction,
despite the 9% FX
impact.
- Debt (in US$):
> 90% of total
Net Debt (R$ Billion)
Net Debt/EBITDA (x) R$
Net Debt/EBITDA (x) US$*
1.691.762.00Avg LTM 1.73 1.65 1.67 1.70 1.96 2.02 1.95
1.67 1.561.74EOP 1.63 1.85 1.88 1.82 2.02 2.03 2.04
US$
3.8
25% debt reduction (in US$)
18% debt reduction (in R$)
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DERIVATIVES NOTIONAL(1) (US$ Million)
The increase in Zero cost collar operations is linked to the reduced FX volatility
This operation minimizes negative impacts in the event of a sudden depreciation of the Real
18%54% 44%56% 53%% of exposure
hedged
(1) Includes Non Deliverable Forwards and US Dollar Option
Hedging Strategy
29%
1,185922
772650
321170
45
162151
141
112 410
1,230
1,084
923 791
433
580
Sep/11 Dec/11 Mar/12 Jun/12 Sep/12 Dec/12
NDF Zero cost collar
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Rating Fibria vs Peers
5.6
4.7
3.93.6
2.9
3.2
4.2
4.8
5.2
4.7
4.5
3.4
5.0
2.4
2.9
4.6
Mar/10 Jun/10 Set/10 Dec/10 Mar/11 Jun/11 Set/11 Dec/11 Mar/12 Jun/12 Set/12 Dec/12
Fibria has been reducing consistently its leverage which reached 3.4x as of Dec/2012
Net Debt/EBITDA (x)
Fibria Arauco CMPC(1) Klabin Suzano
S&P BB+/Stable BBB/Negative BBB+/Negative BB+/Positive BB/Negative
Moodys Ba1/Stable Baa3/Negative Baa3/Negative - Ba2/Stable
Fitch BB+/Positive BBB/Stable BBB+/Stable BBB-/Stable BB-/Stable
(1) 2012 Results not available
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Debt
Amortization
Schedule atDec/2012
(R$ Million)
Cost of Debt
Foreign Currency (% p.a.)Debt by Currency
7%
93%
Local Currency
Foreign Currency
5.5%
5.2%
Dec/11 Dec/12
Debt Profile
1,138 1,075724 677
998810
654
3,132
1,560
2013 2014 2015 2016 2017 2018 2019 2020 2021
Bond Pre-Payment BNDES ECN* Export Credit/Other
*ECN Export Credit Note
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Liability Management
R$ 2.9 billion in free cash flow generation and liquidity events in 2012
2.3
0.8
2.9
(1.1)(0.5)
0.2
(0.1)
1.40.2
0.5
CAPEX Interest Working
Capital
Taxes Equity
Offering
Forest
Sale
Losango
Sale
(1) Includes advance to forest partner program | (2) IR/CS and other | (3) Forestry assets and land in the south of Bahia State | (4) Considers only the receipt of the first payment of R$470 million
(R$ Billion)
EBITDA FCF Total(1)(2) (4)(3)
Asset Light Search opportunities for land monetization
Liquidity Cash position as of Dec/12: R$ 3.0 bn + R$ 1.0 bn revolver credit facility
2013E Capex:
R$ 1.250 bn
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PULP
- Growth with discipline
- Best portfolio of projects
BIO-ENERGY
- Complementary to pulp
- Ensyn
INDUSTRY
CONSOLIDATION ?
OTHER OPPORTUNITIES
- Portocel
- Land and forest
Potential
GrowthProspects
12
GrowthFibria is seeking value creation for its shareholders with capital discipline
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Sustainability long term goals
Long Term Goals to be met by 2025
1. Reduce by one third the area necessary for pulp production
2. Double carbon sequestration
3. Promote environmental restoration of 40 thousand hectares of proprietary lands
4. Reduce by 91% the amount of solid industrial waste sent to landfills
5. Reach 80% approval of neighboring communities
6. Help the community to make 70% of projects self-sustainable in income generation, supported by the
company
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A new added value projected
10.6 10.9
12.1
15.0
2010 2015 2020 2025
MAI* Pulp:
(adt/ha/year)
Expected results in the new forests planted in Fibrias own forests, adopting classical breeding + molecular markers technologies.
*MAI: Mean annual increment
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Pulp and Paper Market
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Global Paper Consumption
(1) Source: RISI
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Developed Markets Emerging Markets
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Developed Markets Emerging Markets
CAGR 1996 2006
Developed Markets: + 1.7%
Emerging Markets : + 6.0%
85,291
117,611
15,548
37,250
P&W
Consumption
(000 tons)(1)
Tissue
Consumption
(000 tons)(1)
114,507
CAGR 2007 2016
Developed Markets: - 4,0%
Emerging Markets : + 4.1%
CAGR 1996 2006
Developed Markets: + 2.4%
Emerging Markets : + 6.9%
CAGR 2007 2016
Developed Markets: + 1.4%
Emerging Markets : + 6.7%
26,877
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Global Market Pulp Demand
000 ton 1996 2006 2016Growth1996-2006
Growth2007-2016
Hardwood 14.3 22.4 29.9 56% 27%
Eucalyptus 5.4 11.1 21.4 106% 67%
Softwood 16.4 22.0 24.1 35% 7%
Market Pulp 30.8 44.4 54.0
Demand growth rateHardwood (BHKP) vs. Softwood (BSKP) (000 ton)
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Hardwood Softwood
Hardwood demand will continue to increase at a faster pace than Softwood
2011 - 2016 CAGR:
Hardwood: +2.3%
Softwood: +1.0%
Source: PPPC
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Source: Hawkins Wright
0,0
0,2
0,4
0,6
0,8
1,0
1,2
1,4
1,6
1,8
2,0
0
100
200
300
400
500
600
700
800
900
1.000
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
BH
KPprices-cifEuro
pe(US$/ton)
Greenfieldcapacity(000ton)
Valdivia
APP
Hainan
VeracelNueva Aldea
Santa F
Mucuri
Fray
Bentos
Kerinci
PL3
Trs
Lagoas
Rizhao
APP Guangxi
Chenming
Zhanjiang
Eldorado
Montes del
Plata
MaranhoGuaba II
Gross capacity addition should not be counted as the only
factor influencing pulp price volatility
New Price
Increase:(as of Mar/13)
US$ 820/ton
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Capacity closures DO happen
-910
-85
-1260
-1180
-540-500
-105
-755
-1400
-1200
-1000
-800
-600
-400
-200
0
2006 2007 2008 2009 2010 2011 2012 2013E
Source: PPPC and Fibria
Closures of Hardwood Capacity Worldwide
000 ton
- Jari, Brazil
- Sappi Cloquet, USA
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Fibria: Competitive Position on the Cost Curve
Total Cash Costof BHKP
delivered to
Europe
(US$/t)
492
435 484422
450 434
377
330314 318
260227
72126 43
86 44 35
36
47 64 52
6362
Cash Cost (US$/t) Delivery (US$/t)
Source: Hawkins Wright (Outlook for Market Pulp, December 2012) | Fibrias 2012 cash cost divided by FX considered in the report R$/US$ 2.08
564
289
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Technical Age and Scale in the Market Pulp IndustryFurther closures are expected due to lack of adequate investments in the
industry....
North American Pulp Mills Other Pulp Pulp Mills
Hardwood (BHKP) Market Pulp Softwood (BSKP) Market Pulp
North American Pulp Mills Other Pulp Pulp Mills
Source: Pory
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China
24.3
14.8 14.6
11.1
6.3 6.14.4
2.2 0.8 0.6
N.America
W.Europe
Japan
Oceania
E.Europe
L.America
China
N&MEast
AsiaFarEast
Africa
0
5
10
15
20
25
30
35
1991 1996 2001 2006 2009 2010 2011
N.America W.Europe E.Europe L.America NME
Japan China Asia FE Oceania Africa
Average
Growth Rate
+3.8%a.a.
Average
Growth Rate
+3.8%a.a.
Kg/capita Million tons
Per Capita Consumption of Tissue by Region, 2012(1) World Tissue Consumption, 1991-2011(1)
(1) Source: RISI
Growth
Potential
Growth
Potential
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China
12%15%
17%
19%
26%
20%
26% 25%
14%
15%
16%
18%
25%
21%
26%26%
0
2.000
4.000
6.000
8.000
2005 2006 2007 2008 2009 2010 2011 2012
Eucaplyptus ('000 t) Hardwood ('000 t)
Latin America is
the main
supplier of pulpto China
(1) Source: PPPC Global 100 Report
Chinas Market Share of Market Pulp Shipments (%)(1)
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Closing Remarks
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Investment Grade Recovery
Continuous focus on operating excellence
Free cash flow generation
Leverage reduction
Fibrias Key Messages
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Questions & Answers
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THANK YOU
Investor Relations
E-mail: ir@fibria.com.br
Phone: +55 11 2138-4565
Website: www.fibria.com.br/ir
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