17
November 2017 Why to invest in Suzano?
November 2017
Why to invest in Suzano?
Why to invest in Suzano?
Strategy to Maximize the Return on Invested Capital
Competitive Advantages and Leading
Position in the Industry
Strong Operating Cash Flow
Governance Upgrade to Novo Mercado
Attractive Valuation
Transformation and results
evolution are the foundation…
...to prepare
Suzano for the
FUTURE
Cost
Discipline
Capital
Discipline
Financial
Discipline
Supply
Discipline
Product
Portfolio
Reshaping ofthe Industry
AdjacentBusinesses
StructuralCompetitiveness
Strategic Pillars
Maximizing returns for shareholders
Why to invest in Suzano?
Strategy to Maximize the Return on
Invested Capital
Competitive Advantages and Leading Position in the Industry
Strong Operating Cash Flow
Governance Upgrade to Novo Mercado
Attractive Valuation
Suzano’s forest competitiveness with adequate yield allows lower wood cost
Wood Competitiveness
BHKP Wood Cost by region(US$/ton)
Suzano: average FX of R$3.20/US$ (LTM on 09/30/2017)
Source: Hawkins Wright (Aug/17)
87 91
155 160181
196210 213 213
223235 237
320 322
Suzano Brazil East
Europe
Chile/
Uruguay
Canada Indonesia US Finland Other
Asia
Sweden Bel/
France
Iberia Japan China
Results
consistency
with strong
operational and
financial performance…
Suzano
Fibria
¹ LTM: Last twelve months ending on 09/30/2017
580536
642 623588
474 491
581
649 648
Dec/13 Dec/14 Dec/15 Dec/16 Sep/17
Pulp Cash Cost LTM¹ (R$/ton)
Operating Cash Flow LTM¹ (R$/ton)
302260
833
506
638
320267
728
311 285
Dec/13 Dec/14 Dec/15 Dec/16 Sep/17
Pulp Adjusted EBITDA LTM¹ (R$/ton)
547 536
1,109
778873
538 526
1,043
680 640
Dec/13 Dec/14 Dec/15 Dec/16 Sep/17
…and
continuous
search for the
best operation
in the industry
Suzano’s Pulp Cash Cost
Downward trend
642 623 588 570
475
2015 2016 LTM 3Q17 2018¹ 2021 - 2022¹
Target Cash Cost
Cash Cost(R$/ton)
Wood cost reduction
Wood Supply optimization
Forest yield increase
Average distance reduction:
Bahia State: to 60km
Maranhão State: to 120km
São Paulo State: to 200 km
Industrial cost reduction
Debottlenecking of Imperatriz Unit
Reduction of raw material consumption
Higher dilution of fixed costs¹ Nominal value in 2016
LTM: Last twelve months ending on 09/30/2017
+R$ 400 million
in EBITDA
Paper business to benefit from the Brazilian economy recovery
Paper market is less volatile
Resilient cash flow
Brazilian paper market is consolidated
Leadership position in the Brazilian
market with significant market share
LTM: Last twelve months ending on 09/30/2017
Source: Forestry Industry Association (IBÁ)
Flexibility in volume allocation
Brazilian Industry Sales Volume
Paperboard and Printing & Writing (‘000 ton)
2,048 1,992
2016 LTM 3Q17
Paper Competitiveness
S u z a n o’s
Price adjustment above inflation
Strong distribution channel in
Brazil
Suzano’s Go-To-Market Project in
Brazil improves paper
profitability
Suzano is an integrated paper producer, which leads to a higher
contribution margin per ton
Suzano’s
2,418
2,614
2,792
3,140 3,175
Dec/13 Dec/14 Dec/15 Dec/16 LTM¹
Inflation: +27%
+31%
Suzano’s Domestic Paper Prices (R$/ton)
Domestic
Sales
68%¹
¹LTM: Last twelve months ending on 09/30/2017
Tissue Equipment - Mucuri Unit (BA)
Competitiveness on production and logist ics costs adds va lue to pulp
Operational
Integrated production and
control of more than 90% of cash cost
Market
Potential
Fastest growing
paper segment in
Brazil: +5% p.a. in
2015 (RISI)
Tax Strategy
Structural solution for monetization of “ICMS” (VAT)
credits
Logistic
Production close to the North and
Northeast markets in Brazil
Production capacity: 120k tonnes
Start up: Sep/17 in Mucuri (Bahia State)
Start up: 4Q17 in Imperatriz (Maranhão State)
Production of jumbo rolls and final products
Modern and integrated mills
Final
product
Pulp
¹ Current market price and Suzano's cost expectations.
Cash Flow (R$/ton¹)
TISSUE
Why to invest in Suzano?
Strategy to Maximize the Return on
Invested Capital
Competitive Advantages and Leading
Position in the Industry
Strong Operating Cash Flow
Governance Upgrade to Novo Mercado
Attractive Valuation
1.1 1.4
3.5
2.73.1
2013 2014 2015 2016 LTM 3Q17
¹ Operating Cash Flow = Adjusted EBITDA – Sustaining Capex
LTM: Last twelve months ending on 09/30/2017
Adjusted EBITDA (R$ billion)
1.7
2.4
4.63.9 4.1
2013 2014 2015 2016 LTM 3Q17
696784 748745
Average FX (R$/US$) 3.493.33 3.202,35
517641 590609
793
2.16
677
ROIC (%)
5.2%6.4%
14.7%
11.9%13.0%
2013 2014 2015 2016 LTM 3Q17
ROIC : indicator used to manage Suzano
Operating Cash Flow¹ (R$ billion)
Avg. China FOEX (US$/ton)
Avg. Europe FOEX (US$/ton)
Why to invest in Suzano?
Strategy to Maximize the Return on
Invested Capital
Competitive Advantages and Leading
Position in the Industry
Strong Operating Cash Flow
Governance Upgrade to Novo Mercado
Attractive Valuation
GAJAH ANNUAL REPORT 2015 | 14
Equal political and
economic rights:
1 share 1 vote and
100% tag along
Non-premium
migration reinforces
the commitment of
controlling
shareholders to the
capital market and
other stakeholders
Creates conditions to
continue improving
and innovating
Liquidity gains
contribute even more
to position Suzano as
protagonist in the
reshaping of the
industry in the long
term
Migration to Novo Mercado materializes the
commitment to cultivate the highest standards of governance
Note: Novo Mercado is the highest corporate governance segment of the Brazilian Stock Exchange (B3).
Why to invest in Suzano?
Strategy to Maximize the Return on
Invested Capital
Competitive Advantages and Leading
Position in the Industry
Strong Operating Cash Flow
Governance Upgrade to Novo Mercado
Attractive Valuation
Suzano’s multiple does not reflect the
highlight operational and financial performance in the industry
FIBRIASUZANO KLABIN
Adjusted EBITDA¹ (R$ billion)
Operational Cash Flow³ (R$ billion)
EV² (R$ billion)
6.1
3.1
29.0
3.3
2.5
19.6
4.6
3.4
22.5
¹ Adjusted EBITDA: sell side analysts estimates for 2018.
² Enterprise Value: sell side analysts estimates for 2018.
³ Operating Cash Flow = Adjusted EBITDA¹ – Sustaining Capex estimated for 2018.
EV² / Operational Cash Flow³ 12.0x 11.6x8.8xPotential
re-rating to
come with
governance
upgrade
