Institutional Presentation...Presentation Disclaimer Certain statements in this presentation may...
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Institutional Presentation
Transcript of Institutional Presentation...Presentation Disclaimer Certain statements in this presentation may...
Institutional
Presentation
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.
2
01 | Corporate Overview
02 | Strategy
03 | Pulp & Paper Industry
04 | Results
Corporate Overview
Suzano is a forestry-based company, publicly traded, controlled by Suzano Holding.
Suzano operates in the pulp and paper businesses
Controlling Group
Treasury
53%
2%
Capital Structure (December/14)
Free Float45%
Forests
Ports
Mills
Itaqui Port
Mucuri
Portocel
Vitória
Santos
Piauí
Limeira
SuzanoEmbu
Rio Verde
4Market Cap: R$12.5 billion
Competitive Advantages
Forestry
Low wood cost
− High productivity of our forests
− Low average distance
Biotechnology
Eucalyptus cycle: 7 years
Pulp
Low production costs
Certified products
Energy self-sufficient
Diversified markets
Commercial strategy
Paper
Regional leader
Vertically integrated operations
Distribution
Maranhão
Production Capacity
1,100 1,290 1,290 1,290 1,290 1,290
1,7501,920 1,920 1,920
2,9203,420
2,8503,210 3,210 3,210
4,2104,710
2010 2011 2012 2013 2014 2015
Production Capacity
(‘000 tons)
(‘000 ton) Pulp Paper
Unit Integrated Market Pulp Fluff Uncoated Coated Paperboard
Maranhão - 1,500 - - - -
Mucuri 200 1,540 - 250 - -
Suzano 460 40 100* 270* 90* 200
Limeira 310 340 - 280 100 -
Rio Verde - - - 50 - -
Embu - - - - - 50
Total 970 3,420 100* 850* 190* 250
PulpPaper
5*Note: Flexibility to produce Fluff or Printing and Writing paper
Diversified and Complementing Product Portfolio
Suzano’s products portfolio is made of market pulp, paperboard, uncoated paper
and coated paper
Net Revenues58% Exports / 42% Domestic Market
R$ 7.3 billion
Market Pulp2nd eucalyptus market pulp producer
53%
Paper
47%
Printing and Writing
36%
Uncoated
27%
Coated
8%
Paperboard
10%
Note: Figures of last 12 months ending on 12/31/2014.
Other paper represented 1% of net revenue on the period.
6
In 2014, the market pulp capacity1 totalizes 61 million tons. The top 20 biggest producers
represent 73% of the market.
7
1Includes Sotfwood, Hardwood, Unbleached and Sulphite
Fonte: Hawkins Wright (dec/14) and Suzano
Total: 44 million
tons¹
Total: 20 million tons
0.91.1
1.41.41.41.51.61.71.81.81.82.0
2.32.32.42.5
3.43.83.9
5.3
Ence
Canfor
Resolute FP
Sodra
IP
Domtar
Mercer
Eldorado
Paper Excelence
Weyerhaeuser
Metsa Group
Ilim
Georgia Pacific
Stora Enso
UPM-Kymmene
CMPC
Suzano
Arauco
APRIL
Fibria
0.1
0.3
0.3
0.3
0.4
0.8
0.9
1.2
1.2
1.2
1.5
1.7
1.8
3.4
5.3
Faruki
Lwarcel
Portucel
Mondi
Other Brazil
Altri
Ence
Cenibra
UPM-Kymmene
Stora Enso
Arauco
Eldorado
CMPC
Suzano
Fibria
Positioning on Pulp Segment
Pulp Production Capacity – Top 20¹
(million ton)
Eucalyptus Pulp Production Capacity
(million ton)
Brazilian Paper Demand2014 - (‘000 ton)
Source: Brazil's Forestry Industry Association – Ibá (data considers the Common Mercosul Nomenclature - NCM - for the products manufactured by Suzano)
Suzano Other ProducersImports
Positioning on Paper Segment
Leadership on Brazilian paper market
8
94%
52%
92%
6%
48%
8%
Uncoated
Coated
Paperboard 588
558
1,363
National Producers Imports
Forestry Assets
Suzano’s investment in R&D over many years allows the Company to expand its
forestry assets to the northeast region of Brazil
2014
Total area (k ha)1 1,060
Total planted area (k ha)2 520
Own planted area (k ha)1 434
Forest Partnership Program (k ha) 86
Own Preserved Area (k ha)1 460
Average Distance in Bahia (km)2 73
Average Distance in São Paulo (km)2 212
Average Distance in Maranhão (km)2 150
Base 12/31/20141 Own and leased areas2 Figures consider own, leased and third-parties areas
2014
Annual planting (k ha) 64
Planted seedlings / day (k) 221
Note: Both own and leased land can suffer variation up to 5% quarter over quarter. The total amount can differ due to rounding.
The areas of SER Project were incorporated into Suzano’s areas.
SP
MG
BA
ES
TO
PI
MA
9
Nursery in Mucuri
Certifications
Our responsible socioenvironmental management results in competitive
advantages as the Forest Stewardship Council® certification.
Biodiversity
We invest in technology, environmental monitoring and encourage the
rational use of natural resources to minimize the impacts of our activities.
Socioenvironmental Responsability
We have tools aimed at strengthening the relationship with stakeholders.
Also, we develop projects focused on income generation and education in
the communities.
Sustainability
10
01 | Corporate Overview
02 | Strategy
03 | Pulp & Paper Industry
04 | Results
Strategy
12
Focus
Deleveraging
Structural Competitiveness
Structural Competitiveness
Forestry Industrial
Logistics Commercial
Average distance reduction
- Short term: wood and land swap
- Medium term: forestry precision
- Long term: biotechnology
Clone improvement
Standartization and insourcing harvesting
Structural Efficiency Gain
– Investment in retrofitting
– Small projects, high returns
Integrated logistics with synergy gains
– New logistic modes
– Road transportation with
autonomous drivers
Price discipline
Optimization of regional and customer
mix
Expansion of client base
13
Maximize the return on assets and cash generation
01 | Corporate Overview
02 | Strategy
03 | Pulp & Paper Industry
04 | Results
World Paper Supply and Demand by Region
World paper demand is estimated to grow +1.7% p.a. from 2014 to 2019, driven by
emerging economies, while supply is projected to grow +1.6% p.a. during the
period
Paper Global Demand
(million tons)
Paper Global Supply
(million tons)
CAGR Demand 2009 - 2013 2014e - 2019e
North America -1.8% -0.7%
Western Europe -0.9% -0.4%
Eastern Europe +4.1% +2.9%
Asia +4.1% +2.9%
Latin America +3.0% +2.3%
Others* +2.7% +2.7%
Total +1.7% +1.7%
CAGR Supply 2009 - 2013 2014e - 2019e
North America -1.4% -0.6%
Western Europe -0.5% -0.2%
Eastern Europe +3.7% +3.5%
Asia +4.2% +2.9%
Latin America +2.6% +2.7%
Others* +2.7% +3.6%
Total +1.6% +1.6%
North America
Western Europe
Eastern Europe
Asia
Latin America
Others*
Note: *Others includes Middle East and Africa
Source: Poyry (2013) 15
23 25 27 3025 28 29 32
158186 193
22318
22 2326
7774 74
738377 77
74385413 422
458
2009 2013 2014 2019e
13 14 15 1819 21 22 25
156184 191
220
1619 19
2391
89 908991
86 8683388
414 423458
2009 2013 2014 2019e
World Paper Supply and Demand by Segment
World paper demand growth is driven by tissue and paperboard segments
CAGR Demand 2009 - 2013 2014 - 2019e
Printing & Writing +0.2% +0.4%
Tissue +3.5% +3.2%
Paperboard +2.7% +2.4%
Specialties +0.3% +0.5%
Others* +3.3% +2.7%
Newsprint -1.8% -1.2%
Total +1.7% +1.7%
CAGR Supply 2009 – 2013 2014 - 2019e
Printing & Writing -0.1% +0.3%
Tissue +3.5% +3.2%
Paperboard +2.3% +2.3%
Specialties +1.0% +0.6%
Others* +3.4% +2.7%
Newsprint -1.9% -1.2%
Total +1.6% +1.6%
Printing & Writing
Tissue
Paperboard
Specialties
Others*
Newsprint
Note: *Others Includes corrugated and sackkraft paper, products with little or no virgin fiber consumption
Source: Poyry (2013)
Paper Global Demand
(million tons)
Paper Global Supply
(million tons)
16
34 31 31 29
135 154 160 183
35 35 353645
50 525927
31 3238110
111 111113
385413 422
458
2009 2013 2014 2019e
34 32 31 29
135 155 160 183
3334 35
364651 52
592731 32
38112111 112
113388
414 423458
2009 2013 2014 2019e
Per-capita Consumption of Tissue
Demand for tissue is impacted by cultural factors, the economic growth (GDP) and the
development of the country (urbanization). The share of this segment in total paper demand
should increase driven by higher demand in emerging countries
Per-capita Consumption of Tissue
(Kg/person/year)
24
21 20 2019 19
18 18 18 1817
16 16
11
8 87
5 54
0.1
USA
Canada
Sw
eden
Norw
ay
Macau
Sw
itze
rland
Fin
land
Hong K
ong
Denm
ark
Aust
ria
Germ
any
UK
Icela
nd
Chile
Mexic
o
Uru
guay
Arg
enti
na
Bra
zil
Colo
mbia
Chin
a
India
Source: World Tissue Business Outlook – RISI (2013)17
World Market Pulp Supply and Demand
Market Pulp Global Demand
(million tons)
Market Pulp Global Supply
(million tons)
Expectations of a scenario marked by supply and demand in balance. The growth in
market pulp demand is driven by pulp consumption in Asia, which has invested in non-
integrated paper mills. Supply growth is driven by Latin America, the most
competitive region for pulp production
CAGR Demand 2009 – 2013 2014 - 2019e
North America -3.8% -1.7%
Europe -0.3% +0.2%
Asia +7.8% +4.4%
Latin America +5.5% +3.3%
Others* +6.3% +3.5%
Total +3.2% +2.4%
North America
Europe
Latin America
Asia
Others*
CAGR Supply 2009 – 2013 2014 - 2019e
North America +0.4% +0.1%
Europe +1.3% +1.0%
Asia +4.5% +4.2%
Latin America +6.9% +3.9%
Others* +1.7% +0.1%
Total +2.9% +2.2%
Note: *Others includes Middle East and Africa
Source: Poyry (2013) 18
2 2 2 3
1926 27
343
4 4
518
18 18
187
6 6
6
5057 59
66
2009 2013 2014 2019e
0 0 0 07 9 9 11
1317 18
2214
14 141516
16 161652
58 5966
2009 2013 2014 2019e
Pulp and Paper Production Chain
19
130
226
3252
112
2014
Corrugated
Newsprint
Others
Printing & Writing
Tissue
Paperboard
423
433
Total fiber
consumption5
BSKP3
Others4
BHKP2
BEKP1
244
Recycled
189
Virgin fiber
Non-wood,
Mechanical Pulp and
Integrated Pulp
59
Market Pulp
423
Paper Production
56%
44%
69%
25
2
10
21
2014
59
31%
Million t
on
Million t
on
1 Bleached Eucalyptus Kraft Pulp | 2 Bleached Hardwood Kraft Pulp | 3 Bleached Softwood Kraft Pulp | 4 Includes Unbleached Kraft Pulp and sulphite | 5 excludes dissolving pulp and fluff
Source: Poyry (2013) and PPPC (Sep/14)
Globally, market pulp represents 14% of fiber consumption for paper production
CAGRBEKP: +4.5% p.a. | Others BHKP: +0.5%p.a.
Competitiveness of Eucalyptus Pulp
BEKP competitiveness leads to fiber substitution
1 Market Pulp: Excludes Mechanical Pulp | 2 Bleached Eucalyptus Kraft Pulp | 3 Others Bleached Hardwood Kraft Pulp | 4 Bleached Softwood Kraft Pulp5 Includes sulphite and unbleached pulp
Source: Poyry (2013) and PPPC (Dec/2014)
CAGRBEKP: +7.2%p.a | Others BHKP: -2.1%p.a.
20
49 50 50 50 5053
5557
5960 62 63 64
66
12
1314
16 1617
18
1921
2324
25 2526
12
11 109 9 10 10 10 10 10 10 10 10 10
23 2322 22
2223 24
2525 26 26 26
27 27
4 3 3 3 3 3 3 2 2 2 2 2 2 2
0
10
20
30
40
50
60
70
0
5
10
15
20
25
30
35
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015e 2016e 2017e 2018e 2019e
Tota
l Mark
et V
olu
me
(millio
nto
n)
Volu
me b
yFib
er
Type
(Million
ton)
Market Pulp BEKP Others BHKP BSKP Others1 3 42 5
21
612
Oth
er
524
Swed
en
520
Fin
lan
d
513
Ch
ile
422
East
ern
Eu
rop
e
307
Ch
ina
533
Can
ada
520
532519
Oth
er A
sia
512
Jap
an
510
Bel
/Fra
504
Swed
en
450
Iber
ia
437
USA
555
Oth
er E
uro
pe
590
Jap
an
USA
BC
Co
ast
647
East
Can
ada
618
Wes
t C
anad
a
Fin
lan
d
437
Ind
on
esia
395
Afr
ica
379C
hile
/Uru
guay
378
Bra
zil
341
Ru
ssia
301
6.5 MM ton25.1 MM ton 6.3 MM ton 19.4 MM ton
Cash Cost in Pulp Production
New pulp projects are located in low-cost regions, most of them in South America.
Brazil is the main destination for global investments
Cash Cost CIF / Europa
(US$/ton)
*Others includes New Zeland, Argentina, China and South Africa
Source: Hawkins Wright (Dec/14)
Low Cost High Cost High CostLow Cost
Hardwood Softwood
21
Forestry Competitiveness in Brazil
Brazil presents competitive advantages to support continuous increase of its global
forestry standing
Competitive Advantages - Brazil
• Availability of productive land
• Excellent soil and climate conditions
• Short harvesting cycle for planted forests
• Opportunity to recover degraded areas
• Low establishments and maintenance costs
Source: ABRAF – 2014.
5.5 adtm/ha/year 10.5 adtm1/ha/year
Biotechnology
1980 2014
+100%
• More wood / hectare
• More pulp / m³
• Superior quality
• Smaller area
• Decreasing costs / m³
Source: Suzano
Hardwood Productivity
(m3/ha/year)
Pulp Productivity
22
38
3125
22 20 1918 15
12
6 6
Brazil China Indonesia Australia Chile NewZealand
SouthAfrica
USA Portugal Finland Sweden
Euca Fluff
Up to 70% softwood substitution for tampons and up to 30%
for diapers
Cost reduction for clients
Annual Capacity: up to 100 kton
Capex: approximately R$30 million
Start-up: December/2015
Unit: Suzano
Flexibility to produce fluff or printing and writing paper
according to current production capacity
First company in the world to produce fluff from hardwood
23
01 | Corporate Overview
02 | Strategy
03 | Pulp & Paper Industry
04 | Results
Packaging7%
Tissue55%
Special18%
Others5%
P & W15%
1,445 1,435 1,480
2,373
363 412 415
478
1,808 1,847 1,895
2,850
2011 2012 2013 2014
1,824 1,876 1,932
2,982
2011 2012 2013 2014
Operating Result – Pulp Business
Presence in main international markets and strategic relationship with clients with
80% of total sales through long-term contracts
Pulp Production
(‘000 tons)
Pulp Sales Volume
(‘000 tons)
Pulp Sales Volume per Region
2014
Pulp Sales per Segment
2014
Domestic Market
Export
Europe30%
Brazil17%
South / Central America
1%
Asia41% North
America11%
25
532 452 408 389
803 895 904 934
1,335 1,347 1,312 1,322
2011 2012 2013 2014
1,287 1,311 1,293 1,301
2011 2012 2013 2014
Operating Result – Paper Business
Operational excellence in paper: product portfolio and revenue management,
optimization of assets, and strengthening of distribution channel
Paper Production
(‘000 tons)
Paper Sales Volume
(‘000 tons)
Paper Sales Volume per Region
2014
Europe3%
Brazil71%
South / Central America
14%
Others1%
North America
11%
Suzano’s Strategy
• Consolidation of the leadership position in the domestic market
• Improvement in sales mix between the domestic and export markets
• Unique model of joint operations with the distribution channel in
Latin America
Domestic Market
Export
26
1,200 1,261 1,307 1,284
2011 2012 2013 2014
5.1% 3.6% -1.8%
Financial ResultCost reduction even with inflation of 6.2%
Net Revenue
(R$ million)
COGS
(R$/ton)
2,013 2,188 2,577 3,851
2,835 3,004 3,111
3,4134,848 5,192 5,689
7,265
2011 2012 2013 2014Average
R$/US$2.161.67 1.95
Pulp Paper
27
2.35
Inflation +5.7% +5.9% +6.2%
Consolidated Cash Cost*
(R$/ton)
540 563 580 536
2011 2012 2013 2014
580
536
12
(57)
1
2013 Wood Chemicals Fixed Cost 2014
- R$ 45/ton
Consolidated Cash Cost*
(R$/ton)
*Ex-maintenance downtime
1,141 1,2601,781
2,452
2011 2012 2013 2014
23.5%24.3%
31.3% 33.8%
Financial Result
Continuous focus on increasing operational results
Adjusted EBITDA/ton
(R$/ton)
28
363395
555 588
2011 2012 2013 2014
Adjusted EBITDA and Adjusted EBITDA Margin
(R$ million) (%)
Adjusted EBITDA Adjusted EBITDA Margin
Sales Expenses / Net Revenue
(%)
5.1%
4.8%
4.4%
4.1%
2011 2012 2013 2014
Adm. Expenses / Net Revenue
(%)
6.9%
7.8 %
6.6%
5.4%
2011 2012 2013 2014
Amortization (R$ million)
Debt Profile and Index Exposure
Foreign
Currency*
55%
Local Currency
45%
Long Term
87%
Short Term
13%
29
Debt on 12/31/2014
3,686
1,7951,468 1,462
1,825
2,503
1,679
3,029
CashPosition
2015 2016 2017 2018 2019 2020 2021onward
Gross Debt: R$13,761 million
Net Debt: R$10,074 million
Average Cost of Debt:
In BRL: 10.5% p.a. or 91.2% of CDI
In USD: 4.7% p.a.
Average Debt Maturity: 3.95 years
* The debt percentage in foreign currency, considering derivative adjustment, was 57%.
4.8x5.1x 5.2x
4.1x
2011 2012 2013 2014
Net Debt / Adjusted EBITDA (x)
Basket of Currencies
3%Fixed (US$)33%
Libor18%
CDI27%
TJLP13%
Fixed (R$)6%
29
CAPEX 2015
Competitiveness Project
• Digester at Suzano unit
• Insourcing and equipmentmodernization
• Reduction in average supply radius in SP
• Energy efficiency program
• Small projects, high returns
EBITDA Gain: ~R$ 95 million/year as of2015
1.05
1.52
0.05 0.03
0.39
Maintenance ValeFlorestar
EucaFluff
Capex2015e
Capex (R$ billion)
CompetitivenessProjects
Stock Performance
Stock Performance - SUZB5
(100 basis: Jun/12 - Dec/14)
Daily Trade Number - SUZB5
(Trade number)
Source: Bloomberg 30
SUZB5+192%
Ibovespa-8%
IBrX-50+4%
60
110
160
210
260
Jun-1
2
Jul-
12
Aug-1
2
Sep-1
2
Oct-
12
Nov-1
2
Dec-1
2
Jan-1
3
Feb-1
3
Mar-
13
Apr-
13
May-1
3
Jun-1
3
Jul-
13
Aug-1
3
Sep-1
3
Oct-
13
Nov-1
3
Dec-1
3
Jan-1
4
Feb-1
4
Mar-
14
Apr-
14
May-1
4
Jun-1
4
Jul-
14
Aug-1
4
Sep-1
4
Oct-
14
Nov-1
4
Dec-1
4
2,894
6,574
8,990
11,279
2011 2012 2013 2014
Daily Financial Volume – SUZB5
(R$ million)
13
25
37
44
2011 2012 2013 2014
