1

Jan - Mar 2005

Sustainable growth with valuecreation and solid returns

2

Focus on two main businesses: Market Pulp and Paper (P&W and Specialty)

Integrated Businesses: Overview

850

655

1150(1)

655

1400

2002 2003 2005

Eucalyptus Pulp P&W and Specialty Papers

Production Capacities (per product) ( x1000 tons)

Paper production capacityIQ05(x1000 tons)

3%

(1) Learning curve

1400

610

2004

635Coated

16%100kt

Specialty Papers

3%20kt

Chemical11%70kt

Uncoated70%445kt

* Not including 75kt off-machine coater

3

Integrated Businesses: Overview

Product Mix (Sales Volume) Value Mix (Revenue)

2004 (1,459k tons)

IQ05 - (350k tons) IQ05 - (US$251M)

Uncoated Paper - Domestic

Coated/chemical paper - Domestic

Uncoated / coated paper - Exports

Pulp - Exports

Pulp - Domestic

2004 - (US$1,010M)

54%

5%

14%

14%

13%

17%

27%

15%

37%

3%

53%

12%

14%

5%

16%

20%

28%

14%

35%

3%

4

Vertically-integrated operations

Integrated Businesses: Overview

Forestry Data (Dec 04)Total Area: 258,000haPlanted: 134,000ha

Wood

Wood

Luiz Antonio Mogi

Specialty Papers20k tpa

Chemical Papers 70k tpaCoated Papers 100k tpa

Pulp

Pulp

Piracicaba

Jacareí

Uncoated Papers 340k tpa

Uncoated Papers 105k tpa

Market Pulp900k tpa

KSR DistributionDirect Sales

Branches

Warehouse

Sales Office

Private Terminal Santos Port

5

• Global scale production - 1.4 million tons

• Sales volume grew 81% in 2003 and another 39% in 2004

• Average pulp prices increased 1% in 2004 vs. 2003 and 11% in IQ05 vs. 1Q04

• Production cost competitiveness

• Growth opportunities, both organically and through M&A

• 2020 Outlook: 4 million tons of market pulp over the next 15 years (CAGR 11% p.a.)

Pulp Business: Global Player

Source: VCP

Pulp price and sales evolution

316 341 343 334 607 844 826*

$489

$650

$495 $457$507 $518

$550

1999 2000 2001 2002 2003 2004 IQ05

Pulp sales ktons Pulp list price BEKP (CIF Europe) US$/ton

* Annualized

6

• Exporter profile (lower exposure to macroeconomic fluctuations)

• Commercial alliances with strategic customers

• Approximately 95% of sales volume is linked to long-term contracts at market prices

• China accounts for 2/3 of sales to Asia and is expected to continue to be a an important pulp purchaser

Pulp Business: Global Player

9%

91%

Pulp Sales Volume (IQ05 – 206,4 ktons)

Source: VCPPrices BEKP list US$/ton in April 2005

Domestic Market

9%

Exports 91%

Pulp Sales Volume (IQ05 - 206,4 ktons)

Asia30%

US$570

Europe59%

US$600

North America11%

US$635

7

Breakdown of pulp cash cost (VCP IQ05)• Natural and technological wood cost advantages

• Global scale

• Low energy costs

Pulp production cash cost - VCP

Pulp Business: Cost Competitiveness

Cash production cost - IQ05US$/ton fob mill (BHKP)

171 181 185310 357 390 393 394 399 409

Labor7%

Maintenance6%

Wood40%

Raw materials33%

Packaging/Other4%

Energy/Fuel oil6%

Other4%

137166

134 127154 157 171

1999 2000 2001 2002 2003 2004 IQ05

8

Market in recovery - 2004/2005

• Pulp price increases in April/05 to US$600 in Europe, US$635 N. America and US$570 in Asia

• Paper demand, inventory rebuilding and capacity shutdowns reinforce the positive momentum

• Price gap between NBSK and BEKP at US$100/t sustained by greater hardwood supply and by higher production costs for softwood (Canada), partially offset by the effect of substitution

• Weak US$ increases costs in US$ for Europeans and Canadians, raising minimum price levels

Price vs. operating costs BEKP x NBSK

Pulp Business: Market trends

Source: VCP, Hawkings Wright

$650

$550

$200

$250

$300

$350

$400

$450

$500

$550

$600

$650

$700

$750

$800

$850

$900

$950

$1.000

jan/

95ab

r/95

jul/9

5ou

t/95

jan/

96ab

r/96

jul/9

6ou

t/96

jan/

97ab

r/97

jul/9

7ou

t/97

jan/

98ab

r/98

jul/9

8ou

t/98

jan/

99ab

r/99

jul/9

9ou

t/99

jan/

00ab

r/00

jul/0

0ou

t/00

jan/

01ab

r/01

jul/0

1ou

t/01

jan/

02ab

r/02

jul/0

2ou

t/02

jan/

03ab

r/03

jul/0

3ou

t/03

jan/

04ab

r/04

jul/0

4ou

t/04

jan/

05

NBSK

BEKP

Supply Cost curve Softwood

Supply Cost curveHardwood

Supply costs del W. Europe

9

• Strong regional market share

• Efficient distribution and integrated logistics

• Value added product mix

• “Client Focus” – Relationship and loyalty program for strategic local and international customers

• Growth in cut-size exports

• Operating margin stability

• Cost competitiveness with paper / pulp integration

• 2020 Outlook: 2 million tons over the next 15 years (CAGR 8% p.a.)

Paper Business: Regional and Global Presence

Source: VCP

Paper prices and sales evolution

519 530 569 571 568 615 574*

R$ 1.281R$ 1.563

R$ 1.802

R$ 2.206R$ 2.402 R$ 2.363 R$ 2.254

R$ 1.834R$ 2.103 R$ 2.251

R$ 2.587

R$ 3.255 R$ 3.287R$ 3.091

1999 2000 2001 2002 2003 2004 IQ05

Paper sales ktons Avg. export price - R$/tAvg domestic price - R$/t

Value added

* Annualized

10

Domestic Market

• 1Q05 X 4Q04: 11% reduction in sales volume due to decrease in demand

• 1Q05 X 4Q04: average paper prices declined 4% due to increase in ten rates

Source: VCP

Paper Business: Regional and Global Presence

Paper sales - local vs. exports

0

50.000

100.000

150.000

1Q99

2Q99

3Q99

4Q99

1Q00

2Q00

2Q01

3Q01

4Q01

1Q02

2Q02

3Q02

4Q02

1Q03

2Q03

3Q03

4Q03

1Q04

2Q04

3Q04

4Q04

1Q05

Ton

s

0%

10%

20%

30%

40%

Paper Domestic sales Paper Exports % Export / Total

Paper Volume - IQ05

Export Market

32%

Domestic Market

68%

Paper RevenueDomestic

Market74%

Export Market26%

11

Market Share Brazil – 2004

Paper Business: Regional and Global Presence

Cut Size

Coated paper Chemical (carbonless/thermal)

International Paper33%

Ripasa22%

VCP

22%Suzano Bahia

Sul23%

VCP

77%

Imports

5%

Others

18%

Source: Bracelpa

Imports20%

VCP33%

Ripasa21% Suzano

21%

Others

5%

VCP19%

International Paper21%

Suzano Bahia Sul34%

Ripasa14%

Others12%

Uncoated Paper (rolls/sheets)

12

Forestry objective: Produce and supply wood for pulp and energy needs with quality adjusted to usage, competitive costs in a socially and environmentally responsible manner.

Wood

197,000 ha in SP

61,000 ha in RS

Brazil

Amazon Rainforest 3,500km

New Forestry Base

Capão Bonito-SP

Bauru-SP

Altinopolis-SP

Uberlândia-MG

Paraíso-MG

Luiz Antônio-SP

Piracicaba-SP

Jacareí-SP

Mogi das Cruzes-SP

Private Terminal in Santos Port - SP

Luiz Antônio-SP

São Paulo-SP

Forestry Area

Pulp and Paper Plant

Paper Plant

13

Strategic goal to guarantee wood supply and ensure VCP’s long-term growth

ongoing investments in land purchases and development of planted Eucalyptus areas in the state of São Paulo

creation of a new forest area in the state of Rio Grande do Sul with 62,000 ha currently. Growth in this region is driven by the following factors:

Availability of land at attractive costs (land substitution for cattle raising)

Proximity to Northern Uruguay (wood availability)

Proximity to Rio Grande port (export platform)

Forestry productivity similar to São Paulo forests

Inter-modal transportation options (ex. Wood transport by railway)

Qualified labor force

Politically, socially and environmentally favorable (ex. Agro-silviculture, supply program, 35% preserved areas versus 20% required by law)

Planting the Future

14

• Favorable climate and soil conditions, mechanized forest operations and investments in technology have yielded among the highest productivity levels in the world

• Eucalyptus genome mapping projects are expected to continue to improve productivity

Source: VCP

High productivity and a combination of technology and natural advantages

Brazil 745-50

Argentina 7-1225

Chile 10-1220

Indonesia 720-25

Australia 720-25

Iberia 12-1510-12

Sweden 35-405,5

Finland 35-404

USA 2510

Canada 457

Country HarvestYield

(yrs) (m3/ha/yr)

Yield20m3/ha/year

Yield50m3/ha/year

1970s Today

Wood

Wood costs and % of third-party wood purchases

40

45

50

55

60

65

70

4Q03 1Q04 2Q04 3Q04 4Q04

US

$/to

n

25%

27%

29%

31%

33%

35%

37%

39%

41%

Wood cost (US$ ton) % Third-party wood

15

Genetic Improvements

R&D / Technology: Forestry

1970Species/Origin Selection

1980Population Selection

1990Tree and Family SelectionVegetative Propagation

1995Clone plantingSelection as per end use

2000 and beyondMolecular MarkersGenome Project: Trees with specific traits tailored to end use

16Source: VCP

Integrated Logistics

Wood38%

Pulp34%

Paper25%

Raw materials3%

Breakdown of logistic costs

VCP’s logistics expenses - US$/ton

68

58

5454

5355

55 57 50

30 2933

36 37

50

44

2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05

Logistic expenses Crude Oil US$/barrel

17

Initiatives to reduce logistics costs in the forestry, pulp and paper areas are offsetting higher freight costs associated with exports to keep VCP’s logistics costs under control

• Contract 2 logistics operators (Wilson Sons and TNT) to assume all of the operational activities associated with material flow from the raw materials receiving up to delivery to end customers. The benefits have translated into lower costs, scale gains, lower asset, asset divesting, and specialization of customer services

• MRS – Pulp shipping from the plant to Santos port by train – A 25% reduction in logistics costs with the substitution of truck shipping to rail transport

• Rail shipping for wood eliminates direct relationship between cost and average radius

• Break Bulk: paper loading on boats outside of containers. The objective is to reduce logistics costs related to paper exports, which increased drastically with the competition for containers that came about with the increase in Brazilian exports

• With this new form of loading, VCP frees itself of its dependence on container ships and avoids problems associated with partial loading of shipments on time, which results in loss of sales abroad.

• For this project, VCP is loading its paper directly on top of its pulp, taking advantage of pre-established pulp transport contracts (competitive market advantage).

Integrated Logistics

18

Solid Financial Position

Consistent earnings growth and strong cash generation

• Net profit has grown at an average of 25% p.a. over past 5 years• Stable EBITDA margin of over 40% (significantly higher than European peers) and net margin of approximately 30% in the same period

EBITDA (US$m) and EBITDA Margin (%)

20%

Source: VCP, Company Reports

20%

26%

22%20%

18%

14% 14%

41%

49%

41%38%

41%38%

42%

239 229

414

269

376

340382*

0%

10%

20%

30%

40%

50%

60%

1999 2000 2001 2002 2003 2004 2005

0

50

100

150

200

250

300

350

400

450

EBITDA margin Europe (%) VCP EBITDA (%) EBITDA US$ million

Earnings per ADR (US$) and Net Margin (%)

$0,53

$1,31$1,01 $0,83

$1,27$1,58

$1,27

17%

32%29%

26%30% 30%

25%

1999 2000 2001 2002 2003 2004 2005

* Annualized

19

Consistent value creation and return for shareholders

• VCP applies GVA (value added management) and has created value even during cycle troughs

Source: VCP

Solid Financial Position

15%

28%

16%

13%

19% 19%

16%

11% 11% 11%9%

10%9% 10%

5%

8%

10%

13%

15%

18%

20%

23%

25%

28%

30%

1999 2000 2001 2002* 2003 2004 IQ05

ROIC

w acc

RoEV

20

Consistent value creation and return for shareholders

• New dividend policy offers greater transparency and yield visibility• Considered a combination of 3 factors: cash returns for shareholders, future growth opportunities and requirements for “investment grade” status• Dividends will be calculated from a base of 60% free cash flow as per the following formula:

FCF = EBITDA – Working capital variation – Taxes – Investments

Source: VCP / Note: (1) Based on average shareholders’ equity for period / (2) Based on stock price at end of period / (3) Proposed dividend distribution based on FX rate of R$2.70/USD

Solid Financial Position

Dividends (US$m) and yield (2) %

ROE (1) %

8%

23%

17% 17%

25%23%

18%

1999 2000 2001 2002* 2003 2004 IQ05ROE %

(1) Based on average shareholders' equity for period

Dividends US$m and yield (2) %

$23

$45$32

$38

$85

$107

1,5%4,2%

2,4% 2,8% 3,5% 3,4%

1999 2000 2001 2002* 2003 2004

21

133

465536

469

713

84 125

679

317

165218

-22

502 531E*

1999 2000 2001 2002 2003 2004 IQ05

Net Debt (USGAAP) Capex

*

Strong balance sheet, competitive financing costs

Source: VCP

Solid Financial Position

13%

42%

70%

42%31%

46%

-2%5,9% 5,5% 5,5%

6,6%5,5%

9,8%8,7%

1999 2000 2001 2002 2003 2004 IQ05

Net Debt/Shareholders' Equity Average cost gross debt

* Includes Ripasa acquisition

22

1Q2005 Highlights

CAPEX IQ05 Expected for 2005(US$ Million)

Expansion Projects 3 68Modernization 6 24Forestry 20 106Maintenance, IT, Others 7 58

Total 36 256

Debt Debt Dec 31,2004 Mar 31,2005 %

(US$ Million) Cost(%) Total

- Short term 376 326 27 %In Reais TJLP* + 3% 30 29 2 %In Dollars US$ + 3.2% 346 296 25 %

- Long Term 569 868 73 %In Reais TJLP* + 3% 102 96 8 %In Dollars US$ + 5.5% 467 773 65 %

Total Debt 945 1194 100 %(-) Cash (476) (481)Net Debt 469 713

*TJLP = 9.75% p.a. in Mar, 2005

23

Acquisition of Ripasa

Transaction (50/50 VCP/Suzano Bahia Sul) Acquisition of 66.67% of the common shares and 17.68% of the preferred shares

US$ 480 million, up to march 31, 2005

Acquisition of 33.33% of the common shares and of 8.57% of the preferred shares US$ 240 million, up to 6 years

Total transaction - 59.5% of total capital US$ 720 million

Transaction Schedule

Purchase agreement - November 10, 2004

Step I - Up to the conclusion of the transaction - Keep Ripasa running “as is”. Step II – After conclusion of the transaction

Stockholding restructuring De-list Ripasa from Bovespa Transform Ripasa into a production unit Capture of potential synergiesIndependently commercialize each company’s share of the production

24

Acquisition of Ripasa

• Foundation October 22, 1959

• 2,822 employees• 4 production units• Annual capacity:

– Total pulp 455,000 ton– Paper 525,000 ton

• Forest – 86,400 ha(76% for plantation)

Ripasa adds 24% to VCP’s capacity

573Net debt

1,041Equity

2,087 Total Assets

9143Export (paper)

20176Paper

3434Pulp

235110Domestic Market

326153Sales volume

14%EBITDA margin

46EBITDA

   

   

   R$ (000)Tons Description

 Consolidated figures 3M05

25

Shareholder Structure

% of Total Capital Stock March 31, 2005

VCP Trading100%

Aracruz12.4%

VCPListed on

Bovespa and NYSE

Preferred Shares

BNDESPar8%

Local

Investors14%

Bovespa

15%

Foreign Investors

78%

ADRs63%

BNDESPAR4%

Votorantim Group55%

Free Float41%

26

VCP – Evolution of Best Practices Results

3.8%

3.0%

3.6%

8.8%

7.7%

3.2%

4.2%

R$ 0

R$ 25

R$ 50

R$ 75

R$ 100

R$ 125

R$ 150

R$ 175

R$ 200

R$ 225

R$ 250

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

1999

OrganizationalRestructuringIncorporation of

Celpav

Sale of PapelSalto

2000

ADR IIINYSE

USGAAP And BRGAAP

QuarterlyReporting

2001

Level I Corporate

GovernanceBovespa

2002

IBF Project

Audit Committee

CVM 358/02

Edgar Filing (electronic info)

2003

Eurobond US$125m 2a

5.85%aa

New dividend policy

SecondaryShare offeringUS$285 mln

Sarbanes-Oxley

2004

Ethics Committee

Continuous revision

Of ethics policies

Apr 2004 IssueUS$350m

7 years

Libor + 2%

Debt cost linked to Libor