Suzano S.a. · BMFBOVESPA:SUZB3
Suzano — Suzano Papel e Celulose — Investor Presentation (August 2018)
45 slides from Suzano's investor presentation, Aug 10, 2018
Slide 1: Institutional Presentation 2Q18
06 Institutional Presentation 2Q18 Exhibit 99.4
Slide 2: Disclaimer
Disclaimer This communication contains certain statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. Some of these forward-looking statements are identified with words like
Slide 3: Agenda
Company Overview 4 Industry Outlook 10 Competitiveness 16 Strategy 21 Operational and Financial Highlights 33 Agenda 108
Slide 4: 1. Company Overview
S) SUZANO PULP AND PAPER 1. Company Overview
Slide 5: Suzano
Suzano Data from 06/30/2018 ¹ SUZB3: R$44.97| 2 Flexibility to produce either Fluff or Printing and Writing paper | 3 Last twelve months ended on 06/30/2018 | 4 In local currency With over 90 years of operations, the Company produces pulp, paper and tissue Pulp Market Pulp Eucafluff Market Cap¹ R$ 4
Slide 6: Corporate Governance
Corporate Governance Members of the Board are well-known in the Brazilian Corporate landscape and supported by the committees on the decision making process Board of Directors Sustainability and Strategy Committee Audit Committee Management Committee Eight members, four independent David Feffer Pres
Slide 7: Shareholder Structure and Stock Performance
Shareholder Structure and Stock Performance BNDES 7% Other 29% Free Float 43% Treasury 1% Mondrian 7% Average Daily Financial Volume SUZB3 (R$ million) Average Daily Trades SUZB3 Source: Bloomberg. As of November 2017, the Company's shares became part of the Novo Mercado, the highest corporate gover
Slide 8: Production Capacity
¹ Flexibility to produce either Fluff or Printing and Writing paper | ² Lignin start up in 2018 Production Capacity Suzano is the 2nd largest eucalyptus pulp producer and the 5th largest market pulp producer in the world. Suzano has also a leading position in the Paperboard and Printing & Writing se
Slide 9: Strong Forest and Industrial Competitiveness
Strong Forest and Industrial Competitiveness Commercial Presence Total Area1: 729k ha Planted Area2: 300k ha Average Structural Distance: 184 km States of Maranhão, Pará, Tocantins and Piauí Forest Assets Port Distribution Center Commercial Office Total Area1: 285k ha Planted Area2: 199k ha Average
Slide 10: 2. Industry Outlook
© SUZANO PAPEL E CELULOSE 2. Industry Outlook
Slide 11: Pulp Industry
Pulp Industry Total Fiber Consumption1 Recycled Virgin Fiber Non-wood, Mechanical Pulp and Integrated Pulp Market Pulp 427 245 182 118 64 Fiber Consumption (million tons) 1 Excludes Dissolving Pulp and Fluff. Source: Poyry (2017), Hawkins Wright (Dec/2017) and internal analysis ² Pulp and Paper Prod
Slide 12: Pulp Demand Growth
+0.2/y +0.8/y +0.6/y +1.0/y +1.5/y +1.7/y ¹ Pulp and Paper Products Council (PPPC) – Special Research Note Chemical Market Pulp Demand Forecast 2018 – 2022 as of May 2018 ² Data from September/2017 (PPPC). BEKP: Bleached Eucaliptus Kraft Pulp Hardwood Pulp¹ (million tons) Softwood Pulp¹ (million ton
Slide 13: Pulp Production Capacity
(million tons) Brazilian Companies ¹ Considers the total installed capacity as reported in the Companies’ public filings and investor relations, including of operations to be initiated Pulp Production Capacity¹ 118
Slide 14: Paper Demand
Paper Demand 4 0 2 1 3 -3 -1 -2 20 40 60 80 100 Average growth of 1.3% p.a. Estimanted global demand 486MM/ton in 2030 Demand for pulp driven by tissue and paperboard consumption Share on total fiber consumption in 2016 (%) 119 Paper Consumption by Region (%) Estimated demand growth until 2030 (%p.a
Slide 15: Brazilian Paper Demand
¹Source: Forestry Industry Association (IBA). Printing & Writing¹ Paperboard¹ (thousand tons) Brazilian Paper Demand (thousand tons) 120
Slide 16: 3. Competitiveness
© SUZANO PAPEL E CELULOSE 3. Competitiveness
Slide 17: Pulp Competitiveness
Cash Cost CIF / Europe (US$/ton) Câmbio de R$ 3.41/US$ Fonte: Hawkins Wright (Apr/18). Pulp Competitiveness Brazil has the fastest tree growth rates in the world, the highest productivity and biggest scale positioning Brazilian producers as the lowest cost players in the world Hardwood Softwood 12
Slide 18: Pulp Competitiveness
CAGR BEKP: +5.7% p.a. | Other BHKP: -0.8% p.a. CAGR BEKP: +2.4% p.a. | Other BHKP: +1.5% p.a. Pulp Competitiveness The competitiveness of the eucalyptus tree in Brazil leads to the growth compared to other fibers Fiber volume (million tons) Source: Hawkins Wright (Apr/18). 1 Bleached Eucalyptus Kraf
Slide 19: Paper Competitiveness
Paper Competitiveness Suzano is an integrated paper producer leading to higher contribution margin per ton Leadership position in Printing & Writing Segment in Brazil Leadership position in Paperboard Segment Paper Market is less volatile 124 Costumer base expansion (Suzano Mais)
Slide 20: Tax Credits
Tax Credits Tax loss carry forward: R$1.7 billion Total of federal tax credits to be used: R$164 million As of 06/30/2018. Federal Taxes Competitiveness Suzano's assets leads to a fiscal situation which allows low cash disbursement for income and social contribution taxes Tax Benefits 75% of income
Slide 21: 4. Strategy
© SUZANO PAPEL E CELULOSE 4. Strategy
Slide 22: Pillars to Maximize Returns and Reduce Volatility of Results
127 3 Pillars to Maximize Returns and Reduce Volatility of Results Structural Competitiveness Adjacent Business Reshaping of the Industry Anticipated return improvement as result of cost reduction initiatives coupled with disciplined investments to achieve optimal cost Investments in adjacent busine
Slide 23: Structural Competitiveness
Forestry Average distance reduction and standardization and insourcing harvesting Industry Structural efficiency through retrofitting and debottlenecking Logistics Integrated logistics with synergy gains Structural Competitiveness Structural Competitiveness Maximize the return on assets and cash gen
Slide 24: Adjacent Businesses
Integrated production Production of jumbo rolls and final products First genetically modified clone approved by CTNBio for commercial purposes Potential to increase productivity by nearly 20% Replacement of petroleum-based chemicals Tissue Adjacent Businesses Fluff FuturaGene First company in the wo
Slide 25: Consumer Goods
Consumer Goods Modern and integrated mills in Imperatriz and Mucuri Acquisiton of Facepa – Fábrica de Papel da Amazônia S.A. Production capacity of 170k tonnes Brands launched: Max Pure and Mimmo Complementarity of product portfolio Global Demand (million tonnes) Brazilian Demand (million tonnes) CA
Slide 26: Tissue High Growth Potential
Forecast 2025 9 High Growth Potential Tissue Consumption (million tons) Per capita consumption in Brazil lower than Latin America Demand +700 thousand ton 131 Adjacent Business
Slide 27: Tissue Market in Brazil
Tissue Market in Brazil Source: RISI 4 top players High Fragmentation 47% market share 132 Adjacent Business
Slide 28: Tissue Product Comparison
Product Use in Plies Price/Roll Cost per use Single Ply 10 (1.0m) 100 3.3 Two-Ply 6 (1.2m) 150 3.0 Three-Ply 4 (1.2m) 200 2.6 Consumer Goods Better quality products offer more benefits to consumers. Better quality at lower cost per use. Single Ply Two-Ply Higher margin and competitiveness for Suzano
Slide 29: Tissue Next Steps
Consumer Goods Tissue Next Steps Geographic expansion in Brazil Portfolio expansion 134 Goal: Speed to market and brand investment Adjacent Business
Slide 30: Eucafluff
Demand¹ (million tons) CAGR: 4% p.a. Products Breakdown¹ (%) Suzano is the first Company in the world to produce fluff from hardwood Adjacent Business Eucafluff Source: ¹ RISI | ² IPS Testing and MTS, comparing diapers with 100% long fiber vs. Long and short fiber blends. IPS and MTS are independent
Slide 31: Lignin
Replacement of petroleum-based chemicals from renewable source Main applications: Cement Additives Phenolic Resins Rubber Components Lignin Adjacent Business Capacity: 20k tonnes per year Capex: R$100 million Start Up: 2018 Mill: Limeira Lignin Production Process Fiber Lignin Wood Wood Chips Bleachi
Slide 32: FuturaGene
Adjacent Business FuturaGene First genetically modified clone approved by CTNBio for commercial purposes Less Land Utilization Lower Forest Formation Cost Biotechnology is on the right side of Sustainability Less chemical expenditure Higher carbon sequestration 137
Slide 33: 5. Operational and Financial Highlights
5. Operational and Financial Highlights 38
Slide 34: Pulp Segment
Pulp Segment Pulp Production (‘000 tons) Pulp Sales (‘000 tons) Pulp Revenue Breakdown 2Q18 Pulp Sales Volume per Segment 2Q18 139
Slide 35: Pulp Segment
Cash Cost (R$/ton) EBITDA (R$/ton) Operational Cash Flow² (R$/ton) ROIC¹ Pulp Segment 140 ¹ ROIC = (Adjusted EBITDA – Sustaining CAPEX – Tax cash account) / Capital Employed ² Operational Cash Flow = Adjusted EBITDA – Sustaining Capex | LTM: Last Twelve Month
Slide 36: Paper Segment
Paper Revenue Breakdown 2Q18 Paper Segment Paper Sales (‘000 tons) Paper Production (‘000 tons) 11
Slide 37: Paper Segment
Paper EBITDA (R$/ton) Operational Cash Flow² (R$/ton) ROIC¹ Paper Segment 142 ¹ ROIC = (Adjusted EBITDA – Sustaining CAPEX – Tax cash account) /Capital Employed ² Operational Cash Flow = Adjusted EBITDA – Sustaining Capex | LTM: Last Twelve Month
Slide 38: Consolidated Results
ROIC¹ (%) 3.22 3.61 3.32 3.24 Consolidated Results 3.21 697 1,044 967 1,009 783 Operational Cash Flow² (R$ million) Adjusted EBITDA (R$ million) Avg Europe FOEX 143 ¹ ROIC = (Adjusted EBITDA – Sustaining CAPEX – Tax cash account) / Capital Employed ² Operational Cash Flow = Adjusted EBITDA – Sustain
Slide 39: Consolidated Results: COGS and SG&A
COGS (R$/ton) ∆: +3.8% SG&A (R$/ton) ∆: +29.3% Higher production and sales volume Increasing utilization of own forest portfolio Reduced operational costs Higher production and sales volume increased the dilution of fixed costs Decline in the share of third party wood purchases Shorter distances bet
Slide 40: Debt Leverage at an adequate level
Debt Leverage at an adequate level Net Debt (R$ and US$ billion) and Leverage (x) Net Debt (R$) Net Debt (US$) Net Debt/Adjusted EBITDA (R$) Net Debt/Adjusted EBITDA (US$) 145
Slide 41: Debt Profile
Gross Debt: R$18 billion Net Debt / Adjusted EBITDA: 1.7x Average debt maturity of 90 months Average Cost of Debt : 4.6% p.a. (in USD) (considering market swap curve) As of 06/30/2018 Debt Profile Competitive debt profile and cost of debt Amortization (R$ million) 146
Slide 42: Capital Discipline (Capex)
2017 0.7 1.1 1.8 0.3 0.6 1.3 Capex (R$ billion) Total 2018e 0.6 1.2 2.8 0.7 0.2 - - 6M18 Capital Discipline Sustaining Structural Competitiveness and Adjacent Businesses Acquisition of land and forests Acquisition of Facepa 147 0.3 0.3
Slide 43: Suzano's Ratings Evolution
Dívida Líquida / EBITDA Aj. UDM 1 Last twelve months ending on 06/30/2018 in R$. ² Last twelve months ending on 03/31/2018 in US$. Rating Klabin CMPC Arauco Fibria Suzano Standard & Poors BB+ BBB- BBB- BBB- BBB- Moody's - Baa3 Baa3 Ba1 Ba1 Fitch Ratings BB+ BBB BBB BBB- BBB- BB+ BB/ BB- BB+/BB BB+/B
Slide 44: Bonds
Bonds jun/17 mar/18 jun/18 2021 Price (USD) 106.17 105.27 103.46 Yield 3.99% 3.87% 4.42% 2026 Price (USD) 103.4 104.84 101.54 Yield 5.27% 5.03% 5.51% 2047 Price (USD) 101.17 113.25 102.93 Yield 6.91% 6.03% 6.77% 2021 Principal Amount US$ 189,630,000 (original amount: US$ 650,000,000) Duration 10 yea
Slide 45: Investor Relations
Investor Relations 2018 www.suzano.com.br/ir ri@suzano.com.br 150
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