Suzano S.a. · BMFBOVESPA:SUZB3
Suzano — Suzano Papel e Celulose — Investor Presentation (March 2019)
42 slides from Suzano's investor presentation, Mar 26, 2019
Slide 1: Forward-looking statements
This communication contains certain statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended. Some of these forward-looking statements are identified with words like "believe," "may," "
Slide 2: Agenda
Agenda Irreplicable Assets Growing Market Sound Financial Management ESG for more value and less risk Technology, Innovation & Digital The Future
Slide 3: Agenda
Agendqu Irreplicable Assets Growing Market Sound Financial Management ESG for more value and less risk Technology, Innovation & Digital The Future
Slide 4: An irreplicable first class asset base
An irreplicable first class asset base hectares of planted and certified areas equivalent to 200x Manhattan HO m3/ha/year average productivity Geographically areas" structural average radius eucalyptus genetic base harvesting and inbound logistics
Slide 5: An irreplicable first class asset base: Our mills
An irreplicable first class asset base Our mills 10.9 tons of market pulp 1.4 tons of paper MWm 10 average Surplus equivalent to 1.4 mn people town supply chain assets base
Slide 6: An irreplicable first class asset base: Our logistics
An irreplicable first class asset base Our logistics All mills either close to shore or railway connected export pulp ports 12 fully dedicated vessels 86 countries served
Slide 7: An irreplicable first class asset base: Paper business
An irreplicable first class asset base Paper business 100% pulp integrated Unique go-to-market model leading Brazilian brand 35 thousnads clients 40% Brazilain market share1
Slide 8: Fully integrated global distribution
Fully integrated global distribution Plantaion Mill Railway Port
Slide 9: Undisputable competitiveness in the Pulp industry
Undiputable competitiveness in the Pulp industry 1 Source: Hawkins Wright December 2018 (CIF Europe - USD/ton) 2 Market pulp capacity production including hardwood and softwood volumes,
Slide 10: Consistently reducing cash cost
Consistently reducing cash cost R$/ton1 1 Cash production cost ex-downtimes. Pro forma basis of Suzano Papel e Celulose and Fibria Celulose cash production cost (R$/ton). Figures are adjusted by Brazilian inflation (IPCA) which represents R$ 104/t in 2015, R$ 52/t in 2016 and R$ 57/t in 2017.
Slide 11: Structural competitiveness boosted by synergies
Structural competitive boosted by synergies Operational Synergies Capture Profile1
Slide 12: Structural competitiveness boosted by synergies: selected examples
Structural competitiven boosted by Selected examples Industria Forestry Procurement G&A Initiative Reduction in products (SKUs) per plant Wood supply optimization Routes Optimization Contractual parameters equalization Organizational Structure adjustment Benefit Lower consumption of chemicals Higher
Slide 13: Tax synergy
Tax synergy Adjusted Balance Sheet to fair value1 R$ 18.4 bn Preliminary Goodwill1 R$ 8.1 bn Average2 annual deductible expenses of R$1.2 bn1 Average3 annual fiscal deduction of R$0.8 bn1 Accounting effect: EBT reduction Tax effect: taxable base reduction Total R$ 26.5 bn 1 Based on preliminary PPA
Slide 14: Consistent growth
Consistent growth Global Market Pulp Demand in million tons 1.4/y By Grade in million tons Softwood +0.2/y +0.2/y H 21.8 24.3 „ 24.9 2015 2018 2005 Hardwood l.l/y 30.8 1.0/y 21.1 0.4/y 27.0 2023E 1.0/y 39.0 2005 2015 2018 2023E 2005 2015 2018 2023E Source: PPPC S&D 2019
Slide 15: Supported by Chinese market dynamics
Supported by Chinese market dynamics Chinese Market Pulp Demand in million tons +l.l/y Tissue Consumption per Capita in kgs per year 25.6 North West Japan Latin China America Europe America Chinese Waste Paper Imports in million tons Tissue Machine Closures from Environmental Restrictions 1.5 in mil
Slide 16: Driven by consumer goods end-uses
Driven by consumer goods end-uses Global Market Pulp Demand by end use Demand Annual Growth until 2030 Tissue St Fluff Printing & Writing Specialty Packaging Breakdown +2.9% -0.7% +0.6% +2.3% Paper and paperboard demand average growth of /(4€Ah/ until 2030 Source: PPPC S&D 2019, Poyry, Hawkins Wrigh
Slide 17: Pulp: low correlation, lowest volatility
Pulp Low correlation Lowest volatility Historicaly volatility of Commodities (US$)1
Slide 18: Low correlation, lowest volatility
Low correlation Lowest volatility 7% BHKP BHKP Correlation? UME Metals -1% cattle 2% Copper -2% Historical Volatility of Commodities (uss)* 28% 22% [ Sey Won Ore Nickel 1% 1% 3% W suzano 33% 28% Sugar Crude Oil -3% 1%
Slide 19: Revenues mostly from international markets
Revenues mostly from international markets Note: Pro forma figures of Suzano and Fibria historical data. Average exchange rate of R$ 2.35 in 2014, R$ 3.33 in 2015, R$ 3.49 in 2016, R$ 3.19 in 2017 and R$ 3.65 in 2018
Slide 20: FX risk management
FX risk management Revenue COGS SG&A Sustaining Capex 88% USD 20% USD 27% USD 11% USD Hedging Policy Operating Hedge Target: up to 75% of the following 18 months Current: 63% of net exposure2 Debt Hedge Target: Net debt 100% denominated in USD Sensitivity1 - R$ 700 million EBITDA - R$ 600 million Op
Slide 21: Healthy debt profile
Healthy debt profile Amortization Schedule (US$ miiiion) 5,056 1 The gross debt and cash consider: (i) the accounting position of Suzanoand Fibriaon Dec 31,2018; (ii) less the transaction's Cash Installment payment (R$ 27.8 billion); (iii) plus the cash raising and debt of re-tap of the 2029 Bond (U
Slide 22: Global and diversified funding sources
Global and diversified Funding sources
Slide 23: Funding sources
Non Trade Fins > ® suzano Related Bank Funding Sources 67% 37% 19% International Trade Finance | Local Capital and Capital Banks Related Bank Markets Funding sources
Slide 24: Currently the most competitive G-spread in Brazil
Currently the most competitive G-spread in Brazil
Slide 25: Currently the most competitive G-spread in Brazil
Currently suzano G-spread in Brazil | elilive 372 299 252 260 220 239 Investment Grade 174 Rating Outlook STANDARD BBB- Stable FitchRatings Ee Bet @RAZIL SUZANOGRASKEM GERDAURAIZEN VALE_—KLABIN PETROBRAS RF
Slide 26: Capital discipline
Capital discipline CapeX (R$ billion) 2018 2019e Modernization and Expansion 2.0 0.6 orest and Land F, Port Terminals1 0.2 0.4 1 States of Sao Paulo and Maranhao.
Slide 27: ESG for more value and less risk
ESG for more value and less risk
Slide 28: Robust Governance in Place
Robust Governance in Place Supported by Audit Statutory Committee Management and Finance Committee Innovation and Strategy Committee Sustainability Committee
Slide 29: Continuously improving corporate governance
Continuously improving Corporate Governacne A well-known investment case
Slide 30: A well-known investment case
suzano Awell-known investment case.. 1992 1992 2000 2009 | 2018 ARA VvcP fists] NYSE NYSE
Slide 31: Key Themes
Key Themes Forest Management Coummunity Development Low Carbon Economy Water, Energy & Waste Management
Slide 32: New journey: Drivers
Ne journey:Drivers Who What How We are We do We do it
Slide 33: Technology, Innovation & Digital a game changer
Technology, Innovation & Digital a game changer
Slide 34: Forestry innovability: Tree Genetics and Breeding
Forestry “innovability” Tree Genetics and Breeding
Slide 35: Industrial innovability: Pulp Development
Industrial innovability: Pulp Development
Slide 36: Industrial innovability: Pulp Development
W suzano as eM « y innevabilid $3 Pulp Development Tensile resistance improvement SWKP replacement EucaStrong High Kappa New products Other materials replacement: Fluff Bio-composites Textiles Packaging Sustainability & Cost out Fewer usage of natural resources
Slide 37: Diversify cash flow through a well-defined biostrategy
Diversify cash flow through a well-defined biostrategy
Slide 38: Diversify cash flow through a well-defined biostrategy
Y suzano Diversify cash flow through a well-defined bicsteate wo selected ldenttcation of Seectione Pitot hgreementsvith 55 Commercial Estimated Market > > > > > Fethnologies > Potential Techno eerments with > Investments > Afpicaton Partners > favestents Meee Parnes my Heittclony Porters mn cereale
Slide 39: Optionalities
Optionatities
Slide 40: Innovation and New Businesses
plicnald Ney Innovation and New Businesses @ RK 3S Bio fuel Lignin Dissolving Pulp Bio Composites Consumer Goods Geographic expansion in Brazil Portfolio expansion © 4 Organic MSA g International Expansion
Slide 41: Pulp demand growth, scalability, innovation
Pulp demand growth Global presence SCALABILITY Lowest production cost Irreplicable INNOVATION EM detached High performance Culture STRONG CASH GENERATION Strong Governance Sound Sustainability
Slide 42: MERCADO
MERCADO SUZONO
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