Citi - 12th Annual Brazil Equity

Conference
June, 2019
Disclaimer
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,” “could,” “would,” “might,” “possible,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,”
“estimate”, “potential”, “outlook” or “continue,” the negative of these words, other terms of similar meaning or the use of future
dates. Forward-looking statements in this communication include, without limitation, statements regarding the implementation of
operating and financing strategies and initiatives, including with respect to the integration of Fibria’s operations and expected
potential synergies, plans with respect to capital expenditures, and factors or trends affecting financial condition, liquidity or
results of operations. Such statements reflect the current views of management and are subject to a number of risks and
uncertainties, including changes in prices and customer demand for our products, changes in raw material costs, pricing actions by
competitors, changes in the rates of exchange of the Brazilian real against the US dollar, and general changes in the economic
environment in Brazil, emerging markets or internationally. Such forward-looking statements are qualified by the inherent risks
and uncertainties surrounding future expectations generally, and actual results could differ materially from those currently
anticipated due to such risks and uncertainties. There is no guarantee that the expected events, trends or results will actually occur.

The statements information, opinions and forward-looking statements contained in this presentation speak only as at the date of
this presentation and should thus be considered in the context of the circumstances prevailing at the time. They are based on many
assumptions and factors, including general economic and market conditions, industry conditions, and operating factors, and are
subject to change without notice. Any changes in such assumptions or factors could cause actual results to differ materially from
current expectations. Suzano does not undertake any obligation to update any information, opinion or forward-looking
statements as a result of new information, future developments or otherwise, except as expressly required by law. All information,
opinions and forward-looking statements in this communication are qualified in their entirety by this cautionary statement.
The New Suzano
An

first class
assets base

Our plantations

hectares of planted
and certified areas Geographically eucalyptus genetic base
equivalent to 200x Manhattan

areas
m³/ha/year structural harvesting and
average productivity average radius inbound logistics
An

first class
assets base

Our mills

MWm
average pulp
equivalent to supply chain
tons of tons of 1.4 mn
market pulp paper people town
An

first class
assets base

Our logistics

mills fully
either close to shore export
or railway connected pulp
served
An

first class
assets base

Paper business

pulp go-to-market Brazilian clients Brazilian

integrated model brands market share¹

¹ Addressable market.
Fully integrated

Plantation

Mill

Railway

Port
Undisputable

in the pulp industry

Cash Cost(¹) Top 10(²)

Hardwood Softwood
Suzano 10,9
APP + PE 3,8
CMPC 3,7
459 462
435 442 442 Arauco 3,1
391 April 2,8
361 367
341
293 286
Metsa 2,7
UPM 2,6
225
Stora Enso 2,1
Mercer 2,0
Ilim 1,8

US/Canada
Other Asia/Japan

Chile
Europe
Brazil

Canada/US

East Europe

Other World
Chile/Uruguay

China
Indonesia

Other Europe

¹ Source: Hawkins Wright December 2018 (CIF Europe – USD/ton).

² Market pulp capacity production including hardwood and softwood volumes.
Consistently
cash cost
R$/ton¹

709 690 668

622

2015 2016 2017 2018

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.
 in place

Well-balanced
Board of Directors Supported by Management
Up to 10 members Audit Statutory Committee

Eligibility assessment Management and Finance Committee

20% independent Innovation and Strategy Committee

members Sustainability Committee
Talent and Compensation Committee
+
Synergies
Structural competiti v en ess
boosted by

Capture Profile1
100%
90%
Operational Synergies G&A

Supply Chain
40%
R$800MM R$900MM Forestry
per year¹
Industrial
¹ Total Steady State. Dec / 2019 Dec /2020 Dec / 2021
 Structural competiti v en ess
boosted by

Selected Logistic /
examples Industrial Forestry Commercial Procurement G&A

Reduction in Wood supply Routes Contractual Organizational

Initiative products (SKUs) optimization Optimization parameters Structure
per plant equalization adjustment

Lower consumption Wood Operational scale Lower cost in Headcount

of chemicals logistics cost expansion industrial and reduction
Benefit reduction forestry inputs
Higher OEE¹ Transshipment and fuel
costs reduction

¹ Overall equipment effectiveness

Adjusted Balance Average² annual deductible Accounting effect:
Sheet to fair value¹ R$ 18.4 bn expenses of R$1.2 bn¹ EBT reduction

Preliminary Average3 annual fiscal Tax effect:

Goodwill¹ R$ 8.1 bn deduction of R$0.8 bn¹ taxable base reduction

Total R$ 26.5 bn

¹ Based on preliminary PPA as disclosed on 2018 Financial Statements – Note 32 (ii).

² Estimate considering preliminary 10 years depreciation period.
³ Estimate considering preliminary 10 years fiscal amortization period.
Resulting Company
 mostly from international markets
3% 15%
Others Specialties
Net revenues (US$ billion) 8,7
7,0
Americas
6,1 6,1
5,6 Pulp

Europe

Asia
57% 25%
Tissue P&W
2014 2015 2016 2017 2018
Note: Pro forma figures of Suzano and Fibria historical data. Note: The data represents simple sum out of the sold volumes
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. of Suzano + Fibria and also considers Klabin’s volumes.
 Adjusted EBITDA¹ and Margin¹ Operational Cash Generation²
R$ million and (%) R$ million
1

25.00 6.0%

20.00

51.6% 51.4%
0,9

0,8

5.0%

20.00

16,361
0,7

15,770
15.00

15.00
4.0%

12,481 11,907 0,6

0,5

3.0%

10.00

0,4

10.00

2.0%

0,3

5.000

0,2

5.000

1.0%

0,1

0 0.0% 0 0

2018 LTM1Q19 2018 LTM1Q19

¹ Excludes sales from the commercial agreement with Klabin. ² Operational Cash Generation = Adjusted EBITDA less Sustaining CAPEX. Note: for 2018 and LTM 1Q19 data is pro forma, considering
the sum of the results of the companies, or weighted where applicable
 Revenue 88% USD Hedging Policy
COGS 20% USD Operating Hedge Debt Hedge
Target: up to 75% of the Target: Net debt
SG&A 27% USD following 18 months 100% denominated
Sustaining in USD
11% USD Current: 63% of
Capex net exposure²
Sensitivity¹

~ R$ 700 million
EBITDA
~ R$ 600 million
¹ Sensitivity at each R$ 0.10/US$ variation
Operational Cash ² Net exposure as of December 2018.
Generation
 debt profile
Amortization Schedule (US$ million)¹ 6,646
average debt maturity

2,541
RCF 756 Average Cost (US$)²:
2,439
1,524 1,519
1,393
Cash on 1,785
1,128
hand 931
US$ 15.6 bn
Liquidity 2019 2020 2021 2022 2023 2024 2025
onwards

¹ PTAX of 3.90 R$/US$ on March 31,2019

² Total average cost in US$ considering the debt in BRL adjusted by the market swap curve.
 10%
Non Trade Finance 32%
Related Bank
Local

Counterpart
Sources

68%
International
36% 32% 22%
International
Trade Finance
Related Bank
Local Capital and
Capital Banks Markets

Funding breakdown considers the adjustments mentioned at amortization schedule slide.

Funding sources
 Policies
Indebtedness
Net Debt/EBITDA Ratio (in US$):

1.0x to 3.0x 1.0x to 3.5x

Normal Cycle Investment Cycle

Dividend
The lowest between:
25% of the net income or
10% of the Operational Net Debt (US$ billion)
Cash Flow Generation¹
13.8 10

Leverage US$
(Net Debt / Adj. EBITDA)²
3.3x
Mar-19³ Long-Term Target

¹ Operational Cash Flow = Adjusted EBITDA – Sustaining Capex | ² Net Debt and Leverage on March 31, 2019 and considers the adjustments mentioned on amortization schedule slide. | . ³Closing rate (BRL/USD): Dec/18: R$
3.87; Mar/19: R$3.90
Capital

Capex (R$ billion) 2018 2019e

Sustaining 3.9 4.0
Modernization and Expansion 2.0 0.6
Forest and Land 1.3 1.4
Port Terminals¹ 0.2 0.4

Total 7.4 6.4

¹ States of São Paulo and Maranhão.

Bonds
 One of the

G-spread in Brazil
312
293
280
249 249 256
228 236
210
191

Investment Grade
Rating Outlook

BBB- Stable

BBB- Stable BRAZIL GERDAU SUZANO BRASKEM VALE VOTORATIM RAIZEN KLABIN PETROBRAS BRF

¹ Issuances with no maturity in 2026 interpolated for comparative purposes using a premium of 6.5bps per annum of extension/compression; G-spread as of May 9, 2019.
Source: Bloomberg.
 Peers
6,0

5,5

5,0

Suzano 26 (BBB-)
4,5

CMPC 27 (BBB-)
4,0 Arauco 27 (BBB-)

3,5
IP 26 (BBB)

3,0
May-18 Aug-18 Nov-18 Feb-19 May-19

Source: Bloomberg, as of 05/09/2019

Pulp Market
 on global
pulp demand
Global Market Pulp Demand By Grade
in million tons in million tons

Softwood
+1.4/y +0.2/y +0.2/y +0.4/y
+1.3/y 66,0 27,0
21,8 24,3 24,9
+1.2/y 58,9
55,0

42,8 2005 2015 2018 2023E

Hardwood
+1.0/y
+1.0/y +1.1/y 39,0
34,0
30,8
21,1

2005 2015 2018 2023E 2005 2015 2018 2023E

Source: PPPC S&D 2019.
 Supported by
market dynamics
Chinese Market Pulp Demand Tissue Consumption per Capita Tissue Machine Closures from
in million tons in kgs per year Environmental Restrictions
in million tons
25,6 1,4 1,4 1,5

+1.1/y
16,0 15,7
25,3 0,6
+1.1/y 0,5
6,7 6,0
19,8
+1.1/y North West Japan Latin China 2015 2016 2017 2018E 2019E
16,5 America Europe America

Chinese Waste Paper Imports Woodchip Supply Restrictions

in million tons in million BDMT
29 28 25
26 Others 3
23
Chile 3,1 3,3
2
5,8 17 Australia 6,5 4,5
?
Southeast Asia 13,3
12,4

2005 2015 2018 2023E 2015 2016 2017 2018 2019- 2018 2023E
2023E
Source: PPPC S&D 2019, RISI, Hawkins Wright, Suzano BI.
 Driven by end-uses

Global Market Pulp Demand Annual

Demand by end use
58.9
million tons Growth until 2030

Paper and
paperboard
Tissue & Fluff 47% +2.9% demand average
growth of

Printing & Writing 26% -0.7%

Specialty 20% +0.6%

Packaging
until
+2.3%
Breakdown 2030

Source: PPPC S&D 2019, Poyry, Hawkins Wright, Suzano BI.

 No major new capacity announced after OKI and H2 projects

1 200 BHKP BHKP adjusted by CPI 2,5

Pulp Prices - CIF Europe (US$/ton)(2)

Capacity Additions (‘000 ton)(2)

1 000 Horizonte 2
2

Eldorado
800 MAPA(3)
Rizhao APP South
Maranhão Sumatra(1) 1,5
Três Lagoas Montes del
Plata Guaíba II
600 Fray Bentos
APP Hainan
Santa Fé Klabin
Nueva Aldea
Veracel 1
Mucuri Kerinci Chenming
400 Valdivia
Aracruz PL3 Zhanjiang
Jacarei APP Guangxi Oji
Nantong Metsa
0,5
200

- 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

7,400 kt 5,250 kt
(1) Partially integrated production
(2) Sources: Hawkins Wright, Poyry and Suzano
(3) Gross capacity, does not consider the closure of Line 1 in Horcones plant (Source: RISI)
 Adjustment of production to meet demand and manage
inventory levels

Maximization of NPV in the long term Estimated Market Pulp Production in 20191

Preservation of more productive

forest base

Wood supply mix management 9.0 – 9.4

million tons

Gradual implementation during the year

1Production capacity depending on conditions of global pulp market.

Our Future
Innovation and New Businesses Consumer Goods Pulp Paper

Fluff Nanocellulose Bio fuel Geographic Organic

expansion in Brazil
International
Expansion

Lignin Dissolving Pulp Bio Composites Portfolio expansion M&A

Backup
 2018 2019 2020
Mill – Pulp capacity
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20

Aracruz - Line A (ES) – 590 kt

Aracruz - Line B (ES) – 830 kt
Aracruz - Line C (ES) – 920 kt

Imperatriz (MA)² – 1,650 kt

Jacareí (SP) – 1,100 kt

Limeira (SP)² – 690 kt

Mucuri - Line 1 (BA)² – 600 kt

Mucuri - Line 2 (BA) – 1,130 kt No downtimes

Suzano (SP)² – 520 kt No downtimes

Três Lagoas - Line 1 (MS) – 1,300 kt

Três Lagoas - Line 2 (MS) – 1,950 kt

Veracel (BA)¹ – 560 kt No downtimes

 Demand Growth 2018-2030
in million tons
+80
(+1.5%/yr)
487 495
472 479
458 465
438 445 451
426 432 91 90
414 420 92 91
93 93
95 94
97 96 96
P&W 99 98 57 59
54 55
51 52
46 48 49
43 44 45
Tissue & Fluff 41

205 210 215 220

186 191 195 200
169 174 178 182
Containerboard 166

Cartonboard 49 50 51 52 53 54 55 56 58 59 60 61 62

Specialty 60 60 60 61 61 61 62 62 62 63 63 64 64

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Source: Poyry, Hawkins Wright, Suzano BI

 Share on total fiber consumption
4 20 40 60 80 100

Estimated demand growth until 2030 (%p.a.)

Tissue Containerboard
3
Paperboard

Packaging
1 Uncoated
Newsprint Woodfree Other

-1

Coated
Average growth of
-2 Woodfree

-3 Emerging Markets: 2.2% p.a.

Coated Mature Markets: -0.2% p.a.
Source: Poyry Uncoated
(2017)
Mechanical
Mechanical
 65
413 398 Unbleached 59
Non-Wood
175 2
Others Mechanical Fluff
6
Newsprint 34 4 6
23 Tissue
35 Softwood
Recycled Integrated
P&W 217 20
110
100

BCP
59

Packaging Hardwood
222 Virgin 34
Market Pulp
175
65

2018 Total Fiber Consumption Virgin Pulp Market Pulp Bleached Chemical
Paper Pulp (BCP)
Production

Source: Poyry, Hawkins Wright and Suzano BI

Investor Relations
www.suzano.com.br/ir
ri@suzano.com.br