Fibria Celulose : 2Q16 Earnings Release

f39a0197-eb83-413d-9e04-047c7c55248d.pdf

2Q16 Results

Reduction of 5% in 2Q16 cash cost: R$662/t (average for May and June: R$639/t). Decline of R$1.5 billion in estimated 2016 capex. Leverage of 1.82x (R$) and 2.10x (US$).

Pulp Sales	000 t	1,342	1,136	1,282	18%	5%	2,477	2,511	-1%	5,084
Net Revenues	R$ million	2,386	2,395	2,309	0%	3%	4,781	4,306	11%	10,555

Net Income (Loss)	R$ million 745 978 614 -24% 21% 1,723 48 - 2,032
Free Cash Flow(6)	R$ million	413	615	493	-33%	-16%	1,028	877	17%	3,016

1Q16	2Q15	6M 15	(LTM)
Pulp Production	000 t	1,287	1,203	1,321	7%	-3%	2,491	2,613	-5%	5,063

Key Figures Unit 2Q16 1Q16 2Q15 2Q16 vs

2Q16 vs

6M16 6M15 6M 16 vs

Last 12 months

Adjusted EBITDA(1)	R$ million	925	1,254	1,157	-26%	-20%	2,179	2,164	1%	5,352
EBITDA margin pro-forma(7)	%	43%	52%	50%	-9 p.p.	-7 p.p.	48%	50%	-2 p.p.	52%
Net Financial Result(2)	R$ million	1,095	922	321	19%	241%	2,017	(1,425)	-	(244)

Dividends paid	R$ million	304	0	149	-	103%	304	149	103%	2,302
ROE(5)	%	21.9%	25.3%	11.7%	-3 p.p.	10 p.p.	21.9%	11.7%	10 p.p.	21.9%
ROIC(5)	%	21.3%	23.4%	13.3%	-2 p.p.	8 p.p.	21.3%	13.3%	7 p.p.	21.3%
Gross Debt (US$)	US$ million	3,958	3,231	2,906	23%	36%	3,958	2,906	36%	3,958
Gross Debt (R$)	R$ million	12,705	11,498	9,015	10%	41%	12,705	9,015	41%	12,705
Cash(3)	R$ million	2,983	1,189	818	151%	265%	2,983	818	265%	2,983
Net Debt (R$)	R$ million	9,722	10,309	8,197	-6%	19%	9,722	8,197	19%	9,722
Net Debt (US$)	US$ million	3,029	2,897	2,642	5%	15%	3,029	2,642	15%	3,029
Net Debt/EBITDA LTM	x	1.82	1.85	2.23	-0.03 x	-0.41 x	1.82	2.23	-0.41 x	1.82
Net Debt/EBITDA LTM (US$)(4)	x	2.10	1.86	1.95	0.24 x	0.14 x	2.10	1.95	0.14 x	2.10

(1) Adjusted by non-recurring and non-cash items | (2) Includes results from f inancial investments, monetary and exchange variation, mark-to-market of hedging and interest

(3) Includes the hedge fair value | (4) For covenants purposes | (5) For more details p. 16 | (6) Before dividend payment, expansion capex and purchase of land

1. Calculation excludes pulp sales from agreement w ith Klabin

   2Q16 Highlights

   Pulp production of 1,287 thousand tons, 7% more than in 1Q16 and 3% less than in 2Q15. LTM production stood at 5,063 thousand t.

   Pulp sales, including pulp from Klabin, totaled 1,342 thousand t, 18% and 5% up on 1Q16 and 2Q15, respectively. LTM sales stood at 5,084 thousand t.

   Net revenue of R$2,386 million (1Q16: R$2,395 million | 2Q15: R$2,309 million). LTM net revenue came to R$10,555 million (including net revenue from Klabin pulp sales).

   Cash cost of R$662/t, 5% less than in 1Q16 and 14% up on 2Q15 (for more details, see page 8). Excluding the impact of the scheduled downtimes, the cash cost would have been 1% down on the previous quarter. The average for May and June was R$639/t.

   Second-quarter EBITDA totaled R$925 million, 26% and 20% less than in 1Q16 and 2Q15, respectively. LTM EBITDA amounted to R$5,352 million. Including Klabin pulp sales. The EBITDA Margin stood at 43% (including sales from commercial contract with Klabin).

   EBITDA/ton of R$690/t (US$197/t) in the quarter, 38% and 24% down on 1Q16 and 2Q15, respectively.

   Free cash flow in the quarter before expansion capex and dividends totaled R$413 million, 33% and 16% lower than in 1Q16 and 2Q15, respectively. LTM free cash flow came to R$3,016 million, with a free cash flow yield of 25.3% in R$ and 22.0% in US$.

   Cash ROE and ROIC of 21.9% and 21.3%, respectively. For more details, see page 16.

   Net income of R$745 million (1Q16: R$978 million | 2Q15: R$614 million). LTM net income stood at R$2,032 million.

   Gross debt in dollars of US$3,958 million, 23% and 36% more than in 1Q16 and 2Q15, respectively. Gross debt/EBITDA ratio in dollars of 2.69x.

   Net Debt/EBITDA ratio of 2.10x in dollars (Mar/16: 1.86x | Jun/15: 1.95x) and 1.82x in reais (Mar/16: 1.85x | Jun/15: 2.23x). Total cost of debt in dollars, including the full swap of real-denominated debt, of 3.4% (1Q16: 3.4% p.a. | 2Q15: 3.5% p.a.). Investment grade with stable outlook reaffirmed by S&P and Fitch.

   Conclusion of funding tied to export credit notes issued by the Company through the public distribution of agribusiness receivables certificates (CRAs) totaling R$1.35 billion, largest issuance ever held in Brazil.

   Reduction of R$1.5 billion in estimated capex for 2016 and R$800 million in the total capex of Horizonte 2 Project.

   Subsequent events

   5thInvestor Tour to take place at the Aracruz Unit on September 21stand 22nd, 2016.

   Market cap - June 30, 2016:

   R$11.9 billion | US$3.7 billion(1)FIBR3: R$21.53 FBR: US$6.76 Free float (common shares)(2): 553,590,604 shares

2. Market cap in R$ converted by the Ptax

3. Excluding treasury shares

4. Investor Relations

   Guilherme Cavalcanti André Gonçalves Camila Nogueira Roberto Costa Raimundo Guimarães [e-mail] | [phone]

   Conference Call: July 25, 2016

   English (simultaneous translation into Portuguese): 12:00 p.m. (Brasília) Participants in Brazil: [phone] | Other

   participants: [phone] Webcast: www.fibria.com.br/ir

   2

   The operating and financial information of Fibria Celulose S.A. for the second quarter of 2016 (2Q16) presented in this document is based on consolidated figures and expressed in reais, is unaudited and was

   prepared in accordance with Corporate Law. The results of Veracel Celulose S.A. were included in this document based on 50% proportional consolidation, with the elimination of all intercompany transactions.

   Contents

   Executive Summary 4

   Pulp Market 5

   Production and Sales 6

   Results Analysis 7

   Financial Result 9

   Net Result 11

   Indebtedness 12

   Capital Expenditure 14

   Free Cash Flow 15

   ROE and ROIC 16

   Capital Market 16

   Subsequent Events 17

   Appendix I - Revenue x Volume x Price * 18

   Appendix II - Income Statement 19

   Appendix III - Balance Sheet 20

   Appendix IV - Cash Flow 21

   Appendix V - Breakdown of EBITDA and Adjusted EBITDA (CVM Instruction 527/2012) 22

   Appendix VI - Economic and Operational Data 23

   Executive Summary

   Following a challenging beginning of year, demand for hardwood pulp in China began to pick up, confirmed by the pulp sales figures presented by Global 100 Report of PPPC (+7% year-on-year in the first five months). Unscheduled maintenance downtimes and the widening gap between hardwood and softwood pulp prices also contributed to the more balanced market fundamentals. Thanks to the improved scenario, Fibria announced a price increase in all regions (Europe: US$710/t, North America: US$870/t, and Asia: US$550/t) as of June. The quarter was also marked by a decline in the production cash cost (especially in May and June) and a reduction in projected 2016 capex.

   The previous 2016 capex estimated at R$8.2 billion, according to the original budget released on January, 31, 2016, was revised to R$6.7 billion, a decrease of R$1.5 billion attributed to Horizonte 2 Project and projects of logistics. In relation to the total capex of Horizonte 2 Project, the amount was reduced to R$7.9 billion, a decrease of R$800 million over the previously projected capex of R$8.7 billion. The capex related to in progress logistics projects, which were R$690 million in the capital budget announced on January, 31, were reprogrammed for the next year, triggering a reduction of about R$500 million in capex 2016. It is important to remember that in May, the Company announced an increase in the nominal capacity of the Horizon Project 2, from 1.85 million tonnes to 1.95 million tonnes.

   On June 29, Fibria informed its shareholders and the market in general that it filed the announcement of the conclusion of its capital market funding operation with the Brazilian Securities and Exchange Commission. This operation involved the public distribution of agribusiness receivables certificates (CRAs) of the 80thand 81stseries of the 1stissue of Eco Securitizadora de Direitos Creditórios do Agronegócio S.A., totaling R$1.35 billion, backed by export credit notes issued by the Company. The 80thseries issue of CRAs amounted to R$880 million, maturing in 4 years, with six-monthly interest payments equivalent to 97% of the accumulated variation in the CDI interbank rate and amortization in a single installment in June 2020. The 81stseries totaled R$470 million, maturing in 7 years, with annual interest payments equivalent to the IPCA consumer price index + 5.9844% and amortization in a single installment in June 2023.

   In May 2016, the Company began commercializing hardwood pulp produced by Klabin S.A. in its unit in Ortigueira, Paraná, in accordance with the supply agreement entered into between the parties and disclosed to the market on May 4, 2015. The contract is for six years (with the possibility of renewal by mutual agreement), four of which with a minimum volume of 900 thousand tons, followed by two years of gradual reduction (phase out) with volumes equivalent to 75% and 50%, respectively, of the volume delivered in the fourth year. The purchase price will be based on the Company's average net Paranaguá FOB sales price and the volume acquired will be sold to countries outside South America.

   Pulp production totaled 1,287 thousand tons in 2Q16, 7% more than in 1Q16, due to the reduced impact of scheduled maintenance downtimes, including the mill C retrofit in the Aracruz Unit. The 3% reduction over 2Q15 was largely due to:

   i) the slower stabilization curve following the stoppage, in line with the adaptation of the boiler cycle to 15 months and ii) the residual effect of the Aracruz Mill C retrofit, which was concluded at the end of April. Sales volume came to 1,342 thousand tons, 18% up on 1Q16 as a result of additional volume from the commercial agreement to sell Klabin's pulp and the upturn in sales to Asia and North America. In the year-on-year comparison, the impact of the Klabin agreement was the main factor behind the improvement. Pulp inventories closed the quarter at 54 days.

   The production cash cost was R$662/t, 5% down on 1Q16, due to the lower effect of scheduled maintenance downtimes and the reduced consumption of chemicals, partially offset by higher wood costs. Excluding the impact of the 1Q16 stoppage, the cash cost would have fallen by 1%. The 14% upturn over 2Q15 was mainly due to higher costs with wood (wider average transportation radius and more wood acquired from third parties), the lower utilities result (electricity sales) and the appreciation of the average dollar against the real (see page 8 for more details). The average for May and June was R$639/t, in line with advances in the use of process tools, which have been improving mill stability in recent