Latin American CEO of the year: Carlos Aguiar, Fibria

Aguiar: Fibria was the result of the merger between two Brazilian pulp and paper companies - Aracruz and VCP. Mergers are always a complex and delicate process and can take years to accomplish, but I believe this process has been quite fast in the case of Fibria. Therefore, the year 2010 for Fibria was a period of unification, with the creation of an identity and the elaboration of the company's processes and Code of Conduct and the up-dating of methods, policies and strategic vision.

Fibria undertook, therefore, to implement a series of initiatives to strengthen its position with its internal and external audiences as an entirely new company and not as a mere successor of VCP and Aracruz. From those two companies, Fibria incorporated the best practices, but with a very clear sense of renewal focused on expanding and deepening such practices from the very start, while seeking innovative solutions to the issue of sustainability, which has special meaning for Fibria.

To achieve our goals, Fibria is committed to finding synergies in all its activities. By the end of 2010, over 180 initiatives had been mapped out in the Commercial, Logistics, Industrial, Forestry, Technology, Supplies and Finance areas. Gains in excess of R$2.7 billion in Net Present Value (NPV) were accounted for - nearly R$300 million above our estimated synergy goals. These actions have contributed to strengthening Fibria's leadership and competitiveness in the pulp market.

Fibria has been carrying out its liability management plan since 2009, in order to settle or refinance loans, with the aim of reducing costs and obtaining terms that are compatible with the company's current credit risk. We started this process with the sale of the Guaiba Unit,, the smallest unit in Fibria's portfolio, for US$1.43 billion. Another major step was taken in April 2010, when the company carried out a bond issue totaling US$750 million, with a ten year maturity and a half-yearly coupon of 7.5% per annum. It allowed us to totally refinance the derivative debts of Aracruz, thereby bringing that chapter to a close. Our efforts in structuring and managing our borrowing enabled the company to achieve a lower cost of capital and to quickly and efficiently bounce back from the financial crisis. Due to this and to strong pulp prices, the company's net debt to EBITDA ratio fell from eight to three times. This opened the way for the company to attain investment grade in the near future, which will further help us reduce the cost of our debt and improve the conditions for financing our future growth.

With financial support for renewed growth, Fibria has initiated projects for expansion and technological upgrading. We are modernizing Fiberline A at the Aracruz Unit, to enhance its efficiency and bring down costs. We are also investing in the expansion of the forestry base in Mato Grosso do Sul state, where we have already planted 35,000 ha of eucalyptus, in order to supply the operations of a new mill in Três Lagoas. This second mill at the same industrial location is going to produce an additional 1.5 million tonnes/yr of pulp. We are in the process of leasing land for new plantations and we have already signed commitments for wood supplies to this new brownfield project.

In the states of Espírito Santo and Bahia, we have resumed the restoration of some of our plantations, as well as the planting of native vegetation in preservation areas, thereby creating jobs both in the nursery and in forestry management. We also started building a nursery in Helvécia, in the southern part of Bahia state, which will be able to produce 30 million seedlings a year, using very modern technology.

At Veracel, we are quite close to signing a new agreement with our partner to start plantations for the second line of production. We have already some excess wood there and that site is certainly one of the best for forestry growth, as it's a brownfield project. The environmental licensing is in the final phase of approval.

Fibria regards certification as a good business practice, if it is issued by independent quality certification entities like Cerflor or the FSC. Certification can be seen as a powerful driver of business sustainability and relations with our stakeholders. Certification benefits not only the relationship with government agencies, neighboring communities and other stakeholders, but also contributes to regional development and the strength of our market relations, both in Brazil and overseas, helping to create value for our shareholders. During last year, 870,000 ha of forests managed by Fibria renewed or gained certification, for good forest stewardship, from the FSC or CERFLOR.

Fibria plans to have more units certified in the coming years, while maintaining the certifications that have already been gained. The next priority is achieving FSC certification for the Aracruz Unit and its forest partners. Other priorities are ISO 9001 and ISO 14001 certifications for the new Três Lagoas Unit and OHSAS 18001 certification of all Fibria's Units.

The sale of the Piracicaba Unit, our last remaining paper mill, is in line with the company's strategy of focusing on its core business and, when concluded, will also benefit the net debt reduction. On August 11, Fibria announced the signing of a Term Sheet granting exclusivity to Oji Paper in negotiating with the company the possible sale of the asset for an indicative price of US$313 million. Assuming the negotiation evolves in a satisfactory manner, it is expected that a deal would be closed by September 29.

I see Fibria being more competitive than now, growing through the best brownfield projects in the industry, with a very strong and comprehensive leadership based on large scale, good management and innovation. And producing at least 1.5 million tonnes more than today, with an even better cost position than our peers.

I have worked for many years in this industry, from the old romantic times until today, and we have seen important changes. I believe that my main contribution to this industry has been the many ideas for innovating in big new projects, the ways which were found to improve labor productivity in the mills, the development of long term and strong relationships with customers and also the development of many suppliers around our mill sites. In addition, we have the very important accomplishment of transforming eucalyptus pulp, considered a filler pulp in the old days, into the main fiber of today.

The biggest changes in Brazil are the modern mills and the high forestry yields achieved in less than 30 years, thanks to research and technology, making this industry in Brazil very competitive and of a quality that is recognized all around the world. We also notice a big development in the sustainability aspects of our business, which makes our industry a good example for the world.

The new business environment in Brazil, with the strong real, presents an opportunity for the new generation to work hard to overcome this new challenge.