Tissue Paper Industry_good Report

Global Tissue Market Workshop Fibria-ABTCP – 30th April. 2013 Daniela dos Reis – Innovation Center R&D Engineer

1

Global Tissue Consumption Development from 2001 to 2015 In mio. tonnes

Year on year growth in %

40 35

5 Average growth 2001-2008: 3.6%

Expected average growth 2010-2015: 4.1%

4

30 25

3

20 2

15 10

1

5 0

0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Before the economic crisis => average growth of 3.6% Expected to grow till 2015 => 4.1% Source: RISI (Status: 2011-03)

2

Drivers of Tissue Consumption How are the medium-term and long-term perspectives?

Population Growth Economic Development Urbanization Living and Hygiene Standards

Substitution? 3

Tissue Consumption Per Region Total Tissue consumption 2011: 30.4 mio. tonnes

4

Tissue Consumption By Region In mio. tonnes

14 Asia-Pacific incl. ME

12 10

North America

8 Western Europe

6 4

Latin America

2

Eastern Europe

0 2000

Africa 2003

2006

2009

2012

2015

Since 2008, Asia-Pacific incl. ME is the largest Tissue consuming region NA continue to grow even by being most mature market 5

Global Tissue Market Production Growth – Additional Per Region: 2012 – 2015 Total additional Production 2012-2015: 4.0 mio. tonnes

23% 40% 3% 3% 4% 4%

China USA Eastern Europe* Brazil Indonesia Italy Mexico Middle East Other

4% 9%

10%

40% of expected additional production until 2015 => expected to be in China USA will continue to grow strongly (only behind China in tons): mainly in Premium Brazil & Mexico: driving LA expansion => quality demand increasing rapidly

6

World Tissue Consumption 2010 Per capita consumption per region 25

Worldwide average: 4.15 kg/capita 20

15

Most mature markets: Premium & Ultra Premium quality

Mature Markets: quality + quantity 10

Developing markets: quantity 5

Emerging markets 0 América do Europa Norte Ocidental

Japão

Oceania

América Latina

China

Europa Oriental

Oriente Médio

Asia

Africa 7

Tissue Consumption Growth Per Capita in selected Countries In kg / capita 24.1

25.0

2011 2015 19.7 17 14.6

15.3

9.8

10.4

4.9

6.0

5.2 4.0

4.3 5.0 3.0 n/a

USA

Germany Japan

South Korea

Brazil

China

0.7 0.8

Russia Indonesia

0.1 0.1 India

World total

Even high developed countries continue to increase per capita consumption Still very low per capita consumption in Asia & EEUR => huge growth potential 8

End-Consumers - World Tissue Consumption Forecast by End-Use In mio. tonnes 41.8 3.7% 31.8 25.8

34.4

Consumer Away from Home

28.2

21.7 24.5

26.5

32.5

3.9%

3.0%

19.6

21.6

5.4

6.2

6.6

7.3

7.9

9.3

2001

2006

2009

2012

2014

2019

16.3

Av. Growth 2001-2019

Growth in Consumer Tissue is expected to be larger than in AfH 9

Tissue Market - World Share of Private Label in Retail Tissue Share of private label in Retail Tissue in % (Retail value based on retail sales price) 60 Western Europe World North America Japan Eastern Europe Total Asia-Pacific China

50 40 30 20 10 0 2005

2006

2007

2008

2009

2010

Private label is popular in Western Europe and is getting more popular in NA but, with Premium quality 10

End-Consumers - World Tissue Consumption Forecast by End-Use In mio. tonnes 45 40 35 30 25 20 15 10 5 0

42

Av. Growth 2001-2019

+3.7% 32 26

34

+4.2%

28

22

Toilet Tissue Facial/Hankies Toweling Napkins Sanitary and Other

+3.1%

2001

2006

2009

2012

2014

2019

+3.9% +2.2% -2.1%

Toilet Tissue shows the highest consumption growth rates Source: RISI (Status: 2011-02)

11

Largest Tissue Producers World Total World Capacity in 2011 in mio. tonnes: 34.7 12% Kimberly-Clark 11%

9% 56%

SCA Georgia-Pacific P&G APP Sofidel Others

5% 4% 3%

KV, GP and SCA are the by far largest Tissue producers 12

Tissue Paper by Region Characteristics and Trends 13

Tissue End-Consumers – World Drivers of Tissue Consumption Most important drivers of Tissue consumption at different stages of development GDP/capita GDP, Population, Urbanization

Quality Upgrades, infrastructure, retail system

Quality Upgrades and product penetration levels decisive for further growth

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

Source: RISI

Tissue consumption/ capita in kg

14

Tissue Paper Premium Current Consumer Perception in each Region Several plies (3 to 5) Virgin Fibre England- Strong Private Labels

Structured Paper High Softness High Absorbency Capacity 1-ply and 2-ply

Virgin Fibre Superficial Softness

Virgin Fibre Superficial Softness Absorbency is increasing Same quality as EUA High Strength

15

Tissue Market - North America Trends Most Mature market Strong dominance of Brands Premium did not suffer with last recession Supermarkets requiring Premium Private Label PL business will grow

in the next few years

3-ply toilet not successful against Premium New investments resulting in old TM & mill closures Business has grown based on quality upgrading, new product launches and modified product re-launches, in addition to innovative marketing by industry leaders

16

Tissue Market - Europe Trends  Market expansion exceed recession tumble  Germany leading growth by far (2010)  Quality demand in WE; high kg/capita: 15,5  High PL share (50%) in WE; cost pressure Towel tissue as major driver for premium High GDP growth in EE stimulates demand

17

Tissue Market – Asia and China Trends 

The total Chinese Tissue market is expected to grow by 12% annually in the 2005 to 2015 period.



App has tripled its market share in the last 6 years and planning a higher global performance

  

More demanding pollution regulations by Chinese authorities



Cultural issues in India are still a barrier in the Tissue consumption

Biggest players are investing in new and modern machines Infrastructure improvements and advances in the retail system are necessary to improve the business

18

Tissue Market - Latin America Trends  

Strong market expansion over the last years Mexico, Brazil & Colombia driving expansion

Towel  Production of Premium still low but growing  Only 1 premium product in kitchen towel  Premium on AfH towel growing strongly Toilet  Premium still not being sold in Latin America  Some countries migrating from 1-ply to 2-ply & 3-ply  Future migration can follow Europe or USA

19

Tissue Market – Brasil Trends 2-ply Tissue Paper in 2010  Production increased by 15,4 % in 2010  25,5% of 4708 bi of rolls  39% of Tissue Business Sales Demanding quality products 3-ply Tissue paper has been introduced into the market Different consumption per capita in each region  South / Southeast: 10 kg/year  North/ Northeast: < 1 kg/year  Average: 4.5 kg/year  Production and Converting growth in the regions North and Northeast 20

Tissue quality = Eucalyptus fibers 21

Tissue Market Main Quality requirements per grade Tissue Grade Quality Requirements

Toilet

Softness, Bulk

Facial

Softness, Tensile Strength

Napkin

Bulk, Tensile Strength

Towel

Absorbency Capacity, Bulk, Wet Tensile Strength 22

Most common fibers

Fiber type

Characteristics

After-press dryness

Hardwood:

Eucalyptus, Birch, Aspen

handfeel, good formation, bulk, structural softness, lower strength

STD

Softwood:

Pinus, Spruce

tension strength, bad formation

=

CTMP

absorbency, brightness reversion