SAP for Forestry Business Improving Efficiency and Controls at Suzano 01 | Corporate Overview 02 | Strategy and Industry 03 | Suzano IT 04 | Forestry BU Control Corporate Overview
Suzano is a forestry-based company, publicly traded, controlled by Suzano Holding. Suzano operates in the pulp and paper businesses.
Itaqui Port
Competitive Advantages Maranhão Forestry Biotechnology Eucalyptus cycle: 7 years Mucuri Forests Pulp Limeira Ports Portocel Low production costs Suzano Mills Embu Vitória Certified products Rio Verde Santos Energy self-sufficient Diversified markets Commercial strategy Paper Capital Structure (June/15) Regional leader 42% Free Float Vertically integrated operations 56% Distribution Controlling Group 2% Treasury
Market Value: R$ 18.3 billion 4 Diversified and Complementing Product Portfolio
Suzano’s products portfolio consists of market pulp, paperboard, uncoated paper and coated paper.
Net Revenues 64% Exports / 36% Domestic Market
R$ 8.7 billion
Market Pulp Paper 2nd eucalyptus market pulp producer
60% 40%
Paperboard Printing and Writing
Uncoated Coated
Note: Figures of last 12 months ending on 6/30/2015. Other paper represented 1% of net revenue on the period. 6 Positioning on Pulp Segment
In 2015, the market pulp capacity¹ totalizes 63 million tons. The top 20 biggest producers represent 74% of the market.
Pulp Production Capacity – Top 20¹ Eucalyptus Pulp Production Capacity (million ton) (million ton) Fibria 5,6 Fibria 5,6 Arauco 3,9 Suzano 3,5 CMPC² 3,6 APRIL 3,6 CMPC ² 2,9 Suzano 3,5 Eldorado 1,7 UPM-Kymmene 2,5 Arauco 1,5 Stora Enso 2,4 Georgia Pacific 2,3 Cenibra 1,3 Ilim 2,0 Stora Enso 1,2 Metsa Group 1,8 UPM-Kymmene 1,2 Weyerhaeuser 1,8 IP 1,8 Altri 1,0 Paper Excelence 1,7 Ence 0,9 Eldorado 1,7 Mondi 0,3 Mercer 1,6 Domtar 1,5 Total: 46 million Portucel 0,3 Total: 22 million tons¹ tons Sodra 1,4 Lwarcel 0,3 Resolute FP 1,3 IP 0,2 Cenibra 1,3 Canfor 1,1 Grupo Orsa 0,1
1Includes Sotfwood, Hardwood, Unbleached and Sulphite; excludes mechanical pulp / ² Guaiba 2 total capacity Source: Hawkins Wright (Jul/15) and Suzano 7 01 | Corporate Overview 02 | Strategy and Industry 03 | Suzano IT 04 | Forestry BU Control Suzano’s strategy
Structural Competitiveness
Maximize the return of our assets and cash flow generation
Benchmark in operational efficiency
Adjacent Business
Increase profitability through innovative businesses that innovate and break paradigms
Reshaping of the Industry
Reduce the variability of the industry’s returns
11 Structural Competitiveness
Forestry Industrial
Average distance reduction Retrofitting investments Wood swap Energy efficiency Standardization and insourcing harvesting Operational efficiency Precision Forestry Remove structural bottlenecks Productivity increase
Commercial Logistics
Customer focus Integrated logistics with synergy gains Price discipline New logistics modes Expansion of client base Service level improvement
12 Adjacent Businesses
FuturaGene innovation Fluff
First genetically modified clone First company in the world to use approved by CTNBio for hardwood to produce fluff commercial purposes Capacity to replace up to 70% of Potential to increase fluff to produce sanitary pads productivity by nearly 20% and up to 30% for diapers
Lignin
Replacement of petrochemicals with renewable source
Can be used in several high value- added applications
13 World Market Pulp Supply and Demand
Expectations of a scenario marked by supply and demand in balance. The growth in market pulp demand is driven by pulp consumption in Asia, which has invested in non-integrated paper mills. Supply growth is driven by Latin America, the most competitive region for pulp production
Market Pulp Global Demand Market Pulp Global Supply (million tons) 67 (million tons) 67 58 60 6 59 60 52 16 North America 50 6 6 18 16 16 Europe 7 18 15 18 5 15 15 18 4 14 Latin America 4 14 3 23 Asia 35 18 19 27 29 15 20 Others* 8 9 9 12 2 3 3 4 1 1 1 1 2010 2014 2015e 2020e 2010 2014 2015e 2020e
CAGR Demand 2009 – 2014 2015e – 2020e CAGR Supply 2009 – 2013 2014 - 2019e North America -2.6% -1.8% North America +1.0% +0.1% Europe +0.2% +0.0% Europe +1.7% +1.2% Asia +8.2% +4.1% Asia +4.2% +4.7% Latin America +4.4% +2.7% Latin America +5.7% +3.4% Others* +5.8% +2.9% Others* +1.5% +0.3% Total +3.8% +2.2% Total +3.0% +2.2%
Note: *Others includes Middle East, Oceania and Africa Source: Poyry (2013) 19 Cash Cost in Pulp Production
New pulp projects are located in low-cost regions, most of them in South America
800 Cash Cost CIF / Europa (US$/ton)
400
0
USA USA
Chile
Brazil
Iberia
Africa
China
Japan Japan
Russia
Finland Finland
Canada
Sweden
BC BC Coast
Indonesia
Other Asia Other
Bel/Fra
Other WorldOther
East Canada East
Other Europe Other
West Canada West
Chile/Uruguay
Eastern Europe Eastern Sweden Hardwood Softwood
18.9 Mt 13.8 Mt 12.4 Mt 13.7 Mt Low Cost High Cost Low Cost High Cost 11 *Others includes New Zeland, Argentina, China and South Africa Source: Hawkins Wright (Jul/15) 22 Forestry Competitiveness in Brazil
Brazil presents competitive advantages to support continuous increase of its global forestry standing
Hardwood Productivity (m3/ha/year) Competitive Advantages - Brazil 38 31 • Availability of productive land 25 22 20 19 • Excellent soil and climate conditions 18 15 12 • Short harvesting cycle for planted forests 6 6 • Opportunity to recover degraded areas Brazil China Indonesia Australia Chile New South USA Portugal Finland Sweden Zealand Africa • Low establishments and maintenance costs Source: ABRAF – 2014.
Pulp Productivity • More wood / hectare
Biotechnology • More pulp / m³ 10.5 adtm1/ha/year 5.5 adtm/ha/year • Superior quality +100% • Smaller area
1980 2014 • Decreasing costs / m³
Source: Suzano 23 Stock Performance
Daily Trade Number - SUZB5 Daily Financial Volume – SUZB5 (Trade number) (R$ million)
12.486 11.279 62
8.990 44 37 6.574 25
2012 2013 2014 LTM* 2012 2013 2014 LTM*
*Last twelve months ending on 6/30/2015.
Stock Performance - SUZB5 (100 basis: Jun/14 – Jun/15)
220 SUZB5 200 +99% 180 160 140 120 IBrX-50 100 +1% 80 Ibovespa 60 +0% Jun-14 Jul-14 Aug-14 Sep-14 Oct-14 Nov-14 Dec-14 Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15
Source: Bloomberg 35 01 | Corporate Overview 02 | Strategy and Industry 03 | Suzano IT 04 | Forestry BU Control Corporate IT Overview
Suzano has an SAP-based implementation dating back to 1998, but only recently merged all BUs into one integrated ECC suite on HANA.
SAP CRM 7 SAP HANA
SAP BW
4 01 | Corporate Overview 02 | Strategy and Industry 03 | Suzano IT 04 | Forestry BU Control Simplify Forestry Project Objectives
1 2 3
Understand business needs in Identification in opportunities Nursery/Plantation, Harvesting, Propose solutions on SAP, leveraging for added value and increased Forestry Development, standard features and existing simplicity (operational). Procurement, Wood Purchasing processes. and Overall Mobility in the field. Simplify Forestry Project Methodology Operational Needs
Economically Available Viable Technology
Project Drivers:
• Simplify System Interaction • Automation and Information Made Available • Standardization and Security • Improve Information Management • Boost productivity • Improve planning tasks
"Simply Innovate" Simplify Forestry UNF - Maranhão
Overview UNF - Bahia
UNF - Sao Paulo
Manufacturing demand Technological package Production plan informed Recommendation for clones, by industry. nutrition and chemical control. Productivity and Cost Management Operational KPIs
Planning and Budgeting Industry Setting harvesting plans, Wood receipt and industrial production. purchasing and collection Promotion & Wood Purchasing needs Inventory Management Promotion and purchase Demand management, management for timber purchasing and goods harvesting. receipt. Maintenance Control of events, Harvest & Exhaustion preventive and corrective Planning and execution maintenance. Nursery management of logging orders Logistics Seedlings planning and Wood transport for production management Forestry Plantation industry. based on Forestry Planning and execution of Demand. deployment orders, renovation, drive and maintenance. Quality control S-Flor Simplify Forest - Case Details
Requirements by Type Process Optimizations
Mobility FORESTRY & NURSERY Reports Interfaces Workflows
User interface: Focusing on mobility solutions for forestry 19 2 confirmations. Budget calculation, tactical planning using 1 2 59 simulation (SAP BPC). Among the main proposed solutions: • Creating simulator, using SAP BPC for generating budget, YP and Rolling Forecast. Proposed solution: Continue the use of PP module in a • Use of a single production order by stage to perform operations and simplified way to control forestry and real cost of management. consumption of materials and quality control. • Monitor planned and actual costs (and variances) directly in the production order. • Records of Production Areas in installation locations with integration of master data and processes with Zenith. Involved systems: SAP / GIS / Zenith / Mobility (SAP SMP) • Nursery: Seedling quality control and notes for the operator to control productivity.
Involved SAP modules: SAP ERP-PP, ERP-PM, ERP-QM, SAP-BPC, SAP SMP S-Flor Simplify Forest - Case Details
Requirements by Type Process Reports
Optimizations Mobility HARVEST Interfaces Workflows
User interface: Focusing on mobility solutions for confirmation; 13 1 Simplification of wood movements and asset exhaustion in SAP 1 5 52 ECC. Among the main proposed solutions: • Solution deployment for mobility, adding better validation controls and integrated directly with SAP (online and offline). Proposed solution: Implementation of integrated mobility solutions • Adjustments for Pre-Harvesting Inventory and production awards. with SAP, greater efficiency in the availability of data management • Use of SAP QM for measurements and data collection for SPC. and reliability improvements for calculations (eg. Exhaustion) • Improvements in calculations and cockpit efficiency Exhaustion. • Increasing the speed for management data availability.
Involved systems: SAP / GIS / Zenith / Mobility (SAP SMP)
Involved SAP modules: SAP ERP-PP, ERP-PM, ERP-QM, SAP-BPC, SAP-SMP, SAP-DMS S-Flor Simplify Forest - Case Details
Process Optimizations Requirements by Type
Mobility PROCUREMENT Reports Interfaces Workflows
User interface: Use of mobile interface to simplify services 19 1 3 4 confirmation and receiving / consumption of raw materials and fuel. 1 Approval Center (Fiori)
Among the main proposed solutions:
Proposed solution: Automate operations with greater use of MRP to purchase MRO and Supplies parts. Increased integration with PP • SAP MRP Shopping for MRO and Supplies. and PM module. Increased use of SAP Master Data improving • Use of service registration DIEN enabling integration with Prod. purchase history. Order to improve procurement management / taxes. • Schedule Agreements and automation. • Integration with SAP PP and SAP PM. Involved systems: SAP / Mobility (SAP SMP)
Involved SAP modules: SAP ERP-MM, SAP ERP-PP, SAP ERP-PM S-Flor Simplify Forest - Case Details
Process Requirements by Type Reports Optimizations DEVELOPMENT & WOOD Workflows PURCHASE Interfaces Mobility
37 12 User interface: Use of mobility for technical visits, reports, services 6 5 53 and events. BI tools for management analysis.
Among the main solutions:
Proposed solution: Greater efficiency in the process of prospecting / contract through the system, alignment of processes with forestry / • Control for prospection, Letter proposal and contracts. harvesting and increase automation. • Include Development in global planning processes (Simulation, Budget, PB and RF). • Automate processes in execution, accounting, compensation and closing. Involved systems: SAP / Mobility (SAP SMP)
Involved SAP modules: SAP ERP-FI, SAP ERP-MM, SAP-RE, SAP ERP-PP S-Flor Simplify Forest - Case Details
Process of Optimizations Requirements by Type
Reports MAINTENANCE Mobility Workflows Interfaces
18 0 1 3 User interface: Mobility for pointing events and interventions. 14 Cockpit sending / receiving equipment for exterior renovation. Hierarchies in the equipment records. Among the main proposed solution set:
• Control of Production Breaks (duration and reasons). Proposed solution: Implement SAP PM module for maintenance management, availability of machines, costs and supplies. • Notes maintenance in Mobile devices (online and offline). • Preventive Maintenance Control. • Automation for goods receipts for equipment and fuel supply. Involved systems: SAP / Mobility (SAP SMP)
Involved SAP modules: SAP ERP-PM, SAP ERP-QM S-Flor Simplify Forest - Case Details
BOOK MANAGEMENT, REPORTING AND TO-BE scenario: INDICATORS (AS-IS) • Workshops reviewed all the needs of the teams. The result generated an extensive list of requirements. The list will be reviewed / approved by IT staff in terms of business priority.
For each process, we evaluated the different reports and KPIs used. • From a technical point of view, we should analyze the requirements to maximize the generation of basic views and generate datamarts / views by specific area. Part of the analysis work was the identification of the main sources of information and the definition of un initial grouping of reports and function indicators for base data. 81 Priority 1 59 14 45 Reports Forestry / Nursery Maintenance Comptroller KPI 49% 51%
52 30 53 Development & Harvest Planning Wood Purchase S-Flor Simplify Forest - Solution Map
SAP Solution – Suzano Forestry
Management & Planning Indicators
Forest Forestry & Technology Budget & Planning Simulators Registry Harvest package Versions
Production Capacity Own production & Production Quality control Nursery demand WorkflowAnalysis Third Party (Phases) (seedlings)
Plantation Routing & Material Creating Execution & Forestry Plantation Planning BOMs Requirements Orders Confirmations
Creating Harvesting Movement Forest Production Quality Harvest Orders Confirmation Confirmation Exhaustion Award
Corrective Preventive Predictive Maintenance Stops Renovations Supplies
Maintenance Maintenance Maintenance Planning | Measurement | Notifications | Measurement | Planning
Development and Development Prospecting & Development - Development Wood Purchase Wood Purchasing Planning Contract Forestry - Harvest
Inputs - Direct Maintenance Supplies Fuel Forestry & MRO Seedlings services Services Nursery Simplify Forestry – Technical Solution Map
Strategic Planning & Analytics
Data Warehouse Consolidation & Budget Analytics SAP BWoH SAP BPC SAP BO
Operational Mobile
Shipping & Materials Maintenance SAP MM SAP PM
Production Planning & Document management Mobility Tactical SAP DMS SAP SMP SAP PP / BPC
Quality Finance & Controlling SAP QM SAP FI / CO
Legacy * Partial Usage SAP SD / SAP WM REMSOFT GIS ZENITH SGF * In Analysis: Deck of Use SAP S&OP Forestry Assets
Suzano’s investment in R&D over many years allows the Company to expand its forestry assets to the northeast region of Brazil
2015
Total area (k ha)¹ 1,064
Total planted area (k ha)² 522
Own planted area (k ha)¹ 438
Forest Partnership Program (k ha) 84
Own Preserved Area (k ha)¹ 462
Average Distance in Bahia (km)² 73
Average Distance in São Paulo (km)² 212
Average Distance in Maranhão (km)² 150
Base 6/30/2015 1 Own and leased areas 2 Figures consider own, leased and third-parties areas
2015 Nursery in Mucuri Annual planting (k ha) 85
Planted seedlings / day (k) 276
Note: Both own and leased land can suffer variation up to 5% quarter over quarter. The total amount can differ due to rounding. 8 SAP Real Estate FX - Project Overview
. Simplification of the forestry process in SAP Real Estate FX; . Aligning the new guidelines Suzano, with the implementation of a SAP system that allows managing the assets of the company thoroughly, ensuring the reliability and traceability of information; . Centralized data management and generation KPIs enabling the direct management of processes; . Review processes for data cleansing; and . Cost reduction - competitiveness.
+ 6k real estate properties + 14k Production Units
Payback 2.16 years Paulo Mancinelli
Executive IT Manager [email protected]
36 Disclaimer
Certain statements in this presentation may constitute forward-looking statements. Such statements are subject to known and unknown risks and uncertainties that could cause the Company’s actual results to differ materially from those set forth in the forward-looking statements. These risks include changes in customer demand for the Company’s products, changes in raw material costs, seasonal fluctuations in customer orders, pricing actions by competitors, significant changes in the applicable rates of exchange of the Brazilian real against the US dollar, and general changes in the economic environment in Brazil, emerging markets or internationally.
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