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Message from the board of directors

Fibria, the company that has been formed by the merger of Aracruz Celulose and Votorantim Celulose & Papel (VCP), was born and formally began its activities on September 1, 2009, as the global leader in the production of market pulp. At the time, the world was still feeling the after effects of the economic crisis that had erupted in the previous year.

With the drying up of credit worldwide, there was a dramatic fall in demand and, consequently, in pulp prices, while product inventories swelled, forcing us to conduct technical stoppages, cut back our spending and make adjustments in all areas. These were essential measures to enable us to get through that period without compromising the company’s ability to continue operating.

April 2009 saw the beginning of a recovery in sales and dollar denominated pulp prices, which helped to improve the company’s internal situation. China continued to buy large quantities of eucalyptus pulp, to replace the inferior quality pulp coming from its older mills, some of which had been closed down under the program to improve the country’s environmental conditions, as well as to rebuild its own inventories. The Brazilian economy began to grow once more, and to become more attractive to investors. Despite the strong local currency (real) having reduced the margins on exported products, and the higher dollar prices, the scenario was already much improved from that at the beginning of the year, when credit was still restricted and demand was weak.

In August, the process of absorbing Aracruz shares within VCP was completed. The creation of Fibria gave the two companies’ professionals the opportunity to push ahead with the activities of the world’s leading producer of bleached eucalyptus pulp.

In addition to the process of integration, our attention was also focused on reducing the debt originating from the global economic crisis and the acquisition of Aracruz, which generated the need for a debt management plan. The opportunity to sell the Guaíba Unit, in the state of Rio Grande do Sul, allowed us to reduce a significant portion of our indebtedness, as well as to raise financial market funding, in order to create a debt profile that was more in keeping with the Fibria fundamentals.

The outlook for 2010 continues to be challenging, but we believe we have taken important steps to protect our business, reducing the debt and resuming investment in our mills and forests. The right conditions have been created for us to capture the synergies arising from the merger of the two companies and the implementing of a strategy aimed at securing our competitive advantages.

There has been a perceptible change in the market consensus as regards investing in Fibria’s shares, based on analysts’ recommendations. This change is the result of the improved fundamentals of the pulp & paper sector, the company’s management of its indebtedness, and especially Fibria’s competitive advantages. These advantages have been reinforced by the Três Lagoas Unit, located in the state of Mato Grosso do Sul, which came into operation in March. The new mill was already operating at full capacity by the end of the year, raising the company’s total production capacity to 5.2 million tons in 2009.

The market has shown considerable faith in the company, borne out by our selection for leading sustainability indicators, such as the Dow Jones Global Sustainability Index – where Fibria is the only forestry sector representative – and the BM&FBovespa Corporate Sustainability Index, and the above average performance of our shares against the Brazilian stock market index (Ibovespa).

In 2010, we shall continue to seek new levels of excellence that will, by the end of the year, bring our shares close to investment grade, which should bring down the cost of servicing our debt and ensure access to sources of financing for the growth projects that we shall be looking at over the course of the year.

So, we look to the future with great optimism as we thank our customers, shareholders, investors, collaborators, suppliers, governments, NGOs and all the other stakeholders for all the confidence and support they have shown us during 2009.

We take this opportunity to reaffirm our commitment, stated at the time that Fibria was conceived, to develop our renewable forestry business as a sustainable source of life, generating wealth and economic growth, promoting human and social development, and guaranteeing environmental conservation.