FIBRIAbook2016 Ingles Verso Jornal

A NEW HORIZON
FOR EVERYONE
With more investments,
jobs and opportunities
for Brazil.
FINANCIAL
STATEMENTS
2016
FIBRIA CELULOSE S.A.
CNPJ n 60.643.228/0001-21
Financial statements
DEMONSTRAES 2016 2016
FINANCEIRAS
2016 MANAGEMENT REPORT
MESSAGE FROM MANAGEMENT
In 2016, Fibria consolidated its leadership position in the global pulp market. At an extremely challenging time for investment in Brazil, we moved forward with the expansion of our
unit in Trs Lagoas (MS). The Horizonte 2 Project, as it is known, remains on schedule and below budget, having reached 77% of physical completion and 57% of financial execution
at the end of December. During the year, we formalized the contracting of all the projects funding and began drawing down on them. We have a very competitive cost of capital
because the market recognizes that we are a sound company, which has adopted a prudent and austere management style since its inception, based on capital discipline, high
corporate governance standards, transparency and a focus on sustainability.
Committed to the continuous improvement of our governance practices, we have reviewed all our Corporate Policies, in addition to the Internal Regulations of the Board of Directors,
advisory committees and the Executive Board. Among these changes, it is worth noting that, as of 2016, the Companys executives participate in the Advisory Committees only as
guests, without voting rights, except in the case of the Innovation Committee. Also, in order to strengthen the governance and risk management structure, we have created the
Governance, Risk and Compliance Executive Area, which reports directly to the Chairman of the Board of Directors and the Statutory Auditory Committee on technical matters, and
to the CEO on administrative matters.
Throughout 2016, Fibria expanded its innovation efforts, improving the use of its forestry base to create new products. We continue making progress in Research and Development,
Intellectual Property Management, Competitive Intelligence and Technology Prospecting. In addition, the acquisition of a stake in CelluForce, an innovative biomaterials company
and the world leader in the development and production of cellulose nanocrystals (CNC), has brought potential opportunities for Fibria in this market segment.
From the industrial operation point of view, the Company continued to pursue efficiency gains through the implementation of projects, process improvements and innovation. All this
was done while we were still mastering the longer production periods, resulting from the change in the regulatory standard, which extended the maximum period between recovery
boiler inspections from 12 to 15 months. It is worth noting the increase in our forestry base, which reached 1.06 million hectares thanks to base formation in order to supply the new
production line in Mato Grosso do Sul. In 2016, the global pulp market was characterized by growing demand and delay in the start-up of new production capacity expected for the
year.
Annual net revenue totaled R$9.62 billion, 5% less than in the previous year, due to the lower average net dollar price, partially offset by a higher sales volume. As a result of the
more adverse pulp price scenario and the higher cash cost of goods sold (COGS), EBITDA totaled R$3.7 billion (margin of 43%, excluding the volumes from the Klabin agreement),
30% down on 2015. We closed the year with net income of R$1.66 billion and free cash flow of R$1.89 billion. As the Company recorded a positive net result, the management has
proposed the distribution of R$393 million as a mandatory minimum dividend, which will be submitted for approval at the Annual Shareholders Meeting scheduled for April.
Fibria closed the year with net debt of US$3.5 billion, as a result of long-term and low-cost funding raised for the Horizonte 2 Project, in addition to the issuing of agribusiness
receivables certificates (CRAs) to further reinforce its already sound cash position. Although 2016 was marked by market uncertainty and a more robust investment cycle, Fibria
retained its Investment Grade status, assigned by Standard & Poors (with a negative outlook) and Fitch (with a stable outlook), attesting to the quality of its credit risk management.
On the social and environmental front, Fibria has maintained its strategy of generating shared wealth from the forest plantations. Our business involves carbon sequestration and
the emission of oxygen. Our forests protect and regulate the rainfall cycle, bringing balance to the environment and promoting biodiversity and food production. Fibria therefore offers
so many benefits that far outweigh the negative aspects associated with the pulp industry as a whole. Raw materials mineral, plant or fossil will always be necessary for the
development of products, but plant raw materials are the only ones that have proven to be sustainable over time. Hence, the forest-based industry is part of the solution for the
adversities caused by climate change. Rather than minimizing impacts on the surrounding communities, Fibria wants to avoid them altogether, which is why it develops and
implements strategies, working together with the communities, for income generation and local development. In 2016, more than 1,000 new families benefited from the Companys
social projects, which currently cover over 7,000 families, enjoying a proven increase in income.
An exceptionally positive year for the Company was further underlined by various awards and other recognition. Fibria was once again included in the Dow Jones Sustainability
World Index (DJSI World) and the Dow Jones Sustainability Emerging Markets Index (DJSI Emerging Markets), important sustainability indices of the New York Stock Exchange
(NYSE), as well as in the portfolios of other important indices, such as BM&FBovespas Corporate Sustainability Index (ISE). We were also highlighted in the Change the World
list of U.S. Fortune magazine and recognized as the Best Company in the Pulp and Paper Sector by the poca Negcios 360, Valor 1000 and Melhores da Isto Dinheiro
yearbooks. Fibria was also voted company of the year, receiving the title Champion of the Champions in the As Melhores do Agronegcio (Best of Agribusiness) yearbook, by the
Globo Rural magazine.
Finally, we would like to thank all those, particularly our employees, clients, shareholders and other investors, partners and suppliers, who have contributed to our excellent results
until now, each and every one of whom has played a fundamental role in the history of Fibrias success.
Marcelo Strufaldi Castelli Jos Luciano Penido

CEO Chairman of the Board of Directors
www.fibria.com.br 2
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FINANCEIRAS
MARKET OVERVIEW Regarding the growth pillar, the Horizonte 2 Project is strictly on schedule and within
budget, having reached 77% of physical completion and 57% of financial execution in
The balance between hardwood pulp supply and demand once again exceeded agents December 2016. During the year, we formalized the contracting of all the projects
expectations in 2016. The market was characterized by strong growth in demand for funding lines and began drawing down on them. Completion of the expansion project will
eucalyptus pulp, which increased by 6.8% compared to 2015, according to the PPPCs play an important role in helping Fibrias Trs Lagoas unit become one of the worlds
W20 report, and by delays in the start-up of the new capacity scheduled for the year. largest pulp production sites. With an annual production capacity of 1.95 million tons of
pulp and investments estimated at R$7.5 billion, the start-up of this industrial line is
PERFORMANCE ANALYSIS scheduled for the fourth quarter of 2017. This project will increase Fibrias total pulp
production capacity by 37%.
In 2016, pulp production totaled 5.0 million tons, 3% lower than in 2015, due to the
retrofit of recovery boiler B at the Aracruz unit (ES) and the slower stabilization curve Under the new business pillar, Fibria is always seeking to identify complementary
following the maintenance stoppage, in line with the adaptation of the cycle to 15 initiatives in the value chain, focusing on maximizing the creation of wealth from its
months, whose learning curve was completed in 2016. forests, through activities such as bioproducts (bio-oil, lignin and nanocellulose), real
estate and other options. One of the highlights of 2016 was investment in the Canadian
Pulp sales volume came to 5.5 million tons, 8% more than in 2015. The volume
company CelluForce, with the acquisition of an 8.3% stake in preferred shares, for
increase was mainly due to the agreement with Klabin, under which we sold 478,000
CAD5.3 million. CelluForce is an innovative advanced biomaterials company and the
tons in 2016.
world leader in the development and production of cellulose nanocrystals (CNC), a
The breakdown of sales by final use was as follows: the Tissue segment accounted for biodegradable and renewable technology that can be used in several applications. The
48% of the 2016 total, followed by Printing and Writing, with 34%, and Specialties, with strategic partnership agreement between the two companies gives Fibria access to a
18%. Europe continued to head the revenue rankings, generating 36% of the total, broad technology platform, with potential opportunities for progress in CNC production
followed by Asia, with 32%, North America, with 22%, and Brazil, with 10%. and industrial applications in South America in the coming years.
Net operating revenue totaled R$9.6 billion, 5% lower than in 2015, due to the 15%
decline in the average net dollar price, partially offset by the 8% increase in sales CAPITAL EXPENDITURE
volume, including the volume from the agreement with Klabin, and the 5% appreciation
of the average exchange rate between 2015 and 2016. Capex totaled R$2.0 billion in 2016, excluding the Horizonte 2 expansion project and
pulp logistics, which was 5.0% less than the approved capital budget for the year.
The cost of goods sold (COGS) totaled R$7.1 billion, 21% up on 2015, due to higher Including the Horizonte 2 Project and pulp logistics, capex totaled R$6.2 billion.
sales volume, including Klabins pulp volume. It is worth noting that, despite the increase
in COGS, the operation with Klabin has no impact on the Companys EBITDA. The Board of Directors has approved a capital budget of R$5.2 billion for 2017, R$3.0
billion of which will be allocated to the Horizonte 2 expansion project, which is to be
Selling expenses came to R$481 million, 10% higher than in the previous year, chiefly submitted for approval at the Annual Shareholders Meeting scheduled for April.
due to the upturn in sales volume and the 5% average appreciation of the dollar against
the real. LIABILITY MANAGEMENT
Administrative expenses stood at R$276 million, 4% more than in 2015, mainly as a

In 2016, Fibria undertook several funding operations, mostly to finance the Horizonte 2
result of increased spending on salaries and related charges and the adjustment of
Project. In May 2016, the Company entered into financing agreements with Fundo de
outsourced service agreements.
Desenvolvimento do Centro-Oeste (FDCO) for the amount of R$831 million, the Export
In 2016, adjusted EBITDA totaled R$3.7 billion (margin of 43%, excluding Klabins Credit Agency (Agncia de Crdito Exportao - ECA) Finnvera, for a dollar amount
volume), 30% lower than in 2015. In general terms, the scenario of declining dollar- equivalent to 384 million, and with the BNDES for the amount of R$2.35 billion. As a
denominated pulp prices throughout the year and the increase in cash COGS per ton result, all the financing lines for the Horizonte 2 Project have been formally contracted
were the main reasons for this reduction. It is worth noting that the operation with Klabin and are being disbursed as the expenses are incurred.
has no impact on EBITDA.
The Company carried out three issues of agribusiness receivables certificates (CRAs),
The net financial result was positive by R$1.6 billion, against a negative R$3.7 billion totaling R$3.3 billion, at a total weighted average cost of 97.8% of the CDI rate. With
in 2015. This variation was mainly due to the impact of the exchange variation on dollar- these issues, Fibria has reinforced its strategy of seeking competitive funding sources
denominated debt (the dollar depreciated by 17% against the real during the period), through transactions that may result in more attractive terms.
since a large part of the Companys debt is pegged to the dollar, given its primary nature
Cash and cash equivalents closed December 31, 2016 at R$4.72 billion, including the
as an exporter, and the positive result of the mark-to-market of derivative financial
mark-to-market of hedge instruments totaling a positive R$18 million. Excluding the
instruments, partially offset by higher interest expenses on loans and financing.
impact on the cash position of the mark-to-market of the hedging, 72% of the cash was
Given all of the above, Fibria reported a 2016 net income of R$1.7 billion, a 366% allocated to local currency denominated government and fixed-income securities and
improvement over 2015. Since the Company recorded this positive net result, the the rest to short-term investments abroad.
management proposed the distribution of a mandatory minimum dividend of R$393
million which will be submitted for approval at the Annual Shareholders Meeting The Company has four unused revolving credit facilities, totaling R$1.76 billion, three of
scheduled for April. which in local currency totaling R$850 million and one in foreign currency totaling
US$280 million. These funds, despite not being utilized, help improve the Companys
STRATEGY liquidity. When added to the current cash position of R$4.72 billion, these lines have
resulted in an immediate liquidity position of R$6.48 billion. As a result, the cash to short-
Fibria continues to maintain a strategy based on three pillars: (i) continuous operational term debt ratio closed 2016 at 5.7x.
improvement; (ii) disciplined growth in the pulp market; and (iii) the pursuit of The Company ended the year with gross debt of R$16.15 billion, corresponding to
complementary opportunities in the value chain. US$4.96 billion, which represents a 52% year-on-year increase in dollars, due to funding
The continuous operational improvement pillar encompasses initiatives designed to operations for the Horizonte 2 Project. Net debt ended the year at R$11.44 billion, while
improve operational performance, increase forest productivity and reduce the capital the net debt/EBITDA ratio in dollars stood at 3.30x and the total average debt maturity
employed in the business. was 51 months.
www.fibria.com.br 3
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FINANCEIRAS
DIVIDENDS SUSTAINABILITY
The Companys bylaws require the distribution of a minimum annual dividend of 25% of The essence of our business is to produce renewable forest-based products while
net income, adjusted for allocations to the capital reserves, as provided by Brazilian respecting life. We are committed to operating in a sustainable manner, in line with the
Corporate Law. As the Company recorded a net positive result of R$1.66 billion in 2016, highest global standards. Fibria is the first link in an extensive value chain that begins in
the management has proposed the distribution of R$393 million as a mandatory the forest and ends at the final consumers of various types of paper widely used in the
minimum dividend, which will be submitted for approval at the Annual Shareholders education, hygiene and health areas, among others. Operating in global markets where
Meeting scheduled for April. there is growing demand for social and environmental responsibility throughout the
production chain, Fibria interacts with its various stakeholders, including several rural
Fibrias dividend policy envisages the possibility of paying extraordinary dividends communities adjacent to its operations. Focusing on innovation, operational excellence
throughout the year, in accordance with its cash generating capacity, providing its Debt and communication with its stakeholders, Fibria seeks to mitigate its negative impacts
and Liquidity Policies and commitment to investment grade status are respected. and maximize its contribution to society, assuming its role as an agent for change. The
Company is devoting its best efforts to adopting sustainable cultivation practices in its
CAPITAL MARKET forest plantations and constantly pursues greater industrial and logistics ecoefficiency,
with an unwavering willingness to share value with all its stakeholders. As a result of
Fibrias shares, which are traded in the Novo Mercado listing segment of the
these commitments, the Company received important recognition in 2016, such as
BM&FBovespa under the ticker FIBR3, fell by 39% in 2016, closing the year at R$31.89. being included in the Change the World list of U.S. Fortune magazine and winning the
On the NYSE, the Companys level III ADRs, traded under the ticker FBR, closed 2016 Best Company in the Pulp and Paper Sector award in the poca Negcios 360, Valor
at US$9.61, 24% down. The average daily trading volume on the BM&FBovespa and the 1000 and Melhores da Isto Dinheiro yearbooks. Fibria was selected, for the fifth time,
NYSE was 4.2 million in 2016, 36% up on 2015. The average daily financial volume was to form part of the portfolio of the Dow Jones Sustainability World Index (DJSI World), of
US$33.4 million, 20% lower than in the previous year. the New York Stock Exchange (NYSE). Fibria was the only company chosen from the
Paper and Forest Products sector, among nine companies competing to be part of the
Total shares (common shares) 553,934,646 common shares (ONs) global index. The Company was included in the Dow Jones Sustainability Emerging
ADR (American Depositary Receipt) 1 ADR = 1 common share Markets Index (DJSI Emerging Markets) for the fourth time and was also the only
company chosen among the seven that took part in the selection. At the BM&FBovespa,
Market cap on December 31, 2016 R$17.7 billion | US$5.4 billion
Fibria was once again included in the Corporate Sustainability Index (ISE).
Fibrias shares are included in the main Brazilian stock market indices (Ibovespa, IBRX- The Company annually publishes the Fibria Report, in accordance with the guidelines
50, IBRX-100, IGC, ITAG, ICO2 and ISE), as well as in the Dow Jones Sustainability (G4 version) of the Global Reporting Initiative (GRI) and the International Integrated
World Index (DJSI World) and the Dow Jones Sustainability Emerging Markets Index Reporting Council (IIRC). The report is filed with the CVM through the IPE system, in the
(DJSI Emerging Markets), important sustainability indices of the New York Stock Sustainability Report category, and is also available on the Companys website (www.
Exchange. fibria.com.br).
Fibria has maintained close relations with its investors and the market in general through Fibrias Position on Human Rights
the promotion of important public meetings and events, such as the Investor Tour, held Published in 2016 in accordance with the Human Rights Principles of the OCDE, the
at the Aracruz unit (ES) in September, and Fibria Day, held at the NYSE (USA) in document highlights the Companys commitment to respecting and supporting
December. universally recognized basic human rights and establishing principles and guidelines to
ensure the respect for and protection of these rights, as well as to ensure the
CORPORATE GOVERNANCE implementation of remedial measures should they be breached as a result of its direct or
indirect activities, and is applied throughout its production chain.
Born in 2009, Fibria completed its first seven-year cycle in 2016. The Company remains
Materiality
committed to the best corporate governance practices and has continuously improved
transparency for its stakeholders. Among the initiatives carried out in 2016 to improve its In 2016, Fibria updated its Materiality Matrix, which identifies the most important issues
governance, it is worth noting the reviewing of all the Companys corporate policies and for the Company and society as a whole, taking into account its strategy and the views
of its stakeholders. The issues of business expansion, innovation and technology,
the Internal Regulations of the Board of Directors, the advisory committees and the
economic management, supply chain management, human capital management,
Executive Board. There were also improvements such as the recommendation of
climate change and focus on the client, as well as the six topics dealt with below, make
expertise geared to diversity of experience and knowledge in the composition of the
up the thirteen main items in the Companys materiality matrix:
Board of Directors.
Sustainable forest management: Fibria preserves around 34% of its total area (364,000
Fibrias Corporate Governance Policy now includes clauses related to current practices,
hectares) through protection, restoration, management and integration with the forest
such as the installation of the Ad Hoc Committee for matters regarding Related Parties
crop base, and also seeks to minimize external pressures and degradation factors that
and the Board of Directors Crisis Management Committee. All the revisions to corporate
may be affecting these areas. One of the Companys long-term goals is to promote the
policies and internal regulations were approved by the Board of Directors and are environmental restoration of 40,000 hectares of its own areas between 2012 and 2025,
available on the Companys Investor Relations website. and had restored 22,524 hectares by the end of 2016. Biodiversity in Fibrias forest
In 2016, Fibria also improved and formalized the Board of Directors Skills Matrix. In areas is the subject of studies and monitoring that seek to understand, protect and
addition, in order to strengthen the Companys governance structure, the Board of expand the native fauna and flora species and populations. Fibria has certifications for
Directors decided to give Executive Area status to the area responsible for Internal its quality management, environmental, occupational health and safety and forest
Auditing, Corporate Governance, Risk Management, Compliance and the Ombudsman. management systems. All units are certified by the Forest Stewardship Council (FSC)
As a result, we created the Governance, Risk and Compliance Executive Area, which and Cerflor/PEFC.
reports directly to the Chairman of the Board of Directors, providing technical information Community relations: In certain specific communities located in underprivileged regions
to the Statutory Auditory Committee whenever necessary, and works with the CEO on in the north of Esprito Santo and the south of Bahia, there are social conflicts whose
administrative matters. origins are often not associated with the Company and which the Company is frequently
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DEMONSTRAES FINANCEIRAS
Financial statements 2016 2016
unable to resolve. Despite the complexity of the challenge, helping to settle these Fibrias classic Genetic Improvement Program, designed to achieve the long-term
conflicts is one of Fibrias priorities and the Company has been working either directly IMACel (air dried tons of pulp per hectare per year) goals established by the organization,
with the communities or by engaging with other parties that can also contribute to made significant progress, confirmed by the average potential of the new clones/clonal
creating solutions, such as the various spheres of government, NGOS and other compounds of 11.75 adt/ha/year, exceeding expectations for the period 2015-2019, with
companies. In fact, there has been notable progress in the resolution of these conflicts the additional advantage of lower vulnerability to biotic and abiotic stress resulting from
in the last five years, with concrete results that have had a positive impact on the social climate change.
license to operate.
The biotechnology program also achieved significant results in 2016, led by the continual
Local and regional development: Rather than minimizing impacts on the surrounding increase in our efficiency in the generation of new transgenic events. We have also
communities, Fibria wants to avoid them altogether, which is why it develops and continued with the research to assess the potential of other biotechnological tools, such
implements strategies, working together with the communities, for income generation as genome editing. The biosafety aspects and regulatory issues related to genetically
and local development. The company has invested more than R$150 million in its social modified eucalyptus (EucaGM) were the focus of a great deal of attention throughout
development programs since 2009. In 2016, more than 1,000 new families benefited 2016, with initiatives focused on both internal and external stakeholders.
from the Companys social projects, which currently cover over 7,000 families, enjoying
In 2016, the forest management research area analyzed and recommended new
a proven increase in income.
fertilizers, including by-products of our plants, using the Integrated Fertilization
Government relations: Fibria believes that, in a democratic society, everyone, including Recommendation System (SIRA), developed by Fibria. In recent years, the revision of
companies, has the right to participate in drawing up public policies and taking part in fertilizer formulas and the optimization, via SIRA, of the amounts of fertilizer applied,
discussions concerning the regulatory frameworks. The Company therefore seeks to have resulted in significant gains in logistics, costs and occupational safety. In addition,
contribute by defending its point of view through direct contact with authorities and new information was generated on alternative crops, in order to assess the potential of
politicians and/or by actively participating in the various associations that represent the these crops as a source of biomass for the diversification of Fibrias businesses.
forestry and pulp and paper sectors, of which it is a member, in order to ensure a stable
In the forest protection area, Fibria has become a forestry sector pioneer in the use of
political and institutional environment and clear and well-designed regulations.
the Big Data/Predictive Analytics approach in order to better understand the physiological
In this context, Fibria is guided by a structured model, with special emphasis on ethics disorder of eucalyptus, leading to the implementation of an action plan covering
and transparency, underpinned by the clear guidelines established in its Code of everything from risk zone mapping to the planting of tolerant clones, substantially
Conduct and Anti-Corruption Policy, approved by the Board of Directors. reducing the risks associated with the physiological disorder of eucalyptus. In 2016, the
Technology Center produced and introduced seven million natural enemies in
Transparency and leadership in institutional issues: In the course of its business, the
plantations, contributing to the integrated control of pests and diseases. We have
Company maintains relations with a wide range of stakeholders in various economic
developed methods to help classic genetic improvement, in the assessment of our
segments, Brazilian states and other countries. In order to ensure constructive
clones resistance to diseases, with an emphasis on diseases caused by bacteria, in
relationships with these stakeholders, it invests in dialog and specific communication
addition to a management package for areas with critical leafcutter ant infestations at the
channels, such as the Ombudsman, which is open to all stakeholders, guarantees
Trs Lagoas unit, which also contributed to retaining the FSC certification of all Fibria
anonymity and receives reports of violations of the Code of Conduct, and Fale com a
units.
Fibria (Contact Us), which receives suggestions, requests for information and complaints
from communities living in the vicinity of the Companys units. With the recent water shortage resulting from extreme weather conditions, forest
ecophysiology research is becoming increasingly important, encouraging Fibria to
The Company also voluntarily participates in several forums, associations and working
intensify its meteorological monitoring. In 2016, the Company increased its number of
groups, including the Brazilian Business Council for Sustainable Development (CEBDS),
meteorological stations from 37 to 57.
SustainAbilitys Engaging Stakeholders program, The Forests Dialogue (TFD), the UNs
Global Compact, the Pact for the Restoration of the Atlantic Forest and the Brazilian In 2016, the Technology Center developed Fibrias integrated forestry plan, in order to
Climate, Forest and Agriculture Coalition. ensure the maintenance of water in its areas without compromising the supply of wood
in the short, medium and long terms.
Management of water resources: Fibria continuously monitors the micro-basins in its
operational areas, in order to prevent or minimize any possible adverse effects of its In 2016, the Company substantially improved its intellectual property management,
forest management activities on the quantity and quality of the water, and the most competitive intelligence and technology prospecting. Fibria filed three new patent
recent results of this process indicate no such impacts on the water reserves in these applications. In addition, 26 important new patents were granted and three new
regions. The withdrawing of water for the mills and forest management activities is eucalyptus cultivars were protected.
authorized through licenses and registration, strictly in compliance with the local
We have also improved in the evaluation of less technologically mature processes,
environmental legislation. Based on the use of the best available water management
which have the potential to be included in the production line in the medium and long
technologies and practices and the adoption of effective prevention and control
terms, with lower input consumption, enhanced energy efficiency and higher final
procedures, the Company has achieved high levels of water reutilization. All the industrial
product quality.
units are in compliance with international water use and effluent quality standards.
Fibria has made impressive progress in the research on lignin, after acquiring the
TECHNOLOGICAL INNOVATION Canadian company Lignol Innovations, renamed Fibria Innovations, which is based in
Canada. In 2016, the value of our patent portfolio in this area increased and we moved
Through continuous investment in research and technological innovation, Fibria seeks a forward with the development of higher value-added applications for all kinds of lignin.
better understanding of the interaction between fibers, industrial processes and We also began engineering studies for the installation of our first operational-scale
products, thereby generating competitive advantages in the pulp market and contributing production unit.
to the diversification of the Companys businesses. The research and technological In addition, we have made significant progress in the development of research and
innovation undertaken by Fibrias Technology Center are geared towards increasing innovation related to the diversification of our bioproduct business. Worthy of note are
forest productivity, improving the quality of our forests and developing new products in a the pilot nanofibrillated cellulose production unit, which is in the final stage of construction,
sustainable manner. These efforts take place not only inside our laboratories, but also in and the partnership with the Canadian company CelluForce, the leader in the
association with universities, suppliers and research institutes around the world. Given development of nanocrystalline cellulose. The studies for the implementation of the first
the importance of innovation to the Companys strategy, in 2016, it invested around R$72 bio-oil plant in Brazil, in partnership with Ensyn, are still in progress.
million in this area, including operating expenses and capital expenditure.
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SUPPLIERS The latest measurement, conducted in 2016, showed a ratio of 6.1 engaged employees
for each disengaged worker, a significant improvement over the 2014 ratio of 3.3 to 1,
Fibria has an extensive and diversified supplier base, ranging from small farmers to reflecting the Companys excellence in personnel management. The climate survey is
large national and multinational corporations. It currently has around 8,000 registered conducted every two years and had a record respondent participation of 94%, against
suppliers, whom it seeks to engage in best social and environmental practices, focusing 91% in the 2014 survey, indicating the workers improved trust in the Company. The
on the responsible use of natural resources and respect for workers rights. favorability rating, which stood at 79% in 2016, was 7 percentage points up on the
The Company constantly requires that all its suppliers comply with the prevailing labor previous result (72%), another important improvement.
and environmental policies and legislation and with Fibrias health and safety criteria, As of January 2017, Fibria began the process of disclosure and breakdown of the results
whether its in the company approval and/or hiring processes or throughout the term of within the Company, allied to the continuous climate management efforts, in which
the contracts. Fibria has a Web Portal that optimizes communications with potential management and teams develop and monitor plans focused on initiatives that affect the
suppliers that are in the process of approval and the performance assessment of Companys results and performance.
strategic suppliers, as well as in the monitoring of their accessory obligations. In the Horizonte 2 Project, we began implementing the strategy of hiring and training the
Local development in the regions where it operates is another important aspect taken workers needed for the expansion of the unit in the Trs Lagoas region (MS). The project
into account by the Company, which prioritizes, whenever possible, the acquisition of involves building the technical capacity of members of the local community, in partnership
products and/or services from local suppliers. Also, in order to help these suppliers with SENAI, through the training and development of operators, mechanics and
improve their business, it sponsors and actively participates in development programs to technicians to support the capacity increase in that units industrial and forestry
certify such suppliers in regard to environmental, financial management, tax, labor, operations. The results obtained until now have been very positive, with more than 3,000
quality and occupational health and safety issues. These initiatives include the Integrated applicants for the 646 vacancies in the forestry operations. On the industrial operations
Supplier Development and Accreditation Program (PRODFOR) in Esprito Santo state, front, 98 people were trained and 65% of them were hired.
which was implemented by Fibria in 1998 and is now a national benchmark, having Fibria is strongly committed to the health and safety of its employees and outsourced
developed more than 650 suppliers, and the Supplier Accreditation Program (PQF workers in all its operations. Its Occupational Health and Safety system comprises tools
Avanado) in Mato Grosso do Sul state, set up by Fibria in 2010, which is led by the and practices selected on the basis of a global benchmark study conducted by the
Company and has more than 100 accredited suppliers. Whenever possible, the Company Company in order to help prevent accidents, incidents and occupational diseases. These
also participates as an anchor in the rounds of negotiations organized by official supplier practices have ensured compliance with the requirements of OHSAS 18001 and the
promotion and development bodies within its operational areas. These meetings are sustainable forest management certifications of CERFLOR and the FSC (Forest
designed to bring together small suppliers and major supply chain drivers. Stewardship Council). The Companys progress over the last seven years has led to a
As part of the Companys expansion strategy, involving the Horizonte 2 Project, Fibria reduction in the accident rate, resulting in lost days declining from 2.33 to 0.70 accidents
participated in the Production Chain Densification Program of the Mato Grosso do Sul per million man-hours worked, covering Company employees and outsourced workers
(69.9% decline). The rate of reportable accidents (OSHA_USA) fell from 8.26 to 4.06
state government. The Company held two seminars to open its service and product
(50.7% reduction).
contract lines, which were also attended by major suppliers engaged for the Project, who
subcontract products and services in the region, which then become part of the supply Unfortunately, despite all our efforts and progress, because we have a total workforce of
chain. The two events were attended by more than 100 suppliers, in the Business Round around 18,000 (including employees and outsourced workers), there are occasionally
format, with the support of the local SEBRAE. fatal accidents. In 2016, there were two cases, one involving an industrial maintenance
employee at the Jacare unit (SP) and another resulting from a road accident involving a
In 2016, Fibria established its Supply Chain Sustainability Strategy, with a current
driver in the wood logistics area, in Minas Gerais state.
diagnosis and the definition and prioritization of strategic action to increase the influence
of the Companys social, economic and environmental initiatives on its supply chain. Fibria is devoting its best efforts to continuously improve its practices and relentlessly
These initiatives, such as training, on-site audits, supplier manual and recognition, will pursues the goal of eliminating fatal accidents. All health and safety indicators are
be implemented in 2017 and are included in the remuneration of the Companys published every year in our Fibria Report.
executives.
RELATIONS WITH THE INDEPENDENT AUDITORS
Also in 2016, the On-site Audit Project was consolidated through audits at suppliers
facilities, taking into account fiscal, financial, health/safety, environmental, sustainability, Pursuant to CVM Instruction n 381/2003, we hereby declare that, in the fiscal year
labor and governance factors. This process gives us better insight into the suppliers ended December 31, 2016, we did not engage our independent auditors to carry out any
situation, mitigates possible risks and develops suppliers based on the identification of work other than that related to the external audit.
opportunities and suggestion of improvements in sub-par processes.
The Companys policy for engaging services, unrelated to the external audit, from our
independent auditors is based on internationally accepted principles that preserve their
PERSONNEL
independence, namely that the auditors: (a) shall not audit their own work; (b) shall not
For Fibria, having engaged employees means having people motivated to strive for perform management activities for their client; and (c) shall not promote their clients
excellent results. In order to assess whether this goal is being met, since 2014, Fibria interests.
has adopted a new climate survey, using Gallups Q12 employee engagement The Companys financial statements for December 31, 2016 were audited by BDO RCS
methodology. Auditores Independentes SS.
Marcelo Strufaldi Castelli Jos Luciano Penido

CEO Chairman of thze Board of Directors
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Consolidated balance sheet at December 31 (In thousands of Reais)
Assets 2016 2015

Current
Cash and cash equivalents (Note 9) 2,660,073 1,077,651
Marketable securities (Note 10) 2,033,159 1,411,864
Derivative financial instruments (Note 11) 256,723 26,795
Trade accounts receivable, net (Note 12) 634,987 742,352
Inventory (Note 13) 1,638,014 1,571,146
Recoverable taxes (Note 14) 144,182 462,487
Other assets 149,718 168,283
7,516,856 5,460,578
Non-current
Marketable securities (Note 10) 5,688 68,142
Related parties receivables (Note 16) 9,777 11,714
Recoverable taxes (Note 14) 1,717,901 1,511,971
Advances to suppliers (Note 22) 664,381 630,562
Judicial deposits 198,657 195,344
Deferred taxes (Note 15) 1,210,541 2,399,213
Assets held for sale (Note 1(b) / Note 37) 598,257 598,257
Other assets 111,032 92,714
Investments (Note 17) 130,388 137,771
Biological assets (Note 18) 4,351,641 4,114,998
Property, plant and equipment (Note 19) 13,107,192 9,433,386
Intangible assets (Note 20) 4,575,694 4,505,634
26,923,472 23,973,400
Total assets 34,440,328 29,433,978
Liabilities and shareholders equity 2016 2015

Current
Loans and financing (Note 23) 1,138,287 1,072,877
Trade payables (Note 24) 1,866,831 668,017
Payroll, profit sharing and related charges 168,056 170,656
Taxes payable 85,573 564,439
Dividends payable 396,785 86,288
Other payables 121,750 90,235
4,023,121 2,955,299
Non-current
Deferred taxes (Note 15) 409,266 270,996
Provision for legal proceeds, net (Note 25) 189,892 165,325
Liabilities related to the assets held for sale (Note 1(b) / Note 37) 477,000 477,000
16,599,527 13,663,359
Total liabilities 20,622,648 16,618,658
Shareholders equity (Note 29)
Share capital 9,729,006 9,729,006
Share capital reserve 11,350 15,474
Treasury shares (10,378) (10,378)
Other reserves 1,599,640 1,639,901
Statutory reserves 2,421,456 1,378,365
Equity attributable to shareholders of the Company 13,751,074 12,752,368
Equity attributable to non-controlling interests 66,606 62,952
Total shareholders equity 13,817,680 12,815,320
Total liabilities and shareholders equity 34,440,328 29,433,978
The accompanying notes are an integral part of these consolidated financial statements.
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Consolidated statement of profit or loss - Years ended December 31

In thousand of Reais, except for the income per shares
2016 2015 2014

Net revenues (Note 32) 9,614,817 10,080,667 7,083,603
Cost of sales (Note 34) (7,108,346) (5,878,209) (5,545,537)
Gross profit 2,506,471 4,202,458 1,538,066
Operating income (expenses)
Selling expenses (Note 34) (481,306) (437,253) (365,214)
General and administrative (Note 34) (275,797) (265,621) (265,077)
Equity in results of joint-venture (751) 393 (622)
Other operating income and expense, net (Note 34) (321,167) 24,347 749,462
(1,079,021) (678,134) 118,549
Income before financial income and expenses 1,427,450 3,524,324 1,656,615
Financial income (Note 33) 282,465 221,679 133,950
Financial expenses (Note 33) (751,710) (569,793) (1,040,597)
Result of derivative financial instruments, net (Note 33) 700,927 (830,128) (6,236)
Foreign exchange gain (loss) and indexation charges, net (Note 33) 1,384,535 (2,507,023) (721,842)
1,616,217 (3,685,265) (1,634,725)
Income (loss) before income taxes 3,043,667 (160,941) 21,890
Income taxes
Current (Note 15 (b)) (53,265) (684,246) (46,280)
Deferred (Note 15 (b)) (1,326,786) 1,202,172 186,942
Net income for the year 1,663,616 356,985 162,552
Attributable to
Shareholders of the Company 1,654,848 342,185 155,584
Non-controlling interest 8,768 14,800 6,968
Basic earnings per share (in Reais) (Note 36) 2.99 0.62 0.28
Diluted earnings per share (in Reais) (Note 36) 2.98 0.62 0.28
Consolidated statement of comprehensive income - Years ended December 31

In thousand of Reais
2016 2015 2014

Other comprehensive income
Items that will not be reclassified to profit or loss
Actuarial gains (loss) on post-employment benefit obligations (Note 30(c)) (39,427) 8,721 (7,288)
Tax effect thereon 13,405 (2,963) 2,478
Share of other comprehensive income - Veracel post-employment benefit
obligations (Note 30(c)) (370) (291)
Tax effect thereon 125 99
(26,267) 5,566 (4,810)
Items that may be subsequently reclassified to profit or loss
Foreign exchange effect on available-for-sale financial assets - Ensyn
Corporation (Ensyn) (Note 17)(b)) (20,682) 31,853 5,837
Tax effect thereon 7,032 (10,830) (1,985)
Foreign exchange effect on available-for-sale financial assets - CelluForce
Inc. (CelluForce) (Note 17)(b)) (522)
Tax effect thereon 178
(13,994) 21,023 3,852
Total other comprehensive income (loss) for the year, net of taxes (40,261) 26,589 (958)
Total comprehensive income for the year, net of taxes 1,623,355 383,574 161,594
Attributable to
Shareholders of the Company 1,614,587 368,774 154,626
Non-controlling interest 8,768 14,800 6,968
1,623,355 383,574 161,594
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Consolidated statement of cash flows - Years ended December 31

In thousand of Reais
2016 2015 2014

Income (loss) before income taxes 3,043,667 (160,941) 21,890
Adjusted by
Depreciation, depletion and amortization (Note 34) 1,922,741 1,827,097 1,790,628
Depletion of timber resources from forestry partnership programs (Note 22) 60,702 65,141 83,366
Foreign exchange (gain) loss and indexation charges, net (Note 33) (1,384,535) 2,507,023 721,842
Change in fair value of derivative financial instruments (700,927) 830,128 6,236
Equity in results of joint-venture 751 (393) 622
Loss (gain) on disposal of property, plant and equipment and
biological assets, net (Note 34) 31,342 (135,347) 68,297
Interest from marketable securities (185,832) (128,825) (83,055)
Interest expense 608,661 470,139 475,780
Change in fair value of biological assets (Note 18 / Note 34) 212,248 (184,583) (51,755)
Financial charges on Bonds upon partial repurchase 498,583
Impairment of recoverable taxes - ICMS (Note 14) 96,524 247,870 88,444
Tax credits (6,600) (849,520)
Provision for impairment of investments 6,716
Stock option program (4,124) 11,554 1,232
Amortization of transaction costs and other 22,126 8,124 23,704
Decrease (increase) in assets
Trade accounts receivable 2,481 207,542 (84,515)
Inventory (47,110) (213,897) 77,870
Recoverable taxes 39,972 (261,544) (172,337)
Other assets/advances to suppliers (53,515) (85,573) 121,814
Increase (decrease) in liabilities
Trade payables 1,213,678 (67,037) (19,569)
Taxes payable (428,478) (100,509) (49,130)
Payroll, profit sharing and related charges (2,600) 35,617 5,653
Other payables 29,410 (18,159) (16,142)
Cash provided by operating activities 4,470,582 4,853,427 2,666,654
Interest received 166,188 107,532 80,220
Interest paid (606,282) (405,546) (491,173)
Income taxes paid (106,411) (76,395) (28,945)
Net cash provided by operating activities 3,924,077 4,479,018 2,226,756
Cash flows from investing activities
Proceeds from sale of land and building - Asset Light project 902,584
Acquisition of property, plant and equipment, intangible assets and forests (6,087,674) (2,357,307) (1,539,883)
Advances for acquisition of timber from forestry partnership program (94,496) (608) (51,119)
Subsidiary incorporation - Fibria Innovations (11,630)
Marketable securities, net (539,199) (714,065) 408,577
Acquisition of interest in subsidiary (6,716)
Installments paid for acquisition of investment - CelluForce (Note 1(d)) (13,379)
Installments paid for additional acquisition of investment (19,593) (26,947)
Capital increase on joint-venture (3,267)
Proceeds from sale of property, plant and equipment 12,619 207,643 4,845
Advances received on disposal of assets (Losango) 7,000
Derivative transactions settled (Note 11(c)) (145,446) (419,631) (53,099)
Others (9) (1,260)
Net cash used in investing activities (6,870,842) (3,315,200) (356,018)
Cash flows from financing activities
Borrowings (Note 23) 7,741,537 3,087,989 4,345,609
Repayments of principal (Note 23) (2,746,808) (1,800,670) (6,636,153)
Premium paid on Bond repurchase transaction (365,351)
Dividends paid (306,376) (2,147,840)
Others (3,837) 7,879 11,902
Net cash provided by (used in) financing activities 4,684,516 (852,642) (2,643,993)
Effect of exchange rate changes on cash and cash equivalents (155,329) 305,408 (37,430)
Net increase (decrease) in cash and cash equivalents 1,582,422 616,584 (810,685)
Cash and cash equivalents at beginning of year 1,077,651 461,067 1,271,752
Cash and cash equivalents at end of year 2,660,073 1,077,651 461,067
www.fibria.com.br 9
Statement of changes in shareholders equity - Years ended December 31, 2016, 2015 and 2014
In thousands of Reais
Capital Other reserves Statutory reserves

Retained
Share Other Additional earnings Non-
issuance Capital Treasury comprehensive dividends (accumulated controlling
Capital costs reserve shares income Legal Investments proposed deficit) Total interest Total
As at January 1, 2014 9,740,777 (11,771) 2,688 (10,346) 1,614,270 303,800 2,805,481 14,444,899 46,355 14,491,254
Net income 155,584 155,584 6,968 162,552
Other comprehensive income (958) (958) (958)
(958) 155,584 154,626 6,968 161,594
DEMONSTRAES
Transactions with shareholders
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Unclaimed dividends forfeited 231 231 231

Stock option program 1,232 1,232 1,232
Dividends declared - non-controlling
interest (Portocel) (1,655) (1,655)
Minimum mandatory dividend
www.fibria.com.br
- 25% (Note 29) (36,951) (36,951) (36,951)
Legal reserve (Note 29) 7,779 (7,779)
FINANCEIRAS
Investment reserve appropriation 110,854 (110,854)

As at December 31, 2014 9,740,777 (11,771) 3,920 (10,346) 1,613,312 311,579 2,916,566 14,564,037 51,668 14,615,705
Net income 342,185 342,185 14,800 356,985
Other comprehensive income 26,589 26,589 26,589
2016 2016
26,589 342,185 368,774 14,800 383,574

Unclaimed dividends forfeited 158 158 158
Repurchase of shares (32) (32) (32)
Stock option program 11,554 11,554 11,554
Dividends distributed (Note 29) (2,110,854) (2,110,854) (2,110,854)
- 25% (Note 29) (81,269) (81,269) (81,269)
Additional dividend proposed (Note 29) 218,731 (218,731)
Investment reserve appropriation 25,075 (25,075)
As at December 31, 2015 9,740,777 (11,771) 15,474 (10,378) 1,639,901 328,689 830,945 218,731 12,752,368 62,952 12,815,320
Net income 1,654,848 1,654,848 8,768 1,663,616
Other comprehensive income (40,261) (40,261) (40,261)
(40,261) 1,654,848 1,614,587 8,768 1,623,355
Stock option program (4,124) (4,124) (4,124)
Dividends distributed (Note 29) (218,731) (218,731) (218,731)
- 25% (Note 29) (393,026) (393,026) (393,026)
Investment reserve appropriation (Note 29) 1,179,079 (1,179,079)
As at December 31, 2016 9,740,777 (11,771) 11,350 (10,378) 1,599,640 411,432 2,010,024 13,751,074 66,606 13,817,680
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Notes to the consolidated financial statements

at December 31, 2016 (In thousands of Reais, unless otherwise indicated)
1. Operations and current developments
(a) General information

Fibria Celulose S.A. is incorporated under the laws of the Federal Republic of Brazil, as a publicly-held company. Fibria Celulose S.A. and its subsidiaries are referred to in these
consolidated financial statements as the Company, Fibria, or we. We have the legal status of a corporation, operating under Brazilian corporate law. Our headquarters and
principal executive office is located in So Paulo, SP, Brazil.
We are listed on the Brazilian stock exchange (BM&FBOVESPA S.A. - Bolsa de Valores, Mercadorias e Futuros) and the New York Stock Exchange (NYSE) and we are subject to
the regulatory requirements of the Brazilian Comisso de Valores Mobilirios (CVM) and the U.S. Securities and Exchange Commission (SEC).
Our activities are focused on the growth of renewable and sustainable forests and the manufacture and sale of bleached eucalyptus kraft pulp. Forests in formation are located in
the states of So Paulo, Mato Grosso do Sul, Minas Gerais, Rio de Janeiro, Esprito Santo, Bahia and Rio Grande do Sul.
We operate in a single operating segment, which is the production and sale of short fiber pulp from our pulp production facilities located in the cities of Aracruz (State of Esprito
Santo), Trs Lagoas (State of Mato Grosso do Sul), Jacare (State of So Paulo) and Eunpolis (State of Bahia) (Veracel Celulose S.A. (Veracel), a jointly- controlled entity).
The pulp produced for export is delivered to customers by sea, under long-term contracts with shipping companies, through the ports of Santos, located in the State of So Paulo
(operated under a concession from the Brazilian Federal Government which expires in 2017) and Barra do Riacho, located in the State of Esprito Santo (operated by our subsidiary
Portocel - Terminal Especializado Barra do Riacho S.A. (Portocel)).
On December 9, 2015, we participated in the public auction n 03/2015, promoted by Agncia Nacional de Transportes Aquavirios - ANTAQ, a regulatory agency, for the leasing
of the public areas and infrastructures for handling and storage of paper, pulp and general cargo, for 25 years (renewable for 25 years). The Company was awarded the contract
based on its proposal for the Macuco Terminal (STS07), located in the port of Santos, State of So Paulo, in the amount of R$ 115,047, which the approval of the public auction and
the adjudication were published in the Federal Official Gazette on March 2, 2016. On September 29, 2016, we signed the instrument of investiture in the terminal.
With this approval and based on the standard IFRIC 12 - Service Concession Arrangements, the subsidiary Fibria Terminal de Celulose de Santos SPE S.A., recently established
by the Company for the administration of Macuco Terminal, recognized on March 2016, the amount of R$ 115,047 related to the grant concession rights into the group of Intangible
assets, which will be amortized over the concession period. The amortization of these rights will start on the same date that the Macuco Terminal is ready for use.
The main investments according to the contract include:
(i) a new storage facility, handling and transshipment of cargo equipment, with static capacity of 75,000 tons at least, ensuring the movement of 1,800,000 tons of pulp bales per
year; and,
(ii) the implementation of new railway lines for access to port facilities.
The startup of the terminal is expected for the second semester of 2017.
In May 2016, we started the acquisition of hardwood pulp produced by Klabin S.A. (Klabin), at its plant located in the city of Ortigueira, in the state of Paran, under a supply
agreement signed between the parties as disclosed to the market on May 4, 2015.
This is a take-or-pay agreement, with a six-year term commencing from the beginning of the plant operations (which may be extended upon agreement between the parties), being
four years at a minimum volume of 900,000 tons of short fiber pulp (except if otherwise agreed between the parties) and two years of a gradual reduction of volume (phase out),
equivalent to, respectively, 75% and 50% of the volume delivered in the fourth year of the agreement. The purchase price of the volume from Klabin will be based on the average
net price charged by the Company and the volume acquired may be sold for countries outside South America.
(b) Non-current assets held for sale
Losango project assets
On December 28, 2012, the Company and CMPC Celulose Riograndense Ltda. (CMPC) signed the definitive Purchase and Sale Agreement for the sale of all of the Losango
project assets, comprising approximately 100 thousand hectares of land owned by Fibria and approximately 39 thousand hectares of planted eucalyptus and leased land, all located
in the state of Rio Grande do Sul, in the amount of R$615 million.
The amount of R$ 477 million was received in advance and recognized under Liabilities related to the assets held for sale. Another installment, amounting to R$ 140 million, was
deposited in an escrow account and will be released to us once additional government approvals are obtained. In case the approvals are not obtained after the period of 96 months,
the amount paid will be returned to CMPC, plus interest, and the escrow deposits made by CMPC will be reverted.
Since the signing of the agreement with CMPC, we have taken all necessary actions to obtain the approvals needed, such as the fulfillment of all conditions precedent, the partial
renewal of the area operating license and filing the documentation required by the government agencies. We are confident that approval will be granted.
We have concluded that these assets should remain classified as assets held for sale as non-current assets as at December 31, 2016. However, the completion of the sale is not
under our sole control and depends on various government approvals, which have been slower than expected.
The Losango assets did not generate any significant impact in the years 2016, 2015 and 2014, since that at this moment, the result of the transaction has not been recognized.
(c) Expansion plan of the Trs Lagoas Unit
On May 14, 2015, the Board of Directors approved the Horizonte 2 Project for the construction of the second Trs Lagoas pulp production line, in the subsidiary Fibria-MS Celulose
Sul Mato-Grossense Ltda. (Fibria-MS).
The Horizonte 2 Project is under construction and consists of a new bleached eucalyptus pulp production line with a capacity of 1.95 million tons per year and an estimated
investment of US$2.3 billion (R$ 7.5 billion). The startup of the line is projected for the fourth quarter of 2017 and the physical execution is approximately 77% concluded.
The Project is being financed by the Companys operating cash flows and financing agreements negotiated with financial institutions.
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(d) Acquisition of equity interest

On November 18, 2016, the Company has executed (i) a subscription agreement pursuant to (subject to certain conditions) the acquisition of a minority equity interest in CelluForce
Inc. (CelluForce), a private company incorporated in Canada, with the headquarter in Montreal and which is the worlds leader in the commercial production of cellulose nanocrystals
(CNC); (ii) a shareholders agreement; and (iii) a strategic alliance agreement under which Fibria has the right of exclusive supply, in South America, of CNC produced under the
CelluForces technology.
CNC, a biodegradable and renewable product, have based solutions in numerous applications such as in the oil and gas field, in improving manufacturing processes of paper and
non-woven, in improving cement applications, in the development of electronic applications and in other segments like plastics and composites, paints and coatings, cosmetic
ingredients, health care industry, and food and beverage industries.
We paid the amount of CAD$ 5,300 thousand (equivalent then to R$ 13,379) for a number of preferred shares corresponding to approximately 8.3% of CelluForces capital.
Furthermore, pursuant to the
shareholders agreement executed by us and the other shareholders, we will be entitled to appoint one member for CelluForces Board of Directors. The corresponding balance
related to our ownership is presented under Investments (Note 17).
2. Presentation of financial statements and summary of significant accounting policies
2.1 Financial statements - basis of preparation

The financial statements have been prepared under the accounting basis of business continuity and the historical cost convention, as modified by available-for-sale financial assets,
other assets, financial liabilities (including derivative instruments) and biological assets measured at fair value.
(a) Accounting policies adopted
The Companys consolidated financial statements have been prepared and are being presented in accordance with and in compliance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB), and disclose all (and only) the applicable significant information related to the financial
statements, which is consistent with the information utilized by management in the performance of its duties.
The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgment in the process of applying the
Fibrias accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements,
are disclosed in Note 3
(b) Approval of the financial statements
The consolidated financial statements were approved by the Board of Directors and Fibrias Management on January 27, 2017.
2.2 Consolidation
2.2.1 Consolidated financial statements
Intercompany transactions, balances and unrealized gains and losses on transactions between group companies are eliminated. Unrealized losses are also eliminated unless the
transaction provides evidence of a loss in value (impairment) of the asset transferred. Accounting policies of subsidiaries have been modified where necessary to ensure consistency
with the policies adopted by the Company.
(a) Subsidiaries
Subsidiaries are all entities (including special-purpose entities) over which the Fibria has the power to govern the financial and operating policies of the entity, generally through a
majority voting stake. The Company controls an entity when the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to
affect those returns through its power over the entity. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing
whether Fibria controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred to Fibria and de-consolidated from the date that control
ceases.
The exclusive controlled investment fund is consolidated.
(b) Joint operations
Veracel Celulose S.A. (Veracel), Asapir Produo Florestal e Comrcio Ltda. (Asapir) and VOTO - Votorantim Overseas Trading Operations IV Limited (VOTO IV) are joint
operations, accordingly, assets, liabilities, revenue and expenses are recognized in relation to the interest in the joint operation.
None of the jointly-operated entities have publicly traded shares.
The Company does not have any significant restrictions or commitments with regards to its jointly-operated entities.
The balance of assets, liabilities and net revenue at December 31, 2016 and 2015 of the jointly-operations are separately presented (Note 17(a)).
(c) Associated companies and joint ventures
Associates are all entities over which the Company has significant influence but not control or joint control, generally with an ownership percentage between 20% and 50% through
voting rights.
Investments in associates and joint ventures are accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and
the carrying amount is increased or decreased to recognize the investors share of the profit or loss of the investee after the date of acquisition.
Currently the Company has a 50% share in the joint venture F&E Technologies LLC, an US incorporated entity.
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(d) Subsidiaries and jointly-operated entities
The subsidiaries and jointly-operated entities included in the consolidation are as follows:
Percentage of total capital
2016 2015
Direct Indirect Total Total
Companies located in Brazil
Asapir (i) 50 50 50
Fibria-MS 100 100 100
Fibria Terminais Porturios S.A. 100 100 100
Fibria Terminal de Celulose de Santos SPE S.A. (ii) 100 100
F&E Participaes Ltda. 100 100
F&E Tecnologia do Brasil S.A. 100
Portocel 51 51 51
Projetos Especiais e Investimentos S.A. 100 100 100
Veracel (i) 50 50 50
Companies located abroad
Fibria (Europe) S.A. (iii) 100
Fibria Celulose (USA) Inc. 100 100 100
Fibria Innovations Inc. 100 100
Fibria International Celulose GmbH. (iv) 100
Fibria International Trade GmbH. 100 100 100
Fibria Overseas Finance Ltd. 100 100 100
Fibria Overseas Holding KFT 100 100 100
Fibria Trading International KFT 48.3 51.7 100 100
Green Parrot BV (iii) 100
VOTO IV (i) 50 50 50
(i) Jointly-operated entities, as detailed in Note 2.2.1 (b).

(ii) Subsidiary established to participate in the public auction of the Macuco Terminal, in which was awarded (Note 1(a)).
(iii) The subsidiaries Fibria (Europe) S.A. and Green Parrot BV were closed in May and August 2016, respectively.
(iv) The subsidiary was incorporated by the subsidiary Fibria International Trade GmbH., in October 2016.
2.3 Segregation of assets and liabilities between current and non-current
Current assets or liabilities are those for which expectation for realization or disbursement is no more than 12 months after the balance sheet date.
2.4 Foreign currency translation
(a) Functional and presentation currency
The Brazilian Real (Real, Reais or R$) is the functional and presentation currency of the Company.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or the date of valuation when re-
measured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are presented as Foreign exchange gain (loss) and indexation charges, net in the Statement of profit or loss.
2.5 Cash and cash equivalents
Cash and cash equivalents include cash, bank deposits, and highly liquid short-term investments, which have original maturities up to 90 days and are readily convertible into a
known amount of cash and subject to an immaterial risk of change in value.
2.6 Financial assets
2.6.1 Classification, recognition and measurement
The Company classifies its financial assets in the following categories: (a) at fair value through profit or loss (b) held-to-maturity investments, (c) loans and receivables and (d)
available for sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial
assets at initial recognition.
Regular purchases and sales of financial assets are recognized on the trade date - the date on which Fibria commits to purchase or sell the asset. Financial assets are derecognized
when the rights to receive cash flows from the investments have expired or have been transferred but only if Fibria has transferred substantially all risks and rewards of ownership.
(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss comprise the financial assets held for trading and the derivative financial instruments, including embedded derivatives and are
initially recognized at fair value, and the transaction costs are recorded in the Statement of profit or loss. Changes in fair value are recognized in the profit or loss under Financial
income or Financial expenses, depending of the results obtained, for non-derivative instruments, and under Result of derivative financial instruments for derivative instruments.
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(b) Held-to-maturity investments

The held-to-maturity investments comprise the investments in non-derivative instruments that the Company has the ability and intention to hold until maturity and are measured
initially at fair value, including cost of the transaction and subsequently at amortized cost. The Company evaluates whether there is objective evidence that a financial asset or a
group of financial assets is registered above its recovery value.
(c) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market, comprise the Trade account receivables,
Related parties receivables and Cash and cash equivalents and are carried at amortized cost using the effective interest method.
(d) Available-for-sale financial assets
Available-for-sale financial assets are non-derivative instruments that are either designated in this category or not classified in any of the other categories. The changes in the fair
value of the available for sale financial asset are recognized as follow: (i) the effect of foreign currency exchange and changes in the fair value of the investment are recognized
directly in Other comprehensive income in equity; and (ii) the effect of foreign currency exchange and changes in the fair value of the warrant of acquire shares are recognized in
profit or loss of the year.
2.6.2 Offsetting financial instruments
Financial assets and liabilities are offset and the net amount is reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is
an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
2.6.3 Impairment of financial assets
(a) Assets carried at amortized cost
The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a
group of financial assets is impaired only if there is objective evidence of an impairment as a result of one or more events that occurred after the initial recognition of the asset and
that loss event has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated.
The criteria that the Company uses to determine whether there is objective evidence of an impairment loss include:
significant financial difficulty of the issuer or debtor;
a breach of contract, such as a default or delinquency in interest or principal payments;
where Fibria, for economic or legal reasons relating to the borrowers financial difficulty, grants to the borrower a concession that the lender would not otherwise receive;
it becomes probable that the borrower will enter bankruptcy or other financial reorganization;
the disappearance of an active market for that financial asset because of financial difficulties;
observable data indicating that there is a measurable decrease in the estimated future cash flows from a portfolio of financial assets since the initial recognition of those assets,
although the decrease cannot yet be identified with the individual financial assets in the portfolio.
The amount of an impairment loss is measured as the difference between the carrying amount of the asset and the present value of estimated future cash flows discounted at the
financial assets original effective interest rate. If the financial asset is impaired the carrying amount of the asset is reduced and a loss is recognized in the Statement of profit or loss.
If, in a subsequent period, the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized (such as an
improvement in the debtors credit rating), the reversal of the previously recognized impairment loss is recognized in the Statement of profit or loss.
(b) Assets classified as available for sale
The Company assesses at the end of each reporting period whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of
investments classified as available for sale, a significant or prolonged decline in the fair value of the equity below its cost is also evidence that the assets are impaired. If any such
evidence exists for available for sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment
loss on that financial asset previously recognized other comprehensive income - will be recognized in profit or loss.
2.7 Derivative financial instruments and hedging activities
Derivatives are initially recognized at fair value on the date the derivative contract is entered into and are subsequently re-measured at fair value. Changes in fair value are recorded
in Result of derivative financial instruments in the Statement of profit or loss.
Embedded derivatives in non-derivative host contracts are required to be separated when their risks and characteristics are not-closely related to those of host contracts and these
are not measured at fair value through profit or loss.
Non-option embedded derivative are separated from the host contracts in accordance with its stated or implied substantive terms, so that they have zero fair value on initial
recognition.
Even though the Company uses derivatives to mitigate risks, hedge accounting has not been applied in the periods presented. The fair value of derivative instruments is disclosed
in Note 11.
2.8 Trade accounts receivable
Trade accounts receivable correspond to the amounts receivable from sales made in the course of the Companys normal business, less a provision for impairment, if necessary.
The calculation of the provision is based on a reasonable estimate to cover expected probable losses on the realization of receivables, considering the situation of each customer
and the respective guarantees.
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In performing such analysis of impairment, our Treasury Department examines on a monthly basis the maturity of receivables from domestic and foreign customers and identifies
those customers with overdue balances assessing the specific situation of each client including the risk of loss, the existence of contracted insurance, letters of credit, collateral and
the customers financial situation and the legal processes in the event of execution. As a result of this analysis management determines the amount to be recorded as an impairment.
The recognition and reversal of a provision for trade receivables is recorded as Selling expenses in the Statement of profit or loss.
2.9 Inventory
Inventory is stated at the lower of average purchase or production cost and the net realizable value. Finished products and work-in-process consist of raw materials, direct labor,
other direct costs and general production expenses.
The raw materials derived from biological assets are measured based on their fair value less cost to sell at the point of harvest, when transferred from biological assets to inventory.
Imports in transit are stated at the accumulated cost of each import. The net realizable value is the estimated sales price in the normal course of business, less selling expenses.
2.10 Current and deferred income tax and social contribution
Taxes on income comprise current and deferred tax. Tax is recognized in the Statement of profit or loss, except to the extent that it relates to items recognized in other comprehensive
income. In this case the tax is recognized directly in shareholders equity in other comprehensive income.
The current income tax charge is calculated based on the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Company operates and
generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation.
It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
Deferred income tax is recognized, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts. Deferred
income tax is determined using tax rates (and laws) that have been enacted or substantially enacted at the balance sheet date and are expected to apply when the related deferred
income tax asset is realized or the deferred income tax liability is settled.
Deferred income tax assets are recognized only to the extent that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries, except where the timing of the reversal of the temporary difference is controlled by
Fibria and it is probable that the temporary difference will not be reversed in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income
taxes assets and liabilities relate to income taxes levied by the same taxation authority on the same taxable entity.
2.11 Intangible assets
(a) Goodwill
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Companys interest in the net fair value of identifiable assets,
liabilities and contingent liabilities acquired and the fair value of the non-controlling interest in the acquired. Goodwill is recorded in intangible assets. Goodwill impairment reviews
are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable
amount, which is the higher of value in use and the fair value less costs to sell. An impairment charge is recognized immediately as an expense and is not subsequently reversed.
Gains and losses on sale of subsidiaries include the accounting value of the goodwill related to the subsidiary sold.
Goodwill is allocated to Cash Generating Units (CGUs) or groups of CGUs. The allocation is made to the CGUs or group of CGUs which will benefit/from the business combination
originating the goodwill. Each CGU or group of CGUs to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal
management purposes.
(b) Database
The database represents the technical knowledge accumulated over several years and the database of forestry and industrial technologies originating from the Aracruz Celulose
S.A. (Aracruz) acquisition. These assets are the bases for improvements in the productivity per hectare of eucalyptus and also in the industrial process of pulp production.
The database was recognized at fair value at the acquisition date; it has a definite useful life and is recorded at cost less accumulated amortization. The amortization is calculated
on a straight-line basis, at the annual rate of 10%, and recorded in the Statement of profit or loss in Other operating income and expense.
(c) Relationship with suppliers
This relates to the contracts that the Company has for the supply of chemical products, arising from the Aracruz acquisition.
This asset was recorded at fair value on the acquisition date, it has a definite useful life and is subsequently recorded at cost less accumulated amortization. Amortization is
calculated on a straight-line basis, at the annual rates of 6.3%.
(d) Development and implementation of systems (software)
The costs directly attributable to the development and testing of identifiable and unique software, controlled by Fibria, are recognized as intangible assets when the following criteria
are met: (i) it is technically feasible to complete the software for it to be available for use; (ii) management intends to complete the software and use or sell it; (iii) there is an ability
to use or sell the software product; (iv) it will provide probable future benefits that can be demonstrated; (v) suitable technical, financial and other resources are available to conclude
its development and to use or sell it; (vi) the attributable expenditure during its development can be reliably measured.
Software development costs are amortized over their estimated useful lives at an annual rate of 20%.
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2.12 Property, plant and equipment

Property, plant and equipment are stated at cost and depreciated on a straight-line basis, in accordance with the estimated economic useful lives of the related assets. Annual
depreciation rates are described in Note 19. Land is not depreciated.
The cost of major renovations is capitalized if the future economic benefits exceed the performance standard initially estimated for the asset. Renovations are depreciated over the
remaining useful life of the related asset.
Repairs and maintenance are expensed when incurred.
Loans and financing costs are capitalized during the period necessary to execute and prepare the asset for its intended use (Note 19).
The residual values and useful lives of assets are reviewed and adjusted, if appropriate, at the end of each year.
An assets book value is immediately written down to its recoverable amount if it is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing the proceeds with the book value and are recognized as Other operating income and expense in the Statement of
profit or loss.
2.13 Leases
At the inception of an agreement the Company determines whether a contract or set of contracts is or contains a lease when: (i) the performance of the contract is dependent upon
the use of that specified asset and, (ii) the contract gives the Company the right of use of the asset.
Leases of property, plant and equipment in which the Company assumes substantially all the risks and benefits of ownership are classified as finance leases. Finance leases are
recorded as a financed purchase, initially recognized as property, plant and equipment with a corresponding leasing liability.
Leases in which substantially all of the ownership risks and benefits are retained by the lessor are classified as operating leases.
The minimum payments for operating leases (net of any incentives received from the lessor) are expensed on the straight-line method over the lease term. The contingent values
of payment (those that are not a fixed amount but are based in the future amount of a factor such as volume of standing timber) are accounted in the periods where they are incurred.
Operational leases are recognized in profit and loss except for those related to land leased for forest plantations which are capitalized as part of the cost of biological assets.
2.14 Biological assets
Biological assets are measured semi-annually (June and December) at fair value, net of estimated costs to sell. Depletion is calculated based on the total volume harvested. The
fair value of the biological assets is estimated by Companys management and the counter entry of the valuation is recorded in Other operating income and expense.
Biological assets consist of eucalyptus forests exclusively from renewable plantations and intended for the production of bleached pulp. The cycle of harvesting following replanting
occurs between six and seven years.
2.15 Business combination
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured by the sum of consideration transferred, measured at fair value on
the acquisition date. The costs directly attributable to the acquisition are recorded as expense when incurred.
Initially, the goodwill is measured as the surplus of the consideration transferred in relation to the net assets acquired at fair value. After initial recognition, the goodwill is measured
at cost, less any accumulated impairment.
2.16 Impairment of non-financial assets other than goodwill
Assets that are subject to amortization are reviewed for impairment annually or whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Non-
financial assets other than goodwill that suffered impairment are reviewed for possible reversal of the impairment at each reporting date.
2.17 Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers and are recognized initially at fair value and
subsequently measured at amortized cost using the effective interest method. In practice, they are usually recognized at the invoiced amount.
2.18 Loans and financing
Loans and financing are initially recognized at fair value, net of transaction costs incurred and are subsequently stated at amortized cost. Any difference between the proceeds and
the redemption value is recognized in the Statement of profit or loss over the period of the loans and financing using the effective interest rate method.
The premium paid in the repurchase of Bonds are presented as financing activities in the Statement of Cash Flows, when applicable.
2.19 Employee benefits
(a) Pension obligations
The Company participates in pension plans, managed by a private pension entity, which provide post-employment benefits to employees, under defined contribution plans to which
the Company pays fixed contributions and for which it has no legal liability to make additional contributions if the fund does not have sufficient assets to honor the benefits due to
employees for service in the current and prior periods.
Contributions represent net costs and are recorded in the Statement of profit or loss in the period in which they are due.
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(b) Health care (post-retirement)

Some of Fibrias subsidiaries used to provide post-retirement health care benefits in the form of a lifetime benefit to a specific group of employees which has since been discontinued
and closed to new participants from July 2007.
The liability related to the health care plan for retired employees is stated at the present value of the obligation. Managements estimate of the defined benefit obligation is calculated
annually together with independent qualified actuaries. The present value of the defined benefit obligation is determined through discounted future cash outflows (Note 30(c)).
Changes in the present value of the liabilities of the plan regarding the interest accrued are immediately recognized in the Statement of profit or loss. Actuarial gains and losses are
recognized directly in shareholders equity, in Other comprehensive income.
(c) Profit-sharing and bonus plans
As from 2015, the provisions for bonuses and profit-sharing programs are calculated based on qualitative and quantitative targets established by management and are recorded
with a charge to the Statement of profit or loss under Other operating income and expense.
(d) Share-based compensation
(i) Phantom Stock Options Plan
The Company offers a compensation plan in which the amount of the benefit is determined based on changes in the quoted market price of its shares, based on a predetermined
floor price and an established measurement date. The plan consists of cash payments, not involving the issue and/or delivery of shares for purposes of the plan. The Companys
CEO and statutory and non-statutory officers are eligible for the plan.
The provisions are recorded with a charge to the Statement of profit or loss under Other operating income and expense, based on the fair value of the benefits granted and the
vesting period. The fair value of this liability is re-measured at each reporting period.
(ii) Stock Options Plan
The Company operates an equity-settled arrangement under which it receives services from employees as consideration for equity instruments (stock options) of the Company. The
fair value of the employee services received in exchange for the grant of the options is recognized in the Statement of profit or loss under Other operating income (expenses), net,
against to the capital reserve. The Companys CEO, statutory and non-statutory officers and general managers are eligible for the plan.
The total amount expensed is determined by reference to the fair value of the options granted, including any market performance conditions and the impact of any non-vesting
conditions and excluding the impact of any service and non-market performance vesting conditions. Non-market performance and service conditions include assumptions about the
number of options that are expected to vest.
The total expense is recognized over the vesting period, which is the period over which all of the specified vesting conditions are to be satisfied.
At the end of each reporting period, the Company revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. If necessary,
we recognize the impact of the revision to original estimates in the Statement of profit or loss, with a corresponding adjustment to shareholders equity.
The assumptions and model used to estimate the fair value of share-based compensation plans are presented in Note 31(ii).
2.20 Contingent assets and liabilities
Assets, previously treated as contingent, are recognized only when there is evidence that realization is virtually certain, generally when favorable, final and unappealable court
decisions have been obtained and for which the value can be measured. Contingent assets, for which such conditions are not met, are only disclosed in the notes to the financial
statements when material.
Contingent liabilities are provided to the extent that the Company expects that is probable that it will disburse cash and the amount can be reliably estimated. Tax and civil
proceedings are accrued when losses are assessed as probable and the amounts involved can be reliably measured. When the expectation of loss is possible, a description of the
processes and amounts involved is disclosed in the notes to the financial statements. Labor proceedings are provisioned based on the historical percentage of disbursements. Tax
and civil contingent liabilities assessed as remote losses are neither accrued nor disclosed.
2.21 Asset retirement obligations
These primarily relate to future costs for the decommissioning of industrial landfill and related assets. A provision is recorded as a long-term obligation against fixed assets. The
provision and the corresponding asset are initially recorded at fair value, based on the present value of estimated cash flows for future cash payments discounted by an adjusted
risk-free rate. The long-term obligation accrues interest using a long-term discount rate. The asset is depreciated on a straight-line basis over the useful life of the principal.
Depreciation is recorded in the Statement of profit or loss.
2.22 Revenue recognition
Fibria recognizes revenue when: (i) the amount of revenue can be reliably measured; (ii) it is probable that future economic benefits will flow to the entity; and (iii) when specific sales
criteria have been met including transfer of property and transfer of the risk of the product to the client. The latter is based on Incoterm (pre-defined commercial terms published
by the International Chamber of Commerce) parameters and confirmation of available credit by the customer in order for the sale to be consummated. Revenue is the net amount
after deduction of taxes, discounts and sales returns.
(a) Sale of products
The recognition of revenue for domestic and export pulp sales is based on the following principles:
(i) Domestic market - sales are mainly made on credit. Revenue is recognized when the customer receives the product, whether on the carriers premises or at its own premises, at
which point risk and rewards of ownership are transferred.
(ii) Export market - export orders are normally supplied from third party warehouses located near strategic markets; sales are mainly made on credit. Revenue is recognized as per
the Incoterm parameters.
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(b) Financial income

Financial income is recognized on an accrual basis, using the effective interest method, and to the extent that realization is probable.
2.23 Dividend distribution
Dividend distribution to the Companys shareholders is recognized as a liability based on the Companys by-laws and in the dividend policy. Any amount that exceeds the minimum
mandatory dividend is highlighted in the statement of changes in shareholders equity as Additional dividends proposed until approval by the shareholders at the general meeting.
2.24 Non-current assets held for sale
The Company records assets held for sale as non-current assets when the asset (or disposal group of assets) is available for immediate sale in its present condition and subject
only to terms that are usual and customary for sales of such assets and the sale is highly probable.
The Company measures the assets held for sale (or group of assets) at the lower of its carrying amount and fair value less costs to sell. If the carrying amount exceeds the fair value
less costs to sell an impairment loss is recognized in the Statement of profit or loss. Any subsequent reversal of impairment is recognized only to the extent of the loss previously
recognized.
The depreciation of an asset (or group of assets) stops when it is classified as held for sale. The assets and liabilities of a disposal group classified as held for sale are presented
separately and are not offset and presented as a single amount.
2.25 New standards, amendments and interpretations issued by IASB
The standards below have been issued and are effective for future periods, as from January 1, 2018. We have not early adopted these standards.
Standard Effective date Main points introduced by the standard Impacts of the adoption
IFRS 9 - Financial Instruments January 1, 2018 The main change is that, in cases where the fair value option is taken The Company is currently assessing the
for financial liabilities, the part of a fair value change which is due to changes introduced by the standard and does
an entitys own credit risk is recorded in Other comprehensive income not expect significant impacts.
rather than the Statement of profit or loss.
IFRS 15 - Revenue from January 1, 2018 This accounting standard establishes the accounting principles to The Companys evaluation of all the impacts
Contracts with Customers determine and measure revenue and when the revenue should be of the new standard is in progress. Our
recognized. preliminary assessment regarding the impacts
on the measurement and timing for the revenue
recognition from our contracts with customers
indicates no significant impact. We are still
evaluating other aspects of the standard
application in order to conclude our analysis.
IFRS 16 - Leases January 1, 2019 This accounting standard replaces the previous leases standard, IAS The Company is currently assessing the
17 Leases, and related interpretations and sets out the principles for impacts of the adoption.
the recognition, measurement, presentation and disclosure of leases
for both parties to a contract, i.e., the customers (lessees) and the
suppliers (lessor).
Lessees are required to recognize a lease liability reflecting future
lease payments and a right-of-use asset for virtually all lease
contracts, except for certain short-term leases and leases of low-
value assets. For lessors, the accounting stays almost the same and
continues to classify its leases as operating leases or finance leases,
and to account for those two types of leases differently.
There are no other IFRS or IFRIC interpretations that are not yet effective that the Company expects to have a material impact on the Companys financial position and results of
operations.
3. Critical accounting estimates and assumptions
The Company makes estimates concerning the future based on assumptions. The resulting accounting estimates will, by definition, seldom equal the related actual results.
Management believes that the estimates and assumptions that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within
the next financial year are those addressed below.
(a) Income tax and social contribution
The Company recognizes deferred tax assets and liabilities based on the temporary differences between the financial statement carrying amounts and the tax basis of assets and
liabilities. If we or one of our subsidiaries operate at a loss or are unable to generate sufficient future taxable income, or if there is a material change in the actual effective tax rates
or time period within which the underlying temporary differences become taxable or deductible, our deferred tax asset could be reduced and, then the effective tax rate would
increase.
The Company has had a history of recurring taxable income, which has recently been offset by net operating loss carryforward assets. The Companys management believes, based
on projections of income approved at the appropriate levels, that it is probable the deferred tax asset will be fully realized.
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(b) Employee benefits
The current value of the obligations under the healthcare plan depends on a number of factors that are determined based on actuarial calculations using various assumptions. The
discount rate is one of the assumptions used in determining the net cost (revenue) of the actuarial obligations due, which is based on returns offered by Brazilian Government Bonds,
which are denominated in the currency in which the benefits will be paid and that have terms to maturity similar to the terms of the obligations of the healthcare plan (Note 30).
The liability for share-based compensation regarding to Phantom Stock Options plan is recorded at its estimated fair value which is calculated by the Company using the Binomial
Tree model-Trinomial. The fair value of each option granted under the Stock Option plan is estimated at the grant date based on the Black & Scholes option pricing model. Any
changes in the assumptions used for calculating the liability will affect the amount recorded at the balance sheet date.
(c) Fair value of derivatives and other financial instruments
The fair value of financial instruments that are not traded in an active market is determined by using valuation techniques. Fibria uses judgment to select a variety of methods and
make assumptions that are mainly based on market conditions existing at the end of each reporting period. The Company also uses its judgment to define scenarios and the
assumptions for sensitivity analyses (Note 5).
Any changes to the assumptions used for calculations involving the fair value of financial instruments could significantly affect the financial position of the Company.
(d) Biological assets
The calculation of the fair value of biological assets takes into consideration various assumptions which require a high degree of judgment. Any changes in these assumptions, would
have an impact on the discounted cash flow result, resulting in an appreciation or devaluation of these assets (Note 18).
The Company reviewed the assumptions used in the calculating of the fair value of biological assets and concluded as appropriate changing, from 2016, the assumption called
actual planted area, so that the immature forests (up to two years from the date of planting) are maintained at historical cost, as a result of the Managements understanding that
during this period, the historical cost of biological assets approximates of their fair value. The purpose of this change is to reflect the experience acquired in the measurement process
of biological assets and the alignment of the calculation methodology to the Companys forest management, which considers continuous forest inventories with the purpose of
estimate the volume of timber stock or future production projections, represented by the average annual growth (IMA), from the third year of planting.
The assumption regarding the net average sale price of biological assets (measured in R$/m) is now supported only in market prices research, in order to maximize the usage of
external and independent data to measure the fair value of the forests.
If the aforementioned changes would not have been made, the fair value adjustment of biological assets would have generated a higher expense of R$ 10,565 in relation to the
amount recognized as at December 31, 2016.
The other assumptions used by the Company to calculate the fair value of biological assets have not changed.
The main assumptions used by Management to calculate the fair value of the biological assets and the correlation between changes in such premises and the fair value of the
biological assets, are described as follows:
Assumptions used Impact on fair value of the biological assets

Actual planted area (hectare) Increase of the premise, increase the fair value
Average annual growth (IMA) - m3/hectare Increase of the premise, increase the fair value
Net average sale price - R$/m3 Increase of the premise, increase the fair value
Remuneration of own contributory assets - % Increase of the premise, decrease the fair value
Discount rate - % Increase of the premise, decrease the fair value
(e) Allowance for doubtful accounts
The allowance for doubtful accounts is recorded in an amount we consider sufficient to cover any probable losses on realization of our accounts receivable from our customers and
is included in selling expenses. Our accounting policy for establishing the allowance for doubtful accounts reserve requires that all invoices be individually reviewed.
(f) Review of the useful lives and recoverability of long-lived assets
The Company reviews its long-lived assets to be held and used in its activities for impairment. Whenever events or changes in circumstances indicate that the carrying value of an
asset or group of assets may not be recoverable on the basis of future cash flows. The Company reduces the net book value if the carrying amount exceeds the recoverable amount
(Note 38).
(g) Contingent assets, contingent liabilities and legal obligations
The Company is currently involved in certain labor, civil and tax proceedings. The provision for legal proceeds is recorded based on Managements evaluation and on the advice of
internal and external legal counsel, and are subject to a high level of judgment (Note 25).
(h) Goodwill impairment
The Company performs impairment tests at least annually, or more frequently when events or changes in circumstances may indicate that the carrying amount of cash-generating
units to which goodwill has been allocated might not be recoverable (Note 2.16). The recoverable amount of CGUs is determined based on calculations of the value in use, which
involves significant estimates (Note 38(a)).
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4. Risk management
The Companys activities expose it to a variety of risks. Management classifies the risks inherent to its business in the following categories:
(a) Financial risks - corresponds to inadequate cash management, use of resource in new operations, unknown risks, with greater complexity and/or high risk (items 4.2.1(a),
4.2.1(b) and 4.2.1(c)).
(b) Compliance risk - corresponds to legal or regulatory penalties, financial losses or reputational damage that the Company may face due to regulatory noncompliance and include
social and environmental, labor and tax risk assessments.
(c) Operational risk - results from the lack of consistency or adequacy of information systems, processing and operational controls, asset management failures, or cash flow
management, or from potential frauds that affect the activities of the Company.
(d) Strategic risk - results from internal and external events that affect the reputation and sustainability of the Company, such as the risks related to the lack of capability or ability by
the Company in response to changes that can impact the achievement of the strategic subjects.
4.1 Social and environmental risks
(a) Risks associated with climate changes
Our activities are exposed to the potential effects of climate changes, which may affect the equilibrium of the ecosystems, the productivity of the forest and the availability of water
and energy.
Fibria manages and operates its forest and industrial activities through the adoption of controls and monitoring tools, such as agronomic studies, genetic improvement for the
production of eucalyptus that contemplate genetic modifications to adapt to different climatic conditions, monitoring of water consumption in forested areas, among others.
(b) Environmental risks
(i) Management of water resources - Fibria constantly monitors the situation in the watersheds where it operates with respect to water quantity and quality that might affect the
Companys forest management. Use of water by the industrial plants is governed by the environmental legislation of each location and the licensing requirements of each plant.
All our facilities operate under proper and valid licenses.
(ii) Forest protection - protection of the forests against pests, disease, weeds and fires is based on a strategy involving continuous cycles of prevention, monitoring and control. The
Company has ongoing efforts to select and plant increasingly resistant plant strains, and is also concerned with preserving an ecological balance and acquiring know-how to
improve its forest management.
(iii) Biodiversity - the Companys forestry activities are licensed by the relevant regulatory bodies and socio- environmental planning activities are performed. Areas of native forest
species are interspersed with eucalyptus plantations. Fibria strives to maintain its protected areas to conform to the Legal Reserves, Permanent Preservation Areas (APPs) and
Private Natural Heritage Reserves (RPPNs) through the protection, restoration, management and integration of those areas with its forest activities. The Company also seeks
to minimize external and degradation elements that may affect these areas.
(iv) Waste - Fibria is undertaking efforts to recycle pulp production waste by transforming them in products that can be used in the forestry area. This practice generates both
environmental and economic benefits, with reduction in disposal of waste in landfills and replacing supplies with recycled waste in the silviculture operations.
(c) Impacts on communities
Fibria is committed to support communities with different economic, social and cultural backgrounds, which are affected positively or negatively and in different degrees, by the
cultivation of eucalyptus trees. In order to maintain a healthy relationship with all communities, the Company has developed a plan to monitor these neighboring populations and
classified them based on their degree of relationship with the Company. The relationship model has been implemented in all the forestry operations with respect to the silviculture
and harvest activities.
(d) Contracting with suppliers
In order to mitigate the risk of our suppliers hiring child or forced labor, we require suppliers to provide a formal confirmation with respect to this matter.
Two other mandatory requirements to engage our suppliers are compliance with the environmental policies of Fibria and with the criteria for safe transportation (Safe Road Program).
All contracts with suppliers and other business partners incorporate our Code of Conduct or refer to it. The Code reinforces the prohibition of discriminatory practices or violation of
existing legislation. The process to certify approval of suppliers is renewed every two years.
4.2 Financial risks
4.2.1 Factors of financial risks
Fibrias activities expose it to a number of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk, price risk and commodity price
risk), credit risk and liquidity risk. The majority of sales are denominated in U.S. Dollars, while costs/expenses are predominantly incurred in Reais. Accordingly, there is a currency
mismatch between costs/expenses and revenues.
Our overall risk management program focuses on minimizing, mitigating or transferring exposures to market risks. In this context, derivatives are used exclusively for economic
hedge purposes as follows: (i) cash flow hedge against currency mismatching; (ii) cash flow hedge of debt and interest payments against interest and exchange rate volatility; and
(iii) hedge against volatility in the price of pulp or other risk factors.
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The execution of the operations to mitigate market risks is carried out by a central Treasury department following policies approved by the Board of Directors. The control of risks
and monitoring of compliance with the policies is performed by the General Governance, Risks and Compliance (GRC) department, which reports directly to the CEO and to the
Finance Committee (an advisory committee to the Board of Directors) and is sufficiently independent to report non-compliance with the policies, to measure and assess market
risks. The GRC department monitors all market risk exposures and ensures compliance with our policies. The Treasury department identifies, evaluates and hedges financial risks
following the policies established. The Board of Directors reviews on an annual basis the policies and principles for the overall risk management, definition of the areas involved, use
of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
Policies for the use of derivative financial instruments
On July 28, 2016, the Companys Board of Directors approved the revision of the Market Risk Management Policy. The use of derivative financial instruments should follow such
policy. The use of derivative financial instruments is, in the view of management, conservative. Every derivative contracted should be matched to an underlying risk, generated by a
hedged item which in turn results from operational transactions that expose the Company to risks related to changes in the price of commodities or risks arising from debt.
Accordingly, derivative transactions are only permitted if related to an existing exposure (hedge); leveraged financial instruments are not allowed.
(a) Market risk
This is related to changes in prices or rates including interest rates, exchange rates and commodities prices. These changes may affect the expected return of an investment, a
financial investment, revenue from probable sales, the cash flow and fair value of principal and interest on loans. Indicators and an internal assessment tool were developed to
measure these risks. An internal tool was also developed to assess the impacts of stressed scenarios and to perform sensitivity analysis and analysis of gaps.
(i) Foreign exchange risk
The Company operates internationally and is exposed to foreign exchange risk arising from various currency exposures, mainly with respect to the U.S. Dollar.
The Companys financial policy establishes that the purpose of its operations with derivatives is to reduce costs, mitigate cash flows volatility, hedge foreign exchange exposure and
avoid currency mismatches.
The following table presents the carrying amount of the assets and liabilities denominated in U.S. Dollars:
2016 2015
Assets in foreign currency
Cash and cash equivalents 1,338,037 1,068,180
Trade accounts receivable (Note 12) 526,404 674,224
1,864,441 1,742,404
Liabilities in foreign currency
Trade payables (Note 24) 1,016,501 76,304
Derivative financial instruments (Note 11) 129,309 1,081,533
10,183,398 11,372,952
Liability exposure 8,318,957 9,630,548
The Company calculates its net exposure to each risk factor. When the risk factor is an exposure to the U.S. Dollar or Euro, maximum hedge limits are determined for exposure of
up to 18 months. Hedging the exposure of transactions for periods between 12 and 18 months requires a recommendation by the Finance Committee. Exceptionally, during the
construction phase of the Horizonte 2 Project, the cash flow hedges can reach the maximum limit of 36 months.
The Companys exposure to foreign currency generates market risks associated with changes in the exchange rates. Liabilities in foreign currency include loans obtained, mainly,
in U.S. Dollars. The majority of the Companys sales abroad are denominated in U.S. Dollars, while the sales of pulp in Brazil are in Reais. Accordingly, the Companys liabilities act
as a natural hedge for currency exposure in relation to export revenue, mitigating the mismatch between assets and liabilities over the long term.
(ii) Cash flow and fair value interest rate risk
As Fibria has no significant interest-bearing assets, its net income and operating cash flows are substantially independent of changes in market interest rates on such assets.
Interest rates risk from loans and financing contracted at variable interest rates exposes the Company to cash flow risk. Loans and financing contracted at fixed rates expose Fibria
to fair value interest rate risk.
The Company shall evaluate on an annual basis the optimal percentage between fixed-rate debts and debts with floating rates. This review will be made by the Treasury department
and GRC department, who will report annually the results to the Finance Committee.
The Finance and Investor Relations Director is responsible for evaluating the hedging strategy of interest rate and inflation, considering the results of evaluation of the optimal
percentage and market factors.
(iii) Commodity price risk
This risk is related to the volatility in the price of pulp, which is considered a commodity. Prices fluctuate depending on demand, productive capacity, inventories, commercial
strategies adopted by the major forestry companies, paper producers, and availability of substitutes for these products in the market.
This risk is managed through different strategies. The Company has a specialized team, which continuously monitors the price of pulp and analyses future trends, adjusting Fibrias
estimates, in order to assist in the process of taking preventive actions to best deal with the various scenarios. There is no liquidity in the market to sufficiently mitigate a substantive
portion of the risk to which Fibrias operations are exposed. Pulp price derivatives available in the market are characterized by their low liquidity and volume and as a result prices
may be subject to significant distortion.
Currently, the Company executes no derivatives to hedge against the fluctuation of the pulp price.
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(b) Credit risk

Credit risk is the risk of one counterparty failing to discharge its obligation.
For every type of credit exposure and type of agreement a specific model is developed in order to evaluate the risks, identifying the exposure and performing sensitivity analysis of
credit limits.
A monthly report is prepared by the Governance, Risk and Compliance department quantifying credit risk exposure arising from all Fibria relationships. Credit risk is managed on a
consolidated basis. Credit risk arises from cash equivalents (including bank deposits), derivative financial instruments, instruments recorded under marketable securities (Brazilian
Federal Government securities, Bank Deposit Certificates (CDBs), Fixed Income Box (CDB Box), reverse repurchase agreements), letters of credit, insurance companies, customers
(considering the payment terms agreed), suppliers (with respect to advances made for new projects) and others.
The analysis of customers and insurer credit is performed monthly by the Treasury department, as well as the suppliers (for advances for new projects), which is performed on
demand.
(i) Banks and financial institutions
Quantitative measures of credit risk were developed for exposures with banks and financial institutions (investments, current accounts and derivative financial instruments). The
expected value of the exposure Expected Credit Exposure (ECE) and the worst case expected exposure Worst Credit Exposure (WCE) of all exposures with counterparties are
measured (Note 8).
i) If the Company decides working with private issuers that have more than one rating assessment, the median of the rating classifications will be considered if three risks rating are
available and, the lower rating classification if two credit rating are available, issued by the following rating agencies: Fitch, Moodys and Standard & Poors.
ii) The rating required for the counterparties at the local level (Brazil), is A (or A2) or BBB+ (or Baa1) at the global level.
iii) Any private counterpart must have lonely concentration of, more than 25% of the resources under management for the Company and its Brazilians subsidiaries and, more than
27.5% for the foreign subsidiaries.
(ii) Clients and advance to suppliers
In the case of credit risk arising from customer credit exposure, Fibria assesses, through the Credit Committee, the credit quality of the customer, taking into account mainly past
experience and defines individual credit limits, which are continuously monitored.
Fibrias major customers are large highly-rated companies most of which have had a relationship with the Company for over 20 years, reducing the credit risk.
Credit analyses are performed on a regular basis and when considered necessary, and letters of credit or credit insurance coverage is obtained to protect the Company. The majority
of export sales to Europe and Asia are covered by letters of credit or credit insurance with the Compagnie Franaise d Assurance pour le Commerce Extrieur (COFACE).
The allowance for doubtful accounts is recorded at an amount sufficient to cover expected losses on the collection of trade accounts receivable and charged to Selling expenses
(Note 12).
(c) Liquidity risk
With respect to liquidity risk, the Companys policy is to maintain balances of cash and financial investments of at least an amount equivalent to the operational cash outflow for the
following 12 months plus debt service for a period of 12 months.
Surplus cash is invested in highly-liquid instruments; approved policies allow for a minor portion to be invested in instruments with maturity not exceeding 365 days.
All derivative instruments are over-the-counter derivatives and do not demand post margin deposits as collateral.
The table below presents Fibrias financial liabilities into relevant maturity groupings based on the remaining period from the balance sheet date to the contractual maturity date. The
amounts disclosed in the table are the contractual undiscounted cash flows and, therefore, differ from the amounts presented in the consolidated balance sheet.
Less than Between Between

one year one and two and two years five years Over five years
At December 31, 2016
Loans and financing 2,056,644 3,670,577 10,186,429 6,914,993
Derivative financial instruments 225,852 161,454 135,723 44,962
Trade and other payables 1,988,581 50,268 37,481 23,606
4,271,077 3,882,299 10,359,633 6,983,561
Loans and financing 1,358,138 4,451,707 7,326,394 2,817,802
Derivative financial instruments 319,954 560,572 902,136
Trade and other payables 758,252 68,327 44,902 39,556
2,436,344 5,080,606 8,273,432 2,857,358
4.2.2 Capital risk management
Management monitors indebtedness on the basis of a consolidated indebtedness ratio. This ratio is calculated as net debt divided by adjusted EBITDA (as defined below). Net debt
represents total loans, less cash and cash equivalents and marketable securities and the fair value of derivative financial instruments.
Adjusted EBITDA is defined by the Company as net income before interest, income taxes including social contribution, depreciation and amortization and other items including
non-cash fair value adjustments for biological assets.
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The Company aims to maintain a minimum cash balance in order to minimize the risk that cash flow mismatches affect the ability of the Company to meet its commitments. The
minimum cash balance is defined as the sum of: (i) the minimum operating cash used during the cash conversion cycle of the Company; plus (ii) the cash needs to meet financial
debt obligation (principal and interest) for the next 12 months. In addition, the Company may seek additional liquidity, through revolving credit facilities, to meet the minimum cash
balance required by the rating agencies methodologies. Fibrias liquidity is mainly monitored through 12-month projected cash flows. Cash flow projections comprise stress tests
considering exogenous market risk factors such as changes in foreign exchange rates, interest rates and pulp prices, as well as endogenous factors.
Management of debt and liquidity takes into account the contractual financial covenants, maintaining a safety margin in order to avoid breaching these parameters.
The Company prioritizes funding in the same currency as its primary source of cash generation, thus seeking a natural currency hedge over the long term for its cash flows. All
sources of funds are required to be approved pursuant to internal policies and procedures.
Treasury is responsible for developing contingency plans, which should specify all actions to address potential non-compliance. The plans are submitted to the Finance Committee
and monitored by all parties involved in this process.
The Company continues to focus on actions including reductions in fixed and variable costs, selling expenses, capital expenditure and improvements in working capital. We have
also focused on actions that may result in additional liquidity through the disposal of non-strategic assets. These actions are intended to maintain the capital structure of the
Company, resulting in an improved Net Debt to Adjusted EBITDA ratio.
5. Sensitivity analysis
Sensitivity analysis - changes in foreign currency exchange rates

The probable scenario is the closing exchange rate at the date of these consolidated financial statement (R$ x USD = 3.2591). As the amounts have already been recognized in the
consolidated financial statement, there are no additional effects in the Statement of profit or loss in this scenario. In the Possible and Remote scenarios, the U.S. Dollar is deemed
to appreciate/depreciate by 25% and 50%, before tax, when compared to the Probable scenario:
Impact of an appreciation/depreciation of the Real against
the U.S. Dollar on the fair value - absolute amounts
Possible (25%) Remote (50%)
Derivative financial instruments 875,054 1,941,308
Loans and financing 2,117,454 4,234,907
Cash and cash equivalents 334,509 669,019
Sensitivity analysis - changes in interest rates

We adopted as the probable scenario the fair value considering the market yield as at December 31, 2016. As the amounts have already been recognized in the consolidated
financial statement, there are no additional effects in the Statement of profit or loss in this scenario. In the Possible and Remote scenarios, the interest rates are deemed to
increase/decrease by 25% and 50%, respectively, before tax, when compared to the Probable scenario:
Impact of an increase/decrease of the interest rate on the
fair value - absolute amounts
Loans and financing
LIBOR 3,221 6,201
Currency basket 1,400 2,640
TJLP 2,755 5,212
Interbank Deposit Certificate (CDI) 8,600 16,168
Derivative financial instruments
LIBOR 14,262 24,576
TJLP 4,361 4,770
IPCA 52,982 102,100
Marketable securities (a)
(a) Only marketable securities indexed to post-fixed rate were considered in the sensitivity analysis above.
Sensitivity analysis - changes in the U.S. Consumer Price Index

To calculate the Probable scenario, we used the US-CPI index at December 31, 2016. The Probable scenario was stressed considering an additional increase/decrease of 25%
and 50% in the US-CPI for the definition of the scenarios Possible and Remote, respectively.
Impact of an increase/decrease of
US-CPI on the fair value - absolute amounts
Embedded derivative in forestry partnership and standing timber supply agreements 122,016 252,060
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6. Fair value estimates
The assets and liabilities measured at fair value in the balance sheet are classified based on the following fair value hierarchy Levels:
(a) Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities. Only the Brazilian Federal Government securities are classified as Level 1, recognized as
marketable securities.
(b) Level 2 - inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from
prices).
(c) Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).
Specific valuation techniques used to calculate the fair value of the assets and liabilities are:
quoted market prices or dealer quotes for similar instruments;
the fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable yield curves;
the fair value of forward foreign exchange contracts is determined using forward exchange rates at the balance sheet date, with the resulting value discounted back to present value;
other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining assets and liabilities.
the fair value of future contracts on the inflation rate (such as embedded derivative contained in contracts accounted for as capital leases), based on future inflation rates at the
balance sheet date, with the resulting value discounted to present value.
2016
Level 1 Level 2 Level 3 Total
Recurring fair value measurements
Assets
At fair value through profit and loss
Warrant to acquire Ensyns shares (Note 17(b)) 9,875 9,875
Marketable securities (Note 10) 170,747 1,856,668 2,027,415
Available for sale financial assets
Other investments - Ensyn (Note 17(b)) 104,389 104,389
Other investments - CelluForce (Note 17(b)) 12,857 12,857
Biological asset (Note 18) (*) 4,351,641 4,351,641
Total assets 170,747 2,355,714 4,478,762 7,005,223
Liabilities
Derivative financial instruments (Note 11) (480,634) (480,634)
Total liabilities (480,634) (480,634)
2015
Level 1 Level 2 Level 3 Total
Recurring fair value measurements
Assets
Marketable securities (Note 10) 40,614 1,365,478 1,406,092
Other investments - Ensyn (Note 17(b)) 125,071 125,071
Biological asset (Note 18) (*) 4,114,998 4,114,998
Total assets 40,614 1,665,967 4,252,018 5,958,599
Liabilities
Derivative financial instruments (Note 11) (1,128,450) (1,128,450)
Total liabilities (1,128,450) (1,128,450)
(*) See the changes in the fair value of the biological assets in Note 18.
There were no transfers between Levels 1, 2 and 3 during the years presented.
6.1 Fair value of loans and financing
The fair value of loans and financing, which are measured at amortized cost in the balance sheet, is estimated as follows: (i) bonds, for which fair value is based on the observed
quoted price in the market (based on an average of closing prices provided by Bloomberg), and (ii) for the other financial liabilities that do not have a secondary market, or for which
the secondary market is not active, fair value is estimated by discounting the future contractual cash flows by current market interest rates, also considering the Companys credit
risk. The fair value of loans and financing are classified as Level 2 on the fair value hierarchy. The following table presents the fair value of loans and financing:
CNPJ n 60.643.228/0001-21

Yield used to discount (*) 2016 2015

Quoted in the secondary market
In foreign currency
Bonds - VOTO IV 339,412 387,939
Bonds - Fibria Overseas 1,965,237 2,237,193
Estimated based on discounted cash flow
In foreign currency
Export credits LIBOR US$ 5,095,285 6,831,364
Export credits (ACC/ACE) DDI 46,445
Export credits (Finnvera) LIBOR US$ 1,107,075
In local currency
BNDES - TJLP Brazilian interbank rate (DI 1) 1,424,974 809,793
BNDES - Fixed rate Brazilian interbank rate (DI 1) 106,128 107,797
BNDES - Selic Brazilian interbank rate (DI 1) 164,368 11,110
Currency basket Brazilian interbank rate (DI 1) 506,779 549,246
Banco do Nordeste Brazilian interbank rate (DI 1) 105,734
CRA Brazilian interbank rate (DI 1) 3,786,581 658,573
FINEP Brazilian interbank rate (DI 1) 1,676 2,063
FINAME Brazilian interbank rate (DI 1) 2,130 4,951
NCE in Reais Brazilian interbank rate (DI 1) 672,653 694,859
Midwest Fund Brazilian interbank rate (DI 1) 11,138 21,303
FDCO Brazilian interbank rate (DI 1) 367,573
15,656,743 12,362,636
(*) Used to calculate the present value of the loans.
6.2 Fair value measurement of derivative financial instruments (including embedded derivative)
The Company estimates the fair value of its derivative financial instruments and acknowledges that it may differ from the amounts payable/receivable in the event of early settlement
of the instrument. This difference results from factors such as liquidity, spreads or the intention of early settlement from the counterparty, among others. The amounts estimated by
management are also compared with the Mark-to-Market (MtM) provided as reference by the banks (counterparties) and with the estimates performed by an independent financial
advisor.
A summary of the methodologies used for purposes of determining fair value by type of instrument is presented below.
S
wap contracts - the present value of both the asset and liability components are estimated through the discount of forecasted cash flows using the observed market interest rate
for the currency in which the swap is denominated, considering both of Fibrias and the counterparts credit risk. For the cross-currency swaps (BRL x US$) the discount is
calculated using the yield of the Dollar coupon and, for the swap of IPCA in local currency, the discount is calculated using the yield of the Brazilian interest rate - future yield of
the CDI. The contract fair value is the difference between the asset and liability. The only difference is the swap TJLP x US$, where the cash flows of the asset (TJLP x Pre) are
forecasted for a stable yield, accordingly to the value of the current TJLP, during all period of the swap, issued by the Banco Nacional de Desenvolvimento Econmico e Social
(BNDES).
O
ptions (Zero Cost Collar) - the fair value was calculated based on the Garman-Kohlhagen model, considering both Fibrias and the counterparty credit risk. Volatility information
and interest rates are observable and obtained from BM&FBOVESPA exchange information to calculate the fair values.
S
wap US-CPI - the cash flow of the liability position is projected using the yield of the US-CPI index, obtained through the implicit rates of US securities indexed to inflation (TIPS),
disclosed by Bloomberg. The cash flow of the asset position is projected using the fixed rate implicit in the embedded derivative instrument. The fair value of the embedded
derivative instrument is the present value of the difference between both positions.
The yield curves used to calculate the fair value in December 31, 2016 are as follows:
Interest rate curves
Brazil United States Dollar coupon
Vertex Rate (p.a.) - % Vertex Rate (p.a.) - % Vertex Rate (p.a.) - %
1M 13.92 1M 0.85 1M 12.25
6M 12.53 6M 1.05 6M 3.95
1Y 11.59 1Y 1.19 1Y 3.36
2Y 11.08 2Y 1.46 2Y 3.25
3Y 11.21 3Y 1.69 3Y 3.65
5Y 11.50 5Y 1.99 5Y 4.61
10Y 11.66 10Y 2.37 10Y 5.63
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7. Financial instruments by category
2016 2015
Assets
Loans and receivables
Cash and cash equivalents (Note 9) 2,660,073 1,077,651
Trade accounts receivable (Note 12) 634,987 742,352
Other 260,750 260,997
3,555,810 2,081,000
Marketable securities (Note 10) 2,027,415 1,406,092
2,536,336 1,718,530
Held-to-maturity investments
Marketable securities (Note 10) 11,432 73,914
Other investments - fair value method (Note 17(b)) 117,246 125,071
Liabilities
At amortized cost
Trade and other payables 2,262,931 1,011,672
18,415,442 13,755,504
Derivative financial instruments (Note 11) 480,634 1,128,450
8. Credit quality of financial assets
The credit quality of financial assets can be assessed by reference to external credit ratings (when available) or to historical information about counterparty default rates, analysis
of its financial position and information about negative credit events. With respect to credit quality of counterparties that are financial institutions such as amounts recorded in cash
and cash equivalents, marketable securities and derivative financial instruments, the Company follows its internal policy as Note 4.2.1(b)(i).
2016 2015
Trade accounts receivable
Counterparties with external credit rating
AA- 18,978 28,665
A 62,458 147,798
BBB+ 51,546 20,588
BBB 6,621 4,358
BB+ 10,663 36,912
BB 3,522
BB- 4,621 1,429
B+ 56,459
B 910 40,847
B- 1,324
Counterparties without external credit rating
A - Low risk 210,835 113,280
B - Average risk 142,217 265,937
C - Average to high risk 69,679 77,692
D - High risk 6,683 7,153
Total trade accounts receivable (Note 12) 641,670 749,505
Cash and cash equivalents and marketable securities
brAAA 1,582,621
brAA+ 1,417 419,590
brAA 107,923
brAA- 3,174,565 1,502
brA+ 196,730
brA 145,970
A+ 413,081 78,306
A 456,586 172,130
BBB+ 255,053 195,585
BBB (ii) 53,943
Other (i) 1,575
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2016 2015
Total cash and cash equivalents and marketable securities (Notes 9 and 10) 4,698,920 2,557,657
Assets - derivative financial instruments
brAAA 16,162 6,158
brAA+ 22,710 34,690
brAA- 229,465
AA- 57,458
A+ 1,149 217
A- 24,730
BBB+ 19,512 5,852
371,186 46,917
(i) Includes counterparties with no external credit rating from the three main rating agencies.
(ii) Transaction approved by the Finance Committee, an advisory body to the Board of Directors.
None of the financial assets that are fully performing has been renegotiated in the last year. None of the loans to related parties are past due or impaired.
9. Cash and cash equivalents
Average yield p.a. - % 2016 2015

Cash and banks (i) 2,019,923 196,274
Fixed-term deposits
Local currency 101.26 of CDI 64,087 3,985
Foreign currency (ii) 0.80 576,063 877,392
2,660,073 1,077,651
(i) Refers, mainly, to the amount received by the Company on December 29, 2016 regarding the CRA raised, as explained in Note 23.
(ii) Mainly overnight maturing within 90 days.
10. Marketable securities
Average yield p.a.- % 2016 2015

In local currency
Brazilian Federal provision fund 77 of CDI 54 250
Brazilian Federal Government securities
At fair value through profit and loss 89.79 of CDI 170,693 40,364
Held to maturity (i) 6 11,432 73,914
Private securities (repurchase agreements) 101.26 of CDI 1,856,668 1,365,478
Marketable securities 2,038,847 1,480,006
Current 2,033,159 1,411,864
Non-Current 5,688 68,142
(i) The yield of 6% p.a. refers to the agrarian debt bonds.
11. Derivative financial instruments (including embedded derivative)
(a) Derivative financial instruments by type

Reference value (notional) - in U.S Dollars Fair value
Type of derivative 2016 2015 2016 2015
Instruments contracted of economic hedge strategy
Operational hedge
Cash flow hedges of exports
Zero cost collar 1,760,000 310,000 268,443 (8,627)
Hedges of debts
Hedges of interest rates
Swap LIBOR x Fixed (USD) 590,257 622,907 (1,832) (8,902)
Swap IPCA x CDI 843,845 19,861
Hedges of foreign currency
Swap DI x US$ (USD) 315,686 358,607 (259,021) (648,052)
Swap TJLP x US$ (USD) 36,240 98,287 (58,188) (230,433)
Swap Pre x US$ (USD) 81,867 112,107 (78,711) (185,519)
(109,448) (1,081,533)
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Reference value (notional) - in U.S Dollars Fair value

Embedded derivative in forestry partnership and standing timber supply agreements (*)
Swap of US-CPI 813,154 857,710 127,860 253,572
18,412 (827,961)
Classified
In current assets 256,723 26,795
In non-current assets 242,323 273,694
In current liabilities (245,839) (302,787)
In non-current liabilities (234,795) (825,663)
Total, net 18,412 (827,961)
(*) The embedded derivative is a swap of the US-CPI changes during the term of the Forestry Partnership and Standing Timber Supply Agreements.
(b) Derivative financial instruments of economic hedge strategy by type and broken down by nature of the exposure
Reference value (notional) - in currency of origin Fair value

Type of derivative and protected risk Currency 2016 2015 2016 2015
Swap contracts - Hedge of debts
Asset
LIBOR to fixed US$ 590,257 622,907 1,868,111 2,308,517
Real CDI to USD R$ 616,099 698,559 1,027,838 1,058,346
Real TJLP to USD R$ 59,265 159,938 59,142 153,963
Real Pre to USD R$ 177,633 236,072 155,624 182,240
IPCA to CDI R$ 843,845 867,675
Liability
LIBOR to fixed US$ 590,257 622,907 (1,869,943) (2,317,419)
Real CDI to USD US$ 315,686 358,607 (1,286,859) (1,706,398)
Real TJLP to USD US$ 36,240 98,287 (117,330) (384,396)
Real Pre to USD US$ 81,867 112,107 (234,335) (367,759)
IPCA to CDI US$ 843,845 (847,814)
Total of swap contracts (377,891) (1,072,906)
Options - Cash flow hedge
Zero cost collar US$ 1,760,000 310,000 268,443 (8,627)
(109,448) (1,081,533)
(c) Derivative financial instruments by type of economic hedge strategy contracts
Fair value Value (paid) or received

Operational hedge
Cash flow hedge of exports 268,443 (8,627) 38,576 (125,107)
Hedge of debts
Hedge of interest rates 18,029 (8,902) (17,446) (15,333)
Hedge of foreign currency (395,920) (1,064,004) (166,576) (279,191)
(109,448) (1,081,533) (145,446) (419,631)
(d) Fair value by maturity date of economic hedge strategy contracts

2016 2015
2016 (281,423)
2017 7,609 (396,982)
2018 (58,385) (280,340)
2019 (28,615) (76,408)
2020 (29,514) (46,380)
2021 14,237
2022 (5,451)
2023 (9,329)
(109,448) (1,081,533)
Fair value does not necessarily represent the cash required to immediately settle each contract, as such disbursement will only be made on the date of maturity of each transaction,
when the final settlement amount will be determined.
The outstanding contracts at December 31, 2016 are not subject to margin calls or accelerated liquidation clauses resulting from mark-to-market variations. All operations are over-
the-counter and registered at CETIP (a Brazilian clearing house).
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A description of the types of contracts and risks being hedged:

(i) LIBOR versus fixed rate swap
The Company has plain-vanilla swaps of quarterly LIBOR versus fixed rates with the objective of hedging debt carrying interest based on LIBOR against any increase in LIBOR.
(ii) DI versus U.S. Dollar swap
The Company has plain-vanilla swaps of Interbank Deposit (DI) versus the U.S. Dollar with the objective of changing our debt exposure in Reais, subjected to DI into a debt in U.S.
Dollars with fixed interest. The swaps are matched to debt with respect to underlying amounts, maturity dates and cash flows.
(iii) TJLP versus U.S. Dollar swap
The Company has plain-vanilla swaps of Long-term Interest Rate (TJLP) versus the U.S. Dollar with the objective of changing our debt exposure in Reais subject to interest based
on TJLP, to debt in U.S. Dollars with fixed interest. The swaps are matched to the related debt with respect to underlying amounts, maturity dates and cash flows.
(iv) Zero cost collar
The Company entered into zero cost collar (an option to purchase (put) U.S. Dollars and an option to sell (call) U.S. Dollars) with no leverage, with the objective of protecting our
exposure to export sales denominated in U.S. Dollar, with a strike price of the put (floor) and the call (ceiling) results in a floor and cap of the dollar exchange rate.
(v) Pre fixed rates versus U.S. Dollar swap
The Company has plain-vanilla swaps to transform fixed interest debt in Reais to a debt in U.S. Dollar with fixed rate. The swaps are matched to debt with respect to underlying
amounts, maturity dates and cash flows.
(vi) IPCA x CDI swap
The Company has plain-vanilla swaps of IPCA versus CDI with the objective of changing our debt exposure in IPCA to a fixed debt in percentage of the CDI. The swaps are matched
to the related debt with respect to underlying amounts, maturity dates and cash flows.
12. Trade accounts receivable
(a) Breakdown of the balance by type of customer

2016 2015
Domestic customers 115,266 75,281
Export customers 526,404 674,224
641,670 749,505
Allowance for doubtful accounts (6,683) (7,153)
634,987 742,352
In 2016, we concluded factoring transactions for certain customers receivables, in the amount of R$ 1,812,105 (R$ 1,788,970 at December 31, 2015), where substantially all risks
and rewards related to these receivables were transferred to the counterpart, so that these receivables were derecognized from accounts receivable in the balance sheet.
(b) Breakdown of the balance by maturity and allowance for doubtful accounts
The following table presents a breakdown of trade receivables by maturity:
2016 2015
Not past due
Up to two months 164,312 338,548
Two to six months 344,737 313,650
Six months to one year 809 7,672
Past due
Up to two months 110,870 82,482
Two to six months 14,259
634,987 742,352
At December 31, 2016, trade accounts receivable of R$ 125,129 (R$ 82,482 at December 31, 2015) were past due but not considered to be impaired. Management has a process
to manage collections and does not expect to recognize any losses on these receivables. The receivables are related to several third party customers for whom there is no recent
history of default.
At December 31, 2016, trade accounts receivable of R$ 6,683 (R$ 7,153 at December 31, 2015) were impaired and included in the allowance for doubtful accounts. The individually
impaired trade accounts receivable mainly relate to customers under judicial collection with a low probability of recovery.
Changes in the allowance for doubtful accounts are as follows:
2016 2015
At the beginning of the year (7,153) (8,798)
Reversal 470 1,645
At the end of the year (6,683) (7,153)
(c) Main customers
In the year ended December 31, 2016, the Company had three customers that represent 49% of the Companys net revenue (54% in 2015 and 48% in 2014).
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(d) Breakdown of the balance by currency
Fibrias trade accounts receivable are denominated in the following currencies:
2016 2015
Real 108,583 68,128
U.S. Dollar 526,404 666,727
Euro 7,497
634,987 742,352
13. Inventory
2016 2015
Finished goods at plants/warehouses
Brazil 216,877 155,286
Abroad 729,973 731,498
Work in process 20,150 12,935
Raw materials 507,020 520,445
Supplies(*) 158,083 150,838
Imports in transit 5,911 144
1,638,014 1,571,146
(*) Net of R$ 11,455 as at December 31, 2016 (R$ 9,447 as at December 31, 2015) related to the provision for obsolescence of the inventory for maintenance.
14. Recoverable taxes
2016 2015
Withholding tax and prepaid Income Tax (IRPJ) and Social Contribution (CSLL) 988,113 762,743
Value-added Tax on Sales and Services (ICMS) on purchases of property, plant and equipment 28,048 26,235
Value-added Tax on Sales and Services (ICMS and IPI) on purchases of raw materials and supplies 1,056,530 978,399
Federal tax credits 356,058
Credit related to Reintegra Program 87,434 91,145
Social Integration Program (PIS) and Social Contribution on Revenue (COFINS)
Recoverable 764,253 727,210
Provision for the impairment of ICMS credits (1,062,295) (967,332)
1,862,083 1,974,458
Current 144,182 462,487
Non-current 1,717,901 1,511,971
Based on the annual budget approved by the Companys management, the tax credits are expected to be realized as follows:
Amount
In 2017 144,182
In 2018 133,207
In 2019 108,890
In 2020 98,000
In 2021 101,266
As from 2022 1,276,538
1,862,083
Changes in the provision for impairment of the Companys recoverable taxes are as follows:
2016 2015
Provision for impairment (94,963) (233,178)
At the end of the year (1,062,295) (967,332)
Fibria has been accumulating ICMS credits in the States of Esprito Santo, Bahia and Mato Grosso do Sul since its sales are mostly to foreign customers which are exempt from
ICMS. The Companys management revises on a monthly basis the estimates for the realization of such credits and maintain an impairment provision for the full amount for the
credits in States of Mato Grosso do Sul, Bahia and Esprito Santo due to the difficulties for its realization.
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15. Income taxes
The Company and the subsidiaries located in Brazil are taxed based on their taxable income. The subsidiaries located outside of Brazil use methods established by the respective
local jurisdictions. Income taxes have been calculated and recorded considering the applicable statutory tax rates enacted at the balance sheet date.
The Company still believes in the provisions of the International Double Taxation Treaties signed by Brazil. However, as the decision regarding its applicability is still pending on the
Supreme Court (Supremo Tribunal Federal - STF), currently the Company taxes the foreign profits according to the Law 12,973/14.
The Law 12,973/14 revoked the article 74 of Provisional Measure 2,158/01. The law determines that the adjustment in the value of the investment, in the direct or indirect controlled
company, domiciled abroad, equivalent to its profits before tax, except for the foreign exchange, must be computed in the taxation basis of the corporate income tax and social
contribution over profits of the controller company domiciled in Brazil, at the end of the fiscal year. The repatriation of these profits in subsequent years will not be subject to taxation
in Brazil. The Company has provisions regarding the Corporate Income Tax of the subsidiaries on an accrual basis.
(a) Deferred taxes
2016 2015
Tax loss carryforwards (i)(ii) 272,134 54,888
Provision for legal proceeds (ii) 138,367 119,924
Sundry provisions (impairment, operational and other) (ii) 567,269 637,176
Results of derivative contracts - payable on a cash basis for tax purposes (ii) (6,260) 281,507
Exchange losses (net) - payable on a cash basis for tax purposes (ii) 1,411,652 2,396,243
Tax amortization of the assets acquired in the business combination - Aracruz (ii) 97,466 99,196
Actuarial gains on medical assistance plan (SEPACO) (ii) 17,148 3,743
Provision for tax on investments in foreign-domiciled subsidiaries (414,336) (338,315)
Tax accelerated depreciation (22,977) (7,324)
Reforestation costs already deducted for tax purposes (474,324) (387,568)
Fair values of biological assets (70,848) (174,450)
Transaction costs and capitalized financing costs (80,341) (5,347)
Tax benefit of goodwill - goodwill not amortized for accounting purposes (626,210) (536,752)
Other provisions (7,465) (14,704)
Total deferred taxes, net 801,275 2,128,217
Deferred taxes - asset (net by entity) 1,210,541 2,399,213
Deferred taxes - liability (net by entity) 409,266 270,996
(i) The balance as at December 31, 2016 is presented net of R$ 286,209 (R$ 346,291 in 2015) related to the provision for impairment for foreign tax losses, as detailed in item (e)
below.
(ii) Total gross deferred tax assets at December 31, 2016 were R$ 2,504,036, which are expected to be realized as below.
Tax loss carryforwards and deferred tax credits from temporary differences are expected to be realized in accordance with the following schedule, based on the managements
projection of future taxable profits:
Amount
In the next 12 months 267,442
In 2018 386,576
In 2019 722,144
In 2020 187,733
In 2021 213,881
Between 2022 to 2023 83,305
Between 2024 to 2025 65,811
After 2026 577,144
2,504,036
Over the next 12 months, the Company expects to realize R$ 97,032 related to deferred tax liabilities.
Changes in the net balance of deferred income tax are as follows:
2016 2015
At the beginning of the year 2,128,217 924,308
Tax loss carryforwards 217,246 (137,759)
Temporary differences from provisions (51,464) 198,028
Provision for tax on investments in foreign-domiciled subsidiaries (76,021) (312,338)
Derivative financial instruments taxed on a cash basis (287,767) 139,569
Amortization of goodwill (91,188) (92,598)
Reforestation costs (102,409) (36,605)
Exchange losses (net) taxed on a cash basis (984,591) 1,483,024
Fair value of biological assets 103,602 (21,430)
Actuarial losses on medical assistance plan (SEPACO)(*) 13,405 (2,866)
Transaction costs and capitalized financing costs (74,994) (5,347)
Other 7,239 (7,769)
At the end of the year 801,275 2,128,217
(*) Deferred taxes related to the other comprehensive income.
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(b) Reconciliation of taxes on income

2016 2015 2014
Income (loss) before tax 3,043,667 (160,941) 21,890
Income tax and social contribution benefit (expense) at statutory nominal rate - 34% (1,034,847) 54,720 (7,443)
Reconciliation to effective expense
Equity in results of joint-venture (255) 134 (212)
Credit from Reintegra Program 1,924 23,178 12,589
Benefits to directors (10,975) (6,507) (3,281)
Benefit - Tax on net income (Imposto sobre o Lucro Lquido - ILL) 32,117
Taxes on earnings of foreign subsidiaries (7,739)
Foreign exchange effects on foreign subsidiaries (i) (314,151) 457,790 122,748
Other, mainly non-deductible provisions (21,747) (11,389) (8,117)
Income tax and Social Contribution benefit (expense) for the year (1,380,051) 517,926 140,662
Effective rate - % 45.3 321.8 (642.6)
(i) Relates to net foreign exchange gains recognized by our foreign subsidiaries that use the Real as the functional currency. As the Real is not used for tax purposes in the foreign
country, this net foreign exchange gain is not recognized for tax purposes in the foreign country nor will it be subject to tax in Brazil.
(c) Income tax on business combinations
The Company has taxable temporary differences associated with a gain on bargain purchase option resulting from the asset exchange with International Paper, for which a deferred
tax liability, in the amount of R$ 605,540, was not recognized, since the realization of such gain is under the control of management and there are no plans for realizing such gain
in the foreseeable future.
Tax goodwill resulting from the acquisition of Aracruz has been attributed to expectation of future profitability and amounts to R$ 570,080, representing a tax benefit for income tax
and social contribution of R$ 193,827, to be recognized over the next 26 months.
(d) Recoverability of tax loss carryforwards
An impairment was recorded in 2011 of Hungarian Forint HUF 25,752 (equivalent to R$ 286,209 as of December 31, 2016, and R$ 346,291 as of December 31, 2015).
Changes in the provision for impairment of the Companys foreign tax credits are as follows:
2016 2015
Exchange gain/loss 60,082 (82,994)
At the end of the year (286,209) (346,291)
16. Significant transactions and balances with related parties
(a) Related parties

The Company is governed by a Shareholders Agreement entered into between Votorantim S.A., which holds 29.42% of our shares, and BNDES Participaes S.A. (BNDESPAR),
a Brazilian Federal Government economic development bank, which holds 29.08% of our shares (together the Controlling shareholders).
The Companys commercial and financial transactions with its subsidiaries, companies of the Votorantim Group and other related parties are carried out at normal market prices
and conditions, based on usual terms and rates applicable to third parties.
(i) Balances recognized in assets and liabilities
Balances receivable (payable)
Nature 2016 2015
Transactions with controlling shareholders
Votorantim S.A. Rendering of services (392) (9)
Votorantim S.A. Land leases (851)
BNDES Financing (2,458,333) (1,851,408)
(2,458,725) (1,852,268)
Transactions with Votorantim Group companies
Votorantim S.A. Financing 9,777 11,714
Votener - Votorantim Comercializadora e Energia Energy supplier 6,937
Banco Votorantim S.A. Investments 186,720 32,806
Banco Votorantim S.A. Financial instruments (1,066)
Votorantim Cimentos S.A. Energy supplier 517
Votorantim Cimentos S.A. Input supplier (4) (50)
Polimix Concreto Ltda. Input supplier (143)
Votorantim Siderurgia S.A. Standing wood supplier (2,140) (4,164)
Sitrel - Siderurgia Trs Lagoas Ltda. Land leases (10)
Pedreira Pedra Negra Input supplier (11) (21)
Votorantim Metais Ltda. Chemical products supplier (885) (277)
Companhia Brasileira de Alumnio (CBA) Land leases (1,122) (695)
192,325 45,558
Net (2,266,400) (1,806,710)
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Balances receivable (payable)

Nature 2016 2015
Presented in the following lines
In assets
Marketable securities 186,720 32,806
Related parties - non-current 9,777 11,714
Other assets - current 7,454
In liabilities
Loans and financing (Note 23) (2,458,333) (1,851,408)
Derivative financial instruments (1,066)
Suppliers (4,564) (6,210)
(2,266,400) (1,806,710)
(ii) Amounts transacted in the year
Amounts transacted
Nature 2016 2015 2014
Transactions with controlling shareholders
Votorantim S.A. Rendering of services (14,201) (11,320) (13,009)
Votorantim S.A. Land leases (7,373)
Votorantim S.A. Sale of land 171,700
Votorantim S.A. Land purchased (451,700)
BNDES Financing (35,158) (348,240) (181,658)
(49,359) (646,933) (194,667)
Transactions with subsidiary Bahia Produtos de Madeira S.A. Sales of wood 9,709
Transactions with Votorantim Group Companies
Votorantim S.A. Financing (1,937) 3,745 1,259
Votener - Votorantim Comercializadora de Energia Energy supplier (16,879) 84,945 101,565
Banco Votorantim S.A. Investments 8,973 2,825
Banco Votorantim S.A. Financial instruments 2,703 (7,236) (604)
Banco Votorantim S.A. Rendering of services (1,884) (649)
Votorantim CTVM Ltda. Rendering of services (119) (283)
Votorantim Cimentos S.A. Energy supplier 11,045 6,536 6,648
Votorantim Cimentos S.A. Input supplier (363) (189) (1,310)
Votorantim Cimentos S.A. Sales of wood 126
Votorantim Cimentos S.A. Land leases (2,095)
Polimix Concreto Ltda. Rendering of services (143)
Votorantim Siderurgia S.A. Standing wood supplier (9,734) (4,164)
Sitrel Siderurgia Trs Lagoas Ltda. Energy supplier 6,589 4,710 4,120
Sitrel Siderurgia Trs Lagoas Ltda. Land leases (38)
Pedreira Pedra Negra Input supplier (129) (363)
Votorantim Metais Ltda. Chemical products supplier (9,402) (4,387) (87)
Votorantim Metais Ltda. Land leases (2,318) (9,072)
Companhia Brasileira de Alumnio (CBA) Land leases (961) (2,669) (458)
(12,136) 80,486 199,966
(iii) Comments on the main transactions and contracts with related parties
Controlling shareholders
The Company has a contract with Votorantim S.A. related to services provided by the Votorantim Shared Service Center, which provides outsourcing of operational services relating
to administrative activities, personnel, back office, accounting, taxes and the information technology infrastructure shared by the companies of the Votorantim Group. The contract
provides for an overall remuneration of R$ 9,280 (R$ 11 million in 2015) and has a one-year term, with annual renewal upon formal confirmation by the parties.
Additionally, Votorantim S.A. provide various services related to technical advice, training, including management improvement programs. These services are also provided to the
entire Votorantim Group and the Company reimburses Votorantim S.A. at cost for the charges related to these services.
The Company has financing contracts with BNDES, the majority shareholder of BNDESPAR, for the purpose of financing investments in infrastructure and the acquisition of
equipment and machines, as well as the expansion and modernization of its plants (Note 23).
Management believes that these transactions were contracted at terms consistent with those entered with independent parties, based on technical studies performed when these
contracts were executed.
Votorantim Group companies
The Company, through its VOTO IV joint-operation has an account receivable of US$ 3,000 thousand with Votorantim S.A., maturing in July 2017, resulting in a receivable of R$9,777
as at December 31, 2016.
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The Company has a commitment to purchase energy from Votener - Votorantim Comercializadora de Energia Ltda. to supply our units in Jacare, Aracruz and Trs Lagoas. Since
these units already generate their own energy, the contract has the purpose of optimizing the energy matrix. The amount to be paid or received upon the sale of energy changes
based on plant energy requirements. The total amount contracted is approximately R$ 1,200 for the services of energy to be rendered by Votener, maturing on December 31, 2021.
In the event of early termination of the contract, that party is required to pay all obligations incurred up to effective date of termination of the contract.
The Company has a marketable security investment with Banco Votorantim in the amount of R$ 126,161, maturing in August 2017 and an average interest rate of 101.42% of the
CDI.
The subsidiary Fibria-MS has a marketable security investment with Banco Votorantim in the amount of R$ 56,238, maturing in August 2017 and an average annual interest rate of
101.46% of the CDI.
The subsidiary Portocel has a marketable security investment with Banco Votorantim in the amount of R$ 4,321, maturing in September 2017 and an average annual interest rate
of 101.3% of the CDI.
Banco Votorantim had rendered advisory services to us during the process of issuance of the Agribusiness Credit Receivable Certificates, where we paid the total amount of R$
1,884 regarding the fees for the structuring, distribution and success processes.
Votorantim CTVM Ltda. rendered services to us during the process of issuance of the Agribusiness Credit Receivable Certificates, where we paid distribution fees of R$ 119.
Votorantim Cimentos has an agreement with the Company for the supply of road construction supplies, such as rock and calcareous rock, in the amount of R$ 533 through March 2017.
On December 23, 2015, we signed a cession of rights and obligations agreement with Votorantim Siderurgia S.A. (VS) for the cession to us of the first cycle of rotation of the
eucalyptus forests regarding existing contracts signed with rural producers from the State of Minas Gerais. As a consequence, we agreed with the payment in the amount of R$
4,164 corresponding to the reimbursement of the value already paid in advance by VS to the rural producers regarding the existing contracts. The payment will be made as follows:
90% of the total within 20 days from signing the cession and the remaining balance up to 20 days after the harvest.
The Company had an agreement with Pedreira Pedra Negra Ltda. for the supply of road construction supplies, such as rock and gravel, in the amount of R$ 590 matured on
December 31, 2016.
The Company had an agreement to purchase sulfuric acid from Votorantim Metais, in the amount of R$ 11,500, for the supply of 24,000 tons of sulfuric acid. The agreement ended
on December 31, 2016.
The Company has land lease agreements, for approximately 1,673 hectares of planted area, with Companhia Brasileira de Alumnio - CBA, with final maturity in February 2023,
amounting R$ 8,521.
The subsidiary Fibria-MS has land lease agreements, for approximately 255 hectares, with Sitrel - Siderurgia Trs Lagoas Ltda., with original maturity in September 2031, totaling
R$ 1,721.
In the years ended December 31, 2016 and 2015, no provision for impairment was recognized on assets involving related parties.
(b) Remuneration of officers and directors
The remuneration expenses of the Fibrias officers and directors, including all benefits, are summarized as follows:
2016 2015 2014

Benefits to officers and directors (i) 22,184 52,301 42,473
Benefit program - Phantom Stock Options and Stock Option plans (Note 31) (8,252) 15,931 7,934
13,932 68,232 50,407
(i) Benefits include fixed compensation, social security contributions to the National Institute of Social Security (INSS) and the variable compensation program.
Benefits to key management do not include the compensation for the Statutory Audit Committee, Finance, Compensation and Sustainability Committees members of R$ 1,195 for
the year ended
December 31, 2016 (R$ 1,154 for the year ended December 31, 2015 and R$ 1,354 for the year ended December 31, 2014).
The Company does not have any other post-employment plans and does not offer any other benefits, such as additional paid leave for time of service.
The balances to be paid to the Companys officers and directors are recorded as follows:
2016 2015
Current liability
Payroll, profit sharing and related charges 17,427 37,563
Non-current liability
Shareholders equity
Capital reserve 5,359 9,329
25,796 56,293
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17. Investments
2016 2015
Investment in associate and joint-venture - equity method 3,267 751
Other investments - at fair value (b) 127,121 137,020
130,388 137,771
(a) Selected financial information of subsidiaries and joint-operations

Total assets Total liabilities Net revenue
2016 2015 2016 2015 2016 2015 2014
Subsidiaries
Direct
Fibria Celulose (USA) Inc. 237,583 363,162 115,172 227,410 2,071,941 2,465,703 1,706,428
Fibria Innovations Inc 17,787 21,908 831 544
Fibria International Celulose GmbH 2,173,017 (2)
Fibria International Trade GmbH 11,364,727 9,650,414 8,368,070
Fibria Overseas Finance Ltd. 1,966,487 2,346,128 1,947,616 2,329,773
Fibria Overseas Holding KFT 1,238,231 2,322,618 1,171,473 12
Fibria Terminais Porturios S.A. 412 392 9 2
Fibria Terminal de Celulose de Santos SPE S.A. 125,302 831
Fibria Trading International KFT. 2,395,330 4,491,997 371,829 (5)
Fibria-MS 11,052,636 7,390,030 5,155,767 2,520,272 1,740,267 1,598,514 1,341,761
F&E Participaes Ltda. 200 200
Portocel 172,753 160,111 36,822 31,637 127,866 128,134 111,432
Projetos Especiais e Investimentos Ltda. 5,639 5,370 2,559 1,964
Indirect
F&E Tecnologia do Brasil S.A. 200 200
Fibria (Europa) S.A. 3,539 395
Fibria International Trade GmbH 12,798,063 10,625,096 8,845,901 6,187,759
Green Parrot BV 5 1
Joint-operations (*)
Asapir 6,889 2,067 4,849 774
Veracel 1,550,446 1,942,842 207,691 511,725 509,063 495,869 487,550
Voto IV 571,053 660,771 311,537 372,174
(*) Corresponding to our 50% interest.
None of the subsidiaries or the joint-operations entity has publicly traded shares.
The provisions and contingent liabilities related to the entities of the Company are described in Note 25.
Additionally, the Company does not have any significant restriction or commitments with regards to its associates and joint-operations.
(b) Other investments
The Company holds 8.3% of CelluForce capital (Note 1 (d)) and 12.62% of Ensyns capital and certain rights, which, if exercised, would allow us to subscribe an additional US$ 10
million in its capital.
We performed an assessment regarding the rights related to these shares and concluded that we do not have significant influence over the investments, and, thus, these
investments do not meet the definition of investments in associates.
See below the changes in the balance for the year ended December 31, 2016 and 2015:
2016 2015
At the beginning of the year 137,020 79,524
Increase of ownership - Ensyn 19,593
Acquisition of ownership - CelluForce 13,379
Fair value of the warrants, recognized in the profit and loss - Ensyn (*) (93) 356
Foreign exchange gains of the warrants, recognized in the profit and loss - Ensyn (1,980) 5,694
Foreign exchange gains of the shares, recognized in the Other comprehensive income (21,205) 31,853
At the end of the year 127,121 137,020
(*) The fair value of the warrants was calculated based on the discounted cash flow of the investment, considering the following main assumptions: future currency exchange rate,
price of heating oil in the United States, oil gas WTI (West Texas Intermediate) and any relevant change in the business plan of the investment.
CNPJ n 60.643.228/0001-21

18. Biological assets
2016 2015
At the beginning of the year 4,114,998 3,707,845
Additions 1,538,029 1,344,355
Harvests in the year (depletion) (1,086,973) (1,102,725)
Change in fair value - step up (212,248) 184,583
Disposals / provision for disposals (2,165) (19,063)
Transfer (i) 3
At the end of the year 4,351,641 4,114,998
(i) Includes transfers between biological assets and property, plant and equipment.
In determining the fair value of biological assets, the discounted cash flow model (DCF) was used, with projections based on a single scenario, with productivity and area of
plantation (eucalyptus trees) for a harvest cycle of approximately seven years.
The projected cash flows are consistent with the project areas growing cycle. The volume of production of eucalyptus trees to be harvested was estimated considering the average
productivity in cubic meters of wood from each plantation per hectare at the time of harvest, which is impacted by the distance between the farms and the mills. The average
productivity index varies according to the genetic material, climate and soil conditions and the forestry management programs. This projected volume is based on the average annual
growth by region.
The average net sales price was projected based on the estimated price for eucalyptus in the local market, through a market study and research of actual transactions, adjusted to
reflect the price of standing timber by region. The average estimated cost contemplates expenses for selling, chemicals, control of growth, ant and other pest control, composting,
road maintenance, inputs and labor services. Tax effects based on current rates, as well as the contribution of other assets, such as property, plant and equipment and land were
considered in the estimated of average rates of return for those assets, based on the average of the existing lease agreements.
The valuation model considers the net cash flows after income taxes. The discount rate used also considers the tax effects.
Main inputs considered in estimating the fair value of biological assets were:
2016 2015
Actual planted area (hectare) 469,100 445,359
Average annual growth (IMA) - m3/hectare 38.5 39.4
Remuneration of own contributory assets - % 5.9 5.6
Discount rate - % 7.18 7.39
The decrease in the fair value of biological assets during the year ended December 31, 2016 was the result of the combined fluctuation of the inputs presented above which resulted
in a loss of R$ 212,248. The changes in the fair value of the biological assets are recognized in the profit and loss, within Other operating income (expenses) (Note 34).
2016 2015
Forest additions and harvesting (311,230) (211,293)
Growing of plantation (IMA, area and age) 65,221 28,086
Assumptions related to price,cost,discount rate and others 33,761 367,790
(212,248) 184,583
The Company has no biological assets pledged as of December 31, 2016.
19. Property, plant and equipment
Machinery, Property, plant

equipment and equipment
Land Buildings and facilities in progress (i) Other Total
At December 31, 2014 1,200,512 1,358,716 6,457,787 217,627 18,091 9,252,733
Additions 453,775 335 3,640 553,291 1,903 1,012,944
Disposals (17,367) (6,056) (16,005) (887) (40,315)
Depreciation (112,005) (653,595) (14,368) (779,968)
Acquisition of assets - Fibria Innovations 4,212 4,212
Transfers and others (iii) 50,294 184,508 (303,900) 52,878 (16,220)
At December 31, 2015 1,636,920 1,291,284 5,980,547 467,018 57,617 9,433,386
Additions 843 12,446 4,415,880 1,770 4,430,939
Disposals (5,629) (6,164) (24,577) (221) (36,591)
Depreciation (117,670) (653,783) (20,162) (791,615)
Transfers and others (iii) 9,745 100,469 292,272 (417,827) 86,414 71,073
At December 31, 2016 1,641,036 1,268,762 5,606,905 4,465,071 125,418 13,107,192
Cost 1,636,920 2,723,578 13,360,212 467,018 218,881 18,406,609
Accumulated depreciation (1,432,294) (7,379,665) (161,264) (8,973,223)
Net 1,636,920 1,291,284 5,980,547 467,018 57,617 9,433,386
CNPJ n 60.643.228/0001-21

Machinery, Property, plant

equipment and equipment
Land Buildings and facilities in progress (i) Other Total
Cost 1,641,036 2,809,597 13,623,064 4,465,071 209,653 22,748,421
Accumulated depreciation (1,540,835) (8,016,159) (84,235) (9,641,229)
Net 1,641,036 1,268,762 5,606,905 4,465,071 125,418 13,107,192
(i) Includes the amount of R$ 4,175,743 for the Horizonte 2 Project.
(ii) Includes vehicles, furniture, IT equipment and others.
(iii) Includes transfers between property, plant and equipment, intangible assets and inventory.
The annual average depreciation rates for property plant and equipment as of December 31, 2016 and 2015, based on their useful life, are as follow:
Average rates
Buildings 4%
Machinery, equipment and facilities 5.5%
Others 10% to 20%
The balance of property, plant and equipment in progress is comprised mainly of expansion of the Horizonte 2 Project and optimization projects of the Companys industrial units,
being R$ 53,217 in the Jacare unit, R$ 4,222,384 of Fibria-MS, R$ 144,244 in the Aracruz unit, R$ 45,226 in Veracel and others.
Borrowing costs capitalized were calculated based on the weighted average cost of the eligible loans. During 2016 the average rate applied was 12.98% p.a. (15.32% p.a. in 2015)
Property, plant and equipment given as collateral are disclosed in Note 23(i).
The Company currently does not have items of fixed assets for which it expects to abandon or dispose or for which provision for asset retirement obligations would be required.
20. Intangible assets
Annual 2016 2015

amortization Accumulated
rate - % Cost amortization Net Net
Goodwill - Aracruz 4,230,450 4,230,450 4,230,450
Systems development and deployment 20 149,217 (113,909) 35,308 28,677
Concession right - Macuco Terminal (Note 1(a)) 115,047 115,047
Intangible assets acquired in the business combination - Aracruz
Databases 10 456,000 (364,800) 91,200 136,800
Relationship with suppliers Chemical products 6.3 165,000 (82,500) 82,500 92,812
Other 22,449 (1,260) 21,189 16,895
5,138,163 (562,469) 4,575,694 4,505,634
(a) Roll forward of net book value
2016 2015
At the beginning of the year 4,505,634 4,552,103
Additions 118,706 8
Amortization (67,499) (76,021)
Disposals (293) (67)
Transfers and others (*) 19,146 29,611
(*) Includes transfers between property, plant and equipment and intangible assets.
Amortizations of intangible assets were recorded in General and administrative expenses and Other operating income and expense.
The impairment test for the goodwill related to the Aracruz is described in Note 38.
21. Finance and operating lease agreements
(a) Financial leases

Financial leases correspond to the purchase of industrial equipment for processing of chemicals and oxygen. The financial lease agreements have purchase options at the end of
the lease term.
The assets are recognized substantially under Machinery, equipment and facilities within property, plant and equipment and the respective obligations under Other payables.
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2016 2015
Accumulated
Cost depreciation Net Net
Oxygen and chemical facilities 89,841 (44,873) 44,968 50,649
89,841 (44,873) 44,968 50,649
Present value and future minimum payments:
Years Present value Future value

2017 9,106 15,771
2018 to 2022 37,480 78,851
After 2023 7,584 19,711
54,170 114,333
There are no restrictions imposed by financial lease agreements.
(b) Operating leases
(i) Minimum non-cancellable payments
L
and leases - the Company leases land for planting forests based on third-party operational leases supplementing raw materials for its production. The leases are for a period of
up to 21 years. Lease payments, equivalent to market value are made according to the contract. The land lease agreements have renewal options of the lease period at market
value.
C
oastal transportation - the Company has 20-year coastal freight service contracts, ending in 2023, for the domestic transportation by sea of raw materials utilizing maritime barges
from the Caravelas (BA) to Portocel (ES) Terminals.
O
cean transportation - the Company has 25-year sea freight services contracts, ending in 2039, with STX Pan Ocean Co. Ltd. for transportation of pulp from Brazil to several ports
in Europe, North America and Asia.
At December 31, 2016, minimum payments of future operating leases are as follows:
Coastal Ocean
Years Land leases transport transport
2017 146,021 82,600 104,521
2018 to 2019 286,692 165,199 209,042
2020 to 2022 365,462 247,799 313,563
After 2023 571,633 82,600 1,831,923
1,369,808 578,198 2,459,049
(ii) Contingent payments
F
orestry partnership agreements - on December 30, 2013, the Company entered into a forestry partnership and a standing timber supply agreement for a maximum term of 24
years, with contingent payments related to the repurchase of the standing timber that the counterparty has the right to receive. The purchase price is established in U.S. Dollars,
as defined in the contract, and adjusted according to the US-CPI index.
Since there is not a mandatory volume of timber determined by the forestry partnership agreement that could guarantee a minimum payment to the counterparty, there are no
minimum future payments to be disclosed by the Company.
22. Advances to suppliers - forestry partnership programs
The program, which commenced in 1990, in the States of Esprito Santo and expanded to other States: Bahia, Minas Gerais, So Paulo, Mato Grosso do Sul, Rio Grande do Sul
and Rio de Janeiro, is directed towards planting eucalyptus forests on the land of partners. Under the program, the Company provides technology, technical assistance, inputs and
funding depending on the type of agreement, and is guaranteed wood for its pulp production. These advances will be settled through delivery of wood by forest producers.
2016 2015
Advances made 125,041 30,084
Wood harvested (60,702) (65,141)
Transfers to forests (30,520) (29,552)
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23. Loans and financing
(a) Breakdown by type of loan

Current Non-current Total
Average
Interest annual interest
Type/purpose rate rate - % 2016 2015 2016 2015 2016 2015
In foreign currency
BNDES - currency basket UMBNDES 6.5 82,620 78,632 485,154 652,610 567,774 731,242
Bonds - US$ (*) Fixed 5.6 13,187 15,801 2,245,762 2,686,105 2,258,949 2,701,906
Finnvera LIBOR 3.2 228 1,077,494 1,077,722
Export credits (prepayment) LIBOR 3.0 419,362 595,795 4,713,781 6,141,049 5,133,143 6,736,844
Export credits (ACC/ACE) Fixed 45,123 45,123
515,397 735,351 8,522,191 9,479,764 9,037,588 10,215,115
In Reais
BNDES TJLP 10.0 181,379 186,937 1,353,227 776,421 1,534,606 963,358
BNDES Fixed 5.8 34,290 29,745 80,680 100,460 114,970 130,205
BNDES Selic 7.2 1,824 18 239,159 26,585 240,983 26,603
FINAME TJLP/Fixed 2.7 2,062 3,236 167 2,226 2,229 5,462
BNB Fixed 11.0 108,768 108,768
CRA CDI 11.3 75,887 16,687 3,908,957 659,275 3,984,844 675,962
NCE CDI 12.6 315,476 88,855 370,408 613,177 685,884 702,032
FCO, FDCO and FINEP Fixed 8.0 11,972 12,048 430,667 13,047 442,639 25,095
622,890 337,526 6,492,033 2,191,191 7,114,923 2,528,717
1,138,287 1,072,877 15,014,224 11,670,955 16,152,511 12,743,832
Interest 218,585 94,172 91,935 109,658 310,520 203,830
Short-term borrowing 44,905 44,905
Long-term borrowing 919,702 933,800 14,922,289 11,561,297 15,841,991 12,495,097
1,138,287 1,072,877 15,014,224 11,670,955 16,152,511 12,743,832
(*) Includes US$ 600 million (equivalent to R$ 1,965,237 as at December 31, 2016), regarding Fibria 2024 issued by Fibria Overseas Finance Ltd., fully and unconditionally
guaranteed by the Company.
The average rates were calculated based on the forward yield curve of benchmark rates to which the loans are indexed, weighted through the maturity date for each installment,
including the issuing/contracting costs, when applicable.
(b) Breakdown by maturity of the non-current portion
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total
In foreign currency
BNDES - currency basket 67,698 54,984 152,775 162,579 40,341 6,777 485,154
Bonds 312,004 1,933,758 2,245,762
Finnvera 134,692 134,686 134,686 134,686 134,686 134,686 134,686 134,686 1,077,494
Export credits (prepayment) 1,158,172 2,460,359 362,292 732,958 4,713,781
1,360,562 2,650,029 961,757 1,030,223 175,027 141,463 2,068,444 134,686 8,522,191
In Reais
BNDES - TJLP 136,415 188,624 262,699 277,750 153,758 114,962 97,963 85,451 35,605 1,353,227
BNDES - Fixed rate 33,197 27,093 15,200 4,791 399 80,680
BNDES - Selic 6,507 30,708 30,708 29,593 27,729 40,096 38,813 24,709 10,296 239,159
FINAME 167 167
BNB 108,768 108,768
CRA 1,202,822 661,966 755,571 1,288,598 3,908,957
NCE 283,958 43,225 43,225 370,408
FCO, FDCO and FINEP 403 55,784 46,810 46,810 46,810 46,810 46,810 46,810 46,810 46,810 430,667
460,647 345,434 1,601,464 1,020,910 984,267 1,599,234 183,586 156,970 92,711 46,810 6,492,033
1,821,209 2,995,463 2,563,221 2,051,133 1,159,294 1,740,697 2,252,030 291,656 92,711 46,810 15,014,224
(c) Breakdown by currency
Currency
2016 2015
Real 6,873,940 2,502,114
U.S. Dollar 8,469,814 9,483,873
Selic (*) 240,983 26,603
Currency basket 567,774 731,242
16,152,511 12,743,832
(*) Contractual definition of currency in contracts with BNDES that are in Reais plus Selic interests.
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(d) Amortization of transaction costs

Annual effects of the amortization of transaction costs on the effective interest rate method:
2016
Description 2017 2018 2019 2020 2021 After 2022 Total
BNDES 2,807 2,807 2,797 2,735 2,689 9,041 22,876
BNB 71 71 71 71 71 139 494
FDCO 235 235 235 235 235 1,647 2,822
Bonds 3,833 3,833 3,833 3,379 2,926 7,071 24,875
FINNVERA 8,425 8,425 8,425 8,425 8,425 33,698 75,823
CRA 11,003 11,003 11,003 10,700 9,645 12,687 66,041
Export credits (prepayment) 7,268 6,987 5,067 4,271 166 23,759
33,642 33,361 31,431 29,816 24,157 64,283 216,690
The capitalization of transaction costs for loans and financing increases the average effective cost of the debt by 0.16% p.a.
(e) Roll forward
2016 2015
At the beginning of year 12,743,832 8,326,519
Borrowings 7,904,486 3,118,475
Interest expense 717,329 479,287
Foreign exchange gains (losses), net (1,716,123) 3,037,653
Repayments - principal amount (2,746,808) (1,800,670)
Interest paid (606,282) (405,546)
Additional transaction costs (162,949) (30,486)
Other (*) 19,026 18,600
(*) Includes amortization of transactions costs.
(f) Relevant operations settled in the year
Export credits - ACC
In 2016, the Company paid some export contracts (ACC) in the amount of US$ 544 million (equivalent then to R$ 1,837,208), which interest rate were between 1.24% and 1.99%
p.a., contracted during 2016.
(g) Significant operations contracted in the year
BNDES
In 2016, the Company drew down R$ 143,426 from BNDES with maturities between 2016 and 2023, accruing interest between TJLP plus 1.86% p.a. to 3.42% p.a., UMBNDES plus
2.42% p.a. to 2.48% p.a., Selic plus 2.44% p.a. to 2.72% p.a. and fixed interest rate of 7.00% p.a. The proceeds were used in industrial, forestry and IT projects.
In May 2016, the Company through its subsidiary Fibria-MS signed a contract of credit limit of R$ 2,347,524, which will be used to finance the Horizonte 2 Project. Until December
2016, R$ 835,611 was released, maturing in 2026 and an interest rate of TJLP plus 2.26% p.a. and Selic plus 2.66% p.a. The remaining balance will be released according to the
fulfillment of the conditions of releases as per the needs of the Project.
Agribusiness Credit Receivable Certificates - CRA
In 2016, the Company concluded four public distributions of Agribusiness Credit Receivable Certificates issued by Eco Securitizadora de Direitos Creditrios do Agronegcio S.A.,
backed in export credit notes issued by the Company.
In the first distribution, the total amount released was R$ 1,350 million, in two tranches, being the first tranche in the amount of R$ 880 million, with maturity for the principal in 2020,
payments of interest semi-annually and an interest rate of 97% of CDI and the second tranche in the amount of R$ 470 million, with maturity for the principal in 2023, payments of
interest annually and an interest rate of IPCA plus 5.9844% p.a. The funds were received by the Company on June 23, 2016.
In the second distribution, the total amount released was R$ 374 million, with maturity for the principal in 2023, payments of interest annually and an interest rate of IPCA plus
5.9844% p.a. The funds were received by the Company on August 15, 2016.
In the third distribution, the total amount released was R$ 326 million, with maturity for the principal in 2020, payments of interest semi-annually and an interest rate of 97% of CDI.
The funds were received by the Company on August 31, 2016.
In the fourth distribution the total amount of R$ 1,250 million was released in two tranches, being the first tranche in the amount of R$ 756 million, with maturity for the principal in
2022, payments of interest semi-annually and an interest rate of 99% of CDI and the second tranche in the amount of R$ 494 million, with maturity for the principal in 2023, payments
of interest annually and an interest rate of IPCA plus 6.1346% p.a. The funds were received by the Company on December 29, 2016.
The events of default of the contracts are reflected in the item (h) below.
Finnvera (Finnish Development Agency)
In May 2016, the Company, through its subsidiary Fibria-MS, entered into a loan agreement for the financing of imported equipment for the second pulp production line in Trs
Lagoas (Horizonte 2 Project). The total amount raised was U.S. Dollar equivalent to 383,873 thousand with the financial institutions BNP Paribas, Finnish Export Credit, HSBC
CNPJ n 60.643.228/0001-21
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Bank and Nordea, totally guaranteed by Finnvera (Export Credit Agency). In 2016, the amount of US$354 million (equivalents then R$ 1,188,140) was released in three tranches of
US$ 194 million, US$ 136 million and US$ 24 million, maturing in December 2025 and interest rates at semi-annual LIBOR plus 1.03% p.a. for the first tranche and semi-annual
LIBOR plus 1.08% p.a. for the second and third tranches. In December 2016, we canceled voluntarily U.S. Dollar equivalent to 4,561 thousand and the remaining balance not
released of U.S. Dollar equivalent to 62,469 thousand, will be released according to the payments for the suppliers of the project. The events of default of the contract are reflected
in the item (h) below.
Middle West Development Fund (FDCO)
In September 2016, the Company, through its subsidiary Fibria-MS, raised R$ 423,621 from the total of R$ 831,478 contracted with Banco do Brasil, with an interest rate of 8.0%
p.a., monthly payments of principal and interest as from June 2019 and final maturity in December 2027. The remaining balance might be released until the end of 2017.
Forestry loan - BNB
In December 2016, the Company entered into a forestry loan with Banco do Nordeste, in the total amount of R$150,427, with an interest rate of 12.95% p.a., payments of principal
and interest on the maturity date in December 2023. In December 2016, the amount of R$ 109,178 was raised and the remaining balance might be released until the end of 2018.
(h) Covenants
Some of the financing agreements of the Company contain covenants establishing indebtedness ceilings and leverage indices, as well as minimum coverage of outstanding
amounts.
The Companys debt financial covenants are measured based on consolidated information translated into U.S. Dollars. The covenants specify that the indebtedness ratio (Net debt
to Adjusted EBITDA, as defined (Note 4.2.2)) cannot exceed 4.5x and the Company shall keep the minimum of 1.00 of coverage the outstanding amounts.
The Company is in full compliance with the covenants established in the financial contracts at December 31, 2016.
The loan indentures with debt financial covenants also present the following events of default:
Non-payment, within the stipulated period, of the principal or interest.
Inaccuracy of any declaration, guarantee or certification provided.
Cross-default and cross-judgment default, subject to an agreed.
Subject to certain periods for resolution, breach of any obligation under the contract.
Certain events of bankruptcy or insolvency of the Company, its main subsidiaries or Veracel.
Expropriation, confiscation or any other action affecting a significant portion of the Companys assets;
Addiction, invalidity, ineffectiveness or unenforceability of the contract;
Extinction or termination the contract for any reason or person;
Split of the Company without the prior consent of the creditor;
Any direct or indirect controlling which does not integrate the Votorantim Group, to perform any act aimed annul, revise, cancel or repudiate by judicial or extrajudicial means the
contract;
Compliance with certain environmental and social conditions on the Horizon Project 2, for Finnveras contract.
(i) Loans and financing guarantees
At December 31, 2016, certain loans and financing are guaranteed mainly by property, plant and equipment items from the Jacare, Aracruz and Trs Lagoas units, with a net book
value of R$ 9,881,389 (December 31, 2015 - R$ 3,633,149, from the Jacare and Aracruz units), considered sufficient to cover the corresponding loans and financing amounts.
(j) Unused credit lines
Credit lines Entities Amount Maturity Cost Commission
Revolving credit facility Fibria Celulose S.A. R$ 300 million 2018 100% of CDI plus 2.1 % p.a. 0.35% p.a.
Revolving credit facility Fibria Celulose S.A. R$ 250 million 2018 100% of CDI plus 2.1 % p.a. 0.33% p.a.
Revolving credit facility Fibria International Trade GMBH. US$ 280 million 2018 1.55% p.a. to 1.70% p.a. plus LIBOR 3M 35% of the agreed spread
Stand by facility Fibria Celulose S.A. R$ 300 million 2018 Semi-annual of CDI plus 1.50% p.a. 0.50% p.a.
The Company has not used these credits facilities. The value related to the commissions is recorded as a current liability under Other payable.
The total amount paid related to unused credit lines at December 31, 2016 was R$ 8,334 (R$ 8,448 as at December 31, 2015).
24. Trade payables
2016 2015
Local currency
Related parties 5,416 5,738
Third parties 844,914 585,975
Foreign currency
Third parties (i) 1,016,501 76,304
1,866,831 668,017
(i) As mentioned in Note 1 (a), we have a long-term take or pay supply agreement of hardwood pulp with Klabin with special conditions in terms of volume, exclusivity, guarantees
and payment terms up to 360 days, whose prices were practiced in market conditions, as established in the agreement. As at December 31, 2016, the amount of R$ 740,196
(zero as at December 31, 2015) refers to pulp purchases of the contract abovementioned.
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25. Contingencies
2016 2015
Judicial deposits Provision Net Judicial deposits Provision Net
Nature of claims
Tax 107,300 112,616 5,316 96,997 106,571 9,574
Labor 67,343 230,155 162,812 64,429 201,561 137,132
Civil 21,222 42,986 21,764 18,918 37,537 18,619
195,865 385,757 189,892 180,344 345,669 165,325
The Company has tax and civil claims arising in the normal course of business that are assessed as possible (but not probable) losses by Management, as supported by outside
legal counsel. No provision has been recorded to cover possible unfavorable outcomes from these claims. At December 31, 2016, these claims amount to: tax R$ 6,826,837 (item
(b) below) (R$ 6,830,705 as at December 31, 2015) and civil R$ 1,957,936 (item (d) below) (R$ 1,540,725 as at December 31, 2015).
The change in the provision for legal proceeds is as follows:
2016 2015
Settlement (19,027) (16,334)
Reversal (14,645) (38,196)
New litigation 22,263 37,089
Accrual of financial charges 51,497 60,966
(a) Probable tax contingencies
The tax claims representing probable losses refer to discussions related to federal, state and municipal taxes, for which, substantially, there are judicial deposits as collateral, so
there is no material exposure.
(b) Possible tax contingencies
Estimated Amount
Tax incentive - ADENE development agency (i) 133,941
IRPJ/CSL - partial approval (ii) 218,099
Income tax assessment - IRPJ/CSLL - swap of industrial and forestry assets (iii) 2,038,914
Income tax assessment - IRPJ/CSLL - Fibria Trading International II (iv) 356,677
Income tax assessment - IRPJ/CSLL - disallowance of depreciation, amortization and depletion expenses - 2010 (v) 621,420
Income tax assessment - IRPJ/CSLL - FTI and FIT 2011 (vi) 59,322
Other tax liabilities (vii) 3,398,464
Total possible tax contingencies 6,826,837
(i) Tax incentive - Agency for the Development of Northeastern Brazil (ADENE)
In 2002 the Company was granted its request by the Brazilian Federal Revenue Service (Receita Federal do Brasil) to benefit from reductions in corporate income tax and non-
refundable surcharges calculated on operating profits (as defined) for Aracruz plants A and B (period from 2003 to 2013) and plant C (period from 2003 to 2012), when the
qualification reports for the tax reductions are approved by ADENE.
In 2004, the Company was served an Official Notice by the liquidator of the former Superintendence for the Development of the Northeast (SUDENE), who reported that, the right
to use the benefit previously granted is unfounded and would be cancelled. In 2005, the Brazilian Federal Revenue Service served the Company an assessment notice requiring
the payment of the amounts of the tax incentive used, plus interest. After administrative discussion, the assessment notice was partially upheld and recognized the Companys right
to the tax incentive through 2003.
The Companys Management, supported by its legal counsel, believes that the decision to cancel the tax benefits is erroneous and should not prevail, either with respect to benefits
already used, or with respect to benefits not used until the corresponding final periods.
Currently, the claim is under discussion in the judicial level, where it is pending of judgment regarding the appeal presented by the Company.
(ii) Income tax/CSLL - partial approval
The Company requested approval to offset 1997 tax losses with amounts owed to the tax authorities. The authorities approved in March 2009, only R$ 83 million, which generated
a difference of R$ 51 million. The Company has appealed the rejection of the tax credits and obtained a partially favorable decision and the final decision is under discussion in the
judicial level.
(iii) Tax assessment - IRPJ/CSLL - Swap of industrial and forestry assets
In December 2012, the Company received a tax assessment for the collection of income tax and social contribution, alleging unpaid tax on a capital gain in February 2007, closing
of the transaction, when the Company executed an agreement with International Paper for the swap of industrial and forestry assets.
On January 19, 2016, the Tax Federal Administrative Court (CARF - Conselho Administrativo de Recursos Fiscais) rejected as per the casting vote of CARFs President, the appeal
filed by the Company in the administrative process. The Company was notified of the decision on May 25, 2016 and due to the impossibility of new resources and the consequent
closure of the case at the administrative level, decided to continue the discussion with the Judiciary and the presentation of challenge is pending by the Union. The Company
presented judicial guarantee, which was accepted and maintains its position to not constitute provisions for contingencies, based on the Companys and its external legal advisors
opinion that the probability of loss on this case is possible.
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(iv) Tax assessment - IRPJ/CSLL - Fibria Trading International II

In June 2014, the Company received a tax assessment notice with respect to the 2010 Fibria Trading International equity earnings which was recognized by Fibrias former
subsidiary Normus (merged by the Company in June 2013). We received favorable decision in the administrative instance and are awaiting the judgment for the appeal presented
by the tax authorities.
(v) Tax assessment - IRPJ/CSLL - disallowance of depreciation, amortization and depletion expenses - 2010
In December 2015, we received a tax assessment requiring the payment of IRPJ and CSLL, questioning the deductibility of depreciation, amortization and depletion expenses of
2010 included by us in the calculation of income tax expense. We present administrative appeal on the legal period and are awaiting the judgement.
(vi) Tax assessment - IRPJ/CSLL - FTI and FIT 2011
In November 2015, the Company received a tax assessment with respect to its share of 2011 earnings in Fibria Trading International and Fibria International Trade GmbH, which
had been recognized under the equity method.
However, this assessment did not reflect the accumulated losses of Fibria Trading International. The payment of the amount regarding the Fibria International Trade GmbH has been
included on the REFIS. At the moment we are awaiting the judgement of the appeal presented by us in the first administrative instance.
(vii) Others tax liabilities with probability of loss classified as possible
Fibria has over 665 legal cases for individual amounts of less than R$ 100 million. The total estimated possible loss for theses legal cases is R$ 3,398,464. The average estimated
for each case is R$ 5,110.
(c) Comments on labor proceedings
The Company is a party to approximately 6,226 labor lawsuits, with a total exposure of R$ 1,201,138, filed by former employees, third parties and unions, claiming the payment of
health and safety premiums, overtime, commuting time, occupational illnesses and workers compensation, tangible and moral damages, understated indexation on the fine of 40%
of the Government Severance Indemnity Fund for Employees (FGTS), severance pay of employees of thirty parties.
(d) Comments on civil proceedings
The Company has approximately 1,307 civil lawsuits, with a total exposure of R$ 2,356,804, most of which refer to claims for compensation by former employees or third parties for
alleged occupational illnesses and workers compensation, collection lawsuits and bankruptcy situations, reimbursement of funds claimed from delinquent landowners and
possessory actions filed in order to protect the Companys equity. The Company has insurance for public liability that covers, within the limits set in the policy, unfavorable sentences
in the civil courts for claims for compensation of losses.
In June 2012, a Public Civil Action was filed by the Federal Public Prosecutor to prohibit the Companys trucks from using federal highways above certain weight limits alleging
damage to federal highways, the environment and economic order. The updated amount penalty of R$ 1,604,607 as at December 31, 2016, was indicated by the Federal Public
Prosecutor. The Company successfully appealed the decision and filed suit for the others matters against the Action. The proceedings are in stage of procedural instruction.
(e) Judicial deposits
The Company has judicial escrow deposits at December 31, 2016 of R$ 145,956 (R$ 144,954 in December 31, 2015) for cases classified by external legal advisors as being remote
or possible loss, for which no provision have been recorded. The contingencies refer to PIS, COFINS, income taxes and INSS, among other amounts. The deposits also include
R$ 37,464 of the credit balance of REFIS (Note 26).
26. Tax Amnesty and Refinancing Program (REFIS)
Law 11,941/09
In November 2009, the Company elected to join a REFIS program and in 2011 agreed the amount of the eligible liabilities after meeting all formal requirements established in the
legislation.
After taking into account the legal right to offset judicial deposits related to the liabilities it was determined that the deposits exceed the outstanding liabilities (after the reductions
established by the program) and hence the remaining balance was in favor of the Company. At December 31, 2016 the balance is R$ 37,464, and it is presented within non-current
assets under Judicial deposits.
27. Asset retirement obligations
The Company uses judgment and various assumptions when determining the asset retirement obligations. Environmental obligations relate to future obligations to restore/recover
the environment arising from the right of use of the asset, which causes environmental damages as a result of the activities of the project or from regulatory requirements of the
environmental agencies, and which are required to be compensated.
The dismantling and retirement of an asset occurs when it is permanently retired, through its shutdown, sale or disposal. This future long term obligation accrues interest which is
recorded as a financial expense in profit and loss and it is also adjusted for inflation. Depreciation expense of the asset retirement obligation asset is recorded in the Statement of
profit or loss.
In 2016, we recognized financial expenses in the amount of R$ 541 adjusting the provision for asset retirement (R$552 in 2015).
The balance of the provision for asset retirement obligations as of December 31, 2016 amounted to R$ 11,136 and it is included in non-current Other payables (R$ 10,630 as of
December 31, 2015).
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28. Long-term commitments
Take or pay arrangements
The Company entered into long-term take-or-pay agreements with pulp, transportation, diesel, and chemical and natural gas suppliers effective for an average period of six years.
These agreements contain termination and supply interruption clauses in the event of default of certain essential obligations. Generally, the Company purchases the minimum
agreed under the agreements, hence there is no liability recorded at December 31, 2016. The contractual obligations assumed at December 31, 2016 correspond to R$ 1,387,613
per year (R$ 260,354 at December 31, 2015).
29. Shareholders equity
(a) Capital
The Company is authorized to increase its capital up to 150,000,000 new common shares, by resolution of the Board of Directors, which will decide the price and the number of
shares to be issued, as well as the term and conditions of payment.
At December 31, 2016 and 2015, fully subscribed and paid-up capital is represented by 553,934,646 nominative common voting shares without par value.
(b) Dividends
The Companys by-laws provide for a minimum annual dividend of 25% of net income, adjusted by the changes in reserves, as determined by Brazilian Corporate Law.
2016 2015
Net income attributable to the shareholders of the Company 1,654,848 342,185
(-) Legal reserve (5%) (82,743) (17,110)
Calculation basis 1,572,105 325,075
Minimum mandatory dividends (25%) 393,026 81,269
The Annual and Extraordinary General Meeting held on April 27, 2016, approved the distribution as dividends 92.29% of the adjusted net income of 2015, in the amount of R$
300,000, where R$ 81,269 was distributed as mandatory dividends and R$ 218,731 as additional dividends. The payment of the dividends approved was made on May 6, 2016.
(c) Statutory reserves
The legal reserve is constituted under Brazilian corporate law through the appropriation of 5% of the net income for the year and cannot exceed 20% of the capital. The purpose of
the legal reserve is to protect capital, and it can only be used to offset losses and increase capital.
The investment reserve, corresponding to the balance of retained earnings, after the appropriation of the legal reserve, mainly relates to earnings reserved to meet the investment
plans, upgrading and maintenance of plants, as approved by the Statutory Audit Committee and the Board of Directors.
(d) Treasury shares
As at December 31, 2016, the Company holds in treasury 344,042 (344,042 as at December 31, 2015) common shares with a unit value of R$ 30.16 per share, which corresponds
to R$ 10,378.
(e) Other reserves
The amount of R$ 1,599,640 as at December 31, 2016 (R$ 1,639,901 as at December 31, 2015) refers, mainly, to the effects of the fair value uplift of the prior interest of Votorantim
Celulose e Papel S.A. (VCP) (predecessor company) in Aracruz, at the time of the 2009 business combination.
(f) Share-based payments
Share options are granted to Companys CEO, statutory and non-statutory Officers and General Managers. The exercise price of the granted options is equal to the shares weighted
average price in the three months prior to the date of the grant, without discount or indexation. Options are conditional on the beneficiaries completing three years service (the
vesting period) from the grant date, subject to the group achieving its target. The options have a contractual option term of six years. The Company has no legal or constructive
obligation to repurchase or settle the options in cash (Note 31(ii)).
Share options outstanding at the end of the year have the following expiry date and exercise prices:
Exercise price
Grant date Expiration date per share options 2016 2015
01/01/2014 12/31/2016 23.75 2,233 7,607
01/01/2015 12/31/2017 24.45 2,012 5,179
01/01/2016 12/31/2018 52.69 1,114
5,359 12,786
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30. Employee benefits
(a) Variable remuneration program
The Company maintains a performance based bonus program for its employees, which is tied to its performance plans and the attainment of specific objectives based on cash
generation, which are established and agreed upon at the beginning of each year. The amount recorded as expenses for the year ended December 31, 2016 was R$ 79,167
(December 31, 2015 - R$ 95,954 and December 31, 2014 - R$ 69,573).
(b) Defined contribution pension plan
In 2000, the Company became a sponsor of the Senador Jos Ermrio de Moraes Foundation (FUNSEJEM), a not-for-profit pension fund for the employees of the Votorantim Group.
Under the funds regulations, the Company matches employees contributions to FUNSEJEM, which may range from 0.5% to 6% of nominal salary. The Companys contributions for
the year ended December 31, 2016 amounted to R$ 11,657 (R$ 9,682 as of December 31, 2015 and R$ 9,288 as of December 31, 2014).
(c) Medical assistance provided to retirees
The Company entered into an agreement with the So Paulo State Pulp and Paper Industry Workers Union to provide the funding for a lifetime medical assistance plan (SEPACO)
for all of the Companys employees covered in this agreement, their dependents, until they come of age, and their spouses, for life.
The Companys policy determines that the cost of the benefit be allocated from the date of hiring to the date on which the employee becomes eligible to receive the medical
assistance benefit. The amount recorded as expenses for the year ended December 31, 2016 was R$ 6,678 (R$ 6,940 as of December 31, 2015 and R$ 7,567 as of December 31, 2014).
The actuarial methods are based on economic and biometric assumptions, as follows:
Actuarial assumptions
2016 2015
Discount rate - % 5.65 7.3
Real growth rate of medical costs - % 3.0 3.0
Rate of increase of utilization of medical assistance - % 3.0 3.0
Long-term inflation - % 5.5 5.7
Biometric table of general mortality AT-2000 AT-2000
Biometric table of general mortality for invalids IAPB 57 IAPB 57
The sensitivity analysis of the obligation related to the healthcare plan regarding changes in the main assumptions is the follows:
Change in assumptions Increase in assumptions Decrease in assumptions

Discount rate - % 0.50% Decrease of 5.6% Increase of 6.2%
Trend rate of medical costs - % 0.50% Increase of 6.4% Decrease of 5.8%
Mortality 1 year Increase of 4.5% Decrease of 4.4%
The sensitivity analysis is based on changes in just one assumption while the other assumptions remain unchanged.
The actuarial obligation, recorded under Other payables, is as follows:
2016 2015
Reconciliation of liabilities
Present value of actuarial obligations at beginning of the year 89,944 91,434
Cost of current service from:
Interest on actuarial obligations 11,806 10,339
Benefits paid (5,270) (4,656)
Actuarial (gain) losses in the Other comprehensive income 39,718 (8,430)
Others 142 1,257
Present value of actuarial obligations at end of the year 136,340 89,944
(d) Employee benefits expenses
2016 2015 2014

Payroll, profit sharing and related charges 668,932 654,984 589,472
FGTS and other rescission indemnifications 41,449 38,428 35,886
INSS 24,181 17,078 14,985
Others 43,956 32,703 29,105
778,518 743,193 669,448
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31. Compensation program based on shares
(i) Phantom Stock Options (PSO)

The program is based on the PSO concept, which consists of an award in cash based on the appreciation of the shares of the Company, as compared to a predetermined price
during a predetermined period. The awards cannot be settled in shares. The Companys CEO and the statutory and non-statutory Officers are eligible for the plan.
At the time of each award, the participants under the plan will receive a quantity of PSO, to be defined based on a target reward and on the expectation of an increase in the value
of the Company. The target for the appreciation of the shares of the Company is established by the Board of Directors and the number of PSO awarded will be calculated in such a
manner that, if the appreciation target is attained, the resulting reward will be equal to the target value.
The PSOs can only be exercised after a vesting period of three years, as from the award date established in the contracts, and the maximum period for the exercise of the option is
five years since granted. Exceptionally, the first award, denominated as the Program 2009, had a graded vesting period.
The exercise price of the options at the award date is calculated by reference to the average price of the FIBR3 shares, in accordance with the volume traded in the three months
prior to the date of the award.
During 2016, the Programs below awarded were exercised by the Companys CEO and the statutory and non-statutory Officers, with the settlement made by the Company in cash.
Programs
Program Award date Vesting period Expiration date Options Exercise price
2009 08/26/2010 08/27/2010 12/31/2016 17,889 27.55
2009 08/26/2010 12/26/2010 12/31/2016 17,889 27.55
2009 08/26/2010 10/27/2011 12/31/2016 17,889 27.55
2010 08/26/2010 08/28/2013 12/31/2017 37,997 27.55
2011 01/02/2012 01/02/2014 12/31/2018 44,471 28.31
2013 01/02/2013 01/02/2016 12/31/2020 241,031 20.37
The change in the number of PSO and their corresponding weighted average prices for the period are presented below:
2016 2015
Weighted average price for Weighted average price for
Number of PSO exercise of options - Reais Number of PSO exercise of options - Reais
Outstanding at the beginning of the year Payments 377,166 23.05 679,075 19.45
(377,166) 24.66 (301,909) 15.18
Outstanding at the end of the year 377,166 23.05
Exercisable options at the end of the year 376,726 23.05
(ii) Stock Options
The Program consists of a plan to grant Options to purchase shares. The Companys CEO, statutory and non-statutory Officers and General Managers are eligible for the plan.
The Stock Option plan is managed by the Board of Directors of the Company, that establishes grant programs annually, and is responsible for defining: (i) the beneficiaries of the
options, (ii) the total number of options of each grant, and the number of each type of options to which each Beneficiary will be entitled individually, (iii) the goals related to
performance to establish criteria for the selection of beneficiaries and determining the number of options to be granted to each beneficiary, and (iv) the form and time of payment of
the exercise price of the options.
The Stock Option plan can only be exercised after a vesting period of three years, as from the grant date established in the contracts, and the maximum period for the exercise of
the option is six years since granted.
The exercise price of the options at the award date is calculated by reference to the average price of the FIBR3 shares, in accordance with the volume traded in the three months
prior to the date of the award.
Assumptions and calculation of fair value of options granted
The fair value of each option granted was estimated at the grant date based on the Black & Scholes option pricing model. The significant inputs into the model were:
Fair value assumptions
Grant Expectations
Program Grant-date Number of options Exercise price Fair value of options Dividends Volatility Free interest rate risk Term maturity
2014 01/01/2014 349,091 23.75 10.59 - 36.27% 12.26% p.a. 3 years
2015 01/01/2015 338,749 24.45 13.90 - 33.03% 12.43% p.a. 3 years
2016 01/01/2016 204,292 52.69 26.52 - 31.69% 15.63% p.a. 3 years
The settlement of this benefit plan for executives will be made by the Company in shares when the options are exercised.
Changes in the number of share options outstanding and their related weighted average exercise prices are as follows:
2016 2015
Average exercise price per share option Options Average exercise price per share option Options
At the beginning of the year 28.24 687,840 27.90 349,091
Granted 52.69 204,292 28.60 338,749
At the end of the year 30.64 892,132 28.24 687,840
In 2016, the reversal of compensation expense with the options to purchase shares was R$ 4,125 (R$ 11,554 of expense in 2015 and R$1,232 of expense in 2014), charged to the
Statement of profit or loss under Other operating (expenses) income and the corresponding provision (or reversal) made against the Capital reserve.
CNPJ n 60.643.228/0001-21

32. Revenue
(a) Reconciliation
2016 2015 2014

Gross amount 12,257,002 12,895,290 8,762,454
Sales taxes (223,979) (201,210) (152,719)
Discounts and returns (*) (2,418,206) (2,613,413) (1,526,132)
Net revenues 9,614,817 10,080,667 7,083,603
(*) Related mainly to trade discounts.
(b) Information about markets
2016 2015 2014

Revenue
Export market 8,620,295 9,168,894 6,412,432
Domestic market 905,175 818,680 590,773
Services 89,347 93,093 80,398
9,614,817 10,080,667 7,083,603
(c) Information by geographic areas
2016 2015 2014

Europe 3,507,714 4,311,769 2,935,260
North America 2,071,941 2,467,956 1,706,428
Asia 3,040,543 2,389,476 1,768,974
Brazil and others 994,619 911,466 672,941
9,614,817 10,080,667 7,083,603
33. Financial results
2016 2015 2014

Financial expenses
Interest on loans and financing (i) (608,661) (470,139) (475,780)
Loan commissions (26,647) (10,773) (23,955)
Financial charges upon partial repurchase of Bond (498,583)
Others (116,402) (88,881) (42,279)
(751,710) (569,793) (1,040,597)
Financial income
Financial investment earnings 199,104 131,641 91,299
Others (ii) 83,361 90,038 42,651
282,465 221,679 133,950
Gains (losses) on derivative financial instruments
Gain 1,373,215 665,554 379,965
Losses (672,288) (1,495,682) (386,201)
700,927 (830,128) (6,236)
Foreign exchange and losses
Loans and financing 1,716,123 (3,033,221) (690,271)
Other assets and liabilities (iii) (331,588) 526,198 (31,571)
1,384,535 (2,507,023) (721,842)
Net financial result 1,616,217 (3,685,265) (1,634,725)
(i) Does not include the amount of R$ 108,668 as at December 31, 2016 (R$ 9,147 as at December 31, 2015), related to capitalized financing costs.
(ii) Includes interest accrual of the tax credits.
(iii) Includes the effect of foreign currency exchange on cash and cash equivalents, trade accounts receivable, trade payable and others.
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FINANCEIRAS

34. Expenses by nature
2016 2015 2014

Cost of sales
Depreciation, depletion and amortization (1,960,328) (1,866,052) (1,848,202)
Freight (921,939) (912,647) (810,061)
Labor expenses (580,120) (497,910) (460,741)
Variable costs (raw and consumable materials) (3,645,959) (2,601,600) (2,426,533)
(7,108,346) (5,878,209) (5,545,537)
Selling expenses
Labor expenses (33,142) (29,152) (25,372)
Selling expenses (i) (411,878) (373,336) (313,741)
Operating leases (2,095) (1,879) (2,165)
Depreciation and amortization charges (9,742) (9,977) (8,481)
Other expenses (24,449) (22,909) (15,455)
(481,306) (437,253) (365,214)
General and administrative and directors compensation expenses
Labor expenses (104,451) (99,321) (93,217)
Third-party services (consulting, legal and others) (106,963) (105,652) (107,470)
Depreciation and amortization charges (13,373) (16,209) (17,311)
Donations and sponsorship (8,599) (7,359) (7,978)
Taxes and contributions (6,119) (5,687) (6,608)
Operating leases and insurance (11,339) (9,197) (9,245)
Other expenses (24,953) (22,196) (23,248)
(275,797) (265,621) (265,077)
Other operating income, net
Program of variable compensation to employees (60,806) (119,448) (90,118)
Capital gain on land and buildings sold - Asset Light Project (Note 1(d))
Tax credits 10,346 7,383 852,291
Increment of the provision for impairment of the ICMS credits (165,085)
Gain (loss) on disposal of property, plant and equipment (31,342) 135,347 (68,297)
Change in fair value of biological assets (Note 18) (212,248) 184,583 51,755
Provision (reversal) for contingencies (23,174) (13,716) 14,230
Others (3,943) (4,717) (10,399)
(321,167) 24,347 749,462
(i) Includes handling expenses, storage and transportation expenses and sales commissions, among others.
35. Insurance
The Company has insurance coverage for operational risks, with a maximum coverage of R$ 8,800,000. For the Horizonte 2 Project, during the construction and commissioning
phase, the Company has an insurance for engineering risk, which will be converted for operational risk after the conclusion of the Project. The maximum coverage of this insurance
is R$ 5,500,000. Additionally, the Company has insurance coverage for civil general liabilities in the amount of US$ 25 million corresponding to R$ 81.5 million on December 31, 2016.
Fibrias management considers these amounts sufficient to cover any potential liability, risks and damages to its assets and loss of profits.
The Company does not have insurance coverage for its forests. To mitigate the risk of fire, the Company maintains internal fire brigades, a watchtower network, and a fleet of fire
trucks. There is no history of material losses from forest fires.
The Company has a domestic and international (import and export) transportation insurance policy effective through August 31, 2017, renewable for additional 12 months.
In addition, Fibria has insurance coverage for civil responsibility of its directors and officers for amounts considered adequate by management.
36. Earnings per share
(a) Basic
The basic earnings per share is calculated by dividing net income attributable to the Companys shareholders by the weighted average of the number of common shares outstanding
during the period, excluding the common shares purchased by the Company and maintained as treasury shares.
2016 2015 2014
Numerator
Net income attributable to the shareholders of the Company 1,654,848 342,185 155,584
Denominator
Weighted average number of common shares outstanding 553,590,604 553,591,112 553,591,822
Basic earnings per share (in Reais) 2.99 0.62 0.28
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FINANCEIRAS

The weighted average number of shares in the period is represented by a total number of shares of 553,934,646 issued and outstanding for the year ended December 31, 2016,
2015 and 2014, excluding the 344,042 treasury shares of shares in the year ended December 31, 2016 (344,042 as at December 31, 2015 and 342,824 as at December 31, 2014).
During the years 2016 and 2015 there were no changes in the number of shares of Company.
(b) Diluted
Diluted earnings per share are calculated by dividing net income attributable to the Companys shareholders common shares by the weighted average number of common shares
available during the year plus the weighted average number of common shares that would be issued when converting all potentially dilutive common shares into common shares:
2016 2015 2014
Numerator
Net income attributable to the shareholders of the Company 1,654,848 342,185 155,584
Denominator
Weighted average number of common shares outstanding 553,590,604 553,591,112 553,591,822
Dilution effect
Stock options 892,132 687,840 349,091
Number of common shares outstanding adjusted according to dilution effect 554,482,736 554,278,952 553,940,913
Diluted earnings per share (in Reais) 2.98 0.62 0.28
37. Non-current assets held for sale
2016 2015
Losango Project
Biological assets 284,217 284,217
Property, plant and equipment - substantially land 305,632 305,632
Others 8,408 8,408
598,257 598,257
Upon classification as assets held for sale, the carrying amount of the assets held for sale was compared to their estimated fair values less cost of sale, and no impairment losses
were recognized.
The Company assumed indemnification commitments with respect to potential losses, as agreed in the corresponding sale agreements which have specific limits, period for the
indemnification commitments and procedures for the other party to require the indemnification.
38. Impairment testing
As of December 31, 2016, the Company performed its annual impairment test of the CGUs to which goodwill is allocated as described in item (a) below. As described in item (b)
below, the Company performed an impairment analysis of its long lived assets.
(a) CGUs with goodwill allocated - Aracruz
In December 2016, the Company performed an impairment analysis of the carrying amount of goodwill based on the value in use of the group of CGUs where goodwill was allocated.
Value in use was estimated using a discounted cash flow model for the group of CGUs. The process of estimating the value in use involves assumptions, judgments and estimates
for future cash flows which represent the Companys best estimate approved by management. The impairment test did not result in the need to recognize an impairment loss.
Goodwill allocated to the group of CGUs (Aracruz, Portocel and Veracel) amounted to R$ 4,230,450 at December 31, 2016.
Cash flows for a period of ten years were considered and an additional amount was calculated for the perpetuity of the cash flow of the tenth year, discounted to present value using
the WACC (Weighted Average Cost of Capital) rate. This rate takes into consideration the various components of financing, debt and own capital used by the Company to finance
its activities. The cost of capital of the CGU was determined using the Companys own capital cost through the Capital Asset Pricing Model.
The main assumptions used in determining value in use at December 31, 2016, are as follows:
Assumptions
Net average pulp price - U.S. Dollar/ton (*) 595
Average exchange rate in the period - R$/U.S. Dollar 4.07
Discount rate - WACC (nominal and real) - % 9.43 and 7.18
(*) The net average pulp price was obtained from external sources in the sector and it is consistent with the Companys strategic budget.
Management determined the gross margin based on its expectations of market development. The weighted average growth rates used are consistent with the forecasts included in
industry reports and in the Companys strategic budget.
Management believes it to be reasonably possible that future changes in the pulp price combined with changes in the exchange rate may result in the recoverable amount of the
CGUs to be different.
The recoverable value of the CGU as per the impairment test exceeds its book value (headroom) by R$ 3.96 billion (R$ 8.2 billion in 2015).
For purposes of the sensitivity analysis, we evaluated that even with a combined reduction of 10% in the pulp price and in the exchange rate (U.S. Dollar) over the next four years
of discounted cash flows, the recoverable amount will still being higher than its value in use.
CNPJ n 60.643.228/0001-21
FINANCEIRAS

(b) Companys long lived assets
At December 31, 2016, the Company assessed whether the value in use of its long lived assets exceeded its carrying amount. Value in use was measured using the discounted
cash flows method. The processes to estimate the value in use followed the same assumptions and judgments described in item (a). The impairment test did not result in the need
to recognize an impairment loss.
39. Subsequent events
Green Bond issuance
On January 11, 2017, the Company, through its subsidiary Fibria Overseas Finance Ltd., concluded the issuance in the international market of the notes, the Green Bond Fibria
2027, maturing in 2027, with a fixed interest rate of 5.5% p.a., with semi-annual payments, in the amount of US$ 700 million (equivalent to R$ 2,247,000).
The funds raised with the Green Bond Fibria 2027 were received on January 17, 2017, and will be used for investments in projects with environmental benefits that contribute to the
achievement of the Companys long-term sustainability goals.
This transaction is fully guaranteed by the Company.
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Administrative Council
Jos Luciano Duarte Penido

Chairman Board of Director
ALEXANDRE GONALVES SILVA CARLOS AUGUSTO LIRA AGUIAR

EDUARDO RATH FINGERL ERNESTO LOZARDO
JOAO CARVALHO DE MIRANDA JOO HENRIQUE BATISTA DE SOUZA SCHMIDT
MARCOS BARBOSA PINTO RAUL CALFAT
BOARD
Marcelo Strufaldi Castelli

Board of Directors
AIRES GALHARDO
Forestry Director MARIA LUIZA DE OLIVEIRA PINTO E PAIVA
GUILHERME PERBOYRE CAVALCANTI Sustainability and Corporate Relations Officer
Finances and Investors Relations Director WELLINGTON NGELO LOUREIRO GIACOMIN
LUIZ FERNANDO TORRES PINTO Supply and Logistics officer
Human Organizational Development Director
Arvelino Cassaro - Accountant - CRC: 1ES007400/O-4 S SP
Opinion of the Fiscal Council
The Fiscal Council of FIBRIA CELULOSE S.A. (Fibria or Company), in the use of the attributions conferred to it under Article 163 of the Brazilian Corporate Law (Law n 6,404/76),
according to the meeting held on January 27, 2016 in the Companys headquarter, examined the Financial Statements: Individual (controlling company) and consolidated (Fibria
and its subsidiaries) and the respective explanatory notes, the Management Annual Report and other financial statements prepared by the Company for the fiscal year ended
December 31, 2016, as well as the proposals contained therein, including the capital expenditure proposal for the fiscal year of 2017. Based on the analysis carried out and
considering the opinion of the independent auditors, BDO RCS Auditores Independentes SS, dated January 27, 2017, presented without reservations, as well as the information
and clarifications provided by representatives of the Company during the year, the members of the Fiscal Council unanimously concluded, in accordance with the provisions of
Article 163 of Law 6.40476, to opine favorably on the submission of such documents and proposals for approval of the Ordinary General Meeting, related to the fiscal year of 2016.
So Paulo, January 27, 2017.
Maurcio Aquino Halewicz Gilsomar Maia Sebastio Raphael Manhes Martins

Chairman of the Fiscal Council Member of the Fiscal Council Member of the Fiscal Council
ANNUAL REPORT OF THE STATUTORY AUDIT COMMITTEE
The members of the Statutory Audit Committee of Fibria Celulose S.A., acting within their legal duties and responsibilities, pursuant to the Internal Rules of the Committee, have
analyzed the financial statements, together with the independent auditors report and the management annual report of the 2016 fiscal year (Financial Statements of 2016 fiscal
year). Considering the information provided by the Companys management and by BDO RCS Auditores Independentes SS, as well as the proposal for the allocation of the
results of 2016 fiscal year, considering that such proposal fairly reflects in all relevant aspects the Companys and its subsidiaries equity and financial positions, and recommend,
unanimously, the approval of the documents by the Companys Board of Directors and its forwarding to the General Shareholders Meeting, in accordance with the Corporate
Law (Law n 6,404/76).
So Paulo, January 27, 2017
Maria Paula Soares Aranha - Coordinator of the Statutory Audit Committee
Jos cio Pereira da Costa Junior Jlio Srgio de Souza Cardozo
Member Member and Financial Expert
CNPJ n 60.643.228/0001-21
FINANCEIRAS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders
Fibria CeluloseS.A.
In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of profit or loss, comprehensive income, changes in shareholders equity
and cash flows present fairly, in all material respects, the financial position of Fibria Celulose S.A. and its subsidiaries at December 31, 2016 and December 31, 2015, and the
results of their operations and their cash flows for each of the three years in the period ended December 31, 2016 in conformity with International Financial Reporting Standards
as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting
as of December 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Companys management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Managements Report on Internal Control over Financial Reporting. Our
responsibility is to express opinions on these financial statements and on the Companys internal control over financial reporting based on our integrated audits. We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained
in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control
over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A companys internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A companys internal control over financial reporting includes those
policies and procedures that (i)pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii)provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (iii)provide reasonable assurance regarding prevention
or timely detection of unauthorized acquisition, use, or disposition of the companys assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ PricewaterhouseCoopers
Auditores Independentes
So Paulo, Brazil, January 27, 2017
www.fibria.com.br

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A NEW HORIZON

2016 MANAGEMENT REPORT

MESSAGE FROM MANAGEMENT

Marcelo Strufaldi Castelli Jos Luciano Penido

Administrative expenses stood at R$276 million, 4% more than in 2015, mainly as a

Marcelo Strufaldi Castelli Jos Luciano Penido

Consolidated balance sheet at December 31 (In thousands of Reais)

Assets 2016 2015

Liabilities and shareholders equity 2016 2015

Consolidated statement of profit or loss - Years ended December 31

2016 2015 2014

Consolidated statement of comprehensive income - Years ended December 31

2016 2015 2014

Consolidated statement of cash flows - Years ended December 31

2016 2015 2014

Capital Other reserves Statutory reserves

Unclaimed dividends forfeited 231 231 231

Investment reserve appropriation 110,854 (110,854)

26,589 342,185 368,774 14,800 383,574

Notes to the consolidated financial statements

1. Operations and current developments

(a) General information

Notes to the consolidated financial statements

(d) Acquisition of equity interest

2.1 Financial statements - basis of preparation

Notes to the consolidated financial statements

(i) Jointly-operated entities, as detailed in Note 2.2.1 (b).

Notes to the consolidated financial statements

(b) Held-to-maturity investments

Notes to the consolidated financial statements

Notes to the consolidated financial statements

2.12 Property, plant and equipment

Notes to the consolidated financial statements

(b) Health care (post-retirement)

Notes to the consolidated financial statements

(b) Financial income

3. Critical accounting estimates and assumptions

Notes to the consolidated financial statements

(b) Employee benefits

(c) Fair value of derivatives and other financial instruments

(d) Biological assets

Assumptions used Impact on fair value of the biological assets

(e) Allowance for doubtful accounts

(f) Review of the useful lives and recoverability of long-lived assets

(g) Contingent assets, contingent liabilities and legal obligations

(h) Goodwill impairment

Notes to the consolidated financial statements

Notes to the consolidated financial statements

Notes to the consolidated financial statements

(b) Credit risk

Less than Between Between

Notes to the consolidated financial statements

Sensitivity analysis - changes in foreign currency exchange rates

Sensitivity analysis - changes in interest rates

Sensitivity analysis - changes in the U.S. Consumer Price Index

Notes to the consolidated financial statements

6. Fair value estimates

6.1 Fair value of loans and financing

Notes to the consolidated financial statements

2016 MANAGEMENT REPORT

Consolidated balance sheet at December 31 (In thousands of Reais)

Unclaimed dividends forfeited 231 231 231

Investment reserve appropriation 110,854 (110,854)