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Aracruz Celulose S.A. 02 July 2008

Update Report – 1Q 08 Results

Strong fundamentals already priced in

ADR HOLD Fundamental research indicates a 7% upside in ADR over the next 6-12 months. We have calculated
Direct
the target access toonthe
price based full report
fundamental free
factors, ofacharge
using weighted at
average of target prices obtained
Fundamental stock
using DCF and comparative valuation methodologies.
http://www.iirgroup.com/researchoracle/viewreport/show/20160
Ticker: ARA
Target price: US$77.00
Current price: US$72.09 We reiterate the ADR a HOLD on fundamental grounds, with a 6-12 month target price of US$77.00.

Brazilian SELL The Brazilian preferred stock is expected to depreciate by approximately 13% over the next 6-12
months, as the 7% fundamental upside is expected to be offset by 20 percentage points’ downside
Preferred attributable purely to the anticipated appreciation of the Brazilian real against the US dollar. We
continue to value this stock over a 6-12 month investment horizon as we anticipate a significant
Stock negative currency impact over the medium term1.
Ticker: ARCZ6.SA
Target price: BRL10.01 We reiterate the Brazilian preferred stock (1 ADR = 10 Brazilian preferred shares) a SELL, with a 6-12
Current price: BRL11.50 month target price of BRL10.01.

Supervisor: Meera Patil
Analyst: Abhay Amlekar
Editor: James Smithies
Global Research Director:
Satish Betadpur, CFA
Investment horizon - short term actionable trading strategies
This report addresses the needs of strategic investors with a long term investment horizon of 6-12 months. If this
report is provided to you by your broker under the Global Settlement, you may now also access (free of charge) the
short term trading outlook that we publish from time to time for this issuer, looking at the coming 5-30 days for
readers with a shorter trading horizon. These are available online only at www.researchoracle.com.

Next news due:

2Q 08 results, 07 July 2008
Report summary
Aracruz Celulose S.A.’s (Aracruz) 1Q 08 top-line was in line with our estimate, driven by strong growth
in sales volumes and pulp prices. Strong demand for hardwood pulp, set against low pulp inventories
in Europe and China, pushed hardwood prices higher during the quarter. Going forward, we expect pulp
prices to increase further, as demand from Europe and Asia is expected to outstrip supply. The
increasing trend of substitution of hardwood pulp for softwood pulp has also given a further boost to
hardwood pulp demand. Taking into account new capacity additions and an upward revision to FY
2008 pulp production guidance, we are optimistic about the company’s growth prospects. However, at
current levels, we believe the stock is fairly valued.

Currency impact for US investors

Aracruz reports in US dollars. Earnings forecasts are, therefore, also expressed in US dollars. Although
Aracruz may have costs as well as revenues in other currencies, we assume that the net risk is
minimized through effective hedging strategies. As a result, the impact of currency movements on the
ADR price is assumed to be neutral. Wherever specific currency risks are identified, these will be
highlighted in the report.

Currency impact on the Brazilian preferred stock1

The impact by itself of the anticipated currency movements on the Brazilian preferred stock (now
BRL11.50, without considering changes in the share price, is broadly negative and is expected to be:

Over 6 months: BRL11.53

Over 12 months: BRL9.37

Page 1 Refer to page 5 for all footnotes