DISCLAIMER The statements contained in this presentation related to the business outlook, operating and financial projections, and growth prospects of Klabin S.A. are merely projections, and as such are based exclusively on the expectations of the Company s management concerning the future of the business. These forward-looking statements depend substantially on the market conditions, the performance of the Brazilian economy, the industry and international markets, and therefore are subject to change without prior notice. This presentation on Klabin s performance includes non-accounting and accounting data, such as operating and financial information, as well as projections based on Management s expectations. Note that the non-accounting data has not been reviewed by the Company s independent auditors. The Company s management believes EBITDA may provide useful information on the Company s operating performance and allow for comparisons with other companies in the same industry. Note however that EBITDA is not a measure established in accordance with generally accepted accounting principles of the International Financial Reporting Standards IFRS, and may be defined and calculated differently by other companies. 2
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CAPACITY Domestic market eucalyptus and pine forests 2.5 m t wood logs 243 k ha 700 k t planted forests: 243 thousand ha 1.7 m t short fiber and long fiber pulp coated boards 960 k t kraftliner 145 k t industrial bags Domestic and export markets Domestic market 250 k t old corrugated containers 200 k t 540 k t recycled paper corrugated boxes 4
FORESTRY PRODUCTIVITY PARANÁ 49 Cloning 55 58 62 71 Forestry 37 productivity Eucalyptus m 3 / (ha.year) 38 13 14 15 18 MAI Tonnes of pulp/ (ha.year) 8 9 10 Growth Density Factory yield 1995 2000 2005 2010 2015 2012 5
FORESTRY LOGISTICS Average hauling distance Klabin Pulp 74 Km Average hauling distance Monte Alegre 50 Km Klabin Pulp Klabin SA Vale do Corisco 6
MARKET POSITION PAPER Leader in the Brazilian packaging paper market, where we allocate more than 50% of our capacity Coated Boards Kraftliner 670 thousand tonnes sold in 2012 50% market share Sole supplier of liquid packaging board in Latin America 387 40% installed capacity thousand tonnes sold in 2012 7
MARKET POSITION CONVERSION Leader in the Brazilian packaging market where we allocate more than 95% of our capacity Industrial Bags Corrugated Boxes 50% market share Second player s 15% market share is 16% market share Second player s market share is 9% 8
DESTINATION OF KLABIN S PRODUCTS Strongly linked to the consumer market Food 68% 13% 7% Other consumer goods Building Others Sales volume destination paper and packaging 9
SUPERIOR COST CONTROL Matrix control of costs (Falconi) Monte Alegre mill Forestry 1,618 3% 1,664 Reversion of excessive outsourcing High return investments Mechanical Vapor Recompression (Debottlenecking in Monte Alegre) Biomass boilers in Santa Catarina State High voltage transmission line Evaporation system 2Q12 2Q13 Nominal cash cost R$ / tonne 10
ADJUSTED EBITDA LTM 57% growth Margin 24% 25% 26% 1.028 28% 1.089 29% 1.180 31% 1.286 32% 1.352 33% 1.424 33% 1.452 922 939 1,7 1,7 1,7 1,7 1,7 1,7 1,7 1,7 1,7 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Dec12 Mar13 Jun13 LTM: Last twelve months Sales Volume LTM (excluding wood million tonnes) Adjusted EBITDA LTM (R$ million) 11
NET DEBT Net Debt/Adjusted EBITDA 2.0 2.4 2.5 2.3 2.5 2.3 2.4 2.2 2.4 2,5 2,0 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Net Debt / Adjusted EBITDA (LTM) LTM: Last twelve months 12
CAPEX R$ million 2012 2013E Maintenance and special projects 552 361 Sack kraft expansion 77 127 Recycled expansion 25 212 Total 654 700 13
SUSTAINABILITY COMMITTED TO THE BEST PRACTICES Certifications Forest management in the most rigorous environmental, social and economic standards: 94.5% of Klabin's forests certified by the FSC (Forest Stewardship Council ); Quality Management System ISO 9001; Environmental Management System ISO 14001; Occupational Health and Safety Management System OHSAS 18001. Committed to fundamental principles and rights Monitoring supply chain focusing on: prevention of child, forced or compulsory labor; combating discriminatory practices, on appreciation of diversity, preventing bullying and sexual harassment, and respect for freedom of association. Voluntary commitments and practices adhered to: the UN Global Compact, CPC - Companies for the Climate, CDP - Carbon Disclosure Project, Pact for Integrity and Against Corruption and Pact for the Eradication of Slave Labor, among others. Promoting local development, with a focus on socio-economic aspects of the communities where we operate and in generating income for populations surrounding the plants. 14
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BRAZILIAN PACKAGING MARKETS HIGHER EXCHANGE RATE INHIBITED IMPORTS OF PACKAGED PRODUCTS Brazilian sales of coated boards * FX exchange rate (R$ / dollar) Brazilian imports of packaged products (monthly avg - tsd tonnes) 254 262 1,87 2,03 348 300 6M12 6M13 Brazilian sales of corrugated boxes 1,594 1,657 6M12 6M13 Source: BACEN, SECEX/MDIC, ABPO and Bracelpa * Excluding LPB 6M12 6M13 6M12 6M13 Tsd tonnes 16
DOMESTIC MARKET SALES KLABIN GREW MORE THAN THE MARKET Competitive advantage of Klabin s products cost and quality Focus on food markets Klabin Sales Volume (excluding wood tsd tonnes) 561 601 Flexibility of product lines 6M12 6M13 17
SALES AND NET REVENUE Sales volume (excluding wood tsd tonnes) Net revenue (R$ million) 430 429 850 34% 860 30% 1.030 1.094 2.000 2.160 25% 24% 33% 67% 30% 70% 66% 70% 25% 75% 25% 75% 75% 76% 2Q12 2Q13 6M12 6M13 2Q12 2Q13 6M12 6M13 Domestic Market Export Market 18
PAPER BUSINESS UNIT Kraftliner 192 61% 39% 169 54% 46% 245 257 6M12 6M13 6M12 6M13 Coated boards 0% 327 47% 53% 326 46% 54% 709 752 Kraftliner Recycled Kraftliner and coated boards 6M12 6M13 Thousand tonnes Domestic market Export market 6M12 6M13 R$ million 19
CONVERSION BUSINESS UNIT 313 343 867 977 Total conversion 6M12 6M13 6M12 6M13 Thousand tonnes R$ million Corrugated boxes Industrial bags Corrugated boxes and industrial bags 20
COST AND EBITDA 17% EBITDA GROWTH YOY 1,593 3% 1,627 1,639 Higher domestic sales Higher exports prices Low cost 593 693 6M12 6M13 Unit cash cost (R$/tonne) 6M12 6M13 Adjusted EBITDA (R$ million) 21
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FROM NOW ON 2013 2014 2016 More benefits from the cost reduction Forestry investments to increase productivity and reduce costs New sack kraft machine in the 4Q13 Recycled paper machine in the 3Q14 PM9 (coated boards) debottlenecking Modernization of the lumber yard in Monte Alegre New Pulp mill New coated boards machine 23
PUMA PROJECT Domestic and foreign markets Competitive forest Lower cost producer Fluff market FSC Long and short fiber Energy generation 24
FOREST OVERVIEW A singular forest base located in one the most prolific regions of the world 107,000 hectares planted with pine and eucalyptus Paraná region has one of the highest forest yields in the world ~ 32% above Brazilian average Well distributed and located forest base: average distance of 74km FSC certified Productivity m3/(ha*year) Hardwood Brazil Africa 20 Chile 25 Iberian 12 Scandinavia 6 44 58 Softwood 22 10 7 4 38 43 Klabin
LOGISTICS OVERVIEW Integrated logistics solution assuring efficiency and competitiveness Puma will operate with low logistics costs Location Railroad logistics based on already existing rail infrastructure from America Latina Logistica(ALL) Terminal at the Port of Paranaguá A dedicated warehouse will be built Paranaguá port supports large vessels Klabin Area 27,530 sq m 26
FLEXIBLE PRODUCTION MIX Exposure to high growth markets with the most updated technology available Hardwood Softwood Fluff Global demand should keep growing at healthy levels in the next years Asia should be the driver for this growth Main markets: tissue and specialties Most of the softwood used in the domestic market comes from imports which are less competitive Main markets: packaging and tissue Global and local demand for fluff should grow substantially Focus in the local market: huge opportunity Main markets: hygiene products Global demand for hardwood (mm t) 23 3 9 3 6 2005 28 3 9 2 8 6 2010 North America Europe Latin America +3% 33 3 9 3 11 7 2015 China Others Softwood market pulp in Brazil Mkt pulp 24% 76% Integrated Brazilian market (2012) (000 tonnes) 479 69 410 Domestic sale Imports Market Pulp Demand for fluff Brazilian market (000 tonnes) +5% 310 396 2010 2015 Global market +3% 4,75 5,35 2011 2015 27 (mm tonnes)
PUMA PROJECT EARTH MOVEMENT 28
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SHAREHOLDER STRUCTURE Common Preferred Monteiro Aranha 20% BNDES 13% Treasury 5% Brazilian investors 42% Brazilian investors 20% Klabin Irm ãos 60% Foreign investors 40% 316,827,563 shares 600,855,733 shares Level 1 of Corporate Governance at BM&FBovespa Tag along rights of 70% for preferred shares Average daily trading volume in 2Q13 R$ 37 million Dividends in 2012 R$ 275 million (yield 4%) 30
INCOME STATEMENT (R$ thousand) 2Q13 1Q13 2Q12 6M13 6M12 2Q13/1Q13 2Q13/2Q12 6M13/6M12 Gross Revenue 1,325,897 1,294,947 1,232,089 2% 8% 2,620,844 2,397,202 9% Net Revenue 1,093,793 1,066,404 1,030,299 3% 6% 2,160,197 1,999,540 8% Change in fair value - biological assets 70,267 61,609 4,850 14% 1349% 131,876 439,456-70% Cost of Products Sold (807,242) (719,699) (755,367) 12% 7% (1,526,941) (1,383,405) 10% Gross Profit 356,818 408,314 279,782-13% 28% 765,132 1,055,591-28% Selling Expenses (86,645) (86,479) (96,499) 0% -10% (173,124) (176,627) -2% General & Administrative Expenses (67,039) (64,195) (66,464) 4% 1% (131,234) (126,029) 4% Other Revenues (Expenses) 4,574 7,364 (1,042) -38% -539% 11,938 (5,400) N/A Total Operating Expenses (149,110) (143,310) (164,005) 4% -9% (292,420) (308,056) -5% Operating Income (before Fin. Results) 207,708 265,004 115,777-22% 79% 472,712 747,535-37% Equity pickup 1,365 823 19,988 66% -93% 2,188 23,574-91% Financial Expenses (111,336) (88,806) (129,005) 25% -14% (200,142) (218,157) -8% Financial Revenues 47,459 46,098 72,486 3% -35% 93,557 140,616-33% Net Foreign Exchange Losses (354,319) 59,662 (412,140) N/A -14% (294,657) (336,994) -13% Net Financial Revenues (418,196) 16,954 (468,659) N/A -11% (401,242) (414,535) -3% Net Income before Taxes (209,123) 282,781 (332,894) N/A -37% 73,658 356,574-79% Income Tax and Soc. Contrib. 79,298 (81,227) 148,988 N/A -47% (1,929) (81,962) -98% Net income (129,825) 201,554 (183,906) N/A -29% 71,729 274,612-74% Depreciation and amortization 163,258 173,066 164,348-6% -1% 336,324 272,193 24% Change in fair value of biological assets (70,267) (61,609) (4,850) 14% 1349% (131,876) (439,456) -70% Vale do Corisco 8,495 7,263 6,001 17% 42% 15,758 12,370 27% EBITDA 309,194 383,724 281,276-19% 10% 692,918 592,642 17% 31
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