INSTITUTIONAL PRESENTATION ITAU CONFERENCE NEW YORK - MAY, 2015 KLBN11 KLBN11 / KLBAY
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
CONSISTENT PERFORMANCE
INTEGRATED BUSINESSES COMPETITIVENESS TROUGH ALL THE CHAIN FOREST PULP PAPER and CONVERSION 243 thousand ha 1.7 million tonnes COATED BOARDS 750 thousand tonnes 220 thousand tonnes INDUSTRIAL BAGS and SACK KRAFT 330 thousand tonnes CORRUGATED BOXES and KRAFTLINER 1,050 thousand tonnes EUCALYPTUS AND PINE FORESTS OLD CORRUGATED CONTAINERS HIGH YIELD FOREST INDUSTRIAL EFFICIENCY HIGH QUALITY and FLEXIBILITY 4
50% COATED BOARDS INDUSTRIAL BAGS LOW COST QUALITY sole supplier of liquid packaging board in Latin America market share LEADER IN BRAZIL IN ALL MARKETS KRAFTLINER installed capacity CORRUGATED BOXES DIVERSIFIED PRODUCT LINE 40% MARKET POSITION STRONGLY LINKED TO RESILIENT MARKETS 7% building 12% others food 13% other consumer goods 68% 50% source: ABPO, IBÁ market share market share 16% SALES VOLUME DESTINATION PAPER AND PACKAGING 5
BUSINESS EVOLUTION TIMELINE 2011-2013 2014-2015 2016 2016 on PERFORMANCE IMPROVEMENT PAPER EXPANSIONS - COMPLETED PUMA PULP MILL NEW GROWTH OPPORTUNITIES 1,7 MILLION TONNES 2,0 MILLION TONNES 3,5 MILLION TONNES INCREASED RESULTS AND SET THE PATH FOR FUTURE GROWTH 6
EBITDA GROWTH CONSISTENT RESULTS DESPITE CHALLENGING SCENARIOS % CHANGE VS PREVIOUS YEAR *LTM = Last twelve months
EBITDA GROWTH SUSTAINABLE PERFORMANCE adjusted EBITDA LTM - R$ million 2011-2013 PERFORMANCE IMPROVEMENT 2014-2015 STABLE MARGINS + EXPANSION OF CAPACITY 8
PUMA PROJECT
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LOW OPERATION COST ANNUAL PRODUCTION CAPACITY 1.5 MILLION TONNES OF PULP 1.1 MILLION TONNES OF SHORT FIBER 400 THOUSAND TONNES OF LONG FIBER PART CONVERTED TO FLUFF PRODUCTION OF 270 MWh of ENERGY SELF SUFFICIENT 120 MWh FOR PUMA USE 150 MWh FOR SALE IN THE MARKET 11
CURRENT STATUS COMPLETION areas delivered to EPC s 100% of earthmoving concluded Assembly started EPC s with Klabin coordination dedicated team: strong feedback and control 95% of equipment supplies, materials and services concluded COST lower dependency on imported equipments EUR 365 million (55% already paid) 0% 58% OF THE PROJECT COMPLETED 100% 41% 0% OF THE CAPEX DISBURSED 100% 12
46% INDUSTRIAL CAPEX 14% TOTAL CAPEX R$ 7.2 BI national equipments and materials 14% imported equipments 27% INDUSTRIAL CAPEX R$ 5.8 BI NET OF RECOVERABLE TAXES engineering and other services civil construction and assembly PROJECT FULLY FUNDED 13
LOGISTICS MULTIMODAL 72 Km forestry average distance 441 Km railway to the port FORESTS PULP MILL PARANAGUÁ PORT INBOUND OUTBOUND 14
Investor Relations www.klabin.com.br/ir invest@klabin.com.br Phone: +55 (11) 3046-8401
APPENDIX EARNINGS1Q15 PUMA MARKET COMMERCIAL CONTRACT
EARNINGS 1Q15
SALES VOLUME excluding wood tsd tonnes NET REVENUE R$ million HIGHLIGHTS ADJUSTED EBITDA R$ million 443 35% - 1% 437 33% 1,203 26% 1,308 28% 424 461 65% 67% 74% 72% 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 exports domestic market 18
COATED BOARDS 1% PAPER BUSINESS UNIT KRAFTLINER (3) KRAFTLINER AND COATED BOARDS (1) RECYCLED (2) KRAFTLINER 161 thousand tonnes 45% 163 thousand tonnes 45% 415 R$ million 474 R$ million 105 thousand tonnes 69% 96 thousand tonnes 66% 171 R$ million 182 R$ million 55% 55% 31% 34% 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 1Q14 1Q15 exports domestic market 19
CONVERSION MARKET POSITION CORRUGATED BOXES (7) CORRUGATED BOXES AND INDUSTRIAL BAGS (1) INDUSTRIAL BAGS (3) 525 R$ million 536 R$ million 173 thousand tonnes 169 thousand tonnes 1Q14 1Q15 + 1Q14 1Q15 20
CASH COST UNIT CASH COST CASH COST BREAKDOWN +7% 1,782 R$/tonne 1,900 R$/tonne 1Q14 1Q15* *Excluding non-recurring effects of stoppages in Otacílio Costa mill (SC) and in the Turbo Generator 8, in Monte Algre (PR) mill 21
NET DEBT 22
5,60 0 DEBT PROFILE MATURITY SCHEDULE R$ million CASH POSITION Local currency : R$ 4.1 billion Average tenor: 45 months Foreign currency: R$ 6.9 billion Average tenor : 57 months 23
CAPEX CAPEX R$ million 2011 2012 2013 2014 2015E maintenance 3T14 296 3T14 390 3T14 369 3T14 384 3T14 350 special projects and growth 159 264 431 319 385 vale do corisco 428 - - - - PUMA project - - 99 2,242 3,437 total 883 654 899 2,945 4,172 24
PUMA PULP MARKET
PULP MARKET 2014 112 million tonnes integrated pulp 164 mm t 52.6 million tonnes market pulp VIRGIN FIBER PULP PULP MARKET DISTRIBUTION long fiber 45% 22% other short fibers 33% eucalyptus Source: Hawkins Wright; RISI 26
LARGEST MARKET PULP MILLS OF THE WORLD million tonnes per year in 2014 Fibria Aracruz 2,340 PUMA: 6 th LARGEST PULP MILL April Riau 2,200 April Rizhao 1,700 WORLD DEMAND million tonnes per year in 2014 CMPC Guaíba 1,690 Suzano Mucuri 1,565 Klabin 1,500 Suzano Maranhão 1,500 Eldorado 1,500 short fiber 28.6 17.5 52.6 market pulp Montes del Plata 1,300 eucalyptus Source: Hawkins Wright (jul/14) 27
4 th LARGEST IN FLUFF WORLD CAPACITY OF FLUFF thousand tonnes per year in 2014 GP Weyco IP Puma Klabin Domtar Resolute Stora Arauco Rock Tenn Rayonier UPM 400 334 290 255 250 170 110 100 Source: Hawkins Wright 1,045 1,420 2,296 the only designed to produce fluff from the start mills converted in fluff mills WORLD DEMAND million tonnes per year in 2014 23,7 fibra longa SBSK = pinus long fiber from USA 6,4 fluff and SBSK 28
FOCUS ON CONSUMER MARKETS MARKET PENETRATION IN DISPOSABLE DIAPERS 2013 USA 96% SOPHISTICATION AND INNOVATION IN HIGHER VALUE ADDED PRODUCTS high potential of growth BRA 50% ARG 72% Source: RISI, Euromonitor 29
BRAZIL IS THE 3 RD LARGEST MARKET OF DISPOSABLE DIAPERS IN THE WORLD SALES OF DIAPERS FOR ADULTS R$ billion 0.8 1.0 1.2 SALES OF DIAPERS FOR INFANT R$ billion 0.4 2008 0.5 2009 0.6 2010 2011 2012 2013 3.3 4.2 4.9 5.7 6.0 6.5 2008 2009 2010 2011 2012 2013 Source: Euromonitor 30
COMPOSITION OF DIAPERS 30% TO 50% OF THE AVERAGE WEIGHT OF A DIAPER IS COMPOSED OF FLUFF (20 TO 40G) 31
SPREADS AMONG DIFFERENT FIBERS CIF EUROPE US$/TONNE 275 fluff x short fiber 60 long fiber x short fiber may 13 jun 13 jul 13 aug 13 sep 13 oct 13 nov 13 dec 13 jan 14 feb 14 mar 14 apr 14 may 14 jun 14 jul 14 aug 14 sep 14 oct 14 nov 14 dez 14 jan 15 feb 15 mar 15 Source: RISI, FOEX 32
GLOBAL CASH COST (SHORT FIBER) 600 500 CIF EUROPE US$/TONNE 400 PUMA 5 million tonnes 10 million tonnes 15 million tonnes 20 million tonnes 25 million tonnes ANNUAL CAPACITY Source: Hawkins Wright CIF: COST, INSURANCE AND FREIGHT INCLUDED 33
KLABIN & FIBRIA COMMERCIAL CONTRACT HARDWOOD PULP
Contract Ra=onale Puma Project 1. 5 mt/year 1.1 mt of hardwood 400 kt of softwood, part converted to fluff Sale minimum 900 kt of hardwood / year 200 kt of hardwood / year + 400 kt of solwood / year EXPORTS EXCEPT SOUTH AMERICA SOUTH AMERICA ALL MARKETS
Sales dynamics 900 kt hardwood forestry pulp plant Paranaguá Port (PR) Same price as Fibria FOB Paranaguá final customer KLABIN industrial efficiency FIBRIA commercial expertise
Timeline 900 kt of hardwood pro rata of the period Minimum of 900 kt of hardwood Phase out 1 75% of the delivered in 2019 Phase out 2 50% of the delivered in 2019 Pro rata 50% of the delivered in 2019 End of the contract 2016 2017 2018 2019 2020 2021 2022 From start- up date unyl December 12 months 12 months 12 months 12 months 12 months 72 months aler start- up The contract may be renewed by agreement between the paryes Volumes may be reduced if Klabin decides to integrate into paper for packaging
Agreement benefits LogisYcs and commercial structure synergies; Ensure sales volumes; Ensure pulp market access with Klabin brand. LogisYcs and commercial opymizayon and synergies; Support customers growth and enhance customers needs; PotenYal development of new customers. Mutual value creayon, with beder servicing for both Companies customer s base.
Highlights 1 Klabin is going to sell most of the Puma Project hardwood pulp to Fibria. 2 Klabin is going to sell the remaining hardwood pulp in South America, and solwood and fluff pulp globally. 3 Fibria will conynue to place its hardwood pulp in all regions, including South America, on a compeyyve basis. 4 InnovaYve agreement exploring core competences: Fibria s commercial experyse and the recognized Klabin s industrial efficiency.
INCOME STATEMENT numbers in thousand R$ 40
BALANCE SHEET numbers in thousand R$ 41