Klabin (KLBN4) Klabin Day 2024 summary

Strategic planning and business model evolution

• Achieved a balanced portfolio of one-third fiber, one-third paper, and one-third packaging ahead of the 10-year roadmap, supported by long fiber technology and integration.

• Completed an expansion cycle, increasing production capacity from 3.5 to 5 million tons per year between 2018 and 2024, with new assets like PM27, PM28, and Figueira.

• Entered a harvesting phase, prioritizing cash generation, deleveraging, and a conservative approach while maintaining growth DNA.

• Strategic planning is reviewed biennially, incorporating market trends, consumption behaviors, and stakeholder feedback.

• Future investments will focus on long fiber and fluff, leveraging Brazil's competitive advantages before considering international expansion.

Financial discipline and capital allocation

• Updated capital allocation policies in October 2024, reinforcing discipline and transparency, with a new leverage target of 2.5x–3.5x Net Debt/EBITDA outside investment cycles and up to 4.5x during cycles.

• Dividend distribution target increased to 15–25% of Adjusted EBITDA, compared to the previous 10–20%.

• CapEx guidance has been consistently met, with disciplined spending supporting free cash flow and deleveraging objectives; long-term CapEx expected around R$2.5 billion annually.

• Capital allocation decisions are guided by strategic alignment and a minimum IRR of WACC plus 4 percentage points, with share buybacks considered as an alternative to new investments.

• Maintains strong financial strength and predictability, with Net Debt/EBITDA trending downward post-expansion.

Operational performance and market outlook

• 2025 is expected to see over 200,000 tons of incremental production due to project ramp-ups, maintenance scheduling, and normalization of operations.

• Production ramp-up of PM27 and PM28, with normalization of pulp production and market recovery in containerboard expected to support higher volumes through 2027.

• Cash cost per ton has remained flat for three years and is expected to stay stable in 2025, targeting growth below inflation and leveraging synergies.

• The Figueira project was delivered ahead of schedule and under budget, featuring state-of-the-art automation and the lowest conversion costs in the portfolio.

• Expanded national market leadership, increasing market share from 17% in 2019 to 22% in 2023, with the packaging division outpacing GDP growth.