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 original 10-year roadmap, supported by a major expansion cycle that increased production capacity from 3.5 to 5 million tons per year between 2018 and 2024.

• Emphasized long fiber technology, integration, and unique access to pine in Brazil, pioneering fiber-to-fiber processes and launching differentiated products like Eukaliner.

• Maintains an integrated, diversified, and flexible business model, supporting low volatility, resilience, and a focus on organic growth in Brazil, especially in fluff and long fiber segments.

• Entered a "harvesting" phase, prioritizing cash generation and deleveraging over the next two years, with ongoing ramp-up and optimization of new and existing assets.

• Strategic planning is continuously updated, with a new 10-year plan in development, but the core focus on long fiber, stability, and ROIC protection remains unchanged.

Financial guidance and capital allocation

• Financial policies were tightened in 2023 and updated in October 2024, setting a new leverage target of 2.5x–3.5x Net Debt/EBITDA outside investment cycles (up to 4.5x during cycles), and extending investment cycle duration to 24 months after startup for projects ≥US$1.2 billion.

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

• CapEx guidance remains disciplined, expected around R$2.5 billion annually in the long term, supporting free cash flow generation and deleveraging objectives.

• For 2025, production is expected to increase by over 200,000 tons versus 2024, driven by project ramp-ups, recovery from non-recurring events, and operational flexibility.

• Deleveraging will be accelerated by both operational cash generation and the Project Plateau transaction, expected to close in early 2025.

Operational efficiency and market performance

• Figueira Project (Piracicaba II) was delivered on time and on budget, featuring a highly automated plant with conversion costs over 50% lower than the previous best factory, and is considered the most productive in Brazil.

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

• Sustained cost discipline, with total cash cost per ton flat for three years and expected to remain unchanged in 2025, targeting growth below inflation and leveraging synergies from recent projects.

• The company has a diversified client base across food, beverages, hygiene, electronics, and e-commerce, with a 22% market share in corrugated boxes and ambitions to reach 25%.

• Integrated model protects ROIC and reduces supply chain volatility, enabling price increases above inflation and sector growth outpacing GDP.