4Q17 EARNINGS RELEASE

Transcription

1 4Q17 EARNINGS RELEASE FEBRUARY ADJUSTED EBITDA REACHES R$ 855 MILLION IN 4Q17, 31% GROWTH VERSUS 4Q16 ADJUSTED EBITDA PULP PRODUCTION VOLUME PACKAGING SALES VOLUME SALES REVENUE NET DEBT/ EBITDA R$ 855 mi +10% vs 3Q17 +4% vs 4Q16 PULP +17% vs 4T16 4.1x Adjusted EBITDA was R$ 855 million in 4Q17, a year-on-year increase of 31%, and of R$ 2,738 in 2017, 20% growth versus Pulp production volume was 1,401 thousand tonnes in 2017 and 394 thousand tonnes in 4Q17, 10% more than in 3Q17. Pulp sales volume in the quarter of 364 thousand tonnes, a 3% increase based on the same comparison. Packaging sales volume was 190 thousand tonnes in 4Q17 and 762 thousand tonnes in 2017, 8% above Boosted by pulp sales and improved demand in the paper and packaging markets, total net revenue reached R$ 2,298 million in the quarter, 17% higher than in the same period in the previous year. With the improvement in the company s operating cash generation during the quarter, the net debt/ebitda ratio reached 4.1x at the end of December vs 4.4x at the end of September. KLABIN December Market Value: R$ 18.6 billion KLBN11 Closing Price: R$ Daily Volume 4Q17 R$ 40 million CONFERENCE CALL Portuguese (with simultaneous translation) Friday, 02/02/18, 11:00 (Brasília) Tel: (11) Password: Klabin IR invest@klabin.com.br

2 HIGHLIGHTS R$ million 4Q17 3Q17 4Q16 4Q17/3Q17 4Q17/4Q /2016 Sales volume (thousand tonnes) % 8% 3,220 2,650 22% % Domestic Market 50% 49% 46% 1 p.p. 4 p.p. 49% 50% -1 p.p. Net Revenue 2,298 2,225 1,964 3% 17% 8,373 7,091 18% % Domestic Market 59% 60% 58% -1 p.p. 1 p.p. 60% 60% 0 p.p. Adjusted EBITDA % 31% 2,738 2,287 20% Adjusted EBITDA Margin 37% 34% 33% 3 p.p. 4 p.p. 33% 32% 1 p.p. Net Income (83) n/a n/a 532 2,482-79% Net Debt 11,278 11,147 12,005 1% -6% 11,278 12,005-6% Net Debt / EBITDA (LTM - BRL) 4,1x 4,4x 5,2x 4,1x 5,2x Capex % -51% 925 2,567-64% Klabin presents its consolidated financial statements according to international accounting standards (International Financial Reporting Standards - IFRS) as determined by CVM 457/07 and CVM 485/10 instructions. Information on Vale do Corisco is not consolidated in the Financial Statements and is represented by the Equity Pick up method only. Adjusted EBITDA is in accordance with CVM Instruction 527/12. Some of the figures on the charts and tables may not express a precise result due to rounding. The EBITDA margin incorporates the effects of Vale do Corisco LTM last 12 months. SUMMARY The fourth quarter saw continued improvement in Brazilian economic indicators despite the still uncertain political scenario, mainly in relation to the next presidential elections. The decline in inflation and interest rates reinforced optimism, leading the Ibovespa to once more hit historic highs. Increased optimism in relation to Brazilian economic data continued to benefit food producers and other non-durable consumer goods manufacturers. As a reflection of this phenomenon, corrugated box shipments increased 6.8% in 4Q17 in relation to the same quarter in the previous year, as shown in data published by the Brazilian Corrugated Board Association (ABPO). For the full year, growth was 4.9%. Abroad, continuous demand coming mainly from China in addition to restrictions in the use of mixed shavings due to environmental issues, boosted packaging paper and pulp prices globally. Kraftliner prices continued to report increases during the fourth quarter of the year, and FOEX published list prices, which still do not reflect recent producer announcements, ended 2017 at US$ 827/t. Once more, these are historic peaks, representing a 3% increase in relation to prices at the end of September and 43% in contrast to year-end Pulp demand from emerging markets remained buoyant, especially from China, prices continuing to spiral throughout the fourth quarter of In this context, hardwood list prices published by FOEX, reached US$ 979/ton in Europe, a 10% increase in relation to prices at the end of the 3Q17 and 50% in relation to the end of Market softwood list prices in Europe ended the year at US$ 1,000/ton versus US$ 906/ton in September 2017 and US$ 809/ton at the end of last year. Klabin s sales volume increased 8% year-on-year, boosted by a continuous increase in pulp sales from the Puma Unit in addition to good momentum in paper and packaging markets. In this context, pulp volume sales rose 3% and 21% in relation to 3Q17 and 4Q16, respectively. Another important event during the period was the trend in kraftliner markets allowing Klabin to be more selective in corrugated box markets, thus maximizing results on the back of the company s flexibility. 2

3 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec ,027 1,089 1,180 1,286 1,351 1,424 1,452 1,504 1,562 1,602 1,627 1,652 1,718 1,755 1,812 1,881 1,976 2,026 2,173 2,238 2,287 2,314 2,371 2,536 2,738 RELATÓRIO - 4T13 12 DE FEVEREIRO DE 2014 The increase in volumes sold and improved prices in international markets boosted net revenue growth by 17% in relation to the 4Q16. Consequently increased volumes sold resulted in additional benefits from the dilution of fixed and administrative costs on higher net revenues, plus cost discipline, driving Klabin s EBITDA margin up to 37% in the period versus 33% in the 4Q16 and 34% in the 3Q17. For the same reasons, adjusted EBITDA reached R$ 855 million in the quarter, a 31% growth in relation to the same period in the previous year. In the last twelve months, adjusted EBITDA amounted to R$ 2,738 million, the 26 th consecutive quarter of growth. 3, th QUARTER OF EBITDA GROWTH 2,500 2, , , LTM Last twelve months Sales Volume LTM (excluding wood million tonnes) Adjusted EBITDA LTM (R$ million) Exchange Rate The FX rate maintained the same stability in the 4Q17 as seen in the previous quarter, ending the period on average at R$3.25/US$, 3% above 3Q17 and 1% below 4Q16 average rates. The closing rates used to convert currency denominated debt was R$3.31/US$, 4% above the end of the third quarter R$ / US$ 4Q17 3Q17 4Q16 4Q17/3Q17 4Q17/4Q /2016 Average Rate % -1% % End Rate % 2% % Source: Bacen 3

4 OPERATING AND ECONOMIC-FINANCIAL PERFORMANCE Sales volume Klabin s sales volume during the third quarter, excluding wood, totaled 842 thousand tonnes, 8% more than in the 4Q16, driven by increases in pulp sales volume. Pulp sales during the period reached 363 thousand tonnes, a 3% growth when compared to 3Q thousand tonnes of hardwood and 98 thousand tonnes of softwood and fluff pulps. Paper and packaging sales amounted to 479 thousand tonnes during the quarter. Once more, the highlight was the 4% growth in conversion product sales, boosted by the good momentum in Brazilian corrugated box shipments according to ABPO data. Sales volume (excluding wood tsd tonnes) Sales volume by product 4Q % +3 Paper / Conversion +62 Pulp % Kraftliner 10% Others 1% 50% Conversion 24% Pulp 43% 46% 4Q16 4Q17 Coated Board 23% Domestic Market Exports Exports represented 50% of total volume sold. This reflects the growth in domestic demand for paper, converted products and softwood pulp which boosted domestic sales in comparison to the 4Q16, when exports accounted for 54%. Volume sold in the whole of 2017 reached 3,220 thousand tonnes, a 22% increase in relation to It is important to note the 70% increase in pulp volume sold during the period, the result of the successful ramp up process at the Puma Unit during There was also an 8% increase in converted product sales driven mainly by demand for corrugated boxes in the domestic market. 4

5 Net Revenues Growth in total volumes sold, improvement in international prices for products such as pulp and kraftliner and the increased share of business of converted products in the sales mix of paper products overall, drove Klabin s revenue higher in comparison to the same period in Total sales revenue in 4Q17, including wood, was R$ 2,298 million, 17% more than in the same quarter of the previous year. With larger volumes of pulp sold in the quarter and the increase in global market prices, revenues from hardwood, softwood and fluff pulps reached R$ 728 million, 55% more than in 4Q16 and 11% more than 3Q17. Sales revenues from paper, packaging and wood reached R$ 1,570 million, 5% above the 4Q16, influenced mainly by the increase in converted product sales with a higher value added in comparison with the other products. The larger pulp and converted product volumes, and better international pulp and paper prices increased revenues both in the domestic and international market, growing by 20% and 13% in relation to the same period of the previous year, respectively. Exports as a share of total revenue were 41% in 4Q17, flat in relation to 4Q16 and 3Q17. Net Revenue (R$ million) Net Revenue by Product 4Q17 1,964 42% Pulpe Conversion/ Wood 2,298 41% Kraftliner 8% Others 2% Wood 4% Pulp 32% 58% 59% Conversion 29% Coated Board 25% 4Q16 4Q17 Domestic Market Exports Revenue in 2017 reached R$ 8,373 million, an 18% increase in relation to 2016, mainly because of Puma Unit pulp sales and converted product sales, in addition to price increases in some international markets for some products. It is worth mentioning that the increase was despite a lower FX rate and equilibrium between domestic and international markets, proving the company s flexibility and ability to act in different markets and under various economic scenarios. 5

6 Operating Costs and Expenses PULP CASH COST With the unveiling of pulp sales from the Puma Unit in 3Q16, for comparative purposes, the unit cash cost of pulp production is now disclosed for each quarter, contemplating production costs for hardwood, softwood and fluff pulps and volumes produced during the period. The production cash cost does not include selling and general and administrative expenses, constituting exclusively amounts expended on pulp production only. With the end of ramp-up operations, pulp production at the Puma Unit reached 394 thousand tonnes during the fourth quarter, a 10% increase in relation to 3Q17. Unit cash cost of pulp production during the period was R$ 681/t, flat in relation to 3Q17, benefiting, on one hand, from higher cost dilution but on the other hand from flat energy generation which translated into lower generation costs per tonne of produced pulp and the impact of higher prices for chemicals, particularly caustic soda. R$ 681/ t R$ 681 / t Others Labor Fuel Oil R$ 781 / t R$ 768 / t Q Q Chemical Wood Energy Others TOTAL CASH COST Labor / Third parties Fuel Oil Total unit cash cost, which includes the sale of all Company products, reached R$ 1,728/t in the quarter including non- recurrent operational revenues and expenses. This value represents a 2% increase when Chemicals compared to the same 331 period for the previous year. The decrease in total unit cash costs in 300 real terms is due to 8% larger sales volume during the quarter on the back of the pulp unit s ramp up process. In addition to the dilution Wood effect, cost was favorably impacted by lower per tonne -56 costs in the production of pulp in comparison to paper and converted -88 product manufacturing costs within the Company s total cost base. In 2017, unit cash cost was R$ 1,766/ton, 4% less than the unit cash cost in The 4Q16reduction is also mainly due 1Q17 to the increase in pulp sales as the Unit s manufacturing operations were ramped up during the year. 6

7 Cash Cost Breakdown 4Q16 Cash Cost Breakdown 4Q17 Electricity 6% Maintenance materials / stoppage 8% Fuel Oil 4% Others 5% Labor / third parties 38% Electricity 6% Maintenance materials / stoppage 9% Fuel Oil 3% Others 6% Labor / third parties 36% Freight 12% Freight 12% Chemicals 13% Wood / Fibers 14% Chemicals 13% Wood / Fibers 15% Cost of goods sold during the quarter was R$ 1,509 million, 6% above the same period in the preceding year, explained mainly by higher pulp volume sales. Considering volumes sold in the quarters, unit cost of products sold in 4Q17 was 3% lower than 4Q16. Cost of goods sold per ton in 2017 was flat in relation to the previous year also mainly explained by the effects of dilution. Sales expenses totalled R$ 179 million in the quarter, versus R$ 167 million in 4Q16 and R$ 171 million in 3Q17, in line with the increase in pulp sales. Thus, 4Q17 sales expenses represent 7.8% of net revenues, the same level as in 3Q17 and a reduction in relation to the 8.5% posted in 4Q16. Sales expenses in 2017 reached R$ 657 million and represented 7.8% of net revenues in the period, a 0.5% decrease in relation to the previous year. General and administrative expenses totalled R$ 141 million in the quarter, versus R$ 131 million in the 4Q16 and R$ 125 million in 3Q17. In addition to the annual wage bargaining agreement during the period, provisions for the employee profit/results sharing program mainly explain the increase. Adjustments in structure to meet the requirements of the enhanced pulp operations, inflation in employee benefits during the period and the increase to the Company s long term incentive program explain the increase in general and administrative expenses to R$ 528 million for the year as a whole. Other operating revenues/expenses totalled R$ 2 million in revenues in 4Q17 and R$ 12 million for the full year. Effects of the variation of fair value of biological assets During 4Q17, the effects of the variation in fair value of biological assets was positive at R$ 59 million, reflecting principally the growth in forest plantations and recognized at their fair value. In turn, the depletion effect of fair value of the biological assets on the costs of goods sold was R$ 83 million in the period under review. Hence, the non-cash effect of the fair value of biological assets on operational results (EBIT) was a negative R$ 24 million in the quarter. 7

8 Operating Cash Generation (EBITDA) R$ million 4Q17 3Q17 4Q16 4Q17/3Q17 4Q17/4Q /2016 Net Income (loss) (83) n/a n/a 532 2,482-79% (+) Income taxes and social contribution (80) 351 (34) n/a 138% % (+) Net Financial Revenues 693 (330) 235 n/a 194% 713 (1,817) n/a (+) Depreciation, amortization, depletion % -7% 1,940 1,423 36% Adjustments according to IN CVM 527/12 art. 4º (+) Biological assets adjustment (48) (145) (56) -67% -15% (750) (525) 43% (-) Equity Pickup (3) (5) (16) -45% -82% (14) (49) -72% (+) Vale do Corisco n/a n/a % Ajusted EBITDA % 31% 2,738 2,287 20% Adjusted EBITDA Margin 37% 34% 33% 3 p.p. 4 p.p. 33% 32% 1 p.p. n/a - Not applicable Note: Adjusted EBITDA margin is calculated considering the pro forma net revenue, which includes Vale do Corisco The increase in the volume of pulp and converted product sales combined with increases in international kraftliner and pulp prices boosted net revenue in the quarter. This together with the Company s efforts to control costs contributed to the increase in operational cash generation (adjusted EBITDA) that reached R$ 855 million in 4Q17, 31% higher than in the same period EBITDA margin also increased reaching 37% versus 33% in 4Q16 and 34% in 3Q17. The increase in sales volume, especially from pulp and packaging paper segments, and cost dilution and control also leveraged cash generation for the full year. Hence, despite the lower FX rate, adjusted EBITDA in 2017 reached R$ 2,738 million, a 20% increase in relation to the previous year. Free Cash Flow R$ million 4Q17 3Q17 4Q Adjusted EBITDA ,738 2,288 (-) Capex (248) (216) (511) (925) (2,567) (-) Interest paid/received (124) (177) (88) (595) (542) (-) Income tax - (1) (119) (5) (134) (+/-) Working Capital 227 (223) (41) 395 (124) (-) Dividends (150) (119) (117) (507) (448) (+/-) Others 1 46 (1) Free Cash Flow (224) 1,113 (1,480) Dividends Puma Project ,707 Special projects and growth Adjusted Free Cash Flow* , Adjusted FCF Yield 12.3% 6.1% * excluding dividends and expansion projects - LTM - last twelve months. - Yield - Adjusted FCF per share (excluding treasury stock) divided by the average price of the Units in the period. Adjusted free cash flow before dividends and expansion projects was positive at R$ 769 million during the period, influenced by cash generation and improvement in working capital. For the same reasons, for the full year, free cash flow reached R$ 1,918 million, a significant increase in relation to R$ 994 million seen in This increase also boosted FCF yield that ended 2017 at 12.3%, nearly double the previous year. 8

9 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17 Sep-17 Dec-17 12,009 11,382 11,473 12,005 11,377 11,748 11,147 11,278 RELATÓRIO - 4T13 12 DE FEVEREIRO DE 2014 Debt and financial investments Gross debt on December 31, 2017 was R$ 19,550 million, a R$ 702 million increase in relation to the end of 3Q17, explained by the effect of the increase in FX rate on currency denominated debt and by new funding. Out of total debt, R$ 14,061 million, or 72% (US$ 4,251 million), are dollar denominated. Average maturity increased from 51 to 52 months, of which 40 months for loans in Reais and 53 months for currency loans. Short term debt at the end of the quarter was 13% of the total with the average cost of local funding and currency-denominated lines being 7.4% p.a. and 4.9% p.a. respectively. The company s position in cash and financial investments at the end of 4Q17 amounted to R$ 8,272 million, R$ 571 million more than at the end of the 3Q17 and reflecting cash generation, funding flows and amortizations during the period. The additional amount is equivalent to debt maturing over the next 40 months. Consolidated net debt on December 31, 2017 amounted to R$ 11,278 million, a R$ 131 million increase against September 30, 2017, largely due to FX variation on US dollar denominated debt. However, an improved EBITDA during the period underscored the deleveraging trend, Klabin ending the quarter with a ratio of 4.1x, a 0.3x reduction in comparison to 3Q17. In relation to the end of 2016, the reduction was of 1.1x. NET DEBT AND LEVERAGE 17,000 15,000 13,000 11,000 9,000 7,000 5,000 3,000 1,000 (1,000) Net Debt (R$ million) Net Debt/EBITDA (R$) 9

10 Financial Result Debt (R$ million) Short term dec-17 sep-17 Local currency 873 5% 917 5% Foreign currency 1,596 8% 1,423 7% Total short term 2,470 13% 2,340 12% Long term Local currency 4,616 23% 4,294 23% Foreign currency 12,464 64% 12,213 65% Total long term 17,080 87% 16,507 88% Total local currency 5,489 28% 5,211 28% Total foreign currency 14,061 72% 13,636 72% Gross debt 19,550 18,848 (-) Cash 8,272 7,701 Net debt 11,278 11,147 Net debt / EBITDA (LTM) 4.1x 4.4x Financial expenses were R$ 308 million in the quarter, a R$ 7 million reduction in relation to 3Q17. On the back of the reduction in Brazilian interest rates, financial revenues reached R$ 105 million, R$ 44 million below the preceding quarter. Consequently, the financial result in the period, excluding the currency translation effect, was a negative R$ 202 million. FX rates ended the quarter at 4% above the closing rate for 3Q17. Thus, due to the impact on the Company s currency denominated debt, net FX variation amounted to a negative R$ 491 million in 4Q17. Note that the effect of FX variation on the company s balance sheet is purely an accounting one with no short-term cash effect. BUSINESS PERFORMANCE Consolidated information per unit in 2017: R$ million Forestry Pulp Papers Conversion Consolidation Total Net revenue Domestic market ,637 2,461 (5) 5,020 Exports - 1,825 1, ,353 Third part revenue 330 2,422 2,951 2,675 (5) 8,373 Segments revenue 1, , (2,759) - Total net revenue 1,690 2,485 4,263 2,699 (2,764) 8,373 Change in fair value - biological assets Cost of goods sold (2,178) (1,702) (3,023) (2,273) 2,749 (6,427) Gross income , (15) 2,736 Operating expenses (96) (334) (380) (333) (41) (1,184) Operating results before financial results (56) 1,552 Note: In this table, total net revenue includes sales of other products. * Forestry COGS includes the exaustion of the fair value of biological assets in the period. 10

11 FORESTRY BUSINESS UNIT Volume (1.000 tonnes) 4Q17 3Q17 4Q16 4Q17/3Q17 4Q17/4Q /2016 Wood % 11% 2,596 2,462 5% R$ million Wood % 37% % In the fourth quarter 2017, sales volume of wood logs to third parties was 871 thousand tonnes, 11% more than posted in 4Q16. The more favorable mix and prices increased revenues by 37% year-on-year. The same reasons explain the increase of 5% in volumes and 14% in revenue for the full year in comparison to PULP BUSINESS UNIT Production Volume (1.000 tonnes) 4Q17 3Q17 4Q16 4Q17/3Q17 4Q17/4Q /2016 Short Fiber % 28% 1, % Long Fiber % 27% % Total Pulp Volume % 28% 1, % Sales Volume Volume (1.000 tonnes) 4Q17 3Q17 4Q16 4Q17/3Q17 4Q17/4Q /2016 Short Fiber DM % 35% % Short Fiber EM % 27% % Total short fiber volume % 28% % Long Fiber DM % 169% % Long Fiber EM % -38% % Total long fiber volume % 5% % Total pulp volume % 21% 1, % R$ million Short Fiber % 70% 1, % Long Fiber % 29% % Total Pulp Revenues % 55% 2,418 1,247 94% Persistently strong demand from Asian countries continued to influence international prices for hardwood pulp, thus maintaining the scenario the outset of List prices for hardwood pulp in Europe published by FOEX reached US$ 979/t, increasing 10% in relation to the end of 3Q17 and 50% in relation to the end of Pulp sales volume in the period rose 3% compared with 3Q17 and reached 364 thousand tonnes, of which 265 thousand tonnes was hardwood and 98 thousand tonnes, softwood and fluff. Pulp volume produced in the quarter was 394 thousand tonnes, 10% more on the same comparative basis. Sales of hardwood are mainly anchored to an agreement with Fibria signed in May Under this agreement, Klabin supplies Fibria with a minimum of 900 thousand tonnes of hardwood pulp annually, to be sold by Fibria on an exclusive basis to countries outside South America, at an average net price equivalent to what Fibria charges, considering the purchasing markets. Klabin commercializes directly all remaining pulp output, hardwood pulp being sold in Brazil and South America, and softwood and fluff pulps in both domestic and global markets. 11

12 The first semester of 2017 marked the end of the ramp process of the Puma Unit, which produced 1,401 thousand tonnes of pulp during the year, of which 1,029 thousand tonnes of hardwood and 372 thousand tonnes of softwood and fluff pulps. The qualification processes for PineFluff and PineCel were finalized in 2017, enabling the Company to increase volumes sold to the domestic market. Just as with the excellent acceptance of LyptusCell hardwood pulp by the various markets where Fibria is present, the same market receptivity was also given to the PineCel pulp (softwood) and PineFluff products, with exports of both products already entering 34 different markets. PAPER BUSINESS UNIT Kraftliner Kraftliner prices continued to report increases during the fourth quarter of the year, FOEX list prices in Europe, - which do not entirely reflect recent producer announcements - closing 2017 at US$ 827/t. This value represents a return to historic highs and a 3% increase in relation to values reported at the end of September and 43% for the full year. The improvement in Brazilian market of corrugated boxes benefited conversion units at the expense of a 5% yearon-year reduction in kraftliner sales to third parties. For the full year, kraftliner sales also saw a reduction mainly because of the trend towards sales to the corrugated box plants with demand growing on the back of sector momentum and also reflecting the two conversion plant acquisitions at the end of The increase demand was most notable during first half of the year following the appreciation of the Real and when international kraftliner prices were still low. Thus, kraftliner product volume and revenues were 12% and 10% respectively, lower in relation to Coated boards 4Q17/3Q17 4Q17/4Q /2016 Volume (1.000 tonnes) 4Q17 3Q17 4Q Kraftliner DM % 48% % Kraftliner EM % -21% % Total Kraftliner % -5% % Coated boards DM % 0% % Coated boards EM % 2% % Total Coated boards % 1% % Total Paper % -1% 1,049 1,092-4% R$ million Kraftliner % 6% % Coated boards % 0% 2,106 2,190-4% Total Paper % 1% 2,824 2,989-6% Klabin held sales volumes flat in the quarter in relation to both 4Q16 and 3Q17. Sales volumes were also flat for consolidated 2017 in relation to 2016 although with the company operating its plant at full capacity. With the domestic coated boards market indicating the first signs of recovery, Klabin once again sold larger volumes of its output to the domestic market, mainly to the food segment. Thus, domestic market sales volume saw a 6% increase in relation to the third quarter For the full year, there was an increase in export volumes thanks to product quality and receptivity not only in Brazil, but also in growing markets such as China and other countries in Southeast Asia. 12

13 CONVERSION BUSINESS UNIT Volume (1.000 tonnes) 4Q17 3Q17 4Q16 4Q17/3Q17 4Q17/4Q /2016 Total conversion % 4% % R$ million Total conversion % 8% 2,619 2,381 10% ABPO data for sector corrugated box shipments again showed signs of recovery in 4Q17, reporting growth of 6.8% in relation to 4Q16 and 4.9% for the full year of ABPO estimates a 3.5% growth for 2018 thus confirming the favorable moment for the market. In the industrial bags segment, the civil construction market has been indicating incipient signs of recovery since October 2017 with SNIC (National Cement Industry Union) estimating growth between 1% and 2% in 2018 after a 25% drop over the last three years. Additionally, Klabin is increasingly focusing its business on new markets such as fertilizers, food and coffee as well growing its industrial bag sales in overseas markets, especially Mexico and United States. The output of the new bag machine being installed by Klabin - forecasted to begin operations in April - will be directed towards supplying these different markets. In the light of the foregoing scenario, Klabin reported a 4% year-on-year growth in conversion volume in 4Q17 and 8% in revenues, always using its flexibility to maximize the relative opportunities between the markets for paper and conversion products. For the full year, despite the negative effect of currency rates on industrial bag exports, volume and revenues rose year-on-year by 8% and 10% respectively, once more demonstrating the company s ability to adapt and compete under different markets conditions. INVESTMENTS R$ million 4Q17 3Q Forestry Maintenance Special projects and growth Puma Project Total high return for improving performance in all the segments in which the Company operates. Klabin invested R$ 248 million in 4Q17. Of the total invested in the quarter, R$ 66 million was allocated to forestry operations, R$ 124 million to investments in the operational continuity of the plants, R$ 13 million in remaining investments at the Puma unit and R$ 45 million to special and expansion projects, more particularly those with a CAPITAL MARKETS Equity Markets In the fourth quarter of 2017, Klabin s units (KLBN11) reported a depreciation of 4% vs 3% appreciation of the IBOVESPA. Trading on every day B3 was open for business, the Units registered 483 thousand transactions involving 128 million securities and an average daily trading volume of R$ 40 million at the end of the period. 13

14 Klabin s capital stock comprises 4,788 million shares, of which 1,860 million are common and 2,928 million, preferred shares. The Company s shares are also traded in the United States market and listed under a Level I ADR program on the Over-the-Counter market under the KLBAY ticker symbol. Klabin is a component of B3 s Corporate Sustainability Index (ISE). The index represents shares of companies that are outstanding in the degree of their commitment to the sustainability of the businesses and the country as a whole. The participating companies are selected annually, based on the criteria of the Getúlio Vargas Foundation s Center for Sustainability Studies (GVces) KLBN11 x Ibovespa Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 KLBN11 Ibovespa Index Dividends In the fourth quarter of 2017, the Company paid out R$ 150 million in dividends on November 14, The Board of Directors Meeting of January 31 approved further dividend payments of R$ 171 million, reflecting a payout of R$ per lot of a thousand shares and R$ per lot of a thousand Units % 2.2% 2.8% 3.3% 4.0% 2.0% % % -4.0% Dividends payment (R$ million) Dividend Yield -6.0% LTM Last twelve months 14

15 US$/note US$/note RELATÓRIO - 4T13 12 DE FEVEREIRO DE 2014 Fixed Income Klabin s securities representing debt (notes) maturing in October 2024 and September 2027, both with an issue value of US$ 500 million, are listed in the secondary market of the Luxembourg Stock Exchange. The Notes were issued at a coupon rate of 5.25% p.a. and 4.875% p.a. with interest disbursed semi-annually. Klabin has a credit risk rating of BB+ from Fitch Ratings and Standard & Poors. Notes Klabin , Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Notes Klabin ,2 98 Sep-17 Oct-17 Nov-17 Dec-17 Stake in Melodea Ltd. In January 2018, Klabin completed the acquisition of 12.5% of the Israeli startup Melodea Ltd - Bio Based Solutions, with a contribution of US$ 2.5 million. A pioneer in the development of a sustainable process for the extraction of Cellulose Nano Crystalline (CNC), Melodea develops CNC technologies to improve the strength and performance of paints, adhesives, cement, biocomposites, paper and packaging. The CNC, in a combination of properties such as high crystallinity and ability to form films and dense structures, is an innovative route for the development of renewable and sustainable barriers in paper and packaging, providing greater resistance to air penetration, water, vapors and oils, among others, with lower environmental impact. 15

16 CONFERENCE CALL Português Sexta-feira, 02 de fevereiro de h00 (Brasília). Senha: Klabin Telefone: (11) ou (11) Replay: (11) ou (11) Senha: # O áudio da Teleconferência também será transmitido pela internet. Acesso: English (simultaneous translation) Friday, February 02, :00 a.m. (NY). Password: Klabin Phone: U.S. participants: International participants: Brazilian participants: (55 11) or (55 11) Replay: (55 11) or (55 11) Password: # The conference call will also be broadcasted by internet. Access: Klabin is the largest integrated producer, exporter and packaging paper recycler in Brazil with gross revenues of R$ 9.7 billion in The Company has a capacity to produce 3.5 million tonnes of products annually. It has defined the strategic focus of its operation on the following businesses: paper and coated boards for packaging, short and long fiber pulp, corrugated boxes, industrial bags and wood logs. The Company is a leader in all markets in which it operates. Statements in this release relative to the Company s business perspectives, estimates for operational and financial and the Company s potential growth are merely forecasts and based on Management s expectations in relation to the future of the Company. These expectations are highly dependent on market changes, on Brazilian general economic performance, on the industry and on international markets, therefore being subject to change. 16

17 EARNINGS 4Q17 FEBRUARY 1, 2017 Appendix 1 Consolidated Income Statement (R$ thousand) (R$ thousands) 4Q17 3Q17 4Q16 4Q17/3Q17 4Q17/4Q /2016 Gross Revenue 2,670,167 2,575,004 2,263,335 4% 18% 9,727,020 8,204,424 19% Net Revenue 2,297,896 2,224,595 1,963,845 3% 17% 8,373,378 7,090,798 18% Change in fair value - biological assets 59, ,104 57,277-59% 4% 789, ,911 48% Cost of Products Sold (1,508,919) (1,652,498) (1,429,532) -9% 6% (6,427,492) (5,227,023) 23% Gross Profit 848, , ,590 18% 43% 2,735,547 2,396,686 14% Selling Expenses (178,720) (170,747) (167,322) 5% 7% (656,844) (586,075) 12% General & Administrative Expenses (141,102) (125,499) (130,704) 12% 8% (528,398) (466,493) 13% Other Revenues (Expenses) (1,621) (14,340) 1,037-89% n/a (11,877) 4,707 n/a Total Operating Expenses (321,443) (310,586) (296,989) 3% 8% (1,197,119) (1,047,861) 14% Operating Income (before Fin. Results) 526, , ,601 30% 79% 1,538,428 1,348,825 14% Equity pickup 2,917 5,295 16,190-45% -82% 13,624 49,321-72% Financial Expenses (307,603) (314,878) (354,517) -2% -13% (1,287,854) (1,231,088) 5% Financial Revenues 105, , ,436-29% -41% 748, ,945-15% Net Foreign Exchange Losses (490,538) 495,485 (59,407) n/a 726% (174,148) 2,168,932 n/a Net Financial Revenues (692,685) 330,104 (235,488) n/a 194% (713,384) 1,816,789 n/a Net Income before Taxes (162,828) 742,014 75,303 n/a n/a 838,668 3,214,935-74% Income Tax and Soc. Contrib. 79,935 (351,394) 33,559 n/a 138% (306,499) (732,989) -58% Net income (82,893) 390, ,862 n/a n/a 532,169 2,481,946-79% Depreciation and amortization 375, , ,915-23% -7% 1,940,487 1,423,112 36% Change in fair value of biological assets (47,808) (145,104) (55,916) -67% -15% (749,860) (524,817) 43% Vale do Corisco - - 8,027 n/a -100% 9,124 40,300-77% Adjusted EBITDA 854, , ,627 14% 31% 2,738,179 2,287,420 15% 17

18 EARNINGS 4Q17 FEBRUARY 1, 2017 Appendix 2 Consolidated Balance Sheet (R$ thousand) Ativo Dec-17 Sep-17 Passivo e Patrimônio Líquido Dec-17 Sep-17 Ativo Circulante 11,803,589 11,277,315 Passivo Circulante 3,747,333 3,488,779 Caixa e bancos 58,384 25,322 Empréstimos e Financiamentos 2,230,624 2,086,903 Aplicações financeiras 6,970,038 7,043,448 Debentures 239, ,368 Títulos e valores mobiliários 1,243, ,122 Fornecedores 713, ,645 Clientes 1,754,063 1,792,581 Impostos a recolher 55,673 45,242 Estoques 933, ,529 Salários e encargos sociais 281, ,432 Impostos e contribuições a recuperar 567, ,864 Dividendos a pagar 0 0 Outros 277, ,449 Adesão REFIS 71,467 64,312 Outros 155, ,877 Não Circulante 18,745,952 18,884,512 Realizável a Longo Prazo Não Circulante 19,568,055 19,175,650 Impostos a compensar 1,287,669 1,438,126 Empréstimos e Financiamentos 16,444,917 15,846,857 Depósitos judiciais 83,381 88,218 Debentures 634, ,814 Outros 344, ,745 Imp Renda e C.social diferidos 1,544,578 1,715,491 Investimentos 173, ,289 Outras contas a pagar - Investidores SCPs 272, ,461 Imobilizado 12,619,495 12,611,085 Adesão REFIS 307, ,200 Ativos biológicos 4,147,779 4,139,334 Outros 363, ,827 Intangível 89,949 91,715 Patrim.Líquido - acionistas controladores 7,234,153 7,497,398 Capital Social Realizado 2,516,753 2,384,484 Reservas de Capital 1,187,329 1,319,553 Reservas de Reavaliação 48,704 48,704 Reservas de Lucros 2,699,580 2,928,366 Ajustes de avaliação Patrimonial 987,916 1,022,331 Ações em Tesouraria (206,129) (206,040) Ativo Total 30,549,541 30,161,827 Passivo Total 30,549,541 30,161,827 18

19 EARNINGS 4Q17 FEBRUARY 1, 2017 Appendix 3 Debt Maturity Schedule 12/31/17 R$ million 1Q18 2Q18 3Q18 4Q /26/27 Total BNDES ,275 Others ,340 Debentures Interests Local Currency , , ,489 Trade Finance ,040 1,355 1,283 1,490 1, ,599 Fixed Assets ,149 Bonds ,642 1,642 3,344 ECA's ,968 Foreign Currency ,596 1,822 1,730 1,927 1,975 1,109 2,034 1,867 14,061 Gross Debt 1, ,470 2,371 2,741 2,460 3,238 2,082 2,321 1,867 19,550 R$ million Average Cost Average Tenor Local Currency 7.4% p.y. 40 months Foreign Currency 4.9% p.y. 53 months Gross Debt 52 months 3,238 2,470 1,596 2,371 1,822 2,741 1,730 2,460 1,927 1,975 2,082 1,109 2,321 2,034 1,867 Foreign Currency 14,061 Gross Debt 19,550 1, ,867 1, , Q18 2Q18 3Q18 4Q /26/27 Local Currency 5,489 Local currency : R$ 5.5 billion Average tenor: 40 months Foreign currency: R$ 14.1 billion Average tenor : 53 months 19

20 EARNINGS 4Q17 FEBRUARY 1, 2017 Appendix 4 Consolidated Cash Flow (R$ thousand) 4Q17 4Q Cash flow from operating activities 336, ,177 1,792,978 1,202,849 Operating activities 720, ,237 2,049,877 1,360,848. Net income (82,893) 108, ,169 2,481,946. Depreciation and amortization 252, , , ,221. Depletion in biological assets 123, , , ,891. Change in fair value - biolgical assets (59,406) (57,277) (789,661) (532,911). Equity results (47,936) (4,300) (29,319) (44,670). Results on Equity Pickup (2,917) (16,190) (13,624) (49,321). Deferred income taxes and social contribution (164,956) (37,746) 6, ,966.Income taxes and social contribution - (119,343) (5,098) (134,244). Interest and exchange variation on loans and financing 836, ,334 1,265,244 (1,486,137). Interest, exchange variation and profit sharing of debentures 20,137 18,608 98,984 60,166. Variation of the present value of debentures 2,422 7,254 15,096 29,016. Payment of interest on loans (166,489) (201,830) (993,519) (970,694). REFIS Reserve 10,603 11,684 41,708 48,777. Others (541) (46,734) (19,141) (7,158) Variations in Assets and Liabilities (384,158) (55,060) (256,899) (157,999). Receivables 38,518 (271,113) (128,683) (124,281). Inventories (26,632) (1,740) (56,246) (175,789). Recoverable taxes 184,242 81, ,377 (327,644). Marketable Securities (611,051) (14,534) (651,870) (34,160). Prepaid expenses Other receivables 14,493 (95,662) (51,005) (249,208). Suppliers 24, ,210 97, ,094. Taxes and payable 10,431 10,740 2,030 8,243. Salaries, vacation and payroll charges (27,966) (19,215) 23,754 62,363. Other payables 9,299 83,485 (330) 45,383 Net Cash Investing Activities (236,960) (602,250) (838,817) (2,648,153). Purchase of property, plant and equipment (175,888) (463,099) (687,914) (2,421,779). Cust biological assets planting (ex taxes) (72,421) (48,122) (237,371) (144,868) Acquisition of investments and payment of capital in subsidiaries - (93,063) - (93,063). Sale of property, plant and equipment 5,100-5, Income of assets sale 6,249 2,034 81,368 10,799 Net Cash Financing Activities (139,557) 826, ,541 2,264,301. New loans and financing 599,009 1,242,405 4,093,903 4,505,275. Debentures capitalization Debentures interest payment (62,871) (64,283) (349,746) (450,140). Loan amortization (527,218) (218,548) (3,049,098) (1,371,314). Minority shareholders entry ,766 65,000. Minority shareholders exit 1,568 (1,454) (120,958) (18,971). Dividends payment (150,090) (117,000) (507,000) (447,503). Stocks repurchase - (15,068) (11,468) (24,262). Stocks disposal 45-13,142 6,216 Increase (Decrease) in cash and cash equivalents (40,348) 554,979 1,155, ,997 Cash and cash equivalents at beginning of period 7,068,770 5,317,741 5,872,720 5,053,723 Cash and cash equivalents at end of period 7,028,422 5,872,720 7,028,422 5,872,