EARNINGS RELEASE 4Q16 FEBRUARY 01, 2017

Transcription

1 EARNINGS RELEASE 4Q16 FEBRUARY 01, Q16 ADJUSTED EBITDA REACHES R$ 653 MILLION AND R$2.3 BILLION IN 2016, 16% YOY GROWTH ADJUSTED EBITDA PULP PRODUCTION VOLUME PULP AND PAPER SALES VOLUME SALES REVENUE CONVERSION SALES VOLUME R$ 653 m 308 kt 777 kt R$ 1,964 m + 4% 1 4Q16 HIGHLIGHTS The company reported an Adjusted EBITDA in 4Q16 of R$653 million and R$2,287 for the full year, an 8% and 16% increase, respectively in relation to the same periods in Pulp volume produced in the quarter reached 308 thousand tonnes, a 5% QoQ increase. For the full year, production totaled 831 thousand tonnes, in line with the PUMA unit s ramp up schedule and meeting the goal established in Driven by the start-up in operations at the Puma Unit, total volume sold was 777 thousand tonnes in the 4Q16 and 2,650 thousand tonnes for the full year, increasing by 56% and 45% in relation to 4Q15 and 2015, respectively. December 31, 2016 Klabin Market Value R$ 19.4 billion KLBN11 Closing Price R$ Daily Volume 4Q16 R$ 39 million Net Sales revenues totaled R$1,964 million in the quarter, a 23% increase in relation to the same period in Conversion product sales reached 183 thousand tonnes in 4Q16, a 4% increase in relation to 4Q15 and evidence of Klabin s ability to operate under differing market conditions. Conference Call Portuguese (with simultaneous translation) Thursday, 02/02/17, 11:00AM (BZ) Tel: (11) Password: Klabin invest@klabin.com.br

2 FINANCIAL HIGHLIGHTS R$ million 4Q16 3Q16 4Q15 4Q16/3Q16 4Q16/4Q /2015 Sales volume (thousand tonnes) % 56% 2,650 1,833 45% % Domestic Market 46% 44% 62% 2 p.p. -16 p.p. 50% 66% -16 p.p. Net Revenue 1,964 1,965 1,596 0% 23% 7,091 5,688 25% % Domestic Market 58% 57% 62% 1 p.p. -4 p.p. 60% 68% -8 p.p. Adjusted EBITDA % 8% 2,287 1,975 16% Adjusted EBITDA Margin 33% 30% 37% 3 p.p. -4 p.p. 32% 34% -2 p.p. Net Income (loss) % -79% 2,482 (1,253) n/a Net Debt 12,005 11,473 12,411 5% -3% 12,005 12,411-3% Net Debt / EBITDA (LTM - BRL) 5.2x 5.1x 6.3x 5.2x 6.3x Capex ,364-8% -63% 2,567 4,627-45% 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. Notes: 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 last quarter of 2016 in Brazil saw the end of another year of economic decline, strong FX volatility and political turbulence. The Senate s recent approval of a ceiling on Federal Government spending and the improvement in inflation indices - ending the year below the Central Bank s upper tolerance level for inflation - boosted economic confidence. Improvements have not yet translated into a recovery in economic activity and job creation, but are paving the way for interest rate reductions. On the external front, Donald Trump s election to the presidency of the United States affected markets at the end of Doubts concerning the new administration s economic policies, principally of a fiscal and tax nature, also generated a high degree of volatility in the prices of a broad range of assets worldwide. Still impacted by the domestic economic crisis, the paper and packaging markets saw corrugated box shipments fall by 3% in the 4Q16 year-on-year, according to data published by the Brazilian Corrugated Board Association (ABPO). For the full year, corrugated box shipments were 2% lower than in In relation to international packaging paper markets, European kraftliner prices continued under pressure, and in December, the FOEX USD list price dropped to its lowest level since Thus, the average list price at US$596/tonne in the 4Q16 was 3% and 8% lower than in 3Q16 and 4Q15, respectively. For the full year, the average price at US$615/tonne was 5% below the average for In the pulp market, despite a slight year-end improvement, hardwood pulp prices continued lackluster due to the prospects of new capacity coming on stream. Consequently, average FOEX prices in Europe decreased to US$655/t in 4Q16 from US$671/t in 3Q16. On the other hand, average softwood pulp prices remained steady using the same comparison, the spread between the two being US$148/t. The Puma Unit, still at the ramp up stage, was responsible for the important increase in sales during the period, total sales volume reaching 777 thousand tonnes in 4Q16, a year-on-year increase of 56%. It is 2

3 1,027 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 RELATÓRIO EARNINGS RELEASE - 4T13 4Q16 12 DE FEVEREIRO FEBRUARY 01, DE also important to note that in light of the Real s appreciation in the final months of the year, the company s intrinsic flexibility and recent acquisitions of corrugated board units were instrumental in a 4% increase in conversion product sales in relation to 4Q15 and using largely paper originally destined for international markets. Thus, the increase in sales volume spearheaded by pulp sales, together with Klabin s competitiveness in the conversion market saw net revenues of R$1,964 million, a 23% growth in relation to the same period in the previous year. With the increase in sales volumes in 4Q16, Klabin has benefited from the dilution of fixed and manageable costs. This fact, allied to strict cost controls, has helped compensate for inflation, the effects of which still persist in the case of some raw materials and services. Klabin s results in the 4Q16 were once more driven by the increase in pulp sales from the Puma Unit and by the company s flexibility in being able to quickly adapt to changes in economic scenario. Despite adverse conditions involving important variables such as Brazilian economic activity, FX rates and international pulp and paper prices, which characterized 2016 and continued to feed through to the final quarter, Klabin was still successful in posting a R$653 million adjusted EBITDA, an 8% growth over the same period in , st QUARTER OF EBITDA GROWTH 1, , Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Exchange Rate Sales Volume LTM (excluding wood million tonnes) Adjusted EBITDA LTM (R$ million) R$ / US$ 4Q16 3Q16 4Q15 4Q16/3Q16 4Q16/4Q /2015 Average Rate % -14% % End Rate % -17% % Source: Bacen The Brazilian political scenario and Donald Trump s election brought a strong degree of volatility to the FX market during the last quarter of the year. The shock result of elections in the United States drove up FX rates to R$3.46/US$. Conversely, the improvement in expectations in relation to the Brazilian economy, led the FX rate downwards to R$3.26/US$ by the end of the 4Q16, practically the same level as at the beginning of the quarter. The average FX rate during the quarter of R$3.30/US$ was in line with the 3Q16 but 14% lower than the R$3.84/US$ rate reported for the same quarter of the previous year, impacting revenues from exports and domestic products with dollar-linked prices. 3

4 OPERATING AND FINANCIAL PERFORMANCE Sales Volume Klabin s sales volume continued to grow in 4Q16, driven mainly by the continuing ramp up in production at the Puma Unit, initiated in March. Excluding wood, volumes sold, reached 777 thousand tonnes, a 56% increase in relation to the 499 thousand tonnes sold in 4Q15. The Puma Unit contributed 301 thousand tonnes in sales during the quarter, of which 208 thousand tonnes of hardwood and 93 thousand tonnes of softwood and fluff pulp. In addition to pulp sales, the company increased the commercialization of conversion products in a still recessive Brazilian economic environment and despite the drop in corrugated box shipments according to data published by ABPO, driven by Klabin s well consolidated positioning in these markets. In the light of a strengthening Real and the increase in recycled paper prices in relation to the end of 2015, Klabin decided to reduce the acquisition of recycled paper in the domestic market, redirecting part of its virgin fiber paper exports to its conversion operations. The yearon-year reduction in paper sales and 5% increase in conversion is a reflection of this strategy. During the quarter under review, exports reached 54% of the total versus 38% in 4Q15 and 56% in 3Q16, driven mainly by increased pulp sales largely to overseas markets. Sales volume (excluding wood tsd tonnes) Sales volume by product 4Q % Net revenue (R$ milion) 38% -24 Paper / Conversion +301 Pulp % % Kraftliner 12% Others 1% Pulp 39% 62% 62% 58% 46% Conversion 24% 4Q15 4T15 4Q15 Domestic Market 4Q16 4Q16 4T16 Exports Coated Board 24% In 2016, total sales reached 2,650 thousand tonnes, a year-on-year increase of 45% due to initial pulp sales and higher paper sales volume, still reflecting debottlenecking and capacity increases during Net Revenues Bolstered by pulp revenues of R$471 million from the Puma Unit, 4Q16 net revenues, including wood, reached R$1,964 million, 23% higher than in 4Q15. Important to point out that revenues were negatively impacted by a lower average FX rate during the period in relation to 2015 and affecting revenue flows from products with prices indexed to the USDollar. 4

5 Following the increase in sales of converted products and pulp in Brazil, revenues from the domestic market reached R$1,138 million, a 15% increase in comparison to 4Q15. Export revenues impacted by higher pulp sales reached R$826 million, a 36% increase in relation to the same period last year. Consequently, the share of export revenue in relation to total sales revenue was 42% in 4Q16 in comparison to 38% in 4Q15. 1, % Net Revenue (R$ million) Net revenue (R$ milion) -102 Paper / Conversion 38% +471 Pulp % 1,964 42% Net Revenue by Product 4Q16 Others Kraftliner2% 9% Wood 4% Pulp 24% 62% 62% 58% 58% Conversion 32% Coated Board 29% 4Q15 4T154Q15 Domestic Market 4Q16 4Q16 4T16 Exports The start-up of the Puma Unit s operations during the year and Klabin s efforts to identify the best markets under different economic scenarios, once more reflected in enhanced net revenues. During 2016, net revenues totaled R$7,091 million, a 25% increase over Considering Klabin s stake in the revenue of Florestal Vale do Corisco S.A., pro-forma net revenue totaled R$1,978 million in the quarter and R$7.159 million in the year. Operating costs and expenses PULP CASH COST From 2Q16 for the sake of comparison with subsequent quarters and given initial pulp sales from the Puma Unit, we are using the unit cash cost of pulp production. This includes the production costs of hard and softwood fibers and fluff and tonnage produced during the period. Production cash cost does not include selling and general and administrative expenses, consisting exclusively of amounts expended on pulp production. Unit cash cost of pulp production was R$768/tonne in the 4Q16, R$13/tonne below 3Q16. Puma Unit evolved in its learning curve during the quarter, improving its technical indicators, mainly with cost of fibers reduction and better net energy production. Labor and third parties cost increase were mainly due to the wage bargaining agreement and non-recurring ramp up issues during in the period. 5

6 At the end of December, the Puma Unit had almost completed its tenth month of production. During the mill s first year of operation, corresponding to the planned ramp up period, fixed costs are higher, both because of lower fixed cost dilution as well as higher consumption per unit while plant operations have still not stabilized at full capacity. R$ 781 / t R$ 768 / t Energy Others Labor / Third parties Fuel Oil TOTAL CASH COST R$ 781 / t 360 R$ 730 / t Q Q Chemicals Wood Energy Others Labor / Third parties Oil Fue Chemicals Total unit cash cost, which includes all products sold by the Company, was R$1,700/tonne in the quarter and includes non-recurring amounts under the other operating revenues and expenses account. The amount represents a 16% reduction in relation to the same period for the previous year, explained mainly by the 56% increase in volumes sold in the quarter, namely in the form of pulp sales from the new unit. In addition to the dilution effect, cash cost reductions per tonne in the periods reflect the impact of lower cost additions per tonne in the production of pulp in comparison to the production 3Q16 costs of paper and converted 4Q16 products relative to the company s overall costs. It should be pointed out that in the light of higher pulp output, some of the components of the cash cost saw a relative increase as a percentage of the total. In 2016, the unit cash cost was R$1,831/tonne, 11% less than This reduction is mainly due to a 797 thousand tonnes increase in pulp sales during the year. Cash Cost Breakdown 4Q15 Cash Cost Breakdown 4Q16 Electricity 9% Maintenance materials / stoppage 9% Fuel Oil 3% Others 5% Labor / third parties 34% Electricity Maintenance 6% materials / stoppage 8% Fuel Oil 4% Others 5% Labor / third parties 38% Freight 11% Chemicals 14% Wood / Fibers 15% Freight 12% Chemicals 13% Wood / Fibers 14% 6

7 Cost of goods sold in the quarter was R$1,430 million, 34% higher than in the same period of the previous year, increasing mainly on the back of higher pulp volumes sold. Considering the total volume sold in the quarters, cost of goods sold per unit in 4Q16 was 14% lower than 4Q15. In 2016 as a whole, cost of goods sold per tonne decreased 9% in relation to the previous year - also mainly explained by the effects of dilution. Selling expenses reached R$167 million in the quarter versus R$121 million in 4Q15 and R$186 million in 3Q16. The significant increase in volumes sold by the new pulp plant largely explains higher selling expenses in relation to the same period last year. In relation to the 3Q16, in addition to normalization of commercial expense levels following the initial ramp up in pulp sales, there was a decline in non-recurring costs that had impacted total selling expenses in the preceding quarter. Thus, selling expenses in the 4Q16 represented 8.5% of net revenues, dropping in relation to the 9.5% in 3Q16. In 2016, selling expenses reached R$586 million, representing 8.3% of the year s net sales. General and administrative expenses of R$ 131 million in the quarter, a 5% increase in comparison to 3Q16, explained mainly by the annual wage bargaining agreement. In relation to the same quarter in 2015, the increase was 29%, mainly due to the changes in rules on payroll tax in December 2015, the wage bargaining agreement and inflation in employee benefits breaks during the period. Also, adjustment of structures necessary and other nonrecurring expenses for the new pulp production operations and the expansion of the long-term incentive program were factors that specifically impacted the period of comparison. These same reasons also explain most of the increases for the year as a whole, this item reporting a total R$ 466 million. However, despite the significant increase in pulp sales, general and administrative expenses per tonne fell by 17% when compared to the same quarter of the previous year and 5% for the full year in comparison with Other operating revenues/expenses totaled R$ 1 million in revenues in the 4Q16 and R$ 5 million for the full year. Effects of the variation in fair value of biological assets During 4Q16, the effects of the variation in fair value of biological assets was positive at R$57 million, mainly because of growth in forestry area and recognized at fair value. In turn, the effect of the depletion of the fair value of biological assets on the cost of goods sold amounted to R$125 million in 4Q16. Thus, the non-cash effect of the fair value of biological assets in operational results (EBIT) was R$67 million negative in the quarter. Operating cash generation (EBITDA) R$ million 4Q16 3Q16 4Q15 4Q16/3Q16 4Q16/4Q /2015 Net Income (loss) % -79% (1.253) n/a (+) Income taxes and social contribution (34) (15) % n/a 733 (695) n/a (+) Net Financial Revenues (232) -8% n/a (1.817) n/a (+) Depreciation, amortization, depletion % 51% % Adjustments according to IN CVM 527/12 art. 4º (+) Biological assets adjustment (56) (133) (227) -58% -75% (525) (528) -1% (-) Equity Pickup (16) (9) (7) 73% 131% (49) (31) 58% (+) Vale do Corisco % -46% % Ajusted EBITDA % 8% % Adjusted EBITDA Margin 33% 30% 37% +3 p.p. -4 p.p. 32% 34% -2 p.p. n/a - Not applicable Note: Adjusted EBITDA margin is calculated considering the pro forma net revenue, which includes Vale do Corisco Klabin s cash generation in 4Q16 was largely driven by pulp sales from the new Puma Unit. In addition to the sharp increase in net revenues, growth in total sales volume also diluted the company s costs, thus benefiting results in double. 7

8 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 2,711 2,824 3,985 4,028 5,242 7,440 8,144 11,614 12,411 12,009 11,382 11,473 12,005 RELATÓRIO EARNINGS RELEASE - 4T13 4Q16 12 DE FEVEREIRO FEBRUARY 01, DE Sales growth associated to Klabin s flexibility in adjusting to different economic scenarios reflected in additional growth in relation to the same quarter of the previous year. Thus, operating cash generation (adjusted EBITDA) of R$653 million was 8% higher than in 4Q15, the 22nd consecutive quarter of growth. Also impacted by the increase in volumes sold, EBITDA for the full year of 2016 reached R$2,287 million, 16% more than in the previous year. These values include Klabin s stake in Florestal Vale do Corisco S.A. of R$8 million in the quarter and R$40 million in Indebtedness and financial investments Gross debt on December 31 was R$ 18,469 million. Out of total debt, R$ 13,132 million or 71% (US$4,029 million) is dollar denominated, mostly in the form of pre-export advances. The average maturity profile of financing held stable at the end of 4Q16, standing at 43 months while local currency financing had an average maturity of 39 months and currency denominated lines, 46 months. Short-term debt at the end of the quarter was 15% of the total with average cost of domestic lines of 9.3% p.a. and currency lines of 4.7% p.a. plus FX variation. The company s cash and financial investments at the end of 4Q16 amounted to R$6,464 million, R$569 million more than at the end of the 3Q16, the effect of cash generation and additional funding. This amount is equivalent to amortizations maturing over the next 30 months. Consolidated net debt on December 31, 2016 totaled R$12,005 million, a R$532 million increase in relation to September again mainly reflecting investments in the construction of the Puma Unit and the acquisition of new corrugated board conversion units, as well as the company s decision not to discount receivables in the domestic market during the period. In relation to the end of 2015, net debt was R$406 million lower due to the appreciation of the Real between the analyzed periods. Thus, the net debt/adjusted EBITDA ratio ended the year at 5.2x, the same level as 3Q16 and 1.1 times lower compared with NET DEBT AND LEVERAGE 17,000 15,000 13,000 11,000 9,000 7,000 5,000 3,000 1,000 (1,000) Net Debt (R$ million) Net Debt/EBITDA (R$) 8

9 Debt (R$ million) Short term dec-16 sep-16 Local currency 937 5% 885 5% Foreign currency % % Total short term % % Long term Local currency % % Foreign currency % % Total long term % % Total local currency % % Total foreign currency % % Gross debt (-) Cash Net debt Net debt / EBITDA (LTM) 5.2x 5.1x Financial Results Financial expenses totaled R$408 million in the quarter, a R$73 million increase in relation to 3Q16. A higher cash position permitted the company to report financial revenues of R$232 million in the quarter, R$76 million more than in the previous quarter. Thus, the financial result during the period, excluding the FX translation effect, was a negative R$ 176 million, the same level as 3Q16. For the full year, financial results recorded a negative R$352 million. FX rates ended the quarter at the same level as at the end of 3Q16. Thus, due to the impact on the company s currency denominated debt, net FX variation amounted to a negative R$ 59 million in 4Q16. For the year as a whole, the drop in FX rates had a positive impact on FX variation of R$2,168 million. It is worth highlighting that the effect of FX variation on the company s balance sheet is purely an accounting one, with no short-term cash effect. BUSINESS PERFORMANCE Consolidated information per unit in 2016: R$ million Forestry Pulp Papers Conversion Consolidation Net revenue Domestic market ,559 2,164 (2) 4,230 Exports - 1,066 1, ,860 Third part revenue 324 1,251 3,089 2,428 (2) 7,090 Segments revenue 1, , (2,352) - Total net revenue 1,425 1,265 4,308 2,446 (2,354) 7,090 Change in fair value - biological assets Cost of goods sold (1,622) (1,076) (2,847) (2,059) 2,378 (5,226) Gross income , ,397 Operating expenses (45) (245) (422) (310) 23 (999) Operating results before financial results 291 (56) 1, ,398 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. Total 9

10 FORESTRY BUSINESS UNIT 4Q16/3Q16 4Q16/4Q /2015 Volume (1.000 tonnes) 4Q16 3Q16 4Q Wood % -9% 2,462 3,204-23% R$ million Wood % -3% % In the fourth quarter 2016, the company s wood log volumes sold to third parties totaled 788 thousand tonnes, 9% less than in 4Q15. Albeit partially offset by better prices and mix during the period, lower volume explains the 3% year-on-year decrease in revenues. In 2016, initial wood supplies to the new pulp operations resulted in a decline in wood sales to third parties to 2,462 thousand tonnes, 23% less than in As was the case in 4Q16, lower volumes, partially offset by better prices and mix, resulted in a slower decline in sales revenues, totaling R$320 million in PULP BUSINESS UNIT Production Volume (1.000 tonnes) 4Q16 3Q16 4Q15 4Q16/3Q16 4Q16/4Q /2015 Short Fiber % N/A N/A Long Fiber % N/A N/A Total Pulp Volume % N/A N/A Sales Volume Volume (1.000 tonnes) 4Q16 3Q16 4Q15 4Q16/3Q16 4Q16/4Q /2015 Short Fiber DM % N/A 72 - N/A Short Fiber EM % N/A N/A Total short fiber volume % N/A N/A Long Fiber DM % N/A 32 - N/A Long Fiber EM % N/A N/A Total long fiber volume % N/A N/A Total pulp volume % N/A N/A R$ million Short Fiber % N/A N/A Long Fiber % N/A N/A Total Pulp Revenues % N/A 1,247 - N/A In 4Q16, total volume produced by the Puma Unit reached 308 thousand tonnes, a 5% increase in relation to 3Q16. Total pulp volumes sold reached 301 thousand tonnes, of which 208 thousand tonnes of hardwood and the remainder, softwood pulp. For the full year of 2016, total pulp volumes sold were 797 thousand tonnes, in line with the forecasted learning curve established in Despite recent improvements, hardwood pulp prices in the quarter continued to be squeezed with average FOEX prices in Europe decreasing to US$655/tonne in 4Q16 from US$ 671/ton in 3Q16. On the other hand, average 10

11 softwood pulp prices were flat in the same period. Note that the appreciation of the Real/US Dollar rate also affected pulp prices in Reais. Sales of hardwood pulp are mainly anchored to an agreement with Fibria signed in May Under this agreement, Klabin will supply 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. Klabin commercializes all of the remaining output from Puma, with hardwood pulp sold in Brazil and South America, and softwood pulp and fluff in both domestic and global markets. Sales price is equivalent to the average net price practiced by Fibria, FOB (free on board) Paranaguá, excluding South American countries. Following a period of ratification and in line with plan, fluff pulp sales are already being delivered to regular clients in the domestic market and this trend will accelerate in coming months. The company has sold softwood pulp to 18 different countries, indicative of the excellent acceptance of Klabin s pulp in global markets. PAPER BUSINESS UNIT Kraftliner European kraftliner list prices published by FOEX in December 2016 were the lowest in US Dollars since December Thus, prices ended 4Q16 at an average of US$553/tonne, below both 3Q16 and also 4Q15. For Klabin, the recent appreciation of the Real has also affected prices in local currency. With reduced export margins and signs of improvement in the Brazilian economy, larger quantities of kraftliner were diverted to the conversion units, affecting 4Q16 sales volume in relation to the same quarter in the previous year. Volume was also smaller on the back of a reduction in third party paper purchases, which had been driven in the 4Q15 by the hike in FX rates and lower recycled paper prices. Lower volumes, strengthening FX rates and lower international prices led to a year-on-year reduction in net revenues. For the full year, there was also a reduction in kraftliner sales due to an increase in product sales to corrugated board and industrial bag plants. The movement was stronger in the second half of the year following the appreciation of the Real and the more accentuated decrease in international market prices. Thus, sales volume and revenues were 5% and 7% respectively lower in relation to Coated Boards Volume (1.000 tonnes) 4Q16 3Q16 4Q15 4Q16/3Q16 4Q16/4Q /2015 Kraftliner DM % -9% % Kraftliner EM % -26% % Total Kraftliner % -23% % Coated boards DM % 1% % Coated boards EM % -8% % Total Coated boards % -3% % Total Paper % -11% 1,092 1,103-1% R$ million Kraftliner % -31% % Coated boards % -9% 2,190 2,096 4% Total Paper % -16% 2,989 2,954 1% Demand for coated boards in 4Q16 posted a 5% decrease in relation to the same period in 2015, according to a report published by the Brazilian Tree Industry (IBÁ), a reflection of continued weakness in the Brazilian economy. 11

12 Despite worsening IBA numbers, but due to the resilience of the markets in which it operates, Klabin successfully increased sales volumes in the domestic market both by comparison with 4Q15 and 3Q16. Meanwhile, exported volumes of coated board dropped on the back of a less attractive lower average FX rate during the period. For the full year, it is worth highlighting the increase in volumes sold both domestically and internationally, thanks to quality and to the receptivity of the products not only in Brazil but also in growing markets such as China and Southeast Asia. CONVERSION BUSINESS UNIT 4Q16/3Q16 4Q16/4Q /2015 Volume (1.000 tonnes) 4Q16 3Q16 4Q Total conversion % 4% % R$ million Total conversion % 5% 2,381 2,251 6% ABPO statistics posted no recovery in corrugated box shipments, ending 4Q16 with a 3% drop in relation to the same period last year. However, benefiting from its significant operations with leading food sector companies, in addition to already enjoying contributions from the recently acquired plants in Manaus (AM) and Rio Negro (PR), Klabin was able to report a year-on-year increase in sales volumes. Despite the fragility of the cement industry, which reported a 12% decrease during 2016 according to data published by the National Cement Industry Union (SNIC), Klabin maintained its sales in the industrial bags market by breaking into new segments such as fertilizers, food and coffee. In the export markets, the company has consolidated its presence in new markets with each passing quarter, increasing export volumes to countries such as Mexico and the United States, where it has had success in the sale of bags not only to the civil construction sector but also to the food, grain and chemical markets. In this context, sales volume of converted products showed a 4% increase in 4Q16 in relation to 4Q15. Despite the negative FX effect on industrial bag exports, revenues in the quarter were up by 5% in relation to the same period last year, once more indicative of the Company s ability to adapt and its competitiveness in different markets and under adverse scenarios. For the full year, despite the adversities in the Brazilian domestic economy and FX volatility, volume was 3% higher, accompanied by a 6% increase in revenues versus INVESTMENTS R$ million 4Q Forestry Maintenance Special projects and growth Puma Project 172 1,707 Total 511 2,567 Klabin invested R$511 million in 4Q16, principally destined to the new pulp plant in Ortigueira (PR) and the acquisitions in the corrugated board packaging segments. Of total investments in the quarter, forestry operations received R$45 million, covering replanting for supply to the new Puma Unit. Investments in the operational continuity of the plants accounted for a further R$109 million while R$185 million went towards special projects and expansion, especially the acquisition of the Hevi corrugated board conversion unit in Manaus (AM) and Embalplan in Rio Negro (PR). During the quarter, capex in the Puma Project amounted to R$172 million. Total capex in the project was approximately R$ 8.5 billion, with R$ 1.7 billion invested in 2016, with the remaining tranche of about R$ 150 million to be paid out in

13 US$/note dez-15 jan-16 fev-16 mar-16 abr-16 mai-16 jun-16 jul-16 ago-16 set-16 out-16 nov-16 dez-16 RELATÓRIO EARNINGS RELEASE - 4T13 4Q16 12 DE FEVEREIRO FEBRUARY 01, DE CAPITAL MARKETS Equity Markets In the fourth quarter of 2016, Klabin s units (KLBN11) appreciated 4%, in comparison to the IBOVESPA s 3% appreciation. The Units traded on every day the BM&FBovespa was open for business, registering 539 thousand trades involving 141 million securities and an average daily trading volume of R$39 million at the end of the period. KLBN11 x Ibovespa KLBN11 Índice Ibovespa Klabin s capital stock is represented by 4,733 million shares, of which 1,849 million are common shares and 2,884 million, preferred. Klabin s shares are also traded in the United States under a Level I ADRs program on the OTC market under the KLBAY ticker symbol. Klabin is a component of BM&FBovespa s Corporate Sustainability Index (ISE). The index includes shares of companies that are outstanding in terms of degree of commitment to sustainability both in terms of the company and the country as a whole. The participating companies are selected annually, based on Fundação Getúlio Vargas (GVces) Sustainability Study Center criteria. Fixed Income Klabin s debt securities (notes) mature in July 2024, with an issue value of US$ 500 million and negotiated in the secondary market on the Luxembourg Stock Exchange. The notes were issued at a rate of 5.25% p.a. with semiannual interest paid during the months of January and July. Fitch Ratings assigned Klabin a BBB- investment grade and Standard & Poors BB+ rating. 105 Notes Klabin ,

14 TELECONFERENCE CONFERENCE CALL PORTUGUESE Quinta-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) Thursday, February 2 nd, :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$ 8.2 billion. The company has a capacity to produce 3.5 million tonnes of products annually. The company defines as its strategic focus operation in the following businesses: paper and packaging, coated boards, corrugated boxes, industrial bags and wood and logs. Statements in this release relative to the Company s business perspectives, operational and financial results estimates and, to the Company potential growth are merely forecasts based on Management s expectation 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. 14

15 EARNINGS RELEASE 4Q16 FEBRUARY 01, 2017 Annex 1 Consolidated Income Statement (R$ thousands) (R$ thousands) 4Q16 3Q16 4Q15 4Q16/3Q16 4Q16/4Q /2015 Gross Revenue 2,263,335 2,260,526 1,877,204 0% 21% 8,204,424 6,745,775 22% Net Revenue 1,963,845 1,964,848 1,595,507 0% 23% 7,090,798 5,687,589 25% Change in fair value - biological assets 57, , ,614-59% -75% 532, ,113-1% Cost of Products Sold (1,429,532) (1,537,686) (1,063,709) -7% 34% (5,227,023) (3,981,502) 31% Gross Profit 591, , ,412 4% -22% 2,396,686 2,242,200 7% Selling Expenses (167,322) (186,008) (121,389) -10% 38% (586,075) (428,902) 37% General & Administrative Expenses (130,704) (124,623) (101,326) 5% 29% (466,493) (338,013) 38% Other Revenues (Expenses) 1,036 7,768 10,369-87% -90% 4,707 (13,104) -136% Total Operating Expenses (296,990) (302,863) (212,346) -2% 40% (1,047,861) (780,019) 34% Operating Income (before Fin. Results) 294, , ,066 12% -46% 1,348,825 1,462,181-8% Equity pickup 16,190 9,352 6,580 73% 146% 49,321 30,626 61% Financial Expenses (407,598) (334,677) (233,853) 22% 74% (1,284,166) (848,485) 51% Financial Revenues 231, , ,906 49% 45% 932, ,900 60% Net Foreign Exchange Losses (59,406) (77,109) 306,158 30% n/a 2,168,929 (3,174,030) n/a Net Financial Revenues (235,487) (256,600) 232,211 9% n/a 1,816,789 (3,440,615) n/a Net Income before Taxes 75,303 16, , % n/a 3,214,935 (1,947,808) n/a Income Tax and Soc. Contrib. 33,559 14,649 (264,251) -56% n/a (732,989) 694,611 n/a Net income 108,862 31, , % -79% 2,481,946 (1,253,197) n/a Depreciation and amortization 405, , ,446-9% 51% 1,423, ,727 42% Change in fair value of biological assets (57,277) (139,745) (226,614) -59% -75% (532,911) (536,113) -1% Vale do Corisco 8,027 9,459 15,074-15% -47% 40,300 42,007-4% Adjusted EBITDA 652, , ,972 12% 8% 2,287,420 1,975,232 15% 15

16 EARNINGS RELEASE 4Q16 FEBRUARY 01, 2017 Annex 2 Consolidated Balance Sheet (R$ thousands) Assets Dec-16 Dec-15 Liabilities and Stockholders' Equity Dec-16 Current Assets 9,960,035 8,675,744 Current Liabilities 4,143,664 3,162,295 Cash and banks 41,576 56,511 Loans and financing 2,593,029 1,716,306 Short-term investments 5,831,144 4,997,212 Debentures 245, ,810 Securities 591, ,143 Suppliers 634, ,199 Receivables 1,625,380 1,501,099 Taxes payable 53,643 45,400 Inventories 876, ,126 Salaries and payroll charges 257, ,349 Recoverble taxes and contributions 803, ,501 Dividends to pay 180,000 0 Other receivables 190, ,152 REFIS Adherence 66,884 61,772 Noncurrent Assets 19,353,694 17,592,436 Other accounts payable 112, ,459 Long term 0 0 Noncurrent Liabilities 18,069,729 17,753,545 Taxes to compensate 1,554,672 1,159,638 Loans and financing 14,765,982 14,834,935 Judicial Deposits 85,704 77,391 Debentures 864,456 1,140,679 Other receivables 385, ,820 Deferred income tax and social contribution 1,476, ,269 Other investments 555, ,275 Other accounts payable - Investors SCPs 229, ,116 Property, plant & equipment, net 12,995,407 12,009,146 REFIS Adherence 340, ,240 Biological assets 3,656,596 3,606,389 Other accounts payable 392, ,306 Intangible assets 120,264 12,777 Dec-15 Stockholders Equity 7,100,336 5,352,340 Capital 2,384,484 2,383,104 Capital reserve 1,301,907 1,293,962 Revaluation reserve 48,705 48,705 Profit reserve 2,543, ,162 Valuation adjustments to shareholders'equity 1,028,238 1,064,181 Treasury stock (206,082) (185,774) Total 29,313,729 26,268,180 Total 29,313,729 26,268,180 16

17 EARNINGS RELEASE 4Q16 FEBRUARY 01, 2017 Annex 3 Loan Maturity Schedule 12/31/16 R$ milhões /26 Total BNDES Outros Debêntures Moeda Nacional Pré Pagamento Financ. de Ativo Fixo - BNDES Bonds ECA's Moeda Estrang End. Bruto R$ million Foreign Currency 13,133 Average Cost Average Tenor Local Currency 9.3% p.y. 39 months Foreign Currency 4.7 % p.y. 46 months Gross Debt 43 months Gross Debt 18, /26 Local Currency 5,336 Local currency : R$ 5.3 billion Average tenor: 39 months Foreign currency: R$ 13.1 billion Average tenor : 46 months 17

18 EARNINGS RELEASE 4Q16 FEBRUARY 01, 2017 Annex 4 Consolidated Cash Flow Statement (R$ thousands) 4Q16 4Q Cash flow from operating activities 331, ,948 1,202,849 1,739,996 Operating activities 386, ,153 1,360,848 2,167,727. Net income 108, ,606 2,481,946 (1,253,197). Depreciation and amortization 240,851 82, , ,424. Depletion in biological assets 165, , , ,303. Change in fair value - biolgical assets (57,277) (226,614) (532,911) (536,113). Equity results (4,300) (10,741) (44,670) (6,910). Results on Equity Pickup (16,190) (5,595) (49,321) (29,641). Deferred income taxes and social contribution (37,746) 244, ,966 (724,821).Income taxes and social contribution (119,343) - (134,244) (16,326). Interest and exchange variation on loans and financing 317,334 (201,178) (1,486,137) 4,004,843. Interest, exchange variation and profit sharing of debentures 18,608 46,737 60, ,815. Variation of the present value of debentures 7,254 10,219 29,016 40,891. Payment of interest on loans (201,830) (177,934) (970,694) (765,019). REFIS Reserve 11,684 12,632 48,777 47,653. Others (46,734) (22,428) (7,158) (9,175) Variations in Assets and Liabilities (55,060) (15,205) (157,999) (427,731). Receivables (271,113) (125,014) (124,281) (352,423). Inventories (1,740) (37,509) (175,789) (137,417). Recoverable taxes 81,769 (181,786) (327,644) (1,118,961). Marketable Securities (14,534) (18,078) (34,160) (59,539). Other receivables (95,662) (25,598) (249,208) (51,239). Suppliers 171, , ,094 1,081,199. Taxes and payable 10,740 (4,841) 8,243 (9,737). Salaries, vacation and payroll charges (19,215) (10,964) 62,363 55,470. Other payables 83,485 16,780 45, ,916 Net Cash Investing Activities (602,250) (1,352,275) (2,648,153) (4,595,526). Purchase of property, plant and equipment (463,099) (1,335,913) (2,421,779) (4,526,734). Cust biological assets planting (ex taxes) (48,122) (27,925) (144,868) (100,471) Acquisition of investments and payment of capital in subsidiaries (93,063) - (93,063) -. Sale of property, plant and equipment - 9, ,007. Income of assets sale 2,034 2,122 10,799 14,672 Net Cash Financing Activities 826, ,501 2,264,301 2,663,420. New loans and financing 1,242,405 1,075,783 4,505,275 4,925,579. Debentures interest payment (64,283) - (450,140) (342,486). Loan amortization (218,548) (356,800) (1,371,314) (1,514,105). Minority shareholders entry , Minority shareholders exit (1,454) - (18,971) (213). Dividends payed (117,000) (105,010) (447,503) (377,995). Stocks repurchase (15,068) (21,472) (24,262) (32,623). Stocks disposal - - 6,216 5,263 Increase (Decrease) in cash and cash equivalents 554,979 (316,826) 818,997 (192,110) Cash and cash equivalents at beginning of period 5,317,741 5,370,549 5,053,723 5,245,833 Cash and cash equivalents at end of period 5,872,720 5,053,723 5,872,720 5,053,723 18