Institutional Presentation November, 2012 1
2 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.
A differentiated company 3
4 A differentiated company Competitive forest Market position Industrial technology Superior cost management Clear growth strategy
5 Differentiation of forests Brazil Heart of Paraná (logistics and volume) Massive forest Monte Alegre Distribution of rain Soil quality State of Paraná Insolation
Forestry productivity 49 55 Cloning 58 62 71 Forestry productivity m 3 /(ha.year) 37 38 13 14 15 18 MAI t/(ha.year) 8 9 10 Growth Density Factory yield 1995 2000 2005 2010 2015 2012 6
7 Leader in the Brazilian packaging paper market, where we allocate more than 50% of our capacity Market position paper Coated Boards Kraftliner 653 thousand tonnes sold in 2011 50% market share Sole supplier of liquid packaging board in Latin America 415 40% installed capacity thousand tonnes sold in 2011
8 Leader in the Brazilian packaging market where we allocate more than 95% of capacity Market position conversion Industrial Bags Corrugated Boxes 50% market share Second player s market share is 16% 15% market share Second player s market share is 9%
9 Destination of Klabin s products Strongly linked to the consumer market Food 68% 13% 7% Other consumer goods Building Others Sales volume destination paper and packaging
10 Exports Sustainable export capacity One of the three largest suppliers for Tetra Pak in the world, with long term relationship of more than 25 years Export revenues account for approximately US$ 500 million per year
11 Constantly investing in the latest equipment and production efficiency Industrial technology 2008 2009 2010 2011 2012 Machine 9 of coated boards in Monte Alegre, the best and most modern in Latin America 4 new printers for corrugated boxes Start up of a new corrugator in Goiana (PE) Start up of a new corrugator in Jundiaí DI (SP), the widest and fastest in Brazil and one of the majors of the world
12 Matrix control of costs (Falconi) Superior cost control Focus in 2011: Monte Alegre mill Focus in 2012: Forestry Reversion of excessive outsourcing 1,621-1% 1,600 High return investments Mechanical Vapor Recompression (Debottlenecking in Monte Alegre) Biomass boilers in Santa Catarina State High voltage transmission line Evaporation system 9M11 9M12 Nominal cash cost R$ / tonne
13 Superior cost control teamwork and proper incentives Group of executives with extensive experience in the market, merged with the hiring of new executives New compensation metrics: individual and collective goals Aggressive targets Variable compensation linked to results, focus on short-term and long-term Long-term incentives through stock matching
Adjusted EBITDA LTM 39% growth 28% 29% 31% Adjusted EBITDA LTM Margin 24% 922 25% 939 26% 1,028 1,089 1,180 1,286 Jun11 Sep11 Dec11 Mar12 Jun12 Sep12 Adjusted EBITDA LTM (R$ million) EBITDA LTM (R$ million) LTM Last twelve months 14
Growth strategy 15
16 Clear growth strategy short-term Great performance despite unfavorable economic conjuncture, explained by cost management From now on: economic conditions becoming more favorable Sack kraft machine and recycled paper machine
17 Recycled machine in Goiana Klabin (today) Northeast sales: 150 tsd t 100 tsd t Kraftliner production in Monte Alegre: 100 tsd t Recycled production in Goiana: 50 tsd t
18 Recycled machine in Goiana Klabin (with project) Northeast sales : 210 tsd t 50 tsd t Kraftliner production in Monte Alegre: 50 tsd t Recycled production in Goiana: 50 tsd t New recycled machine: 110 tsd t South sales: 50 tsd t
19 Recycled machine in Goiana Benefits Release and sale of 50 thousand tonnes of kraftliner in the South Sale of 60 thousand tonnes of recycled in the Northeast Reduction in freight of 50 thousand tonnes from South to Northeast Numbers Capex: R$ 300 million IRR: 18% ROE: 28% Start up: August 2014
20 Growth strategy long-term Growth on the same site The only company that owns a large pine forest in Brazil Project driven towards domestic market
21 Softwood imports in Brazil 377 286 Large and growing market in Brazil, currently supplied by softwood imports 2007 2011 thousand tonnes
22 New pulp line project Same site, high productivity Project based on fluff market and Klabin paper needs Flex mill (long and short fibers) Capital structure to dilute risks 150 MW of electricity in excess Lowest cash cost producer High return with conservative assumptions
Inbound logistics Average hauling distance New mill 75 Km Average hauling distance Monte Alegre 50 Km Klabin Pulp Klabin SA Vale do Corisco 23
24 Outbond Logistics Klabin Area 27.530 m² Paranaguá Port Paraná Terminal Pulp Mill Existing railroad to Paranaguá Port: 424 km To be constructed: 17 km
25 Capital structure Klabin SA US$ 1 billion Investors US$ 1 billion 51% 49% Klabin Pulp US$ 3.8 billion Debt US$ 1.8 billion
Financial results 26
Sales 1,306 1,290 34% 66% 32% 68% 2,895 22% 78% 3,085 24% 76% Excluding wood sales 9M11 9M12 Sales volume (thousand tonnes) 9M11 9M12 Net revenue (R$ million) Export Market Domestic Market 27
28 EBITDA and Net Income 967 709 605 9M11 9M12 Adjusted EBITDA (R$ million) 60 9M11 Net income (R$ million) 9M12
jun-10 set-10 dez-10 mar-11 jun-11 set-11 dez-11 mar-12 jun-12 set-12 2.462 2.106 2.128 2.002 1.893 2.313 2.735 2.674 3.014 3.090 2,8 2,2 Net Debt/ EBITDA (LTM) 2.2 2.2 2.2 2.2 2,106 2,128 2,2 2,1 Dívida Líquida (R$ milhões) 2,0 2.1 2.1 2.0 2.0 2,002 1,893 2,4 2.4 2.5 2.4 2.5 2,313 Net debt 2,5 2,3 2,5 2,4 2,735 2,674 2.5 2.3 2.3 2.3 2.5 2.3 3,014 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 3,090 Sep-12 6,0 5,5 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0-0,5-1,0-1,5-2,0 LTM Last twelve months Endividamento Líquido Net debt (R$ million) Endividamento Liq. / EBITDA (UDM) 29
30 3,150 Loan maturity schedule 836 373 905 418 800 79 R$ million Cash 436 99 337 4Q12 247 83 164 1Q13 310 103 207 2Q13 234 219 148 3Q13 86 96 123 4Q13 463 2014 488 2015 582 130 452 2016 721 2017 559 83 477 2018 610 47 564 2019 502 36 466 2020 Forward Local currency R$1.6 billion Average tenor: 30 months Foreign currency R$ 4.6 billion Average tenor: 44 months Gross debt R$ 6.2 billion
31 Capex R$ million 9M12 2012E 2013E Maintenance and special projects 342 477 361 Sack kraft expansion 47 93 127 Recycled expansion 0 30 212 Total 389 600 700
Appendix 32
Shareholder structure Common Preferred Monteiro Aranha 20% BNDES 13% Treasury 5% Brazilian investors 42% Brazilian investors 20% Klabin Irmãos 60% Foreign investors 40% 316,827,563 shares 600,855,733 shares Level 1 of Corporate Governance at BM&FBovespa Tag along rights of 70% for preferred shares Average daily trading volume in 9M12 R$ 23 million Dividends in 2011 R$ 207 million (yield 4%*)
34 Capacity Domestic market 2.5 m t wood logs 243 k ha 700 k t eucalyptus and pine forests planted forests: 243 thousand ha 1.7 m t short fiber and long fiber pulp coated boards 960 k t 145 k t industrial bags Domestic and export markets kraftliner Domestic market 250 k t old corrugated containers 200 k t 540 k t recycled paper corrugated boxes
35 Paper business unit Kraftliner 316 63% 286 57% 403 380 37% 9M11 43% 9M12 9M11 9M12 486 502 968 1.111 Coated boards 46% 54% 47% 53% Kraftliner Recycled 9M11 9M12 Thousand tonnes 9M11 Kraftliner and coated boards Domestic market Export market 9M12 R$ million
36 Conversion business unit -1% 379 371 919 912 Corrugated boxes 9M11 9M12 9M11 9M12 Corrugated boxes Industrial bags 101 9M11 105 9M12 359 9M11 413 9M12 Industrial bags Corrugated boxes and industrial bags Thousand tonnes R$ million
jan-10 mar-10 mai-10 jul-10 set-10 nov-10 jan-11 mar-11 mai-11 jul-11 set-11 nov-11 jan-12 mar-12 mai-12 jul-12 set-12 Imports Exchange rate (R$ / US$) 2,03 1,72 1,87 1,65 Jan 10 Jan 11 Jan 12 May 12 Sep 12 Effective imports of goods packed (monthly average - tonnes) 2010 2011 2012* 2012* / 2011 Industrialized food 286,043 369,261 339,862-8% Pharmaceutical 3,201 3,239 3,264 1% Toys 3,611 4,235 4,000-6% Hygiene 5,761 6,814 6,631-3% Footwear 1,320 1,602 1,633 2% * January to August Source: SECEX / MDIC - Receita Federal SP. 09/26/2012 37
Income statement (R$ thousand) 3Q12 2Q12 3Q11 9M12 9M11 3Q12/2Q12 3Q12/3Q11 9M12/9M11 Gross Revenue 1.305.430 1.232.089 1.199.418 6% 9% 3.702.632 3.489.050 6% Net Revenue 1.085.766 1.030.299 990.623 5% 10% 3.085.306 2.895.075 7% Change in fair value - biological assets 333.122 4.850 19.255 6768% 1630% 772.578 272.146 184% Cost of Products Sold (714.806) (755.367) (729.482) -5% -2% (2.098.211) (2.213.520) -5% Gross Profit 704.082 279.782 280.396 152% 151% 1.759.673 953.701 85% Selling Expenses (81.989) (96.499) (76.594) -15% 7% (258.616) (238.996) 8% General & Administrative Expenses (74.243) (66.464) (64.311) 12% 15% (200.272) (176.367) 14% Other Revenues (Expenses) 1.236 (1.042) 7.359-219% -83% (4.164) (11.368) -63% Total Operating Expenses (154.996) (164.005) (133.546) -5% 16% (463.052) (426.731) 9% Operating Income (before Fin. Results) 549.086 115.777 146.850 374% 274% 1.296.621 526.970 146% Equity pickup 1.755 19.988-91% N/A 25.329 N/A Financial Expenses (115.435) (129.005) (112.572) -11% 3% (333.592) (338.393) -1% Financial Revenues 75.953 72.486 89.135 5% -15% 216.569 241.978-11% Net Foreign Exchange Losses (15.377) (412.140) (500.955) -96% -97% (352.371) (339.954) 4% Net Financial Revenues (54.859) (468.659) (524.392) -88% -90% (469.394) (436.369) 8% Net Income before Taxes 495.982 (332.894) (377.542) N/A N/A 852.556 90.601 841% Income Tax and Soc. Contrib. (165.144) 148.988 134.487 N/A N/A (247.106) (30.311) 715% Net income 330.838 (183.906) (243.055) N/A N/A 605.450 60.290 904% Depreciation and amortization 151.759 164.348 149.811-8% 1% 423.952 462.335-8% Change in fair value of biological assets (333.122) (4.850) (19.255) 6768% 1630% (772.578) (272.146) 184% Vale do Corisco 7.033 6.001-17% N/A 19.403 - N/A EBITDA 374.756 281.276 277.406 33% 35% 967.398 717.159 35%
Investor Relations Phone: +55 (11) 3046-8401 www.klabin.com.br/ir invest@klabin.com.br 39