EARNINGS RELEASE 3Q16

October 27, 2016

3Q16 ADJUSTED EBITDA OF R$585 MILLION, 13% HIGHER THAN IN THE

SAME QUARTER OF LAST YEAR.
PAPER AND PACKAGING PAPER SALES VOLUME

472 thousand tonnes

3Q16 HIGHLIGHTS

Paper and packaging sales volume amounted to 472 thousand

tonnes, a 2% increase in relation to 3Q15 and 5% in relation to
2Q16. On the back of FX rate changes during the quarter, paper
and packaging sales to the domestic market increased 4% in
relation to 2Q16.

Since start-up in March, pulp sales from the new Puma Unit in
the city of Ortigueira (PR), continued to develop, totaling 315
thousand tonnes, a 74% increase in relation to 2Q16.

Net revenues totaled R$1,965 million in the quarter, a 36%

growth in relation to the same period in 2015, mainly due to
pulp sales.

3Q16 Adjusted EBITDA reached R$585 million, a 13% increase

when compared to 3Q15. Adjusted EBITDA for the first 9M16
totaled R$1,635 million, 19% above 9M15.

Klabin finalized the acquisition of industrial assets for the

production of corrugated boxes of the company Hevi, in
Manaus (AM) in September, and in October, Embalplan,
another converter based in Rio Negro (PR), boosting
production capacity by 10%.

PULP SALES VOLUME

315 thousand tonnes

NET REVENUES

R$ 1,965 million
ADJUSTED EBITDA

R$ 585 million
CORRUGATED BOXES ACQUSITIONS

EMBALPLAN AND HEVI

September 30, 2016
Klabin
Market Value R$ 19 billion
KLBN11
Closing price R$ 17.04
Daily volume 3Q16 R$ 43 million
Teleconference
Portuguese (with simultaneous translation)
Friday, October 28, 2016, 9:00AM (NY)
Tel: (11) 3193-1133 - Password: Klabin
http://cast.comunique-se.com.br/Klabin/3Q16

IR
Antonio Sergio Alfano
Tiago Rocha Brasil
Daniel Rosolen
Marcos Maciel
Lucia Reis
Natasha Utescher

www.klabin.com.br/ri
invest@klabin.com.br
+55 11 3046-8401

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FINANCIAL HIGHLIGHTS

R$ million

3Q16

2Q16

3Q15

Sales volume (thousand tonnes)

787

631

463

% Domestic Market

44%

50%

67%

Net Revenue

1,965

1,699

1,446

% Domestic Market

57%

60%

67%

Adjusted EBITDA

585

538

520

Adjusted EBITDA Margin

30%

Net Income (loss)

Net Debt

31%

3Q16/2Q16 3Q16/3Q15
25%

70%

-6 p.p.

-23p.p.

16%

36%

-3 p.p.

-10 p.p.

9%

13%

9M16
1,873
51%
5,127
60%
1,635

1,334
67%
4,092
70%
1,372

40%
-16 p.p.
25%
-10 p.p.
19%

36%

-1 p.p.

-6 p.p.

33%

-1 p.p.

31

1,268

(1,341)

n/a

n/a

2,373

(1,774)

n/a

11,473

11,382

11,615

1%

-1%

11,473

11,615

-1%

-14%

-50%

2,055

Net Debt / EBITDA (LTM - BRL)

5.1x

5.2x

Capex

552

645

6.2x
1,113

32%

9M15 9M16/9M15

5.1x

6.2x
3,263

-37%

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.

SUMMMARY
The third quarter of 2016 confirmed changes already
anticipated in the in the Federal government with
important consequences for the economy. The most
important stemming from the change in economic
outlook was the maintenance of the FX rate at lower
levels and the appreciation of the Ibovespa, which
after two years reached the 60,000-point mark.
Despite the improvement in confidence, economic
activity indicators continue to stagnate.

forthcoming periods in line with

expectations for the Brazilian economy.

changing

Again in relation to corrugated board markets, worthy

of mention is Klabins acquisition of Embalplan
Indstria e Comrcio de Embalagens S.A, with plants
in the city of Rio Negro in the state of Paran and
purchase of the industrial assets for the production of
corrugated boxes of the company Hevi Embalagens
da Amaznia Ltda located in Manaus, state of
Amazonas. These acquisitions, with a combined value
of R$ 187 million, represent a 70 thousand ton annual
increase in Klabins corrugated box production
capacity. The purchase of the Embalplan and Hevi
Embalagens assets is in line with Klabins consistent
growth strategy in its markets and marks the
beginning of conversion operations in the states of
Paran and Amazonas. Klabin has fully concluded the
purchase of Hevi Embalagens assets while the
acquisition of Embalplan Indstria e Comrcio de
Embalagens S.A awaits a decision from the Brazilian
Antitrust Authority, CADE.

Overseas, uncertainties surrounding an interest rate

hike in the USA and the United Kingdoms exit from
the European Union persist. The Japanese
government, threatened by low growth rates and
deflation, approved a stimulus program in an effort to
rekindle the countrys economy.
In the paper and packaging markets, according to
data published by the Brazilian Corrugated Board
Association (ABPO), after a 6% fall in corrugated box
shipments during the first quarter of 2016 in relation
to 1Q15, the second and third quarters recorded
stability in relation to the same periods of 2015. The
trend indicates an expected improvement in

In relation to international packaging paper markets,

European kraftliner prices continued under pressure,

twelve months

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with FOEX average list prices at US$612/t, 2% and 7%

lower than in 2Q16 and 3Q15, respectively.

year. It is important to note that the Puma Unit

reported production and commercialization of
300,000 tonnes of pulp in 3Q16, as foreseen in the
th
Indenture document to the 6 debenture issue. As a
result, the debentures will be converted on January
31, 2018.

In the pulp market, hardwood pulp prices continued

lackluster due to the prospects of new capacity
coming on stream. Consequently, average FOEX
prices in Europe decreased to US$671/t in 3Q16 from
US$693/t in 2Q16. On the other hand, average
softwood pulp prices increased to US$811/t from
US$796/t, the spread at the end of the quarter
between the two being US$148/t.

With the increase in sales volumes in 3Q16, Klabin

has benefited from the dilution of fixed and
manageable costs. This fact, allied to the companys
strict cost controls, has helped compensate for
inflation, the effects of which still persist in the case
of some raw materials and services. On the other
hand, the company incurred additional sales expenses
due to pulp commercialization, affecting operational
expenses during the period.

The Puma Unit, still at the ramp up stage, was

responsible for the important increase in sales during
the period, especially hardwood pulp. As a result,
Klabins total sales volume reached 787 thousand
tonnes in 3Q16, a year-on-year increase of 70%. In
the light of the recent appreciation of the Real,
Klabins flexibility has allowed it to direct larger
amounts of paper products to the domestic market,
the latter taking 66% of total 3Q16 sales versus 64%
in 2Q16. Despite the impact of lower FX rates and
prices in the international market, the increase in
sales volume spearheaded by pulp sales, together
with Klabins competitiveness in the domestic market,
resulted in net revenues of R$1,965 million, a 36%
growth in relation to the same period in the previous

In summary, despite the negative impacts from

unfavorable FX rates and from pressure on
international pulp prices, Klabins 3Q16 results
reported growth, driven by an increase in pulp sales
from the Puma Unit and also by the companys
flexibility in adapting rapidly to a changing economic
scenario. During this challenging quarter, Klabins
adjusted EBITDA reached R$585 million, a 13%
growth in relation to the same period last year.
EBITDA Ajustado UDM
(R$ milhes)

Volume de Vendas UDM

(excluindo madeira milhes t)

21st QUARTER OF EBITDA GROWTH

1,5

1,7

1,0
0,5

1,7

1,7

1,7

1,7

1,7

1,7

1,7

1,7

1,8

1,8

1,8

1,8

1,8

1,8

1,8

1,8

1,8

1,9

2,0

2.238

2.173

2.026

1.881

1.812

1.755

1.652

1.627

1.602

1.504

1.452

1.286

1.180

1.027

939

2,5 900
2,0

1.089

3,0

1.351

4,0

3,5

1.424

4,51.400

1.562

5,0

1.718

1.900

1.976

2.400

2,4

400

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

twelve months

Sales Volume LTM

(excluding wood million tonnes)

Adjusted EBITDA LTM

(R$ million)

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Exchange Rate
R$ / US$
Average Rate
End Rate

3Q16

2Q16

3Q15

3.25
3.25

3.51
3.21

3.54
3.97

3Q16/2Q16 3Q16/3Q15
-7%
-8%
1%
-18%

9M16

9M15

9M16/9M15
3.17
12%
3.97
-18%

3.55
3.25

Source: Bacen

Despite the countrys tumultuous political scenario, the Real/USDollar rate remained flat during the third quarter
2016, with both the average and final rate for the period closing at R$3.25/USDollar. The rate represents an 8% and
7% decrease in relation to the average in 3Q15 and 2Q16, respectively, directly impacting the companys exports.
Low volatility during the quarter resulted in an FX rate at the end of the period at the same level as on June 30, 2016,
with little variation in Klabins currency denominated loans.

OPERATING AND FINANCIAL PERFORMANCE

Sales Volume
Klabins sales volume continued to grow in 3Q16, driven mainly by the continuing ramp up in production at the Puma
Unit, initiated in March. Volumes sold, not including wood, reached 787 thousand tonnes, a 70% increase in relation
to the 463 thousand tonnes sold in 3Q15. The Puma Unit contributed 315 thousand tonnes in sales during the
quarter, approximately 85% of its nominal capacity. This volume represented a 74% increase in relation to the
volume sold during 2Q16 when the plant first went into production.
In addition to pulp sales, the company increased paper sales and conversion by 2% in 3Q16 in relation to 3Q15 and
by 5% when compared to 2Q16. The increase reflected sales of converted products that were 6% higher than in
3Q15 thanks to the companys product line flexibility. This allows Klabin to direct its products according to the
changing configurations of the markets in which it operates. In comparison to 2Q16, converted products grew by 4%.

Sales volume
(excluding wood tsd tonnes)

Sales volume by product

3Q16

787

Kraftliner
12%

56%

Others
2%

+315

463
33%

+9

Pulp
40%

Pulp

Paper /
Conversion

67%

Conversion
23%
44%

Coated Board
23%

3Q15
3T15

3Q16
3T16
Mercado Interno

Mercado Externo

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During the quarter under review, sales abroad reached 56% of the total, versus 33% in 3Q15 and 50% in 2Q16 driven
mainly by the increase in pulp sales directed mostly to the export market.
In 9M16, total sales reached 1,873 thousand tonnes, a year-on-year increase of 40% due to initial pulp sales and
higher paper sales volume, this also reflecting debottlenecking and capacity increases during 2015.

Net Revenues
Boosted by pulp revenues of R$491 million from the Puma Unit, 3Q16 net revenues including wood reached R$1,965
million, 36% and 16% more than in 3Q15 and 2Q16, respectively. Important to point out that revenues were
negatively impacted both by lower FX rates during the period in comparison to the previous periods, impacting all
products exported by the company, and also lower average dollar denominated prices for pulp sales.
Following the increase in sales of converted products and pulp in Brazil, revenues from the domestic market reached
R$1,123 million, a 15% and 10% increase in comparison to 3Q15 and 2Q16, respectively.
Lower average FX rates during the period and the recent decline in pulp prices impeded export revenue growth
proportional to the increase in total volumes exported. Thus, export revenues were R$842 million, a 78% growth in
relation to 3Q15 and 25% in relation to 2Q16. Despite the FX impact, higher pulp shipments increased the share of
exports to 43% of total sales in 3Q16 in comparison to 33% in the same quarter of the previous year and to 40% in
2Q16.
The pro-forma net revenue, considering Klabins stake in the revenue of Florestal Vale do Corisco S.A. totaled
R$1,982 million in the quarter.

Net Revenue by Product

3Q16

Net Revenue
(R$ million)
1,965
+491

1,446
33%

+28

Outros Madeira
4%
Kraftliner 2%
9%

43%

Celulose
25%

Pulp

Paper /
Conversion

57%
67%

Converso
32%

Cartes
28%

3Q15

3Q16

In the 9M16, net revenue reached R$5,127 million resulting in a 25% increase in relation to the same period of 2015,
reflecting largely initial pulp sales and the increase in paper and converted product sales.

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Operating costs and expenses

PULP CASH COST
In the light of initial pulp sales from the Puma Unit, for the sake of comparison with subsequent quarters, from
2Q16, the unit cash cost of pulp production is used. 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.
The Unit Cash Cost of Pulp Production was R$ 781/ton in 3Q16. The ramp up at the Puma Unit progressed during
the period, resulting in higher production volumes and consequently feeding through to higher fixed cost dilution for
the whole of the operation. This generated a 12% reduction in comparison to 2Q16 cash cost. The reduction was
possible despite the increase in the overall mix of softwood fiber production that has higher wood costs.
However, it is worth mentioning that the Unit had almost completed its seventh month of production by the end of
the quarter with fixed costs still not totally diluted. Consequently, the Unit Cash Cost does not yet reflect real
production costs that the Puma unit will reach when production is at full nominal capacity. As production lines
develop in accordance with the planned learning curve, it is natural for production costs to decrease.

R$ 890 / t
50
193

R$ 781 / t
51
140

190

178

103
163

Energy
Others
Labor / Third parties

Oil Fue
Chemicals

307

360

-29

-37
3Q16

2Q16

Wood

TOTAL CASH COST

Total unit cash cost, which includes all products sold by the Company, was R$ 1,773/ton in the quarter and includes
non-recurring amounts for other operational revenues and expenses. The amount represents a 12% reduction in
relation to the same period for the previous year, explained mainly by the 70% increase in volumes sold in the
quarter because of the new units pulp sales. The continued ramp up and consequent growth in pulp sales volume,
also in relation to 2Q16, permitted a 5% reduction in cost when comparing the two quarters. 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 papers and to converted product production costs out of the Companys total costs. It should be pointed out that

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the increase in pulp production also led to an increase in the participation of some components of the cash cost as
percentage of the total. A case in point is wood, mainly because of softwood pulp production.

Cash Cost Breakdown

3Q16

Cash Cost Breakdown

3Q15
Electricity
9%
Maintenance
materials /
stoppage
10%

Electricity Others
6%
7%
Maintenance
materials /
stoppage
9%

Others
5%
Labor / third
parties
32%

Labor / third
parties
33%

Fuel Oil
4%

Fuel Oil
3%

Freight
12%

Freight
12%
Chemicals
14%

Wood / Fibers
15%

Chemicals
13%

Wood / Fibers
16%

Cost of goods sold in the quarter was R$ 1,538 million, 65% higher than in the same period of the previous year and
22% above 2Q16, increasing mainly on the back of higher pulp production in the Companys product mix during the
quarter. Considering the total volume sold in the quarters, cost of goods sold per unit in 3Q16 was 3% and 2% lower
than in 3Q15 and 2Q16, respectively.
Selling expenses reached R$ 186 million in the quarter, versus R$ 107 million in 3Q15 and R$ 127 million in 2Q16. In
addition to the higher level of the commercial expenses during the ramp up of the pulp sales, the impressive growth
of the sales volume and non-recurring items impacted expenses during the period. Thus, considering also the
negative impact of the exchange variation in the net revenues, total sales expenses in 3Q16 represented 9% of net
revenues versus 7% in 3Q15.
General and administrative expenses of R$ 125 million in the quarter, a 58% and 12% increase in comparison to
3Q15 and 2Q16, respectively. During the second quarter, aside from non-recurring expenses, such as the valuation
and preparation expenses of the Hevi and Embalplan acquisitions in the corrugated boxes unit, changes in rules on
tax breaks for payroll and adjustment of corporate structures for additional pulp production facilities also increased
these expenses in comparison to the previous year. However, due the significant increase in pulp sales in the
quarter, general and administrative expenses per tonne fell by 7% when compared to the same quarter of the
previous year.
Other operating revenues/expenses totaled R$ 8 million in 3Q16.

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Effects of the variation in the fair value of biological assets

During 3Q16, the effects of the variation in the fair value of biological assets was positive at R$ 140 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 in the cost of goods sold amounted to R$ 154 million in 3Q16. Thus, the non-cash effect of the
fair value of biological assets in operational results (EBIT) was R$14 million negative in the quarter.

Operating cash generation (EBITDA)

R$ million
Net Income (loss)
(+) Income taxes and social contribution
(+) Net Financial Revenues
(+) Depreciation, amortization, depletion
Adjustments according to IN CVM 527/12 art. 4
(+) Biological assets adjustment
(-) Equity Pickup
(+) Vale do Corisco
Ajusted EBITDA
Adjusted EBITDA Margin

3Q16

2Q16

3Q15

31
(15)
257
445
(133)
(9)
9
585
30%

1,268
523
(1,296)
322
(272)
(17)
10
538
31%

(1,341)
(717)
2,490
186
(98)
(11)
10
520
36%

3Q16/2Q16 3Q16/3Q15
-98%
n/a
n/a
-98%
n/a
-90%
38%
139%
-51%
-45%
-5%
9%
-1 p.p.

36%
-13%
-6%
13%
-6 p.p.

9M16

9M15

2,373
767
(2,052)
1,017

(1,774)
(959)
3,673
730

9M16/9M15
n/a
n/a
n/a
39%

(469)
(33)
32
1,635
32%

(301)
(24)
27
1,372
33%

56%
38%
20%
19%
-1 p.p.

n/a - Not applicable

Note: Adjusted EBITDA margin is calculated considering the pro forma net revenue, which includes Vale do Corisco

Pulp sales from the new Puma Unit were the main driver behind the increase in Klabins cash generation in the third
quarter of 2016. In addition to the sharp increase in net revenues, growth in total sales volume also diluted the
Companys costs, thus benefiting results in double.
Sales growth associated to Klabins flexibility in adjusting to different economic scenarios reflected in additional
growth in relation to the same quarter of 2015. Thus, operating cash generation (adjusted EBITDA) of R$ 585 million
st
was 13% higher than in 3Q15, the 21 consecutive quarter of growth.
Also impacted by the increase in volumes sold, EBITDA for the first nine months of 2016 reached R$ 1,635 million,
19% more than in the same period of the previous year.
These values include Klabins stake in Florestal Vale do Corisco S.A. of R$ 9 million in the quarter and R$32 million in
the 9M16.

Indebtedness and financial investments

Gross debt on September 30 was R$ 17,368 million, flat in relation to the end of June. Out of total debt, R$ 12,114
million, that is 70% (US$ 3,727 million) is dollar denominated, mostly pre-export advances.
In spite of continued investments in the Puma Project, the Companys cash and financial investments at the end of
3Q16 amounted to R$ 5,895 million, the same level as at the end of 2Q16, the effect of cash generation and
additional funding, the latter equivalent to amortizations maturing over the next 29 months.
Klabins cash generation offset a capex outlay of R$ 552 million during the period, with consolidated net debt
amounting to R$ 11,473 million on September 30, 2016, the same level as at June 30, 2016. Thus, net debt/adjusted
EBITDA reduced slightly to 5.1x at the end of 3Q16 from 5.2x at the end of 2Q16. It is important to note that there is
a still R$ 167 million in capex to be disbursed in the Puma Unit. However, the increasing cash generation from the
new plant tends to accelerate the companys deleveraging.

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The average maturity profile of financing was flat, at the end of 3Q16 standing at 44 months. Local currency
financing had an average maturity of 40 months and currency denominated lines, 47 months. Short-term debt at the
end of quarter was 15% of the total with average cost of domestic lines of 9.9% p.a. and currency lines of 4.6% p.a.

NET DEBT AND LEVERAGE

17,000

6.2

6.3
5.9
5.2

15,000

Net Debt (R$ million)

11,382

11,473

Jun-16

Sep-16

12,009

Sep-15

Dec-14

4,028
Sep-14

2,824
Jun-14

2,711
Mar-14

3,985

(1,000)

Dec-13

1,000

3,595

3,000

Sep-13

5,000

5,242

7,440

7,000

8,144

1.7

Mar-16

2.4
1.7

9,000

11,614

3.0

2.6

Jun-15

2.4

Mar-15

11,000

12,411

13,000

5.1

4.5

Dec-15

4.2

Net Debt/EBITDA (R$)

Debt (R$ million)

set-16

jun-16

Short term
Local currency
Foreign currency
Total short term

885
1,749
2,634

5%
10%
15%

737
1,681
2,418

4%
10%
14%

Long term
Local currency
Foreign currency
Total long term

4,369
10,364
14,734

25%
60%
85%

4,431
10,344
14,774

26%
60%
86%

Total local currency

Total foreign currency
Gross debt
(-) Cash
Net debt
Net debt / EBITDA (LTM)

5,254
12,114
17,368
5,895
11,473
5.1x

30%
70%

5,168
12,024
17,192
5,810
11,382
5.2x

30%
70%

7.0
6.5
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
-2.5
-3.0
-3.5
-4.0

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Financial Results
Financial expenses totaled R$335 million in the quarter, flat in relation to 2Q16. Financial income totaled R$ 155
million in the quarter, leading to a negative R$ 180 million financial result in the period, excluding FX effects.
FX rates closed the quarter almost at the same level as at the end of 2Q16. Thus, due to the impact on the
companys currency denominated debt, net exchange variation amounted to a negative R$ 77 million in 3Q16. It is
worth highlighting that the effect of exchange variation on the companys balance sheet is purely an accounting
one, with no short-term cash effect.

BUSINESS PERFORMANCE
Consolidated information per unit in 9M16:

R$ million
Net revenue
Domestic market
Exports
Third part revenue
Segments revenue
Total net revenue
Change in fair value - biological assets
Cost of goods sold
Gross income
Operating expenses
Operating results before financial results

Forestry

Pulp

246
246
796
1,042
476
(1,193)
325
(40)
285

103
677
780
7
787
(703)
84
(158)
(74)

Papers Conversion Consolidation

1,147
1,160
2,307
897
3,204
(2,206)
998
(313)
685

1,598
199
1,797
14
1,811
(1,507)
304
(231)
73

(3)
(3)
(1,714)
(1,717)
1,811
94
24
118

Total
3,091
2,036
5,127
5,127
476
(3,798)
1,805
(718)
1,087

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.

FORESTRY BUSINESS UNIT

thousand tonnes

3Q16

2Q16

3Q15

Wood

657

527

600

Wood

85

81

81

R$ million

3Q16/2Q16 3Q16/3Q15
25%
9%
5%

5%

9M16

9M15 9M16/9M15

1,674

2,339

-28%

245

285

-14%

In the third quarter of 2016, the companys wood log volumes sold to third parties totaled 657 thousand tonnes, 9%
more than in 3Q15. With the largest sales volume, wood sales revenues in the quarter totaled R$ 85 million, 5%
above the same period of 2015.
In the 9M16, the beginning of the wood supply for new pulp operation impacted the volume of timber sales to third
parties, which was 1.674 million tonnes, 28% below the same period of 2015. The lower sales volume was partly
offset by better prices and mix practiced in the period, resulting in a smaller decline in sales revenue, which totaled
R$ 245 million in the same comparison.

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PULP BUSINESS UNIT

Production
Volume (tsd ton)
Short Fiber
Long Fiber
Total Pulp Volume

3Q16

2Q16

3Q15

209
85
294

174
56
230

3Q16

2Q16

3Q15

29
189
218
11
86
97
315

16
149
165
2
14
16
181

313
178
491

256
30
286

3Q16/2Q16 3Q16/3Q15
20%
N/A
52%
N/A
28%
N/A

9M16
383
141
524

9M15 9M16/9M15
-

N/A
N/A
N/A

Sales Volume

Volume (tsd ton)

Short Fiber DM
Short Fiber EM
Total short fiber volume
Long Fiber DM
Long Fiber EM
Total long fiber volume
Total pulp volume

3Q16/2Q16 3Q16/3Q15
81%
N/A
27%
N/A
32%
N/A
450%
N/A
511%
N/A
503%
N/A
74%
N/A

9M16

9M15 9M16/9M15

45
338
383
13
100
113
496

569
208
777

N/A
N/A
N/A
N/A
N/A
N/A
N/A

R$ million
Short Fiber
Long Fiber
Total Pulp Revenues

22%
492%
72%

N/A
N/A
N/A

N/A
N/A
N/A

In 3Q16, there was an approximately 75% increase in total volume of pulp sales in line with the expected learning
curve at the Puma Unit. Total volumes sold reached 315 thousand tonnes, of which 218 thousand tonnes of
hardwood pulp and the remainder, softwood. In this quarter, hardwood pulp prices continued under pressure with
average FOEX prices in Europe decreasing to US$671/ton in 3Q16 from US$ 693/ton in 2Q16. On the other hand,
average softwood pulp prices increased to US$ 811/ton from US$ 796/ton on the same comparative basis, with
Klabins softwood pulp sales jumping during the period to 97 thousand tonnes in 3Q16 up from 16 thousand tonnes
in 2Q16. Note that the appreciation of the Real/USDollar rate also affected pulp prices in Reais.
Sales of hardwood pulp are performed mainly through an agreement with Fibria signed in May 2015. 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. With the exception of the volumes sold under the
Fibria agreement, Klabin will directly commercialize all of the remaining output from Puma, with hardwood pulp sold
in Brazil and South America, and long fiber 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) Paranagu, excluding South American
countries.
Following a period of ratification and in line with plan, fluff pulp sales are already being delivered to long-term clients
in the domestic market. This trend will accelerate in coming months as the plant reaches its nominal capacity. The
company has already sold softwood pulp to 18 different countries, indicative of the excellent acceptance of Klabins
pulp in global markets.

11

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2016

PAPER BUSINESS UNIT

Volume (1.000 ton)

3Q16

2Q16

3Q15

Kraftliner DM
Kraftliner EM
Total Kraftliner
Coated boards DM
Coated boards EM
Total Coated boards
Total Paper

21
73
94
106
75
181
275

29
74
103
92
66
159
262

27
79
106
106
67
172
278

Kraftliner
Coated boards
Total Paper

174
551
725

201
506
708

226
529
755

R$ million

3Q16/2Q16 3Q16/3Q15
-26%
-23%
-2%
-8%
-9%
-11%
15%
0%
14%
13%
14%
5%
5%
-1%
-13%
9%
2%

-23%
4%
-4%

9M16

9M15 9M16/9M15

79
228
307
291
215
506
813

92
208
300
287
205
491
791

-14%
10%
3%
1%
5%
3%
3%

620
1,612
2,231

597
1,459
2,056

4%
10%
9%

Kraftliner
Despite signs of recovery in recent weeks, kraftliner list prices ended 3Q16 at an average of US$612/tonne, below
2Q16 and 3Q15. For Klabin, the recent appreciation of the Real has also affected prices in local currency.
With lower profitability of exports and signs of improvement in the Brazilian economy, larger quantities of kraftliner
have been sent to the conversion units, resulting in a decline in sales of 11% in 3Q16 in relation to the same quarter
last year. Lower volumes, strengthening FX rates and lower international prices led to a year-on-year reduction in net
revenues.
In the first nine months of 2016 and largely reflecting the increase in exports early in the year as well as enhanced
recycling capacity, volume sold reached 307 thousand tonnes, a 3% increase in relation to the same period last year.

Coated Boards
With the persistent weakness in the Brazilian economy, demand for coated boards in July and August posted a 2%
decrease in relation to the same period in 2015, according to a report published by the Brazilian Tree Industry (IB).
In this context, and due to the resilience of the markets in which it operates, the company has been successful in
maintaining year-on-year stability in coated board sales volumes to the domestic market in relation to the same
period of 2015. Volumes of coated board sold abroad, however, increased by 13% in relation to 3Q15, thanks to
quality and to the receptivity of the products in growing markets such as China and Southeast Asia. The increase in
volumes sold partially offset the appreciation of the Real, with net revenues reaching R$ 551 million, a 4% increase in
relation to 3Q15.
During the first nine months, volumes sold showed a 3% increase, with a 10% increase in net revenues in relation to
the same period of 2015, once again indicative of the companys flexibility and resilience.

CONVERSION BUSINESS UNIT

thousand tonnes

3Q16

2Q16

3Q15

Total conversion

183

177

174

Total conversion

621

589

577

R$ million

12

3Q16/2Q16 3Q16/3Q15
4%
6%
5%

8%

9M16

9M15 9M16/9M15

525

514

2%

1,763

1,665

6%

RELATRIO
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2016

Despite some signs of improvement in relation to early 2016, Brazilian Corrugated Boxes Association (ABPO) data
shows corrugated boxes shipments were flat in comparison to volume in 3Q15. Klabin, in the period, benefited from
its major participation in the food sector, especially during the fruit harvest in the Brazilian Northeast, and in the
meat packing industry.
Despite the fragility of the cement industry that reported a 13% decrease in the quarter in relation to 3Q15
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,
Klabin 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 6% increase in 3Q16 in relation to 3Q15. Revenues in
the quarter were up by 8% in relation to the same period last year, once more indicative of the Companys ability to
adapt and its competitiveness in different markets and under adverse scenarios.

INVESTMENTS
Klabin invested R$ 522 million in 3Q16, with capex in the new
pulp plant in Ortigueira (PR) still the main destination. Of total
Forestry
34
93 investments in the quarter, forestry operations received R$ 34
Maintenance
109
289 million, covering replanting for supply to the new Puma Unit.
Special projects and growth
104
129 Operational plant continuity received R$109 million while
Puma Project
305 1,544 R$104 million went towards special projects and expansion,
Total
552 2,055 especially towards the acquisition of industrial assets for the
production of corrugated boxes of the company Hevi, in Manaus (AM).

R$ million

3Q16 9M16

During the quarter, capex in the Puma Project amounted to R$305 million. Total capex in the project is equivalent
approximately to R$8.5 billion, with R$1.5 billion invested in the first nine months of 2016. A further approximately
R$167 million will be invested in 4Q16.

CAPITAL MARKETS
Equity Markets
In the third quarter of 2016, Klabins units (KLBN11) appreciated 11%, in comparison to the IBOVESPAs 13%
appreciation. The Units traded on every day the BM&FBovespa was open for business, registering 549 thousand
trades involving 190 million securities and an average daily trading volume of R$48 million at the end of the period.
In the last twelve months, Klabins shares depreciated 22% compared to IBOVESPAs 30% appreciation.

13

RELATRIO
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2016

KLBN11 x Ibovespa
130
100

78

Sep-15

Oct-15

Nov-15

Dec-15

Jan-16

Feb-16

Mar-16

KLBN11

Apr-16

May-16

Jun-16

Jul-16

Aug-16

Sep-16

Ibovespa Index

Klabins capital stock is represented by 4,733 million shares, of which 1,849 million are common shares and 2,884
million, preferred. Klabins shares also trade in the United States, Level I ADRs trading in the OTC market under the
KLBAY ticker symbol.
Klabin is a component of BM&FBovespa 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 Fundao Getlio Vargas (GVces)
Sustainability Study Center criteria. Klabin is part of the current portfolio which is valid until January 2017.

Fixed Income
Klabins 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.

Price - Notes Klabin in 2024

Last 12 months
105.00

101.35

103.00

US$/note

101.00
99.00
97.00
95.00

93.00
91.00
89.00
87.00
85.00
Sep-15

Oct-15 Nov-15 Dec-15

Jan-16 Feb-16

14

Mar-16 Apr-16 May-16 Jun-16

Jul-16

Aug-16 Sep-16

RELATRIO
- 4T133Q16
12 DE FEVEREIRO
2014
EARNINGS RELEASE
OCTOBER 27,DE
2016

TELECONFERENCE
Portugus

English (simultaneous translation)

Sexta-feira, 28 de outubro de 2016 11h00 (Braslia).

Friday, October 28th, 2016 09:00 a.m. (NY).

Senha: Klabin

Password: Klabin

Telefone: (11) 3193-1133 ou (11) 2820-4133

Phone: U.S. participants: 1-888-700-0802

Replay: (11) 3193-1012 ou (11) 2820-4012

International participants: 1-786-924-6977

Senha: 2331933#

Brazilian participants: (55 11) 3193-1133 or (55 11) 2820-4133

Replay: (55 11) 3193-1012 or (55 11) 2820-4012

O udio da Teleconferncia tambm ser transmitido pela internet.

Password: 7719437#

Acesso: http://cast.comunique-se.com.br/Klabin/3T16
The conference call will also be broadcast by internet.
Access: http://cast.comunique-se.com.br/Klabin/3Q16

Klabin is the largest integrated producer, exporter and packaging paper recycler in Brazil with gross revenues of R$ 6.7 billion. The
company has a capacity to produce 2 million tonnes of products annually. The company defines as its strategic focus the following
businesses: paper and packaging, coated boards, corrugated boxes, industrial bags and wood and logs. The Company is the leader
in all markets where it is present.
Statements in this release relative to the Companys business perspectives, operational and financial results estimates and, to the Company
potential growth are merely forecasts based on Managements 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.

15

EARNINGS RELEASE 3Q16 OCTOBER 27, 2016

Appendix 1
Consolidated Income Statement (R$ thousand)

(R$ thousands)

3Q16

2Q16

2Q15

3Q16/2Q15

3Q16/3Q15

9M16

9M15

9M16/9M15

Gross Revenue

2,260,526

1,965,221

1,719,529

15%

31%

5,941,089

4,868,571

22%

Net Revenue

1,964,848

1,698,628

1,445,697

16%

36%

5,126,953

4,092,082

25%

139,745

272,442

98,731

-49%

42%

475,634

309,499

54%

22%

65%

(3,797,491)

(2,917,793)

-21%

-8%

1,805,096

1,483,788

Change in fair value - biological assets

Cost of Products Sold

(1,537,686)

(1,255,645)

(929,311)

Gross Profit

566,907

715,425

615,117

Selling Expenses

(186,008)

(127,481)

(107,458)

46%

73%

(418,753)

(307,513)

36%

General & Administrative Expenses

(124,623)

(111,129)

(78,796)

12%

58%

(335,789)

(236,687)

42%

(7,528)

716%

-203%

(23,473)

-116%

(567,673)

32%

Other Revenues (Expenses)

Total Operating Expenses
Operating Income (before Fin. Results)
Equity pickup

7,768

952

3,671
(750,871)

30%
22%

(302,863)

(237,658)

(193,782)

27%

56%

264,044

477,767

421,335

-45%

-37%

1,054,225

916,115

15%

9,352

16,685

10,707

-44%

-13%

33,131

24,046

38%

5%

42%

(876,568)

(614,632)

43%

-60%

-13%

700,509

421,994

66%

Financial Expenses

(334,677)

(317,764)

(235,506)

Financial Revenues

155,186

388,101

177,378

Net Foreign Exchange Losses

(77,109)

1,225,909

(2,431,549)

n/a

-97%

2,228,335

(3,480,188)

-164%

(256,600)

1,296,246

(2,489,677)

n/a

-90%

2,052,276

(3,672,826)

-156%

1,790,698

(2,057,635)

-99%

n/a

3,139,632

(2,732,665)

-215%

n/a

-98%

-98%

-102%

2,373,084
1,017,197

Net Financial Revenues

Net Income before Taxes
Income Tax and Soc. Contrib.

16,796
14,649

(522,571)

Net income

31,445

Depreciation and amortization

444,550

321,868

185,980

38%

139%

(139,745)

(272,442)

(98,731)

-49%

42%

Change in fair value of biological assets

Vale do Corisco
Adjusted EBITDA

1,268,127

716,802

(1,340,833)
-

(766,548)

(475,634)

958,862
(1,773,803)

-180%
-234%

730,281

39%

(309,499)

54%

9,459

10,411

10,047

-9%

-6%

32,273

26,933

20%

585,041

537,604

519,608

9%

13%

1,634,794

1,372,260

19%

16

EARNINGS RELEASE 3Q16 OCTOBER 27, 2016

Appendix 2
Consolidated Balance Sheet (R$ thousand)
Sep-16

Jun-16

Current Assets

Assets

8,974,515

8,988,191

Cash and banks

25,979

46,419

5,291,762

5,169,755

576,769

594,285

1,354,267

1,442,887

Inventories

875,175

912,683

Salaries and payroll charges

Recoverble taxes and contributions

674,075

697,559

Dividends to pay

Other receivables

176,488

124,603

19,249,482

19,122,827

Short-term investments
Securities
Receivables

Liabilities and Stockholders' Equity

Sep-16

Jun-16

3,776,546

3,547,972

2,360,066

2,194,352

Debentures

274,861

224,476

Suppliers

627,383

701,730

Current Liabilities
Loans and financing

Taxes payable

Long term

0
64,301

128,758

102,122

Noncurrent Liabilities

17,118,109

17,141,847

Loans and financing

13,859,584

13,882,709

0
1,576,416

Judicial Deposits

85,312

83,453

Other receivables

306,344

278,032

Deferred income tax and social contribution

Other investments

539,647

530,295

12,959,771

12,936,138

Biological assets

3,688,234

3,694,116

Intangible assets

23,796

24,377

Property, plant & equipment, net

Debentures

873,095

891,253

1,518,875

1,574,646

Other accounts payable - Investors SCPs

218,071

138,146

REFIS Adherence

346,535

351,624

Other accounts payable

301,949

303,469

StockholdersEquity

7,329,342

7,421,199

Capital

2,384,484

2,384,484

Capital reserve

1,301,907

1,301,907

Revaluation reserve

48,705

48,705

Profit reserve

2,743,170

2,834,413

Valuation adjustments to shareholders'equity

1,042,090

1,040,111

Treasury stock
Total

28,223,997

28,111,018

224,538

1,646,378

Taxes to compensate

36,453

276,927
65,648

REFIS Adherence
Other accounts payable

Noncurrent Assets

42,903

Total

(191,014)
28,223,997

17

(188,421)
28,111,018

EARNINGS RELEASE 3Q16 OCTOBER 27, 2016

Appendix 3
Loan Maturity Schedule - 09/30/2016
R$ million

4Q16

2016

2017

2018

2019

2020

2021

2022

2023

2024 2025/26

Total

BNDES

115

115

509

501

452

338

286

282

265

215

2,966

Others

70

70

66

180

118

284

190

104

88

39

1,139

5,254

Debentures Interests
Local Currency
Trade Finance

51

51

420

62

523

62

31

236

236

995

681

631

1,145

538

417

354

254

1,147

497

497

1,100

1,151

1,164

1,201

1,175

758

124

Fixed Assets

26

26

173

201

208

200

185

179

168

160

Bonds

18

18

1,635

ECA's

115

247

247

241

239

198

156

156

184

1,788

Foreign Currency

544

544

1,387

1,599

1,619

1,642

1,600

1,135

448

1,934

206

12,114

Gross Debt

780

780

2,382

2,281

2,251

2,787

2,138

1,552

802

2,188

208

17,368

R$ million

2,382
1,387

2,281

2,251

1,599

1,619

Local Currency

1,642

Foreign Currency
Gross Debt

2,188

2,138

Foreign
Currency
12,144

1,934

1,600

1,135

544

1,145

780
544

236

236

4T16

2016

995

2017

681

2018

Gross Debt
17,368
802
448

631

2019

538

2020

7,170
22

1,618

1,520

Average Cost Average Tenor

2,787

1,552

780

2021

Local currency : R$ 5.2 billion

Average tenor: 40 months

417
2022

354

254

2023

2024

208

206
2
2025/26

Foreign currency: R$ 12.1 billion

Average tenor : 47 months

18

Local
Currency
5,254

9.9% p.y.

40 months

4.6 % p.y.

47 months
44 months

RELATRIO - 3T16 27 DE OUTUBRO DE 2016

Appendix 4
Consolidated Cash Flow Statement (R$ thousand)
3Q16

3Q15

9M16

9M15

Cash flow from operating activities

611,234

591,346

871,672

1,297,048

Operating activities

369,611

765,958

974,611

31,445

. Net income

(1,340,833)

2,373,084

1,709,574
(1,773,803)

. Depreciation and amortization

263,259

75,838

507,370

. Depletion in biological assets

181,291

110,142

509,827

499,457

(139,745)

(98,731)

(475,634)

(309,499)

. Change in fair value - biolgical assets

(17,655)

. Equity results
. Results on Equity Pickup
. Deferred income taxes and social contribution

(40,370)

3,831

(9,352)

(10,707)

(33,131)

(24,046)

(56,129)

(721,613)

580,712

(968,824)

(920)

.Income taxes and social contribution

. Interest and exchange variation on loans and financing
. Interest, exchange variation and profit sharing of debentures

. Payment of interest on loans

. REFIS Reserve
. Others
Variations in Assets and Liabilities
. Receivables
. Inventories
. Recoverable taxes
. Marketable Securities

(1,059)

336,594

2,751,232

24,971

167,318

7,254

. Variation of the present value of debentures

921

230,824

(14,901)
(1,803,471)
41,558

(16,326)
4,206,021
370,078

10,224

21,762

30,672

(280,312)

(216,662)

(768,864)

(587,085)

12,556

12,955

37,093

35,021

16,354

26,933

39,576

13,253

241,623

(174,612)

(102,939)

(412,526)

88,620

(150,673)

146,832

(227,409)

37,508

(56,168)

(174,049)

(99,908)

(45,558)

(220,931)

(409,413)

(937,175)

17,516

(17,856)

(19,626)

(41,461)

. Other receivables

(83,793)

10,240

(153,546)

(25,641)

. Suppliers

141,965

191,628

465,884

709,394

6,450

13,988

. Salaries, vacation and payroll charges

52,389

40,822

81,578

66,434

. Other payables

26,526

14,338

(38,102)

148,136

. Taxes and payable

(2,497)

(4,896)

Net Cash Investing Activities

(550,237)

(1,101,640)

(2,045,903)

(3,243,251)

. Purchase of property, plant and equipment

(517,068)

(1,086,615)

(1,958,680)

(3,190,821)

. Cust biological assets planting (ex taxes)

(35,664)

(26,175)

(96,746)

(72,546)

. Sale of property, plant and equipment

758

. Income of assets sale

Net Cash Financing Activities
. New loans and financing

. Minority shareholders entry

6,050

8,765

12,550

1,162,215

1,438,249

2,070,919

260,068

2,007,953

3,262,870

3,849,796

65,000

. Minority shareholders exit

(156)
(107,988)

. Dividends payed

(2,593)

. Stocks repurchase

. Stocks disposal

7,566

1,737

(173,761)

. Loan amortization

758

40,570

. Debentures interest payment

5,100

(342,486)

(385,857)

(342,486)

(332,250)

(1,152,766)

(1,157,305)

65,000

(17,517)

(213)

(330,503)

(272,985)

(9,194)

(11,151)

(171,003)
-

6,216

5,263

Increase (Decrease) in cash and cash equivalents

101,567

651,921

264,018

124,716

Cash and cash equivalents at beginning of period

5,216,174

4,718,628

5,053,723

5,245,833

Cash and cash equivalents at end of period

5,317,741

5,370,549

5,317,741

5,370,549

19