3Q10 Earnings Release

Klabin reports net income of R$ 226 million in 3Q10 and R$ 335 million in 9M10
As of this quarter, Klabins consolidated financial statements will be reported in accordance with International Financial Reporting Standards (IFRS), as determined by Instructions 457/07 and 485/10 issued by the Securities and Exchange Commission of Brazil (CVM). Data for prior periods were adjusted for comparison purposes. The main impacts are related to biological assets and the useful life of assets. The following table presents selected indicators before and after these adjustments.
R$ million Sales volume - 1,000 t
% Exports

3Q10 436
29%

2Q10 430
30%

3Q09 402
35%

3Q10/2Q10

3Q10/3Q09

9M10 1,299
32%

9M09 1,109
37%

9M10/9M09

1%
- 1 p.p.

8%
- 6 p.p.

17%
- 5 p.p.

Net revenue
% Exports

983
21%

905
21%

750
21%

9%
- 0 p.p.

31%
- 0 p.p.

2,732
22%

2,155
25%

27%
- 3 p.p.

Change in fair value - biological assets EBIT before adjusts EBIT after adjusts EBITDA
EBITDA Margin

124 144 203 252

26%

89 127 154 236

26%

16 87 (0) 199
27%

40% 13% 32% 7%

- 0 p.p.

695% 65% N/A 27%

-1 p.p.

301 403 506 730

27%

47 200 7 528
25%

541% 102% 6741% 38%

2 p.p.

Net Income before adjusts Net Income after adjusts Net Debt
Net Debt / EBITDA (LTM)

186 226 2,106

2.2 x

49 67 2,462
2.8 x

183 125 2,886

3.7 x

277% 235% -14%

-21%

2% 80% -27%
-41%

267 335 2,106

2.2 x

518 391 2,886

3.7 x

-49% -14% -27%

-41%

Capex
LTM - last twelve months N/A - Non applicable

109

93

61

17%

80%

248

212

17%

Note: Due to rounding, some figures in tables and graphs may be slightly imprecise.

3Q10 Highlights
Investor Relations:

Sales volume: record of 436 thousand tonnes; Net revenue: record of R$ 983 million; Financial investments: R$ 2.7 billion, 3.9x the amount of short-term debt; EBITDA: R$ 252 million, this year's highest quarterly result; Net debt/EBITDA ratio: 2.2x, versus 3.6x in December 2009 and 5.3x in March 2009; Book value per share: R$ 5.25 after adjustments. Prior to adjustments, book value per share was R$ 2.76.

Antonio Sergio Alfano Luiz Marciano Vinicius Campos Daniel Rosolen Lucia Reis

Conference Call: Friday, Nov. 12, 2010 9:00 a.m. (EST) Dial-in: 1-888-700-0802 Brazilian participants: (55 11) 4688-6331 Code: Klabin Replay: (55 11) 4688 6312 Code: 47720

9M10 Highlights
Sales volume: 1,299 thousand tonnes, up 17% from 9M09; Net revenue: R$ 2,732 million, growing 27% in relation to 9M09; EBITDA: R$ 730 million, up 38% from 9M09, for EBITDA margin of 27%; Net debt reduction of R$570 million from December 2009.

Visit our website www.klabin.com.br

Earnings Release 3Q10 November 11th, 2010

KLABIN reports IFRS financial statements

Klabins consolidated financial statements as of this quarter are reported pursuant to the International Financial Reporting Standards - IFRS. According to Mr. Antonio Sergio Alfano, Chief Financial and Investor Relations Officer, the adoption of the international accounting standards will open room for Brazils capital markets to be in line with a global trend of accounting standards consolidation, thus, increasing transparency, as well as the quality of information to shareholders and to the financial market in general. The main impacts of IFRS have been attributed to the cost of land (market value of land), the fair value of biological assets (market value of forests) and the change in estimated useful life of assets (machinery and equipment). The adoption of these criteria increased the asset value of the company for R$ 3.3 billion. As a result, the company's shareholders equity rose from R$ 2.5 billion to R$ 4.8 billion at September 30, 2010.

Reconciliation of net income

R$ million Net income before IFRS adjustments
(1) (2) (2) (3)

3Q10 186 124 (107) 42 (20) 226

2Q10 49 89 (112) 50 (9) 67

3Q09 183 16 (103) 30 125

9M10 267 301 (340) 142 (35) 335

9M09 518 47 (239) 65 391

Change in fair value of biological assets Depletion of biological assets / inventories at fair value Fixed assets useful life revaluation Diferred income and social contribution taxes Net income after IFRS adjustments

Notes:

(1) Recognized as revenue; (2) Recognized in COGS (3) Recognized in income and social contribution taxes expenses

Reconciliation of the shareholders equity

R$ million Shareholders' equity before IFRS adjustments Fair value of forests Deemed cost Deferred income tax on revaluation reserve Unrealized profit reserve Effect on net income of the period Shareholders' equity after IFRS adjustments Sep-10 2.531 1.292 1.117 (27) (164) 68 4.818

Fair value of biological assets: the Companys biological assets encompass the cultivation and planting of pine and eucalyptus forests in order to supply wood pulp for paper production, as well as the sale for sawmills. Previously classified under Property, plant and equipment, these assets were allocated to a specific group of non-current asset called biological assets, and now they are recognized by their fair value, instead of only being recognized at the historical cost according to previous accounting standard. The adoption of fair value of biological assets increased the value of forests in the Company from R$ 860 million, to R$ 2.5 billion in September'10. The net effects of the adoption are held in the Companys shareholders equity as unrealized profit reserve, and carrying them to retained earnings after their actual realization, to occur via depletion. The variation in the fair value of biological assets is mainly composed by the growth of planted areas and changes in the timber market price. In the 9M09, among the factors which resulted in a decrease of biological assets balance, we point out a 7% drop in the eucalyptus and pine prices on the market, besides a 5% reduction of planted areas. In 2010, prices recovered, showing a tendency of returning to the historical levels.

Earnings Release 3Q10 November 11th, 2010

Depletion of biological assets and inventories at fair value: likewise, the depletion of biological assets upon harvesting was calculated based on the fair value determined for the forests on that date. Deemed Cost: in the first-time adoption of the deemed cost, the Company decided to assign cost to certain classes of property. Thus, lands were valued at its market price. The market value of the lands of the Company was determined based on an evaluation report issued by a specialized company, and approved by the Board. The value of land increased from R$ 262 million to R$ 1,954 million in September, 2010. The net effect of the adoption is also maintained in the Companys shareholders equity. Revaluation of the machinery and equipments useful lives: the equipments now are depreciated based on their economic useful lives. By the end of 2009, the Company evaluated the useful life of its machinery and equipment, defining new depreciation rates applicable to 2010. Deferred income and social contribution taxes: it refers to the deferred income and social contribution taxes, calculated over the adjustments already mentioned.

Markets and Exchange Rate

Brazil's economy remained robust in the third quarter of this year, with packaging sales accompanying growth in the consumption of durable and non-durable goods. The strong demand favored the implementation of the price increases announced during the second quarter of this year. On the other hand, costs continued to rise, pressuring the Companys results. According to the Brazilian Pulp and Paper Association (Bracelpa), Brazilian shipments in 3Q10 of coated board, excluding liquid packaging board, remained strong at 158 thousand tonnes, for growth of 11% in relation to 3Q09 and 8% against 2Q10. August registered a new record for shipments of 55 thousand tonnes. In the first nine months of 2010, coated board sales totaled 444 thousand tonnes, up 23% from 9M09. However, in the first few months of last year Brazilian demand was still suffering from the impacts from the international crisis. In the year to September, Klabins share of the domestic board market, excluding liquid packaging board, stood at 26%. Brazilian demand for corrugated board, as measured by the volume of corrugated boxes and sheets shipped, remained at high levels in 3Q10. According to data from the Brazilian Corrugated Boxes Association (ABPO), Brazilian shipments totaled 647 thousand tonnes in the months of July, August and September of 2010, 9% higher than in the same period last year and stable in relation to 2Q10. In the first nine months of the year, the volume of corrugated board shipments totaled 1.9 million tonnes, 15% higher than in the same period of 2010. Brazils construction industry has been prioritizing the domestic market and is investing heavily in expanding its production capacity. Preliminary data from the National Cement Industry Trade Union (SNIC) and market estimates indicate that domestic cement sales totaled approximately 16 million tonnes in 3Q10. In the year to date this volume was approximately 44 million tonnes in the year, 15% more than in the same nine-month period of 2009. During this period the country's North presented growth of 66%, much higher than the national average. However, this region accounts for only 4% of Brazil's overall sales. In August, a new converter line acquired by Klabin launched operations at the unit located in Lages, Santa Catarina. This new equipment replaces two other lines that no longer exist at this unit. According to the U.S. Census Bureau, the number of housing starts in the United States totaled 610 thousand houses in the annualized September result. In August, this annualized indicator stood at 608 thousand homes, base on the revised data. The indicator increased by 4% and 13% in relation to September 2009 and June 2010, respectively. Klabin has been conducting its sale of logs for new market opportunities. Old corrugated containers prices in the quarter remained above R$ 500/t, making paper made from virgin fibers more competitive. In this scenario, the previously announced increases in kraftliner prices were fully implemented. According to FOEX, the list price of kraftliner brown 175 g/m in Europe surpassed US$ 700/t in September, for an increase of 18% from the average price in June this year. Due to the appreciation in the Brazilian real against the dollar, the same price increase in local currency terms was 12%.

Earnings Release 3Q10 November 11th, 2010

The foreign exchange rate (sell, end of period), which closed at R$1.80/US$ on June 30, 2010, depreciated by 6% in the quarter to reach R$ 1.69/US$ at the end of September 2010. In comparison with December 31, 2009 and September 30, 2009, the dollar depreciated by 3% and 5%, respectively. The average exchange rate in 3Q10 was R$ 1.75/US$, down 6% and 2% from 3Q09 and 3Q09, respectively. In the first nine months of the year, the average exchange rate was R$ 1.78/US$, for depreciation of 14% from 9M09.

3Q10 Average Rate End Rate 1.75 1.69

2Q10 1.79 1.80

4Q09 1.74 1.74

3Q09 1.87 1.78

3Q10/2Q10

3Q10/3Q09

3Q10/4Q09

9M10 1.78 1.69

9M09 2.08 1.78

9M10/9M09

-2% -6%

-6% -5%

1% -3%

-14% -5%

Operating, economic and financial performance

Sales volume
Sales volume in 3Q10 was 436 thousand tonnes, growing 8% and 1% from 3Q09 and 2Q10, respectively. In the first nine months of 2010, paper sales volume totaled 1,299 thousand tonnes, growing by 17% from the same period of 2009. Domestic sales volume, excluding wood, was 308 thousand tonnes in 3Q10, increasing by 17% and 2% from 3Q09 and 2Q10, respectively. In 9M10, domestic sales volume was 878 thousand tonnes, 25% higher than in 9M09. Domestic sales volume accounted for 68% of the total volume, in comparison with 63% in 2009. Export sales volume came to 128 thousand tonnes in 3Q10, down 9% and 1% from 3Q09 and 2Q10, respectively. From January to September of 2010, exports totaled 421 thousand tonnes, up 3% from 9M09. In 3Q10, coated board sales volume represented 39% of total sales, in comparison with 34% in 3Q09.

Sales volume (thousand tonnes) 1,299 1,109

32% 37%

Sales volume by product 9M10

Ind. Bags 8% Others 2%

Kraftliner 22%

Coated Boards 38%

436
29% 71%

430
30% 70%

402
35% 65%

68% 63%

3Q10

2Q10

3Q09

9M10

9M09

does not include wood

Corrugat. Boxes 30%

Domestic Market

Export Market

Earnings Release 3Q10 November 11th, 2010

Net revenue
Net revenue, including wood, totaled R$ 983 million in 3Q10, growing by 31% and 9% from 3Q09 and 2Q10, respectively. In 9M10, net revenue came to R$ 2,732 million, up 27% from 9M09. Domestic net revenue stood at R$ 779 million, growing by 31% and 9% from 3Q09 and 2Q10, respectively. In the first nine months of 2010, net revenue from domestic sales came to R$ 2,120 million, up 31% from the same period in 2009. Domestic revenue accounted for 78% of the total, up from 75% in 2009. Net revenue from exports totaled R$ 204 million in 3Q10, growing by 30% and 6% from 3Q09 and 2Q10, respectively. In 9M10, net revenue from exports totaled R$ 612 million, up 14% from 9M09.

Net Revenue (R$ million) 2.732

22%

Net Revenue by Product 9M10

Wood 7% Others 2%

2.155
25%
Ind bags 13%

Coated Boards 34%

983
79%

905
79%

750
79%

78% 75%
Kraftliner 13%

3Q10

2Q10

3Q09

9M10

9M09
includes wood

Domestic Market

Export Market

Corrugat. Boxes 31%

Export destinations
The weakening of the European market led to changes in the Companys export mix. The products sold to Europe in 2009 have been redirected to the domestic market and stronger markets that present higher demand. In 3Q10, exports to Latin America continued to gain share in the companys sales mix due to the region's robust economic growth. Similarly, the volume of exports to Asia has grown due to the higher sales of liquid packaging board to China, Singapore and Pakistan. In 9M10, the volume sold to Latin America accounted for 44% of total export volume, in comparison with 37% in 2009. Meanwhile, the share of Klabins exports to the European market decreased from 30% in 9M09 to 17% in 9M10. Today Asia is the companys second-largest market, accounting for 28% of sales volume in the year through September.

Earnings Release 3Q10 November 11th, 2010

Sales Volume - 9M10 421 thousand tonnes

North America 6% Africa 5%

Sales Volume - 9M09 409 thousand tonnes

Africa 7% Latin America 37%

North Americ a 7%

Europe 17%

Latin America 44%

Asia 19%

Asia 28% Europe 30%

Net Revenue - 9M10 R$ 612 million

North America 6% Afric a 5%

Net Revenue - 9M09 R$ 539 million

North America 7% Latin America 42% Africa 5%

Europe 16%

Asia 17%

Latin America 49%

Europe 22% Asia 31%

Operating Income
Cost of goods sold after adjustments totaled R$ 767 million in 3Q10, up 19% and 7% from the adjusted figures for 3Q09 and 2Q10, respectively. The increase in relation to the previous year reflects the higher sales volume and cost pressures. The increase in COGS in relation to 2Q10 is explained by the maintenance stoppage at the Otaclio Costa plant, the balance of the Monte Alegre stoppage, higher wood purchases, higher labor expenses and higher consumption of electricity, fuel oil, fibers and old corrugated container (o.c.c.).

In 9M10, COGS amounted to R$ 2,150 million, up 18% from the same period in 2009, due to the higher sales volume. In 9M10, unit COGS was 1% higher than in 9M09.
Unit cash cost in 9M10 was R$ 1,538/t, an increase of 3% from the same period the previous year. Selling expenses in the quarter were R$ 77 million, up 7% and 6% from 3Q09 and 2Q10, respectively. In 9M10, these expenses totaled R$ 223 million, down 3% from 9M09. Freight expenses were R$ 47 million, accounting for 60% of total selling expenses in 3Q10.

Earnings Release 3Q10 November 11th, 2010

General and administrative expenses totaled R$ 57 million in 3Q10, up 28% and 5% from 3Q09 and 2Q10, respectively. This increase in relation to 3Q09 is due to the expansion in the workforce and the provision for profit sharing. In 9M10, general and administrative expenses stood at R$ 158 million, 24% higher than in 9M09, due to the reasons already mentioned. Operating income before the financial result (EBIT) was R$ 203 million in the quarter, up 32% on 2Q10. In 9M10, EBIT totaled R$ 506 million, improving from the EBIT of R$ 8 million in 9M09, due to the reasons mentioned above.

Operating Cash Flow (EBITDA)

Operating cash flow (or EBITDA) was R$ 252 million in 3Q10, increasing by 27% and 7% in relation to 3Q09 and 2Q10, respectively. EBITDA margin stood at 26% in the quarter, in comparison with 27% in 3Q09 and 26% in 2Q10. In 9M10, EBITDA was R$ 730 million accompanied by EBITDA margin of 27%, which represents an increase of 38% from EBITDA of R$ 529 million in 9M09, with EBITDA margin of 25%.

EBITDA Composition - R$ million Operational result (after financial result) (+) Financial result (+) Depreciation (-) Biological assets adjust EBITDA EBITDA Margin
N / A - Not applicable

3Q10 347 (144) 173 (124) 252 26%

2Q10 109 45 171 (89) 236 26%

3Q09 174 (174) 215 (16) 199 27%

3Q10/2Q10 3Q10/3Q09

9M10 524 (18) 525 (301) 730 27%

9M09 527 (519) 568 (47) 529 25%

9M10/9M09

218% N/A 1% 39% 7% - 0 p.p.

99% -17% -20% 675% 27% -1 p.p.

-1% -97% -8% 540% 38% 2 p.p.

EBITDA, EBITDA margin and Net Revenue R$ million

1,000 900 905 800 700 600 500 400 300 722 750 683 805 844 983

50%

40%

25%

27% 22%

27%

29% 26% 26%

30%

20% 200 100 0 180 199 150 10% 219 242 236 252

1Q09

2Q09 EBITDA

3Q09

4Q09 Net Revenue

1Q10

2Q10

3Q10

EBITDA Margin

Debt
In the new accounting practices, the discount of receivables, previously recorded in current assets reducing the receivables account, was reclassified to the group of loans and financing due to their nature.

Earnings Release 3Q10 November 11th, 2010

Gross debt stood at R$ 4,837 million on September 30, 2010, compared with R$ 4,728 million on December 31, 2009, of which 59% (or US$ 1,675 million) was denominated in foreign currency (primarily export pre-payment facilities). The average debt term stood at 40 months, or 34 months for debt denominated in local currency and 44 months for debt denominated in foreign currency. At end-September, short-term debt accounted for 14% of total debt. On September 30, cash and cash equivalents totaled R$2,731 million, which exceeds the amortizations coming due in the next 40 months.
Net debt stood at R$ 2,106 million on September 30, 2010, a decrease of R$ 570 million from the end of 2009.

Debt (R$ million) Short term

Local currency Foreign currency

09/30/10 695
329 366 14% 7% 8% 86% 35% 51% 100% 41% 59%

06/30/10 690
321 369 14% 7% 8% 86% 33% 53% 100% 39% 61%

12/31/09 802
492 310 17% 10% 7% 83% 36% 47% 100% 46% 54%

Long term
Local currency Foreign currency

4,142
1,671 2,471

4,142
1,580 2,562

3,926
1,683 2,243

Gross debt
Local currency total Foreign currency total

4,837
2,000 2,837

4,832
1,901 2,931

4,728
2,175 2,553

Cash Net debt Net debt / EBITDA (LTM)

LTM - last twelve months

2,731 2,106 2.2 x

2,370 2,462 2.8 x

2,052 2,676 3.6 x

The net debt/EBITDA ratio fell from 3.6x in December 2009 to 2.2x in September 2010.
Net debt (R$ million)
7500 6500 4.4 5500 4500 3500 2500 1500 500 -500 Mar-09 Jun-09
Net Debt 3,786 3,192 2,886 2,676 2,528

5.3

6.0 5.5 5.0 4.5 4.0 3.5 2.2

2,462 2,106

3.7

3.6 3.1 2.8

3.0 2.5 2.0 1.5 1.0 0.5 0.0

Sep-09

Dec-09

Mar-10

Jun-10

Sep-10

Net Debt / EBITDA (LTM)

Net Income
Net income in 3Q10 was R$ 226 million, growing by 80% and 235% from 3Q09 and 2Q10, respectively. Net income in the first nine months came to R$ 335 million, compared with R$ 391 million in the same period of 2009.

Earnings Release 3Q10 November 11th, 2010

Business Performance
FORESTRY
Klabin handled 2.6 million tonnes of pine and eucalyptus logs, woodchips and waste for energy generation in 3Q10, up 24% and 5% from 3Q09 and 2Q10, respectively. Of this amount, 1.8 million tonnes were transferred to the plants in the states of Paran, Santa Catarina and So Paulo. The volume of log sales to sawmills and planer mills totaled 817 thousand tonnes in the quarter, up 59% from 3Q09 and down 4% from 2Q10. In 9M10, wood sales volume totaled 2,352 thousand tonnes, increasing by 74% from the same period last year.
Sales volume (thousand tonnes) 2,352 Net revenue (R$ milhes)

1,355 854 513 72 69 42 3Q10 2Q10 3Q09 9M10 9M09 3Q10 2Q10 3Q09

194

817

115

9M10 9M09

Net revenue from log sales to third parties in 3Q10 was R$ 72 million, up 72% and 3% from 3Q09 and 2Q10, respectively. In 9M10, this net revenue came to R$ 194 million, 69% higher than in the same period of 2009. The slow economic recovery in the United States and the country's weak macroeconomic fundamentals have led the U.S. homebuilding industry to operate at levels below its historical average. According to the U.S. Census Bureau, the seasonally adjusted annualized rate of privatelyowned housing starts in the United States stood at 610 thousand units in September, for growth of 4% and 13% in relation to September 2009 and June 2010, respectively.
Housing starts thousand units
1,297 1,151 1,053 1,025 868 658 528 540 587 559 617 602 589

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

Source: US Census Bureau

Quarter average

Housing starts

The company continued efforts to increase its wood sales, with better forestry management practices making higher yielding areas available for planting.

Earnings Release 3Q10 November 11th, 2010

At the close of September, own and third-party planted areas totaled 208 thousand hectares, of which 138 thousand were planted with pine and 70 thousand hectares with eucalyptus trees, in addition to 192 thousand hectares of permanent preservation and legal reserve areas.

PAPERS
Sales volume of coated board and paper for packaging totaled 256 thousand tonnes in 3Q10, up 5% and 3% from 3Q09 and 2Q10, respectively. In 9M10, this sales volume totaled 778 thousand tonnes, up 18% from 9M09. Net revenue from board and paper totaled R$ 452 million in 3Q10, up 32% and 10% from 3Q09 and 2Q10, respectively. In 9M10, this net revenue was R$ 1,284 million, up 30% from 9M09. Exports of these products totaled 119 thousand tonnes in 3Q10, down 9% and 1% from 3Q09 and 2Q10, respectively. In 9M10, these exports totaled 396 thousand tonnes, up 4% from 9M09. Exports accounted for 51% of the units total sales volume in 9M10, down from 58% of total sales volume in 9M09.

Kraftliner
Kraftliner sales volume was 85 thousand tonnes in 3Q10, down 22% from 3Q09 and stable in comparison with 2Q10. The lower sales volume in relation to 3Q09 was due to the higher volume of transfers to Klabins corrugated board plants. In 9M10, kraftliner sales volume was 279 thousand tonnes, 2% lower than in 9M09. Kraftliner sales to the export market stood at 41 thousand tonnes in 3Q10, down 52% from 3Q09 and up 3% from 2Q10. In 9M10, kraftliner sales volume in the export market came to 162 thousand tonnes, down 31% from 9M09. In 2010, kraftliner exports accounted for 58% of the units total sales volume, while in 2009 exports accounted for 83% of sales volume. Kraftliner net revenue was R$ 122 million in 3Q10, up 27% and 17% from 3Q09 and 2Q10, respectively. In 9M10, net revenue was R$ 342 million, up 23% from 9M09.

Sales volume (thousand tonnes)

Net revenue (R$ million)

279

284

342 279

58%

85
48%

85
47%

108
78%

83%

122

104

96

3Q10

2Q10

3Q09

9M10

9M09

3Q10

2Q10

3Q09

9M10 9M09

Domestic market

Export market

Kraftliner net revenue in the quarter confirms that the price increases announced in 2Q10 were effectively implemented. According to FOEX, the average list price of kraftliner brown of 175g/m in euros in 3Q10 increased by 11% in relation to the previous quarter. The chart below shows the evolution in kraftliner prices in both euros and reais.

10

10

Earnings Release 3Q10 November 11th, 2010

Kraftliner Brown 175 g/m list price (/tonne and R$/tonne)

1,459 1,302 1,217

1,393

1,356

1,344

1,392 1,162 1,029 1,038 1,079 1,089 1,207

529

524

516

501 487

486 462 411

2Q09

385

404

433

478

533

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

3Q09

4Q09

1Q10

2Q10

3Q10

Source: FOEX and BAC EN

Quarter average

Kraftliner ( / tonne)

Kraftliner (R$ / tonne)

The domestic market remains pressured from high scrap costs, whose average price surpassed R$ 500/t in 3Q10. According to Bracelpa, the current level of scrap prices represents an increase of 102% from the same quarter last year.

547 495 401

Brazilian OCC delivered price R$ / tonne

518 383 465

355 317 346 255 240 216 256

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

Source: Bracelpa

Quarter average

Monthly volume

Coated Boards
The volume of coated boards sales in 3Q10, including liquid packaging boards, was 171 thousand tonnes, growing by 27% and 4% in relation to 3Q09 and 2Q10, respectively. In 9M10, this sales volume totaled 499 thousand tonnes, up 34% from 9M09. Coated boards net revenue stood at R$ 331 million in 3Q10, up 33% and 8% from 3Q09 and 2Q10, respectively. In 9M10, net revenue was R$ 941 million, up 32% from 9M09. Coated boards exports totaled 78 thousand tonnes in 3Q10, 68% higher than in 3Q09 and 2% lower than in 2Q10. In 9M10, these exports reached 234 thousand tonnes, up 59% from 9M09.

11

11

Earnings Release 3Q10 November 11th, 2010

Sales volume (thousand tonnes) 499

Net revenue (R$ million) 941 710.9 373

40%

47%

711

171
46% 54%

165
49% 51%

135
35% 65%

53% 60%

331

307

248

3Q10

2Q10

3Q09

9M10

9M09

3Q10

2Q10

3Q09

9M10 9M09

Domestic market

Export market

According to Bracelpa, domestic sales volume of coated board (excluding liquid packaging board) stood at 158 thousand tonnes in 3Q10, up 11% and 8% from 3Q09 and 2Q10, respectively. In 9M10, domestic sales volume totaled 444 thousand tonnes, up 23% from 9M09. Klabins share of the domestic coated board market reached 26% in 9M10.

CONVERSION
Sales volume from manufactured products totaled 170 thousand tonnes in 3Q10, up 12% from 3Q09 and down 1% from 2Q10. In 9M10, this sales volume totaled 493 thousand tonnes, 15% more than in 9M09. Net revenue from manufactured products totaled R$ 442 million in 3Q10, up 25% and 8% from 3Q09 and 2Q10, respectively. In 9M10, this net revenue was R$ 1,209 million, 20% higher than in 9M09.

Corrugated Board
Shipments of corrugated boxes and sheets totaled 132 thousand tonnes in 3Q10, up 13% from 3Q09 and down 2% from 2Q10. In 9M10, this sales volume reached 386 thousand tonnes, up 16% from 9M09.

Sales volume (thousand tonnes)

Net revenue (R$ million) 853 690

386 333

314 132 135 117

290

241

3Q10

2Q10

3Q09

9M10 9M09

3Q10

2Q10

3Q09

9M10 9M09

12

12

Earnings Release 3Q10 November 11th, 2010

Net revenue totaled R$ 314 million in 3Q10, up 30% and 8% from 3Q09 and 2Q10, respectively. In 9M10, net revenue came to R$ 853 million, up 24% from 9M09. According to the Brazilian Corrugated Cardboard Association (ABPO), corrugated box and board shipments in 3Q10 totaled 646 thousand tonnes, up 9% from 3Q09. In 9M10, shipments stood at 1,902 thousand tonnes, up 16% from 9M09.

CAGR 4%
1,902 1,520 1,607 1,618 1,695 1,723 1,646

9M04 Source: ABPO

9M05

9M06

9M07

9M08

9M09

9M10

Industrial Bags
Sales volume of industrial bags at the plants in Brazil and Argentina totaled 38 thousand tonnes in 3Q10, up 12% and 4% from 3Q09 and 2Q10, respectively. In 9M10, sales volume of industrial bags totaled 108 thousand tonnes, up 13% from the same period last year. Net revenue from industrial bag sales was R$ 128 million in 3Q10, up 15% and 8% from 3Q09 and 2Q10, respectively. In 9M10, net revenue totaled R$ 356 million, up 11% from 9M09.

Sales volume (thousand tonnes)

Net revenue (R$ milhes) 356 321

108

95

128

119

111

38 3Q10

36 2Q10

34 3Q09 9M10 9M09 3Q10 2Q10 3Q09 9M10 9M09

According to data from the National Cement Industry Union (SNIC), cement consumption in the domestic market totaled 43.7 million tonnes in 9M10, for growth of 15% in comparison to 9M09.

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Earnings Release 3Q10 November 11th, 2010

Brazilian cement consumption million tonnes

5.3 4.7 4.0 4.0 4.2 3.9 4.3 3.9 4.1 4.6 4.4 4.5 4.7

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

Quarter average
Source: Nation Labor Union of C ement Industry

Monthly consumption

Capital Markets
September 30 , 2010 Preferred shares Share price (KLBN4) Book value Average daily trading volume 3Q10 Market capitalization 600.9 million R$ 4.70 R$ 5.25 R$ 11.3 million R$ 4.2 billion
th

In 3Q10, Klabins preferred stock (KLBN4) registered a nominal loss of 6%, while the Bovespa Index (Ibovespa) increased 14%. The company's stock was traded in all sessions on the Securities, Commodities and Futures Exchange (BM&FBovespa), registering 136,300 transactions that involved 146.5 million shares in the quarter, for average daily trading volume of R$ 11.3 million.

18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0

Average Daily Volume (R$ thousand/day)

The following chart shows the performance of Klabins preferred stock and the Bovespa Index:

Ja n0 9 Fe b0 9 M ar 09 Ap r0 9 M ay 09 Ju n0 9 Ju l0 9 Au g0 9 Se p0 9 O ct 09 N ov 09 D ec 09 Ja n1 0 Fe b1 0 M ar 10 Ap r1 0 M ay 10 Ju n1 0 Ju l1 0 Au g1 0 Se p1 0

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Earnings Release 3Q10 November 11th, 2010

115%

105% 101 95% 89 85%

75% Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Klabin Ibovespa Index

Klabin stock also trades in the U.S. market through Level I ADRs, which are listed on the over-thecounter market under the ticker KLBAY. Klabins capital is represented by 917.7 million shares, composed of 316.8 million common shares and 600.9 million preferred shares. On September 30, 2010, the Company held 16.9 million preferred shares in treasury.

Repurchase of shares
At an extraordinary meeting held on October 13, 2010, the Board of Directors approved the repurchase of up to 45,278,818 preferred shares issued by the Company (corresponding to 10% of the shares of that class at the market on the date in question) for a period of 365 days, to be held in treasury for subsequent sale or cancellation, without capital reduction. Until the day November 9, 2010 the Company purchased of 8,108,900 preferred shares at an average price of R$ 4.74 per share totaling R$ 38.4 million. Until that date the Company held 25,016,800 preferred and own shares as treasury

Capex
The main investments made in 3Q10 and 9M10 are listed below:

R$ million Forestry Papers Conversion Others Total

3Q10 30 68 11 109

2Q10 27 49 17 93

9M10 84 129 34 1 248

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Earnings Release 3Q10 November 11th, 2010

Strategy
The companys strategic plan is periodically revised to accompany the evolution in the markets. Currently, investments are being directed primarily to reduce costs and gain productivity. The main investments currently being made are described below:

Conversion
Corrugated Boxes
1. Acquisition of 4 Flexo Folder Gluer printers from WardMarquip (USA) with the capacity to print in four colors on corrugated board. Two printers are already functional in Jundia - Distrito Industrial, So Paulo. The other printers will be installed in Feira de Santana, Bahia and Itaja, Santa Catarina. These new printers will increase the Companys productivity; 2. Refurbishment of the corrugators installed at Jundia TP, So Paulo and Goiana, Pernambuco, with an increase in the maximum operational speed from 300 meters per minute to 400 meters per minute The equipment at Betim, Minas Gerais will have its maximum operational speed increased from 240 meters per minute to 300 meters per minute. Investment in these acquisitions and refurbishments totaled R$ 42 million, including the material handling lines, unitization equipment and cargo palletization.

New investments for the Division were approved in October:

1. The acquisition of a high-performance corrugator for the Jundia Distrito Industrial, So Paulo unit, with operational speed of 400 meters per minute and startup expected in 2012;

2. Transfer of a corrugator to the Goiana, Pernambuco unit, with operational speed of 240 meters per minute and startup expected in 2012; 3. Acquisition of a new printer for the Goiana, Pernambuco unit, with startup expected in 2012; The investment in these acquisitions totaled approximately R$ 100 million.

Industrial Bags
1. In 4Q10, a complete line of multi-layered bags was acquired and will be installed in the Lages, Santa Catarina plant, with startup expected in the first half of 2011; The new line should increase industrial bags productivity by 10%.

Papers
Monte Alegre
1. The acquisition, for R$ 60 million, of a new high-voltage transmission line for the unit in Monte Alegre, Paran. Investments include a step-down substation from 230 kV to 69 kV, as well as a 35 km transmission line. Operational startup is expected in the second half of 2011; Debottlenecking of the evaporation area for estimated investment of R$ 22 million and installation expected within 9 months; Adjustments in the collection of noncondensable gases, with investment estimated at R$ 24 million; Replacement of the lime cooler in Kiln II, for investment of R$ 8.5 million;

2. 3. 4.

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Earnings Release 3Q10 November 11th, 2010

5.

Replacement of the peeler on Line 1, for estimated investment of R$ 8 million.

Otaclio Costa
1. Investment in the biomass boiler of R$ 35 million, with startup expected in 2011; 2. Refurbishment of the evaporation line, for investment of R$35 million.

Correia Pinto
1. Acquisition of a new biomass boiler for installation within 18 months; 2. Refurbishment of the recovery boiler for investment of R$ 12 million;

Forestry
1. Planting of 20 thousand hectares and forestry maintenance, for investment of R$ 120 million. Increase in the pace of forest planting to assure the supply of raw materials to the new pulp plant; Collection modules, machinery and equipment for investment of R$ 8 million;

2.

The long-term strategic objectives are still in the planning phase and envisage:
1. Construction of a global-scale pulp plant with capacity between 1.3 and 1.5 million t/year, expanding Klabin's pulp production capacity to 3.2 million t/year; 2. Installation of a new coated board machine with capacity of between 400 thousand and 500 thousand t/year, boosting coated board capacity to 1.2 million t/year and paper and paper packaging capacity to 2.4 million t/year.

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Earnings Release 3Q10 November 11th, 2010

Conference Call
Friday, November 12, 2010 at 11:00 a.m. (Brazil). Code: Klabin Dial-in: +55 (11) 4688-6331 Replay: +55 (11) 46886312 Code: 47718

Conference Call
Friday, November 12, 2010 at 9:00 a.m. (EST) / 12:00 p.m. (Brazil) Code: Klabin Dial-in: U.S. participants: 1-888-700-0802 International participants: 1-786-924-6977 Brazilian participants: (55 11) 4688-6331 Replay: (55 11) 46886312 Code: 47720

Webcast
An audio webcast of the conference call will also be available on the internet. Access: www.ccall.com.br/klabin

With gross revenue of R$ 3.6 billion in 2009, Klabin is the largest integrated manufacturer of packaging paper in Brazil, with annual production capacity of 1.9 million metric tons. Klabin has adopted a strategic focus on the following businesses: paper and coated boards for packaging, corrugated boxes, industrial bags and wood. Klabin is the leader in all its market segments.
The statements made in this earnings release concerning the Company's business prospects, projected operating and financial results and potential growth are merely projections and were based on Managements expectations of the Companys future. These expectations are highly susceptible to changes in the market, in the state of the Brazilian economy, in the industry and in international markets, and therefore are subject to change.

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Earnings Release 3Q10 November 11th, 2010

Appendix 1 Consolidated Income Statement IFRS (thousands of R$)

3Q10 Gross Revenue Net Revenue Change in fair value - biological assets Cost of Products Sold Gross Profit Selling Expenses General & Administrative Expenses Other Revenues (Expenses) Total Operating Expenses Operating Income (before Fin. Results) Financial Expenses Financial Revenues Net Foreign Exchange Losses Net Financial Revenues Net Income before Taxes Income Tax and Soc. Contrib. Minority Interest Net Income Depreciation/Amortization/Exhaustion Change in fair value - biological assets EBITDA 1,187,347 982,593 124,461 (767,347) 339,707 (77,427) (57,494) (1,490) (136,411) 203,296 (73,666) 66,203 151,385 143,922 347,218 (115,664) (5,848) 225,706 173,271 124,461 252,106 2Q10 1,096,044 905,399 89,029 (716,770) 277,658 (72,726) (54,906) 4,260 (123,372) 154,286 (76,170) 58,764 (28,319) (45,725) 108,561 (37,095) (4,121) 67,345 170,933 89,029 236,190 3Q09 914,140 750,372 15,655 (643,464) 122,563 (72,313) (44,743) (5,915) (122,971) (408) (68,033) 42,196 199,788 173,951 173,543 (47,593) (822) 125,128 215,138 15,655 199,075 9M10 3,305,865 2,732,377 301,013 (2,149,524) 883,866 (222,718) (158,334) 3,235 (377,817) 506,049 (231,591) 167,416 81,786 17,611 523,660 (175,767) (13,259) 334,634 525,337 301,013 730,373 9M09 2,610,043 2,154,841 46,963 (1,818,500) 383,304 (229,565) (128,183) (17,928) (375,676) 7,628 (220,376) 128,878 611,009 519,511 527,139 (133,848) (2,021) 391,270 567,932 46,963 528,597 25.7% 26.1% 26.5% 78.1% 34.6% 7.9% 5.9% 0.2% 13.9% 20.7% 7.5% 6.7% 15.4% 14.6% 35.3% 11.8% 0.6% 23.0% 17.6% 79.2% 30.7% 8.0% 6.1% 0.5% 13.6% 17.0% 8.4% 6.5% 3.1% 5.1% 12.0% 4.1% 0.5% 7.4% 18.9% 85.8% 16.3% 9.6% 6.0% 0.8% 16.4% 0.1% 9.1% 5.6% 26.6% 23.2% 23.1% 6.3% 0.1% 16.7% 28.7% 100.0% 100.0% 100.0% % of Net Revenue 3Q10 2Q10 3Q09

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Earnings Release 3Q10 November 11th, 2010

Appendix 2 Consolidated Balance Sheet IFRS (thousands of R$)

Assets Current Assets Cash and banks Short-term investments Securities Receivables Inventories Recoverble taxes and contributions Other receivables set-10 4,204,334 9,303 2,528,732 193,262 784,806 455,569 189,376 43,286 dez-09 3,536,197 12,356 1,829,296 209,874 661,128 470,615 294,268 58,660 Liabilities and StockholdersEquity Current Liabilities Loans and financing Suppliers Income tax and social contribution Taxes payable Salaries and payroll charges Dividends to pay Proviso REFIS Other accounts payable Noncurrent Liabilities Loans and financing Imp Renda e C.social diferidos Noncurrent Assets Deferred income tax and soc. Contrib. Taxes to compensate Judicial Deposits Other receivables Other investments Property, plant & equipment, net Biological assets Intangible assets 8,002,132 127,533 128,334 90,192 123,938 11,552 4,963,481 2,499,281 57,821 8,015,236 149,533 164,673 81,932 113,120 11,552 4,966,089 2,473,239 55,098 StockholdersEquity Capital Capital reserves Revaluation reserve Profit reserve Valuation adjustments to shareholders'equity Treasury stock Minority Interests Total 12,206,466 11,551,433 Total 4,817,691 1,500,000 84,491 51,583 2,159,189 1,102,238 (79,810) 147,011 12,206,466 4,662,158 1,500,000 84,491 52,117 2,001,023 1,104,337 (79,810) 56,665 11,551,433 Other accounts payable set-10 1,665,248 694,845 267,873 79,423 52,339 94,227 70,001 344,846 61,694 5,576,516 4,142,409 1,272,749 161,358 dez-09 1,504,619 802,312 189,696 1,622 50,399 68,859 0 331,685 60,046 5,327,991 3,925,637 1,197,047 205,307

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Earnings Release 3Q10 November 11th, 2010

Appendix 3 Loan Maturity Schedule September 30th, 2010

R$ Million BNDES Others Local Currency Trade Finance Fixed Assets Others Foreign Currency Gross Debt 4Q10 82 4 86 57 1 106 164 249
Average Cost 9.9% p.y. 3.7 % p.y.

1Q11 76 0 76 23 0 28 51 128

2Q11 76 8 84 73 0 73 158

3Q11 82 0 82 55 1 22 78 160

4Q11 232 8 240 101 1 102 342

2012 313 17 330 407 5 44 456 786

2013 288 18 306 468 5 66 538 844

2014 281 21 302 343 3 64 410 712

2015 315 31 346 267 3 64 334 680

2016 54 25 79 104 2 123 230 308

After 2017

Total 1,840 159 2,000 2,162 30 645 2,838 4,837

42 26 68 266 8 128 402 470

Local Currency Foreign Currency Gross Debt

Average Tenor 34 months 44 months 40 months

Short term = 14%

R$ Million 844 786 712 680 Foreign Currency 2,838

456

538 410 334

470 308
402 230

342 249
164 86
4Q10

Gross Debt 4,837

Local Currency 2,000

102

128
51 76
1Q11

158
73 84
2Q11

160
78 82
3Q11 4Q11

240

330

306

302

346

79
2012 2013 2014 2015 2016

68
After 2017

Local Currency

Foreign Currency

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Earnings Release 3Q10 November 11th, 2010

Appendix 4 Consolidated Cash Flow IFRS (thousands of R$)

3Q10
Cash flow from operating activities Operating activities . Net income . Depreciation and amortization . Depletion in biological assets . Change in fair value - biolgical assets . Equity results . Deferred income taxes and social contribution . Interest and exchange variation on loans and financing . Interest Payment . Minority interest . Others Variations in Assets and Liabilities . Receivables . Inventories . Recoverable taxes . Marketable Securities . Prepaid expenses . Other receivables . Suppliers . Taxes and payable . Income and social contribution . Salaries, vacation and payroll charges . Other payables Net Cash Investing Activities . Purchase of property, plant and equipment . Purchase of biological assets . Increase in intangible . Sale of property, plant and equipment Net Cash Financing Activities . New loans and financing . Amortization of financing . Payment of capital at subsidiaries by minority shareholders . Acquisition of minority shares in subsidiaries . Dividends Paid Increase (Decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 188,043 300,524 (118,389) 58,510 (1,864) (50,738) 356,236 2,181,799 2,538,035 273,058 189,112 225,706 57,736 113,901 (124,460) 2,680 80,879 (112,816) (64,608) 5,848 4,246 83,946 (42,310) (17,065) 40,356 (4,929) 9,120 (10,933) 18,257 1,248 57,595 21,601 11,006 (104,865) (74,592) (30,273)

9M10
724,446 549,687 334,634 165,359 359,980 (301,012) 2,815 97,828 92,633 (219,881) 13,259 4,072 174,759 (137,413) (15,046) 141,231 16,612 7,772 (8,930) 79,186 1,940 97,696 25,368 (33,657) (247,725) (169,296) (76,049) (3,013) 633 219,662 759,162 (509,585) 80,261 (2,436) (107,740) 696,383 1,841,652 2,538,035

3Q09
183,396 125,111 125,128 104,321 109,183 (15,655) (1,182) 44,959 (162,092) (67,603) 822 (12,770) 58,285 9,677 (5,645) 35,470 (7,293) (7,394) 6,390 26,557 (1,224) 161 6,989 (5,403) (77,034) (60,500) (16,112) (2,617) 2,195 78,146 198,940 (80,731) 6,744

9M09
481,795 298,550 391,270 312,504 253,794 (46,963) (6,956) 126,147 (515,330) (226,908) 2,021 8,971 183,245 48,593 (6,237) 65,304 67,785 16,248 27,703 (35,971) 4,923 1,442 6,659 (13,204) (204,038) (131,967) (81,006) (2,617) 11,552 (27,212) 268,624 (223,753) 7,793 (265)

(46,807) 184,508 1,361,214 1,545,722

(79,611) 250,545 1,295,177 1,545,722

22