Earnings Release 4Q10

EBITDA of R$ 231 million in 4Q10 and R$ 962 million in 2010, up 29% over 2009
Klabins consolidated financial statements are presented in accordance with International Financial Reporting Standards (IFRS), as determined by CVM Instructions 457/07 and 485/10. Data for prior periods were adjusted for comparison purposes.
R$ million Sales volume - 1,000 t
% Domestic Market

4Q10 417
68%

3Q10 436
71%

4Q09 435
66%

4Q10/3Q10

4Q10/4Q09

2010 1,716
68%

2009 1,544
64%

2010/2009

-4%
-3 p.p.

-4%
2 p.p.

11%
4 p.p.

Net revenue
% Domestic Market

931
78%

983
79%

805
78%

-5%
-1 p.p.

16%
0 p.p.

3,663
78%

2,960
76%

24%
2 p.p.

EBIT before IFRS adjusts EBIT after IFRS adjusts EBITDA

EBITDA Margin

118 315 231

25%

144 203 252

26%

109 53 219
27%

-18% 55% -8%

-1 p.p.

8% 496% 6%
-2 p.p.

521 821 962

26%

309 60 747
25%

69% N/A 29%

1 p.p.

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

95 225 2,128
2.2 x

186 226 2,106

2.2 x

(185) (223) 2,676

3.6 x

-49% 0% 1%
0%

N/A N/A -20%

-39%

361 560 2,128

2.2 x

333 169 2,676

3.6 x

9% 232% -20%
-39%

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

138

109

35

26%

295%

386

247

56%

Note: Due to rounding, some figures in tables and graphs may not result in a precise sum.

4Q10 Highlights
Net revenue of R$ 931 million in the quarter, 16% higher than in 4Q09; Net Income of R$ 225 million, versus a R$ 223 million net loss in 4Q09; In December, Standard & Poors upgraded Klabins rating on the global scale from BB to BB+.

Investor Relations: Antonio Sergio Alfano Luiz Marciano Vinicius Campos Daniel Rosolen Lucia Reis

2010 Highlights
Sales volume of 1.7 million tonnes, led by the domestic market, where sales volume grew 17% over 2009; Wood sales volume reached 3.1 million tons, up 65% on 2009; Short-term operating working capital declined R$ 231 million in relation to December 2009; Net debt decreased R$ 548 million. Net debt/EBITDA ratio fell from 3.6x in December 2009 to 2.2x in December 2010; EBITDA margin in 2010 of 26%, up from 25% in 2009. Net income of R$ 560 million in 2010.
Visit our website www.klabin.com.br Conference Call: Friday, Feb. 25th, 2011 9:00 a.m. (EST) Dial-in: 1(888) 700-0802 Code: Klabin Replay: (11) 46886312 Code: 5236425

4Q10 Results February 24th, 2011

Markets and Exchange Rate

The strong growth in Klabin's sales volume and net sales revenue in relation to 2009 reflected the brisk growth in domestic demand, which was driven by the government's income-transfer policies, the growth in formal employment, the hike in the minimum wage, the higher income levels and the ample supply of credit. The recovery in the domestic economy and the appreciation in the Brazilian real versus the U.S. dollar generated an opportunity for Klabin to channel a portion of its volumes previously destined for the export market to meet the demand in the local market. Brazilian exports of packaging paper also benefited from the economic recovery in certain regions and from the supply restrictions faced by international producers in the first half of the year, which are explained by the capacity shutdowns, strikes and natural phenomena that hindered world supply (earthquake in Chile, freezing of the Baltic Sea and the rigorous winter in the Northern Hemisphere). In 2010, the waning of the crisis also boosted demand for old corrugated container (O.C.C.) and recycled paper. This scenario led to hikes in kraftliner prices in all markets. In Europe, according to FOEX, the list price of kraftliner brown 175 g/m reached approximately 600/t in December, for an increase of 46% from the price in the same month of 2009. In the year, the average international kraftliner price was 509/t, 23% higher than the average in 2009. Brazilian demand for corrugated boxes, as measured by the volume of boxes and sheets shipped, reached record levels in 2010. According to data from the Brazilian Corrugated Board Association (ABPO), Brazilian shipments reached 2.5 million tonnes in the period from January to December, up 12% on 2009. In the year, there was also a recovery in the meat packaging segment, which helped fuel growth in shipments to the domestic market. To efficiently meet this stronger demand, Klabin invested in its conversion area and maintained market share of 20% in this segment. According to the Brazilian Association of Pulp and Paper Producers (Bracelpa), in 2010, Brazilian shipments of coated board, excluding liquid packaging board, reached a record 576 thousand tonnes, for growth of 14% on 2009. Klabins share of coated board sales in the domestic market reached 27%, in comparison with 25% in 2009. Brazils cement industry, which is the main consumer of Klabins industrial bags, has been prioritizing the domestic market and investing heavily in expanding its production capacity. Preliminary data from the National Cement Industry Trade Union (SNIC) indicate that domestic cement sales reached 59 million tons in 2010, up from 52 million tons in 2009. The North posted the country's strongest growth rate, of 58%, however, this region corresponds to only 6% of Brazil's consumption. The company's conversion unit acquired a new production line at the Lages 1 Unit in the state of Santa Catarina, which expanded capacity, provided greater flexibility and increased quality and safety in the production process. The foreign exchange rate (sell, end of period), which closed at R$ 1.74/US$ on December 31, 2009, fell by 4% in the year to reach R$ 1.67/US$ at the end of December 2010. In comparison with September 30, 2010, the dollar depreciated by 2%. The average foreign exchange rate was R$ 1.70/US$ in 4Q10, down 3% and 2% from 4Q09 and 3Q10, respectively. In the year, the average foreign exchange rate was R$ 1.76/US$, depreciating by 12% from 2009.

4Q10 Average Rate End Rate 1.70 1.67

3Q10 1.75 1.69

4Q09 1.74 1.74

4Q10/3Q10

4Q10/4Q09

2010 1.76 1.67

2009 1.99 1.74

2010/2009

-3% -2%

-2% -4%

-12% -4%

4Q10 Results February 24th, 2011

Operating and financial performance

Sales volume
In 4Q10, sales volume, excluding wood, totaled 417 thousand tonnes, down 4% in relation to 4Q09, reflecting lower kraftliner sales, and 4% lower than in 3Q10, due to the seasonal impacts. In the domestic market, sales volume was 283 thousand tonnes, contracting 2% and 8% from 4Q09 and 3Q10, respectively, due to the lower volume of kraftliner sales. Export sales volume came to 133 thousand tonnes in the quarter, 9% lower than in 4Q09 and 4% higher than in 3Q10. In the year, sales volume was 1,716 thousand tonnes, for growth of 11% from 2009, with domestic sales volume 17% higher and export sales remaining stable.

Sales volume (thousand tonnes)

Sales volume by product 2010

Ind. Bags 8% Others 2%

1,716 1,544
32% 36%
Kraftliner 22%

Coated Boards 38%

417
32% 68%

436
29% 71%

435
34% 66%

68% 64%
Corrugat. Boxes 30%

does not include wood

4Q10 3Q10 4Q09 Domestic Market

2010 2009 Export Market

Net revenue
Net revenue in 4Q10, including wood, totaled R$ 931 million, 16% higher than in 4Q09, reflecting the higher prices, and 5% lower than in 3Q10, explained by the lower sales volume. Net revenue in the domestic market was R$ 730 million, 16% higher than in 4Q09 and 6% lower than in 3Q10. Export revenue in 4Q10 was R$ 201 million, up 16% on 4Q09 and down 2% on 3Q10. In 2010, net sales reached R$ 3,663 million, 24% more than in 2009, explained by the higher sales volume and the recovery in international prices. Net revenue in the domestic market was R$ 2,850 million, up 27% on the previous year. In exports, revenue totaled R$ 813 million, 14% higher than in 2009.

4Q10 Results February 24th, 2011

Net Revenue (R$ million) 3,663

22%

Net Revenue by Product 2010

Wood 7% Others 2%

2,960
24%
Ind bags 13%

Coated Boards 34%

78%

931
78%

983
79%

805
78%

76%
Kraftliner 13%

4Q10

3Q10

4Q09

2010

2009
inc ludes wood
Corrugat. Boxes 31%

Domestic Market

Export Market

Exports The economic recovery in certain regions in 2010, combined with the limited supply due to capacity closures during the international crisis, led to increases in international prices for coated board and kraftliner. On the other hand, the depreciation in the average foreign exchange rate of 12% in relation to 2009 weakened the gains in Brazilian real from paper exports. Klabin took advantage of the stronger local market to concentrate more volumes in Brazil and opted to distribute exports to nearer regions, for which freight costs are lower. Sales to Latin America remained strong and increased their share in the export mix, going from 38% of export sales in 2009 to 45% in 2010. Sales of coated board and industrial bags boosted the share of this region. Export volume to Asia reached 27% of total exports in 2010, up from 22% in 2009, due to the higher sales volumes to Tetra Pak in China, Singapore and Pakistan.

Sales Volume - 2010 554 thousand tonnes

Africa North 6% America 5% Europe 15%

Net Revenue - 2010 R$ 813 million

North America 6% Africa 5%

Europe 17%

Latin America 45%

Latin America 44%

Asia 27%

Asia 30%

4Q10 Results February 24th, 2011

Operational Costs and Expenses

Cost of goods sold was R$ 592 million in 4Q10 and R$ 2,741 million in the year. Excluding the effects of biological assets, cost of goods sold in 4Q10 was R$ 670 million and R$ 2,621 million in the year. Selling expenses were R$ 77 million in 4Q10, up 10% from 4Q09 and stable in relation to 3Q10. Freight costs in 4Q10 were R$ 45 million, up 8% on 4Q09 and 3% lower than 3Q10. In the year, selling expenses came to R$ 300 million, stable in relation to the previous year. General and administrative expenses totaled R$ 57 million in 4Q10, up 16% from 4Q09 and down 2% from 3Q10. In the year, selling expenses reached R$ 215 million, increasing 21% on the previous year. The increase was mainly due to the collective payment agreement and the profit sharing program. Cash cost was R$ 1,575 / t in the year, up 10% over 2009, reflecting the change in the products mix, collective bargaining agreement, the higher O.C.C. and fiber prices and the higher consumption of fuel oil. Operating income before the financial result (EBIT) was R$ 315 million in 4Q10, increasing by 496% from 4Q09 and 55% from 3Q10. In 2010, EBIT was R$ 821 million.

Operating cash generation (EBITDA)

Operating cash generation (EBITDA) was R$ 231 million in 4Q10, increasing by 6% from 4Q09 and decreasing by 8% from 3Q10. EBITDA margin was 25%, compressing by 2 p.p. and 1 p.p. from 4Q09 and 3Q10, respectively. In the year, EBITDA was R$ 962 million, 29% higher than in 2009, for EBITDA margin of 26%.

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

4Q10 348 (33) 64 (148) 231 25%

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

4Q09 (23) 75 184 (18) 218 27%

4Q10/3Q10 4Q10/4Q09

2010 872 (50) 589 (449) 962 26%

2009 505 (444) 751 (65) 747 25%

2010/2009

0% -77% -63% 19% -8% -1 p.p.

N/A N/A -65% 722% 6% -2 p.p.

73% -89% -22% 591% 29% 1 p.p.

Indebtedness and financial investments

Gross debt stood at R$ 4,857 million on December 31, 2010. Of the total debt, R$ 2,855 million (59%) was denominated in foreign currency, equivalent to US$ 1,714 million, consisting mostly of trade finance. The average debt term stood at 41 months, or 34 months for debt denominated in local currency and 47 months for debt denominated in foreign currency. At the end of December, short-term debt accounted for 17% of total debt. The average borrowing cost is 8.4% p.a. in local currency and 3.8% p.a. in foreign currency. At the close of December, financial investments totaled R$ 2,729 million, representing an increase of R$ 677 million on December 2009 and corresponding to 3.2x the volume of short-term gross debt. Net debt stood at R$ 2,128 million on December 31, 2010, in comparison with R$ 2,676 million a year earlier, for a reduction of R$ 548 million. The net debt/EBITDA ratio, which stood at 3.6x at the end of 2009, ended 2010 at 2.2x.

4Q10 Results February 24th, 2011

Debt (R$ million) Short term

Local currency Foreign currency

12/31/10 842
496 346 17% 10% 7% 83% 31% 52% 100% 41% 59%

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

Long term
Local currency Foreign currency

4,015
1,506 2,509

3,926
1,683 2,243

Gross debt
Local currency total Foreign currency total

4,857
2,002 2,855

4,728
2,175 2,553

(-) Cash Net debt Net debt / EBITDA

2,729 2,128 2.2 x

2,052 2,676 3.6 x

Net Income
Net income after IFRS adjustments was R$ 225 million in 4Q10, which compares with a net loss of R$ 223 million in 4Q09 and net income of R$ 226 million in 3Q10. In 2010, net income was R$ 560 million, versus net income of R$ 169 million in 2009.
R$ million Net income before IFRS adjustments
Change in fair value - biological assets Biological asset depletion and property revaluation Reversion in property costs Deferred income taxes and social contribution effects

4Q10 95
148 78 (28) (67)

3Q10 186
124 -65 0 -19

4Q09 (185)
18 (74) 19

2010 361
449 (120) (28) (102)

2009 333
65 (313) 85

Net income after IFRS adjustments

225

226

(222)

560

169

Business Performance
Consolidated information by operational segment
R$ million Net Revenue
Domestic Market Exports 273 1,031 720 1,546 93 1 2,850 813

Forestry

Papers

Conversion

Elimination

Total

Third part Revenue

Segments revenue

273
434

1,751
855

1,639
10

1
(1,299)

3,663
-

Total Net Revenue

Change in fair value - biological assets Cost of Goods Sold

707
449 (754)

2,606
(1,967)

1,649
(1,311)

(1,299)
1,290

3,663
449 (2,741)

Gross Income
Operating Expenses

402
(82)

639
(263)

338
(179)

(8)
(26)

1,371
(549)

Operating Results before Financial Results

320

376

159

(34)

821

Note: In this table, the figures for total net sales include sales of other products.

4Q10 Results February 24th, 2011

FORESTRY
In 4Q10, volume of wood sales to third-parties totaled 761 thousand tons, up 42% on 4Q09 and down 7% on 3Q10. The lower sales in relation to 3Q10 were basically due to the heavy rains. In 2010, wood sales volume reached 3.1 million tons, 65% higher than in 2009. The strong growth is explained by the recovery in the wood market and new market opportunities and niches.

Sales Volume (thousand tons)

3,113

Net Revenue (R$ million)

260

1,892 158

761

817 536 66

72 42

4Q10

3Q10

4Q09

2010

2009

4Q10

3Q10

4Q09

2010

2009

Net revenue from log sales to third parties in 4Q10 was R$ 66 million, up 55% on 4Q09 on down 8% on 3Q10. Full-year net revenue from wood sales amounted to R$ 260 million, representing 7% of total revenue and an increase of 65% on the prior year. At the close of December, own and third-party planted area totaled 213 thousand hectares, of which 136 thousand were planted with pine and araucaria and 77 thousand hectares with eucalyptus trees, in addition to 192 thousand hectares of permanent preservation and legal reserve areas. Klabin is the guarantor of small landowners interested in obtaining financing facilities from banks for use in planting forests. These facilities are contracted through the Program for the Commercial Planting and Recovery of Forests (Propflora) and the National Program to Support Family Farming (Pronaf), and are settled with part of the wood planted.

PAPER
The volume of paper and coated board sales to third parties was 246 thousand tonnes in 4Q10, 8% more than in 4Q09, due to lower kraftliner sales, and 4% lower than in 3Q10, reflecting the seasonal impacts. In 2010, paper sales volume reached 1,024 thousand tonnes, 11% more than in 2009. Net revenue from paper and coated board sales was R$ 429 million in the quarter, 12% higher than in 4Q09 and 5% lower than in 3Q10. In 2010, paper net revenue came to R$ 1,713 million, growing by 25% from 2009. Exports totaled 126 thousand tonnes in 4Q10, down 8% from 4Q09 and up 6% from 3Q10. In the year, exports reached 522 thousand tonnes, increasing by 1% on 2009.

Kraftliner
Kraftliner sales volume was 88 thousand tonnes in 4Q10, down 19% on 4Q09 and up 5% on 3Q10. In 2010, sales volume reached 367 thousand tonnes, down 6% from 2009, due to the higher transfers of kraftliner to corrugated boxes mills.

4Q10 Results February 24th, 2011

Kraftliner exports stood at 59 thousand tonnes in the quarter, representing 67% of total sales of this product. Domestic kraftliner sales reached 29 thousand tonnes in 4Q10, falling 23% and 33% in relation to 4Q09 and 3Q10, respectively. Kraftliner net revenue was R$ 124 million in 4Q10, up 17% and 2% from 4Q09 and 3Q10, respectively. In the year, this figure totaled R$ 466 million, 21% higher than in the previous year.
Sales Volume (thousand tonnes) 393 Net Revenue (R$ million) 466 385

367

60%

78%

88
67%

85
48%

109
65%

124

122

106

4Q10

3Q10

4Q09

2010

2009

4Q10

3Q10

4Q09

2010

2009

Domestic Market

Exports

The economic recovery and stronger consumption drove demand for packaging paper. This higher demand for both virgin fiber paper and recycled paper spurred increases worldwide in kraftliner prices during the entire year. According to the FOEX, in 2010, the average list price in USD of kraftliner brown 175g/m2 in Europe rose 45% in euro terms and 33% in dollar terms, reaching US$ 792/t by the close of December. In 2010, the average price in Europe stood at US$ 675/t, 13% higher than the average in 2009 of US$ 576/t.

1,459 1,356 1,344 1,392 1,302 1,217 1,162 1,029 1,038 1,079 1,089 1,207 1,364

(R$ / t)

592 524 516 533 501 487 486 462 411 385 433 404 478

( / t)

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

Source: FOEX e BAC EN

Quarter average

Kraftliner ( / t)

Kraftliner (R$ / t)

4Q10 Results February 24th, 2011

Coated Boards
Coated boards sales volume in 4Q10 was 158 thousand tonnes, remaining stable in relation to 4Q09 and down 8% against 3Q10. In the year, sales volume stood at 656 thousand tonnes, up 24% in relation to 2009. Net revenue from coated boards sales in the quarter was R$ 306 million, 10% higher than in 4Q09 and 8% lower than in 3Q10. In 2010, net revenue from cardboard sales stood at R$ 1,247 million, up 26% on 2009. Net revenue from cardboards sales accounted for 34% of total revenue in 2010. In the domestic market, sales volume stood at 91 thousand tonnes, contracting 1% and 3% on 4Q09 and 3Q10, respectively. Coated boards exports totaled 67 thousand tonnes in 4Q10, 2% higher than in 4Q09 and 14% lower than in 3Q10.

Sales Volume (thousand tonnes) 656 531

Net Revenue (R$ milion)

1,247

46%

988
40%

158
43% 57%

171
46% 54%

54%

158
42% 58%

60%

306

331

277

4Q10

3Q10

4Q09

2010

2009

4Q10

3Q10

4Q09

2010

2009

Domestic Market

Exports

According to data from the Brazilian Association of Pulp and Paper Producers (Bracelpa), coated boards sales volume in the domestic market, excluding liquid packaging board, totaled 141 thousand tonnes in 4Q10, for decreases of 4% and 9% on 4Q09 and 3Q10, respectively. In 2010, sales totaled 576 thousand tonnes, up 14% on 2009. Klabin recorded market share of 27% in 2010, versus 25% in the previous year.

CONVERSION
Sales volume from conversion products was 160 thousand tonnes in 4Q10, up 1% from 4Q09 and down 6% from 3Q10. In the year, sales volume totaled 653 thousand tonnes, increasing 11% from 2009. Net revenue from conversion products totaled R$ 421 million in 3Q10, up 15% on 4Q09 and down 5% on 3Q10. In 2010, net revenue reached R$ 1,629 million, up 18% on 2009.

Corrugated Boxes
Shipments of corrugated boxes stood at 126 thousand tonnes in 4Q10, up 1% from 4Q09 and down 5% from 3Q10. In 2010, shipments totaled 512 thousand tonnes, an increase of 12% from the prior year.

4Q10 Results February 24th, 2011

Sales Volume (thousand tonnes) 512 457

Net Revenue (R$ million)

1,157

946

126

132

124

304

314

256

4Q10

3Q10

4Q09

2010

2009

4Q10

3Q10

4Q09

2010

2009

Net revenue totaled R$ 304 million in 4Q10, up 19% from 4Q09 and down 3% from 3Q10. In the year, net revenue was R$1,157 million, growing by 22% in relation to 2009. According to the Brazilian Corrugated Board Association (ABPO), corrugated boxes and sheet shipments totaled 2.5 million tonnes in 2010, 12% higher than in 2009.

Brazilian Corrugated Shipments thousand tonnes

218 209 197 185 181 197 184 168 183 198 201 216 214

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

Quarter average

Monthly volume

Industrial Bags
Sales volume of industrial bags for the plants in Brazil and Argentina, in the domestic and foreign markets, totaled 34 thousand tonnes in 4Q10, contracting by 2% and 11% on 4Q09 and 3Q10, respectively. In 2010, sales volume rose to 142 thousand tonnes, presenting growth of 9% in relation to 2009. Net revenue from industrial bags sales in the quarter was R$ 116 million, up 7% on 4Q09 and down 10% on 3Q10. In the year, this net revenue was R$ 472 million, growing by 10% against 2009. Net revenue from industrial bag sales accounted for 13% of total revenue in 2010.

10

10

4Q10 Results February 24th, 2011

Sales Volume (thousand tonnes)

Net Revenue (R$ million) 472

142

429 130

34

38

35

116

128

108

4Q10

3Q10

4Q09

2010

2009

4Q10

3Q10

4Q09

2010

2009

Klabin benefited from the growth in the construction industry in 2010. Preliminary data from the National Cement Industry Union (SNIC) and market estimates indicate that domestic cement sales in 2010 totaled 59 million tons, an increase of 15% on 2009. In December 2010, cement sales grew 16% on a year earlier, confirming the strong demand in the country.

Brazilian cement consumption million tons

5.3 4.0 3.9 4.2 4.7 4.3 4.6 3.9 4.1 4.4 4.5 4.7 5.0

4Q07

1Q08

2Q08

3Q08 4Q08 1Q09 Quarter average

2Q09

3Q09 4Q09 1Q10 Monthly consumption

2Q10

3Q10

4Q10

Source: Nation Labor Union of C ement Industry

Capex
The investments made in 2010 are listed below:

R$ million Forestry Papers Conversion Others Total

4Q10 49 52 34 2 138

2010 133 181 68 3 386

2009 98 122 27 247

11

11

4Q10 Results February 24th, 2011

Investments came to R$ 138 million in 4Q10, bringing the total in 2010 to R$ 386 million, of which 47% was allocated to the Paper Business Unit, 35% to the Forestry Business Unit and 18% to the Conversion Business Unit. The Forestry Business Unit planted 17 thousand of own hectares during the year. The increased planting of higher yielding species assures raw materials for the expansion in fiber production capacity. Klabin made investments to improve the energy matrix of its paper mills. The main projects were the installation of new biomass boilers at the Otaclio Costa plant in Santa Catarina, which began its operations on January 2011, and at the Correia Pinto plant also in Santa Catarina, which will begin operations in 2012. Other projects initiated were the refurbishment of the evaporation system at Otaclio Costa, which will begin operation in the third quarter of 2011, and the construction of the new highvoltage transmission line for the Monte Alegre plant in Paran, which is expected to begin operations in the fourth quarter of 2011. Four printers with the capacity to print in four colors on corrugated board were acquired and installed at the conversion units. This equipment is in operation, with two at the Jundia-DI plant in So Paulo, one at the Feira de Santana plant in Bahia and one at the Itaja plant in Santa Catarina, and represents an expansion in conversion capacity and better graphic solutions for meeting the new demands in the market. In 2010, a new complete line for producing multi-layered valve-type bags was also acquired and installed. The equipment, already operational at the Lages mill in Santa Catarina, substitutes two older lines and will provide productivity and quality gains.

Capital markets
December 31 , 2010 Preferred shares Share price (KLBN4) Book value Average daily trading volume 3Q10 Market capitalization 600.9 million R$ 5.85 R$ 5.44 R$ 17.9 million R$ 5.2 billion
st

In 4Q10, Klabin preferred stock (KLBN4) registered a gain of 24%, while the Ibovespa index remained stable. Klabin stock was traded in all sessions on the BM&FBovespa, registering 205,450 transactions that involved 216.3 million shares, for average daily trading volume of R$ 17.9 million, 58% higher than in the previous quarter.
Average Daily Volume (R$ thousand/day)

25,000 20,000 15,000 10,000 5,000 0

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

12

12

4Q10 Results February 24th, 2011

In the year, Klabin preferred stock gained 10%, versus a gain in the Ibovespa of 1%. The following chart shows the performance of Klabin preferred stock and the Bovespa Index:
115% 110 105% 101 95%

85%

75% Dec09 Jan10 Feb10 Mar10 Apr10 May10 Jun10 Jul10 Aug10 Sep10 Oct10 Nov10 Dec10

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.

Sale of preferred shares by BNDESPAR

With the start of sales of preferred shares by BNDESPAR in July, average daily trading volume on the BM&FBovespa increased by 50%, from R$ 9.7 million in the first six months to R$ 14.6 million in the last six months of 2010. By December 31, 2010, BNDESPAR had sold 77.4 million of Klabins preferred shares, which led the bank's interest in the Companys preferred shares to fall from 31% to 18%.

Stocks repurchase and treasury stock

In an extraordinary meeting of the Board of Directors held on October 13, 2010, authorization was given for a Preferred Stocks Repurchase Program involving up to 45.3 million shares issued by the company. The program is valid for 365 days, i.e. until October 12, 2008. In 2010, the Company bought 10.3 million shares and ended the year with 27.2 million preferred shares in treasury.

Dividends
On October 8, 2010, Klabin shareholders received interim dividends in the amount of R$ 70 million, which corresponds to R$ 72.98 per lot of thousand common shares and R$ 80.28 per lot of thousand preferred shares. In 2010, R$ 177 million in dividends were paid, of which R$ 57 million corresponded to supplementary dividends relative to fiscal year 2009 and R$ 120 million to interim dividends relative to 2010. The Management will submit to the Annual Shareholders Meeting, to be held on April 2011, a proposal for the payment of complementary dividends in the amount of R$ 70 million, which corresponds to R$ 73.85 per lot of thousand common shares and R$ 81.24 per lot of thousand preferred shares. As a result, the dividends distributed relative to fiscal year 2010 will total R$ 190 million.

13

13

4Q10 Results February 24th, 2011

New CEO
In November, an announcement was made that Mr. Reinoldo Poernbacher would retire, with Mr. Fabio Schvartsman replacing him as CEO. Mr. Schvartsman was elected at the Board of Directors meeting held on February 2, 2011.

Strategy
2010 was a year full of challenges. In addition to the continuous improvements in performance, investments were initiated to reduce costs at the paper plants and to expand capacity at the industrial bags and corrugated boxes. In 2011: Klabin plans to continue deleveraging, reducing the net debt/EBITDA ratio; Klabin continues to renew its forestry area, substituting older forests with new ones, with gains in fiber yields of up to 50%; At the Otaclio Costa mill in Santa Catarina, the new biomass boiler, which began operations in January 2011, replaced the boiler fired by fuel oil. The investment will result in cost savings, advances in the energy matrix and technological updates; At the Correia Pinto mill in Santa Catarina, the new biomass boiler will replace two older boilers, resulting in self-sufficiency in terms of electricity needs; At the corrugated boxes plants, in addition to the recently installed printers, two new corrugators will be installed that will lead to an increase in production capacity at the Jundia DI (SP) and Goiania (PE) units; At the industrial bag unit in Lages, Santa Catarina, an additional line to produce multi-layered bags will be installed that will increase the units production by 10%.

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4Q10 Results February 24th, 2011

Conference Call
Friday, February 25th, 2011 9:00 a.m. (Eastern time) 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: 5236425

Webcast The conference call will also be broadcasted over the Internet. Acesso/Access: www.ccall.com.br/klabin

With gross revenue of R$ 4.4 billion in 2010, Klabin is the largest integrated manufacturer of packaging paper in Brazil, with annual production capacity of 1.9 million tonnes. Klabin has adopted a strategic focus on the following businesses: paper and coated board 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 regarding 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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4Q10 Results February 24th, 2011

Appendix 1 Consolidated Income Statement IFRS (R$ thousand)

IFRS - R$ mil 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 4Q10 1,125,347 930,940 147,612 (591,580) 486,972 (77,435) (56,542) (37,656) (171,633) 315,339 (76,722) 66,695 43,010 32,983 348,322 (114,063) (9,117) 225,142 63,599 147,612 231,326 3Q10 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 4Q09 980,881 805,338 17,615 (679,771) 143,182 (70,482) (48,723) 28,698 (90,507) 52,675 (169,815) 41,757 52,746 (75,312) (22,637) (198,912) (934) (222,483) 183,477 17,615 218,537 2010 4,431,465 3,663,317 448,625 (2,741,103) 1,370,839 (300,153) (214,876) (34,421) (549,450) 821,389 (308,313) 234,111 124,796 50,594 871,983 (289,831) (22,376) 559,776 588,936 448,625 961,700 2009 3,590,924 2,960,179 64,577 (2,498,271) 526,485 (300,047) (176,906) 10,770 (466,183) 60,302 (390,191) 170,635 663,755 444,199 504,501 (332,759) (2,955) 168,787 751,409 64,577 747,134 24.8% 25.7% 27.1% 26.3% 25.2% 63.5% 52.3% 8.3% 6.1% 4.0% 18.4% 33.9% 8.2% 7.2% 4.6% 3.5% 37.4% 12.3% 1.0% 24.2% 6.8% 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% 84.4% 17.8% 8.8% 6.1% 3.6% 11.2% 6.5% 21.1% 5.2% 6.5% 9.4% 2.8% 24.7% 0.1% 27.6% 22.8% 74.8% 37.4% 8.2% 5.9% 0.9% 15.0% 22.4% 8.4% 6.4% 3.4% 1.4% 23.8% 7.9% 0.6% 15.3% 16.1% 84.4% 17.8% 10.1% 6.0% 0.4% 15.7% 2.0% 13.2% 5.8% 22.4% 15.0% 17.0% 11.2% 0.1% 5.7% 25.4% 100.0% 100.0% 100.0% 100.0% 100.0% % of Net Revenue 4Q10 3Q10 4Q09 2010 2009

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4Q10 Results February 24th, 2011

Appendix 2 Consolidated Balance Sheet IFRS (R$ thousand)

Assets Current Assets Cash and banks Short-term investments Securities Receivables Inventories Recoverble taxes and contributions Other receivables dez-10 4,127,147 39,880 2,491,225 198,222 753,961 460,128 131,102 52,629 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 - minority Proviso REFIS Other accounts payable Noncurrent Liabilities Loans and financing Deferred income tax and social contribution Other accounts payable Noncurrent Assets Taxes to compensate Judicial Deposits Other receivables Other investments Property, plant & equipment, net Biological assets Intangible assets 8,134,096 131,621 90,698 125,678 11,542 5,004,023 2,762,879 7,655 7,865,703 164,673 81,932 113,120 11,552 4,996,892 2,491,169 6,365 Stockholders' Equity Capital Capital reserves Revaluation reserve Profit reserve Valuation adjustments to shareholders' equity Treasury stock Minority Interests Total 12,261,243 11,401,900 Total 4,994,085 1,500,000 84,491 51,404 2,365,900 1,120,643 (128,353) 160,417 12,261,243 4,662,159 1,500,000 84,491 52,117 2,001,024 1,104,337 (79,810) 56,665 11,401,900 dez-10 1,690,913 842,121 269,839 37,013 40,669 93,542 2,584 349,340 55,805 5,415,828 4,014,976 1,235,635 165,217 dez-09 1,504,619 802,312 189,696 1,622 50,399 68,859 0 331,685 60,046 5,178,457 3,925,637 1,047,513 205,307

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4Q10 Results February 24th, 2011

Appendix 3 Loan Maturity Schedule December 31st, 2010

R$ Million BNDES Others Local Currency Trade Finance Fixed Assets Others Foreign Currency Gross Debt
Local Currency Foreign Currency Gross Debt

1Q11 83 1 83 30 1 62 93 176
Average Cost 8.4 % p.y. 3.8 % p.y.

2Q11 76 9 85 73 0 2 76 161

3Q11 84 0 84 54 1 22 77 161

4Q11 234 8 243 99 2 101 343

2012 322 17 339 400 6 44 450 789

2013 296 18 314 460 6 65 531 845

2014 290 21 311 337 5 63 405 715

2015 323 31 355 262 5 63 330 684

2016 58 25 83 103 3 122 227 310

2017 25 9 34 129 4 133 167

After 2018

Total 1,842 160 2,002 2,247 41 567 2,855 4,857

50 20 70 299 9 126 434 504

Average Tenor 34 months 47 months 41 months

R$ Million Short term = 17% 845 789 715 684 Foreign Currency 2,855

450

531 405 330

504

343
101

310
434 339 314 311 355 227

Gross Debt 4,857

Local Currency 2,002
70
After 2018

176
93 83
1Q11

161
76 85
2Q11

161
77 84
3Q11 4Q11

167
133

243

83
2012 2013 2014 2015 2016

34
2017

Local Currency

Foreign Currency

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4Q10 Results February 24th, 2011

Appendix 4 Consolidated Cash Flow IFRS (R$ thousand)

2010
Cash flow from operating activities Operating activities . Net income . Depreciation and amortization . Depletion in biological assets . Fixed assets costs result . Change in fair value - biolgical assets . Equity results . Deferred income taxes and social contribution . Deferred income taxes and social contribution - REFIS . Interest and exchange variation on loans and financing . Interest Payment . REFIS Reserve . Minority interest . Others Variations in Assets and Liabilities . Receivables . Inventories . Recoverable taxes . Judicial deposists . 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 . Others 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 . Dividends Paid - minority . Stocks repurchase Increase (Decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 160,832 1,042,934 (740,515) 90,122 (3,251) (177,003) (2,912) (48,543) 689,453 1,841,652 2,531,105 546,475 1,295,177 1,841,652 683 73,050 (1,288) (23,501) 493,446 (419,648) 34,328 (8,592) (123,035) 11,652 (872) (12,599) 80,333 (9,730) 34,227 24,683 (46,910) (384,914) (266,489) (119,108) 197,647 1,423 19,755 (25,464) 8,247 1,561 9,198 (7,445) (177,513) (157,346) (91,929) 108,452 (281,723) 17,655 22,376 6,584 148,698 (96,060) (32,244) 196,218 913,535 764,837 559,776 223,639 337,100 28,197 (448,625) 2,120 189,286 (64,577) (63,400) 88,554 234,240 (507,897) (306,683) 97,445 2,955 29,993 318,894 (10,216) 6,215 117,973

2009
747,489 428,595 168,786 416,388 332,791

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