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WHAT IS KLABIN?

Klabin is a Brazilian company, the largest producer and exporter of paper for packaging and leader in the manufacture of paperboard and coated board for packaging, corrugated boxes, and industrial bags. Founded in 1889, Klabin operates 25 industrial units — 24 in Brazil and one in Argentina.

WHAT IS THE HISTORY OF KLABIN S.A?

Our story began with the arrival of two immigrant families in Brazil: Klabin and Lafer and the opening of a workshop for manufacturing and importing office supplies and printing items. In 1902, they expanded their businesses by leasing their first paper factory – Fábrica de Papel Paulista. In 1909, they constituted their first factory – Companhia Fabricadora de Papel – which by the second decade of the last century was already one of the largest manufacturers in Brazil. Since then Klabin has never stopped growing, becoming the leading manufacturer of paper and coated paper for packaging, corrugated boxes and industrial bags. To find out more about our history, please access the Klabin Memory tab in our klabin.com.br website

WHAT ARE KLABIN S.A.’s AREAS OF BUSINESS?

Forestry

Production of raw material for the other business areas, pulp and sales of logs to sawmills and laminators.

Papers

Production of paperboard, kraft paper and recycled paper for packaging companies.

Pulp

Long and short fiber pulp and fluff pulp.

Corrugated Board and Industrial Bags

Conversion of paperboard for the manufacture of all types of packaging with uses in sectors such as foodstuffs, beverages and fresh fruit and vegetables as well as industrial bags for segments such as civil construction, animal feed, among others.

WHAT ARE KLABIN’S PRODUCTS?

Forestry

Pine and eucalyptus logs from certified rigorously managed plantations with FSC® (C001941) certification for meeting the demand for raw materials from our manufacturing units. Any excess supply goes to the market for use in furniture making, civil construction and sawmills.

 

Papers

  • Paperboard — this consists of three layers which can be made of long/short and/or recycled fiber according to the client’s requirements. The types of paperboard manufactured by Klabin are:

– Liquid Packaging Board (LPB) — packaging for liquid products such as milk and fruit juices;

– Carrier Board (CB) — highly resistant packaging, such as multi-pack packaging for beer;

– Folding Box Board (FBB) — medium resistance packaging such as boxes for frozen foods and laundry detergent.

  • Recycled paper — used in the company’s own production of corrugated board packaging as well as being sold to other packaging companies. Approximately 15% of the raw materials are obtained from the corrugated board packaging conversion units and the remainder from scrap paper merchants. The Piracicaba plant has the largest paper recycling machine in Brazil with a production capacity of 240 tons/day.
  • Kraftliner — uses 100% virgin pine and eucalyptus fibers, a mix which gives resistance, excellent printability, has a wide range of uses and a high performance in the most varied of industrial equipment such as  corrugators and printers.
  • Sack Kraft — uses 100% virgin pine fibers providing high resistance to the product. Ideal for the manufacture of industrial bags.

 

Corrugated Board and Industrial Bags

  • Corrugated board — made of kraftliner and recycled paper, this product is manufactured by Klabin for use in any type of packaging according to  client specifications, with uses in various segments such as foodstuffs, beverages, cosmetics, electro-electronic goods, hygiene and cleaning materials, fresh fruit and vegetables and flowers, electrical materials, chemicals and derivatives, apparel and footwear, glass and ceramics.
  • Industrial bags — made from sack kraft and produced for the civil construction industry, food and chemical products, agribusiness, animal rations, among others.

 

Pulps

  • Long fiber
  • Short fiber
  • Fluff
WHAT IS KLABIN’S PRODUCTION CAPACITY?
TOTAL AREA THOUSAND HECTARES
Planted Area 266
Pine 158
Eucalyptus 108
Native Forest 298
TOTAL CAPACITY THOUSAND TONS
Boards 750
Kraftliner 800
Sack Kraft 200
Recycled Paper 400
TOTAL CAPACITY THOUSAND TONS
Corrugated Cardboard 1,050
Industrial Bags 185
TOTAL CAPACITY THOUSAND TONS
Short fiber pulp 1,150
Long fiber pulp / Fluff pulp 450
HOW TO INVEST IN KLABIN’S SHARES?

Buying shares necessarily involves registration with a financial institution, be it a bank or a broker, which will provide assistance in the choice of your investments and will act as an intermediary with the Stock Exchange, through a completed registration form and approved by the broker.

Before investing in shares, it is important to improve your knowledge of the subject to ensure a conscious decision. The São Paulo Stock Exchange (B3) provides a step-by-step process for helping new investors on how to invest in the capital markets.

WHERE DOES KLABIN TRADE ITS SECURITIES? WHAT ARE THE TICKER SYMBOLS?

In Brazil, we trade our shares on the São Paulo Stock Exchange (B3) under the following ticker symbols:

  • Units: KLBN11
  • Preferred: KLBN4
  • Common: KLBN3

In the United States, our shares are listed under  the ADR1 program, the securities trade on the over-the-counter – OTC market under the KLBAY ticker symbol.

WHERE DOES KLABIN SELL ITS PRODUCTS?

We sell our products to the domestic market as well as more than 80 countries. We have the flexibility to choose the market which offers us the best commercial conditions, albeit always maintaining our commitment to supply the domestic market.

WHAT ARE THE CHARACTERISTICS WHICH MAKE KLABIN UNIQUE IN THE MARKET?

We have a total area of 542 thousand hectares split between 294 thousand hectares of preserved indigenous forest and 248 thousand hectares of
pine and eucalyptus plantations in the South of Brazil. In this region, the conditions of soil and temperature are ideal for the development and maturing of pine (14 years) and eucalyptus (7 years).

This forestry base allows us to produce long and short fiber and adjust the mix between the two fibers according to the specifications of the different types of manufactured papers.

In addition, we are always striving to modernize our manufacturing units and develop new technologies for reducing their costs and optimizing processes.

With the Puma Project, we are the only Brazilian company to produce three types of fiber: short and long (some of which converted into fluff) through an excellent logistical relationship between forest, industrial units, and port.

HOW DOES KLABIN PRESERVE THE ENVIRONMENT

We have an area of 542 thousand hectares of which 294 thousand hectares consist of preserved indigenous forest cover and a further 248 thousand put over to pine and eucalyptus plantations as well as being the pioneer in adopting forestry management techniques in a mosaic format — a system that blends pine and eucalyptus plantations with preserved indigenous forest.

In 1998, we were the first in the pulp and paper sector in the southern hemisphere to obtain, FSC® (C001941) – Forest Stewardship Council® certification, attesting to management that conserves natural resources, provides fair labor conditions, and fosters good relations with the community.

We also operate programs for expanding and diversifying income in the communities where we operate by installing forest plantations on rural properties. The activity helps prevent rural depopulation, encourages the use of good environmental and social practices as well as cultivation methods together with the sustainable management of the properties. A total of 19 thousand rural producers have already benefited from these initiatives while more than 160 million seedlings have been distributed.

Since 2014, we have been part of B3’s Corporate Sustainability Index (ISE) and in 2020, we have also been a component of the Dow Jones Sustainability Index (DJSI) in the World Index and the Emerging Market Index portfolios.

WHERE DOES KLABIN HAVE ITS OPERATIONS?

We have operations in Brazil (24 plants) and Argentina (1 factory). In Brazil, there are production units operating in the states of São Paulo (Angatuba, Jundiaí, Piracicaba, Paulínia, Suzano, Franco da Rocha), Minas Gerais (Betim), Goiás (Rio Verde), Santa Catarina (Correia Pinto, Itajaí, Lajes and Otacílio Costa), Paraná (Monte Alegre, Ortigueira and Rio Negro), Rio Grande do Sul (São Leopoldo), Bahia (Feira de Santana), Pernambuco (Goiana), Amazonas (Manaus) and Ceará (Horizonte). Klabin has offices in São Paulo, Rio de Janeiro, Pernambuco, Santa Catarina, Rio Grande do Sul, Ceará, Bahia, Minas Gerais and Austria.

WHAT IS THE DIFFERENCE BETWEEN LONG AND SHORT FIBER AND FLUFF PULPS?

In general terms the difference lies in the properties of each fiber. The long fiber (softwood) is a pulp originating from the pine (gymnosperm), the length of which varies from 2 to 5 millimeters. Short fiber (hardwood) comes from the eucalyptus (angiosperm) and on average is 0.5 to 2 millimeters in length. The long fiber pulp has greater mechanical resistance. The short fiber has greater homogeneity and the qualities of heat absorption and opacity.

The fluff pulp comes from the pine’s long fiber. It possesses  unique characteristics of softness. Previously only imported, it is now produced domestically thanks to Klabin´s pioneering initiatives.

Klabin produces both types of pulp enabling us to make use of the characteristics of both fibers  and in this way, further improve our products.

WHICH ARE THE MAIN USES OF EACH TYPE OF FIBER?

Due to its characteristics of absorption, short fiber is used to produce writing and printing papers and the sanitary/tissue category (tissue paper, napkins, paper handkerchiefs, among others).

Due to its greater resistance, long fiber is used in the internal layers of paperboard and in the production  of packaging as well as cardboard. We are specialists in the production of the latter with a broad range of industrial clients. Fluff pulps are widely used  in the market for high quality diapers and sanitary pads.

WHAT IS THE PUMA II PROJECT?

The Puma II Project involves the expansion of the Puma Unit and constitutes the largest investment in our history. The industrial complex in Ortigueira, state of Paraná, will consist of two stages in an expansion project due for completion by 2023 and involving the building of two innovative paper machines. The project will make Klabin the first company in the world to produce Eukaliner, for which it already has the patent. Together with White Top Kraftliner, the papers require less energy for their production with results up to 20% superior than products currently on the market.

WHAT IS THE DIFFERENCE BETWEEN INTEGRATED AND MARKET PULP?

Pulp is said to be integrated when upon being manufactured it is dispatched directly to an adjacent plant for manufacturing products for sale. An example is the production of short fiber pulp which is then delivered to a contiguous plant for producing paperboard.

Pulp described as market pulp is a product which is sold directly to the market. The Puma unit is such an example where part of the pulp output is sold directly to outside clients.

HOW IS PULP MANUFACTURED? WHAT IS THE "KRAFT" PROCESS?

There are two leading types of manufacturing: chemical and mechanical. The chemical method uses only chemical reagents and heat to dissolve the lignin which binds the wood fibers together. The second method uses mechanical energy to breakdown and remove the fibers. Kraft manufacturing uses the first technique. The highlight here is the production of a pulp with the highest resistance, great flexibility, and an efficient system for recovering the chemical reagents and for producing energy.

WHICH ARE THE VARIABLES WHICH AFFECT THE SECTOR?

They are innumerable, but the principal ones are pulp prices, regulatory changes, interruptions/faults in production, labor issues, the currency market, the domestic and international economic scenario and the demand for pulp and paper.

WHAT IS THE IMPORTANCE OF CHINA FOR THE SECTOR?

China consumes much more than it produces. Its consumption of paper is 30% of the world total and the country imports substantial amounts of pulp for conversion into packaging. Its principal raw material is recycled paper which is transformed into packaging for its export industries, contrary to Brazil where the raw material is predominantly virgin fiber pulp. The different inputs imply distinct production processes since we use virgin fiber in the manufacture of packaging for food and beverages.

HOW DOES THE CURRENCY MARKET INTERFERE IN THE SECTOR?

A large proportion of Brazilian companies export their products and have overseas lines of business. Thus, the oscillations in Brazilian currency in relation to the Euro, and principally, to the US Dollar, have a direct effect on the share prices of these companies since such oscillations can translate into higher or lower export revenues.

WHAT IS THE DIFFERENCE BETWEEN KLABIN’s COMMON AND PREFERRED SHARES AND UNITS?

Common shares differ by granting voting rights on decisions of the General Meetings, contingent on legal restrictions. On the other hand, holders of preferred shares will have priority rights to reimbursement in the event that the company is wound up. Voting rights are restricted to events pursuant to Article 15 of the Corporate Bylaws.

Restricted voting rights are granted to preferred shares in the case of events involving transformation, incorporation, merger, or spinoff of the company, approval of agreements between the company and its controlling company or other corporations – conditional on these being included as an item on the agenda of a shareholders’ meeting -, evaluation of goods for an eventual increase of capital and the approval of the choice of a specialized company for calculating the economic value of the company.

The Units are assets made up of more than one class of security traded together. They are our assets with the greatest liquidity in the equities market. Each one of them is made up of one common share and four preferred shares. Should you have further doubts, please see the Corporate Bylaws.

WHAT IS AN ADR AND HOW IS IT TRADED?

ADR (American Depositary Receipts) is a certificate of deposit issued by American banks, representing shares of companies with their registered offices outside the United States, facilitating in this way, foreign investment in Klabin S.A. The price of an ADR is usually close to that of the share in its market of origin, adjusted proportionally between the ADR and the original share.

Each ADR corresponds to 2 Units of Klabin (1 ADR = 2 KLBN11).

WHERE CAN I FIND INFORMATION ON MY SHARES AND ADRs IN KLABIN?

For more information on your shares, please contact the custodian bank.
Banco Itaú
Av. Engenheiro Armando de Arruda Pereira, 707 — 9° andar
Torre Eudoro Villela 04344-902 — São Paulo (SP)
Tel: +55 11 3003-9285 (State Capitals and Metropolitan Regions) / +55 0800 7209285 (other locations)

For more information on your ADRs, please contact the depository bank.

BNY Mellon
In the United States, call 1-888-BNY-ADRS (1-888-269-2377)

Outside the United States, call +1 201-680-6825

WHERE CAN I FIND A RECORD OF PAST SHARE PRICES?

Click here to see the record of past prices of KLBN11, KLBN4, KLBN3 and KLBAY in our interactive chart.

WHAT IS A CORPORATE GOVERNANCE LEVEL? AT WHAT LEVEL IS KLABIN?

Corporate Governance may be understood as a compendium of rules and good corporate practices which align the objectives of the company’s managers with those of the interests of the investors. It is conducive to improved administration and monitoring of the management of the company.

The São Paulo Stock Exchange (B3) has created various levels for companies which adopt these practices. Depending on the level of commitment, the company is listed as Level 1, 2 or Novo Mercado. Level 1 reflects compliance with a more restricted set of practices while the Novo Mercado is the most comprehensive set of practices that can be adopted.

Since January 9, 2014, we have adopted B3’s Level 2 Corporate Governance Practices.

For more information on the advantages of being part of Level 2 Corporate Governance, please access B3’s website.

WHAT IS TAG ALONG? DO KLABIN’s SHARES ENJOY THIS RIGHT?

Tag along rights guarantee that in the event of a sale of a controlling stake in the company, the acquirer must make a public offering for the purchase of shares not only to the controlling shareholders but also to the minority shareholders. The latter have the right to receive at least 80% of the amount for the shares paid to the controlling shareholders, this percentage varying according to the level of Corporate Governance of the company in question.

As a signatory to the São Paulo Stock Exchange’s (B3) Level 2 Corporate Governance, we guarantee the right of payment for the shares of the minority stockholders (tag along) at 100% of the amount paid for the shares pertaining to the controlling stockholders.

HOW FREQUENTLY DOES KLABIN DISCLOSE ITS FINANCIAL STATEMENTS? WHEN ARE PUBLIC MEETINGS HELD? HOW CAN I KEEP AN EYE ON THE DATES?

The financial statements provide data for analysis of the past and present situation of a company. They indicate the prospects over the short, medium, and long-term.

Click here to consult our quarterly financial statements.

Our public meeting is held annually and has an audience of analysts and other interested parties. The dates for publishing the reports and the public meeting can be found here.

WHAT IS KLABIN’S DIVIDEND POLICY? WHERE CAN I FIND THE DATES OF RECENT PAYOUTS?

For each fiscal year, shareholders are granted a minimum dividend of at least 25% (twenty-five per cent) of the adjusted Net Income in accordance with the legislation. However, it is company practice on many occasions, to pay dividends at 20% of the adjusted EBITDA. Our different share classes enjoy the same economic rights and for this reason there is no difference in the amount paid in dividends between them.

Check here to check the dates of the last dividend payments.

WHAT IS THE ANNUAL GENERAL MEETING (AGM)?

The Annual General Meeting (AGM) is an event called by the board of directors of a company to examine, discuss and vote on the financial statements as well as to decide on the allocation of the Net Income for the fiscal year and dividends. It must be held within four months of the end of the fiscal year. The call notice for the AGM must be published at least three times using the company’s official communication channels.

WHAT DOES THE "EX" DATE MEAN?

Ex-dividends is the date on which the shares are traded without rights to dividends.

WHAT DOES IT MEAN TO BE PART OF B3’s CORPORATE SUSTAINABILITY INDEX (ISE)?

We became components of the ISE in 2014, a further indication of our commitment to sustainable development which seeks integrated and responsible growth, combining profitability, social development, and environmental commitment.

According to the definition of the São Paulo Stock Exchange (B3), “ISE is a tool for comparative analysis of the performance of the companies listed on the Stock Exchange from the point of view of corporate sustainability, based on economic efficiency, environmental equilibrium, social justice and corporate governance. It also serves to expand the understanding of companies and groups committed to sustainability, differentiating them by quality, degree of commitment to sustainable development, equitability, transparency and accountability, nature of the product, as well as corporate performance in the economic-financial, social, environmental dimensions and in terms of climate change”.

This achievement reinforces our company’s historic commitment to sustainable development. For us, sustainability is present along the entire value chain, from our unique forestry base to the relationship with the clients, suppliers, investors and communities in the regions where we operate. We are also pioneers in the pulp and paper sector certifications and in management of the biodiversity. With this additional market recognition, we seek to reinforce our vision of caring and respecting the planet.

WHAT DOES IT MEAN TO FEATURE IN THE DOW JONES SUSTAINABILITY INDEX?

We are now a component in the Dow Jones Sustainability Index in two portfolios: the World Index and the Emerging Markets Index. The DJSI showcases companies which are world leaders in terms of economic performance, governance practices and socio-environmental operations.

Klabin is the only Brazilian company in the pulp and paper sector to be a component of the Dow Jones World Sustainability Index, thus enhancing the visibility of its operations in the forest plantation sector of the country..

WHICH COMPANY CONDUCTS KLABIN’S INDEPENDENT AUDIT?

ERNST & YOUNG Auditores Independentes S.S.

WHICH ARE THE ACCOUNTING RULES CURRENTLY IN EFFECT? WHAT IS THE PRACTICE ADOPTED BY KLABIN?

The accounting rules most used in Brazil are the International Financial Reporting Standards (IFRS), Generally Accepted Accounting Principles in the United States (US GAAP) and Brazilian Accounting Norms (BR GAAP).

Our consolidated account statements are prepared according to the accounting practices adopted in Brazil which encompass the standards of the Brazilian Securities and Exchange Commission (CVM) and the Pronouncements, Guidance and Interpretation issued by the Accounting Pronouncements Committee (CPC) and are in line with international accounting norms (International Financial Reporting Standard — IFRS), issued by the International Accounting Standard Board (IASB).

WHAT IS EBITDA? WHY DOES KLABIN USE THIS PARAMETER?

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is a financial indicator which measures how much a company generates in resources from its operation alone.

It corresponds to net income before tax/social contribution, depreciation and amortization expenses and the financial result. EBITDA does not measure financial performance according to the account practices adopted in Brazil, IFRS or US GAAP, neither should it be considered in isolation or as an alternative to net income, as a measure of operational performance or as an alternative to the operational cash flows or again as a measure of liquidity.

Other companies may calculate EBITDA differently from that of Klabin. EBITDA has various limitations that render it a less than perfect tool for measuring profitability since it does not sweep up certain costs arising from our businesses and which could significantly affect profits such as financial expenses, taxes, depreciation, capital expenses and other related charges.

WHAT IS EBIT? HOW DOES IT RELATE TO EBITDA? WHAT IS EBITDA MARGIN?

EBIT (Earnings Before Interest and Taxes) is another financial indicator that measures the result of the operation of a company. It is the difference between operational revenues and expenses. Having calculated EBITDA, subtract depreciation and amortization expenses to obtain EBIT. The EBITDA Margin is the ratio of EBITDA to Net Revenue.

WHAT IS A BIOLOGICAL ASSET? WHAT IS ITS RELATION TO THE ADJUSTED EBITDA?

According to the Accounting Pronouncement Committee’s Pronouncement 29 (CPC 29), a biological asset is a live animal or plant. It must be recognized in the account statements when it is under the control of the company for account of past events and can be shown that the company will enjoy the future economic benefits associated with this asset or when the fair value/cost can be measured correctly.

As part of our businesses, we have a vast area of forests which are booked as biological assets. Variations in fair value of our forests (biological assets), on many occasions, give rise to major changes in the net result for the period. As a way of taking these variations into consideration, other businesses in which Klabin is the controller in addition to its participation in Vale do Corisco as well as other sector companies, calculate Adjusted EBITDA to reflect their situation more precisely.

WHAT IS A PRICE LIST?

The price list is a reference price for commodities in certain regions of the world. It varies according to supply and demand in the region. It is used as a basis for price negotiations.

WHAT IS THE CASH COST OF PRODUCTION?

For the pulp and paper sector, the analysis of costs through the Cost of Goods Sold (COGS) is now no longer applicable since it covers costs which do not represent cash disbursements such as in the case of depreciation and amortization of the means of production. Thus, the cash cost of production is known as the cost of manufacture comprising all the costs which represent disbursement of cash. This method recognizes all the direct costs involved from manufacture to dispatch from the factory gates. It is how much the company disburses cash to produce.

WHAT IS GROSS OPERATIONAL REVENUE?

Represents all products sold during a given period, before discounts to clients, returned products or taxes or other adjustments.

WHAT ARE COSTS OF GOODS SOLD (COGS)?

These are the purchases of raw materials and services, including direct and indirect labor, maintenance stoppages, wood, inputs, fuels, depreciation and depletion among other costs.

WHAT IS GROSS PROFIT?

Gross Profit is the difference between a company’s different forms of invoicing and the Cost of Goods Sold (COGS).

WHAT IS NET PROFIT/LOSS?

Represents the remaining profit after all costs and expenses (including taxes) have been deducted from total revenue in a given period. If the result is positive, we call it profit and if negative, a loss.

WHAT ARE SELLING, GENERAL AND ADMINISTRATIVE EXPENSES?

These expenses include typically the payroll for employees involved in the company’s sales and administration, outsourced services, logistics, communications, among others.

WHAT IS WORKING CAPITAL?

Contrary to conventional wisdom, this is not the amount a company needs for its operations. Rather it is the amalgamation of three accounts: Suppliers (how much my suppliers finance me), Accounts Receivable (how much I finance my clients) and Inventories. The first account has a positive impact and the second two, a negative impact on working capital.

WHAT IS THE WEIGHTED AVERAGE COST OF CAPITAL (WACC)?

The Weighted Average Cost of Capital is the minimum rate required by investors for a company to make an investment. It is calculated as a weighted average of the relative participation of third party and proprietary capital.

WHAT ARE FINANCIAL EXPENSES / REVENUES?

This account includes revenues and expenses with interest related to financial transactions, raising of new debt and amortization of past debt.