DECEMBER 2016, SAO PAULO

APIMEC

DECEMBER 2016, SAO PAULO

KLBN11 / KLBAY

FABIO SCHVARTSMAN
C H I E F E X E C U T I V E
O F F I C E R

DEZEMBRO 2016, SAO PAULO

AGENDA
OVERVIEW AND STRATEGY
FABIO SCHVARTSMAN

PULP COMMERCIAL OPERATION: FOCUS IN FLUFF PULP

JOS SOARES
CONVERSION: CORRUGATED BOXES AND INDUSTRIAL BAGS
CRISTIANO TEIXEIRA
QUESTIONS

KLBN11 / KLBAY

STRUCTURAL COMPETIVENESS

APIMEC

High Productivity on Fibers

Pine
Forest Productivity

Eucalyptus
Forest Productivity

m/ha/year
46

m/ha/year
58

38
22

44
25

22
10

20

12

10

Pine
LOW AVERAGE
HAULING DISTANCE
PR with PUMA 66 Km
SC 74 Km

50
39

42

42

44

46

47

35

70

60

30

50

52

95-05

05-11

58

61

12-15

16-20

65

41
35

40

24

20

26

20

<69

Source: Ib e Klabin

Mean Annual Increment (IMA)

m/ha/year

50

31
30

Eucalyptus

Mean Annual Increment (IMA)

m/ha/year
40

PLANTED AREA
230 TSD HECTARES
of high yield forest

70-89 90-04

05

06-09 10-11 12-15 16-20 21-25

<73

74-85

85-95

21-25

LEADER IN ALL SEGMENTS IN BRAZIL

Flexible product line and diversified markets

APIMEC

CORRUGATED
BOXES

KRAFTLINER
INSTALLED
CAPACITY*

INSTALLED CAPACITY

*Market Share

Market Share

40%

18%

COATED
BOARDS

Limited

400 tsd

tonnes/year

INDUSTRIAL
BAGS
INSTALLED CAPACITY

Market Share

Market Share

50%

SALES VOLUME DESTINATION

PAPER AND PACKAGING

50%

67%
FOOD

1,1 million
tonnes/year

INSTALLED CAPACITY

Limited

400 tsd
Construo

tonnes/year

KLABIN

APIMEC

Growth strategy

APIMEC 2013

3,5
Million
tonnes per
year

1,7
Million
tonnes per
year

2013
* Except wood sales

1,8
Million
tonnes per
year

2014

2,0
Million
tonnes per
year

2015

2016

KLABIN

APIMEC

Growth strategy

KLABIN TODAY

3,5
Million
tonnes per
year

1,7
Million
tonnes per
year

2013
* Except wood sales

1,8
Million
tonnes per
year

2014

2,0
Million
tonnes per
year

2015

2016

2017: FOCUS ON PERFORMANCE

APIMEC

Operational efficiency and increased cash generation

COST REDUCTION

HIGH RETURN PROJECTS

Falconi / Papers mills

Corporate G&A expenses
reduction
PUMA Unit ramp up

Angatubas boiler
Industrial Bags Line
New printing machines
Forest area: reprimarization and
maintenance workshop
Turbine system

EXPECTED CAPEX:
R$ 291 million

FLEXIBILITY AND
RESILIENT MARKETS

Fluff on domestic market

Conversion / Hevi e
Embalplan

EXPECTED ANNUAL RETURN :

R$ 108 million
*after ramp up

PAPER MARKETS

APIMEC

Focus in growing markets

PAPER MARKETS DEMAND (2014-2030)

Demand growth per year

Fluff
Klabin
Fluff

4%
3%

Tissue
Klabin
Pulp

Containerboards
Klabin kraftliner and
recycled paper

2%

Sackpaper
Klabin sack
kraft and
industrial bags

1%
Market D

Market E

Market C

-2%

Market B

-1%

Market A

0%

Coated boards
Klabin coated
boards

-3%

KLABIN MARKETS

-4%
0%
Source: POYRY

20%

40%

60%

Share of consumption in 2014

80%

100%

KLABIN

APIMEC

Consistence growth

INTEGRATION
PUMA RAMP UP
CASH COST REDUCTION
HIGH RETURN PROJECTS
PAPER CAPACITY
DEBOTTLENECKING

NEW GROWTH CYCLE

CASH COST REDUCTION

HIGH RETURN PROJECTS
PUMA EVOLUTION

2,238

GROWTH IN PULP

1,881
OPERATIONAL
IMPROVEMENT

1,286
939

sep11

sep12

1,652
1,504

sep14

sep13

Adjusted EBITDA UDM

R$ million

sep15

sep16

DECEMBER 2016, SAO PAULO

JOS SOARES

PULP COMMERCIAL DIRECTOR

PUMA UNIT

MARKET PULP

APIMEC

In 2015

168

mm tonnes

Virgin fiber pulp

105

mm tonnes

63

mm tonnes
Integrated Pulp

market pulp

MARKET PULP
DISTRIBUTION

44%
Long Fiber

36%
Eucalyptus

20%
Other short
fibers

Source: Hawkins Wright | ago-16; RISI

DEMAND BY REGION SHORT FIBER

APIMEC

Market Pulp million tonnes

6,2%

1,2%
0,1%

3,4

3,2

3,4

2015

2016e

2020e

10,3

10,4

10,9

2015

2016e

2020e

9,2

2015
China

9,9

2016e

China
EXPECTED GROWTH OF 1.2 MILLION TONNES PER YEAR
3,7%

2,7%

2,2

2,2

2,5

2015

2016e

2020e

4,7

5,0

2015

2016e

5,7

2020e

Asia (ex China) + Africa + Oceania

Source: Hawkins Wright | ago-16; RISI

12,5

2020e

DEMAND BY REGION LONG FIBER

APIMEC

Market Pulp million tonnes

-0,1%
0,0%

4,2

4,2

4,2

2015

2016e

2020e

3,7%

7,2

7,2

7,1

2015

2016e

2020e

7,3

7,6

2015

2016e

8,8

2020e

China

EXPECTED GROWTH OF 300 THOUSAND TONNES PERChina

YEAR
0,8%
0,4%

1,2

1,2

1,3

2015

2016e

2020e

4,4

4,4

4,6

2015

2016e

2020e

Asia (ex China) + Africa + Oceania

Source: Hawkins Wright | ago-16; RISI

DEMAND BY REGION FLUFF

APIMEC

Market Pulp million tonnes

1,3%
1.485

1,0%
1.053

2015

1.066

1.108

2016e

2020e

2015

1.530

2016e

7,7%

1.370

1.581

2020e

947

1.020

2015

2016e

2020e

China
China

EXPECTED GROWTH OF 200 THOUSAND TONNES PER YEAR

Segments

5,0%
1.856
3,5%
848

878

1.451

1.524

38 %

1.008

Diapers
2015

2016e

2020e

2015

2016e

26%
Incontinen
ce

2020e

Asia (ex China) + Africa + Oceania

12%
Others

24%
Tampons

Source: Hawkins Wright | ago-16; RISI

KLABIN 4th BIGGEST IN FLUFF

APIMEC

Market FLUFF million tonnes

GLOBAL CAPACITY OF FLUFF

GLOBAL DEMAND

Thousand tonnes per year in 2016

Million tonnes per year in 2015

IP+WY

2.920.000

G-P
Domtar

Klabin
StoraEnso
WestRock

24,3

1.985.000
760.000

400.000

THE ONLY MILL DESIGNED FOR FLUFF

PRODUCTION

255.000
200.000

Resolute

280.000

Arauco

240.000

Source: Hawkins Wright (jul/16); Fisher

AVERAGE CASH
COST of producers
EX KLABIN of FLUFF

USD 433/ton

5,8
Long Fiber

Fluff

INFANT DIAPERS MARKET

APIMEC

Global and Brazilian Market growth

EUROPE
and EUA
1200

BRAZIL
R$ billion

WORLD
US$ billion

Diapers used by
baby per year

+7,8%
+9,8%

6.397

+7,6%
+3,2%

9.323

6.925

36.599

4.001

2010

Source: Euromonitor

2015

2016e

2020e

BRAZIL
553
Diapers used by
baby per year

China consumption of 376

by baby per year

2010

61.841

42.923

45.033

2015

2016e

2020e

INCONTINENCE DIAPERS MARKET

APIMEC

Global and Brazilian Market growth

2015
36 million of

BRAZIL

elders

R$ billion

WORLD
US$ billion

+9,5%
+4,9%

3.012
1.619

2050
66 million of

1.871

641

5.646

11.270
7.158

7.674

2015

2016e

elders
2010

2015

Source: Euromonitor / ONU

2016e

2020e

2010

2020e

KLABIN MARKETS FOCUS ON FLUFF IN BRAZIL

Sales strategy

26

thousand tonnes
were sold until
September

85%

Of the market
approved the Klabin
fluff pulp

50%

market share
expected for 2017

50
Costumers
distribution

APIMEC

THE QUALITY OF PINEFLUFF COMPARING WITH OTHERS PLAYERS

Fine Content (%)

Density of FLUFF pulp (g/cm3)

0,63

0,64

PineFluff

0,64

0,64

0,60

3,40

3,30
0,60

3,00

3,00

3,20

2,70

Grinding Energy (kWh/t)

PineFluff

25,60

31,50
28,10

25,50

1.052

1.074

Resistance to Overflow (Mullen) (kPa)

34,80
30,80

PineFluff

3,70

3,60

0,62

0,59

APIMEC

27,10

28,90

900

PineFluff

1.036

965

1.082

1.190
901

KLABIN MARKET

APIMEC

Sales Strategy

SHORT FIBER

LONG FIBER

2Q16 AND 3Q16, 383 THOUSAND TONNES SOLD

2T16 AND 3T16, 210 THOUSAND TONNES SOLD

330 THOUSAND TONNES SOLD TO FIBRIA

45 THOUSAND TONNES SOLD IN DOMESTIC MARKET

SHORT TERM: PULP SALES IN GLOBAL AND DOMESTIC

MARKET

LONG TERM: CONVERTION IN FLUFF

SALES IN DOMESTIC MARKET

PUMA - COMPETITIVINESS

APIMEC

Production Cash Cost Long fiber and short fiber

LONG FIBER

462

447

409

SHORT FIBER

335
288

PUMA

FOB MILL
US$/TONNES

174

million
tonnes

source: Hawkins Wright july 2016

272

10

million
tonnes

15

million
tonnes

20

million
tonnes

25

million
tonnes

30

million
tonnes

ANNUAL
CAPACITY

KLBN11 / KLBAY

DECEMBER 2016, SO PAULO

CRISTIANO TEIXEIRA
EXECUTIVE OFFICER

INTEGRATED MODEL: CONVERSION

CONVERSION
920k tpy

FIBERS

Planted
Forests

PAPERS
Market Pulp

Pine

Coated
boards

Eucalyptus

Integrated
Pulp
Kraftliner

Recycled

Corrugated
boxes
750k tpy

Industrial
bags
170k tpy

* Installed capacity

APIMEC

Diversified and flexible

KRAFTLINER

CONTAINERBOARD MARKET: GLOBAL

APIMEC

Competitiveness in Kraftliner
Klabin Papers

57%

29%

Integration

Exports

14%

Kraftliner global cash cost

USD/tonnes

Productive
units

Average US$377/tonnes

Klabin
MA / OC
Source: Fisher

Cash cost 30%

less than the global
average

Domestic
Market

CONTAINERBOARD MARKET: BRAZIL

APIMEC

Total Capacity - 2016

5,1 mm tonnes
4,5

4,1

Biggest Players (tsd tonnes)

Kraftliner

2,0

1,6

819

Klabin
WestRock

Recycled
paper

2,5

2,5

IP

0,4
Production

Source: Risi Capacity Report 2016

Domestic
Market

Recycled paper

Kraftliner

Exports

435
183

Smurfit

276

Fernandez

235

Klabin

235

CORRUGATED BOXES

GLOBA CONSUMPTION OF CORRUGATED BOXES

APIMEC

Global per capita consumption of corrugated boxes (m2/hab/year)

113

108

106

105

99
83

49

43
36

Source: International Corrugated Case Association - ICCA 2015

30

CORRUGATED BOXES: BRAZIL

APIMEC

Shipments - Klabin vs Brasil

107

Klabin
Brazilian shipments

100

99

jan-15

apr - 15

Horticulture

jul-15

oct - 15

Exports growth of 7% p.y.

in the last 3 years

jan-16

abr-16

PIB

jul-16
sep-16

Animal Protein

Growth of poultry of
14% p.y. in the last 3
years and exports of
protein of 5% p.y.

KLABIN MARKETS BIG CLIENTS

Differentiated in fibers, quality and service

SERVICES PROVIDED
PACKAGING ENGINEERING

PACKAGING SYSTEMS

TECHNICAL SUPPORT

APIMEC

KLABIN DIFFERENTIALS

APIMEC

Klabin national footprint to fulfill the costumer needs

KLABIN -

10 UNITS

MARKET SHARE 2015

WestRock 4 UNITS

17%

International Paper 4 UNITS

Irani

8%

42%
Trombini

7%
Penha
Adami
Smurfit/INPA
Outros

Source: ABPO, Relatrio Anual - 2015

6%

4% 4% 5%

6%

CORRUGATED BOXES: BRAZIL

APIMEC

Use of virgin and recycle fiber: FLEXIBILITY

OCC prices

Mix of fibers to corrugated boxes

Recycled
Klabin

34%

Virgin

(R$/tonnes - FOB without taxes)

800
700
600

66%

500
Brazil

67%

33%

400
300
200
jan-15
Source: Anguti

Large participation in the food market: RESILIENCE

others
Klabin

20

HPPC chemist

10

food

65

mai-15

set-15

jan-16

mai-16

set-16

KLABIN MANAUS - AM

APIMEC

Acquisition rationale
20k tonnes/year
Curling Total Capacity

Benefits of the presence in

Manaus:

Segments
(% 2015)

68%

Electronics

1%

Plastic
products

2%

Metallurgy

25%
Boards

5%

Others

Synergies with recycled paper factory of Goiana

National footprint
New markets

KLABIN RIO NEGRO PR

APIMEC

Acquisition rationale
50k tonnes/year
Curling Total Capacity

Benefits of the presence in

Paran:

Segments
(% 2015)

41%

Furniture

8%

Clothing

4%

4%

Vesturio Metallurgy

Synergies with Monte Alegre

Optimization of units distribution of
So Paulo and Santa Catarina to
Paran

25%
Perfumery
and
Cosmetics

11%
Food
Products

9%
Plastic
Products

10%
Others

CORRUGATED BOXES

APIMEC

New opportunities

Display: costumed
for wholesales

E-commerce market:
3% of retail sales in Brazil in 2015
and 8% in the USA.

Total orders in the e-commerce

(millions)
107
103
88
67
54

Source: Webshoppers e Sociedade Brasileira de Varejo e Consumo

107

INDUSTRIAL BAGS

INDUSTRIAL BAGS
Paper for industrial bags (Sack Kraft)

Paper for sacks

Global production of papers (2015)

7,2 million tonnes
Sack Kraft Global Cash cost

mills

USD/tonnes

Klabin
Lowest production
cost of paper
Source: Fisher 4Q15. Incluiding Bag and Sack, Extensible Paper, Extensible Sack.

APIMEC

INDUSTRIAL BAGS

APIMEC

Klabin presence Industrial sacks

Klabin is the

2th

biggest industrial
bags producer of
the world

Global market
12 bi units (2014)
Mondi

Lages Mill
Is the

biggest
of the world

Klabin
Segezha

Hood
CMPC
Coveris Flexible
Iguau Celulose

Industrial bags are

made of long and virgin
fiber (pine)

Source: Fisher 4Q15. Including Bag and Sack, Extensible Paper, Extensible Sack.

Gascogne

Smurfit Kappa
Cemex

1,2 bi of capacity

INDUSTRIAL BAGS

APIMEC

Industrial bags sales strategy

Sales
% participation
12%

Globalization
Strengthening the supply of special
bags: miscellaneous
Differentiated service

12%
21%

88%

88%
79%

2014

Exports

2015

2016
expected

Domestic

Klabins presence

113

84

Klabin

SNIC

jan-14 apr-14 jul-14 sep-14 jan-15 apr-15 jul-15 sep-15 jan-16 apr-16 jul-16 sep-16

15,7%
16vs15
Jan-Sep
Production of cement
IBGE

15,3%
16vs15
Jan-Sep
fabricao de artefatos
de concreto, cimento,
fibrocimento, gesso
IBGE

63%
16vs15
Jan-Sep
Klabin sales (thousands
of bags) to the
international market

Source: IBGE, SNIC (*prvia) e MCC- Civil constrution monitor,

Klabin volume of bags for civil construction

SALES OF CONSTRUCTION MATERIALS (IBGE) X KLABIN BAGS FOR CIVIL CONSTRUCTION

(jan/2014 = 100 No seasonal adjustment)

INDUSTRIAL BAGS

APIMEC

New products - Opportunities

Pet Food

Coffee
Largest coffee growers
(em mi de sacas 60kg)

29

Vietn

Colmbia

Fertilizers

Mercado
Consumo mundial de
caf foi 2,2%
superior ao volume
produzido em 2015

49

Brasil

Market growth in 2015

(in billing $)
10% p.y.

4% p.y.

13

Brazilian market
30 million tonnes

National
Production

30%

Imports

70%

Source: INDEX Mundi, Euromonitor, ANDA, ABITRIGO.

Flours/Bran

Industrial grinding
Flour and brain of wheat
CAGR
+1%

2005

2010

2015

2005

2010

2015

KLBN11 / KLBAY

DECEMBER 2016, SO PAULO

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