EARNINGS RELEASE 4Q16

FEBRUARY 01, 2017

4Q16 ADJUSTED EBITDA REACHES R$ 653 MILLION AND R$2.3 BILLION

IN 2016, 16% YOY GROWTH
4Q16 HIGHLIGHTS

ADJUSTED EBITDA

R$ 653 m

The company reported an Adjusted EBITDA in 4Q16 of R$653

million and R$2,287 for the full year, an 8% and 16% increase,
respectively in relation to the same periods in 2015.

Pulp volume produced in the quarter reached 308 thousand

tonnes, a 5% QoQ increase. For the full year, production
totaled 831 thousand tonnes, in line with the PUMA units
ramp up schedule and meeting the goal established in 2015.

Driven by the start-up in operations at the Puma Unit, total

volume sold was 777 thousand tonnes in the 4Q16 and 2,650
thousand tonnes for the full year, increasing by 56% and 45% in
relation to 4Q15 and 2015, respectively.

Net Sales revenues totaled R$1,964 million in the quarter, a

23% increase in relation to the same period in 2015.

Conversion product sales reached 183 thousand tonnes in

4Q16, a 4% increase in relation to 4Q15 and evidence of
Klabins ability to operate under differing market conditions.

PULP PRODUCTION VOLUME

308 kt
PULP AND PAPER SALES VOLUME

777 kt
SALES REVENUE

R$ 1,964 m
CONVERSION SALES VOLUME

+ 4%
December 31, 2016
Klabin
Market Value R$ 19.4 billion
KLBN11
Closing Price R$ 17.72
Daily Volume 4Q16 R$ 39 million
Conference Call
Portuguese (with simultaneous translation)
Thursday, 02/02/17, 11:00AM (BZ)
Tel: (11) 3193-1133 - Password: Klabin
http://cast.comunique-se.com.br/Klabin/4Q16

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

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FINANCIAL HIGHLIGHTS

R$ million
Sales volume (thousand tonnes)
% Domestic Market
Net Revenue

4Q16

3Q16

4Q15

777

787

499

46%
1,964

44%

62%

1,965

1,596

4Q16/3Q16 4Q16/4Q15
-1%

56%

2 p.p.

-16 p.p.

0%

23%

% Domestic Market

58%

57%

62%

1 p.p.

-4 p.p.

Adjusted EBITDA

653

585

603

12%

8%

Adjusted EBITDA Margin

33%

30%

37%

3 p.p.

-4 p.p.

Net Income (loss)

Net Debt

2016

2015

2,650

1,833

50%
7,091
60%
2,287
32%

66%
5,688
68%
1,975
34%

2016/2015
45%
-16 p.p.
25%
-8 p.p.
16%
-2 p.p.

109

31

521

246%

-79%

2,482

(1,253)

n/a

12,005

11,473

12,411

5%

-3%

12,005

12,411

-3%

Net Debt / EBITDA (LTM - BRL)

5.2x

5.1x

Capex

511

558

6.3x
1,364

5.2x
-8%

-63%

2,567

6.3x
4,627

-45%

Klabin presents its consolidated financial statements according to international accounting standards (International Financial Reporting Standards - IFRS) as
determined by CVM 457/07 and CVM 485/10 instructions. Information on Vale do Corisco is not consolidated in the Financial Statements, and is represented by the
Equity Pick up method only. Adjusted EBITDA is in accordance with CVM Instruction 527/12.
Notes:
Some of the figures on the charts and tables may not express a precise result due to rounding. The EBITDA margin incorporates the effects of Vale do Corisco
LTM last 12 months.

SUMMARY
The last quarter of 2016 in Brazil saw the end of
another year of economic decline, strong FX volatility
and political turbulence. The Senates recent approval
of a ceiling on Federal Government spending and the
improvement in inflation indices - ending the year
below the Central Banks upper tolerance level for
inflation
boosted
economic
confidence.
Improvements have not yet translated into a recovery
in economic activity and job creation, but are paving
the way for interest rate reductions.

year, corrugated box shipments were 2% lower than

in 2015.

On the external front, Donald Trumps election to the

presidency of the United States affected markets at
the end of 2016. Doubts concerning the new
administrations economic policies, principally of a
fiscal and tax nature, also generated a high degree of
volatility in the prices of a broad range of assets
worldwide.

In the pulp market, despite a slight year-end

improvement, hardwood pulp prices continued
lackluster due to the prospects of new capacity
coming on stream. Consequently, average FOEX
prices in Europe decreased to US$655/t in 4Q16 from
US$671/t in 3Q16. On the other hand, average
softwood pulp prices remained steady using the same
comparison, the spread between the two being
US$148/t.

In relation to international packaging paper markets,

European kraftliner prices continued under pressure,
and in December, the FOEX USD list price dropped to
its lowest level since 2009. Thus, the average list price
at US$596/tonne in the 4Q16 was 3% and 8% lower
than in 3Q16 and 4Q15, respectively. For the full year,
the average price at US$615/tonne was 5% below the
average for 2015.

Still impacted by the domestic economic crisis, the

paper and packaging markets saw corrugated box
shipments fall by 3% in the 4Q16 year-on-year,
according to data published by the Brazilian
Corrugated Board Association (ABPO). For the full

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

responsible for the important increase in sales during
the period, total sales volume reaching 777 thousand
tonnes in 4Q16, a year-on-year increase of 56%. It is

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also important to note that in light of the Reals

appreciation in the final months of the year, the
companys intrinsic flexibility and recent acquisitions
of corrugated board units were instrumental in a 4%
increase in conversion product sales in relation to
4Q15 and using largely paper originally destined for
international markets. Thus, the increase in sales
volume spearheaded by pulp sales, together with
Klabins competitiveness in the conversion market
saw net revenues of R$1,964 million, a 23% growth in
relation to the same period in the previous year.

controls, has helped compensate for inflation, the

effects of which still persist in the case of some raw
materials and services.
Klabins results in the 4Q16 were once more driven by
the increase in pulp sales from the Puma Unit and by
the companys flexibility in being able to quickly adapt
to changes in economic scenario. Despite adverse
conditions involving important variables such as
Brazilian economic activity, FX rates and international
pulp and paper prices, which characterized 2016 and
continued to feed through to the final quarter, Klabin
was still successful in posting a R$653 million adjusted
EBITDA, an 8% growth over the same period in 2015.

With the increase in sales volumes in 4Q16, Klabin

has benefited from the dilution of fixed and
manageable costs. This fact, allied to strict cost

22st QUARTER OF EBITDA GROWTH

1,027

2.5 900
2.0

1.5

1.7

1.7

1.7

1.7

1.7

1.7

1.7

1.7

1.8

1.8

1.8

1.8

1.8

1.8

1.8

1.8

1.8

1.9

2.0

2.4

2,287

2,238

2,173

2,026

1,881

1,812

1,718

1,652

1,627

1,602

1,504

1,452

1,286

1,089

3.0

1,180

3.5

1,351

4.0

1,424

4.51,400

1,562

5.0

1,755

1,900

1,976

2,400

2.7

1.0
0.5

400

Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16

Sales Volume LTM

(excluding wood million tonnes)

Adjusted EBITDA LTM

(R$ million)

Exchange Rate
R$ / US$
Average Rate
End Rate

4Q16

3Q16

4Q15

3.30
3.26

3.25
3.25

3.84
3.90

4Q16/3Q16 4Q16/4Q15
2%
-14%
0%
-17%

2016
3.48
3.26

2015
3.34
3.90

2016/2015
4%
-17%

Source: Bacen

The Brazilian political scenario and Donald Trumps election brought a strong degree of volatility to the FX market
during the last quarter of the year. The shock result of elections in the United States drove up FX rates to
R$3.46/US$. Conversely, the improvement in expectations in relation to the Brazilian economy, led the FX rate
downwards to R$3.26/US$ by the end of the 4Q16, practically the same level as at the beginning of the quarter. The
average FX rate during the quarter of R$3.30/US$ was in line with the 3Q16 but 14% lower than the R$3.84/US$ rate
reported for the same quarter of the previous year, impacting revenues from exports and domestic products with
dollar-linked prices.

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OPERATING AND FINANCIAL PERFORMANCE

Sales Volume
Klabins sales volume continued to grow in 4Q16, driven mainly by the continuing ramp up in production at the Puma
Unit, initiated in March. Excluding wood, volumes sold, reached 777 thousand tonnes, a 56% increase in relation to
the 499 thousand tonnes sold in 4Q15. The Puma Unit contributed 301 thousand tonnes in sales during the quarter,
of which 208 thousand tonnes of hardwood and 93 thousand tonnes of softwood and fluff pulp.
In addition to pulp sales, the company increased the commercialization of conversion products in a still recessive
Brazilian economic environment and despite the drop in corrugated box shipments according to data published by
ABPO, driven by Klabins well consolidated positioning in these markets. In the light of a strengthening Real and the
increase in recycled paper prices in relation to the end of 2015, Klabin decided to reduce the acquisition of recycled
paper in the domestic market, redirecting part of its virgin fiber paper exports to its conversion operations. The yearon-year reduction in paper sales and 5% increase in conversion is a reflection of this strategy.
During the quarter under review, exports reached 54% of the total versus 38% in 4Q15 and 56% in 3Q16, driven
mainly by increased pulp sales largely to overseas markets.

Sales volume
(excluding wood tsd tonnes)

Net revenue
(R$ milion)
+301

499

1.308
38%

-24

Pulp

Sales volume by product

4Q16

777

Kraftliner
12%

54%

Others
1%

1.463
42%

Paper /
Conversion

Pulp
39%

38%
62%

62%

4Q15
4Q15
4T15

Domestic Market

58%

4Q16

46%

Conversion
24%

Coated Board
24%

4Q16
4T16

Exports

In 2016, total sales reached 2,650 thousand tonnes, a year-on-year increase of 45% due to initial pulp sales and
higher paper sales volume, still reflecting debottlenecking and capacity increases during 2015.

Net Revenues
Bolstered by pulp revenues of R$471 million from the Puma Unit, 4Q16 net revenues, including wood, reached
R$1,964 million, 23% higher than in 4Q15. Important to point out that revenues were negatively impacted by a lower
average FX rate during the period in relation to 2015 and affecting revenue flows from products with prices indexed
to the USDollar.

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Following the increase in sales of converted products and pulp in Brazil, revenues from the domestic market reached
R$1,138 million, a 15% increase in comparison to 4Q15. Export revenues impacted by higher pulp sales reached
R$826 million, a 36% increase in relation to the same period last year. Consequently, the share of export revenue in
relation to total sales revenue was 42% in 4Q16 in comparison to 38% in 4Q15.

Net Revenue by Product

4Q16

Net Revenue
(R$ million)

Net revenue
(R$ milion)
+471

1,596

1.308

38%

-102

Pulp

1,964

Others Wood
4%
Kraftliner 2%
9%

42%

1.463

Pulp
24%

42%

Paper /
Conversion

38%
62%

62%

58%

58%
Conversion
32%

Coated Board
29%
4Q15
4T154Q15

Domestic Market

4Q164Q16
4T16

Exports

The start-up of the Puma Units operations during the year and Klabins efforts to identify the best markets under
different economic scenarios, once more reflected in enhanced net revenues. During 2016, net revenues totaled
R$7,091 million, a 25% increase over 2015.
Considering Klabins stake in the revenue of Florestal Vale do Corisco S.A., pro-forma net revenue totaled R$1,978
million in the quarter and R$7.159 million in the year.

Operating costs and expenses

PULP CASH COST
From 2Q16 for the sake of comparison with subsequent quarters and given initial pulp sales from the Puma Unit, we
are using the unit cash cost of pulp production. This includes the production costs of hard and softwood fibers and
fluff and tonnage produced during the period. Production cash cost does not include selling and general and
administrative expenses, consisting exclusively of amounts expended on pulp production.
Unit cash cost of pulp production was R$768/tonne in the 4Q16, R$13/tonne below 3Q16. Puma Unit evolved in its
learning curve during the quarter, improving its technical indicators, mainly with cost of fibers reduction and better
net energy production. Labor and third parties cost increase were mainly due to the wage bargaining agreement and
non-recurring ramp up issues during in the period.

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At the end of December, the Puma Unit had almost completed its tenth month of production. During the mills first
year of operation, corresponding to the planned ramp up period, fixed costs are higher, both because of lower fixed
cost dilution as well as higher consumption per unit while plant operations have still not stabilized at full capacity.

R$ 781 / t
51

R$ 768 / t
55

140

159

Energy
Others

103

112
Labor / Third parties

163

167

Fuel Oil
Chemicals

R$ 781 / t
360
56

R$ 730 / t
331
56

Wood

154

166

TOTAL CASH COST

Energy

178
-56
4Q16
61

-37
108
3Q16

Others
Labor / Third
parties
Oil Fue

167

Chemicals

Total unit cash cost, which includes all products sold by the Company, was R$1,700/tonne in the quarter and
includes non-recurring amounts under the other operating revenues and expenses account. The amount represents
333
315
a 16% reduction in relation to the same period for the previous
year, explained mainly by the 56% increase in
volumes sold in the quarter, namely in the form of pulp sales from the new unit. In addition to the dilution effect,
cash cost reductions per tonne in the
periods reflect the impact of lower cost additions per tonne in the production
-36
-47
of pulp in comparison to the production
costs of paper and converted
products relative to the companys overall
3Q16
4Q16
costs. It should be pointed out that in the light of higher pulp output, some of the components of the cash cost saw a
relative increase as a percentage of the total. In 2016, the unit cash cost was R$1,831/tonne, 11% less than 2015.
This reduction is mainly due to a 797 thousand tonnes increase in pulp sales during the year.
Cash Cost Breakdown
4Q16

Cash Cost Breakdown

4Q15
Electricity
9%
Maintenance
materials /
stoppage
9%

Others
5%

Electricity
Maintenance 6%
materials /
stoppage
8%
Fuel Oil
4%

Labor / third
parties
34%

Fuel Oil
3%

Others
5%
Labor / third
parties
38%

Freight
12%

Freight
11%
Chemicals
14%

Wood / Fibers
15%

Chemicals
13%

Wood / Fibers
14%

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Cost of goods sold in the quarter was R$1,430 million, 34% higher than in the same period of the previous year,
increasing mainly on the back of higher pulp volumes sold. Considering the total volume sold in the quarters, cost of
goods sold per unit in 4Q16 was 14% lower than 4Q15. In 2016 as a whole, cost of goods sold per tonne decreased
9% in relation to the previous year - also mainly explained by the effects of dilution.
Selling expenses reached R$167 million in the quarter versus R$121 million in 4Q15 and R$186 million in 3Q16. The
significant increase in volumes sold by the new pulp plant largely explains higher selling expenses in relation to the
same period last year. In relation to the 3Q16, in addition to normalization of commercial expense levels following
the initial ramp up in pulp sales, there was a decline in non-recurring costs that had impacted total selling expenses
in the preceding quarter. Thus, selling expenses in the 4Q16 represented 8.5% of net revenues, dropping in relation
to the 9.5% in 3Q16. In 2016, selling expenses reached R$586 million, representing 8.3% of the years net sales.
General and administrative expenses of R$ 131 million in the quarter, a 5% increase in comparison to 3Q16,
explained mainly by the annual wage bargaining agreement. In relation to the same quarter in 2015, the increase
was 29%, mainly due to the changes in rules on payroll tax in December 2015, the wage bargaining agreement and
inflation in employee benefits breaks during the period. Also, adjustment of structures necessary and other nonrecurring expenses for the new pulp production operations and the expansion of the long-term incentive program
were factors that specifically impacted the period of comparison. These same reasons also explain most of the
increases for the year as a whole, this item reporting a total R$ 466 million. However, despite the significant increase
in pulp sales, general and administrative expenses per tonne fell by 17% when compared to the same quarter of the
previous year and 5% for the full year in comparison with 2015.
Other operating revenues/expenses totaled R$ 1 million in revenues in the 4Q16 and R$ 5 million for the full year.

Effects of the variation in fair value of biological assets

During 4Q16, the effects of the variation in fair value of biological assets was positive at R$57 million, mainly
because of growth in forestry area and recognized at fair value. In turn, the effect of the depletion of the fair value
of biological assets on the cost of goods sold amounted to R$125 million in 4Q16. Thus, the non-cash effect of the
fair value of biological assets in operational results (EBIT) was R$67 million negative in the quarter.

Operating cash generation (EBITDA)

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

4Q16

3Q16

4Q15

109
(34)
235
406
(56)
(16)
8
653
33%

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

521
264
(232)
268
(227)
(7)
15
603
37%

4Q16/3Q16 4Q16/4Q15
246%
-79%
129%
n/a
-8%
n/a
-9%
51%
-58%
73%
-15%
12%
+3 p.p.

-75%
131%
-46%
8%
-4 p.p.

2016

2015

2.482
733
(1.817)
1.423

(1.253)
(695)
3.441
999

2016/2015
n/a
n/a
n/a
42%

(525)
(49)
40
2.287
32%

(528)
(31)
42
1.975
34%

-1%
58%
-5%
16%
-2 p.p.

n/a - Not applicable

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

Klabins cash generation in 4Q16 was largely driven by pulp sales from the new Puma Unit. In addition to the sharp
increase in net revenues, growth in total sales volume also diluted the companys costs, thus benefiting results in
double.

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Sales growth associated to Klabins flexibility in adjusting to different economic scenarios reflected in additional
growth in relation to the same quarter of the previous year. Thus, operating cash generation (adjusted EBITDA) of
R$653 million was 8% higher than in 4Q15, the 22nd consecutive quarter of growth.
Also impacted by the increase in volumes sold, EBITDA for the full year of 2016 reached R$2,287 million, 16% more
than in the previous year.
These values include Klabins stake in Florestal Vale do Corisco S.A. of R$8 million in the quarter and R$40 million in
2016.

Indebtedness and financial investments

Gross debt on December 31 was R$ 18,469 million. Out of total debt, R$ 13,132 million or 71% (US$4,029 million) is
dollar denominated, mostly in the form of pre-export advances. The average maturity profile of financing held
stable at the end of 4Q16, standing at 43 months while local currency financing had an average maturity of 39
months and currency denominated lines, 46 months. Short-term debt at the end of the quarter was 15% of the total
with average cost of domestic lines of 9.3% p.a. and currency lines of 4.7% p.a. plus FX variation.
The companys cash and financial investments at the end of 4Q16 amounted to R$6,464 million, R$569 million more
than at the end of the 3Q16, the effect of cash generation and additional funding. This amount is equivalent to
amortizations maturing over the next 30 months.
Consolidated net debt on December 31, 2016 totaled R$12,005 million, a R$532 million increase in relation to
September 30 2016 again mainly reflecting investments in the construction of the Puma Unit and the acquisition of
new corrugated board conversion units, as well as the companys decision not to discount receivables in the
domestic market during the period. In relation to the end of 2015, net debt was R$406 million lower due to the
appreciation of the Real between the analyzed periods. Thus, the net debt/adjusted EBITDA ratio ended the year at
5.2x, the same level as 3Q16 and 1.1 times lower compared with 2015.

NET DEBT AND LEVERAGE

17,000

6.2

6.3

5.9
5.2

15,000

Net Debt (R$ million)

11,473
Sep-16

12,005

11,382
Jun-16

12,009
Mar-16

Net Debt/EBITDA (R$)

Dec-16

Sep-15

Jun-15

Dec-14

4,028

2,824
Jun-14

Sep-14

2,711

(1,000)

Dec-13

1,000

Mar-14

3,000

3,985

5,000

5,242

7,440

7,000

5.2

8,144

1.7

12,411

2.4

1.7

9,000

11,614

3.0

2.6

Mar-15

11,000

Dec-15

4.2

13,000

5.1

4.5

7.0
6.5
6.0
5.5
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
-0.5
-1.0
-1.5
-2.0
-2.5
-3.0
-3.5
-4.0

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Debt (R$ million)

dec-16

sep-16

Short term
Local currency
Foreign currency
Total short term

937
1.912
2.850

5%
10%
15%

885
1.749
2.634

5%
10%
15%

Long term
Local currency
Foreign currency
Total long term

4.399
11.220
15.619

24%
61%
85%

4.369
10.364
14.734

25%
60%
85%

Total local currency

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

5.337
13.132
18.469
6.464
12.005
5.2x

29%
71%

5.254
12.114
17.368
5.895
11.473
5.1x

30%
70%

Financial Results
Financial expenses totaled R$408 million in the quarter, a R$73 million increase in relation to 3Q16. A higher cash
position permitted the company to report financial revenues of R$232 million in the quarter, R$76 million more than
in the previous quarter. Thus, the financial result during the period, excluding the FX translation effect, was a
negative R$ 176 million, the same level as 3Q16. For the full year, financial results recorded a negative R$352 million.
FX rates ended the quarter at the same level as at the end of 3Q16. Thus, due to the impact on the companys
currency denominated debt, net FX variation amounted to a negative R$ 59 million in 4Q16. For the year as a whole,
the drop in FX rates had a positive impact on FX variation of R$2,168 million. It is worth highlighting that the effect of
FX variation on the companys balance sheet is purely an accounting one, with no short-term cash effect.

BUSINESS PERFORMANCE
Consolidated information per unit in 2016:

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

Forestry

Pulp

324
324
1,101
1,425
533
(1,622)
336
(45)
291

185
1,066
1,251
14
1,265
(1,076)
189
(245)
(56)

Note: In this table, total net revenue includes sales of other products.
* Forestry COGS includes the exaustion of the fair value of biological assets in the period.

Papers Conversion Consolidation

1,559
1,530
3,089
1,219
4,308
(2,847)
1,461
(422)
1,039

2,164
264
2,428
18
2,446
(2,059)
387
(310)
77

(2)
(2)
(2,352)
(2,354)
2,378
24
23
47

Total
4,230
2,860
7,090
7,090
533
(5,226)
2,397
(999)
1,398

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FORESTRY BUSINESS UNIT

Volume (1.000 tonnes)

4Q16

3Q16

4Q15

Wood

788

657

865

Wood

74

84

77

R$ million

4Q16/3Q16 4Q16/4Q15
20%
-9%
-12%

-3%

2016

2015

2,462

3,204

2016/2015
-23%

320

362

-12%

In the fourth quarter 2016, the companys wood log volumes sold to third parties totaled 788 thousand tonnes, 9%
less than in 4Q15. Albeit partially offset by better prices and mix during the period, lower volume explains the 3%
year-on-year decrease in revenues.
In 2016, initial wood supplies to the new pulp operations resulted in a decline in wood sales to third parties to 2,462
thousand tonnes, 23% less than in 2015. As was the case in 4Q16, lower volumes, partially offset by better prices and
mix, resulted in a slower decline in sales revenues, totaling R$320 million in 2016.

PULP BUSINESS UNIT

Production
Volume (1.000 tonnes) 4Q16 3Q16 4Q15
Short Fiber
Long Fiber
Total Pulp Volume

225
83
308

208
85
293

4Q16/3Q16 4Q16/4Q15
8%
N/A
-2%
N/A
5%
N/A

2016

2015

608
223
831

2016/2015
N/A
N/A
N/A

Sales Volume

Volume (1.000 tonnes) 4Q16 3Q16 4Q15

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

27
181
208
20
74
94
301

29
189
218
11
86
97
315

294
177
471

313
178
491

4Q16/3Q16 4Q16/4Q15
-8%
N/A
-4%
N/A
-5%
N/A
77%
N/A
-13%
N/A
-3%
N/A
-4%
N/A

2016

2015

72
519
591
32
174
206
797

2016/2015
N/A
N/A
N/A
N/A
N/A
N/A
N/A

862
385
1,247

N/A
N/A
N/A

R$ million
Short Fiber
Long Fiber
Total Pulp Revenues

-6%
0%
-4%

N/A
N/A
N/A

In 4Q16, total volume produced by the Puma Unit reached 308 thousand tonnes, a 5% increase in relation to 3Q16.
Total pulp volumes sold reached 301 thousand tonnes, of which 208 thousand tonnes of hardwood and the
remainder, softwood pulp. For the full year of 2016, total pulp volumes sold were 797 thousand tonnes, in line with
the forecasted learning curve established in 2015.
Despite recent improvements, hardwood pulp prices in the quarter continued to be squeezed with average FOEX
prices in Europe decreasing to US$655/tonne in 4Q16 from US$ 671/ton in 3Q16. On the other hand, average

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softwood pulp prices were flat in the same period. Note that the appreciation of the Real/US Dollar rate also
affected pulp prices in Reais.
Sales of hardwood pulp are mainly anchored to an agreement with Fibria signed in May 2015. Under this agreement,
Klabin will supply Fibria with a minimum of 900 thousand tonnes of hardwood pulp annually, to be sold by Fibria on
an exclusive basis to countries outside South America. Klabin commercializes all of the remaining output from Puma,
with hardwood pulp sold in Brazil and South America, and softwood pulp and fluff in both domestic and global
markets. Sales price is equivalent to the average net price practiced by Fibria, FOB (free on board) Paranagu,
excluding South American countries.
Following a period of ratification and in line with plan, fluff pulp sales are already being delivered to regular clients in
the domestic market and this trend will accelerate in coming months. The company has sold softwood pulp to 18
different countries, indicative of the excellent acceptance of Klabins pulp in global markets.

PAPER BUSINESS UNIT

Volume (1.000 tonnes)

4Q16

3Q16

4Q15

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

21
70
91
110
77
188
279

21
73
94
106
75
181
275

23
95
118
109
84
194
312

Kraftliner
Coated boards
Total Paper

179
578
757

174
551
725

261
637
898

R$ million

4Q16/3Q16 4Q16/4Q15
0%
-9%
-3%
-26%
-3%
-23%
4%
1%
3%
-8%
4%
-3%
1%
-11%
3%
5%
4%

-31%
-9%
-16%

2016

2015

100
298
399
401
292
693
1,092

116
303
418
396
289
685
1,103

2016/2015
-13%
-1%
-5%
1%
1%
1%
-1%

799
2,190
2,989

858
2,096
2,954

-7%
4%
1%

Kraftliner
European kraftliner list prices published by FOEX in December 2016 were the lowest in US Dollars since December
2009. Thus, prices ended 4Q16 at an average of US$553/tonne, below both 3Q16 and also 4Q15. For Klabin, the
recent appreciation of the Real has also affected prices in local currency.
With reduced export margins and signs of improvement in the Brazilian economy, larger quantities of kraftliner were
diverted to the conversion units, affecting 4Q16 sales volume in relation to the same quarter in the previous year.
Volume was also smaller on the back of a reduction in third party paper purchases, which had been driven in the
4Q15 by the hike in FX rates and lower recycled paper prices. Lower volumes, strengthening FX rates and lower
international prices led to a year-on-year reduction in net revenues.
For the full year, there was also a reduction in kraftliner sales due to an increase in product sales to corrugated
board and industrial bag plants. The movement was stronger in the second half of the year following the
appreciation of the Real and the more accentuated decrease in international market prices. Thus, sales volume and
revenues were 5% and 7% respectively lower in relation to 2015.

Coated Boards
Demand for coated boards in 4Q16 posted a 5% decrease in relation to the same period in 2015, according to a
report published by the Brazilian Tree Industry (IB), a reflection of continued weakness in the Brazilian economy.

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Despite worsening IBA numbers, but due to the resilience of the markets in which it operates, Klabin successfully
increased sales volumes in the domestic market both by comparison with 4Q15 and 3Q16. Meanwhile, exported
volumes of coated board dropped on the back of a less attractive lower average FX rate during the period.
For the full year, it is worth highlighting the increase in volumes sold both domestically and internationally, thanks to
quality and to the receptivity of the products not only in Brazil but also in growing markets such as China and
Southeast Asia.

CONVERSION BUSINESS UNIT

Volume (1.000 tonnes)

4Q16

3Q16

4Q15

Total conversion

183

183

176

Total conversion

618

621

586

R$ million

4Q16/3Q16 4Q16/4Q15
0%
4%
-1%

5%

2016

2015

708

690

2016/2015
3%

2,381

2,251

6%

ABPO statistics posted no recovery in corrugated box shipments, ending 4Q16 with a 3% drop in relation to the same
period last year. However, benefiting from its significant operations with leading food sector companies, in addition
to already enjoying contributions from the recently acquired plants in Manaus (AM) and Rio Negro (PR), Klabin was
able to report a year-on-year increase in sales volumes.
Despite the fragility of the cement industry, which reported a 12% decrease during 2016 according to data published
by the National Cement Industry Union (SNIC), Klabin maintained its sales in the industrial bags market by breaking
into new segments such as fertilizers, food and coffee. In the export markets, the company has consolidated its
presence in new markets with each passing quarter, increasing export volumes to countries such as Mexico and the
United States, where it has had success in the sale of bags not only to the civil construction sector but also to the
food, grain and chemical markets.
In this context, sales volume of converted products showed a 4% increase in 4Q16 in relation to 4Q15. Despite the
negative FX effect on industrial bag exports, revenues in the quarter were up by 5% in relation to the same period
last year, once more indicative of the Companys ability to adapt and its competitiveness in different markets and
under adverse scenarios. For the full year, despite the adversities in the Brazilian domestic economy and FX volatility,
volume was 3% higher, accompanied by a 6% increase in revenues versus 2015.

INVESTMENTS
Klabin invested R$511 million in 4Q16, principally destined to
the new pulp plant in Ortigueira (PR) and the acquisitions in
Forestry
45
136 the corrugated board packaging segments. Of total
Maintenance
109
405 investments in the quarter, forestry operations received R$45
Special projects and growth
185
320 million, covering replanting for supply to the new Puma Unit.
Puma Project
172 1,707 Investments in the operational continuity of the plants
Total
511 2,567 accounted for a further R$109 million while R$185 million
went towards special projects and expansion, especially the acquisition of the Hevi corrugated board conversion unit
in Manaus (AM) and Embalplan in Rio Negro (PR).

R$ million

4Q16

2016

During the quarter, capex in the Puma Project amounted to R$172 million. Total capex in the project was
approximately R$ 8.5 billion, with R$ 1.7 billion invested in 2016, with the remaining tranche of about R$ 150 million
to be paid out in 2017.

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CAPITAL MARKETS
Equity Markets
In the fourth quarter of 2016, Klabins units (KLBN11) appreciated 4%, in comparison to the IBOVESPAs 3%
appreciation. The Units traded on every day the BM&FBovespa was open for business, registering 539 thousand
trades involving 141 million securities and an average daily trading volume of R$39 million at the end of the period.
KLBN11 x Ibovespa
139

100

KLBN11

dez-16

nov-16

out-16

set-16

ago-16

jul-16

jun-16

mai-16

abr-16

mar-16

fev-16

jan-16

dez-15

76

ndice Ibovespa

Klabins capital stock is represented by 4,733 million shares, of which 1,849 million are common shares and 2,884
million, preferred. Klabins shares are also traded in the United States under a Level I ADRs program on the OTC
market under the KLBAY ticker symbol.
Klabin is a component of BM&FBovespas Corporate Sustainability Index (ISE). The index includes shares of
companies that are outstanding in terms of degree of commitment to sustainability both in terms of the company
and the country as a whole. The participating companies are selected annually, based on Fundao Getlio Vargas
(GVces) Sustainability Study Center criteria.

Fixed Income
Klabins debt securities (notes) mature in July 2024, with an issue value of US$ 500 million and negotiated in the
secondary market on the Luxembourg Stock Exchange. The notes were issued at a rate of 5.25% p.a. with semiannual interest paid during the months of January and July. Fitch Ratings assigned Klabin a BBB- investment grade
and Standard & Poors BB+ rating.

Notes Klabin 2024

US$/note

105
100
95,6

95
90

85

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TELECONFERENCE
CONFERENCE CALL PORTUGUESE

ENGLISH (simultaneous translation)

Quinta-feira, 02 de fevereiro de 2017 11h00 (Braslia).

Thursday, February 2nd, 2017 08:00 a.m. (NY).

Senha: Klabin

Password: Klabin

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

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

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

International participants: 1-786-924-6977

Senha: 1768442#

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

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

O udio da Teleconferncia tambm ser transmitido pela internet.

Password: 4735670#

Acesso: http://cast.comunique-se.com.br/Klabin/4T16
The conference call will also be broadcasted by internet.
Access: http://cast.comunique-se.com.br/Klabin/4Q16

Klabin is the largest integrated producer, exporter and packaging paper recycler in Brazil with gross revenues of R$ 8.2 billion. The
company has a capacity to produce 3.5 million tonnes of products annually. The company defines as its strategic focus operation
in the following businesses: paper and packaging, coated boards, corrugated boxes, industrial bags and wood and logs.

Statements in this release relative to the Companys business perspectives, operational and financial results estimates and, to the Company
potential growth are merely forecasts based on Managements expectation in relation to the future of the Company. These expectations are highly
dependent on market changes, on Brazilian general economic performance, on the industry and on international markets, therefore being subject
to change.

14

EARNINGS RELEASE 4Q16 FEBRUARY 01, 2017

Annex 1
Consolidated Income Statement (R$ thousands)

(R$ thousands)

4Q16

3Q16

4Q15

4Q16/3Q16

4Q16/4Q15

2016

2015

2016/2015

Gross Revenue

2,263,335

2,260,526

1,877,204

0%

21%

8,204,424

6,745,775

22%

Net Revenue

1,963,845

1,964,848

1,595,507

0%

23%

7,090,798

5,687,589

25%

57,277

139,745

226,614

-59%

-75%

532,911

536,113

-1%

Change in fair value - biological assets

Cost of Products Sold

(1,429,532)

(1,537,686)

(1,063,709)

-7%

34%

Gross Profit

591,590

566,907

758,412

4%

-22%

Selling Expenses

(167,322)

(186,008)

(121,389)

-10%

38%

(586,075)

(428,902)

37%

General & Administrative Expenses

(130,704)

(124,623)

(101,326)

5%

29%

(466,493)

(338,013)

38%

-87%

-90%

(13,104)

-136%

(780,019)

34%

Other Revenues (Expenses)

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

1,036

7,768

10,369

(5,227,023)

(3,981,502)

2,396,686

2,242,200

4,707

31%
7%

(296,990)

(302,863)

(212,346)

-2%

40%

(1,047,861)

294,600

264,044

546,066

12%

-46%

1,348,825

1,462,181

-8%

16,190

9,352

6,580

73%

146%

49,321

30,626

61%

(848,485)

51%

581,900

60%

Financial Expenses

(407,598)

(334,677)

(233,853)

22%

74%

Financial Revenues

231,517

155,186

159,906

49%

45%

932,026

Net Foreign Exchange Losses

(59,406)

(77,109)

306,158

30%

n/a

2,168,929

(3,174,030)

n/a

(235,487)

(256,600)

232,211

9%

n/a

1,816,789

(3,440,615)

n/a

3,214,935

(1,947,808)

n/a

Net Financial Revenues

Net Income before Taxes
Income Tax and Soc. Contrib.
Net income

75,303

16,796

784,857

348%

n/a

33,559

14,649

(264,251)

-56%

n/a

108,862

31,445

520,606

246%

-79%

405,915

444,550

268,446

-9%

51%

Change in fair value of biological assets

(57,277)

(139,745)

(226,614)

-59%

-75%

Adjusted EBITDA

(732,989)
2,481,946
-

Depreciation and amortization

Vale do Corisco

(1,284,166)

1,423,112

694,611
(1,253,197)

n/a
n/a

998,727

42%

(532,911)

(536,113)

-1%

8,027

9,459

15,074

-15%

-47%

40,300

42,007

-4%

652,626

585,041

602,972

12%

8%

2,287,420

1,975,232

15%

15

EARNINGS RELEASE 4Q16 FEBRUARY 01, 2017

Annex 2
Consolidated Balance Sheet (R$ thousands)
Dec-16

Dec-15

Current Assets

Assets

9,960,035

8,675,744

Cash and banks

41,576

56,511

5,831,144

4,997,212

591,303

557,143

1,625,380

1,501,099

Inventories

876,915

701,126

Recoverble taxes and contributions

803,355

736,501

Other receivables

190,362

126,152

19,353,694

17,592,436

Short-term investments
Securities
Receivables

Liabilities and Stockholders' Equity

Dec-16

Dec-15

4,143,664

3,162,295

2,593,029

1,716,306

Debentures

245,080

329,810

Suppliers

634,856

702,199

Current Liabilities
Loans and financing

Taxes payable

53,643

45,400

Salaries and payroll charges

257,712

195,349

Dividends to pay

180,000

66,884

61,772

112,460

111,459

Noncurrent Liabilities

18,069,729

17,753,545

Loans and financing

14,765,982

14,834,935

864,456

1,140,679

1,476,866

954,269

REFIS Adherence
Other accounts payable

Noncurrent Assets
Long term

1,554,672

1,159,638

Judicial Deposits

85,704

77,391

Other receivables

385,706

219,820

Deferred income tax and social contribution

555,345

507,275

Other accounts payable - Investors SCPs

229,315

143,116

12,995,407

12,009,146

REFIS Adherence

340,364

361,240

Biological assets

3,656,596

3,606,389

Other accounts payable

392,746

319,306

Intangible assets

120,264

12,777

Taxes to compensate

Other investments
Property, plant & equipment, net

Debentures

StockholdersEquity

7,100,336

5,352,340

Capital

2,384,484

2,383,104

Capital reserve

1,301,907

1,293,962

Revaluation reserve

48,705

48,705

Profit reserve

2,543,084

748,162

Valuation adjustments to shareholders'equity

1,028,238

1,064,181

Treasury stock
Total

29,313,729

26,268,180

Total

16

(206,082)
29,313,729

(185,774)
26,268,180

EARNINGS RELEASE 4Q16 FEBRUARY 01, 2017

Annex 3
Loan Maturity Schedule 12/31/16
R$ milhes

2017

2018

2019

2020

2021

2022

2023

2024 2025/26

Total

BNDES

547

532

484

370

318

314

290

237

3.092

Outros

134

178

117

284

190

104

88

39

1.134

Debntures

256

173

62

526

62

31

Moeda Nacional
Pr Pagamento
Financ. de Ativo Fixo - BNDES
Bonds

937

883

662

1.180

570

448

379

275

1.527

1.049

1.335

1.264

1.346

1.097

238

194

205

213

204

189

183

170

162

38

ECA's

1.109
2

1.625

5.336
7.855

22
-

1.542
1.663

152

287

287

281

279

224

176

176

208

2.072

Moeda Estrang.

1.912

1.541

1.835

1.749

1.814

1.504

585

1.963

230

13.133

End. Bruto

2.849

2.424

2.496

2.929

2.384

1.952

964

2.238

232

18.469

R$ million

Average Cost Average Tenor

2.929

2.849

Local Currency

1.749
2.424

2.496

2.238

1.814

1.835

1.912

Foreign Currency

2.384

Gross Debt

Foreign
Currency
13,133

1.963

1.952
1.504

1.541

Gross Debt
18,469
1.180

964
585

937

2017

883

2018

570

662

2019

2020

Local currency : R$ 5.3 billion

Average tenor: 39 months

2021

448
2022

379
2023

275

232
230
2

2024

2025/26

Foreign currency: R$ 13.1 billion

Average tenor : 46 months

Local
Currency
5,336

17

9.3% p.y.

39 months

4.7 % p.y.

46 months
43 months

EARNINGS RELEASE 4Q16 FEBRUARY 01, 2017

Annex 4
Consolidated Cash Flow Statement (R$ thousands)
4Q16

4Q15

2016

2015

Cash flow from operating activities

331,177

442,948

1,202,849

1,739,996

Operating activities

386,237

458,153

1,360,848

2,167,727

. Net income

108,862

520,606

2,481,946

(1,253,197)

. Depreciation and amortization

240,851

82,600

748,221

. Depletion in biological assets

165,064

185,846

674,891

685,303

. Change in fair value - biolgical assets

(57,277)

(226,614)

(532,911)

(536,113)

313,424

(4,300)

(10,741)

(44,670)

(6,910)

. Results on Equity Pickup

(16,190)

(5,595)

(49,321)

(29,641)

. Deferred income taxes and social contribution

(37,746)

542,966

(724,821)

. Equity results

(119,343)

.Income taxes and social contribution

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

244,003
-

317,334

(201,178)

18,608

46,737

7,254

(134,244)
(1,486,137)
60,166

(16,326)
4,004,843
416,815

10,219

29,016

40,891

(201,830)

(177,934)

(970,694)

(765,019)

11,684

12,632

48,777

47,653

. Others

(46,734)

(22,428)

(7,158)

(9,175)

Variations in Assets and Liabilities

(55,060)

(15,205)

(157,999)

(427,731)

(271,113)

(125,014)

(124,281)

(352,423)

. Variation of the present value of debentures

. Payment of interest on loans
. REFIS Reserve

. Receivables
. Inventories

(1,740)

(37,509)

(175,789)

(137,417)

. Recoverable taxes

81,769

(181,786)

(327,644)

(1,118,961)

(14,534)

(18,078)

(34,160)

(59,539)

. Marketable Securities
. Other receivables

(95,662)

(25,598)

(249,208)

. Suppliers

171,210

371,805

637,094

. Taxes and payable

. Salaries, vacation and payroll charges
. Other payables

(51,239)
1,081,199

10,740

(4,841)

8,243

(9,737)

(19,215)

(10,964)

62,363

55,470

83,485

16,780

45,383

164,916

Net Cash Investing Activities

(602,250)

(1,352,275)

(2,648,153)

(4,595,526)

. Purchase of property, plant and equipment

(463,099)

(1,335,913)

(2,421,779)

(4,526,734)

. Cust biological assets planting (ex taxes)

(48,122)

(27,925)

(144,868)

(100,471)

Acquisition of investments and payment of capital in subsidiaries

(93,063)

(93,063)

. Sale of property, plant and equipment

. Income of assets sale
Net Cash Financing Activities
. New loans and financing

9,441

758

2,034

2,122

10,799

14,672

826,052

592,501

2,264,301

2,663,420

1,242,405

1,075,783

4,505,275

4,925,579

(64,283)

. Debentures interest payment

(218,548)

. Loan amortization
. Minority shareholders entry
. Minority shareholders exit
. Dividends payed
. Stocks repurchase
. Stocks disposal

(356,800)

17,007

(450,140)

(342,486)

(1,371,314)

(1,514,105)

65,000

(1,454)

(18,971)

(213)

(117,000)

(105,010)

(447,503)

(377,995)

(15,068)

(21,472)

(24,262)

(32,623)

6,216

5,263

Increase (Decrease) in cash and cash equivalents

554,979

Cash and cash equivalents at beginning of period

5,317,741

5,370,549

5,053,723

5,245,833

Cash and cash equivalents at end of period

5,872,720

5,053,723

5,872,720

5,053,723

18

(316,826)

818,997

(192,110)