Message from the Board – Klabin

Message from the Board

SOLID FINANCIAL RESULTS, EVOLVING ENVIRONMENTAL INDICATORS AND AN INNOVATIVE AND INTERNATIONALLY RECOGNIZED APPROACH TO TERRITORIAL DEVELOPMENT REINFORCE KLABIN’S FOCUS ON SUSTAINABILITY AS ONE OF THE COMPANY’S COMPETITIVE ADVANTAGES. THE COMPANY REMAINS COMMITTED TO CONSTANTLY INVESTING IN THE AREA, GUIDED BY INNOVATION AND TECHNOLOGY, TO CONTINUE OFFERING SOLUTIONS FOR A BIODEGRADABLE FUTURE.

(GRI 102-14)

The Brazilian industry experienced an extremely challenging year in 2018, marked by political uncertainties that intensified market instability and by the truck drivers’ strike. Such factors took a toll on industrial production and tax collection. Under this scenario, however, Klabin once again demonstrated its resilience and ability to deliver consistent results.

The company recorded Adjusted EBITDA growth of 47% compared to 2017 and consolidated its pulp operation, with reported production above nominal capacity at the Puma Unit in the second half of the year. In the paper and packaging markets, Klabin increased its domestic sales volume, especially for kraftliner, and achieved good performance in the industrial bags and corrugated board packaging units.

As a result of the strong cash generation in the period, the net debt/Adjusted EBITDA ratio closed the year at 3.1x, against 4.1x in the previous period, reinforcing Klabin’s deleveraging trend observed since the start-up of the Puma Unit operations. These substantial figures contributed to consolidating the environment for new growth plans in the different markets where the company operates.

Aware of the market representation it has achieved in recent years, proven by its incomparable forest productivity, solid financial results and exclusive product mix, Klabin has been focusing on full operational efficiency since 2017. In view of all this, sustainability is understood as a competitive advantage and a long-term commitment to its stakeholders, which guides the company’s performance and future vision.

>> THE COMPANY’S STRONG RESULTS REINFORCED ITS DELEVERAGING TREND, CONTRIBUTING TO CONSOLIDATE THE ENVIRONMENT FOR NEW INVESTMENTS AND GROWTH PLANS <<

Klabin’s robust environmental management model, which contributes to process and operational improvements, and the increased use of renewable sources within the company’s energy matrix result in major achievements in this area, such as a reduction in greenhouse gas emissions. Further evolving in this indicator is a goal and a challenge for the company, which is constantly investing in innovative industrial utility technologies to support the desired improvements.

As a signatory to the United Nations (UN) Global Compact since 2003 and in line with the Sustainable Development Goals (SDGs), Klabin’s social activity gained important recognition in 2018. The company’s progress and prosperity agenda, whose guidelines and outcomes were achieved through the Local Development Forum of Goiana (PE), was disseminated at an event promoted by the UN in New York. Klabin’s adopted approach to promote territorial development, guided by the UN’s SDGs, was considered innovative.

The company also expanded its investments in Research, Development and Innovation. Targeted initiatives include the acquisition of 12.5% of the Israeli startup Melodea Bio Based Solutions and the announcement of the construction of the Pilot Plant Park in Paraná. This new area will house studies and tests on research fronts such as the microfibrillated cellulose, which will later be incorporated into the company’s paper production lines, enhancing the quality and strength of its products.

The cultivation of planted eucalyptus and pine forests inspires R&D+I work in which the two genera of fiber are used. Such a strong competitive advantage supports Klabin, based on the most recent consumption trends, in planning the development of even more sustainable packaging and conceiving projects to boost the multiple uses of wood.

>> THE LOCAL DEVELOPMENT FORUM OF GOIANA WAS RECOGNIZED AT AN EVENT PROMOTED BY THE UN FOR ITS INNOVATIVE APPROACH TO TERRITORIAL DEVELOPMENT BASED ON THE ADOPTION OF THE SDGs <<

The 120-year journey celebrated in 2019 confirms the company’s vocation for innovation and for building its own path towards the future – traits the company has been boasting throughout its history. The celebration’s highlight was the announcement in April of the company’s largest investment yet: BRL 9.1 billion in the Puma II Project, encompassing the assembly of two paper machines, with integrated pulp production in Paraná. One major challenge now is to prepare for the start of construction and assembly works.

Driven by its commitment to sustainably and responsibly addressing all its stakeholders and its unrestricted choice for innovation, Klabin is gearing up for the 21st century as a supplier of multi-purpose, renewable, recyclable and biodegradable forestry products, in line with global sustainable consumption trends.

We would like to thank all those who contributed to the company’s prosperity throughout 2018: the Board of Directors and controlling shareholders, who supported Klabin’s plans and potential for reinvention; the employees, who are engaged and focused on delivering the best results; and the investors, customers and suppliers who, through their partnership, collaborate for our business’s sustainability.

Cristiano Teixeira
Klabin’s Chief Executive Officer