Indstrias Klabin announces fourth quarter and consolidated results for 2000

(So Paulo, March 12, 2001) Indstrias Klabin de Papel e Celulose S.A. announces today fourth quarter and consolidated results for 2000. Except where otherwise indicated, the operating and financial information is presented in consolidated, Reais-denominated numbers according to Brazilian corporate law. The comparisons made in this release relate to figures for 1999, unless otherwise stated. The results of Igaras, an acquisition made by Klabin on October 3, 2000 are included in Klabins consolidated earnings as from the fourth quarter 2000.

HIGHLIGHTS FOR THE YEAR

 Net operating profits before financial results grew 48% to R$ 462 million.  The Company achieved its eighth consecutive quarter of increased cash generation with an annual EBITDA of R$ 632 million.  Sales volume of packaging paper and corrugated boxes, Klabins leading business segments, increased by 22% and 21% respectively.  Average prices increased by 15%.  Acquisition of Igaras for US$ 510 million (US$ 398 million in cash and US$ 112 million of debt assumed by Klabin) consolidates Klabins leadership in the packaging segment.  Klabin increases its capital via a primary share issue worth R$ 278.1 million, an operation concluded on January 4, 2001.  The stake in Klabin Riocell increased from 40% to 99%, through a swap of Klabin preferred shares for common and preferred shares of Klabin Riocell.  The expansion project in Klabin Riocell began, with capital expenditures totaling US$ 130 million.  The capitalization of Klabin Bacell, through the assumption of debt worth R$ 192 million, raised Klabins stake in the company from 61% to 82%.  Formalization of the joint venture Norske Skog Klabin for the manufacture of newsprint.

Comments from Josmar Verillo, CEO The year 2000 for Klabin was marked by positive developments and favorable prospects for the future. We increased the focus on higher value added products, thus reaping the benefits of the strategic plan which had been implemented in 1998. We completed the acquisition of Igaras, which enhanced our leadership in the packaging segment. The financial structure established to fund this acquisition a capital increase through a new share issue. In addition, Klabin was able to take full control of Klabin Riocell thanks to a share swap operation.
Consolidated Net O perating Revenue (R$ million)
1,884 1,482 1,106

Klabin has demonstrated its growing cash generation capacity while also posting net revenues of R$ 1.8 billion, an increase of 27%. EBITDA was R$ 632 million in 2000 with operating profits before financial results posting R$ 462 million, 48% better than 1999. Net profit was R$ 14 million adversely affected by financial and extraordinary expenses.

In 2000, Klabin opted for a new phase of growth aimed at establishing the foundations for generating long-term positive results. The positive impact of the Igaras acquisition will already translate into higher cash generation by early 2001. The Company is well structured to meet the challenge of a growth market in a year when the outlook for the domestic economy is favorable.
1998 1999 2000

Statement of Income
1999 Consolidated Total* - R$ million Gross revenue Net revenue Consolidated Results** - R$ million Gross revenue Net revenue Gross profit Gross margin Operating result (before financial results) Operating margin EBITDA EBITDA margin Net profit/ loss 2000 Chg. (%) 00/99 29% 30% 27% 27% 37% 48% 38% -

1,862 1,631 1,681 1,482 596 40% 312 21% 457 31% (116)

2,409 2,115 2,136 1,884 819 44% 462 25% 632 34% 14

* Includes 100% of revenue from all companies independent of Klabins stake in total shareholding. ** The consolidation is proportional to the participation in the total shareholding in accordance with CVM Instruction 247/96.

Economic and Financial Performance

Sales and Net Revenue
In 2000, the pulp and paper market benefited from steady prices due to the recovery in overseas demand and economic stability in Brazil. This operating environment boosted the Companys business principally in the packaging segment. As from October 2000, the results of Igaras are included in Klabins consolidated earnings, affecting the corrugated boxes and packaging paper sales volume. Sales volume, excluding the wood segment, totalled 1.5 million tons, or 9% higher than 1999. The Company reported volume increases of 22% in packaging paper, 21% in corrugated boxes, 11% in printing and writing paper and 8% in tissue. Pulp volumes posted a decline of 11%.
S ales V o lu m e 2000 N et R ev en u es 2000
P ackag in g

P a c ka g in g O th e rs 1% M u lti-la y er S a c ks & E n v e lo p es 7% T is su e 1 0% N ew s p rin t & P rin tin g P a p e r 1 0% P u lp 2 3% C o rru g a te d B o xe s 2 5%

T issue 21%

O th e rs 3%

P ag e r 19%

Paper 2 4%
M ulti-laye r S acks & E n v e lo pe s 9% C o rru g ate d B o xe s 20%

P u lp N e wsp rin t & P rintin g Pape r 9% 19%

The domestic market accounted for 70% of net revenue and 66% of volume (consolidated 100%), proportions very similar to the previous year (70% and 65% respectively).
S ales V o lu m e

N et R even u es

35%

34%

30%

30%

65%

66%

70%

70%

1999

2000

1999

2000

Domestic Market

Exports

Domestic Market

Exports

The average price of R$ 1,380 per ton was 15% higher year-on-year, reflecting the favorable market environment and the improvement in the mix of higher value added products. Consolidated net revenue was R$ 1.8 billion, 27% above the value reported in 1999.

Gross Profit
Gross profit was R$ 819 million and gross margins increased from 40% to 44%, reflecting sales growth, a better mix of higher value added products, the recovery in average prices and improved operating efficiency.

Operating Profit
The operating profit before financial results was R$ 462 million, an increase of 48% compared to 1999. Operating expenses (sales, general and administrative expenses) represented 19% of net revenue, remaining at the same level of 1999. However, fees for consultancy and advisory services related to the acquisition of Igaras are incorporated in the income statement as extraordinary expenses, as well as part of the expenditures related to the consolidation of company operations.

EBITDA
Cash flow as measured by EBITDA was R$ 632 million, 38% higher than 1999, underscoring Klabins growing capacity to generate cash. The good operating performance is also reflected in improved EBITDA margin for the period, which increased from 31% to 34%, thus maintaining the upward trend that began in 1999.
EB ITDA (R$ m illion) and EB ITDA M argin (% )
700 600 500 400 300 200 100 0

31%

34%
632

3 5% 3 0% 2 5% 2 0% 1 5% 1 0%

16%

457

181

5%

0% On a pro-forma basis, Klabins annual 1998 1999 2000 EBITDA would have posted R$ 724 million had the entire fiscal year of Igaras E B IT D A E B IT D A Margin been included in the consolidated results. This provides a more realistic indication of the Companys cash generation as measured by EBITDA in relation to invested capital.

Net Profit
Klabins net profit totaled R$ 14 million after three years of losses. Profits were negatively impacted by financial expenses that directly affect the balance sheet (depreciation of the Real against the US dollar of 9%), and by non-recurring expenses, attributed to restructuring and administrative rationalization.

Financial Results and Debt

The Company reported net financial expenses of R$ 352 million. The results were impacted by the effect of the depreciation of the Real on debt and financial costs incurred with the structuring of the funding requirements for the Igaras acquisition. Klabin posted net debt of R$ 2,475 million, or 63% of total capitalization (47% in 1999). Of total net debt, 68% is financed from long term funds with maturities out to 2007, 66% of which is denominated in foreign currency.

Debt
(R$ million)

December 31, 2000 Local Foreign Total Currency Currency

December 31, 2000 * Local Foreign Total Currency Currency

Short Term Long Term Gross Debt Cash and short term investments Net Debt

435 549 984

520 955 1,123 1,672 1,643 2,627 (152) 2,475

157 549 706

520 677 1,123 1,672 1,643 2,349 (152) 2,197

* Including funds from the share issue on January 4, 2001.

With the conclusion of IKPCs share issue on January 4, 2001, net debt was reduced to R$ 2,197 million. Debt is expected to decline with a changing maturity profile from 2001 onwards due not only to the new share issue but also to operating cash generation, the lengthening of the debt profile and the substitution of foreign currency for local currency loans. During 2000, there were some important events, which contributed to changes in the Companys capital structure: In October, Klabin concluded the acquisition of Igaras, for a value of US$ 510 million, which included the assumption of US$ 112 million in debt. In November, the financial restructuring of Klabin Bacell, begun in the middle of 1999, was concluded. Under this restructuring program, Klabin Bacell transferred its debt of R$ 192 million to Klabin, which in turn raised its stake in the subsidiary from 61% to 82%. Also in November, a swap operation was concluded in which 82.4 million Klabin preferred shares were exchanged for 289.9 million of common and preferred shares in Klabin Riocell, the latter thereby becoming a wholly owned subsidiary of Klabin. In December, Klabin issued 154.5 million preferred shares worth R$ 278 million, through a primary public offering. The operation was concluded on January 4, 2001 with BNDESPAR acquiring the entire issue and taking a 21% stake in Klabins capital. Also in December, Klabin injected US$ 22 million into the capital of Klabin Argentina.

Fiscal Recuperation Program - REFIS

In December, Klabin Riocell adhered to the Fiscal Recuperation Program, (Programa de Recuperao Fiscal) REFIS, created under Law 9964 of April 10, 2000. Klabins participation means that it renounces all litigation in relation to the debts refinanced under the REFIS program. The value outstanding under this program as of December 31, 2000 was R$ 15.1 million, to be amortized in 60 months and indexed to the Long Term Interest Rate - TJLP.

Capital Expenditure
In 2000, Klabin invested R$ 1 billion in acquisitions, projects for increasing installed capacity, technological upgrades and reforestation. Out of this total, R$ 789 million is linked to payments related to the acquisition of Igaras, Lalekla and Bacraft.

The Company concluded an important phase in its capital expenditure program for the expansion and modernization of the plant at Klabin Papis in Telmaco Borba in the State of Paran. The program, under which R$ 310 million has so far been invested since 1997, involved the installation of the coater-on-machine together with the substitution of the recovery boiler furnace. Klabin also invested R$ 50 million in Klabin Celucat, covering refurbishing work for machinery as well as increasing installed capacity for the production of multi-layer sacks. Work has started to raise installed capacity at the Klabin Riocell plant where output will increase from 300,000 tons of pulp annually (of which 250,000 tons is bleached pulp) to 405,000 tons 100% bleached. Klabin is to invest a total of US$ 130 million in this project, which is scheduled for conclusion by the beginning of 2002. Another key project in progress during the year was the implementation of the SAP R/3 management information system that will integrate all the units of the Klabin group. Begun in 1998, R$ 16 million has already been invested in this project over the past three years.

Capital markets
Klabins shares were traded on all open business days of the So Paulo Stock Exchange in 2000. Total trading volume was R$ 314 million representing 14,000 transactions and involving 195.6 million shares. Trading in Klabins shares accounted for 18% of all transactions in the pulp and paper sector in terms of financial volume. The shares recorded a depreciation of 1.4% during the year, against a depreciation of 10.7% for the Ibovespa.
Performance of Klabin Preferred Shares 2000
30 Traded Volume 25 Millions of shares 20
1,74

2,0 1,9 1,8 1,7

1,63

15 10 5 0

1,53

1,6 1,5 1,4

1,45

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Klabin also has a Level 1 ADR program. The companys ADRs are traded on the US over the counter market, each ADR representing ten preferred shares. Share buy-back The Company repurchased and cancelled 66.7 million of its own preferred shares during the year, with no change in its capital stock. Share issue Subsequently, in November 2000, Klabin issued 82.4 million new common and preferred shares as part of the swap operation of shares in IKPC in exchange for a stake representing approximately 59% of Klabin Riocell. Dividends In May 2000, the Company distributed R$ 14 million in complementary dividends pertaining to the 1999 fiscal year. In October 2000, the company made an advance payment of dividends related to the fiscal year 2000 totaling R$ 22 million (R$ 30.04 per lot of a thousand common shares and R$ 33.05 per lot of a thousand preferred shares). In April 2001, will be defined the dividend for the year 2000.

R$ / Share

Average Price

Special conditions related to the swap for shares in Klabin Riocell As part of the public offer to swap Klabin preferred shares for Klabin Riocell common and preferred shares, and in accordance with the best practices of corporate governance, Klabin has undertaken a tender offer for the shares of all remaining shareholders over a three year period, maintaining the same swap ratio as in the original public offering. In addition, Klabin has offered a retroactive tag along facility to those shareholders of Klabin Riocell that accept the swap offer. Thus in the event that control of Klabin Riocell is sold within two years, the Company will pay the difference, should the price of the public offering adjusted according to the TR (reference rate) be less than the eventual sale price. Capital Stock Klabins capital stock on December 31, 2000 was R$ 928.4 million, divided into 763.1 million shares: 316.9 million common and 446.2 million preferred shares. From January 4, 2001, with the paying in of 154.5 million preferred shares, capital stock increased to a total of R$ 1,206.6 million represented by 917.6 million shares of which 316.9 million are common and 600.7 million preferred shares.

Shareholding Structure on 01/04/01

C o m m o n S h ares
O thers 21%
Inte rnatio nal Inve sto rs 13%

P referr e d S h are s

M onteiro Aranha G roup 20%

Klabin Irmos 59%

B ND E S PA R 32%

L o cal Inve sto rs 55%

Annex 1
Consolidated Income Statement
Brazilian Corporate Law (Thousands of R$) 2000 Net Revenues Cost of Sales Gross Profit Selling Expenses General & Administrative Expenses Other Revenues (Expenses) Operating Result (before Fin. Results) Financial Expenses Financial Revenues Operating Result Non Operating Revenues (Expenses) Net Income (Loss) before Inc. Tax and Soc. Contrib. Income Tax and Soc. Contrib. Minority Interest Net Income (Loss) Amortization / Depreciation EBITDA 1,884,092 (1,065,373) 818,719 (202,213) (155,890) 1,484 462,100 (405,632) 53,928 110,396 9,077 119,473 (58,248) (47,490) 13,735 169,845 631,945 Results 1999 1,481,899 (885,847) 596,052 (163,695) (116,704) (3,554) 312,099 142,569 (144,823) (4,454) (149,277) 12,839 19,974 (116,464) 144,444 456,543 175,402
8

Change 402,193 179,526 222,667 38,518 39,186 (5,038) 150,001 (88,641) 255,219 13,531 268,750 (71,087) (67,464) 130,199

% of Net Revenues 2000 100.0% (56.5%) 43.5% (10.7%) (8.3%) 0.1% 24.5% (21.5%) 2.9% 5.9% 0.5% 6.3% (3.1%) (2.5%) 0.7% 1999 100.0% (59.8%) 40.2% (11.0%) (7.9%) (0.2%) 21.1% (40.5%) 9.6% (9.8%) (0.3%) (10.1%) 0.9% 1.3% (7.9%)

(599,491) (193,859)

Annex 2
Consolidated Balance Sheet
Brazilian Corporate Law (Thousands of R$)
Assets Current Cash and banks Short-term investments Receivables Inventories Recoverable taxes and contributions Other receivables Dec. 31-00 Dec. 31-99 832,036 24,382 127,470 301,305 236,230 82,345 60,304 790,667 8,669 272,030 247,289 170,492 52,451 39,736 Liabilities and Shareholders Equity Current Loans and financing Debentures Suppliers Income tax and social contribution Taxes payable Dividends payable Salaries and social charges Other accounts payable Dec. 31-00 Dec. 31-99 1,247,717 952,094 2,822 157,956 33,425 25,711 0 37,792 37,917 1,798,051 1,556,553 115,300 126,198 23,507 58,892 1,228,352 928,444 111,604 102,989 85,315 4,356,519 631,863 407,857 4,515 110,132 3,448 21,354 13,998 28,381 42,178 1,302,709 1,072,105 150,000 80,604 0 237,673 1,017,121 605,065 109,177 106,810 196,069 3,189,366

Long-Term Deferred income tax and soc. contrib. Taxes to compensate Recoverable taxes Other receivables Permanent Other Investments Property, plant & equipment, net Deferred charges

211,570 83,946 25,221 52,568 49,835 3,312,913 609,193 2,578,416 125,304

167,518

Long-Term Loans and financing 78,452 27,686 Debentures

40,589 Other accounts payable Results for Future Fiscal Years 20,791 Minority Interests 2,231,181 74,457 Share Capital 2,031,483 Capital Reserves 125,241 Revaluation Reserve Profit Reserve 3,189,366 Total Shareholders Equity

Total

4,356,519

Annex 3
Average Price - R$ / t Ex-tax 1999 2nd Q 3rd Q 4th Q 1,019 930 934 1,091 1,152 1,575 991 1,124 1,203 2,085 2,516 3,002 724 836 937 608 785 879 1,139 919 1,088 947 1,060 1,139 1,422 1,449 1,668 1,090 1,218 1,399 1,195 Sales Volume - 1,000 t
1999 1st Q 2nd Q 3rd Q 4th Q 24 21 21 23 11 11 10 17 65 77 73 75 31 33 32 36 92 93 95 97 69 74 60 71 23 19 35 26 72 75 81 79 24 26 27 25 3 3 2 1 322 339 341 353 Year 89 49 290 132 377 274 103 307 102 9 1,355 2000 1st Q 2nd Q 3rd Q 4th Q 27 26 28 29 11 10 10 9 74 62 81 136 34 37 38 35 72 92 87 83 56 64 67 49 16 28 20 34 72 76 89 135 26 27 28 27 3 4 3 3 319 334 364 457 Year 110 40 353 144 334 236 98 372 108 13 1,474
10

Newsprint Printing Packaging Tissue Pulp Klabin Riocell Klabin Bacell Corrugated Boxes Sacks/Envelopes Average Annual Average

1st Q 796 1,023 1,059 2,050 747 633 1,088 878 1,370 1,057

2000 1st Q 2nd Q 3rd Q 4th Q 948 1,005 1,188 1,338 1,475 1,556 1,512 1,579 1,099 1,094 1,174 1,005 3,034 2,967 3,111 3,023 954 1,114 1,147 1,270 1,086 1,130 900 1,012 1,141 1,357 1,371 1,489 1,133 1,132 1,117 1,117 1,626 1,611 1,652 1,667 1,333 1,400 1,447 1,344 1,380

Newsprint Printing Packaging Tissue Pulp Klabin Riocell Klabin Bacell Corrugated Boxes Sacks/Envelopes Others Total