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accompanied by an EBITDA margin of 27%. EBITDA before non-recurring adjustments came to R$ 188 million, with a margin of 23%; Net income of R$ 114 million before the impact of the Federal Tax Debt Restructuring Program (REFIS). After these effects, the result was a net loss of R$ 185 million, versus a net loss of R$ 314 million in 4Q08; Increase of 9% in the average dollar price of kraftliner compared to 3Q09.
2009 Highlights
Net debt fell by R$ 1.2 billion, while the net debt/EBITDA ratio declined from 5.1x in December 2008 to 3.4x in December 2009; Solid cash position: financial investments totaled R$ 2.1 billion at year-end, versus R$ 1.7 billion at the close of 2008; Operating cash flow (EBITDA) came to R$ 747 million, 3% up on the previous year, with an EBITDA margin of 25%, versus 24% in 2008; Net income of R$ 632 million before the impact of the REFIS program. After these effects, net income stood at R$ 333 million, versus a net loss of R$ 349 million in 2008; Coated boards domestic market share, excluding board for liquid packaging, stood at 25%, compared to 18% in 2008.
R$ Million Net Revenue
% Exports
4Q09 805
22%
3Q09 750
21%
4Q08 806
35%
4Q09/3Q09
4Q09/4Q08
2009 2,960
24%
2008 3,097
28%
2009/2008
-4%
0%
EBITDA
EBITDA Margin
219
27%
199
27%
242
30%
747
25%
729
24%
3%
0%
Net Income
Net Debt Net Debt/EBTIDA (last 12 months) Capex
The quarterly and annual information for fiscal years 2009 and 2008 are presented in accordance with Laws 11,638/07 and 11,941/09, the provisions of the Accounting Pronouncements Committee (CPCs) and the provisions laid down by the Securities and Exchange Commission of Brazil (CVM).
Investor Relations:
Antonio Sergio Alfano, Luiz Marciano Candalaft, Vinicius Campos, Daniel Rosolen, Lucia Reis Tel: +55 11 3046-8404/8415/8416 invest@klabin.com.br Visit our website: www.klabin.com.br
2009 / 2008
-24% -25%
-7% -2%
8% -25%
1,544
Ind. Bags 9%
39%
Others 2%
36%
Kraftliner 25%
64% 61%
C orrugated Boxes
2008
30%
Domestic Market
Net Revenue
Net revenue, including timber, came to R$ 805 million in 4Q09, stable over 4Q08 and 7% higher than the previous three months. Net revenue in the domestic market totaled R$ 632 million, growth of 20% and 6% over 4Q08 and 3Q09, respectively. Export revenue stood at R$ 174 million, 38% less than in 4Q08 due to lower prices and a reduction in kraftliner volume, and an 11% improvement over 3Q09. Annual net revenue amounted to R$ 2,960 million in 2009, 4% down on 2008 due to the economic crisis and the consequent reduction in paper and timber sales volume. The domestic market accounted for 78% of total revenue in the fourth quarter and 76% in the full year.
2,960
24%
28%
Kraftliner 13%
Wood 5%
76% 805 22% 78% 4Q09 750 21% 79% 3Q09 806 35% 65% 4Q08 2009
72%
includes wood
32%
2008
Domestic Market
Export Market
Exports In 2009, exports to Latin America remained buoyant, thanks to strong sales of coated board and industrial bags. Exports to Asia increased from 18%, in 2008, to 22%, above the figures for Africa and North America.
Volume - 2009
North America 6%
Africa 7%
Europe 27%
Europe 20%
Operating Expenses
The cost of goods sold totaled R$ 606 million in 4Q09, 9% and 12% up on 4Q08 and 3Q09, respectively, due to increased sales volume, labor cost increase and higher old corrugated containers prices. COGS per tonne fell by 2% over 4Q08 and climbed by 4% over 3Q09. In the full year, COGS came to R$ 2,185 million, 4%, or R$ 102 million, down on 2008, due to the 2% reduction in sales volume and lower old corrugated containers and oil prices. COGS per tonne fell by 2%. Selling expenses totaled R$ 70 million in 4Q09, 23% and 3% down on 4Q08 and 3Q09, respectively. Freight costs in 4Q09 totaled R$ 42 million, 29% down year-on-year and 11% less quarter-over-quarter. Selling expenses came to R$ 300 million in the year, 6% down on 2008. General and administrative expenses totaled R$ 49 million in 4Q09, 4% down year-on-year and 9% less than in 3Q09. Annual G&A expenses fell 5% over 2008 to R$ 177 million. The cash cost stood at R$ 1,337/t in the quarter, 8% and 4% down on 4Q08 and 3Q09, respectively, and R$ 1,449/t in the full year, 5% lower than in 2008. Operating income before the financial result (EBIT) amounted to R$ 110 million in 4Q09, 18% down year-on-year and 26% less than in 3Q09. Annual EBIT totaled R$ 309 million, 5% down on 2008.
12/31/08 Local Currency Foreign Currency Short Term % Short Term Local Currency Foreign Currency Long Term % Long Term Local Currency Total % Local Currency Foreign Currency Total % Foreign Currency Gross Debt Cash Net Debt 396 83 479 9% 2,092 2,880 4,972 91% 2,488 46% 2,963 54% 5,451 1,703 3,748
12/31/09 492 203 695 15% 1,683 2,243 3,926 85% 2,175 47% 2,446 53% 4,621 2,052 2,569
Net Income
Net income in 4Q09, before the non-recurring impact of REFIS program totaling R$ 299 million, came to R$ 114 million. Including this effect, the company posted a net loss of R$ 185 million, versus a net loss of R$ 314 million in 4Q08 and net income of R$ 183 million in 3Q09. Annual net income, before the non-recurring impact of R$ 299 million from adherence to the REFIS Program, totaled R$ 632 million. Including this effect, net income stood at R$ 333 million, versus a loss of R$ 349 million in 2008.
4Q09 Net income before adjustments Adjustments of adherence to REFIS Net (loss) / income after adjustments 114 299 -185
Business Performance
BUSINESS UNIT - FORESTRY Sales volume of logs to third-parties in 4Q09 totaled 536,000 tonnes, 26% up on 4Q08 and 4% more than in 3Q09. The Company handled 2.1 million tonnes of logs in the quarter, 1.6 million of which went to pulp production. In the full year, Klabin handled 7.9 million tonnes of pine and eucalyptus logs, woodchips and biomass for energy generation, 6% less than in 2008. Of this total, 6.0 million tonnes were transferred to the plants in Paran, Santa Catarina and So Paulo and 1.9 million tonnes were sold on the market.
536
513
42
42
4Q09
3Q09
4Q09
3Q09
Domestic Market
Net revenue of logs to third parties in 4Q09 totaled R$ 42 million, 12% and 2% up on 4Q08 and 3Q09, respectively. Annual net revenue of logs amounted to R$ 158 million, representing 5% of total revenue and 21% down on 2008. In 4Q09, the homebuilding industry in the United States remained stable in relation to the previous quarter. In the year as a whole, U.S. new housing starts fell to a seasonally adjusted average of 555,000 units, 39% down on the 2008 average. However, the December figure was in line with December 2008, standing at 557,000 new units.
590 540
555
jan/06
Source: US Census Bureau
jan/07
jan/08
jan/09
Quarter average
Housing starts
At the close of December, own and third-party planted area totaled 214,000 hectares, 145,000 of which planted with pine and araucaria and 69,000 with eucalyptus. In addition, 191,000 hectares were given over to permanent preservation and legal reserve areas. Klabin acts as the guarantor for small landowners wishing to obtain financing for forest plantation. The loans are contracted through the Program for Commercial Planting and Forest Recovery (Propflora) and the National Program to Support Family Farming (Pronaf), and are partially settled with some part of the planted logs. In 2009, such areas totaled 6,900 hectares in the regions adjacent to the Companys forestry units in the states of Paran, Santa Catarina and So Paulo, involving around 542 rural producers.
BUSINESS UNIT - PAPER Paper and coated board sales volume to third parties totaled 267,000 tonnes in 4Q09, 8% and 10% up on 4Q08 and 3Q09, respectively. In 2009, sales volume came to 923,000 tonnes, 4% less than the year before. Net revenue of paper and boards stood at R$ 383 million in 4Q09, 9% down on 4Q08 and 12% up on 3Q09. In the full year, net revenue of paper totaled R$ 1,373 million, 7% less than in 2008. Paper and board exports amounted to 137,000 tonnes in the quarter, 15% less than in 4Q08 and 5% more than in 3Q09, accounting for 51% of the Units total sales volume, versus 66% in 4Q08 and 54% in 3Q09. Annual exports totaled 520,000 tonnes, 11% less than in 2008. Kraftliner Fourth-quarter kraftliner sales volume came to 109,000 tonnes, 9% down on 4Q08 and 1% up on 3Q09. In the full year, this figure totaled 393,000 tonnes, 14% lower than in 2008, due to the temporary shutdown of the recycled paper unit in Ponte Nova in the first quarter, which resulted in increased use of kraftliner in the production of corrugated boxes. Kraftliner exports stood at 71,000 tonnes in the quarter, representing 65% of total sales of this product. Domestic kraftliner sales volume totaled 38,000 tonnes, a hefty 144% up year-on-year and 59% more than the previous quarter. Net revenue of kraftliner came to R$ 106 million in 4Q09, 36% down on 4Q08 and 11% up on 3Q09, thanks to higher prices in the quarter. The annual figure came to R$ 385 million, a 29% decline over 2008. Net revenue of kraftliner accounted for 13% of total revenue in 2009.
545
80% 78%
385
109
65%
108
78%
120
87%
4Q09
3Q09
4Q08
2008
4Q09
Domestic Market
The reduction in kraftliner prices during the international crisis led to permanent and temporary capacity shut-downs throughout the year. According to surveys by RISI, production in North America has been cut by 2.2 million tonnes since 4Q08. With the end of the black liquor tax credit, the closures should continue in 2010, creating a favorable scenario for new price hikes. According to FOEX, the average dollar list price of 175g/m2 kraftliner brown increased by 9% in 4Q09, closing at US$ 611/t. In 2009, international prices average US$ 577/t, 21% down on the US$ 732/t recorded in 2008.
. 7
1,318
1,308
1,398
1,329 1,191
2 . 5 0
. 3
. 1
. 9
539
581
1 . 7 0
. 5
1 Q05
2Q05
3Q05
4Q05
1 Q06
2Q06
3Q06
4Q06
1 Q07
2Q07
3Q07
4Q07
1 Q08
2Q08
3Q08
4Q08
1 Q09
2Q09
3Q09
4Q09
So urce: FOEX - Kraftliner bro wn 1 g/m 2 - PIX P ACKA GING EUROP E B enchmark Indexes 75
Coated board
Coated board sales volume totaled 158,000 tonnes in 4Q09, 24% up year-on-year and 17% up quarteron-quarter. Annual sales stood at 531,000 tonnes, 5% more than in 2008. Coated board net revenue came to R$ 277 million in the quarter, 10% up on 4Q08 and 12% more than in 3Q09, thanks to increased demand in the domestic and international markets. In 2009, net revenue from coated board sales stood at R$ 988 million, 6% up on the year before and accounting for 33% of total annual revenue. Coated board exports totaled 66,000 tonnes in 4Q09, 15% and 41% higher than in 4Q08 and 3Q09, respectively.
40% 43%
158
42% 58%
135
35% 65%
127
45% 55%
60%
57%
277
248
253
4Q09
3Q09
4Q08
2009
Exports
2008
4Q09
3Q09
4Q08
2009
2008
Domestic Market
According to Bracelpa, domestic coated board sales volume (excluding liquid packaging boards) totaled 147,000 tonnes, 25% and 3% more than in 4Q08 and 3Q09, respectively. Annual sales volume totaled 507,000 tonnes, in line with the year before. Klabins market share was 25% in 2009, versus 18% in 2008. BUSINESS UNIT CORRUGATED BOXES Shipments of corrugated boxes amounted to 124,000 tonnes in 4Q09, 18% and 6% up on 4Q08 and 3Q09, respectively, and 457,000 tonnes in the year, 3% more than in 2008.
457
444
124
117
241
230
4Q09
3Q09
3Q09
4Q08
2009
2008
Domestic Market
Net revenue from corrugated boxes totaled R$ 256 million in 4Q09, 11% up year-on-year and 6% more than the previous three months. Annual net revenue amounted to R$ 946 million, flat over 2008 and representing 32% of total revenue. Preliminary ABPO figures indicate shipments of corrugated boxes and sheets of 2.3 million tonnes in 2009, also flat over 2008. In 4Q09, packaging consumption moved up substantially, averaging 209,000 tonnes per month, 14% and 6% more than in 4Q08 and 3Q09, respectively.
175 181
184
jan/06
jan/07
jan/08
jan/09
Quarter average
Source: Brazilian Association of C orrugated Boxes
Monthly volume
10
BUSINESS UNIT INDUSTRIAL BAGS Industrial bags sales volume from Brazil and Argentina on the domestic and international markets totaled 35,000 tonnes in 4Q09, 19% up on 4Q08 and 2% more than in 3Q09. Annual sales climbed by 2% to 130,000 tonnes.
Net revenue from industrial bags came to R$ 108 million in 4Q09, 7% up year-on-year and 3% down on 3Q09. The annual figure stood at R$ 429 million, 5% more than in 2008 and accounting for 15% of total 2009 revenue.
130
429 127
411
35 4Q09
34 3Q09
108 4Q09
111 3Q09
In order to prepare for expected strong demand in 2010, in December 2009 the Industrial Bags Business Unit acquired a complete production line for multilayered valve-type bags. According to preliminary SNIC figures and market estimates, domestic cement sales totaled 51 million tonnes in 2009, in line with the previous year. In 4Q09, cement sales moved up by 2% over 4Q08, but fell by 5% over 3Q09. In December, sales climbed by 4% over the same month in 2008, confirming strong domestic demand.
jan/06
jan/07
jan/08
jan/09
Quarter average
Source: Nation Labor Union of C ement Industry
Monthly consumption
11
R$ Million
Forestry Papers Packaging Indutrial Bags Others Total
Capex totaled R$ 35 million in 4Q09 and R$ 247 million in the full year, 49% of which was allocated to the Paper Business Unit, 40% to the Forestry Business Unit and 10% to the corrugated boxes plants.
Capital Market
In 4Q09, Klabin's preferred shares (KLBN4) appreciated by 26%, while the Ibovespa index recorded gains of 15%. The Company's shares were traded in all sessions of the So Paulo Stock Exchange (BM&FBovespa), totaling 133,408 transactions involving 132.3 million shares, giving an average daily traded volume of R$ 10.4 million, 22% more than the previous quarter. In the year as a whole, Klabins preferred shares appreciated by 60%, versus 83% for the Ibovespa. The following chart shows the performance of Klabins preferred stock and the benchmark Ibovespa index:
KLBN4 x IBOVESPA Inception = 12/31/08
200 190 180 170 160 150 140 130 120 110 100 90 80 70
dez/08 mar/09 KLBN4 jun/09 set/09 IBOVESPA dez/09 83%
60%
Klabins shares are also traded on the U.S. over-the-counter market as Level I ADRs under the ticker KLBAY. Klabins equity is represented by 917.7 million shares, 316.8 million of which common and 600.9 million preferred. At the close of 2009, 16.9 million preferred shares were held in treasury.
12
December 31 , 2009 Preferred Shares Share Price (KLBN4) Book Value Average Daily Trading Volume 4Q09 Market Capitalization 600.9 million $5.31 $2.96 R$ 10.4 million R$ 4.8 billion
st
Dividends
On November 16, 2009, Klabins shareholders received interim dividends of R$ 43.4 million, or R$ 45.27 per thousand common shares and R$ 49.80 per thousand preferred shares. In 2009 as a whole, dividend payments totaled R$ 123.0 million. Management will submit a proposal for the payment of supplementary dividends amounting to R$ 57 million to the approval of the Annual Shareholders Meeting to be held on March 29, 2010, raising the 2009 dividend total to R$ 180 million, equivalent to 30% of net income before adherence to REFIS program.
Strategy
Klabins corporate planning following the implementation of the MA 1100 Expansion Project includes targets for 2010 and 2011, as well as longer-term objectives. The short-term goals are:
To increase sales volume; To develop new products for the domestic and international markets; To attract key clients in the international market; To increase operating cash flow; To extend financing terms, thereby improving the debt profile; To reduce the net debt/EBITDA ratio; To improve our Global Scale Rating;
The Company has approved investments which will positively impact its variable costs:
Installation of a biomass boiler in the Otaclio Costa plant, in Santa Catarina, to substitute the oilfired boilers; Substitution of the 69Kv high-voltage transmission line at the Monte Alegre plant, in Paran, with a 230Kv line, thereby reducing energy costs.
13
The construction of a global-scale pulp plant with a capacity of between 1.3 and 1.5 million tonnes per year, increasing pulp production capacity to 3.2 million tonnes per year. The installation of a new coated board machine with a capacity of between 400,000 and 500,000 tonnes per year, expanding coated board capacity to 1.2 million tonnes per year and total paper and paper packaging production to 2.6 million tonnes per year.
In order to guarantee the raw material for the new pulp plant, the company needs to increase wood production, which will be achieved through the following strategy:
Own resources:
The replanting of existing forests, given that yields from the new forests are 50% higher than those being harvested; The replacement of pine by eucalyptus forest thanks to demand for hardwood pulp in Monte Alegre;
Third-party resources, particularly from investment funds, with initial investments of US$ 20 million, rising to an estimated US$ 100 million. Expansion of planted area through incentive program.
14
Conference Call
Friday, February 26, 2010 at 10:00 a.m. (Braslia). Code-in: Klabin Phone: (11) 4688-6331 Replay: +55 (11) 46886312 Password: 45850
Conference Call
Friday, February 26, 2009 9:00 a.m. (N.Y.) / 11:00 a.m. (Braslia) Password: Klabin Phone: U.S. participants: 1-888-700-0802 International participants: 1-786-924-6977 Brazilian participants: (55 11) 4688-6331 Replay: (55 11) 46886312 Password: 45851
Webcast
An audio webcast of the conference call will also be available on the internet. Access: www.ccall.com.br/klabin
With gross revenue of R$ 3.6 billion in 2009, Klabin is the largest integrated manufacturer of packaging paper in Brazil, with annual production capacity of 2.0 million tonnes. Klabin has adopted a strategic focus on the following businesses: paper and coated board for packaging, corrugated boxes, industrial bags and wood. Klabin is the leader in all market segments in which it operates. The statements made in this earnings release concerning the Company's business prospects, projected operating and financial results and potential growth are merely projections and were based on Managements expectations of the Companys future. These expectations are highly susceptible to changes in the market, in the general performance of the Brazilian economy, in the industry and in international markets, and therefore are subject to change.
15
16
dec-09
3,389,115 12,356 1,829,296 209,874 553,614 431,047 294,268 58,660
sep-09
3,219,798 11,644 1,534,078 339,736 520,619 443,769 326,378 43,574
jun-09
2,915,517 11,935 1,349,279 332,443 520,664 437,526 225,377 38,293
mar-09
3,042,020 21,596 1,175,912 419,402 673,176 447,491 253,424 51,019
dec-08
3,180,419 104,586 1,190,591 407,521 633,080 437,092 326,969 80,580
dec-09
1,454,107 694,798 189,696 1,622 50,399 68,859 57,002 331,685 60,046 4,099,942 3,925,637 174,305 56,665 2,387,018 1,500,000 84,491 78,964 815,851 (12,478) (79,810)
sep-09
1,129,828 784,021 179,346 1,931 47,075 66,320 51,135 4,052,229 3,905,643 146,586 37,745 2,673,061 1,500,000 84,491 79,461 1,101,098 (12,179) (79,810)
jun-09
1,070,259 743,461 171,679 1,792 48,299 59,331 45,697 4,216,440 4,059,244 157,196 30,179 2,540,190 1,500,000 84,491 79,973 964,764 (9,228) (79,810)
mar-09
1,032,379 714,830 171,777 1,796 40,905 48,270 54,801 4,805,959 4,657,867 148,092 29,156 2,272,927 1,500,000 84,491 80,493 690,916 (3,163) (79,810)
dec-08
843,368 479,262 215,546 764 42,152 59,661 45,983 5,123,843 4,971,637 152,206 27,974 2,247,015 1,500,000 84,491 81,016 661,627 (309) (79,810)
Noncurrent Assets Deferred income tax and soc. Contrib. Taxes to compensate Judicial Deposits Other receivables Other investments Property, plant & equipment, net Intangible assets
4,608,617 4,673,065 149,533 164,673 37,239 113,120 11,552 4,077,402 55,098 118,199 185,232 33,963 109,375 11,552 4,159,319 55,425
5,061,781 314,062 206,514 79,793 106,028 8,700 4,299,443 47,241 Stockholders' Equity Capital Capital reserves Revaluation reserve Profit reserve Valuation adjustments to shareholders'equity Treasury stock Minority Interests
Total
7,997,732
7,892,863
7,857,068
8,140,421
8,242,200
Total
7,997,732
7,892,863
7,857,068
8,140,421
8,242,200
17
566
467 306 551 420 234
311
47
199 141
264 64 77
1Q10 2Q10
194
118
42 76
3Q10
125
49 76
4Q10
326
316
292
288
72
2011 2012 2013 2014 2015 2016
57
After 2017
Local Currency
Foreign Currency
18
Attachment 4 Consolidated Cash Flow Statement BR GAAP Law 11,638/07 (thousands of R$)
2009
Cash flow from operating activities Operating activities . Net income . Depreciation, amortization and depletion . Equity results . Deferred income taxes and social contribution . REFIS income taxes and social contribution . Interest and exchange variation on loans and financing . Interest Payment . REFIS Provision . Results on Equity Pickup . Gains from variations in equity interests . Minority interest . Others Variations in Assets and Liabilities . Receivables . Inventories . Recoverable taxes . Judicial deposists . Marketable Securities . Prepaid expenses . Other receivables . Suppliers . Taxes and payable . Income and social contribution . Salaries, vacation and payroll charges . Other payables Net Cash Investing Activities . Purchase of property, plant and equipment . Increase in intangible . Sale of property, plant and equipment . Others Net Cash Financing Activities . New loans and financing . Amortization of financing . Payment of capital at subsidiaries by minority shareholders . Stocks Repurchase . Acquisition of minority shares in subsidiaries . Dividends Payment Increase (Decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 837,392 428,730 332,907 438,165 (63,400) 173,100 234,240 (507,897) (306,683) 97,445
2008
(509,605) 593,868 (348,646) 403,698 (2,163) (251,113) 1,113,429 (297,212) 238 (48,952) 9,214 15,375 (1,103,473) (198,723) (102,249) (99,485) 7,501 (407,521) (1,904) (37,186) (212,294) (331) (26,779) (9,689) (14,813) (519,247) (524,524) (7,414) 6,648 6,043 225,388 749,694 (220,548) (6,109) (60,652) (236,997) (803,464) 2,098,641 1,295,177
2,955 27,898 408,662 79,466 6,215 117,973 (878) 197,647 1,423 20,633 (25,464) 8,247 1,561 9,198 (7,359) (177,512) (246,658) (2,616) 73,050 (1,288) (113,405) 403,764 (419,648) 34,328 (8,728) (123,121) 546,475 1,295,177 1,841,652
19