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FAQ

Klabin S.A.

1. What is Klabin?

Klabin is the largest paper producer and exporter in Brazil, the leading company in the production of paper and board for packaging, corrugated cardboard and industrial bags, in addition to trading timber in logs. With 16 industrial units — 15 across Brazil, in seven States, and one in Argentina — the company is Brazilian and was founded in 1899.

2. What is the history of Klabin S.A?

The history of Klabin started with the arrival of two families of immigrants, Klabin and Lafer, in Brazil which, due to their strong connection and performance in several joint businesses, in 1899, they decided to found Klabin Irmãos & Cia. (KIC), in a production shop and importer of office and printing supplies. In 1902, KIC chose to expand its businesses and leased their first paper mill, Fábrica de Papel Paulista, and, in 1909, they built their first mill, Companhia Fabricadora de Papel which, right from 1920´s, was one of the largest manufacturers of the sector in Brazilian soil. From then on Klabin has not stopped growing until becoming today the leading company in the production of paper and boards for packaging, corrugated cardboard packages and industrials bags. 

For more information on the history of Klabin, please, log on to Timeline.

3. What are the business areas of Klabin S.A.?

Forestry:

  • production of raw material for other business areas and cellulose and the trading of timber for sawmills and sheeters.

Paper:

  • production of paperboard, kraft paper and recycled paper for packaging companies.

Cellulose:

  • Cellulose: long, short fiber cellulose, and fluff.

Corrugated paper and Bags:

  • paper conversion to develop any type of package, with application in sectors such as food, drinks and produce and industrial bags, servicing segments such as civil construction, feed, among others.   

 

Learn more in the Business and Products area of the institutional site

 

4. What are the products Klabin S.A produces?

a) Forestry

  • Timber — In addition to meeting the demand or raw material for Klabin paper mills, the Forestry Unit is the largest Brazilian supplier of timber originated in planted and certified forests. The pine and eucalyptus logs have their origin in forests which follow strict management plan, with FSC® certification. They are used by furniture industries, civil construction and sawmills.

b) Paper

  • Paperboard — it is paper formed by three layers, which can be long, short and/or recycled fiber, according to the need of the client. The types of paperboard manufactured by Klabin are:
    • LiquidPackagingBoard (LPB) – packages for wet products, such as milk and juices;
    • Carrier Board (CB) – high resistance packages, such as beer sixpack;
    • Folding Box Board (FBB) – medium resistance packages, such as frozen food boxes and laundry detergent.  
  • Recycled paper — used in the production of corrugated cardboard packages itself and also traded by other packaging companies. Around 15% of the raw material comes from corrugated cardboard package conversion units and the remaining is acquired by wastepaper wholesellers. The Piracicaba plant has the greatest number of recycled paper machines in Brazil, with a production capacity of 240 tons/day.
  • Kraftliner — Uses 100% of pine and eucalyptus virgin fibers, a mix which lends resistance, optimum printability and possibility for different applications. Excellent performance in the most varied industrial equipment, such as corrugators and printers.
  • Sack Kraft — Uses 100% of pine virgin fibers yielding high resistance to the product. Ideal for the manufacture of industrial bags.

c) Corrugated Cardboard and Industrial Bags

  • Corrugated cardboard — composed by kraftliner and recycled paper, they are developed by Klabin to be used in any type of packaging, in compliance with client specifications, with application in several segments such as foodstuff, drinks, cosmetics, electronics, hygiene and cleaning, produce and flowers, electrical, chemical materials and byproducts, clothes and shoes, glasses and ceramics.
  • Industrial bags — sackkraft composites, they are produced by Klabin in order to supply the civil construction, food, chemical products, agribusiness, feed industry, among others.

d) Cellulose

  • Long Fiber
  • Short Fiber
  • Fluff

5. What is the importance of each one of the business areas for the consolidated results?

 Net Income

6. What is Klabin´s production capacity?

2015

Total Area Thousand Hectares
Planted Area 235
Pine 144
Eucalyptus 91
Native Forest 254
Total Capacity Thousand Tons
Boards 750
Kraftliner 830
Sack Kraft 210
Recycled Paper 230
Total Capacity Thousand Tons
Corrugated Cardboard 655
Industrial Bags 155

7. Where does Klabin S.A sell its products?

Klabin S.A sells its products in more than 50 countries, both in the internal market as well as in the foreign market. It can opt for the market which offers the best commercial conditions, however, always keeping the commitment to supply the internal market.

8. What are the characteristics that make Klabin S.A unique in the market?

Klabin S.A has a total area of 490 thousand hectares (equivalent to 490,000 football fields) divided into: 255 thousand hectares of preserved native forests and 239 thousand hectares planted with pine and eucalyptus, in the southern region of Brazil. In this region, soil and temperature conditions are ideal for the development and maturity of pines (15 years) and eucalyptus (7 years). 

This forest base enables the Company to produce long and short fiber cellulose, and adequate the mix between both fibers in compliance with the specificity of the different types of paper manufactured by Klabin.

Moreover, Klabin always seeks to modernize its plants and develop new technologies which decrease its costs and optimize their processes.

With the Puma Project, the company will be the only Brazilian to produce the three types of cellulose fibers: short and long (a part converted into fluff) by means of excellent logistics between forest, plant and port.   

The People and Management area is considered national reference, with several awards, such as Top Employers 2016. 

9. How does Klabin S.A preserve the environment?

Klabin has an area of 490 thousand hectares, being 255 thousand hectares of preserved native woods and 239 thousand hectares planted with pine and eucalyptus, in addition to being the pioneer in adopting forest management in the form of mosaic – a system that blends planted pines and eucalyptus forests and preserved native woods.

The company was the first in the cellulose and paper sector in the Southern Hemisphere to be issued, in 1998, the FSC® - Forest Stewardship Council®, which certifies a management which preserves the natural resources, provides fair labor conditions and stimulates good relations with the community. 

Moreover, the company holds a Forest Fostering Program, an initiative that seeks to amplify and diversity the income in communities in which it performs, from the formation of planted forests in rural properties. The activity helps to keep farmers on the land, by promoting the recovery of vegetation and the establishment of different types of crops. The program has benefited 19 thousand farmers and distributed more than 160 million seedlings.

In addition, from 2014, the company has integrated the Bovespa sustainability index. 

10. Where does Klabin hold operations?

Klabin holds operations in Brazil (15 factories) and Argentina (1 factory). In Brazil, there are production units in seven states: São Paulo (Angatuba, Jundiaí and Piracicaba), Minas Gerais (Betim), Santa Caratina (Correia Pinto, Itajaí, Lajes and Otacílio Costa), Paraná (Monte Alegre and Ortigueira), Rio Grande do Sul (São Leopoldo), Bahia (Feira de Santana), Pernambuco (Goiana). There are offices in São Paulo, Rio de Janeiro, Pernambuco, Santa Catarina, Rio Grande do Sul, Ceará, Bahia and Minas Gerais. 

For more information, check here.

11. What is the Puma Project?

The Puma Project is the largest expansion project in the history of the company. It consists in the addition of 1.5 million annual tons of production capacity, with the construction of a large factory in Ortigueira, Paraná. Already finalized, it is a Unit which produces the three types of cellulose fibers: long, short fiber and fluff. Other highlights are energy efficiency (self sufficient in energy, with the sale of surplus) and exclusive minimum sale agreement of the production with Fibria.

For more information, check our institutional site.

Paper and Cellulose Sector (Pulp and Paper)

1. What is the difference between long fiber, short fiber cellulose and fluff?

Broadly, the difference between them is on the properties of each fiber. The long fiber (softwood) is about the cellulose from Pine (gymnosperm), whose length varies from 2 to 5 millimeters. Short fiber (hardwood) is derived from the eucalyptus (angiosperm) and has on average 0.5 to 2 millimeters in length. The long fiber cellulose has greater mechanical resistance. The short fiber has greater softness, absorption and opacity.

Klabin produces both types of cellulose, so that it can use the characteristics of both fibers and thus perfect its products.

The fluff cellulose comes from the long fiber of the pine. It has unique softness characteristics. Previously only imported, now it is produced in domestic soil, fruit of Klabin´s pioneering spirit.

2. What are the main uses of each type of fiber?

The short fiber, for its characteristics of softness and absorption, is used for the production of writing and printing paper and the sanitary/tissue category (tissue paper, napkins, paper handkerchief, among others). 

The long fiber, for its greater resistance, is used in inner layers of paperboard and in the production of packages, such as cardboard. Klabin is specialized in the production of the latter, with a wide range of industrial clients. The fluff cellulose is widely used in the high quality diaper and pad market.

3. What is the difference between the integrated and market cellulose?

The cellulose is said to be integrated when, after manufacture, it is sent directly to a plant adjoining that of manufacture, originating products to be traded. An example is to produce the short fiber cellulose and send it for production at an adjoining plant that produces paperboard.

4. How is cellulose manufactured? What is the “kraft” process?

There are two main manufacturing types: chemical and mechanical. The chemical uses only chemical reagents and heat to dissolve the bonds of the wood. The second uses mechanical energy to break down and remove the fibers. The kraft process is one of the main processes of the first type. Its highlight is the production of a higher resistance cellulose, great flexibility and efficient reagent recovery system and energy production.

5. What are the variables that affect the sector?

They are many, but the main ones are the price of cellulose, regulatory changes, stoppages/failures in the production, labor issues, exchange market, national and global economical situation and offer and demand of paper and cellulose.

6. What is the importance of China?

China consumes more than it produces. Its paper consumption corresponds to 25% of the world consumption and the country imports a lot of cellulose for the conversion into packages. Their main raw material is recycled paper, which is turned into packages for the export industry, as opposed to Brasil, where the predominant raw material is the virgin fiber cellulose. These raw material differences imply in distinct productions, since Klabin uses virgin fiber for the production of packages for foodstuff and drinks.

7. How does the exchange market interfere in the sector?

A large share of Brazilian companies of the sector export their products and have business lines in foreign countries. Thus, oscillation in the Brazilian currency with the Euro and mainly the Dollar have a direct effect in the price of its shares, since they can mean greater or lesser revenue from export.

Shares and the Stock Market

1. How to invest in shares from Klabin?

In order to buy shares, a file in a financial institution is necessary, whether a bank or a brokerage house, which will give you the needed aid in the choosing of your investments in addition to performing the trading intermediation with the Stock Exchange through a registration form filled out and approved by the brokerage house. 

Before investing in shares it is important to enhance your knowledge on the topic in order to assure a conscious decision. For such, the BMF&Bovespa website offers a step-by-step to help new investors how to invest in the capital market.

2. Where does Klabin negotiate its papers? What are their symbols?

In Brazil, Klabin negotiates its shares at BM&FBovespa — São Paulo Stock Exchange (São Paulo), being:

  • Units: KLBN11
  • Preferential: KLBN4
  • Ordinary: KLBN3

In the United States, Klabin lists its shares by the ADR1 program, and the securities are listed at OTC (over-the-counter), under code KLBAY.

3. What are the differences between the ordinary, preferential shares and units of Klabin S.A?

The ordinary shares differ for granting voting rights in the decisions of the General Meetings, having observed the legal restrictions. As for the owners of preferential shares they will have the rights of priority in reimbursement, in case of winding up of the Company and restricted vote, in the events provided on Article 15 of the Articles of Association. Still the right for restricted voting is given for all preferential shares in the event of transformation, incorporation, merger or  split of the company, approval of agreements between the company and its controller or other companies, provided they are matters of the assembly, evaluation of goods which compete for the increase of capital and the choice of specialized company for the setting up of the economical value of the company.

The units are assets comprised of more than one class of securities traded in conjunction. They are assets with greater liquidity of Klabin in the stock market. Each of them is comprised of 1 ordinary share and 4 preferential shares. In case of doubt, refer to the Articles of Association:

4. What is ADR and how are they negotiated?

ADR (American Depositary Receipts) is a deposit certificate issued by north-American banks, representative of shares from companies headquartered outside of the United States, facilitating, therefore, the foreign investment at Klabin S.A. The price of an ADR is usually close to that of the price of the share from its market of origin, adjusted by the ratio between ADR and the original share.

Each ADR corresponds to 2 Klabin Units (1 ADR = 2 KLBN11).

5. Where can I get information on my shares and ADRs from Klabin?

For more information on your shares, get in contact with the custodian.
Banco Itaú
Av. Engenheiro Armando de Arruda Pereira, 707 — 9th floor
Torre Eudoro Villela 04344-902 — São Paulo (SP) Tel +55 11 3003-9285 (State Capitals and Metropolitan Areas) / +55 0800 7209285 (Other locations)
itaucustodia.com.br


For more information on your ADRs, get in contact with the depository bank.
NY Mellon
From the United States, call 1-888-BNY-ADRS (1-888-269-2377)
Outside of the United States, call +1 201-680-6825
By e-mail ${email::bnymellon.com#shrrelations}
bnymellon.com/shareowner

6. Where can I get the price history of the shares?

It is possible to visualize the KLBN11, KLBN4, KLBN3 and KLBAY price history in our Interactive Graph, here.

7. What is Corporate Governance Level? What level is Klabin on?

Corporate Governance can be understood as a set of corporate rules and good practices which align the goals of the company administrators and the interests of investors. It allows for a better management and monitoring of the company´s executive management. 

BM&FBovespa has created levels for companies which adopt these practices. Depending on the commitment level, the level is listed as Level 1, 2 or New Market, where Level 1 is the most restricted set of practices to obey and New Market is the widest possible set of adopted practices. 

From January 09, 2014, Klabin has integrated Level 2 of the São Paulo Stock Exchange Corporate Governance (BM&FBovespa).

For more information on the differentials of integrating level 2 of Corporate Governance, click here.

8. What is tagalong? Do the Klabin shares have this right?

The right for “tagalong” guarantees that, in the event of sale of corporate control, the buyer shall perform a public offer of share acquisition not only to the controlling shareholders, but also to the minority shareholders. These latter have the right to receive a minimum of 80% of the amount paid for the controllers´ shares, with this percentage varying with the level of Corporate Governance of the company in question.

As a company belonging to level 2 of BM&FBovespa Corporate Governance, Klabin guarantees  the right for payment of the minority shares of 100% of the amount paid for the controllers´ shares.

9. How often does Klabin release its financial statements? When do public meetings take place? Where can I follow the dates?

The financial statements are a subsidy for the analysis of the past and the current situation of a company. They provide short, mid and long term perspectives. Klabin releases its statements on a quarterly basis, and they may be accessed here.

Klabin´s public meeting takes place annually and counts on the presence of analysts and other interested people. The date of release of the statements and the public meeting can be seen here.

10. What is Klabin´s dividend policy? Where can I find the dates of the last payments?

On each period, a dividend of at least twenty-five percent (25%) is attributed to the shareholders over the Net Profit adjusted under the form of the law. However, many times it is a common practice of Klabin to pay dividends in the form of 20% of the Adjusted EBITDA. Klabin's different classes of shares have the same economical rights, thus, there is no difference between the amount of paid dividends between them. 

Is it possible to check the dates of the last payments of dividends here.

11. What is Ordinary General Assembly (AGO)?

The Ordinary General Assembly (AGO) is an event convened by the board of a company to: (1) assess, discuss and vote financial statements and (2) approve the destination of Net Profit of the period and dividends. They must take place four months after the end of the accounting year and be released at least three times on the company´s official means of communication.

12. What does “ex” date mean?

"Ex-dividend" is the date on which the shares start to be negotiated without rights for dividends.

13. What does it mean to be a part of the Bovespa Sustainability index (ISE)?

Klabin started to integrate the ISE index in 2014, which demonstrates its commitment even further with sustainable development, seeking integrated and responsible growth, which unites profitability, social development and environmental commitment.

According to the BM&FBovespa definition, “ISE is a tool for the corporate analysis of the performance of the companies listed on the Stock Exchange under the aspect of corporate sustainability, based on the economical efficiency, environmental balance, social justice and corporate governance. It also expands the understanding on companies and groups committed to sustainability, differentiating them in terms of quality, level of commitment with sustainable development, equity, transparency and rendering of accounts, nature of the product, in addition to the corporate development in the economical-financial, social, environmental dimensions, and climate changes.”

This achievement reinforces Klabin´s historical commitment with sustainable development. For the company, sustainability is present in the entire value chain, from its differentiated forest base to the relationship with its clients, suppliers, investors and the communities of the regions where it performs. Klabin is a pioneer in certifications of the cellulose and paper sector and in the management of biodiversity. The company seeks, with this extra market acknowledgment, to reinforce its vision that care and respect to the planet are part of its nature.

14. What is our independent auditing?

Our independent auditing is PricewaterhouseCoopers (PwC).

Financial

1. What are the current Accounting standards? What is the practice used by Klabin?

The Accounting standards mostly used in Brazil are the International Financial Reporting Standards (IFRS), Generally Accepted Accounting Principles in the United States (US GAAP) and the Brazilian Accounting Standards (BR GAAP).

The consolidated accounting statements of the Company for the periods ended on December 31, 2015 and 2014 were drafted in compliance with the accounting practices adopted in Brazil, which comprise the standards of the Securities Commission (CVM) and the Pronouncements, Guidelines and Interpretations issued by the Accounting Pronouncement Committee (CPC) and they are in compliance with the International Financial Reporting Standard – IFRS) issued by the International Accounting Standard Board (IASB).

2. What is EBITDA?  Why does Klabin use this index?

EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) or LAJIDA is a financial indicator which evaluates how much resource a company yields only with its operation. It corresponds to the net profit before the income tax and social contribution, of the expenses on depreciation and amortization and the financial result. EBITDA is not a financial performance measure according to the accounting practices adopted in Brazil, IFRS or US GAAP, nor should it be considered individually, or an alternative to the operational cash flows, or as a measure of liquidity. Other companies may calculate the EBITDA in a different manner from the Company. The EBITDA represents several limitations which jeopardize its use as a measure of profitability of the Company, due to the fact that it does not take into account certain costs arising out of businesses of the Company, which could affect, in a significant manner, the profits of the Company, such as financial expenses, taxes, depreciation, capital expenses and other related taxes.

3. What is EBIT? How does it relate with the EBITDA? What is the EBITDA Margin?

The EBIT (Earnings Before Interest and Taxes) is another financial indicator which measures the operation result of a company. It is the difference between revenues and operational expenses. After the EBITDA calculation, depreciation expenses are subtracted from amortization in order to obtain the EBIT. The EBITDA margin is the ratio between EBITDA and the Net Revenue.

4. What is Biological Asset? What is its relation with the Adjusted EBITDA?

According to the pronouncement of the Accounting Pronouncement Committee 29 (CPC 29), a biological asset is a living animal or plant. It must be recognized in the statements of a company when (i) it is of the company´s control due to past events, (ii) proven that the company shall enjoy the future economical benefits associated with this asset or (iii) when the fair value/cost can be measured correctly. 

As part of its businesses, Klabin has a vast area of forests which are accounted as biological assets. Many times the variations in the fair value of its forests (biological assets) yield great changes in the net result of the period. As a way of considering these variations, other businesses in which it is the controller and enjoys participation in the Corisco Valley, Klabin and other companies of the sector calculate the Adjusted EBITDA, which would reflect the company´s situation more faithfully.

5. What is Price-List?

Price-list is a reference price for commodities in certain regions of the world. It varies according to the offer and demand of the region. It is used as basis for price negotiations.

6. What is cash cost of production?

For the paper and cellulose sector, the cost analysis through Cost of Goods Sold (CMV) started not making sense any longer, given that it encompasses costs which do not represent cash disbursement, such as depreciations and amortizations of the means of production. Therefore, it is denominated cash cost of production. This method recognizes all direct costs involved from the manufacture to the exit from its gates. It is “how much money it takes off its pocket” in order to produce.

7. What is Gross Operational Revenue?

It represents all products sold over a certain period, before the discounts to clients, returns or taxes, or other adjustments.

8. What are Costs of Goods Sold (CMV)?

They are the purchase costs of raw materials and services, including direct and indirect labor, stoppages for maintenance, wood, supplies, fuel, depreciation and depletion, among other costs.

9. What is Gross Profit?

Gross Profit is the subtraction between all forms of invoicing of a company and the Cost of Goods Sold (CMV).

10. What is Net Profit / Loss?

It represents the profit remaining after all costs and expenses (including taxes) have been deduced from the total revenue in a certain period. If the result is positive we call it profit, if it is negative, we call it loss.

11. What are Expenses on Sales, General and Administrative?

These expenses typically include the salary of employees related with the sales and management of the company, third party services, logistics, communication, among others.

12. What is Working Capital?

The Working Capital account, as opposed to conventional wisdom, it is not how much a company needs for its functioning. It is, in reality, a composition of three accounts: Suppliers (how much my suppliers have financed me), Accounts Receivable (how much I finance my clients), and Stocks. The first account impacts positively and the two last ones impact the working capital negatively.

13. What is Weighted Average Cost of Capital (WACC)?

The Weighted Average Cost of Capital is the minimum tax required by investors for a company to perform an investment. It is calculated as a weighted average of the relative share of third parties and the equity.

14. What are Financial Expenses /  Revenues?

This account includes revenues and expenses with interests related to financial transactions, collection of new debts and amortizations of past debts.

 

More doubts?
Should you have specific doubts on any financial data or Klabin shares, get in contact with the Investor Relations (RI) team. But before getting in contact, we strongly encourage you to seek the answer on the website, for it is reach in information.

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