DECEMBER 2016, SAO PAULO

APIMEC
DECEMBER 2016, SAO PAULO KLBN11 / KLBAY

FABIO SCHVARTSMAN
C H I E F E X E C U T I V E
O F F I C E R
DEZEMBRO 2016, SAO PAULO KLBN11 / KLBAY

AGENDA

OVERVIEW AND STRATEGY

FABIO SCHVARTSMAN

PULP COMMERCIAL OPERATION: FOCUS IN FLUFF PULP

JOS SOARES

CONVERSION: CORRUGATED BOXES AND INDUSTRIAL BAGS

CRISTIANO TEIXEIRA

QUESTIONS
 STRUCTURAL COMPETIVENESS
APIMEC
High Productivity on Fibers

Pine Eucalyptus
Forest Productivity Forest Productivity
m/ha/year m/ha/year
46 58
PLANTED AREA
38 44 230 TSD HECTARES
22 22 25 20
12
of high yield forest
10 10 6 4
7 4 4

Pine Eucalyptus
Mean Annual Increment (IMA) Mean Annual Increment (IMA)
LOW AVERAGE m/ha/year m/ha/year
HAULING DISTANCE 50 47 65
PR with PUMA 66 Km
46 70
44 58 61
42 42
39 60 52
SC 74 Km 40 50
35
50 41
31
40 35
30
24 26
30
20 20
<69 70-89 90-04 05 06-09 10-11 12-15 16-20 21-25 <73 74-85 85-95 95-05 05-11 12-15 16-20 21-25

Source: Ib e Klabin
LEADER IN ALL SEGMENTS IN BRAZIL
Flexible product line and diversified markets APIMEC

KRAFTLINER CORRUGATED
BOXES
INSTALLED
CAPACITY* INSTALLED CAPACITY

*Market Share Market Share Limited

40% 18% 400 tsd tonnes/year

COATED INDUSTRIAL
BOARDS BAGS
INSTALLED CAPACITY

Market Share Market Share 1,1 million

50% 50% tonnes/year

67%
INSTALLED CAPACITY

SALES VOLUME DESTINATION Limited

PAPER AND PACKAGING 400 tsd tonnes/year
FOOD Construo
 KLABIN
APIMEC
Growth strategy

APIMEC 2013 3,5

Million
tonnes per
year

2,0
1,8
1,7
Million
Million tonnes per
Million tonnes per year
tonnes per year
year

2013 2014 2015 2016

* Except wood sales

 KLABIN
APIMEC
Growth strategy

KLABIN TODAY 3,5

Million
tonnes per
year

2,0
1,8
1,7
Million
Million tonnes per
Million tonnes per year
tonnes per year
year

2013 2014 2015 2016

* Except wood sales

 2017: FOCUS ON PERFORMANCE
APIMEC
Operational efficiency and increased cash generation

COST REDUCTION HIGH RETURN PROJECTS FLEXIBILITY AND

RESILIENT MARKETS
Falconi / Papers mills Angatubas boiler
Corporate G&A expenses Fluff on domestic market
Industrial Bags Line
reduction Conversion / Hevi e
New printing machines
PUMA Unit ramp up Embalplan
Forest area: re-
primarization and
maintenance workshop
Turbine system

EXPECTED CAPEX: EXPECTED ANNUAL RETURN :

R$ 291 million R$ 108 million
*after ramp up
 PAPER MARKETS
APIMEC
Focus in growing markets

PAPER MARKETS DEMAND (2014-2030)

Demand growth per year Fluff
4% Tissue
Klabin
Klabin Containerboards Coated boards
Fluff
Pulp Klabin kraftliner and Klabin coated
3% recycled paper boards

2%
Sackpaper
Klabin sack
1% kraft and
industrial bags
Market D Market E
0%
Market B

-1%
Market C
Market A

-2%

-3%
KLABIN MARKETS
-4%
0% 20% 40% 60% 80% 100%

Source: POYRY Share of consumption in 2014

 KLABIN
APIMEC
Consistence growth
INTEGRATION

PUMA RAMP UP
CASH COST REDUCTION
HIGH RETURN PROJECTS

PAPER CAPACITY
DEBOTTLENECKING NEW GROWTH CYCLE
CASH COST REDUCTION
HIGH RETURN PROJECTS

PUMA EVOLUTION

GROWTH IN PULP 2,238

1,881
sep16
OPERATIONAL 1,652
IMPROVEMENT sep15
1,504
sep14
1,286
939
sep13
sep12
sep11 Adjusted EBITDA UDM
R$ million
DECEMBER 2016, SAO PAULO

JOS SOARES
PULP COMMERCIAL DIRECTOR
PUMA UNIT
 MARKET PULP
APIMEC
In 2015

168 mm tonnes MARKET PULP

Virgin fiber pulp DISTRIBUTION

105 44% 36%

mm tonnes 63
mm tonnes Long Fiber Eucalyptus

Integrated Pulp market pulp

20%
Other short
fibers
Source: Hawkins Wright | ago-16; RISI
 DEMAND BY REGION SHORT FIBER
APIMEC
Market Pulp million tonnes
1,2% 6,2%
12,5

10,3 10,4 10,9 9,9

0,1% 9,2

3,4 3,2 3,4

2015 2016e 2020e 2015 2016e 2020e 2015 2016e 2020e

China

EXPECTED GROWTH OF 1.2 MILLION TONNES PER YEAR

China

3,7%
5,7
4,7 5,0
2,7%

2,2 2,2 2,5

2015 2016e 2020e 2015 2016e 2020e

Asia (ex China) + Africa + Oceania

Source: Hawkins Wright | ago-16; RISI

 DEMAND BY REGION LONG FIBER
APIMEC
Market Pulp million tonnes
-0,1% 3,7%
8,8
7,2 7,2 7,1 7,6
0,0% 7,3

4,2 4,2 4,2

2015 2016e 2020e 2015 2016e 2020e 2015 2016e 2020e

China

EXPECTED GROWTH OF 300 THOUSAND TONNES PERChina

YEAR

0,8%

4,4 4,4 4,6

0,4%

1,2 1,2 1,3

2015 2016e 2020e 2015 2016e 2020e

Asia (ex China) + Africa + Oceania

Source: Hawkins Wright | ago-16; RISI

 DEMAND BY REGION FLUFF
APIMEC
Market Pulp million tonnes
1,3%
7,7% 1.370
1.485 1.530 1.581
1,0% 1.020
947

1.053 1.066 1.108

2015 2016e 2020e 2015 2016e 2020e 2015 2016e 2020e

China
China
EXPECTED GROWTH OF 200 THOUSAND TONNES PER YEAR
5,0% Segments
1.856
3,5% 1.451 1.524

848 878 1.008 38 % 26%

Diapers Incontinen
ce
2015 2016e 2020e 2015 2016e 2020e
Asia (ex China) + Africa + Oceania 12% 24%
Others
Tampons

Source: Hawkins Wright | ago-16; RISI

 KLABIN 4th BIGGEST IN FLUFF
APIMEC
Market FLUFF million tonnes

GLOBAL CAPACITY OF FLUFF GLOBAL DEMAND

Thousand tonnes per year in 2016 Million tonnes per year in 2015

IP+WY 2.920.000

G-P 1.985.000 24,3

Domtar 760.000
5,8
THE ONLY MILL DESIGNED FOR FLUFF
Klabin 400.000 PRODUCTION Long Fiber Fluff
StoraEnso 255.000

WestRock 200.000

AVERAGE CASH
Resolute 280.000
COST of producers
EX KLABIN of FLUFF
Arauco 240.000
USD 433/ton

Source: Hawkins Wright (jul/16); Fisher

 INFANT DIAPERS MARKET
APIMEC
Global and Brazilian Market growth

BRAZIL EUROPE
WORLD
R$ billion
and EUA US$ billion
1200
Diapers used by
baby per year

+7,6%
+7,8%
+3,2%
+9,8% 9.323 61.841
6.397 6.925 42.923 45.033
36.599
4.001
BRAZIL
2010 2015 2016e 2020e 553 2010 2015 2016e 2020e
Diapers used by
baby per year

China consumption of 376

Source: Euromonitor by baby per year
 INCONTINENCE DIAPERS MARKET
APIMEC
Global and Brazilian Market growth

2015
BRAZIL 36 million of WORLD
R$ billion elders US$ billion

+9,5%
+4,9% 11.270
3.012
7.158 7.674
1.619 1.871 2050 5.646
641 66 million of
elders
2010 2015 2016e 2020e 2010 2015 2016e 2020e

Source: Euromonitor / ONU

KLABIN MARKETS FOCUS ON FLUFF IN BRAZIL
APIMEC
Sales strategy

26 thousand tonnes
were sold until
September

Of the market
85% approved the Klabin
fluff pulp

50%
market share
expected for 2017

50
Costumers
distribution
THE QUALITY OF PINEFLUFF COMPARING WITH OTHERS PLAYERS
APIMEC

Density of FLUFF pulp (g/cm3) Fine Content (%)

0,64 0,64 0,64 3,60 3,70

0,63 3,40
0,62 3,30 3,20
0,60 0,60 3,00 3,00
0,59
2,70

PineFluff A B C D E F G PineFluff A B C D E F G

Grinding Energy (kWh/t) Resistance to Overflow (Mullen) (kPa)

34,80 1.190
1.036 1.082 1.052 1.074
30,80 31,50 900 965 901
28,10 28,90
25,60 25,50 27,10

PineFluff A B C D E F G PineFluff A B C D E F G
KLABIN MARKET
APIMEC
Sales Strategy

SHORT FIBER LONG FIBER

2Q16 AND 3Q16, 383 THOUSAND TONNES SOLD 2T16 AND 3T16, 210 THOUSAND TONNES SOLD

330 THOUSAND TONNES SOLD TO FIBRIA SHORT TERM: PULP SALES IN GLOBAL AND DOMESTIC
MARKET
45 THOUSAND TONNES SOLD IN DOMESTIC MARKET
LONG TERM: CONVERTION IN FLUFF

SALES IN DOMESTIC MARKET

 PUMA - COMPETITIVINESS
APIMEC
Production Cash Cost Long fiber and short fiber

LONG FIBER
462
447
409 SHORT FIBER

335
288
272

PUMA 174

FOB MILL
US$/TONNES

5 10 15 20 25 30 ANNUAL
CAPACITY
million million million million million million
tonnes tonnes tonnes tonnes tonnes tonnes

source: Hawkins Wright july 2016

DECEMBER 2016, SO PAULO KLBN11 / KLBAY

CRISTIANO TEIXEIRA
EXECUTIVE OFFICER
 INTEGRATED MODEL: CONVERSION
APIMEC
Diversified and flexible

* Installed capacity
CONVERSION
FIBERS
920k tpy

Planted
Forests PAPERS

Market Pulp Coated

boards
Pine Eucalyptus

Integrated Corrugated Industrial

Pulp boxes bags
Kraftliner 750k tpy 170k tpy
Recycled
KRAFTLINER
 CONTAINERBOARD MARKET: GLOBAL
APIMEC
Competitiveness in Kraftliner
Klabin Papers

57%
29%
Integration Exports

14%
Domestic
Market
Kraftliner global cash cost
USD/tonnes

Average US$377/tonnes
Productive
units

Klabin Cash cost 30%

MA / OC less than the global
average
Source: Fisher
 CONTAINERBOARD MARKET: BRAZIL
APIMEC

Total Capacity - 2016

5,1 mm tonnes

4,5 4,1

Biggest Players (tsd tonnes)

Kraftliner 2,0 1,6 Recycled paper
Kraftliner
Klabin 819 Smurfit 276

WestRock 435 Fernandez 235

Recycled 2,5 2,5 IP 183 Klabin 235

paper
0,4

Production Domestic Exports

Market

Source: Risi Capacity Report 2016

CORRUGATED BOXES
 GLOBA CONSUMPTION OF CORRUGATED BOXES
APIMEC
Global per capita consumption of corrugated boxes (m2/hab/year)

113
108
106
105
99

83

49
43
36
30

Source: International Corrugated Case Association - ICCA 2015

CORRUGATED BOXES: BRAZIL
APIMEC

Shipments - Klabin vs Brasil

107 Klabin

Brazilian shipments
100
99
PIB

jan-15 apr - 15 jul-15 oct - 15 jan-16 abr-16 jul-16

sep-16

Animal Protein
Horticulture Growth of poultry of
Exports growth of 7% p.y. 14% p.y. in the last 3
in the last 3 years years and exports of
protein of 5% p.y.
KLABIN MARKETS BIG CLIENTS
APIMEC
Differentiated in fibers, quality and service

SERVICES PROVIDED

PACKAGING ENGINEERING

PACKAGING SYSTEMS

TECHNICAL SUPPORT
 KLABIN DIFFERENTIALS
APIMEC
Klabin national footprint to fulfill the costumer needs

KLABIN - 10 UNITS MARKET SHARE 2015

WestRock 4 UNITS

International Paper 4 UNITS 17%

Irani
8%
42%
Trombini
7%
Penha
6%
Adami 6%
4% 4% 5%

Smurfit/INPA

Outros

Source: ABPO, Relatrio Anual - 2015

CORRUGATED BOXES: BRAZIL
APIMEC
Use of virgin and recycle fiber: FLEXIBILITY

OCC prices (R$/tonnes - FOB without taxes)

800
Mix of fibers to corrugated boxes
700
Recycled Virgin
600
Klabin 34% 66%
500

400
Brazil 67% 33%
300

200
jan-15 mai-15 set-15 jan-16 mai-16 set-16
Source: Anguti

Large participation in the food market: RESILIENCE

others HPPC chemist food

Klabin 20 5 10 65
KLABIN MANAUS - AM APIMEC
Acquisition rationale

20k tonnes/year
Curling Total Capacity Benefits of the presence in
Manaus:
Segments
(% 2015)

68% 25%
Electronics Boards

1%
Plastic 2% 5%
products Metallurgy Others

Synergies with recycled paper factory of Goiana

National footprint
New markets
KLABIN RIO NEGRO PR APIMEC
Acquisition rationale

50k tonnes/year
Curling Total Capacity
Benefits of the presence in
Paran:
Segments
(% 2015) Synergies with Monte Alegre

Optimization of units distribution of

25% So Paulo and Santa Catarina to
41% Perfumery Paran
Furniture and
Cosmetics

11%
8%
Food
Clothing
Products

4% 4% 9%
Vesturio Metallurgy 10%
Plastic
Products Others
 CORRUGATED BOXES
APIMEC
New opportunities

Display: costumed
for wholesales

E-commerce market:
3% of retail sales in Brazil in 2015
and 8% in the USA.

Total orders in the e-commerce

(millions)
103 107 107
88
67
54

Source: Webshoppers e Sociedade Brasileira de Varejo e Consumo

INDUSTRIAL BAGS
 INDUSTRIAL BAGS APIMEC
Paper for industrial bags (Sack Kraft)

Paper for sacks

Global production of papers (2015)
7,2 million tonnes

Sack Kraft Global Cash cost

USD/tonnes
mills

Klabin
Lowest production
cost of paper
Source: Fisher 4Q15. Incluiding Bag and Sack, Extensible Paper, Extensible Sack.
 INDUSTRIAL BAGS APIMEC
Klabin presence Industrial sacks

Klabin is the 2th

biggest industrial
bags producer of Global market
the world 12 bi units (2014)
Mondi
Lages Mill Klabin 1,2 bi of capacity
Is the Segezha

biggest Hood
CMPC
of the world Coveris Flexible
Iguau Celulose
Gascogne
Industrial bags are Smurfit Kappa
made of long and virgin Cemex
fiber (pine)

Source: Fisher 4Q15. Including Bag and Sack, Extensible Paper, Extensible Sack.
INDUSTRIAL BAGS APIMEC
Industrial bags sales strategy

Sales Globalization
% participation Strengthening the supply of special
bags: miscellaneous
Differentiated service
12% 12%
21% Exports
Klabins presence

88% 88%

79%
Domestic

2014 2015 2016

expected
SALES OF CONSTRUCTION MATERIALS (IBGE) X KLABIN BAGS FOR CIVIL CONSTRUCTION

Source: IBGE, SNIC (*prvia) e MCC- Civil constrution monitor,

(jan/2014 = 100 No seasonal adjustment)

113

Klabin volume of bags for civil construction

84

Klabin SNIC

jan-14 apr-14 jul-14 sep-14 jan-15 apr-15 jul-15 sep-15 jan-16 apr-16 jul-16 sep-16

15,7% 15,3% 63%

16vs15 16vs15
16vs15 Jan-Sep Jan-Sep
Jan-Sep
fabricao de artefatos Klabin sales (thousands
Production of cement de concreto, cimento, of bags) to the
IBGE fibrocimento, gesso international market
IBGE
 INDUSTRIAL BAGS APIMEC
New products - Opportunities
Coffee Pet Food
Market growth in 2015
Largest coffee growers (in billing $)
(em mi de sacas 60kg)
Mercado 10% p.y.
Brasil 49 Consumo mundial de
caf foi 2,2%
Vietn 29 superior ao volume
4% p.y.
produzido em 2015
Colmbia 13

Fertilizers Flours/Bran Industrial grinding

Brazilian market Flour and brain of wheat
30 million tonnes

CAGR
National +1%
Production 30%

Imports 70%
2005 2010 2015

2005 2010 2015

Source: INDEX Mundi, Euromonitor, ANDA, ABITRIGO.
DECEMBER 2016, SO PAULO KLBN11 / KLBAY

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