Klabin SA Q1 2025 Earnings Call (English, Portuguese) Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rafael Barcellos - Bradesco BBI - Analyst : Good morning, thank you for taking my questions. My first question is to Cristiano. I'd like to hear your view about the company's operational moment. If you could talk a little bit more about the nonrecurring maintenance stoppage at the pulp operation, especially how much you expect in terms of production for the year? And still talking about operating performance, what's your assessment of the paper machine 28 and its performance. And here specifically, I'd like to understand about the production mix for PM28 as you see it for the year, especially the volume of coated boards, how much we should expect considering the market challenges that you addressed about the increase of Chinese exports and so on. So that's my first question. My second question is more on corrugated boxes aimed towards Douglas. I caught my attention that in the market thermometer in your presentation, you say the demand is neutral. But when we look at compared to the dashboard of last quarter, it seems that the demand expectation improved a little bit. So, Douglas, if you can tell us a little bit more about this environment of higher interest rates, whether or not it affects your order portfolio and how you feel the client sentiment and this reading that the perception has improved or not, if I'm right or if it's more a seasonable thing? And finally, if it's possible, Cristiano was talking briefly now about this price re-composition, but there was also over past years, a margin re-composition as well in the corrugated boxes industry. So, if you can talk about the dynamic of the OCC, that would be good for us to understand profitability.

Question: Tathiane Candini - JPMorgan - Analyst : The first question is just a follow-up from the previous question. When we talk about operational stability in pulp. Obviously, we understand the stabilities are recurring, and they may occur at a given quarter, but they are a bit more expressive in the first quarter. If I'm not mistaken, there was a maintenance stoppage at the end of the year. It's about that machine. Is there any advance of this maintenance stoppage thinking about this higher stability in the first quarter? Or was it actually solved and the schedules maintained? And the second question is about leverage. we saw a significant reduction of the company's leverage this quarter. And I'd like to understand, I think it's something that we discussed extensively in our last conversations last quarter. But I'd like to understand whether there's any change in your positioning in terms of new investments or which parameters you're monitoring and -- or if the view remains of thinking of more investments starting as of 2027.

Question: Daniel Sasson - Ita· Corretora de Valores S.A. - Analyst : My first question is for Nicolini. He's quiet today. Nicolini, we've seen in recent weeks a very important movement among the producers of pulp, divulging drops in the prices, especially in the resale market for pulp below $500. If you could comment on the dynamics you've seen and especially if you think that the lower volumes for the prices of pulp, the $550, for example, mentioned by some producers or the $500 on resale, if that would be enough to stimulate this comeback of the demand, especially from China. I think that's an important point -- or if you think that the problem is larger due to the uncertainties of what will happen to the production levels in China due to trade war and not so much related to affordability. So, I think that would be interesting. And my second question, you have already talked about the paper machine 28 and the expectation of converting kraftliner to coated board. Chris, if you could just remind us what is missing to ratify with the main clients or with your main one. I think that the expectation was to have this already happened or we used the curve for the shift of coated boards that you gave in '23, '24. There was a speeding up of the process. It might take more time. I want to better understand today how confident you are in terms of this migration to be done as fast as possible for a high value-added product.

Question: Daniel Sasson - Ita· Corretora de Valores S.A. - Analyst : I'm sorry for the follow-up. That is a much more abrupt drop. Do you mean the $550 price announced by the competitors in Latin America or $500 in the resale?

Question: Caio Ribeiro - BofA Global Research - Analyst : My first question is about the fluff market. I would like to further explore the tariff effects that were announced by China against the US considering that a good part of the fluff capacity is in the US and China imports a considerable volume of fluff. And you mentioned that there is fluff from Latin America that is benefiting from that. Do you see any effect that could be reflected on growing premiums in the local price of fluff in Latin America as compared to short fiber? What would be the impact in decisions of product mix of fluff as compared to long fiber this year? That is the first question. And the second one, exploring a little bit more the deleveraging and the capital allocation of the company. I understand the focus today is the deleveraging. But also, if you could give us more details in relation to the level of deleveraging you expect to reach before you consider a future expansion. What would be the timing for that, that you would reach this level? And is there anything going to change for the products that you believe are more attractive in terms of their expansion vis-a-vis the tariff scenario that has changed many of the products that you have exposure?

Question: Caio Greiner - UBS - Analyst : I have two questions. First, about the timber sales that you made. We noticed that it went up this quarter. So, if you could talk a little bit more about the strategy. We understand that this is related to the acquisition of the excess assets of Caete. But if you could talk a little bit more about what we can expect in coming quarters, if it's a reasonable level that will be maintained. And you can talk about the margin burn that you're having in the sales as well, that would be very helpful. Second question about coated boards, and we can bring (inaudible) to the discussion. I know Cristiano talked about at the beginning of the call about weak demand but the release specifically also addressed the entry of imports of coated boards from China. So, if you could talk a little bit more about this. What product lines are you seeing coming in at what price range, if we understand the global dynamics, and we're seeing a little bit more exports and probably we will see more exports from China, but we also always heard that the Chinese products would not necessarily compete with Klabin's products. I don't know if this perception was mistaken. So, I'd like to hear a little bit more from you. And overall, whether you see this as a concern. When we start to hear about imports increasing coming from China since we also see other industries, it kind of starts to shine a red light. So, I'd like to understand or hear from you about this.

Question: Caio Greiner - UBS - Analyst : Soares, if I may, a follow-up. These coated boards coming in, do they compete directly with Klabin's products? Are they coming in at a price level that is significantly below what you practice or is that relatively you remain competitive at the current price levels?

Question: Caio Greiner - UBS - Analyst : Great, thank you, Soares and Ivo. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MAY 08, 2025 / 2:00PM, KLBN4.SA - Q1 2025 Klabin SA Earnings Call (English, Portuguese)