Klabin SA Q2 2024 Earnings Call 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 more for Cristiano. We have recently been seeing a wave of M&A and a series of markets in the United States and Europe and the Latin American countries as well getting into this scenario. With that said, we're seeing no evaluation in the strategy of integration and verticalization that we see at Klabin. I'd like to understand your view about these recent events and of course not only how this impacts Klabin, but what should be Klabin's role in this scenario? And my second question about the corrugated box markets, the market's been showing good numbers and I think as Cristiano mentioned in the beginning over the growing demand. But I'd like to hear more about the second half of the year, how you see the fundamentals for the second half of the year? I understand there was an attempt of price increase recently, so it would also be interesting to hear about the competitive environment prices and how Klabin is positioning itself in terms of prices for the second half of the year? Thank you.

Question: Rafael Barcellos - Bradesco BBI - Analyst : Thank you. Just to follow up with Cristiano. Cristiano, I understand Klabin's strategy, but in this point of M&A and organic growth, how do you see the possibilities for Klabin today, from now on?

Question: Rafael Barcellos - Bradesco BBI - Analyst : Great. Thank you.

Question: Daniel Sasson - Ita· BBA - Analyst : Good morning. Thank you for the presentation. If we can talk a little bit about costs, in addition to the strong performance you had in volume and prices in the quarter that also got my attention, but you have a perspective of total cash cost as you see it remaining flat in 2024 compared to '23. But the performance was extremely good in the first -- or the second -- the first half of the year, something close to [BRL950]. So if you can talk a little bit more, if there's room maybe for the cost to be lower for the year than the [BRL3.100], I think it would help us project the second half. And also, if you can talk a little bit about the impacts of the CaetO project, which impact it has already had in the cost reductions and what we can expect from maybe a harvest plan to being reconsidered, being closer to the land you acquired, and how that impacts the second half of the year? And my second question, maybe to Soares, Cristiano as well, talked a little bit about this in the volume expectation slide. But if you can tell us a little bit more about the timing of the domestic market or the scenario in terms of competition. For example, we saw news in terms of price increases in packaging. So in this context, there was strong demand and the higher costs with bulk that impact your competitors who are not integrated. So if you can give us an overview or a perspective for packaging and papers to -- until the end of the year, I appreciate it. Thank you.

Question: Daniel Sasson - Ita· BBA - Analyst : Thank you. That was very clear.

Question: Rodolfo Angele - J.P. Morgan Securities LLC - Analyst : Good morning. First, I would just like to say that I really enjoy this new format. It's very important that we have more time to chat, so congrats on this change. I have two questions. First, Cristiano mentioned how the OCC process is complex, especially in terms of the machine. So what are the next steps? Should we expect anything else, especially in regards to operating improvements, lower costs? So if he could elaborate a little bit on the ramp up process. And secondly, you also mentioned the importance of the softwood to Klabin or the long fiber to Klabin. And we are seeing prices of fibers being lower now. I know that the ramp up process may be approaching its end. So I would like to hear from you what in your view, would be the performance of long fiber or softwood going forward, considering lower pulp prices? Do you think there is room for an extensive performance of the long fiber? Thank you.

Question: Rodolfo Angele - J.P. Morgan Securities LLC - Analyst : Thank you.

Question: Caio Ribeiro - BofA Global Research - Analyst : Good morning. Thank you for taking my question. My first question is on the pulp market. I would like to revisit that topic. And more specifically speaking about short fiber. Today, we see that the resale prices are significantly lower than (inaudible) prices. So I would like to hear from you what do you expect going forward and whether you believe that the spread should tighten with (inaudible) being closer to resale price or whether you see reasons for this difference or gap between the two prices in the coming months? And secondly, still elaborating on the topic of capital expansion question. I think you said that the company will focus on its deleverage. So could you tell me what leverage levels you expect to achieve before you even announced a new investments and whether this deleveraging could be accelerated in the next 12 months by the sale of existing forestry assets like project in CaetO. What would be most adequate timing to announce a new project? Thank you.

Question: Caio Ribeiro - BofA Global Research - Analyst : Very, very clear. And Thank you, Cristiano and Nico.

Question: Eugenia Cavalheiro - Morgan Stanley - Analyst : Good morning. I'd like to know if you can give us more detail about the different geographies for the pulp part. And you mentioned a little bit at the beginning of the call, but if you could give us more detail of how you see the Europe market as well. That would be helpful. Thank you.

Question: Lucas Laghi - XP Investimentos - Analyst : Good morning, everyone. Just a follow-up on our side in terms of cost. I think you talked a lot about the consolidated dynamics, but when we look at a EBITDA per unit here in the second quarter, we see a positive evolution in the business ex-pulp, focusing on papers and packaging, basically driven by an improvement in the unit cost or the cash cost for the paper and packaging business. So I'd like to understand a little bit more about the drivers of this quarter that explained the sequential improvement. Especially when we think about mix, I think you talked a lot about with the expectation of improvement with the ramp up of the machines, but I'd like to understand more on the side of the fiber cost and the paper production if there's been any significant change in the cost of paper, the cost of integration. So if the data has already helped account for some of that decrease that we saw in the cash cost of paper packaging and the dilution of fixed costs that I think was assisted by the improvement in volume. So if you could rank this for me at this point, what do you see as the main reasons for this sequential drop in costs for paper and packaging. I think that would help us understand a little bit better and how to think about this line from now on. Thank you.

Question: Lucas Laghi - XP Investimentos - Analyst : Great. Thank you. Just wanted to connect us on the ranking of what responded for this or accounted for this performance. Thank you for your comments. Have a great day.

Question: Igor Guedes - Genial Investimentos - Analyst : Good morning, everyone. Thank you for taking my questions. First I would like to understand what you see in terms of downside risk for the kraft liner segment? I know you already mentioned this point, but I would just like to exploit there a little further. In the second quarter '23, you were shutting down machines because the market conditions were not so favorable. And a few months later, we already see that the kraft liner market supported by the OCC dynamics, a good capacity to take up prices. I mean, I think you went from one stream to the next in a very short period of time. So what are the risks that you see that could make the market to return to a more difficult situation? And my second question has to do with the variation in your biological asset we saw that there was an impact in the bottom line. So could you give me a view of what are the impacts of this line and what is happening there? Thank you.