Release 1Q16
Transcription
Release 1Q16
1Q16 EARNINGS RELEASE APRIL 28, 2016 ADJUSTED EBITDA REACHES R$512 MILLION IN 1Q16, UP 11% OVER 1Q15, AND MARKS 19TH CONSECUTIVE QUARTER OF GROWTH. PUMA UNIT STARTS OPERATIONS 1Q16 HIGHLIGHTS NET REVENUE R$1,463 million Net revenue of R$1,463 million, up 12% over 2015, even with the deterioration of markets in Brazil. 4% growth Total sales of 455 thousand tons, 4% increase in the quarter, highlighting the growth of 13% in exports and the sales stability in Brazil even in a challenging scenario, showing Klabin's agility in positioning itself in different market scenarios. In the 19th consecutive quarter of uninterrupted growth, the Adjusted EBITDA totaled R$512 million for the quarter, up 11% over the same period in 2015, without yet including the pulp sales from the Puma Project. The EBITDA Margin was 35%. 1Q16 investments totaled R$853 million, with R$734 million directed towards the new pulp plant. The new pulp plant in Ortigueira (PR), the Puma Unit, launched operations on time and on budget, and on March 4, 2016, produced the first bleached pulp bales, marking a new phase in the Company’s existence. SALES VOLUME ADJUSTED EBITDA R$512 million INVESTMENTS R$853 million PUMA PROJECT Start of operations March 31, 2016 Klabin Market Cap R$23 billion KLBN11 Closing Price R$19.37 Daily traded vol. 1Q16: R$63 million Conference Call Portuguese (with simultaneous translation) Friday, 4/29/16, 11h00 (Brasília) Phone: (11) 3193-1133 - Password: Klabin http://cast.comunique-se.com.br/Klabin/1Q16 IR Antonio Sergio Alfano Tiago Rocha Brasil Daniel Rosolen Marcos Maciel Lucia Reis Natasha Utescher Albert Shih Liu www.klabin.com.br/ri [email protected] +55 11 3046-8401 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 FINANCIAL HIGHLIGHTS R$ million ∆ ∆ 1Q15 1Q16/4Q15 1Q16/1Q15 1Q16 4Q15 Sales volume (thousand tonnes) 455 499 437 % Domestic Market 64% 62% 67% Net Revenue 1,463 1,596 1,308 -9% 4% 2 p.p. -3 p.p. -8% 12% 2016 2 455 1 64% 1,463 5 % Domestic Market 65% 62% 70% 3p.p. -5 p.p. Adjusted EBITDA 512 603 461 -15% 11% 512 Adjusted EBITDA Margin 35% 37% 35% -2 p.p. 0 p.p. 35% 1,074 521 (729) 106% n/a 1,074 (1 12,009 12,411 -3% 61% 12,009 12 Net Income (loss) Net Debt Net Debt / EBITDA (LTM - BRL) 5.9x Capex 853 6.3x 1,364 7,440 4.2x 1,000 1 5.9x -37% -15% Klabin's consolidated financial statements are presented in accordance with International Financial Reporting Standards (IFRS), as determined by CVM Instructions 457/07 and 485/10. Vale do Corisco’s information is not consolidated, being represented in the financial statements by equity income. Adjusted EBITDA is in accordance with CVM Instruction 527/12. Notes: Due to rounding, some figures in tables and graphs may not result in a precise sum. The EBITDA margin includes the effects of Vale do Corisco. LTM - last twelve months THE BEGINNING OF A NEW KLABIN TH On March 4 , exactly within the deadline and budget established when the project was approved in 2013, the Company produced the first pulp bales at the Puma Unit, in Ortigueira (PR). With the plant, Klabin begins a new stage in its history, moving into new markets and becoming the only Brazilian company to simultaneously provide bleached pulps from hardwood, softwood and fluff produced in a mill entirely designed for this purpose. The Puma Unit reinforces Klabin’s commitment to the best global sustainability practices by combining high forestry productivity, low operating costs, efficient logistics and cutting-edge environmental technology, ensuring highly competitive end products. Coupled with its vocation for manufacturing paper and packaging, the new plant enables a new growth cycle and represents Klabin’s ability to dream and achieve. It is important to remember that the first sales from this new unit took place during the month of April and further details will be included in a chapter about Pulp in the Quarterly Report for the second quarter. 2 65% 853 4 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 SUMMARY The sharp deterioration of the Brazilian economy over the last year continued into the beginning of 2016. As the economy awaits a solution to the political crisis that has generated high volatility in the equity and foreign exchange markets, continued to decline, with rising unemployment, reduced investment and inflation still at high levels. in March and a very challenging international environment. In the domestic market, the total volume in relation to the same period last year remained stable, demonstrating the company's competitiveness in an adverse scenario and the resilience of the markets served by Klabin. As a result of the increase in sales volume, the more undervalued real versus 1Q15 and Klabin’s competitiveness in the domestic market, net revenue in the period totaled R$1,463 million, up 12% over the same period last year. Externally, the central banks of the world's major economies have maintained low interest rates, which brought greater liquidity to global markets and a consequent depreciation of the dollar, especially in March. In this joint effort to return to the path of economic growth, the main commodities prices stabilized earlier this year after the significant reduction seen throughout 2015. Regarding the cost lines in the first quarter of 2016, the increase in the cash cost per ton was below the inflation recorded in the same period. The Company's efforts to control costs, the dilution of fixed costs through the higher sales volume and the normalization of electricity prices more than offset the impact of inflation that still persists on some inputs and services contracted by Klabin. The deterioration of activity levels in the Brazilian economy continued to impact the paper and packaging markets in the first quarter of the year. The Brazilian Corrugated Board Association (ABPO) indicated in its previous report from March a 5% decline in corrugated board shipments in 1Q16, compared to the same period in 2015. It is worth noting that in the first quarter of 2016 Klabin was focused on the successful start of operations at its new pulp mill, which will almost double the Company’s production capacity. Pulp production began in March, in full compliance with the project's schedule and budget, with production levels indicating a promising learning curve. Even during the execution of this highly complex project and the ongoing worsening of the Brazilian economic indicators in early 2016, Klabin has once again proven its ability to execute and the consistency of its results. Through the versatility of its product line and operations in resilient markets, adjusted EBITDA for the quarter was R$512 million, up 11% over the same period last year. In the last 12 months adjusted th EBITDA totaled R$2,026 million, marking the 19 consecutive quarter of growth, even without the benefit accruing from the pulp sales resulting from the Puma Project. Meanwhile in the international packaging paper market, despite the recent decline in the kraftliner list price in Europe, the average price of €571/t (FOEX) in 1Q16 was the same as in 1Q15. This stability in international prices, coupled with a higher average exchange rate compared to the same period in 2015, ensured strong profitability from sales to export markets. In 1Q16, the total sales volume reached 455 thousand tons, up 4% over 1Q15, due to increases in paper production capacity made over 2015. Using the agility and flexibility of the product line, Klabin allocated most of this additional production for export, taking advantage of the still favorable conditions in these markets, even with the recent appreciation of the real 3 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 EBITDA GROWTH 1.5 1.7 1,027 939 922 2.5900 2.0 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.7 1.8 1.8 1.7 1.8 1.8 1.8 1.8 1.8 1.8 1.8 2,026 1,881 1,812 1,755 1,718 1,652 1,627 1,504 1,452 1,286 1,089 3.0 1,180 3.5 1,351 4.0 1,424 4.5 1,400 1,562 5.0 1,602 1,900 1,976 2,400 1.9 1.0 0.5 400 - Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Sales Volume LTM (excluding wood – million tonnes) Adjusted EBITDA LTM (R$ million) Exchange Rate The real remained at a level close to R$4.00/US$ in the first two months of the year, still reflecting the country’s economic and political crisis. However, after the strong appreciation of the real over the month of March, caused by changes in the domestic political scenario and the maintenance of interest rates in the United States, the exchange rate at the end of the quarter was R$3.56/US$ , 9% down from the close of 2015. In turn, the average exchange rate, which reflects the impact of the high levels of the first two months of the year, was R$3.90, up 2% over 4Q15 and up 36% over 1Q15. R$ / US$ Average Rate End Rate 1Q16 4Q15 3.90 3.56 3.84 3.90 ∆ ∆ 1Q15 1Q16/4Q15 1Q16/1Q15 2016 2.87 3.21 2% -9% 36% 11% Source: Bacen OPERATING AND FINANCIAL PERFORMANCE Sales volume Even with the extended retraction of activity in the packaging markets in Brazil throughout 2015, Klabin recorded an increase in sales volume at the beginning of 2016. The total volume sold by the Company, excluding wood, was 455 thousand tonnes for the quarter, up 4% from the same period in 2015. It is worth noting that even with the start of production at the Puma Unit in March, no pulp sales were incorporated into the 1Q16 results. Given the decline in the domestic economy and the turmoil in international markets, this increase in sales once again reflected the flexibility and global competitiveness of Klabin’s product line. This flexibility, combined with the capacity increases implemented last year, especially new Recycled Paper Machine nº24 in Goiana (PE), enabled the Company to expand its position in profitable markets. 4 3.9022 3.558 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 Much like at the end of last year, for the first quarter of 2016 the higher average exchange rate over the same period last year and the slowdown of the Brazilian economy have created a more favorable environment for exports and Klabin again increased its sales to export markets. On the other hand, a strong presence in more resilient segments of the domestic market has enabled the Company to maintain its stable sales in Brazil, even with significant signs of worsening in various sectors of the economy. In this context, the volume of exports in 1Q16 grew 13% over the same quarter last year to 164 thousand tonnes in the period. The volume of domestic sales totaled 291 thousand tonnes in 1Q16, the same level as the volume sold in 1Q15. Thus, the share of exports in the overall sales volume was 36% in the quarter, versus 33% in the same period last year, highlighting once again the Company's agility in positioning itself in different market settings. Sales volume by product 1Q16 Sales volume (excluding wood – tsd tonnes) 437 33% 67% 1Q15 Domestic Market Others 3% 455 36% Kraftliner 24% 64% Conversion 36% Coated Board 37% 1Q16 Exports Net Revenue In the first quarter, net revenue, including wood, totaled R$1,463 million, up 12% over 1Q15. With the increasing share of exports in the total volume, net revenue from sales to export markets totaled R$517 million in 1Q16, up 32% over 1Q15 and now accounting for 35% of total revenue, up from 30% in the same quarter last year. Despite the impact of the economic weakness on the packaging paper markets in Brazil and the lower log sales in the quarter with the start of supply to the new pulp plant, Klabin’s positioning in more resilient segments also increased revenue in the domestic market, which was R$946 million for the quarter, up 3% over the same period last year. 5 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 Net revenue (R$ milion) Net revenue by product Others 2% 1.463 1.308 Wood 5% Kraftliner 17% 35% 30% 70% 65% Conversion 38% Coated Board 38% 1Q15 1Q16 Domestic Market Exports Pro forma net revenue, including Klabin’s proportional revenue in Florestal Vale do Corisco S.A., totaled R$1,483 million for the quarter. Operating Costs and Expenses The unit cash cost, which includes fixed and variable costs and operating expenses, was R$2,120/t in 1Q16. Excluding non-recurring items from other operating revenue and expenses, the unit cash cost for the quarter came to R$2,108/t, up 8.5% over the same period last year, below the level of inflation recorded for period. Excluding the additional costs related to technical stops of Turbo Generator 8 in Monte Alegre plant (PR) and maintenance at the plant in Otacilio Costa (SC) occurred only in the first quarter of 2015, the change in unit cash cost between the two periods was 11.6%, in line with Brazilian inflation. Cash Cost Breakdown 1Q16 Cash Cost Breakdown 1Q15 Electricity 10% Maintenance materials / stoppage 10% Electricity Others 6% 9% Maintenance materials / stoppage 9% Others 6% Labor / third parties 32% Labor / third parties 34% Fuel Oil 2% Fuel Oil 3% Freight 11% Freight 11% Chemicals 15% Wood / Fibers 13% Chemicals 14% 6 Wood / Fibers 15% RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 The increase of the consumption of OCC (old corrugated containers) after the startup of the new Goiana recycling machine, in addition to inflationary pressure on labor, exerted pressure on costs for the period. The higher export sales volume, which increased the cost of freight, and the new hires to cope with the growth of the Company operations also impacted the variation between the periods of comparison. On the other hand, lower costs of energy, as well as the dilution of fixed costs through the increased sales volume, resulted in the increase in the per ton cash cost in line with the government’s official price index for the comparison between the quarters. Selling expenses totaled R$105 million in the quarter, up 11% over 1Q15, accompanying the increase in sales revenue for the period. Thus, 1Q16 selling expenses represented 7% of net revenues, the same rate recorded in 1Q15, despite the increase in volume to the export market. General and administrative expenses totaled R$100 million for the quarter, 33% over 1Q15 and 1% below the last quarter of 2015. The new level of general and administrative expenses, already recorded in 4Q15, is mainly due to extinction of payroll reduction programs by the government and the strengthening of corporate structures to cope with the expansion of Klabin regarding its new pulp operations. Other operating income/expenses resulted in a R$6 million expense in 1Q16. Effect of the variation in the fair value of biological assets The effect of changes in the fair value of biological assets was R$63 million positive in 1Q16, primarily due to the growth of forests that have been recognized at their fair value. In turn, the effect of the depletion of the fair value of biological assets in cost of goods sold was R$157 million in 1Q16. As a result, the non-cash impact of fair value of the biological assets on operating income (EBIT) for the quarter was a negative R$101 million. Operating Cash Flow (EBITDA) R$ million Net Income (loss) (+) Income taxes and social contribution (+) Net Financial Revenues (+) Depreciation, amortization, depletion Adjustments according to IN CVM 527/12 art. 4º (-) Biological assets adjustment (-) Equity Pickup (+) Vale do Corisco Ajusted EBITDA Adjusted EBITDA Margin 1Q16 4Q15 1Q15 ∆ ∆ 1Q16/4Q15 1Q16/1Q15 1.074 259 (1.013) 251 521 264 (232) 268 (729) (390) 1.385 250 106% -2% 336% -6% n/a n/a n/a 0% (63) (7) 12 512 35% (227) (7) 15 603 37% (56) (8) 8,17 461 35% -72% 0% -20% -15% -2 p.p. 14% -7% 47% 11% 0 p.p. n/a - Not applicable Note: Adjusted EBITDA margin is calculated considering the pro forma net revenue, which includes Vale do Corisco The larger volume of papers available for sale after the increase in capacity introduced in 2015 enabled Klabin to increase its share in export markets over the same quarter last year. Additionally, even with the sharp slowdown of the domestic economy, Klabin was able to maintain the total volume of sales in Brazil steady with the rate seen in 1Q15, reinforcing the competitiveness of its products and the consistency of the markets in which it operates. Coupled with the Company’s disciplined cost matrix, the increase in net revenue from the higher volume of sales and the devaluation of the real was reflected in higher earnings compared to the same quarter last year, with operating cash flow (adjusted EBITDA) at R$512 million and an EBITDA margin of 35%. 7 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 This amount represents an 11% increase over the same quarter last year and includes Klabin’s R$12 million stake in the company Florestal Vale do Corisco S.A. Indebtedness and Financial Investments Gross debt totaled R$17,889 million on March 31, 2016, down R$133 million from the end of 2015 mainly due to the positive impact of the exchange rate on the portion of debt in foreign currency. Of the total debt, R$12,508 million, or 70% (US$3,515 million) is denominated in US dollars, mainly export prepayments. Even with the investments in the Puma Project, the Company’s cash and financial investments ended 1Q16 at R$5,880 million, up R$269 million over 4Q15, a result of the Company's cash generation and capture of new financing lines. This amount exceeds the financing amortizations due in the next 30 months. Consolidated net debt totaled R$12,009 million on March 31, 2016, down R$402 million from the R$12,411 million on December 31, 2015. This reduction is due to the effect of the lower exchange rate on foreign currency debt at the end of the quarter and the Company’s cash flow generation, which more than offset the R$853 million in investments and the R$ 120 million dividend payment made in the quarter. As a result, net debt/adjusted EBITDA, which had been 6.3x at the end of 2015 fell to 5.9x at the end of 1Q16. It is worth noting that the launch of operations at Klabin’s new pulp mill (Puma Project), which occurred in the last month of March, will tend to accelerate the company's deleveraging process from the coming quarters. The average maturity term remained stable at 48 months by the end of 1Q16, 40 months for financing in local currency and 51 months for financing in foreign currency. Short-term debt at the end of the quarter amounted to 13% and the average cost of financing in local currency was 11.6% per annum and 4.6% per annum in foreign currency. NET DEBT AND LEVERAGE 17,000 6.2 Net Debt/EBITDA (R$) 8 12,009 4,028 Sep-14 2,824 Jun-14 3,985 Dec-13 2,711 3,595 Sep-13 Net Debt (R$ million) Mar-14 3,437 Jun-13 (1,000) 3,136 1,000 Mar-13 3,000 Mar-16 2.3 5,000 11,614 1.8 Sep-15 1.7 2.4 8,144 2.3 2.7 Jun-15 2.2 1.7 7,440 2.2 7,000 2.4 1.7 3.3 Mar-15 2.4 3.8 3.0 2.6 4.6 5,242 2.2 9,000 2.4 Dec-14 11,000 5.4 4.5 12,411 4.2 13,000 5.9 6.0 Dec-15 15,000 6.3 Net Debt / EBITDA (LTM) 7.0 6.5 6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0 -2.5 -3.0 -3.5 -4.0 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 Debt (R$ million) 03/31/2016 12/30/2015 Short term Local currency Foreign currency Total short term 984 1,383 2,367 5% 8% 13% 978 1,068 2,046 5% 6% 11% Long term Local currency Foreign currency Total long term 4,397 11,126 15,523 25% 62% 87% 4,701 11,275 15,976 26% 63% 89% Total local currency Total foreign currency Gross debt (-) Cash Net debt Net debt / EBITDA (LTM) 5,381 12,508 17,889 5,880 12,009 5.9x 30% 70% 5,679 12,343 18,022 5,611 12,411 6.3x 32% 68% Financial Result Even with the increase in the Company's gross debt in the last twelve months due to the contracting inflows of credit lines linked to the Puma Project, financial expenses remained stable in the first quarter of 2016. The contracting of credit lines at attractive costs kept financial expenses at R$224 million in 1Q16, compared to R$216 million in 1Q15 and R$234 million in 4Q15. Financial revenue came to R$157 million for the quarter, stable compared to 4Q15, but 32% higher compared to the R$119 million registered in 1Q15. This increase is explained by the increase in Brazilian interest rates, and the increase in the Company's cash position. As a result, the positive impact from higher financial revenue and the maintenance of financial expenses left the financial result, excluding exchange rate variations, steady with a net loss of R$67 million in the first quarter of 2016, a gain of R$30 million compared to net loss of R$97 million in 1Q15. The exchange rate ended the quarter 9% below the level seen at the end of 2015. As a result, due to the impact on the foreign currency debt, the net foreign exchange variation was positive by R$1,080 million in 1Q16. It is valid to point out that the exchange variation has an exclusively accounting effect on the Company’s balance sheet, with no significant cash impact in the short term. 9 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 BUSINESS PERFORMANCE Consolidated information by business unit in 1Q16: R$ million Forestry Domestic market Exports Third part revenue Segments revenue Total net revenue Change in fair value - biological assets Cost of goods sold Gross income Operating expenses Operating results before financial results Papers 79 Conversion Consolidation Total 371 452 823 286 1,109 (666) 443 (105) 338 79 222 301 63 (371) (7) (13) (20) 497 65 562 3 565 (469) 96 (67) 29 (1) (1) (511) (512) 502 (10) (17) (27) 946 517 1,463 1,463 63 (1,004) 522 (202) 320 Note: In this table, total net revenue includes sales of other products. * Forestry COGS includes the exaustion of the fair value of biological assets in the period. BUSINESS UNIT - FORESTRY thousand tonnes 1Q16 4Q15 1Q15 ∆ ∆ 1Q16/4Q15 1Q16/1Q15 2016 Wood 490 865 749 -43% -35% 490 Wood 80 77 90 4% -11% 80 R$ million During the first quarter the log sales to third parties totaled 490 thousand tons, 35% below the 1Q15 volume. The heavy rains that hit the forest regions of Paraná and Santa Catarina hampered the operation of timber harvesting, impacting the log sales in the period. In addition to this factor, the beginning of the wood supply for new pulp operation also contributed to lower sales to third parties. With the difficulty in harvesting and timber transport over the period, selling prices to third parties were elevated and revenue in log sales totaled R$80 million, down 11% compared to the 1Q15. 10 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 BUSINESS UNIT – PAPER Volume (1.000 tonnes) 1Q16 4Q15 1Q15 ∆ ∆ 1Q16/4Q15 1Q16/1Q15 2016 Kraftliner DM Kraftliner EM Total Kraftliner Coated boards DM Coated boards EM Total Coated boards Total Paper 29 81 110 93 73 166 276 23 95 119 109 84 194 312 33 63 96 89 74 163 259 26% -15% -7% -15% -13% -14% -12% -12% 29% 15% 4% -1% 2% 7% 29 81 110 93 73 166 276 Kraftliner Coated boards Total Paper 244 555 799 261 637 898 182 474 655 -7% -13% -11% 35% 17% 22% 244 555 799 R$ million Kraftliner In the 1Q16, the sales volume of container boards totaled 110 thousand tons, an increase of 15% over the first quarter of 2015. With the higher availability of recycled papers by recent increases in capacity for the production of corrugated boxes, Klabin continued to target higher sales of virgin fiber papers to the foreign market. Therefore, exports of kraftliner, driven by high average exchange rate during the period, grew 29% in volume and 48% in revenues compared to the 1Q15. In the foreign market kraftliner prices in the 1Q16 released by FOEX remained stable over the same period of 2015 at € 571/t. In the domestic market, even with the economic downturn, the cost pressure in the production chain, such as personnel and old corrugated container (OCC), has been supporting prices for packaging. Coated Boards In 1Q16, coated boards sales reached to 166 thousand tons, up 2% increase over the same period last year. The domestic market registered growth of 4% in volume compared to 1Q15, especially in the food and beverage sectors, proving the resilience of these markets even amidst the deterioration of the Brazilian economy. In the export market volumes remained stable in the same comparison. Net revenue for the period totaled R$555 million, up 17% over the revenue recorded in the first quarter of 2015, due to the higher sales volume and the higher exchange rate, which benefited the portion of the coated boards destined for the export market. BUSINESS UNIT – CONVERSION thousand tonnes 1Q16 4Q15 1Q15 ∆ ∆ 1Q16/4Q15 1Q16/1Q15 2016 Total conversion 165 176 169 -6% -2% 165 Total conversion 553 586 536 -6% 3% 553 R$ million 11 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 The year began with a greater decrease in the corrugated board box industry, which was down 5.3% compared to 1Q15, according to data released by the Brazilian Corrugated Board Association (ABPO). Despite the unfavorable scenario, Klabin intensified its sales initiatives and improved existing contracts, resulting in a decline that was less than the industry average in 1Q16. With regard to industrial bags, the economic deterioration in Brazil also impacted the construction industry, and data released by the National Cement Industry Union (SNIC) showed decrease of 15% in 1Q16 from the same period last year. The impact of this decrease was mitigated by Klabin with higher sales to the export market, as well as the Company's strong presence in the Northeast, where demand has been higher compared to other regions. Klabin is increasing its presence in countries as Mexico and the USA and is obtaining success in the diversification of bag sales not only to construction markets, but also for others uses as with fertilizers, animal feed, coffee and other goods. In this context, Klabin’s conversion sales fell by only 2% in 1Q16 compared to 1Q15, again demonstrating its resilience and flexibility of action in several markets. Quarterly revenue increased 3% in the same comparison due to the transfer of increases for some raw materials and services that had been impacting Klabin’s production costs. INVESTMENTS Klabin invested R$853 million in 1Q16, including investments in the new pulp mill in Ortigueira (PR). Of the total invested in the quarter, R$80 million was allocated to the operational continuity of the plants, R$25 million was allocated to forestry operations, R$14 million was invested in special projects and capacity expansions and R$734 million in the Project Puma. The 1Q16 marked the startup of Klabin’s new pulp mill (“Puma Unit”) located in Ortigueira, Paraná. The first pulp bale was produced on March 4, 2016, already with Chain of Custody certification from the Forest Stewardship Council® - FSC® (FSC-C129105). The new unit’s construction was completed in 24 months and on budget. Total investment in the project was R$8.5 billion, which included the infrastructure, taxes and contractual corrections. The Puma Unit have the capacity to produce 1.5 million tonnes of pulp, with 1.1 million tonnes of bleached hardwood pulp (eucalyptus) and 400 thousand tonnes of bleached softwood pulp (pine), a portion of which will be converted into fluff pulp, making it the world’s only industrial unit designed to produce the three fibers. Klabin’s production will help substitute imports of fluff pulp, which is an important input used to make diapers and sanitary pads and will represent hard currency out flow savings form the country. After the start up, the operations of the plant has taken place within the learning curve established by Klabin. During the month of April the production of fibers has grown continuously and has already achieved daily production levels equivalent to 80% of the nominal capacity. The first sales of pulp were also made in April. CAPITAL MARKETS Shares In the first quarter of 2016, Klabin’s shares (KLBN11) depreciated 17%, against an increase of 15% for the Ibovespa. The Company’s shares were traded during all of the BM&FBovespa trading sessions, registering 544 thousand 12 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 transactions involving 184 million shares and an average daily trading volume of R$63 million at the end of the period. Over the last twelve months, Klabin’s shares appreciated by 6% against a decline of 2% for the Ibovespa. Performance KLBN11 x Brazilian Index (Ibovespa) 106 98 KLBN11 Mar-16 Feb-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15 May-15 Apr-15 Mar-15 100 Ibovespa Index Klabin’s capital stock is represented by 4,733 million shares, made up of 1,849 million common shares and 2,884 million preferred shares. Klabin’s shares are also traded on the US market, as Level I ADRs, listed on the “over-thecounter” (OTC) market under the ticker KLBAY. Klabin is a member of the BM&FBovespa’s Corporate Sustainability Index (ISE). The index is made up of the shares of companies that stand out for their high degree of commitment to the sustainability of business and the country. The participant companies are selected annually based on criteria established by the Getulio Vargas Foundation’s Center for Sustainability (GVces). Klabin is part of the current portfolio until January 2017. Dividends nd The payment of dividends was approved by the board meeting of February 2 . The total amount paid on February, nd 22 was R$ 26,21 per 1000 stocks and R$ 131,07 per 1000 units totaling R$ 120 million disbursed. Fixed Income Klabin’s notes mature in July 2024, with an issue amount of US$500 million, and are being traded in the secondary market of the Luxembourg Stock Exchange. The bonds were issued at a rate of 5.25% per year and interest payments are made semi-annually, in January and July. Standard & Poor's and Fitch Ratings have maintained Klabin a BBBinvestment grade. 13 RELATÓRIO - 4T13 • 12 DE FEVEREIRO 1Q16 EARNINGS RELEASE • APRIL 28, 2016DE 2014 CONFERENCE CALL Portuguese Friday, April 29, 2016 - 11:00 (Brasília). English (with simultaneous translation) Password: Klabin Friday, April 29, 2016 – 10:00 a.m. (EDT). Phone: (11) 3193-1133 or (11) 2820-4133 Password: Klabin Replay: (11) 3193-1012 or (11) 2820-4012 – Password: 1821238# Phone: U.S. participants: 1-888-700-0802 The conference call will also be broadcast over the internet. International participants: 1-786-924-6977 Access: http://cast.comunique-se.com.br/Klabin/1Q16 Brazilian participants: (55 11) 3193-1133 or (55 11) 2820-4133 Replay: (55 11) 3193-1012 or (55 11) 2820-4012 – Password: 3474917# The conference call will also be broadcasted by internet. Access: http://cast.comunique-se.com.br/Klabin/1Q16 With gross revenue of R$6.7 billion in 2015, Klabin is the largest integrated manufacturer, exporter and recycler of packaging paper in Brazil, with an annual production capacity of 2 million tons. Klabin has adopted a strategic focus on the following businesses: paper and coated boards for packaging, corrugated boxes, industrial sacks and wood logs. It is the leader in all of its market segments. The statements in this earnings release concerning the Company's business prospects, projected operating and financial results and potential growth are merely projections and were based on Management's expectations regarding the Company's future. These expectations are highly susceptible to changes in the market, the general performance of the Brazilian economy, the industry and the international markets, and are therefore subject to change. 14 1Q16 EARNINGS RELEASE • APRIL 28, 2016 Appendix 1 Consolidated Income Statement (R$ thousand) (R$ thousands) 1Q16 4Q15 ∆ ∆ 1Q15 1Q16/4Q15 1Q16/1Q15 Gross Revenue 1,715,342 1,877,204 1,555,081 -9% 10% Net Revenue 1,463,477 1,595,507 1,308,449 -8% 12% 63,447 226,614 55,538 -72% 14% -6% 8% -31% 20% Change in fair value - biological assets Cost of Products Sold (1,004,160) (1,063,709) (930,067) Gross Profit 522,764 758,412 433,920 Selling Expenses (105,264) (121,389) (94,461) -13% 11% General & Administrative Expenses (100,037) (101,326) (74,964) -1% 33% 10,369 (6,033) N/A -16% -1% 20% Other Revenues (Expenses) Total Operating Expenses Operating Income (before Fin. Results) Equity pickup (5,049) (210,350) (212,346) (175,458) 312,414 546,066 258,462 -43% 21% 7,094 6,580 7,535 8% -6% Financial Expenses (224,127) (233,853) (215,714) -4% 4% Financial Revenues 157,222 159,906 118,846 -2% 32% 1,079,535 306,158 (1,287,743) 253% N/A Net Financial Revenues 1,012,630 232,211 (1,384,611) 336% N/A Net Income before Taxes 1,332,138 784,857 (1,118,614) 70% N/A -2% N/A 106% N/A Net Foreign Exchange Losses Income Tax and Soc. Contrib. Net income (258,626) 1,073,512 (264,251) 520,606 - (728,566) 0% 0% Depreciation and amortization 250,779 268,446 250,316 -7% 0% Change in fair value of biological assets (63,447) (226,614) (55,538) -72% 14% 12,403 15,074 8,167 -18% 52% 602,972 461,407 -15% 11% Vale do Corisco Adjusted EBITDA 512,149 - 390,048 15 15 - 1Q16 EARNINGS RELEASE • APRIL 28, 2016 Appendix 2 Consolidated Balance Sheet (R$ thousand) Mar-16 Dec-15 Current Assets Assets 8,616,633 8,675,744 Cash and banks 22,454 56,511 5,282,396 4,997,212 575,070 557,143 1,318,434 1,501,099 Inventories 834,676 701,126 Salaries and payroll charges Recoverble taxes and contributions 486,419 736,501 Dividends to pay 97,184 126,152 18,317,442 17,592,436 1,297,729 1,159,638 Judicial Deposits 79,411 77,391 Other receivables 227,427 Short-term investments Securities Receivables Liabilities and Stockholders' Equity Mar-16 Dec-15 3,382,676 3,162,295 1,870,514 1,716,306 Debentures 490,522 329,810 Suppliers 653,497 703,199 Current Liabilities Loans and financing Taxes payable 42,514 45,400 151,146 195,349 0 0 63,015 61,772 111,468 111,459 Noncurrent Liabilities 17,269,891 17,753,545 Loans and financing 14,626,801 14,834,935 Debentures 900,841 1,140,679 219,820 Deferred income tax and social contribution 927,575 954,269 518,710 507,275 Other accounts payable - Investors SCPs 150,791 143,116 12,659,276 12,009,146 REFIS Adherence 356,552 361,240 Biological assets 3,522,068 3,606,389 Other accounts payable 307,331 319,306 Intangible assets 12,821 12,777 6,281,508 5,352,340 Other receivables REFIS Adherence Other accounts payable Noncurrent Assets Long term Taxes to compensate Other investments Property, plant & equipment, net Stockholders´Equity Capital 2,384,474 2,383,104 Capital reserve 1,301,916 129,318,705 Revaluation reserve 48,706 48,705 Profit reserve 1,683,923 748,162 Valuation adjustments to shareholders'equity 1,044,309 1,064,181 Treasury stock Total 26,934,075 26,268,180 Total 16 16 (181,820) 26,934,075 (185,774) 26,268,180 1Q16 EARNINGS RELEASE • APRIL 28, 2016 Appendix 3 Loan Maturity Schedule - 12/31/2015 R$ million 2Q16 3Q16 4Q16 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025/26 Total BNDES 104 74 90 268 476 476 415 301 250 245 234 188 1 2,855 Others 52 10 42 104 23 181 119 285 191 104 89 39 0 1,134 31 279 358 116 62 484 62 31 Debentures Interests 249 Local Currency - - - 405 84 163 651 858 773 596 1,070 502 380 323 514 57 106 677 1,241 1,267 1,225 1,232 872 678 59 Fixed Assets 29 9 8 45 178 202 211 201 185 176 167 Bonds 18 19 - - - - - - - ECA's 12 62 2 76 126 252 252 246 244 204 164 Foreign Currency 573 129 115 816 1,545 1,722 1,687 1,678 1,300 1,059 Gross Debt 977 212 278 1,468 2,402 2,495 2,283 2,748 1,803 1,439 Trade Finance - - - 227 - 1 - 157 1,774 1,391 5,381 7,251 18 1,541 - 1,792 164 198 1,924 390 2,094 216 12,508 713 2,321 218 17,889 Average Cost Average Tenor R$ million 2.748 2.402 1.545 2.495 1.722 1.678 2.283 2.321 1.687 2.094 Foreign Currency 12,508 1.803 1.300 1.468 816 1.059 1.070 405 2Q16 858 212 129 84 278 115 163 3Q16 4Q16 651 390 596 2016 2017 713 773 2018 2019 502 2020 Local currency : R$ 5.4 billion Average tenor: 40 months 2021 380 2022 11.6% p.y. 40 months Foreign Currency 4.6 % p.y. 51 months Gross Debt Gross Debt 17,889 1.439 977 573 Local Currency 218 323 2023 227 2024 216 1 2025/26 Foreign currency: R$ 12.5 billion Average tenor : 51 months 17 17 Local Currency 5,381 48 months 1Q16 EARNINGS RELEASE • APRIL 28, 2016 Appendix 4 Consolidated Cash Flow Statement (R$ thousand) Cash flow from operating activities Operating activities 1Q16 1Q15 960,592 430,622 694,097 1,073,512 . Net income 637,907 (728,566) 77,405 75,166 . Change in fair value - biolgical assets (63,447) (55,538) . Depletion in biological assets 173,374 . Depreciation and amortization (9,503) . Deferred income taxes and social contribution 175,150 (393,011) . Interest and exchange variation on loans and financing (266,389) . Payment of interest on loans (302,779) (180,384) 26,600 188,783 7,254 10,223 12,210 14,997 . Interest, exchange variation and profit sharing of debentures . Variation of the present value of debentures . REFIS Reserve 444 . Equity results 1,563,114 505 (7,094) (7,535) (11,730) (14,815) . Others (15,760) (10,182) Variations in Assets and Liabilities 266,495 (207,285) . Receivables 182,665 (125,007) (133,550) (36,085) . Recoverable taxes 123,721 (332,270) . Marketable Securities (17,927) . Results on Equity Pickup .Income taxes and social contribution . Inventories . Prepaid expenses (3,011) . Other receivables 15,640 165,294 . Suppliers (8,330) 516 (9,876) 295,485 (2,886) (16,807) . Salaries, vacation and payroll charges (44,203) (28,209) . Other payables (19,248) 53,298 Net Cash Investing Activities (849,549) (997,850) . Purchase of property, plant and equipment (827,775) (978,189) . Cust biological assets planting (ex taxes) (25,606) (21,461) 3,832 1,800 - - . Taxes and payable . Income of assets sale . Sale of property, plant and equipment Net Cash Financing Activities 140,084 390,545 . New loans and financing 792,114 755,744 . Debentures interest payment (130,718) . Loan amortization (407,512) . Dividends payed (120,015) . Stocks repurchase . Stocks disposal (359,097) - - (11,151) 6,215 5,262 . Minority shareholders entry - . Minority shareholders exit - (213) Increase (Decrease) in cash and cash equivalents 251,127 Cash and cash equivalents at beginning of period 5,053,723 5,245,833 Cash and cash equivalents at end of period 5,304,850 5,069,150 18 18 (176,683)
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