Economic performance
  • 103-1
  • 103-2
  • 103-3

Economic performance

The year 2020 was marked by the pandemic outbreak of the new coronavirus around the world, with effects as yet unpredictable. Even in this scenario of major uncertainties and volatility, Klabin once again proved the excellence of its integrated and highly flexible business model, capable of adapting to the most diverse economic environments. The company attained record results, including an increase in sales volume and net revenue across all business lines, and delivered another year of Ebitda growth, strong cash generation and improved ROIC.

Following strict safety and hygiene protocols at the construction site, 68% of the works on the first packaging paper machine for the Puma II Project were completed by 12/31/20, with startup scheduled for July 2021. When we consider the advances made until the release of the 4Q20 results, this percentage was 78% on 01/31/2021. The acquisition of International Paper’s packaging paper and corrugated board units in Brazil is also worth mentioning, adding 305,000 tons of corrugated board capacity and consolidating Klabin’s leadership position in this market, at a time of strong demand.

In 2020, Klabin’s Brazilian operations produced more than 99.5% of the total volume for the year.

With respect to financial management, Klabin continued work on liability management, further extending the average term of its debts, with a reduction in their average cost as well. Two important financial policies were approved – Indebtedness and Dividends –, bringing even more transparency, predictability and comfort to stakeholders in relation to the Company’s financial management practices. All of these initiatives reinforce Klabin’s vocation as a company geared toward growth, value creation and the development of a sustainable economy, competitively offering recyclable, biodegradable solutions from renewable sources.

All of the Company’s financial information is audited by Ernst Young, an independent third party. Further details can be found on the Financial Statements page of the Investor Relations website.

  • 102-7

Klabin

Information GRI Indicator
Number of employees*14,874See 102-8
Number of operations24See 102-3
Number of products9See 102-2
Net revenue (in BRL millions)11,949See 201-1

*Direct employees; the number does not consider the new employees from the corrugated board packaging units acquired from International Paper in 2020.

Forestry

Klabin handled approximately 15 million tons of pine and eucalyptus logs and chips, in addition to biomass for energy generation.
The focus on the availability of wood to supply an increased internal consumption of the pulp and paper operations reduced third-party log sales by 11% to 1.5 million tons, reaching net revenue of BRL 208 million.

Pulp
1.545 million tons produced: 3% above the nominal capacity of the Puma Unit, in line with the volume produced in 2019.
Price reduction due to the imbalance of supply and demand generated by the impacts of the pandemic: according to FOEX, the average price dropped 19% for bleached hardwood pulp and 7% for bleached softwood pulp, both delivered in China, in the year.
Sales volume was 1,530,000 tons, a 3% increase over the previous year, ending the year with a volume above budget.
Net sales of BRL 3.89 billion, an increase of 11% compared to 2019. The benefit from the devaluation of the Brazilian real against the U.S. dollar and the higher sales volume were the main growth drivers.

Paper
The uncertainties generated by the pandemic led to a downturn in packaging paper prices early in the year, followed by a strong recovery in the second half of the year.
The favorable market conditions, Klabin’s commercial positioning and its operational flexibility drove the kraftliner sales volume to reach 432,000 tons and net revenue of BRL 1.197 billion. The increases compared to the previous year were 11% and 21%, respectively.
The board market showed an important resumption of volumes in 2020 in Brazil. Due to its strong presence in essential goods markets, which had strong demand during the pandemic, and the excellent operational performance of its units, Klabin obtained an increase of 5% in sales volume and 18% of revenue in 2020, when compared to the previous year.

Packaging
The sales volume of Klabin’s Corrugated Board Packaging reached 724,000 tons, an increase of 18% in relation to the previous year. Of this volume, 68,000 tons came from the corrugated board units incorporated from International Paper in 4Q20. Net revenue, in turn, was BRL 2.694 billion, an upswing of 24% in relation to 2019, with an increase of BRL 258 million from the new units.
The Industrial Bags business, which had retreated due to the COVID-19 pandemic in the first six months, showed a strong recovery in the second half of 2020. Klabin’s sales in this segment, even with stable volumes compared to 2019, recorded an increase of 11% in net revenue. This result is linked to Klabin’s presence in different markets and to the diversified product portfolio, also having been influenced, in the portion of foreign sales, by the devaluation of the Brazilian real in relation to the U.S. dollar.

  • 102-2

Activities, brands and products
Largest producer and exporter of packaging paper in Brazil, leading producer of cardboard, corrugated cardboard packaging and industrial bags in the domestic market, it is also the country’s only company to offer the finest solutions in hardwood, softwood and fluff pulps.

Commitment to sustainable development is a premise for Klabin’s business deals. In line with the new macro consumer trends, the Company is prepared to offer the market solutions based on secure, lightweight, efficient and recyclable packaging, resulting from renewable, biodegradable and flexible sources.

  • 102-6

Markets served

Klabin’s products are mainly aimed at industries in the industrialized and fresh food segments (milk, frozen meat, fruits, among others), health and personal hygiene (toilet paper, tissues, diapers, toothpaste, among others), hygiene and cleaning (powder laundry detergent and soap, for example), construction and electronics. In addition to spearheading the Brazilian market, the company also ships its products to 89 countries worldwide. We also have the Klabin for You channel, focused on the end consumer. In 2020, we launched E-Klabin, with Klabin’s innovative and sustainable solutions aimed at e-commerce – a segment that has significantly grown in relevance with the Covid-19 pandemic.

  • 102-10

Significant changes

Governance

In 2020, the Company addressed important issues related to governance, with emphasis on the approval, at the Extraordinary General Shareholders’ Meeting held on 11/26/2020, of the merger of Sogemar, with the consequent extinction of the payment of royalties related to Klabin brands. This operation, in addition to creating value for shareholders, was an important step in improving corporate governance practices due to the completion of a relevant transaction between related parties. Subsequently, the creation of three advisory committees to the Board of Directors was also approved in December, with the respective election of their members. They include: Audit and Related Parties, Sustainability and Compensation committees. Another significant step was the approval of two important financial policies – Indebtedness and Dividends –, bringing even more transparency, predictability and comfort to stakeholders in relation to the Company’s financial management practices.

Operations

Following strict safety and hygiene protocols, the work on Puma II advanced, achieving 68% completion of the first packaging paper machine by 12/31/20. When we consider the advances made until the release of the 4Q20 results, this percentage was 78% on 01/31/2021. The machine’s startup is scheduled for July 2021. This machine will have a capacity of 450,000 tons per year, being the first machine on the planet to produce kraftliner made from 100% eucalyptus.

In line with the packaging expansion plan on Klabin’s Strategic Roadmap, we acquired International Paper’s packaging paper and corrugated board packaging units in Brazil, adding 305,000 tons of capacity to this product and consolidating Klabin’s leadership position in this market, at a time of strong demand.

Both the new capabilities and the expansion of our geographic footprint, added to investments in innovation, R&D and the constant search for sustainable solutions, open several new paths for growth both now and in the coming years.

Business Performance

Forestry

Klabin handled approximately 15 million tons of pine and eucalyptus logs and chips, in addition to biomass for energy generation.

The focus on the availability of wood to supply an increased internal consumption of the pulp and paper operations reduced third-party log sales by 11%, which corresponds to 1.5 million tons and a net revenue of BRL 208 million.

Pulp

The volume produced was 1.545 million tons: 3% above the nominal capacity of the Puma Unit, in line with the volume produced in 2019.

Price reduction due to the imbalance of supply and demand generated by the impacts of the pandemic: according to FOEX, the average price dropped 19% for bleached hardwood pulp and 7% for bleached softwood pulp, both delivered in China, in the year.

Sales volume was 1,530,000 tons, a 3% increase over the previous year, ending the year with a volume above budget.

Net sales of BRL 3.89 billion, an increase of 11% compared to 2019. The benefit from the devaluation of the Brazilian real against the U.S. dollar and the higher sales volume were the main growth drivers.

Paper

The uncertainties generated by the pandemic led to a downturn in packaging paper prices early in the year, followed by a strong recovery in the second half of the year.

The favorable market conditions, Klabin’s commercial positioning and its operational flexibility drove the kraftliner sales volume to reach 432,000 tons and net revenue of BRL 1.197 billion, and the increases compared to the previous year were 11% and 21%, respectively.

The board market showed an important resumption of volumes in 2020 in Brazil. Due to its strong presence in essential goods markets, which had strong demand during the pandemic, and the excellent operational performance of its units, Klabin obtained an increase of 5% in sales volume and 18% of revenue in 2020, when compared
to the previous year.

Packaging

The sales volume of Klabin’s Corrugated Board Packaging reached 724,000 tons, an increase of 18% in relation to the previous year. Of this volume, 68,000 tons came from the corrugated board units incorporated from International Paper in 4Q20. Net revenue, in turn, was BRL 2.694 billion, an upswing of 24% in relation to 2019, with an increase of BRL 258 million from the new units.

The Industrial Bags business, which had retreated due to the Covid-19 pandemic in the first six months, showed a strong recovery in the second half of 2020. Klabin’s sales in this segment, even with stable volumes compared to 2019, recorded an increase of 11% in net revenue. This result is linked to Klabin’s presence in different markets, the diversified product portfolio, and by the devaluation of the Brazilian real in relation to the U.S. dollar, with regard to the portion of foreign sales.

  • 201-1

Economic and financial results

 Var. 2020/2019202020192018
Sales volume (thousands of tons)7%3,5583,3273,189
Volume produced (tons)3%3,612,6813,498,0013,367,010
Domestic market11%1,956.91,7691,589
Export3%1,601.11,5581,601
% domestic market4%55%53%50%
Net revenue (in BRL millions)16%11,94910,27210,016
Net revenue (in USD millions)-10%2,2982,549
Domestic market14%6,9956,1145,534
Export19%4,9544,1584,483
% domestic market-2%59%60%55%
Change in fair value of biological assets69%658390628
Cost of goods sold9%-7,885-7,241-6,342
Gross profit38%4,7223,4214,302
Sales-100%-1,139-910-764
General & administrative19%-718-601-558
Other operating income (expenses)-48%317610-2
Total operating expenses-100%-1,54-902-1,325
Adjusted EBITDA14%4,9064,3224,024
EBITDA Margin-2%41%42%40%
Net profit-100%-2,488676137
Net indebtedness38%19,78214,35512,399
Net indebtedness/EBITDA4.0x3.3x3.1x

Distribution of economic value generated (in BRL millions)

Direct economic value generated2020201920182017
Gross revenues13,69811,88611,5169,727
Distributed economic value    
Shareholders (equity remuneration – income)223957840507
Employees (remuneration, benefits and
charges for employees)
1,5901,4511,4191,373
Government (taxes, fees and contributions)-8008843911,032
Remuneration of third-party capital
(interest and rent)
7,9943,0033,7041,548
Retained direct economic value (in BRL millions) 1,934 -204 -604 25
Percentage of retained economic value2020
Retained value-37%
Distributed value137%

Environmental Investments

2020201920182017
Investments (BRL)433,612,653.09119,298,669.698,892,955.0013,815,311.00
Operating expenses (BRL)18,827,727.0012,110,881.0030,147,998.009,635,762.00
Total (investments + operating expenses) – (BRL)452,440,380.13131,409,551.0139,040,953.0023,451,073.00
Waste treatment and disposal expenses – (BRL)42,107,589.4331,489.00
Savings, cost reduction, incentives etc. (BRL)26,830,898.0033,794,079.0042,589,420.0018,142,208.00
Denominator (% of coverage) – production volume100100100100

This increase of 263% in environmental investments for 2020 takes into account the disbursement of the Puma II Project’s environmental investments to such as Water Treatment Plant (ETA), the Waste Water Treatment Plant (ETE), the Boiler Water Treatment Plant (ETAC) the Biomass Gasification Plant, the Sulfuric Acid Plant and the CDR, CDF and FC Electrostatic Precipitators.

*The environmental investments for 2020 incorporate the disbursement for 2019 and 2020 of the Puma II Project.

The increase in expenses is due to the treatment and disposal of waste, representing a 12.5%  increase in the quantity of waste generated and also reflecting the disposal of waste in landfills for   coprocessing or other treatment. These initiatives  support  compliance with the 2030 goal of zeroing disposal industrial waste in landfills.