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Klabin plans to invest up to $3.2bn as of 2024

Priority is expansion of fluff pulp, a market in which the company is already among the fourth largest in the world

12/01/2022

Cristiano Teixeira — Foto: Silvia Zamboni

Cristiano Teixeira — Foto: Silvia Zamboni

The largest producer and exporter of packaging paper in Brazil and leader in the paper packaging market, Klabin has chosen Santa Catarina State for its next cycle of growth. The investment will start with fluff pulp, used in the production of menstrual pads and disposable diapers, but will also cover paper and packaging.

With three growth projects underway – in Paraná, São Paulo, and Ceará – the company is designing a future expansion round in the state where it already has industrial operations. The plan is to install between 1 million and 1.2 million tonnes per year of additional capacity of different products, such as fluff pulp, sack kraft, and kraft liner, in the Otacilio Costa and Correia Pinto plants, in the next few years.

Klabin does not yet disclose investment forecasts for this new cycle. However, based on similar projects and considering recent inflation which has further affected machinery and equipment costs, market sources heard by Valor estimate that a package with these features are expected to demand investments of $3 billion to $3.3 billion.

Klabin’s management had already indicated its intention to expand the production of fluff pulp. With the Puma I project, in Ortigueira (Paraná state), the company has become the fourth largest in the world in this segment, whose production is concentrated mainly in North America.

“We did not present a proposal about the fluff to the Board of Directors, but we are carrying out studies and we foresee fluff and long fiber as the main products in which the company is likely to invest in the future,” said CEO Cristiano Teixeira at the opening of Klabin Day, on Wednesday.

According to the executive, the risk of global recession has led the company to postpone the discussions about the new growth cycle, so a formal project may be submitted for approval by the board only at the end of next year or the beginning of 2024. Initially, the project was expected to be submitted for approval in the first half of 2023, but the global context has changed. If approved, the investment would start to be executed in 2024, and operate after 24 months.

In the pulp sector, the big bet in the short and medium term is on fluff. According to Alexandre Nicolini, head of Klabin’s pulp business, this type of pulp currently represents 10% of the global market, and specialized consulting firms project an expansion of 3.5% per year until 2040.

Just as it did in the Puma II project, which is in the construction phase of the second paper machine, the MP 28, the plan is to also to execute the new expansion cycle in stages.

According to the initial design, the new fluff pulp line would have priority and an installed capacity of 500,000 to 600,000 tonnes per year, together with a sack kraft machine of 200,000 to 250,000 tonnes per year. The kraft liner investment would come in the second phase.

The forest base to cope with the expansion is estimated at 100,000 to 120,000 hectares and Klabin has begun to prepare it. In Santa Catarina, the planting has begun on an additional 35,000 hectares for the project.

The company plans to invest R$5.4 billion in 2023, of which R$2.2 billion in maintenance and R$1.1 billion in special projects, including Figueira and Horizonte plants, said Marcos Ivo, the company’s financial and investor relations director.

The Puma II project, the largest investment in the company’s history, is expected to receive another R$2.1 billion over the next year. Puma II’s second paper machine, the MP 28, focused on paper boards, will go into operation in the second quarter of next year.

“The modernization or substitution of the Monte Alegre plant boiler is still under study, and we have two alternatives that indicate a lower investment than expected. The forecast is to conclude the studies and submit them to the board of directors for approval during the first half of the year,” said Mr. Teixeira.

If the project is approved, the disbursements planned for 2023 will refer to preparatory works and are already included in the total investment announced for the year.

According to the executive, the company’s sales volume in the next five years will benefit from the new capacities that have already started to operate, increasing the share of corrugated cardboard packaging and paper in the revenues.

“Historically and structurally, the Ebitda of packaging is more resilient and stable, especially in corrugated paper and paper board,” said the executive, adding that, for 2023, the vision for the average price of board in the international market implies at least a double-digit increase.

Given the new projects, the return on invested capital (ROIC) should continue to advance in the coming years, added Mr. Ivo. Between 2016 and 2022, this indicator was 14% on average, compared to 9% in previous years. From 2023 on, the forecast is for an average ROIC above that 14%.

“Looking ahead, we are confident in indicating that the ROIC will be higher as the projects since Puma I mature,” said the executive.

*By Stella Fontes — São Paulo

Source: Valor International

https://valorinternational.globo.com/
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Klabin sees seasonal recovery in domestic market in 2Q

Klabin (KLBN11): XP reitera recomendação de compra após resultados

The second quarter is still expected to be marked by sluggish activity on the domestic market, although a “slight” upturn in demand for paper packaging has already been perceived, due to more favorable seasonality, says Klabin CEO Cristiano Teixeira. International trade, on the other hand, is likely to remain firm.

“The domestic market is still likely to go slowly because of the inflation scenario,” he said in a conference call with analysts. In the first quarter, the company’s sales to the Brazilian market represented 55% of the 900,000 tonnes sold in total, against 56% in the fourth quarter and 61% in the same period of 2021.

At the beginning of the year, Klabin benefited mainly from price increases realized in recent quarters and from the reallocation of volumes to the overseas market, which offset the greater pressure of costs and the seasonally weaker consumption of cardboard boxes in the country. As a result, net revenue rose 28%, to R$4.42 billion, and the EBITDA advanced 35%, to R$1.73 billion.

According to the company’s head of the pulp business unit, Alexandre Nicolini, the readjustments announced for hardwood pulp as of May 1, in China, the United States and Europe, have already been applied. In the Chinese market, the increase announced by the company was $30, to $810 per tonne.

Traditionally, Suzano, the world’s largest producer of eucalyptus pulp, used to lead the movement of readjustments by South American producers in the different regions. In recent months, however, Klabin has taken the lead. “The company had a vision of the difference between the resale price and the market price in China and, therefore, there was room for a new increase,” Mr. Nicolini justified.

In Europe, mentioned Mr. Nicolini, an increase of $50 per tonne was applied for May and there is a new increase, of $50 per tonne, announced for June. “The market remains quite resilient, although the situation in China is a little more delicate, because of the lockdowns. Even so, Klabin does not feel any reduction in the demand for its products,” he said.

According to the executive, the company anticipated a higher pressure on pulp prices in China compared to other regions and, last year, decided to increase the volumes for the other markets, including Brazil. The strategy proved to be right, and the realized prices were above the industry average.

In the corrugated cardboard business, said head of packaging Douglas Dalmasi, Klabin opted to forgo volume and concentrate on prices during the first quarter. “We don’t look at specific market share. Our vision is more medium-term. We underperformed the market in terms of volume, but prices were above the sector’s average because we favor profitability,” he said.

In the kraftliner market, Flavio Deganutti, head of the paper business, declared it is possible to see the first signs of a resumption in U.S. exports of this type of paper, but a major announcement of capacity closures contributes to maintaining the fairer relationship between global supply and demand. “We don’t see any major movement [of change in this scenario] in the coming months,” he added.

Source: Valor International

https://valorinternational.globo.com

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Klabin starts operation of new machine in Paraná

The first paper machine of the Puma II project, the largest investment in Klabin’s history, went into operation on Monday. Installed in Ortigueira, in the state of Paraná, the machine named MP 27 has a capacity of 450,000 tonnes per year of Eukaliner packaging paper and should produce more than 100,000 tonnes this year already.

The company has already started the works for the second machine of the project, which comprises a total investment of R$12.9 billion until 2023 – so far, Puma II has received more than R$6.5 billion. The two new machines will be supplied by the Finnish company Valmet.

At its debut, the MP27 will encounter encouraging market conditions – fair supply, heated demand in Brazil and in the international market, besides prices on the rise. In addition, Eukaliner is better suited for making lightweight boxes and offers better print quality, important requirements for packaging used in e-commerce, which has been leveraged by the Covid-19 pandemic.

“The moment in the packaging paper market is very favorable, which made it possible to sell 100% of the production volume in advance,” says the director of Klabin’s paper business, Flavio Deganutti.

Innovative, Eukaliner is the first kraftliner in the world obtained exclusively from eucalyptus pulp, which confers a weight gain of around 10% in relation to conventional pulp. For this reason, it will be negotiated with a premium of 5% to 10% compared to traditional kraftliner prices.

According to Mr. Deganutti, in the first month of operation, the goal is to produce brown Eukaliner, and then white. Sales will be balanced between the domestic and export markets, with an initial mix of 35% and 65%, respectively, and part of the production should be converted into boxes and packaging by Klabin itself.

The additional supply is not expected to impact prices, because the capacity of MP27 is relatively small compared to the 170 million tonnes of the global market.

Initially, Klabin had planned to start operating the new machine in the second half of July, but technical issues led to the postponement until now. The MP 27 is integrated with a production line of unbleached pulp.

According to Klabin’s director of Industrial Technology, Innovation, Sustainability and Projects, Francisco Razzolini, a good part of the common structure, which will also serve the second machine of Puma II, has already been executed.

In November the gasification plant will start up. It will use biomass to replace fossil fuels. In the first quarter, the line will bring self-sufficiency in sulfuric acid, obtained from the capture and treatment of gases from the production process. “There will be a gain in energy efficiency and a reduction in the use of water, and all the energy generated will be used in the new project,” says the executive.

The second machine in Puma II, the MP 28, will be dedicated to card production and will start operating at the end of the second quarter of 2023. Today, the cartonboard market is even tighter than that of kraftliner, and Klabin has already started conversations to sell the production. MP 28 will have a production capacity of 460,000 tonnes per year.

Source: Valor international

https://valorinternational.globo.com/

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Klabin aims at packaging in new expansion push

Klabin – Wikipédia, a enciclopédia livre

After announcing investments of R$12.9 billion by 2023 to expand kraftliner and cardboard production, Klabin now started studies for a new cycle of growth focused on packaging. In this new, long-term phase, which will require “relevant” disbursements, the company will inject R$342 million to put in place 23 special expansion projects by 2022.

With fast and high returns, these incremental projects focused on new technologies and on eliminating bottlenecks will contribute to the company’s financial deleveraging. They focus on cardboard boxes and paper bags as demand has been driven by the advance of e-commerce and the growing demand for sustainable packaging.

“We are deepening the studies for more relevant investments in the coming years,” Douglas Dalmasi, Klabin’s packaging head, said, without elaborating on the plans for the paper bag and corrugated box business. The projects recently approved by the company’s board of directors work as a bridge for the new growth cycle, he said. Most of it, or R$251 million, will be destined to packaging from the total to be invested.

The incremental projects, which are revisited each year by the management team, will come into operation in the middle of next year. In packaging, the addition of capacity will be 50,000 tonnes annually, particularly boxes – Klabin produces 1 million tonnes of boxes and 150,000 tonnes of industrial sacks annually. In 2020, the company bought International Paper (IP) packaging assets in Brazil, raising its share in the Brazilian corrugated cardboard market to 24%.

The Brazilian paper packaging market remains heated, Mr. Dalmasi said, and the incoming orders for July suggest an even stronger month than June. The latest statistical bulletin from the Brazilian Paper Packaging Association (Empapel) shows that the Brazilian Corrugated Cardboard Index (IBPO) advanced 24.3% in May, in the annual comparison, to 147.4 points. In volume, shipments reached 331,045 tonnes, the highest for May and the 11th consecutive year-over-year record growth.

The corrugated cardboard market typically grows between one and two percentage points above the GDP. For 2021, Empapel projects a 7% increase in shipments, and the medium- and long-term outlook is positive. The prices of cardboard boxes, sheets, and accessories also remain on the rise, reflecting the strong increase in costs. The industry is still passing on the higher costs to cardboard packaging prices, and Klabin’s level of service is now normalized – unlike what happened at the beginning of the year, when manufacturers, in general, were working with longer delivery times.

The most substantial gain with the incremental projects will come from the new technologies that will be incorporated into the operation to meet customer demand. “These are technologies that enable more sophisticated printing, some digital,” Mr. Dalmasi said.

Customers from markets that are on the rise, such as fruit, cosmetics, and online retail, as well as some segments of processed foods, beverages, and toys, have been looking for higher-end printing services and Klabin will come out ahead of the competition with more innovative technology, the executive said. With the investments directed at operations in Pernambuco, Bahia, Minhas Gerais, São Paulo, and Santa Catarina, the company will have Brazil’s most robust digital printing equipment, he added.

At the end of March, Klabin’s net debt, of R$21.7 billion, corresponding to 4.2 times the EBITDA in reais, a still high ratio because of investments in Puma II. With the beginning of the expansion in Ortigueira, Paraná, and the improved operating result propped up by the strong performance of the packaging business and by higher pulp prices, the company is on track for more accelerated deleveraging.

The largest investment in the papermaker’s history, the Puma II project, includes two new paper machines at the industrial complex in Paraná integrated with pulp production and makes Klabin the first company in the world to produce kraftliner, the paper used in packaging, exclusively from eucalyptus pulp. The use of hardwood pulp brings, among other gains, cost reduction, higher compression resistance, and better printing quality.

The first Puma II machine, which will make the Eukaliner, is about to start operating, with an installed capacity of 450,000 tonnes per year. The second machine, which will make paperboard, will have a capacity of 460,000 tonnes per year and will be operational by 2023.

Source: Valor international

https://valorinternational.globo.com/

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Klabin now plans to invest R$13bn in Paraná

Klabin defined on Wednesday the type of paper it will produce in the second machine at the Puma II project and raised to R$12.9 billion the total investment in the expansion at Ortigueira (Paraná), an increase of R$2.6 billion in relation to the initial budget. It will be a new paperboard machine and not another kraftliner machine like the first one, allowing the company to enter the group of the ten largest virgin fiber board manufacturers in the world. Last year, cardboard consumption in Brazil rose by 6.5%.

Source: Valor international

https://www.valor.com.br/international/briefs

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Klabin innovates with packaging paper fully made of eucalyptus

Klabin, Brazil’s largest manufacturer of packaging paper and corrugated cardboard packaging, will produce on a large scale the first kraftliner in the world fully made from eucalyptus fiber. The so-called Eukaliner will be made in Ortigueira, Paraná, starting in May 2021. The new machine to be used, which is part of the R$9.1 billion investment plan launched last year, will have 450,000 tonnes per year of capacity. The Eukaliner can be used in a wide range of products, especially in food boxes that travel the world, and in electronic commerce. Tests have shown that eucalyptus pulp offers good resistance to stacking because it is denser. In practice, this allows reducing the weight of paper used in packaging.

Source: Valor Econômico

http://www.valor.com.br/international

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