August 1, 2001

www.klabin.com.br

Klabin reports 2nd quarter earnings of R$ 15 million

Sales Volume totaled 453 thousand tons, 7% higher than the previous quarter; Net Revenue reaches R$ 567 million, 6% higher than the previous quarter; EBITDA was R$183 million, an improvement of 3% over the previous quarter; Net Profit registered R$ 15 million; Sale of Klabin Riocell forestry assets for R$ 67 million; Hedge operations of US$ 264 million, significantly reducing foreign currency exposure.

Highlights
R$ Million Average Price (R$/ton) Sales Volume (1,000 ton) Net Revenue Gross Profit Gross Margin EBIT Net Profit (Loss) EBITDA EBITDA margin (%) Equity Net Debt Total Capitalization Net Debt / EBITDA (annualized) Net Debt / Total Capitalization Depreciation / Amortization Capital Expenditures 2Q/01 1,301 453 *567 *235 *41% *124 15 *183 *32% 1,425 2,408 3,894 *3,3 x 62% 58 92 1Q/01 1,327 425 536 217 40% 122 (80) 178 33% 1,428 2,369 3,856 3,3 x 61% 55 64 2Q/00 1,400 334 433 185 43% 106 2 145 33% 968 1,394 2,623 2,4 x 53% 39 47 QoQ -2% 7% 6% 8% 2% 3%

2%

* Excluding the net result on the sale of forestry assets of Klabin Riocell.

**The results of Igaras, acquired on October 3, 2000, are consolidated as from the 4th Q00

Release Trimestral 1 de agosto de 2001

Economic and Financial Performance

Initial Considerations
The results of Igaras, acquired in October 2000, have been consolidated into Klabins statements since 4th Q00. Due to the significant contribution of this acquisition and for the purposes of a better understanding of the Companys performance, all comparisons in this report are based on figures for 2Q01 in relation to those of 1Q01. The sale of Klabin Riocells forestry assets, concluded in May 2001, generated net revenue of R$ 67 million and net operating revenue of R$ 42 million. Due to the nonrecurring nature of this transaction and to provide a better analysis of Klabins 2Q01 results as well as a comparison with the previous quarter, a proforma income statement excluding the result of the forestry assets sale is shown in attachments I and II. Similarly, the comments that follow also do not take into account this effect.

Net Revenue and Sales Volume

Sales volume for 2Q01 was 453 thousand tons (878 thousand tons for the first half of 2001), 7% higher than the previous quarter. The recovery in pulp exports from Klabin Riocell, contributed to the improvement in sales volume, reporting a growth of 35% during the period. The pulp segment accounted for 21% of volume in 2Q01 and 19% for the first half of the year. The packaging segment was mainly flat, reporting a slight growth of 2% in the quarter due to an increase of 3% in the sales volume of corrugated boxes and 5% in multiwall sacks and envelopes. This segment continues to account for the majority of sales volume, representing 66% in 2Q01 and 68% for the first half of 2001. In other segments, tissue recorded an increase of 14% in sales volume. The only exception to this positive trend was the decline of 19% in publication paper sales volume, which reflected falling demand in the domestic market. In terms of markets, the recovery in Klabin Riocells exports led to an increase in export volume increasing from 35% in 1Q01 to 40% in 2Q01.
Volume 1st Q01
Pulp 19% Tissue 7% Publication Paper 6%

Sales Volume by Market

Sacks/ Envelopes 7%

40%

35%

60%
Corrugated Boxes 30%

65% 1st Q'01

Exports

Packaging Paper 31%

2nd Q'01

Domestic Market

Release Trimestral 1 de agosto de 2001

The average price in 2Q01 of R$ 1,301 per ton reflects a decline of 2% in relation to 1Q01 (R$ 1,327 per ton). This decline is due to changes in the mix of products sold during the period, with a higher portion of pulp (which prices fell in the period) offsetting the increase in prices in other segments, especially packaging paper. As a result of the trends in volumes and prices, net revenue in 2Q01 was R$ 567 million, an increase of 6% compared with the previous quarter. Net revenue for the first half of 2001 totaled R$ 1,103 million. Revenue breakdown in the first half of 2001 is shown below with the packaging paper segment accounting for 59% of revenue, pulp 16%, and the other segments 25%.
Net Revenue 1st Q01
Pulp 16% Publication Paper 7% Sacks/ Envelopes 9%

Net Revenue by Market

34%

30%

Others 2% Tissue 16%

66%

70% 1st Q'01

Exports

2nd Q'01

Domestic Market

Packaging Paper 24%

Corrugated Boxes 26%

Operating Result and EBITDA

The operating profit before the financial result was R$ 124 million in 2Q01 representing a margin of 22% - a slight decline of 1% compared to the previous quarter. This small reduction reflected increased selling expenses during the period, a result of higher exports and increased freight costs. This effect offset the lower general and administrative expenses, which were down by R$ 1.8 million despite a non-recurring expense of R$ 1.3 million in severance EBITDA payments. R$ Million Margin EBITDA totaled R$ 183 million, an increase of 3% compared to the previous quarter, evidence of the Companys steady cash generation. Meanwhile, EBITDA margin was 32% in the quarter and 33% in the first half of the year.
200 150 100 50 0

35%

33%

35%

31%

33%

32%

40% 30%

144

145

164

178

178

183

20% 10% 0%

1Q 00

2Q 00

3Q 00

4Q 00

1Q 01

2Q 01

EBITDA

EBITDA Margin

Excluding the effect on the sale of forestry assets in 2Q01

Release Trimestral 1 de agosto de 2001

Financial Results and Debt

Net financial expenses totaled R$ 150 million in 2Q01 of which R$ 70 million, or 47% relates to the 6.6% depreciation of the Real against the US Dollar during the quarter. In the first half of the year, Klabin accumulated net financial expenses of R$ 384 million, of which R$ 224 million, or 58% of the total, related to the net effects of the foreign exchange rate variation on liabilities indexed to foreign currency. The accumulated devaluation of the local currency in 1H01 was 17.9%, compared to 0.6% in 1H00, thus distorting any comparison between the two periods. Net debt was R$ 2,408 million at the end 2Q01, or 62% of total capitalization (61% in 1Q01), an increase of 2% compared to the previous quarter. Compared to December 2000, gross debt fell by R$ 25 million and net debt by R$ 67 million. The larger portion of the companys debt is concentrated in the long term (72%), with maturities extending out to 2008. Foreign currency denominated financing remained almost unchanged, growing slightly from US$ 800 million in 1Q01 to US$ 803 million in 2Q01. Foreign currency debt can be broken down as follows: US$ 473 million in trade finance, US$ 147 million in Eurobonds and the remaining US$ 183 million in other financing lines (IFC, DEG and others). As part of its policy of minimizing foreign currency exposure, at the end of 2Q01, the Company had outstanding hedge operations amounting to US$ 264 million, thus leaving only 8% of the total foreign currency financing exposed. The chart below shows the Companys foreign currency debt: Foreign Currency Debt June 30, 2001 US$ Million TOTAL Trade Finance - Natural Hedge Hedge Exposure 803 (473) (264) 66

Net Profit
In the 2Q01, Klabin recorded a net profit of R$ 15 million as a result of extraordinary gains from the sale of forestry assets amounting to R$ 40 million after income tax. Without these non recurring gains, the net result would have been a loss of R$ 25 million, an improvement in relation to 1Q01, where the Company posted a loss of R$ 80 million. The loss for the first half of the year totaled R$ 65 million, and as a direct result of the effect of the 17.9% depreciation of the Real against the US Dollar, causing net financial expenses in the amount of R$ 224 million.

Release Trimestral 1 de agosto de 2001

Capital Expenditures
Capital expenditures totaled R$ 92 million in 2Q01 and R$ 156 million in the first half of the year. Expenditures were mainly directed towards the Klabin Riocell expansion project, as well as preventive maintenance of Klabins plants. Investments of R$ 52 million were made in the Klabin Riocell project in 2Q01, totaling R$ 88 million for the first half of the year, with approximately 55% of the project being completed.

National Plan for Energy Rationing

Klabin is reducing its energy consumption by 10MWh/h, or 4% of its total needs, to comply with the Brazilian governments rationing program for the Southeast and Northeast regions of the country. In order to adhere to government requirements in these areas, Klabin has shifted its paper production to lower specific power consumption products, also adopting other power saving measures at its plants and invested R$ 2 million in the acquisition of power generators. As a result, Klabin is maintaining its production at paper mills, corrugated boxes and tissue plants at pre-rationing levels. The plants located in the south of Brazil are not subject to energy rationing.

Capital Markets
Klabins preferred shares were traded on all the business days of the So Paulo Stock Exchange (Bovespa) in 1H01. Share prices reported a depreciation of 41% against a decline of 5% in the Ibovespa. During 1Q01, the Bovespa recorded 7,609 transactions involving 70 million Klabin preferred shares with an average daily volume of R$ 589,000. Investor confidence in the sector remains low due to the 17.9% devaluation of the Real in the first half of the year, the crisis in Argentina and its consequent effects on the Brazilian economy, and the domestic energy crisis. However, in June, Klabins shares reported a 15% appreciation, the best performance among its peers at the Bovespa.
Share Performance at Ibovespa Base: 12/28/00 = 100
130 120 110 100 90 80 70 60 50 40 30
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Ibovespa

Klabin

Release Trimestral 1 de agosto de 2001

Dividends
Dividends totaling R$ 22.5 million were distributed to shareholders in May on the basis of R$ 23.01 per thousand common shares and R$ 25.31 per thousand preferred shares.

For further information, please contact:

Ronald Seckelmann, CFO and Investor Relations Director Luiz Marciano Candalaft, Investor Relations Manager Phone: +55 (11) 3225-4045 E-mail: marciano@klabin.com.br Doris Pompeu Brasil Phone: +55 (11) 3848-0887 ext: 208 E-mail: doris.pompeu@thomsonir.com.br

Klabin is the leading forest products company in Latin America. With gross revenue of R$ 2.1 billion in 2000, it is the largest integrated producer of pulp and paper in Brazil with an annual sales production capacity of 2.1 million tons. The Companys strategic focus includes activities in the following areas: cartons, corrugated boxes, paper sacks, tissue, wood and pulp.
Statements included in this report regarding the Companys business outlook and anticipated financial and operating results, regarding the Companys growth potential, constitute forward-looking statements and are based on management expectations regarding the future of the Company. These expectations are highly dependent on changes in the market, general economic performance of Brazil, industry and international markets, therefore they are subject to change.

Attachment 1 Consolidated Income Statement Brazilian Corporate Law (Thousand of R$)

1st Q/01
535,926 (319,197) 216,729 (52,550) (40,334) (1,786) (94,670) 122,059 (92,127) (153,648) 12,540 (111,176) 2,118 (109,058) 29,593 (283) (79,748) 55,456 177,515 (951) 15,163 58,171 224,282 (2,012) 18,126 2,402 15,724 15,724 2,402 18,126 (2,012) (951) 15,163 58,171 182,651 15,438 15,438 (70,695) (70,695) (95,130) (95,130) 41,631 166,111 124,480 2,421 41,631 3,003 (82,953) 2,898 126,900 284 127,184 31,605 668 94,911 2,715 5,136 (110,107) (110,107) 15,437 (1,905) (1,905) 119 (38,518) (38,518) (1,816) (69,684) (69,684) 17,134 9.8 7.5 0.3 17.7 22.8 17.2 28.7 2.3 20.7 0.4 20.3 5.5 0.1 14.9 10.3 33.1 276,218 234,587 17,858 40.4 (357,539) (332,714) 13,517 59.6 633,757 567,301 31,375 100.0

(Thousands of R$) 2nd Q/01 (*)

Results 2nd Q/01 Change

% of Net Revenue 1st Q/01 2nd Q/01 (*)

100.0 58.6 41.4 12.3 6.8 0.3 19.4 21.9 7.3 16.8 12.5 2.7 2.8 0.4 3.2 0.4 0.2 2.7 10.3 32.2

Net Revenue

Cost of Products Sold

Gross Profit

Selling Expenses

General & Administrative Expenses

Others Revenue (Expenses)

Total Operating Expenses

Operating Result (before Fin. Results)

Net Result on the Sale of Forestry Assets

Financial Expenses

Net Foreign Exchange Losses

Financial Revenues

Operating Result

Non Operating Revenues (Expenses)

Net Income (Loss) before Taxes

Income Tax and Soc. Contrib.

Minority Interest

Net Income (Loss)

Amortization / Depreciation

EBITDA

* Excluding the Net Result on the Sale of Forestry Assets of Klabin Riocell (Net Revenue and Cost of Produtcs Sold)

Attachment 2 Consolidated Income Statement Brazilian Corporate Law (Thousand of R$)

1st Half'00
840,905 (474,121) 366,784 (88,382) (67,137) 722 (154,797) 211,987 (119,745) (3,003) 21,750 110,989 2,101 113,090 (50,338) (23,167) 39,585 77,211 289,198 (1,234) (64,585) 113,627 401,797 27,581 (90,932) 4,520 (95,452) 27,978 27,978 (95,452) 4,520 (90,932) 27,581 (1,234) (64,585) 113,627 360,166 (224,343) (224,343) (187,257) (187,257) 41,631 288,170 246,539 (204,777) (204,777) 49,980 34,552 41,631 67,512 221,340 6,228 (206,441) 2,419 (204,022) 77,919 (21,933) (104,170) 36,416 70,968 (3,691) (3,691) 4,413 (78,852) (78,852) 11,715 (122,234) (122,234) 33,852 492,947 451,316 84,532 (676,736) (651,911) 177,790 56.4 43.6 10.5 8.0 0.1 18.4 25.2 14.2 0.4 2.6 13.2 0.2 13.4 6.0 2.8 4.7 9.2 34.4 1,169,683 1,103,227 262,322 100.0

(Thousands of R$) 1st Half'01 (*)

Results 1st Half'01 Change

% of Net Revenue 1st Half'00 1st Half'01 (*)

100.0 59.1 40.9 11.1 7.1 0.3 18.6 22.3 3.8 17.0 20.3 2.5 8.7 0.4 8.2 2.5 0.1 5.9 10.3 32.6

Net Revenue

Cost of Products Sold

Gross Profit

Selling Expenses

General & Administrative Expenses

Others Revenue (Expenses)

Total Operating Expenses

Operating Result (before Fin. Results)

Net Result on the Sale of Forestry Assets

Financial Expenses

Net Foreign Exchange Losses

Financial Revenues

Operating Result

Non Operating Revenues (Expenses)

Net Income (Loss) before Taxes

Income Tax and Soc. Contrib.

Minority Interest

Net Income (Loss)

Amortization / Depreciation

EBITDA

* Excluding the Net Result on the Sale of Forestry Assets of Klabin Riocell (Net Revenue and Cost of Produtcs Sold) *The results of Igaras, acquired on October 3, 2000, are consolidated as from the 4th Q00 8

Attachment 3 Consolidated Balance Sheet Brazilian Corporate Law (Thousand of R$)

Dec. 31-00 Jun. 30-01 832,036 24,382 127,470 301,305 236,230 82,345 60,304 902,422 11,033 183,404 317,819 245,529 71,969 72,668 Current Loans and financing Debentures Suppliers Income tax and social contribution Taxes payable Payroll provisions Other accounts payable

Assets

Liabilities and Shareholder's Equity

Dec. 31-00 Jun. 30-01 1,247,717 952,094 2,822 157,956 33,425 25,711 37,792 37,917 989,463 723,665 3,052 151,675 10,727 21,623 37,130 41,591

Current Cash and banks Short-term investiments Receivables Inventories Recoverable taxes and contributions Other receivables

Long-Term Deferred income tax and soc. contrib. Taxes to compensate Recoverable taxes Other receivables 3,312,913 609,193 2,578,416 125,304 3,349,771 641,592 2,581,202 126,977

211,570 83,946 25,221 52,568 49,835

268,609 48,216 107,881 63,826 48,686

Permanent Other investiments Property, plant & equipment, net Deferred charges

Total

4,356,519

4,520,802

Long-Term Loans and financing Debentures Other accounts payable Results for Future Fiscal Years Minority Interests Shareholders' Equity Capital Capital reserves Revaluation reserve Profit reserve Retained Earnings Total

1,798,051 1,556,553 115,300 126,198 23,507 58,892 1,228,352 928,444 111,604 102,988 85,316 0 4,356,519

2,026,215 1,760,677 115,300 150,238 19,574 60,261 1,425,289 1,206,589 117,495 101,392 62,802 (62,989) 4,520,802

Attachment 4 Sales Volume and Net Average Price Consolidated 100%

1,000 t 1st Q (*) 2nd Q (*) 38 36 74 62 34 37 72 92 56 64 16 28 72 76 26 27 3 4 319 1,333 1,400 334 364 1,447 457 1,344 1,474 1,380 4th Q 38 136 35 83 49 34 135 27 3 YEAR 150 353 144 334 236 98 372 108 13

Publication Paper Packaging Tissue Pulp Klabin Riocell Klabin Bacell Corrugated Boxes Sacks/ Envelopes Others

2000 3rd Q (*) 38 81 38 87 67 20 89 28 3

2001 1st Q 2nd Q 30 25 135 135 30 34 70 94 49 69 21 25 128 132 30 31 2 2 425 1,327 453 1,301

Total

Average Price (R$/ton)

*Does not include Igaras sales volume and prices.

10