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iKRelease2005 2q
iKRelease2005 2q
iKRelease2005 2q
www.klabin.com.br
June 30th, 2005 KLBN4 (BOVESPA) / KLBAY (OTC) Total Shares PN (000) Local Price Share PN Book Value Free Float Daily Trade Volume 600,856 R$ 4.04 R$ 2.53 79% R$ 3,213 mil
Highlights
Sales volume totaled 360 thousand tons, with net revenue at R$ 720 million. Export coated carton boards amounted to 31 thousand tons, up 64% from the second quarter of 2004. Net revenue from exports reached USD 84 million, accounting for 29% of total net revenue. Cash generation (EBITDA) achieved R$ 239 million, with an EBITDA margin of 33%. Net Debt was R$ 373 million. reduced to
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Initial Considerations
The information presented herewith in connection with the Companys operations and finances in 2Q05, 2Q04, 1H05 and 1H04 consists of consolidated figures stated in local currency (R$), in accordance with the generally accepted accounting practices adopted in Brazil, except where otherwise indicated.
Financial Highlights
R$ million
Gross Revenue Net Revenue
Domestic Market Exports % Exports
2Q05
858.0 720.1
511.9 208.2 29%
2Q04
777.3 659.5
457.0 202.5 31%
1H05
1,658.2 1,393.3
1,001.9 391.4 28%
1H04
1,506.6 1,289.7
875.8 413.9 32%
Change 2Q05/2Q04
Change 1H05/1H04
10% 9% 12% 3% 1%
Gross Income
Gross Margin EBIT EBIT Margin
301.4
42%
297.9
45%
610.6
44%
586.7
45%
177.4
25%
170.8
26%
364.5
26%
344.7
27%
4%
6%
EBITDA
EBITDA Margin
239.0
33%
229.2
35%
484.8
35%
459.6
36%
4%
5%
Net Income Net Debt Net Debt/EBTIDA (annualized) Capex Production Volume (1,000 t) ( * ) Sales Volume (1,000 t )
Domestic Market Exports % Exports
(19%) (36%)
(6%) (36%)
15% 6% 9% 6% 13%
51% 5% 1% 7% (7%)
(*)
Figures related to paper, boards and recycled paper production, do not considered corrugated boxes and industrial bags.
In regard of 1H05, sales volume amounted 676.3 thousand tons or 1% higher than the same period of 2004. Net revenue, including wood, totaled R$ 720.1 million in 2Q05, an increment of 9% in relation to 2Q04. As for 1H05, net revenue reached R$ 1,393.3 million, up 8% from the same period of previous year. The rate of 3% growth on export net revenue did not follow the same upside leaning of 13% in export sales volume. The difference was due to combination of the decrease in approximately USD 40/t on international kraftliner prices and the depreciation of the dollar against Real by 18.5% over the semester.
Net Revenue
Wood 10%
Kraftliner 19%
Wood included
Net Revenue
Operating Results
Cost of products sold in 2Q05 was R$ 418.7 million, which generated a gross income of R$ 301.4. The margin was 42% in 2Q05 compared with 45% in 2Q04. Selling expenses in 2Q05 increased by 8% to R$ 82.8 million compared to 2Q04, mainly affected by export freight costs, which amounted to R$ 54.7million. General and administrative expenses counted for R$ 42.7 million, which corresponded to 5.9% of net revenue versus 5.4% in 2Q04. Operating results before net financial expenses (EBIT) amounted R$ 177.4 million, with operating margin of 25%.
6/30/2005
Currency Foreign 206.4 468.7 675.1 Total 396.2 1,357.0 1,753.2 (1,380.6) 372.6 Local 195.8 922.8 1,118.6
3/31/2005
Currency Foreign 279.0 395.8 674.8 Total 474.8 1,318.6 1,793.4 (1,413.7) 379.7
Net debt is equivalent to 15% of total capitalization, and 38% of the annualized EBITDA. Net debt already decreased in 2Q05, and it should pursue the downward until the end of the year.
Net Income
Klabin reported a net income of R$ 90.1 million in 2Q05 versus R$ 111.4 million in 2Q04, this decrease was basically due to the impact of an appreciation of the Brazilian Real against the U.S. dollar. This kind of currency variation affects Klabin by reducing the Companys export revenues and increasing its net financial expenses.
Business Evolution
BUSINESS UNIT FORESTRY In this quarter, Klabin sold 1.9 million tons of Pine and Eucalyptus logs, of which 1.1 million tons were transferred to its own mills in Paran, Santa Catarina and So Paulo. The volume of wood sold to sawmills and laminating companies in Paran and Santa Catarina totaled 769.7 thousand tons in 2Q05. The heated U.S. housing industry increased the demand for logs. However, domestic sawmill and plywood companies, which are customers of Klabin, faced strong competition in the wood products sold to the U.S. due to the supply from companies in Argentina, Chile and New Zealand. As a result, this excess supply pushed down the log prices. Klabin will continue to attend the domestic demand for wood and logs, however, the company may reduce its supplies if prices continue to decrease. Net revenue from wood sales to third parties reached R$ 72.7 million in 2Q05, which moderately increased by 2% in relation to 2Q04. BUSINESS UNIT PAPERS At the end of April, there was a planned downtime for maintenance at Correia Pinto (SC) of five days. The interruption occurred in order to improve the drying systems and to adjust the drying fabrics circuits of the paper machine. By increasing the machines speed, the production of sack kraft was boosted by 10 thousand tons, which generated a new installed capacity of 125 thousand tons per year. Sales volume of containerboards and coated carton boards to third parties in 2Q05 was 209.1 thousand tons, up 8% from 2Q04. Sales volume throughout 1H05 reached 384.8 thousand tons, remaining the same level of 1H04. Export sales in 2Q05 increased 16% to 142.2 thousand tons compared to 2Q04, which accounted for 68% of total containerboard sales. Net revenue of paper and coated carton boards in 2Q05 reached R$ 309.4 million, upward 7% in relation to 2Q04. Kraftliner sales volume totaled 121.1 thousand tons in 2Q05, of which 110.8 thousand tons were shipped to international market. Export net revenue generated USD 49.1 million. This kraftliner price reduction in U.S. dollars in Europe can be attributed to the European economy slowdown, the increase of testliner installed capacity in Germany, and finally, the oversupply of kraftliner from the U. S. producers. Sales volume of coated carton boards added up 88.0 thousand tons in 2Q05 or 13% greater than 2Q04. Likewise, the volume sold in 1H05 exceeded the quantity marketed in 1H04 by 8%. Net revenue of coated carton boards in 2Q05 was R$ 174.0 million, which represented an increase of 16% in relation to 2Q04. The quarter highlights were the volume of coated carton boards exported by Klabin, namely 31.4 thousand tons, a substantial climb of 64% in relation to 2Q04. Net revenue from exports reached R$ 60.5 million, up 45% from 2Q04.
The seven-week stoppage at Finnish pulp and paper mills due to labor disputes provided an important opportunity to Klabin, which confirmed that the company is capable to make logistic adjustments in order to meet higher-than-expected demands. Between May and June, Klabin exported 11.5 thousand tons of coated carton boards for liquid packaging to Tetra Pak factories in Spain, Ukraine, Russia and Hungary. The coated carton board sales department is continually developing customers located in markets that are strategically important for the expansion project of coated carton boards, specifically the United States, Canada and Europe. BUSINESS UNIT PACKAGING CORRUGATED BOXES Preliminary data provided by the Brazilian Association of Corrugated Boxes Manufactures (ABPO) indicated that the shipment of corrugated boxes, sheet and accessories amounted to 551.5 thousand tons in 2Q05 or 5% higher in relation to 2Q04. In 1H05, the total shipment was 1,048.6 thousand tons, 2.9% greater than the quantity shipped in the first half of 2004. Klabin maintained its leading position with a sales volume of 113.9 thousand tons in 2Q05, which represented an increase of 11% in relation to 2Q04. The supply of corrugated boxes to tobacco exporters had greatly impacted on the sales volume growth. The volume sold throughout the first semester of 2005 was 212.6 thousand tons or 9% higher than the period in 2004. Net revenue for corrugated boxes reached R$ 226.3 million in 2Q05, a climb of 17% in relation to 2Q04. Approximately 20% of all the corrugated boxes sold to local customers in 2Q05 had the export market as their final destination. BUSINESS UNIT PACKAGING INDUSTRIAL BAGS In 2Q05, Klabin sold 28.5 thousand tons of industrial bags, generating net revenue of R$ 87.1 million. The volume marketed in 1H05 was 2% superior to that registered in the same period of the previous year. In 2Q05, building industry domestic market demand remained stable. On the other hand, the agribusiness sector was underperformed due to the loss of grain crops caused by adverse weather conditions in the south of Brazil. Sales volume of industrial bags in Argentina reached 5.7 thousand tons and fetched net revenue of R$ 13.3 million.
Capital Expenditure
The following table lists the capital expenditures in 2Q05 and 1H05:
R$ Million Forestry Paper mills Convertion Others Total 2Q05 8.9 44.4 17.8 0.9 72.0 1H05 16.9 103.8 43.1 1.6 165.4
A program of capital investments was completed at Otaclio Costa (SC) the largest kraftliner mill in Latin America resulting in an outstanding product quality that is widely recognized by our international customers. During the second semester of the current year, the company will initiate studies on the economic feasibility of a clear bottleneck project at Otaclio Costa (SC), which aims the reduction of variable costs and the 20% increase of the mill installed capacity for kraftliner production. The expansion project of coated carton boards at Angatuba (SP) is running according to schedule, and its planned downtime should occur in September. The paper machine is scheduled to start up in early October. In June 2005, Klabin concluded a project with the purpose to modernize and enlarge the mill at Goiana (PE). The investments totaled R$ 30 million, which increased the production of corrugated boxes from 3.7 thousand to 5.0 thousand ton per month. The project involved the construction of a new warehouse for reels, the acquisition of new types of printers and the installation of a new corrugating machine. This unit caters to market segments that are growing steadily in the northeast region of Brazil, such as fruit packing, food processing, hygiene & cleaning products, and beverages. The projects basic engineering design, which intends to double the coated carton boards production capacity at Monte Alegre (PR), should be completed in August. The capital investment required for this project as well as its feasibility study and financial structure will be submitted by the Executive Board to the Board of Directors for approval. In order to sustain Klabins outline growth, the company not only continually engages reforestation in its forestry, but also encourages third parties to cultivate via forestation program.
Capital Market
The chart that follows shows the behavior of Klabins stock quotations in contrast with that of the So Paulo Stock Exchange Index (Ibovespa)
KLBN4 vs. Ibovespa Closing Price: 12/30/2004 = 100
120 115 110 105 100 95 90 85 80 75 70 65
D 4 -0 ec 05 nJa 05 bFe 5 -0 ar M 5 -0 ar M A 5 -0 pr 5 -0 ay M 05 nJu 05 nJu
Ibovespa -4%
Klabin -25%
Source: Bovespa
Klabin shares maintained their liquidity and they were negotiated on all the trading sessions of the So Paulo Stock Exchange (Bovespa). In 2Q05, there were 14,500 transactions involving 50 million Klabin shares, resulting in a daily traded volume of R$ 3.2 million.
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Klabin shares are also traded over the counter (OTC) as Level I ADRs in the U.S. market, under the code KLBAY. The capital stock of Klabin S.A. consists of 917.7 million shares, including 316.8 million common shares and 600.9 million preferred shares. DIVIDENDS The complementary dividends were distributed to the stockholders on April 8, 2005, a payment of R$ 90 million, which corresponded to R$ 92.05 per 1,000 common shares and R$ 101.26 per 1,000 preferred shares. Hence, the dividends from the year 2004 totaled R$ 165 million or 38% of its net income after provisions were made for reserves required by law.
Outlook
At the first quarter of 2005, GDP increased 2.9% in relation to the same period of previous year. A cautious prognosis estimates a growth at an annual rate of 3%, thus greater than the 2.4% average registered over the past ten years. Nevertheless, the evaluation is still lower compared to the 4% expansion expected for the world economy. The current domestic demand does not show improvements that would confirm the seasonal accelerated pace of third quarter, which usually corresponds to the upturn period of the year. During the first quarter of 2005, the Euro zone grew 0.5%, and the prospects for the year 2005 are not very encouraging. The deceleration growth scenario could impact the demand of packaging papers, and therefore, it would push down the prices for kraftliner. If the scenario for the exchange rate continues to follow the current downside trend, Klabins results will be affected by lower export revenues in Reais.
Conference Call Monday, July 25th, 2005 10:00 hs (Braslia) Password: 459 Phone: +55 11 4613-0509 Conference Call Monday, July 25th, 2005 10:00 a.m. (N.Y.) / 11:00 a.m. (Braslia) Password: 297 Phone: U.S. participants: 1-888-340-8477 International participants: 1-786-924-8430 Brazilian participants: 11 4613-0509
Ronald Seckelmann, CFO and IR Director Luiz Marciano Candalaft, IR Manager Gustavo Vittorazze Schroden , IR Analyst Yolanda Carolina Nunes, IR Analyst ycslnunes@klabin.com.br Tel: (11) 3225-4045 Tel: (11) 3225-4059 Tel: (11) 3225-4046 marciano@klabin.com.br gvschroden@klabin.com.br
With a gross revenue of R$ 3.2 billion in 2004, Klabin stands as the largest integrated packaging paper manufacturer in Brazil, with a production capacity of 1.5 million tons per year, and as a leader in most of its business markets. For strategic purposes, the Company will focus on the following business lines: packaging paper and coated carton board products, corrugated boxes, industrial bags and wood.
The statements contained herein with regard to the Company's business prospects, operating and financial result projections, and references to its potential growth are merely forecasts based on the expectations of Company Management in relation to its future performance. Such estimates are highly dependent on market behavior and on Brazilian economic, industry and international market conditions. They are therefore subject to change.
2Q05
857,989 720,108
(418,679) 301,429 (82,807) (42,653) 1,416
2Q04
777,256 659,453
(361,593) 297,860 (76,759) (35,911) (14,445)
1H05
1,658,180
1,393,312 (782,722) 610,590 (154,420) (79,809) (11,866) (246,095) 364,495 (62) (143,646) (36,722) 86,657 (93,711) 270,722 (3,280) 267,442 (34,429) (14,690) 218,323 99,616 20,666 484,777
1H04
1,289,696
1,289,696 (703,015) 586,681 (147,260) (65,008) (29,815) (242,083) 344,598 (208) (75,041) (40,020) 51,794 (63,267) 281,123 1,178 282,301 (46,631) (4,404) 231,266 94,247 20,722 459,567
2Q04
100.0%
54.8% 45.2% 11.6% 5.4% 2.2% 19.3% 25.9% 0.0% 5.8% 4.2% 3.8% 6.3% 19.6% 0.0% 19.6% 2.1% 0.6% 16.9% 7.3% 1.6%
1H05
100.0%
56.2% 43.8% 11.1% 5.7% 0.9% 17.7% 26.2% 0.0% 10.3% 2.6% 6.2% 6.7% 19.4% 0.2% 19.2% 2.5% 1.1% 15.7% 7.1% 1.5%
1H04
100.0%
54.5% 45.5% 11.4% 5.0% 2.3% 18.8% 26.7% 0.0% 5.8% 3.1% 4.0% 4.9% 21.8% -0.1% 21.9% 3.6% 0.3% 17.9% 7.3% 1.6%
(124,044) 177,385 98
(92,276) (22,281) 50,649
(63,908) 113,575
(1,927)
(41,366) 129,307
115
111,648
(14,430) (7,065)
129,422
(13,815) (4,226)
90,153
51,142 10,495 239,022
111,381
48,056 10,379 229,180
33.2%
34.8%
34.8%
35.6%
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6/30/2005 670,630 386,146 10,064 102,183 39,947 23,900 58,740 49,650 1,514,075 1,042,911 314,050 157,114 86,120 2,326,014 1,100,000 84,525 88,465 1,053,024 4,596,839
12/31/2004 837,895 396,103 8,887 136,894 73,363 24,061 60,715 90,007 47,865 1,363,382 903,880 314,050 145,452 59,364 2,107,511 800,000 193,845 89,521 1,028,010 (3,865) 4,368,152
Long-Term Receivables Deferred income tax and soc. contrib. Taxes to compensate Judicial Deposits Other receivables
Permanent Assets Other investments Property, plant & equipment, net Deferred charges Total
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Attachment #4 Exports
1Q04 Volume (1,000 ton) Kraftliner Coated Carton Boards Corrugated Boards Bags Others Total Wood Sales (1,000 t) Net Revenue (R$ million) Kraftliner Coated Carton Boards Corrugated Boxes Bags Others Wood Sales Total 140.2 44.3 3.5 20.6 2.9 0.0 211.4 125.5 41.6 8.5 22.2 4.7 0.0 202.5 133.1 39.1 5.0 21.9 4.8 0.0 203.8 133.8 37.4 3.7 19.9 2.7 0.0 197.5 532.5 162.3 20.7 84.6 15.0 0.0 815.2 118.1 38.8 2.1 19.1 5.1 0.0 183.2 121.8 60.5 3.6 17.4 4.8 0.0 208.2 239.9 99.3 5.7 36.5 9.9 0.0 391.4 131.5 20.5 1.4 6.9 0.1 160.4 0.0 103.5 19.2 3.2 7.7 0.9 134.5 0.0 99.5 17.4 1.9 7.6 4.7 131.2 0.0 100.7 17.6 1.3 7.4 1.5 128.6 0.0 435.2 74.7 7.8 29.6 7.3 554.6 0.0 89.8 18.7 0.8 7.4 4.6 121.2 0.0 110.8 31.4 1.7 7.0 0.7 151.7 0.0 200.6 50.2 2.5 14.4 5.3 272.9 0.0 2Q04 3Q04 4Q04 2004 1Q05 2Q05 1H05
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Attachment #6
Financing Repayment Schedule 30/06/05
Gross Debt - Average Terms: 31 months Currency
R$ Million
Local
Foreign
TOTAL
61.0 117.2 407.0 618.2 301.8 53.5 69.7 63.9 36.7 24.2 1,753.2
45.1 16.0 3Q05 45.0 72.2 4Q05 163.8 243.2 2006 564.8 53.4 2007 67.1 234.7 2008 38.8 14.7 2009 52.0 17.6 2010 46.3 17.6 2011 33.8 2.9 2012 21.3 2.9 2013 onwards TOTAL 1,077.9 675.3 Local Currency - average Terms: 34 months Average Cost: 18.0% per year
R$ Million 3Q05 4Q05 2006 2007 2008 2009 2010 2011 2012 2013 onwards TOTAL BNDES 26.9 26.3 95.5 77.6 24.6 6.3 5.8 0.0 0.0 0.0 263.0 Debentures 0.0 10.1 0.0 314.1 0.0 0.0 0.0 0.0 0.0 0.0 324.1 Others 18.2 8.6 68.3 173.2 42.5 32.5 46.3 46.3 33.8 21.3 490.8
TOTAL 45.1 45.0 163.8 564.8 67.1 38.8 52.0 46.3 33.8 21.3 1,077.9
Foreign Currency - Average Terms: 28 months Average Cost: 6.2% per year US$ Million 3Q05 4Q05 2006 2007 2008 2009 2010 2011 2012 2013 onwards TOTAL Trade Finance 5.9 30.7 102.8 22.0 12.0 0.0 0.0 0.0 0.0 0.0 173.4 Fixed Asset 0.4 0.0 0.7 0.7 0.0 0.0 0.0 0.0 0.0 0.0 1.8 Others 0.5 0.0 0.0 0.0 87.8 6.3 7.5 7.5 1.3 1.3 112.1 TOTAL 6.8 30.7 103.5 22.7 99.8 6.3 7.5 7.5 1.3 1.3 287.3
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Attachment #7
Consolidated Cash Flow Statement Period ended 30/06/2005
Thousand of R$ Cash flow from operating activities Net income Items not affecting cash and cash equivalents Depreciation, amortization and depletion Gain (loss) on sale of assets Provision for loss on permanent assets Deferred income and social contribution Interest and exchange variation on loans and Financing Equity in subsidiaries Exchange variation on foreign investments Minority interest Decrease (increase) in assets Accounts receivable Inventories Recoverable taxes Prepaid expenses Other receivables Increase (decrease) in liabilities Trade accounts payable Taxes payable Imposto de renda e contribuio social Salaries, vacation and payroll charges Reserve for contingencies Other payables Net cash provided by operating activities (carry forward) Cash flow from investing activities Cash, cash equivalent and investments Guarantee deposits Purchase of property, plant and equipment Increase in deferred charges Sale of property, plant and equipment Capital contribution Escrow deposits Net cash provided by (used in) investing activities Cash flow from financing activities New loans and financing Issue of debentures Payment of interest Capital contribution to subsidiaries by minority shareholders Dividends paid Net cash used in financing activities Increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Second Quarter 2005 2004 90,153 61,637 543 936 (11,475) 8,680 (98) 2,347 7,065 42,129 (5,026) (30,767) 7,702 10,127 (14,689) (8,733) 22,328 14,312 5,384 (16,931) 185,624 (1,149) (69,659) (1,396) 70 (1) (8,756) (80,891) 134,582 (155,334) (28,230) (4) (90,007) (138,993) (34,260) 1,378,200 1,343,940 (34,260) 111,381 58,435 (447) 1,867 78,971 72 329 4,226 (108,719) (1,810) (9,679) 153 (74,084) 11,882 (3,740) 8,123 12,428 (6,667) (110) 82,611 (31,844) 118,441 (71,287) (471) 1,243 (80) (2,687) 13,315 178,810 (115,942) (22,787) 17,107 (200,238) (143,050) (47,124) 922,429 875,305 (47,124) First Half 2005 218,323 120,282 1,805 936 (9,384) 70,697 62 1,879 14,690 77,424 (29,095) 21,733 258 12,115 (36,310) (161) (33,236) (1,975) 5,134 6,711 441,888 (2,502) (156,690) (2,446) 154 (32) (8,673) (170,189) 333,344 (221,394) (52,396) 12,066 (90,007) (18,387) 253,312 1,090,628 1,343,940 253,312 2004 231,266 114,969 (1,230) 12,730 119,673 208 (1,635) 4,404 (159,504) 18,978 37,509 (931) 14,254 8,971 3,030 (34,379) (2,829) (23,123) 15,866 358,227 (31,844) 63,658 (115,579) (889) 2,133 (80) (10,714) (93,315) 436,886 (236,301) (42,952) 18,737 (200,238) (23,868) 241,044 634,261 875,305 241,044
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