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Quarterly Report 3Q09: 3Q09 EBITDA Reaches R$ 199 Million, With 27% Margin
Quarterly Report 3Q09: 3Q09 EBITDA Reaches R$ 199 Million, With 27% Margin
Quarterly Report 3Q09: 3Q09 EBITDA Reaches R$ 199 Million, With 27% Margin
Jul/Aug/Sep 2009
3Q09 750
21%
2Q09 683
23%
3Q08 770
23%
3Q09/2Q09 3Q09/3Q08
9M09 2,155
25%
9M08 2,291
25%
9M09/9M08
-6%
0%
EBITDA
EBITDA Margin
199
27%
150
22%
155
20%
529
25%
487
21%
9%
0%
Net Income
Net Debt Net Debt/EBTIDA (last 12 months) Capex
N / A Non applicable This quarterly information is presented in compliance with the criteria established by Law 11,638/07, by the accounting notices (CPCs) approved by the Securities and Exchange Commission of Brazil (CVM) and by Law 11,941/09. Results presented in 2008 also have been modified by the same law.
Investor Relations:
Antonio Sergio Alfano, Luiz Marciano Candalaft, Vinicius Campos, Daniel Rosolen, Lucia Reis Tel: +55 (11) 3046-8404/8415/8416 invest@klabin.com.br Visit our website: www.klabin.com.br
-10% -9%
12% -7%
-18% -24%
38% 37%
Kraftliner 26%
402 35 65%
62%
C orrugated Boxes
3Q09
2Q09
3Q08
9M08
30%
Domestic Market
Net Revenue
Net revenue in 3Q09, including wood, totaled R$ 750 million, 3% lower than 3Q08 and 10% higher than 2Q09. In the domestic market, net revenue was R$ 594 million, stable compared to 3Q08 and 13% higher than 2Q09. Exports revenues in 3Q09 totaled R$ 157 million, 12% lower than 3Q08 due to decrease in kraftliner prices and 1% higher than 2Q09. In the first nine months of the year, net sales reached R$ 2,155 million, 6% below the same period in 2008 due to lower sales of paper and wood in the period. Domestic revenues totaled 79% of total revenue in the quarter and 75% in the nine months of the year.
75% 75%
3Q09
2Q09
3Q08
9M09
9M08
includes wood
32%
Domestic Market
Export Market
Exports
In 3Q09 the percentage of exports to Latin America, where sales of coated boards and industrial bags are stronger, continued to grow. Exports to Asia and Africa also grew in percentage, compared to the other periods of the year.
Volume - 9M09
North America 7%
Africa 7%
Europe 30%
Europe 22%
Operating Results
The cost of goods sold in 3Q09 was R$ 540 million, 8% lower than 3Q08 and 4% higher compared to 2Q09. COGS per ton in the quarter was 11% and 9% lower than 3Q08 and 2Q09, respectively. In the quarter, there was a 7% and 12% decrease in variable and fixed costs per tonne compared to 2Q09. From January to September 2009, COGS was R$ 1,579 million, 9% below the same period in 2008. The reduction of R$ 150 million compared to last year is explained by a 7% lower sales volume. COGS per tonne in 9 months was 2% below the same period last year.
Sales, general and administrative expenses were R$ 117 million in 3Q09, 8% lower than 3Q08 and 5% higher than 2Q09. In the third quarter of 2009, freights totaled R$ 47 million, up 3% and 10% compared to 3Q08 and 2Q09, respectively due to higher sales volume. Excluding freights, these expenses fell 14% compared to 3Q08 and increased 3% compared to 2Q09. In 9 months, general, sales and administrative expenses reached R$ 358 million, 2% below the same period last year. Cash cost for the quarter was R$ 1,369 / tonne, 14% and 10% lower than 3Q08 and 2Q09, respectively. In the year the cash cost was R$ 1,466 / tonne, down 4% over the same period of 2008. Operating result before financial result (EBIT) in 3Q09 was R$ 87 million, 66% and 106% higher than 3Q08 and 2Q09, respectively. In nine months, EBIT was R$ 200 million, 4% over the same period of 2008.
EBITDA
Operating cash generation (EBITDA) in 3Q09 was R$ 199 million, 28% and 33% higher than 3Q08 and 2Q09, respectively. The EBITDA margin was 27% versus 20% in 3Q08 and 22% in 2Q09. In 9 nine months, EBITDA reached R$ 529 million, with a margin of 25%, 9% increase over the same period last year.
EBITDA Composition - R$ million Operational result (after financial result) (+) Financial result (+) Depreciation EBITDA
EBITDA Margin
The increase in EBITDA compared to the prior quarter was due to higher sales and a reduction in cost of good sold per unit, partially offset by the depreciation of the dollar, which reduced export prices in Brazilian reais.
60 -29 150
20
-2
199
EBITDA 2Q09
Sales Volume
Price + FX
COGS + Deprec.
SG&A
EBITDA 3Q09
Indebtedness
The gross debt at September 30th, 2009 was R$ 4,689 million compared to R$ 5,451 million at December 31st, 2008, a R$ 762 million reduction. This decrease is mainly due to appreciation of 24% of the Brazilian real against the US dollar (final rate) from December 2008 until September 2009, which generated a foreign exchange gain, without effects in cash, of $ 694 million. From the total debt, R$ 2,411 million (51%) are denominated in foreign currency equivalent to US$ 1,356 million, substantially, pre-payment of exports.
Average debt term is 41 months, 34 months for local currency nominated debt and 48 months for foreign currency debt. The short-term debt at the end of September accounts for 17% of the total.
By the end of September the financial investments totaled R$ 1,885 million, R$ 182 million higher than in December 2008, and overcome at 2.4x gross debt liabilities of short term.
Net debt at September 30th, 2009 was US$ 2,804 million, R$ 944 million lower than in December 2008. The net debt / EBITDA ratio, which was 5.1x at December 31st, 2008, ended the third quarter at 3.6x.
12/31/08 Local Currency Foreign Currency Short Term % Short Term Local Currency Foreign Currency Long Term % Long Term Local Currency Total % Local Currency Foreign Currency Total % Foreign Currency Gross Debt Cash Net Debt 396 83 479 9% 2,092 2,880 4,972 91% 2,488 46% 2,963 54% 5,451 1,703 3,748
06/30/09 09/30/09 604 139 743 15% 1,753 2,307 4,060 85% 2,357 49% 2,446 51% 4,803 1,694 3,109 611 173 784 17% 1,667 2,238 3,905 83% 2,278 49% 2,411 51% 4,689 1,885 2,804
Net Income
Net income in 3Q09 was R$ 183 million, compared to a loss of R$ 256 million in 3Q08 and gain of R$ 306 million in 2Q09. In nine months, net income reached R$ 518 million, versus a loss of R$ 35 million in the same period of 2008. The appreciation of the Brazilian real contributed to the net income, generating gain of exchange variation.
Business Performance
BUSINESS UNIT - FORESTRY
Klabin handled 2.1 million tonnes of logs of pine and eucalyptus and biomass for pulp and energy in 3Q09, volume 1% lower than 3Q08 and 19% higher than 2Q09. Of this total, 1.6 million tonnes was transferred to the mills of Parana, Santa Catarina and Sao Paulo. The sales volume of logs to sawmills and laminators was of 513 thousand tons in 3Q09, 17% lower than 3Q08 and 20% higher than 2Q09. In 9 months of 2009, the volume of logs was 1.4 million tonnes, 28% below the same period last year.
513
3Q09
2Q09
3Q08
9M09
9M08
3Q09
2Q09
3Q08
9M09
9M08
Domestic Market
Net revenues of wood logs to third parties in 3Q09 was R$ 42 million, 21% lower than 3Q08 and 14% higher compared to 2Q09. In 9 months, net revenues from wood sakes was R$ 115 million, a reduction of 29% over the same period last year. In 3Q09, the market for residential construction in the United States showed signs of recovery, with an increase of 9% over the average of the second quarter. Until September, the annual average rate of the starting of construction of new private residential units in the US was 553 thousand, 44% lower than the first nine months of 2008.
Jan/06
Source: US C ensus Bureau
Jan/07
Jan/08
Jan/09
Quarter average
Housing starts
By the end of September, the areas, owned and from third parties, totaled 216 thousand hectares, of which 147 hectares planted with pine and 69 hectares planted with eucalyptus, plus 191 hectares of conservation areas and legal reserves. BUSINESS UNIT - PAPER Paper and coated boards sales volume for third parties was 243 thousand tonnes in 3Q09, 5% and 23% higher than 3Q08 and 2Q09, respectively. In 9 months of 2009, the volume of papers reached 657 thousand tonnes, down 9% over the same period last year. Net revenues of paper and coated boards totaled R$ 344 million in 3Q09, 2% lower than 3Q08 and 17% higher than 2Q09. During the year, papers net revenues accumulated R$ 990 million until September, a reduction of 7% compared to 9 months of 2008. Exports in 3Q09 totaled 131 thousand tonnes, stable compared to 3Q08 and 16% higher compared to 2Q09. In 3Q09, exports accounted for 54% of the total volume sold, compared to 57% in 3Q08 and in 2Q09. By the end of September, exports reached 383 thousand tonnes, 9% below the same period in 2008.
Kraftliner
Kraftliner sales volume was 108 thousand tonnes in 3Q09, 9% and 29% higher than 3Q08 and 2Q09, respectively, explained by the increase in demand during this period in domestic and foreign markets. In 9 months, volume reached 284 thousand tonnes which is 16% lower than the first 9 months of 2008. Sales to export market reached 84 thousand tonnes in 3Q09, equivalent to 78% of total sales of this product. Sales to the domestic market reached 24 thousand tonnes in 3Q09, 7% lower than the 3Q08 and 56% higher than the 2Q09. Net revenues of kraftliner reached R$ 96 million in 3Q09, 18% lower than 3Q08 and 19% higher than 2Q09. In the year, kraftliner revenues reached US $ 279 million, 26% below the same period last year.
379
78%
279
83%
108 84
78% 82%
99
74%
96
3Q09
2Q09
3Q08
9M09
9M08
3Q09
Domestic Market
Exports
European prices have been adjusted in 25 / tonne in September and 20 / tonne in October. In November is expected a further increase of 40 / tonne. In Latin America the increase was US$ 30 / tonne in August and September, a further increase of US$ 30 / tonne was announced for November. For markets in Africa, Asia and the Middle East, price increased US$ 30 / tonne in September / October, with expectations of announcement of a further US$ 30 / tonne increase since November. According to data from FOEX, the dollar price of kraftliner remained stable in 3Q09.
7 .
1,318
1,308
1,398
1,329 1,191
2 5 . 0
3 .
1 .
539
570
9 .
7 .
5 .
Coated boards
Coated boards sales volume in 3Q09 totaled to 135 thousand tonnes, 1% and 18% higher than 3Q08 and 2Q09, respectively. In the year, volume sold was 373 tonnes, 2% lower than in 9M08. Coated boards net revenues reached R$ 248 million in 3Q09, 6% and 16% higher than 3Q08 and 2Q09, respectively, due to higher volumes in the domestic market. In 9 months, net revenue of coated boards was R$ 711 million, 4% higher than the 9M08 explained by the increase in the average exchange rate. Coated boards prices remained stable in reais in the domestic market and in dollar in the foreign markets during the quarter. Exports of coated boards totaled 47 thousand tonnes in 3Q09, 19% lower than 3Q08 and 6% higher than 2Q09. According to data released by the Brazilian Association of Pulp and Paper - Bracelpa - sales of coated boards (excluding liquid packaging board) in the domestic market in the 3Q09 reached 142 thousand tonnes, 2% and 20% higher than 3Q08 and 2Q09 respectively. In nine months, sales have accumulated 360 thousand tonnes, still 8% below the same period of 2008.
Sales Volume (thousand tonnes) 373 380 711
40% 42%
135
35%
114
39%
133
44% 56% 60% 58%
248
214
235
65%
61%
3Q09
2Q09
3Q08
9M09
Exports
9M08
3Q09
2Q09
3Q08
9M09
9M08
Domestic Market
BUSINESS UNIT CORRUGATED BOXES Klabins shipments of corrugated boxes reached 117 thousand tonnes in 3Q09, 4% and 2% higher than 3Q08 and 2Q09, respectively. In 9M09 the shipments totaled 333 thousand tonnes, a reduction of 2% over the same period last year. Net revenues in 3Q09 totaled R$ 241 million, stable compared to 3Q08 and 2% higher than 2Q09. In the year, net revenues were R$ 690 million until September, 4% lower than the 9M08.
117
115
3Q09
2Q09
3Q08
9M09
9M08
3Q09
2Q09
3Q08
9M09
9M08
Domestic Market
According to preliminary information from the Brazilian Association of Corrugated Boxes - ABPO - in the first half of 2009 shipments of boxes and corrugated sheets was 7% below the same period in 2008. In 3Q09 there was significant increase in consumption of packaging. The average shipments in the quarter were 198 thousand tons per month, 1% and 8% higher than 3Q08 and 2Q09, respectively. From January to September, the Brazilian shipments of corrugated boxes and sheets were 1,646 million tonnes, 4% lower than the 9M08.
175 181
184
Jan/06
Jan/07
Jan/08
Jan/09
Quarter average
Source: Brazilian Association of C orrugated Boxes
Monthly volume
BUSINESS UNIT INDUSTRIAL BAGS Industrial bags sales volume from Brazil and Argentina in the domestic and foreign markets in 3Q09 totaled 34 tonnes, 5% and 9% higher than 3Q08 and 2Q09, respectively. In 9 months, the volume of bags reached 95 tonnes, 3% lower than the 9M08.
10
Net revenue in 3Q09 was R$ 111 million, 5% and 6% higher than 3Q08 and 2Q09, respectively. For the year, net revenues until September, was R$ 321 million, 4% higher than the same period last year.
Sales Volume (thousand tonnes) Net Revenue (R$ Million) 321 309
95
98 111
105
106
34 3Q09
31 2Q09
Preliminary data from the National Labor Union of Cement Industry (SNIC) and market estimates indicate that cement sales for the Brazilian market from January to September 2009 reached 38 million tonnes, 2% below the same period last year. In 3Q09, sales of cement have grown 11% over the previous quarter, although still have been 4% lower than 3Q08.
Jan/06
Jan/07
Jan/08
Jan/09
Quarter average
Source: Nation Labor Union of C ement Industry
Monthly consumption
Capex
The main investments made in nine months are listed below:
R$ Million Forestry Paper mills Corrugated Boxes Industrial Bags Others Total
Capex in the third quarter was R$ 61 million, totaling R$ 216 million in the first nine months of 2009, of which 48% was allocated to the Paper Business Unit, 39% in Forestry Business Unit and 12% in Corrugated Boxes Mills.
11
Capital Markets
In 3Q09, Klabin preferred stock (KLBN4) registered a nominal gain of 40.5%, while the Ibovespa gained 19.5%. The Company's stock was traded in all sessions on the So Paulo Stock Exchange (BM&FBovespa), registering 130,087 transactions involving 151.8 million shares in the quarter, at an average daily trading volume of R$ 8.5 million, 20% higher from previous quarter. The following chart shows the performance of Klabins preferred stock and the benchmark Ibovespa index:
KLBN4 x IBOVESPA Inception = 06/30/09
Klabin stock also trades in the US market as Level I ADRs, listed on the over-the-counter market under the ticker KLBAY. Klabins equity is represented by 917.7 million shares, of which 316.8 million are common shares and 600.9 million are preferred shares. On June 30th, the Company held 16.9 million preferred shares in treasury.
At September 30st, 2009 Preferred Shares Share Price (KLBN4) Book Value Average Daily Trading Volume 3Q09 Market Capitalization 600.9 million R$ 4.20 R$ 2.91 R$ 8.5 million R$ 3.9 billion
Stocks Repurchase
In an extraordinary meeting of the Board held on 13 October 2009, it was authorized repurchase program of preferred shares to 45.7 million shares issued by the Company. This program is valid for 365 days or until October 12, 2010.
Dividends
On August 31, 2009, Klabin has paid interim dividends in the amount of R$ 46.8 million, R$ 46.80 per thousand shares and R$ 53.68 per thousand shares. In 2009 the Company paid a total of R$ 79.6 million.
12
Strategy
The continued economic recovery in Brazil, USA and Europe, creates a promising scenario for Klabin. The reaction of the Brazilian economy has been guaranteed the good demand for durable and nondurable goods. Klabins exports of boards for the United States and Europe tend to grow in the near future with the entry of new large customers already in the final stages of negotiation. Given this positive scenario, the management objectives for 2010 are:
Increase operating cash flow and deleverage the Company; Increase sales volume; Develop new large customers in the export market; Develop new products for the domestic market; Expand the planted area in Monte Alegre, especially with eucalyptus for future growth; Improve rating in global scale; Resume the studies for the establishment of a pulp mill hardwood and softwood with an annual capacity of 1.5 million tonnes.
13
14
15
Total
7,892,863
8,242,200
Total
7,892,863
8,242,200
16
R$ million
228
22 206
228
22 206
196 154
130 135 66 19
After 2017
4Q09
2009
2010
2011
2012
2013
2014
2015
2016
Local Currency
Foreign Currency
17
Attachment 4 Consolidated Cash Flow Statement BR GAAP Law 11,638/07 (thousands of R$)
3Q09
Cash flow from operating activities Operating activities . Net income . Depreciation, amortization and depletion . Equity results . Deferred income and social contribution . Interest and exchange variation on loans and financing . Interest Payment . Results on Equity Pickup . Minority interest . Others Variations in Assets and Liabilities . Receivables . Inventories . Recoverable taxes . Marketable Securities . Prepaid expenses . Other receivables . Suppliers . Taxes and payable . Income and social contribution . Salaries, vacation and payroll charges . Other payables Net Cash Investing Activities . Purchase of property, plant and equipment . Increase in intangible . Sale of property, plant and equipment . Others Net Cash Financing Activities . New loans and financing . Amortization of financing . Payment of capital at subsidiaries by minority shareholders . Acquisition of minority shares in subsidiaries . Dividends Payment Increase (Decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 186,239 137,586 182,803 112,097 (1,182) 74,668 (162,092) (67,603) 822 (1,927) 48,653 45 (5,645) 35,470 (7,293) (7,394) 6,390 26,557 (1,224) 161 6,989 (5,403) (78,322) (76,612) (2,617) 2,195 (1,288) 76,591 197,385 (80,731) 6,744 (46,807) 184,508 1,361,214 1,545,722
9M09
546,951 299,838 518,056 328,869 (6,956) 191,460 (515,330) (226,908) 2,021 8,626 247,113 112,461 (6,237) 65,304 67,785 16,248 27,703 (35,971) 4,923 1,442 6,659 (13,204) (205,326) (212,973) (2,617) 11,552 (1,288) (91,080) 204,756 (223,753) 7,793 (265) (79,611) 250,545 1,295,177 1,545,722
3Q08
80,444 153,201 (255,708) 102,895 385 (147,708) 528,848 (69,048) 178 2,409 (9,050) (72,757) (2,795) (30,379) (29,704) 10,626 (5,144) (25,470) 1,350 324 9,587 (1,152) (120,056) (125,988) 4,865 1,067 75,935 94,412 (18,477)
9M08
16,038 439,893 (34,477) 295,718 989 (71,057) 460,227 (214,400) 238 8,185 (5,530) (423,855) (70,358) (62,115) (89,164) 11,248 (16,823) (164,236) (1,673) (30,247) 7,739 (8,226) (416,715) (429,427) 6,264 6,448 431,588 727,959 (178,661) 2,292 (120,002) 30,911 2,098,641 2,129,552
18