Klabin records net income of R$ 303 million in 6M11, up 178% on 6M10

Klabin's consolidated financial statements are presented in accordance with International Financial Reporting Standards (IFRS), as determined by CVM Instructions 457/07 and 485/10. Data for prior periods were adjusted for comparison purposes.
R$ million Sales volume - thousand tonnes
% Domestic Market

2Q11 435
66%

1Q11 438
61%

2Q10 430
70%

2Q11/1Q11 2Q11/2Q10

6M11 873
64%

6M10 863
66%

6M11/6M10

-1%
5 p.p.

1%
-4 p.p.

1%
-2 p.p.

Net revenue
% Domestic Market

947
78%

957
74%

905
79%

-1%
4 p.p.

5%
-1 p.p.

1,904
76%

1,750
77%

9%
-1 p.p.

Operational Result (EBIT) EBITDA

EBITDA Margin

177 190
20%

203 249
26%

154 236
26%

-13% -24%
-6 p.p.

15% -19%
-6 p.p.

380 440
23%

303 478
27%

26% -8%
-4 p.p.

Net Income Net Debt

Net Debt / EBITDA (LTM)

163 1,893
2.0 x

140 2,002
2.1 x

67 2,462
2.8 x

16% -5% -19%

142% -23% 0%

303 1,893
2.0 x

109 2,462
2.8 x

178% -23% 51%

Capex
LTM - last twelve months

93

115

93

209

139

Note: Due to rounding, some figures in tables and graphs may not result in a precise sum.

2Q11 Highlights
Sales volume, excluding wood, remains stable in relation to 1Q11, despite the scheduled maintenance stoppage at the Monte Alegre mill in June; Share of domestic sales increases from 61% in 1Q11 to 66% in the quarter; Net revenue: R$ 947 million, up 5% from 2Q10; Excluding costs with the maintenance stoppage, EBITDA margin contracts 3 percentage points from 2Q10; On July 15, 2011, Klabin paid interim dividends of R$ 82 million.

6M11 Highlights
Sales volume: 873 thousand tonnes, up 1% from 6M10; Net revenue: R$ 1.9 billion, up 9% from 6M10; Net revenue from domestic sales: R$ 1.5 billion, up 8% on 6M10; Net debt/EBITDA ratio decreased from 2.8x in June 2010 to 2.0x in June 2011.

Investor relations Antonio Sergio Alfano Luiz Marciano Vinicius Campos Daniel Rosolen Lucia Reis +55 11 3046-8401

Conference call Portuguese Tuesday, 08/02/11 9am (EDT) Phone: +55 11 4688-6331 Password: Klabin Replay: +55 11 46886312 Password: 1339305 English Tuesday, 08/02/11 10am (EDT) Phone US: 1-888-700-0802 Password: Klabin Replay: +55 11 46886312 Password: 2621947

2Q11 Results August 1st, 2011

2Q11 Summary
Klabin, Brazil's largest paper producer, exporter and recycler and the leader in paper, coated boards for packaging, corrugated boxes packaging, industrial bags and wood logs for sawmills and planer mills, ended the second quarter of 2011 with net income of R$ 163 million. The result was 142% higher than the R$ 67 million recorded in the second quarter of 2010 and 16% higher than the R$ 140 million recorded in the prior quarter. EBITDA (earnings before interest, taxes, depreciation and amortization) came to R$ 190 million, for EBITDA margin of 20%. The lower EBITDA margin in relation to 2Q10 is due to the effects from the scheduled maintenance stoppage at the Monte Alegre mill located in Telmaco Borba, Paran State, and the appreciation in the Brazilian real.
500 450 400 350 300 250 200 150 100 50 5% 0%

EBITDA and EBITDA margin

(R$ million)
26% 20% 190 249 236 26%

35% 30% 25% 20%

Net income
(R$ milliion)

163
15% 10%

140 67

2Q11

1Q11

2Q10

2Q11

1Q11

2Q10

Sales volume, excluding wood, reached 435 thousand tonnes in the second quarter, in line with the 430 thousand tonnes sold in the same period of 2010. Despite the maintenance stoppage at the Monte Alegre mill, total sales volume did not vary significantly in relation to 1Q11. In addition, the diversification of Klabin's coated board line offset the weaker domestic market. Klabin ended the second quarter with net revenue of R$ 947 million, up 5% on the same quarter of the prior year. In 6M11, net revenue came to R$ 1,904 million, up 9% from 6M10. Domestic sales accounted for 66% of sales volume in the quarter, up from 61% in 1Q11. Net revenue from domestic sales corresponded to 78% of total net revenue. Meanwhile, net revenue from exports totaled R$ 205 million (US$128 million), 6% more than in 2Q10. In 6M11, net revenue from exports came to R$ 451 million (US$ 266 million), for growth of 11% on 6M10.
Paper sales volume
(excluding wood)

Net revenue
(R$ million)
947 957 246

(thousand tonnes)
435 EM 147 438 169 430 129 742

905 193

EM

205

DM

288

269

301

DM

711

712

2Q11

1Q11

2Q10

2Q11

1Q11

2Q10

Klabin ended the quarter with a strong cash position, holding total investments(1) of R$ 2,691 million at the close of June 2011. This amount is equivalent to 3.1 times the amount of short-term gross debt. Net debt stood at R$ 1,893 million at the end of June, R$ 235 million lower than the net debt of R$ 2,128 million recorded in December 2010. The net debt/EBITDA ratio declined from 2.2x in December 2010 to 2.0x in June 2011. The Extraordinary Board of Directors Meeting held on June 21, 2011, approved the distribution of interim dividends of R$ 82 million, which were paid on July 15, 2011, corresponding to R$ 86.51 per lot of thousand common shares and R$ 95.16 per lot of thousand preferred shares.
(1) Includes cash and cash equivalents.

2Q11 Results August 1st, 2011

Markets and Exchange Rate

In the second quarter of 2011, the attention of economic agents remained focused on the fiscal problems in developed countries and the efforts to control inflation in emerging countries. In this period marked by considerable uncertainty, European markets proved lackluster in April, May and June. The risk of default in certain Euro Zone countries increased the negative expectations regarding the pace of economic recovery on the continent. At the end of the second quarter, Greece received assistance, after the approval of a fiscal austerity program and of privatizations. This measure, combined with the cuts in government spending in other countries, brought temporary relief from the fear associated with the deterioration in the economic situation of more important European countries, such as Italy. In view of the weak industrial activity and high unemployment in the United States, the FED revised downward its growth forecasts for 2011. The tough negotiations between the country's executive branch and its Congress to increase the country's debt ceiling helped increase volatility in markets at the end of the quarter. China's economy has been registering strong growth, which continues to fuel concerns with inflation in that country. In Brazil, inflation indicators began to show signs of deceleration, reflecting seasonal factors and the measures adopted by the government, i.e., the monetary tightening cycle and the fiscal policies and macroprudential measures implemented. The combination of high interest rates and economic growth at rates above those of developed countries helped support the continuation of strong foreign-currency inflows into Brazil. Despite some attempts by the central bank to curb the local currency appreciation, the Brazilian real continued to strengthen against the dollar in 2Q11. The USD (sell, end of period), which closed at R$ 1.63/US$ on March 31, 2011, weakened by 4% against the BRL in the quarter to R$ 1.56/US$ at the end of June 2011. In relation to December 31, 2010, the USD has weakened by 6%. The average exchange rate was R$ 1.60/US$ in 2Q11, down 11% and 4% from 2Q10 and 1Q11, respectively. In the first six months of the year, the average BRL/USD exchange rate was 9% lower than in 6M10.
2Q11 Average Rate End Rate 1.60 1.56 1Q11 1.67 1.63 2Q10 1.79 1.80
2Q11/1Q11 2Q11/2Q10

6M11 1.63 1.56

6M10 1.80 1.80

6M11/6M10

-4% -4%

-11% -13%

-9% -13%

International kraftliner demand remained stable in the quarter, though with international prices pressured by the high supply in the U.S. market. According to data published by FOEX, in Europe the average list price of kraftliner brown 175 g/m fell from 599/t in March to 582/t in June. In 2Q11, the average list price of kraftliner in euro was 23% higher than in 2Q10. According to the Brazilian Association of Pulp and Paper Producers (Bracelpa), in 2Q11 Brazilian shipments of coated boards, excluding liquid packaging board, was 125 thousand tonnes. Though lower than in the previous year, domestic demand in the quarter grew 5% from 1Q11, in line with the seasonality typical in this market. Old corrugated containers prices remained stable in April and May and fell slightly in June. However Brazil's corrugated boxes market expanded in relation to 1Q11. According to data from the Brazilian Corrugated Boxes Association (ABPO), Brazilian corrugated board shipments reached 810 thousand tonnes in the period from April to June, for growth of 7% on the first quarter of the year. In the first six months of the year, domestic demand for corrugated boxes remained stable in relation to 6M10, at 1,570 thousand tonnes. Preliminary data from the National Cement Industry Trade Union (SNIC), which include bulk and bag cement, show that consolidated cement sales in the quarter grew by 6% in relation to 1Q11, indicating that the construction sector is gaining strength. During the quarter, the Company remained selective in its sales of conversion products, seeking to optimize the sales mix and prioritize higher-margin markets.

2Q11 Results August 1st, 2011

Operating and Financial Performance

Sales volume
Sales volume, excluding wood, totaled 435 thousand tonnes in the quarter. Despite the maintenance stoppage at the Monte Alegre mill, sales volume remained stable in relation to 1Q11. In the six-month period, sales volume was 873 thousand tonnes, 1% higher than in 6M10. Impacted by the waning demand in Brazil, sales volume in the domestic market fell by 4% from 2Q10 to 288 thousand tonnes. In comparison with 1Q11, the increase of 19 thousand tonnes (7%) reflected the seasonality typical in the domestic paper market. In 6M10, domestic sales volume was 557 thousand tonnes, down 2% from the year-ago period. Exports sales volume came to 147 thousand tonnes in the quarter, up 14% from 2Q10. In 6M11, exports came to 316 thousand tonnes, 8% higher than in 6M10.
Sales volume (excluding wood) (thousand tonnes) 873
36%

Sales volume by product 6M11

Ind. Bags 8% Others 1%

863
34%

435
34% 66%

438
39% 61%

430
30% 64% 70% 66%

Kraf tliner 24%

Coated Boards 38%

2Q11

1Q11

2Q10

6M11

6M10
does not include wood

Domestic Market

Export Market

Corrugat. Boxes 29%

Net Revenue
Second-quarter net revenue (including wood) totaled R$ 947 million. The 5% increase from 2Q10 is explained by the higher prices practiced in the domestic market. Net revenue fell 1% from 1Q11, reflecting the stronger real and the drop in international kraftliner prices. In 6M11, net revenue came to R$ 1,904 million, up 9% from 6M10.

Net revenue (R$ milliion) 1,904 1,750

24% 23%

Net Revenue by Product 6M11

Wood 7% Ind bags 12%

Others 2% Coated Boards 34%

947
22%

957
26%

905
21% 76% 77%
Kraf tliner 14%

78%

74%

79%

2Q11

1Q11

2Q10

6M11

6M10
includes wood

Domestic Market

Export Market

Corrugat. Boxes 31%

2Q11 Results August 1st, 2011

Domestic net revenue stood at R$ 742 million, 4% higher than in both 2Q10 and 1Q11. Revenue from the domestic market as percentage of total revenue was 78% in the quarter, versus 74% in 1Q11. In 6M11, net revenue from domestic sales was R$ 1,453 million, 8% higher than in the same period of 2010. Exports totaled R$ 205 million (US$ 128 million) in 2Q11, up 6% from 2Q10, due to the higher prices practiced in the international market, and down 17% from 1Q11, reflecting the lower volumes and the stronger local currency. In 6M11, net revenue from exports totaled R$ 451 million (US$ 266 million), or 11% higher than in 6M10. Exports The seasonality of the paper market was observed in 2Q11, with the percentage of domestic sales rising to 66%, from 61% in 1Q11. The Company directed a lower volume of products to the export market in relation to the previous quarter. The depreciation of 4% in the USD exchange rate in the period led to lower prices in BRL, and consequently to lower export revenue than in 1Q11. In relation to 2Q10, Klabin's export revenue increased, due to the hikes in international prices that occurred in the second half of 2010. Latin America remains Klabin's most important export market, accounting for 47% of the Company's sales volume and 41% of its net revenue in the first six months of the year, followed by Asia, which concentrates its exports of board for liquid packaging.
Sales Volume - 6M11 316,000 tonnes North Af rica America 4% 5% Net Revenue - 6M11 R$ 451 million North America 6% Af rica 4%

Europe 17% Latin America 47%

Europe 19%

Latin America 41%

Asia 27%

Asia 30%

Operational Costs and Expenses

Unit cash cost in the quarter was R$ 1,742 per ton, including fixed and variable costs and selling and administrative expenses, for increases of 12% and 8% from 2Q10 and 1Q11, respectively, due to the stoppage maintenance at the Monte Alegre mill in June 2011. Excluding the costs associated with the stoppage, unit cash cost was R$ 1,645 per tonne, up 8% and 2% from 2Q10 and 1Q11, respectively. Cost of goods sold was R$ 773 million in 2Q11. In addition to the costs with the maintenance stoppage at the Monte Alegre mill, COGS was impacted by the higher consumption of fuel oil in the quarter, the higher costs with purchases of wood from third parties and the higher costs with packaging materials for our products. In 6M11, COGS amounted to R$ 1,484 million, up 7% on the same period of 2010. Selling expenses were R$ 77 million in 2Q11, down 11% on 1Q11, mainly reflecting the booking of non-recurring expenses in the first quarter. In 2Q11, freight costs corresponded to R$ 45 million, down R$ 2 million in relation to 1Q11, reflecting the lower volume of exports. Selling expenses in the first six months were R$ 162 million, 9% higher than in 6M10. General and administrative expenses amounted to R$ 57 million in 2Q11, up 3% and 2% on 2Q10 and 1Q11, respectively, due to the contracting of third-party services to reorganize the Company's

2Q11 Results August 1st, 2011

processes. In 6M11, general and administrative expenses were R$ 112 million, up 11% from 6M10, impacted by the pay increases granted under the collective bargaining agreement and other nonrecurring expenses booked in the beginning of the year. Other operating revenue (expenses) was an expense of R$ 10 million in 2Q11, compared with an revenue of R$ 4 million in 2Q10. In the first six months, other operating revenue (expenses) was an expense of R$ 19 million, which compares with revenue of R$ 5 million in 6M10.

Effect from variations in the fair value of biological assets

The variation in the fair value of biological assets resulted in a revenue gain of R$ 145 million in 2Q11, which was 63% and 34% higher than in 2Q10 and 1Q11, respectively. In the six month period, the same effect represented a revenue gain of R$ 253 million, for growth of 44% on 6M10. The effect from the depletion of the fair value of biological assets on cost of goods sold was R$ 92 million in the quarter, 18% lower than in 2Q10 and 8% higher than in 1Q11. In 6M11, the effect from depletion was a loss of R$ 177 million, which was 24% lower than in 6M10. As a result, the effect from the variation in the fair value of biological assets on operational income (EBIT) was a gain of R$ 53 million in 2Q11, in comparison with a gain of R$ 23 million in 1Q11 and a loss of R$ 23 million in 2Q10.

Operating Income
Operating income before the financial result (EBIT) was R$177 million, up 15% on 2Q10 and down 13% on 1Q11. In 6M11, EBIT was R$380 million, decreasing by 26% from 6M10.

Operating cash flow (EBITDA)

Operating cash flow (EBITDA) was R$ 190 million in 2Q11, decreasing by 19% and 24% from 2Q10 and 1Q11, respectively. EBITDA margin stood at 20%, versus 26% in both 2Q10 and 1Q11. In 6M11, EBITDA was R$ 440 million, for margin of 23%, versus R$ 478 million and EBITDA margin of 27% in 6M10. EBITDA in the quarter was impacted by the stronger Brazilian real and the costs with the scheduled maintenance stoppage at the Monte Alegre mill. Excluding fixed costs with the maintenance stoppage, EBITDA margin fell 3 percentage points from 2Q10. The appreciation of 11% in the average price of the Brazilian real against the U.S. dollar in the same comparison period led to contraction of 2 percentage points in EBITDA margin.
EBITDA Composition R$ million Operational result (after financial result) (+) Financial result (+) Depreciation, amortization, depletion (-) Biological assets adjust EBITDA EBITDA Margin
N / A - Not applicable

2Q11 246 (69) 159 (145) 190 20%

1Q11 237 (34) 154 (108) 249 26%

2Q10 109 46 171 (89) 236 26%

2Q11/1Q11 2Q11/2Q10

6M11 483 (103) 313 (253) 440 23%

6M10 176 126 352 (177) 478 27%

6M11/6M10

4% 107% 3% 35% -24% -6 p.p.

127% -252% -7% 63% -19% -6 p.p.

174% N/A -11% 43% -8% -4 p.p.

Indebtedness and financial investments

Gross debt stood at R$ 4,584 million on June 30, 2011, compared to R$ 4,857 million on December 31, 2010, of which R$ 2.701 million or 59% (US$1,730 million) was denominated in foreign currency (primarily export pre-payment facilities). At the close of June, financial investments totaled R$ 2,691 million, corresponding to 3.1x the volume of short-term gross debt. Net debt stood at R$ 1,893 million at the end of June, R$ 235 million lower than the net debt of R$ 2,128 million recorded at the end of 2010. The net debt/EBITDA ratio fell from 2.2x on December 31, 2010 to 2.0x in June 2011.

2Q11 Results August 1st, 2011

5,500

Net Debt / EBITDA (R$ million) 4.4 3.7 3.6 3.1

4,500

3,500

2.8 2.2 2.2 2.1 2.0

2,676

2,528

2,500

1,500

500

(500)

Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11

Net Debt (R$ million) Net Debt / EBITDA (LTM)

6.0 5.5 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0

3,192

2,886

2,462

2,106

2,128

2,002

The average debt term stood at 39 months, or 31 months for debt denominated in local currency and 46 months for debt denominated in foreign currency. At end-June, short-term debt accounted for 19% of total debt. The average debt cost stood at 7.9% p.a. in local currency and 3.8% p.a. in foreign currency.
Debt (R$ million) Short term
Local currency Foreign currency

06/30/11 865
515 350

12/31/10 842
496 346

19% 11% 8% 81% 30% 51% 100% 41% 59%

1,893

17% 10% 7% 83% 31% 52% 100% 41% 59%

Long term
Local currency Foreign currency

3,719
1,368 2,351

4,015
1,506 2,509

Gross debt
Local currency total Foreign currency total

4,584
1,883 2,701

4,857
2,002 2,855

(-) Cash Net debt Net debt / EBITDA

2,691 1,893 2,0 x

2,729 2,128 2,2 x

Financial Result
The net financial result in the quarter was net financial income of R$ 69 million, versus a net financial expense of R$ 46 million in 2Q10. In the six month period, the net financial result was income of R$ 103 million, reflecting the financial expenses of R$ 211 million, which were offset by financial income of R$ 153 million and foreign exchange gain of R$ 161 million, in view of the 6% appreciation in the real.

Net Income
Net income was R$ 163 million in 2Q11, versus R$ 67 million in 2Q10 and R$ 140 million in 1Q11. In the first six months, net income was R$ 303 million, 178% higher than in the same period of 2010.

2Q11 Results August 1st, 2011

Business Performance
Consolidated information by operational segment in 6M11
R$ million Net revenue
Domestic market Exports 141 520 409 792 42 1,453 451

Forestry

Papers

Conversion

Consolidation adjustments

Total

Third part revenue

Segments revenue

141
232

929
412

834
7

(651)

1,904
-

Total net revenue

Change in fair value - biological assets Cost of goods sold

373
253 (418)

1,341
(1,050)

841
(667)

(651)
651

1,904
253 (1,484)

Gross income
Operating expenses

208
(33)

291
(155)

174
(96)

(9)

673
(293)

Operating results before financial results

175

136

78

(9)

380

Note: The figures in the table for total net sales include sales of other products.

BUSINESS UNIT FORESTRY

The volume of wood sales to third parties in 2Q11 came to 666 thousand tonnes, for reductions of 22% and 10% on 2Q10 and 1Q11, respectively. In 6M11, wood sales volume totaled 1,402 thousand tonnes, or 9% lower than in the same period last year. Wood sales were affected by heavy rainfall and transportation problems. Net revenue from wood log sales to third parties in 2Q11 was R$ 64 million, down 8% and 6% from 2Q10 and 1Q11, respectively, reflecting the lower sales volume. In 6M10, this figure amounted to R$ 132 million, up 7% on the same six month period of 2010.
Net revenue (R$ million)

Sales volume (thousand tonnes)

132 1,535 1,402

123

666

737

854

64

68

69

2Q11

1Q11

2Q10

6M11

6M10

2Q11

1Q11

2Q10

6M11

6M10

At the close of June, own and third-party planted areas totaled 212 thousand hectares, of which 131 thousand were planted with pine and 81 thousand hectares with eucalyptus trees, in addition to 193 thousand hectares of permanent preservation and legal reserve areas.

BUSINESS UNIT PAPER

The sales volume of paper and coated board (kraftliner, white top liner, testliner, sack kraft, folding box board, carrier board and liquid packaging board) to third parties was 263 thousand tonnes in 2Q11. In 6M11, sales totaled 542 thousand tonnes, up 4% over the same period last year.

2Q11 Results August 1st, 2011

In 1H11, the volume of domestic sales reached 123 thousand tonnes, while exports totaled 302 thousand tonnes. In comparison to 1H10, sales volume in the domestic market fell by 2%, while exports increased by 9%. Net revenue from paper and coated board sales was R$ 438 million in the quarter, 7% higher than in 2Q10. In 6M11, revenue from paper sales came to R$ 911 million, growing by 10% from 6M10.

Kraftliner
Kraftliner sales volume was 104 thousand tonnes in 2Q11, up 22% on 2Q10. In 6M10, kraftliner sales volume totaled 214 thousand tonnes, up 10% from the same period in 2010. Domestic sales of kraftliner amounted to 39 thousand tonnes, and accounted for 37% of total sales of that product, against 53% in 2Q10, when consumers were afraid of supply reduction. In the first half, sales of domestic kraftliner reached 71 thousand tonnes, 2 thousand tonnes below the 1H10. Exports reached 65 thousand tonnes in the 2Q11, totaling 143 thousand tonnes in the first half. The increase compared to 1H10 was 22 thousand tonnes (19%). Net revenue from kraftliner in the quarter was R$ 127 million, 22% higher than in 2Q10, explained by the price increase in the international market and better sales mix. In 6M10, net revenue from this product amounted to R$ 268 million, up 21% from the first six months of 2010.
Sales volume ('000 tonnes) 214 195 268 221
67% 62%

Net revenue (R$ million)

104
63%

111 85
71% 47% 53% 33% 38%

127

141 104

37%

29%

2Q11

1Q11

2Q10

6M11

6M10

2Q11

1Q11

2Q10

6M11

6M10

Domestic Market

Export Market

According to data from FOEX, the average list price in euros of kraftliner brown 175g/m in Europe fell 2% during the second quarter to an average of 588/tonne. The average list price in Brazilian real was R$ 1,352/tonne in 2Q11, also 2% down from 1Q11. In relation to 2Q10, the average price of kraftliner in BRL increased by 24%.
Kraftliner Brown 175 g/m list price (/tonne and R$/tonne)

1,459 1,302 1,217

1,392 1,162 1,029 1,038 1,207 1,079 1,089

1,364

1,373

1,352

501

487

486

462

411

385

404

433

478

533

592

602

588

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

Source: FOEX and BACEN

Quarter average

Kraftliner ( / tonne)

Kraftliner (R$ / tonne)

2Q11 Results August 1st, 2011 Coated boards

In 2Q11, coated board sales volume was 159 thousand tonnes. Although the data disclosed by the Brazilian Association of Pulp and Paper (Bracelpa) indicated weaker demand in Brazil in comparison with 2Q10, Klabin's sales to the domestic market remained stable, with liquid packaging board sales volume offsetting the lower sales folding box board and carrier board. In 6M11, sales volume was 327 thousand tonnes, stable in relation to 6M10. Exports of these products totaled 75 thousand tonnes in 2Q11, down 6% and 11% from 2Q10 and 1Q11, respectively, due to the strategy of chasing for better margins in this segment. Net revenue from coated board sales amounted to R$ 644 million in 6M11, up 5% from 6M10.

Sales volume ('000 tonnes) 327 327

Net revenue (R$ million) 644

49% 48%

611

159
47%

168
50%

165
49% 51% 52%

312

332

307

53%

50%

51%

2Q11

1Q11

2Q10

6M11 Export Market

6M10

2Q11

1Q11

2Q10

6M11

6M10

Domestic Market

According to Bracelpa, in 2Q11 Brazilian shipments of coated boards, excluding liquid packaging board, was 125 thousand tonnes. Though lower than in the previous year, domestic demand in the quarter grew 5% from 1Q11, in line with the seasonality typical in this market.

BUSINESS UNIT - CONVERSION

Sales volume from converted products (corrugated boxes and industrial bags) was 163 thousand tonnes in 2Q11, down 5% from 2Q10 and up 6% from 1Q11. In 6M11, sales volume totaled 316 thousand tonnes, decreasing by 2% from the year-ago period. Net revenue from converted products totaled R$ 429 million in 2Q11. In 6M10, net revenue amounted to R$ 832 million, up 9% from 6M10.

Corrugated boxes
Shipments of corrugated boxes totaled 129 thousand tonnes in 2Q11, up 7% from 1Q11. In the first six months of 2011, sales volume reached 249 thousand tonnes, 2% lower than in 6M10. The reduction in relation to the previous year is due to the delay in the tobacco harvest and the efforts to achieve higher margins in the segment. Net revenue from corrugated boxes sales totaled R$ 308 million in 2Q11, growing by 6% and 7% from 2Q10 and 1Q11, respectively. In 6M11, net revenue from corrugated boxes sales came to R$ 596 million, up 11% from 6M10.

10

10

2Q11 Results August 1st, 2011

Sales Volume (thousand tonnes) Net revenue (R$ million)

596 249 254 539

129

121

135

308

288

290

2Q11

1Q11

2Q10

6M11

6M10

2Q11

1Q11

2Q10

6M11

6M10

According to the Brazilian Corrugated Boxes Association (ABPO), shipments of corrugated boxes and sheets in the quarter totaled 810 thousand tonnes, stable in relation to 2Q10 and 7% higher than in 1Q11. Shipments in the year to date totaled 1,570 thousand tonnes, unchanged in relation to the same six-month period of last year.

Brazilian Corrugated Shipments thousand tonnes

271 265 248 249 232 212 232 251 249 268 266 253 270

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

Quarter average
Source: Brazilian Corrugated Cardboard Association

Monthly volum e

Note: In June 2011, the ABPO revised its figures for corrugated boxes shipments disclosed previously.

Industrial Bags
The sales volume of industrial bags from Brazil and Argentina in the domestic and export markets totaled 34 thousand tonnes in 2Q11, contracting by 6% from 2Q10 and increasing by 4% from 1Q11. In 6M11, sales volume of industrial bags totaled 67 thousand tonnes, decreasing by 4% from the year-ago period. To optimize its sales mix and focus on markets with higher margins, the Company continued to use selective sales practices in the industrial bags in the quarter.
Sales volume (thousand tonnes) 70 Net revenue (R$ million)

67

236

228

34

33

36

121

116

119

2Q11

1Q11

2Q10

6M11

6M10

2Q11

1Q11

2Q10

6M11

6M10

11

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2Q11 Results August 1st, 2011

Net revenue from industrial bags sales was R$ 121 million in the quarter, growing by 1% and 4% from 2Q10 and 1Q11, respectively. In 6M11, net revenue from industrial bag sales came to R$ 236 million, up 4% from 6M10. Preliminary data from the National Labor Union of Cement Industry (SNIC) and market estimates indicate that domestic cement sales totaled 15.6 million tonnes in 2Q11, for an increase of 6% from 1Q11.

Brazilian cement consumption million tons

5.4 4.7 4.2 4.3 3.9 4.6 4.1 4.4 4.6 4.8 5.2 4.9 5.2

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

Quarter average
Source: Nation Labor Union of Cement Industry

Monthly consum ption

Capital Expenditure
The table below presents a breakdown by Unit of the investments made in the quarter:
R$ million Forestry Papers Conversion Others Total 2Q11 30 51 12 93 115 1Q11 37 74 4 93 2Q10 27 49 17 6M11 67 125 16 1 209 6M10 53 62 23 1 139

Investments came to R$ 93 million in the quarter, which were allocated mainly to: The new biomass boiler at the plant in Correia Pinto, Santa Catarina State, which is expected to start operations in early 2Q12. The construction works are nearing conclusion. The transmission line in Monte Alegre, Paran State, which is expected to start operations in 4Q11. The debottlenecking of the evaporation system at the Otaclio Costa mill in the state of Santa Catarina, with the objective of reducing steam consumption. The installation of two new corrugators at the corrugated boxes units in Goiana, Pernambuco State and in Jundia, So Paulo State. The installation of a new complete valve bag production line at the plant in Lages, Santa Catarina State.

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2Q11 Results August 1st, 2011

Capital Markets
Stock Performance
June 30th, 2011 Preferred shares Share price (KLBN4) Book value Average daily trading volume 2Q11 Market capitalization 600.9 million R$ 5,80 R$ 5,60 R$ 15 million R$ 5.2 billion

In the first six months of 2011, Klabin preferred stock (KLBN4) accumulated a loss of 1%, while the IBOVESPA decreased by 10%. In the last 12 months, Klabin preferred stock (KLBN4) gained 16%, while the IBOVESPA rose by 2%.
Performance KLBN4 x Brazilian Index (Ibovespa)

116

100

102

Mar11

Nov10

Apr11

Jul10

Jan11

May11

Jun10

Dec10

Sep10

Aug10

Klabin

Oct10

Ibovespa Index

Klabin stock was traded in all sessions on the BM&FBOVESPA in 2Q11, registering 200,000 transactions that involved 160 million shares, for average daily trading volume of R$15 million, which was 32% and 12% higher than in 2Q10 and 1Q11, respectively.
Average Daily Volume (R$ million/day)
22 17 14 9 6 7 9 10 12 9 9 8 9 10 8 7 12 15 14 14 13 12 12 17

Feb11

Jun11

16

Jun09

Jun10

Aug09

Aug10

Mar10

May10

Mar11

13

May11

Dec09

Sep09

Sep10

Dec10

Feb10

Nov09

Nov10

Feb11

Jun11

Apr10

Apr11

Jul09

Jan10

Jul10

Jan11

Oct09

Oct10

13

2Q11 Results August 1st, 2011

Klabin stock also trades in the U.S. market through Level I ADRs, which are listed on the over-thecounter market under the ticker KLBAY. Klabin's capital stock is represented by 918 million shares, composed of 317 million common shares and 601 million preferred shares. On June 30, 2011, the Company held 27.2 million preferred shares in treasury.

Dividends
The Extraordinary Board of Directors Meeting held on June 21, 2011, approved the distribution of interim dividends of R$ 82 million, which were paid on July 15, 2011, corresponding to R$ 86.51 per lot of thousand common shares and R$ 95.16 per lot of thousand preferred shares. As of the disclosure date of this release, R$ 152 million had already been paid in dividends in 2011.

Sale of preferred stock by BNDESPAR

In the second quarter of 2011, BNDESPAR sold 17.7 million Klabin preferred shares (KLBN4) on the BM&FBovespa. In the last 12 months, the bank's interest in the Company's preferred stock has decreased from 31% to 15%.

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2Q11 Results August 1st, 2011

Conference Call
Portuguese

Tuesday, August 2, 2011 - 10:00 a.m. (Braslia) Code: Klabin Dial-in: +55 (11) 4688-6331 Replay: +55 (11) 46886312 Code: 1339305 English Tuesday, August 3, 2011 10:00 a.m. (EDT). Code: Klabin Dial-in: U.S. participants: 1-888-700-0802 Foreign participants: +1 (786) 924-6977 Brazilian participants: +55 (11) 4688-6331 Replay: +55 (11) 4688-6312 Code: 2621947 Webcast An audio webcast of the conference call will also be available on the internet. The conference call will also be broadcast over the internet. Go to: www.ccall.com.br/klabin

With gross revenue of R$ 4.4 billion in 2010, Klabin is the largest integrated manufacturer of packaging paper in Brazil, with annual production capacity of 1.9 million tonnes. Klabin has adopted a strategic focus on the following businesses: paper and coated board for packaging, corrugated boxes, industrial bags and wood logs. Klabin is the leader in all its market segments.
The statements made in this earnings release concerning the Company's business prospects, projected operating and financial results and potential growth are merely projections and were based on Management's expectations

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2Q11 Results August 1st, 2011

regarding the Company's future. These expectations are highly susceptible to changes in the market, in the general economic performance of the Brazilian economy, in the industry and in international markets, and therefore are subject to change.

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2Q11 Results August 1, 2011

Appendix 1 Consolidated Income Statement (Thousand R$)

2Q11
Gross Revenue Net Revenue Change in fair value - biological assets Cost of Products Sold Gross Profit Selling Expenses General & Administrative Expenses Other Revenues (Expenses) Total Operating Expenses Operating Income (before Fin. Results) Financial Expenses Financial Revenues Net Foreign Exchange Losses Net Financial Revenues Net Income before Taxes Income Tax and Soc. Contrib. Net income from continuing operations . Owners of the Company . Noncontrolling interests Depreciation and amortization Change in fair value of biological assets EBITDA 1,145,202 947,447 145,084 (772,704) 319,827 (76,652) (56,715) (9,603) (142,970) 176,857 (116,888) 84,090 102,273 69,475 246,332 (76,956) 169,376 163,143 6,233 158,630 (145,084) 190,403

1Q11
1,144,430 957,005 107,807 (711,334) 353,478 (85,750) (55,341) (9,124) (150,215) 203,263 (93,923) 68,753 58,728 33,558 236,821 (87,842) 148,979 140,202 8,777 153,894 (107,807) 249,350

2Q10
1,096,044 905,399 89,029 (716,771) 277,657 (72,726) (54,906) 4,260 (123,372) 154,285 (76,170) 56,040 (25,595) (45,725) 108,560 (37,095) 71,465 67,344 4,121 170,933 (89,029) 236,189

6M11
2,289,632 1,904,452 252,891 (1,484,038) 673,305 (162,402) (112,056) (18,727) (293,185) 380,120 (210,811) 152,843 161,001 103,033 483,153 (164,798) 318,355 303,345 15,010 312,524 (252,891) 439,753

6M10
2,118,518 1,749,784 176,552 (1,382,176) 544,160 (145,291) (100,840) 4,725 (241,406) 302,754 (157,925) 101,213 (69,599) (126,311) 176,443 (60,105) 116,338 108,927 7,411 352,066 (176,552) 478,268

% of Net Revenue
2Q11 1Q11 2Q10 6M11

100.0%

100.0%

100.0%

100.0%

81.6% 33.8% 8.1% 6.0% 1.0% 15.1% 18.7% 12.3% 8.9% 10.8% 7.3% 26.0% 8.1% 17.9% 17.2% 0.7% 16.7%

74.3% 36.9% 9.0% 5.8% 1.0% 15.7% 21.2% 9.8% 7.2% 6.1% 3.5% 24.7% 9.2% 15.6% 14.7% 0.9% 16.1%

79.2% 30.7% 8.0% 6.1% 0.5% 13.6% 17.0% 8.4% 6.2% 2.8% 5.1% 12.0% 4.1% 7.9% 7.4% 0.5% 18.9%

77.9% 35.4% 8.5% 5.9% 1.0% 15.4% 20.0% 11.1% 8.0% 8.5% 5.4% 25.4% 8.7% 16.7% 15.9% 0.8% 16.4%

20.1%

26.1%

26.1%

23.1%

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2Q11 Results August 1, 2011

Appendix 2 Consolidated Balance Sheet (Thousand R$)

Assets
Current Assets Cash and banks Short-term investments Securities Receivables Inventories Recoverble taxes and contributions Other receivables

Jun-11
4,071,892 56,266 2,425,784 209,180 761,492 462,546 108,068 48,556

Mar-11
4,015,790 19,063 2,415,810 203,465 770,979 475,446 86,880 44,147

Dec-10
4,127,147 39,880 2,491,225 198,222 753,961 460,128 131,102 52,629

Liabilities and StockholdersEquity

Current Liabilities Loans and financing Suppliers Income tax and social contribution Taxes payable Salaries and payroll charges Dividends to pay Dividends to pay - minority Proviso REFIS Other accounts payable Noncurrent Liabilities Loans and financing Imp Renda e C.social diferidos

Jun-11
1,853,435 865,989 243,767 32,057 48,095 88,053 81,998

Mar-11
1,673,997 847,781 272,144 10,724 40,387 64,903

Dec-10
1,690,913 842,121 269,839 37,013 40,669 93,542 2,584

433,313 60,163 5,201,149 3,717,987 1,318,502 164,660 5,142,031 1,500,000 84,491 51,047 2,554,822 1,080,024 (128,353) 187,142 12,383,757

373,182 64,876 5,232,998 3,793,117 1,275,130 164,751 5,132,943 1,500,000 84,491 51,224 2,543,502 1,082,079 (128,353) 180,977 12,220,915

349,340 55,805 5,415,828 4,014,976 1,235,635 165,217 4,994,085 1,500,000 84,491 51,404 2,365,900 1,120,643 (128,353) 160,417 12,261,243

Noncurrent Assets Long term Taxes to compensate Judicial Deposits Other receivables Investments Property, plant & equipment, net Ativos biolgicos Intangible assets

8,311,865 147,481 97,279 150,059 11,542 5,017,980 2,880,325 7,199

8,205,125 132,915 91,989 127,431 11,542 5,026,761 2,806,819 7,668

8,134,096 131,621 90,698 125,678 11,542 5,004,023 2,762,879 7,655

Other accounts payable StockholdersEquity Capital Capital reserves Revaluation reserve Profit reserve Valuation adjustments to shareholders'equity Treasury stock Minority Interests

Total

12,383,757

12,220,915

12,261,243

Total

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2Q11 Results August 1, 2011

Appendix 3 Loan Maturity Schedule June 30, 2011

R$ million BNDES Others Local Currency Trade Finance Fixed Assets Others Foreign Currency Gross Debt 3Q11 91 0 92 64 2 30 96 188
Average Cost Local Currency Foreign Currency Gross Debt 7.9 % p.y. 3.8 % p.y.

4Q11 235 9 244 90 2 2 94 338

2012 326 17 342 375 6 41 422 764

2013 300 18 318 431 6 61 498 816

2014 293 21 314 316 5 59 380 694

2015 327 31 358 246 5 59 309 668

2016 60 25 85 96 3 114 213 298

2017 30 11 41 156 4 160 201

2018 40 12 51 187 7 193 245

2019 21 6 28 163 4 39 206 234

After 2020

Total 1.726 156 1.883 2.175 43 483 2.702 4.584

3 5 8 52 79 131 139

Average Tenor 31 months 46 months 39 months

R$ Million 816 764 694 668 Foreign Currency 2,702 Gross Debt 4,584 298 201
342

422

498 380 309

338
94

245
193 51
2018

188
96 92
3Q11 4Q11 2012 2013 2014 2015

234 139
206 131 28
2019

244

318

314

358

213 160 85
2016

Local Currency 1,883

41
2017

8
After 2020

Loc al Currency

Foreign Currency

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2Q11 Results August 1, 2011

Appendix 4 Consolidated Cash Flow (Thousand R$)

2Q11
Cash flow from operating activities Operating activities . Net income . Depreciation and amortization . Depletion in biological assets . Fixed assets costs result . Change in fair value - biolgical assets . Deferred income taxes and social contribution . Interest and exchange variation on loans and financing . Interest Payment . Income taxes and social contribution . REFIS Reserve . Others Variations in Assets and Liabilities . Receivables . Inventories . Recoverable taxes . Marketable Securities . Prepaid expenses . Other receivables . Suppliers . Taxes and payable . Salaries, vacation and payroll charges . Other payables Net Cash Investing Activities . Purchase of property, plant and equipment . Purchase of biological assets . 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 Paid . Dividends Paid - minority Increase (Decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 150,502 139,210 163,143 6,233 58,430 100,200 (145,084) 41,196 (56,295) (60,390) (26,128) 50,206 7,699 11,292 11,991 12,900 6,601 (5,715) (469) (31,812) (28,508) 29,041 23,150 (5,887) (93,018) (64,719) (28,622) 323 (10,307) 213,062 (153,299) 145 (170) (70,002) (43) 47,177 2,434,873 2,482,050

6M11
302,066 275,174 303,345 15,010 116,320 196,204 (252,891) 78,321 (59,198) (127,710) (82,550) 74,048 14,275 26,892 (9,046) (2,418) 105,951 (10,958) 6,000 (32,889) (26,072) 2,470 (5,489) (657) (206,621) (148,061) (60,759) 2,199 (144,500) 214,398 (300,611) 12,652 (894) (70,002) (43) (49,055) 2,531,105 2,482,050

2Q10
237001 192917 67,344 4,121 53,404 117,531 (89,028) 13,332 92,090 (59,410) (7,576) 2,551 (1,442) 44084 (46,634) (2,207) 24,500 89 (4,372) 4,084 32,954 24,458 23,008 (11,796) (97,565) (70,965) (26,657) 57 (105,127) 68,136 (131,774) 17,049 (1,536) (57,002) 34,309 2,147,490 2,181,799

6M10
464,172 350,077 108,927 7,411 107,621 244,447 (176,551) 16,950 205,449 (155,273) (10,258) 5,359 (4,005) 114,095 (82,079) 2,019 100,875 21,541 (1,348) 2,003 60,929 51,051 3,767 (44,663) (142,620) (93,000) (45,776) 633 (4,477) 18,595 445,615 (391,197) 23,564 (2,385) (57,002) 340,147 1,841,652 2,181,799

20