• Net Revenue: BRL4.9 billion, up 15% year-on-year.

• Adjusted EBITDA: BRL2,052 million with a margin of 41%, a 10-percentage-point improvement from the previous year.

• Total Cash Cost per Ton: BRL2,890, down 11% year-on-year and 3% from the previous quarter.

• Net Debt: BRL23.8 billion, an increase of BRL2.4 billion from the previous quarter.

• Leverage Ratio: Net debt to adjusted EBITDA ratio at 3.2 times.

• Liquidity: BRL15.7 billion, including BRL13 billion in cash.

• Dividends: BRL410 million to be paid on August 15, with a 12-month total of BRL1,422 million, representing a 5.7% dividend yield.

• Warning! GuruFocus has detected 8 Warning Signs with KLBAY.

Release Date: July 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Klabin SA (KLBAY) reported a 15% year-on-year increase in net revenue for the second quarter of 2024, reaching BRL4.9 billion, driven by higher sales volume and favorable exchange rates.

• The company's adjusted EBITDA improved significantly, reaching BRL2,052 million with a margin of 41%, marking a 10-percentage-point increase compared to the same period in 2023.

• Klabin SA (KLBAY) successfully ramped up its coated board machine, which is more profitable than its kraft liner machine, contributing to increased margins.

• The company maintained robust liquidity, ending the quarter with BRL15.7 billion, including BRL13 billion in cash, ensuring financial stability.

• Klabin SA (KLBAY) announced the payment of dividends amounting to BRL410 million, reflecting a dividend yield of 5.7% over the last 12 months.

Negative Points

• Klabin SA (KLBAY) faced logistical challenges, particularly with container exports, which impacted production and could have resulted in an additional 30,000 tons of output.

• The company's net debt increased by approximately BRL2.4 billion compared to the previous quarter, largely due to currency effects, raising concerns about leverage.

• There is a market perception of concern regarding China's consumption, which could negatively impact short fiber pulp volumes in the third quarter.

• The general stoppage in production facilities led to a slight decrease in volume for fluff and coated boards, affecting overall output.

• Klabin SA (KLBAY) experienced a negative impact on its bottom line due to variations in the valuation of biological assets, although this was attributed to natural oscillations.

Q & A Highlights

Q: How does Klabin view the recent wave of M&A activity in the industry, and what is Klabin's strategy in this context? A: Cristiano Cardoso Teixeira, CEO, stated that Klabin's strategy focuses on integration and verticalization, which has been a long-standing approach. The company believes that being closer to the consumer market provides greater price stability. Klabin is currently focused on ramping up its machines, increasing revenues, and deleveraging, with no immediate plans for M&A activities.