Release Date: November 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Klabin SA (KLBAY, Financial) reported a 14% year-on-year increase in net revenue for the third quarter of 2024, reaching 5 billion BRL, driven by higher pulp and kraft liner prices and increased sales volume.
- The company achieved an adjusted EBITDA of 1,805 million BRL, with an EBITDA margin expansion of 5 percentage points compared to the third quarter of 2023.
- Klabin SA (KLBAY) successfully integrated the KTE project ahead of schedule, achieving a new cost level and operational efficiencies.
- The company is experiencing strong demand in the corrugated boxes market, particularly in Brazil, with expectations of continued growth in the fourth quarter.
- Klabin SA (KLBAY) has a robust liquidity position, ending the quarter with 2.2 billion BRL, supported by 7.5 billion BRL in cash and an undrawn revolving credit facility.
Negative Points
- Klabin SA (KLBAY) faces ongoing logistical challenges, including global shipping delays and capacity constraints at Brazilian container terminals, impacting shipment volumes.
- The company's net debt increased by approximately 5.7 billion BRL quarter-on-quarter, primarily due to the payment for the KTE project.
- There is uncertainty in the Chinese market affecting short fiber pulp prices, with expectations of a slight drop in the fourth quarter.
- Despite improvements, the company still faces pressure from high OCC costs in the domestic market, affecting profitability in the corrugated boxes segment.
- Klabin SA (KLBAY) is not considering asset sales to accelerate deleveraging, relying instead on cost reductions and cash generation from ongoing projects.
Q & A Highlights
Q: Can you discuss Klabin's capital allocation strategy and the potential for increasing fluff capacity given market needs?
A: Cristiano Teixeira, CEO, explained that Klabin is focused on deleveraging and sees long fiber fluff as a strategic product for future investment. Despite market needs, the company will not change its two-year trajectory focused on reducing debt and generating cash before considering new investments.
Q: What are the expectations for the corrugated box market in the fourth quarter and 2025?
A: Douglas Dalmasi, Packaging Business Director, noted that the corrugated box market has been strong, driven by export sectors like proteins and fruits. Klabin expects continued growth slightly above GDP in 2025, with opportunities to pass on cost increases due to strong demand.
Q: Is Klabin considering share buybacks or M&A activities as part of its growth strategy?
A: Cristiano Teixeira, CEO, stated that while share buybacks are always under consideration, there are no current plans for mergers and acquisitions. The focus remains on deleveraging and optimizing existing operations.
Q: How is Klabin addressing logistics issues affecting pulp and container board shipments?
A: Roberto Bizon, Supply Chain Manager, highlighted ongoing global and domestic logistics challenges, including geopolitical issues and terminal capacity constraints. While there is slight improvement, significant bottlenecks remain, impacting shipment schedules.
Q: What is the outlook for pulp prices, particularly in China and Europe?
A: Marcos Ivo, CFO, indicated that pulp prices in China have stabilized, with signs of increased demand, particularly in the tissue segment. In Europe, price adjustments are ongoing, with expectations of reduced additional volumes starting in November.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
