By Brazil Stock Guide – After nearly a decade of expansion, Klabin (KLBN11) declared it has entered a new “harvest phase,” marking the end of its most ambitious investment cycle and the beginning of a period of strong free cash flow and swift deleveraging. CEO Cristiano Teixeira told analysts that, even amid one of the weakest pricing cycles for pulp and kraftliner in recent years, the company’s modernized mills, efficient cost base, and balanced portfolio position it to perform strongly in the coming quarters.
Harvest After the Investment Cycle
“The major investment risks are behind us. Now it’s harvest time,” Teixeira said during the third-quarter call. Recent projects such as the Puma II complex in Ortigueira and the new recovery boiler at Monte Alegre have made Klabin a technological reference point in Latin America. The CEO described the company’s next stage as driven by strong free cash flow, disciplined CAPEX, and state-of-the-art plants. In 3Q25, Klabin posted adjusted EBITDA of R$2.1 billion and a 39% margin, while net debt fell to R$26.1 billion and leverage dropped to 3.6× EBITDA. Free cash flow reached R$699 million, sustained by higher volumes, strong packaging performance, and the stronger real. “The focus now is to generate cash and deleverage quickly,” Teixeira emphasized, adding that the company’s next chapters will be marked by capital discipline and cash returns to shareholders.
What Klabin Built
The investment cycle completed in 2025 transformed the company’s industrial and forestry footprint. Although the total value was not specified in the call, Klabin’s cumulative investments since 2017 are estimated at around R$20 billion.
Costs, Efficiency, and CAPEX Discipline
Responding to analysts from Bradesco BBI and UBS, Teixeira and CFO Marcos Ivo reaffirmed that the heavy-investment cycle is over. “The large transformational projects are completed,” Ivo said, referring to the Monte Alegre boiler and the Aralco acquisition.
He noted that Klabin now operates at a steady maintenance-CAPEX level, focused on operational continuity and forestry productivity. The company’s cash cost per ton, at R$3,104, sits at the bottom of its guidance range, confirming efficiency gains from the new assets. Ivo explained that the Aralco forests strengthened Klabin’s cost competitiveness, reducing average haul distances and wood procurement expenses, while maintaining flexibility to optimize harvests depending on climate and pricing cycles. Teixeira added that the modernization drive extended to all major mills. “The equipment upgrades give us stability. The next step is to extract value from what we’ve built,” he said.
Packaging Growth and Paperboard Strategy
On market dynamics, Klabin executives highlighted the resilience of the packaging segment, which continues to outperform both GDP and industry averages. Douglas Dalmasi, head of corrugated packaging, said Klabin is “growing faster than the market” and has continued to raise prices above inflation, supported by strong demand from the food industry, which accounts for 70% of packaging sales. Prices of recycled paper, he said, have stabilized around R$1,200 per ton, not enough to pressure margins.
In paperboard, Francisco Soares explained that the MP28 machine is running at 40–45% of capacity for coated board, with the remainder dedicated to kraftliner production, which currently offers higher profitability. “The paperboard market is challenging because of Chinese oversupply,” Soares said. “We are focusing on differentiated domestic segments — pharmaceuticals, frozen food trays, and premium cup stock — where margins are healthier.” Teixeira added that the long-term outlook favors Klabin’s kraftliner grades: “Virgin fiber packaging will have a premium in the future as capacity tightens in the Northern Hemisphere.”
Financial Structure and Shareholder Returns
Klabin closed September with R$12.4 billion in liquidity, including R$9.7 billion in cash and available credit lines. Leverage fell by 0.3× quarter-over-quarter, and Ivo reaffirmed that the company’s capital policy remains intact, with a 2.5×–3.5× leverage target range. He emphasized that deleveraging “will continue naturally” as free cash flow rises and no large projects are planned. In the past 12 months, Klabin distributed R$1.3 billion in dividends — a 5.5% yield — and the board approved an additional R$318 million payment on November 19.
The CFO also said a share-buyback program is being considered, given the gap between Klabin’s trading price and consensus fair value. “We are reaping what we planted,” Teixeira concluded. “Our goal is to generate cash, reduce debt, and strengthen Klabin’s position as a global reference in productivity and sustainability.”sition as a global reference in productivity and sustainability.
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