By Brazil Stock Guide — Brazilian pulp and packaging producer Klabin (KLBN11) reported net income of R$393 million ($76 million) for the third quarter of 2026, down 18% from R$478 million a year earlier. Net revenue increased 3% to R$5.57 billion, supported by higher pulp and paper prices, but mounting operating costs eroded profitability despite broadly stable sales volumes.
Adjusted EBITDA fell 12% year over year to R$1.86 billion, while the adjusted EBITDA margin narrowed to 33% from 39%. Total cash costs per metric ton, including scheduled maintenance shutdowns, rose 12% to R$3,483. The company attributed part of the increase to preventive measures against potential disruptions from El Niño, which added R$111 per ton, alongside higher input and freight expenses linked to global geopolitical tensions.
The appreciation of the Brazilian real against the U.S. dollar added further pressure by reducing the local-currency value of export revenue. The real strengthened 5.7% year over year, according to Klabin. Currency effects, higher costs and the absence of nonrecurring income from land sales contributed to the decline in operating earnings.
Klabin’s pulp business generated R$1.51 billion in revenue, up 6%, driven by an 18% increase in U.S. dollar-denominated prices for short-fiber pulp. Sales volumes remained broadly unchanged at 403,000 metric tons. Paper revenue rose 4% to R$1.89 billion, supported by a 23% increase in overseas paperboard sales and continued operational improvements at the company’s PM28 paper machine.
The packaging division, meanwhile, posted revenue of R$2.01 billion, down 1% year over year, as price increases largely offset a 3% decline in sales volumes. Across its businesses, Klabin sold 1.064 million metric tons, virtually unchanged from a year earlier despite a scheduled maintenance shutdown at its Otacílio Costa mill in southern Brazil.
Capital expenditures increased 36% year over year to R$754 million. Free cash flow remained positive at R$73 million, compared with R$699 million in the third quarter of 2025. Adjusted free cash flow, excluding shareholder distributions and special and expansion projects, totaled R$368 million, down from R$1.03 billion a year earlier.
Net debt stood at R$23.98 billion at the end of September, an 8% reduction from a year earlier. Net debt to adjusted EBITDA, measured in U.S. dollars to better reflect the company’s financial profile, stood at 3.3 times, compared with 3.6 times a year earlier, although leverage edged higher from the previous quarter. Klabin distributed approximately R$1.2 billion to shareholders over the trailing 12 months, representing a dividend yield of 5.2%.
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