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, Financial) 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.
Q: Can you provide insights into the cost performance and expectations for the second half of the year?
A: Marcos Paulo Conde Ivo, CFO, explained that the first half of the year showed strong cost performance, slightly better than guidance. However, due to seasonality and planned stoppages, the company maintains its guidance for the year. The integration of Arauco's assets is expected to bring synergies and cost benefits in the second half.
Q: What is the outlook for the corrugated box market in the second half of the year?
A: Jose Soares, Paper Commercial Director, noted that the first half was a positive surprise with growth close to 6%. The second half is expected to be strong, with projected growth in line with industry expectations. Price increases have been announced and are being implemented gradually, supported by strong demand and cost pressures.
Q: How does Klabin view the pulp market, particularly short fiber, and what are the expectations for pricing?
A: Alexandre Nicolini, Pulp Commercial Director, mentioned that resale prices are only an indicator and that negotiations in China have been low. However, some producers are negotiating short fiber at higher prices than resale. The company remains focused on its strategy and expects positive outcomes in the medium to long term.
Q: What are the risks and opportunities in the kraft liner market, and how does Klabin view the current dynamics?
A: Jose Soares highlighted that the market is experiencing a third wave of demand, particularly in retail. Inventory levels are low, and there is no downside risk at the moment. The company has announced price increases, and the outlook remains positive with no immediate risks identified.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
