Goldman Sachs

Natural Resources Brazil Tour - 03.02.2012

High performance
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2011 Markets and Klabin

5% decrease in average exchange rate compared to 2010;

Increase in imports of packaged goods;

Klabin
Only 2% growth in the Brazilian corrugated boxes shipments; Changed the incentive system; Focus in margins (not in volumes); Focus in cost reduction.

24% decrease in OCC* price;

11% decrease in international kraftliner price;

10% decrease in Brazilian coated boards consumption (excluding liquid boards).

* OCC Old corrugated container

Example 1: Coated boards market

Brazilian coated boards market (excluding liquid) * (thousand tonnes)

Klabins sales volume in domestic market (including liquid) (thousand tonnes)

Klabins net revenue in domestic market (including liquid) (R$ million)

-10%

8%

576

519 355

781
2%

845

362

2010

2011

2010

2011

2010

2011

* Source: Bracelpa

Example 2: Corrugated boxes market

Brazilian corrugated boxes market* (thousand tonnes)
2%

Klabins sales volume in domestic market (thousand tonnes)

Klabins net revenue in domestic market (R$ million)

3,162

3,216

6%
1,157 1,223

-2%
512 502

2010
* Source: ABPO

2011

2010

2011

2010

2011

Example 3: Industrial bags

Brazilian cement market* Klabins sales (R$ million) (thousand tonnes)
-4%
8%

12%

2%

64 59

6%
128 116 109 119 121 130 123 116

1Q10

1Q11

2Q10

2Q11

3Q10

3Q11

4Q10

4Q11

2010
* Source: SNIC

2011

Costs reduction

High performance
Sustainable reduction in operational cost (fixed and variable)
Main achievements

Cost reduction in Monte Alegre mill; Investments with high return in Monte Alegre and Otaclio Costa mills; Reversion of excessive outsourcing with and without investments in all mills; Restructuring of the forestry departments

Still to come Cost reduction in the forestry area; High return investments in Monte Alegre and Correia Pinto mills; High return investments in the forestry areas; Reversion of excessive outsourcing with investments in forestry area; Cost reduction in G&A.

INDG* in Monte Alegre (implemented)

50 coordination teams 8 fixed cost groups People Maintenance Stoppages Third parties Rent Transport Taxes and ensurance Comunication and general expenses Total Warehouse Shipments R$ R$ R$ R$ R$ R$ R$ R$ R$ Paper Machine R$ R$ Entities: R$ R$ R$ R$ R$ R$ R$ Wood yard ... Laws Total R$ R$ R$ R$ R$ R$ R$ R$ R$

Packages: groups of similar expenses

R$ R$ R$ R$ R$ R$ R$ R$ R$

Crossed control:
18 Areas

R$ R$ where the R$ R$ R$ R$ R$ R$ R$

... R$ ... R$ expenses occur ... R$ ... R$ ... R$ ... R$ ... R$ ... R$ ... R$

6 variable cost groups Wood and fibers Energy and utilities Chemicals GRU/GFI Chemicals GPP Paints Packaging and other materials Total

PMAD R$ R$ R$ R$ R$ R$ R$

ESCO R$ R$ R$ R$ R$ R$ R$

2 managers controlling FCC FRE ... RVAP the same expense!

R$ R$ R$ R$ R$ R$ R$ R$ R$ R$ R$ R$ R$ R$ ... ... ... ... ... ... ... R$ R$ R$ R$ R$ R$ R$

Total R$ R$ R$ R$ R$ R$ R$

* INDG Institute for Managerial Development the largest organization in business management consultancy in Brazil.

Lessons of forestry benchmarking (to be implemented) Forestry benchmark

Harvest Increase length of the logs; Change in shift operation; Reverse outsourcing; Timber transport Dryer wood; Utilize logistical potential of the forest; Silviculture Mechanization of activities; Reverse outsourcing.

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High return investments

Implemented
Biomass boiler in Otaclio Costa mill Evaporation plant improvement in Otaclio Costa mill High voltage transmission line in Monte Alegre mill Mar/11 Oct/11 Nov/11 Investments R$ 129 million

To be implemented
Mechanization and soil preparation Biomass boiler in Correa Pinto mill Debottlenecking in Monte Alegre mill Feb/12 Jun/12 Oct/12 Investments R$ 171 million

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Reverse excessive outsourcing

Industrial (implemented during 2011)

Monte Alegre mill maintenance; Otaclio Costa and Correa Pinto mills maintenance;
245 employees

Internal transportation (forklift trucks); Fireman team in mills at Santa Catarina State.

Forestry (to be implemented in 2012)

Soil preparation; Santa Catarina State harvesting; Angatuba (So Paulo State).
140 employees

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Unit cash cost reduction

Nominal cash cost / tonne

-5%

Total cash cost in 2011

R$ 2.8 billion

Mar Aug/2011

Sep Dec/2011

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2011 results

2011 Highlights

Sales volume: 1% increase comparing to the 2010; Net revenue: R$ 3.9 billion, 6% higher than 2010 (including 5% reduction in average exchange rate); EBITDA: R$ 1,077 million, best performance in the Companys history; Net income: R$ 183 million, affected by exchange rate variation in 2011 (just accounting); Sale of Del Castilho mill (RJ), with positive effect on cash flow of $ 40 million; Acquisition of 51% of the quotes of the company Vale do Corisco, adding 31 thousand hectares of planted forests in the state of Paran.

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Sales volume

Sales volume (excluding wood) (thousand tonnes) 1.716

32%

Net revenue (R$ milliion)

1.739
34%

3.663
22%

3.889
22%

417
32% 68%

432
34% 66%

68%

66%

78%

78%

931
22% 78%

994
23% 77%

4Q10

4Q11

2010

2011

4Q10

4Q11

2010

2011

Domestic market

Exports

Domestic market

Exports

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Cash cost

Nominal cash cost (R$ / tonne) -5% -2%

1.645

1.612 1.561

Cash cost improvements since September 2011.

2Q11

3Q11

4Q11

EBITDA

500 450 400 350 300 250 200 150 100 50 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 180 150 199 219 25% 22% 242 236 252 231 249 190 27% 27% 29% 26% 26% 25% 26% 20% 28%

32%

35% 30%

319 277

25% 20% 15% 10% 5% 0%

4Q11

3Q11: improvements since September; 3Q11 x 3Q10 4Q11 x 4Q10 10% growth

38% growth

EBITDA

EBITDA Margin

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Net debt

5,500

6.0

4,500

Net Debt / EBITDA LTM (R$ million)

3.6 3.1

5.5

Devaluation

5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 -0.5 -1.0 -1.5 -2.0

Vale do Corisco
2.8 2.2 2.2 2.1 2.0 2.4 2.5 2,735

3,500

2.3 2,536

2,676

2,528

2,500

2,462

2,106

2,128

2,002

1,500

500

(500)

Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Jan-12

LTM Last Twelve Months

Net Debt (R$ million)

Net Debt / EBITDA (LTM)

1,893

2,313

Pulp mill

Vale do Corisco

Jaguariava (Arauco)

Monte Alegre (Klabin)

Klabin

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Vale do Corisco

Vale do Corisco

Vale do Corisco acquisition

107 thousand hectares of forests; 63 thousand hectares planted; US$ 473.5 million paid in November 2011; Klabins part: 51%.

With this acquisition, Klabins planted forests total 243 thousand hectares, in which up to 110 thousand hectares are available for new industrial projects, being 60% pine and 40% eucalyptus.

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New pulp line study

1. Flex mill (long and short fibers); 2. Capital structure to dilute risks; 3. Capacity of 1.5 million tonnes / year (0.5 million tonnes long fiber and 1.0 million tonnes short fiber); 4. 150 MW of electricity in excess; 5. Lowest cash cost producer; 6. High return with conservative assumptions; 7. Total investment of US$ 3.8 billion includes: US$ 1 billion of land and forests; US$ 250 million for energy generation and flexibility; US$ 250 million of infrastructure.

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Flexibility
6 products / markets versus eucalyptus (1 product and market).

Tissue

Eucalyptus
Specialties

Less market volatility; Consumer goods;

Packaging

Long Fiber
Tissue

Cash flow stability; Higher value added products;

Fluff

Diapers and absorbent

Fluff domestic market opportunity.

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Capital structure of pulp mill

Capex

Klabin SA

Equity Debt Total

US$ 2 bi US$ 1.8 bi US$ 3.8 bi

51% to 55% Klabins contribution:

Klabin Pulp
45% to 49%

Investors

mainly forests (estimated value of US$ 1 billion).

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26
100 150 200 250 300 350 50 0

Source: Risi
Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 May-08 Jul-08 Sep-08 Nov-08 Jan-09 Mar-09 May-09 Jul-09 Sep-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11 Sep-11 Nov-11

Softwood x Eucalyptus Fluff x Eucalyptus 175

Spread (US$/tonne)

High return

295

Long fiber Brazil *

Lack of new long fiber capacities in Brazil and all over the world.

(thousand tonnes)

High production costs in North

Hemisphere

2,024

Imported

Mills shutting down or converting. High yield of pine in Brazil enables

competitive advantage also in this

segment.

2011

Imports substitution

Source: Bracelpa *Includes Fluff

Integrated

Market pulp

Lower cost - Outbound logistics

Paranagu Port

Klabin area 40.000 m

17 km 424 km

Pulp mill

Paran Terminal

Paranagu Port

To be constructed

Existing railroad to Paranagu Port

Lower cost Inbound logistics

Average hauling distance Monte Alegre: 50 Km

Average hauling distance new mill: 80 Km

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Klabin Pulp mill Brazil Russia Chile Indonesia Iberia & Norway Finland USA Canada France/Belgium Sweden China Klabin Pulp mill Russia Chile USA New Zealand Finland BC Interior & Alberta Fra/Aus/Ger Sweden Eastern Canada BC Coast

Source: Klabin and Hawkins Wright, February 2012 FOB

Bleached hardwood (US$ / tonne)

World pulp cash cost (FOB)

Bleached softwood

IR
invest@klabin.com.br www.klabin.com.br/ir
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