Message from the Chief Executive Officer

 

In 2023, Klabin once again demonstrated the resilience and effectiveness of its integrated, diversified, and flexible business model. Faced with a complex macroeconomic landscape, marked by international conflicts and a downturn in pulp and containerboard prices, the Company sought greater efficiency and implemented several cost reduction initiatives. As a result, even in the face of challenges, the total cash cost per ton in 2023 remained at the same level as in 2022.  Furthermore, the distribution of a total of BRL 1.4 billion in profits to shareholders over the last year, representing a dividend yield of 5.8%, reinforces Klabin's commitment to value generation. 

To ensure the future supply of wood for the plants, with quality and safety, and with diligent capital allocation, a contract was signed with Arauco on December 20, 2023 for the purchase of companies holding a total area of 150,000 hectares, mainly in the state of Paraná. The deal encompasses 85,000 hectares of productive land and 31.5 million tons of standing timber, as well as forestry machinery and equipment. With the completion of this operation, which is subject to the verification of contractually agreed-upon conditions precedent, customary in transactions of this nature, the Company will have completed its land expansion in Paraná to supply the Puma II Project, thereby achieving its target of self-sufficiency in wood ahead of schedule. As a result, forest investments in the region will decrease. Looking ahead, reduced operating costs are expected for harvesting and transporting wood, as well as an overall improvement in total cash cost.    

Discipline and agility were the guiding concepts for the Company's operations in 2023, allowing significant milestones to be achieved. One of them was the start-up of the paperboard machine PM28 in Ortigueira (PR), which marked the beginning of operations for the second phase of the Puma II Project, Klabin's largest investment in history. The new machine produces more resistant and higher quality paperboard, geared especially toward the food and beverage segments (long-life, beer, and industrialized product packaging) and products for the growing food service sector (cups and trays).  

Fluff pulp deserves special mention, as its market showed remarkable resilience in 2023. The business showed solid performance during the period, reaching a record sales volume since the start of operations and maintaining prices at high levels, making a significant contribution to the Company's results.  

The Packaging business also marked significant accomplishments. The new corrugator at the Horizonte Plant (CE) came online, with an additional production capacity of 80,000 tons of corrugated board per year. This strengthened the Company's position as the main supplier of corrugated board packaging in the North and Northeast regions of the country. The most modern industrial bag line in Latin America also came online at the Lages Plant (SC). Klabin's plants in Horizonte (CE), Goiana (PE), Betim (MG), and Lages (SC) also received new printers, improving the quality of the products delivered to customers. In Piracicaba (SP), the construction of the Figueira Project continues to progress as planned. The new factory, with a capacity to produce 240,000 tons of corrugated board per year, began operations in April 2024.  

The document outlines its current actions and targets for mitigating the impacts of climate change and adapting to them, inviting the value chain to do the same. The Plan also updates the Company's targets and makes them more ambitious: to reduce 42% of absolute greenhouse gas (GHG) emissions from scopes 1, 2, and 3 by 2030 based on 2022 levels, and to reduce absolute emissions from scopes 1, 2, and 3 by 90% by 2050. Both are awaiting approval by the Science Based Targets initiative (SBTi).  

The work aimed at achieving Klabin's Sustainable Development Goals (KODS) continues to yield strong results. One of the highlights is the progress in the use of energy from renewable sources. The company has already exceeded the target, which was set for 2030, of having an energy matrix consisting of at least 92% renewable sources. In addition, through the acquisition of renewable energy certificates (IRECs), Klabin proves that all energy that the Company purchased in Brazil comes from renewable sources, anticipating another target set for 2030.  

Another significant advancement occurred in expanding the percentage of industrial solid waste reuse and recycling. The intention is to eliminate the disposal of industrial solid waste in landfills by 2030. Currently, 99.3% of the Company's solid waste is recycled, reused, and/or co-processed. The great challenge is to find the appropriate destination to achieve 100% of the target.  

All these efforts have gained recognition both domestically and abroad. For the 11th consecutive year, Klabin is part of the B3 Sustainability Index (ISE), and for the fourth year in a row, the global portfolio of the Dow Jones Sustainability Index (DJSI). The Company has also been on the CDP Triple A List for three years, being the only company in Latin America to achieve the maximum score in three of the evaluated indicators. In 2023, the Company was also recognized by CDP as a Supplier Engagement Leader, being among the best-rated companies on issues related to climate change, and was among the top 1% of suppliers rated on management and sustainability systems, winning the Platinum category by EcoVadis for the second year running.  

In addition, the Company's long-standing commitment to sustainable development is reflected in public initiatives it subscribes to, such as the Brazil Network of the UN Global Compact, which it has been a part of since 2003, and the National Pact for the Eradication of Slave Labor, since 2013.  

On the Research & Development front, the Company prioritized projects that meet customer demands and continued to look for new business opportunities based on by-products. Pine chemicals, which are obtained from pine trees, for example, have shown promise with regular sales. The expectation is that the exploration of new perspectives for these products, such as microfibrillated cellulose and lignin, will intensify in the coming years.    

Given the challenging landscape of 2023, relying on the professionalism, dedication, and commitment of our employees were essential. Everyone has worked hard to create increasingly collaborative, efficient, and safe environments. More than ever, dialogue has been at the heart of relations. Important steps have been taken when it comes to diversity, such as the approval of the Diversity Aspiration by the Executive Board. The initiative is part of the strategy and governance review project that will guide Klabin's actions on this topic in the coming years. 

Finally, Klabin would like to express its deep gratitude to its employees, board members, and all other partners for their partnership and support. In 2023, the foundation was laid for 2024, a year that also requires prudence and attention. The Company will continue to work to make its processes increasingly efficient, safe, sustainable, and innovative in order to meet the expectations of customers, investors, and employees, as well as communities. In 2024, the year when Klabin celebrates its 125th anniversary, its desire is to honor a century-old legacy by launching perspectives for future cycles.  
 

Cristiano Teixeira 
Klabin's CEO