April 2, 2025
(CE Noticias Financieras (Latin America))
–
Fitch Ratings has affirmed the 'BB+' Long-Term Foreign and Local Currency IDRs (Issuer Default Ratings) and the '
AAA
(bra)' Long-Term National Rating of
Klabin S.A
(leader in the packaging segment in
Brazil
). The agency also affirmed the 'BB+' rating on
Klabin Austria Gmbh's
senior notes, with guarantees from
Klabin
. The outlook for the corporate ratings is stable.
According to the credit rating agency's report,
Klabin's
ratings reflect the company's leadership in the Brazilian paper and packaging sector and its broad forestry base, which allows it to have a low-cost production structure and operations with high vertical integration. "The company's solid liquidity position and low refinancing risk remain important credit considerations." Fitch believes that
Klabin's
cash flow generation will continue to be robust, due to its low cost of production in the industry and strong demand from the paper and packaging segments.
The stable outlook incorporates a deleveraging projection following the acquisition of 150,000 hectares of land from Arauco (Caeté project), with net leverage returning to below 3.5 times in 2026.
Klabin
has no significant investment projects and has reached agreements to monetize part of the acquired assets, improving its deleveraging profile.
Market share
Advertising Space
Klabin's
leadership in the Brazilian packaging market and its high level of verticalization strengthen its product flexibility in the competitive but fragmented packaging market. The company has a 22% share of the corrugated cardboard market and 40% of the coated board market. In
Brazil
, it is the only producer of paperboard packaging for liquids (LPB - Liquid Packaging Board) and the largest of kraftliner and industrial bags, with shares of 60% and 51%, respectively.
The paper and packaging business accounted for 59% of the company's Ebitda in 2024, while the pulp business accounted for 41%. Fitch considers the competitive advantage sustainable due to its scale, high level of integration and diversification of the customer base in the food sector, which is more resilient and represents 67% of paper and packaging sales.
Caetê Project
Klabin
announced the acquisition of 150,000 hectares, of which 85,000 are productive land, in 2024. The transaction was part of the company's strategy to increase the percentage of its own eucalyptus wood in its production process to around
75%. This will have a positive impact on the cash cost of production, as the main blocks of land acquired are relatively close to the company's facilities, which reduces the cost of harvesting.
Klabin
also reached an agreement to monetize part of the forestry base while maintaining operational control of the assets. This will result in a cash inflow of
R$1.8 billion
during 2025, which should be used to reduce debt. Additional monetizations may occur in the short term with the same purpose of strengthening the capital structure.
Pulp in 2025
Average prices for bleached eucalyptus kraft pulp for 2024 reached
USD625
per ton, compared to
USD85
per ton in 2023. Fitch expects prices to remain around
USD600
per ton in 2025, considering a low starting point and a gradual increase during the year. Following the start-up of Suzano's last mill, no significant capacity increases are expected until 2028. This should put pressure on prices in the following years, despite a softer increase in projected demand compared to previous years.
Fitch expects
Klabin's
Ebitda margin to remain close to 40% over the rating horizon.
Klabin
is expected to generate Ebitda of
R$8.5 billion
and cash flow from operations (CFFO) of
R$5.8 billion
in 2025 and
R$9.7 billion
and
R$6.0 billion
, respectively, in 2026. This compares to
R$8.2 billion
of Ebitda and
R$4.3 billion
of CFFO in 2024.
Klabin's
FCF should return to positive in 2025, due to a lower dividend policy and projected investment requirements, after reaching negative
R$7.3 billion
in 2024.
Fitch's base scenario projections considered annual dividends of between
R$1.2 billion
and
R$1.5 billion
in 2024 and 2025, and total investments of around
R$6.4 billion
in the period. The base case projection incorporates the disbursement for the Caeté project in 2024.
As of
December 31, 2024
, the company had
BRL7.5 billion
in cash and
BRL42.7 billion
in total debt, including around
BRL3.0 billion
in factoring operations, according to Fitch's criteria.
The company has an extended debt amortization profile, with
BRL4.9 billion
of debt maturing in 2025, including
BRL3.0 billion
in factoring operations,
BRL2.4 billion
in 2026 and
BRL3.3 billion
in 2027.
* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistribute or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.