Sustainable finance strategy
Sustainable finance strategy
Investments
Investments on the road to growth
In 2022, Klabin took another step forward in its Puma II project, which seeks to expand capacity in the packaging paper segment. This was done through the approval of a complementary investment to add the capacity to produce white paperboard made from virgin fibers on MP28.
MP28 will help Klabin meeting the growing demand for sustainable products and paper packaging.
Efforts have also been directed towards the feasibility of projects that will increase the production capacity of corrugated board packaging: the expansion of the Horizonte Unit (CE), increasing the annual installed capacity by 80,000 tons; and the Figueira Project in Piracicaba (SP), to install a high-level factory, with an additional capacity of 100,000 tons of corrugated board per year.
BRL 188 million
were invested to expand the installed capacity of the Horizonte Unit, which is already operational and will increase its annual packaging capacity from 20,000 tons to 100,000 tons.
BRL 1.6 billion
is the amount invested to build a corrugated board packaging unit in Piracicaba (SP), slated to begin operations in the second quarter of 2024.
Challenges of forest planning
The imminent start-up of Paper Machine 28 presents a new challenge to the Company, as paperboard has a distinct entry profile in the market, requiring extensive research, experiments, and tests to meet the quality standards demanded by customers for the approval of these products. The impact on the forest area is primarily seen in the maturity and type of forest chosen to obtain the best results in the delivery of the final product.
Klabin has been successful in the planning and integration between the Forestry Unit and the plants, providing a steady supply of high-quality wood and maintaining a competitive edge.
The forest expansion program includes the purchase of wood and the purchase of the expansion base. Klabin has been successful in implementing its expansion program. This program is implemented through land purchase or lease, and rural partnership.
Given Klabin's long-term business model, the sustainability strategy and financial strategy are inextricably linked. The Company's debt profile provides extensive access to the global securities market.
Klabin has 30% of its debts linked to sustainability performance, reaffirming its position as a leader in the segment of debt securities associated with sustainable goals, integrating its financial strategy with the 2030 Agenda and the Company's growth.
In addition to meeting the targets associated with sustainable financial instruments, the actions directed towards sustainability aspects also meets the high international standards required for financing by the International Finance Corporation (IFC), which is part of the World Bank Group and is the largest development institution focused on the private sector in emerging markets.
Participation in the CFO Task Force of the Brazil Network of the UN Global Compact starting in 2022 reinforces Klabin's representation in forums that promote discussions about the role of corporate finance and investments as catalysts for sustainable development.
History of Sustainable bonds
With the Revolving Credit Facility (RCF), the Sustainability-Linked Bond (SLB), and the IDB/IFC/JICA agreement renegotiation, Klabin commits to achieving three ESG goals by 2030, with interim targets in 2025 and 2027. They represent three of the 23 KSDGs, related to reusing industrial solid waste, reducing specific water consumption in the process, and reintroducing threatened or endangered species to the ecosystems where it operates.
Learn more about Sustainable Finance at:
Klabin has sustainable finance initiatives, of wich the Sustainability-Linked Bond (SLB) is part and wich earned the Company the 2022 Golden Tombstone Award from the Brazilian Institute of Finance Executives (IBEF).
The case was evaluated as one of the most important financial fundraising operations in Brazil.
Debt management
The increase in operating cash flow measured by Adjusted EBITDA contributed to the Company's debt reduction even during the Puma II investment cycle, resulting in a decrease in the net debt to adjusted EBITDA ratio, measured in US dollars. The ratio stood at 2.6x at the end of 2022, compared to 2.9x in 2021.
The average cost of Klabin's foreign currency debt, the Company's primary source of credit, remained steady at an annual rate of 5.2%. The cost of debt in local currency was reduced to 10.8% annually, due to the adoption of debt dollarization. Currently, about 80% of the company's debt is contracted in dollars.
The pursuit of an extended average debt term is also part of the strategy adopted due to the long-term nature of the business. In 2022, Klabin issued simple debentures that serve as collateral for the issuance of the Agribusiness Receivables Certificate (CRA). With the issuance of BRL 2.5 billion, the largest in the history of CRAs in Brazil, maturing in 2034, Klabin paid off other debts with shorter maturities.
