MESSAGE FROM THE BOARD
The year 2022 was yet another period of growth for Klabin, despite the uncertainties that required caution and vigilance in both foreign and domestic contexts. Our integrated and flexible business model, coupled with our diversified product portfolio, has enabled us to sustain the Company's expansion process. Klabin's growth strategy is founded on pillars that are linked to sustainable development, competitiveness, and value creation: a high-yield forestry asset, outstanding operational efficiency of its mills, and continuous development of technologies, solutions, and products that support the Company's ability to generate lasting results.
Financial highlights include the 13th consecutive year of growth in Adjusted EBITDA, which, along with a disciplined allocation of capital, has benefited cash generation in the period and, consequently, the creation of value for shareholders. This is evidenced by the return on capital employed, measured by ROIC (Return on Invested Capital), of 19.2% in 2022, demonstrating Klabin's ability to balance growth and value creation in a variety of circumstances.
Milestones such as the operation of Paper Machine 27 (MP27) at the Puma II Project, which has seen an impressive learning curve in the year since it came online, and the investment in MP28 for the production of white paperboard made from virgin fibers, help Klabin pave the way for other innovative initiatives and create opportunities for the Company, focused on sustainable products.
We continue to make strides in offering innovative solutions with products from renewable sources that are recyclable and biodegradable. EkoFlex, Klabin's first paper designed for flexible packaging, is one of these initiatives, as is PineFluff eXcel, a fluff pulp made from a blend of hardwood and softwood.
In addition to the projects that will increase our production capacity for corrugated board packaging – the expansion of the Horizonte Unit (CE), with the first phase completed in early 2023, and the Figueira Project in Piracicaba (SP), scheduled for 2024 – we opened a terminal at the Port of Paranaguá (PR). The new structure enables us to operate more productively and efficiently, by connecting the railway to the port area, and contribute to the reduction of impacts on the environment and the reduction of CO2 emissions.
We have a consistent strategy for decarbonization, which has been steadily evolving, as well as the incorporation of renewable sources into the Company's energy matrix: 90.9% against the target of 92% by 2030. The Brazilian energy matrix is composed of 45% renewable sources, and the pulp and paper industry has an average of 70%.
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. This positions Klabin on international lists that set it apart from the competition in the market. In 2022, we once again achieved significant recognition: for the second year in a row, we were part of the Triple A-List, the highest score given by CDP in the programs: Climate Change, Water and Forests. For the third year in a row, we have been included in the prestigious Dow Jones Sustainability Index portfolio in the global category, and for the tenth consecutive year, we have been featured in B3's Corporate Sustainability Index (ISE).
The objectives of our 2030 Agenda for Sustainable Development, the KSDGs, are represented mainly in the initiatives mentioned here, with progress towards the targets set for 2030. The acceptance rate of communities and transparency in their relationship with public management are also fronts whose evolutions are the result of this impacts management. We still have big challenges in other pillars and we continue to do intense work to improve our indicators.
Financial highlights include the 13th consecutive year of growth in Adjusted EBITDA, which, along with a disciplined allocation of capital, has benefited cash generation in the period and, consequently, the creation of value for shareholders. This is evidenced by the return on capital employed, measured by ROIC (Return on Invested Capital), of 19.2% in 2022, demonstrating Klabin's ability to balance growth and value creation in a variety of circumstances.
Milestones such as the operation of Paper Machine 27 (MP27) at the Puma II Project, which has seen an impressive learning curve in the year since it came online, and the investment in MP28 for the production of white paperboard made from virgin fibers, help Klabin pave the way for other innovative initiatives and create opportunities for the Company, focused on sustainable products.
We continue to make strides in offering innovative solutions with products from renewable sources that are recyclable and biodegradable. EkoFlex, Klabin's first paper designed for flexible packaging, is one of these initiatives, as is PineFluff eXcel, a fluff pulp made from a blend of hardwood and softwood.
In addition to the projects that will increase our production capacity for corrugated board packaging – the expansion of the Horizonte Unit (CE), with the first phase completed in early 2023, and the Figueira Project in Piracicaba (SP), scheduled for 2024 – we opened a terminal at the Port of Paranaguá (PR). The new structure enables us to operate more productively and efficiently, by connecting the railway to the port area, and contribute to the reduction of impacts on the environment and the reduction of CO2 emissions.
We have a consistent strategy for decarbonization, which has been steadily evolving, as well as the incorporation of renewable sources into the Company's energy matrix: 90.9% against the target of 92% by 2030. The Brazilian energy matrix is composed of 45% renewable sources, and the pulp and paper industry has an average of 70%.
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. This positions Klabin on international lists that set it apart from the competition in the market. In 2022, we once again achieved significant recognition: for the second year in a row, we were part of the Triple A-List, the highest score given by CDP in the programs: Climate Change, Water and Forests. For the third year in a row, we have been included in the prestigious Dow Jones Sustainability Index portfolio in the global category, and for the tenth consecutive year, we have been featured in B3's Corporate Sustainability Index (ISE).
The objectives of our 2030 Agenda for Sustainable Development, the KSDGs, are represented mainly in the initiatives mentioned here, with progress towards the targets set for 2030. The acceptance rate of communities and transparency in their relationship with public management are also fronts whose evolutions are the result of this impacts management. We still have big challenges in other pillars and we continue to do intense work to improve our indicators.
The diversity aspects, for instance, have mobilized the Company to pursue an increasingly inclusive work environment. Regarding to gender, one of the five pillars of diversity considered by Klabin, we advanced by more than two percentage points in the number of women in leadership roles and by three percentage points in the total number of employees. These are concrete results of our efforts not only to have more female employees in leadership, but also in the entire workforce, to sustain Klabin's growth without losing sight of the commitment to diversity. And this is a journey that is sponsored by senior leadership: All of Klabin's directors have tied their compensation to targets related to diversity and other sustainability aspects in 2022.
We know that the foreign and domestic economic contexts continue to demand close attention. Therefore, we are faced with the budgetary challenge of optimizing cost management and focusing on efficiency gains in 2023.
Once again, I thank the Board of Directors, our employees, the investors the customers, the suppliers, the communities, and all those who are part of our business environment for the trust deposited in our work, which allows us to continue firmly on our path of growth, sustainable development, and value creation for society as a whole.
Cristiano Teixeira
Klabin’s Chief Executive Officer
We know that the foreign and domestic economic contexts continue to demand close attention. Therefore, we are faced with the budgetary challenge of optimizing cost management and focusing on efficiency gains in 2023.
Once again, I thank the Board of Directors, our employees, the investors the customers, the suppliers, the communities, and all those who are part of our business environment for the trust deposited in our work, which allows us to continue firmly on our path of growth, sustainable development, and value creation for society as a whole.
Cristiano Teixeira
Klabin’s Chief Executive Officer
