Klabin, a leading manufacturer of paper for packaging and cellulose, reported a net profit of R$ 446 million in the first quarter of 2025, reflecting a 3% decrease compared to the same period in 2024. This figure, however, exceeded market expectations, as the consensus gathered by Bloomberg had anticipated a net profit of R$ 422 million. The company's performance aligns with market forecasts, showcasing resilience in a challenging economic landscape.
The adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) for the quarter stood at R$ 1.86 billion, marking a significant 13% increase from the previous year. This growth pushed the EBITDA margin up from 37% to 38%, indicating improved operational efficiency. Klabin's net revenue also saw a robust 10% increase, totaling R$ 4.86 billion for the quarter.
Analysts had projected an EBITDA of R$ 1.84 billion against net revenues of R$ 4.89 billion, according to data from Lseg. The total cash cost for the quarter was R$ 3.0 billion, which is 9% higher than the same period last year. The cash cost of cellulose production remained stable at R$ 1,268 per ton, consistent with the first quarter of 2024.
Despite a slight reduction in total production volume of cellulose and paper, which reached 1.043 million tons—a 1% decline compared to the previous year—Klabin's operational metrics remained strong. Specifically, cellulose production was recorded at 365,000 tons, down 4% from the first quarter of 2024 due to non-recurring maintenance shutdowns. However, paper production increased by 1%, totaling 678,000 tons, aided by the ramp-up of new production lines.
Sales volume, excluding wood, amounted to 906,000 tons, reflecting a 2% decrease from the same period last year. In the paper segment, sales volume reached 311,000 tons, a 2% increase year-on-year, bolstered by higher kraftliner sales in both domestic and international markets. Conversely, sales of corrugated cardboard remained stable at 216,000 tons.
Klabin's cost of goods sold (COGS) for the quarter was R$ 2.3 billion, an increase of 8% compared to the first quarter of 2024. This rise in costs can be attributed to several factors, including higher prices for chemicals, particularly caustic soda, and increased operational costs due to maintenance activities. Additionally, inflation and the depreciation of the dollar against the Brazilian real contributed to the overall cost increase.
The company reported a free cash flow generation of R$ 492 million for the quarter, significantly higher than the R$ 946 million generated in the same period last year. This performance reflects improved operational results, reduced capital expenditures (CAPEX), and enhanced capital efficiency initiatives. Over the past twelve months, Klabin's adjusted free cash flow totaled R$ 3.6 billion, yielding a free cash flow yield of 14.0%, which is an increase of 3.7 percentage points compared to the previous year.
In terms of financial health, Klabin's consolidated return, measured by Return on Invested Capital (ROIC), was reported at 10.7% for the first quarter of 2025, representing a 1.0 percentage point increase from the previous year. The company's net debt to adjusted EBITDA ratio, reflecting its financial leverage, was stable at 3.9x, consistent with the previous quarter.
General and administrative expenses totaled R$ 297 million in the first quarter, up 16% compared to the same period last year. This increase is primarily due to higher variable compensation expenses, increased IT costs related to dollarized contracts, and strategic consultancy fees. Furthermore, sales expenses rose to R$ 375 million, an increase of 9% year-on-year, driven by higher freight costs associated with increased sales volume to international markets.
Klabin's management expressed confidence in achieving their total cash cost guidance, initially announced on December 10, 2024, indicating a target cash cost per ton between R$ 3,100 and R$ 3,200 for 2025. The company remains committed to maintaining operational efficiency amid rising costs and economic uncertainties.
In a significant move for shareholders, Klabin's Board of Directors approved the distribution of dividends amounting to R$ 279 million. This translates to R$ 0.04576010128 per common or preferred share and R$ 0.22880050642 per unit. The dividend payment is scheduled for May 22, 2025, with shares trading ex-dividend starting May 14, 2025.
As Klabin navigates a volatile geopolitical environment, including concerns about international trade and domestic economic conditions, it continues to identify market opportunities. The recent tariff announcements by the US government have raised concerns about potential slowdowns in global trade, but Klabin's management remains optimistic about its ability to adapt and thrive in changing market conditions.
Overall, Klabin's first quarter results reflect a company poised for growth, demonstrating resilience in the face of challenges and a commitment to operational excellence. Stakeholders will be closely watching how these dynamics unfold in the coming quarters as Klabin aims to leverage its strengths in the packaging and cellulose markets.
