Brazil increases containerboard exports due to depreciated currency; Klabin targets paper business’ performance improvement

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Brazil increases containerboard exports due to depreciated currency; Klabin targets paper business’ performance improvement

February 18, 2014 - 23:09

SAO PAULO, Feb. 19, 2014 (RISI) -The Brazilian Real currency depreciation against the US dollar has been encouraging local packaging paper producers to increase their export volumes. According to data from the Brazilian pulp and paper assn (Bracelpa), the country's total packaging paper exports rose by 63.6% to 54,000 tonnes in December 2013 over December 2012, with volumes for full year 2013 hitting 619,000 tonnes or 22.8% higher than a year ago.

Klabin, the largest supplier in the country, is one of those which are directing more paper to overseas markets aiming to improve the company's financial performance. "Since the exchange rate has improved, we have been accelerating the company's exports, and this already happened in the fourth quarter and is clearly happening in this first quarter of 2014," said Klabin's CEO Fabio Schvartsman. "Due to our paper capacity limitation, we have been buying paper in the domestic market - especially recycled containerboard - to feed our corrugated packaging plants - and thus having more kraftliner available for exports, which obviously is improving our results," the executive added.

On Dec. 31, the currency exchange rate was at $1/Real 2.34 and on Feb. 14 it was at $1/ Real 2.41 compared to $1/Real 1.96 on Feb. 14, 2013, representing a 23% depreciation of the Brazilian currency against the US dollar in the period. "The currency depreciation trend observed in the first nine months of last year continued in the fourth quarter, improving Brazilian products' competitiveness as a whole in exports and inhibiting end product imports into our market," stated Klabin's CFO Sergio Alfano. "In this scenario - strong domestic market and higher revenues from exports due to good prices in dollar terms as well as the appreciated dollar - Klabin once again has benefited from its business diversification and flexibility, maintaining strong sales volume both in the domestic market and abroad, ending the year 2013 with a record EBITDA," the CFO concluded.

Klabin's 2013 kraftliner revenues at Real 598 million were 13% higher than 2012, driven by higher export prices and the depreciated Real currency. In terms of volume, Klabin increased kraftliner exports by 4% to 220,000 tonnes in 2013 over 2012 while it reduced kraftliner domestic sales by 10% to 157,000 tonnes. In the fourth quarter, the company exported 75,000 tonnes of kraftliner, a volume 47% higher than the same period of 2012, while its domestic sales dropped by 17% to 41,000 tonnes.

Also, Klabin's converted packaging sales - including corrugated boxes and industrial bags - increased by 9% in 2013 to 693,000 tonnes from 638,000 tonnes in 2012, with revenues growing by 13% to Real 2 billion. "Our target is not related to market share. What we are doing at this moment - buying more recycled paper from third-party suppliers in order to sell more of our kraftliner overseas - doesn't impact our products' supply [especially converted packaging] in the domestic market," Schvartsman explained.