Executives: Fabio Schvartsman - Chief Executive Officer Cristiano Teixeira - Chief Executive Officer Eduardo de Toledo - Chief Financial Officer and Investor Relations Officer Francisco Razzolini - Executive

Officer
Analysts: Ivano Westin - Credit Suisse Thiago Lofiego - Bradesco BBI Carlos de Alba - Morgan Stanley Jonathan Brandt - HSBC Karel Luketic - Merrill Lynch Lucas Ferreira - JP Morgan Bruno Giardino -

Santander
Operator: Good morning and welcome to Klabin's Conference call. At this time, all participants are connected in listen only mode. Afterwards, we will have a question-and-answer session and further instructions for you to participate will be given. [Operator Instructions] I would like to remind you that this call will be recorded and also broadcast simultaneously on the Internet by webcast. You may access it at HTTP//cast.comunique.com.br/Klabin/2017 where you will find the presentation as well.

Before proceeding we would like to clarify that forward-looking statements that might be made during this call related to the business perspectives of the company, projections, operating and financial targets relating to the growth potential of the company are just forecasts and assumptions based on the expectations of management in relation to the future of Klabin. These expectations are highly dependent on market conditions, on the general economic performance of the country, of the industry and of international markets and therefore they are subject to change. Today with us in São Paulo we have Mr. Fabio Schvartsman, Mr. Cristiano Teixeira, Mr.

Eduardo de Toledo and Mr. Francisco Razzolini. Fabio and Eduardo will make presentations and afterwards they will be answering questions that you might wish to formulate. Mr. Fabio Schvartsman you have the floor.

Fabio Schvartsman: Thank you very much. Good morning everyone and thank you for participating in this new Klabin conference call about the first quarter of 2017. This quarter was a tough year in general I believe and especially due to the fact that we have to work against the exchange rate because we saw an appreciation of the real vis-à-vis the first quarter of 2016 of $0.77 or 19% of the whole export revenue. And in spite of all of that and in spite of the fact that all announcement regarding the price increases that are occurring in fact they impacted the performance of the company more and in spite of all that, the company was able through a very potent effort regarding improvements at our lakes and our crossover able to offset the EBITDA and particularly I was very happy for the fact that we were able to do that in such an adverse scenario such as the one that we had. And I would like to say to the world about Puma.

Puma as we have already mentioned in the last call, reached 90% of its capacity and this happened until the stoppage that occurred in March and after the stoppage we had a regular ramp up in the last few days and in the last 15 days Puma is already operating at 100% of its capacity and everything is due to the fact that from now on Puma will be able to deliver all the volume that it can deliver in nominal terms. Of course the endeavor of the company will be focused on making this expend that is to say so that we may work beyond this capacity and in the next few quarters this could be the case. And of course we will be communicating this to you. I would like to mention especially the endeavors made by the company in order to reduce its indebtedness according to the public commitment that we have taken on in spite of all these difficulties you can see that we had a major reduction in our indebtedness of 5.2 to 4.9 in the quarter of 5.9 if we take as a reference the third quarter of 2016 to 4.2 times now 4.9 times, this represents our efforts to be very careful and prudent in all the investments that we make with a very strong management of our working capital with a huge concern in terms of working below it's possible level of inventories. And all these are leading into a reduction in our indebtedness as you could expect.

Regarding our mix I would like to mention the improvement in the sales of [indiscernible] the company that was very good, very strong in this quarter as well as the sale of corrugated boxes and other converted products that grew by 13% on a year-on-year basis in spite of this scenario in which although we do see a modest evolution in the ABPO numbers and through the construction with no signs whatsoever of improvement while they are going down and in addition to 5% in this quarter compared to the same quarter last year. And as we do very quickly I would like to mention our expectations regarding the next quarter. First of all, due to the successful ramp up of Puma we could see an important increase in our sales volumes and production of pulp as of now. And of course this would be certainly due to lower production costs because we will have a high stability in the whole operation. Together with that we have the fact that we had good prices of pulp by clubbing both hardwood and softwood as well as fluff.

We have been seeing major increases in prices and that gradually will start to be shown in our results as of the second quarter this year and the same will be occurring with kraftliner especially in the exports markets where these price increases will also start to appear. Together with that we have the fact that conversion will continue to have a good performance with a Major increase in volumes. Having said all that, what we can see is that the company's expectation is to see an acceleration of the EBITDA increase on a comparable basis of one digit that we grew in the first quarter to 2 digits in the second quarter. Then after that we will have a major growth in the third and the fourth quarters of this year. Due to this reason we grew the EBITDA throughout the year in a much better condition than 2016.

So this is what I had to say to you that before giving the floor to Eduardo who will be talking in detail about our performance in the first quarter, I would like to officially introduce to you my successor, Cristiano Cardoso who is here and that as of the next call will be presenting the results so that he many introduce himself to you. Thank you very much for participating in the first quarter of 2017 conference call. First and foremost I would like to express my thanks to those who placed their trust on me and following these great six months that Fabio was able to carry out this transformation and to my great friend I thank very much from the depth of my heart and unconditional support. It is a great privilege for me to be with Klabin it makes a difference in the right direction in this sector pulp and paper and the extremely importantly in these markets and it is with this certainty that I take on this position at Klabin and I commit myself to continue to generate value be it on the current platform or the next. Growth effect from that will happen at the beginning of my administration.

Thank you very much.

Cristiano Teixeira: Good morning everyone. It is a pleasure to be with you at this call and I would like to use the presentation or the slides that we have prepared. Starting with the first slide, I'm sure as volume grows in this quarter, 304,000 tons vis-à-vis the same quarter last year and this very extensive growth of 67% [ph] was made possible due to the startup of Puma and as Fabio mentioned had a good performance in the first quarter and even before the first general stoppage. So it was a good volume mainly taking into account the fact that we are talking about a quarter with the general stoppage of Puma.

In terms of net revenue it went from 1,463 to 1,867 in line with the evolution of the sales volume and in terms of mix now we have 40% of our revenues coming from exports and 60% from our domestic market. I think it's important to mention the balance of Klabin because it's a very unique situation in the fact where they allow Klabin to be much more resilient from the view point of results. Let's go into the next page where we have details about the Puma cash cost as Fabio mentioned. We are achieving good progress there and we went from a cash cost of R$768 per ton to R$733 per ton a drop by 5% and still again before general stoppage, before all the adjustments that were made in the first - made in the stoppage of Puma we can see that there is an important progress in the consumption of chemicals and the consumption of wood, fiber, very important evolution in energy generation awaiting and disclosure. Energy generation when the plant is more stabilized of course you can further optimize it and that is one of the last items that they optimize and then much to our joy the better image generation started already when the energy market was under pressure and the stock price with the [indiscernible] and we believe this will have an important impact on our results in the next few quarters.

Now let's go to the adjusted EBITDA slide. We achieved a 23rd consecutive growth in quarters. It's a very impressive story and it has everything to do with Fabio's management of Klabin, Fabio's administration and we are sure that we will be able to continue on this path in the next quarters. On the next slide we talk about debts, as Fabio mentioned we were able to reduce to 4.9x net debt to EBITDA ratio in this quarter. Basically this was possible because we were able to deliver good EBITDA in spite of the appreciation of the exchange rate and on one hand this helps us in regard to our net debt and also the delivery of a good EBITDA while the other hand makes this indicator have this kind of evolution and which is rather positive for a quarter.

On the next slide we talk about dividend. I would like to draw your attention to this because sometimes people do not really notice that. Klabin has been adopting paying out 20% of the EBITDA on a quarterly basis in such a way that if we look at the last four quarters the total of dividends paid out was 0.50 cents per unit and if we take the current price of our stock it would be a dividend yield of 3.33%. And imagining the evolution of the EBITDA as Fabio mentioned which is what we expect. Of course we can imagine that the dividend yield were also had a great development if you consider the price of the stocks now and what we expect for the next quarters.

And this is the big highlight for Klabin in relation to other companies in general, other players, I would say in the equity markets as well. And the last slide of the presentation reinforces the work that we have been carrying out in terms of delivery results on the short and the medium ground and it has to do with our focus on cost and the initiatives that we carried out in the industrial and in the forestry areas together with [indiscernible] with very good results being delivered even higher results than our expectation. It has been working very well and at the same time we continue to seek consistently with efforts from our engineering area, I have been talking to some of you and I said that during last year and two years ago, our efforts were focused on delivering Puma regarding the frame and the price et cetera on time and on budget, and now we are focusing our attention to improve our linage both in terms of engineering production costs et cetera. So, we have already been reaping results from all of these efforts and we will be reaping additional without either short and the medium run. Now, I would like to open for questions.

Operator: Ladies and gentlemen we will start the Q&A session. [Operator Instructions] The first question comes from Ivano Westin from Credit Suisse.

Ivano Westin: Good morning, Fabio, Cristiano and other officers. Thank you for the question. The first question is about the Puma project, about the utilization rate after the stoppage you said that the plant is ready to reach 100% of its nominal capacity.

I would like to know if this is going to be achieved in May and you said that you could even increase that to only 0.65 with a small investment of $20 million, so when could this be done? And could you talk about volume in terms of every quarter this year? One question about kraftliner, we show in the first quarter, the price increase and the demand for virgin fiber papers and some stock purchase in the supply. And I would like to know what do you expect for kraftliner in the international markets as of May and also may be you could talk about difference in terms of profitability between the domestic market and the export market and especially Fabio as the CEO of the company you did a wonder job as you improved the company, you could be returning to shareholders and you went ahead with the Puma project and that you are going to have Cristiano with you. So which challenges do you expect Cristiano to face?

Fabio Schvartsman: Thank you very much for all your questions. But starting a practice that I believe will be more common as of now, I will forward your question to Puma consultancy [ph] group. Back to Cristiano and I will be answering your remark about Cristiano, your question about Cristiano in fact.

Francisco Razzolini: This is Francisco Razzolini, good morning. This general stoppage came to an end at the end of March and of course we made the necessary adjustments regarding the startup beginning of our operation and we saw the results of that as of the second half of April, the operation at full capacity and they should continue over the year, so the quality is excellent. The operation is really on stream as well as energy generation. The investment that we expect is $50 million and it should occur part two during 2017 and part of that during 2018 because we depend on the general stoppages in order to implement the necessary changes. These are relatively small changes.

They do not really interfere in our daily operations; however, we need to stop the plant in order to make the connections so that we do not lose production and this should happen as of the middle of next year the frank operation.

Ivano Westin: Just a followup. Could you talk about the cash cost for the quarter is until the end of the year? I can make a remark from the view point of cash cost of view is to reach the targets that we had already established when we talk about that in the second quarter of 2016, so we gave you a guidance regarding costs and we knew that we will be able even to exceed these targets over this year.

Cristiano Teixeira: Ivano, thank you for the question about kraft as of May. All the signs are positive all the orders and all the capacity for May is totally sold by [indiscernible] the international market as of the United States continues to be very active, may be due to cash consumption to the demand for paper and the inventories of kraftliner and all that have positive signs and we believe that the prices of kraftliner for this year will continue to be positive.

The outlook is positive for prices and the domestic market vis-à-vis exports for the last few months we have positive signs. I have already talked about the increasing demand from exports this brings us more flexibility and additional alternative to start recycled paper in the domestic market and maintaining our export run as the prices are attractive.

Fabio Schvartsman: Ivano your question about the challenges to be faced by Cristiano, well let's place it into perspective structurally speaking Klabin in normal conditions should naturally deliver and that base on growth the consistent the data growth, consistent in the sense of always having growth however, accelerating this growth over the next few quarters and I think it should be reasonable to consider that we have at least an addition five quarters of EBITDA growth and our main major EBITDA growth. So Cristiano's challenge is to declare for what comes after these quarters because then you will have everything in hand, everything that was done during all this time. And this has to do with what I would call [indiscernible] under current operation where there is a very important room for us for improvement and we are looking after that in all fronts and this should be translated gradually into more and more vigilance but important growth for this company will only happen with new investments.

After the several quarters that I mentioned there is only one way to continue growing, either you have additional capacity or you end up staying at this level that you have reached. And of course you have to prepare for the future expansion of Klabin and this is what Cristiano will be focusing on and always of course taking into account in a very careful and two different manners, the reduction in the company’s investment that comes first and together with that the situation of the market, if you have noticed you can see that is starting when they publish their results, the quarterly results. They informed that they decided not to go ahead with the project of paper machine that they estimated doing, because of they are uncertain, because of a very uncertainty to international scenario and it is not reasonable to invest in paper machines when you have uncertainty in the markets because the idea to create value of course everything we do is to create value. So I believe focus on the current operations the second point, key to investments for growth and the third front as important as the two others. The internationalization of Klabin because of its size and because of all the markets it operates is too big for the Brazilian market.

So Klabin really has to establish a process to become international gradually over the next few years and Cristiano as well as the other members of the team are focused on building this plan, this business plan that will leave Klabin to become more and more international. So, I would say that these are the main challenges that will be faced by Cristiano.

Ivano Westin: Fabio, thank you very much, very clear. Congratulations for the work done and I wish the best to Cristiano in his new position.

Operator: Thiago Lofiego, Bradesco BBI.

Thiago Lofiego: Good morning everyone. Fabio, first I would like to congratulate you for everything that you have done at Klabin. It was crucial for the turnaround of the company and value generation, so congratulations and I wish you the best of luck at Vale and I would like to wish the best of luck to Cristiano as well. Now, let’s go to my question. Fabio, if you allow me to ask Cristiano, Cristiano what is the most probable path towards growth, the growth that Fabio has just mentioned? We know that you have on the table two very interesting projects both coated board and kraftliner, so how do you see the Klabin's growth strategy from now on and what about the timeframe for that? The second question is about fluff.

I would like to better understand the approval, have you received all the approvals and what kind of volume could we expect and what about exports of fluff, so could you give us some more color?

Cristiano Teixeira: Thiago, thank you for the questions. The most probable path, well let’s put everything in context and also following what Fabio has already said first. The current platform of Klabin still has important opportunities for value generation. We have studied together with our engineering team about the opportunities to focus more on our own units as we have already delivered Puma on time and on budget. So, engineering now is focused on analyzing all our assets and check where we still have value, important returns to be achieved based on what we already have in our current production base.

So, I think we still have a lot to extract from them. Now, talking about the machines, in other calls Fabio has already said that and this is a recurrent matter. The Coated Boards as we know we are in the [indiscernible] it is the high-end of the pulp and paper market. And this is a very small sector in terms of worldwide volume and because of that we must have an alliance with a major account or with key accounts, key clients and this is what we have been doing. This is what we are still doing and as we and our clients believe that the time has come, so the machine will be placed.

In terms of kraft, let’s say you want to choose three to stay in a very small three candidates to place a packaging, Klabin ranks first or probably in the cost of paper production the kraft is not different in terms of cash cost and as we have the situation we have all it takes to be candidates for a new kraftliner machine with capacity to compete worldwide. Regarding fluff I would like to ask Francisco to take the floor because he will answer your question about fluff.

Francisco Razzolini: About fluff we have a very good performance, a very good quality. We get approval from all the clients to whom we have submitted our products. 88% of the Brazilian market with approval for fluff from potential clients, respective clients and we are ready to export to over 20 countries.

There was an interesting change in terms of fluff, should the end of March and beginning of April with a very strong worldwide demand. We have more orders and portfolio in our order book than we can supply and we have to be priority to some markets and to some clients and the demand for fluff is excellent right now, prices are pointing to an upward curve and we are converting more fluff now than the bales for softwood. And the moment is very good for fluff. And we are achieving a very quick penetration in markets, both domestic market and abroad.

Thiago Lofiego: Can you talk about the volume of fluff for this year and for next year?

Francisco Razzolini: We expect $250,000 tons this year to the volume of last.

And we will probably get to between $300,000 and $350,000 the next year depending on market variations we will have this flexibility of going to bales or to fluff depending on what happens in the market, depending on the one that brings more results to the company, but this is our expectations. And both are surprised about what Francisco said and that drew our attention was the change in the market follow the Klabin products is being demanded internationally from many different places and places that we did not accept and we were surprisingly good prices all over the world. And because of that Klabin is considering how to address this point because we were expecting something much more focused on the Brazilin domestic market and with less alternatives in the international markets. And now we have a group problem like say which is the fact that we have a strong demand in the domestic market and also very good demand coming from the international markets. And this is leading us to within that.

This point and probably very quickly we will get to the total fluff that we can produce having this kind of demands remaining. Thank you, Fabio. Thank you Cristiano, Razzolini. Next question will be in English, Carlos de Alba from Morgan Stanley. Carlos

de Alba: Yes, good morning everyone and congratulations on a strong performance Fabio and all the best to Cristiano.

So my first question is how do you see the evolution on kraftliner prices given that some of the new supply in the U.S. that we saw at the beginning of the year is starting to normalize slowly. Do you expect prices to stay in the current levels maybe come down? And also what is the view in terms of the spread between local prices in the kraftliner and the export prices? And then also are there any specific viable or thresholds or metrics that the company is looking at - in order to decide when to go for investments of the newer paper machines? And then finally on dividends, given the still very strong positions for EBITDA growth going forward and they did in policy obtain percentage of EBITDA in the dividend every year, do you expect to see a threshold for the dividend payment and/or the dividend yield or it would continue to increase just together with EBITDA? Thank you.

Cristiano Teixeira: Thank you, Carlos. Cristiano, the prices of kraftliner.

We continue to see announcements and some attempts on the part of our competitors in terms of prices and we are also going towards price increases. So the signs that we have are signs of increase in market, so I see no negative signs at all regarding kraft prices. We still have a very good expectation for the whole year, be it in terms of the increases that it will have now and also be the others at the average for the year, so execution is high. Regarding the timeframe of investment in the machines as I've said before and Fabio always repeats this, it will be done when the investment, when we are all sure about that, not in the long run because we're ready sure in the long run, but what I mean is that to be sure that in the next few years it will be generating value to the company. So it will be done when we realizing this value for the company and now about dividends I would like to ask Eduardo Toledo to answer.

Eduardo

de Toledo: Carlos, good morning and thank you for the question. In terms of dividend our policy has been consistent for many years already because at the end of a quarter we pay out 20% of the EBITDA and this policy is reasonably healthy. I believe that by doing that where we can have the necessary room for the company CapEx and we were able to do that even in a phase of extremely strong investments which were the Puma project R$8.5 billon. So in spite of that we were able to pay out a dividend. So there is a huge is to maintain this policy or payout 20% of the EBITDA at the end of each quarter for the foreseeable future.

Cristiano Teixeira: Carlos, I would like to add something to my answer because I forgot to answer a part of that about the metrics that we use and somebody reminded me for kraft exports vis-à-vis the products showed in the domestic market. As I said at the beginning of my presentation about kraft as kraft has this positive expectation that I have already referred to, we have opportunities being identified at a very timely moment of acquiring recycled paper in the domestic market which is very good for Klabin as well because which is fiber that you consume that you take it from the market and it generates expectations, generates demand and it supports the price adjustment in the conversion units so the scenario is also positive or in the metric that we use is the opportunity itself. So, if the opportunity is to export, okay we'll go after it, if the opportunity is in the domestic market we will go after that. Carlos

de Alba: Thank you.

Operator: Jon Brandt, HSBC in English.

Jonathan Brandt: Hi good morning, thanks for taking my questions. Fabio first I wanted to ask you, I understand your contract, you are not renewing your contract rules which already are expected and certainly the next opportunity there that you are going through is a great one, but I’m wondering if you could you elaborate a little bit on their regions for deciding to the meeting during staying involved in the company in some form or other, sitting on the board or in some other way. And secondly, I want to ask about your M&A international organization [indiscernible] could you elaborate a little bit on that and would you go outside of Latin America, would you do it through M&A or organically and what sort of leverage would we need to see before you start to embark on your next core phase whether M&A or organically? Thank you.

Fabio Schvartsman: Jon, thank you for your question. Well, first the reason for my change and I have already been mentioning this in the presentation, the previous presentation that it was really a big surprise to everybody and to me as well.

I was very happy here at Klabin, I had no intention whatsoever of leaving the company and I was negotiating the newer of my contracts with that’s not being, what happens is that at this moment I was approach by value to participate the process that I was appointed to this process and Vale is the biggest possible challenge professionally in Brazil. So I cannot deny that this challenge is extremely attractive and I was really in doubt whether I should remain at Klabin and whether I should accept Vale. And I just had to accept Vale and there is another reason that Vale is such an important company in Brazil it is so important for the company, for the country and that if we are able to improve Vale it will be very good for Brazil. So as a Brazilin citizen it would an opportunity for me to be able to give back to this country. It is the only thing that I have receive in this country and everything I received here in Klabin in trying to make it successful ? And I would like to add that Klabin is the best company I have ever worked for, is the paper checked to see.

It is the most important, it is a benchmark worldwide. And I came back I can say that because I travelled all over the world representing Klabin and this is something that I her from everybody in every country. And the [indiscernible] answered it is tough. It is placed it is a fantastic market and would the adequate management has said and will continue to have it should be delivering a lot of value creation and a great joy to all of our shareholders of Klabin. Going to International, Internationalization is a solid Klabin to date has a much more installed capacity than the domestic demand.

So this is really to up to a certain point you can baulk on that just exporting to international clients and that's it. However, now Klabin has reached a point and which it is important to be very sure of their penetration in all of the markets that you have a presence in there, if you want to continue on the virtual cycle, so international expansion will happen whether it will be by means of an M&A or organic expansion everything that is on the table. It will depend on the evolution of our negotiations and as the opportunities arise and when important focus of the company is on that and can you share will continue to focus on this back because this is really unavoidable. As Cristiano said and Eduardo said as well, the situation of cash cost which is extremely competitive and that we have at Klabin give us the possibility of being anywhere with this combination of cost and quality. Of course there is a difficulty in terms of having significant presence in significant markets and this is the reason why you need local presence in order to occupy the space and this is what Klabin will be doing because this is really inevitable.

I expect I have, I hope I have answered your questions.

Jonathan Brandt: Yes, thank you very much.

Operator: Karel Luketic, Merrill Lynch.

Karel Luketic: Good morning everyone. Thank you for the opportunity.

I would like to congratulating Fabio and the whole team of Klabin for the work done in the last few years. Fabio we are sad that you are leaving, but I’m very happy for you because you will be heading Vale and I'm certain that Klabin will continue to be on this very successful track of the last few years. Now going to the questions, the first one is a follow up about Puma. Now that Puma has reached a 100% capacity can you give us the volume guidance for this year 1.4 has you had mentioned and the – for product and regarding cost reduction. You had many initiatives besides Puma in the paper area, so what the potential benefit for 2017 in these areas?

Fabio Schvartsman: I would like to answer these questions myself if I may also because I do not want my colleagues to be responsible or accountable for what I am going to say.

Puma will exceed the guidance that you have. However, it will be more clear as quarters follow. I know that my colleagues are very conservative and they do not want to make this kind of statement and this is the reason why I decided to make the statement myself. This is the way I believe this process will continue. Your second question is about cost initiatives.

Well, this is another point where I can give you excellent views. The more recent evaluation of forestry will be delivery the cost reductions for the whole company and not to mention the cost reduction that is happening each one of our businesses. If anything we will exceed by far the cost reduction that we expected and in fact it already, it is already reflected in part in the results of the first quarter because in order to offset the huge appreciation of the currency it has to be with a lot of initiatives regarding cost and mix and this is where we have been placing our focus very widely, so introducing significant things as well. And I would like to reiterate that the figures for the next quarters will be of relevant growth vis-à-vis this current quarter that we are leaving now. Regardless of appreciation of the exchange rate or any other external help so to say this will happen anyway in any scenario.

Thank you.

Operator: Lucas Ferreira, JP Morgan.

Lucas Ferreira: Good morning everyone. I would like to wish the best of luck both to Cristiano and to Fabio and to new positions. Fabio, you said during the call that we would be having positive news, one would be the cost lower than expected and when you look at the budget that you drafted last year and you compared to the outlook that you have today both regarding cost and prices, how do you see that? Do you believe there is room well, do you believe that the budget was very conservative the one that you closed last year at the end of last year? And the second question has to do with the growth plan for the medium and the long run, how does it sit into the plans of the control your shareholders that generations of the shareholding family, so how do you see this will develop?

Fabio Schvartsman: Thank you for your questions Lucas.

Regarding the budget exception made to the exchange rate that we had new expectation whatsoever to have such a strong exchange rate such as it is today. So, exceptions made to that. We will by far exceed our budget and of course the exchange rate will have a certain weight on that, but anyway it means the living of results which is better than expected and with a reasonable degree of certainty regarding that. Regarding the growth plan and the family, well the one that really wants the – shareholders the family and this is really the reason why this long term investment plans that Klabin has been putting into place you see Puma is a huge investment and the return will come in many, many years to come and the other investments in this sector, be it in forests, or be it investments in machines, they always have a very high CapEx and the return is not in the short term. And the major advantage that you had over all these years was the fact that the controlling family, the controlling shareholders, the family they have given us the consistent support and even much more than support, this is the why they see themselves in the business, so the translation from one generation to another and whatever happened regarding the changes in the family because of the force of nature.

We do not have a bearing on this other notion because this is in their DNA. This thing up growing in pulp and paper is something that they seek all the time and this is exactly the reason why we are very able to do that. So there is no contradiction in terms near between one thing and the other. Thank you.

Operator: Bruno Giardino with Santander.

Bruno Giardino: Good morning. Congratulations Fabio for the job done at Klabin. I have not been covering this sector for a long time, but everything says wonderful things about you and I do also wish Cristiano a big success. Recycled paper how do you see the evolution of sizes of recycled paper and does this bring more opportunity for M&A in this sector such as you did last year and how do you see profitability in the export of bags with this appreciation of the Real?

Fabio Schvartsman: Thank you, Bruno. Just putting things into context in the recycled paper, Klabin is the largest producer of recycled paper in Brazil and it is all integrated in our own operations.

How do we see this market? More from the tactic viewpoints for prices for this product we see an upward trend for those who sell the paper which is not our case. Once the seasonal curve regarded the higher cost which is OCC as of May already we see some signs but as of May the price of OCC starts to go up because of seasonality. Could you please repeat your question regarding bags? Oh still talking about M&A also clarifying another point, the M&A that we did last year, but we made two acquisitions that I would call “surgical” being improved being footprint, there were acquisitions in states where we did not have operations before and they did not have recycled paper. They were what we call non-integrated companies. They improved Klabin’s footprint because we were able to integrate them be it in the [indiscernible] supply in the North, be it in the Parana unit at Santa Catarina supplying the new conversion unit in Parana.

So they were surgical operations, so to say and that improved our business footprint and we are very pleased with the result of these acquisitions. Regarding new opportunities, there is nothing on the table right now. We are not focusing on that and the corrugated box sector is a sector in which M&A deals have to be especially careful and today we have nothing on the table. Now going a little bit, I would like to talk to my friends who helped me regarding bags. Competitiveness and the export of bags with higher appreciation of the Real whether you will continue to export.

Well, the good thing, well I know that I’m rethinking myself, it maybe repetition is due to the fact that Klabin at every step reinforces flexibility. The historical flexibility of the company be it in the Puma unit that brought fluff in the strong market and the new path for growth for Klabin albeit in the good news that we had two years ago when strategically we focused on the international markets and our bags were very well positioned in the markets that we targeted and we have been very successful in this endeavour and in fact we have another alternative in our market front end opportunities for future growth studies, bags are already an export reality for Klabin another export item for Klabin.

Operator: [Indiscernible]

Unidentified Analyst: A quick question. Fabio, what about the negotiation regarding you becoming a member of the board of Klabin?

Fabio Schvartsman: As far as I’m concerned regarding being a board member of Klabin, I expressed to the members of the controlling family and the other shareholders, my willingness to help them by participating in the board in case they wish. So it’s not up to me, it is really up to them to evaluate the situation and they will reach a conclusion when they reach the conclusion I will be always willlias if they always willing to help whenever necessary.

Operator: [Indiscernible]

Unidentified Analyst: Good morning, thank you. Do you have an estimate for your free cash flow for 2017 that you can share with us?
Eduardo

de Toledo: We do not give guidance about free cash flow. What we have mentioning EBITDA and I think it was very clear what Fabio said about that in terms of CapEx we have already said 1 billion Reals for the year. It is, we are very close to that or in this range, so there is no big difference regarding the number that we have already published and regarding dividends our policy is very well known to all of you given the payout at the end of each quarter and then you can take your own conclusion. And on financial side the net debt is R$11 billion.

This net debt is basically dollar denominated and 4.5% a year on average. So I think with this information you can draw your own conclusions, but we do not have or we cannot give any guidance in this regard.

Operator: Okay there are no more questions I would like to give the phone back to Fabio Schvartsman for his closing remarks. Gentlemen?

Fabio Schvartsman: My personnel thanks for your presence in all these conference calls that we have held in the last few years. It was a very joyful path for me and that comes to an end now.

So this is my official good-bye. In fact today is my last day at Klabin and I think nothing could be better than closing that with this conference call delivering the 23rd quarter of consecutive growth in the company’s EBITDA which is a great target and I tell my friend Cristiano that he will really have to make his best endeavours to beat that. The challenge is paced and the company has this kind of spirit of going after performance and what is really great about this company and that I would like to share with you right now is the fact that nowadays the company is a true team. Everybody works for the company, everybody hand in hand, everybody seeking the best possible results over the years we learned discipline in CapEx or deliver what we promised we learned not to make investments, not without making sure that the investment will create value. So this is already valuable and there is a coacher in the company regarding performance and seeking results and reducing costs.

Klabin is positioned to have a great future. So it is with a huge joy that I close my cycle here and giving the company in the hands of the very competent hands of Cristiano. Cristiano was brought to the company by me, he worked with me for other companies. He had an outstanding performance and he has been in Klabin for almost six years. So he stayed at Klabin for almost the same time as I stayed and he was fundamental for the delivery of the results that we have delivered in the last few years and he was fundamental in the change of culture in the construction of this team, spirit.

So I could not imagine a happier succession then Cristiano because he has everything that was good under my administration and knowing Cristiano as I know I’m absolutely sure that he was doing, even better contribution then the one I gave. I believe and I practice the fact that I like to have people better than I’m working with me. So because these people who are better than me they push me up and they pushed me up so high so, high that I will end up at Vale. So, I thank the team for their support of the controlling shareholders that gave me all the freedom to do what I had to do here, so my personal gratitude to the family and they are co-responsible for the performance of the largely [indiscernible] – Klabin and they will continue to be the trustees of this trust that will allow Cristiano to deliver the same quality of work. Thank you all very much.

I wish you a very good day and in the next conference call I will be broadcasting from another place. Klabin’s conference call is closed. Thank you very much for participating and we wish you all a very good day. Thank you.