Operator: Good morning, and welcome to Klabin's Conference Call. At this time, all participants are connected as listeners-only and later we will conduct a question-and-answer session and instructions will be given at that time. We kindly ask that, for the benefit of time, each analyst asks a minimum -- maximum of two questions. As a reminder, this conference is being recorded and also being transmitted simultaneously through webcast, which can be accessed through Klabin's Investor Relations' website where the presentation is also available. Any statements eventually made during this conference call in connection with Klabin's business outlook, projections, operating and financial targets, and potential growth should be understood as merely forecasts based on the company's management expectations in relation to the future of Klabin.

Such expectations are highly dependent on market conditions, on Brazil's overall economic performance and on industry and international market behavior and therefore, are subject to change. Today with us, we have Mr. Cristiano Teixeira, CEO; Marcos Ivo, CFO and IRO; and the other company's officers. Initially, Mr. Cristiano and Mr.

Ivo will comment on the company's performance during the fourth quarter and year of 2024. After that, the officers will be available to answer any questions that you may ask. Now, I'll turn the floor to Mr. Cristiano. Please, you may go ahead.

Cristiano Teixeira: Good morning. Thank you once again for being with us. Now, on this meeting about the last quarter of 2024, I will talk a little bit about the performance on the quarter, but I'll speak more to the whole year, and that allows us to give you a better and more structured view. On Slide 3, you can see our performance with about 1 million tonnes in sales for the quarter, revenue of R$5.3 billion, which represented 17% increase compared to the same quarter of last year, that was the fourth quarter of 2023. I remain with what we've been talking about for some time.

The company has been improving in terms of mix and I'll talk a little bit more about that on the whole year view. But the company has been working with the three segments of our fibers, our papers, including coated boards and containerboard and packaging. So, we maintain this behavior of taking the company to what was outlined by the strategy with one-third, one-third, and one-third in terms of volume. Of course, the results and revenues vary according to price curve, but that's the work that has been done over the last few years. And we start to see this is contracted.

I'll specify it a little bit more, but we can already start to see the representation in the fourth quarter of 2024, and we can go to Slide 4, where we see the year better. And of this total of R$3.9 million sales for the year, which represented about R$20 billion in terms of revenue, 9% more than 2023. So, with the ramp-ups that we've been talking about and EBITDA, R$7.3 million, 17% more than 2023, the same way, confirming that we continue to improve the company's margins. In addition to increasing volume revenue, we also improved the company's margins focused on the cash cost performance considered by the volumes of the company that go up, reducing cash costs, but also with this product that was an extraordinary project that was Caete, which also brought a reduction on the company's average distance to supply the units in Ortigueira and Telêmaco. So, in this representation here on the chart for the performance of 2024, I'd like to talk to you when we talk about market -- paper market, it's 1.3 million tonnes.

So, what's going to happen in coming years? This is already contracted. The equipment is all installed either machine 28 or 27 as well as the units here at Figueira, the units in Piracicaba in São Paulo and the units in the state of Serra for corrugated boxes. So, all of the investments have been made and contracted. The equipment has been installed. So, what happens in the company in the coming years? There's an improvement in terms of mix.

So, there will be an increase from this 1.3 million. There will be a transfer of the kraftliner production to the production of coated board. So, the 520 tonnes will go down and the coated board share increases. Remember that we were having the ramp-up of the machine, producing more kraftliner in the beginning as the product become -- products begin being approved, and we can get into further detail with Soares, but we increased our coated board capacity, reducing our kraftliner capacity. In practical terms, this means price stability, long-term contracts mainly.

Another portion of kraft is also reduced, increasing conversion of corrugated boxes. Remember that our nominal capacity for corrugated boxes being stabilized is 1.1 million tonnes. So, part of that kraftliner paper, once the units are stabilized at Figueira and Seara, there will also be a transfer of those papers for the company's bigger conversion. So, with that, we reached what we have been delivering to you, especially in 2024 and start delivering in the next two to three years, stabilizing the company with strong cash generation compared to today. We've already been showing that since 2023, talking about what was going to happen in 2024, it's also going to happen in 2025, 2026 and 2027.

So, there's a significant improvement in cash generation. And that aligns with information that's already public, disclosed to you that we've been providing for some time, simply based on the capacities that are already released in our investments. So, there will be this biggest cash generation in coming years and an important release in the cash -- free cash flow with a strong focus on deleveraging the company precisely because we'll be generating more free cash. So, all of the company's structuring always taking the business model of one-third, one-third, and one-third with the biggest integration of papers and stabilizing the financial data and deleveraging mainly in the next two to three years, put the company as a company that is ready to face the challenges of the market that are coming ahead, obviously, being able to enjoy a lot of its capacity for integration. And over the last five, six years, as you've seen, this has been happening in this year as well in the beginning of the year, but basically contracted for the first and second quarters with a recovery of prices on inflation in the packaging areas of Klabin.

So, passing through either inflation with a premium on top of that. So, the company starts to pass on or transfer more sales volume to more stable markets, making up for inflation or even higher than inflation for the price, and it also stabilizes with the coated board volume. As you know, this is a product that has long-term contracts and reduces its capacity for containerboard sales to the market. Of course, this is one of the products along with short fiber that is more volatile for the company. Of course, we'll always be able to operate with this volume of kraftliner in coming years, depending on international prices of the papers.

Especially machine -- paper machine 28, we can operate in other ways and other machines, but especially machine 28 will always be considering the best segment in terms of absolute margin for that machine. So, despite this flexibility that we may still have in producing kraftliner or coated boards or even converting packaging -- Klabin's own packaging, we will operate the company's SMOP with a lot more flexibility than what we had been operating already. Remember the flexibility that we always brought to you. Klabin could make containerboards or packaging. Today, with the same machine, we can always choose between coated boards, and you know the coated board segment, either for liquid food items or for folding markets in general, will be able to performance of choosing the market vis-à-vis what we see in the kraftliner market, vis-à-vis what we see in the packaging market itself.

So, it increases Klabin's flexibility in coming years. So, we closed the year of 2024, representing what we had been already been declaring that was the company's period of deliveries. We have only seen the first year of this delivery period. We still have a couple of years ahead, as I said, with significant improvement in cash generation and free cash flow and the company's leverage precisely with the volumes already contracted and released to you by the investments that we've announced. So, that should happen in the next 18 to 24 months.

We've been working a lot in addition to the capacities in the markets. We've been working a lot in the company's efficiency. And I'd like to point here something that often goes unnoticed, but we've started in January 1st, a new version of SAP. This new version of SAP came in with no impact to our clients. We had a plan that was very close, especially to the Brazil's corrugated box clients, but there was a joint plan, and we had no segment that was impacted by this new version of SAP that comes in very well.

Today, at the end of February, we are already working with numbers that -- I mean, we spent one quarter comparing it with the company's previous accounting figures, but the figures have been coming through a lot faster for our release, for our internal analysis and with the reliability as we had in the previous version. So, given that context for a company -- for the company seeking efficiency with the increase of volumes, mix improvements or even with this restless work, improving the company's support departments, gaining productivity by reducing G&A, either through systems, technologies or training people. So, given this context, I'd like to tell you with this company portfolio, it becomes an important macroeconomic proxy. I mean, we realize the capacity of analysis that we can work on, on the company's data. In addition to having 24% market share of corrugated boxes and selling papers to our competitors, but also being in coated boards and especially in the fibers, present in different segments, hygiene and cleaning.

As you well know, natural or processed food items and construction, Klabin starts to have this contracted profile in terms of mix and products and volumes, it becomes a more important proxy than it was before. So, something that we've always talked about. It's nothing new. When we start to realize, I'm getting to the final analysis. But when we start to run a quick comparison with Brazil, we prepared ourselves for Brazil in 2022, 2023 for a country that would be strong in 2024, 2025.

And that happened, the volumes of corrugated boxes sold and shipped published by INTALPEL. And of course, Klabin keeps track of that in terms of market share. So, a significant improvement in the consumption of supermarkets in Brazil. So, there was an improvement in income levels and the job generation in the country, we had this information confirmed today that also concerned markets yesterday, but all of these improvements that we had addressed came from the investments made, especially here in São Paulo and the Figueira unit and in the State of Seara. So, this first part of the analysis is that company was mindful of this moment of improvement in Brazil.

What we're saying now, of course, with an expectation in terms of inflation, it's important that we always say that even though we're a proxy of the economy, Klabin for a number of years, this analysis, we can go back for at least 20 years, Klabin, when the GDP improves, our sales of corrugated boxes keep up with the GDP, sometimes even at a premium, depending on the level of exports that the company has. And when there's a worsening on the GDP due to monetary policy management to combat inflation, when there's a worsening of the GDP in the medium to the long-term, Klabin is also able to drop less than the GDP. So, what we've been working on now, and we brought to you a lot of times already when this can happen, we're not saying it's going to happen now. It's quite the opposite. We're still going through a significant increase in sales of corrugated boxes and increasing prices and so on.

But if we make a projection, if there is a worsening, we're also protected in the domestic market, either considering the price correction that always keeps up with the inflation at least, and we increase our numbers of conversion due to the explanation that I told you about the product mix and so on, but also when there's a change in the average ticket of the consumers, I already gave you this example, a series of times in the past years. But when there's a replacement of type of protein or a worsening of the average ticket, Klabin also keeps up with this replacement in terms of volume. We may lose on the liquids, but we grow on the other hand. And in the recent past, we talked about the replacement of beef to poultry or eggs. And now eggs, as we see are not as affordable, but there's replacement of swapping types of protein, we were always able to keep up with them since Klabin is a proxy and we supply all of the big brands in Brazil.

So, I apologize for this longer explanation. I tried to give you a little bit more of a view of what we built in 2024 or what we intend to deliver in the coming years based on the volumes that have already been contracted and published in our investments or mostly on what you expect for Brazil. So, Klabin is prepared both from what we hope remains to maintain this level of employment of job generation that has been delivered, improvement in income levels. And if soon, we expect the government to be able to control inflation, we'll be prepared for that volume. If there is a worsening or an improvement in these macroeconomic features, translating that into the GDP, you know that we're able to both keep up with the inflation or even maintain and improve our volume considering the product mix that I have just explained.

So, right now, I turn back the floor to Marcos Ivo to -- I was a little more detailed in this explanation, but Marcos will be more objective in terms of figures so that we can understand the fourth quarter of 2024 precisely and the whole year of 2024. And I'll come back in a minute with you to talk about the trends after the Q&A.

Marcos Ivo: Good morning everyone. Thank you very much for being with us in this conference call. Now, going back to the presentation on Page 5, net revenue in the fourth quarter was R$5.3 billion, up 17% year-on-year.

And Cristiano has mentioned that this increase reflects the higher price of pulp and kraftliner, growth in paper and packaging sales volume, thanks to the ramp-up of our projects and also the real depreciation against the dollar, which happened in that. Adjusted EBITDA, excluding non-recurring effects was R$1.8 billion in the fourth quarter of 2024, 13% higher than the same period in 2023 with an adjusted EBITDA margin of 25%. Now, moving to Slide number 6 for 2024 as a whole. Net revenue was R$20 billion, up 9% year-on-year. This is mainly explained by the greater sales volume of paper and packaging, thanks to our project, Puma II and Horizonte, also higher pulp prices and also Brazilian real depreciation against the dollar.

Adjusted EBITDA in 2024, excluding non-recurring effects, reached R$7.3 billion, 17% higher in the annual comparison. Here, I would like to highlight the adjusted EBITDA margin, which was 37%, up 2 percentage points vis-à-vis 2023. We can see that the sound performance of all the businesses, Puma II ramp-up, synergies stemming from Caete Project and the foreign exchange effect contributed to adjusted EBITDA growth in 2024 when compared to 2023. Now, moving on to Page 7. The total cash cost per tonne in 2024, including the effect of downtime was R$3,173, confirming the cost projection we previously provided to the market.

The year-to-date cash cost for the year materialized several actions carried out by Klabin with a focus on synergies from Caete Project and the dilution resulting from greater sales volume in the period. Now, moving forward to Slide 8. Klabin ended 2024 with a net debt of R$33.3 billion, up approximately R$3.8 billion compared to the end of the third quarter of 2024. This increase is primarily explained by the impact of the real depreciation against the dollar in the fourth quarter of last year, which affects foreign currency-denominated debt. Leverage measured by the net debt to adjusted EBITDA ratio in dollars ended the year at 3.9 times, which was stable compared to the 3Q 2014 and within the parameters set in the company's financial debt policy.

Now moving to Page 9. Klabin's liquidity remains strong, ending the year at R$10.6 billion. This liquidity consists of R$7.5 billion in cash and the remainder in undrawn revolving credit lines. The average debt maturity at the end of the quarter was 87 months and the average cost in dollars was 5.7% per year. Now, on Slide number 10, on the left-hand side of the page, we have Klabin's CapEx for 2024, which totaled R$3.3 billion, also confirming the projection we provided to the market.

To the right on the same page, dividends distributed to shareholders throughout 2024 amounted to R$1.528 billion, which represents a dividend yield of 6.2%. So, now I would like to conclude emphasizing Klabin's commitment to financial discipline and capital allocation reflected in constant compliance with our financial policies. I also highlight the predictability of our company's business model, which delivered in 2024 projections previously disclosed to the market for cash cost and CapEx. I will now hand the floor back to Cristiano, who will provide more details on our business trends.

Cristiano Teixeira: Thank you, Marcos.

So, now moving on, on what we have been doing from the last call before turning to the Q&A, I would like to bring to you our projections for the upcoming quarters. So, on Slide 11, first, I will concentrate in the first column, which is the demand. Remember that this first column, when we talk about -- we talk about that market impression for that product. So, that is like an external information coming into Klabin. Now, looking at the two other columns, sales volume and price, those represent what we should be executing in the first quarter when compared to the fourth quarter and sales volume and price always have carryover effects or logistics issues, and I will talk about those shortly.

But first, let's talk about demand about the different products here. And then, of course, the officers can give you more color in the Q&A session. About short fiber, what we see again, in terms of demand, and I would like to stress what has been already said for a long time, not only by us, but also by other short fiber producers as well as consulting services that has become recurring and frequent in the past few years stop producing. And because of a number of reasons, I won't go over them. But what we see now in the first quarter compared to what we were seeing in the last quarter of prior year, we see already a significant difference.

In the midst of the third quarter to the fourth quarter, we would see ramp-up of important projects that had been delivered and the year 2024 and also at the end of 2023, SMIPC and also looking at the demand, historical demand of 1 million tonnes organically that we saw growing, especially in Asia. We saw that as a sign of concern, especially because of the issues we were already discussing by the end of the year in regards to United States and China. So, we were concerned about that at the end of last year. We started the year removing production, removing 200,000 tonnes a month -- this month -- in the beginning of the year and that has offset the ramp-up of the other projects that I mentioned. And we are also to change the expectation in terms of price stability.

And now we have a price improvement in the quarter -- in the first quarter for short fiber. So, this is good news in terms of the market, but also we are still concerned about the outgoing capacities and if they will be fine or not, once discussions are still there in terms of this Chinese manufacturer. But a matter of fact is that we see a price improvement in the short fiber pulp price different from what we had seen at the end of the year -- last year. Therefore, it's a positive moment because of all these reasons. In terms of demand for short fiber.

When we talk about fluff, and now we'll talk about all the products under the market or demand column. When we talk about fluff, another statement that we have been making constantly in our calls, fluff is a product that stabilized a premium price and along fiber in general and also fluff, but mainly fluff has stabilized a price premium compared to short fiber, and that has been significant in the last few years. So, what we had five years ago in terms of instability and it was a difference. And we now found a stabilization of this premium, which was $300. And now what we see is that most of the fiber removal from the market for the many reasons that you already know, the long fiber or 80% of the fiber production in the world that is no longer being produced is long fiber.

So, the price is the same because of that and also because of the trend that we always talked about in terms of the use of long fiber, especially and for the elderly. So, when we look at these market factors and also the main fluff manufacturers in the world having problems in remunerating their assets or generating cash because they have a high cash cost. We see then Klabin performing very well in fluff because we are a competitive company and long fiber, and we take part on premium products in the world, which are specifically elderly products. So this is a more broad understanding here. And when I talk about the market, and that confirms what we are talking to in terms of structure for the past few years, what we see right now is prices for fluff coming from the main manufacturers in the world with a significant improvement for fluff right now, improving what we see as positive in the past few years.

As far as coated board demand, as you know, this is a very large market compared to fluff. This is a market of 50 million tonnes. And when we look at the different segments, there are different niches of 3 million, 4 million, 5 million tonnes. But when we look at coated board as a whole, we see influence of China exports last year. There are different players last year because of tariffs imposed by Europe.

So, this market is having a hard time. Obviously, the niches in this coated board segment are more protected when compared to others. But what we see right now, and this also may be having seasonal characteristics, but for more commoditized coated boards, we see a worsening in the scenario when compared to the end of last year. This explanation has -- can be compared here to kraft. But with kraft, also in the last quarter, 2024, there was a bullish view for United States.

We expected to have the U.S. coming strong in terms of corrugated boxes expedition or shipment, and we are still waiting for that. If there is this strong shipment of boxes for the U.S., that could reduce American export and also dropping craft prices in the world. Of course, this market is very confusing right now in the world, we have to see how the American economy will perform in the next quarters. But in regards to what we had in terms of the year expectation is still positive.

We have an expectation that -- and despite of saying here that the -- the market in the first quarter is not as good as we expected when compared to the fourth quarter. But for the year, we still have a positive expectation for kraftliner. For corrugated box and bags, remember that the middle, the center of the graph is turning a little bit to the left is worsening. And these are seasonal in Brazil. We have volumes.

What we have increased and we have defined since the acquisition of IP corrugated box here in Brazil and now so the capacity increase and all that market share that we were able to gain in the past few years, we will be maintaining. And also, we will go for a mix improvement. So, there is a positive overview here. But specifically in the first quarter because of seasonal issues, both bags and corrugated boxes are not as good when compared to the fourth quarter of 2024. Now, talking a little bit about volume and price.

Then I will go from Klabin's market understanding, which was the first column. But when we turn to the next two columns, unfortunately, they are not intuitive. I'll talk a little bit about them, but especially because of inertia that we are carrying over, specifically because of logistics. The more unstable the market is, that is the product changes, clients have less minute demand for Klabin and all of that, and this is happening since 2022 and 2023. And you remember that we did have logistics issues, 2024 was no different.

So, we start foreseeing a stabilization of that, specifically in the logistics process as well as in the clients' inventory. We are seeing a greater stability than we had seen in prior years. And you will realize that in Klabin's results in the second quarter. So, what you see here in terms of volume and price and what's not intuitive when you talk about the demand is because exactly because we have that inertia in terms of the market overview and what we ship to clients. And the shipment because of the carryover that we have is still posting all the prices.

So, here, we are translating to you each one of the products, this carryover expectation and what we expected to generate in the first quarter. But in the second quarter, we will see a better compliance between the market overview and sales volume and price. So, I end now my comments in terms of the expected trends. We will now turn to the Q&A session, and we have all officers to take your questions as well.

Operator: Ladies and gentlemen, we will now begin the question-and-answer session.

[Operator Instructions] Our first question Rafael Barcelos, Bradesco BBI. Please go ahead.

Rafael Barcelos: Good morning. Thank you for taking my questions. My first question to Cristiano.

I'd like to understand a little bit more of your strategic view on the company. I understand that the priority for the company is deleveraging. That's very clear. But if you could tell us about the main discussions on capital allocation that you've been having and how you're keeping up with news in terms of M&A in the industry and what Klabin's role would be in this context? Even looking at the domestic market, Klabin has always brought this flag of consolidating the corrugated box market. So, how do you see the competitive environment in the future of the industry and Klabin's role? And another question about costs.

If you can talk a little bit more about how you look at the cost trajectory, both in terms of pulp, paper and packaging throughout the year, what's the main important synergies of the Caete Project that we may see, if you can get into more details about this cost trajectory? Thank you.

Cristiano Teixeira: Thank you, Rafael. So, in terms of our strategic view and you talked about capital allocation, the best choice that we can have or you can see today for capital allocation is paying off debt. That's what we've been doing. So, all of the focus on free cash generation for the next 18 to 24 months will be to reduce the company's leverage.

Of course, we always study, as you well know, other ways such as share buyback or investments in the company. But at this time, there is nothing in our pipeline that would be more interesting for the company than paying off debt. So -- and with that, I link the strategic view also to what you asked about in terms of costs. we had, I wouldn't say a surprise. We knew the asset that we acquired from Arauco very well.

It's an extraordinary asset. And that was indeed better than what we anticipated in terms of time to execute. We were able to advance the business case, talking about reducing cash costs, specifically with the reduction of the average distance, as I mentioned in my opening remarks. So, that's direct costs. And as you could see significant improvements precisely in this project that was, of course, compromised by leverage, which is what I'm addressing to you that this leverage will also be tackled at a much faster pace than what we were doing before, especially due to cost improvements due to Caete.

So, what's coming up in terms of costs? We have the ramp-up of paper machine 28, especially in the ramp-up of Figueira in particular. But of course, in absolute terms, the ramp-up of paper machine 28 is still a lot more important at this time, but all of this volume that I actually mentioned that we're going to increase and is already contracted for the company since the investments have already been made and disclosed by us, all of that will bring dilution of fixed costs. I also talked to you about our discipline in terms of efficiency gains in G&A that continues that brings some safety as we published to you the company's cash cost view and CapEx view. We are very confident today of our strategic view of two-year strategic view to use capital allocation towards reducing debt and improving the company's costs by diluting fixed costs or by seeking efficiency. All of that will bring the company's leverage to very quickly to very low levels.

And then Rafael and then we'll talk briefly about the future. Klabin continues, as you know, with our focus, connecting it directly to what I said about the fluff market. We remain very interested in the fluff -- the long fiber fluff market, specifically speaking. You already know, and we've talked about this project before. This is in the three-year horizon maybe or at least more than two years.

So, we'll continue bringing more information to you, not earlier than that. And noting that the company being stabilized in two years in terms of the production volume that I talked about in the beginning, getting to our cash generation capacity at stable levels, which is an important premium compared to what we have today. Once we reach that level and deleverage for the reduction of debt is already below what we have today, well below what we have today at that point, an investment such as the one in Santa Catarina that we talked to you about often is a very small step for this company that we're going to see at around 2028. So, this investment is not on the level of investments that we've been seeing in short fiber pulp. So, even after this period of two years working on deleverage, improving costs, reducing debt, even after this period, the investment we foresee in the future in fluff should have a very small impact being below the guidelines that we published in our indebtedness policy.

I think Rafael, I apologize, but in terms of the industry, I will not really explore this now. I confess to you that we're at a moment where a view, we always have 10-year studies at the company, and that remains. But I can confess to you that these geopolitical movements or commercial moves and the flow of markets we've been seeing around the world require more reflection, more pondering in the short-term. Klabin is certain of the segments it works on. We're very confident.

And with the strategic decisions we made in recent years, again, we feel very safe, very protected due to the explanations that I gave you in the beginning of the talk. But for us, regardless of the direction that the industry is going in terms of M&A and so on. When it comes to Klabin for us, it's more of the same, protecting the strategic design that we have, reducing our debt, as I told you, and having this potential for conversion in Brazil in line with our clients in terms of service level, focusing on niche such as LPB and fluff that you know we have important global partnerships. So, little visibility and from us, no reflection about M&A from our side in the industry on the short-term due to this moment of the world and a strong focus on reducing debt costs and improving cash generation with the volumes already contracted.

Rafael Barcelos: Thank you, Cristiano.

Operator: Our next question is from Daniel Sasson from Itaú BBA. Please you may go ahead and ask your question.

Daniel Sasson: Thank you very much. Thank you all for taking my question. Cristiano, a quick follow-up on the prior topic from my colleague.

And maybe you have that focus very clear on deleveraging and the ratio of net debt over adjusted EBITDA is a lot high, but the path for deleveraging seems to be clear even with this outlook for the pulp segment compared to what you had in your budget last year. And maybe you can reach 3.5 times by the end of this year, right, which is the top of your guidance from 2.5 times to 3.5 times, not considering the expansion period. So, just to make sure to reach to that level is enough for you to say, okay, I am at 3.5 times, and I still see a strong cash generation ahead so that you can bring expansion projects to be approved by the Board, even if that does not mean cash disbursement in the short-term, 2025, 2026? Or really, you will only be thinking about that from 2027 on and then to work on stronger projects more significantly starting on 2028, as you mentioned. I just want to make sure if I well understood your timeframe, the timeframe of your decision. And my second question is to Nico.

In the initial speech, you talked about the impact of this large player in China leaving the market and the demand increasing 200,000 tonnes a month for the nonintegrated manufacturers. I would like to know if you have an update on that our visibility is not as great in terms of the potential comeback of this player? And even if that player comes back, if there are additional integration movements happening in some capacities in China, for instance, [Indiscernible], if those could offset this movement. That is how concerned are you with the possible price drop in pulp or if the scenario would be to maintain that scenario and higher levels as we have seen in the beginning of the year? Thank you.

Cristiano Teixeira: Thank you, Sasson. So, being very much straightforward.

There is no possibility of having -- or announcing investments in 2025 or 2026. The focus of the company right now, and we have a dozen projects in terms of efficiency gain in the company, we are very conservative right now, and we really have the ambition to be a worldwide reference. So, I think we are already there, but we'll establish some criteria that will place us far ahead of the competition because we'll be working on the efficiency this year and next year. So, any type of investment that we decide to talk about is going to be in 2027. Therefore, Sasson, there is something that translates the discipline, but is kind of an annoying because deleveraging is annoying, but that's it.

In 2025, 2026, we are going to focus in efficiency, deleveraging, and we are not going to be announcing any investments, any other reflections will be then announced in 2027. Nico will comment on the other question. Well, sometimes annoying is good, right?

Antonneio Nicolini: Yes, that's right. Good morning. This is Nico.

Thank you for your question Sasson about the [Indiscernible], what we have is a lot of speculation in the market. No one has a very clear vision of a possible comeback of [Indiscernible]. What we know is that some of the larger lines are still not working a line of 1.4 million, 1.5 million tonnes, a smaller line working, 600,000 tonnes. But this is a significant impact every month that they don't work, we have 150,000 less of pulp in the market. So, that has contributed in the market, and we do not expect this recovery to happen before April.

That involves the Chinese government. We know that the government wants to attract two main players, at least so that they can take over the control of this company. But everything is uncertain for now. We have seen three price increase announcements, two of the three have already been implemented successfully. The third one now in China and Europe.

We do not see that happening before Shanghai Pulp Week, but we believe that it is possible that this third price increase will happen. It's more than $20 in China. So, we had three consecutive increases of $20 in Europe, in the United States, an initial one of $100 and two other ones of $60. And we believe that that will happen now in March, but after Shanghai Pop.

Daniel Sasson: Thank you very much Nico.

Operator: Next question, Tathiane Candini, JPMorgan. Please you may go ahead.

Tathiane Candini: Good morning. First, thank you for taking my questions. My first question goes a little bit in line just to confirm the expected trends.

When we're talking about -- and I think you've talked a little bit about this already. But when we look at the first months of the year, the prices of pulp and demand has been seeming a little stronger compared to the fourth quarter. So, I'd like to understand whether the forecast that you have in terms of volume and price is due to a lag that we should see an improvement reflected in the second quarter or whether there's another factor? And if I may, a second question. Thinking a little bit about what you said at the beginning of the call, we tend to see Klabin with a little bit more exposure domestically, and we'll possibly see a more stressed macro scenario in Brazil in the second half of the year. So, I'd like to understand from you, thinking about Papers and Packaging, if there's any strategy thinking a little bit more about the second half and if there is a little more pressure on the macro or if the strategy remains focused on Brazil? Thank you.

Cristiano Teixeira: Thank you for your question. So, I understand your lag as a carryover, right?

Tathiane Candini: Yes, exactly.

Cristiano Teixeira: So, yes, I confirm what you understood. We actually -- we really did have and you'll see in the second quarter an improvement, and this improvement is due to what we've been seeing in the first quarter. This improvement that is happening is not represented.

It will not be effectively delivered in the first quarter due to the lag that you mentioned, the carryover that we brought from the end of last year, which is a longer accumulation due to logistics and operational effects. So, the first answer is to confirm you understood it, and you see the improvement starting on the second quarter. Now, in terms of the macro scenario for Brazil, I'll give you the reference that I brought when I talked about Klabin being a proxy of the macro economy. It's a fact. I always bring this if you blow up in terms of customers, brands, especially in corrugated boxes, selling more than 1 million tonnes of corrugated boxes, selling papers, both craft and coated boards to markets in beer, liquid foods, other box manufacturers, definitely, Klabin is a proxy of the domestic market.

So, what I told you is that we had -- I mean, I think we got it right with the investments we made because we had an expectation of a strong Brazil in the years of 2024, 2025, which did happen and is happening still. Obviously, today, in general, when we talk about the economy, we're talking a lot more about what's expected of the economy from what's happening. But what's happening today are good factors. So, the income was -- the revenue was generated. The improvement in consumption did happen.

So, this inflation is a product of that improvement, which leads to other analysis that since Brazil doesn't have sufficient production capacity for that improvement, there was no gain in productivity. So, when we project that, we project the inflation. And if this inflation happens, when it happens and what we've been seeing in terms of interest rates going up to reduce economic activity, we do expect that at some point in the second half of this year, maybe 2026, there will be a slowdown of the GDP in Brazil. And when that happens, as I explained in the beginning, and if that happens -- but if it does, here at Klabin, we sell both products with lower added value with a smaller ticket in the economy for food always. 70% here is for food.

And when we -- as well as we sell more premium products or even for exports. So, in corrugated boxes alone, I'd like to bring a component that we don't talk a lot about to you. But when there's an improvement, of exports, for example, of proteins and fruits. Remember that Klabin is by far the biggest market share for packages for the export of proteins and fruits from Brazil. So, even corrugated boxes have an effect of exports that's very important.

Also absorbing some -- whenever there is a devaluation of the Brazilian currency, that means an increase in reals for us here in Brazil since we sell to exporters, and we seek to sell those packages for exports more connected to the foreign market. So, we are mindful of any potential macroeconomic change in Brazil as we have been in the past, and we made that investment. Now, the situation is better. We don't have investments to make. What we have is greater flexibility.

I also talked to you about this, that the same machine, the most modern coated board machine in the world today, PM28 can be used both for coated boards for liquid foods or for beer or for coated boards in general or kraft paper in the same machine, and this craft can be both exported or converted into packages and packaging can serve the domestic market and the foreign market. So, just reaffirming that Klabin is at a much better position in terms of our flexibility than we were one year or two years ago. So, we're very safe and prepared, and we will relatively compared to any other manufacturer in the world. I can assure you that based on our portfolio, we always will be relatively better than any other manufacturer that's integrated in Brazil or in the world.

Tathiane Candini: Very clear.

Thank you.

Operator: Our next question is from Caio Ribeiro from Bank of America. Please Caio.

Caio Ribeiro: Good morning. Thank you very much for this opportunity.

My first question is about the forest base of Klabin. The company is working on some recent movements of buying and selling forestry assets such as [indiscernible]. But looking ahead in the forestry asset that the company has today, do you foresee a need to increase in this forestry asset to be able to cater to future expansions? On the other hand, do you see opportunities to divest in some forestry assets to help and optimize the company's structure and help in this deleveraging strategy? This is my first question. And my second question, as you mentioned, Cristiano, most of the capacity in the pulp market has been for long fiber and fluff. This is contributing to increase the premium for long fiber when compared to short fiber.

And you talked about the possibility of increasing your footprint in the fluff market. And looking at fluff and long fiber in the market, we see that there are no added capacity for these products in the upcoming years. So, my question is if you are considering adding capacity that would allow you to have more flexibility to change the mix between manufacturing and selling fluff or long fiber in the market? Thank you.

Cristiano Teixeira: Thank you, Caio. So, first, about the forestry assets, you already said it all in your question.

I will just add a piece of information here. When we talk about Paraná and Santa Catarina states, these are states with big tradition in wood and in Santa Catarina, especially in long fiber, these are hard woods, and they have a whole ecosystem of export -- wood export in the region. And with this whole ecosystem that we have in those two states, we have strategically defined and also with positive effects in the community of these two states. But we are present in 62 towns, and we are going to operate with 75% of self-sufficiency. Therefore, there is market in the region for us to supply with third-party wood at competitive costs and with a low average distance.

And this is our strategic position, considering the position that we have in these two states of 75%. And let me mention that this is not possible in other Brazilian states, maybe in any other Brazilian state because we do not have the full ecosystem of wood as we have in those two states. So, any other investments out of these two states for that to be done, we would need a very large forestry base and then self-sufficiency would have to be 100%. So, now going back to Klabin's world, 75% of these two states is safe for us, and we are above that. Remember that we have acquired Arauco areas to use the wood that we have and those areas once the wood is used and the wood where we invested in closer areas when that wood is ready to be cut.

So, Klabin will have land available and lands that are distant from our average radius and those areas will then be available for monetization. Yes, this is already happening. We have already anticipated we -- forecasted and the areas that are not related to the supply of second cycle of Klabin, they will be monetized. And we have good projects to bring to you in the future. And it also will strengthen our deleveraging speed.

Now, about your second question for long fiber or fluff, while our focus is greater in fluff. Obviously, any investment in a drying machine in a fluff pulp machine, that machine also will be able to produce -- to manufacture the bleached along fiber. But Klabin's focus whenever this investment is mature is going to be fluff.

Caio Ribeiro: Perfect, very clear. Thank you very much.

Operator: The next question, Marcio Farid, Goldman Sachs. Please, you may go ahead.

Marcio Farid: Thank you. A few things here on my slide that attracted my attention in the balance sheet this quarter. I think expenses were higher than expected.

Operational was very strong. The cost decrease in paper pulp, but the expenses were high. So, that offset some of those gains. So, just to understand what's recurring and what's non-recurring for us to think about the coming quarters. And also, when we look at the Puma production and sales for the year at around 450, 500, 1,500, but being below 1,600 or 1,650 below past year.

So, just to understand what's been happening at Puma and if you can expect a stronger production for 2025? And a follow-up to Caio's question, actually, the opposite from what he thought, I was wondering whether we were going to see more forestry monetization rather than acquisitions. And you talked a little bit of the thesis from the past would be to monetize the forest. I believe a lot of it has been done, but with the deal with FMO, but just to understand if there's more models or monetization of biological assets to be made to help on the speed of deleverage that would be great. Thank you.

Cristiano Teixeira: Thank you, Farid.

In terms of expenses, remember that during last year, many times, we had given the guidance, but many times during the calls, you asked us if we were going to improve by the end of the year, and we said we're going to follow the guidance. So, we remain on that same line. What we set forth on the guidance, our expenses and our cash cost will follow the guidance. So, about that, we remain on the same line that we've been talking about. That's what we delivered and what we are going to deliver.

As for production, it's the same. We have the guidance in terms of product mix, slightly impacted by the carryover that I already mentioned. But what we're going to see that you can expect from us is delivering on the guidance that you've already been seeing for Klabin in the last three or four calls. As for your last question, I don't know if I understood it correctly. But yes, we do have still some monetization.

We have already done part of it. And of course, when it becomes material, we'll bring it to you. I don't know. If that was not what you meant on your last question, please feel free to ask again.

Marcio Farid: No, it is clear.

I think for production, it was more specifically about Puma I, thinking about pulp because they're running between 100 and 150 tonnes below the plant's normal capacity, just to understand whether it's recurring or not. As for the follow-up on the cost, so from what I understood, the level of expenses that we see for the fourth quarter is recurring. It is a higher level, but it's partially offset with a lower cash cost, right? I think that's what I understood.

Cristiano Teixeira: Yes, that's it, Farid. And as for the production, it's what we also talked about on Klabin Day.

It's not recurring. The normal numbers that we sent to you in terms of information of production and costs by the guidance we provided remain the same we gave on Klabin Day.

Marcio Farid: Great. Thank you.

Operator: Ladies and gentlemen, we end right now the Q&A session.

I would like to turn the floor to Mr. Cristiano Teixeira for his final remarks. Please, Mr. Cristiano.

Cristiano Teixeira: Thank you all very much.

And we hope to see you again in our next earnings call. Remember that we will have the opening of Figueira in March 27 and I would like to take this opportunity to tell you that this opening will be dedicated to our clients, but I should stress that this is going to be very important to rectify what we have been talking about in terms of technology, our investment in Figueira. Thank you all very much and see you in our next call.

Operator: The full recording of this conference call is available at the IR website of the company. Klabin's earnings call has ended.

We thank you all very much for your participation and have a nice day. Thank you.