Klabin : Release 3Q16

EARNINGS RELEASE - 3Q16

October 27, 2016

3Q16 ADJUSTED EBITDA OF R$585 MILLION, 13% HIGHER THAN IN THE SAME QUARTER OF LAST YEAR.

PAPER AND PACKAGING PAPER SALES VOLUME

472 thousand tonnes

PULP SALES VOLUME

315 thousand tonnes

NET REVENUES

1

3Q16 HIGHLIGHTS

ADJUSTED EBITDA

Paper and packaging sales volume amounted to 472 thousand tonnes, a 2% increase in relation to 3Q15 and 5% in relation to 2Q16. On the back of FX rate changes during the quarter, paper and packaging sales to the domestic market increased 4% in relation to 2Q16.

Since start-up in March, pulp sales from the new Puma Unit in the city of Ortigueira (PR), continued to develop, totaling 315 thousand tonnes, a 74% increase in relation to 2Q16.

Net revenues totaled R$1,965 million in the quarter, a 36% growth in relation to the same period in 2015, mainly due to pulp sales. 3Q16 Adjusted EBITDA reached R$585 million, a 13% increase when compared to 3Q15. Adjusted EBITDA for the first 9M16 totaled R$1,635 million, 19% above 9M15.

Klabin finalized the acquisition of industrial assets for the production of corrugated boxes of the company Hevi, in Manaus (AM) in September, and in October, Embalplan, another converter based in Rio Negro (PR), boosting production capacity by 10%.

R$ 1,965 million R$ 585 million

CORRUGATED BOXES ACQUSITIONS

EMBALPLAN AND HEVI

September 30, 2016 Klabin

Market Value R$ 19 billion

KLBN11

Closing price R$ 17.04

Daily volume 3Q16 R$ 43 million

Teleconference

Portuguese (with simultaneous translation) Friday, October 28, 2016, 9:00AM (NY)

Tel: [phone] - Password: Klabin http://cast.comunique-se.com.br/Klabin/3Q16

IR

Antonio Sergio Alfano Tiago Rocha Brasil Daniel Rosolen Marcos Maciel

Lucia Reis Natasha Utescher

www.klabin.com.br/ri [e-mail]

[phone]

RELATÓRIO - 4T13 • 12 DE FEVEREIRO DE 2014

FINANCIAL HIGHLIGHTS

R$ million	3Q16	2Q16	3Q15	∆ 3Q16/2Q16	∆ 3Q16/3Q15	9M16	9M15	∆ 9M16/9M15
Sales volume (thousand tonnes)	787	631	463	25%	70%	1,873	1,334	40%
% Domestic Market	44%	50%	67%	-6 p.p.	-23p.p.	51%	67%	-16 p.p.
Net Revenue	1,965	1,699	1,446	16%	36%	5,127	4,092	25%
% Domestic Market	57%	60%	67%	-3 p.p.	-10 p.p.	60%	70%	-10 p.p.
Adjusted EBITDA	585	538	520	9%	13%	1,635	1,372	19%
Adjusted EBITDA Margin	30%	31%	36%	-1 p.p.	-6 p.p.	32%	33%	-1 p.p.
Net Income (loss)	31	1,268	(1,341)	n/a	n/a	2,373	(1,774)	n/a
Net Debt	11,473	11,382	11,615	1%	-1%	11,473	11,615	-1%
Net Debt / EBITDA (LTM - BRL)	5.1x	5.2x	6.2x	5.1x	6.2x
Capex	552	645	1,113	-14%	-50%	2,055	3,263	-37%

Klabin presents its consolidated financial statements according to international accounting standards (International Financial Reporting Standards - IFRS) as determined by CVM 457/07 and CVM 485/10 instructions. Information on Vale do Corisco is not consolidated in the Financial Statements, and is represented by the Equity Pick up method only. Adjusted EBITDA is in accordance with CVM Instruction 527/12.

Notes:

Some of the figures on the charts and tables may not express a precise result due to rounding. The EBITDA margin incorporates the effects of Vale do Corisco.

SUMMMARY

The third quarter of 2016 confirmed changes already anticipated in the in the Federal government with important consequences for the economy. The most important stemming from the change in economic outlook was the maintenance of the FX rate at lower levels and the appreciation of the Ibovespa, which after two years reached the 60,000-point mark. Despite the improvement in confidence, economic activity indicators continue to stagnate.

Overseas, uncertainties surrounding an interest rate hike in the USA and the United Kingdom's exit from the European Union persist. The Japanese government, threatened by low growth rates and deflation, approved a stimulus program in an effort to rekindle the country's economy.

In the paper and packaging markets, according to data published by the Brazilian Corrugated Board Association (ABPO), after a 6% fall in corrugated box shipments during the first quarter of 2016 in relation to 1Q15, the second and third quarters recorded stability in relation to the same periods of 2015. The trend indicates an expected improvement in

forthcoming periods in line with changing expectations for the Brazilian economy.

Again in relation to corrugated board markets, worthy of mention is Klabin's acquisition of Embalplan Indústria e Comércio de Embalagens S.A, with plants in the city of Rio Negro in the state of Paraná and purchase of the industrial assets for the production of corrugated boxes of the company Hevi Embalagens da Amazônia Ltda located in Manaus, state of Amazonas. These acquisitions, with a combined value of R$ 187 million, represent a 70 thousand ton annual increase in Klabin's corrugated box production capacity. The purchase of the Embalplan and Hevi Embalagens assets is in line with Klabin's consistent growth strategy in its markets and marks the beginning of conversion operations in the states of Paraná and Amazonas. Klabin has fully concluded the purchase of Hevi Embalagens assets while the acquisition of Embalplan Indústria e Comércio de Embalagens S.A awaits a decision from the Brazilian Antitrust Authority, CADE.

In relation to international packaging paper markets, European kraftliner prices continued under pressure,

RELATÓRIO - 4T13 • 12 DE FEVEREIRO DE 2014

with FOEX average list prices at US$612/t, 2% and 7% lower than in 2Q16 and 3Q15, respectively.

In the pulp market, hardwood pulp prices continued

year. It is important to note that the Puma Unit reported production and commercialization of 300,000 tonnes of pulp in 3Q16, as foreseen in the

th

lackluster due to the prospects of new capacity

Indenture document to the 6

debenture issue. As a

coming on stream. Consequently, average FOEX prices in Europe decreased to US$671/t in 3Q16 from US$693/t in 2Q16. On the other hand, average softwood pulp prices increased to US$811/t from US$796/t, the spread at the end of the quarter between the two being US$148/t.

The Puma Unit, still at the ramp up stage, was responsible for the important increase in sales during the period, especially hardwood pulp. As a result, Klabin's total sales volume reached 787 thousand tonnes in 3Q16, a year-on-year increase of 70%. In the light of the recent appreciation of the Real, Klabin's flexibility has allowed it to direct larger amounts of paper products to the domestic market, the latter taking 66% of total 3Q16 sales versus 64% in 2Q16. Despite the impact of lower FX rates and prices in the international market, the increase in sales volume spearheaded by pulp sales, together with Klabin's competitiveness in the domestic market, resulted in net revenues of R$1,965 million, a 36% growth in relation to the same period in the previous

result, the debentures will be converted on January

31, 2018.

With the increase in sales volumes in 3Q16, Klabin has benefited from the dilution of fixed and manageable costs. This fact, allied to the company's strict cost controls, has helped compensate for inflation, the effects of which still persist in the case of some raw materials and services. On the other hand, the company incurred additional sales expenses due to pulp commercialization, affecting operational expenses during the period.

In summary, despite the negative impacts from unfavorable FX rates and from pressure on international pulp prices, Klabin's 3Q16 results reported growth, driven by an increase in pulp sales from the Puma Unit and also by the company's flexibility in adapting rapidly to a changing economic scenario. During this challenging quarter, Klabin's adjusted EBITDA reached R$585 million, a 13% growth in relation to the same period last year.

1.812

1.881

1.976

2.026

2.173

2.238

21st QUARTER OF EBITDA GROWTH

939

1.027

1.089

1,7 1,7 1,7 1,7 1,7 1,7 1,7 1,7 1,7 1,81,81,81,81,81,8 1,81,8 1,81,92,0

1.180

1.286

1.351

1.424

1.452

1.504

1.562

1.602

1.627

1.652

1.718

1.755

2,4

Sep-11 Dec-11 mar/12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16

Sales Volume LTM

(excluding wood - million tonnes)

Adjusted EBITDA LTM (R$ million)

RELATÓRIO - 4T13 • 12 DE FEVEREIRO DE 2014

∆	∆	∆ 9M16 9M15 9M16/9M15
R$ / US$	3Q16		2Q16	3Q15	3Q16/2Q16	3Q16/3Q15

Exchange Rate

Average Rate	3.25	3.51	3.54	-7%	-8%	3.55	3.17	12%
End Rate Source: Bacen	3.25	3.21	3.97	1%	-18%	3.25	3.97	-18%

Despite the country's tumultuous political scenario, the Real/USDollar rate remained flat during the third quarter 2016, with both the average and final rate for the period closing at R$3.25/USDollar. The rate represents an 8% and 7% decrease in relation to the average in 3Q15 and 2Q16, respectively, directly impacting the company's exports. Low volatility during the quarter resulted in an FX rate at the end of the period at the same level as on June 30, 2016, with little variation in Klabin's currency denominated loans.

OPERATING AND FINANCIAL PERFORMANCE

Sales Volume

Klabin's sales volume continued to grow in 3Q16, driven mainly by the continuing ramp up in production at the Puma Unit, initiated in March. Volumes sold, not including wood, reached 787 thousand tonnes, a 70% increase in relation to the 463 thousand tonnes sold in 3Q15. The Puma Unit contributed 315 thousand tonnes in sales during the quarter, approximately 85% of its nominal capacity. This volume represented a 74% increase in relation to the volume sold during 2Q16 when the plant first went into production.

In addition to pulp sales, the company increased paper sales and conversion by 2% in 3Q16 in relation to 3Q15 and by 5% when compared to 2Q16. The increase reflected sales of converted products that were 6% higher than in 3Q15 thanks to the company's product line flexibility. This allows Klabin to direct its products according to the changing configurations of the markets in which it operates. In comparison to 2Q16, converted products grew by 4%.

Sales volume (excluding wood - tsd tonnes) Sales volume by product 3Q16

+315

787

56%

Kraftliner 12%

Others

2%

463

33%

67%

+9

Paper /

Conversion

Pulp

44%

Conversion

23%

Pulp 40%

Coated Board 23%

3T15

3T16

3Q15 3Q16

Mercado Interno Mercado Externo