Klabin S.A. (KLBN4) Earnings Call Transcript & Summary

Hello, good morning. Good morning, everyone. Welcome to Klabin Day 2021. I am Adriana Bittar, and I'm going to be with you in this event. Another year has gone by, and it's time to share with you investors and analysts Klabin's results for this last year. It is a moment to harvest results and replant our next guidelines for the future. Before we start some important messages. Our event has simultaneous interpreting from Portuguese into English. And on the top right corner of your screen, you can choose the language in which you wanted to hear this event. Part of our agenda is going to be dedicated to answering your questions. So send the questions by the chat area, which is on the right side of your screen. And a final message, also important, we know that with vaccination going forward, pandemic is controlled, but it is crucial that we still take care of ourselves because it is not over yet. Safety is one of Klabin's pillars and everyone that is here in this study -- studio have been tested and everyone is respecting social distancing and behind the cameras, everyone is wearing mask. There we go. Here on the stage with me, Alexandre Nicolini, Executive Director for Pulp Business Unit, Ana Cristina Barcellos, People and Corporate Services Director; Cristiano Teixeira, Chief Executive Officer for Klabin, Douglas Dalmasi, Packaging Director for Klabin, Flavio Deganutti, Paper Business Director, Francisco Razzolini, Director of Industrial Technology Innovation, Sustainability and Projects, and Marcos Ivo, Financial and Investor Relations Officer. So officially start our agenda with Klabin's CEO, Cristiano Teixeira.

Good morning, everyone. Good afternoon, good night to you investor that is with us from anywhere in the world. This is a day for you, so that you can understand the company, a company that has a long history and that needs to be understood every day because we are constantly renewing ourselves. So we always learned that reputation is a product of what you do of your attitude. That's why we value Klabin's attitude. So I would like to ask you to pay attention to all our Director's presentations. You will see that we promise what we deliver, and we deliver what we promise. And we have a strong team in-house, and we have a team that is prepared to replace any of us at any time, so that the company doesn't lose its space. This is a company that is connected to the future, and we are connected to the new trends. We are growing, not letting go paying dividends to our shareholders. So please pay attention throughout this presentation to all of our directors, and I will come back and talk to you a little bit more at the end of those.

Thank you very much, Cristiano, for your initial remarks. And Klabin is committed to value generation during this growth journey. So now let's continue talking about the results that we are harvesting today after decisions made in the past. We will see the perspectives to replant the future with the Director's of Pulp Business Unit, also Paper and Packaging. We will start with Alexandre Nicolini, Executive Director for Pulp and Business Unit. Welcome, [ Nico ].

Thank you very much, Adriana. Good morning, everyone. Welcome. 2021 is going down the history for Klabin, as a year that talks about all the businesses in the company and the strong results that we have reached over the year, but mainly thanks to the fruits that we are harvesting in the past -- from the past years. I have to start talking about 2021 by mentioning 2 important steps for Klabin, which are about the performance of our business. So the startup of our Puma Unit, where Klabin intended to sell 3 different types of pulp, and this is the only company in Brazil that is producing these 3 types of fiber. The second important step came with the transition of the contract from Fibria, which was anticipated in a little over 2 years, and that happened by the end of 2019. I bring to you now a slide that you already know or most of you know. And here, we have our 3 business areas in the pulp business, short fiber of eucalyptus, 25 million tonne market, the largest growing market now, and Klabin has a competitive advantage here. And also the quality of service level that we provide to our service is the long fiber market of 20 million tonnes, a relevant market and with great opportunities for Klabin. And Klabin is having a good performance year since the Puma startup as well. And so fluff market, which is a specialized one of higher added value, and here, Klabin is competing the more consolidated market with players that are renowned in the market. Klabin now is working in the pulp market, and this market is growing at healthy rate. The new capacities are more concentrated in short fiber. And obviously, in long fiber and fluff, we have an expectation that the demand will be higher than the supply in the next 5 years. Now talking a little bit about our assets, Klabin also has a special position in short fiber. The Puma's product happened in 2015. Obviously, Klabin is competing with the assets of high competitiveness as well. But we have a quality product and a service level that is increasingly high as well. As far as long fiber is concerned, Klabin has a special position also because of cost and the age of the asset. This is a more consolidated market. These are [ sentinerial ] producers concentrated in Nordic -- and countries and Canada. And Klabin is gaining position in the past few years and also strengthening this position in the market. In the fluff market, which is -- it is a more concentrated market. Few play -- fewer players in the market with older assets, so with high cost, and that's not very competitive. And here, Klabin is really with great advantage both in terms of cost, as well as quality and competing with all the other producers. Now talking about our growth strategy and also of the fruits that we harvested in the past few years, the transition with the Fibria contract happened in the fourth quarter of 2019. We started 2020, as the first solo flight for Klabin. It was a difficult year. The market was unbalanced. The supply and demand also were unbalanced. There was the beginning of the pandemic -- pandemic that caused a few complications. But even then, Klabin with its strong leadership position in Brazil was able to minimize the impact of the pandemic. And also we had a lower demand than what was expected for the year. So we were able to review our commercial strategy, also market approach that we would have starting 2021 repositioning, and I will talk more about that in terms of our global mix and new contracting for different markets. All this work that was done throughout 2020 allowed us to have important results, new partnerships, new clients, the consolidation of Klabin in relevant markets and optimization of the sales mix. And this is a constant work that we are still doing and that -- we do it at a very good pace. We had 90% of our production already contracted for this year. And this is good for us in terms of the flow of our pulp and new developments in products that are part of Klabin's DNA, and all of that was translated in sound result for this year of 2021. And here, I have the business performance. Starting 2020, we started 2020 with a slow market. It was very complex. Klabin had contracted volume for the year that was very low at the time. We had a high exposure to Chinese market, which was the one that had the highest flow in 2020. Starting in that year, we started working with several clients in order to strengthen our market position, bringing more competitiveness to the Brazilian market, which is a very relevant market for Klabin. We established long-term partnerships always considering what we consider the one-stop shop that is customers being able to buy the 3 types of fiber from a single supplier. We also focus on quality and service level, which now are recognized by the market. And obviously, by talking to customers, we found 2 very important topics nowadays that are about innovation and sustainability. So in 2021, we were able to have over 90% of our production contracted, and we went beyond. Also in 2020, we contracted 50% of our production for 2022. We are going to start next year at a total level of contracting of 92%. So that places us at a very good position. We know that the pulp market is a cyclic market, is volatile. And having 92% of our volume contracted allow us to feel safe in terms of selling all our production. Now talking about our geographic distribution, here we have more details. You can see that Klabin is a diversified company and with great flexibility. So in yellow, we have 2020, we have an excessive consolidation in China. It was hugely dependent on China because of large contracted volumes. It was a -- an year that we learned a lot. We had higher exposure to the foreign market. We had to restructure ourselves, and we had to contact other customers or other clients to explore potential businesses that could allow us to be safer in terms of selling your mix of products. Starting 2021, our exposure to Asia Pacific market came down. We start -- we continued growing in Brazil. This is a relevant market in Brazil. Now we have a more -- a larger footprint in the American market, which is very important, especially in the tissue market, which is very important for the business. They are one of the highest consumers for virgin fiber consumption. And we also decreased our exposure to exotic market, where we have lower competitive levels, and we always prefer to have long-term contract. So this evolution of these long-term partnerships translated in the mix that you see in blue for 2022, where we start having a very relevant exposure in Brazil, mainly in Brazil, but also in Latin America, with almost 39% of our production capacity for these markets. In the [ peer ] market, which is a mature market and that continues to grow at healthy levels for 2021, that was a very important market for Klabin. We have long-term contract, a little bit more growth in the North American market and also Africa, Pacific and Middle East exposure -- market exposure as well. So that shows that we are positioning ourselves in long fiber, collectors and fluffing with a sound and diversified approach. And I will -- I bring to you our crown the jewel of the crown Machine 26. This is the machine that produces fluff and long fiber. This is a flexible machine. It has the capacity of switch among them. Obviously, Klabin throughout the past years is focusing mainly in the fluff market, which is a market that has higher added value. This is a market, where we have a very high competitive level. Today, MC26 is operating [ at the limb ], but also in other global accounts, which allows us to have great visibility of this product. Here, we have a little bit of the last developments by Klabin. When Klabin started, the fluff production process was mainly working in a more basic segment of this product, which is the nontreated pulp. And throughout 2021, thanks to several developments with clients, qualification tests and also a very active R&D area, now we have some new products that are in our final stages of tests, which are Excel fluff pulp. Good morning, everyone. I'm sorry, we did have a technical issue here. I'm going to go back to the slide on our Machine 26, which is our machine for long fiber and fluff. As we usually say, this is the jewel of the crown. This is a very competitive machine with several production records and also a speed record of 206 meters per second. This is a world record. We are very proud about this machine. This is a flexible machine, we are able to produce long fiber and bales, as well as fluff. Obviously, Klabin in the past few years, it is concentrating production more in the fluff market, which is a more specialized market. And that's where Klabin is competing with the main producers in the segment. Today, Klabin has more or less 70% of the production of this machine in the fluff market, and we maintain 30% in long fiber, which has an important role, especially to supply to the domestic market. And Klabin is the only supplier of long fiber for this market. In terms of development, this is a machine that is flexible, as I mentioned. Throughout this year in a strong partnership with our innovation and R&D areas, we ran several tests for different products. Klabin was working with the most basic segments of fluff. And we know that the segment has other areas in which we have great potential in terms of development. And Klabin developed the new products that are now in the qualification stage, and we have sales potential starting next year. These are fluff products of higher added value. And here, we are talking about TCF fluff, chlorine-free treated fluff, fluff with odor control and also Excel fluff, which is hybrid. It has a little bit of short fiber and -- but most of it is made out of long fiber with no damage to the performance and quality of the product. So you might check out our new products next year as next steps here for the business. I should mention that the focus will always be in Puma's operating excellence. This is a highly competitive factory. We are constantly focusing on costs as well. One of our assumptions is to increase the share in clients and strategic segments. Klabin now has a low exposure of 15% in printing paper and a greater focus of specialty papers and tissue. So that places us in a very good position and so focusing in segments that are growing at healthy rates. Our business model is flexible in terms of sales and operating areas. Klabin will do everything it can to maintain a sales mix to bring in results, so that we are a business unit with a high margins and with results that really comply with all investments made and obviously, development of higher added values, which translate into products with greater margins and greater price premiums. I will stop now and I'll come back at the end to take your questions. Thank you.

Great. Thank you very much, Nico. [Operator Instructions] Later on, we will have a Q&A session with Cristiano and all the officers of Klabin. So do send your questions and let us know who the questions are for. So we will keep on talking about results, deliveries and future projects. And now Flavio Deganutti, Paper Business Director. Please, Flavio?

Good morning. It is a pleasure to be here. This is a special year for the world of pulp and paper, especially packaging paper. Here, we usually say that it is as if the demand and what we thought for the future, especially migrating packages for the -- our type of product as it has been brought forward 2 or 3 years. So it's very special because now we have the new equipment, Machine 27, I will talk more about that. And also, we are building Machine 28, which will produce a top-notch cardboard -- coated board for the whole world. I think this is the more emblematic -- the most emblematic picture that we have. This is equipment building in a difficult moment. And we did this in the pandemic and on August 30, we have this beautiful picture at 2:00 a.m. after a lot of technology, a lot of struggle, a lot of cooperation. Here, we see not only the equipment is state-of-the-art machine and the only one developed to have low weight kraftliner, 100% eucalyptus. Here, we have a product that has been patented by Klabin. We are able to reach weight ranges that we cannot easily find in this market, and we can develop a product that has a sustainable approach that is beyond the conventional. And also in this picture, we have a great team. Paraná and Ortigueira City, close to Telêmaco, where we have Monte Alegre site, has a great -- a huge profit, not only of forest equipment, but also good people, people that is -- people trained and prepared to make this happen. The figures are there. Starting on August 30, and here I have September, the first few months, we have a production scaling. This is the curve of the machine, considering its maximum capacity. In November, we have reached 75% of what we aimed for. It is a little bit over its original curve. And for 2022, we plan 87% of production and a percentage of total capacity. This is not a traditional machine. In addition to having barrier applicators before the finishing of the product. Here, we have the figures of Eukaliner and Eukaliner White. Another thing that we promised and we delivered. We run dozens of tests. Eukaliner goes back to the areas in Klabin. It was built little by little in the current machines. And then in cooperation with the packaging area, fibers that would travel to be tested in Brazil and in the world, the development of the specification, the believing in technology and then on August 30, we had the proven efficacy with the results that you see there. So this product not only saves in terms of weight, but also allows our clients to increase the speed of their own machines, therefore, save energy. And that also has been proven because Klabin has this integrated model and uses its own packaging area to convert this paper. Also, I highlight 3 elements on the bottom, Eukaliner, our main product for this machine; Eukaflute, this is a semi-chemical dedicated to special boxes, for instance, export of protein and fruits; and Eukaliner White Brazil doesn't have much of these products, neither South America. So this machine will manufacture products that are now imported from Europe and other areas, and we will have this product being sold in Brazil with great performance. So we decided to sell this machine ahead of time, maybe a unique feature of the kraftliners market. We made 70% of advanced sales of the machine. We chose that because 30% of the sales were due to market conditions. So the contracts that are outlined in this world map show the main destinations of the contracts we have signed. Of course, we try to fit this product where 100% eucalyptus, virgin fiber and print quality make more sense. Therefore, we chose destinations where this relates to our product so well. As I said in the beginning, now in 2021, we see what we were imagining to see in 2025. We have robust growth numbers, 3 million tons in 2020, more than 5 million tons combining virgin and recycled fibers, and it continues to grow. The transformation rhythm on e-commerce or the migration of packaging from plastic materials to our products continues to be more and more consolidated. This is an example of the European market. The dark blue part of the bars represent traditional growth, anchored in industrial growth and the organic growth of each of the European countries. What we see in the other colors in yellow, e-commerce and in purple plastic replacement, adds almost 1 million tons per year in terms of demand. And this is only the beginning. We're seeing that this is sustainable. Of course, the pandemic expedited this process, but it remains, in a structural way, in Klabin's vision. A little bit more about the future, beautiful decision aligned with the shareholders to transform the second machine at Puma, Machine 28, as -- into a machine ready to make coated boards. You know that Klabin produces high-level coated boards for the liquid packaging markets, for the multi-packing markets, especially beers and bottles and cans, and there are many other applications. And you can see this is a recent picture of the past few days of the construction of Machine 28. On the left, we have Machine 27 that is producing the numbers that I just showed you. We're also happy to find this timing with studying this machine at special moments in terms of price, demand drivers. I show you here the projected growth for this year. The world continues to grow. Klabin is not present in all segments, Klabin chooses to act, especially in the most premium segments today. See U.K. for the multipacking market; foodservice for cups and trays; LPB, that's the liquid food items; and transformation foods. So this is a universe of special coated board products, of coated board products that require barriers. So that's what we are investing in. And it's a universe of products that require short fibers, long fibers and technology. So that's where we're believing Machine 28 will fit in. I also bring you, in addition to looking at organic growth, what adds to this migration of plastic packaging, it's an important [indiscernible] that has been with us in this journey. This number of additional 3 million in the 10-year route is very conservative. It's something that we came from the analysis of each type of packaging, where transformation is simpler or more complex and where we need to invest in CapEx with our customers. But in conservative times, we do see great growth in the coated board market. In line with all of this, we have an image of our container terminal. This is right next to our plant in Ortigueira. We have access to rail -- to the railway, the ability to load the containers, both for railroads and highways, and the capacity of receiving production from the Ortigueira plant right next to it, but also the production from Monte Alegre to export through the Port of Paranaguá. So it's very important. It's a private container site in the state of Paraná. And construction of the future. We recently began building, you see that it's a highly privileged location in the container terminal in the Port of Paranaguá. Another aspect that is very important, you must have seen the logistics difficulties and the container element. Very quickly here, you have a picture of the products made by Machine 27, the large rails, making the most of Klabin's flexibility using the ships that export or transport pulp to Europe, carrying it on a break bulk format, brings advantages in terms of cost and flexibility to supply markets that require so much of our product. A little bit more now about the future. This is quite impressive. It's our pilot plant for MFC and lignin in the -- next to the technology center in Panama. From this plant, in the pre-industrial scale, we're harvesting this treated fiber. MFC here is the microfibrillated pulp. We added to one of our main coated board products, and we are able to reduce the weight of those packages. So in practical terms, these numbers show the ability of creating a multipack that it's at least 10% lighter. I also have here a breakdown of our present and our future. Today, we already make packages with water barrier, the KlaFold FZ in the first picture. We also have KlaFold GB for the grease barrier. Many food products can remove the plastic from the interior of the packages because of this solution. We're very close to launching 2 important products: one, a barrier to water vapor in the top picture. Of course, we want to preserve the characteristics of the product inside the box, and this barrier will also replace polyethylene that's used as the current barrier. And KlaCup Bio that's from renewable sources. This market adds value to us. I showed you briefly that the growth of the coated board market is structural based on important drivers. And when we combine this growth with the barrier product, especially for the food industry, the numbers we have there is 7.7%. So again, a very significant growth related to special products with different types of barrier. And here, the joy of a recognition of this relationship that has many decades, we were recently in Switzerland, and we received the main sustainability award from this great client of ours. They recognized Klabin's best practices in forest management. And because we have a Mosaic planted forest, we're capable to maintain a high-level biodiversity. And this recognition is very important, very special, and we're very grateful. Closing my remarks, of course, I'll remain available for your questions later. But we have the combination of different elements, the right timing, exploring the Eukaliner family with its multiple products; building Machine 28, a unique machine that will come at a very special moment; and the combination of these products, either with MFC or barriers, this is a route that expresses the good choices Klabin has made over the last 2 decades. I'll be available for your questions. Thank you.

Flavio, thank you very much. Let's learn more now about the results that have been reached, the opportunities and the expectations, with the Executive Director of the Packaging business unit, Douglas Dalmasi. Welcome, Douglas.

Thank you, Adriana. Good morning, everyone. It's a great pleasure to be here with you today. As you know, and we always say, the packaging business integrates the most value to the highly competitive business model that comes from our forests, our paper factories. It brings flexibility to us so that we can act in the multiple types of markets, optimizing results. It stabilizes the results of our growth and also places us at our customers, bringing the trends and how consumers seek to improve packaging and meet the needs of the consumers. As Flavio said in the previous presentation, we have grown in the production of packaging paper. But in packaging, we also grew, and we had to keep up with that growth in order to maintain our integrated model and generate value. In this period that we reported on previous Klabin days, our market share went from 16% to 24%. So our share, especially through acquisitions in the coated boards and corrugated boxes, came from acquisitions, but brownfield projects as well, adding value in the packaging chain. So we know how to make M&As and delivers results. And the results that we brought through these acquisitions came better than we had expected or anticipated in the models and prospects that we showed our investors. We're also an innovative company. We have a platform that is in tune in the customers' homes, but also well prepared within our structure to bring innovation to the market. So we brought a lot of variety. I'll show you some of them in a minute. But today, we have a platform and an innovation pipeline and product launch pipeline that is prepared to any types of needs and pains of our customers. We also increased our international presence more in the paper bags area. We opened markets today and have a relevant presence, especially in North America, which opens a very important growth route for us for the coming years. And that all increase profitability as well, adding value and competitiveness from the forest to the production of papers, integrating and generating results in packaging as well. There are 2 important messages on this slide. It shows the resilience and growth of this industry. The left side shows the GDP in the period. The central part shows the performance of the packaging market, a growth above the GDP, more than 4% in that period. And we are highly above the market due to acquisitions and incremental projects, we grew more than 11%, in line with our investments and maintaining the level of integration and bringing the results that this area adds so much value to. If we extend this period, we're going to see the same behavior. The growth is always higher than the GDP. So where does this value come from this growth above the GDP growth. It's the -- has a great share -- the corrugated box has a great share in the food industry. And when the GDP goes down, it goes down less. And when the GDP grows, we grow more. And we have shares of industries, where the Brazil has high share, for example, in exports, for example, for meats, of proteins and foods. And we also have a competitive edge. Our integration brings us an important edge because we have virgin fiber in this case. Especially in the export of proteins and fruits, there's a high share of virgin fibers for technical requirements of the packaging to export these products, and we can also have a high share, making best of this competitive edge that Brazil has and that these industries have brought historically and will bring for coming years. In terms of the bags, we've been able to reduce our share. The chart on the left shows that in the cement industry, it's not that we reduced our volume, we reduced our share. We are prepared to participate in the growth of the cement industry with investment and technology, but we have developed other routes, as I said before, for exports, especially in North America, that's what the dark blue shows, our share momentum. And we developed to other users, other markets, bags that have more added value and more profitability. So today, we have different paths for growth. And now we have a good problem. We have to invest to bring more returns and more growth to the company. On the right side, we have significant changes that will drive this market even further. We have a relevant change that has been happening in the world. Europe has gone through that. Mexico is doing that now. Argentina, we'll do that in 2024. And Brazil will have this change up to 2028. That's changing the bags from 50 kilos down to 25 kilograms. That will bring a higher number of packages and a higher consumption of paper, bringing our volumes to even higher levels. This market of paper bags, without a doubt, is the market where we have the greatest overlap with plastics. So we're starting to navigate and we're going to invest to increase our share in low weight bags that compete with the single-use bags. Today, we're increasing and expanding our portfolio. We started to launch products that have lower grammage. We'll invest to enter these markets because when we go to the supermarket today, the pouches for example, are all plastic. But the customers, with the sustainability mind, are asking for these types of products in the market. So the low grammage product demand will increase in the few coming years. It's a great leverage for growth in the packaging market. Now all this diversity and this growth, we can harvest the fruits in terms of profitability. This is the history of our prices by diversification, by growth. We increased in bags in the center by the -- more than 40% in this period; and in corrugated boxes, almost 60%, a result of products with higher added value as well as growth of the market. Trends now, when we talk about trends, we tend to think about, "Oh, that's the future." No. This is what's happening today. Sustainability is a huge strength of our industry, circular economy in Brazil and in our sector in the world, is mature. So we -- this is an advantage that we have with our packages. It's a product that biodegrades quickly, it's recyclable, coming from renewable sources. That's another special advantage that sustainability brings us. E-commerce is a reality over the last 2 years. It was even boosted even more in retail. The share of e-commerce on retail before the pandemic was about 5% or 6%, and today, it responds to more than 10%, becoming stable at this level and growing. The projection for coming years is a CAGR of more than 21% and Klabin is prepared for that. We have platforms that meet the needs to accelerate the e-commerce of traditional customers as well as accelerating the sales at marketplaces and the pains that marketplace customers have. We are prepared to solve and provide solutions, and we also have our own paper product marketplace, Klabin ForYou, where we provide solutions for small consumers and even individuals. And with the entry of e-commerce, our customers are giving more and more importance to design and the appearance. It's a way of communicating when the product arrives at the clients house, they want to show their brand and their product with a sophisticated appeal and messages that may add an experience when the client receives that product. These are some examples in sustainability. We're very proud of showing you all this. The first example is our hydro dispersible package. We won the ABRE Award for Functional Packaging. It's a cement bag that is thrown directly in the equipment to add water and it dissolves in that paste, optimizing the entire chain, with the advantage of not having to take the packages and send it back for recycling. It's a high contribution in terms of sustainability and optimization. Our eco-layer bags for mortar, we removed a plastic film pellicle that was in the stack, present in this package, to extend the shelf life of mortar and their shelf life is increased. It used to be 6 months. And with the water barrier applied and all our barrier developments, we've been able to increase the shelf life and we were able to remove the plastic barrier with replacing it with a sustainable barrier. The example on the right, Bunge published on their website the change of the packages into adopting the use of paper bags and we are partners with a relevant volume. And with Vedacit, the change from the plastic buckets to a paper package, reducing the plastic footprint by 80% on this package. In terms of e-commerce, our Box on Demand project, especially the fanfold, where we provide a continuous corrugated board for the customer, and they make the package, exactly the box, exactly for that order, optimizing the packaging material, leaving no extra room that is not necessary, optimizing freight in the chain. We have our e-commerce solutions with digital prints or high graphic prints, adding the -- to the customer's experience. And on the right, the new developments in design and aesthetics, with packaging for customers such as TV, we also won the ABRE award. This is a low grammage bag, a paper bag, that brings sustainability, makes consumers' lives easier and adding to bring an experience to the customer. The display bags to replace the use of packages in the potato market. And at the bottom, it's a package for mattresses. It was sought out, especially for that. This particular customer wants to add an experience since the opening of the package and the contact with that mattress. So it's a sophisticated package to customers that really value the experience, that will provide to their final consumers. With all that, the growth projections, the chart on the left shows the size of the market and the growth, containerboard worldwide with a growth of almost 2%. And Sack Kraft that historically had a growth of around 1% over the last few years and the trend indicates to maintain a growth above 4%. So exchanged levels Sack Kraft for bags, but also great growth on containerboard expected for the coming years with all the appeals that paper packaging has. On the right side, we see that in the different markets, America -- Latin America is the fastest growing. And within Latin America, Brazil holds the highest share and also drives this growth up for the next few years. We are present at important markets that are growing at relevant levels for the coming years, and this is already a reality we have today. What about the future? What are the next steps in the packaging business? To summarize, you saw that historically, it is above the GDP. We have the trends that will now drive this growth even further. We are prepared for that with print and sophisticated products, meeting and solving the pains and the needs of our customers. We do have the advantage of integration that brings profitability to Klabin's model. We have our eyes on and to increase the level of Klabin's involvement, prepared to face all types of needs from our customers with our new products, with technology from printing to different or outstanding static products, adding value and profitability to our products in this chain. Have a great day, and thank you. I'll be available for your questions at the end.

Excellent Douglas thank you. Klabin has been delivering solid consistent results through its integrated business model that is diverse and flexible. A very present aspect in all of Klabin's business areas is sustainability. Let's now learn more from the results of the recent projects on this topic and what is coming, with Francisco Razzolini, Executive Director of Industrial Technology, Innovation, Sustainability and Projects.

Thank you. Thank you, Adriana, for the introduction. Thank you, everyone, who's following us. It's a pleasure to talk to you again at such a distinct dear audience. I think it's almost the 20th edition with Apimec, with this work with our investors. It's always a pleasure to talk to you, especially such a relevant topic for us as sustainability. Sustainability permeates as the essence of Klabin. Over the past many years, we've been working on this and with a higher focus at each time. On the most recent Apimec editions, we brought our trends and views of sustainability and how Klabin was working on this topic, in-house. At Apimec 2017, we brought details of our biodiversity in our areas, how we were working at that time. We were already showing we had 86% of renewable energy sources, almost 98% of all our raw materials were also from renewable sources. In 2018, we talked a lot about the macro trends, the megatrends and how Klabin was seeing these megatrends and how they would go or become part of the development of our strategy for our growth and investments. Last year, we had the opportunity of launching here at Apimec, our Klabin 2030 agenda that we named as KODS, the Klabin Sustainable Development Goals. These targets are 23 for 2030, involving 11 priority topics for Klabin, involving 14 out of 17 SDGs. And they were organized and structured in such a way that we can keep track of the targets, of the goals, the evolution of those goals. And that's how we've been addressing this and keeping up with them as they happen. This year, we launched an ESG panel with the company's portal at our website. You can go there or either through the QR code on the right of the presentation screen or esg.klabin.com.br. It has the performance and our evolution and our goals, our targets. Our ESG indicators, a complete panel with all the targets, in line with the principles or the main framework that says TCFD, GRI, CDP. And it shows the history and the traceability of how we are moving forward on each one of the relevant topics for our goals. We also worked on the sustainability road map, in line with our expansion plans. We've been working for future evolution. We've integrated the sustainability goals to the variable remuneration of all levels of managers, as well as all of our employees since they are all part of our [ BPR ] program, the payment program of variable salaries to all of our employees, all our workers. And we are counting on the evolution of the results in our ESG dashboard. What's very important in 2021 for Klabin was our approval in the targets that were science-based targets initiative. Our targets agreed on with SBTi. And with them, we brought a very important history in the reduction of greenhouse effect gases. We were able to have our reduction target already based on what we already have. The objective for that was around 165 million kilograms of equivalent carbon per tonne of product, we expect to get it below 130 by 2025. A lot of that is already happening with the projects that are being implemented, and we should be able to get it under 100 under 90. Our objective is to get to 88.8%, a reduction of 49% by 2035. Many people tell me or ask me if it's an ambitious target or not. And I can tell you, for those we've reduced 60%, 64% over the last 15 years. It's quite ambitious, but we've been getting very far in our processes with the elimination of greenhouse effect gases, but we still believe we can do more, go further. To illustrate that, we bring you here an example of the Transition Pathway initiative. This is public data that you can access on the Transition Pathway website. And we show you here, maybe it doesn't look as clear for you at home that are looking at it, but there's 3 colors from a darker blue to a lighter blue. The dark blue were the objectives before the Paris pledges, that lighter blue, we see what's actually going to bring the evolution of the [ blends ] temperature to a maximum of 2 degrees, below 2 degrees is the trend. Klabin is at that lowest level there below or under 0.2 CO2 tonnes per tonne of product. We have another 2 companies at the same level with us, one of them is a great customer of ours, FLSmidth, and the other Suzano, another Brazilian company. So we are very well positioned here. And what Klabin has been working on and doing, we've been trying to engage our entire chain and our customers. We've had a very important participation this year at COP26. We were the only company that was invited to participate in the business, meaning there was a select group of 10 global companies, who worked directly with the organizers of COP26 with the British government in the definition of the main steps for the industry, the private sector and the very important launch of the Netzero campaign that Klabin has embraced and launched the campaign in Brazil. Cristiano became our CEO, became the ambassador of [indiscernible] team in Brazil, working together with the Global Compact SDG 13 with the Global Compact. And we launched this campaign called Impacted to Netzero together with the Global Compact, seeking the engagement of companies to adopt targets to reduce greenhouse effect gases. We had a record participation of the Brazilian companies and all companies specifically the Brazilian companies participated on COP26, you have seen the results, and we consider them to be extremely relevant with the definition of the pricing system agreement for carbon commerce, also private commitments for Netzero and also the transition campaign financing, and also the resilience campaign once our global temperature has an increase of 1.1 degrees. And by 2030, it should be reaching 1.5 degrees. So important climatic events should be happening till then. As an important step also, how we are when compared to other sectors. Our pulp and paper industry is doing very well. I would say Klabin is at a very privileged position if we compare to other areas. Our sustainable economy, our renewable base do help a lot in carbon fixation and definition and implementation of new products, as you have seen in the prior presentations, in everything we have done. An important concept difference that we should mention is regarding carbon. A lot is being discussed in terms of carbon and how you can base on carbon credits that should be established and redefined once they already existed in the base of Kyoto Protocol, but now we're in the base of Paris Agreement and also Glasgow pledge. And we -- it will move on. The carbon balance in itself, and we discussed that a lot in Klabin. We do have a positive carbon balance. We fixate a large amount of it. It is calculated by the difference between the amount of CO2 removed from the atmosphere with the pre-planting in the reforestation and the stock that we have in preserved forest and what is emitted and the emissions by the industrial process. And the carbon credit are the representation of a carbon -- of a carbon tonnage that was not removed from the atmosphere and it was fixated. For this carbon credit, probably you might not have all the carbon balance that was credited in this line of carbon credit. For that, we need a principle that is called additionality. You have to contribute to the additional fixation of carbon. This is a very important step and is being discussed now. In the forest area, we do have a base for that based on the Kyoto Protocol [indiscernible], which is a Clean Development Mechanism and now we are transitioning to a new mechanism that might be called Sustainable Development Mechanism. And we have the carbon footprint and that measures the amount of CO2 or CO2 equivalent also considering other greenhouse gases that are absorbed in direct or indirectly over the useful life of a product or service, and that's important, so that we can understand the whole evolution here. And Klabin is also working on our finance -- the sustainable finance. And we have been pioneer and we are using the green bonds. Klabin has already issued sustainable bonds of $1.2 billion. And out of this $1.2 billion, we already used $420 million. In this chart in the middle, you can see the allocation of our green bond resources over the past 5 -- 4, 5 years, that is starting in 2017. And we are using that mainly for our forest management. Therefore, we are able to fix a 16 million of carbon equivalent with the investment of this green bond. Also in renewable energy, we are making important investments, ensuring the removal of 148,000 tonnes of equivalent CO2 vis-a-vis the reduced emissions as well as products and processes that are aqua efficient. Also important for Klabin this year, we launched our sustainability-linked bond based on sustainability performances. In this index, we have 3 main goals that are very specific, and this launching was awarded the ISG Deal of the Year from Bonds & Loans. Marcos Ivo and the whole team of IR, they received an award now in December in the U.S., and we are very proud of that as well. In terms of development and innovation, innovation and sustainability go hand in end and Klabin works focusing on the processes. Our sustainability is based on improvement processes and also to have reductions in order to improve the environment as well as have financial gains and opportunities and mainly those related to the communities, where we are at. What is new here is that we are moving now to gasification process for wood. One of our focus is for Puma unit. This is a new project in the region for Latin America as well. We have here the potential to increasing 1.4% our renewable energy matrix with that. And also now, we have an integrated plant of sulfuric acid, and in this process we've verticalized a little bit more. And this sulfuric acid plant will generate the acid by the residual gas. We use compounds of sulfur that is the base of the sulfuric acid in our annealing process. And by the recovery process integrated to the recovery process, we will be able to reuse this residual gas and produce sulfuric acid in the same site. As already mentioned by Flavio, Douglas, and Nicolini, we have a lot of work being developed by our R&D and innovation teams in replacing plastic films by repulpable solutions and also the multiple use of wood moving forward in lignin and also the microfibrillated cellulose, MFC. Another important opportunity that we are looking for has to do with certifications and services. Part of what we see as opportunities are ecosystemic services and Klabin has around 40% of its area, as preserved native forest. And we were able to have an initial certification with FSC environmental services by diversity conservation, carbon sequestration, our water areas and also a new certification with black liquor that is the main source of bioenergy and also our FSC certification for Pinus lignin. Our impacts have been very positive throughout the whole chain, and we develop also social work with the communities. We already have involved in their process, 43% of our suppliers. And also another thing that is very important for us is that in the last 12 months, we went from 17% to 20% in terms of women in the organization. We have legal forests. We already got the certification -- or I'm sorry, the recovery of 19,000 hectares of protected and restored areas from suppliers, from our vendors with already over 1 million seedlings planted in native forest. It's also important work in the communities, where we are now. We launched our social indicator -- indicator with 58 indicators, it's much broader than the [ IVH ] and it is being followed up in 12 areas, in 12 cities in Paraná and 15 in Santa Catarina. We also have an important work being developed in sound solid waste that we are implementing in different cooperatives. And we have a pioneer program of 100% circular territory that is being developed in partnership of the Telêmaco Borba City Hall, the Telêmaco administration. And we intend to have 100% of recyclable products for the region. Matas Sociais social woods is another important project for Klabin and its communities. It engages small and medium growers to this supply chain of Klabin and other companies in the region as well. This project already allowed for income increase for these growers and we have around 600 properties involved. And another project that makes us very proud is, sowing education. We have 14 cities, 11,000 students and over 1,000 teachers and we had an increase of 23% in our Basic Education Development Index. Important for Klabin now, so the -- some -- major. Achievements for this year, some of them we maintained such as the ISE, ICO2B3, WWF Index, also the Bioeconomy World Forum and commitments with The Global Compact, SBT, TCFD, ecoVadis in our supply system. And also 2 other important topics that are new now for November. Our presence in the Dow Jones Index for the second year in a row. Klabin improved in all the aspects that have been analyzed either in the social area, environmental area and also governance and we had our best score of all times. And just yesterday, we found out that we got AAA certification in the climatic change programs from CDP. We are 1 of the 14 global companies that participated out of the over 12,000 ones that we are the -- 1 of the 14 that got this index. All the team of Klabin of sustainability and innovation and also process improvement projects, technology, automation, technology, everyone work together, and we also had the collaboration of all areas. That places us in a new avenue. Our model has been work and boldness and that allows us to have a more sustainable future. Thank you very much for your attention.

Very good. Thank you very much, Francisco. And now to talk to us, and it's her first time at Klabin Day is Ana Cristina Barcellos, Tina. She is our Director for People and Corporate Services, and she is going to talk about projects focusing on management and succession and about ILP for everyone, please. Tina?

Thank you, Adriana. Good morning, everyone. It is a pleasure to talk to you this morning. As we have seen today, and we have seen over the years, Klabin has been having wonderful results and mainly results that are sustainable over time. But none of that would be possible if we do not have a competent team, a committed team and very engaged one. So this morning, I will be talking about 2 very relevant topics for us. The first one is succession. How we care about the succession about -- in terms of our leadership. Klabin in last years have been investing in accelerating the preparation of those that are mapped as potential successors in order to ensure not only the sustainability of the business but also to encourage greater diversity, encouraging again, great leadership practices and the turnover, as development possibility. Talking about our results in terms of succession and the result of this work that we have been developing in the last few years. Just looking at the last year, 64% of our changes to leadership positions, they have been filled in by internal succession. And if we look back in the last 5 years, this figure is 67% also showing how this work has been sustainable over time. We balance that out. We believe in the importance of having external oxygen into the company, but we are sure that we have prepared people to take over leadership position and that also ensures the sustainability of our business for the future. Another topic that I would like to share with you and talking -- now -- we now focus on our Director's compensation here. We see how this remuneration is balanced. How is the mix 34% of our remuneration for top management is based on a fixed wage 40% on the [ ICP ], which is our variable compensation for the short term and 26% were -- on our long-term variable compensation. Talking about the long-term variable compensation, we have 2 main programs, one is called the matching, where the Director can get the part of this short-term variable compensation and acquire by purchase companies shares, and then the companies will match that. After 3 years, really, the Director will really be the owner of these shares. And we also have another long-term variable compensation, which is called performance, and it is connected to long-term performance goals and for 5 years here. In the long-term incentive program, we aim to have an alignment in our leadership, also retain our key professionals and to ensure a performance that is in line with our long-term objectives. It's something new that we have. There is a long-term incentive program for all our employees in the leadership team and also our experts, we already have that. And there's something else that is new for next year, which is to have a long-term incentive for all our employees. This is a proposal that has been already submitted and approved by our Board of Directors, and they should be approved by the shareholders' meeting next year. We believe that with this program, we can improve the engagement of our employees in creating future values for the company. And how does that work? Just as the same or matching program that I mentioned for our top executives, All Klabin's employees, all employees of all levels, they will work with part of the Profit Sharing Program, that's optional. They can get up to 10% of what they received in terms of Profit Sharing Program. They can purchase company shares. The company will match them and that is also be related to a investing period of 3 years. When we reflected and designed this program, which is very innovative, especially here in Brazil, where very few companies have this type of program to all levels of employees. We have seen the results that we were able to get with the long-term incentive program that we were able to get with experts and coordinators. When we launched this program for coordinators and specialists, it was amazing to see the engagement of all of them in terms of following up the company's results and understand the impact of their work in the company's value generation. And so we did have an extraordinary engagement result much higher than what we imagined. So we had this idea of expanding the same program to all levels of the organization. We have here the maximum investment of this program. If all employees choose to [ acquire ] the maximum number of units is a small cost of 12 million, considering the huge potential return that it might bring us in terms of engagement, in terms of interest in following up their results and especially knowing everyone's impact in value generation and result creation for the company. These were the 2 main topics that I had to bring to you and share. So I will be available to take your questions at the end. Thank you very much.

Thank you. Thank you very much, Tina. And now for the financial results of the company and the strategies for Klabin's growth, I will turn the floor to Marcos Ivo, our CFO and IR Officer.

Good morning, everyone. It is a pleasure once again to be part of the Klabin Day. I'm also happy because we see presentations with positive results, but especially a future full of opportunities to grow and to continue generating value. We have seen in the presentations of our business units with Nico, Douglas and Flavio, how Klabin has been consistent in its strategy and the consistency also in communicating with investors, when we look at what we communicated in the same event in 2016. And remember that in 2016, Klabin was just starting to operate Puma I, a huge investment that has extended the company's leverage. Even then, at that moment, we were saying that the next years would bring more growth and more integration. That is greater participation in the business of corrugated boxes, especially. In 2018, with a greater clarity that we would do and the company was already very close to a balance sheet that would allow to make another investment. In the Klabin Day of 2018, we also gave you another sign that we only have a growth cycle with kraft, coated board and greater share of corrugated box in the Brazilian market. And also the bottling, [ another ] projects of high return, which are part of Klabin's history already. When we compare what was effectively done and now we are getting to the end of 2021, we found a great compliance to what was said in terms of the strategies execution that was communicated to the market in the past. The company carried out several small projects, but with very high return, as the last [indiscernible] of [ 340 ] million that we announced in June of last year -- of this year. We acquired assets of corrugated boxes for IP in Brazil that allowed us to have 6% in -- of market share in this business, strengthening Klabin's leadership. In our special project, the Puma II, with this first stage already in production and the second stage being produced with kraft and coated board. All of that, that compliance to the strategic planning, the execution in line to what we executed and previously communicated to the market is followed by growing results and these results are consistent. 2021 and now we can state that safely will be the 12th year in which Klabin increases its EBITDA continuously. We believe that this result in addition to investment is possible, thanks to the business model of this company, which is integrated because we have -- we work from the forest up to packages developed with our papers. It's diversified because we use to have several products. We have 3 pulp fibers. And I should highlight fluff and long fiber, kraft paper, coated board and all the packages that are developed with these papers. So this integration and diversity allow Klabin to have diversity to work in several markets, adapting to the economy cycles, and also the price cycles of our own products. And this is an example that we always like to mention the integration of corrugated box and kraft. When Brazil was going very well and GDP is growing in Brazil, and there is a strong demand of corrugated box, we reduced export volume and we integrate this paper in corrugated boxes. And the other way around also works because it is very easy for Klabin to export more this paper. And this goes also for the geography. So this is a crucial pillar of Klabin's results. Our business model allows us to have a great navigation throughout different economic cycles. I talked about consistency and strategy and the growth that we have from there. We talked about the growing and resilient EBITDA, but just as important is the return on capital -- on invested capital. Klabin explained that to the market, especially in the past years that we would have a changing level in terms of ROIC with Puma I. Puma I would be a transforming machine because it would allow us to have the right profit in the forest asset. We had a huge forest in Paraná that was used in Puma I and also because the result of the project, this was a project, as it was proven to be a very high return. In addition to the transformation, it brought to Klabin, allowing the company to have cash generation, to continue investing in other project of also a high return, allowing us to associate these 3 areas and bring the company to another level of profitability and a higher ROIC. So how do we see the company's investment ability. The company grew, and it changed the level it was at and now we have greater investment capacity. When we developed Puma I in the past, and we would look at the size of the investment vis-a-vis the operating cash generation of the company measured by the EBITDA, we had a very high multiple. That's why we reached the high leverage in 2016 [ pre start ] of the operation, then we took 3 years to deleverage the company. And it was this period of time between Puma I and Puma II that we needed to be deleveraged. And how do we see that now and [ on an ] easier way because the size of investments and the cash generation of the company is lower. And this you can see here in the screen. When we started Puma II in the second quarter of 2019, the leverage measured by net debt over EBITDA in dollars by Klabin was 3x. When we communicated the project to the market, we stated that the leverage would be much lower than what it had been in Puma I, and this now is already delivered to all of you. We can also safely say that the Puma II leverage peak is over. It was 4x between the end of last year and the beginning of this year. Right now, the company already has a leverage that is similar to the moment when it announced the Puma II project, and we should not be leveraging ourselves up in the second stage of the project. Now talking about the future. This a snapshot of capital allocation for Klabin in 2022. Klabin has a policy, which is public. It's available on our website about investors' remuneration. This is our dividend policy and also interest on equity policy. And under these policies, we will be paying dividends in between 15% and 25% of the adjusted EBITDA. Klabin usually is at and the average here in 20% and what we expect for next year is to follow on -- in the same level. In terms of expected investments for 2022 is BRL 4,700 million, approximately BRL 2.8 billion disbursements for Phase 2 of Puma II, BRL 420 million for special projects. The disbursement of the approved projects for -- in June of this year that were communicated to the market and the remaining amount for maintenance CapEx for forest and industrial maintenance. And what can we expect from the future? I think the title of this slide continuous growth will translate to how we see the future. We were talking about growth cycles. And now the word that, that best adjust to what we aim is continuous growth, especially because of the markets in which Klabin has a footprint at. And these markets are better today than what they were a few years ago. So we have major trends already discussed here. And they strengthen -- the demand for these markets is strengthened and especially because of Klabin's capacity to invest. We have greater capacity to invest now because the company has grown and also, we have greater future projects. So what do you expect that a company that had a CAGR of 19%, Klabin's EBITDA in the last 10 years has increased 19% a year. So we expect to continue this growth, facing all the factors that I mentioned, growing in the main business lines that we have now, fluff, long fiber, kraftliner, sack krafter, recycled paper and also in packaging. And I conclude my session here sharing a consideration with you, very similar to the one I made at the end of this event last year, and we consider it even more valid today than we did a year ago. We believe that Klabin is a company that has unique features for value generation. It's a company with very clear growth opportunities, which has grown and has very clear growth opportunities. It's a company with a better that is below 1. And even more than that, it's a company that we easily see in its results, its resilience and stability. No wonder we increased our EBITDA over the last 12 years. We've improved and our return on invested capital is at very adequate levels. The investments that Klabin has made in the past years assure us that this return will remain at a good level in the coming years. All of that combined in a world that is watching sustainability closer, the capital market is starting to look into this topic as well. Klabin, without a doubt, is a global reference for sustainability, not only according to our self-evaluation, but as clearly displayed and truly important in the levels of Dow Jones Sustainability Index and CDP. So the thought that I leave you with is how much these features are reflected in the company's pricing models. Thank you very much.

Excellent. Ivo, thank you. It's very gratifying to see that Klabin has lived up to the promises made in the past, and we'll continue delivering solid results in the future. So let's move to Cristiano Teixeira's final remarks, the Director General of Klabin. So Cristiano, please?

Thank you, Adriana. Thank you all very much. So this conversation that we're seeking today is to sell the company. That's our job. You're an investor, an individual that's a new audience for us that we are always seeking to explain ourselves better. Institutional investors, major investors, you all have views that are different from the company's view. But I'll try to summarize it in simpler terms and a day-to-day reality, so that we can recognize the company's role not only in its routine, but it's in its projections and future views. Look, it's very difficult, especially for you, the individual investor, who may not be able to understand the complexity of the business, but we're oftentimes called a complex company. But it's simple. It's very difficult nearly impossible to walk in a supermarket aisle in Brazil, especially aisles that sell food products or cleaning, hygiene products that you don't see a package that is a Klabin product. It's very unlikely that you do your personal care every day without using a Klabin product. It's very unlikely that women in their intimate routines don't use the Klabin product or elderly people or anyone that ends up using Klabin product. So [ that's ] very unlikely that you don't use a Klabin product in your daily life at this time in Brazil, but more and more so in the whole world. Klabin today is present in R&D centers of all of the major brands in the world. Our R&D department, our scientists are dedicated on product fronts to develop solutions that are biodegradable, the trends that are in line with what we hear from society and its behavior, what we heard at COP26. So Klabin is a complex company, yes, but it is managed by people of the highest quality, people who are focused. We have excellence centers and development centers for all our products that we work with. Therefore, a company that has this feature that for more than 120 years has been developing products to -- dedicated to behavior and that is increasingly more recognized for its forestry-based products. But it's a company that is not intimidated. It respects its past. It knows its history, but it looks towards the future without intimidation. So please go back to some of the events that we hold and look, and I'm not being pretentious. We want to be humble and with the serenity that we always present to you, investors. But look at the -- which company was it that started bringing the issues and trends for replacing single-use plastics in Brazil, maybe in the world. Go and look at who is -- it is that brought an eucalyptus-based products that was so innovative. When we talked about this product in the beginning, this product was not exactly recognized for everyone, as a high likelihood of happening in fact. And then, we said this product would be sold before the machine even started. So we have the recognition at least internally in our own group. The recognition that we live up to our promises. We make it a point to invest and grow the company without losing sight of this close relationship with you investors, making the payment of proceeds that attract you to participate in this company. We are very proud of what we are building of our past that brought the content that this company represents in terms of development, participating and businesses around the world. But maybe there is no other company in our industry with the relative growth potential that we have in all markets, where we operate, as Klabin does. Thank you all very much. And it will be my pleasure to answer your questions in a little minute.

Thank you, again, Cristiano. And now we will have our question-and-answer session about the information presented and the future projects of Klabin. [Operator Instructions] We have some questions here already. Ricardo Monegaglia from Morgan Stanley sent 2 questions actually without directing to whom he's asking. I'll read them and you help me see who answer. But in your view, the [ seedling ] and the pulp markets per region is different today when compared to what we talked about in the results presentation. What's the main change. I know, there are Chinese markets they are probably opened room for announcements of price increase in pulp. Second question, the prices of kraftline on ForEx remains strong at $950 per tonne and the favorable exchange rate for the company, which, in our math, can generate margins above 55%. It would help us to get an update in the payback sensitivity, in [indiscernible] EBITDA, who can answer the first question.

Thank you, Adriana. Now regarding our seedling, especially in the Chinese market, there was all this expectation that the decrease [ on the match ] that we were facing since around May of this year until about September, that this could somehow contaminate the other geographies. There was also an expectation that the reduced -- reduction of shipments that was significant over the last 10 months year-on-year, they got to 10%. In absolute numbers, this is about 2 million tonnes. This deviation of volumes per geography ended up not having an impact on price in other geographies because in cases like Europe, United States, even Brazil, they remained with a demand that was higher than expected, resulting that the market remains strong. China movement at this time and the pipeline is somehow empty. This express a decrease in shipments made the change to be at low levels, very low. The Chinese New Year starts in February next year. So traditionally, November, December and January, are stronger months in terms of consumption, but we also start to see a slight improvement in terms of the machine occupancy rate in the different paper segments. So all of these features ended up leading to an increase in price of $20 that was recently announced for the month of December. Ricardo, you are correct, the [ fundaments ] of the kraft market, as Flavio mentioned on his presentation are better. The prices today are at very healthy levels. And it's important to say that being -- they are in -- on healthy levels because the market [ fundaments ] are good. So that means that the economic return as measured by any of the indicators that you mentioned for the Puma II project is better today than it was a year ago, and it's better today than it was when we announced the project.

Excellent. Rafael Barcellos from Santander also has 2 questions. He did not specify, who is -- who he is asking these 2. But first, could you comment a little bit about the price dynamic for OCCs and if you see any change in the drop of prices for boxes. And if you can talk about the price increase level for coated boards for 2022?

So the OCC prices are stable at around BRL 1,000 per [ ton ] in the Southeast of Brazil. We'll always have a pressure for cost optimization, of course, but the demand remains good, and the projection for us for the next year is of good demand. And so we want to maintain our margins and our results at this profitability levels. And the second question -- so answering the question, we have very solid fundamental basis, we have low entry of capacity in the type of products that we make. It's more of a contracted market. The prices are more stable. And they have had important adjustments in 2021, part of it will be naturally visible in 2022 with the expiry of the contract. So the 2-digit growth will be there for sure.

Wonderful. Now Marcio Farid from Goldman Sachs sent his questions. Can you please talk about the vision on supply and demand for the kraftliner market globally? We also saw some plants in China recently converting to produce kraftliner from short fibers. How does Klabin stand out in these -- in terms of these products compared to other companies?

It's me, again. So first, we see that mature economies are doing quite well in our base scenario. The United States remains with significant growth, Europe as well. The United States is a major player in the global market for kraftliner. Throughout this year, they collected 1 million tonnes. So being the largest exporter then maintaining that in their domestic market have allowed the prices to behave as we all saw. The base scenario is still that. We'll see the entry of capacity, especially in recycled papers, where the major continents United States, Europe and Asia, and it should bring some rebalance of supply and demand, but still maintaining prices at a high level, with some correction towards the end of the year. About the specific Eukaliner question made 100% of eucalyptus fiber. It's not trivial. Klabin has had that for decades. Klabin had a conversion in 2000, 2002 of internal paper and Machine 6 to the kraftliner world, and it remains a productive machine. And with that machine, we started to learn on how to use eucalyptus and it was the support for all of our current developments to be able to launch now Machine 27, Machine 28. And that's how we treat the surface as well. We have specific equipment that have brought important benefits to this product. But it is a trend, Klabin has challenged the industry that is anchored on long fibers, but it will be a trend for the future to see a share of short fiber naturally in this market because we want a competitive product to compete in the -- with the plastics market, for example.

Excellent. We have 2 questions here from [indiscernible]. First one is for Flavio. Slide 22 is interesting. The change from plastic to paper has been visible in the growth of the box volume and your -- with your European competitors. But being said that this growth will be even greater, and your slides suggested an increase of 1%. Does this cooperate a view that the demand may be bigger in the future, the global prices of containerboard are high? And in my opinion, they will be higher for longer. So what do you see as the main positive and negative points for the market in 2022? And the second question will be to Douglas. I'll read it now. What are the challenges to lead customers to change from plastic to paper, the higher cost of paper compared to plastic use shelf-life machinery in the -- at the customers? Can you give us an idea of how long this may take from the initial meetings until the paper package gets down to the customers' lines? We'll start with Flavio, the first question.

Thank you. It's a very interesting question. First is a correction. The slide was not very clear. But what we have there is volume in millions of tonnes, not percentage. The caption was missing. But as I said before, many of the consulting firms, including those who Klabin has worked with have a more conservative view in terms of the potential for migration. They look at the simpler side where technology is not a barrier. We can replace some plastics today directly, but they also look at the investments made in machines that do the storing or this packaging and they will depreciate and have the correct time for replacement as well as the size that depends on technology advances, more complicated barriers, water vapor, oxygen for the LPB market will take longer. But the consulting firms stand to be more conservative. We do see a potential that goes beyond the projections. I have an example on China. China did a very relevant transformation of its fiber bases. They moved from recycled fibers. They were the largest importer in the world of recycled fibers. And today, they collect and buy more virgin fiber, both in paper and pulp. But they also did an important transformation in terms of consolidation. The main paper players there today are larger. Less efficient plants have been closed or incorporated, and it also promotes at least in terms of volume, very relevant transformation in the plastics universe. So an important share of the investments in that continent is precisely to meet this demand. And a lot of this paper will stay there within the country, replacing, for example, plastic bags and facts. This is a very interesting scenario, a balanced scenario that shows potential that goes beyond what has been protected so far.