Hello, everyone. Welcome. Before we start our day, I would like to start with a lot of energy, with a special good morning. Is that okay? I will greet you and I would like to hear back from you. Good morning. It's very nice to have you here. We are starting our Klabin Day 2022. Welcome. I am Ludmila Dutra and I will be here with you this morning. Thank you all very much for all of you that are with us in this Klabin day. I would like to specially thank the board of directors of Klabin on behalf of Paulo Galvão, the Chairman of the Board. 2022 was the year of a number of achievements, and now is the time to share the results with you. This is the moment to analyze our advancements and talk about the guidelines for the next cycle. Before we start, we have some important information. This event is a hybrid event. That is, we do have an in-person audience, we have people that are following us virtually. We are prepared to organize interactions and demands from all areas. Safety is crucial to Klabin. That's why for those of us that are here in person, we would like to remind you that the emergency exit is at the back of this room. The team will be available to address any of your needs. If you are with us from your home, we do have simultaneous interpretation from Portuguese to English. At the end of our program, we will have a Q&A session with Klabin's directors. If you are here in person at the event, you may identify yourselves and ask your questions directly. If you are following us remotely, and that is virtually from your homes, you can ask your questions by the QR code that you will see now and during the programming, and it's going to be at the bottom of the transmission. Do not forget, please identify yourselves. Please state your name, the name of your company or institution, and a email for contact. These were our initial messages. We have here with us, Cristiano Teixeira, Klabin's CEO. Alexandre Nicolini, pulp director. Douglas Dalmasi, paper and packaging director. Flávio Deganutti, paper director. Francisco Razzolini, Director of Industrial Technology, Innovation, Sustainability and Projects. Marcos Ivo, Financial and Investor Relations Officer. Our forest director. Also Tina Barcelos, People and Corporate Services Director. Thank you very much and welcome. To officially open our agenda today, I would like to turn the floor to the Chief Executive Officer of Klabin, Mr. Cristiano Teixeira. Welcome, Mr. Teixeira, a round of applause to him, please. Good morning, everyone. Thank you. I would like to ask you to turn to the first slide. Another one, please. That's the slide. We can start. You can put all the images on this screen. I would like to start by thank you all for being here in person. I know that we are not used to going back to in-person events, we did have a good turnout considering what we were doing during the pandemic. Now we also have those that are following us remotely. I would like to bring to you a quick presentation, especially for new investors that might not know our history. Each one of us, directors will have quick introductions. I started in the pulp and paper industry at Ripasa in the 1980s. I had experience there with some of the directors that are now at Klabin. I had a long career at Duratex, where I worked for 13 years, and then Itaúsa Group. I turned to a drilling, oil drilling company. Fabio Schvartsman invited me to come to Klabin. At Klabin, since Fabio left, I took over as the CEO. Each one of us will make a brief introduction, mainly focusing in the new Klabin investors. The first importance information that we need to put into context is our economic situation. Then I will turn to our business model and the main highlights that you have seen that you will be seeing that our directors will talk about. Our economic scenario, it really poses some concerns, you know that from information that you get from the market. We know and we are sure about the defensive and resilient and perennial model that we have, the planned model. Klabin's officers are not distracted by the short term. Our pieces of equipment, our business model is a business model for the long term. This short-term distraction that might pose some curiosity, and we are always available to take questions and bring answers. You need to understand the mindset of these officers. The mindset of a company that is designing today something that is going to be realized 15 years from now for machines that will last 50 years - 60 years, machines that are now generating a lot of value to Klabin, and they are already 50 years old. This long-term structured business and a sound business that is not distracted, at the same time is not running a risk of being dogmatic. Dogmatic, I mean, here, it's, that in a sense that, we actually believe in the rigorous planning of we want to achieve. We discuss and we discuss Klabin and we talk about Klabin's in 2030 to all our employees. This is a strategy that we build starting at the top management of the company, and then we engage it via communication and talks to all the employees of the company. We have conventions with managers and coordinators. Yesterday, here in the same room, we had a direct communication with 580 coordinators of the company. That's what we call the middle management or the middle leaders. Not only bringing to them our 2023 vision, but also our 2030 vision. It is this business understanding, this soundness in our mindset and the perennial model without distracting ourselves with the short-term issues, and that's why we are always focusing on growth. The forest area of Klabin is preparing itself to new cycles. We have a great awareness about where we can get to, especially related to what has been done in the last five years. If we project to the next, 10 years, if we go back to the idea, to the planning of Puma that we built in 2013, throughout this period, we were focused in this area, in the forestry area, that today is managing 50 million tons of wood. This is the largest movement of wood in the world in a single place. In the past few years, in addition to having prepared the construction of the forestry base to supply Puma II that is ready now. In addition to having done this process of mapping areas, buying third-party wood that is going to bring us, especially right now in this mixed anticipation moment, and you well understand it, we are anticipating the use of pine wood, especially because of the machine curve, the Machine 28. Some of the products that were to the middle and the end of the curve of the machine were anticipated by commercial negotiations, and they will bring more value and more return on invested capital for Machine 28 for example, to coated board for beer, and we're gonna talk more about that. That anticipation of pine wood made us replan ourselves, and now we are ready, and we already have formal commitment of all our suppliers for that period, especially for the first rotation in the forestry supply. The second rotation for wood for these machines is already having the forestry. It's already being planted close to Klabin. We always say that we are going to buy third-party wood in the beginning, especially when we bring in a special mix of fibers that have not yet been planted in our region. We are gonna go get this third-party wood. During this period of time, we are acquiring areas that are closer to Klabin. This, the first rotation, the second rotation of the machine, it will be at for those, the average distance will come down. The structural cost of wood that basically today is determined at the region because of the distance, because we already have the highest forestry yield. The trees grow faster than in other regions, and that determines the distance cost. This distance comes down in the second rotation of the machine or in our first rotation of our wood, the wood that was planted by ourselves. We'll talk about pulp. Today, we have a focus, and we have always told you when we brought in the Puma Project, it already had a special characteristic. It had two dryers, three types of pulp, two types of fiber, seizing a great competitive advantage that we have in the region, which is the pine wood. You will see in Nico's presentation that this focus is greater now, especially preparing for what we understand that is important, that is bringing focus to niche products, especially in fluff, and bringing a future view growth that is in line to what I mentioned, for the forestry and already having a trust that we delivered the enough supply for Puma II. Then talking about Kraftliner and Coated board. I would like to draw your attention to first, our Eukaliner. The Eukaliner was the first kraftliner that was manufactured with 100% of eucalyptus, but we had a lower cost, it was a lighter paper. For those of you that do not know it very well, please pay attention to each business model when we have those presentations. When we talk about packaging paper, you will see the versatility of Eukaliner. To date, this is a product that is known worldwide. Six years ago, Klabin announced in a conference in Chicago, and that's where I say this is the Mecca of kraftliner. We announced that this product was going to be made out of eucalyptus, 100%, and a much lighter product, and it would be better for transportation because it was a lighter material. A lot of people questioned us at the time, but we were already working, we were already doing a lot of R&D on this product. When we placed this product in the market, in the beginning, people asked about it. We tested it all over the world in the main converters, they said it themselves. These are clients in other business areas, they are our competitors. They proved the cost reduction, especially in energy consumption and less fiber per square meter, therefore a very versatile product. Another product line that I would like to draw your attention to are coated boards. Coated boards, Klabin, they are bringing us an opportunity to replace other types of packages, for instance, plastic, at a speed that was higher than what we expected. Thus explanation, we are anticipating the consumption of pinewood, and that has caused a reaction in our forestry area because it's ready for the supply, but this anticipation of the pinewood consumption and the response here, and the input comes from the market for this anticipation and the replacement of plastic. The first product that drew Klabin's attention, we'll talk more about it today, are the liquid products, specifically milk and beer. These products, since in the midst of the pandemic, were already posing a higher demand for Klabin. Like milk, food, beer, we are 70% food. I come to our packaging area. Klabin has, in its integrated business model, we always focus on that word when we go towards the end of our chain. We prepare, we invested in R&D, we have the best forests, the most productive ones in the world. We have a pulp area, which is a niche one for specific markets such as diapers and that is with a high added value all over the world. We have papers, versatile papers, especially for e-commerce or any type of packaging, secondary packaging. We have our Coated board that is very close specifically to replacing plastic, and we have our conversion area. Our conversion area, therefore, has this integration, then stability. That really helps us in the commodities' sinusoidal curves, thus turning Klabin into a sound company, even in a moment where we have economic instability. Something that was discussed by everyone, and I would like to draw your attention, this is the right moment. 2023, in my opinion, is going to be the perfect time to show and to prove, not because of the dogma, but to prove by the belief in the business model how much packaging will normalize, will stabilize Klabin's results. As international prices come down, especially in packaging paper for corrugated boxes, we then reduce exports. We reduced the purchasing of third-party paper. We regulated our own plant, our own recyclable paper production, and we increased our conversion capacity. With transfer price at the market, ensuring a profitability that will ensure the best return on invested capital on the machines on the forest. Therefore, Klabin's ROIC, which has doubled in the last, in the last 10 years and will continue increasing, the answer to improve the ROIC is in the integrated model with products that are focused in perennial businesses and with a strict planning, sound planning, with no distractions in the short term. Finally, moving away from our business areas, we'll have an opportunity here with Francisco Razzolini to talk about the carbon market opportunities. That's very interesting. We came back together from COP. We had direct participations in interesting negotiations, also with Brazilian negotiators that represented us. Therefore, Itamaraty was representing us in negotiation that COP. Also Ana Cristina, she is our Management Director, and she's going to talk about the ILP for everyone. If you do not know this acronym, this is something that we have here. This is an inside acronym, Tina can tell me if I'm wrong or not, but I believe this was the first company in Brazil, maybe the few companies in the world just thinking about if we consider intensive capital companies that allowed all employees. I'm talking about the lady that works in the kitchen, the guys that work on the shop floor. All employees can convert, in this first year, 10% of their profit sharing distribution of their Annual award into Klabin stocks. That allowed us to have an amazing engagement level. We are now seizing this engagement level. The response, the feedback of our employees was really surprising. It is surprising because I mentioned our kitchen lady, and she really went after our officers for a better performance. I'm very glad to say that. I think this is the first company in Brazil and probably one of the few in the world that has distributed stocks to all employees of the company. Thank you all very much. I would like to quickly introduce our officers. Sandro is our next speaker, so I will take over the emcee's function. For those of you that do not know Sandro, he is our new Forest Director. I will put things into context here so that it's not too vague from, like, where he came from. That's why I'm going to introduce him, then the other ones will introduce themselves. Sandro has almost 30 years of Klabin. He started in Igara, right? With Douglas and other colleagues. Almost 30 years of Klabin. He started as a controller in the forest area in Santa Catarina, the controller of Santa Catarina factory in Otacílio Costa. He was transferred to Puma. At Puma, he also was project controller. He came and replaced me. I went to operations. I was from operating planning. That's how I came into Klabin. I went to operations. Sandro came in. He replaced me coming from Puma. He worked on the plant's operating planning. Now we invited Sandro because Tati retired, and we are very proud for his leadership and everything he has done for the company. At the end of the year, Tati will retire, and then we are transitioning. With one year, I would like to draw your attention to that, with a year ahead of Tati's retirement, Sandro worked with him. They worked on a shared management, and that's how it was announced in the company. Now Sandro is taking over by himself. Good luck, Sandro, and welcome. Now the floor is yours. Thank you very much, Cris. Thank you for the introduction. It's a pleasure to be here. It's a pleasure to be here and to talk about our forestry area and to talk about it to all of you. I would like to start by showing you our main figures. Cristiano already touched on them, we have good numbers this year consolidating on important guidelines of our planning. We reached 349,000 ha of productive areas, this figure means a very important landmark because it has a conclusion of over 90% of the expansion program of our base for Puma II. Right now, we are moving on with our expansion program in a more strategic and selective fashion, always aiming at maintaining the areas with better quality and especially reducing the distance, bringing our areas, our structural base, closer to our operations. We also have some planning for 2023. It's structure planning for the reforestation program. 2023, we want to exceed 50,000 ha of reforestation within a year. That's a very important reference for the forest area. We've been planning and getting ready for over a year now. This is turning into a reality. Like Cristiano said, the operation close to 16 million tons per year. Very important move. In Paraná State alone, approximately 14 million tons. It's very important to say as well that we work very intensively. Well, in the beginning of our business model, diversification of fiber, it all starts in the forest. We're very careful to come to a balance among different fibers and pulp. It brings us a lot of benefits and opportunities in operation. Now we can have a planting program that is relentless. We plant all year round trying to find the best location in the area. We rotate areas according to the cycle and the species response. We're constantly getting ourselves ready to different fiber and pulp diversification, which always starts in forests. Here we have a direct link. We think about the base condition of the forest. This is very diversified with different fibers and pulp. This is very nicely integrated and very strongly integrated in our plants. Allowing these plants in units to put together different fibers in our production line in order to react very promptly to different products for different types of applications, responding with our production for the right demand. Like Cris said before, we were very well prepared to Puma I and Puma II, including the forest bases. This allows us now to be very fast and agile for this increased and diversified demand for softwood. Flávio is going to tell you more about it later. Here we want to share and show you a little bit of our supply strategy. Like we always say, an expansion cycle in the window of opportunity comes to meet a need of acquiring third-party wood in the first cycle, in the first rotation. This topic is one of the most well-planned from the moment we make a decision to expand our capacity, because we have to have guarantee that we'll have the wood so we can promptly plant in order to be in a stable operational cycle. As we can see with eucalyptus, we are already in a very strong ramp-up phase for the following years. Stability is planned more recently. When it comes to pine, because the cycle is longer and we are always benefiting from market demands for this fiber and pulp, the cycle is slightly longer. This shows an overview of our planning system. These two pictures show you a little bit of our years ahead, and this is how we're going to work and operate our forests. It's important to say that third-party wood that I showed you in the supply matrix on the slide before, it was fully mapped before we made a decision for the project. Today, it's almost fully contracted. This allows us to plan our operations for the next five years, this is fully designed, know exactly where we are going to be, the volume that will be delivered by region, the needs to be met by every region, because naturally, we are not there. We have to have full respect for all this planning. This has been on for about two years now, and it takes into account where the wood will be taken in the cycle. The second map is really cool. This is when we reach stability, and it has to be on our radar. Just to give an idea in terms of distance, we'll be operating in this phase in a radius, depending on the year, slightly longer, reaching 150 km- 170 km. Once we are stable, this number is under 100 km, keeping the structural and competitive distance required at Klabin. This is our daily operation, not only planning our operations, but also a vision for stability and structural competitiveness. To end, I would like to show four major drivers for the forest area. These are strong investment in R&D, technology and innovation everywhere in all business, but very strongly in our forests. Our fiber and pulp diversification allows us to be very keen with R&D, rotating areas, always trying to have maximum productivity and yield in the areas where we are. Second driver, today we're fortunate enough to have an expansion program for a forest base, different areas, this is nearly concluded, like I said before. Next, the operations for the next four to five years has been fully mapped and designed and always in our operational schedule, which includes structure, the operations required to run the cycle. Last but not least, because in forests, I'd like to say that the future is right now, we're moving very well in the base expansion project in Santa Catarina State, reaching 35,000 ha added to our base already being planted in order to cater for our future expansion on that site. This is what I had for today. Thank you. We're here for you. Thank you, Sandro. I also thank Cristiano. Thank you so much. Before we move forward, as a reminder for those who are following us remotely, you may also send your questions. After presentations delivered by the management, there will be a Q&A session. All you have to do is to send your question via QR code on the screen. For those of you who are here with us in the room, a microphone will be brought to you so you can ask your questions and interact with us real time. Now we'll be addressing the outlook for paper, pulp, and packaging. The first speaker is Alexandre Nicolini, pulp business unit officer. Welcome, Nico. Good morning, everyone. Welcome. I'm going to be on this side so you can see the slides carefully. Just a brief summary of my career. I joined Klabin about two and a half years ago. 29 years in the industry now. I started back in 1992 in the old industry of Simão, which was acquired by Votorantim Group back in 1993. I've been through other Brazilian companies in the industry as well, also multinational company from Sweden and Norway, before I joined Klabin in mid-2020. It's a pleasure to be here, and I'll open my presentation addressing the pulp business, making reference to our diversified product portfolio. Klabin is the only Brazilian company that sells three types of fiber and pulp: eucalyptus, pinus, softwood, and fluff for eucalyptus and pine. It's important to highlight this diversified portfolio. The single purpose is to show you that Klabin does not rely on a single product. Why is this important? This diversified portfolio brings an important contribution to the results of the business unit. Today, for fluff and softwood accounts for 38% of the EBITDA margin of the whole business. When it comes to production, it accounts for only 1/3 of our total production. This diversification and geographical flexibility allows us to work on key strategic options. On the one hand, maintain our strategic accounts. Clients whose relationships are long-term started working with Klabin since we started Puma back in 2016, with a very strong relationship, and we maintain these accounts as top priorities for us. On the other hand, we have the commercial area jobs with relentless demand for our products above our production capacity, allowing us to make some choices in terms of having the best revenue management. It all converts into this slide down here showing our geographical footprint. This footprint has been changing over time. The main assumption is always to search for the best results. Brazil is one of our priorities at all times, be it in terms of lower service costs vis-à-vis the international market, but also a geographical distribution that does not heavily depend specifically in one region or another. I underscore our revenue management, which has been one of the key aspects of the pulp business results over the years. This has allowed us to contract in recent years, and also for 2023, 90% of our production. This percentage is quite high, and it brings us better predictability, better outflow of our products, and confidence about the perpetuity of the business. The remaining 10% are maintained as sales to the stock market in order to optimize our earnings. Where is Klabin, or in the global pulp market? Basically, we are in three segments: hardwood, softwood, and fluff. All segments are growing with demand projections that are very significant for the coming years. Consulting firms address and talk about a demand of over 11 million tons, including all fibers by 2030. A period from eight to nine years, very similar to the growth that happened in the last decade, which was 14 million tons. Annualized accounted for 1.4 million tons of demand, additional demand over the years for all pulp and fiber. For softwood, Klabin competes with high cost manufacturers. Despite lower production volumes, considering we've been concentrating our efforts in the fluff market, Klabin plays a very important role in the Brazilian market. Today, we are a supplier with over 80% of the Brazilian market share in softwood alone, not only paper, but also fiber and cement, with a very different dynamic compared to board and paper. Lastly, the fluff segment, accounting for 10% of the global pulp market. You know, Klabin has put a lot of energy in the sense of increasing our exposure to the markets, this will be the focus of my presentation over the next slides. Projections for fluff growth. These are very sound and healthy, just as goes for other pulp. Considering projections from the major analysts in the market, we expect growth of 3.5% from 2022 to 2040 on an annual basis. These projections and forecasts are very conservative, considering some segments of the fluff market have demand growing far more than 3.5%. At the end of the day, we bet heavily on this segment, and we dream high in our future to develop new capacities in this specific segment. What are the major growth drivers for the fluff market? Obviously, increased expectation of the population is the main driver for demand growth, which is broken down to different drivers like populational growth and demand for personal hygiene, personal care product, change in female care products, particularly in developing countries. That's a very important thing to take into account. Populational aging, which allows us to maintain lifestyle and welfare of the population at large. Innovation and development of new products is another driver, obviously, to meet the expectations and demand from the market. Finally, increase in income. I highlight specifically the increase in adult incontinence. Like I said, we project growth of almost 5%, which is way above projections for annual growth for the fluff market at large. Who are the major players in the segment? Here I show the main players. As you can see, this segment is very much concentrated. three producers in North America with 85% of production, annual production of fluff and softwood. Klabin ranks four for the last two years, considering all our efforts and assumptions to increase our production capacity for fluff. Other manufacturers as well, as you can see on the slides. When it comes to competitiveness, Klabin stands out in the market. It is the lowest cost producer in the world. Here I show our average cash cost forecast on a global basis. It also includes the cash cost of Klabin, which is the lowest, and also other manufacturers in Latin America. This strengthens our cash cost, which is very high. Please bear in mind that these data are the most updated data. Maybe they don't include the marginal cost increase for the last two years, the inflation process that we're all going through. We also highlight some manufacturers. For instance, number eight, the cash cost is greater than $900 per ton. It makes us believe that the floor cost for this segment is very high, and that's a market where we are more stringent when it comes to price compared to other pulp that are more commoditized. I also highlight things related to production lines of these high cost manufacturers. These are old lines. Obviously, these projections of cash costs are average projections. They don't include by plant, by factory. We all know what happened this year, closing capacity, for instance, WestRock closing units at a time in which the market reached historical price levels. We're based on this assumption that we believe that Klabin will stand out as a player for fluff in the future. What about our approach in the fluff market? This is one of my favorite slides and I'd like to share with you now. It's a little bit of the history of Klabin. Ever since the beginning of our operations in the production line of the Puma Project back in 2016. In 2016, close to 80% of our production was concentrated... I'm sorry, the laser pointer is not working well. 80% of our production was in softwood and 20% production for fluff. This market's dynamic is very different. Sales are more technical. Over the years, Klabin has been increasing its exposure in the pulp market. Please bear in mind we used to have a single product, which was the base product. Fluff was not treated, untreated fluff, and it remained in our portfolio from 2016 to mid-2019. We worked a lot on this, the innovation area, the commercial area, in terms of trying to explore a specific niche for this segment, bringing more added value. Considering this, as of 2020, Klabin started the test and qualification of several other products focused on such market niches from one to five products. Out of these five products, in 2022, 7% of our sales for fluff are related to these new products which were recently launched. Starting 2023, we'll more than double the sales of specialty products, growing to 15%. This is the assumption that we'll be using ahead. Now I bring more color to these five products that Klabin has developed. Please note that this stems from a single production line. A production line which is Machine 26 already achieving some record levels, the world record in terms of speed. This machine has huge operational excellence. We manufacture five products in a single production line without interfering our efficiency in that particular machine. Out of the five products in our portfolio, I'd like to highlight Pine Fluff Excel, which is in yellow. Just like to comment, this is a new product and now it is included in our portfolio. The official launch was in October this year. This product has the best from both fibers, eucalyptus and pinus pulp. This product is very disruptive. Nobody else in the world manufactures this kind of pulp to date, and demand is very significant by our clients. It's very cost efficient for us manufacturers and customers as well, but with very significant margins. It begins to be part of our portfolio starting in October this year, like I said. This is where we're also going to put a lot of focus starting 2023, in the sense of promoting this line of products to specific niche markets. All these efforts oriented to our operational excellence and the production of different pulp grades, the performance of the commercial area contracting 90% of our production. It wouldn't have been possible if there weren't investments in logistics as well. Klabin will open a new terminal in December this year, part 01. It is state-of-the-art, a terminal that is interconnecting the plant to the port, eliminating completely the need for trucks. In terms of sustainability and also in terms of operational efficiency, it brings significant gains for Klabin cost-wise. At the end of the day, we'll double starting next year our operations in Paranaguá port. As my take-home messages, I would just like to highlight our focus on niche markets. I told you before about eucalyptus and the three basic assumptions: excellence, high level of service, revenue management. More specifically for fluff and softwood, focusing on niche market with higher added value that may contribute very effectively to the global earnings of the pulp business. All this global acknowledgment already achieved by Klabin is due to the high level of service delivered to our customers and strategic partnerships already set. They all allow us to contract more than 90% of our production, like I said before, considering the solid and sound client portfolio. The focus for the future is high competitiveness. This is a business in which competition is very important. Focus on operational excellence, continuous optimization of our pulp and fiber portfolio. As a pillar, innovation and sustainability. At the end of the day, this will allow us to go to market and improve our capillarity in the global pulp market. I end my presentation. Thank you, and I'll be here for questions. Thank you, Nico. Now we'll check the performance, challenges, and the outlook of the paper business. To talk about it, I'd like to invite upstage Flávio Deganutti, he's the paper unit officer. Welcome, Flávio. Over to you. Thank you. Thank you. It's so good to see full house and also people in a hybrid environment, everybody keeping an eye on Klabin. I have a brief presentation. My story is mixed with Klabin. I've been here for 23 years. I come from countryside of Mato Grosso do Sul. I studied engineer in Paraná, and I joined Klabin going through the industrial base. 17 of the 23 years I was in Paraná in Monte Alegre plant with multiple products and one of the stars of the company. The paper business, I think you'll recall, last year I spoke a lot about Eukaliner Machine 27. That's a dream that turned into reality. Cris reminded us of his speech back in ECC in Chicago six years before. The crowd was speechless. Kraftliner, 100% high-performance eucalyptus, brought a lot of questions to people's minds. When this was converted into reality, which is Machine 27, tested and approved by Klabin in its operations and also in Europe, Italy, for protein and fruit manufacturers, it confirmed that Klabin's promises turned into reality. Today, my focus is on the coated board market. We are about to start a new dream with Machine 28, which is being built. I'm going to show some photos for coated board, which is the main benefit from these single-use plastic for our units with fiber products. Look at the size of the market. 27 million tons of virgin fiber coated boards. 20 million board from recycled fiber. This market has grown very significantly over the pandemic. Consumption at home, e-commerce, and the replacement of materials gained momentum in this cycle. You're very familiar with Klabin's performance. Klabin has a strength, which I highlighted before, three stars. LPB, liquid packaging board. CUK, which is for beer cans and bottles. Two universes that benefited from additional demand owing to replacement. We're also active in the folding box board in orange, 11 million tons. FBB, particularly for boards that require high technology, soft wood with special folding, and therefore, they need performance in the point of consumption. Specifically for LPB and CUK, these are brown pulp products. Most of these boards, 5 plus 3, 8 million tons, this is part of the base brown pulp market. This is how it goes. This coat has different layers which cover the surface for LPB and naturally for beer, we need strong soft wood, which is what we provide. I always bring some news here. Please note this landmark of 80% of the 27 million tons. These are white pulp product, 100% or mostly white, particularly the base layer. We don't play this game, we'll become a player soon. We're just about to do it in the final approval phase to get the machine ready also to be in the white pulp market. Without compromising the supply for market pulp, like Nico said. Through debottlenecking, we also managed to manufacture white pulp Coated board. Why does it matter? We're getting to SBS, we have an avenue for growth in solid white board, we also have an avenue for growth in FSB, the darker green of 5 million tons. FSB is Food Service Board, tray and cups. I'll bring you more color later on. Big fast food chains, large food consumption, they need this kind of application. That's why we want to open this kind of avenue for Klabin to be in the flexible market. Bringing you more color about the liquid packaging board market. The long story since the 1980s, Francisco started this project with our colleagues in the past. It's a hard time. The only manufacturer in the Southern Hemisphere to produce this high-level board as we do today. As you can see, well, everybody used it before. We don't have a better way to store milk, to give long life to milk. Maybe it's trivial for more mature countries, but it's not easy for developing countries, bring it from the field and allow long life. The same goes for functional foods that are increasingly being more prominent. As leadership, we are one of the major LPB manufacturers in the world, opening the avenue I said before. Part of LPB boards, just as in the U.S. and also in Japan and in Australia and Korea, they're exclusively made from white Coated board. This machine also has this opportunity, and that's where we grab a lot of contracts signed by the company. I have another highlight. The future agenda of this Coated board goes through one route, which is to increase the content of fibers. You know that this Coated board needs layers of aluminum and polyethylene to improve the life of the package. All the agenda with a major packaging manufacturer in the world includes one element, which is to increase the content of fibers. We have some triggers. To reach 80% of fibers involves the whole chain. That's going to reduce our carbon footprint. It's going to turn easier the recycling process. That becomes a noble material for the following material in terms of recovery of that. I also have some color on the CUK, coated unbleached kraft, which is especially dedicated to beer. If I go back to 2018, we had two digits growth year-after-year here in Brazil. A part of the plastic films that we see that unitize 12 cans or bottles have been replaced by packages like these that you see here. There is not a limit in terms of the technical limit here. We have machines that operate well with plastic and offering solutions as Machine 28 will do. We bring immediate solution, and that has to do with agreements towards that direction. I highlight here our tech team. You see here MFC, microfibrillated cellulose. It's a way to offer the same Coated Board with the same functionalities, but in a lighter fashion. The only way that we have now to offer a lighter Coated Board for this application is by using special fibers as the ones that we manufacture in Paraná. Also some color in the Folding Box Board. We do not have an operation to work in this world exclusively with hardwood and Going back to what Cristiano and Sandro mentioned, these are TAC coated boards for the high-end segment. We associated our coated board to barriers. You heard about an important investment of a barrier applier. Dispersible barriers that replace plastic films, that usually replace the coated boards just like that nice pizza that we see here in this image. Just like the detergent packaging, they do have a plastic film, because there they need a water barrier. Klabin is ready to launch a product that can work well for that application. For food service board here. In the growth that we have seen in the world for coated board replacing packaging, the food service world was the one that has benefited the most, and is the one that is growing more. The average growth in the period is over 4%. Klabin is already working there. We learned a lot in this segment with that brown cups that you currently see in the machines in Paraná. What we have now that is new is the same avenue that I mentioned before in the beginning of the presentation. The possibility of manufacturing cups like the ones that you see at Starbucks in the image that you see in the middle of the slide. This is our mainstream here. Most of the cups, of the trays and clam shells are made out of coated board. Now let's analyze now our growth rates. 2.2%, a very healthy growth rate that was more relevant in 2020, 2021 and 2022. To the right, I highlighted growth rates by family. Look at the figures that I mentioned, the 4.3% in the food service business. Now the drivers. I mentioned all of them here. Almost all of them I mentioned. They do relate to what Nicolini mentioned before. Plastic replacement, the main driver, and does bring additional demand. Urbanization, fast and practicality now here talking about food service, cups and trays for home delivery. Packaging as a marketing tool. This is the first point of contact. A lot of times when you receive an e-commerce packaging, when you open it, you get surprised with the quality of the printing. A major concern with the environment, so our barriers talk straight to that. Smaller families, aging families, and also legislation. Europe is very close to regulating central elements that will help the type of packaging that we have. I have a highlight with a figure of what we are talking about. This is brand-new information from our engineering partner on this topic from AFRY. Here we have the FBB world, the folding bolt box. Just Europe benefits from 1 million additional tons. 2 x Machine 28 just for the replacement aspect. The growth rates of CUK, that blue small circle to the left, it goes close to 6% on this map. The growth rate for the folding box, the orange ball, goes up 2%. It's almost 50% of growth rate of what we are seeing here. Now let's check the dream turning into reality. It might be more interesting to some more than to others, but this is really a dream that comes true for me here. This is in Paraná. The plant is already built in 70%. The drone navigated over the machine. We have over 5,000 people in the construction of this equipment. It's a huge building that is just by the machines, the Machine 25 and Machine 26, the dry pulp and also Paper Machine 27 that produces Kraftliner. That in fact, look at our train transporting Nicolini's pulp to Paranagua Port. I would like to stress the ramp up of this machine, 70% of construction is concluded. It's on time, on our schedule. We are gaining time wherever is possible. Most of the material is already there. Our labor is favorable. When we compare that to phase one of the project, we see that there's an advancement. We are in a very positive stage. Now the chain now is filled by all product families, also the ones from White Nature, including SBS, with this ramp-up curve that I bring here in the upper part of the slide. Let's analyze here two scenarios. My boss will come after me, after that. We have three optimistic scenarios, and those scenarios were developed in 2021. Here are the scenarios. This is what we see today, the machine getting to 100% filled with Coated board in 2025. Remember, this machine is a hybrid machine, so it can produce not only Coated board but also Kraftliner and White Top Liner. This is Klabin's investment in a flexible model. Naturally, this could happen, but that's not what we foresee now because of the context that I just mentioned. We believe we'll have the machine manufacturing 100% of its capacity with coated board by 2025, and 6% of this volume is already contracted now for liquid packaging CUK and also in folding box. To end my main message, going back to our main topics here, a new machine starting in the 2Q with a ramp up that is being well-planned. 100% filled with coated board by the end of 2024. Very positive periods. This is the only large machine that goes into this time window. We do not have a competition with other plants that are able to manufacture these products from 2023 to 2024 and part of 2025, and that's also something that favors the signing of this contract. We have the Machine 27 history there, even in a moment where we see the pandemic peak and also greater trends of productivity, quality and tech products. I will be available to take your questions at the end, and now I conclude my presentation. Thank you very much, Flávio. Really, we will have a Q&A session shortly. We are going to get an update on the results, opportunities and expectations for the packaging segment. For that, we'll have Douglas Dalmasi, Packaging Director. Douglas, welcome to the floor. The floor is yours. Thank you. Good morning, everyone. It's a great pleasure to be with you. When Cris said that we wanted to introduce ourselves, I had to calculate how many years I have been with Klabin. That's 30 years. I'm very proud to be with Klabin for 30 years, since I graduated from college. I have been through different areas, three or four years in different areas. I had an experience in the finance area and supply chain, different business units. In the last four years, I was and I have been now the packaging officer for Klabin. That was a great opportunity to work in the different areas and get knowledge on all of them. We'll talk now about packaging, our boxes and bags, and they are part of our chain, as we already have seen this morning. It is part of our forestry competitive advantage, our pine trees and eucalyptus. It also integrates our papers, the most diverse ones. Here we are diversifying ourselves. We have different types of papers, different types of fibers, and the right paper for the right use with high technology, a lot of knowledge for many years, low cost and scale. We have this huge internal client that is driving growth for the company, brings diversity, flexibility, footprint at the end client, and I will show you all these drivers. It also reduces the volatility of results in the company, bringing in resilience of its markets, the packaging market, boxes and sacks, so that we can have growth, perennial growth. I do like this chart. We'll talk about growth. This is a growth projection that was developed by a respected consulting company, A. They project growth in the sector. The width of the bar shows the market. These are paper markets, and this shows the size of each market, and the height shows the growth. In blue, we have the Containerboard and the Sack Kraft. In green, the Coated boards that Flávio just talked about. For containerboard, this is a market that has a good world projection, 2% for the next years. For Sack Kraft, a growth of 4%. This is a market that has a huge overlap with replacement of other materials, plastic for instance, and that has become really a special position in terms of growth. We are seeing a lot of replacements here. This is the world projection. When we look at Latin America, the growth is even higher. In Latin America, Brazil's growth is the highest one in Latin America. When we go to Brazil, this is what we have. We are leaders. One at every container box or corrugated boxes that you find in a Brazilian market is ours. One in each four. One out of two sacks or bags are ours. We are strong leaders in these areas. When we look at the growth history of corrugated boxes, and this was measured by Empapel, we have a historical growth from 2015 to 2022 over a GDP. A resilient market that is growing over the GDP historically. If we extend this history, we will see the same behavior, growth over GDP. The trends drive even more this growth. The e-commerce, which is already a reality, but it still has a lot to deliver, it's going to drive growth even more in the packaging industry. Sustainability, we see changes of other things changing from other materials to paper packaging. Also design and aesthetic appeal that we see that is more present in our clients. These global trends are driving the business, and we see a correlation among them. E-commerce, considering that the packages are getting to our homes more and more, we find that clients realize that it's important to have sustainable packages and also to have a package that will bring a special experience, that complete the product when it gets to their homes with a good design, a sophisticated printing, so that we can have a nice experience when we receive the package. Zooming into the e-commerce now. A lot of deliveries. The Brazilian market is growing here. I'm comparing the American market, the Chinese market, and Brazilian market. Klabin is at the vanguard here in United States, has an average growth of 20%. The percentage of retail is over 20% in the e-commerce. China, 50% of its e-commerce or 50% of the retail is e-commerce. In Brazil, before the pandemic was at 7%, and now it is at 13%. We know it does have a lot to deliver. 13% of the Brazilian retail business is coming from e-commerce. We see that growing every day, and it's growing strongly. Klabin works in the three different ways in the e-commerce business. We have a pillar which is to accelerate marketplaces. We have clients such as Amazon, Mercado Libre, Magalu, KaBuM!. These are our clients with a high participation of Klabin, and we have sellers to accelerate the e-commerce of their marketplaces. Another pillar, we work with accelerating e-commerce of our additional customers such as O Boticário, Carrefour, Unilever, other ones that have their own marketplaces, and we have work cells looking at the whole chain with packages, logistics, and everything to accelerate the e-commerce of our clients. We have our own marketplace for paper products. Klabin For You you can go in there and purchase. We do have a sale there. It's a huge website offering paper products, and you can buy them from Klabin, and these products can be manufactured at Klabin or not. This is a marketplace for Klabin. You might ask us why Livelo is there. We accepted Livelo so that we could find people, so that people could have access to our marketplace and buy. For instance, you can convert your points at Livelo, and the points market is growing in the market, and you can convert your points to buy packaging at Klabin For You. This is an amazing synergy, and we are learning, and we are growing with this e-commerce market. A lot of resilience. 70% of our volume is in retail. Another information, 65% is in food, so it brings a lot of resilience to us. When you go to the supermarket, on the shelves, you will find products with corrugated boxes, our industrialized food, fruit boxes, a tray in a shelf. That's what we call shelf-ready pack. That's a display where you pull the products from. We are really there at retail with consumers. Therefore, we do have a lot of resilience. Diversification. We are in different industries in the local market, supplying to the local market, but also areas that export, and we cater to large brands following the growth of large brands, just as average and the small clients. We have over 3,000 clients. We sell to proteins, for instance, proteins that are exported. We sell to the fruits markets that exports to origins in the country. The south, the apple that goes abroad. In the northeast, mangoes and grapes that are exported to Europe. Also major brands that supply to the local market. We have over 16,000 products. You can see that we have become more and more customized. Look, these are over 15,000 products, so very customized. This brings us a lot of resilience, a lot of the diversification, more added value products. The market is evolving. We have invested in 2021 in a package of printers and equipment to cater to this diversification. Digital printers, seven-color printers, because this is the market demand. The market has demanded more and more printing different designs to meet the new trends. All this growth, the growing market, both in coated board as well as in packaging, Sack Krafts and bags, all that diversification increase our prices above inflation and improves our return. Here we have a comparison of our prices in from 2015 to 2022 compared to inflation. Price increase over inflation. We do have diversification growth, and we are growing our margin with a growth that allows the demand to increase and push up the prices, but also for by diversification and added value more and more every day. This is something new. That's something that we opened a month ago. If you follow us, you know that we have a tech hub for papers and fibers that was installed in Paraná, and we have researchers working there for future developments, and we want to use the best way possible our forest. Now we have opened a tech center for packaging. We have methodology, process. We bring in the customers, we developed this hub, and that's in Jundiaí, in São Paulo. That will connect all our chain for different developments. We have a huge pipeline of new products that is being developed. That comes via e-commerce, sustainability, aesthetics, but also it comes because of the pains and needs our clients have. Sometimes they don't tell us, but when we bring these customers inside, we are able to hear them and to develop the equipment. When they come in, they bring someone from marketing from the industrial area, supply. In the very same day, they leave the place with a prototype for something that they need. This is an innovation, and it is internally connecting with the final clients. I have a few examples here, and I like to mention what you see, that continuous plate. It seems the simplest one, but that's one of the nicest examples that we have. We are going to open what we call Box on demand. We developed a continuous paper, and you connect to the equipment, and at the end of the machine, it will develop the package in the size that they need. For instance, Amazon or Mercado Libre, they have to deliver an umbrella and then a chocolate. That's going to be a tailor-made package, and we'll have a better logistics and better integration with the whole chain, bringing innovation to our client. This is growing in the company. For the next years, new products growing, from 2018 to 2022, we had a growth of 23%, thanks to new developments that we have been able to carry out by hearing our clients. To end my message, we have a lot of resilience, growth over GDP. The trends are driving this growth ahead. We have lower volatility, a great diversification, lower volatility of results thanks to integration. Even going through different economic cycles over the years, we have a pipeline of new products, new markets, a lot of new things happening. We will guarantee supply to... We have Puma II, we acquired forest, we acquired third-party wood, we invested in Puma II, and this year we announced two new operations, Project Horizonte in Ceará, that will start up in the first quarter of 2023, and Figueira, which will start up in the second half of 2024 to cater to the needs of our clients. That's what I had to bring to you. Thank you. Thank you very much. Thank you very much, Douglas. Now delivering consistent results and generating a value to its investors. Klabin has a sustainable business model. Over 120 years, sustainability is present in the whole strategy of the company, and Klabin is leading the company in the climatic issues discussions. To talk about the carbon market, I would like to bring to the floor Francisco Razzolini, who is an Industry Technology Innovation, Sustainability and Projects Director. Mr. Razzolini, the floor is yours. Good morning, everyone. It's very interesting to follow Klabin's trajectory in all our business areas, right? We start in forest, we go to paper packaging. You see that a paper packaging is so simple, and a piece of paper, a sheet of paper is so simple, and sometimes that does not reflect all the technology involved and all the passion that we have because we are in this for a long time. I would like to introduce myself. I am at Klabin for 38 years. I'm a chemical engineering. I have a master in paper engineering. I have been in different positions at Klabin. I started in Monte Alegre factory, and I was with Flavio in liquid packaging start. Also, the first prototypes of Eucal iner that we developed in the 80s that ended up culminating with the [Zuening] Project, which is amazing in the packaging paper. I have been in different areas in Klabin: operations, M&A, planning. In the last 20 years, I have dedicated myself to projects and major opportunities of expansion for Klabin in paper. I worked with [MAB one hundred project], and also I was in supply. Since 2011, R&D, working with projects and planning at the time. The structuring of Puma Project, starting with the name up to the plant's operation, and Nico took over that in 2020. We focused in other opportunities such as innovation, consolidation of R&D, automation technology, and finally, in 2019, sustainability. At Klabin, we chose to work with sustainability on the technical side. We are very rigorous with our operations. In Klabin, we want to have our operations running very well so that we can show what we have been doing. This is happening more recently. I came. From that time, from 1985, I usually joke, the day that I started at Klabin was a holiday, not because I joined Klabin, but because Tancredo Neves, our former president, passed on the very same day. That is to say that I have been with Klabin for a long time. I was able to follow the transformation of pulp and paper. We were known by pollution and the odor. It was easy to tell, "You work at Klabin, right?" Because we would get to places when we would have that odor from the plant. That doesn't happen anymore. We have seen an amazing growth of the company. Right now we are on the right side of sustainability, I can say. We now have planted forests of very high yield. Klabin has the best yield in the world. The plants are very modern, automated, all the digitization cycle that we had and still have, and that we see in the developments also in innovation, research and development, and also the transformation to final products. That opportunity that we see now that we have, which is to look for sustainability for all the plant with renewable-based products, recyclable, biodegradable products, and more than ever, sustainable products, also in terms of energy. I have talked to Marcos and Cris, and we discussed about what to bring to you today. We brought Klabin sustainable development goals and our targets for 2030. In 2021, we brought to you our ESG panel with all the transparency that this topic requires. Right now, it is a very easy access, and we can follow all the opportunities that we have developed at Klabin, all our investments and how we are following the targets that we compromised, we are committed to follow. We also now are triple A at CDP. Once again, we are in the agenda, in the Dow Jones agenda. Also, we have had our target approved at SBTi. For this year, I want to talk about something very specific, which is carbon. This has been very much discussed and also by the recent COP27. We bring this topic working a little bit on some concepts that perhaps we don't fully understand at first. Sometimes we don't know what carbon balance is all about, or carbon footprint, and more specifically, the carbon market. Just very briefly about carbon balance. We have been very vocal at Klabin. What do we do about it? Carbon balance is a balance considering emissions and removal of carbon dioxide we have. At Klabin, we work in two different ways. First way is our total emissions. Everything or all carbon dioxide emission from our operations, Scope 1, 2, and 3, 7.2 million tons. On the other hand, in the balance, we are an integrated product from the forest to the product, and we can remove 12 million tons of carbon from our native forests. Sandro showed us almost 292,000 ha in our planted forests, which are approximately 350,000 ha. This balance is positive at Klabin. By the way, this is one of our goals from 2020 to 2030. We want to capture 45,000 tons of carbon. Next, about the same definitions. Another topic is carbon footprint. What is the carbon footprint? Nothing but a calculation of CO₂ emissions calculation throughout the life cycle of a product. We can tell today the carbon footprint of Kraftliner, for example, LPB or Eukaliner or the corrugated box. It all helps us compare these products with other products from other chains and competing materials, particularly in the packaging industry, but also in the personal care and pulp. This is important. Last year, we showed a chart. You can revisit last year's presentation, and we show Klabin's rank in terms of specific carbon emission. The carbon footprint throughout Klabin, which was around 150 kilograms per ton, one of the best rates in the world when compared to peers in our industry and also compared to other segments. Our goal as PTI, we foresee and expect to be lower than 150 by 2025, 125, and then under 100 or less than 90 by 2035. Last but not least, what is the carbon market actually? A lot is spoken about this today. This is nothing but a tool that was created to encourage the reduction of greenhouse gas effect emissions by setting a financial value to carbon. How does it work? Well, it happened during Conference on Climate known as COP or C-O-P. This topic was defined at COP in Kyoto, COP 3 back in 1997, creating a mechanism of clean development. More recently, this was revisited back in 2015 in Paris in COP 21, therefore the Paris Agreement was created, a new framework for all issues related to carbon. Since 2015, this is going through a regulation process. Last year we had a significant headway, which were approvals during COP of articles 5 and 6, addressing ecosystemic or environmental services involving the carbon market per se. This mechanism is still ongoing. The name was not formally defined. It's known as MDS or Sustainable Development Mechanism. In this COP, the regulation process made some progress and COP demanded to the executive board to work this over the year so we know better about the transition process between MDL to MDS. MDL was expected to end back in 2020 and then COP didn't happen, so it was transferred to 2021. It was not deliberated upon and now in 2022, finally, COP approved the executive board to address this transition instrument. By the way, we also have projects including this transition. How does the market work with carbon today? There are two ways. One is the regulated market. In the regulated market, it goes according to the framework by country, taking into account the goals set by every country. We could say this market has a regulated and approved system. In this market today we find good prices, unfortunately, it is not so broad. It is restricted to the European unit who is already advancing and also other countries in the world. We have the California mechanism, for instance. California now with Quebec, they have a partnership, so this is going on. In Brazil we are also going through a regulating process. We also have the voluntary market. These are transactions that are on a volunteer basis for emission compensation among parties. The market also has to go through a certification process, but it's still very small and prices are not so attractive. Brazil is working in its NDC. There was a revision of this nationally set contribution, NDC. How is it going to work, this nationally set contribution? If we don't meet this, carbon credits can be or not sold by countries. This regulation has not been concluded yet. There are some efforts by Decree No. 11,075/2022 last year, setting forth plans by sector, by industry, creating the national system of greenhouse gas effect emission reduction. In Congress there is also a bill about the same topic. Nothing has been set yet in COP or internationally, nor in Brazil or even subnational level. What about carbon credits per se? A credit represents 1 ton of carbon that is not emitted or absorbed by the atmosphere, that's a currency to be transacted. This is a long-term project. It goes through a phase of viability or feasibility study. You have to check the stakeholders, you work to design concept documents. It has to be audited and then you post a registration. Even when it's on a voluntary basis, you also have to go to the approval by someone who validate the terms. It also has to be checked until you finally have the authorization from the UN to emit carbon credits, if you want to be an international player or in Brazil, if you want to perform transactions in the country only. What about opportunities at Klabin? We launched the Puma project too, wood gasification project. We're also working for a while transforming our matrix into biomass boilers and also power boilers. In recent years, we had several implementations. We're increasingly working with other products from wood, and one of them is the pine or Tall Oil. Several applications, including replacing fuel oil and particularly for plante com Klabin, plant with Klabin. We have several small, mid, and large size partners. We work on forested areas and we create permanent preservation areas, and we want to have an addition process. In other words, we are adding the removal of carbon. This is also feasible and it's about to be approved. Two projects that are more related to conservation. Klabin has possibly one of the largest preserved areas for Araucaria in the country. In Paraná States, Catarina as well, we have about 3,000 Araucaria trees. Araucaria is a tree considered to be an endangered species, and we have a project in order to manage and find a mechanism for environmental purposes. Jaguar Connection, we have several area preservation projects, and they're being discussed and about to be approved. At the end of the day, what is a carbon project? Let us assume we have 1,000 ha, and these 1,000 ha generate 120,000 tons of carbon or 120 per ha in 20 years. We can see 150, 140, but it's not clear yet how this is going to happen. Some people say you can only have 150 of credit emitted over this time frame and maybe a little bit more at the end. Other people say there'll be a compensation process, 20% of the credit will comprise a bank, which will attenuate any potential problem should a forest, for instance, be on a fire or is attacked by pests. What do we mean by 120,000 tons of carbon? If we consider the price of carbon for $10, it means $1.2 million. If the carbon price is $50, $6 million. If the price is $100, $12 million per 1,000 ha. We know that considering forestry cost today for such a product to be self-sustainable based on carbon credit alone, the carbon credit has to cost more than $30. What about carbon credit again? We believe at Klabin in the regulated market. This is where truly we need to invest our actions. It also depends on several approvals. I would say that possibly a two to three-year horizon for the market to be consolidated. Regulations involve several areas. The voluntary market exists, and there are opportunities for transactions, but they are side by side. We tend to say the capacity to add is our goal. Klabin showed our big balance of carbon. We retain a lot of carbon. These already existing forests, they are now bringing additional contribution to the environment or for the planet. Whenever there are expansion areas or areas to recover, this is where we can use forests under this mechanism. This is important input. We are working on projects. We are dedicating ourselves to it, but in the long run. This is our tip and hint. If you want to know more about ESG, check our panel, our portal. You can also contact us directly. I'll be here to take any further questions. Thank you. Thank you, Francisco. Next, we introduce another important topic at Klabin, people, human resources. To talk about people management and policies, we invite to join us upstage Cristina Barcellar, People and Corporate Service Officer. Good morning, all. It's a pleasure to join you today in person after a couple of years. I'm Tina. I'm in charge of human resources and corporate services at Klabin and fully in charge of the legal area for the moment. Just telling a little bit of my story. In general, I'll be joining Klabin for 10 years. I'm very proud of it. Something that I realized while I listened to my colleagues, of all the executive officers who spoke today for you, only one of them came from the market. All the others made a career, built a career at Klabin. It's a live example how Klabin invests in succession and is concerned about having and educating successors to lead the company. I'll address two topics today. The first topic is about the mix of our management payment. We have three elements here. One is the base salary, the fixed part of compensation. It's the only fixed part, accounting for 34% of the compensation base. The remaining 66% are variable payment methods. 40% short-term incentive pegged to our annual goals, and 26% are related to our long-term performance. Now, diving deeper into our long-term payment, which is long-term incentives. This comprises of two parts. One part known as matching. This is where the executive can have part of short-term investment and can do a matching investing in the company, and this matching only becomes official after a three-year timeframe. We also have another part of long-term incentive known as performance. This is pegged to a long-term performance, five years. This is our performance assessment, and the performance indicator is TSR compared to cost of capital. When we speak of short-term incentive, our annual goals comprises of financial indicators as well as operational, market, and ESG indicators. Speaking of ESG, this is something new in our process change. Many goals for many executives already were related to ESG. Starting 2022, we have a combo, so to speak. This is ESG for Klabin for 2030. We have a combo with all ESG fronts and all officers of the company have their goals pegged to this combo in ESG, and not only where they are in their areas, but also as a group. All officers are responsible for meeting these goals. Coming back to our long-term incentive, this is a very important tools in terms of alignment with shareholders, long-term alignment. Klabin is a long-term company. Retention generates a lot of fruit. Speaking of long-term, Cristiano said in the beginning, he talked about the program internally known as LP for All. This is where we talk about this program at Klabin Day last year. It hadn't started yet. We started back in 2022. As a big challenge I had, Cristiano said there are very few companies who dare, who are bold to have such a level of project to all employees. Some people only relate to the company's management. Klabin already extended it to all levels of Klabin, and we also extended to all our employees in 2022. It was a big challenge. We didn't know how compliance would be and enrollment. These people have a harder time to expose immediate liquidity. A group that counts on our share in results that are already previously taken. We strongly invest in communication, and not only communication, we also invest heavily in financial education for our employees. Not only employees, but to our families as well. We posted results that were just amazing. 33% of enrollment in year one. We started with some companies, most of them multinational companies, which extend the program to Brazil as well. Very few companies, like I said, have this option to all employees. The companies we talked to, they came and said, "Well, after many years, a lot of communication, we managed to achieve 30% as something very successful." At Klabin, we managed to have 33% in year one. For us, this shows the size and magnitude of the company's engagement in the company in the long run. Our employees join Klabin in order to stay for longer times, and this program also has a three-year vesting period. I brought some figures because we just had our climate poll, and the engagement index is 94% of our employees reflected from this question that we ask: Would you recommend Klabin to your friends as a good company to work at? That's a question that companies who work on climate survey in the market, usually they have all these surveys because it directly reflect the engagement and commitment by employees with the company and their intention to stay. Just as I talked about the executives, many of these officers have been in the company for many years, but it also applies to all levels of the company. Many people, many generations at the company who join with the intention to make history and to build the future of the company. Last piece of information, if 100% of employees enrolled our long-term incentive plan, the value of the company in this program would be $13 million. We brought this to say that this is a small value compared to the return it may bring in terms of employee engagement. To close, coming back to the example shared by Cristiano, our coffee server also enrolled, as well as many people in the shop floor, people in the forestry area. We also went to the field to talk to all of them. The coffee server really came to the table, our CFO, and she said, "I want to check if you're really taking care of the company, because now part of the company also belongs to me." This engagement return is invaluable, and we can see this reflected in all-- everyone who works at the company. This is what I'd like to share, and I'll be here to take questions. Thank you. Thank you, Tina. Here at Klabin, we talk a lot about the company's business model, which is an integrated model. Like I said before, in addition to diversification and flexibility, this also shows the resilience of the company and how easy it is for us to navigate in different economic scenarios, delivering consistent results to shareholders. To talk about it and talk about the outlook for the future, I'd like to invite upstage Marcos Ivo, CFO and IRO. Welcome, Marcos. Hello, good morning, everyone. Happy to be back. Part of the audience, almost 500 people also watching us on the web. I'll be brief today, just trying to summarize the outstanding presentations that were delivered up to now, so that we can have more time for the Q&A session. We know that it's a very important part of our interaction. Just briefly introducing myself to those of you who I never met before. I joined Klabin nearly, well, for two eucalyptus cycles or one pine cycle. Next year, I will be at the company for 14 years. I've been through nearly all areas of the financial sector, but I also worked for five years in the forestry area, first as a head of the business unit and a very rich experience working at a forest area with a chance to live in Paraná State, where we have two big plants. It gave me a lot of knowledge of the company's reality at large. Firstly, today, over the presentations, we know that Klabin is very well-positioned in markets with a future demand positively affected by circular trends. For example, we have growth and populational growth and aging, internet sales like e-commerce, and also replacement of single-use plastic. In addition, we are also positioned in basic or staple markets related to foods and beverages and personal care. This positioning, added to Klabin's business model, brings a lot of resilience to the company in several economic cycles. It also brings excellent opportunities for growth in the future. We shouldn't forget sustainability of our products that were very well discussed and explained over our presentations, considering our products come from renewable sources. They are recyclable and biodegradable. Klabin made significant investments over the years, particularly in Puma II Project, and also investing in conversion in corrugated box and industrial bags. Klabin sales volume for the next five years will benefit from the ramp-up of the two machines in Puma II Project and corrugated box projects. Speaking of the two machines for Puma II Project, we have Machine 27, which manufactures Eukaliner and startup happened late last year. This piece of equipment has a total capacity of 150 million tons, and full capacity is expected to be achieved by 2024. As for Machine 28, which will bring coated board, total capacity of 460,000 tons, the full capacity is expected to be achieved between 2026 and 2027. At the end of the day, Klabin has this growing volume for the next couple of years. We also would like to mention corrugated box, particularly owing to Figueira and Horizonte projects, bringing volume growth for this product at Klabin. If we put both businesses together, for the coming years, there will be an increase in the share of packaging and paper with a total sales volume at Klabin, and as a result, an increase in the share of this business in the company's EBITDA. Please bear in mind that historically speaking and structurally speaking as well, the EBITDA of the paper and packaging business is more resilient and more stable, especially in Coated board and corrugated box, and that's especially where the incremental volume will come from Klabin. Still speaking of Coated board, Flávio talked a lot about the context of this market and to what extent this market is favorable, at least by 2025. In other words, we'll have a couple of years that will be very favorable for us in the future. What does it mean for Klabin? In addition to making it easier with Machine 28, with 60% of production sold, it will also convert it to a price rise. Our vision today for year 2023 give signs of an average price of coated board with an increase vis-à-vis year 2022 of at least two digits. Here we show ROIC. We spoke a lot about ROIC in our interactions with capital markets. Klabin, as a result of successful strategy, capital allocation, business model, and good performance for the last 13 years, we improved EBITDA more and more, and this also includes year 2022. At the same time, we also changed the level of return on invested capital. The first 6 years of the last decade, Klabin's ROIC was 9%. When we check the period from 2016 to 2022, this average ROIC increased to 14%. Looking ahead, I am very confident to show you all that Klabin's ROIC for the next 6 years on average will be greater than what we had in the last six years. How does this confidence come from? From the maturation of our projects since Puma I. For the next six years, we're going to have these projects becoming more mature, sustaining the company's ROIC increase. We always want to be transparent, on this slide, we share our capital allocation. It continues to be focused on increased CapEx and maintenance, as well in payment of value to our shareholders. Klabin has a policy for proceeds, it sets as a goal the payment between 15%-25% EBITDA as proceeds. Historically, it pays 20% EBITDA or the middle of the average between dividends and interest on capital to shareholders. For the last 12 months, following this policy, Klabin paid a total of BRL 1.624 billion as dividends plus IOC or long-term interest rates with a dividend yield of 6.6% to our shareholders. In terms of allocation of CapEx, the forecast for 2023 is total CapEx of BRL 5.4 billion. Out of which, BRL 2.1 billion to conclude Puma II Project, BRL 1.1 billion for other special projects towards growth, and substantially, the Horizonte Figueira corrugated box project, another BRL 2.2 billion as maintenance CapEx. Out of this CapEx, BRL 800 million for replanting of our forests and BRL 1.4 billion of industrial maintenance. A topic that also has been discussed with the capital market is the replacement or the reform of our boiler in Monte Alegre because it's from 1978. Our engineering team is still working on this topic. We are moving well. Today, we have two possible alternatives, they're being detailed, and they point to a lower CapEx than what we had initially considered. We believe that the engineering studies and the submission of the project to our board of directors will happen over the first half of 2023. It's important to mention that in terms of CapEx for this boiler project in Monte Alegre, for 2023, we'll have only the disbursements of preparatory works that the full amount is included in this total of 5.4 million BRL that I bring to you here for 2023. Klabin has a robust balance sheet that prepares the company both for a more difficult scenario in the global economy and also for possible growth after Puma II. We ended the last quarter with a 2.6 x net- debt- over EBITDA leverage. Our average tenure is of 9.4 years for our debt, we have a diversified source of debt. Also important considering our interest rate context right now to highlight the profile of our dollar-denominated debt. The net debt of Klabin is mainly in US dollar. Out of this dollar-denominated debt, the average cost is of 5.1% a year, 92% of this dollar-denominated debt is contracted at a fixed interest rate. What does that mean to us? Even with the interest rate increase that we see all over the world, in the beginning, in the first moment, we will not be affected because we have contracted fixed rate. Therefore, our debt is not increasing right now. Finally, I would like to bring to you a very clear message of a Klabin that is well-prepared to cater to current and future demands of society. We saw that we have a business model that is integrated, diversified, and flexible, and it brings resilience and stability to our results, allowing Klabin to have predictability and regularity in paying dividends to its shareholders. At the same time, Klabin continues growing with new projects where it will materialize its competitive advantages in increasing capacities and large projects of great return. Therefore, we move on in our trajectory, generating value to the whole society in a sustainable fashion. Thank you very much. I will be available to take your questions in the Q&A. Thank you very much, Marcos. I thank you all very much. Thank you all the speakers. Now we end today's presentations. Now we are going to open the floor for the Q&A session. I would like to remind you, if you are following Klabin Day online and you have not asked your question yet, please send it via the QR code that you see on the screen right now. Identify yourselves, state your name, the name of your company, the institution, and also an email for contact. For those of you that are here with us in person, just raise your hand. One of the receptionists will take the microphone to you. We already have a question here. Is that true? Okay, please raise your hand. Before starting the Q&A, I would like you all to identify yourselves when you ask the question. Now, I would like to invite all the officers that had their presentations here that they come to the floor so that we can start the Q&A session. Thank you. Welcome again. Cristiano, this is what I'm going to do. The questions that come with a name, I will direct it to that person. The questions that are more general questions, I would turn them to you, and then you can redirect them if needed. We have an in-person question. We have two in-person questions here. Please, you can introduce yourself. Good morning. I'm Rafael Barcellos from Santander. Thank you all for the presentation, and thank you the IR team for this event. My first question is about demand and innovation. Considering this extensive cycle of high commodity prices, especially paper and packaging prices that are high, how do you think this could affect or inhibit the innovation in the segment of paper and packaging? Replacing plastic, all these macro trends are driving up this sector. When you go through a cycle of high prices, the question is how much that can hurt the demand or even inhibit the innovations that are driving up the demand in the segment. My second question is about cost. This is one of the main topics here and one of the main questions from investors, I believe. On the side of the top line, we understand that Klabin has a flexible approach. You work in resilient sectors. For 2023, our question is on costs. Cristiano, you talked about the forest dynamic, you talk about cost there, I know. We know there are some exogenous factors that affect cost as well. Can you comment on how you see this on 2023? Then if you can talk about cost of pulp and cost of paper and packaging, that would be great. Thank you for your question. Let's start by R&D. Klabin has been increasing its investments, we measure it on top of the net revenue. We are already at 0.35% of investment vis-à-vis our net revenue. Then I'll turn to Francisco, he'll give you more color on these projects that we have ongoing. My answer is no, I do not see ourselves changing that profile. Very much on the contrary, we have a line that we call the bioproduct. Chico talked about the Tall Oil, and that is a fuel and replaces the fossil fuel. No, I am very excited about the increase of investments in R&D because we see Klabin with a new business division in the future for bioproduct. As far as costs are concerned, I will separate that, just like you said it. In terms of forestry, the distance topic is a choice of ours, and this is a discounted cash flow at the end of the day. When we see an investment, for instance, in the Coated board machine, I can wait and to have in 14 years all the wood planted and to add a machine there, or I can listen to the market. I can follow markets and trends and clients, and that's what we do here. Instead of waiting for the wood, we could use that investment that could make an early investment. In this period of time, we could acquire an area and plant wood close to Klabin's plant. This is an example we always give people. The structural cost of distance when compared to this anticipation of investments that is normalized in the first rotation of our own wood. Structurally, the cost comes down and the trend is to come down at Klabin. The other costs, the other raw materials that are affected by oil and chemical products and so on, we always focus in efficiency and your specific consumption. That also goes through R&D investments and also state-of-the-art equipment that allow us to be a resilient company in terms of costs. Exactly because of the efficiency and the chemical consumption. Finally, still in the costs line, Projeto Figueira investment. That unit is reducing in 50% the conversion costs, just the fixed conversion cost. If I consider my higher conversion costs, I can exchange at my 50% less fixed conversion cost, therefore I have more capacity and a more efficient site. With that exchange, and we have been doing that a lot in pulp and paper, we will also be doing that in the conversion areas, reducing therefore the conversion costs and allowing ourselves to have more competitiveness. I would like Chico and Marcel, if they want to elaborate more on that, feel free to do so. Thank you, Rafael. I think your question is more structural, right? We have seen the world decelerating on the energy area, and we might see some hiccups, but the trend is of course to have sustainable products and I think Klabin, as Cristiano mentioned, with all the efforts that we are driving towards direction. Well, Rafael, just adding to what Cristiano has said, and trying to translate into figures in the short term. We expect for 2023 a total average cost for Klabin, I'm not going to separate products here. If Klabin were to have a single product in BRL per ton, we foresee the cash cost per ton, the general cost growing lower two digits. For these lower two digits, we have 2 percentage points that are a mix. Next year, we are going to produce more coated board, and coated board they are more expensive and they have a higher added value. The wood impact represents around 4 percentage points of growth in the total cash cost of Klabin. Other than that, we have inflation, and inflation just like we have in the model for all the items. I also like to highlight, wood sometimes is a question, but how do I see that? Klabin has learned how to develop safe projects without anticipating the CapEx of wood, and that can easily be seen in terms of a better return of the project. This was the first time in the company's history where we developed a project without having the full forest asset ahead of us. It's great because we have now learned, we have done it, all the projects are there, and that's gonna help us in the future growth. Thank you. Thank you, Rafael, for your question. We have another question here in the audience. Please introduce yourselves. Good morning, everyone. I am Leonardo Correa from BTG Pactual. It's a pleasure to be with you again. Thank you very much for the presentation. My first question is, well, Nicolini, your presentation was very much focused in fluff. When I look at Klabin's projects, there's nothing proved in terms of expansion for fluff capacity. Clearly, there is a growth trend. You are excited about it. Almost all the presentation was towards that line of thought. What do you need to have more capital invested in this front? My second question, Cris, I want to bring you to the discussion. Something that people don't usually ask about, but I think that it's clear for most of the market and for analysts and for opinion makers, that Klabin is being undervalued in these past few months. When we think in terms of performance of paper and any metric that you use to analyze it, the company's shares are very much discounted in different areas. I would like to hear from the management. How do you explain that? How do you see it? What the market is not seeing? The market is not paying for growth? Or just like Ivo showed in that ROIC slide, the market is not seeing the sustainability of this ROIC from now on. Maybe the market does not understand this flexible, diversified model with low volatility. I would like to hear from you, how do you see this moment, and why the stocks are not reflecting the value that some people think that it deserves to have? Thank you. Very well. I will help Nico here, and he can add. Let's start talking about new investments. Yes. In fact, we do not have anything that has been submitted to our board of directors. You know it well. We work with a clear vision. Five or six years ahead of time, ahead of having any idea of investments, we study the market. We know well which pieces of equipment are going to start by the engineering process, and the maturation time of a process like that is very long. We are paying attention to that, and in fact, we see fluff, especially for softwood, which is the larger market of a great value as one of the main products in which Klabin should invest in the future. We are getting ahead of ourselves, of course, in the region, that is a region different from Paraná. We are being conservative, we are already working on our forest base. Yes, we should extend in this year of 2023. In the light of today, you know, we do not feel comfortable to submit that to our board of directors. If throughout the year, the macroeconomic situation changes, or at least if what we see in the world, which is a movement to increase interest rates to controlling inflation, the American mortgage over 7% of population and so on. If we do not see it happening, what seems like it's going to happen, which is a worldwide recession, we will submit that to the board, but in light of today, we rather wait. Nico, would you like to talk about the product itself, and then I'll come back to talk about the market? I would like to add. We have two different things. On the one side, we have a success story, which is our Machine 26 evolution. I showed it to you in terms of market, product, penetration, a sound client base. I think this is already settled. On the other hand, we have a cautious side. The macroeconomic situation, we do not know how the main economies will behave. We do have market studies, we have feasibility studies, but the macroeconomic situation really draws our attention and makes us to take a step back right now and analyze the market and to try to find out what's going to happen and if we should anticipate or postpone a possible future investment. To conclude the first part of the question. In terms of engineering and forestry, and that's what we need before we propose a new project, this is well established. In fact, what we have now is a process that I consider to be right for this cautious moment. Let me try to address the fact that the market is discounted and Klabin is discounted. I would like to say that maybe we should hear from you rather than saying anything. Of course, I would like to hear from Marcos after I comment on this. Well, in the beginning, I dedicated myself to the spreadsheet that you run and the main analysts that, you know, work with Klabin. I analyzed the Excel spreadsheets to see how you got to that number because we do have our discounted cash flow. We know what is the volume that we are bringing in to the next years. We do know the price curves of these products. We also know the global trends of consumption of products that are based in fibers and recyclables and biodegradables. We have the sustainability characteristics by sequestration of carbon is still underevaluated on the economic point of view. We have new technologies. We are going into this area mitigating carbon. We know how much we can improve the company's ROIC, switching equipment, diluting fixed cost, providing life to 60-year-old sites of the company that could be the most modern sites in the world. I do know the capacity of cash generation and the resilience of this company. I can state that this company is among the main ones, and I would not add more than three companies there. One of the three main, efficient companies in pulp and paper in the world, and the company with a higher trend to grow organically. A lot of that just by replacing production of high cash cost of the northern hemisphere. I see Klabin as a company with a huge potential and a potential that cannot be followed by the competition because our process, our people, our technology, and our forestry. I think we are way too discounted, but I would like to hear from Marco. Well, Leo, I will go with Cristiano. This is something that we ask you a lot in our interactions with. We talked about that with investors and analysts. Just like analysts mentioned, we are focused in the intrinsic value generation and what we have done, what we'll do ahead. We are focused on that, on the intrinsic value generation and our IOC. In terms of the market, we are very much disciplined, you know. We are always talking to investors in Brazil and abroad, and we are explaining our business model, we are explaining our value drivers. Today, we had again, a presentation since the beginning showing you Klabin's models and why Klabin cannot be considered in a simple or commodities company or simple items basket. This is clear in these moments when the market is more depressed. We can just look at the results of the last quarter and the next quarter. We really do not behave as a commodity company, but we know that value is one thing and price is another. Even in your models, most of them apply a value to Klabin that is much higher than the shares price for today. We'll keep on working, and I count on your help. We are here to hear from you, to hear your suggestions so that we can explain even better, and so that the market can understand us and apply to us the correct value so that we can get closer the value of the company to the stock price. Okay. Thank you, Marcos. Let's move on because we also have questions from our remote audience. I will start with David Guglielmo from Supergraph Graphical Products. I would like to know if Klabin should migrate to Novo Mercado and only have preferential shares. I would like to thank Paulo Galvão from the board. He wasn't here before. I also would like to thank the presence of the other board members with us. About the single class, this is not something that the top management is discussing right now, but I think this will be discussed when there is an opportunity ahead of time, maybe an M&A. This is not something that we are discussing right now. The economic right of shares are equal for all. Any of the shares that you are acquiring, you're going to receive the same amount of dividends, you have the same economic value in the case of an M&A or and so on. I am sure that in economic terms, you are safe. In terms of value creation for a possible M&A, I'm sure that that would be analyzed and controllers will analyze if that opportunity arises. Marcos, if you want to add? Yes. Let me add. We have that on our website, right, equal rights, that means equal dividends, 100% tag along. Our bylaws state that if one day Klabin migrates to a single class, we will not have a premium payment. Both shares nowadays have equal conditions. We have another question from our online audience. João Paulo Kowalski. He's an individual investor. Before asking, he asks, Klabin has a history of dividends payment as a reference of the 20% of its Adjusted EBITDA. In the past few years, even with the challenges and cumulative investments, company is meeting the target, showing that the company is also being a company of growth and appreciating the dividends. The company sees in this strategic planning the maintenance of this policy of dividends payment also being a company that is growing. Thank you for your question. Yes, the projection for capital allocation for Klabin for 2023, as I mentioned today, for the future is following combining paying dividends according to our policy. Today, we pay 20% of EBITDA as 20% of EBITDA as dividends every quarter. We pay dividends to our shareholders, and we can still grow and seize opportunities that we have in other markets. Yes, we intend to maintain the same capital allocation policy that we have right now. Great. Thank you. We now have two questions from the audience. You can ask your question. I am Isabella Vasconcelos, Bradesco BBI. Thank you very much for the presentation and for all the details. I have a few questions. The first one, a follow-up on the next growth steps. I think that the macroeconomic comments and considerations are clear. To understand how we should think about the prioritization of different types of projects that Klabin has, fluff, Sack Kraft, Kraftliner, the new segment of bioproducts that Cris mentioned. What is, what are you considering in terms of timeline for execution? Also, if wood availability is a concern for you now, even in Brazil. My second question is about Coated board, specifically for white coated board. Can we have more color on price premium costs, or if there is a difference Anything that is relevant in terms of profitability regarding these new segment of products that Klabin has now. Another one very quick to Marcos, just to confirm if the CapEx that you have for 5.4... Oh, I'm sorry. The CapEx for the revamp, for the boiler is already in that continuity or if it is allocated into another segment. These are my questions. Thank you. Perfect. Let's start by the wood question. I usually say that there is a balance sheet of value locked in Brazil, they have not done this math. I will give you some numbers here. Our whole industry, represented by Ibá, has 9 million ha that are planted. Just one company, the largest one in the industry of a protein company, manages almost 90 million ha. That is 10 x the land that is dedicated to protein production. Protein production in Brazil is still of low yield, is of 0.8 cattle head per ha. We have examples in Brazil with feedlot cattle of eight cattle heads per ha, but in average, you could consider, with no exaggeration, from two to four cattle head per ha. That would mean the release of million ha that could double or triple the volume of planted area in Brazil. Productive land, good land already that's a legal area already. I do not believe that we have any problems in the long term in terms of wood supply in Brazil. I see a need to have planning and vision so that this wood is either unlocked for the country because it is locked by the livestock. I think that will come not only by the agribusiness, but also by planted forests. This is an industry which is global benchmarking in cash costs, and I believe that Klabin might be one of the main ones in this area. You asked three questions. I focused on this question about wood. I know you also asked about investments. Marco can talk about it. About investment timing, we said a couple of times in our conference calls that our focus right now is on fluff, Sack Kraft, and slightly heavier fluff. We're keeping an eye on Santa Catarina region. What I mean by heavy Kraft is because the pine base is higher than light Kraft. Considering that we have this longer horizon, particularly if we consider macroeconomics today, I believe that by the end of 2023 and early 2024, we will be ready to make proposals to the board of directors. The investment maturity might be from 24 to 36 months, depending on how our engineering team finds it more feasible. Either all pieces of equipment at once or one at a time. The idea today is very much focused on the fluff Sack Kraft market and also Containerboard, therefore Kraftliner. This change might occur owing to engineering designs. Marcos, did I forget anything? For CapEx, approximately BRL 150 million for prep work for the boiler. It's included in the maintenance CapEx. It's included in BRL 1.4 billion for industrial maintenance. Flávio, you can talk about the white-coated board. Thank you. This white-coated board, firstly, that's more than 20 million ton market. We don't want to be in this market. We want to be high-end specialty coated board, particularly for soft board. There is a premium price. We want to be in geographies that make more sense to us. It includes Brazil, more high-end. LPB is another one with a premium price, about 10% vis-à-vis historical levels. It more than offsets production costs to manufacture coated board. When it comes to our business model for Machine 28, it replaces Kraftliner lower margin products allocated for the first years of the machine. There is an increase in profitability and yield. Great. There are a couple of questions coming in. Please go ahead. Please introduce yourself. Good morning. Ricardo Morandini from Morgan Stanley. Thank you for the presentation. I have two questions. First, a follow-up question about the cost of wood. When you check the schedule for the share of owned and third-party wood, when it comes to pine, the share of owned wood continues to go down until 2026. However, for owned eucalyptus, it goes up. When should we start to see a stable wood price year-over-year? Will it only be when the share of owned pine wood goes up again, or could we expect to see an increase, and the sequential increase in the ratio of own versus third-party eucalyptus will more than offset the drop in pine. That's my first question. The second question is about the recovery boiler. Firstly, I would like to understand what drives you replacing or revamping the recovery boiler. You show the old one or revamping. Is there a difference in production should you decide to build one from scratch? I believe there is a difference in CapEx, but could you give us more color? Conceptually, what would change between one decision and the other? Thank you. Let me talk about the recovery boiler, and then Marcos and Sandro can tell you more about the wood cycle. What drives us to invest in a recovery boiler, I'm going to share some data and then I'll be more accurate for Monte Alegre unit. How do we analyze competitiveness in the industry? Obviously, we all start with forest yield. However, Well, I could mention many things, but I'll focus on the industrial area. When you go to the industrial area, you have the drying machines. You can both dry by doing pulp and also different kinds of paper. Competitive conversion. The main piece of equipment when it comes to CapEx, once you cook the wood, it's exactly the recovery boiler. We consider what happens in the world. We try to find a concentration of production and to check the average age of equipment. A recovery boiler could reach 50 or 60 years. It's possible. However, with a lot of investment in maintenance. In this industry sometimes you're not so careful with assets, not only in Brazil but in the whole world, particularly in moments of crisis. At the end of the day, the average age of these equipments today, particularly in the U.S., are about 45 years. The vast majority of recovery boilers in the U.S. are in the last quartile of their lives. When you project the market into the future, like I said many times, not only Brazil but Klabin, particularly because it is the only Brazilian manufacturer that is characterized by softwood capacity. I see Klabin as a company that will gain more and more global market share, particularly with soft fiber, softwood, and particularly owing to the replacement of equipment in the U.S., which will eventually happen. We don't see new investment in pulp in the U.S. Rather, we see machine conversion for recycled products, so the end of the line. However, we don't expect to see investment in pulp cooking in the U.S. This brings a certainty that capacity will come from Brazil, more specifically from Monte Alegre. This boiler is one of our boilers with this characteristic of being at the end of life. Today, we run with a lot of safety. We have the option to replace this equipment and put it into a new area of the site, adding more capacity to the site. We also have the possibility of having a smaller boiler, more integrated in the current layout, and we also have the chance to renovate the current boiler, basically just having the structure, but everything else would be replaced. We started conversations for a couple of years now, always making reference to the operational safety of the factory, which is absolutely in order. We've been considering all possibilities and today we are closer to the first quartile of the investment. We began to consider or being more conservative, this would be for the last quartile of the cost as investment CapEx. The good news today is that our engineering team has found solutions that will bring this CapEx to a much smaller number compared to what we first envisaged. The cash flow, discounted cash flow, so this boiler is not disconnected. It eventually loses capacity. Today, it's at full capacity. If we stick to it will lose capacity over time, so the plant's capacity would be reduced. Currently, it's around 1 million tons. If we think about the discounted cash flow into the future, at least two decades, if we replace the equipment, we maintain or even improve a specific yield because it's new technology in the discounted cash flows. The motivation exists. Studies are going on. We're very optimistic and motivated because CapEx is relatively smaller compared to what we considered before. As for wood cost, it comes to a peak, becomes flat, and goes down before the pine curve. On the chart, you will see that the absolute number for pine or eucalyptus is higher than pine. Because eucalyptus cycle is shorter, starting next year, there will be a larger share of own wood, and it gets stronger starting 2027 and 2028 hitting the target. Second reason, also because pine's cycle is longer, we can anticipate purchases with good planning. The impact is smaller of having 1 ton of third-party pine compared to eucalyptus. We don't want to lock the curve year-over-year because it's important for the forest team to have the freedom as we move forward. By the way, remember the forest operation is climate dependent, so the cost of the cycle should be the cheapest possible. Changing the order from 2026 to 2025 or 2023 makes it easier for us to have a lower net present value in the cycle. After this disclaimer, we believe the peak will happen in 2023, 2024, and from onwards we can slightly go down. There is a first important leap in 2028 when there will be a reduction of two digits in the cost of wood and then a stronger reduction of two digits in the thirties. Actually, we have time for just one last question, and the microphone is already there with the speaker. Can I just suggest something? If you want, you can send your questions later via email, and I'll show you the email address later on. Okay? Please introduce yourself. I'm Guilherme Nippes with XP Investimentos. I have two questions. The first question is, can you make comments on softwood inventory levels? We can see that globally inventory levels are going up, and Klabin was no different. When you check the numbers for Q3 and we have a relative comparison, we can see inventory levels are around 100 days vis-a-vis a historical level of 60 days. I'd like to better understand what you expect to see for 2023 and beyond, if inventory levels should go back to more regular levels or will be higher for some time. My second question is related to Monte Alegre. I'm sorry to be redundant about the renovation, but I'd like to understand if you could first tell us the order of magnitude of the CapEx. I believe that's a frequently asked question. The second question is, what about the time frame for this investment? Part would come in 2023, like you said, but another significant amount in 2024. What about the total value of CapEx, and how much would you lose production in this time frame? Thank you. I'll ask Nico to answer the question about softwood inventory levels. With regards to the boiler, as soon as we have the data available, as soon as we go deeper into discussions in-house, not only with the management but also the board of directors, we'll be sharing every detail. We always like to be very transparent. I just ask you to be a little bit more patient. Please bear with us. If we're not sharing this today, it's because there is not a significant impact. Obviously, if it were strong, we would talk about it. What we can say right now is that for the period of the renovation, I don't want to set any date, any deadline, because like I said, we might renovate it or replace it and the timeline will change. Even when it comes to the impact on production, we cannot say anything right now. What I can tell you is for the next five years, possibly the boiler will be replaced. This time frame, it's very safe when it comes to the operational standpoint. There will be no economic impact due to lack of production until we come to this notice. Certainly, in five years' time, this will all be settled. Like I said in the beginning, investment is around 1/3 of what we expected at first, at least based on current studies. If our maintenance CapEx is around $1.4 million with some wiggle room, this will be marginal, so, low impact. As soon as we learn more about it, rest assured that we're going to be very transparent as we've always been. Nico, can you dive deeper into softwood inventory? Thank you for the question. We have two different scenarios. We have hardwood today, which is more comfortable, and we also have the softwood market, which is a little bit weaker compared to hardwood. There are two motivations here. One is economic, considering hardwood prices are still at very high levels, so, the gap between woods dramatically decreased. Earlier this year, the gap was higher than $200 per ton. Today it's lower than $100 US dollars. We believe this is temporary, and that's the economic aspect. The main aspect is a structural impact. I think you know that owing to the war between Russia and Ukraine, the Finnish and the Nordic countries no longer produce a considerable amount of hardwood, which is birch. The equipment is there to be used and being produced. These manufacturers, because they cannot have access to Russian wood to manufacture and produce hardwood, are now focusing more on softwood in the current machines. For this region, there is an oversupply of softwood pulp. This whole softwood production in Europe has two markets, Europe per se and also the Chinese market. Today, China is standing out vis-à-vis other geographies. Demand is weaker compared to Europe and the US, and this puts a lot of pressure on this market. I highlight that the impact on Klabin is nearly zero. Like I said, our softwood availability is going down in recent years. The current production volume is to the domestic market, not for paper, but for fiber and cement, and focusing on fluff, and the outlook remains quite good. Great, Nico. Thank you. The purpose of our panel actually is to give voice so you can ask questions and clarify all the questions you have. For this reason, we're going to close our online audience, but we'll open the floor for this gentleman who is in front of us. Good morning. It's a pleasure to be here. I'm really honored to be here with such a magnificent and outstanding talk. I'm from Imagine, and I am a Klabin shareholder since it went public. It's already paid for one share of Klabin BRL 302, and already paid BRL 0.14. Fair enough. My feeling is the following: Klabin does not manage to show the image higher than that of BRL 4 because actually, when you pay proceeds, and Klabin's proceeds are way above others, no matter how high proceeds are, when it comes to the share base, the factor or the number is very small. My feeling is the following: Klabin pays small dividends, but actually it's not small. The company's management, in my opinion, should be more concerned with regards to the company's image. I'm very confident that if Klabin put together the U.S. market, it wouldn't cost $0.67 alone. This is my opinion. I'd like to ask the following question. Brazil is a country with systematic inflation. All assets are converted into financial assets. What we notice is that the value of companies do not represent their reality. Today, share is around BRL 92. I'd like to know the following: Because Klabin has a physical equity represented by land mostly, I would like to know if this really mirrors the current reality of the company. Thank you for your comments and recommendations. As for our equity, I would like Marco to help me, but naturally, we use the accounting methodology in order to do this assessment. I'd like to bring more color on the physical asset. I really like what you said about it, and I'll now turn it over to Marcos Ivo to talk about the rest. I'm always curious when the market, the capital markets. By the way, I'm an industry guy. My whole career was in the industry, obviously I have this intrinsic value of the real economy. This is very close to my heart, and I have a hard time to make it more concrete once I leave the real economy, and I have to make these values subjective, particularly for some companies which don't have a real asset. I don't want to sound rude about these companies who are not in the real economy. All I want to do is to highlight the merit that you mentioned about forests. About forests, when it comes to the environment and the economy, I cannot think of a more value-creating asset for untapped industries. I'm going to give an example, moving away from pulp and paper. I'm referring to civil construction. Wood, once used for civil construction purposes. Wood at least is carbon, half is carbon, half is water, at least. If you use this wood to build a house, this house or carbon will be retained for at least 50 or even 70 years in a house, which is the time it takes for the molecule. Once emitted, that's the time it takes to be reabsorbed by the atmosphere through photosynthesis generated by the planet or by algae and forests. As you can see, forests are not only fully explored. For instance, think of a need of carbon inventory by the civil construction industry, not to mention bioeconomics. Francisco brought a good example of pine oil. It's a biodiesel which replaces fuel oil. All these examples that I'm saying are upsides to Klabin's business. These are value that might one day bring even more added value to Klabin. If you consider the current forest, the return on investment capital, the team in charge of state-of-the-art equipment worldwide and constantly manufacturing products. According to McKinsey, these are products in the market that replace other markets, like biodegradable packaging that we speak so often about. The real value of Klabin's assets, in my opinion, this is underrated. I thank you for your suggestions. Our department will certainly focus on how to communicate better. Just adding to what he said, Klabin is very careful about the accounting rules in Brazil. Even this year, we were awarded by the transparency award by ANEFAC. This stems from the current accounting standards. Possibly or very likely, the value of the assets that is there does not reflect the real value of the assets. You mentioned this in your question. Restatement is no longer possible in balance sheets. For the last couple of years, there was significant inflation rate in Brazil. Just the short time frame, but it naturally brings some distortion in the balance sheet. Another point, just for the sake of example, is the value of the land and native forest. Sandro showed in his presentation, Klabin has almost 300,000 ha of native forests. The value of this asset in the balance sheet is zero. Even in the land, as we buy land over time, the last time due into accounting standards that we were allowed to change and reassess land asset was in IFRS back in 2019, and it has been frozen since then. These are just examples that make us say that our value in the balance sheet does not reflect the real value. On the other hand, we have to be compliant with the regulations, the accounting standards. Thank you all for sending your questions. Unfortunately, for the sake of time, we have to end our question and answer session. For those of you whose questions were unanswered, please send your questions via email to the team. You can see this on the screen, invest@klabin.com.br. Huge thanks to all of you who came and join us this meeting. We thank all the officers who joined us today. Cristiano, please remain on stage because we are going to close the meeting with a special moment. Thank you. Thank you, Cristiano, Marcos. We have good news. Great news, actually. Once again, the company was acknowledged by APIMEC, the Association for Investors and Assets with the Platinum 2020 New Diligence Seal. To make it official, I'd like to invite upstage Lucy Souza. She's the executive chairman of APIMEC. Welcome, Lucy. I'd like to invite Paulo Galvão, representing our board, to get the award with us and our CFO. Good afternoon, dear analysts, investment professionals and investors who are here with us and also online. We're delighted as APIMEC Brasil. We are APIMEC Brasil. We are delighted to hand in the CEO of 21 consecutive meetings as partners with us. Additionally, I also handed in what was announced earlier this year. We didn't have the chance to give you before. You also were awarded with the best meeting of last year. 35,000 professionals in 2021, face-to-face or online with your partnership with APIMEC. These professionals assessed you, and you were the winners with the best meeting in 2021. We're running for 2022 as well. You'll get an invitation to evaluate this meeting via email. Please, we count on your feedback. Maybe Klabin will be the next winner again. Other than that, just to conclude, I would like to give you... Possibly you have or probably you have a library. The book that shares the history of our association, which is mingled with capital markets. We've been together for 52 years in capital markets. This is the book. I thank you all, and I give the floor back to Cristiano. Cristiano, the floor is yours again. I just would like to thank you all very much for being here with us. It's a pleasure to talk to you. Thank you. Thank you, Cristiano. Thank you, Lucy. Before we end this event, on behalf of Klabin, I would like to thank you very much for being with us, both of you that are in here with us in person and also our guests that followed us online. After two years, it is a great pleasure to be able to have this event again in person. Please check all the contents that we have available at the Klabin Invest platform, especially for analysts and investors. Thank you very much. See you in our next event.