Earnings Release 3Q11

EBITDA of R$277 million in 3Q11,

the highest quarterly result since 3Q04
Klabin's consolidated financial statements are presented in accordance with International Financial Reporting Standards (IFRS), as determined by CVM Instructions 457/07 and 485/10.

R$ million Sales volume - thousand tonnes

% Domestic Market

3Q11 434
71%

2Q11 435
66%

3Q10 436
71%

3Q11/2Q11 3Q11/3Q10

9M11 1,306
66%

9M10 1,299
68%

9M11/9M10

0%
5 p.p.

0%
0 p.p.

1%
-2 p.p.

Net revenue
% Domestic Market

991
81%

947
78%

983
79%

5%
3 p.p.

1%
2 p.p.

2,895
78%

2,732
78%

6%
0 p.p.

Operational Result (EBIT) EBITDA

EBITDA Margin

147 277
28%

177 190
20%

203 252
26%

-17% 46%
8 p.p.

-28% 10%
2 p.p.

527 717
25%

506 731
27%

4% -2%
-2 p.p.

Net Income (loss) Net Debt

Net Debt / EBITDA (LTM)

(243) 2,313
2.4 x

163 1,893
2.0 x

226 2,106
2.2 x

60 22% 3% 10% -12% 2,313

2.4 x

335 2,106
2.2 x

-82% 10% 23%

Capex
LTM - last twelve months / N/A - not applicable

96

93

109

305

248

Note: Due to rounding, some figures in tables and graphs may not result in a precise sum.

3Q11 Highlights
Share of domestic sales increased from 66% in 2Q11 to 71% in the quarter; Net revenue: R$ 991 million, up 5% from 2Q11. Domestic market accounted for 81% of total net revenue; EBITDA: R$277 million, up 46% from 2Q11 and 10% from 3Q10; the best result since 3Q04, when exchange rate was R$ 2.98/US$. EBITDA margin of 28%, up 8 percentage points on 2Q11; Net foreign exchange loss, although with no cash effect, of R$501 million, due to the 19% appreciation of the U.S. dollar. Extraordinary Meeting of the Board of Directors approved a complete revision of Klabin S.A.s executive compensation system.

9M11 Highlights
Net revenue: R$2.9 billion, up 6% on 9M10; Net income: R$60 million, impacted by the foreign exchange variation in September; Net debt/EBITDA ratio increased from 2.2x in December 2010 to 2.4x in September 2011 due to the foreign exchange variation.
Investor relations Antonio Sergio Alfano Vinicius Campos Daniel Rosolen Lucia Reis +55 11 3046 8401 Conference call Portuguese Tuesday, 01/11/11 8am (EDT) Phone: +55 11 4688 -6331 Password: Klabin Replay: +55 11 46886312 Password: 659952 English Tuesday, 01/11/11 9am (EDT) Phone US: 1-888-700-0802 Password: Klabin Replay: +55 11 46886312 Password: 1131859

3Q11 Results October 31st, 2011

3Q11 Summary
Klabin, Brazils largest paper producer, exporter and recycler and the leader in the paper, coated boards for packaging, corrugated boxes, industrial bags and wood logs for sawmills and planer mills markets, closed 3Q11 with EBITDA of R$ 277 million, accompanied by EBITDA margin of 28%. EBITDA, which is earnings before interest, taxes, depreciation and amortization, was the highest recorded by the Company since 3Q04 (when the exchange rate was R$ 2.98/US$), and was 46% higher than in 2Q11, driven by an improved sales mix and reduced cash cost.
500 450 400 350 300 250 200 150 100 50

EBITDA and EBITDA margin

(R$ million)
28% 26% 277 20% 190 252

35% 30% 25% 20% 15% 10% 5% 0%

3Q11

2Q11

3Q10

Sales volume, excluding wood, reached 434 thousand tonnes in the third quarter, in line with the 436 thousand tonnes sold in the same period of 2010. Sales in 9M11 totaled 1,306 thousand tonnes, 1% more than in the same period in 2010. Domestic sales accounted for 71% in 3Q11, a 5 percentage point increase over the second quarter. Klabin ended 3Q11 with net revenue of R$ 991 million, up 1% on the same quarter of the prior year. Net revenue in 9M11 totaled R$ 2,985 million, 6% higher than in 9M10. The domestic market accounted for R$ 803 million and exports R$ 188 million (US$ 115 million) in the third quarter. In 9M11, net revenue from exports totaled R$ 639 million (US$ 391 million), up 4% from 9M10.

Paper sales volume

(excluding wood) 991

Net revenue
(R$ million)
947 205 983 204

(thousand tonnes)
434 EM 126 435 147 436 EM 128 803

188

DM

308

288

308

DM

742

779

3Q11

2Q11

3Q10

3Q11

2Q11

3Q10

At the close of September, Klabins financial investments(1) totaled R$ 3,030 million, corresponding approximately to over 3.3x of short-term gross debt. Net debt at the close of September was R$ 2,313 million, R$ 185 million higher than R$ 2,128 million at the close of December 2010, resulting from the foreign exchange variation. The net debt/EBITDA ratio rose from 2.2x on December 31st, 2010 to 2.4x on September 30th, 2011. Net income in the quarter was affected by the foreign exchange variation in September, in this regard, net income in 9M11 decreased to R$ 60 million. Klabins foreign exchange exposure is basically related to prepayment of long-term exports and hence export revenues more than compensate for future payables. The Extraordinary Meeting of the Board of Directors held on September 22nd, 2011 approved the payment of interim dividends amounting to R$ 55 million, to be paid at R$ 58.22 per lot of thousand common shares and R$ 64.04 per lot of thousand preferred shares. The Meeting also approved the complete revision of the Klabin S.A.s executive compensation system in order to modernize it, making it more closely pegged to results and better aligned with shareholder interests (see page 15).
(1) Includes cash and cash equivalents.

3Q11 Results October 31st, 2011

Markets and Exchange Rate

The economic crisis in Europe and the slowdown in global industrial production extended into the third quarter of 2011. Important Eurozone countries were affected by the Greek crisis and the health of their economies was brought into question. The Greek governments fiscal austerity program failed to produce the effects expected by the European Central Bank and did not stave off the risk of the country's moratorium. Global industrial production declined in 3Q11, mainly influenced by the negative results from the Eurozone countries, signaling a contraction of the world economy. Chinas industrial production slowed down moderately in the quarter, reducing previous estimates for the countrys GDP growth in 2011. The high unemployment levels and bleak outlook regarding the European crisis were reflected in the U.S. economy in 3Q11. In Brazil, foreign currency inflows remained strong during the first half of the quarter. However, this scenario changed at the beginning of September with the worsening of the crisis in Europe, resulting in a sharp rise of the U.S. dollar to the record levels of July 2009. The 50bps reduction in the Selic interest rate in August also helped push the dollar, making Brazilian capital markets less attractive to foreigners. Brazils industrial production followed the global trend and declined in the third quarter. Inflation indicators once again started moving up in 3Q11, for a total increase of 7.3% in the past 12 months. The dollar (sell, end of period), which closed at R$ 1.56/US$ on June 30th, 2011, appreciated 19% in the quarter to reach R$ 1.85/US$ on September 30th, 2011. Compared with December 31st, 2010, the dollar increase was 11%. Average exchange rate in 3Q11 was R$ 1.64/US$, 7% lower than in 3Q10, but 2% higher than in 2Q11. Between 9M10 and 9M11, average rate fell 8%.

3Q11 Average Rate End Rate

Source: Bacen

2Q11 1.60 1.56

3Q10 1.75 1.69

3Q11/2Q11

3Q11/3Q10

9M11 1.63 1.85

9M10 1.78 1.69

9M11/9M10

1.64 1.85

2% 19%

-7% 9%

-8% 9%

International kraftliner demand remained stable in the quarter, though international prices continued to drop. In Europe, according to data published by FOEX, the list price of kraftliner brown 175 g/m fell from 582/tonne in June to 573/tonne in September. In Brazil, kraftliner and scrap prices remained stable between July and September. The domestic paper market witnessed the typical seasonality and delivered results stronger than in the two first quarters of the year. According to the Brazilian Association of Pulp and Paper Producers (Bracelpa), Brazilian shipments of coated boards, excluding liquid packaging boards, in 3Q11 increased 9% from 2Q11 to 136 thousand tonnes, while decreasing 12% from 3Q10. The corrugated boxes market expanded in relation to 2Q11, influenced by the market seasonality. According to data from the Brazilian Corrugated Boxes Association (ABPO), Brazilian corrugated boxes shipments reached 828 thousand tonnes from July through September, for growth of 2% over the second quarter of the year. In 9M11, domestic demand for corrugated boxes remained stable, growing 1% over 9M10 to reach 2,397 thousand tonnes. Preliminary data from the National Cement Industry Trade Union (SNIC), which include bulk and bag cement, indicate that consolidated cement sales in 9M11 grew 8% over 9M10. With the aim of improving the sales mix and the margins, the Company remained selective in the sale of conversion products during the quarter.

3Q11 Results October 31st, 2011

Operating and Financial Performance

Sales volume
Sales volume, excluding wood, totaled 434 thousand tonnes in 3Q11. In 9M11, sales volume totaled 1,306 thousand tonnes, 1% up year-on-year. Domestic sales volume in 3Q11 came to 308 thousand tonnes, stable in relation to 3Q10 and up 7% (20 thousand tonnes) from 2Q11, led by the growth in paper (kraftliner and coated boards) sales, accompanied by the typical seasonality in the Brazilian market. In 9M11, domestic sales volume was 865 thousand tonnes, 2% lower than in 9M10. Export volume in 3Q11 came was 126 thousand tonnes, down 1% from 3Q10. In 9M11, exports came to 442 thousand tonnes, 5% higher than in 9M10.
Sales volume (excluding wood) (thousand tonnes) 1,306
34%

Sales volume by product 9M11

1,299
32%
Kraftliner 24%

Ind. Bags 8%

Others 2%

Coated Boards 37%

434
29% 71%

435
34% 66%

436
29% 71%

66%

68%

3Q11

2Q11

3Q10

9M11

9M10 Total

does not include wood

Corrugat. Boxes 29%

Domestic Market

Export Market

Net Revenue
Net revenue, including wood, came to R$ 991 million in 3Q11, up 1% from 3Q10 and 5% from 2Q11, driven by the higher share of domestic sales and the impact of the stronger dollar on export volumes in September. In 9M11, net revenue came to R$ 2,895 million, up 6% from 9M10.

Net revenue (R$ milliion) 2,895

22% 22%

Net Revenue by Product 9M11

2,732

Wood Others 1% 7% Ind bags 12% Coated Boards 34%

991
19% 81%

947
22% 78%

983
21% 79%

78%

78%
Kraftliner 14%

3Q11

2Q11

3Q10

9M11 Export Market

9M10
includes wood

Corrugat. Boxes 32%

Domestic Market Total

3Q11 Results October 31st, 2011

Domestic net revenue stood at R$ 803 million, 3% and 8% higher than in 3Q10 and 2Q11, respectively. The domestic markets share of total revenue was 81% in 3Q11, versus 78% in 2Q11. In 9M11, net revenue from domestic sales was R$ 2,257 million, 6% higher than in the same period of 2010. In 3Q11, exports totaled R$ 188 million (US$ 115 million), down 8% from 3Q10, due to the products mix and the exchange rate. In 9M11, net revenue from exports totaled R$639 million (US$ 391 million), up 4% from 9M10. Exports The seasonality of the Brazilian market increased the percentage of domestic paper sales in 3Q11. As a result, the Company directed a lower volume for exports than in the previous quarter. The share of domestic sales increased from 66% in 2Q11 to 71% in the quarter. The 17% appreciation of the dollar in September compared with late August reflected in higher real prices and partially offset the 14% drop in exports in 3Q11. As a result, export revenues in the quarter were 9% lower than in 2Q11. Klabins export revenues were lower in comparison with 3Q10 due to the 7% lower dollar on average between the periods. Latin America remains Klabin's key export market, accounting for 42% of the Company's sales volume and 41% of its net export revenue in 9M11, followed by Asia, which concentrates its exports of liquid packaging boards.
Sales Volume - 9M11 Net Revenue - 9M11

Africa 11%

North America 4%

Africa 9%

North Americ a 4%

Latin America 42% Europe 19%

Europe 19%

Latin America 41%

Asia 24%

Asia 26%

Operational Costs and Expenses

Unit cash cost in the quarter, including fixed and variable costs as well as operational expenses, stood at R$ 1,644/t, and was impacted by non-recurring expenses relating to cost-cutting measures, which included dismissals, by the maintenance stoppages in Correa Pinto (SC) in July and by the gain from the sale of land. Excluding non-recurring expenses and revenues as well as costs with maintenance stoppages, unit cash cost in 3Q11 came to R$ 1,612/t, down 2% and 1% from 3Q10 and 2Q11, respectively. Note that the effect of the reduced cash cost in the quarter was concentrated in September, reflecting the launch of cost-cutting measures being implemented by the Company. Cost of goods sold in 3Q11 was R$ 729 million, down 6% from 2Q11 and in 9M11 was R$ 2,214 million, up 3% on 9M10. Selling expenses in 3Q11 were R$ 77 million, remaining stable in relation to 3Q10 and 2Q11. Freight costs totaled R$ 47 million, up R$ 2 million on 2Q11, due to higher sales directed to northeast Brazil

3Q11 Results October 31st, 2011

with the onset of the fruit harvest season in August. In 9M11, selling expenses were R$ 239 million, up 7% from 9M10. General and administrative expenses totaled R$ 64 million in the quarter, up 12% and 13% on 3Q10 and 2Q11, respectively. The increase was due to higher spending on labor, third-party services relating to the Companys reorganization processes and dismissals. In 9M11, general and administrative expenses amounted to R$ 176 million, up 11% from 9M10, also impacted by the collective bargaining agreement. Other operating revenue (expenses) was revenue of R$ 7 million in 3Q11, compared to an expense of R$ 1 million in 3Q10, impacted by the gain of R$ 8 million from the sale of land in Mato Grosso do Sul. In 9M11, other operating revenue (expenses) was an expense of R$ 11 million, compared to revenue of R$ 3 million in 9M10.

Effect of variations in the fair value of biological assets

The effect of variation in the fair value of biological assets was a positive R$ 19 million in 3Q11, quite lower than in 3Q10 and 2Q11, due to stable wood prices and lower contingent of forests that was recognized at fair value than in previous periods. In 9M11, this effect came to R$ 272 million, down 10% from 9M10. The effect of the depletion of the fair value of biological assets on cost of goods sold was R$ 80 million in the quarter, down 25% and 13% from 3Q10 and 2Q11, respectively. In 9M11, the effect from depletion was R$ 257 million, down 24% from 9M10. As a result, the effect of the fair value of biological assets on the operating result (EBIT) was a loss of R$ 61 million in 3Q11, compared to gains of R$ 53 million and R$17 million in 2Q11 and 3Q10, respectively.

Operating Income
Operating income before financial result (EBIT) was R$ 147 million in 3Q11, down 28% and 17% from 3Q10 and 2Q11, respectively, affected by the effect of the variation in the fair value of biological asset, as mentioned earlier. In 9M11, EBIT was R$ 527 million, increasing by 4% from 9M10.

Operating cash flow (EBITDA)

Operating cash flow (EBITDA) was R$ 277 million in the third quarter, increasing by 10% and 46% from 3Q10 and 2Q11, respectively. EBITDA margin stood at 28% in 3Q11, compared with 26% in 2Q10 and 20% in 2Q11. In 9M11, EBITDA totaled R$ 717 million, with margin of 25%, versus R$ 730 million in 2010, with margin of 27%. EBITDA in the quarter was the highest since the third quarter of 2004, when the exchange rate was R$ 2.98/US$, and the growth was main driven by the higher share of domestic sales and the reduction in costs. Exports were also positively impacted by the appreciation of the dollar in September.

EBITDA Composition R$ million Operational result (after financial result) (+) Financial result (+) Depreciation, amortization, depletion (-) Biological assets adjust EBITDA EBITDA Margin
N / A - Not applicable

3Q11 (371) 517 150 (19) 277 28%

2Q11 246 (69) 159 (145) 190 20%

3Q10 347 (144) 173 (124) 252 26%

3Q11/2Q11 3Q11/3Q10

9M11 113 414 462 (272) 717 25%

9M10 524 (18) 525 (301) 730 27%

9M11/9M10

N/A N/A -6% -87% 46% 8 p.p.

N/A N/A -13% -85% 10% 2 p.p.

-78% N/A -12% -10% -2% -2 p.p.

3Q11 Results October 31st, 2011

Indebtedness and financial investments
Gross debt stood at R$ 5,343 million on September 30th, 2011, compared with R$ 4,857 million on December 31st, 2010, of which R$ 3,487 million (US$ 1,880 million), or 65%, was denominated in foreign currency (primarily export pre-payment facilities). At the close of September, cash totaled R$ 3,030 million, corresponding to approximately 3.3x the volume of short-term gross debt. Net debt stood at R$ 2,313 million at the end of September, R$ 185 million higher than the net debt of R$ 2,128 million recorded in December 2010, impacted by the foreign exchange variation. The Net Debt/EBITDA ratio, which stood at 2.2x on December 31st, 2010, ended September 2011 at 2.4x. Considering that a substantial portion of its net foreign exchange exposure of US$ 1,745 million consists of export pre-payment facilities with average maturity of more than 4 years, the Company will benefit from the depreciation in the real with its exports before the payment of its debt. Therefore, the effect of the reals depreciation in the results at the end of September had an exclusively accounting impact and does not represent actual loss.
Net Debt / EBITDA (R$ million)

6.0 5.5 5.0 4.4 4,500 4.5 3.7 3.6 4.0 3.1 3.5 3,500 2.8 3.0 2.4 2.2 2.2 2.1 2.5 2.0 2,500 2.0 1.5 1.0 1,500 0.5 0.0 -0.5 500 -1.0 -1.5 (500) Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 -2.0 5,500

3,192

2,886

2,676

2,528

2,462

2,106

2,128

2,002

Net Debt (R$ million)

Net Debt / EBITDA (LTM)

The average debt term stood at 43 months, or 30 months for debt denominated in local currency and 50 months for debt denominated in foreign currency. At end-September, short-term debt accounted for 17% of total debt. The average borrowing cost stood at 8.7% p.a. in local currency and 3.8% p.a. in foreign currency.
Debt (R$ million) Short term
Local currency Foreign currency

09/30/11 930
522 408

1,893

12/31/10 842
496 346

17% 10% 8% 83% 25% 58% 100% 35% 65%

2,313

17% 10% 7% 83% 31% 52% 100% 41% 59%

Long term
Local currency Foreign currency

4,413
1,334 3,079

4,015
1,506 2,509

Gross debt
Local currency total Foreign currency total

5,343
1,856 3,487

4,857
2,002 2,855

(-) Cash Net debt Net debt / EBITDA

3,030 2,313 2,4 x

2,729 2,128 2,2 x

3Q11 Results October 31st, 2011

Financial Result
Financial expenses in totaled R$ 106 million in 3Q11, 43% higher than in 3Q10, due to the increase in gross debt denominated in foreign currency and the monetary variation on the part of BNDES financing in the currency basket. Financial revenues totaled R$ 89 million in the quarter, 35% more than in the same period the year earlier, due to the raise in the Selic rate in July and August, and the higher volume of investments. The effect of net foreign exchange variations was R$ 501 million and mainly reflected the appreciation of the dollar on the Companys debt. This effect is purely accounting in nature and does not involve any cash disbursement. The financial result in 3Q11 was a loss of R$ 517 million, due to the foreign exchange variation, versus a net financial gain of R$ 144 million in 3Q10. In 9M11, the financial result was negative at R$ 414 million, due to financial revenues of R$ 242 million, which was more than offset by financial expenses of R$ 316 million and negative net foreign exchange variations of R$ 340 million, due to the 9% appreciation of the dollar.

Net Income
The net result in 3Q11 was loss of R$ 243 million, impacted by the devaluation of the real in September, whose effect was negative in R$ 331 million, compared to net income of R$ 226 million in 3Q10 and R$ 163 million in 2Q11. Net income in 9M11 was R$ 60 million.

Business Performance
Consolidated information by operational segment in 9M11
R$ million Net revenue
Domestic market Exports 213 825 575 1,219 63 2,257 638

Forestry

Papers

Conversion

Consolidation adjustments

Total

Third part revenue

Segments revenue

213
352

1,400
641

1,282
10

(1,003)

2,895
-

Total net revenue

Change in fair value - biological assets Cost of goods sold

565
272 (632)

2,041
(1,559)

1,292
(1,030)

(1,003)
1,008

2,895
272 (2,213)

Gross income
Operating expenses

205
(40)

482
(223)

262
(144)

5
(20)

954
(427)

Operating results before financial results

165

259

118

(15)

527

Note: The figures in the table for total net sales include sales of other products.

3Q11 Results October 31st, 2011 BUSINESS UNIT FORESTRY

The volume of wood sales to third parties in 3Q11 increased 3% over 2Q11 to 688 thousand tonnes. The wood market in Brazil has been shrinking during 2011. In addition, the heavy rains in Santa Catarina state have affected Klabins harvest. In 9M11, wood sales totaled 2,091 thousand tonnes, 11% lower than in the same period last year. Net revenue from log sales to third parties in 3Q11 was R$ 69 million, 8% higher than in 2Q11. Benefiting from an improved product mix, the Company focused its efforts on sales of higher value added products. In 9M11, net revenue reached R$ 201 million, up 4% on 9M10.
Sales volume (thousand tonnes) Net revenue (R$ million)

2,352 2,091

201

194

688

666

817

69

64

72

3Q11

2Q11

3Q10

9M11

9M10

3Q11

2Q11

3Q10

9M11

9M10

At the close of September, own and third-party planted areas totaled 211 thousand hectares, of which 129 thousand hectares were planted with pine and 82 thousand hectares with eucalyptus trees. In addition to its planted areas, Klabin has 190 thousand hectares of permanent preservation and legal reserve areas.

BUSINESS UNIT PAPER

Paper and coated boards sales (kraftliner, white top liner, testliner, sack kraft, folding box board, carrier board and liquid packaging board) to third parties totaled 261 thousand tonnes in 3Q11 and 802 thousand tonnes in 9M11, up 3% on 9M10. In 9M11, domestic sales totaled 380 thousand tonnes, while exports totaled 422 thousand tonnes. Compared with 9M10, domestic sales remained stable while exports grew 6%. Net revenue from paper and board was R$ 460 million in 3Q10, 2% higher year on year, and R$ 1,371 million in 9M11, 7% more than in 9M10.

Kraftliner
Kraftliner sales in 3Q11 came to 100 thousand tonnes, 18% higher than in 3Q10. Sales in 9M11 totaled 314 thousand tonnes, 13% higher than in 9M10. The sales growth is related to the greater operational stability of the plant in Monte Alegre. Domestic sales totaled 44 thousand tonnes in 3Q11 and accounted for 44% of total kraftliner sales. In 9M11, domestic kraftliner sales totaled 115 thousand tonnes, 2 thousand tonnes lower than in 9M10 when there was a buildup of inventories. Exports totaled 56 thousand tonnes in 3Q11 and 200 thousand tonnes in 9M11. The growth in exports in relation to 9M10 was 38 thousand tonnes (23%).

3Q11 Results October 31st, 2011

Net revenue from kraftliner sales came to R$ 132 million in 3Q11, up 8% and 4% on 3Q10 and 2Q11, respectively, reflecting the better sales mix and the average appreciation in the U.S. dollar in the period. In 9M11, net revenue from kraftliner sales was R$ 399 million, up 17% from 9M10.
Sales volume (thousand tonnes) 314 279 Net revenue (R$ million) 399 343
64% 58%

100
56% 44%

104
73% 37%

85
48% 52% 36% 42%

132

127

122

3Q11

2Q11

3Q10

9M11 Export Market

9M10

3Q11

2Q11

3Q10

9M11

9M10

Domestic Market

According to data from FOEX, the average list price in euros of kraftliner brown 175g/m in Europe fell 2% during the third quarter to an average of 577/tonne. The list price in real averaged R$ 1,332/tonne in 3Q11, 1% lower than in 2Q11, but 10% higher than in 3Q10.
Kraftliner Brown 175 g/m list price (/tonne and R$/tonne)

1,459 1,217

1,392 1,162 1,029 1,038 1,207 1,079 1,089

1,364

1,373

1,352

1,332

487

486

462

411

385

404

433

478

533

592

602

588

577

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

Quarter average
Source: FOEX and BAC EN

Kraftliner ( / tonne)

Kraftliner (R$ / tonne)

Coated boards
Coated boards sales volume in 3Q11 was 161 thousand tonnes, down 6% from 3Q10 and up 1% against 2Q11. Although data disclosed by Bracelpa indicate lower demand in Brazil in relation to 3Q10, Klabins domestic sales grew 5%, driven mainly by the greater diversification of the coated boards line. Sales volume in 9M11 totaled 266 thousand tonnes, up 1% from 9M10. Coated boards exports totaled 63 thousand tonnes in 3Q11, down 19% and 15% from 3Q10 and 2Q11, respectively, due to the efforts to achieve better sales mix. Net revenue from coated boards sales amounted to R$ 972 million in 9M11, up 3% from 9M10.

10

10

3Q11 Results October 31st, 2011

Sales volume (thousand tonnes) 488 499

Net revenue (R$ million)

972
46% 47%

941

161
39% 61%

159
47% 53%

171
46% 54% 54% 53%

328

312

330

3Q11

2Q11

3Q10

9M11 Export Market

9M10

3Q11

2Q11

3Q10

9M11

9M10

Domestic Market

According to Bracelpa data, domestic sales of coated boards, excluding liquid packaging board, totaled 136 thousand tonnes in 3Q11. Though sales were lower than in the previous year, domestic demand in the quarter increased 9% over 2Q11, accompanying the seasonality typical of this market. Domestic coated boards sales in 9M11 totaled 381 thousand tonnes, 12% lower than in 9M10.

BUSINESS UNIT - CONVERSION

Sales of conversion products (corrugated boxes and industrial bags) totaled 163 thousand tonnes in 3Q11 and 480 thousand tonnes in 9M11, down 3% year over year. Net revenue from conversion products totaled R$ 446 million in 3Q11. In 9M11, net revenue was R$ 1,278 million, up 6% from 9M10.

Corrugated boxes
Sales of corrugated boxes reached 130 thousand tonnes in 3Q11, 2% lower than in 3Q10, but 1% higher than in 2Q11. Sales in 9M11 came to 379 thousand tonnes, down 2% from 9M10, mainly due to the increase in selectiveness by the Companys in pursuit of higher margins in this segment. Net revenue in 3Q11 totaled R$ 323 million, growing by 3% and 5% from 3Q10 and 2Q11, respectively. In 9M11, net revenue came to R$ 919 million, up 8% from 9M10.

Sales Volume (thousand tonnes)

Net revenue (R$ million)

379

386

919

853

130

129

132

323

308

314

3Q11

2Q11

3Q10

9M11

9M10

3Q11

2Q11

3Q10

9M11

9M10

11

11

3Q11 Results October 31st, 2011

According to the Brazilian Corrugated Boxes Association (ABPO), corrugated boxes and board shipments totaled 828 thousand tonnes in 3Q11, 3% and 2% higher than in 3Q10 and 2Q11, respectively. In 9M11, shipments of these totaled 2,397 thousand tonnes, up 1% from 9M10.

Brazilian Corrugated Shipments thousand tonnes

271 249 232 212 232 265 251 249 268 266 253 270 276

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

Quarter average
Source: Brazilian C orrugated Boxes Association

Monthly volume

Note: In June 2011, ABPO revised its figures for corrugated box shipments disclosed previously.

Industrial Bags
Sales volume of industrial bags for the plants in Brazil and Argentina, in the domestic and export markets, totaled 34 thousand tonnes in 3Q11, down 11% and 1% from 3Q10 and 2Q11, respectively. Industrial bag sales in 9M10 totaled 101 thousand tonnes, 6% lower than in 9M10. To optimize its sales mix and focus on markets with higher margins, the Company continued to use selective sales practices in the industrial bags in the quarter.
Net revenue (R$ million) 108 359 356

Sales volume (thousand tonnes)

101

34

34

38

123

121

128

3Q11

2Q11

3Q10

9M11

9M10

3Q11

2Q11

3Q10

9M11

9M10

Net revenue came to R$ 123 million in the quarter, down 4% from 3Q10 and up 2% from 2Q11. Net revenue in 9M11 was R$ 359 million, 1% more than in 9M10. Preliminary data from the National Cement Industry Trade Union (SNIC), which include bulk and bag cement, indicate that cement sales in 9M11 grew 8% over 9M10.

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3Q11 Results October 31st, 2011

Brazilian cement consumption million tons
5.4 4.7 4.3 4.6 3.9 4.1 4.4 4.6 4.8 5.2 4.9 5.2 5.6

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

Quarter average
Source: Nation Labor Union of C ement Industry

Monthly consumption

Capital Expenditure
The following table presents a breakdown by Unit of the investments made in the quarter:
R$ million Forestry Papers Conversion Others Total 3Q11 31 43 20 2 96 93 2Q11 30 51 12 3Q10 31 68 11 109 9M11 98 167 36 3 305 9M10 84 129 34 1 248

Investments came to R$ 96 million in the quarter, which were allocated mainly to: The new biomass boiler at the plant in Correia Pinto, Santa Catarina, which is expected to start operations in early 2Q12. Construction works is already concluded and equipment installation started. The new transmission line in Monte Alegre, Paran, which is expected to start operations in 4Q11. The debottlenecking of the evaporation system at the Otaclio Costa mill in Santa Catarina with the objective of reducing steam consumption, also expected to start operations in 4Q11. Installation of a fiber fragmentation system to improve quality in the production of sack kraft paper in the Correia Pinto unit, in Santa Catarina state, with start-up scheduled for 2012. Expansion of the whitening capacity at the Monte Alegre unit in Paran, with improvements in causticizing, evaporation and in the lumber yard to reduce variable costs. Start-up is scheduled for the second half of 2012. Installation of two new corrugators at the corrugated boxes units in Goiana, Pernambuco, and in Jundia, So Paulo. Installation of a new complete valve bag production line at the plant in Lages, Santa Catarina.

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3Q11 Results October 31st, 2011

Capital Markets
Stock Performance
September 30 , 2011 Preferred shares Share price (KLBN4) Book value Average daily trading volume 3Q11 Market capitalization 600.9 million R$ 5.20 R$ 5.27 R$ 12 million R$ 4.6 billion
th

In the first three months of 2011, Klabin preferred stock (KLBN4) accumulated a loss of 10%, while the IBOVESPA fell 16%. In the last 12 months, Klabin preferred stock (KLBN4) gained 11%, while the IBOVESPA lost 25%.
Performance KLBN4 x Brazilian Index (Ibovespa)

111 100 75

Mar11

Nov10

Apr11

Jan11

May11

Dec10

Sep10

Jun11

Jul11

Klabin

Ibovespa Index

Klabin stock was traded in all sessions on the BM&FBOVESPA in 3Q11, registering 298 thousand trades that involved 121 million shares, for average daily trading volume of R$ 12 million, which was 9% higher than in 3Q10 and 16% lower than in 2Q11.
Average Daily Volume (R$ million/day)
22 17 14 9 10 12 9 9 8 9 10 8 7 12 15 14 14 13 12 17

16 12 13 11 14

Jun10

Aug10

Jun11

Apr10

Apr11

Sep11

Aug11

Oct10

Feb11

May10

May11

Aug11

Jul10

Jan10

Mar10

Jan11

Sep09

Sep10

Mar11

Dec09

Dec10

Jul11

14

Sep11

Feb10

Nov09

Nov10

Feb11

Oct09

Oct10

14

3Q11 Results October 31st, 2011

Klabin stock also trades on the U.S. market. Klabin stock also trades in the U.S. market through Level I ADRs, which are listed on the over-the-counter market under the ticker KLBAY. Klabin's capital stock is represented by 918 million shares, composed of 317 million common shares and 601 million preferred shares. On September 30, 2011, the Company held 30 million preferred shares in treasury.

Dividends
The Extraordinary Board of Directors Meeting held on September 22nd, 2011 approved the payment of interim dividends in the amount of R$ 55 million, which were paid as of October 11th, 2011, corresponding to R$ 58.22 per lot of thousand common shares and R$ 64.04 per lot of thousand preferred shares. As of the disclosure date of this release, R$ 207 million had already been paid as dividends in 2011.

Acquisition of shares
Between August 5th and 10, 2011, the Company acquired 2,803,200 preferred shares, totaling R$ 13.1 million. Since then, the Company has held 30,000,000 own preferred shares in treasury. The extraordinary Board of Directors Meeting held on October 13th, 2011, approved the buyback of up to 41,954,318 preferred shares (corresponding to 10% of this class of shares outstanding on said date) during a period of 365 days, to be held in treasury and subsequently sold or cancelled, with no capital reduction.

Executive variable compensation

The extraordinary Board of Directors Meeting held on September 22nd, 2011 approved the complete revision of Klabin S.A.s executive compensation system in order to modernize it, making it more closely pegged to results and better aligned with shareholder interests. The decision came into effect for the year 2011. The new variable compensation system is subject to tough performance targets and now has greater weight on total executive compensation. A system of matching was created whereby a part of the compensation may be allocated to buy the Companys stock and the Company will provide a benefit of equal amount, conditioned on a lock up period of 3 years. The plan is currently being analyzed by the Securities and Exchange of Brazil for approval.

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3Q11 Results October 31st, 2011

Conference Call
Portuguese Tuesday, November 1st, 2011 at 10:00 a.m. (Braslia) Code: Klabin Dial-in: (11) 4688-6331 Replay: +55 (11) 46886312 Code: 5659952 English Tuesday, November 1st, 2011 9:00 a.m. (EDT) Code: Klabin Dial-in: U.S. participants: 1-888-700-0802 International participants: 1-786-924-6977 Brazilian participants: (55 11) 4688-6331 Replay: +55 (11) 46886312 Code: 1131859 Webcast An audio webcast of the conference call will also be available. The conference call will also be broadcast over the internet. Access: www.ccall.com.br/klabin

With gross revenue of R$4.4 billion in 2010, Klabin is the largest integrated producer, exporter and recycler of packaging paper in Brazil, with annual production capacity of 1.9 million tonnes. Klabin has adopted a strategic focus on the following businesses: paper and coated board for packaging, corrugated boxes, industrial bags and wood logs. Klabin is the leader in all its market segments.
The statements made in this earnings release concerning the Company's business prospects, projected operating and financial results and potential growth are merely projections and were based on Management's expectations regarding the Company's future. These expectations are highly susceptible to changes in the market, in the general economic performance of the Brazilian economy, in the industry and in international markets, and therefore are subject to change.

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3Q11 Results October 31st, 2011

Appendix 1 Consolidated Income Statement (Thousand R$)

3Q11
Gross Revenue Net Revenue Change in fair value - biological assets Cost of Products Sold Gross Profit Selling Expenses General & Administrative Expenses Other Revenues (Expenses) Total Operating Expenses Operating Income (before Fin. Results) Financial Expenses Financial Revenues Net Foreign Exchange Losses Net Financial Revenues Net Income before Taxes Income Tax and Soc. Contrib. Net income (loss) from continuing operations . Owners of the Company . Noncontrolling interests Depreciation and amortization Change in fair value of biological assets EBITDA 1,199,418 990,623 19,255 (729,482) 280,396 (76,594) (64,311) 7,359 (133,546) 146,850 (105,533) 89,135 (500,955) (517,353) (370,503) 134,487 (236,016) (243,055) 7,039 149,811 (19,255) 277,406

2Q11
1,145,202 947,447 145,084 (772,704) 319,827 (76,652) (56,715) (9,603) (142,970) 176,857 (116,888) 84,090 102,273 69,475 246,332 (76,956) 169,376 163,143 6,233 158,630 (145,084) 190,403

3Q10
1,187,347 982,593 124,461 (767,347) 339,707 (77,427) (57,494) (1,490) (136,411) 203,296 (73,666) 66,203 151,385 143,922 347,218 (115,664) 231,554 225,706 5,848 173,271 (124,461) 252,106

9M11
3,489,050 2,895,075 272,146 (2,213,520) 953,701 (238,996) (176,367) (11,368) (426,731) 526,970 (316,344) 241,978 (339,954) (414,320) 112,650 (30,311) 82,339 60,290 22,049 462,335 (272,146) 717,159

9M10
3,305,865 2,732,377 301,013 (2,149,524) 883,866 (222,718) (158,334) 3,235 (377,817) 506,049 (231,591) 167,416 81,786 17,611 523,660 (175,767) 347,893 334,634 13,259 525,337 (301,013) 730,373

% of Net Revenue
3Q11 2Q11 3Q10 9M11

100.0%

100.0%

100.0%

100.0%

73.6% 28.3% 7.7% 6.5% 0.7% 13.5% 14.8% 10.7% 9.0% 50.6% 52.2% 37.4% 13.6% 23.8% 24.5% 0.7% 15.1%

81.6% 33.8% 8.1% 6.0% 1.0% 15.1% 18.7% 12.3% 8.9% 10.8% 7.3% 26.0% 8.1% 17.9% 17.2% 0.7% 16.7%

78.1% 34.6% 7.9% 5.9% 0.2% 13.9% 20.7% 7.5% 6.7% 15.4% 14.6% 35.3% 11.8% 23.6% 23.0% 0.6% 17.6%

76.5% 32.9% 8.3% 6.1% 0.4% 14.7% 18.2% 10.9% 8.4% 11.7% 14.3% 3.9% 1.0% 2.8% 2.1% 0.8% 16.0%

28.0%

20.1%

25.7%

24.8%

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3Q11 Results October 31st, 2011

Appendix 2 Consolidated Balance Sheet (Thousand R$)

Assets
Current Assets Cash and banks Short-term investments Securities Receivables Inventories Recoverble taxes and contributions Other receivables

Sep-11
4,477,746 72,284 2,742,413 215,486 781,517 495,520 137,054 33,472

Dec-10
4,127,147 39,880 2,491,225 198,222 753,961 460,128 131,102 52,629

Liabilities and StockholdersEquity

Current Liabilities Loans and financing Suppliers Income tax and social contribution Taxes payable Salaries and payroll charges Dividends to pay Dividends to pay - minority Proviso REFIS Other accounts payable Noncurrent Liabilities Loans and financing Imp Renda e C.social diferidos

Sep-11
1,938,569 929,709 234,335 76,729 50,529 101,324 55,003.00

Dec-10
1,690,913 842,121 269,839 37,013 40,669 93,542 2,584

431,700 59,240 5,714,699 4,413,882 1,136,755 164,062 4,836,228 1,500,000 84,491 50,871 2,256,941 1,085,401 (141,476) 193,845 12,683,341

349,340 55,805 5,415,828 4,014,976 1,235,635 165,217 4,994,085 1,500,000 84,491 51,404 2,365,900 1,120,643 (128,353) 160,417 12,261,243

Noncurrent Assets Long term Taxes to compensate Judicial Deposits Other receivables Investments Property, plant & equipment, net Ativos biolgicos Intangible assets

8,205,595 134,772 102,330 155,034 11,542 4,993,181 2,801,374 7,362

8,134,096 131,621 90,698 125,678 11,542 5,004,023 2,762,879 7,655

Other accounts payable StockholdersEquity Capital Capital reserves Revaluation reserve Profit reserve Valuation adjustments to shareholders'equity Treasury stock Minority Interests

Total

12,683,341

12,261,243

Total

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3Q11 Results October 31st, 2011

Appendix 3 Loan Maturity Schedule September 30th, 2011

R$ million BNDES Others Local Currency Trade Finance Fixed Assets Others Foreign Currency Gross Debt 4Q11 244 12 256 122 3 11 136 392 2012 336 17 353 451 9 45 505 858 2013 311 18 329 512 9 70 591 920 2014 304 21 325 375 7 70 453 778 2015 338 31 369 292 7 68 367 737 2016 65 25 90 114 4 132 251 340 2017 31 12 43 185 5 190 233 2018 41 12 53 222 8 230 283 2019 22 8 29 317 5 46 367 397
After 2020

Total 1,694 162 1,856 2,898 58 531 3,487 5,343

3 6 9 309 1 88 397 406

Average Cost Local Currency Foreign Currency Gross Debt 8.7 % p.y. 3.8 % p.y.

Average Tenor 30 months 50 months 43 months

R$ Million 920 858 778 737 Foreign Currency 3,487

453 367

505

591

392 340
136

397 283 233

353 369 251 190 90 43
2017

406

Gross Debt 5,343 Local Currency 1,856

367 230

397

256

329

325

53
2018

29
2019

9
After 2020

4Q11

2012

2013

2014

2015

2016

Local Currency

Foreign Currency

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3Q11 Results October 31st, 2011

Appendix 4 Consolidated Cash Flow (Thousand R$)

3Q11
Cash flow from operating activities Operating activities . Net income - controlling shareholders . Net income - noncontrolling interests . Depreciation and amortization . Depletion in biological assets . Change in fair value - biolgical assets . Fixed assets costs result . Deferred income taxes and social contribution . Income taxes and social contribution . Interest and exchange variation on loans and financing . REFIS Reserve . Interest Payment . Others Variations in Assets and Liabilities . Receivables . Inventories . Recoverable taxes . Marketable Securities . Prepaid expenses . Other receivables . Suppliers . Taxes and payable . Salaries, vacation and payroll charges . Other payables Net Cash Investing Activities . Purchase of property, plant and equipment . Purchase of biological assets . Sale of property, plant and equipment . Others Net Cash Financing Activities . New loans and financing . Amortization of financing . Payment of capital at subsidiaries by minority shareholders . Acquisition of minority shares in subsidiaries . Dividends Paid . Stocks repurchase Increase (Decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period 241,901 257,986 (243,055) 7,039 59,567 90,244 (19,255) (11,115) (183,514) (2,230) 621,727 12,758 (64,745) (9,435) (16,085) (20,332) (489) (14,047) (6,306) 7,191 (2,133) (39,336) 47,106 13,271 (1,010) (16,430) (38,369) (27,644) 49,583 107,176 363,055 (160,422) 350 (686) (81,998) (13,123) 332,647 2,482,050 2,814,697

9M11
543,967 533,160 60,290 22,049 175,887 286,448 (272,146) (11,116) (105,193) (84,780) 562,529 86,806 (192,455) 4,841 10,807 (29,378) (2,907) 91,904 (17,264) 13,191 (35,022) (65,408) 49,576 7,782 (1,667) (223,051) (186,430) (88,403) 51,782 (37,324) 577,453 (461,033) 13,002 (1,623) (152,000) (13,123) 283,592 2,531,105 2,814,697

3Q10
273,058 176,884 225,706 5,848 57,736 113,901 (124,460) 2,645 80,879 (12,228) (112,816) 7,802 (64,608) (3,521) 96,174 (42,310) (17,065) 52,584 (4,929) 9,120 (10,933) 18,257 58,843 21,601 11,006 (104,865) (74,592) (30,273)

9M10
724,446 527,202 334,634 13,259 165,359 358,346 (301,012) 2,751 97,828 (22,485) 92,633 13,161 (219,881) (7,391) 197,244 (137,413) (15,046) 163,716 16,612 7,772 (8,930) 79,186 99,636 25,368 (33,657) (247,725) (169,296) (76,049) (3,013) 633 219,662 759,162 (509,585) 80,261 (2,436) (107,740) 696,383 1,841,652 2,538,035

188,043 300,524 (118,389) 58,510 (1,864) (50,738) 356,236 2,181,799 2,538,035

20