SAO PAULO Dec 8 Klabin SA, Brazil's
largest paper producer, has room to keep increasing output from
the Puma wood pulp plant over the next few years, Chief
Executive Officer Fabio Schvartsman said on Thursday, addressing
concerns about slowing growth.
Output at Klabin doubled from 2013 levels after the
1.5-million-tonne Puma project went online this year.
Schvartsman told investors at a São Paulo event that lower
capital spending at Puma would open the door to more profitable
"2017 is the year we're going to make money," he said.
"We've been investing heavily through 2016, and now it's time to
generate returns for our shareholders."
Schvartsman highlighted Klabin's expertise in food
packaging, industrial bags and so-called fluff pulp used in
diapers as factors, allowing the company to improve
profitability without gaining scale through big takeovers.
His comments reflect a transition in Brazil's paper and pulp
market as weaker global prices and the end of several massive
new expansions have put pressure on companies to cut costs or
expand and gain pricing power through mergers and acquisitions.
Schvartsman reiterated that Klabin was not seeking to merge
with major rivals, although he did not rule out an eventual role
in industry consolidation.
"A few small acquisitions are natural in the years ahead ...
but Klabin will only make a more significant move if there is a
structural market change under way," he said.
Analysts have questioned where Klabin's revenue growth would
come from without any major expansions in the pipeline.
Preferred shares of Klabin were up 0.4 percent at 2.75
Schvartsman said the startup of Puma in March had opened an
entirely new channel for sales through market pulp, unlike
competitors such as Eldorado Brasil SA and Fibria SA
that rely entirely on the fickle wood pulp market.
"These other companies end up forced to consolidate the
market to generate value for shareholders," Schvartsman said.
"The difference in our case is that pulp is a source of revenue
to fund our future growth."
However, the economic outlook in Brazil and the world will
have to improve substantially before Klabin invests in another
major expansion, Schvartsman said.
In the meantime, it will take little or no additional
investment in Puma to expand its capacity beyond even the most
optimistic initial estimates, he said. He declined to discuss
numbers until production has ramped up entirely.
(Reporting by Brad Haynes; Editing by Guilelrmo Parra-Bernal
and Lisa Von Ahn)