KLBN3.SAKLBN3.SASAO
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Operator: Good morning, and welcome to Klabin's conference call. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] Any statements made during this conference call about Klabin's business outlook, projections, operating and financial targets and potential growth should be understood as merely forecasts based on the company's management in relation to the -- and their expectations in relation to the future of Klabin. These expectations are highly dependent on market conditions, on Brazil's overall economic performance and on industry and international market behaviors and therefore, are subject to change. We have with us today Mr. Cristiano Teixeira, CEO; Gabriela Woge, CFO and IRO; and the other officers from the company. Mr. Cristiano and Ms. Gabriela will comment on the company's performance during the fourth quarter of 2025. And after that, other executives will be available to answer any questions that you may wish to ask. Now I will pass the call over to Mr. Cristiano. Please go ahead, sir.
Cristiano Teixeira: Thank you, and welcome, everyone, to our earnings call for the fourth quarter of 2025. I would like to officially make it known, not that it is not known, but I'd like to mention Gabriela's presence here as a Financial Director, as a CFO. She has been a partner for some years. And now that she has taken on this position, she will definitely have a wonderful journey for the -- along with the entire company. We'd also like to wish Marcos all the best. He's somewhere in Central America with [ Sares ] visiting our clients, and that is why he is not here today. But here we are for the main -- to discuss the main points about the paper market. So starting on the fourth quarter of 2025. I'd just like to mention briefly the most important points from the end of last year so that we can talk about the performance for the full year. And I will come back when we talk about the trends and our alert signs, our dashboard. So starting on Slide 3, it's important to mention the consolidation of that recovery we started in our production. The second half of 2025 was a benchmark for the recovery of our teams. As you know, the fact that we are working on basically full capacity, as I'll mention on the next slide, except for recycled products. In virgin fibers, we are producing at full capacity and all of it is sold. So obviously, our margins are lower. We don't have any production announcements to make. We are at our full capacity after all. So we don't have any, let's say, fat from not producing. So I always have to prove that we are at full efficiency. If we did have any reduced production, these operational errors would not appear because it would be hidden by the production that was announced to the market. So since we are at our full capacity, we did have an issue early in the first half of the year, which was recovered in the second half. We're full steam now with all machines, and we're having a very positive moment right now. Let's continue with Slide 4. So I'd like to draw your attention to something on this slide. As a reminder of the split that we had for some time, this number related to pulp sales in 2025 is the basis for our expectations in 2026. So fluff is always a priority, as you know, and we are at full production in January. This recovery that we saw in the second half of 2025 has been sustained. We had a downtime in Ortigueira and Monte Alegre, and now all plants are in full production. Looking at papers now, what is the piece of good news we see here? We've been saying for some time that Klabin has been increasing its production. That's what happened in '25 versus 2024, and we have the same expectation for 2026. So this expected production increase will take papers to similar numbers as we have in pulp. So we're going to have a similar split there, about 1.5 million tonnes. And this increase in production in 2026 is still to come, but it will be in the same order of magnitude as we had in 2025 versus 2024, and this will continue to dilute our fixed costs. And especially, we have some expectations about this. We expect the market to be better. We'll go further into details about this later on. But all the signs that we had in January have led to very positive expectation so far. Of course, we have to be cautious. It's the first month of the year. But when we compare to the first month of 2025 or even the pace we had at the end of 2025, we are having a very good January. When it comes to packages -- we will return to this afterwards. But when it comes to packages, once again, it has been a brilliant year. The corrugated boxes area has been performing very well as it had been in previous years. We've been performing well in volume, but especially in recovering price stability. Initially, 7 or 8 years ago, we repositioned ourselves, and we've been able to maintain that position since then. But we are now seeing signs that we are at a new level in corrugated box prices in Brazil. Volumes and market share have improved due to improvement in services, better client relationships. 70% of what we have is under long-term contracts, 3- to 5-year contracts. We have many exporters, and we have many clients in the domestic market, and this will continue. Similarly, although January is only the first month of the year, it's been very positive. I will now hand it over to Gabi, and we'll return and discuss some trends later on.
Maria Woge Liguori: Thank you, Cristiano. Good morning, everyone, and thank you for following our conference call. On Page 5, given the production stabilization and the ramp-up of paper machines, our quarterly sales volume reached 1.25 million -- excuse me, 1,025,000 tonnes in the period, in line with the same period last year. Net revenue in the quarter reached BRL 5.2 billion, down 2% year-on-year due to the appreciation of the real versus the dollar and the pressure on hardwood pulp prices. Adjusted EBITDA was BRL 1.8 billion with a margin of 35% in the fourth quarter of 2025, the same level as the fourth quarter of 2024. This reflects an increase in volumes, especially in pulp and paper, and an increase in packaging prices, as well as the effect of land sales, which are in line with our strategy of monetizing forestry assets. These effects were enough to offset the appreciation of the real against the dollar, pressure on pulp prices and the impact of maintenance downtimes during the period. Moving on to the next page. Net revenue for 2025 was BRL 20.7 billion, an increase of 5% compared to the previous year. This increase is mainly explained by the higher volume in sales across all business segments, the depreciation of the real versus the dollar and price increases in packaging. Adjusted EBITDA in 2025 was BRL 7.8 billion, 7% higher than EBITDA in 2024. Margins were 38%, an increase of 1 percentage point on the same comparison basis. Throughout the year, the solid performance of these segments, the ramp-up of Puma II and the effects from the exchange rate all contributed to a growth in our adjusted EBITDA. During this time, the company used its ability to adapt resilience and execution discipline to deliver consistent results and make important progresses tangible. Moving on to Page 7. The total cash cost per tonne in 2025, including the effects of the general downtime, was BRL 3,225, stable for the fourth consecutive year and confirming the cost projection we gave to the market. The accumulated cash cost for the year materializes this various actions implemented by Klabin, especially the reduction of fixed costs, mainly personnel and services such as travel and consultancies in addition to the dilution provided by a higher sales volume. This performance reinforces our predictability, the financial performance and discipline of our business model. Continuing with Slide 8, we ended the fourth quarter of 2025 with a net debt of BRL 25.9 billion, in line with the third quarter of 2025. Leverage measured by the net debt to adjusted EBITDA ratio in U.S. dollars ended the quarter at 3.3x, down 0.3x comparing -- excuse me, down 0.6x comparing to the fourth quarter of 2024. The company continues its downward trend in leverage in a disciplined manner, confirming its consistent execution of our strategy and the strengthening of its capital structure. Moving on to the next page. Our liquidity remains robust, ending September at BRL 13.6 billion. This liquidity comprises BRL 10.9 billion in cash and the rest in undrawn revolving credit lines. The average debt maturity at the end of the quarter was 85 months, and the average cost in U.S. dollars was 5.2% a year, a reduction of 0.5 percentage points compared to December 2024, which reflects the liability management initiatives carried out throughout the year. Turning to Page 10, we present the company's free cash flow. In 2025, Klabin had a positive free cash flow generation of BRL 715 million. In the last 12 months, our adjusted free cash flow was BRL 2.1 billion, representing a free cash flow yield of 9.2%. Continuing with Slide 11, the dividends distributed to shareholders over the last 12 months totaled BRL 1.215 billion. This amount represents a dividend yield of 5.3%. I would also like to highlight the early declaration of dividends approved at the end of last year in view of the transitional rules laid out by the current legislation, a total of BRL 1.112 billion, the first instalment of which was paid -- will be paid on February 2027 amounting to BRL 278 million. I'll now hand it back to Cristiano.
Cristiano Teixeira: Thank you, Gabi. Starting on Slide 12, talking about pulp. Our sales volume versus the previous quarter is listed here along with our market demand and expected prices. So starting with short fiber, we are recovering. We had been in this moment already at the end of last year, but I want to draw your attention to the next 20 to 30 days. Recently, in Indonesia, there was an operation that was blocked, over 1 million hectares, and this affected the planted area or the planted volume there. That had a deep effect on pulp producers with production costs for February and March. And on the long term, it will also postpone several projects. I have to mention that because this is making us reflect on something. And this is something I've mentioned to you previously. Our current projection -- well, China is importing 40 million tonnes. And by projecting what has been announced in capacity, we have over 5 million tonnes. So when we draw this parallel with the supply of wood in Indonesia -- and why am I talking about Indonesia and China at the same time? Well, as I've mentioned in other opportunities, we have some integrated industrial units. And in this concept, you have to ensure that there are forests near to where you need to guarantee your supply, that is your production units. This is not what we see in China. We are currently seeing that they are importing pulp, wood scrap. So when we look at current and future production, there would need to be an accelerated planting process in China to face their current and projected volumes. So we are very confident in these numbers here in Latin America. We don't see any threats to this. There would need to be a major planting effect not only in China, but we would also need to see a reconciliation between China and Australia and other wood producers from the region. So I'm mixing the short and long term here, but I just want to say that our recovery since last year shows us an impact on trying to recover stocks in Indonesia and postponing investments in Indonesia itself. On the medium to long term, I am confident in our belief that there will be positive mutual dependence from Brazil exporting to China. With fluff, we also see price recoveries. This recovery is short of what we would like, but it is happening. And as a sign of the last few days, something that we should see over the next days is that we expect price readjustments to be announced, which will affect us still on the first quarter. So we have positive expectations when it comes to price. Among our fibers business, as we recently saw in our volumes, we have a significant part of the domestic market in fluff and short fibers, but we also have a significant share of China. And obviously, we are going to reposition our sales mix according to how the other markets behave starting in the first quarter, but also continuing during the second one. But in January, we have already seen a significant recovery for pulp prices. Continuing with paper, I'm mentioning 2 products here, as I usually do, milk and beer. We are well positioned in milk. We have some of the best machines to produce milk cartons in the world from LTV. We have already had technical approval from all of the manufacturers. We're having very positive volumes, and not only with our main clients, but all the other system suppliers. So we will see a significant increase in servicing these clients around the world that produce liquids. So we are already seeing good volumes in January. When it comes to kraftliner, you've been seeing how much we've expanded our exports recently. And I skipped from milk to kraftliner, but -- and I forgot to talk about beer, but that's another important point. So I'm just going to go back here to coated board. We are seeing a recovery in the beer market in January. We're being very cautious about this information. I understand that beer brewers are cautious as well. We had a call from Heineken yesterday. But for us, since we are selling coated board for beers here in Latin America, specifically in Brazil, we did see a significant recovery in January. Our information is always specific about what we're operating, and everything is short term for us because our clients have small inventories. But when we look at January 2026 versus January 2024, we can already see a recovery. And at the end of the year, even with the seasonal pattern, we are starting to see a recovery in the beer market in January, specifically in Brazil, which is positive. But we do understand that beer producers are being cautious here in Brazil. That's what we've been seeing. And similarly, we're seeing a significant improvement in Manaus. Now continuing with corrugated boxes. We're seeing significant numbers from Manaus. Their market expenses are representing some of the items being sold for the World Cup, just as we have good expectations with beer. So we're seeing a very important year ahead of us, which is normally the case when we have a World Cup. That goes -- those years are usually very good for television sets and beer. For the other items under corrugated boxes, as I mentioned initially, the last few years have been brilliant in price and volumes, but also market share gains. And what we're seeing in January for corrugated boxes is that we will continue to outpace the market. Obviously, it's still January. We can't set our expectations for the year yet. But when we look at all of that and when we analyze our budgets, our expected prices and sales volumes, our expectations for 2026 are very positive. We expect paper production to be higher. We expect our market share to be sustained. And in the worst-case scenario, we will follow inflation. It's going to be a good year for industrial bags. Coated board, we expect to have good volumes. Kraftliner is well established. And you saw the reduction of U.S. exports to China. And so Klabin has gone strongly into the Chinese market. And finally, in pulp, in general, we expected a price recovery, which is continuing at a very positive pace. That is in addition to everything else I mentioned when it comes to wood supply in China. So that concludes our analysis of the trends. We have very positive expectations for 2026, and January is starting very well. We expect prices to recover and stabilize in practically all markets. Thank you. We can now continue with the Q&A.
Operator: [Operator Instructions] The first question will be asked by Caio Greiner from UBS.
Caio Greiner: First of all, I'd like to ask about a hot topic, which is M&As in the paper and packaging industry. It's interesting. We talk about this very frequently. We've talked about regional integration. But now we're seeing the opposite movement. We're seeing a major American producer splitting its operations between South and North America. We were expecting last year an M&A with Klabin and a major American player. So I just like to get your take on the strategic changes to the industry. And how much has that impacted your volume and the industry? Do you think Klabin is fitting into these global -- how do you think Klabin is fitting into these global dynamics? And should we continue keeping track of this with an outlook to Klabin? So continuing, you mentioned this frequently, Cristiano, but I'd like to hear more about the replacement of single-use plastics and how it impacts the demand for paper. That might have been one of the biggest points that made the demand disappoint us a bit considering your expectations in the beginning of last year. You mentioned a beer brand in the U.S. that switched back from paper to plastic. And now we are seeing the targets of these major companies in U.S. and many of them are removing the ESG targets, their reduction in single-use plastic targets. So what have you been hearing from your clients? And how do you think that will impact the demand for the industry on the short and medium terms.
Cristiano Teixeira: Starting with your second question on strategy. You are correct in what happened, but I would just add this. Over time, we had a COVID pandemic -- I know that it has been over for a while, but during that time, we expected alcohol products -- well, there were several residential consumption items that grew. Obviously, this was the case for beer. There is an example that you mentioned yourself. So our expectations had to be realigned. Maybe volumes for beer will not be what they were like during the COVID pandemic, but I think now the numbers are normalized. 2025 still hasn't been a positive year. We still haven't seen the recovery we expected. But I do think it's been happening. In January 2026 -- this is very short term, but we'll get to the strategic part of your question. In January 2026, we are seeing very positive historical numbers, as if we were reaching historical levels for beer production again. I see that all my clients are cautious. Some of them had been changing their guidance. But considering that we sell paperboard to other areas that also produce beer, we're seeing that January at least in Brazil is posting a historical level recovery in the volume of beer produced. Obviously, this includes beers packaged as a 6-pack. But then we would need to see how much of that is replacing plastic. So companies may be losing their focus and so on, on sustainability I think is a circumstantial thing. I think reality will make everything bounce back. The recycling level for single-use plastics and the CO2 emissions, I mean this is not discussed enough. And I won't go too deep into it, but we did see an increase in CO2 emissions. The recycling for single-use plastics in the world is very low, it's very poor, and that continues to be true. But I do think that this is just a current circumstance. Again, reality will prevail. And on the medium term, this will come back to the commitments that many governments have made on the reduction of single-use plastics. I just want to add one point here when it comes to beer, but this goes to any supermarket item. You know this better than I do since you are keeping track of macroeconomic factors. We see that the world has been trying to find a rebalance in tax conditions after the COVID pandemic. I'm referring to the COVID pandemic again, even though it's been some time, but we still haven't rebalanced after that. So we saw that taxes have increased around the world. There are interest rate policies to try to control inflation. And I'm not even talking about the tariff wars, but we are seeing that countries are trying to find stability or at least an optimal point for their tax policies. Exchange rates have changed significantly recently. So we have a complex situation. So putting it in simple terms, looking at consumers, whether they are in the U.S. or in Brazil or anywhere in the world -- and I can refer to a book by one of our shareholders. He said, look, I can make a list of how much I pay item by item, toothpaste and so on, without looking at inflation data, just looking at how much a supermarket basket costs. This means that -- this shows that people lost their purchasing power. We don't need to discuss what this means for society and for politics, but what I'm saying is that consumers can feel it. And you can see how much average tickets have been lower in supermarkets. Sales volumes have gone down in retail in some countries, but especially, we see that average tickets are lower in supermarkets. So major brands took a hard hit in 2025 from that, from the lower average ticket. And now we're starting to see a recovery. I mentioned beer brands, but each brand has its own strategy to restructure itself. And they understood, and some of the main brands, they've said that they need to reposition their prices to regain market share. And when I see major brands repositioning themselves, I see that, that is good for Klabin, bringing it back home. Whenever we see major brands repositioning itself -- their selves, this is good for Klabin because we supply to all major brands in the world. So I'm making a long answer out of it, but I want to say that this is circumstantial. I think recycling levels need to go up. We talked about CO2 emissions. And I think, again, truth will prevail at the end. For Klabin, what we've been seeing is that major brands are trying to structure themselves to regain share. When it comes to M&A, I'll try to keep it brief. Obviously, I'm not going to talk about the recent M&As positions that changed and so on. But what I can tell you about Klabin is that we've never been this focused on something I've been saying for a while. We are seeing great years ahead of us in free cash generation, all of the investments that we're making. And of course, you are the ones who are going to judge. But all of our investments have been precise when it comes to capital allocation. Figueira, the paperboard machine, the kraftliner machine, this is all happening at the right time. So all of our precise investments, our capital allocation strategy, the Monte Alegre boiler, all of the interconnections that we made in January, everything is going well. The company has allocated its capital well. As I mentioned earlier, we're going to see good paper production volumes this year. This will also be sold across all the markets we work in. And in 2026 and the next 4 or 5 years, we will see a lot of free cash generation, which will make the company's leverage lower. So we don't expect to talk about M&As in Klabin. There haven't been any studies. This is not in our strategic vision for the next years. Of course, if it does happen -- if it is proposed, it will be assessed. But right now, this is not in our long-term vision. Quite contrary, we're focusing on cash costs here in Brazil. We're focusing on the markets that we work in. We're focusing on long fibers. And there's a difference of about USD 400 between short and long fibers. I've been saying this for many years. Klabin has been focused on this, and that's why we purchased some areas from [ Arau ]. But M&As are not on our radar. We're focusing on free cash generation and using our capacity, which is increasing for 2026.
Operator: The next question was asked by -- will be asked by Marcio Farid from Goldman Sachs.
Marcio Farid Filho: The first question is about pulp. Obviously, fluff performed well this year, above the main benchmarks in the industry. And this is probably due to your strategy of focusing in Brazil and regions outside China. But what we see is that China is gaining relevance in producing and exporting fluff. So I'd just like to ask about your perspective for the next years. So what do you think will happen in China? I think that's the next step in growth. And what can you tell us about that? Also if you can tell us -- I think Cristiano mentioned this, the headlines that we've been hearing from Indonesia. But in any case, if you could see -- if you could tell us what you believe will happen to the supply and demand in the main hardwood and softwood markets around the world?
Cristiano Teixeira: I'll talk about this strategic part that you mentioned about fluff. Let me put it this way. We see the -- we can see the acreage in China, how many millions of acres have been planted in China, where is that wood being taken. So if you have 3 million hectares of Pinus planted in China, where is that being taken? Wood has multiple uses, and markets compete among themselves. So that's the first angle: where is wood being used? The second angle is: what's the productivity of that wood? So how much do they expect to increase their volumes every year. That will give us an understanding of this future projection. And how much is being replanted and how much of it is new areas. So if we look at this, I don't see -- this is not material. We're not seeing any new areas in new planting in China. Specifically, about softwood, there's no long -- excuse me, there's no planting there. Actually, they're reducing their Pinus areas due to the regional issues with pests. They've been reducing their acreage. They're using this wood circumstantially for fluff. But our industry can't only be short term. I know that things get mixed up. We're talking about the financial and economic vision and the company's strategy. So they are not planting new areas in China for Pinus. We don't see this area being prepared to be planted. The most important thing is I don't -- we have to look at the use of soil in China, the use of land. They know that they cannot expand into flat areas. And for agriculture -- they're not going to expand these areas for forests. Forest will always be in more difficult areas in other regions. But again, they're not expanding into new planting areas, especially for softwood, but this also goes for hardwood. What's happening now is just the circumstance of planting these Pinus areas due to their issues with pests. When it comes to the short term, speaking about the American market that is not exporting to China, this is the circumstance that led to the current situation. Linking this to Santa Catarina, which is our expected future project, nothing will change, quite contrary. What I'm saying is that we have a short -- excuse me, a softwood plant in the most competitive area in the world, with the lowest cash cost in the world, with the best logistics to deliver to any part of the world. And they are planting and renewing areas in Santa Catarina and Parana. This is a growing market, such as adult diapers are growing by double-digit figures around the world, versus China that is not planting a new area, that has very low productivity, and that basically is not developing its genetics, that it's no R&D. So I don't see any long-term threats to Klabin's softwood fluff.
Unknown Executive: And just adding to what Cristiano has said, these tariff issues in China have affected the supply of American fluff to China. So that gave us some strength for the local production in China. But it doesn't compete with our fluff simply because these products in China will not be used for premium products, and Klabin gained market share in China. It's important to underscore that. It's also important to mention that when it comes to price, this is something that you need to calculate. We talked about the price gap of $400 per tonne. But if you look at the benchmark prices for softwood and the prices that we delivered last year, we were $200 above the market between softwood and fluff. So this shows our -- the strength of our contracts. This is a business of contracts. It's not a spot market. And we have a good balance between Brazil and the international market, which gives us a leverage on the general prices. Looking at the short term, as Cristiano mentioned just now, we started the year with some maintenance downtimes in our pipeline. We had some weather effects from the U.S., which led to some complications, especially for North American producers. We started seeing a slight reaction in prices in February in spot markets, where prices went up USD 10 to USD 20 per tonne. And this year had a significant announcement of price increases of about $155 in mature markets, Europe and the U.S. And this influences -- this will influence Brazil in March. And we saw a $70 change in net prices for Asian, Middle East and African markets. So we expect this to recover. Obviously, this is a first announcement. And Klabin reinforces that the demand for fluff remains robust. Volumes have been consistent. So this recovery should take place during the end of this quarter, with a more positive impact during the second quarter.
Marcio Farid Filho: Great. And if you can tell us a bit more about hardwood and softwood and fibers in China, that would be great.
Cristiano Teixeira: So hardwood, as you mentioned -- as we mentioned in other calls, we were surprised by high demand from China that started in the fourth quarter of 2025. This movement continues, and we are seeing robust volumes from these markets, not only China, but Asian countries in general. Europe and the U.S. market are not having the same demand levels as Asian countries. But all of the volumes contracted for mature markets are being placed with no issue. We expect prices to be implemented in China. Those $10 from February have already passed. In Europe, the listed prices have been implemented completely. And we also expect another price increase in March. So in general, markets are behaving with resilience during the first quarter. And in the case of mature countries, there's always a delay in implementing these prices, especially Europe and the U.S. And this will probably lead to better prices starting in the second quarter.
Operator: The next question will be asked by Tathiane Candini from JPMorgan.
Tathiane Candini: Actually, my first question is about costs. We expected a cost increase in pulp quarter-on-quarter due to the downtimes that you mentioned. But something that drew my attention was that increase in -- of BRL 90 per tonne due to weather issues that were a bit out of control. So what do you expect this to be when it normalizes? What level do you expect for the first quarter? Do you see a reduction in costs? And the total cash cost is not too far from your guidance for the year. So should we expect reductions or just a normalization? My next question is about paper. In 2025, as you mentioned, we had a very significant mix of kraft versus paperboard. January seems to be stronger, as you mentioned. But I'd just like to understand what your expectations are of the mix between kraftliner and paperboard. Should we expect it to be stronger in the direction of paperboard? What do you expect?
Cristiano Teixeira: So let's start on costs, and Gabi will answer that, and then I'll answer your question about paperboard.
Maria Woge Liguori: As you mentioned, throughout 2025, we faced some weather issues, which impacted the cost of fibers in our forests. After several initiatives made by the company, we expect these costs to normalize. So after these past issues, we expect fiber prices to normalize. But something to point out is that in our cash cost that we listed in our guidance for 2026, the cost of fiber there already reflects some of our expectations for the year. You can see that our cash cost is close to what it was in 2025. We will have the fourth year in a row in which we are seeking stability without passing on inflation through our costs. So this is reflected there. There was also an offset in 2025 from these costs of fibers through other initiatives to preserve our total cash. This was our guidance, and this was reached in 2025. For 2026, we will continue doing the same. The company obviously will need to do everything it needs to do throughout the year. But besides this expected normalization, we also have a number of other initiatives to try to offset these things so that we can deliver on our guidance for the fourth year in a row.
Cristiano Teixeira: Continuing talking about the paper market and the mix that you are asking about. Paperboard machine ramp-ups usually happens with kraftliner, as you know. I mentioned at some point that machine 28 has been fully approved for high-end products in our industry. There's no concerns about this right now. The milk market is doing very well around the world, not only here. When we look at 3 to 5 manufacturers, and this is very regional, we are supplying to the entire world. And we are aligned with the sales behaviour that is happening throughout the world, not only milk, but new proteins, the fitness market and so on. And we're going to keep track of their expected volumes for the next year. So there's no issue there. There are very few paper manufacturers in the world, as you know. And we always have the option of making paperboard for milk, for beer or kraftliner, which at a good moment that we've been reporting. And I've mentioned here before, this reduction in U.S. exports to the Chinese market has created an important volume for Klabin. These are products that we are experienced in, kraftliner for the tobacco industry, which we already service in Brazil. And we've been taking this to China efficiently. We've been replacing some U.S. suppliers. So we should continue doing that. Production volumes will increase, and we are expecting that, but the mix will probably remain similar, which will make our paperboard volumes higher than 2025. But craft volumes will be more significant. I think I mentioned in the last call that virgin fiber kraftliners in the category that we call containerboard will be a premium product, just as we saw with softwood recently. I mentioned this before, and I can assure you that this premium will come. And why do I believe that? There are softwood production players leaving the market, and that is faster than the entrance of hardwood producers. So we're basically not seeing an increase in softwood. This balance in the medium term will make this premium appear. But fiber to fiber can be an issue, and this will happen for some of that replacement. But it will never replace it completely, just as it never had -- has. Klabin has done this in the last 40 years. In fluff, we've done 30% hardwood in the blend, and that facilitates operations for our clients. We still believe that. And this will be the blend used in our machines in the future. So the premium will continue to exist. Each market has its own specificities. I've mentioned tobacco, which is a product that requires more weight. So this production mix -- I don't mean to bore you, but these are -- there are several opportunities and several alternatives there. And we're making a very strong effort to study this opportunity cost, and we will continue to maximize our mix in the best way possible. At the end of 2026 and early 2025 (sic) [ 2027 ], we expect Klabin to be full in its production volume. Looking back and comparing to the next 12 months, we believe Klabin will be at a different production level, which will also help with the point that Gabriela has just raised on stability and confidence in our cash mix for the next years.
Operator: The next question will be asked by Stefan Weskott from Citibank.
Stefan Weskott: My first question is, in 2025, we saw a conclusion of the STE processes, which helped with your leverage. You mentioned that there will be some changes for 2026, but do you think there will be other STE operations in forestry that can help you deleverage for the year? My next question is, looking at paperboard again, we saw how it is offsetting a more challenging year of 2025. So should we expect a better domestic mix? You mentioned that you had positive figures for January. So what do you believe will be the share between domestic and exports in paperboard?
Cristiano Teixeira: I'm going to let Gabi answer first, and then I'll answer your other question.
Maria Woge Liguori: Our strategy on STEs is not new for Klabin. We've been using this as a way of optimizing our capital structure in our forestry expansion for many years. Last year, this operation was a highlight for the company as we used it for the purchase of forestry assets. So this was a special operation in volume as it was connected to this major forest acquisition that we made. But what I can tell you about the future is that if the forestry operation strategy happens through partnerships with teams and other entities -- well, that's a core part of our strategy of optimizing our capital structure. We need to have partnerships. As you mentioned, they help us with deleveraging. And we expect this to happen -- for this to continue happening, not at the same volume. This was a huge operation for the market. But our forestry expansion in the future will definitely count on this structure as well.
Cristiano Teixeira: And continuing on paperboard and the mix, speaking a bit about the domestic market. Well, the domestic market, obviously, is relatively smaller. But what we saw in the last, at least 2 years -- and you mentioned this before. We've answered this question, and I'll underscore it. Yes, there has been a pressure on Chinese paperboard, this deflation when they stepped out of the U.S. They sent a lot of this to Latin America, Europe and a bit to Africa. During that time, Klabin gained market share in Brazil. So not only did we not suffer from this, but we gained market share from this during this time in which China was exporting. And where did that come from? Well, we're focused on major brands. We have several smaller brands in our portfolio, of course, but we're focusing on consolidated clients. There are many Brazilian manufacturers of several products like frozen foods, hygiene products, personal hygiene and cleaning products and other products that use paperboard in Brazil. We can also manufacture white paperboard, and so we've been able to access clients from the pharma industry as well. So we believe the Brazilian market has been oscillating in the last few years. Some major brands have been losing space in some products, but secondary brands, let's call them that, have gained space. And Klabin is selling paperboards to both for frozen foods and liquids -- I've mentioned them before -- but also personal hygiene and cleaning, all of the paper markets that we're working with. And now the pharma industry, high-technology products, or higher than at least traditional folding paper. So we gained market share despite this Chinese threat. We have good long-term contracts with major brands. And what we're seeing right now, and I mentioned this as well, is that major brands are repositioning themselves to regain market share in the secondary brands that I mentioned. So I'm very confident about the Brazilian market. We expect this to continue, and we're going to keep track of the volume. Whatever we are gaining in market share will depend on the market dynamics. And we will continue to export to these clients I mentioned, our suppliers in the milk industry, whatever opportunities we find in beer. And of course, we have a great opportunity -- excuse me, cost of opportunity, which is to implement kraft and -- kraftliner in the markets where we're replacing American suppliers.
Operator: Ladies and gentlemen, this concludes the question-and-answer session. We will now hand it over to Mr. Cristiano Teixeira for his closing remarks.
Cristiano Teixeira: Thank you, everyone. See you on the next call.
Operator: This concludes Klabin S.A.'s conference call. Thank you for your participation, and have a great day.