Morning and welcome to Klabin's conference call. At this time, all participants are in listen-only mode. Later, we will have a questions-and-answers session, and instructions will be given at that time. We kindly ask that, for the benefit of time, each analyst asks a maximum of two questions. As a reminder, this conference is being recorded, and the presentation will be in Portuguese with simultaneous translation into English. All participants will be able to choose which language they wish to hear by clicking on the interpretation button and the language of the presentation by clicking on the presentation screen located above. I'd like to make a brief announcement for those following us in English. This conference is being conducted originally in Portuguese. To switch, please press the interpretation button on the platform and then select the English language.
For English presentation, click on the top to view the English presentation screen. Any statements made during this conference call in connection with Klabin's business outlook, projections, operating and financial targets, and potential growth should be understood as merely forecasts based on the company's management 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; Marcos Ivo, CFO and IRO; and the other officers in the company. Mr. Cristiano and Mr. Ivo will start by commenting on the company's performance during the 3rd Q uarter of 2025. After that, the remaining executives will also be available to answer any questions that you may wish to ask. I will now hand it over to Mr. Cristiano. Go ahead, sir.
Thank you. Good morning, everyone, and welcome to our earnings call. On slide number three, we'll quickly go through a couple of numbers. I brought a few slides for that. When it comes to volume, here we see our sales volume, which was higher due to our higher production. We have 25% more in pulp, 10% more in paper, and 7% more in packaging. This is a very important moment for all of us. I would like to actually draw your attention to slide number four. This refers to a discussion that we have had recently. For a few years, we've been talking about this since we started the Puma II Project, where the company would be split by 1/3 between pulp, paper, and packaging, so 1/3 each.
Obviously, we are preparing the company for its next 10 years, but this is the design that we created when we started investments in this new investment phase starting in 2017. This is where we are. I would just like to draw your attention to the revenue from the packaging area, which sometimes goes unseen. It is the biggest revenue for the company this quarter. I would like to remind you that we are experiencing one of the worst Short Fiber prices in pulp. There are many ways of analyzing these products that are commodities. One of them is to look at the lowest prices in history and update them based on the U.S. inflation, given that many of the manufacturers are based in the U.S.. If we run the numbers that way, we will see that the prices for pulp and Kraft Liner are below the.
Historical worst prices. With inflation correction. Which makes me think that although we are going through a price issue in our curves, these are historical issues that we all know. Despite the fact that we are experiencing the worst time for these products, we are performing very well in our traditional markets, especially paper. That's the major upside for the company. If we consider the average price of fibers, looking at the historical series that you can all access, we might be $100-$150 below the average price for these two products I mentioned, so Short Fiber and Kraft Liner. Which would be an annualized volume through a simple multiplication. Meaning, if we take our Kraft Liner and Short Fiber volumes, we could have at least one more billion in annualized EBITDA. That is in BRL.
I'd like to draw your attention to the fact that this might be one of the most difficult moments the company has ever faced considering commodity prices, and we have had a net margin of 39%, and the other businesses in the company have provided stability, which is what we often tell you. Corrugated Boxes are playing their defensive role. Now I'd like to bring up slides five and six. This is something that I've been saying for a while. Our average growth rate in volume versus GDP. In paper, we have been performing above ink papel and the GDP. When we look at the price, here we have data from a series of years that we have been working on prices above inflation rates, and that's due to several qualities of the market.
Most of our packaging are used in foods, and foods have been performing very well in Brazil in the last 10 years. We're only looking at data since 2019. Prices have also been going up, above the IPCA rates and above the IPCA index. We always have to compare to other companies. Klabin has twice as much volume as the 2nd biggest company, and there are several other companies ranked 3rd, 4th, and 5th. We're still very spread in Corrugated Boxes. If you look at these companies, Klabin has five times the volume. Even though we have our performance that is five times bigger than other companies, we have been outperforming IPCA, inflation, and GDP, which shows a performance that, from my perspective, has been flawless throughout this time. This underscores our flexibility and resilience. We will continue.
Marcos will speak, and we will come back to talk about our dashboard.
Thank you, Cristiano. Good morning, everyone. On page six, since we have higher production, sales volume reached 1.067 million tons in the period. Net revenue for the quarter reached BRL 5.4 billion, a 9% increase year-on-year. This was driven by the paper and packaging industries or segments, which saw higher volumes and prices. Adjusted EBITDA was BRL 2.1 billion in the 3rd quarter, a 17% increase over the 3rd quarter of 2024, with a margin of 39%, as Cristiano said. This reflects the increase in net revenue and also the effect of the comparison base, since the 3rd quarter of last year was impacted by planned maintenance shutdowns. Excluding these effects from the shutdowns, adjusted EBITDA growth would have been approximately 8%.
Moving on to page seven, total cash cost per ton was BRL 3,104 in the quarter. A 2% sequential decrease versus the 2nd quarter of 2025. Compared to the same period in 2024, excluding the effect of the general shutdown for maintenance, cash costs per ton also decreased by 2% consistently. Moving on to slide eight, Klabin ended the 3rd quarter of 2025 with a Net Debt of BRL 26.1 billion, a reduction of around BRL 1.8 billion compared to the end of Q2 2025. This is mainly explained by positive Free Cash Flow in the quarter, a receival of BRL 600 million in equity related to SPE Imobiliária, and the appreciation of the Brazilian real in the period, which affects our dollar-denominated debt. Leverage, measured by the Net Debt to adjusted EBITDA in dollars indicator, ended the quarter at 3.6 times, a reduction of 0.3 times compared to Q2 2025.
Moving on to the next slide, the company's liquidity remains robust, finishing September at BRL 12.4 billion. This liquidity consists of BRL 9.7 billion in cash and the remainder in undrawn revolving credit lines. The average maturity of this debt at the end of the quarter was 86 months, and the average cost in U.S. dollars was 5.3% per year. Moving on to page 10, the company delivered solid Free Cash Flow in the quarter with a positive balance of BRL 699 million. This reflects the company's current focus on ramping up production at Puma II. It also focuses on cost and CapEx discipline, with the consequent generation of Free Cash Flow and deleveraging.
I'll take this opportunity, Marcos, to draw everyone's attention to this slide. As I mentioned, we are stepping out of a long investment period for the company.
Stepping into a Free Cash Flow generation period in which we try to deleverage the company. Investments are becoming more difficult, so we are taking a look inwards, and this is the new look that the company will have. This level and this pace of generating Free Cash Flow is what we should see from the company from now on. We're quickly deleveraging, and I'm linking here to the average price, as I mentioned before. We are at the worst moment for the two most traded products for the company. There's still an EBITDA volume that will still come in due to statistical reasons. As Marcos mentioned, we have a CapEx discipline, which has been very valued in the last discussions in the last few years. We feel very confident with our level of CapEx, our operational continuity.
The equipment that needed to be refurbished in the company, such as the Monte Alegre boiler, which has been addressed. It has made Monte Alegre a cutting-edge site for products and productivity. That includes cash cost and environmental factors. Ortigueira, as we know, is a benchmark. It is a state-of-the-art plant in technology and processes. The company is at a moment in which major investments and the risk of managing and implementing these investments are now past. This risk is in the past. We are ramping up the machinery. We will generate more EBITDA. We are at the worst moment for the curve of some products, as I mentioned, but packaging, for example, has been resilient, and the company will now go through a strong deleveraging process. Go ahead, Marcos.
Continuing on page 11, the CAITE Project, which has greatly strengthened the company's forestry and cost competitiveness, continues to advance and deliver results above expectations. When it comes to partnerships with financial investors, especially TIMOs, we raised BRL 3.6 billion, of which BRL 1.5 billion remains to be received. This last contribution is planned to occur by the end of this year. Considering the monetization of surplus land, we completed our 1st sale in the 3rd quarter of 2025. As a result, we still have approximately 20,000 hectares of usable land that can be monetized over the next few years. Moving on to slide 12, earnings distributed to shareholders over the last 12 months totaled BRL 1.3 billion. This amount represents a dividend yield of 5.5%.
I'd like to highlight the board of directors' approval on November 4th of dividends to the amount of BRL 318 million, which will be paid on November 19. Now I give the floor back to Cristiano, who will talk about our business trends.
Great. We want to value the last part of the presentation, the Q&A. We're going through this very quickly, and we'll try to save time for the Q&A. Looking at the market, the 1st item, pulp or Short Fiber. We see that inventories for Short Fiber are building up, and that has favored our price on the last column. We see that prices have been recovering very well. We are not leaders, of course, in this item when it comes to Short Fiber, but we have been seeing some price recoveries because of the inventories that have been building up, as we saw.
In fluff, we see some stability when it comes to the market, or excuse me, some instability when we look at the market. But when we look at the price column, there's some effect from fluff consumption in China, which is moving away from U.S. imports, and we'll have to wait and see what will happen from now on. We'll need to see what happens geopolitically, and we hope that things will normalize soon. The effect from fluff is due to the volumes in the 3rd quarter of 2025 having a carryover effect. So when we look at the normalized rates, we also see stability. Continuing with Coated Board, again, this is stable both from a market perspective but also with volumes. Corrugated Boxes and industrial bags, again, we are at a seasonal moment, and for the fourth quarter, we often see a reduction.
Considering prices, this is based on the mix. We see that harvests are happening in fruit, and this has the best price performance in Brazil due to it being virgin fibers and so on. We see that the demand will be lower, but I have mentioned some examples in the beginning of my presentation as to why this. We are protected against this. Let's continue with the Q&A.
[Foreign language] . Ladies and gentlemen, we will now begin the questions and answers session. If you would like to ask a question, please click on the raise hand button. If you would like to remove your question from the queue, please click on the lower hand button. The 1st question will be asked by Rafael Barcellos from Bradesco BBI. Go ahead, sir.
Bom dia, Cristiano, todo o time da Klabin.
Good morning, Cristiano on the Klabin team. Thank you for taking my question. Cristiano, you mentioned the challenging environment in some markets, like pulp. Excluding this market issue that is out of your control, I'd like to explore some questions for the items that are more your hand. I'll focus on CapEx costs. Here, Cristiano, my question. Will leave it open for you to talk about any initiatives that you think can provide value for the company. I'll focus on cost and CapEx. After some forestry operations, the new boiler in Monte Alegre and so on, are there any cost benefits that you believe we will start seeing next year? If you can tell us a bit more about how you see costs changing next year. When it comes to CapEx, the company seems to be running at a lower CapEx level versus the guidance.
If you can tell us a little bit more about that. Was that related to any efficiencies that you were able to extract? What should we consider for CapEx next year, especially considering that next year you will no longer have that disbursement from the Monte Alegre boiler, which will be about BRL 800 million for this year? Those are my two questions. Thank you.
[Foreign language], Rafael.
Thank you, Rafael. We can talk about this. We have provided a guidance. I'm going to refer to the company, but I think we set a good example in providing guidance. When it comes to costs, I've mentioned the Monte Alegre boiler, which will definitely have a benefit. It will make our operation more efficient. There have been other pieces of equipment that were updated, but Monte Alegre is already a reference.
I think we've just given a few decades for Monte Alegre to continue to be a reference in cash cost. We will have some marginal benefits, but this is mostly due to these investments. Of course, we have ordinary production and cost figures. Extraordinary events, if we look at the rest of the world, these assets are. This is a very old business, right? There are companies in our industry that have more than 100 years of history, machines running for over 50 years in some countries as an average. We've seen increasing extraordinary events with production lost, which, of course, reflects on fixed costs and impacts on volumes as well, and price effects. What I'd like to draw your attention to is that Klabin, our main fiber production sites like Ortigueira, which is a global.
Benchmark with 2.5 million tons, with the products that you know, and Monte Alegre, which has always been a reference. We replaced an operating boiler, and we've been providing other updates to the plant in order to have stability. For me, the most important thing is that we have been giving you cost guidance, we've been giving you this space, but the most important thing is that we're providing stability to a site which is very old, but it's very up to date when it comes to the technology. That's also going to give the company some price stability. We're going to continue following our guidance concerning CapEx. I'd just like to draw your attention to the transformational investments that we've made. This cycle is now over, with the acquisition of Arauco, construction in Figueira, and Monte Alegre. At the end of this cycle.
We still have some disbursement to be made, but there are other items in forestry where we do not still have stability. We do see benefits, but it is due to the end of the cycle and considers the possibility of having stability, of course. If you allow me to ask a follow-up question specifically on cost, if I can get an assessment of the performance in the last few quarters, and I would also like to understand, I know that you are still going to give us guidance for next year, but I would just like to understand the magnitude of that. In 2026, will the company be running at a lower cost than in 2025? If you could help us understand your cost trajectory and how you think this will happen from now on.
[Foreign language] .
We're concluding the 1st phase, I'd say, of our budget process so that we can offer this up for a better debate with the board. These numbers are being discussed. What I can say is that, of course, despite some of the situations we have been facing, weather issues which not only have affected the South of Brazil, but other parts of Brazil and the world. Obviously, these are things that everyone has to face, but we have a platform of areas and average distances that we've been discussing with you. We feel that our implementation of the CAITE Project has been very successful in monetizing areas and finding benefits for the management and daily operations always provides the best cost. When we look at this from a quarterly perspective, there might be variations due to the weather and due to these effects that I mentioned.
But from a structural perspective, the company's cost platform, and all due respect to all manufacturers, but within our own product portfolio, we have the most productive areas in the world. Não é discurso apaixonado, estou falando dos fatos. I'm trying not to be too passionate, but to speak about facts. We have the best productivity for pines and eucalyptus, much higher than the global average. We have been favored by these areas that are closer to Klabin. And when it comes to technology and equipment, as I said, we're closing a huge cycle that places Klabin among the state-of-the-art plants of the world. Of course, as soon as we have more details on the short term for the cost and CapEx, we'll provide more information to the market as soon as this has been consolidated in the company. But the structural responses, looking at the real economy.
We have to refer to that because in AEI, we are making use of the advantages and productivity that we have in our operations. The company remains a real-world company. Looking at the real economy, stability, and flexibility, the company's equipment and its resources are being placed in forestry and equipment, and this is a global reference. I apologize, I'm not talking about the short term, but I'm just saying that we're going through the budgeting process. What needs to be known is that in the real economy, the company is absolutely productive and with long-term contracts. Klabin is positioning itself as a global competitor, and maybe that is going unseen.
Perfect. Thank you.
[Foreign language] .
The next question will be asked by Daniele Sasson from Itaú BBA. Go ahead, sir.
[Foreign language] .
Hi, good morning, everyone.
Thank you for taking my question. Cristiano, I really liked your opening speech, where you talked about the company being ready to deliver more results in comparison to the rest of the market. The Coated Board versus kraft spread in importation. I'd just like to ask if at this level of spread, would it make sense to produce 100% of MP28 in Coated Board value? We know that, of course, this market is much smaller than Kraft Liner. Are you expecting a better spread in order to do that? I'd just like to hear this comparison between the cost and the spread in products, just so that we can understand the ramp-up for this part. Also, when it comes to Corrugated Boxes, you've had very strong volumes up to date. The prices are flat, but you're growing in volume and share.
But looking towards the future, I'd just like to understand your perspective of this market. Considering the reduction in the shavings prices. And what is your commercial strategy for that? Would it make sense to be a bit less aggressive and maybe concede on prices to hold the margins? Maybe a value-over-volumes strategy? Or how would you deal with this change in market dynamics? Thank you.
Thank you, Daniel. I'm going to let Soares answer that, and then Douglas will talk about Corrugated Boxes.
Hi, Daniel. Thank you for your question. To answer your question on Coated Board, we are projecting that we will reach 45%-47% of machines producing Coated Board. And why not more than that? As you've been seeing, this market has been challenging in the U.S. and Europe as well. There's another important factor, which is excess capacity in China.
China has invaded the market with very low prices. Going into new markets means that you have to compete with Chinese Coated Board, and we've been avoiding that. The spread that you mentioned actually disappears when you compare our Coated Board price. We would need to eliminate that to compete with Chinese Coated Board. We haven't done that. We've taken a different route. We've been trying to differentiate our products in the internal market. We launched a new line. We're going into pharmaceuticals, which was a market that Klabin didn't work in. Although there is a premium, volumes are not so expressive. When we look at the conditions and margins, Coated Board would be better than competing with Chinese Coated Boards. We're waiting to see if the global economy, especially in the U.S., gives any signs of a recovery.
That will give us opportunities to go into Coated Board with profitable conditions. With the conditions we have seen now, it is much better to have White Top Liner in the machine, which is priced at the same level as Coated Board. That gives much better margins than Kraftl iner. Kraftl iner itself in some markets has been providing better conditions than having Folding White Board. That is the scenario for Coated Board right now.
Soares referred to the American market. I would just like to make a comment on that. In the last two weeks, I have been speaking to some executives in the U.S., and I would like to remind you that there are different ways of looking at the economy. The U.S. economy is very strong, as you know, in services especially. I would like to draw your attention to Corrugated Boxes in the U.S. and its production.
The U.S. has significantly reduced in the last 10 years. Their production. They're at the lowest in the last 10 years. As you know, this has an impact from e-commerce, but e-commerce still has a very relevant impact to the economy. The biggest reference in consumption in any country, and this is not different in the U.S., is supermarkets. When we look at supermarkets, 70% of volumes are food products. This cash expediting is connected to exporting. It should have reduced more than it is if we consider close downs in the U.S. due to cash cost. I don't know if we'll be able to go deep into this during the call, but this has an impact on the short term especially. On the medium and long term, this is positive for Klabin.
I have to refer to what we were discussing earlier when it comes to the forestry base. At the medium to long term, looking at this reduction in the U.S., we are replacing several products. Kraft Liner is one. I have mentioned that Kraft Liner, 100% virgin fibers, will be at a premium in the future because this will be scarce since it is a niche product. This will play in our favor in the long term. Douglas will now talk about Corrugated Boxes. Thank you.
Hi, Daniel. Good morning. About Corrugated Boxes, we do not see much on the horizon in the short term. During the last quarter, we saw that the market remains stable, and Klabin has been growing over market levels. About shavings, shavings have been stable. I do not see any relevant changes in price. They are stable if we compare to last year.
It went from BRL 600 - BRL 1,300 or BRL 1,400. Now it is back at BRL 1,200. It is still stable. It is not changing when it comes to price, and we are still seeing higher prices this quarter, or prices growing over the quarters. If we look at the company's price history, we in the last quarter have increased to a relevant degree, and it has been going up quarter by quarter. Now in the last quarter, we still see an increase at a lower pace if we compare to the past because we started this price increase in the last quarter. Again, in the short term, I do not really see any changes. We are growing over the market levels, and we are passing inflation on through the price.
Thank you, Douglas.
Thank you, Soares, Douglas, and Chris.
[Foreign language] .
The next question will be asked by Caio Brenni from UBS. Go ahead, sir.
[Foreign language] .
Hi, good morning, everyone. Thank you. I have two quick questions. The 1st is a follow-up question after Barcellos' question on CapEx. It drew my attention that your numbers in the last 12 months and even the accrued figures for this year are far below the indication that you had for total CapEx this year. My question is, why is it being slower? Are you expecting to accelerate in the 4th quarter? Should we imagine that part of this CapEx will carry over to next year as we saw last year? Should we expect CapEx figures for next year to be slightly higher? The 2nd part of my question, or rather my 2nd question, is about your CapEx outlooks and volumes.
We've talked about this in the last quarter, but earlier this year, you went from a gross volume of about 200,000 tons for 2025, and right now we are at 130. In the 4th quarter, we have maintenance downtimes. Maybe we'll be closer to 100 if you can give me that understanding. I'd like to understand what you're imagining for 2026. I've been looking at everything that you've been seeing. I understand that for some lines, the market is a bit more difficult. There's an issue of demand in Kraft Liner and paperboard, but I'd just like to know what you're imagining for 2026. Can we consider one more year of growth to reach those 200,000 that you had set during your investor day last year? Thank you.
[Foreign language] Thank you, Caio. Let's start with CapEx.
It's true, this is normal for the 4th quarter, not for Klabin, but for the industry. The last quarter is when the CapEx requires planning and so on. We execute this in the 4th quarter usually. We should execute most of it. There's a marginal carryover for 2026. We do not expect higher CapEx in 2026 due to that reason. We're in line with the guidance, and we are confident with what we've been managing here, the company's CapEx. Ensuring operational safety, of course, but this is marginal. Structurally, it's like I said in the beginning, we still have some residuals from the boiler, but we are going into a stability period in which we are focusing on operational continuity. That includes plant management, planting, and so on. Referring to volume, I'd just like to say one thing, and I'll try to explain myself in the best way possible, but.
We can explain this offline afterwards if we need to. But you made a reference to the downtime, which is true. This guidance on volume was based on full operations and the recycling machines. We always give you updates because we can, considering the market, make choices to use more or less recycled paper in our boxes and to use more virgin fibers for exportation. We had to do this this year, so we stopped two machines that worked on recycled paper throughout the year because export prices were not attractive enough for them. We gave priority to the internal market in converting more paper through virgin fibers and reduced exports. You can see this because we offset these Kraft liner exportations, around 45 tons per month, with the Kraft liner from Machine 28. When we look at container board or Kraft liner recycled, we have reduced production.
Of recycled paper, and obviously, we've been using more virgin fibers for our boxes. This is why we're not going to reach the production level that we had mentioned before. Looking towards 2026, Klabin should go in full into virgin fibers. We're very confident with the markets that we're working with. We still haven't decided what to do with the recycled machines. We're looking at the budget, but depending on how the market behaves, we might continue with downtimes for the recycled machines. We'll give you more details during Klabin Day.
Thank you, Cristiano.
[Foreign language] . The next question will be asked by Eugenia Cavalheiro, Morgan Stanley. Go ahead, ma'am.
[Foreign language] . Good morning, everyone. Thank you for taking my questions. [Foreign language] . I would like to understand. Leverage.
You're close to the upper bound of the range that you had in your leverage policy. I'd just like to understand if this is something that you're comfortable with. If you would prefer to go to the low end of the range. I'd also like to understand what the next steps would be for the company, either to lower your leverage. I mean, we've seen some initiatives in that direction. I'd just like to understand if we expect those to continue and how we should understand the company. I'd also like to look at dividends and buybacks, considering shareholder remuneration. I know that you made an announcement, but I'd just like to understand if this will continue or if we are going to change your leverage levels and if that can affect shareholder remuneration.
Thank you, Eugenia. Marcos will answer your questions.
Eugenia, Klabin has two policies.
One is for financial indebtedness, which establishes our leverage range. The minimal leverage established by this policy is 2.5 times Net Debt to EBITDA in U.S. dollars. We still have a lot of space, and as Cristiano mentioned, due to the harvest cycle and the Free Cash Flow generation in the company, the company will continue to deleverage throughout the next quarters until we get to the lower bound of our policy. We will continue to deleverage. Considering the dividend policy, we have published a document to help the market to understand how we are doing this, and it establishes that we are making quarterly payments, preferably, and paying between 10%-20% of our EBITDA in dividends. Usually, we are at the middle of this policy.
This is an announcement that we have made recently that will follow that, and we do not see any reason for that to be changed. Considering buybacks, this is something that we are always looking at. Naturally, it will depend on share prices. It will depend on the project portfolio that we have, being executed or being approved. This is all being analyzed. Considering that we are harvesting the investments that we have already made, considering that we do not have any major transformational investments on our horizon, this makes it more attractive, especially when we look at our prices, considering that this is a market consensus. It is a target as decided by a market consensus. This is something that we are analyzing. Of course, we have to look at it so that maybe in the future we can.
Do something in that direction if it's viable and if it's a good capital allocation decision for the company.
Thank you.
[Foreign language] . The next question will be asked by Enrique Marquez from Goldman Sachs. Go ahead.
[Foreign language] Obrigado por pegar a minha pergunta. Good morning. Thank you for taking my question. So my 1st question is about paperboard. I know that you've discussed this, but we still see strong competition. The domestic market has been very challenging. And according to all signs, as China reviews its five-year plan, it will continue to export. This is a significant growth avenue for the country. I'd just like to know what solutions you find for this market. Is that something that you will do in company? Will you really go to the premium markets, even by missing out on some of the volume?
Do you think the market should have any protection measures? [Foreign language] . We know that steel companies are doing that with steel, so that's my question. Also about deleveraging with this scenario with lower commodities, with the weaker U.S. dollar. Is there anything on the macro side that you need to see for this deleveraging to happen, or can you do all of this in company without needing to depend on pulp prices or changes to the U.S. dollar? Thank you.
Thank you, Enrique. Soares will speak about the advantages that Klabin has with Machine 28, with the technology, and so on. There are still a lot of good things to discuss, but I'll just talk about leverage first. The answer is no. We do not depend on any macroeconomic conditions. We do not depend on price curves or anything.
The company will deleverage strongly. Because its Industrial Park is modern, has been up to date. We have capacities, we have orders. To give you an idea of the volume of Corrugated Boxes that we've discussed, about 70% are in three-year contracts. You know the contracts that we have, and we're operating at full capacity. Our equipment is up to date, and we're not depending on any macroeconomic conditions. What may happen is that it can accelerate if the price curves improve, as I said. Even if they are maintained, which is unlikely, deleverage will be very strong.
Thank you for your question, Enrique. With cardboard, purchasing with Coated Board, there's no big mystery. You're based on big volumes. You don't need to qualify with the end user, but it's a longer product, which requires a big effort from the technical team.
After it has been qualified, then wonderful. You have a client, which is often long-lasting. That has been our approach: to go to new segments, which is a slow process that needs to be continuous. I've mentioned the pharmaceutical industry. We've launched products for frozen foods, cups, white paperboard. We'll continue doing that. Obviously, we're also depending on the global beer market, which is down. You've seen results for Heineken and Ambev. They had a reduced demand. Milk is also a market that has had different demands. As this demand changes, we are getting prepared with quality and cost so that we can grow gradually. Do not expect miracles. That's not going to happen within one year. It's a gradual process because of how the market behaves. It's fragmented. Volumes are lower.
We need to make a big effort from engineering packages with the end user until you get there. This is what we're doing. We're going through that routine. We're tireless at trying to get there gradually.
Good news, just to confirm what Soares has mentioned. Even though we are not producing the same volume of paperboard in Machine 28, and I'm referring here to the flexibility that we have at Klabin, we are providing very good quality kraft. We really believe in this product, and we're always going to choose based on profitability. This is directed, of course, by our commercial strategy, but we're very disciplined at that at Klabin. We're always going to prioritize our strategic partners and, obviously, the company's results. To answer your question, Enrique, what we're mentioning, the deleveraging that the company will have is for this mix, having less.
Paperboard and more. Kraft. That is why we believe the company will be stronger.
Great. Thank you.
[Foreign language] . The next question will be asked by Marcelo Arazi from BTG. Go ahead, sir.
[Foreign language] . Hi, everyone. A couple of questions. The 1st is about cost again. We have seen that fiber costs have gone up in the last quarters. After the acquisition you made for Arauco Florestal, which indicated that you expected these costs to reduce. What is your perspective on that, and how do you believe this will continue? My second question is about pulp. Market perspectives are a bit worse. We know that there are structural issues, so we are investing on. I know that you are investing on price and capacity.
I'd just like to understand your perspective for the industry and how that matches that 1/3, 1/3 , 1/3 strategy. In any case, is this change in the industry changing the percentage that you want to have in each segment? Thank you.
In order not to take the word again, I'll comment on this. About the 1/3 , 1/3 , 1/3 strategy, this is part of the company's strategy. Of course, when we created it, our aim was to give more stability to the company, to be less reliant on commodities, even when it comes to fibers. As you know, 1/3 of this 1/3 is fluff, which is based on contracts. This strategic model has been implemented. There is a variation quarter to quarter due to the price. When commodities are at their peak, this share will go up.
The most important thing is that, on relative terms, we're finding more stability with the current model. Marcos will now talk about cost.
Marcelo, when it comes to cash cost, first, I'd like to highlight that this quarter we ran it at the lowest part of the guidance for the company. It was at 304. This was the 3rd quarter in a row in which we were at that level of guidance. The message for me is that Klabin, in a normalized quarter, in a typical quarter, will be at the lowest part of the threshold, which is a good perspective for the costs for 2026. Because the accrued figures for 2025 have been impacted by this quarter. There has been a non-recurring effect. When we look at fiber and wood specifically, the CAITE Project, which was the acquisition of Arauco in Brazil.
Has really strengthened competitiveness. For forestry and costs in Klabin, in the most productive region of the world for pines and eucalyptus. If you look back, you know that this cost was based on three components. First, a reduction in CapEx for buying standing wood from 3rd parties. Klabin had a guidance at the time stating how much CapEx it would spend on buying from 3rd parties. Now we have a new perspective, and you can clearly see a reduction there that has already taken place in 2024 and 2025. That has been delivered strongly. The next lever was to have financial partners and to monetize our land areas. For that, we are doing much better than we had indicated to the market. We are also delivering this strongly. The 3rd lever was OpEx, so reducing fiber costs that we see in the company's cash cost.
Especially due to a reduction in the average distance and operational costs. This is also taking place. As we've been seeing for a long time, and this goes for all companies in the industry, forestry costs are not linear. Because this changes. Every quarter. You change the areas from which you're harvesting. There are weather issues. In Klabin specifically, we try to optimize the cost of wood in the production cycle. The 15, 16-year cycle for pine and more than that for eucalyptus. That means that in the cycle, you're optimizing your wood production costs. It will be natural to see this change over the quarters, throughout the years. Clearly, the CAITE Project will have a very relevant level of value generation for Klabin.
Thank you, Marcelo. Thank you for your question.
To answer your question about capacity confirmed or in the pipeline to be presented to the board or approved, obviously, the numbers surprise us. In any case, we are keeping an eye on it to see what will be approved. On the other hand, we believe that the fact that the company is producing three types of different fibers means that we're not only exposed to eucalyptus, and that helps us with that context. This will be a leverage for Klabin. It's a defensive portfolio that will keep our prices stable in the market. Obviously, it's very difficult to talk about the capacity that will go into the pipeline. It's hard to imagine what can happen with prices, but the fact is that the market is adjusting. There's a lot of capacity, at least 100% of the global capacity.
We'll have to go through structural changes.
Thank you. Thank you, everyone.
Com licença, não havendo mais perguntas. As there are no further questions, I would like to hand the floor to Mr. Cristiano Teixeira for his closing remarks. Go ahead, sir.
[Foreign language] . Thank you. Thank you, everyone. We'll see you for the next call. This concludes the company's conference call.