Good morning, and welcome to Klabin's conference call. At this time, all participants are in a listen-only mode. Later, we will have a question and answer 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 tab located above. I'd like to make a brief announcement for those watching 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 the English presentation, click on the tab at the top to view the English presentation screen. Any statements made during this conference call in connection with the company's business outlooks, 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. Such expectations are highly dependent on market conditions, on Brazil's overall economic performance, 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 company's officers. We will start with Mr. Cristiano and Ms. Gabriela, who will comment on the company's performance during the third quarter of 2026. After that, the officers 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.
Thank you. Welcome, ladies and gentlemen, to our earnings call for the third quarter of 2026. Before I make any comments about this quarter's performance, I decided to remind you of a few concepts and some of the discussions we've had in the previous years, to give a background to today's conversation. I'd like to remind you of some of the commitments we made and some of the challenges that we've surpassed since 2018. The first and most important point was in 2018, when we started to design Puma II. It was approved following that. It was discussed and approved by the board. In that plan, Klabin decided not to increase our hardwood capacity with eucalyptus pulp. Klabin had a very deep study.
We're still perfecting this data, but this is based on the differential factors for softwood and the competitive advantage that we had of having two paper machines, which are competitive anywhere in the world, with a high level of paper replacement for underperforming types of paper. For example, machine 27, using 100% eucalyptus paper. We also decided to have a coated board machine that was based on softwood. So we've had this consistency from the beginning. We've always believed in the packaging and hygiene markets, and we've always pursued high added value products with a high percentage of softwood. We remain steadfast in this belief. We're confident with the decision we made in the past. The main point after this entire discussion in 2018, which was a big challenge for our entire administration, which includes us and the board.
The biggest challenge we had at the time was to announce a project without having acquired the wood or the trees yet. That was the challenge, but our belief was that if we focused on industrial investments and if we were able to find an assortment of wood in the region, and as a reminder, the state of Paraná is the most productive region in the world, and it's a region that. In Brazil, we know that there are very few areas that have multiple uses for wood, but this exists in the states of Paraná and Santa Catarina. We are able to operate with some level of safety with outsourced wood versus some other states of Brazil where you have to build a good forestry base. But we understood that this base needed to be put together.
When we went to the market after discussing and approving this plan with the board, we made all the necessary disclosures. We said that we decided to invest in these industrial advances and that the forestry part, the wood and the land for the first cycle would be outsourced. Then during the first cycle, we would also seek our own land. We usually place these two things in the same basket, but they are two different initiatives. And the land acquired during the first consumption cycle would be planted, and then from the second cycle on, especially with pinus, we would use our own wood. That would reduce the average distance significantly. Why am I making this introduction? For some of you, this may seem obvious, and I know that for others it won't be. But this was a very important decision.
It was a risky decision at the time, but obviously the entire planted area, we knew where it was, and we knew that we could take this risk, and so we took it with the board. We are still in this period. The pinus cycle takes 13- 14 years, so we still have some years to go. We will start reducing this in 2028, but we are feeling a pressure when it comes to the distance. Here I'm referring to the standing wood that was purchased and that will be harvested until then. Starting in the second half of 2028 and, significantly, in 2029, we will start harvesting our own wood. I mentioned that we first purchased trees where it was possible, and then throughout the first cycle, we purchased some land as well. I remember the Arauco acquisition. It was important.
We weren't in a rush, so we had to be confident and relaxed for these negotiations. But after the first cycle, this entire area presented a very good planting efficiency. And we will start taking this wood in the second half of 2028. Then we will see a reduction in the average distance. Now bringing back to our reality. We've gone through this entire period. The company went from 4.4 million tons with a large product portfolio. Remember, in the beginning, when we decided not to work with hardwood, we already had a very consistent notion that we would prefer to pursue softwood products which have higher added value. And now we are absolutely sure that we chose the right path. Our portfolio, as I mentioned in the past, will soon be 1/3 to 1/3 to 1/3.
I said this in 2018, and now you can see that the company is split among these three business units, packaging, fibers, and paper. Without the pulp business. Oh, excuse me. The pulp business, 1/3 of it is long fibers. This was the option that Klabin made to always start with long fiber fluff. We have some clients that make us very confident about the choice we made. 1/3 of our volume in pulp is long fiber. In papers, we are starting to diversify, and it's becoming increasingly important. We're increasing our share of coated board. Right now, you can see an increase in coated board exports, and this is mainly hardwood folding coated board. Some manufacturers in China are starting to produce their own pulp with the wood they purchased, especially from Vietnam, which will reduce hardwood imports in China.
They're starting to export coated board. This is low added value coated board. I mentioned that its commercial name is folding. I've mentioned in previous calls that Klabin is gaining market share when it comes to long fiber coated board in China. Other manufacturers in Brazil have been pressured by these imports, but we are not, especially because we have long fiber coated board. So we're becoming more consistent. We have long-term, one to two a year, contracts to the main milk and beer manufacturers in the world. So it's important to reinforce when we started and where we are. We're very confident at the administration level about the path we took, and especially about the choices we made. Now let me talk about the third quarter's performance, and I apologize for making a long introduction before that.
I think every once in a while, it's important to reconfirm the company's vision that it had in the past and what we are delivering in the present. So the performance this quarter was very important, especially for fluff. Once again, in the third quarter, we were able to increase our volume from 106 in the third quarter of 2025 to 115,000 tons with a significant price increase. Who are our partners for long fiber fluff? We have partners in Brazil and also around the world. Kimberly-Clark is our biggest partner for long fiber fluff. We have many discussions with research development, long-term contracts. We're very happy about closing a new deal with Kimberly-Clark Global, not only Brazil. Nishali, Fitesa, and Pretendeo. These are the main clients that Klabin has globally in Europe, Asia, and Latin America for long fiber fluff.
We are still having important R&D discussions with them. Now we're going to talk about our performance in paper, starting with coated board. We also saw a significant performance in coated board versus the third quarter of 2025. This quarter, it was 231,000 tons with a price increase as well and with important long contracts with the clients you know very well. Tetra Pak, we made a significant agreement with them for the next two years, SIG, and all the other LPB manufacturers. Even to Chinese LPB manufacturers, we are selling our coated board. We're very close to some of the new manufacturers in the region. Milk and beer. We are very well known for our products for the beer market. I could mention many brands, but I'll mention two, Heineken and ABI. For milk and beer, we're supplying most major manufacturers around the world.
So again, this links to the long fiber coated board that we decided to bet on. In kraftliner, I have to report something that we've been seeing for a few years for the entire industry, how difficult it would be for the manufacturers in the northern hemisphere, especially North America, with high cash cost, especially in high-quality kraftliner. Klabin has been playing an important role in this market. You know about our innovative product, which was 100% eucalyptus kraftliner or Eukaliner, but also with machine 28 starting, and we're able to produce about 200,000 tons of kraftliner with it. We have replaced American exports in many parts of the world. I'll mention a specific client, which is Arrislo in Mexico. They are an independent box manufacturer, and they're one of our important partners. Mexico is now an important country for Klabin.
Other historical partners, like Italy and Philippines, have been with us for over 40 years. But now we're also positioned in China, Canada, and some other places. Some places that were unlikely in the past are now kraftliner clients, and we're very confident because this is a high-tech paper in the containerboard segment. We're very happy not only with some of the independent clients that we're starting to supply to in Mexico and Canada, replacing some American companies, but also the traditional clients that we have in other parts of the world, like Europe, Asia and Latin America, obviously, which is where we are the most important containerboard manufacturers. I'd also like to mention the packaging area, starting with corrugated boxes. I'd like to start off by thanking our important clients.
Over 70% of the packaging areas has been contracted with major names like JBS, Nestlé, Unilever, Natura, basically all major brands in Brazil. And some of them place 100% of their volume with us. We have very good contracts, and we're very solid in the corrugated boxes area. We made a major change in this industry in the last few years, consolidating International Paper, which allowed us to set a different price. Klabin has been able to change the dollar-listed prices for boxes in Brazil, and this is due to the partnership and service quality that we offered to these clients. You might know that we changed this entire industry in the last few years. Industrial bags, Votorantim is our main customer, but we supply many companies. We have a huge market share, so I mentioned some of the great names that we are very proud to partner with.
We have two to four-year contracts with them. We have a very strong and consolidated relationship, and this long fiber strategy with high added value products that we designed in 2018. And we've been steadfast on what we are delivering for the next years, even despite the challenges that we still have for the last 18- 24 months in which we will use outsourced wood. But the entire planted area close to Klabin will start to be harvested in the second half of 2028. That will reduce the average distance from the plant, which will reduce the company's costs. Additionally, just a brief comment about El Niño. I think we can't not discuss this topic. We brought this debate to the board at the end of 2018, excuse me, at the end of 2025, when we were producing a budget for 2026.
At the time, we had already identified, based on NOAA and some other institutes, that the Pacific buoys had recorded a higher average temperature, and that that could trigger a very different El Niño season, not only because of its frequency. As you know, El Niño used to happen every four years, but now it's happening again after two years. There was an expectation for this to be a super El Niño, similar to what we saw in 1983. That was the last super El Niño that affected Brazil. The rainfall expectations, especially for Paraná, are different from the ones we have for other regions of Brazil. Again, we have the most productive area in the world because of the rainfall volume. Our area in Paraná usually receives 1,400-1,500 mm of rainfall per year.
Besides the type of soil we have there, another advantage that we have in the area is that this rainfall pattern is usually distributed across the year. The fact is that in September, we had 350 mm of rainfall. In October, it was nearly 400 mm in our Ortigueira site. In November, we are expecting the same average between 350 and 400 mm. So operating for three months with 400 mm on average, that is 80% of the average volume that we have for the entire year concentrated in three months. That creates operational challenges. The most important thing is that we had been prepared for this. Even with the budget ready, we went to the board, we mentioned the forecasts, and immediately the board guided us to get prepared for this event and s o we did.
None of our plants are facing any risks of running out of wood, but the fact is that it was a very challenging, or it has been a challenging time with this amount of rainfall in the region. We know that this will reduce starting in January, but this will still impact the first quarter of 2027. This El Niño is a fact. We are prepared for it from the operations standpoint. It did impact the company's costs, but this doesn't change our structure. We've been seeing significant reductions in average distance. We've always made this very clear. This was disclosed in mid-2018. So nothing changed structurally. Quite contrary, the company is increasingly confident about its portfolio, about its product line. The challenge that we had was to start this big of a plant without having available land around it.
We actually started by buying wood in the first cycle. Now we're very confident about what we've already delivered and what we can deliver. Again, I'm sorry for connecting so many different topics, but I think it's important to repeat a few things. Now I'll hand it over to Gabriela, who will go over our figures, and then we will be here for some projections for the next quarter.
Thank you, Cristiano. Good morning, everyone, and thank you for joining our conference call. On page four of our presentation, I present this quarter's results, which reflected price increases across all segments, partially offsetting the appreciation of the real against the dollar and cost pressures. Quarterly sales volume reached 1.064 million metric tons in line with the third quarter of 2025. Net revenue for the quarter reached BRL 5.6 billion, up 3% from the third quarter of 2025, reflecting primarily higher pulp prices.
Notably, the continued widespread between fluff and short fiber, as well as a higher kraftliner price in the international market. The sales mix across segments and regions also contributed to the results offsetting the impact of the exchange rate fluctuations during the period. In this context, EBITDA for the quarter was BRL 1.9 billion with a margin of 33%. Moving on to page five, the total cash cost per metric ton in Q3 2026 was BRL 3,500 and BRL 3,300 for the first nine months of 2026. Year- to- date, we incurred BRL 101 per metric ton in impact not included in the guidance related to exogenous factors such as the El Niño and other pressures on input and fuel prices resulting from the geopolitical landscape. Added to this was the fact that no land sales were completed in the third quarter.
Part of these effects was mitigated by initiatives to reduce variable costs, including renegotiations with suppliers and input agreements, which had a positive impact of BRL 19 per metric ton. Fixed costs rose 2.8% compared to the first nine months of 2025, below the period's inflation rate of 4.6%. Even in the face of these pressures, the accumulated cash costs remained in line with the upper end of the guidance range. If current conditions persist, assuming that the next quarter will continue without production stoppages and including land sales, we are on track to end the year within this range. We have to emphasize that these variables have proven increasingly volatile. El Niño has been intensifying and persisting, potentially extending into the first quarter of 2027. Meanwhile, geopolitical conflicts continue to put pressure on fuel prices and other inputs.
In addition to passing on price increases across all segments, we've been actively managing both fixed and variable costs in a disciplined manner. As for the sale of land, which is included in the guidance, this is a decision that is within our control. We continue to monitor the market very closely, but strategically, and we will only carry out transactions under conditions that are appropriate for the company. We continue to work to meet our guidance, although there are challenges due to the increased volatility in the aforementioned variables. Moving on to slide six. Klabin ended the third quarter of 2026 with a net debt of BRL 24 billion and leverage measured by the net debt to adjusted EBITDA ratio in dollars of 3.3x , virtually in line with the second quarter of the year. The company remains focused on disciplined financial management.
Continuing with the next slide, Klabin's liquidity remains robust, ending the quarter at BRL 12.1 billion. This liquidity consists of BRL 9.5 billion in cash, which is sufficient to cover 30 months of debt maturities. The remainder consists of an undrawn revolving credit line. The average maturity of debt at the end of the quarter was 82 months, and the average cost in dollars was 5.2% per year, reflecting the debt management initiatives undertaken in recent months. Moving on to page eight, we present the company's free cash flow, which over the past 12 months totaled BRL 40 million, reflecting higher CapEx, particularly due to the investments in the modernization of the Monte Alegre boiler. In addition, cash flow was impacted by higher wood inventory and the purchase of standing timber in light of preparations for El Niño. Moving on to slide nine.
Distributions to shareholders or payouts over the past 12 months totaled BRL 1.152 billion. This amount represents a dividend yield of 5.2%. I would also like to highlight the payment of the next dividend installment on November 12 to the amount of BRL 278 million. Regarding the share repurchase program, since its announcement in June, we have executed approximately 23% of the approved volume. Finally, I'd like to reiterate that the company continues to benefit from a unique portfolio structure, which provides operational flexibility and helps to mitigate its volatility over the next business cycles. I will now turn the floor back to Cristiano, who will present the business trends for our business.
Thank you, Gabriela. I'd like to start with a positive piece of news. This will be more significant in the fourth quarter, but on October 15, we restarted our recovery boiler in Monte Alegre. Its production capacity is about 1 million tons. It has important machinery that can produce LPB and kraftliner. This has always been a site that had a great level of performance. Now after starting up this boiler, which was produced by Valmet, we have been seeing some great performance. You are all invited. If you are ever interested, you can get in touch with our Investor Relations department, and visit our operations. This is the market thermometer for the fourth quarter. I'll be very brief here. Since I took some time in the beginning, short fiber, fluff, and coated board are all stable, both in volume and in prices.
Kraftliner, we've been paying attention to the great moment that kraftliner is in right now. This is a challenge for statisticians to understand why these things are happening. These are different markets, but kraftliner is really distancing itself from the remaining curves. We're confident to say that this was a strategy that we built, and I've always mentioned it to you. When there were closures in American manufacturers, we would see the consequences in kraftliner prices. This has happened. It started last year, and it should continue happening this year. All of these closures, especially long fiber containerboards, have created a pressure as American exports reduce. This also connects to the new markets that we mentioned, Mexico, Canada, India, China, and so on, where we've gained market share. It continues to be pressured. We believe that this product has a price advantage versus the other containerboards.
I have to remind you that since 2018, as I've always said, there would be a premium for long fibers versus short fiber products. In the beginning, many people were skeptical about that, and I always said that it would be a difference of about $300. That's where it is right now. We really believe in the premium that long fibers have. That applies for long fiber and for kraftliner, some of which is also based on long fiber, and some of which are based on high-tech products like Eukaliner. It's an important moment for kraftliner. We increased our market share significantly, and we're very happy with this product. Of course, we're always conserving our corrugated box market in Brazil.
To talk about this briefly, I mentioned many of our clients in the beginning. We have a very strong position. We're very consistent, and Klabin is very close to the main brands in Brazil. Eggs were a major product for us in the last few years. Protein. We have a very wide range of products, so we're very excited about our partners. I mentioned Nestlé, but there are some others. We're very confident about the market share we got so far and our intended strategy for the next years. Industrial bags are also very strong. Construction is doing well in Brazil, but we're also forecasting stable prices for the fourth quarter. I'll stop at that, and I apologize for taking some more time in this presentation.
I'd very briefly like to invite you to Klabin Day. I hope you can participate. It will be an honor to have you with us by listening and by asking us questions. We'll continue with the Q and A. Thank you.
Ladies and gentlemen, we will now begin the question and answer session. If you'd like to ask a question, please click on the raise hand button. Due to the number of attendees in line, we'd like to ask you to please ask only one question. If you'd like to remove your question from the queue, you can click on the lower hand button. The first question will be asked by Lucas Laghi from XP Investimentos. Go ahead, sir.
Hello, everyone. Thank you for taking my question. I would like to ask about costs. In our conversations with investors, this was a concern that we had about your results, but as you mentioned it yourselves, about half of it is due to the El Niño initiatives. I'd just like to understand, if we add these BRL 150 per ton in cost pressures, will we see this go down in the fourth quarter? Also, considering the future implications of that, what should we consider for the several moving parts that impact your costs? I know that the foreign exchange might be positive for you, but will this create any pressures for you? What other factors do you believe will be relevant when it comes to costs? I'd just like to understand how I should consider your guidance for this year.
What would be a good reference as we move on to 2027? Thank you.
Thank you, Lucas. Good morning, Lucas, thank you for your question. We mentioned this during our call. We had some significant pressure on costs, and this is related to some outside factors, but it did impact our last few quarters. I'm referring mainly to El Niño and the geopolitical context that has impacted the logistics behind our operations. In that context, as Cristiano mentioned at the beginning, El Niño has been intensifying, and this is an event that persisted throughout the year.
We've had significant rainfall, and we also believe that this can impact us in the next quarter, the current quarter and the first quarter of 2027. We will potentially see higher costs due to how challenging it is to continue our operations with this rainfall. The second factor is the geopolitical context. It will depend on these challenges being resolved and how that happens. For the short term, we believe that we will have a very similar fourth quarter, pressured by these two events. It will be very similar to the third quarter, but as you mentioned, with no downtimes. It will be impacted by these two events. To be more pragmatic and to come to a conclusion, the El Niño event should finish by the first quarter of 2027, but the geopolitical challenges might persist throughout the next year.
Great. Thank you.
The next question will be asked by Marcio Farid from Goldman Sachs. Go ahead, sir.
Thank you. Good morning. I noticed your comments about replacing outsourcing for 2028. In the Caetê Project, nearly 95% of this reduction had been captured, and that goes for pinus and eucalyptus. I'd just like to understand if there were any changes in scope and why there was a two-year delay versus the plan. I don't know if it was a delay. Maybe you had some adjustments that changed this due to El Niño or some operational factors. I'd just like to understand what caused this delay to your expectations and what will be the marginal gains for 2028 from these reductions in outsourcing. Thank you.
Thank you, Farid. You mentioned the Caetê Project. We saw a positive impact from that in 2026 and 2025. We captured these benefits in the beginning of this project, and that's due to the aging of timber and when you take it down. There are two ways of looking at this, and I'm sorry for the explanation. I just want to give you a breakdown. We have timber of all ages, and some of it was already available for cutting. This actually surpassed some of the expectations we had in our business case. Obviously, these areas have a longer felling period. We always mention that after the Monte Alegre area, the Caetê Project was the most important acquisition, but it had its structural challenges. The point I raised was about 2018.
At the time, we mentioned that we would continue the first cycle with outsourced timber, and Caetê was outsourced at the time. Starting in the second cycle, we would see our own wood being harvested. That would start in the second half of 2028, and that's when we would see a reduction in the average distance. I prefer to mention that because I don't think we can make these long projections on costs. The cost will be the same for everyone because everyone uses the same raw materials. At least 50% of the cost of wood is due to logistics. By reducing the average distance from 2028, we expect to reduce the average distance by about 25 km, and that will play a significant role in our costs. This will start in the second half of 2028 and will continue in the following years, probably stabilizing in 2029.
That will be the average distance for this production base and for this production mix. You mentioned it yourself. You know this industry, and it depends on if you are using more eucalyptus or more pinus, and that depends on what products you are manufacturing. What I mean to say is that that kind of benefits have already happened as foreseen in the business case. This reduction in the average distance and outsourcing was announced in 2018 in our plan for 2018, and this will start performing in the second half of 2028.
Thank you. I think that 25 km range helps us with our calculations. Thank you.
The next question will be asked by Rodolfo Angele from JPMorgan. Go ahead, sir.
Hello, good morning. Thank you for the information you've given us so far. I'd like to ask about your leverage. I know that you would also like to deleverage faster. I would just like to hear from you what your expectations are, if you have any additional levers that you can use to accelerate this deleveraging process. Thank you.
Thank you, Rodolfo. I will start by talking about the opportunities that we have, but I would also like to share this answer with our specialist, Gabriela, who will give us further details. First, speaking about land sales or timber sales. It is important to say that Klabin, when it comes to both types of wood, Klabin is either the biggest or one of the biggest specialists in negotiating forestry areas in Brazil. This experience is not only due to our history in Paraná. We were much bigger in the past, but we are still an important company there. We continue to have a lot of experience, and we renewed our executives. We are making use of this experience, and we might be one of the biggest land operators in Brazil without having the intention to be a company in that area.
You have seen the prices that we have paid and sold our areas for. When the time comes, we will break this down for you, but we have had some very good opportunities to create value to the company without ever damaging our forestry base. We have made studies and trials in other areas still within our range, but a bit further away, and that can provide some opportunities. As a reminder, Brazil has a lot of investments in corn ethanol. Everyone knows about Brazilian agriculture, its capacity. Since in the last years, we have operated in areas that are close to us, but not enough, we are still seeing opportunities to add value. Of course, when we have more details on that, we will pass it over to you. I will let Gabriela complement my answer.
Hi, Rodolfo. Just adding to Cristiano's answer. From the operational perspective, considering the harvesting cycle, at the end of the year, we will conclude this machine ramp-up. That is an important point to reach our full capacity and to run the company at full steam. We are coming to that point. You have mentioned leverage. We do wish that we had a faster pace, but we are stable at the current level. We have also mentioned that our operations are solid. We have had good operational performance. Commercial performance has also improved in comparison to previous quarters, but this has brought us to a very stable level, and that is how we believe things will continue.
Thank you.
The next question will be asked by Caio Ribeiro from Bank of America. Go ahead, sir.
Hello. Good morning, everyone. My question is about the pulp market. In the last few months, we have seen two price increase rounds. Can you tell us a bit about the factors and trends that you have been seeing to understand if this market would take on further price increases? Are there any trends changing that justify the last two price increases? Thank you. That is all.
Thank you, Caio. Nico.
Hi, Caio. Good morning. Thank you for that question. Our expectation for the fourth quarter is to have stable market conditions in comparison to the third quarter. This $20 increase in Asia announced for October has been fully implemented. The demand is at very good levels. There was a further price increase announced for Europe. Europe is at a good moment. The third quarter is the low season. We're starting to see a gradual improvement in demand in some areas of Europe, like tissue and specialties in general. We saw a $50 price increase announcement. We expect to see a gradual recovery of prices in the fourth quarter and some stability in demands. Inventories remain balanced globally. We're seeing a precise control in the supply. Of course, the supply chain has been negatively affected by the war in the Middle East.
Transit time has increased by about 10 days on average due to the reduced vessel speed in certain regions, and that has made for a more balanced market.
The next question will be asked by Julia Rizzo from Morgan Stanley. Go ahead, ma'am.
Hello. Thank you for taking my question. I'm going to insist on the issue of costs. I don't think that was very clear to me. The extraordinary unexpected costs that you mentioned were BRL 111 per ton. Is this the level you are expecting for the third and fourth quarters, or will this remain for the next quarters? My question is, should we expect these extra costs to phase out, and what can you tell us about that? The other question I'd like to ask is if your cost per ton includes land sales and if there were no land sales in the third quarter, if there are any adjustments required for our expectations here, considering what you said. That's it. Thank you.
Thank you, Julia. I'll start to answer, and Gabriela will tell us about the second part just so I don't get any of the technical aspects wrong. To talk about costs, I'll try to be clear. Maybe my explanation wasn't clear enough. This additional cost should happen especially in the second quarter of 2027, but we will see some impact in the first quarter already. Let me explain myself. I mentioned rain. Rainfall affects our costs directly. It forces us to place more wood close to the plant because we have increased working capital and we have to remove wood in precarious conditions because of the drenched soil and so on. That's why I'm saying that in three months, we had about 80% of the average rainfall for the entire year, and that affected us significantly.
Specialists expect this rain to reduce in mid-January, but it will continue until March, most likely. The costs due to El Niño, and it's important to name things, right? We will probably offload it completely by the second quarter of 2027. Gabriela will add to my answer.
Hi, Julia. Just adding to the points that Cristiano mentioned. What do we foresee? Even if we have the same pressures that we had from El Niño and the war in the fourth quarter, given the initiatives that the company has adopted throughout the year, and since we are at the low end of the range, we believe that we would at most go to the top range of the guidance. We had mentioned BRL 250 million in land purchases, and we executed about half of that. That's the current scenario. We should be at the top range of the guidance, and the point we were raising was especially El Niño. From our understanding, the war will continue, but El Niño has been more intensive, and so we're seeing that it's persisting for some time.
That creates a challenge, but there are scenarios in which we would be very close to the top of the guidance.
Understood. Thank you.
The next question will be asked by Daniel Sasson from Itaú BBA. Go ahead.
Hi, everyone. Thank you for taking my question. Thank you for this opportunity. Moving away from costs, if you can tell us a bit about packaging paper. We saw better prices across several categories, but this was not translated into a better EBITDA. There are some cost effect that you've mentioned already, but are there any changes in mix demand in the competitive environment that's limiting your conversion of price into margins? If you can tell us a little bit more, that would be great. Thank you.
Thank you, Sasson. Marcos, Soares and Douglas are here with us. Marcos and Soares are in Uruguay, but they can join us at any point. But I'll try to make a general comment, and if that's not enough, let us know what you need. Okay. We have to think about this industry, which globally is going through a structural change. I'll try not to go too deep into that, but this reduction in American exports and some of the GDP behavior in the U.S. Let me explain myself. In the last few decades, we understood that the U.S. GDP, or excuse me, cash expenditure was related to the GDP, was a proxy for the GDP. This is related to supermarket consumption. If you hear calls from CEOs of major American companies, they always connect 75% of their box usage to supermarket performance.
Of course, this is different from country to country, but we saw that there was a detachment from the GDP. I know that you've discussed this already. The U.S. GDP was displaced because of investments in services, especially technology. When you look at the economic performance and credit card expenses and so on, you can see that the U.S. has not performed well in corrugated box usage. In 2025, this was pressured by energy costs, labor, logistics. You saw what happened to logistics costs in the U.S., and that made them reduce their production. I'm trying to explain in a different way what I always said would happen in the U.S., and it actually ended up happening.
That changes dynamics around the world because it reduces paper exports for packaging from the U.S. Along these lines, we also saw some regulations being affected in the last few years on OCC. There were bans from sending OCCs from one country to the other, and countries like China, which were not major OCC collectors, started doing that and started producing recycled paper. There are correlations between these things. I'm going to stop here. I don't want to make this conversation too broad. Basically, this change in fiber allocation, virgin fibers, all of that has changed. For us in Brazil, I see that we are repositioning ourselves by bringing in high- and low-weight kraftliner, which has made us into an important player in this industry. We can replace some specific types of paper in some parts of the world, and that creates a lot of value in dollars.
I won't go into appreciation or depreciation of the Brazilian real, but in U.S. dollar terms, we've seen $100 increases in the last 28 months. Bringing this to corrugated boxes in Brazil, as you know, we make use of these opportunities from the global market. We are exporting over 45,000 tons of kraftliner per month. We are sustaining this considering how corrugated boxes are performing in Brazil, and we can always use outsourced materials. When it comes to prices, kraftliner prices have happened. I think the American market, considering my initial explanation, I hope I can connect these dots for you, and I hope that wasn't too complicated. But if the U.S. market continues to perform, and if they start resuming their consumption from supermarkets, that will have an effect on the demand for boxes. If we reach 1%, that would be significant.
That is going to create a problem in their supply in the U.S . So we will have to see if these conditions arise. We have to see, of course, how the world will be in the next few years. We have to hope that it will be more stable than it is right now. If GDP per capita for low-income Americans improves in the next few months, in my opinion, I think there will be a shortage of paper in the U.S., especially virgin fibers. And I think that will add value to our kraftliner, and that is why we are exporting 40,000 tons on average. When it comes to coated board, and I will try to keep it brief again. Coated board has been negatively affected by the eucalyptus folding paper from China. There was a replacement.
They are no longer buying these fibers in bales, but they are buying it from Vietnam, so they are integrating their production. So we do not expect that this will improve. Until this volume gets consumed in the world, it will continue to impact manufacturers significantly. So folding manufacturers in the world will suffer. The exception may happen due to tariffs that might be imposed, but looking at the long term from a structural perspective, I think Chinese folding paper will be a new chapter in packaging materials. But I would like to remind you that Klabin does not do folding coated board. We do sell it in combos for some clients, but we are focused on long fiber coated boards, and in this case, we are not threatened.
So our company is based on long fiber coated board. We have gained market share, and this will gain value over time. When I talk about our premium, I never really specify if it is long fiber fluff, if it is kraftliner or coated board, because any product using long fibers will have a premium. It already does in some cases and will have more premiums in the future. I am sorry if that was a long answer, but I hope that answers it.
Thank you.
Ladies and gentlemen, we will now conclude the question and answer session and Klabin's conference call. Thank you for listening, and have a good day. Thank you.