Good morning, everyone. Welcome to our webinar for the earnings in the first quarter of 2025. We're going to begin with the earnings in the quarter, and by the end of this session, we'll have time for Q&A. All participants will have their video and mic off during the presentation, but questions may be submitted through the Q&A feature or on the chat during the Q&A session at the end. We're also providing simultaneous translation into English. Please select this option, and also in sign language. We'll have the webinar recorded and available in both languages on the company's website. Now I'm going to present our slides here. Just a second.
[Foreign language]
Getting into the earnings for the quarter.
[Foreign language]
In the first quarter of 2025, we have BRL 423,078,000 of net operational revenue, and a net income of BRL 60,000,803 an EBITDA margin of 32.2%, a ROIC of 11.3%. The cost of our debt for the last 12 months after income tax and social contributions, 7.4% a year, and a net debt to EBITDA ratio of 2.21x . Moving on, in our comparison with the previous quarter, we had a quarter that was very good. When it comes to revenues, we had BRL 423,078,000 with 10.1% of exports, and we grew 16.7% compared to the first quarter of 2024 and 3.7% compared to the last quarter. Our EBITDA ended at BRL 136,000,254 a margin of 32.2%, 13.7% higher than the first quarter of 2024, and 14.8% higher than the fourth quarter of 2024. Our profits, we're at BRL 600,000,803 the recurring income, net income.
This is a growth of 136.8% compared to the first quarter of last year. In the fourth quarter, we had also the acknowledgment of the exclusion measure of the ICMS from our tax basis. Now, getting into the sustainable packaging business and the corrugated cardboard business, the overall market had stability in regards to the first quarter of 2024, a slight drop of 0.7%, and a drop of 6.1% compared to the first quarter due to the seasonality. The first quarter was typically slower when it comes to volumes than the fourth quarter. In square meters, the same thing applies. We have an evolution of 0.1% and a drop of 5.5% in regards to the fourth quarter.
Now, in our case, we had a performance that was higher than the market, and this is mainly due to the increase of capacity in Gaia II, which was the increase of capacity in the Santa Catarina packaging, with an evolution in regards to the first quarter of 5.1% and a drop of 2.3% in regards to the fourth quarter, with a total of BRL 43,621. And in square meters, this is 6.4% compared to the first quarter of 2024, and we dropped 1.6% due to seasonality, with 86,000,696 sq m of packaging. Our pricing in tons, we had an evolution in regards to the first quarter of 1.7% on average. In regards to the first quarter of 2024, we had an evolution of 9.7%.
With some transfers that continue to happen in the packaging, we are still at our second trend for this adjustment, which started off in the month of March, and we will start getting into this more intensely in the second cycle now. Also, the increases we had throughout last quarter were very substantial, with an evolution of almost 10% in square meters, 8.4% evolution, and 1% in regards to the fourth quarter of 2024. Now, when we get into the packaging business, getting into the paper business specifically, which are the papers we sell directly to the market.
Most of these papers are transferred to the packaging units, but we also sell a significant amount of papers to the market, and we've split this into flexible packaging paper, which are bags and sacks, and also papers for rigid packaging, like corrugated cardboard, where we sell quite a bit of volume in the market. Those are the c and KraftLiner papers. In the first quarter of 2025, we had a sale of 32,971 tons and 6,796 for rigid packaging, a significant evolution when you consider the amount of sales of paper for flexible packaging, 12.4% and 8.3% in regards to the first quarter of 2024.
Here we get into the impact of a market that was pretty good in the first quarter, but also an evolution of the exports, as well as the machine number two, which was Gaia III, and that's where we had very good performance with this machine and an evolution of the volume sold. The average prices for flexible packaging paper had evolved 7.3% in regard to an annual perspective, and we had a drop of 0.9% in regards to the fourth quarter of 2024. This drop is mainly due to the dollar, but also due to a mix of countries and types of papers. The prices for rigid packaging, which are the paper for corrugated cardboard, had an increase of BRL 3,626 of average price per ton, 2.7% above the fourth quarter and 23.2% in regards to the first quarter of 2024.
This more significant increase in the rigid packaging paper is due to the scraps prices that were pressured. Also, consequently, we had some price increases to reestablish our margins due to the increase of the scraps, and that's what we're going to see here in sequence. The market overall had an evolution of 87.6% in regards to the first quarter of 2024 and 6.9% compared to the fourth quarter of 2024, with an average price FOB of BRL 1,090 per ton. At ENE, we had a smaller increase of 81.6% in regards to the first quarter of 2024 and 7% in regards to the fourth quarter, with BRL 1,004 per ton.
The scraps started off; we had pressure, of course, and they started the year also a bit more pressured, but more towards the end of the first quarter and beginning of the second quarter, with a bit more pressure in the OCC price. Due to pretty good demand, but also stability and economically, which brings in more instability and risk perception, which also, of course, influences the price of OCC. The rosin business, as we mentioned, we discontinued this business. It was a business that represented only about 5% of our revenue, and it had results that were really bad in the last two years due to the drop in the international market, and prices went into a slight significant drop from 2022 onwards.
That is when we decided an opportunity that came out to be able to sell our factory of resins and leasing out our forest assets for the extraction of these resins. We will be selling the logs and the rosins also that are going to be extracted from our forests, plus this kind of leasing model. When we look at the position of our debt, we ended the quarter with BRL 1,000,000,716 of net debt, a cash position, and a net debt of BRL 1,000,093,000. This is a leverage starting to have a downward trend due to the increase of our EBITDA. Although our gross debt did drop a bit, there was a slight drop of 2.71%, and our expectation is that this should continue to drop in the next quarters. Our debt is basically all in reais due to our revenue.
This isn't only 1%; it's in foreign currency. The cost of our debt on average in the last 12 months is 11.2% a year, which is about 5% of the CDI without the spread. In the short term, we have before, of course, income taxes and social contributions. In the short term, we have 92% in the long term and 8% in the short term. This is a debt position that is really well controlled and at a deleveraging process, starting off and potentializing in the next three quarters. In the last 12 months, as we mentioned, our debt was at about 11.3% on average. Here we have our ROIC in the last 12 months, which is 11.6%, and our ED is at 7.4%, which is an average cost of debt after income taxes and social contributions, so with a difference of 3.9 percentage points.
I think the good news is the beginning of the increase in the ROIC after our investment cycle, which led to a slight drop significantly. We start having this growth process in the ROIC again as our debt starts dropping and our results start proving to be better than the first quarters in the last year. The buyback program, we started off in 2024 in March for 18 months. This is still ongoing and active with 76.4% performed. We have a limit of acquisition of 10,651,000 in common shares, and we've already repurchased up until the 31st, 8,136,400 common shares that are in the treasury. About dividends, we distributed BRL 0.71 per share in the last 12 months with a dividend yield of 7.71%, so very positive.
In the last twelve months, BRL 0.71 and a total exit of BRL 168,516,000 paid out in the last twelve months. In the quarter, we are going to be paying BRL 44,777,000, BRL 0.19 per common share. The investments in the Gaia platform are practically—the main investments are complete already. We just have the new printer for the Santa Catarina unit. It is already installed actually, and now it is just commissioning. We should be ending this in this quarter and the refurbishing of machine five, where we have already planned everything and we performed the orders, and the shutdown is scheduled for the beginning of 2026. The good news is that in the last month, we had the licensing of our PCH in San Luis. That was a little bit delayed compared to our initial plan, but we had this licensing so that we could begin the investments this year.
Some highlights: we were acknowledged [Foreign language] in the PME Brazil Award, [Foreign language] the best PMO of the Project Management Institute with this annual award. [Foreign language] We were the best PMO manager in Brazil, [Foreign language] and we're really proud of this because [Foreign language] this is a very important capacity in a capital-intensive company as ours. We were also the award winners of the Embanews News Prize Premier Prize. We received the Roberto Hiraishi Trophy . This is an award that recognizes the packaging, considering aspects like innovation and quality. This is also a very cool award or prize we received. Just today, we're going to be disclosing our integrated report. Up until then, we were reporting the sustainability, and now we have the integrated report from 2024 onwards.
This version has many new innovations with business view and performance in 2024, opportunities and commitments, and especially our indicators connected to the SDGs. We have six public targets for ESG commitments that we've been advancing with consistently so that we can overcome these challenges up until the end of the decade. Our IR team as well, as many of you already know, Odivan is our CFO, and he's responsible for our finances and investor relations. Andre is our investor relations manager. We also have our analysts, Mariciane and Daniela, and the financial team guys: Marcos our finance manager, and Emmanuel, our financial specialist. Evandro, our accounting manager, and Nelson, the new business area. We have Giovanna that provides some support to the investor relations guys. These guys are always available to provide information, clarifying us different information about our results as well.
I think now I'm going to stop sharing, and I think from now on we can answer the questions from our participants. We'll be available now. Thank you, Sergio. Good morning, everyone. We already have a list of questions. I'm going to start off with Guilherme Nix. How's it going, Guilherme? Seven questions in sequence, but we have a lot of information here. Anyways, let's start off here with we'll split this into point by point so that we don't miss anything here. The first one is the demand for corrugated cardboard. I want to hear a bit of the dynamics for this, which sectors have been really leveraging the demand, and if you also expect a strong year throughout 2025. The first is about the corrugated cardboard demand. The second one is about the demand.
What factors have been really leveraging the performance of the paper? If you could separate with unnatural demand, with the effects of the shutdown and the boiler in the last quarter and the ramp-up of Gaia III. We can talk about these first ones, and then we'll get into the next ones. Let's start with the corrugated cardboard demand. Lindomar can also add on, but we started the year really well. Although the market was a little lower in the first quarter of last year, it was a quarter that was very strong last year, and it was a drop that was pretty small in the market as a whole. In our case, we had pretty good evolution, and one of the main factors has been consumption of animal protein industries due to our unit in Santa Catarina being very close to that cluster.
That has really been helping with the growth in the first quarter. Lindomar, do you want to talk about this a bit in the first quarter and the perspective you are looking into up ahead?
[Foreign language]
To add on to Sergio's point about animal protein, I want to highlight the animal poultry and pork segment. It was a segment that has been growing a lot. There is still a perspective that is very positive considering the pork segment, especially the moment we are experiencing. We can highlight the exports also to China. For poultry, the impact is not too big, but what we export in the sector is some cuts of chicken, like smaller pieces of chicken, so we do not have too much availability in the sector. We do not export other types of bigger cuts.
For pork, the expectation is very positive, as you mentioned, the segment had a slight impact compared to last quarter. I want to remind you that the pay is very strong. We're really optimistic about this growth when it comes to demand for the second quarter, especially a growth projection for the second semester. We'll talk about the papers a bit, but one of the main factors has been Argentina; they got back to buying regularly. For exports, you saw the percentage as it represented more in this quarter than in the previous quarter. The internal market of corrugated cardboard, which is quite intense as well in the bags and bags market, also has responded to strong demand this quarter. Oh, yeah, that's a good point.
In the bags market, we still have pay that we're filling out, which still considers the substitution of the paper by plastic, sorry, plastic by paper. These are the two factors that, besides Argentina, right, that you mentioned. Generally, this process worldwide could lead to benefit for Brazil, especially in the agribusiness, overall agribusiness as a whole, with an impact in economic growth overall, and that will help with the demand for corrugated cardboard that helped in the quarter. It should also contribute to the demand in the next quarters. The third question is about pricing. If you could talk about how you're considering the dynamic for prices for corrugated cardboard in the next quarter, were there more announcements or increases moving on to the context of the prices? [Foreign language] Based on the last data from [Mangochi]. He's asking about DPO prices.
We had an increase in prices that was extended till January and February in the last increases. We started this new cycle of price increases that started off in the month of March, sorry, but that was potentialized by the month of April. In the second quarter as a whole, there should be an important impact with a new movement towards an increase in prices to be able to offset this. As the market has a pretty good demand, we have been able to perform these price transfers. There is a bigger resistance from the market, but there is also an understanding that this recomposition is very strong. We have been able to have the price increases based on our goals established for each of these cycles. The next question is about forestry, and if you can talk about what you expect the forestry line.
Do you expect to have any breakdown on this information? Should the revenue be at these two within we've seen throughout the first quarter of 2025? The forestry business, most of the wood actually that we cut goes to our pulp production, and we sell part of this to the market as well. Most of the wood is used for the production of pulp integrated on our paper production business. The forestry business is something that we discontinued. We kept these forestry assets, but we're going to just receive the leasing of this forestry area, right? I think this question is even related to Rio Grande do Sul, where we had a relevant fact issue to the market. We hope that in the next 10 years, we'll have about BRL 6,000,000 estimated per year. That's what we base ourselves on the expected volume.
This volume can actually be a little bit higher, and the price of the [velvet gum] could be varying a bit upwards or downwards. On average, in the 10 years, this is the expectation. Just to help here, besides the numbers in the first quarter, there is also the forest that we bought in Rio Grande do Sul that is going to be used to be able to produce more velvet. The numbers you see are not full yet or they are not complete. As we just acquired this, which led to the delivery of this factory, there was a swap of assets. It is not included in this number. It should be a bit higher than this. Anyways, it is not relevant. Our focus is packaging for paper, and this is secondary.
It's not strategic for us, and it's not that significant either in the revenue and the company's results as a whole. Actually, I think just to reinforce this issue, we had already defined this in our strategic plan from the previous cycle, actually, to leave the rosin [audio distortion] business since it's not a core business. Finally, we were able to have a business that was really well structured, and eventually, we could even eliminate the forestry assets with better market conditions. At this moment, we're going to continue this rosin activity plus the processing. Now, here, getting into the costs, we have pretty good performance of the costs throughout the last quarters.
Although we have a bit of pressure in the price of the scraps, OCC, we have been able to want to know what you expect for the next quarters and if we expect any kind of correction in prices that could in some way benefit this from a cost perspective with a more normalized scenario and after some of the extended holidays in the first quarter and second quarter of 2025. For scraps, we are seeing this pressure in the short term, and we believe that there should be a bit of a slowdown in this in the next months because there is normally a peak initially, but then the market kind of balances itself out. We think that the scraps should get into a more normality period in maybe two months or so. What was the beginning of the question? [Foreign language] About the [Foreign language].
We had some important cost reduction work in the formula of our budget for 2025, support from Falconi, our advisors. We had costs a little lower compared to the fourth quarter. This is actually kind of hindered by the overall expenses because in the last quarter, you had some adjustments in people compensation. In this year, we ended up having an adjustment upwards, and that affected the results. The trend overall is to keep very controlled costs throughout the fourth quarter. We do not have that much control over variable costs. Of course, there are many other variables that could be affected, but the costs that are under our control, we have been able to keep controlled with quite a bit of rationality. Great, perfect. The sixth question is about we saw a reduction of BRL 20,000,000 in the first quarter.
Could you remind us about the effect of the [deconsolidation] of these and the cost lines that you did not need? If you could mention the main costs of these between the lines and the cost of doing business and cost of goods and services. We are going to have more detailed information on the reference term. That is where you will see most of the operation is actually being discontinued. This rosin segment that we were disposing is more of a forestry process, but we are just going to have a forest in Rio Grande do Sul, and the operation volume is a lot lower. If you could consider that what is in segments for rosin in the previous quarter is really what is going to disappear from now on and remain only with the forestry part, which is less relevant. When we segment this, we have the information, right?
You can also send us an email, and we'll be able to talk clear. We'll clarify this further and explain what's the impact. Once again, it's always in the rosin segment, which is not that relevant. The main numbers, we already mentioned that the impact is positive in the reduction of the fixed costs of forest, and it's one unit less corporate structure that we're in that unit that we're continuing. The maintenance capex is also going to be reduced a bit. You have a lot of positive impact in other lines of our results, but our IR team cannot okay. The seventh and last one from Dan, and we'll get into the next questions related to projects.
It's an update on the NELS platform and the schedule for the announcement of this project or any other details you could also share with us. We are in the engineering [audio distortion] for the NELS project platform, and we are waiting on this process for the leveraging with a little more significance to be able to share the new investments with greater confidence and announce this to the market. We should be announcing something by the end of this year on this topic, most likely. [Foreign language] Now we have Marcelo Arás. Marcelo, you can open up your mic. Hey, guys. I think Guilherme asked most of my questions, but if I could just provoke you guys on another point here. We saw that the cash flow generation this quarter was a little tighter.
I wanted to understand how you're looking into this up ahead and how this balance between cash generation and leverage could eventually impact the pace of the buyback program that you guys have been working on. A second point, based on this NELS project point, what's the level of flexibility you have for these projects considering the level of higher interest rates that we've seen so far and even a slight weakening of the demand from now onwards? Thank you.
[Foreign language] About the NELS platform, of course, we're only going to be announcing investments that are really mature and that have a return rate that is more long-term that could justify some investment like this. Of course, we are always conditioned to macroeconomic situations in the short and midterm when we define investments.
We're always going to have a very conservative approach in the approval and allocation of capital in the company to be able to have results and returns. We have flexibility because we have many different projects. You could be starting off a project that's going to be a little smaller or postponing some other projects. This is the beauty of the NELS platform, a real set of projects that you can prioritize to be able to keep the level of leverage and also prioritize projects that maybe have a better return in the short and midterm. What was the other point, Marcelo?
Sorry about that. Yeah, it was about cash generation and buyback. The buyback program, we actually didn't do it during a few moments because of not being able to disclose this while we were disclosing relevant events.
We actually had less buybacks in this quarter than what we had in the previous quarters. We should continue with the buyback program for cash generation, and cash flow should actually improve as quarters advance. It is going to be pressured a bit by the price increases. You have a price increase in the packaging taking place, and that pressures the need for working capital, and that affects the free cash flow as well in the short term. That is not going to keep us from having our buyback program because we believe it is super important, and we are convinced that the value of the company is not represented by the share price in market gain at this moment. The free cash flow at this moment in the first quarter is impacted also by the dividends with the interest rate.
If you look at the interest paid, there's a pretty high value, BRL 60,000,000 which ends up pressuring the quarter. It is not a quarterly process, right? You need to always consider this from an annualized perspective to be able to have more visibility. The cash flow as well for the last 12 months is in line with what we've been working on. There is no type of significant tightening, let's say, in this process. It is navigating within the expected normality, right? The investments in expansion are really reduced at this moment. Also, the level of leverage and liquidity and the cost of the debt is, and that's how we can also monitor the buyback program. The level of liquidity is very healthy as well.
The total value is about BRL 86,000,000 if you consider the quote of the share close to about 8% . We have already done about 50% of it, and we are getting close to the end of this program. We may have another one eventually. We always look at the liquidity conditions considering the buyback program to be able to perform this in a very careful manner. Of course, trying to improve our returns and consolidate this as well. The same is applicable to investments, right? We have a policy for financial management. Any kind of investments we are going to work on, we always have to consider our goals for leverage ratios. Once again, we can see this is quite common here in Brazil to face.
We have a pretty good capital structure where we consider different indicators to keep the company always really healthy with an excellent rating and really keeping it in AA to be able to operate in the capital market, having resources and really being able to operate in a healthy manner. Let me move into the next one here. I think there's no one else with the raised. Our next question comes from Bam. Is the company going to pay off all of its debt first and then start the NELS project? Actually, they're going to control leverage to make decisions in regards to the project. These are fundamental factors, right, to approve any kind of project. We're not going to pay debt. It's healthy to keep a level of debt to be able to leverage the return on capital for shareholders.
You need to have a quality debt as we have today and really take care of the leverage argument. She also has a question for the morning. She actually focused on the results in the quarter. On the cost aspect, could you mention why scraps are still so high? What's the cost dynamic for the year? When you consider the revenue, what do you expect for the pricing for cardboard and paper? That's something that was mentioned. Yeah, it was mentioned, but how's it going, Shin? Anyways, this pressure of the scraps in the beginning of the year is due to demand. That was pretty good, but also because they resumed some capacity for recycled goods. Also, the KraftLiner exports have been evolving, and this removes a bit of the paper from the internal market, and you produce more paper based on scraps.
That ends up pressuring the market a lot internally. As the international market requires more KraftLiner from Brazil, that should be happening in the next quarters. You have to produce a bit more of recycled paper, and some operations are going to be resumed, ending up kind of pressuring the scraps market. [Foreign language] My question is about the competition for management. Even with this drop, the values paid increase. What are the criteria that justify this kind of increase, especially in this scenario with more challenging conditions? Also, would these adjustments indicate some kind of a reduction for 2025? We have all of the management overall has compensations that became fixed variable in short term and long term, which is long-term incentive programs, right? Yep. Management.
Long-term incentives have been based on results from previous years, and so it really impacts the compensation of the year normally related to prior moments than those in 2024. There was nothing too exceptional. There were some things based on market research and the targets that were financial ended up being achieved, which ended up leading this compensation to a pretty good level, but as you mentioned, I would say that most of this comes from the long-term compensation that is related to previous periods. All right. Next question here. Would you have anything you want to add on to this? No, Sérgio. No, Sérgio, I think that's it. You covered it. Maybe you could just talk about the site there where they mostly see the components of the fees and short-term incentives and long-term incentives.
There is also the people committee that looks at this topic and validates and approves this and takes care of this topic related to competition for management. There is some governance that is quite robust. Do you expect to increase capacity organically only, or are you also considering M&A? [Foreign language] We are always looking at M&A opportunities. Their strategy is to grow organically, but also through acquisitions and the possibilities of good assets in our sector. We are always looking at this and assessing if it makes sense for us. We have already had an experience with M&A in 2013, and we know about the challenges. We really assess this synergy with the improvements in logistics and the buying inputs and different variables we consider, of course, with the financial conditions of the company, the quality of the assets.
We also do not have that many possibilities in the market that really interest us at this point. The companies that have this kind of quality I referred to, we have been able to assess, but there is nothing that objective about this yet at the moment. The next one here is also anonymous, and it is about how cash management is with short-term debt. I think I already mentioned this quickly before, but we have a financial management policy. If you are interested, you can also see this on our IR website, where we are very careful about liquidity. We have over BRL 600,000,000 in cash for liquidity purposes. We also look at the average net worth debt. Our debt is always deep, and we have very little short-term debts. Most of our debts are long-term.
From a financial management perspective, we do not have refinancing to be done in 2025 or 2026. The actual cash generation in the company, plus what we have available, off the debt, of course, we have to be looking at this a lot more carefully due to the scenario established, which is more challenging. Our capital structure is designed so that we do not have to go to market and refinance debts in the short term. We never do this just for political purposes. Sorry, due to our policy purposes. About the international market, question from Guilherme Ferraz, is there a possibility for expansion, or should you focus more in the internal market? About your question on the recent acquisition of land, what would be the objective of the company in regards to this acquisition? [Foreign language]
As Odivan mentioned, we had a swap in our office. We had decided to discontinue this business from a perspective, but now we performed this, and the rationale was that we would remain with the rosin extraction from our forest. To complete this transaction, we completed this complementary forest asset for the extraction of rosins, which is an issue of business that has its profitability and, of course, waiting on the most adequate moment so that we can assess the permanence with these forest assets as well. Also, about the international market, is there a perspective for expansion in the international market? That is a difficult question because of the turbulence we have seen. Up until where we can see, there could be new opportunities for Brazil and paper exports, especially for Asia.
These are markets that are not very profitable, especially not at this moment. Of course, this could affect the paper market as a whole. On the other hand, the papers in the U.S. that do not leave the U.S. due to tax issues could reduce their supply of paper in the international market, and that could benefit Brazil from a volume and price perspective. That is a hypothesis that is still being analyzed. Let's see what is going to happen in the next days or weeks when it comes to the fees and the rates and the overall market as well. Now the next question from Amancio, there has been pretty good recovery.
is the expectation for the market and for Irani with the—yes, there is a lot of influence on the price of the stock, but you have the purchase and sale flows that also influence what we see in the stock exchange. Currently, it is an issue with a lot of companies that have very low valuation in the stock exchange and also pretty low cash flow. Of course, we cannot talk about the future. It depends on many factors, but also considering the regulatory restrictions that we are submitted to because we are a public health company. The market analysts, they also disclose information about the perspectives in the business, etc. [Foreign language] Stephan, good morning, and congratulations on the results. About the price of the flexible paper, they had a setback for over a quarter. Is there an expectation for the price increases in the flexible packaging as well?
We had an adjustment in the lighter paper at the end of last year, in the beginning of this year, where we really fulfilled the increase in prices of thinner paper. The thicker paper industry is a market that has a lower demand. It's been a while in Brazil, and it's mostly influenced by civil construction, and the civil construction that really buys from retail, buys from retail, and they use a lot of paper. On one side, we have this increase, and there's also an increase in demand due to the bags. Do you want to add on to this? I think that's it. Due to the thinner papers, as Sergio mentioned, we increased price, and this drop in prices, as you saw, is really how the price of the paper itself didn't drop from one quarter to another.
We sell paper that's like 30 g to 180 g, and there's months where it goes more to China, Argentina, etc. This variation in the price of the 0.9% that you've seen also has a bit of a currency in the mix of countries we ended up selling to. There was an actual drop due to the thickness of the paper or per market, including the foreign currency. Upper segment as well. Thinner paper, we already increased our prices, and maybe in the bags, that's a market depending on demand. Of course, you have this civil construction issue that Sérgio mentioned that could in some way influence this in the second semester. We must wait and see and understand what's going on in the market, also with the coming and going and the tariffs also related to paper around the world.
This drop, as [Hinki] mentioned, leads to many different possibilities, right? The mix of countries, the mix of types of papers, the dollar. You have many different factors that could influence this besides exports. Also, the prices for exports are normally lower than the internal market prices. Since we had more exports in this quarter compared to the previous quarters, that also impacts it. There are many different possibilities. What we could say is that line by line, the types of papers did not really suffer much of a price modification. Alexandre Feinberg is also questioning about the new customers and their perspectives also with Argentina. Argentina is a market where we export traditionally for over 20 years. Leading the market for flexible packaging, we were always on paper, and we needed Brazilian paper. We have not opened up new customers.
It's normally the same customers in the last 20 years, but the perspective is pretty positive, and the volume has also been increasing quarter- over- quarter. However, there are not new customers. It's the same as always for the past 20 years. There's also some stability when you consider the paper market, which is quite significant in our portfolio of customers. They buy recurring and some buy many times a month. The exports typically have a 60-day cycle, but the new customers end up helping that significantly. We sell almost all of the quarters for paper bags, and Argentina is also a very important market for us. In packaging, there's a significant turnover, but the biggest accounts and the most traditional customers remain in our portfolio for many, many years. Do you want to talk about that a bit more, Lindo?
We also have the stability with customers that are very traditional. They see value in our offering, and we also have some prospecting initiatives where we're always looking at new opportunities. As long as, of course, these are in line with our possibility levels, we also have prospecting initiatives, and we have a really consolidated and healthy portfolio. At the moment, when you have an increase in prices, as we've experienced in the first and second quarters, we have to prioritize the price increases instead of the volumes, right? Actually, the volumes end up being recovered in the second semester of the year. You could have some shift in suppliers to avoid the increase at the moment, but the volumes eventually resume normality in the second semester, which is where you have the strongest seasonality.
Now you have Santiago also mentioning this, and he says, of course, the international scenario has probably already been a topic of discussion in management meetings. What would you think are the main impacts that Irani has that are discussed internally due to the war and the overall global scenario? Do you want to talk about that, Odivan? I think the situation initially is everyone's trying to understand what's going on. No one knows what are the actual effects. There's a lot of primary, secondary, tertiary effects with product allocation. Everyone's trying to understand the impact of the war on tariffs for different countries and segments and markets. We've been monitoring this, and this topic is, of course, on our table. We talk about this weekly, but the feeling we get is that at the end, it's like what people are talking about in Brazil, right?
Brazil could even be benefited. Our customers could be benefited. There is a scenario that is positive if this is confirmed. On the other hand, there is also a possibility for global recession that could lead to this global scenario due to the same topic with the tariffs. We have to really monitor this closely. We have this capital structure prepared, and we also are prepared to take advantage of this opportunity up ahead, right? When we consider which direction this story is going to be finishing for us and Brazil, we have a lot going on, and now we're monitoring this slowly at this phase. Sergio, do you want to talk about anything in regards to this? I think the scenario of stability, we have a drop in the global demand that's going to reach us, of course.
Brazil is an important player here as we search for volumes, especially on behalf of China. We have another anonymous question here. Does the company have a follow-on to structure the NELS platform? All of the different initiatives for funding are available with each investment cycle. We have other opportunities, and our expectation, at least for the NELS platform, is to do this through a debt. Of course, it's going to depend on the size of the investment and the market moment, the returns, so that we can really define what's going to be the source of funding. It's not discarded. It's the possibility to have some follow-on eventually. Exactly. Mateo Soares, and we have two more questions here from Mateo Sanchi. Irani, congratulations on the results. My question is about the dynamic for the price of scraps.
Is there an international demand that's really pushing this demand? Is there some kind of a cyclic perspective on the prices? The international demand for Brazil is really closed. There's not exports of scraps. What happens is when you have major pressure in the pricing, you have to activate the imports channel, which was really lower in the beginning of the year. The companies end up importing papers, especially from the U.S., in moments where you have more pressure on prices. There's some seasonality, of course, but theoretically, in this phase, you would have a smaller volume resuming because the return in these scraps for recycling represents a cycle of about 90-120 days. You already have months with lower productions in the second semester.
We had a month with lower production seasonally, and the resuming of the scraps will start happening now in the wild of the sector. In the beginning of the second semester, we'll also have a bit of pressure because you increase demand for recycled papers, and that causes some sort of increase in the scraps as well. This is not kind of written on stone. Each moment has its own story in the increase of scraps. At this moment, we also have this pressure, but we don't think it's totally bad, especially when you consider price increases that could somewhat justify this need for price increases and eventually could lead to a stability in the price of the scraps. Then prices kind of remain at the dimensions they had now upon price increases. Perfect. We have our last question here from Shin.
He is asking about what are the main segments that are affected in Argentina. In Argentina, you have paper for bags and bags, bakery bags, etc. These are basically the main volumes, very little coming from corrugated cardboard and [Hinki]. How's it going? Shin just gave an example here. A big market is like bags of flour, powdered milk bags, packaging, which are the bags we call industrial bags for agribusiness, etc. This is a big segment that's used a lot. Of course, you can also look at coal bags, takeaway, bakery, etc. Most of this use is for agribusiness. Okay, perfect. No other questions now. I think we're ready to wrap up now. Great. Thank you so much. Fabiana, tell everyone about our integrated report available on the website. Yes. We have a leaner, more summarized version without losing the essence.
We want to encourage you all to take a look at our report, get to know Irani a little more. We are going to be sharing the main highlights of what is going on in 2024. It is really cool. We also have the main indicators and permanent indicators that are going to make it easier also to look at the numbers and the evolution. We want to invite you all to take a look at our integrated report that is already available. Perfect, guys. Thank you so much for your presence, everyone. We are all available to clarify any of your questions. Our IR teams and directors are available also to clarify any of these points. Thank you, and see you in the second quarter. Bye, guys. Take care. Thank you so much. Bye-bye.