Hello, everyone. Good morning. We're going to begin our earnings call for 2025 and the fourth quarter of 2025. Before we begin here, we have the standard observations. We'll start off with our presentation for the quarter and the full year, 25, and then we'll provide time for Q&A at the end. As always, this earnings call is also in a webinar format, so all participants will have their mics and videos off. Questions may be submitted through Q&A, the chat, or we'll also open up your mics if you would like. The call will be provided with simultaneous translation to English, and you can select this option by selecting this on the globe icon. I will also have sign language available, Brazilian Sign Language.
The webinar is being recorded and will be provided in both languages in our IR website. Before we begin, our first earnings call here as the CEO of the company, I wanna thank all of shareholders for their trust and also the board for having chosen me to conduct the company from now on. I've been here for 30 years, and I'm really proud of being here, taking on this position, and I'm sure that it's gonna be a great future for the company. I'll also present Andre. He's our new CFO, I believe most of you already know him. At the end, he'll also present himself as he is taking on this position. We changed the structure here in the beginning of the year. All the rest of the directors remain.
Lindomar with the packaging, Henke with forestry and paper, Fabiano will also be responsible for strategy, management, and people as we complete the team here at the company. Now, into our earnings and results. For 2025, we had a net revenue of BRL 1.7 billion and an adjusted EBITDA of BRL 530 million, and a net income of BRL 230 million. We've completed the investments in the Plataforma Gaia, adding up to BRL 1.075 billion. This is ongoing and operations that have already been discontinued. OD would be operations that are discontinued. OC plus OD would be continued and discontinued operations, which is the full results of the company.
However, when you have a discontinued operation, according to the CVM rules, you must disclose the continued or ongoing operations, so you can compare the ongoing operations compared to the previous period in 2024 as well. We ended with a ROIC of 13.3% a year, a cost of debt with a deduction of the tax shield of 8.9% per year, a free cash flow of 21.5%, and we have our deleveraging rate, a net debt to EBITDA ratio of 1.99x. Now, as we look at the fourth quarter, specifically, in the fourth quarter, we have the ongoing and discontinued operations.
Here, we closed at a net revenue of BRL 415 million, almost BRL 416 million, an adjusted EBITDA of BRL 128 million, and a net income of BRL 38 million, basically, and investments in the Gaia platform in the fourth quarter of 2027 of BRL 0.1 million. Here, when you look at the net revenue, the slide here is split. You have the full operation on the right side, you have the ongoing operations. These values are not very different, because it's the operation we discussed, and there's not much... It's not very significant, but it's presented with this structure here following the CVM rules.
In regards to the net revenue, when you add up this in the fourth quarter, ongoing and discontinued operations, we have a drop of 1.9% in regards to the fourth quarter, and 4% compared to the third quarter. In the ongoing operations, we have an increment of 2% and a drop of 4.1% compared to the third quarter. The comparison here of the ongoing operations and the third quarter is stronger than the fourth quarters, and that explains the drop here in revenue in regards to the third quarter. In regards to the fourth quarter, we had an income of 2% in the ongoing activities.
When we look at the EBITDA, the adjusted EBITDA for the fourth quarter, when you add up all the operations, you had an increment of 10.9 in regards to the fourth quarter of last year, and a drop of 11.9 in regards to the third quarter. In the continued operation, we had an increment of 8.7% and a drop of 11.8, compared to the third quarter, and the margin, was 31%. This is smaller than the third quarter, considering the seasonal aspects, and slightly above the fourth quarter of last year, but still in line with the 30%, which would be considered a very healthy operational margin.
The net income, when you look at the turnover again in the full operation, we had a drop of 79% in the fourth quarter of 2025. Basically, in the fourth quarter of 2024, we had BRL 168 million. That did not happen in the fourth quarter of 2025. This tax was not applicable, then we had the BRL 16 million of biological assets in the fourth quarter of 2024 versus BRL 4 million 600. When you look at the recurring results back in the fourth quarter of 2024 and now, BRL 33 million. It's a big adjustment compared to the third quarter. We had BRL 38 million, actually, of recurring earnings and BRL 33 million now in the fourth quarter. We look at the net income operation of the recurring operation.
We had the same effect of BRL 168 million back in the fourth quarter of 2024, which we didn't have in 2025. We had biological assets BRL 16 million positive in the fourth quarter and BRL 4 million positive in the fourth quarter of 2025. The recurring earnings, which were BRL 4,000,480, and now BRL 34,000,387 compared to the. This was a bit lower because of the seasonality in the quarter. I believe that this is a positive point, right? The recurring results and the earnings keep on quite robustly.
When it comes to the segment here, specific segment, sustainable packaging, which is our biggest slice, let's say, of this revenue, which represented 61% of our revenue, and that was the sustainable packaging for corrugated cardboard. When you look at, year-over-year, paper dropped 0.5%. This was the year where you had a reduction in the total number of packaging issued in Brazil, contrasting with 2023, and here it dropped 0.5%, the fourth quarter against 2025, between the third and the fourth quarter. Irani were a little better.
We had an evolution here in square meters, which was pretty much the same, 0.2, due to the differences here, and it dropped 4% in regards to the third quarter, which was actually better than paper. Here, now we have the data from Irani, and we actually dropped more than the market. In regards to year-over-year, and in regards to the third quarter, we had a drop of 1.4 in tons, and in the fourth quarter, we were actually better than the market. Here, you have the results also in square meters, where we have 5% year-over-year and 0.3 quarter-over-quarter.
The average price in this segment, this is data from Irani, we incremented 7% in regards to the fourth quarter, and that dropped 1% compared to the third quarter of 2025, due to the mix of products. There was an increment of 6% year-over-year and a drop of 2.4 in regards to the third quarter of 2025. Now we're moving segments here, which is going to consider the segment of paper for sustainable packaging and flexible packaging as well as we can see in the market for bags and sacks. When you look at the total sales per quarter, we had an increment of 4%. Here are the sales in tons and a drop of 8.1 in regards to the third quarter of 2025.
Here, at the bottom part, you can see the packaging for corrugated cardboard that we sell very little of, and the numbers here, which are the paper for packaging, flexible packaging. The price here, in the biggest part of this volume, it was practically stable year-over-year. It grew about 3.6% in regards to the Fourth Quarter to the Third Quarter, that dropped 6.7%, and it dropped 1.9% in regards to the Third Quarter of 2025. This is for the hard paper as well, as you can see here on the numbers. For the scraps, that's another very important point of our cost base.
We have where we can get information from market sensitivity, in the fourth quarter of 2025, there was an increase of 1% and a drop of 14%. This dropped, Sorry, it increased, and the same happened with us. Our price is 0.5% above and 13% below in the third quarter of 2025. Now, we look at this with the annual view, as we see how the year ended, and just as we have the full operation here on, on the right side, you have the ongoing or continued operation only. When you look at the entire operation, we grew by 6.1%, 2025 against 2024, and we grew 8.4%, sorry.
Despite the challenges in the year, we were able to evolve our net revenue more than inflation in that period. The EBITDA, the adjusted EBITDA, from this operation, it was 11.4 above the amount we had in 2024. From the ongoing operation, which I think is best to get a feel of the dynamic in the business, the EBITDA closed at BRL 539 million, 11.4 up on this amount. We have the ongoing operation with the margins for the year of 32%. That's the EBITDA margin again, with very healthy costs, considering that most of our business is recycling. The EBITDA margin is normally considering higher use of virgin fiber and considering that most of our raw material is recycled.
Net revenue for the full operation. Here we have the net cost of BRL 248 million in 2025, compared to BRL 304 million. We have the effects of the BRL 168 million of tax credits that we didn't have in 2025. That's just something we accounted for throughout the year, and we had BRL 150 million in 2025. The biological assets, we bought assets during. We had to account for this at the fair value, and that increased the value throughout the year of these biological assets, and that's why there's a difference. The recurring results of the full operation went into BRL 126 million.
Then again, the net income of the ongoing operations, which is what is left here in the company. We had the net income of BRL 236 million against BRL 315, the tax credits of BRL 138 and BRL 18, and the number of the biological assets, and the results of the operations, the recurring operations coming from the business, and we had BRL 88 million in 2024 and BRL 138 million in 2025, with an increment of 57% of the results. Once again, looking at the segment of sustainable packaging and corrugated cardboard, here we have the volume of sales of Irani.
Here we have the year of 2025, with a drop of 0.5% in regards to all of the shipment of corrugated cardboards in Brazil. This was contrasting with the year of 2023, where we had a peak that was above 5%, and now there was a slowdown, and that kind of accommodated growth a bit. We had a drop of 2.5, a bit higher than the market as a whole. We've had this strategy of margin over volume, we defend the margins always.
In our impression, margins have a bigger impact than volume, and so of course, there are some limits, but we've been trying to prioritize margins and even when we have to give up on volume sometimes, to value margins and the net revenue and returns from investors. With a drop in volumes a little bit higher than for paper. In square meters, there was the same effect, 0.1, and in our case, we dropped 2.6. The average prices, then you had this increment of 10.9 and in square meters and tons as well.
Here in the paper segment, the total of sales in tons with an increment of 2.6%, 127,000 tons, 99,000 tons of flexible fiber, and 122,000. For paper of corrugated packaging, 2025 and 2024, and that's pretty much in line. The average prices of flexible packaging had an increment of 3.1, considering the full year and in the stiff packaging, considering the price of the scraps, which went up in the first semester. That kind of captured part of this that you can see in the prices for packaging. Our leverage here, moving on to wrap up here on the financials now.
We ended the year with a leverage of 1.99, and we're now on the pace to deleverage, which was already considered in our business case for the investments. This would drop after the conclusion as we capture these returns, right? We already see the deleveraging throughout 2025, and now we ended the year with 1.99. We also had BRL 139.9 billion in cash and a gross debt of 1.97. Our debt is pretty much in local currency and a small percent in dollars. That is the hedge we have. We have 12% of our debt in short term, and so we're really careful.
With the debt profile and the investments we perform, with the maturity period and the profile of the funding is very important as well for us. You can see, we consider debts that are a bit longer here, and that's really in line with the payback for the investments. The average cost, as I mentioned, of debt, closed at, at 13.5%. This cash position we've been carrying has a real favorable positioning, and the cost overall costs, less than what we have invested. We ended with a ROIC of 13.3 and an increment of 2.5 percentage points in regards to 2024. In the same line here of deleveraging, the ROIC also appears due to the investments we've performed.
Here, we're disclosing the cost of debt. The cost of debt was already net of income tax and social contributions. It's good to highlight that we don't disclose the WACC, which is... We disclose the WACC because we understand each investor has a different cost of capital. That allows investors to calculate the WACC they would have to invest in the company, and they can then compare this with our ROIC. We have this value here that's attributed by the controller, and we calculate this, and it demonstrates that we have the ROIC above the WACC, even in this period with high interest rates, right? This increase in interest rate's about 15%, but even so, we've been able to deliver a ROIC that's above the WACC.
This is very positive, right? It's a challenge in Brazil to have a company with this kind of a return on invested capital that is above this cost, right? Here you have the dividends, and in the fourth quarter, we're going to be distributing BRL 10 million. We had actually distributed this amount of BRL 0.04478, and in 2026, we distributed BRL 169 million or BRL 0.73 per share, which is the equivalent of 10.8% of the dividend yield. Comparing with the interest rates that we currently have in Brazil. I want to take advantage of this slide.
We had the re-IPO at 450, and we've already distributed dividends ever since, which is BRL 3.16. Whoever bought this share at 450 and already carried over this share, has already received about BRL 13.16 in dividends, which leads to a nominal cost of shares of BRL 134, and now it's above BRL 9.50. Just to compare and provide visibility on the returns on invested capital. Of course, we have to consider the effects of the interest rate. It's about 5 years, but considering the dimensions here, you can notice that there was added value for whoever bought shares in the company and carried them over till now. Here we have our investments. They've all been complete.
Gaia V, we had a relevant event here. We had a credit operation to fund this BRL 125 million in investments and for renewable energy. We also have Gaia XI, which is... Actually, at this moment, the machines are stopped for this initiative, and that's the investment that will upgrade Máquina de Papel 5, and that's executed, right? We disclosed the relevant facts as well, where the board approved BRL 82.5 in reais. That's where you have the conditions also, of the rates and terms that we're searching for ways to invest in. Some highlights. We're the only company in the packaging segment for paper and pulp that is simultaneously on ISE. These are two rates that, in the environment that we're really proud of.
This is the index for efficient carbon. Irani is Irani is the only company that's in these two indexes simultaneously. We've also achieved this for the 2nd year consecutively. Our target is to increase the positive balance of carbon by 20%. We've already achieved this for the 2nd year consecutively. We're also recognized for the 5th consecutive year on transparency, and that's due to the quality of our financial negotiations, which demonstrates our efficiency and how we've been working every day, and the same kind of transparency we have with our stakeholders as well. This year, we're even happier because among the 10 best companies in the category, we were chosen as a highlight with some of the best financial conditions among the 10 biggest.
We've also considered the issuance of BRL 125 million of green debentures to fund the Gaia V project with the restarting up of this process. Here is our team, our investor relations team. That's pretty complete, and you all know them. The only change is that we have André now taking on as CFO and Emmanuel, that was from the financial area, now he's our coordinator for investor relations. Marcos is accumulating two divisions, right? This is our full team here. You already have our contact information. If you need any support, you can send emails to the investor relations team as well, and they'll answer. With this, we'll wrap up, and we can head to our Q&A and get into the questions you've shared.
I'm going to stop sharing my screen now. Before our Q&A, I just wanted to once again, introduce André here to all of you. He's here, and he's going to talk here. He's been in the company for five years. He's going to be our new CFO now. He's an engineer. He studied at ITA, and he has a postgrad program in finances by Insper. He has other courses as well, and he was leading the investor relations area in the company for the last few years. He knows a lot about the company, but I'm going to leave it up to him to introduce himself.
Thank you, Giovanna. It's a pleasure to speak with you all for the first time, ever since I took on this new responsibility and role in the company.
I think most of you already know me from. Ever since 2020, I've been here in the company, leading the investor relations area. I really just want to thank you all for your trust, and the board and Odivan Cargnin as well. We are keeping up with the long-term goal of building value for all shareholders. Now, I'm going to be conducting this part here of our Q&A session. The first question I'd like to start off with, we have three people with their hands raised, and then we'll get into the questions that were sent in writing as well, here on the Q&A webinar session. Starting off with the people that raised their hands, following the order they've raised their hands. First, we have Edgar from Itaú, now we'll pass on the word, and you can address your question.
Congratulations, André, for your new roles and for the solid results, despite a seasonally weaker quarter. I want to focus on the main highlights here. First, cash generation. You reported this in this quarter, and in 2025, a free cash flow yield that was pretty strong. Even if we remove the buybacks and dividends, you've been generating positive cash position, taking the company to a important deleveraging trend, right? Up ahead, I wanted to understand how you're going to weigh or assess extraordinary dividends, buybacks, and the trajectory of deleveraging in the company.
We should probably have a result that's growing in 2026 versus 25. We've already seen a slowdown in the buyback process in the Q4. The Gaia platform, of course, we still have Gaia V up ahead, but we would imagine a trajectory of deleveraging, right? I want to understand what's the level of leverage that you would like to achieve, considering that you are already following your target or policy, and to prepare the company as well, to understand if there should be any expectations for even greater deleveraging and to prepare the company for this moment of stronger investments up ahead, or if we should see some acceleration in returns for shareholders through buybacks or extraordinary dividends besides the policy. That's the first point.
The second point is, even in a quarter that's seasonally worse when it comes to cardboard boxes, of course, we have a continuity of the value over volume. So that really called our attention when you look at the dynamic for prices in flexible paper, considering a worse volume and quarter-over-quarter, right? Prices did improve significantly. I want to understand what's behind this commercial strategy in this segment specifically for flexible paper. That's it, guys. Thanks.
The first question, Andrea, I think you can answer, and then I'll hop in as well, if necessary.
Okay. Now about deleveraging and dividends. We have a very clear policy when it comes to dividends, and we don't plan to mess with this, right? We've had the payment of dividends, with a lot of recurrence quarterly, as disclosed in our earnings release, and when we finish the year with deleveraging below 2.5, and we also have this additional dividend distribution. That adds up to about 50% payout, right? This is a policy that we understand allows the company to compensate adequately the shareholders, and it also allows for the reinvestment of capital in the company, intending to help build this long-term view. Having said this, it's not in our scope to perform distribution of dividends besides or out of our policy, right? On the buyback program, this is something we always assess.
We have this program open, and we always assess this jointly from time to time to understand the speed of the execution of this program, considering what's the need for planning that we're gonna have for this year. We've already issued a notice to the market in the past, demonstrating the long-term vision that we have for growth, and we've already talked about the relevant notices and events, that we wanted to double our market share, and this is gonna be all reversed, so that this can become concrete with the need for cash and transforming this into CapEx. All of this is being assessed in the company, and we've always been studying this and trying to make the decision in the best way possible when it comes to capital allocation.
We've always kept shareholders notified, and this is the view and the panorama I can share. We also have some studies on the level of debt we consider to be optimal, because a debt, if it's too low, that's also not ideal, right? That's where you perform all of the WACC calculations, minimum WACC calculations, we can see it's healthy, that at some point, on some level of capital use, that the company would use, right? We understand this. We have a, a target policy of 2.5. We would like to be navigating below this, but that's our target, and generally, this view remains in the company.
Just to add on here, first, we have a payout that's already reasonable for a small cap, right? We have a big market, and this is at a dividend policy that's really well-established, and we've been performing this in the last few years, and that also generates a lot of value from the investor perspective, right? People like understanding this, distributing more than 50% payout doesn't make sense. It's not a small cap. It's a small cap that has the potential to grow a lot. When it comes to leverage, I wanted to mention that having this policy of 2.5, we're going through this stress moment right now, and we're seeing what's going on in the market, and we're testing this, we always talk about this internally, right? Interest rate at 15% a year, we're still delivering deleveraging.
That demonstrates that our policy is really well set because it was made to be able to handle these moments with high interest rates, right? It would be great if we could leverage even more than this, but we know that in this environment, it's not gonna work, right? That's why we know this financial management policy is being tested at this moment, and we have a rating of credit that's really good, with the cost of debt that's below. The financial expenses don't compromise our free cash flow, and even at this moment, that's more critical, we can still deliver deleveraging. This is value creation for shareholders, and I think this is a moment that is very opportunistic to really highlight the robustness of our financial management policy. Then on flexible prices, Ehiki.
Hi, good morning, everyone. Well, hi, I'm gonna try to be really brief here and explain this. Historically, in flexible packaging, we always pass along inflation in most of the niches we operate in, and we did this in 2025 as well. However, there was another factor that helped us in 25, even with the dollar issues in the last quarter, which was the returns of exports to Argentina. We were able to modulate this in the quarters, exporting to markets that were less distant. Argentina, with higher prices...
The even with the increases we had in the internal market, in most of the segments we work in, and these 3% above variation on on the flexible packaging prices, that makes it very clear.
yes, very clear. Thank you, guys.
Great. Our next one. Okay, next is Rodrigo from BTG. Rodrigo, you may speak.
Hi, guys. Good morning, everyone, Odivan, Andrea, Lindomar, Ricardo Fappi, and everyone on the team. Thanks for taking my question here. Two questions here on my side. I wanna start off with the scraps prices, and we saw that the prices were dropping about 13% of the year. We know that this is very significant for the metrics for profitability and ROIC in the company.
The fourth quarter, we saw CIF prices at BRL 1,058 per ton, slightly above the BRL 1,000 per ton that we consider to be a good historical average. I wanted to also ask you how you're seeing this price rather scraps. Do you normally consider this level as sustainable? Do you think that there's some pressure of an increase in the prices of these scraps? How can we imagine this cost that's so relevant for the company throughout time, right, in 2026? I also wanted to ask you more about the ROIC.
The scrap prices dropping, the, and the completion of most of the Plataforma Gaia projects, good capital allocation, and the value over volume strategy, we've seen the ROIC being on, on a crescent, right? Now in this quarter, there was a growth of over 13%, right? I think it would be a great moment for the company to communicate to the market how important this ROIC metric is to you all, and how relevant it is when it comes to capital allocation in regards to the targets that were delivered in the company. In the ROIC topic, how can we consider this trajectory throughout 2026, right? Can we imagine the company will reach higher levels considering this current trajectory? Thank you very much, guys.
Thank you, Rodrigo. I'll start off here, and then you guys can add on. About the scraps, first, we don't have in the market any kind of certainty, right? 2026 is a year of uncertainty that goes beyond or really above any other trends, right? There's a huge level of uncertainty internationally and nationally. The scraps, if you were to provide some kind of a sign, we consider that it will tend to be stable or even drop a bit in prices then, instead of going up, right? We have more availability in the fibers, virgin fibers in the system, and you see our competitors that are activating some more production plants. At this moment, we've also seen a lot of...
We, we stopped for the refurbishing of Gaia XI, but that left about 15,000 tons more. If we had to go in some direction, we would think there's higher trends of it going downwards than upwards. There's also sustaining levels, right? The sector really matured a lot, and scraps that are too low would make the supply chain become would, would lose its incentives, right? The sector considers that you need to keep the supply chain attractive, right? For people that are collecting the scraps in the previous phases, right? I don't have such a clear view, and if I could give you a feeling here, we consider some more stability also throughout 2026.
We also don't think this is very probable because of this view in the sector trying to discourage or reduce activity in the supply chain, right? The ROIC is our main target always, right? We've been talking about this ever since our IPO. We need to deliver ROIC that is above the WACC, and that's it. That's why sometimes you see we lose some metrics here or there, or some volumes here and there, because we or we don't deliver what we would like, but it's normally because of the fact that we're trying to defend our ROIC. This is the metric, and we have this absolute clarity that we want to return shareholders' capital in an adequate manner, considering the alternatives of cash that are also very attractive, right? With high interest.
We have a mission that's maybe a little more difficult than companies operating in other countries, right? When it comes to the forecast up ahead, we don't have this guidance, but we've seen this route, and we know we lost a bit of the ROIC. Now we start seeing the returns on these investments. The ROICs will go up just as much as our capacity to capture the return on investments we've performed, right? In order to do this, we have the market, dollar factors, and political environment, and other factors, right? We're connected to the food sector, and most of our revenue lines are somehow related to food. Food seems to be a very resilient market and industry.
People need to eat regardless of anything else, people need boxes to ship off their production. It's a normally a very resilient sector, right? Having said that, we don't provide any guidance, but we're at a moment where we believe we have the challenge to capture the returns on investments we've already performed with the Gaia Platform. Is this clear, Rodrigo?
Yes, it is very clear. Thank you, guys.
Awesome. Now we're headed to Stefan at Citi. Stefan, good morning.
Hi, good morning, guys, thanks for taking my question. Odivan and Andrea, congratulations on success on the next position, the new positions and phase you're in. We saw a competitor of yours, this competitor is a little more exciting. I f you could share a little bit of what you've seen when it comes to demand, and if we could also shift this strategy a bit, the value over volume, which really defended the prices in the last year to gain on a bit more market share this year. The second question, trying to explore costs, excluding scraps, how we can consider the evolution and, and all of the gains also that were performed, and if you could give us some more color on this point, that would be great.
Well, Stefan, thanks for the question, and the last part actually wasn't very clear on scraps. Yeah, just if you could look at the evolution of the costs, excluding the scraps, where we could have a little more of a notion on the fixed costs with the other lines impacting this, and how you're considering the other cost lines, excluding the scraps. Well, I'm gonna leave that up to Lindomar, so he can talk about the packaging.
Hi, Stefan, how's it going? You can hear me well?
Yes.
Stefan, our competitor is not the only ones that are excited. We're also very excited. Even with... You can see the sector grew 2.3% in regards to January 2025. That was really interesting, despite a scenario of a bit of uncertainty.
It's a year where we have the election, we have the World Cup, these events really generate a bit of consumption as well in the food sector, especially. When we talk about our losses, as Odivan mentioned, we had very consistent work for maintaining profitability. It's important to highlight that these are volumes with low profitability, but we're really at that moment where we wanna consider this. It's important to highlight that we've been working on this without destroying value, but really being very consistent to recover volumes lost and filling in our idle capacity as well, preserving our results. We've been working in new segments we didn't operate in before. We performed some technical adjustments as well. In some segments, we can actually share with you is the fruit segment.
It's a segment that's been growing a lot because-- We're already starting to supply and provide from February onwards. It's a segment that will definitely lead to positive results, and there's pretty good demand as well, and a level of profitability that is adequate according to what we're searching for. We have really positive expectations to recover our volumes and fill in our capacities without destroying value and without doing anything stupid.
Great. On the scraps?
Well, on costs, excluding scraps, well, I think there's nothing very structural here that'll change. We have the ordinary inflation, we're always trying to work on and try to contain this advance in the costs, the organic growth as well, and there's nothing very structural today.
I think there's what you mentioned here, the operational leverage as well, with a little idle capacity in the packaging, that dilutes the cost per ton, but that's gonna consider both of them pretty much full. The gains are marginal, and it's gonna follow this criteria, as Lindomar mentioned, without affecting our strategy o f value over volume. There's not much news in regards to this point here. I think that's pretty much it. I don't know if Fabiano has any comments on this? I think that's it. Any other questions? Okay, sorry. Stefan?
No, that's clear. T hanks, guys.
Great, and now we're gonna head to some of the questions that were sent in writing in the Q&A session, and I'm going to read them. Although some of them have already been answered, I believe, but I'll read all of them here. Guilherme Knorre from XP, he's saying, "Good morning. Congratulations, Odivan, and everyone, for your new r- and Andrea, for your new role. On volumes, if you could talk about how you're expecting the mix of sales, and also what you're expecting for corrugated cardboard in 2026. Besides this, if you could talk about what the demand environment is like for each of the products in 2026." The second question is about costs.
If you could talk about the cost performance and what you're expecting on the scraps prices, and if there's possible space for drops, and also the benefits of the Plataforma Gaia expected for 2026. Part of this was already answered, but now we're gonna head to... Odivan, if you would like to move-- Yeah, I think Henrique can talk about this sales mix on flexible and hard paper, and I think we covered all the other points, so you can just double-check that if you'd like.
Yeah, actually, our paper machines have full capacity when it comes to production and sales, and the mix is going to be very similar to last year's. What changes a little bit is the productivity gain you have in the machines, but proportionally, it's very similar to what we presented in 2025.
Henrique, just to add on, I don't know if you talk about the production prices, right? Yeah. Everything we've been producing, basically we sell, so we have no sales problems. The market continues to be really stable, similar to what it was last year, and the trend is that it'll be very similar, the mix, the sales mix, to what it was in 2025, and considering flexible packaging and hard packaging as well. Okay, perfect. Let's move on to our next question. No points left? No, I think that's just when he talked about the main benefits expected for 2026. I think that's the continuation of what we've already been doing, right? In regards to packaging, I think it was covered in the previous answer, right? Okay, perfect.
Now moving on to Angelo's question: "How are you considering the beginning of 2026 for corrugated cardboard, considering that we came from 2025 w- with a drop in volumes that was greater than in paper?" I think, just as I mentioned, demand issues and how we're considering this, considering the changes we've had in new segments, and it's important to mention that we're really positioned in segments that have had really strong demand, with animal protein, for example, and also in the food sector and the internal market, where we've been really leveraging this strategy here, and of course, without destroying value, but really filling in our capacity in the current production plants we have.
Just to reinforce this, we're not really worried about performing a little bit worse than the rest of the market because at the end of the day, we're defending our value. Then sometimes you have some numbers you have to give up on because margins are low. We also have our responsibility with innovation and services, and of course, with the correct margins, right? To keep this strategy of value over volume. We're not scared about losing a little bit of participation or share compared to what the market has performed at. Okay, very good. Now our next question from Carlos Padua. "Good afternoon. It makes a bit of sense to the company to...
Does it make sense to invest more in increasing pulp production, to rely less on the price of scraps, working on the making the cost of production be more stable, maybe? This is a question that is very good, the direct answer is no. Once again, we're gonna look at the returns on invested capital. Yes, you need to have virgin fiber for certain segments. We use pulp in the best way possible, right? Of course, that considers packaging for food, for bakery bag, paper bags, for bread, et cetera. These packages have really good margins and really compatible with the investments that are required.
Buying land, planting forests, waiting for the forest to spend 14 years to be ready to cut off, and then you can imagine in a high-interest world, waiting for 14 years to have this. Then you have to produce pulp, which are really big investments, and then you're gonna have that available, right? In our understanding, with scraps, you have a CapEx that's a lot smaller. There is this volatility you mentioned, but there's ways to reduce this, right? There's a natural hedge as well. When scraps go up, theoretically, the price of the packaging also goes up and the returns on invested capital, right? With the CapEx, that's a lot smaller. It makes more sense to place this kind of paper in a hard packaging, right?
In most of the segments, right? It doesn't make sense to have a virgin fiber that's so much more expensive and so much more noble, let's say, in a secondary kind of packaging, like cardboard box, where you can use that recycled paper for that purpose, right? In many other regions in the world, right, besides, of course, being in the circular economy, reusing, right, reutilizing and repurposing. Of course, not to place this fiber in corrugated cardboard boxes, right? We consider recycled fiber, right? From a customer perspective, they receive this with a recycled fiber and just as TIV and other players in the market have done with a virgin fiber, right?
Most of our fiber is recycled, and that's why it doesn't make sense to see this view of investing pulp for corrugated cardboard boxes and eliminating this productivity of the scraps, right? It's better to handle the volatility of the scraps than have a huge CapEx to have the virgin fiber paper. Okay, very good. Now, we have two questions here from Saulo. Saulo Santana. First, "The company believes that from when will we see all of the wins in the Gaia platform appear in the company's earnings?" Well, I can start here, and then after, Henrique and Lindomar can also add on. I would say that probably in a short period of time, when it comes to years, but, of course, this depends on the market conditions, right?
All the investments also in paper, which is a little more difficult to capture gains with, so that tends to take a bit longer. I don't know if, Henrique, you would like to add on.
Yes, I think that's pretty much it. Part of the investment, most of these investments already have returns. There's just one line that relies on the market conditions a bit. It'll take a little longer, but it will come in the next couple years.
The second question from Saulo is the taxation on dividends, will that change the policy for dividend distribution in the company? I'm going to say no. We'll keep our policy regardless. Our next question is from Alexandria Saf. "Congratulations, Odivan and Andrea. Excellent choice from the board.
What's the limit and strategy to be adopted to balance the loss of market share versus preservation of our margins and ROIC? Well, of course, first, thank you, right, Alexandria, for your greetings. Of course, there's a limit, right? We know that, right? The sensitivity of the margins is a lot greater when it comes to margins and prices over volume, right? If you lose a percentage in margins, t o recover this in volumes, it's a huge effort. It really makes sense to defend margins. Of course, it's gonna depend on the competitive environment and how it's doing, because if you have a, a price war, then we're gonna have to defend ourselves in some way.
Then you have other initiatives and our other efforts with innovation and R&D, customer service, and our NPS, and all these other factors, right? It's not only the product itself, right, but Irani has a very unique value proposition in the market. We have high NPS, and that's really what makes makes us who we are, right? There are risks if there's a war on prices, but I think if there's someone that's gonna lose in this war, it's not gonna be Irani, because we're really well-positioned in regards to our offering to customers, right? The quality of services and R&D, and our capacity for developing projects and products that are competitive to benefit our customers. All right. Lindomar, do you want to add on? Perfect, Odivan?
I think it's just important to mention the market share we've been discussing. This is a point that is very concentrated in the southeast. I want to remind you that our region in the south has been operating basically with its full capacity. Just to reinforce the strategy issue with preserving our results, and I want to confirm our unique value proposition that's recognized by customers. We normally monetize our NPS in the best way possible, and really recognizing our efforts and our results. On market share, we believe this is something that will be quickly adjusted, right, and improved in the next few months. Very well. Thank you, Alexandre, for your question. Now moving on to Xin. Thank you for your question as well.
Xin and Bruno, I also want to greet you all, and thank you. They sent in questions that are very similar, right? The two last questions we have here. I'm going to read both because I think the answer will be the same. First, Xin's point: "Congratulations on all of the Irani team. Could you give us an update on the Nails project?" Now, Bruno's question also is, "If we have any news on the Nails p latform, and if you've advanced in discussions about this project, what are the triggers to think about this in a more concrete manner?" Yes, we've been working on Nails, and working on the engineering, the return calculations, simulation of different scenarios.
Of course, we must look at our leverage situation to fit in investments into our investment capacity, of course, but we also need to consider one investment we have, which is the refurbishing of machine seven. It's still Gaia. In our concept, Gaia is really considering the utilization of the sites that already exist, and Nails is really the capacity through greenfield. We still have this investment here of machine seven, which is more advanced when it comes to studies, and we're going to be presenting this to the board in the next quarters. Even for Nails, which is the capacity for packaging and paper, we've been working on the engineering work, and it's a bigger CapEx. We need to find the right moment for this.
The economic moment for Brazil, with the interest and market conditions, but also the return and the tier for these projects we're engineering for. They're gonna happen. We've already disclosed this, but we're still choosing and analyzing the best timing so that we can really execute this in the best way, so that each investment performed, can really help generate cash to make the next investments feasible, right? We have to carefully organize the timing for these investments, and this is the point we're in. We've kind of, like, already understood that we need to complete Gaia, which is machine seven, and that also relies on the approval from the board. After, of course, we'll have the expansions of the new packaging and paper platforms, as we've already disclosed to the market.
Anything else to add on, guys? Andrea? Okay, no. Great. I think just one last one here from Xin also, and he's saying: "Amidst the perspectives of World Cup and election events, how are you viewing the demand for packaging?" Well, Empapel disclosed a growth of 0.7 compared to 2025, and this is pretty moderate growth. You also have the election. In an election year, these are normally good years for packaging with more consumption. However, since you have a lot of uncertainty in the market, there's a bit of concern, right? With Empapel, the forecast is 0.7% growth. We've actually been believing in this data.
It's carefully prepared by the association, we believe it could be a little better because the base for 2025 had this slowdown compared to 2024. This is our understanding, Xin. Okay. Great. We finished our questions for today. Guys, thank you so much for participating, and thank you for your time. We're available to keep in touch. Contact our IR if you need, and we'll see you all in, in our next call. Thank you so much, and we'll see you in the 1st quarter earnings call. Bye-bye, guys. Thanks. Take care.