Fitch rates Klabin BBB-

Fitch Ratings said it assigned initial BBB- foreign- and local-currency issuer default ratings and an AA(bra) national scale rating to Klabin SA. The outlook is stable.

The agency said Klabin's ratings reflect the company's high levels of liquidity, its modest levels of leverage, its strong cash flow generation, its leading position in the Brazilian packaging sector, the low production cost structure provided by its large forestry base and its high degree of vertical integration, which enhances its product flexibility in the competitive but fragmented packaging industry.

Credit concerns include the volatility of results in the paper and packaging industry, the company's vulnerability to a strong Brazilian real, the uncertainty surrounding a potential pulp project and the prospect that it could be constructed in the midst of prolonged weak pulp prices, Fitch said.

For the last 12 months ended March 31, the net debt-to-EBITDA ratio was 2.3 times.

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