The days of easy, carefree growth in Brazil came to an
abrupt end at the start of this decade. Weaker commodities
prices, infrastructure bottlenecks and persistent inflation
throttled the economys expansion rate from a peak of 7.5
percent in 2010 to less than 1 percent last year, and
economists predict that real gross domestic product will grow
by just a modest 2.5 percent this year and next. The sluggish
economy, combined with popular frustration over poor public
services and corruption, spilled over into massive street
demonstrations earlier this year.
Those conditions would hardly seem to represent an ideal
investment climate, but dont tell that to Fabio
Schvartsman. The chief executive officer of pulp and paper
manufacturer Klabin is on an expansion spree. He is investing
in five existing pulp-making plants to increase their capacity
by a total of 290,000 tons in 2014. The company also plans to
spend 7.2 billion reais ($3.3 billion) to build a new 1.5
million-ton pulp plant in the southern state of Paraná,
which is due to come on stream by the first quarter of 2016.
All told, Klabins production potential is set to more
than double over the next two and half years, from 1.7 million
to 3.5 million tons.
Schvartsman doesnt hold any particularly rosy views
about the broader Brazilian outlook, but he believes the
addition of modern capacity combined with the
groups sizable timber holdings in the state of
Paraná will untether his companys fortunes
from that of the economy.
Obviously, if the performance of the Brazilian and
international economies are better, itll be better for
us, he tells Institutional Investor. But
the good thing is that we are not counting on that. Our
strategy doesnt require a strong economy in order to be
So far, Schvartsmans strategy has delivered strong
results. Klabins earnings before interest, taxes,
depreciation and amortization rose 31 percent in 2012, to R1.35
billion; ebitda in the first half of this year grew 17 percent,
compared with the year-earlier period, to R693 million.
Investors certainly do appreciate that performance.
Schvartsman is voted the top chief executive in the Pulp
& Paper sector by both buy- and sell-side analysts
II surveyed for the 2013 Latin America Executive Team,
the magazines fourth annual ranking of the regions
top CEOs, CFOs, investor relations professionals and IR teams.
The companys chief financial officer, Antonio Sergio
Alfano, is deemed best in the sector by buy-side analysts and
No. 2 by the sell-side. The buy side also awards top marks to
Klabins investor relations team and to IR chief Vinicius