Klabin’s shares have dropped 4.3% due to concerns raised by analysts regarding the company’s cash flow and capital expenditures.
SÃO PAULO–Klabin, the Brazilian paper and pulp company, has experienced a decline of 4.3% in its shares recently. Analysts have expressed worries over the company’s cash flow and capital expenditures, which have prompted this downward trend.
At present, shares are valued at 21.60 reais ($4.38), reflecting an increase of 13% since the end of last year up until Thursday’s market close. In comparison, Brazil’s Ibovespa stocks index has witnessed a 0.4% decrease in late morning trading.
According to XP Investimentos analysts, Klabin should be prepared for potentially higher capital expenditures compared to their initial expectations. These potential increases are primarily attributed to efforts made to secure a consistent wood supply and Klabin’s Monte Alegre production unit, as mentioned in a research note following the company’s investor day.
Furthermore, Klabin has decided to replace the boiler at Monte Alegre, leading to an estimated total capital expenditure of BRL1.8 billion. Additionally, the company indicated a sustaining capital expenditure of BRL2.1 billion for the upcoming years, partly due to increased production and consequent standing wood purchases.
In conclusion, Klabin faces challenges concerning its cash flow and capital expenditures, reflecting the need for strategic planning and effective financial management.
Attribution: Jeffrey T. Lewis
