1

Results 2Q06 July 20, 2006

Quarterly Release
Visit our site: www.klabin.com.br

apr / may / jun - 2006

Klabin reports net profit of R$ 261 million in 1H06, up 19% over 1H05
Sales volume totaled 680 thousand tons in the 1H06, with net revenue of R$ 1,313 million. In 1H06, sales volume of coated boards was 161 thousand tons, with exports reaching 45 thousand tons. Operating cash generation (EBITDA) was R$ 356 million in the first half.
KLBN4 30/06/06 Preferred Shares Share Price Book Value Daily Trade Volume Market Capitalization 600.9 million R$ 5.07 R$ 2.73 R$ 8.1 million R$ 4.7 billion

Sales volume in domestic market grew 4% in 1H06 over 1H05, with special mention for corrugated boxes and coated boards segments which grew 5% in the same period.
R$ million 2Q06 2Q05 1Q06 1H06 1H05 2Q06 /2Q05 1H06/ 1H05

Gross Revenue Net Revenue EBITDA EBITDA Margin Net Income Net Debt Net Debt/EBTIDA (annualized) Capex Production Volume - 1,000 t ( * ) Sales Volume - 1,000 t % Exports

799.4 667.3 169.2 25.4% 97.8 352.2 0.5 148.6 372.0 340.5 38.2%

858.0 720.1 239.0 33.2% 90.1 372.6 0.4 69.7 390.1 359.6 42.2%

775.3 645.2 186.3 28.9% 162.7 281.5 0.4 44.2 382.4 339.7 38.9%

1,574.7 1,312.5 355.5 27.1% 260.5 352.2 0.5 192.8 754.4 680.2 38.5%

1,658.2 1,393.3 484.8 34.8% 218.3 581.2 0.6 156.7 754.0 676.3 40.4%

-6.8% -7.3% -29.2%

-5.0% -5.8% -26.7%

8.5% -5.5%

19.3% -39.4%

113.2% -4.6% -5.3%

23.0% 0.1% 0.6%

( * ) Figures related to paper, boards and recycled paper production, do not considered corrugated boxes and industrial bags.

Investor Relations
Ronald Seckelmann, CFO and IR Director Luiz Marciano Candalaft, IR Manager - Phone: (55 11) 3225-4045 - marciano@klabin.com.br Gustavo Schroden, IR Analyst - Phone: (55 11) 3225-4059 - gvschroden@klabin.com.br Iago Whately, IR Analyst - Phone: (55 11) 3225-4046 iwhately@klabin.com.br

Results 2Q06 July 20, 2006

Operating, Economic and Financial Performance

Production Volume
754 754

The production of paper and coated boards in 2Q06 reached 372.0 thousand tons, 5% down when compared to 2Q05. In 1H06 production volume reached 754.4 thousand tons, stable when compared to 1H05. Despite of the planned maintenance downtime in the Monte Alegre (PR) mill. This downtime, which occurs annually, was carried out in the 3rd quarter of 2005, difficulting the comparison with 2006.

372

390

382

2Q06 thousand tons

2Q05

1Q06

1H06

1H05

Sales Volume
Sales volume in 2Q06, excluding wood, reached 340.5 thousand tons, 5% lower in relation to the same period of 2005. In 1H06 sales volume reached 680.2 thousand tons, 1% higher than the same period of 2005. The highlight of the semester was the volume shipped of corrugated boxes which grew 5% when compared to the first half of 2005, and which was driven by the tobacco exports and the demand for frozen products and fruit. Export volume in 2Q06 totaled 130.2 thousand tons, 14% below 2Q05. In the semester, exports reached 262.2 thousand tons, 4% lower in relation to the same period of the previous year.

Sales Volume by Market

Thousand tons

Sales Volume by Product 2Q06

Others 4%

Bags 9%

680 39% 341 38% 62% 2Q06 360 42% 58% 2Q05 Domestic Market 340 39% 61% 61% 1Q06 1H06 Foreign Market

676
Kraft liner 30%

40%
Corrugat ed Boxes 33%

60%

1H05

does not include wood

Coated boards 24%

Results 2Q06 July 20, 2006

Net Revenue
Net revenue in 2Q06, including wood, totaled R$ 667.3 million, a drop of 7% when compared to the same period in 2005. In 1H06 net revenue was R$ 1,312.5 million, 6% below 1H05. Export revenue continued to be affected by the strengthening of the real against the US dollar, which reached 12% in 2Q06 and 15% in 1H06, compared to the same period last year.

Net Revenue by Market

R$ milion

Net Revenue by Product 2Q06

Wood 10% Ot hers Kraf t liner 18%

1.312 26% 667 26% 74% 720 29% 71% 645 25% 75%

1.393 28%
Bags 13%

3%

Coat ed

74%

72%

boar ds 24%

2Q06

2Q05 Domestic Market

1Q06

1H06 Foreign Market

1H05

Cor rugat ed Boxes 32%

includes wood

Exports Destination
Volume 2Q06 Net Revenue 2Q06

Africa 10%

Nort h America 4%

Africa 6% Asia 10%

Nort h America 5%

Asia 12% Lat in America 45%

Europe 17%

Europe 29%

Lat in America 62%

Results 2Q06 July 20, 2006

Operating Results
Cost of goods sold in 2Q06 was R$ 441.2 million, 5% higher than 2Q05. In 1H06 COGS totaled R$ 855.4 million, 9% higher than 1H05. This increase was affected by the planned maintenance downtime in the Monte Alegre (PR) mill, by the rise in cost of raw materials, specially fuel, besides additional expense of R$ 3.0 million to purchase electrical energy from the Copel grid, caused by the drought which hit the State of Parana and forced Klabin to suspend operation of one turbine in the Maua hydro-electric power plant. Gross profit in 2Q06 was R$ 226.2 million, 25% below 2Q05. Gross margin during the quarter reached 34%, lower than 2Q05 which was 42%. In 1H06 gross profit reached R$ 457.2 million with a margin of 35%, against 44% in 1H05. Selling expenses in 2Q06 were R$ 67.2 million, a reduction of 19% when compared to 2Q05. In 1H06 selling expenses totaled R$ 130.7 million, 15% lower than the same period of 2005. This reduction is mainly related to the expenses decline with internal and external freights, which droped from R$ 100.8 million in 1H05 to R$ 85.5 million in 1H06, besides the rigid control over fixed expenses. General and administrative expenses totaled R$ 42.0 million in 2Q06, 2% lower than 2Q05. In 1H06 totaled R$ 81.7 million, 2% higher than 1H05. The target set by the Company, intended to keep fixed costs at the same level in 2006 as in 2005, is being achieved. Operating results before financial expenses (EBIT) in 2Q06 were R$ 101.9 million, 43% below 2Q05. In 1H06 EBIT were R$ 224.2 million, 38% lower than 1H05.

Operating Cash Generation (EBITDA)

Operating cash generation (EBITDA) in 2Q06, was R$ 169.2 million, with a margin of 25%, versus 37% in 2Q05. In 1H06, EBITDA reached R$ 355.5 million with a margin of 27%, an increase in comparison with 2H05 which was 21%, however lower than 1H05 which was 35%.

EBITDA QoQ Variation - R$ million

186
+2 EBITDA 1Q06 +21

-1 -24 -15
Vo lume P rice Exchange Rate COGS SG&A and Others

169
EBITDA 2Q06

29% (*)

25% (*)

(*) EB ITDA M argin

Results 2Q06 July 20, 2006

Financial results and indebtedness

Net financial results came to R$ 6.0 million of revenue in 2Q06, accumulating a financial income of R$ 100.0 million in 1H06. In the second quarter Klabin took advantage of a favorable financial market and raised longterm financing, mainly in the international market, with payment terms of more than 8 years and attractive interest rates, with the aim to lengthen debt tenor, improve liquidity and building up Companys cash flow in preparation for the coated board expansion project in the Monte Alegre (PR) mill. With these new operations, total average debt terms were stretched from 43 to 49 months, and debt in foreign currency reached 60 months. In 2Q06, gross debt totaled R$ 2,370.4 million, of which only 16% was short term, versus 18% in March of 2006. Foreign currency debt totaled US$ 679.8 million, representing 64% of Klabins total indebtedness, out of which 67% refers to trade finance.

30/06/06 Financing (R$ million) Local Short Term Long Term Gross Debt Cash and Cash Equivalents Net Debt 164.0 696.0 860.0 Currency Foreign 213.2 1,297.2 1,510.4 Total 377.2 1,993.2 2,370.4 (2,018.2) 352.2 Local 111.1 794.3 905.4

31/03/06 Currency Foreign 228.3 795.2 1,023.5 Total 339.4 1,589.5 1,928.9 (1,647.4) 281.5

Net debt rose from R$ 281.5 million on 31/03/06 to R$ 352.2 million on 30th of June, which is equivalent to 50% of EBITDA for the semester annualized.

Net Debt QoQ Variation - R$ million

352
-3

282
+71 Net Debt Mar'06 Net Debt Jun'06

38% (*)

+149 -169
EBITDA

+22
Operational Assets and Liabilities variation Capex Dividends paid Financial Results and Others

50% (*)

(*) Net Debt / EB ITDA annualized

Results 2Q06 July 20, 2006

Net Income
Net income in 2Q06 was R$ 97.8 million, an increase of 9% in comparison with the same period of 2005. In 1H06, net income was R$ 260.5 million, an increase of 19% compared to 1H05.

Business Performance
BUSINESS UNIT - FORESTRY
In 1H06, Klabin handled 3.6 million tons of Pine and Eucalyptus logs, of which 2.2 million tons were transferred to the mills in Parana, Santa Catarina and Sao Paulo. Sales volume of wood to sawmills and laminators in Parana and Santa Catarina was 689.1 thousand tons in 2Q06, 10% lower in relation to 2Q05. In 1H06 the sales volume reached 1.4 million tons, 11% lower than 1H05. The demand for solid wood products in the United States is in decline. The housing starts index in the last three months has been below 2.0 million new houses, which indicates a drop in sales. Net revenue from sales of logs to third parties in 2Q06 was R$ 65.6 million, meaning a drop of 14% in comparison with 2Q05. In 1H06 net revenue totaled R$ 133.7 million, a decrease of 15% compared to 1H05. The strengthening of real against the dollar contributed to the drop in revenue, squeezing Klabin customers income in reais. At the end of 2Q06, Klabin owned 366 thousand hectares of forestry area, of which 191 thousand hectares of planted forests and 131 thousand hectares of preserved native forests.

BUSINESS UNIT - PAPER

In June 2006, a 10-day planned general downtime for maintenance was carried out in the Monte Alegre (PR) mill. This downtime, which occurs annually, was held in the 3rd quarter of 2005, thus making some comparisons with 2006 difficult. Sales volume of paper and coated boards to third parties was 184.9 thousand tons, a decrease of 12% in relation 2Q05. Accumulated sales volume in 1H06 totaled 378.2 thousand tons, a drop of 2% compared to the same period in 2005. Exports in 2Q06 came to 116.3 thousand tons, 18% below 2Q05. In 1H06, export volume reached 237.8 thousand tons, a decrease of 5% in relation to 1H05. Net revenue from paper and coated boards in 2Q06 totaled R$ 278.3 million, 10% below the same period in 2005. In 1H06, net revenue was R$ 555.2 million, a decline of 7% in comparison with 1H05. Kraftliner sales volume totaled 103.6 thousand tons in 2Q06. Export sales reached 91.2 thousand tons, 18% lower in volume than 2Q05. In 1H06 kraftliner sales volume totaled 217.0 thousand tons, of which 192.8 thousand tons were sent to exports, 4% lower than 1H05. The drop in sales volume was due to the increase in demand for corrugated boxes, which in turn meant an increase in the transfer of kraftliner to Klabins converting plants. In the search for better margins, the Company is still working to identify the best export markets for its kraftliner. As a consequence of this study, Klabin has improved its export mix.

Results 2Q06 July 20, 2006

The closure of recycled and virgin-fiber paper capacities in Europe and North America during 1H06, the successful kraftliner price increase (US$50/t) in the USA and the heating-up of economic activity in both Europe and North America, contributed to an adjustment in the demand/supply balance of packaging papers, thus explaining the surge in international prices. In the month of June 2006, international prices in Europe rose between 40 and 50 per ton. Klabin followed this price movement and passed on an increase of 20/t during the month of April/06 and 20 to 30/t during the months of May/06 and June/06. Despite the increases in the international price, prices in reais are still undervalued. According to data from Foex, the average international price converted into reais in 2Q06 is 6.2% lower than in the same period of 2005, equivalent to an R$ 85/ton reduction.
Kraftliner Price X Exchange Rate
650 . 0 2. 0 8

2.69 598
60. 0 0

2.70 598 602 2.60 583 557 2.58 2.45 2.41 2.37 2.36 520 504 506 2.29 2.26 2.28 2.21 2.1 6 2.1 5 2.1 3 2.27 2.1 8 2.25 493 484 496 508 522 528 547
2. 0 5 2. 0 4

600

2. 0 7

598
550 . 0

571

2. 0 6

50. 0 0

2. 0 3

2. 0 2

450 . 0

2. 0 1

40. 0 0

2 .0 0

Source: FOEX Index

A verage P rice (US$ /t)

A verage Exchange Rate (R$ /US$ )

Sales volume of coated boards in 2Q06 reached 81.3 thousand tons, 8% below 2Q05. In 1H06 volume totaled 161.2 thousand tons, unchanged in relation to the same period in 2005. Exports totaled 25.1 thousand tons in 2Q06, 20% lower than 2Q05. During 1H06, export volumes came to 45.0 thousand tons, 10% less than 1H05. Volume in 1H06 unchanged than the same period in 2005 due to the planned downtime at Monte Alegre (PR) mill, the main producer of coated boards. Besides this, in 1H05, Klabin became a partial supplier to Tetra Pak plants in Europe, because the pulp and paper mills in Finland were paralyzed. Sales performance continued to be one of the highlights and Klabin is winning new customers in various parts of the world, such as Central and Eastern Europe, North America, Latin America and Asia, in line with established targets for the expansion project which will come on stream in 4Q07. Together with good sales performance, Klabin is investing in the quality of its products. In 2Q06, Klabin was ranked first in Tetra Paks Supplier Evaluation.

BUSINESS UNIT - CORRUGATED BOXES

Preliminary data provided by the Brazilian Association of Corrugated Boxes (ABPO) indicates that the shipment of boxes, sheets and accessories were 540.4 thousand tons in 2Q06, 2.7% above 1Q06. In the first six months of 2006 accumulated shipments were 1,066.7 thousand tons, 1.8% higher than in 1H05.

Results 2Q06 July 20, 2006

Klabin shipped 114.6 thousand tons of corrugated boxes in 2Q06, 1% over 2Q05. In 1H06, the shipment was 222.1 thousand tons, 5% greater than the first half of 2005. Sales in this quarter were mainly driven by the strong demand from the tobacco exports which peaked in 2Q06. The tobacco harvest will be longer this year, requiring deliveries which will last until September. Other positive highlights were the sectors of frozen products, sheets, fruit and general foods. The negative aspect is the apparent cooling down in sales of the principal distribution channels, such as supermarkets, with negative effects on the sales volume of food, personal hygiene and cleaning materials. Net revenue in 2Q06 totaled R$ 216.1 million, 5% down to the same period in 2005. During 1H06, net revenue came to R$ 418.1 million, 1% below the same period in 2005.

BUSINESS UNIT - INDUSTRIAL BAGS

The sales volume of industrial bags in 2Q06 totaled 29.0 thousand tons, 2% over 2Q05. In 1H06 volume reached 57.7 thousand tons, 1% below the same period in 2005. Net revenue in 2Q06 was R$ 87.9 million, 1% up in comparison with 2Q05. In 1H06 net revenue totaled R$ 176.7 million, 1% below 1H05. Sales volume to the export market in 2Q06 came to 9.5 thousand tons, an increase of 36% in comparison with 2Q05. In 1H06, export volume totaled 16.8 thousand tons, an increase of 17% in relation to the same period of 2005. According to the National Union of the Cement Industry, consumption in the first five months of 2006 grew 10.2% when compared to the same period in 2005, driving demand for multi-wall bags for this sector, whereas the seed sector suffered from a hiatus in the harvest and a less favorable dollar rate for grain exports.

Capital Expenditures
The following table lists the capex in 2Q06 and 1H06:
R$ Million Forestry Paper mills Conversion Others MA 1100 Project Total 2Q06 32 15 11 1 90 149 1H06 51 33 17 2 90 193

In 2Q06 Klabin concluded negotiations with the main equipment and service suppliers for the expansion project of paper and coated boards in the Monte Alegre (PR) mill, which enabled the start-up of this project to be brought forward to the fourth quarter of 2007, and which means it should be running at full capacity by the second half of 2008. Production capacity of this unit will grow from 700 thousand tons to 1.1 million tons per year, and the installed capacity of coated boards will more than double from the current 330 thousand to 680 thousand tons per year which, added to the 60 thousand tons produced at the mill of Angatuba (SP), will make a total of 740 thousand tons per year. The investment will be R$1.5 billion ex-taxes and a further R$ 250 million will be paid out for plant modernization.

Results 2Q06 July 20, 2006

Capital Markets
The following chart shows the performance of Klabins preferred shares in contrast with that of the So Paulo Stock Exchange Index (Ibovespa):
KLBN4 X Ibovespa Closing Price: 29/12/05
150 140 130 120 110 100 90

3/ 06

3/ 06

3/ 06

8/ 06

2/ 06

29 /0 5

8/ 06

9/ 06

3/ 1

5/ 1

4/ 1

6/ 1

5/ 2

2/ 2

1/ 1

12 /

1/ 2

2/ 1

Source: Bovespa

KLBN4

3/ 2

4/ 2

Ibovespa

In 2Q06 the companys shares were negotiated on all the trading sessions of the So Paulo Stock Exchange (Bovespa), and during this period 20,123 transactions were registered, involving 97.5 million shares, with an average daily traded volume of R$ 8.1 million. Klabins shares are also traded over-the-counter (OTC) as Level I ADRs in the U.S. market under the code KLBAY. The capital stock of Klabin consists of 917.7 million shares, of which 316.8 million are common shares and 600.9 million preferred shares.

DIVIDENDS
On the 6th of April 2006, Klabin paid out supplementary dividends regarding the fiscal year 2005 to the amount of R$ 71.3 million, being R$ 72.89 per thousand common shares and R$ 80.18 per thousand preferred shares.

Sustainability
Thanks to sustainable forest management, Klabin was awarded FSC (Forest Stewardship Council) chain-of-custody certification in 2Q06 for: the production of cartonboard and kraftliner in Angatuba (SP), of industrial bags in Lages (SC) and of sack kraft and kraftliner in Correia Pinto and Otaclio Costa (SC). With these certifications, together with the one obtained by the Monte Alegre (PR) unit, the company now has the FSC chain-of-custody seal for all of its virgin-fiber paper and board production. During this period, Klabin managed to register in the United Nations Framework on Climate Change (UNFCC) the project known as Clean Development Mechanism, which makes a credit available to the company of 150,000 tons of CO2 with the substitution of heavy oil by natural gas for a fixed period of 10 years. As a part of future actions, the MA 1100 Project provides for the installation of a power boiler that can burn different kinds of fuel, including biomass, which is a good measure of competitiveness and a plus in a global scenario of high energy costs. Biomass is the product of recovered forest residues, and contributes to the sustainability of business.

6/ 2

7/ 06

4/ 06

8/ 06

7/ 06

2/ 06

10

Results 2Q06 July 20, 2006

Outlook
The international prices of kraftliner continue to show a healthy recovery, surpassing the level of 470 in June 2006. This price level should remain stable until the end of 2006, due to strong domestic demand in the American market, together with the closure of kraftliner and testliner capacities both in North America and in Europe. The expansion project and modernization of the coated board mill in Monte Alegre (PR) is on schedule, and in the second quarter negotiations were concluded for the acquisition of equipment and for civil construction. The first payments, totaling R$ 90.0 million, were made during this quarter. Klabin continues to commit to programs which will increase the companys competitiveness, such as: production cost controls, the structure of fixed costs and a reduction in logistics costs.

11

Results 2Q06 July 20, 2006

Conference Call

Friday, July 21st, 2006 10:00 a.m. (N.Y.) / 11:00 a.m. (Braslia) Password: 811 Phone: U.S. participants: 1-888-340-8477 International participants: 1-786-924-8430 Brazilian participants: (55 11) 4688-6301

Webcast
The audio of the Teleconference will also be transmitted via the internet. Acesso: http://www.collaborate.com.br/klabin

With a gross revenue of R$ 3.2 billion, in 2005, Klabin is the largest integrated manufacturer of packaging papers in Brazil, with an annual production capacity of 1.6 million tons of products. The Company has defined its strategic focus in the following fields of business: paper and coated boards for packaging, corrugated boxes, industrial sacks and wood. It is the market leader in all of these.
The declarations made in this release, which refer to the business prospects of the Company, its forecast of operational and financial results and to its potential growth, should be considered as mere speculation based on Managements expectations with regard to the Companys future. These expectations are highly susceptible to changes in the market, in the state of the Brazilian economy, in industry and, not least, in international markets.

12 12 Results 2Q06 July 20,20, 2006 Results 2Q06 July 2006

Appendix 1 Consolidated Income Statement Brazilian Corporate Law (R$ thousand)

2Q06 Gross Revenue Net Revenue Cost of Goods Sold Gross Profit Selling Expenses General & Administrative Expenses Other Revenues (Expenses) Total Operating Expenses Operating Income (before Fin. Results) Equity in net income (loss) of subsidiaries Financial Expenses Net Foreign Exchange Losses Financial Revenues Net Financial Expenses Operating Income Non Operating Revenues (Expenses) Net Income before Taxes Income Tax and Soc. Contrib. Minority Interest Net Income Depreciation Amortization EBITDA 799,442 667,340 (441,169) 226,171 (67,192) (41,966) (15,085) (124,243) 101,928 (8) (61,864) (10,706) 78,551 5,981 107,901 3,444 111,345 (10,004) (3,557) 97,784 57,349 9,897 169,174 2Q05 857,989 720,108 (418,679) 301,429 (82,807) (42,653) 1,416 (124,044) 177,385 98 (92,276) (22,281) 50,649 (63,908) 113,575 (1,927) 111,648 (14,430) (7,065) 90,153 51,142 10,495 239,022 1Q06 775,288 645,158 (414,183) 230,975 (63,501) (39,743) (5,457) (108,701) 122,274 (200) (59,716) (2,672) 156,400 94,012 216,086 143 216,229 (49,183) (4,392) 162,654 54,084 9,937 186,295 1H06 1,574,730 1,312,498 (855,352) 457,146 (130,693) (81,709) (20,542) (232,944) 224,202 (208) (121,580) (13,378) 234,951 99,993 323,987 3,587 327,574 (59,187) (7,949) 260,438 111,433 19,834 355,469 1H05 1,658,180 1,393,312 (782,722) 610,590 (154,420) (79,809) (11,866) (246,095) 364,495 (62) (143,646) (36,722) 86,657 (93,711) 270,722 (3,280) 267,442 (34,429) (14,690) 218,323 99,616 20,666 484,777 100.0% 66.1% 33.9% 10.1% 6.3% 2.3% 18.6% 15.3% 0.0% 9.3% 1.6% 11.8% -0.9% 16.2% -0.5% 16.7% 1.5% 0.5% 14.7% 8.6% 1.5% 25.4% 100.0% 58.1% 41.9% 11.5% 5.9% -0.2% 17.2% 24.6% 0.0% 12.8% 3.1% 7.0% 8.9% 15.8% 0.3% 15.5% 2.0% 1.0% 12.5% 7.1% 1.5% 33.2% 100.0% 64.2% 35.8% 9.8% 6.2% 0.8% 16.8% 19.0% 0.0% 9.3% 0.4% 24.2% -14.6% 33.5% 0.0% 33.5% 7.6% 0.7% 25.2% 8.4% 1.5% 28.9% 100.0% 65.2% 34.8% 10.0% 6.2% 1.6% 17.7% 17.1% 0.0% 9.3% 1.0% 17.9% -7.6% 24.7% -0.3% 25.0% 4.5% 0.6% 19.8% 8.5% 1.5% 27.1% 100.0% 56.2% 43.8% 11.1% 5.7% 0.9% 17.7% 26.2% 0.0% 10.3% 2.6% 6.2% 6.7% 19.4% 0.2% 19.2% 2.5% 1.1% 15.7% 7.1% 1.5% 34.8% % of Net Revenue 2Q06 2Q05 1Q06 1H06 1H05

13

Results 2Q06 July 20, 2006 Results 2Q06 July 20, 2006 13

Appendix 2 Consolidated Balance Sheet Brazilian Corporate Law (R$ thousand)

Assets Current Assets Cash and banks Short-term investments Receivables Inventories Recoverble taxes and contributions Other receivables 30/06/06 2,859,894 28,564 1,989,684 382,184 273,212 140,962 45,288 31/12/05 2,227,325 102,387 1,366,057 347,799 256,797 91,842 62,443 Liabilities and StockholdersEquity Current Liabilities Loans and financing Debentures Suppliers Income tax and social contribution Taxes payable Salaries and payroll charges Dividends to pay Other accounts payable Long-Term Liabilities Loans and financing Debentures Other accounts payable Minority Interests StockholdersEquity Capital Capital reserves Revaluation reserve Profit reserve Treasury stock Total 30/06/06 626,318 369,133 8,017 107,942 2,566 28,977 60,196 0 49,487 2,111,622 1,679,215 314,050 118,357 105,249 2,504,741 1,100,000 84,525 86,344 972,738 261,134 5,347,930 31/12/05 1,010,522 603,164 9,270 176,194 32,007 24,116 51,493 71,270 43,008 1,343,138 860,735 314,050 168,353 97,300 2,244,662 1,100,000 84,525 87,399 972,738 0 4,695,622

Long-Term Receivables Deferred income tax and soc. Contrib. Taxes to compensate Judicial Deposits Other receivables

345,385 151,802 34,260 109,680 49,643

383,896 208,032 30,099 101,800 43,965

Permanent Assets Other investments Property, plant & equipment, net Deferred charges Total

2,142,651 2,836 2,126,441 13,374 5,347,930

2,084,401 9,915 2,049,509 24,977 4,695,622

14

Results 2Q06 July 20, 2006

Appendix 3 Volume and Net Revenue by Product and Market

Domestic Market Volume (1,000 t) Kraftliner Coated Boards Corrugated Boxes Bags Others Total Wood Volume (1,000 t) Net Revenue (R$ million) 1Q05 13.3 53.9 97.9 22.2 8.2 195.5 778.8 490.0 2Q05 10.3 56.6 112.2 21.5 7.3 207.9 769.7 511.9 3Q05 10.1 61.9 100.0 20.8 6.9 199.7 689.6 487.6 4Q05 2005 1Q06 11.8 60.0 106.7 21.4 7.8 207.7 693.5 481.8 2Q06 12.4 56.2 113.1 19.5 9.1 210.3 689.1 492.0 1H06 24.2 116.2 219.8 40.9 16.9 418.0 1,382.6 973.8

12.1 45.8 62.1 234.5 105.7 415.8 20.2 84.7 6.6 29.0 206.7 809.8 683.4 2,921.5 488.4 1,977.9

Foreign Market Volume (1,000 t) Kraftliner Coated Boards Corrugated Boxes Bags Others Total Wood Volume (1,000 t) Net Revenue (R$ million)

1Q05 89.8 18.7 0.8 7.4 4.5 121.2 0.0 183.2

2Q05 110.8 31.4 1.7 7.0 0.8 151.7 0.0 208.2

3Q05 98.0 25.4 0.8 7.6 2.9 134.7 0.0 162.7

4Q05 127.5 19.5 0.4 8.3 4.0 159.7 0.0 174.3

2005 426.1 95.0 3.7 30.3 12.2 567.3 0.0 728.4

1Q06 101.6 19.9 0.8 7.3 2.4 132.0 0.0 163.4

2Q06 91.2 25.1 1.5 9.5 2.9 130.2 0.0 175.3

1H06 192.8 45.0 2.3 16.8 5.3 262.2 0.0 338.7

Total Sales Volume (1,000 t) Kraftliner Coated Boards Corrugated Boxes Bags Others Total Wood Volume (1,000 t) Net Revenue (R$ million) Kraftliner Coated Boards Corrugated Boxes Bags Others Wood Total

1Q05 103.1 72.6 98.7 29.6 12.7 316.7 778.8 136.0 149.5 197.7 92.0 17.0 81.0 673.2

2Q05 121.1 88.0 113.9 28.5 8.1 359.6 769.7 135.4 174.0 226.3 87.1 21.0 76.3 720.1

3Q05 108.1 87.3 100.8 28.4 9.8 334.4 689.6 103.5 169.9 209.1 85.1 17.4 65.3 650.3

4Q05

2005

1Q06 113.4 79.9 107.5 28.7 10.2 339.7 693.5 121.3 155.6 202.0 88.8 9.4 68.1 645.2

2Q06 103.6 81.3 114.6 29.0 12.0 340.5 689.1

1H06 217.0 161.2 222.1 57.7 22.2 680.2 1,382.6

139.6 471.9 81.6 329.5 106.1 419.5 28.5 115.0 10.6 41.2 366.4 1,377.1 683.4 2,921.5 128.7 503.6 156.6 650.0 210.2 843.3 85.4 349.6 17.7 73.1 64.1 286.7 662.7 2,706.3

117.8 239.1 160.5 316.1 216.1 418.1 87.9 176.7 19.4 28.8 65.6 133.7 667.3 1,312.5

15 15 Results 2Q06 JulyJuly 20, 2006 Results 2Q06 20, 2006

Appendix 4 Financing Repayment Schedule 30/06/06

R$ Million Bndes Finame Debentures Others Local Currency Trade Finance Others Fixed Assets Foreign Currency Gross Debt 3Q06 3.7 0.1 10.9 14.8 77.4 12.7 0.8 90.9 105.7 4Q06 1.5 8.0 17.2 26.7 92.8 1.6 94.5 121.2 2006 3.7 1.6 8.0 28.1 41.5 170.2 14.3 0.8 185.4 226.9 1Q07 0.1 10.6 10.6 8.7 0.8 9.4 20.0 2Q07 1.5 110.4 111.8 18.4 18.4 130.2 3Q07 5.5 0.0 5.5 13.0 0.8 13.8 19.3 4Q07 8.3 1.4 314.1 323.8 22.7 22.7 346.5 2007 13.8 2.9 314.0 121.0 451.7 62.8 1.5 64.3 516.0 2008 33.2 1.4 12.5 47.1 84.4 13.5 97.9 145.0 2009 33.2 118.0 151.2 30.3 13.5 43.8 195.0 2010 33.2 25.0 58.2 159.4 38.2 197.6 255.8 2011 33.2 25.0 58.2 144.3 60.1 204.4 262.6
After 2012

Total 184.0 6.0 322.0 347.9 859.9 1,012.1 496.0 2.4 1,510.4 2,370.4

33.6 18.3 51.9 360.7 356.3 717.0 768.9

R$ million

769

Local Currency Foreign Currency Total Gross Debt

347
23 717

Average Cost 15.6% p.y. 6.9% p.y.

Average Tenor 28 months 60 months 49 months

256 195 106

91 15 3Q06

267

121
95 27 4Q06

130
18

324

145
98 47

44 151

198

204

20
9 11 1Q07

112 2Q07 Local Currency

19
14 6 3Q07 4Q07

58 2009 2010

58 2011

52 after 2012

2008

Foreign Currency

16

Results 2Q06 July 20, 2006

Appendix 5 Consolidated Cash Flow Statement Brazilian Corporate Law (R$ thousand)
Second Quarter 2006 2005 Cash flow from operating activities Net income Items not affecting cash and cash equivalents Depreciation, amortization and depletion Provision for loss on permanent assets Deferred income and social contribution Interest and exchange variation on loans and financing Capitalized interest Equity in subsidiaries Exchange variation on foreign investments Reserve for contingencies Reversal of the reserve Establishment of tax loss carryforward Minority interest Decrease (increase) in assets Accounts receivable Inventories Recoverable taxes Prepaid expenses Other receivables Increase (decrease) in liabilities Suppliers Taxes payable Deferred income and social contribution Salaries, vacation and payroll charges Other payables Net cash provided by operating activities (carry forward) Cash flow from investing activities Purchase of property, plant and equipment Purchase of property, plant and equipment Increase in deferred charges Sale of property, plant and equipment Judicial deposits Others Net cash provided by (used in) investing activities Cash flow from financing activities New loans and financing Amortization of financing Payment of interest Capital contribution to subsidiaries by minority shareholders Dividends paid Net cash used in financing activities Increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 97,784 67,246 (4,193) 9,077 58,682 (3,896) 8 578 344 (4,218) 3,557 (8,775) (4,693) 31,194 (6,023) (3,730) (17,646) (27,776) (831) 14,458 (4,761) 196,386 90,153 61,637 543 (11,475) 8,680 (98) 2,347 6,320 First Half 2006 260,438 131,267 (4,336) 55,220 104,598 (3,896) 208 2,509 268 (55,510) (74,937) 7,949 (34,385) (17,136) 21,656 (8,686) 21,579 (68,084) 4,861 (29,800) 8,703 3,511 325,997 39,521 (192,798) (8,414) 19,460 (1,768) (2) (144,001) 1,161,309 (575,862) (106,849) 1 (71,270) 407,329 589,325 1,428,923 2,018,248 589,325 2005 218,323 120,282 1,805 (9,384) 70,697 62 1,879 6,070

7,065 42,129 (5,026) (30,767) 7,702 10,127 (14,689) (8,733) 22,328 14,312 (16,931) 185,624 (1,149) (69,659) (1,396) 69 (8,756) (80,891) 134,582 (155,334) (28,230) (4) (90,007) (138,993) (34,260) 1,378,200 1,343,940 (34,260)

14,690 77,424 (29,095) 21,733 258 12,115 (36,310) (161) (33,236) (1,975) 6,711 441,888 (2,502) (156,690) (2,446) 154 (8,673) (32) (170,189) 333,344 (221,394) (52,396) 12,066 (90,007) (18,387) 253,312 1,090,628 1,343,940 253,312

(148,579) (7,211) 19,239 (563) 2 (137,112) 609,956 (163,622) (63,529) (71,270) 311,535 370,809 1,647,439 2,018,248 370,809