Welcome everyone to our webinar for the second quarter of 2026. We'll begin with the presentation of our earnings in this quarter, and then after we'll provide some time for Q&A.

Our earnings call is in this model of a webinar where participants have their video and cameras and mics off, and you can submit your questions through Q&A, through the chat, or we'll open up your mic as you prefer. This meeting has simultaneous translation into English.

You can select this option in sign language, Brazil Sign Language, and the webinar will also be recorded and provided in both languages on our IR website and the company. Anyways, let's begin with our presentation.

In the second quarter, we had a net revenue of R$431 million, an adjusted EBITDA of R$131,653,000, a net income of R$30,920,000, and a free cash flow yield in the last 12 months, considering the ongoing and discontinued operations, of 18.7%. An observation here is in this quarter, once again, we had the presentation in the ongoing, continued operations and the discontinued operations.

We discontinued the operations in for resins in the second quarter of last year, and so in this quarter, we still have both present, a format, right, continued and discontinued operations, which is identified by this OD and OC. When we look at our net revenue comparing with the previous quarters, on the left side you can see in this model the continued and discontinued operations.

We had an evolution of 1.6% from R$424 million to R$431 million considering the second quarter of last year and the second quarter of this year, and an evolution of 5.4% in regards to the first quarter. When you look at the only the continued operation, excluding the resin operations, we also in the second quarter of last year, we had an evolution of 4.4% and 5.4% when compared in the first quarter of 2026.

For adjusted EBITDA and our margin, our continued and discontinued operations, we grew by 8.2% and we had a margin of 28.6% to 30.5% this is 16% of R$113 million on a margin of 27.7%, and in the first quarter we had a shutdown of machine 5 due to the modernization project, which impacted the EBITDA, and the comparison is a little bit compromised because of the first quarter having this event. If we look at the continued operation, our EBITDA grew 3.2% in regards to the second quarter of last year, and the margin of 30.8% to 30.5% and compared to the first quarter of R$113 million to R$131 million, which is the same number that I've already mentioned.

Then here in the second quarter, we also had an effect of R$4,490,000, which was generated to, for was a technical event and failure where it began having energy issues, and so went back to operating in the second half of May, and so it was already operating normally. In the second quarter, we also had a negative effect of R$4,490,000.

If it weren't for this effect, our EBITDA would have been R$136,123,000, so that was an evolution that would have been a little better than what we ended up having. The good news is we were able to solve this topic, and ever since the second half of May, power generation got back to the normal levels.

When we look at the net profit on the left side, our net profit dropped 70.3% from R$104,526,000 to R$30,928,000. The main asset here are the biological assets.

With biological assets last year, we had two acquisitions of forests that ended up positively impacting the valuing of the biological assets, and it was an isolated event of the second quarter last year, which adjusted our net profit. This is a recurrent effect of the forest re-plantation that we did in the second quarter of last year, also the same forest, but last year we had R$18,422,000, which we did not have in this quarter.

The recurrent net profit reduced from R$15 million in operations to R$7,235,000 basically because of the impact of larger expense, and over time we saw we have been registering the evolution of all of the readjustments of the values during all the quarters, and this has improved our forests, and they are doing much better because of the values that we have. This explains the reduction of the net profit, the recurrent net profit.

In relation to the first quarter, there was an evolution of R$19 million to R$30 million. In the first quarter, we had an impact on the operational results because of the stoppage of machine 5, as I mentioned, and the continued operation.

The explanations are the same, the numbers change a bit, but what we have here is the operation of the resins that we had in the second quarter of last year, which we no longer have. The explanation in a material form is the same: the impact of the biological assets and the impact of the tax credit and the operational issue because of the larger depreciation and exhaustion, which we registered in the second quarter.

Looking at the segment, here we have the segment of sustainable packaging. Here we have the paper in the quarter, which brings together the market as a whole grew 3.5% from the second quarter to the second quarter of 2026, from 2025 to 2026, and 3.8% in square meters.

In relation to the previous semester, it was 4.4% growth and 4.7% in square meters. The good news here is that we have the recovery of our volumes.

We began to seek volumes that before had been in a strategy of value over volume, but this strategy has limits and it changed in the last quarter, we have been taking accounts of it, and so we have a idle capacity in our plants, which we are seeking to fill. That is why we focused more on volume without deteriorating margins, being very careful.

We were very surgical about this, and we were be able to grow more than the market through this strategy, recovering therefore part of this volume from 41,000 tons to 44,000 tons and 4.9% in relation to the first quarter. In square meters, the effect was higher, was 9% of growth against 4.7%.

This is a positive highlight which we have in this second quarter. The prices evolved quarter against quarter 1.3% in tons, 1.3%, and so they were practically stable.

In relation to the first quarter of 2026, in square meters we registered a drop of 1.9%, and they were stable in relation to the second quarter of 2026. Later we can talk about this in the Q&A, but I believe there is a challenge in the recomposition of costs in the cost operation.

We are trying to transfer the costs. The market as a whole has sought to do this.

We've been successful in some accounts and in others not, but is a process that is being done in a very criterious way by our commercial area. In the segment of paper for packaging, looking at the segment in which we sold paper with a coil, the coiled paper for packaging, we've had a growth of 3.2% in the volume, the total volume of sales, from 30.9 million to 31.9 million, and 8.9% in relation to the first quarter.

The first quarter was affected by the stoppage of machine 5 once again, we registered positive growth. In terms of price, the of the packaging of flexible packaging, which are the papers we use to make bags and sacks for bakeries and groceries, we had a drop of 1.1%.

Basically what explains this is the exchange rate, because we export this paper. In relation to the quarter of last year, this justifies the drop in the price.

If it wasn't for the exchange rate, our price would have increased in line with the recovery of the transfer of the inflation, and it dropped 1.3% in relation to the first quarter. In relation to the rigid paper, the paper that is used to create for the boxes, which is the main raw material, in this case it dropped 2.4% during the period and grew 1.8% in the quarter, reflecting a more pressure in the prices.

In the second quarter, when you look at the data from the market, the price of scraps dropped, but there has been a recovery in regards to the first quarter of 2.2%, and this dynamic was reflected in our numbers. In regards to this quarter of last year, scraps dropped 20% and already had a recovery of 2.9% in the second quarter in regards to the first quarter.

After, we can talk about this a little more, and we see a dynamic that's a little bit different. The pressure in the scrap prices that we have been negotiating and working on and we know exactly where we're headed on that, but in the last few months we've been seeing an increase in the prices of scraps.

Then moving on to the financial aspect, we have another quarter of reductions in our leverage. Our leverage actually went up in the first quarter because our EBITDA was impacted due to the shutdown of machine 5, the first quarter was an EBITDA that was lower than normality because of the event with our CapEx in machine 5.

Now, we've already resumed our deleveraging. We ended the quarter of 2.07, R$833 million in cash and R$1,074,000,000 of net debt, 1.9 of gross debt.

Our debt is basically more is made basically in local currency, 1% in foreign currency, and the cost of debt of 14% a year is equivalent to CDI minus 0.7%, we actually have a positive carryover cost. Our debt as a whole costs less than CDI, where we have our funds invested, the quality of our debt is really good, and 21% of our debt is short-term, and we ended the short-term and 79% in the long-term.

We have a maturity in August 2027 a CRA financial instrument reissued at about R$480, R$490 million, and so it's going to expire it's going to mature in one year, and you probably saw the material fact we announced. After, I'll talk about this a little more.

We just performed an operation today of R$750 million, preparing for the maturity of the CRA instrument next year, and also capitalizing the company and making the company's liquidity higher due to this event with the CRA payment, and also extending the debt and reducing the costs of some facilities we had. Our ROIC reached a quarter this quarter of 12.5% with a average cost of our debt of 9.2%.

Of course the ROIC you have to consider with the WACC, and so we show the cost of debt, and then each shareholder and investor can calculate our WACC according to their own cost of capital, and therefore navigating in mind with the the cost of the WACC, even though we're considering the cost of capital into the investors, and that's how we've been working on this and how we've been delivering on this. Now, the ROIC actually went up a little bit, 0.2 percentage point, and that's really positive.

I think the understanding here is even at a moment where interest is high in this interest cycle, high, pushing upwards, we've been able to deliver a ROIC that is compatible with our WACC. Of course we would like to have a ROIC that's way higher than the WACC, but now when we look at the whole scenario we've seen we've been navigating with a with a WACC sorry, a ROIC that pays for the WACC, right?

Even in a adverse scenario, maybe it's not the best moment for business, but we're still able to compensate the capital adequately. We can talk about the dividends.

We paid in the second quarter of 2026 R$64,194,000, and here we always have the payment of the extraordinary dividends with 25% additional, and that's why we have this bigger impact, but what's valid is R$0.28 per share. We in the last 12 months we've paid R$110 million to shareholders, which is representing 0.47% per share, and in the second quarter, now we're proposing the payment according to our policy for and distribution dividends policy of distribution of 25%, which is the minimum mandatory amount for each quarter, and we propose the distribution of R$0.03438359 per share.

That's still going to be decided by the board of directors. Now, our investments here, you have this little chart in the bottom, all the projects that have already been completed with the Gaia platform, and the chart at the top, which is still underway.

Here we have our PCHs, especially São Luís, doing really well. This is where we have about 25% of the progress already achieved according to our schedule.

That's going to increase our hydro hydro power generation, so that's a great all that provides for major efficiency. We already got the licenses and everything, now we're in the execution.

Total investment R$125 million. Gaia 10 is also 90% completed, and that's the Navarra impressora, and then Gaia 11, which is the shutdown we performed in the first quarter of this year, and we're still finishing up the costs and payments, but the investments were curves to start capturing the returns.

Then we include Gaia 12, which is the expansion and optimization of the plant in Minas Gerais, R$514 million, that's the main project for platform Gaia that's already approved by the board, and so far we invested very little, R$1 million, but we have all the engineering and everything else is working in line with the schedule that was promoted and disclosed to the market. The buyback program, we went back to buying shares in this quarter, and so we were able to buy back 605,100 ordinary share common shares, and that's representing 6.19% of the program that was approved by the board.

The buyback program started off from the 26th of September 2025 and went back to buying back shares now in the second quarter of the year, as well as the capital allocation procedures to maximize shareholder returns to shareholders. Now here you can see the slide that we disclosed as material fact that was approved today by the board, an operation for funding of R$750 million.

We funded this with banks we already have a positive relationship with in the in the company. Everyone knows that the capital market for credit providing is a little more complex at this moment, and all of the negotiations we ran and procedures and we studied led us to have a closing of the banks we already have relationships with due to the conditions of the credit facilities they offered, R$750 million with multiple banks, bilateral operations, and it's a a group of banks, and that costed an average cost of 1.16% per year, total term 5 years and a grace period of 24 to 30 months, and no guarantees required, it's a clean operation, with us prepaying R$158.6 million.

That's operating with the same banks where we funded at the cost of CDI plus 1.84%, so that represented a reduction of the cost of debt that we've been carrying over. That also represents R$591.4 million coming into the company's cash position, and we're prepared to perform the CRA financial instrument payments that are going to mature next year as well with this cash position.

Our financial structure for the maturity of this CRA is going to be solved. Of course we would have been able to fund this in the capital market if it was a window for this and the best credit conditions, but unfortunately that didn't happen.

The capital market, whenever it's open and available, we'll also have the great pleasure to perform these operations. Our CRA is currently issued, and we have a lot of individual investors that are carrying this over, and we are going to end up paying this off next year without needing a new issuance.

There's always a door open, right? We really enjoy performing the issuances on the capital market.

Unfortunately, this was not possible due to the market conditions, but if not, we would have. Of course, things change, and in a new near future, we'll have the possibility to have other issuances and funding through the capital market.

The company has all of these means possible, right? We can fund with BNDES, with the banks, with capital market, and we're always going to find the best offer, right, the best option: lower costs, best terms, and most favorable conditions.

This is a really interesting operation that promoted an increase of liquidity, extending the average term of our debt, and reduction of costs with our debt. It's an operation that really makes our capital structure even more robust.

Then we also, in the second quarter, had our Irani Day. I hope you guys were able to watch.

If you haven't been, you can access them on our website. We were able to share more of our strategy for the company in the future.

We approved Gaia 12, which is this expansion for Minas Gerais, as I mentioned previously. We're going to be investing R$514 million in total to expand our process capacity of machine 7 in Minas.

We're going to increase it by 60%, will go from 62,000 tons per year to 96,000 tons per year. We also have Neos, our new cycle.

I just want to remind you all that Gaia is a pack of investments that we were able to implement to optimize our current sites, and Neos is really expanding our capacity. We'll be adding new plants, and we're going to continue to work on the studies and engineering works, but it still hasn't been approved yet because we're still working on the execution and engineering studies, et cetera, and also monitoring the market conditions to know when will be the exact moment to really start this project and promote this and propose this to the board, looking at our capital allocation strategy and our discipline in capital allocation.

We're not going to perform investments that get in the way of our policy for financial management. We have limitations for leverage, and we really need to study the right moment, the right timing for these approvals.

This is our strategy. We're going to grow our sustainable packaging market, and we'll add a new recycled paper machine as well in this cycle investments.

Then we also announced on the Irani Day our first report for financial information related to sustainability, the IFRS S1 and S2. We're the first company in Brazil to perform this disclosure, and we're going to continue to do so.

Just after we disclosed it, CVM removed the mandatory condition of disclosure of this type of report, but this report provides tangibility to our strategy, right? We celebrated our 20th anniversary of our sustainability report on that same event.

Looking back, the sustainability report has this retrospective perspective, right? Then of course we celebrated all of the evolutions we implemented in these 20 years, and the S1, S2 report looks to the future.

These are complementary reports. Sustainability report looks to the past, and and yes, the S1 and S2 shows the perspectives and future potential results related to sustainability.

Our strategy is really a thesis for our capital allocation, and these reports are very important and useful to help investors and partners and related parties or stakeholders to really understand the strategy in-depth. To wrap up, we were also recognized as a citizen company due to two cases we shared with our decarbonization at Irani and our strategic climate plan as well.

This is a single case here and our strategic plan for decarbonization. We also were certified by GPTW with the index of reliability of 86%, which is a very good rate, which captures the satisfaction of our employees within the company, and it's something that we always follow closely.

We were very happy. Our unit at Minas Gerais was at the 39th position in the regional ranking of Great Place to Work.

From our investor relations team, André is our person responsible that took over in January for investor relations, and this is the rest of the team that everyone knows: Manoel is also the coordinator and Marcos is the coordinator and manager of relations with investors. This is the team you already know, please feel free to ask questions throughout the year.

That's what we had to share. I believe now we will open for questions and answers.

I will stop sharing my screen so that we can all see each other and have a conversation.

Thank you. Hello everyone.

I'm going to open for the participants now. Please send your questions in the Q&A, anyone who wants to raise their hand.

We'll start here with Pedro Mello, analyst from Citi. Pedro, you have the floor.

Good afternoon everyone. Can you hear me?

Yes. I'm going to ask a question, a follow-up on part of the presentation.

You commented at least what appeared here is that you are making a larger shift to gain more market in packaging. For the second semester, what are the expectations for the price transfers, taking into account the strategic increase in market share for the second semester and also in volumes in the mix of packaging?

I wanted to understand if when you transfer the costs, if there is any segment where you understand they are more or less receptive to price transfers and possible readjustments. Basically, how to marry a increase in market share with the evolution of prices.

Perfect. Lindomar is our director of the packaging businesses, I pass the floor to Lindomar to answer this question.

Lindomar, you are muted.

I apologize. Hello everyone, hello Pedro.

Actually, when we talk about demand today, we have an offer that is very large of Kraftliner, and the Kraftliner is basically being directed to the market of corrugated packaging. There is an important idle capacity in this segment.

This has made things difficult for us, but we made an effort in transferring prices to recover our margins. Aligned to this, we have also, in spite of these difficulties, been able to grow, as Odivan showed in the first semester, with a positive expectations in relation to the investments of our capacities in the business of corrugated packaging.

This capacity is not large, it's relatively small, but we have done this work in the perceptions in the active portfolio, and we have been repositioning ourselves, and we should be in the second semester with our capacities aligned. There is, yes, a difficulty in terms of importation.

We continue to work with the team, some accounts we were able to make the implementation. I would tell you that there's no specific segment.

There is an important concentration in the food sector, 75% of our business happens in the food segment, an important concentration in the south of the country in the segment of animal protein, more specifically in dairy and swine, but nothing very more specific in which we've had difficulties in the price transfers we've done. It's a challenge, but we continue to look in the third quarter to recover, but the good news is that we've been growing in volumes.

We've made a few movements and readjustments, and they are improving our margins. I'm not sure if I answered your question, Pedro.

Yes, very good.

Let's go now to Guilherme Nippes from XP. Hello Guilherme.

Good morning everyone. Good morning Odivan, André, thank you so much for the opportunity.

I have two questions here as well. Can you hear me well?

Yes.

Great. On the side of volume, looking more at paper, if you could comment on what the expectation is of volume and prices are for the second the third quarter.

Usually you end up converting a bit more, sometimes there is a higher volume of rigid paper here, and sometimes there is a volume that varies more with flexible paper. Maybe you could comment more on volume, price, and this dynamic for the third quarter.

My second question is on costs. I know you already commented obviously that scraps went up when we look at July, there was an increase as well in the prices of scraps of around 4% versus the tip of June, but I wanted to understand with you what is the dynamic that you have and vision for the future, if it should be R$110, if that would be a more adjusted price, or if we should expect to see pressure, higher pressure coming from the cost of scraps.

In this sense, is there any way that you can mitigate this price increase in your portfolio? Naturally, you tend to work with lower prices sometimes.

Those are my two questions, thank you.

Perfect, Guilherme. Henrique is our business director for paper, could you answer Guilherme?

Hello. I'm not sure if I understood the question properly, but I will try to explain.

With flexible packaging, we still have a price increase that will come in in the third quarter, which is still to come, and the rest of the increases have already been introduced in the internal market. Since the price combines the external market and the internal market, it will be related to the exchange rate.

There was some changes to compensate with the freight costs than an actual price increase because of an excess of paper that exists in the market, in the external market and in Brazil as well. In relation to the sale of rigid packaging or rigid paper, we have been transferring everything that is done in packaging and we sell the access, when we have more productivity, we end up selling a bit more, and the difference will be very small since the second semester is always very hot in the market of packaging.

Usually the sale of paper will be more stable, very similar to what we did in the first quarter, and if there is a difference it will be very small. I am not sure if I was able to clarify, Guilherme.

Yes, that was it. Thank you.

Thank you, Guilherme. On the second question?

Yes, on the scraps.

I will try to help with this question. On the scraps, it's the following: there is some pressure right now in price increases, but obviously probably the market is going after importing scraps to minimize the impact.

If all the companies of the sector are not able to transfer this price increase, I imagine there will be more pressure from the industry to the contrary to break this price increase. At this moment we are feeling this momentary pressure, but in the next few weeks I believe that this will calm down unless the companies are able to transfer this price increase.

On the same line, Guilherme, historically when scraps go up, the sector always ends up compensating and transferring the price. This did not happen only in moments in which the demand for corrugated paper dropped.

What we need to observe is the demand. If there is a demand for packaging, in thesis the sector should have the conditions to compensate for the increases in scrap prices.

Basically that would be it, but I do not have an exact number to tell you besides what went up recently, we do not have more detail on this.

That was very clear. Thank you everyone.

Very good. Now going on to Marcelo from Itaú.

Good morning Marcelo.

Hello André. Can you hear me well?

Yes, we can hear you.

Thank you so much for taking my question. Thinking about the long term, in order to move forward with the project Neos, you need to look at market conditions and structures of the company.

I wanted to understand in more detail, what are the main variables that you have to feel more confidence to start the project Neos, in fact? Is there any new market conditions or is it the capital structure of the company?

Could you detail further for us?

Yes, I believe that the main point that we observe is in our policy of financial management, which gives us limits as our leverage. Whenever we do any study in investments, we try to stay below 2.5 EBITDA.

Besides that, we look at the assets of the projects. We need to have good engineering, we need to study well the location of the plants and markets, the local markets where our plants will be installed, in order to mitigate risks and also to use the assets the best way possible.

The project will be evolving. We'll have some compensations and we will be reviewing them in order to always find the lowest risk with the highest tier.

This is a lot of work, of course. Sometimes it goes from market studies with a lot of depth and perspectives for the regional market, up to the choice of CapEx and equipment.

Nowadays, there is a possibility of bringing equipments from different countries with different prices and different levels of productivity. It's a very detailed engineering that we do, and we will only bring this forward for approval once we are very sure about it.

About capital increase, we need to have tier and risk very well calculated. I believe that would be the main things that we look at, and also market conditions as a whole.

The cycles of high interest rates, especially now, they increase the desire for investment, but if we are able to access good lines of funding, there would be no problem in us investing at this time, as long as we fulfill the requirements within our capital structure and take on well-calculated risks. I believe that is it.

We will be evolving and be monitoring all of this and working so that these variables are all well calculated for the execution of the project.

Excellent. Thank you very much.

All right. Now Bruno Oliveira, a shareholder.

Hello Bruno.

Can you all hear me?

Yes.

Wonderful. Good afternoon Odivan, André, Éder, and everyone.

For me, Dani, it's a great pleasure to participate in one more teleconference with you. My question is focused once again on a more conceptual issue.

We had the announcement of an increase of 7.9 million, which is great for us. However, I would like to understand the sustainability of this policy, because if we look at recurrent net profits, this would be a payout higher than 100%.

Why am I saying this? Because the biological assets have high volatility, and correct me please if I am wrong, but I understand that this variable has a non-cash effect.

I would like to understand from you how this will be sustained and the capillarity of the policy, and also if you have any plan in discussion to change the reference of these calculations.

Perfect. Hello Bruno.

The issue is, first of all, there is nothing to change in the policy of dividends, that's the easier answer. The other part of the logic is that we also need to look at the exhaustion.

In the end, if you remove the non-cash effect from the net profit, there's another negative non-cash effect, which is the exhaustion. That is why it is not unsustainable, because if you do the calculation that you made, which is correct, the only thing is to also remove the net profit from exhaustion because it relates to biological assets, and so they are even a bit higher compared to the values of last year.

The values of this year are even lower than exhaustion. I am not sure if that was clear to you.

No, it was not very clear to me, but the point is more the origin of the profit that I am seeing is more related to the recurrent net profits without the assets. Just to understand, if we take the other variables, the sustainability is guaranteed.

In this recurrent net profit, there is a large parcel of exhaustion, which reduces the net profit, this exhaustion has a non-cash effect as well.

Understood. Thank you very much.

Excellent. I believe now everyone's questions have been answered, and there are a few more from the Q&A that were sent.

Michael sent two questions here. El Niño, does El Niño give you any kind of alerts for productivity?

Has the company prepared for this? A second question: the conflict in the Middle East, does it have any effect on the exports of the company?

Have you felt an increase or drop of demand because of the conflict? I think both of these questions Henrique Zugman is our director on paper, forest paper, I think he can answer them.

Let's go, Michael. On the super El Niño, we are very prepared.

What could affect us? Let's talk about productivity.

It would be the forestry issue. The forestry issue, we work with micro forestry planning, everything that needs to be done in the forest we do beforehand, there is no lack of wood.

We have towers installed not only for monitoring, but they give us warnings with 5 days 5 days ahead of time the meteorological conditions. The other thing is the maintenance of the roads.

On this point of the super El Niño, we do not have any concern because we are very well prepared. On the structural point of the plant itself, looking at the site in Santa Catarina, which is where there will be more rain, in the last years we made a series of investments specifically to make sure the entire factory area was prepared for storms and hail, we are also very well prepared.

Of course we're not God, we cannot control nature, but if there is any problem it will be a micro-operational problem on one day, nothing too relevant. I believe we are at this moment very much at ease in relation to super El Niño.

In relation to exports, as you asked, we had an impact in the first month of the in the first month where there was stoppages of the trucks, there was an initial drop of what was exported to that region, not only for paper, but also for boxes, we also export boxes, and then once this route was re-established, all of the exports came back to normal, obviously with a higher freight cost, we were also not affected. There was a gap in the first month, but in the next months everything recovered, the exports are totally normalized now.

That's it, I believe.

Very good. Next question, Lucas Oliveira asks: "What is your opinion about the economic activity of your main clients being accelerating, de-accelerating, or stable?

What are your perspectives for new businesses?" I think Lindomar can answer this question.

Hello Lucas. In general, we perceive stability, Lucas, in our main segment, which is animal protein.

We have seen many projects of investments in slaughterhouses, and it's somewhere where we feel a drop of demand, but it's a natural process because of the period of the year, which is the chemical segment, where we have the cleaning material during the colder periods there is a drop in the cleaning material demand, but it is a market that represents very little in our sales portfolio. The market is stable, otherwise that, and in some segments there are also projects of expansion and growth.

Very good. Now a question from Carolina: "Good afternoon to all, I'm Carolina from Fastmarkets.

I would like to understand the national market of containerboard as a whole, but especially testliner is being pressured because of the elevated costs of the chain and a competition that has been challenging price transfer. In parallel, we see paper for packaging entering the list of products taxed by the United States, which can make the volumes of exportation be re-accommodated.

What is your understanding on how this affects the supply and demand for the next semester, and how this scenario will be reflected in your next cycle?"

I think I can begin here, Henrique, and then you can complement me. Hello Carolina.

In fact, we have a different scenario of paper, but the taxing from the United States on paper the United States doesn't have so much impact because the volume is small, especially of this kind of paper to the United States. The tax on paper from the United States does not generate so much effects here, but in relation to the export of card paper from China, which impacts the containerboard in Brazil, makes Brazil have a higher production and on the supply of the containerboard.

This would be one of the causes of the increase of the supply of containerboard, not necessarily the tax from the United States, especially because the United States produces a lot of paper, they don't depend on Brazilian exports. I believe that is an issue that we have been accompanying very closely, Carolina, and it already has impacted our cycle of investments.

If you are to remember, the original Neos forecasted an increase of the virgin fiber paper, and we changed the plan to the production of recycled paper. This already is in function of the new scenario from the reading that we made of the difference in the offer of containerboard and virgin fiber in Brazil.

Today we have a price in Brazil of Kraftliner exportation practically with the same price as the fluting paper in the local market. This displays an unbalance in the containerboard in the local market.

The fluting medium has more CapEx, we decided to pivot our Neos of virgin fiber to recycled fiber, which has lower CapEx and lower risk, and a tier very similar or as good or the same as virgin fiber paper. Basically we have already been impacted by this tax, and our understanding on the supply of paper is that.

Henrique, do you have anything to detail further on this?

No, I think that's it, nothing to complement.

The final question we have is from Shin: "Congratulations to all Irani for your Irani Day and the results. Could you give us more information on the oscillations of the biological assets in this quarter?"

I think that Henrique can answer. I'm just going to start because this follows the same methodology as parameters, Henrique, please complement.

Yes, recently we met each other on a flight. Actually, what happened was a variation.

We look at the price of wood in the last three years, there was an evaluation that went up, which made the asset value in the second quarter. In the forest asset in Rio Grande do Sul, there was the effect of the paper that valued a bit, and with resin that also valued a bit, and so this was the valuing that existed in the second quarter in relation to the first quarter.

I think that's it.

Perfect. Are there any other questions?

No, that was all.

We can close. Thank you so much everyone for your participation in our results call.

We hope to see you again in our third quarter call, earnings call. Have an excellent weekend.