CTKA3

Karsten S.A. is one of the most traditional companies in the Brazilian textile sector, founded in 1882 and headquartered in Blumenau, Santa Catarina. With more than a century in operation, it has established itself as a vertically integrated manufacturer of bed, table and bath products, as well as fabrics for home décor, operating from spinning all the way through to final manufacturing. The company’s shares are traded on B3 under the tickers CTKA3 and CTKA4, which places it among listed companies accessible to individual investors. Over its history, Karsten has developed well-known brands such as Karsten, Karsten Decor and Trussardi, focused on this home textile portfolio, including towels for embroidery and home fragrances.

Karsten’s business model is strongly based on the industrialization of textile products and their sale through different channels. The company states that its core activities are the production and sale of bed, table and bath items, towels for embroidery, decorative fabrics and fragrances, segmenting its markets into Industry and Retail. In 2024, consolidated net revenue reached R$ 699.084 million, of which 95.2% came from the Industry segment and 4.8% from the Retail segment, showing that its main economic focus remains on manufacturing and sales to intermediary channels, such as retail chains, rather than on operating its own stores. The company analyzes its business from this perspective of industrialized product versus retail sale, regardless of the geographic location of operations.

Karsten highlights a fully vertically integrated production process, meaning it controls the main stages of the textile chain internally. In the spinning phase, cotton is transformed into different types of yarns, such as conventional, open-end, carded and combed. Next comes the preparation for weaving, in which these yarns are dyed and/or arranged into warps to feed the looms. In weaving, the company produces a wide range of fabrics, including dobby terry, jacquard terry, regular plain and jacquard plain fabrics. Then, in finishing, the fabrics may be only washed, dyed or printed, receiving different types of finishing treatments, depending on their intended use. Finally, in manufacturing, products are embroidered, sewn, measured and packaged, closing the production cycle that results in finished bed, table, bath and décor products.

Karsten’s commercial activities combine industrial sales to various channels with direct presence in retail. In the domestic market, products are distributed to department stores, specialty bed, table, bath and décor stores, as well as hypermarkets, supermarkets, retail and wholesale outlets. The company reports having more than 7,000 points of sale in the country and a presence in approximately 24 countries. Geographically, 97% of its gross revenue comes from the domestic market, with greater concentration in the Southeast (46.73% of sales) and South (35.95%), followed by the Northeast (8.36%), while the Center-West and North regions together account for 8.96%. In the foreign market, exports represent 3% of gross revenue, with emphasis on Latin American countries such as Uruguay, Argentina, Ecuador, Paraguay and Colombia, in addition to sales to the United States, Mexico and other markets.

In addition to its industrial operation, the group owns the subsidiary Karsten Comércio Têxtil Ltda., which is dedicated to the trade and direct sale to end consumers. This subsidiary seeks to broaden the availability of the company’s portfolio in its own stores, offering a full product mix with differentiated pricing policies. In 2025, Karsten reports brick-and-mortar stores in Blumenau, Balneário Camboriú, Porto Belo and Florianópolis, in Santa Catarina, as well as locations in Londrina (PR), two stores in Curitiba (PR), São Paulo (SP) and two in Campo Largo (PR). Even with this expansion in proprietary retail, the revenue figures make it clear that, up to 2024, the Industry segment remains largely predominant, while Retail accounts for a smaller share, though still strategic for closer engagement with end consumers.

From an operational and market standpoint, Karsten faces strong competition both in Brazil and abroad. In the international market, the company notes intense competition with Asian manufacturers, which offer quality products at significantly lower prices than Brazilian ones, pressuring margins and requiring differentiation. In the domestic market, competition is described as fierce in all regions, especially in the Southeast and South, where there is a higher concentration of customers and textile manufacturers. The company also notes significant seasonality in sales, with peaks tied to holidays such as Mother’s Day and the year-end period, concentrating major deliveries in March, April, September, October and November, and recording lower volumes in June and July. Its main input is cotton, both as a commodity and in its derivatives (yarns and fabrics), which exposes operations to international price volatility and exchange-rate variation, especially in dollar- and euro-denominated export transactions.

On the environmental and social front, Karsten operates under specific licenses and rules. The company holds an Operating Environmental License valid until 2026 and submits the Report on Potentially Polluting Activities to IBAMA annually, paying the associated fees. Its facilities are described as being in compliance with current environmental legislation, with the maintenance of indicators and procedures to identify, control and mitigate impacts. Among its initiatives is the “Zero Waste” management program, implemented in 2022 to divert more than 90% of waste from landfills, supported by internal training and the pursuit of recycling technologies. In 2023, the company obtained certification as a Zero Waste company, stating that it is the first bed, table and bath textile company in the country to receive this recognition. The company also uses pine and eucalyptus woodchips in its boiler for steam generation, monitors air emissions, holds a water abstraction permit for the Testo River, and sends its effluents to a third-party treatment plant, with periodic monitoring of parameters.

In terms of governance and ESG practices, Karsten states that its development must be tied to the sustainability of its actions, following good governance practices with an emphasis on transparency toward its stakeholders. The company publishes a Social Report on its website and on the B3 page, in which it presents economic, social and environmental information, including indicators based on a materiality matrix that covers topics such as waste management, water use, pollutant gas emissions, employee education and development, health and safety, and training on the code of conduct. The company prepares a greenhouse gas emissions inventory for scopes 1, 2 and 3, disclosed in a GRI report, and states that it considers the UN Sustainable Development Goals in its disclosures. At the same time, it reports that it does not submit these reports to independent external audit and that it has not yet adopted the TCFD recommendations on climate issues. For investors evaluating CTKA3 and CTKA4 shares on B3, these elements help explain the combination of a traditional textile business, with a vertically integrated industrial operation, strong exposure to the domestic market and a structured set of evolving environmental and social practices.