CTKA3 Karsten

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 of operations, it has established itself as a vertically integrated manufacturer of bed, table, bath and home décor fabrics, operating from spinning all the way through to final sewing. The company’s shares are traded on B3 under the tickers CTKA3 and CTKA4, which places it in the universe of publicly traded companies accessible to individual investors. Throughout its history, Karsten has developed well-known brands such as Karsten, Karsten Decor and Trussardi, focused on this home textiles portfolio, also including towels for embroidery and home fragrances.

Karsten’s business model is strongly based on the industrialization of textile products and their commercialization through different channels. The company reports 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 selling 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 geographical location of its operations.

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

Karsten’s commercial activities combine industrial sales to various channels and direct presence in retail. In the domestic market, products are distributed to department stores, specialty bed, bath, table and décor stores, as well as hypermarkets, supermarkets, retail and wholesale. The company reports having more than 7,000 points of sale in the country and presence in approximately 24 countries. Geographically, 97% of gross revenue comes from the domestic market, with higher concentration in the Southeast (46.73% of sales) and South (35.95%), followed by the Northeast (8.36%), while the Center-West and North together account for 8.96%. In the foreign market, export volume represents 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.

Besides its industrial operation, the group owns the subsidiary Karsten Comércio Têxtil Ltda., dedicated to the trade and direct sale to the end consumer. This subsidiary seeks to expand the company’s portfolio offering in its own stores, with a complete product mix and differentiated pricing policies. In 2025, Karsten reports having physical stores in Blumenau, Balneário Camboriú, Porto Belo and Florianópolis, in Santa Catarina, as well as units 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 getting closer to the end consumer.

From an operational and market standpoint, Karsten faces strong competition both in Brazil and abroad. In the international market, the company mentions intense competition with Asian manufacturers that offer quality products at significantly lower prices than Brazilian ones, pressuring margins and demanding 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 points to 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 showing lower volumes in June and July. The 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 fluctuations, especially in transactions in U.S. dollars and euros related to exports.

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 to IBAMA, annually, the Report on Potentially Polluting Activities, paying the associated fees. Its facilities are described as compliant with current environmental legislation, maintaining indicators and procedures to identify, control and mitigate impacts. Among its initiatives, the company highlights the “Lixo Zero” (Zero Waste) waste management program, implemented in 2022 to divert more than 90% of waste from landfills, supported by internal training and the search for recycling technologies. In 2023, the company obtained certification as a Zero Waste company, describing itself as the first in the bed, bath and table textile sector in the country to receive this recognition. The company also uses pine and eucalyptus wood chips in its boiler for steam generation, monitors air emissions, holds a permit to draw water from 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 linked to the sustainability of its actions, following good governance practices with an emphasis on transparency with its stakeholders. The company publishes a Social Report on its website and on the B3 webpage, where 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 its 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, so far, adopted the TCFD recommendations for climate issues. For investors analyzing CTKA3 and CTKA4 shares on B3, these elements help to understand the combination of a traditional textile business with a vertically integrated industrial operation, strong exposure to the domestic market and a structured set of environmental and social practices that are evolving.