Investor Presentation. January 2018

Transcription

1 Investor Presentation January 2018

2 Contents Empresas Copec at a glance Competitive Advantages Strategic Focus Internationalization Latest and Potential Expansions Financial Strength 3Q17 Results

3 Empresas Copec at a glance Industrial group focused in natural resources and energy Business Units Fuels EBITDA: USD 797 million Main distributor of liquid fuels in Chile and Colombia Largest distributor of liquefied petroleum gas in Chile, Colombia and Peru Stake in largest natural gas distributor in Chile Forestry EBITDA: USD 1,296 million Second largest market pulp and panel producer of the world Largest sawn timber producer in Latam Fishing, Mining and Others EBITDA: USD 4 million One of the most important fishing companies in Chile and the world Participates in coal and metal mining Highlights Consolidated Assets Consolidated EBITDA Market Cap USD 21,096 million CONSOLIDATED EBITDA* Sales USD 19,579 million EBITDA International USD 2,097 million Stable BBB Forestry 65.3% Total of USD 21,484 million Fuels 29.2% Forestry 61.8% Total of USD 2,097 million Fuels 38.0% Risk Rating Local Stable AA- Fishing & Other 5.5% Fishing & Other 0.2% 3 Source: Empresas Copec, Bloomberg, RISI Figures LTM as of September 2017

4 Empresas Copec at a glance Industrial group focused in natural resources and energy ANGELINI GROUP 74.7% 25.3% OTHERS ANTARCHILE S.A % PENSION FUNDS 6.8% 32.4% OTHERS FORESTRY FUELS FISHING OTHER INVESTMENTS 99.99% 81.93% 99.87% 50.00% 99.99% 99.13% 39.83% 39.83% AGESA % 58.51% 40.80% 12.00% 66.80% 39.79% 51.00% Inversiones del Nordeste % % 4 Figures as of September 2017

5 Empresas Copec at a glance 82 years of history 1934 Incorporation Diversification Investments and growth Alto Paraná Arauco II Licancel Metrogas 2003 Corporate restructuring Creation of Empresas Copec Internationalization Expansion of liquid fuels and LPG business to Colombia Montes del Plata pulp mill in Uruguay starts operations (1) Consolidation of the panel business Terpel completes its restructuring process Empresas Copec sells its stake in Guacolda for USD 364 million Expansion in fuels Abastible Sonacol 1986 Entry of Angelini group Financial restructuring Strategic Development Plan Consolidation and strategic focus Angelini assumes control of the Company Divestiture of shares in non-core businesses Focus in fuels, forestry and fishing A world scale player Arauco becomes the second largest market pulp producer in the world and the third main panel producer Arauco acquires a 50% stake in Tafisa (2) Abastible acquires Solgas in Peru and Duragas in Ecuador (3) Copec completes the acquisition of MAPCO in the United States Copec signs an agreement with ExxonMobil to produce and distribute Mobil lubricants and liquid fuels, in Colombia, Ecuador and Peru 5 Source: Empresas Copec (1) Arauco participates in a joint venture with Stora Enso (50% participation each) (2) Tafisa is the subsidiary of the Portuguese group Sonae Industria, dedicated to the panel business, which has plants in Spain, Portugal, Germany and South Africa (3) Abastible acquired Repsol s LPG operations in Peru and Ecuador

6 Empresas Copec at a glance One of the most relevant companies in Chile USD million Market capitalization of Chilean companies (1) IPSA Index Weights Company % COPEC 8,95% LATAM 6,89% ENELAM 6,86% FALABELLA 6,83% CHILE 5,67% SQM-B 5,41% BSANTANDER 5,39% CENCOSUD 4,39% CMPC 4,19% BCI 3,93% ENELGXCH 3,30% OTHERS 38,19% 6 Source: Bloomberg (1) As of January 5 th 2018

7 Competitive Advantages

8 US$/ADt Cash Cost FOB mill Competitive Advantages Low Cash Cost producer in both fibers Short harvesting cycle (years) Chile East Europe BSKP Other Europe Sweden Argentina, China, Oceania BHKP US Finland Coastal BC Canada East Canada Int. West Canada East Europe Finland Indonesia Chile/Uruguay Iberia Japan Bel/France China Sweden Canada US Other Asia Japan Softwood Brazil Annual capacity (000s ADt) Higher exposure to Softwood Fluff 9% Hardwood Chile Canada Finland 38 UKP 13% Capacity by grade* 3,887 th. Adt BHKP 37% *Figures as of June 2017 BSKP 41% Brazil Uruguay Chile Portugal Finland Source: Empresas Copec

9 Competitive Advantages Maximizing the value of every tree Efficient Logistics between forests mills ports Pulp installed capacity Panel installed capacity Million tons Fibria Arauco CMPC APP April Suzano UPM Stora Enso Georgia Pacific Metsa nd Million m 3 Kronospan Arauco Nordbord Egger Georgia Pacific Swiss Krono Louisiana Pacific Kastamonu Duratex Pfeiderer nd 9 Source: Empresas Copec

10 Competitive Advantages Logistic efficiency Strong brand recognition 9,0 7,5 Thousand m 3 sold / gas station Favorite Brand Usual Brand 6,0 Other 16% Other 12% 4,5 3,0 Other players in Chile 84% 88% 1,5 0, Strategic locations Foto terpel 1 st place in "Service Stations" of the National Customer Satisfaction Award, ProCalidad 2016 Distinguished by RepTrack with the Brand Reputation Award th time winner of Consumer Loyalty Award 2016 by Alco consultores and Diario Estrategia Recognized among the 20 companies with the best corporate reputation, according to Merco Empresas y Líderes Colombia 2016 ranking 1 st place in "Home Services" of the National Award of Consumer Satisfaction Source: Empresas Copec

11 11 Competitive Advantages Large scale and coverage Synergies among business lines More than 2,850 gas stations* Gas Stations Distribution of 18.5 million m3 of liquid fuels** Import facilities Storage plants Industrial clients Convenience Stores % Market Share Copec market leadership Industrial Channel 49% Gas crisis 58% Lubricants * Copec Chile + Terpel ** All distribution channels for Copec Chile and Terpel

12 Competitive Advantages Leadership in all businesses in which it participates Fuels distribution in Chile Lubricants distribution in Chile Fuels distribution in Colombia 58% 53% 43% Others 42% 1 st Others 47% 1 st Others 57% 1 st LPG distribution in Chile LPG distribution in Colombia LPG Distribution in Perú* Inversiones del Nordeste 38% 35% 23% 1 st 1 st 1 st Others 62% Others 65% Others 77% 12 Market share as of December 2016

13 Strategic Focus

14 Strategic Focus Growth has concentrated in core segments, while keeping other options for value creation Total Assets Acquisitions/Investments Divestments Total Assets 2000 USD 7.1 Billion Planta Valdivia - Forestry Planta Nueva Aldea - Forestry Mina Invierno - Mining Stora Arapoti - Forestry TPI Quintero - Fuels Golden Omega - Fishing / Nutrition Tafisa Brasil - Forestry Terpel - Fuels Orizon - Fishing / Nutrition Montes del Plata - Forestry Inversiones del Nordeste - Fuels Moncure - Forestry Flakeboard - Forestry Selecta - Fishing / Nutrition Tafisa - Forestry Mapco - Fuels Solgas - Fuels Duragas Fuels AES Gener - Power Generation CGE - Power Generation CCU - Massive Consumption Saesa - Power Distribution Frontel - Power Distribution Abcdin - Commercial Retail Guacolda - Power Generation GNL Quintero - Infrastructure Planta Valdivia Nueva Aldea Stora Arapoti TPI Quintero Tafisa Brasil Moncure Inversiones del Nordeste Total Assets 2016 USD 20.9 Billion Forestry 68% Forestry 68% Others 14% Fuels 18% Fuels 28% Others 4% 14

15 Focus in Fuels and Forestry Diversification within core businesses Consolidated EBITDA (1) CONSOLIDATED EBITDA* 4% 11% 4% Forestry 61,8% Total of USD 2,097 million Fuels 38,0% 30% 8% 4% 1% Fishing & Other 0,2% 37% Consolidated Revenues (2) By Channel (4) By Country By Product By Country (3) Industrial 24% Subsidiaries 48% Gas Stations 28% Total 18.1 million m 3 Colombia 41% Other Countries 8% Total USD 13,225 millon Chile 51% Panels & Wood Products 51% Forestry 2% Other 1% Total of USD 5,128 million Pulp 46% Central and South America 27% Others 4% North America 29% Total of USD 5,128 million Asia 33% Europe 7% 15 (1) Figures as of September 2017 (L12M) (2) Includes Mapco s EBITDA from November 2016 to September 2017 (3) By country of destination. Includes sales of goods produced in each country plus exports to each country. Figures as of September 2017 (L12) (4) Gasoline physical volumes L12M

16 Internationalization

17 Internationalization Productive assets in 16 countries, commercial presence in 23, and sales in more than 80 Canada United States Dominican Republic Germany Spain Portugal Holland Norway China India Thailand Korea Japan Taiwan Philippines Malaysia Indonesia Colombia Ecuador Panama Venezuela Saudi Arabia Peru Australia Chile Uruguay Brasil South Africa Argentina Production Platforms Forestry Fuels Fishing and other investments Arauco Comercial Offices Arauco Agents 17 Source: Empresas Copec

18 Internationalization Non Current Assets History - Local vs Foreign 100% 90% 80% 70% 21% 19% 29% 31% 32% 34% 34% 38% 38% Other Countries 60% 50% 40% Chile 30% 20% 10% 0% sep-17 18

19 Internationalization Two strategic lines of growth outside Chile Replicating our know how within Latam Selected oportunities in developed economies Inversiones del Nordeste Why Terpel? High growth potential in the Colombian market: Colombia s vehicular penetration is lower than in Chile. Low highway vehicular flows. Low market penetration of convenience stores business. Areas in which both company s expertise can generate mutual benefits: Copec s efficiency in its gas stations operation. Terpel s experience in NGV market. EBITDA Terpel ($COP million) 55% Arauco acquires Flakeboard and Moncure Panel companies: Good opportunities in the low part of the cycle. Significant synergies between facilities. Access to commercial channels. Significant upside potential. Total investment reaches US$ million. 19

20 Latest and Potential Expansions

21 Latest and Potential Expansions INVESTMENTS AS OF SEPT-2017: US$759 MILLION CAPEX History (USD Million) Others 1% Fishing 4% Fuels 40% 9M 2017: USD 759 million Forestry 55% Mapco Solgas Duragas Fuels 64% Others 1% Fishing 1% Total of USD 1,835 Million in 2016 Forestry 34% Tafisa 21

22 Latest and Potential Expansions ExxonMobil - Lubricants and liquid fuels On November 2016, Copec signed an agreement with ExxonMobil to produce and distribute Mobil lubricants and liquid fuels, which includes markets in Colombia, Ecuador and Peru. Terpel s General Shareholders Meeting approved the latter as being the investment vehicle. Price will be approximately US$747 million, of which US$235 are cash. Country Colombia ExxonMobil s Market Shares* Lubricants Liquid Fuels 30% 30% The resale of the Colombian fuels distribution operations is regarded as highly probable due to antitrust matters. 30% 19%** Efforts are currently focused on securing the respective permits and approvals from the authorities of the countries involved. Peru Ecuador 9% 6% 22 (*) Market shares are approximated (**) Of the aviation market in Peru

23 Latest and Potential Expansions Mapco - Gas Stations and Convenience Stores On November 14, 2016, Copec completed the acquisition of the 100% of MAPCO shares. This company operates 348 service stations most of which are owned by MAPCO. The company also supplies 142 service stations operated by third parties, which sell fuel and have convenience stores. The price paid to acquire these companies free of debt was US$535 million, along with cash and a working capital adjustment on the closing date amounting to US$16.3 million. Kentucky Mississippi 10 GS Arkansas 12 GS Alabama 89 GS Virginia 8 GS Tennessee 187 GS Georgia 42 GS 23

24 Latest and Potential Expansions Solgas and Duragas - LPG Operations In 2016 Abastible completed the acquisition of Repsol s LPG operations in Ecuador (Duragas) and Peru (Solgas). 23% and 37% market share in Peru and Ecuador respectively. Annual volumes of 466 and 403 thousand tons in Peru and Ecuador respectively. The price paid for Solgas was USD 264 million and the price paid for Duragas was USD 33 million. With this recent acquisition Abastible will become the third largest LPG player in South America. 459 Physical Sales of LPG by country in 2016 Thousand tons % Total of 1.5 million tons 3 rd Abastible becomes the third largest LPG distributor in South America Chile Colombia Perú Ecuador 24

25 Latest and Potential Expansions Growth in the Panel Division Sonae-Arauco: Grayling: Arauco purchased 50% of Tafisa in US$ 153 million through a joint venture with Sonae Industria. It operates 10 panelboard mills distributed in Spain, Portugal, Germany and South Africa. 40% of advance in the Grayling Panel Project in Michigan. The investment will be US$ 400 million and is expected to be operational by late Total capacity of 800,000 m³. Loan for US$ 300 million already secured. million m 3 Installed capacity growth of panels (1) 0,5 0,1 2,3 0,4 26% 0,7 2,1 8,8 0, million m³ 0,8 11,1 2,5 0,6 0,3 Mangualde mill, Portugal 25 (1) Corresponds to 50% of the production capacity of Sonae-Arauco

26 Latest and Potential Expansions Growth in the Panel Division Masisa Do Brasil: Arauco signs agreement to buy Masisa s assets in Brasil in US$ million. Transaction includes two panel mills, at Paraná and Rio Grande do Sul. Capacity of 300,000 m³ in MDF and 500,000 m³ in MDP a year. Acquisition already materialized. Masisa in Mexico: Arauco signs agreement to buy Masisa s assets in Mexico in US$ 245 million. Transaction comprises three panel mills, at Chihuahua, Durango and Zitacuaro. Capacity of 519,000 m³ in PB and 220,000 m³ in MDF a year. Arauco to become the second largest producer of composite panels in the world, reaching an annual production capacity of more than 10 million m³. Installed capacity growth of panels million m 3 26% 0,5 0,1 2,3 0,4 0,6 0,3 2,5 (1) 0,7 2,1 8,8 0, million m³ 0,8 11,1 26 (1) Corresponds to 50% of the production capacity of Sonae-Arauco

27 Latest and Potential Expansions Valdivia Project Dissolving Pulp MAPA Project Conversion of the Valdivia mill into a textile pulp mill, which currently produces 550,000 ton of pulp. Dissolving pulp is a product used in the textile industry as a substitute for cotton. It will provide flexibility to produce either dissolving or paper grade. Arauco would be the first company to produce this kind of pulp in Chile. USD 185 million estimated investment. Already approved by the Board of Directors. New 1.5 million ton pulp line in Arauco Mill. Includes a 166 MW cogeneration plant. Considers closure of Arauco s 290,000 ton line 1 of short fiber pulp, once the new line is operating. Investment of aprox USD 2.3 Billion. Still subject to technical and economical feasibility studies, and final board approval Mt % +31% Pulp capacity as of December 2013 Montes del Plata (Uruguay, 2014) Current Capacity MAPA project net addition (Chile) Potential Capacity *Figures in million tons 27

28 Financial Strength

29 Financial Strength Investment grade since 1995 Healthy cash flows allows to: Finance investment plans Distribute stable dividends Maintain low levels of leverage International Local Stable BBB Stable AA- Fast recovery of debt levels after expansion phases Balanced debt schedule Expansion phase Terpel Montes del Plata Inv. Del Nordeste Flakeboard Moncure NET DEBT / EBITDA Net debt / EBITDA 2.2 Expansion phase Mapco Tafisa Duragas Solgas (US$ Million) Q

30 (MUS$) Financial Strength Equity and Net Debt / Equity Evolution Bonds Covenant* 1,2x 1,4 1, ,0 0,8 0,6 0,4 0, ,0 Equity Net Debt / Equity Consolidated Total Debt 3Q17: MMUS$6.408 Arauco 65% Distribution by affiliate Copec 17% Sonacol 2% Abastible 3% Others 2% EC Holding 10% Distribution by currency US Dollar 59% Chilean Pesos 3% Chilean UF 29% Colombian Pesos 7% Others 2% Distribution by type Bank Debt 31% Bonds 65% Others 4% 30

31 3Q17 Results

32 Financial Strength Consolidated 3Q17 results TIMELINE OF EBITDA & NET INCOME (US$ Million) QUARTERLY EBITDA * 639 Significant growth in EBITDA IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III QUARTERLY NET INCOME Higher Net Income on better scenario for forestry business IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III * 1Q17 EBITDA corrected from USD 494 million to USD 507 million, due to reclassifications. 5

33 Financial Strength Consolidated 3Q17 results EBITDA (US$ Million) EBITDA rose mainly in the forestry sector, in a scenario of better pulp prices, and in the fuels business in Copec % EBITDA variation by company YoY EBITDA Composition 3Q

34 Financial Strength Consolidated 3Q17 results Net Income (US$ Million) % Net income increases due to better results in all sectors Net Income variation by company YoY Net Income composition 3Q

35 Financial Strength Consolidated 3Q17 results Income Statement Net income increased due to higher operating and non-operating results. HIGHER OPERATING INCOME Stronger result in Arauco, due to higher revenue in all business lines Better results in Copec from an increase in margins in Chile and Colombia, and higher sales volume in gas stations in Chile Higher result in Abastible, mainly in Chile and Colombia, together with the consolidation of the operations in Peru and Ecuador RISE IN NON-OPERATING INCOME Drop in other expenses from the insurance payout of US$ 34.5 million that reduced the loss provision for forest wildfires. Million USD 3Q 17 3Q 16 Change Net income Operating income Non operating income 57 (12) 68 Other Income (17) Other expenses (5) (26) 20 Other profit (loss) (1) 2 (3) Financial Income 9 18 (9) Financial expense (83) (93) 11 Profit in associated and JV's Exchange Differences Gain (losses) on net monetary position 0 (3) 3 Taxes (92) (53) (40) EBITDA Higher income in associates and joint ventures from Igemar, due to the sale of Corpesca s Selecta and a stronger result in Metrogas and Agesa. 35 4

36 Strong commitment with society and the environment Community Environmental Biodiversity Important contribution to Education, Culture, Sports and the Community EDUCATION: Arauco Foundation (59 programs in 29 districts, benefitting 470 schools, 4,066 teachers and 71,268 students) Arauco, Constitución and Cholguán schools Belén Educa and Enseña Chile initiatives SPORTS: Copec and Arauco soccer cups, and Rally Mobil APPLIED R&D: Copec Catholic University Foundation Reduction and management of environmental impact Efficient use of non dangerous residuals: Biomass for the production of energy in Arauco Treatment and permanent monitoring of effluents Reduction of greenhouse gas emissions (Kyoto Protocol) Vía Limpia project System of collection of unloadings in Coronel Monitoring of carbon footprint Conservation and protection of biodiversity Certified chains of custody 390 th. hectares declared as Areas of High Environmental Value, vulnerable or in danger of extinction Marine ecosystem environmental surveillance Program Certifications Improvements in management systems and industrial & logistic processes CERTFOR, ISO 9001, ISO and OHSAS certifications in Arauco Protocols for handling of industrial residues 36 (1) License code: FSC C Forestal Arauco

37 Investor Presentation