Second Quarter 2015 Results

Transcription

1 Second Quarter 2015 Results Press Release September 4 th, 2015 International risk rating Standard and Poor s BBB / stable Fitch Ratings BBB / stable Domestic risk rating Feller-Rate AA-/1 st Class Level 1 Fitch Ratings AA-/1 st Class Level 1 Net income was 19.6% up on 1Q15, mainly due to a 16.9% increase in operating income related to the good performance of the fuels and forestry businesses. EBITDA rose 11.2% on the previous quarter and consolidated revenue was US$ 4,948 million, a 5.4% increase. Net income was down 10.7% year-on-year (YoY), largely due to a US$ 63 million decrease in non-operating income, which was partly offset by operating income increasing US$ 56 million. EBITDA was 10.7% up YoY and amounted to US$ 577 million. Consolidated revenue fell 17.3% YoY, mainly because of lower fuel prices. 2Q15 Results Conference Call Wednesday September 16th, :00 Hrs. ET (NY Time) 16:00 Hrs. Santiago Time Dial: From US: +1 (888) From other countries: +1 (973) ID: In accumulated terms, net income was down 38.7%, due to a lower non-operating income mainly because of other revenue related to the sale of Guacolda in the previous year and lower profit of associates and joint ventures, particularly Metrogas and Corpesca. Other income dropped because of a lower revaluation of biological assets and there were more negative exchange rate differences. EBITDA rose 1.0% on the previous year and amounted to US$ 1,095 million. Consolidated revenue dropped 19.7% on the previous year to US$ 9,642 million, mainly because of lower fuel prices. The development highlights of the quarter were the beginning of the construction of a new effluent treatment system in Arauco Mill together with an update in the status of the environmental permit for the Dissolving Pulp Project at the Valdivia Mill. Chg. 2Q 15 / 2Q 15 1Q 15 2Q 14 Accum 15 Accum 14 2Q 14 Chg. 15 / 14 Revenues (17,3%) (19,7%) EBIT ,4% (0,7%) EBITDA* ,7% ,0% Adjusted EBITDA** ,6% (2,1%) Non operating income (66) (67) (3) 2.196,2% (132) 153 (186,6%) Total profit (11,4%) (40,0%) Profit attributable to controlers (10,7%) (38,7%) Profit attributable to minority 10 (2) 13 (22,5%) 8 27 (69,1%) EBITDA margin 11,7% 11,1% 8,7% 3,0% 11,4% 9,0% 2,3% EBITDA / Net interest expenses 8,1 7,0 7,4 8,8% 7,5 7,9 (5,4%) * EBITDA = Operating Income + Depreciation + Amortization + Fair value cost of timber harvested + Others **Adj. EBITDA = Net Income + fin. costs - fin. income + tax + dep & amort + fair value cost of timber harvested - gain from changes in biological assets + exchange rate differences (For details see exhibit in page 22). C o nt act Inf o rmat io n: Cristián Palacios Rodrigo Perera Leopoldo Silva Director of IR and Investments Financial Analyst Financial Analyst T elep ho ne: (56 2) T elep ho ne: (56 2) T elep ho ne: (56 2) cristian.palacios@empresascopec.cl rodrigo.perera@empresascopec.cl leopoldo.silva@empresascopec.cl Figures in US$ millions 1

2 SIMPLIFIED OWNERSHIP STRUCTURE HIGHLIGHTS OF THE QUARTER New effluent treatment investment at Arauco Pulp Mill under way Construction work for a new effluent treatment system at the Arauco pulp mill has commenced. The treatment system, which will be an important addition to the industrial complex in the Horcones area, will be built on 36.4 hectares (90 acres) of land. The company is investing US$ 120 million in this project, which is expected to be ready in May This effluent treatment system is a part of the MAPA project. Dissolving Pulp Project Environmental Permit In April a constitutional action (recurso de protección) was filed at the Court of Appeals of Valdivia against the Environmental Assessment Service (SEA) in relation to the Dissolving Pulp Project at the Valdivia Mill, arguing that the environmental permit was granted without meeting all required formalities. The Court of Appeals granted such action and revoked the environmental permit. Arauco has appealed to the Supreme Court and the case is currently under review.arauco believes that the environmental impact assessment was carried out by the authorities in full compliance with legal standards. 2

3 CONSOLIDATED RESULTS 2Q15 / 2Q14. Net income in the quarter, net of minority participation, was 10.7% down on that in 2Q14 and amounted to US$ 193 million. That was mainly due to non-operating dropping US$ 63 million, partly offset by operating income increasing US$ 56 million. The company s gross margin rose 0.5% amounting to US$ 836 million, which mainly came from the subsidiaries: Arauco, accounting for US$ 454 million; with Copec accounting for US$ 296 million; Abastible for US$ 64 million; Sonacol for US$ 13 million; and Igemar for US$ 12 million. There was an increase in operating income in the forestry and fuels businesses. The increase in Arauco was mainly due to higher wood pulp and panel sales, together with lower unitary production costs for long- and short-fiber wood pulp. The fuels business had higher commercial margins compared to 2Q14. Physical sales of liquefied fuels increased in Chile, Colombia, Ecuador, and the Dominican Republic. There was also the positive effect of the revaluation of inventories, which was negative the previous year. It should also be noted that the income of this sector also rose measured in US dollars, despite a higher exchange rate that affected the recognition of income in this currency. Non-operating income fell, mainly on account of decreased other revenue from the lower revaluation of biological assets and higher financial costs in the forestry business. There was also lower result in associates and joint ventures on account of the weaker performance of Metrogas and Corpesca. Lastly, other expenses increased. 2Q15 / 1Q15. Net income in 2Q15 was 19.6% up on that in 1Q15, mainly explained by higher operating income. Operating income increased 16.9%. That was mainly because of the stronger performance of the fuels business from higher margins, which mainly recovered after the negative effect of the revaluation of inventories in the previous quarter, particularly in Colombia. There were also higher sales volumes in Chile in the industrial channel, in Colombia, Ecuador and Panama, offset to a certain extent by lower volumes in the Dominican Republic. There were also higher physical sales of liquefied petroleum gas (LPG) in Chile due to the seasonality of the winter months. Operating income improved at Arauco from higher wood pulp and panel sales and a drop in the unitary production cost of bleached long- and shortfiber wood pulp. Non-operating income remained stable. Although there was higher income from exchange rate differences and lower financial costs, that was offset by an increase in other expenses and monetary correction. Simplified Income Statement 2Q 15 1Q 15 2Q 14 Chg. 2Q 15 / 2Q 14 Accum 15 Accum 14 Chg. 15 / 14 Revenues (17,3%) (19,7%) Cost of sales (4.112) (3.924) (5.153) (20,2%) (8.036) (10.343) (22,3%) Administration & distribution expenses (490) (475) (543) (9,6%) (966) (1.015) (4,8%) EBIT ,4% (0,7%) Other income (27,8%) (28,8%) Other costs & expenses (50) (36) (37) 34,4% (86) 88 (197,7%) Finance costs (87) (92) (86) 0,7% (179) (163) 9,3% Finance income (3,9%) ,4% Share of profits of associates (96,0%) 3 51 (94,7%) Foreign exchange differences 3 (16) 7 (53,5%) (13) (3) 276,3% Other results (5) (0) (5) 4,9% (5) (8) (37,2%) Non Operational income (66) (67) (3) 2.196,2% (132) 153 (186,6%) Income tax expense (76) (69) (57) 34,5% (145) (192) (24,4%) Total profit (11,4%) (40,0%) Profit attributable to controlers (10,7%) (38,7%) Profit attributable to minority 10 (2) 13 (22,5%) 8 27 (69,1%) Figures in US$ million 3

4 2015 / 2014 (accumulated) Net income up to June was 38.7% down on that in 2014, due to lower non-operating income of US$ 285 million. Operating income remained relatively stable. The company s gross margin fell 3.2% amounting to US$ 1,606 million, which mainly came from its subsidiaries Arauco accounting for US$ 869 million; with Copec accounting for US$ 583 million; Abastible for US$ 116 million; Sonacol for US$ 26 million; and Igemar for US$ 16 million. EBITDA increased 1.0% on the previous year and amounted to US$ 1,095 million. There was higher operating income in the fuels business due to greater volumes in the industrial and gas station channels in Chile, and in Colombia, the Dominican Republic and Ecuador. There were also higher commercial margins. It should be noted that in the first half of 2015 the effect of the revaluation of inventories was negative, whereas it had a positive effect on margins the previous year. On top of this, the sector was affected by the effect of the increase in the exchange rate when recognizing its results in US dollars. In addition there was also a drop in operating income in the forestry business related to lower margins. Non-operating income decreased, mainly because of lower other gains from the sale of Guacolda the previous year, and lower profit of associates and joint ventures, particularly Metrogas and Corpesca. There was also a drop in other income from a lower revaluation of biological assets and more negative exchange rate differences. EBITDA Figures in US$ million Net Income Figures in US$ million

5 EBITDA 2Q 15 1Q 15 2Q 14 Chg. 2Q 15 / 2Q 14 Accum 15 Accum 14 Chg. 15 / 14 Forestry ,9% ,3% Fuels ,7% ,8% Fishing (56,0%) (61,6%) Other investments (4) (2) (3) 18,1% (6) (4) 42,7% TOTAL ,7% ,0% CAPEX Forestry ,9% (23,9%) Fuels ,0% ,9% Fishing ,7% ,1% Other investments (52,2%) 0 0 (28,3%) TOTAL ,9% (12,3%) Figures in US$ million EBITDA change by business (2Q15 v/s 2Q14) (MMUS$) EBITDA change by business (2Q15 v/s 1Q15) (MMUS$) EBITDA change by business (Accum 15 v/s Accum 14) (MMUS$)

6 CELULOSA ARAUCO Y CONSTITUCIÓN (CONSOLIDATED) 2Q15 / 2Q14. Arauco had net income of US$ 105 million in 2Q15, US$ 21 million down on 2Q14. That was mainly due to non-operating income decreasing US$ 32 million, because of a drop in other revenue from a lower revaluation of biological assets and higher financial expenses. Operating income increased by US$ 10 million, partly related to higher wood pulp and panel sales, and there were also lower production costs for long- and short-fiber wood pulp. Consolidated revenue remained stable. In the wood pulp business, sales increased 5.2%, due to the volume rising 12.9%, mainly from the output of the Montes del Plata mill, and prices falling 6.3%. The typical seasonality of the winter in the Northern Hemisphere, which leads to lower paper production and demand for wood pulp, was late. Signs of a wood pulp glut only started to be evident by late in the second quarter, but short- and long-fiber wood pulp prices rose in the quarter across virtually all markets. The short-fiber wood pulp price rose despite the commissioning of a new mill in Brazil in early May. Volumes from this mill should be more relevant by year end. Long and short-fiber wood pulp prices in Asia rose by US$ 40 and US$ 50, respectively, increasing 6 % and 8% in 2Q15. The price difference of these two types of fiber is now only US$ 10/t. This difference could lead to greater demand for long-fiber wood pulp (replacing short-fiber wood pulp). Nevertheless, this replacement will be limited and it generally only occurs if a situation like this is expected to be stable for some months. Paper mills in China are quite flexible and that is where a replacement of this kind might take place. The market in China continues to grow and wood pulp imports increased 10.5% in 2Q15 compared to the previous year. In regard to the paper market, the Chinese market still has a glut with inventories relatively high and lower margins, but this situation has improved on 2Q14. In Europe, the devaluation of the euro has led to stable prices with small increases. Long-fiber wood pulp competes with producers in the Eurozone and prices remain stable or with slight decreases of 0.7% to 1%. In the short-fiber wood pulp market where there are more imports prices follow global trends in US dollars, and they have increased from US$ 20 to US$ 30, or 4% to 5%. Paper mills in Europe are still under pressure and have not managed to improve margins despite the closure of mills and lower output. Producers generally have their mills operating over 90% of capacity, a high operating rate, but have not been able to increase paper prices and transfer the higher costs, like the cost of the devaluation of the euro for imported wood pulp. Mill closures and bankruptcies continue. The market in the Middle East was very active with increasing demand for wood pulp due to new paper mills, particularly tissue production. CHANGES Volume Prices 2Q15 / 2Q14 2Q15 / 2Q14 Accum 2015 / 2014 Pulp 12,9% 11,5% 13,6% Panels 11,7% 7,5% 9,2% Saw n timber (13,4%) 3,0% (5,4%) Pulp (6,3%) (0,4%) (6,9%) Panels (2,6%) (3,4%) (1,0%) Saw n timber (13,4%) 1,5% (9,9%) ARAUCO 2Q 15 1Q 15 2Q 14 Chg. 2Q 15 / 2Q 14 Accum 15 Accum 14 Chg. 15 / 14 Sales (0,1%) ,8% Pulp** ,2% ,6% Panels** ,3% ,3% Saw n timber** (14,9%) (3,5%) Forestry (13,1%) (16,3%) Services ,3% ,7% EBITDA* ,9% ,3% EBIT ,6% (2,1%) Non operating income (27) (35) 4 (714,5%) (62) (21) 190,3% Net income (16,6%) (17,5%) Figures in US$ million *Adj. EBITDA informed by Arauco was US$343 million for 2QT15, US$ 325 million for 1Q15 and US$ 315 for 2Q14. Calculation is as follows: Adj. EBITDA = Net Income + fin. costs - fin. income + tax + dep & amort + fair value cost of timber harvested - gain from changes in biologica assets + exchange rate differences **Includes energy sales 6

7 Panel revenues rose 2.3%, driven by volume increasing 11.7%, partially offset by prices dropping 2.6%. The 1Q15 trend continued and sales were higher than those in the first half of the previous year. The highlight was the increase in plywood sales due to the higher output of the new Nueva Aldea mill. There were also good MDP sales from the Teno mill regarding the volume and value-added product mix. There has been good demand for particleboar in North America. Efforts to attain higher sales of value-added melamine products continue to show good results. MDF had higher competition in virtually all markets due to a general situation of oversupply which, along with the devaluation of the Brazilian real, has increased export volumes. The posibility of exporting MDF from Argentina is still reduced, so everything produced is sold in that country, forcing the company to operate at a lower productive rate / 2014 (accumulated) Arauco had net income of US$ 190 million which was US$ 40 million down on the previous year. That is mainly explained by a US$ 41 million decrease in non-operating income due to decreased other income from the lower revaluation of biological assets and the divestment of non-strategic assets in Uruguay the previous year, along with higher financial expenses. Operating income fell US$ 7 million on account of lower margins. In operating terms, consolidated revenue climbed 1.8%. Wood pulp sales rose 4.6%, arising from volume increasing 13.6% explained by the output of the Montes del Plata mill, partly offset by prices dropping 6.9%. Sawn lumber revenue, including energy sales, was down 3.5%, due to volume and prices dropping 5.4% and 9.3%, respectively. Panel revenues were up 2.3%, driven by volume increasing 9.2% and prices falling 1.0%. Sawn lumber revenues were down 14.9% as a result of volume and prices falling 13.4%. The price decrease in the first six months of the year was due to greater supply from competitors in countries whose currencies have had large devaluation, which has made it more attractive for them to increase their exports. Asia had a volume increase in 2Q15, despite of the Middle East had lower activity due to higher wood competition, mainly from Europe. Both markets had a decrease in exported volumes compared to the first half of Forestry Sector Production The US market maintained its dynamism of new house construction and refurbishment, therefore so the molding business continued to face good levels of demand Good demand levels continue in Chile and the rest of Latin America. Arauco was able to increase market share and commercialized the desired sales mix Q15 / 1Q15. Arauco had net income of US$ 105 million, which was US$ 20 million higher than the previous quarter. That is mainly explained by operating revenue increasing US$ 8 million, due to higher wood pulp and panel sales and a drop in the production costs of bleached long- and short-fiber wood pulp of 0.6% and 9.2%, respectively. Non-operating income rose US$ 8 million. Consolidated revenue rose 7.8%. Wood pulp sales were up 10.4%, due to volume increasing 11.5%, with prices remaining stable. Pulp (th. ton) Panels (th. m3) Sawn timber (th. m3) 2Q 14 1Q 15 2Q 15 Sawn lumber revenues increased 5.3%, mainly because of volume and prices rising 3.0% and 1.5%, respectively. Panel revenues were up 4.6%, driven by volume increasing 7.5% but prices fell 3.4%. 7

8 COPEC (CONSOLIDATED) 2Q15 / 2Q15. Copec had net income of Ch$ 51,474 million in 2Q15, which was up on the Ch$ 24,739 million in EBITDA increased 50.1% to Ch$ 108,580 million. Operating income rose 81.4% on account of higher commercial margins compared to 2Q14. There was also a positive effective in this quarter from the revaluation of inventories that was negative the previous year. Market share in Chile was 61.9%. Non-operating income improved due to more favorable exchange rate differences and greater profit of in associates and joint ventures, along with higher financial income. That was offset by an increase in financial costs. The sales volume in Chile continued the upward trend and increased 9.5% because of a 9.5% increase both, gas stations and industrial channels. In regard to the latter, it should be noted that as of May a new fuel supply contract has been in force with Codelco, which partly explains this increase. Terpel s EBITDA increased 20.2%, along with higher physical fuel sales in Colombia (5.7%), Ecuador (2.2%) and the Dominican Republic (0.3%). Volume dropped 13.2% in Panama. 2Q15 / 1Q15. Net income in the quarter was Ch$ 3,673 million up on the previous quarter. That difference is explained by greater operating income of Ch$ 15,771 million, due to higher margins that also recovered after the negative effect of the revaluation of inventories the previous quarter, particularly in Colombia. COPEC CONSOLIDATED (Including T erpel) 2Q 15 1Q 15 2Q 14 There were also higher sales volumes in Chile in the industrial channel, Colombia, Ecuador and Panama. That was offset by lower sales volumes in the Dominican Republic. EBITDA rose 62.0%. Non-operating income was less negative by Ch$ 1,411 million on the previous quarter, due to lower monetary correction income and higher financial costs. That was partly offset by more favorable exchange rate differences / 2014 (accumulated) Copec s net income in the first half of the year increased Ch$ 23,070 million on the previous year. That difference was partly due to operating income rising 22.0% from a higher volume in the industrial and dealer channels in Chile, Colombia, the Dominican Republic, and Ecuador. There were also higher commercial margins. It should be noted that in the first half of 2015 the effect of the revaluation of inventories and the FIFO costing system was negative whereas it had a positive effect on margins the previous year. EBITDA rose 14.7%. Non-operating income was more favorable than in the first half of the previous year, because of higher income from exchange rate differences and associates and joint ventures. Physical fuel sales in Chile rose 5.7%, because of volume increasing in both channels. The industrial channel had a 2.8% increase and the dealer channel grew 9.2%. The physical fuel sales of Terpel in Colombia, the Dominican Republic and Ecuador increased 4.6%, 8.4%, and 3.7%, respectively Chg. 2Q 15 / 2Q 14 Accum 15 Accum 14 Chg. 15 / 14 Sales (13,1%) (16,4%) EBITDA ,1% ,7% EBIT ,4% ,0% Non operating income (10.823) (9.411) (13.603) (20,4%) (20.234) (22.972) (11,9%) Net income ,1% ,3% Copec Chile physical sales (thousand of m 3 ) Copec Chile market share ,5% ,7% 61,9% 58,8% 59,0% 2,9% 60,3% 59,3% 1,1% TERPEL 2Q 15 1Q 15 2Q 14 Chg. 2Q 15 / 2Q 14 Figures in millions of Chilean pesos Accum 15 Accum 14 Chg. 15 / 14 Sales (0,5%) (6,0%) EBITDA ,2% (9,0%) EBIT ,5% (15,7%) Non operating income (30.417) (28.088) (31.678) (4,0%) (58.505) (52.356) 11,7% Net income Profit attributable to controlers ,5% ,1% Profit attributable to minority interest (99,7%) (99,8%) Terpel physical sales (thousand of m 3 ) Colombia ,7% ,6% Panama (13,2%) (17,9%) Ecuador ,2% ,7% Dominican Republic ,3% ,4% Gazel NGV physical sales (thousand of m 3 ) Colombia (6,2%) (6,5%) Panama ,1% ,4% Ecuador ,3% ,9% 8 Figures in millions of Colombian pesos

9 ABASTIBLE (CONSOLIDATED) 2Q15 / 2Q15. Abastible had a net income increase of 10.5% in 2Q15 amounting to Ch$ 9,846 million. That was due to operating income rising Ch$ 2,912 million, mainly on account of higher margins, and partly offset by lower sales volumes. Non-operating income rose Ch$ 340 million, due to higher income from associates and joint ventures, and lower net financial costs. EBITDA rose 20.0% to Ch$ 21,017 million. The company had sales in Chile of 113 thousand tons of liquefied gas in the quarter, which was a 4.8% YoY decrease, mainly explained by a year with higher average temperatures that hit demand. The sales volume of Inversiones del Nordeste in Colombia increased 1,4% to 46 thousand tons of liquefied gas / 2014 (accumulated) Abastible had net income of Ch$ 15,430 million in the first half of 2015, which was a 13.2% YoY increase. Operating income rose 20.4% because of higher margins, which had dropped the previous year, particularly in Colombia, and higher distribution costs in that period. That was partly offset by lower volume in the bottled channel. Non-operating income increased by Ch$ 837 million due to higher result in monetary correction and greater revenue from associates and joint ventures. The company had sales in Chile of 201 thousand tons of liquefied gas in the first half of 2015, which was 1.5% down on those in the same period in Deliveries increased 1.5% in Colombia. 2Q15 / 1Q15. Abastible had a net income increase of Ch$ 4,262 million. That was due to operating income rising 62.6% because of higher margins and volumes, the latter driven by the seasonality of the winter months when sales generally increase. Non-operating income dropped, because of lower monetary correction income. EBITDA was 39.7% up on 1Q15. ABASTIBLE CONSOLIDATED 2Q 15 1Q 15 2Q 14 Chg. 2Q 15 / 2Q 14 Accum 15 Accum 14 Chg. 15 / 14 Sales (23,2%) (22,7%) EBITDA ,0% ,7% EBIT ,1% ,4% Non operating income (952) (331) (1.292) (26,3%) (1.283) (2.120) (39,5%) Net income ,5% ,2% Abastible Chile LPG physical sales (thousand of tons) (4,8%) (1,5%) IN Colombia LPG physical sales (thousand of tons) ,4% ,5% Figures in millions of Chilean pesos 9

10 PESQUERA IQUIQUE-GUANAYE, IGEMAR (CONSOLIDATED) 2Q15 / 2Q15 Igemar had a net loss of US$ 1.7 million in 2Q15 that was worse than the US$ 8.7 million gain in That was due to operating income decreasing US$ 10.6 million, largely explained by lower sales across all its business lines. EBITDA fell US$ 10.1 million to US$ 7.9 million. Non-operating income was more unfavorable, mainly because of lower earnings in associates and joint ventures. Physical fishmeal sales were 7,028 tons, which was 33.0% down on those the previous year. Physical fish oil sales were 75.6% down on last year amounting to 1,605 tons, and frozen seafood sales were 36.6% down on the previous year and amounted to 4,349 tons. 447,698 boxes of canned seafood were sold, 15.7% down on the previous year. The fish processed was 90,863 tons, dropping 4.6%. Canned seafood, fishmeal and fish oil prices rose 6.3%, 10.2%, and 6.5%, respectively. Frozen seafood prices fell 9.9%. 2Q15 / 1Q15. The company posted a net income increase of US$ 6.5 million in 2Q15 against a US$ 8.2 million loss the previous quarter. That was because of higher operating income of US$ 6.8 million, related to greater frozen seafood, fishmeal and fish oil sales / 2014 (accumulated) Igemar s net income dropped US$ 17.8 million in 2015 to a loss of US$ 9.9 million compared to That is mainly explained by lower non-operating income, mainly because of losses in associates and joint ventures. It had an operating income loss of US$ 3.8 million against the US$ 13.4 million in Physical fishmeal sales were 38.8% up on the previous year amounting to 8,794 tons. Physical fish oil sales were 1,922 tons, a 74.3% increase on last year. 1,1 million boxes of canned seafood were sold, 12.2% down on the previous year. Frozen seafood sales amounted to 7,496 tons, 38.1% down on the previous year. The fish processed decreased 24.6% and amounted to 125,731 tons. Canned seafood prices rose 5.4% and fishmeal and fish oil prices increased 13.3% and 6.1%, respectively. Frozen seafood prices fell 13.0%.astible. Non-operating income improved by US$ 4.0 million, due to lower losses of associates and joint ventures, and lower other expenses. IGEMAR CONSOLIDATED 2Q 15 1Q 15 2Q 14 Chg. 2Q 15 / 2Q 14 Accum 15 Accum 14 Chg. 15 / 14 Sales 49,1 38,3 62,9 (22,0%) 87,3 109,4 (20,2%) EBITDA* 7,9 1,9 18,0 (56,0%) 9,8 25,5 (61,6%) EBIT 1,5 (5,3) 12,1 (87,6%) (3,8) 13,4 (128,5%) Non operating income (5,7) (9,7) (0,6) 837,6% (15,4) (7,4) 107,4% Net income (1,7) (8,2) 8,7 (119,5%) (9,9) 7,9 (224,6%) Physical sales Fishmeal (tons) (33,0%) (38,3%) Fish oil (tons) (75,6%) (74,3%) Canned fish (cases) (15,7%) (12,2%) Frozen fish (tons) (36,6%) (38,1%) Catches (tons) (4,6%) (24,6%) Figures in US$ million 10

11 OTHER AFFILIATES Sonacol Sonacol had net income of Ch$ 5,233 million in 2Q15, which was up on the Ch$ 5,109 million in 2Q14. That was mainly due to operating and nonoperating income increasing 11.0% and 32.3 %, respectively. In accumulated terms, net income was Ch$ 10,375 million, which was up on the Ch$ 10,000 million in the first half of That was because of higher operating income due to greater sales, partly offset by more unfavorable non-operating income and mainly related to lower other income and higher other expenses. The volumes pipelined were 1.9% higher than the previous year. OTHER RELATED COMPANIES Metrogas Corpesca Corpesca had a net income loss of US$ 0.9 million in 2Q15, which was down on the US$ 12.4 million gain in In accrumulated terms, the loss was US$ 9.5 million, which was down on the US$ 16.8 million gain in This is mainly explained by nonoperating income dropping US$ 54.7 million because of losses in associates and joint ventures, associated mainly to the effect from BRL s depreciation on the affiliate Selecta. Operating income rose US$ 25.2 million because of fishmeal and fish oil prices increasing 42.9% and 6.7%, respectively. That was partly offset by fish oil and fishmeal sales volumes dropping 71.8% and 28.7%, respectively. 213,000 tons of fish were processed, which was a 34.9% decrease. Metrogas had net income of Ch$ 17,207 million in 2Q15, a 49.7% YoY decrease, explained by a drop in operating income due to lower margins and higher administration expenses. Non-operating income fell by Ch$ 1,090 million. In accumulated terms, net income was Ch$ 24,964 million, 55.8% down on the previous year, and mainly due to lower operating income of Ch$ 37,985 million on account of lower margins and higher administration expenses. Non-operating income dropped Ch$ 1,119 million. Physical sales were down 7.0%, because of dispatches to power companies falling 13.3% and lower industrial sales of 0.5%. Residential sales dropped 4.9%. Net income from other affiliates and associates 2Q 15 1Q 15 2Q 14 Chg. 2Q 15 / 2Q 14 Accum 15 Accum 14 Chg. 15 / 14 Metrogas* (49,7%) (55,8%) Sonacol* ,4% ,8% Corpesca (0,9) (8,7) 12,4 (107,0%) (9,5) 16,8 (156,9%) Can Can (12,0) (1,0) (1,5) 685,8% (13,0) (2,1) 519,9% Laguna Blanca** (23,2) (6,4) (10,7) 116,1% (29,7) (17,3) 71,1% Figures in US$ million * Figures in millions of Chilean pesos ** Parent company of M ina Invierno, called before Isla Riesco 11

12 CONSOLIDATED BALANCE SHEET ANALYSIS Consolidated current assets fell 8.3% as of June 2015 on those as of December That difference was principally driven by lower cash and cash equivalents, mainly at the subsidiary Arauco, which lower its financial debt and a drop in current biological assets. That was partly offset by higher inventories, mainly at the subsidiaries Igemar, Copec and Arauco, and in increase in current tax assets. Non-current assets as of June dropped 2.0% on those in There was a decrease in property, plant and equipment, mainly in the forestry and fuels businesses. There was also a drop in intangible assets other than appreciation, mainly at the subsidiary Copec, and in investments accounted for using the equity method. All these decreases were mainly because of the appreciation of the US dollar against other functional currencies used by these subsidiaries. The company s shareholders equity remained stable on that at December Although there were lower other reserves due to the effect of the higher exchange rate on subsidiaries with accounting in currencies other than the US dollar, this was offset by an increase in accrued earnings. Long term debt maturities Figures in US$ million Current liabilities fell 12.3%, because of a drop in other current financial liabilities, principally in the subsidiaries Copec and Arauco. There were also lower current tax liabilities and other non-financial liabilities, mainly in the parent company Non-current liabilities dropped 4.5 % compared to those at the 2014 year end. There were lower other non-current financial liabilities mainly explained by a debt payment by Arauco. There was also a decrease in deferred tax liabilities in the forestry and fuels businesses balance Simplified Balance Sheet Statement Jun-15 Dec-14 Chg. Current assets (8,3%) Non-current assets (2,0%) TOTAL ASSETS (3,8%) Short term financial debt (21,1%) Other current liabilities (7,1%) Long term financial debt (5,8%) Other non-current liabilities (1,5%) TOTAL LIABILITIES (6,5%) MINORITY INTEREST (6,8%) SHAREHOLDER'S EQUITY (0,4%) Leverage* 0,48 0,48 (0,2%) Net financial debt (0,9%) ROCE** 8,8% 8,8% (0,0%) 12 Figures in US$ million * Leverage = Net financial debt / Total equity ** ROCE = (Anualized EBIT + Gain from changes in fair value of biological assets + Financial income) / (Total current assets - Total current liabilities + Non-current biological assets + Property, Plant and Equipment - Net non-current assets classified as held for sale)

13 CASH FLOW STATEMENT ANALYSIS The operating cash flow as of June 2015 increased 29.0% on the previous year, basically due to lower payments to suppliers for the supply of products and services, mainly in the subsidiaries Copec and Abastible, and higher other charges for operating activities in the subsidiary Arauco. That was partly offset by lower charges from the sale of goods and providing services, mainly in the subsidiaries Copec and Abastible, along with higher income tax. The financing cash flow increased 257.2% compared to June 2014, mainly because of higher payments of loans at the subsidiaries Arauco and Copec, and lower proceeds from loans, mainly at Arauco. Regarding the investing cash flow, in 2Q15 there was a 341.9% increase in outlays compared to June There were lower other charges for the sale of equity or debt instruments of other entities, related to the sale of the interest in Guacolda the previous year, along with lower dividends received. That was offset by lower purchases of property, plant and equipment, particularly at Arauco and Abastile, and lower other cash disbursements. CASH FLOW STATEMENT Jun-15 Jun-14 Chg. 15 / 14 Cash flow s from (used in) operating activities ,0% Cash flow s from (used in) investing activities ( ) ( ) 341,9% Cash flow s from (used in) financing activities ( ) ( ) 257,2% Net increase (decrease) in cash and cash equivalents before effect of exchange rate changes ( ) (325,6%) Figures in thousand US$ 13

14 BREAKDOWN BY OPERATING SEGMENTS (Accumulated as of June 2015) Breakdown by region Figures as of March 2015 Arauco Copec Abastible Sonacol Igemar Others Subtotal Elimin. Total Revenues from external clients Revenues betw een segments (54.736) - Interest Income Interest Expense ( ) (37.481) (6.273) (3.121) (3.771) ( ) - ( ) Interest expense, net ( ) (31.106) (5.306) (2.993) (3.454) ( ) - ( ) Income (loss) from the reporting segment EBIT (3.812) (7.801) Depreciation Amortization Fair value cost of timber harvested EBITDA (6.398) Share in income (loss) of associates (15.993) (20.851) Income (expense) from income taxes (77.239) (61.420) (8.112) (4.959) ( ) - ( ) Investments by segment Payments for acq. prop., plant and equip Acquisition other long term assets Payments for acq. affiliates and associates Purchase of intangible assets Total investments Country of origin of operating revenue Operating revenues - local (chile) Operating revenues - foreign (foreign companies) Total operating revenues Assets by segment Equity methos investments Liabilities by segments ( ) Country of origin of non-current assets Nacionalidad activos no corrientes Foreign Total non-current assets *Includes Can-Can, Empresas Copec parent company and others Figures in thousand US$ Chile Latin America and Caribbean Europe North Am erica Asia and Others Revenues Non-current assets Total Figures in thousand US$ 14

15 FINANCIAL STATEMENTS STATEMENT OF COMPREHENSIVE INCOME BY FUNCTION Jun-15 Jun-14 Chg. 15 / 14 Revenue (19,7%) Cost of sales ( ) ( ) (22,3%) Gross profit (3,2%) Other income (28,8%) Distribution costs ( ) ( ) (4,7%) Administrative expenses ( ) ( ) (5,0%) Other expense (85.759) ( ) (19,3%) Other gains (losses) (319) (100,2%) Finance income ,4% Financial costs ( ) ( ) 9,3% Share of profit (loss) of associates and joint ventures accounted for using equity method (94,7%) Foreign exchange differences (12.992) (3.453) 276,3% Gains (losses) on net monetary position (5.168) (8.225) (37,2%) Profit (loss) before tax (36,3%) Income tax expense ( ) ( ) (24,4%) Profit (loss) from continuing operations (40,0%) Profit (loss) from discontinued operations Profit (loss) (40,0%) Profit (loss), attributable to Profit (loss), attributable to ow ners of parent (38,7%) Profit (loss), attributable to non-controlling interests (69,1%) Total profit (loss) (40,0%) Earnings per share Basic earnings per share Basic earnings (loss) per share from continuing operations 0, , Basic earnings (loss) per share from discontinued operations 0 0 Basic earnings (loss) per share 0, , Diluted earnings per share Diluted earnings (loss) per share from continuing operations 0, , Diluted earnings (loss) per share from discontinued operations 0 0 Diluted earnings (loss) per share 0, , Figures in thousand US$ 15

16 FINANCIAL STATEMENTS STATEMENT OF COMPREHENSIVE INCOME Jun-15 Jun-14 Chg. 15 / 14 Profit (loss) (40,0%) Other comprehensive income, before tax, actuarial gain (losses) to defined benefit plans 600 (3.205) (118,7%) Other comprehensive income that w ill not be reclassified to profile 601 (3.205) (118,8%) Components of other comprehensive income, before tax Exchange differences on translation Gains (losses) on exchange differences on translation, before tax ( ) (1323,2%) Other comprehensive income, before tax, exchange differences on translation ( ) (1323,2%) Available-for-sale financial assets Gains (losses) on remeasuring available-for-sale financial assets, before tax (11) 4 (375,0%) Other comprehensive income, before tax, available-for-sale financial assets (11) 4 (375,0%) Cash flow hedges Gains (losses) on cash flow hedges, before tax (95,2%) Reclassification adjustments on cash flow hedges, before tax (2) 0 - Other comprehensive income, before tax, cash flow hedges (95,2%) Share of other comprehensive income of associates and joint ventures accounted for using equity method (2) 0 - Other comprehensive income, before tax ( ) (844,6%) Income tax relating to exchange differences on translation of other comprehensive income Income tax relating to available-for-sale financial assets of other comprehensive income ,0% Income tax relating to cash flow hedges of other comprehensive income (183) (9.519) (98,1%) Income tax relating to defined benefit plans of other comprehensive income (135) 0 - Aggregated income tax relating to components of other comprehensive income (9.518) (943,3%) Other comprehensive income ( ) (883,9%) Total comprehensive income (86,6%) Comprehensive income attributable to Comprehensive income, attributable to ow ners of parent (87,3%) Comprehensive income, attributable to non-controlling interests (71,8%) Total comprehensive income (86,6%) Figures in thousand US$ 16

17 FINANCIAL STATEMENTS BALANCE SHEET - ASSETS Jun-15 Dec-14 Chg. Assets Current assets Cash and cash equivalents (26,5%) Other current financial assets (1,1%) Other current non-financial assets ,9% Trade and other receivables, current (0,7%) Trade and other current receivables ,3% Inventories ,6% Current biological assets (17,6%) Current tax assets ,9% Total current assets other than assets or disposal groups classified as held for sale or as held for distribution to ow ners (8,3%) Non-current assets or disposal groups classified as held for sale (0,1%) Non-current assets or disposal groups classified as held for sale or for distribution to ow ners (0,1%) Total current assets (8,3%) Non-current assets Other non-current financial assets ,3% Other non-current non-financial assets ,0% Non-current rights receivables (3,6%) Non-current receivables to related parties ,3% Investments accounted for using equity method (8,9%) Intangible assets other than goodw ill (9,0%) Goodw ill (5,3%) Property, plant and equipment (1,9%) Non-current biological assets (0,4%) Investment property (6,4%) Deferred tax assets (1,7%) Total non-current assets (2,0%) Total assets (3,8%) Figures in thousand US$ 17

18 FINANCIAL STATEMENTS BALANCE SHEET - LIABILITIES AND EQUITY Jun-15 Dec-14 Chg. Liabilities Current liabilities Other current financial libilities (21,1%) Trade and other current payables (1,9%) Other current payables to related parties ,0% Other short-term provisions (82,3%) Current tax liabilities (36,5%) Current provisions for employee benefits ,8% Other current financial liabilities (18,9%) Total current liabilities other than liabilities included in disposal groups classified as held for sale (12,3%) Total current liabilities (12,3%) Non-current liabilities Other non-current financial liabilities (5,8%) Non-current payables ,8% Other long-term provisions (1,2%) Deferred tax liabilities (1,3%) Non-current provisions for employee benefits ,0% Other non-current non-financial liabilities (6,7%) Total non-current liabilities (4,5%) Total liabilities (6,5%) Equity Issued capital ,0% Retained earnings ,2% Other reserves ( ) ( ) 42,0% Equity attributable to ow ners of parent (0,4%) Non-controlling interests (6,8%) Total equity (0,7%) Total equity and liabilities (3,8%) Figures in thousand US$ 18

19 FINANCIAL STATEMENTS STATEMENT OF CASH FLOWS Jun-15 Jun-14 Chg. 15 / 14 Statement of cash flow s Cash flow s from (used in) operating activities Classes of cash receipts from operating activities Receipts from sales of goods and rendering of services (20,6%) Receipts from premiums and claims, annuities and other policy benefits ,9% Other cash receipts from operating activities ,3% Classes of cash payments Payments to suppliers for goods and services ( ) ( ) (25,0%) Payments to and on behalf of employees ( ) ( ) (2,0%) Payments for premiums and claims, annuities and other policy benefits (3.621) (5.389) (32,8%) Other cash payments from operating activities ( ) (78.675) 97,1% Dividends received (41,9%) Interest paid ( ) ( ) 27,5% Interest received (15,6%) Income taxes refund (paid) ( ) (88.854) 114,8% Other inflow s (outflow s) of cash (61,9%) Net cash flow s from (used in) operating activities ,0% Figures in thousand US$ 19

20 FINANCIAL STATEMENTS STATEMENT OF CASH FLOWS (continuation) Jun-15 Jun-14 Chg. 15 / 14 Cash flow s from (used in) investing activities Other cash receipts from sales of equity or debt instruments of other entities (100,0%) Loans to related parties (43.518) (31.189) 39,5% Proceeds from sales of property, plant and equipment (68,6%) Purchase of property, plant and equipment ( ) ( ) (17,0%) Proceeds from sales of intangible assets Purchase of intangible assets (20.290) (24.425) (16,9%) Purchase of other long-term assets (83.577) (74.114) 12,8% Cash advances and loans made to other parties (2.483) (3.442) (27,9%) Cash receipts from related parties Dividends received (61,2%) Interest received Other inflow s (outflow s) of cash (2.010) (15.084) (86,7%) Net cash flow s from (used in) investing activities ( ) ( ) 341,9% Figures in thousand US$ 20

21 FINANCIAL STATEMENTS STATEMENT OF CASH FLOWS (continuation) Jun/15 Jun/14 Chg. 15 / 14 Cash flow s from (used in) financing activities Proceeds from long term borrow ings 212, ,086 (39.0%) Proceeds from short term borrow ings 259, , % Proceeds from borrowings 472, ,583 (15.4%) Payments of borrow ings (981,120) (554,612) 76.9% Dividends paid (211,258) (199,516) 5.9% Interest paid (20,366) (25,052) (18.7%) Other inflow s (outflow s) of cash 4,199 12,593 (66.7%) Net cash flows from (used in) financing activities (735,816) (206,004) 257.2% Net increase (decrease) in cash and cash equivalents before effect of exchange rate changes (505,095) 223,864 (325.6%) Effect of exchange rate changes on cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents (28,947) (8,097) 257.5% Net increase (decrease) in cash and cash equivalents (534,042) 215,767 (347.5%) Cash and cash equivalents at beginning of period 2,013,251 1,507, % Cash and cash equivalents at end of period 1,479,209 1,723,358 (14.2%) Figures in thousand US$ 21

22 EXHIBIT Adjusted EBITDA Calculation As from 1Q13, Empresas Copec presents an alternative calculation of EBITDA, denominated "adjusted EBITDA". The methodology, adopted by the subsidiary Arauco in 2012, better suits the IFRS definition of the indicator, and has the advantage of including the profits from associates. These may be especially relevant for Empresas Copec, given the importance some associates may acquire. 2Q 15 1Q 15 2Q 14 Chg. 2Q 15 / 2Q 14 Accum 15 Accum 14 Chg. 15 / 14 Net Income ,4% ,0% (-)Financial Costs (87) (92) (86) 0,7% (179) (163) 9,3% (-) Financial Income ,9% ,4% (-) Income Tax (76) (69) (57) 34,5% (145) (192) -24,4% (+) Depr & Amort* ,9% ,3% (+) Fair value cost of timber harvested (+) Gain from changes in fair value of biological assets ,5% ,6% (47) (47) (67) -29,5% (94) (134) -29,6% (-) Exchange rate differences 3 (16) 7-53,5% (13) (3) 276,3% (+) Others (-) (-) (-) - (-) (195) - Adj. EBITDA ,6% ,1% Traditional calculated EBITDA (EBITDA = Operating Income + Depreciation + Amortization + Fair value cost of timber harvested), and adjusted EBITDA may differ given the methodological differences. Adjusted EBITDA Figures in US$ millions