3Q17 Earnings Release

Transcription

1 3Q17 Earnings Release November 22 nd, 2017 International Risk Rating Fitch Ratings Standard and Poor s BBB / stable BBB / stable Domestic Risk Rating Feller-Rate AA-/ stable / 1 st Class Level 1 Fitch Ratings AA-/ stable / 1 st Class Level 1 3Q17 Results Conference Call Friday, November 24 th, :00 am ET (NY Time) 11:00 am Santiago Time Dial: From US: +1 (844) From Chile: +1 (230) From other countries: +1 (412) ID: COPEC EBITDA EBITDA in 3Q17 was US$639 million, increasing 44.6% YoY and 17.2% QoQ. 3Q17 / 3Q16 3Q17 / 2Q17 Highlights Net income was US$311 million and increased 165.3% regarding 3Q16, explained by higher operating income in both forestry and fuels businesses, and a non-operating income growing mainly due to an increase of profits in associates and joint ventures. Net income rose 79.2% quarter-on-quarter (QoQ), explained by an increase in operating income, mainly from greater revenues in the pulp business. Additionally, there was also higher non-operating incomes, due to the sale of Selecta in Brazil and the insurance payments from wildfires received by Arauco. In the forestry business, Arauco signed an agreement to acquire Masisa do Brasil, the Board unanimously approved the textile pulp project in Valdivia, and a liability management process was started. In the fishing business, the sale of 60% of Selecta in Brazil was accomplished. Net Debt / EBITDA Debt decreased in 3Q17 with a net debt/ebitda ratio of 2.4 times. That was lower than the 2.9 times in 1Q17 and 2.7 times in 2Q17, mainly due to a higher 12-month EBITDA and net debt reduction. 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Revenues 5,204 4,947 4, % 5.2% 15,029 12, % EBIT % 4.9% % EBITDA* % 17.2% 1,691 1, % Adjusted EBITDA** % 17.4% 1,716 1, % Non operating income 57 (33) (12) 587% 271.1% (175) (26) (563.2%) Total profit % 80.9% % Profit attributable to controlers % 79.2% % Profit attributable to minority % 106.4% % EBITDA Margin 12.3% 11.0% 10.4% 18.4% 11.5% 11.3% 11.0% 2.6% EBITDA / Net interest expenses % 16.9% % * EBITDA = Operating Income + Depreciation + Amortization + Fair value cost of timber harvested + Others **Adj. EBITDA = Net Income + fin. costs - fin. income + tax + dep & amort + fair value cost of timber harvested - gain from changes in biological assets + exchange rate differences (For details see exhibit in page 23). Figures in US$ million C o nt act Inf o rmat io n: Cristián Palacios Juan Pablo Serrano José Pablo Carvallo Director of Finance and IR Investor Relations Investor Relations cristian.palacios@empresascopec.cl juan.serrano@empresascopec.cl jose.carvallo@empresascopec.cl 1

2 SIMPLIFIED OWNERSHIP STRUCTURE 99.20% 39.79% Highlights of the Quarter Arauco signed an agreement to acquire Masisa do Brasil In September 2017, Arauco do Brasil S.A. agreed with Masisa S.A. the total buyout of the social rights of the subsidiary named Masisa do Brasil Ltda. The transaction price is for approximately U.S.$ million, with final disbursement amounting to U.S.$ 52.8 million. The main assets of Masisa do Brasil S.A. consist of two industrial complexes located in Ponta Grossa (Paraná) and Montenegro (Rio Grande do Sul) in Brazil, with a total annual installed capacity of 300,000 m 3 of MDF, 500,000 m 3 of MDP and 660,000 m 3 of melamine capacity. When the transaction is finalized Arauco will have a total installed capacity of over 10 million m3, consolidating its position as the second largest player of panels in the world. The transaction is still subject to a series of conditions precedent, with the authorization of free competition given by the Conselho Administrativo de Defensa Económica (or CADE ) of Brazil being the most relevant. This transaction is expected to finalize during the end of 2017 or the beginning of Board approved Valdivia project During September 2017, Arauco s Board of Directors unanimously approved the Dissolving Pulp Project which will enable the Valdivia Mill to produce dissolving pulp without losing the capacity to switch back to market pulp. Arauco estimates the project will require an investment of US$ 185 million, which the Company will pay with its own cash generation. The project will be executed in the same existing installations, with some minor adjustments and additional equipment. The new equipment includes two new digesters with the purpose of optimizing the pulp production level, a new discharge pond for the pulp, and other treatment area modifications. This project allows Arauco to continue diversifying its product portfolio to the pulp market. Dissolving pulp is used in the textile industry to soften, shine, and purify fibers. It can also be used in the food, cellophane, and flexible packaging industries, among others. This project should take about two years of construction, with the ramp-up scheduled to occur during the end of Arauco performed liability management On November 2 nd, Arauco issued two bonds in the United States market for a total of U.S.$ 900 million: U.S.$ 500 million with a tenor of 10 years and a coupon rate of 3.875%; and U.S.$ 400 million with a tenor of 30 years and a coupon rate of 5.500%. Both bonds are bullet with interests paid each semester. The main use of proceeds for these bonds was to partially repurchase three of our outstanding bonds: (i) 7.250% Notes due 2019 of U.S.$ 500 million, (ii) 5.000% Notes due 2022 of U.S.$ 400 million, and (iii) 4.750% Notes due 2022 of U.S.$ 500 million. There was an early bird settlement payment on November 2 nd, with the final settlement of the cash tender offer on November 13 th. In total, the following amounts were validly tendered: U.S.$ million for the 7.250% Notes due 2019, U.S.$ million for the 5.000% Notes due 2021, and U.S.$ million for the 4.750% Notes due The remaining funds will be used for other corporate purposes. With this liability management, Arauco was able to extend its average debt duration from approximately 4.9 years to 8.3 years. Company sells off 60% of Selecta in Brazil The associate Corpesca, through its subsidiary Corpesca do Brasil, sold to the Korean company CJ Cheil Jedang Corporation, 60% of the shares of the Brazilian company Sementes Selecta for US$214 million. Corpesca will thereby maintain the remaining 10% of the shares of this subsidiary, and it can sell this shareholding percentage to the Korean company 2 years after this transaction. This operation led to a pre-tax profit of about US$117 million for Corpesca. Sementes Selecta is a company that produces soy protein concentrate (SPC), soybean oil and other byproducts, and it has a production capacity of around 700,000 tons of soy a year. 2

3 CONSOLIDATED RESULTS 3Q17 / 3Q16. Net income in the quarter, net of minority participation, was US$311 million and growing 165.3% YoY. That was mainly due to higher operating income of US$179 million YoY, along with non-operating income increasing US$69 million. Non-operating income rose, largely due to higher earnings in associates and joint ventures from increased income at Corpesca, along with greater income form exchange rate differences. The company s gross margin rose 31.9%, amounting to US$941 million, which mainly came from Arauco s subsidiaries of US$453 million; with Copec accounting for US$342 million; Abastible for US$119 million; Sonacol for US$16 million; and Igemar for US$11 million. There was an increase in operating income, mainly in the forestry business, with Arauco improving its performance due to higher earnings across its business lines, highlighting the wood pulp business due to higher prices and volumes in the quarter. 3Q17 / 2Q17. Net income in 3Q17 was 79.2% up QoQ, explained by higher operating and non-operating income. The former increased 24.7%, due to greater income in the forestry business, mainly from higher revenue in the wood pulp business, and also from panels and sawn timber. Non-operating income rose, largely because of higher income in associates and joint ventures from the net income generated by the sale of Selecta. There was a decrease in other expenses from the insurance payout that reduced the loss provision for forest wildfires generated in the first quarter, along with a higher revaluation of biological assets. Exchange rate differences were also positive. The fuels business had greater operating income, particularly at the subsidiaries Copec and Terpel, because of higher margins in Chile and Colombia, despite a drop in the sales volume in the industrial channel in Chile. Abastible s operating income rose due to increased volumes in Chile and Colombia. The fuels business had an increase in operating income, particularly at the subsidiaries Copec and Terpel, because of higher margins in Chile and Colombia, and increasing volumes in Terpel and in the gas stations channel in Chile. Abastible s operating income rose 12.4% due to the good performance of operations in Chile and Colombia, driven by higher volumes. The company also consolidated Solgas in Peru and Duragas in Ecuador. Simplified Income Statement 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Revenues 5,204 4,947 4, % 5.2% 15,029 12, % Cost of sales (4,262) (4,107) (3,565) 19.5% 3.8% (12,455) (10,116) 23.1% Administration & distribution expenses (572) (543) (506) 12.9% 5.2% (1,638) (1,407) 16.4% Operating Income % 24.7% % Other income (23.0%) 40.1% (25.2%) Other costs & expenses (7) (21) (24) (71.0%) (66.7%) (231) (69) 232.8% Finance costs (83) (86) (93) (11.4%) (3.8%) (257) (278) (7.7%) Finance income (49.5%) (27.9%) (35.8%) Share of profits of associates % 183.3% % Foreign exchange differences % % (5.8%) Other results 0 (3) (3) (107.0%) (105.7%) (6) (9) (41.0%) Non Operational income 57 (33) (12) (587.3%) (271.1%) (175) (26) 563.2% Income tax expense (92) (78) (53) 75.5% 17.6% (183) (146) 25.2% Total profit % 80.9% % Profit attributable to controlers % 79.2% % Profit attributable to minority % 106.4% % EBIT % 24.7% % Depreciation & Amortization % 11.0% % Fair value cost of timber harvested % 3.7% % EBITDA % 17.2% 1,691 1, % Figures in US$ million 3

4 2017 / 2016 (accrued). Net income in 2017, net of minority participation, was US$534 million, 26.3% up on that in That was largely due to operating income increasing US$310 million, partly offset by non-operating income decreasing US$149 million. Non-operating income fell, mainly in the forestry business, due to expenses of US$178 million for forest wildfires that hit the subsidiary Arauco in the first quarter of the year. The company s gross earnings rose 25.6%, amounting to US$2.575 million, which mainly came from Arauco s subsidiaries of US$1.217 million; with Copec accounting for US$969 million; Abastible for US$318 million; Sonacol for US$42 million; and Igemar for US$29 million. Operating income rose, mainly in the forestry business, in which Arauco had better performance due to higher revenue across all its business lines, highlighting wood pulp because of higher prices and volume throughout this year. The fuels business also had an increase in operating income, particularly at the subsidiary Copec, due to higher margins in Chile and Colombia, along with a greater sales volume in the gas station channel in Chile. Moreover, income improved from the consolidation of Mapco operations in the United States. Abastible s operating income improved slightly, because of the better performance in Chile and Colombia, along with the consolidation of the operations of Solgas in Peru and Duragas in Ecuador Quarterly EBITDA Net Income Figures in US$ million 4

5 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Var 17 / 16 EBITDA Forestry % 18.3% 1, % Fuels % 14.8% % Copec % 14.1% % Abastible % 18.8% % Sonacol % 9.5% % Fishing (26.3%) 39.2% (35.0%) Others (4) (4) (0) % 3.5% (13) (10) 28.4% TOTAL % 17.2% 1,691 1, % CAPEX Forestry % 27.8% (16.0%) Fuels % 101.2% (42.3%) Fishing % % % Others 1 2 (0) 0.0% 0.0% % TOTAL % 66.6% 759 1,029 (26.2%) EBITDA change by business (3Q 17 v/s 3Q 16) (MMUS$) EBITDA change by business (3Q 17 v/s 2Q 17) (MMUS$) Q 16 Forestry Fuels Fishing Others 3Q 17 2Q 17 Forestry Fuels Fishing Others 3Q 17 EBITDA change by business (Accum 17 v/s Accum 16) (MMUS$) ,332 1,691 Accum 16 Forestry Fuels Others Fishing Accum 17 5

6 ARAUCO 3Q17 / 3Q16. Arauco posted a profit of US$148 million in 3Q17, US$117 million up YoY. That was due to operating income increasing US$147 million, largely related to higher wood pulp prices and volumes and in the panel and sawn timber businesses. Non-operating income increased US$4 million because of a drop in other revenue related to the lower revaluation of biological assets, which was offset by lower other expenses, due to the insurance payout that reduced the loss provision for forest wildfires generated in the first quarter. There were also lower financial costs. Consolidated operating revenue increased 17.3%, explained by higher revenue across all business lines. The greater wood pulp revenue was due to prices increasing 15.0% and 13.0%, respectively. Sawn timber revenues rose, because of an increase in the sawn timber area, with prices increasing 7.6% and volume up 7.6%. Panels had price and volume increases of 1.0% and 2.8%, respectively. The unit production costs of bleached and raw long-fiber wood pulp fell 4.4% and 10.6%, respectively. Bleached short-fiber wood pulp production costs rose 5.5%. Recycled pulp also plays an important role as China has some restrictions on imports of certain kinds of unsorted wastepaper and prices increase more than normally in a market in which paper and packaging materials are in high demand. Strong economic activity in Europe is immediately reflected in paper and pulp demand. European paper mills generally stop for a week to ten days for staff vacations and use that time to undertake major maintenance. This year many production lines did not stop and continued to produce at high rates, and only those that cannot postpone their maintenance plans stopping. Inventory levels are very low and customers confirm price increases as long as the volume is delivered on time. The increases were 6% for short-fiber pulp and 2% for long-fiber pulp, but long-fiber pulp from Chile to Europe is no longer a major export product, and the greatest suppliers are local European companies, mainly from Scandinavia. Paper prices are also rising and the higher costs are transferred to the final product price. Only tissue paper producers find it more difficult to transfer costs as in this business prices are established for longer timeframes, 6 to 12 months. Consumption of printing and writing paper has increased for the first time in ten years. Market Status Wood Pulp Prices remained quite stable in July and August and then started to increase in September. That was the trend in virtually all markets and for grades. July and August are generally months of lower demand due to the decrease in consumption in summer in the Northern Hemisphere, which is a normal seasonal effect. However, this year there was no large and long drop as in prior years. This reflects healthier economies in Europe, Asia and North America, which are having higher growth than in the last 5 years, particularly in Europe and North America, and better than the forecasts for China. Prices rose in Asia following the increase in China, and although they remained stable in July and August, there was a large increase in September. That led to a 5% increase in short-fiber pulp and 4% for longfiber pulp in the quarter. Inventories are very low, particularly in China, which has driven the local prices of traders up to very high levels and import price differences of over US$100 late in the quarter, establishing the bases for greater increases in the next few months. Changes 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 / 16 Volume Pulp 13.0% 12.9% 7.8% Panels 2.8% 4.2% 0.9% Saw n timber 7.6% 14.5% (0.8%) Prices Pulp 15.0% 2.0% 7.0% Panels 1.0% (1.4%) 3.8% Saw n timber 7.6% 1.1% 6.9% At the same time, paper prices also had large increases, which means that producers can pass on the higher costs to the final market and they maintain or increase their margins. ARAUCO 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Sales 1,393 1,280 1, % 8.9% 3,907 3, % Pulp** % 12.9% 1,814 1, % Wood Products** % 5.2% 1,980 1, % Forestry % 20.2% % Services % (21.5%) % EBITDA* % 18.3% 1, % EBIT % 30.0% % Non operating income 9 (25) % (137.2%) (205) (15) % Net income % 76.7% % Figures in US$ million *Adj. EBITDA informed by Arauco was US$385 million for 3Q17, US$335 million for 2Q17, US$256 million for 3Q16 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 Timber Sawn Timber The improvement of sales is due to the recovery of volume and higher prices in the main markets in Asia and the Middle East. This level of demand and prices is expected to continue to the last quarter of this year. Remanufactured products have also had better volume and prices, particularly due to the more dynamic US market. This has led to higher volumes and prices compared to the previous quarter and the same period last year. Despite the fact that the last quarter of the year is traditionally more sluggish, the company expects to maintain a stable rate of billing. Panels The plywood market continues to improve. Billing has increased QoQ and YoY. Most of the traditional plywood markets have had higher consumption, with greater sales volumes to date. Prices have improved slightly, mainly in Europe driven by the appreciation of the euro, and this trend is expected to continue to late Wood board sales in Brazil have recovered slightly, reflected by higher volume compared to previous quarters. Despite the fact that the market in Brazil is still tough, in the last few months the wood board consumption rate has improved. Nevertheless, new MDF mills entering the market will keep up the high competition. Particleboard sales in North America have continued at a good rate and the MDF market is a little slower. The latter is partly due to the large presence of imported wood boards that continue to enter the continent, mainly from South America. In the rest of Latin America sales have remained stable with a slight upward trend due to improvements of the product mix billed. Markets are generally not so dynamic with a reduction of the number of projects that affect demand for construction and furniture making products. There is also high MDF competition in the region, because of the new mills in Mexico and Brazil. Sales levels are expected to be stable for the next few months. 3Q17 / 2Q17. Arauco posted net income of US$148 million which was a US$64 million increase QoQ. This is explained by an operating income increase of US$44 million, largely related to higher revenue in the wood pulp business due to prices and volume increasing 2.0% and 12.9%, respectively. Timber revenue rose 5.0% in the quarter, mainly due to sawn timber, with prices and volume increasing 1.1% and 14.5%, respectively. The panel volume rose 4.2%. Wood pulp unit production costs increased 1.7% for bleached short-fiber wood pulp, 2.4% for bleached long-fiber wood pulp and 0.6% for raw long-fiber wood pulp. Non-operating income rose US$34 million due to the insurance payout that reduced the forest wildfire loss provision made in the first quarter of this year / 2016 (accrued). Arauco had net income of US$187 million, which was US$47 million up on the previous year. That is explained by a US$242 million increase in operating income, largely related to higher revenue across all business lines, highlighting that of wood pulp from higher prices and volume this year. That was partly offset by more negative non-operating income from the effects of wildfires in the early months of the year in Chile. Consolidated revenue rose 10.3%, explained by higher revenue in the wood pulp, timber and forestry segments. The increase in wood pulp revenue was due to volume growing 7.8% and prices rising 7.0%. Revenue rose in the timber business, largely due to an increase in panels with a 3.8% price increase and volume up 0.9%. Sawn timber prices rose 6.9% and volume fell 0.8%. There was also a drop in the unit production costs of bleached long- and short-fiber wood pulp of 5.3% and 2.5%, respectively. Raw long-fiber pulp production costs fell 5.2%. Production by Business Sales Volumes by Business ,2241,247 1, , ,227 1,261 1, Pulp (th ton) Panels (th m3) Sawn Timber (th m3) Pulp (th ton) Panels (th m3) Sawn Timber (th m3) 3Q 16 2Q 17 3Q 17 3Q 16 2Q 17 3Q 17 7

8 COPEC 3Q17 / 3Q16. Copec had net income of Ch$ million in 3Q17, which was up on the Ch$ million in 3Q16. This is mainly explained by an increase in operating income due to higher margins at Copec Chile and at Terpel, along with a positive effect of the revaluation of inventories and increasing volumes in Terpel and in the gas stations channel in Chile. The former was partly offset by a drop in volume in the industrial channel in Chile. EBITDA rose 24.3% to Ch$ million. Non-operating income was more favorable due to higher exchange rate difference income. The total sales volume in Chile fell 1.1%. Although the upward trend continued in the franchisee channel increasing 5.2%, the industrial volume dropped 8.1%. Terpel s EBITDA rose 23.4%, due to higher margins and volumes and a positive effect of the revaluation of inventories. The liquid fuel sales volume increased 2.4% in Colombia, 3.4% in Ecuador, 3.2% in the Dominican Republic, and 32.3% in Peru, and dropped 3.4% in Panama. The NGV business had a volume decrease of 9.9% in Colombia, continuing the trend as of Q17 / 2Q17. Net income in the quarter rose Ch$6.277 million QoQ. That difference is explained by operating income increasing Ch$ million, largely due to higher margins and stable volume. EBITDA was up 10.1%. The sales volume increased 4.0% in the gas station channel in Chile but dropped 6.1% in the industrial channel. In regard to Terpel, EBITDA increased 32.3% due to volume rising 3.3% in Colombia, 0.6% in Panama and 8.9% in Ecuador, but dropping 2.6% in the Dominican Republic. The NGV volume grew 0.7%. Non-operating income increased Ch$1.332 million QoQ, due to positive monetary adjustment income and lower financial costs. COPEC CONSOLIDATED (Including Terpel & Mapco) 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Revenues 2,215,694 2,228,999 1,841, % (0.6%) 6,650,620 5,413, % EBITDA 105,852 96,112 85, % 10.1% 310, , % EBIT 81,099 70,617 62, % 14.8% 235, , % Non operating income (8,869) (10,201) (11,451) (22.6%) (13.1%) (28,220) (36,468) (22.6%) Net income 45,101 38,824 33, % 16.2% 134, , % Copec Chile physical sales (thousand of m3) 2,397 2,415 2,424 (1.1%) (0.7%) 7,308 7,384 (1.0%) Gas stations channel 1,341 1,290 1, % 4.0% 3,966 3, % Industrial channel 1,056 1,125 1,149 (8.1%) (6.1%) 3,342 3,578 (6.6%) Copec Chile market share* 57.5% 57.5% 58.0% (1.0%) 0.0% 58.1% 58.3% (0.3%) Figures in millions of Chilean pesos TERPEL 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Revenues 3,871,004 3,646,845 3,614, % 6.1% 11,106,777 10,604, % EBITDA 214, , , % 32.3% 534, , % EBIT 167, , , % 43.1% 398, , % Non operating income (37,002) (29,506) (41,249) (10.3%) 25.4% (95,839) (123,702) (22.5%) Net income Profit attributable to controlers 79,805 54,748 45, % 45.8% 184, , % Profit attributable to minority interest (99.7%) Terpel physical sales (thousand of m3) Colombia 1,798 1,740 1, % 3.3% 5,241 5, % Panama (3.4%) 0.6% (4.5%) Ecuador % 8.9% % Dominican Republic % (2.6%) % Gazel NGV physical sales (thousand of m3) Colombia (9.9%) (0.9%) (7.4%) Peru % 2.4% % Mexico 17 * % 5.8% % Figures in millions of Colombian pesos MAPCO 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Revenues % 1, EBITDA % Mapco physical sales (thousand of m3) % 1, Figures in US$ thousands *M arket share figures as of M ay

9 2017 / 2016 (accrued). Copec had net income of Ch$ million, which was up on the Ch$ million in That increase was due to higher margins in Chile and Colombia, along with greater sales volumes at Terpel and in the gas station channel in Chile. Moreover, income improved from the recent consolidation of the MAPCO operations in the United States. EBITDA rose 20.2% to Ch$ million. The total volumes in Chile dropped 1.0%, because of a 6.6% decrease in the industrial channel. The gas station channel continued the upward trend with an increase of 4.2%. Market share (as of May 2017 which is the latest figure available) is 58.1%. Terpel s EBITDA increased 9.6%, due to higher margins. Liquid fuel sales volumes rose 0.4% in consolidated terms, explained by increases of 6.5% in Ecuador, 6.5% in the Dominican Republic and 0.3% in Colombia, partly offset by a decrease of 4.5% in Panama. The vehicle natural gas volume dropped 7.4% in Colombia, continuing the trend as of Peru and Mexico had increases of 3.7% and 28.3%, respectively. Mapco s EBITDA was US$31 million with physical sales of 1,443 th. m 3 in the same period. Copec s consolidated non-operating income was more favorable, mainly due to exchange rate differences, partly offset by higher net financial costs. * 9

10 ABASTIBLE 3Q17 / 3Q16. Abastible had a net income increase of 35.6% in 3Q17 amounting to Ch$ million. That was due to higher operating and non-operating income. Operating income increased Ch$2.983 million, with growth in Chile and Colombia, along with the consolidation of the operations of Solgas in Peru and Duragas in Ecuador. EBITDA increased 11.1% to Ch$ million. The company had sales in Chile of 146 th. tons of liquefied gas in the quarter, a 8.5% increase on The sales volume of Inversiones del Nordeste in Colombia increased 3.2% to 51 th. tons of liquefied gas sold. Physical sales in Peru and Ecuador were 131 th. tons and 111 th. tons. It should be noted that Abastible started to consolidate the operations of Solgas in Peru and Duragas in Ecuador as of June and October 2016, respectively. Non-operating income rose Ch$805 million, due to positive exchange rate differences and monetary correction income in 3Q17, along with higher income in associates and joint ventures. That was partly offset by greater financial costs. 3Q17 / 2Q17. Abastible s net income increased 32.3% QoQ. Operating income was up 18.9%, due to higher volume in Chile and Colombia. The company had a 12.0% LPG sales increase in Chile QoQ. Deliveries increased 4.9% and 6.2% in Colombia and Ecuador, respectively, but they dropped 1.2% in Peru. Non-operating income was 33.5% down QoQ, on account of lower other net revenue, partly offset by higher other earnings and positive monetary correction income. EBITDA rose 11.9% / 2016 (accrued). Abastible had net income of Ch$ million in 2017, which was a 4.7% decrease. That was due to non-operating income falling Ch$3.501 million, mainly because of lower exchange rate differences and higher net financial costs, partly offset by other earnings by function. Operating income increased 5.0% due to the better performance of IN in Colombia and consolidation of the operations of Solgas and Duragas, which was offset by lower operating income in Chile. EBITDA rose 12.2% to Ch$ million. The company had sales in Chile of 365 th. tons of liquefied gas in 2017, which was up on the 357 th. tons in the same period in The sales volume of Inversiones del Nordeste in Colombia grew 6.4% to 147 th. tons of liquefied gas sold. The sales volumes of Solgas in Peru and Duragas in Ecuador were 391 th. tons and 315 th. tons, respectively. ABASTIBLE CONS. (Includes Chile, Colombia, Peru, Ecuador) 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Sales 206, , , % 7.8% 562, , % EBITDA 36,181 32,344 32, % 11.9% 89,964 80, % EBIT 27,051 22,747 24, % 18.9% 61,837 58, % Non operating income 1,199 1, % (33.5%) 1,586 5,087 (68.8%) Net income 21,846 16,516 16, % 32.3% 43,740 45,898 (4.7%) Abastible Chile LPG physical sales (thousand of tons) % 12.0% % Figures in million chilean pesos INVERSIONES DEL NORDESTE (Colombia) 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Sales 120, , , % 2.1% 364, , % EBITDA 26,241 23,159 22, % 13.3% 77,362 60, % IN Colombia LPG physical sales (thousand of tons) % 4.9% % Figures in million colombian pesos SOLGAS (Peru) 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Sales 298, , % 826, EBITDA 18,727 14, % 51, Solgas Perú LPG physical sales (thousand of tons) (1.2%) Figures in thousand soles peruanos DURAGAS (Ecuador) 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Sales % EBITDA % Duragas Ecuador LPG physical sales (thousand of tons) % Figures in US$ thousands 10

11 PESQUERA IQUIQUE-GUANAYE (IGEMAR) 3Q17 / 3Q16. Igemar had net income attributable to the controller s owners of US$40,1 million in 3Q17 that was up on the loss of US$7,7 million in 3Q16. That is explained by a non-operating income increase of US$49,1 million, related to the net income generated from Corpesca selling Selecta in Brazil and the net income from the acquisition of an additional shareholding in Corpesca. Operating income dropped US$3,6 million, partly related to fishmeal and fish oil price decreases, along with an increase in the distribution costs and administration and sales expenses. Physical fishmeal sales were 10,7, th. tons, increasing 55.4% YoY. The fish oil sales volume increased 99.7% to 3,0 th. tons. 6,7 th. tons of frozen fish and 533 th. cases of canned fish were sold, increasing 25.8% and 13.8%, respectively. The fish processed was 18 th. tons, falling 11.5% YoY. Fish meal, fish oil and canned fish prices dropped 20.1%, 34.5% and 2.9%, respectively. Frozen fish prices increased 3.3%. 3Q17 / 2Q17. Net income in 3Q17 was US$44,5 million higher QoQ. That was because of non-operating income rising US$42,5 million, related to Corpesca selling Selecta in Brazil and the net income from the acquisition of an additional shareholding in Corpesca / 2016 (accrued). Igemar had earnings attributable to the controller s owners of US$32 million as of September 30, 2017, which was up on the loss of US$8 million as of September 30, That was due to higher non-operating income from greater earnings in associates and joint ventures. Regarding this, Corpesca had extraordinary net income from the sale of the Selecta operations in Brazil. The negative change in operating income was mainly because of the higher costs related to lower catches of own origin landed by the industrial fleet on account of a longer jack mackerel fishing season and lower productivity for common sardine and anchovy. There were also lower fishmeal and fish oil prices. Physical fishmeal sales were 20,5 th. tons, dropping 0.3% on sales in the first nine months of The company sold 5,6 th. tons of fish oil, 14,7 th. tons of frozen fish, and 1,6 million cases of canned fish, increasing 29.7%, 27.8% and 4.3%, respectively, on the same period of the previous year. The fish processed was 145,0 th. tons, increasing 5.0% on the same period in Fishmeal and fish oil prices fell 11.5% and 29.4%, respectively. Frozen and canned fish prices rose 13.4% and 3.5%, respectively. Operating income fell US$0,3 million, largely related to higher distribution costs and administration and sales expenses. IGEMAR CONSOLIDATED 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Sales % 16.4% % EBITDA* (26.3%) 39.2% (35.0%) EBIT (0.2) (107.3%) (382.8%) (0.8) 9.3 (109.1%) Non operating income 36.0 (6.5) (13.1) (375.3%) (655.7%) 23.4 (17.5) (233.3%) Net income 40.1 (4.4) (7.7) (620.0%) (1018.8%) 32.0 (8.4) (481.0%) Physical sales Fishmeal (tons) 10,725 7,433 6, % 44.3% 20,487 20,552 (0.3%) Fish Oil (tons) 2,967 2,127 1, % 39.5% 5,617 4, % Canned Fish (tons) 533, , , % 7.0% 1,626,743 1,559, % Frozen Fish (tons) 6,704 5,791 5, % 15.8% 14,681 11, % Catches (tons) 17,992 64,034 20,331 (11.5%) (71.9%) 145, , % Figures in US$ million *Ebitda = Operating Income + Depreciation + Amortization Igemar calculates its EBITDA as follows: Operating Income + Depreciation + Amortization + Other expenses + Other Income 11

12 OTHER AFFILIATES Sonacol Sonacol had net income of Ch$6.939 million in 3Q17, which was up on the Ch$6.414 million in 3Q16. That was mainly due to operating income increasing 8.0%, due to a 7.3% increase in the volumes pipelined. As of September 30, 2017, accrued net income was Ch$ million, which was up on the Ch$ million in the same period in That was mainly because of operating income increasing 5.8% and less negative non-operating income of 11.7%. The volumes pipelined were 4.9% higher than the previous year. OTHER RELATED COMPANIES Metrogas and Agesa On April 1, 2016, Metrogas S.A. was split into two companies. On the one hand, Metrogas S.A., which has the natural gas distribution operations and keeping the assets and liabilities of the franchise sector in the company. On the other hand, Aprovisionadora Global de Energía S.A., which was the company hived off from the split, which is engaged in the supply business with all the assets and liabilities of the non-franchise sector. Metrogas had net income of Ch$ million in 3Q17, which was up on the Ch$ million in 3Q16. This change is explained by a 45.6% increase in operating income due to higher volumes and margins. Volume, excluding deliveries to electric power generating companies, rose 10.3%, related to higher dispatches to customers in the residential and commercial sector, which increased 17.8%, and higher industrial volume of 3.9%. Aprovisionadora Global de Energía had net income of US$14,7 million in 3Q17. Altogether, the total income of both companies increased 27.0% on the previous year. As of September 2017, Metrogas had net income of Ch$ million, lower than the Ch$ million of the previous year, explained by a drop in operating and non-operating income, principally related to the company split and higher sales costs. Volume, excluding deliveries to electric power generating companies, rose 6.7%, related to higher dispatches to customers in the residential and commercial sector, which increased 12.3%, and higher industrial volume of 2.9%. As of September 2017, Aprovisionadora Global de Energía had net income of US$46,2 million. Altogether, the total income of both companies rise 19.4% in US dollars. Corpesca The company posted a profit of US$111,8 million in 3Q17, which was better than the loss of US$15,6 million in 3Q16, because of higher nonoperating income related to the sale of 60% of the subsidiary Selecta of the investment in Brazil. That was partly offset by more negative operating income YoY. In accrued terms, the company posted net income of US$110,2 million, which was up on the US$16,3 million loss in 2016, mainly due to the sale of its interest in the subsidiary Selecta. There was also lower non-operating income from negative exchange rate differences at Selecta. Operating income was also higher than that last year with a 42% increase in the sale volumes of fishmeal and fish oil, offset by fishmeal and fish oil prices dropping 16% and 37%, respectively. Net income from other affiliates and associates 3Q 17 2Q 17 3Q 16 3Q17 / 3Q16 3Q17 / 2Q17 Accum 17 Accum 16 Chg. 17 / 16 Sonacol* 6,939 6,188 6, % 12.1% 18,557 17, % Alxar 0.3 (1.1) (2.2) 112.8% 127.0% 0.0 (6.6) 100.4% Metrogas* 23,529 16,611 16, % 41.6% 42,083 49,037 (14.2%) Agesa (6.3%) (15.6%) % Corpesca (2.8) (15.6) 816.9% % (16.3) 775.1% Laguna Blanca** (1.7) 311.3% 76.0% 10.8 (7.0) 253.0% Figures in US$ million * Figures in millions of Chilean pesos ** Parent company of Mina Invierno, formerly named Isla Riesco 12

13 CONSOLIDATED BALANCE SHEET ANALYSIS Consolidated current assets increased 3.0% in 3Q17 on those as of December 31, That difference was principally driven by an increase in trade receivables and other current accounts receivable, mainly at the subsidiary Arauco, along with higher inventories at Copec. That was partly offset by lower cash and cash equivalents, and lower current tax assets at Arauco. Non-current assets in 3Q17 increased 1.5% on those at the close of There was an increase in property, plant and equipment at Copec, along with higher investments accounted for using the equity method. That was partly offset by a decrease in non-current biological assets, largely due to the plantations of the subsidiary Arauco affected by forest wildfires early in the year. Current liabilities increased 10,2%, mainly because of higher other current non-financial liabilities related to dividends payable. There were also higher accounts payable and other current financial liabilities. Non-current liabilities fell 3.5%, mainly due to lower other non-current financial liabilities of the subsidiary Arauco. Altogether, the company s shareholders equity increased 4.0% on that at December 2016, mainly because of an increase in retained earnings. There were also less negative conversion reserves. Simplified Balance Sheet Statement Sep-17 Dec-16 Chg. 17 / 16 Current assets 5,058 4, % Non-current assets 16,778 16, % TOTAL ASSETS 21,835 21, % Short term financial debt % Other current liabilities 1,902 1, % Long term financial debt 5,431 5,738 (5.3%) Other non-current liabilities 2,625 2, % TOTAL LIABILITIES 10,935 10,961 (0.2%) Non-controlling interests % SHAREHOLDER'S EQUITY 10,352 9, % Leverage* (6.4%) Net financial debt 5,036 5,175 (2.7%) ROCE** 8.2% 6.6% 1.5pp 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) CASH FLOW STATEMENT ANALYSIS The operating cash flow as of 3Q17 increased 9.1% compared to the previous year, largely explained by higher charges from the sale of goods and provision of services at Copec, and to a lesser extent at Arauco and Abastible. That was partly offset by higher payments to goods and service suppliers at Copec and Abastible. There was also an increase in payments to and on behalf of employees at Copec and lower other net charges for operating activities at Arauco. Regarding the investing cash flow, in 3Q17 there was a 30.4% decrease in outlays compared to The main effect was a lower cash flow used to gain control of subsidiaries or other businesses in 2017 compared to the previous year when the company purchased Solgas in Peru. There was also a decrease in other payments to gain an interest in joint ventures at Arauco, related to the acquisition of Tafisa last year. That was partly offset by higher purchases of property, plant and equipment and intangible assets at Arauco and Copec. Other cash payments increased to acquire equity or debt instruments of other entities at Igemar, related to the purchase of additional ownership in Corpesca The financing cash flow had a net disbursement of US$290 million in 3Q17, increasing 128.5% on the same period in That is explained by a lower net securing of loans in the forestry business, along with higher loan payments at Arauco and Abastible. CASH FLOW STATEMENT Sep-17 Sep-16 Chg. 17 / 16 Cash flow s from (used in) operating activities 1,091,069 1,000, % Cash flow s from (used in) investing activities (711,061) (1,021,955) (30.4%) Cash flow s from (used in) financing activities (516,422) (226,044) 128.5% Net increase (decrease) in cash and cash equivalents (136,414) (247,888) (45.0%) 13

14 DEBT ANALYSIS Total financial debt: MUS$6,408 Debt by Subsidiary Copec 16,5% Debt by Currency Chilean Pesos 3% Chilean UF 29% Debt by Type Others 4% Arauco 65,5% Sonacol 1,9% Abastible 3,5% Bonds 65% EC Holding 9,6% Igemar 1,2% Others US Dollar 59% Others 2% Colombian Pesos 7% Bank Debt 31% Net Debt / EBITDA 3,9 3,2 3,5 3,4 2,8 2,5 2,8 2,7 2,6 2,6 2,4 2,4 2,4 2,2 2,4 2,3 2,7 2,8 3,0 2,9 2,7 2,4 1,6 1,7 Dividend distribution and Dividend Yield* Figures in US$ million Financial debt maturities Figures in US$ million 0,9% 1,0% ,3% 406 1,6% 1,4% ,1% 308 2,3% 262 1,8% 1,3% LTM Dividends (MM USD) Dividend Yield *Dividend Yield is calculated based on dividends paid per calendar year. Market value and exchange rate at the end of each year and more Dividend policy of 40% since

15 BREAKDOWN BY OPERATING SEGMENTS (Accumulated as of September 2017) Figures as of September 2017 Arauco Copec Abastible Sonacol Igemar Others Subtotal Elimin. Total Revenues from external clients 3,907,039 10,116, ,453 37, , ,029,228-15,029,228 Revenues betw een segments - 62,221 7,197 23, ,163 (93,163) - Interest Income 15,651 8,079 2, ,491 35,986-35,986 Interest Expense (171,766) (66,644) (12,708) (3,079) (3,783) 1,058 (256,922) - (256,922) Interest expense, net (156,115) (58,565) (10,334) (2,949) (3,522) 10,549 (220,936) - (220,936) Income (loss) from the reporting segment 187, ,260 73,737 28,297 27,095 33, , ,685 EBIT 455, ,606 94,544 41,677 (846) (14,642) 937, ,182 Depreciation 302,227 74,824 43,008 7,249 16, , ,774 Amortization 10,036 39,841 2, ,623-52,623 Fair value cost of timber harvested 256, , ,408 EBITDA 1,024, , ,666 48,926 16,032 (13,427) 1,690,982-1,690,982 Share in income (loss) of associates 18,579 13,537 11,125-30,945 34, , ,973 Income (expense) from income taxes (156,115) (58,565) (10,334) (2,949) (3,522) 10,549 (220,936) - (220,936) Investments by segment Payments for acq. prop., plant and equip. 289, ,792 45,522 4,951 4, , ,503 Acquisition other long term assets 121, , ,541 Payments for acq. affiliates and associates , ,497-28,497 Purchase of intangible assets 9,860 35, ,753 50,401-50,401 Other Payments for Investments Total investments 421, ,449 45,653 4,951 32,178 5, , , Country of origin of operating revenue Operating revenues - local (chile) 2,237,447 5,143, ,548 37, , ,932,768-7,932,768 Operating revenues - foreign (foreign companies) 1,669,592 4,972, , ,096,460-7,096,460 Total operating revenues 3,907,039 10,116, ,453 37, , ,029,228-15,029,228 Assets by segment 14,029,077 4,698,072 1,264, , , ,766 21,835,267-21,835,267 Equity method investments 361,696 61,233 64, , ,817 1,015,869-1,015,869 Liabilities by segments 6,913,647 2,957, , , ,103 (135,637) 10,935,296-10,935,296 Country of origin of non-current assets Nacionalidad activos no corrientes 6,873,776 1,594, , , , ,978 10,440,956-10,440,956 Foreign 4,482,618 1,361, , ,336,571-6,336,571 Total non-current assets 11,356,394 2,956,057 1,044, , , ,978 16,777,527-16,777,527 Total non-current assets Breakdown by country Chile Colombia USA/Canada Panama Argentina Brazil Uruguay Ecuador Dominican Republic Peru Mexico Total Revenues 7,932,768 3,232,211 1,815, , , , , , , ,573 18,618 15,029,228 Non-current assets 10,438, ,931 1,053, , ,094 1,248,376 1,787,012 35,275 4, ,439 23,419 16,777,527 Figures in thousand US$ 15

16 BREAKDOWN BY OPERATING SEGMENTS (Accumulated as of September 2016) Figures as of September 2016 Arauco Copec Abastible Sonacol Igemar Others Subtotal Elimin. Total Revenues from external clients 3,540,781 7,915, ,206 36, , ,149,884-12,149,884 Revenues betw een segments - 36,330 5,161 19, ,872 62,866 (62,866) - Interest Income 25,759 13, ,242 56,040-56,040 Interest Expense (200,455) (61,010) (8,972) (3,339) (3,062) (1,604) (278,442) - (278,442) Interest expense, net (174,696) (48,000) (8,345) (3,198) (2,801) 14,638 (222,402) - (222,402) Income (loss) from the reporting segment 141, ,356 72,314 25,864 (8,734) 44, , ,681 EBIT 214, ,663 87,134 38,047 9,321 (11,098) 627, ,282 Depreciation 291,677 47,822 31,276 6,715 14, , ,830 Amortization 10,111 43,390 4, ,315-58,315 Fair value cost of timber harvested 253, , ,679 EBITDA 769, , ,598 44,762 24,646 (10,457) 1,332,106-1,332,106 Share in income (loss) of associates 14,003 12,504 10,856 - (7,286) 20,572 50,649-50,649 Income (expense) from income taxes (174,696) (48,000) (8,345) (3,198) (2,801) 14,638 (222,402) - (222,402) Investments by segment Payments for acq. prop., plant and equip. 243, ,196 41,165 7, , ,087 Acquisition other long term assets 103, , , ,316 Payments for acq. affiliates and associates 153,135 39, , , ,136 (101,725) 468,411 Purchase of intangible assets 1,858 17, ,265-19,265 Total investments 501, , ,816 7,687 8, ,734 1,130,804 (101,725) 1,029,079 Country of origin of operating revenue Operating revenues - local (chile) 2,275,949 4,391, ,046 36, , ,160,942-7,160,942 Operating revenues - foreign (foreign companies) 1,264,832 3,523, , ,988,942-4,988,942 Total operating revenues 3,540,781 7,915, ,206 36, , ,149,884-12,149,884 Assets by segment 13,983,993 3,793,932 1,109, , ,859 1,175,088 20,907,211-20,907,211 Equity method investments 438,494 58,504 63, , , , ,710 Liabilities by segments 7,052,552 2,370, , , ,168 24,741 10,492,169-10,492,169 Country of origin of non-current assets Nacionalidad activos no corrientes 7,089,505 1,679, , , , ,930 10,500,063-10,500,063 Foreign 4,298, , , ,312,151-5,312,151 Total non-current assets 11,388,394 2,217, , , , ,930 15,812,214-15,812,214 *Includes Alxar, Empresas Copec parent company and others Figures in thousand US$ Breakdown by country Chile Colombia USA/Canada Panama Argentina Brazil Uruguay Ecuador Dominican Republic Peru Mexico Total Revenues 7,160,881 2,999, , , , , , ,935 84, ,298 13,442 12,149,884 Non-current assets 10,500, , , , ,813 1,158,172 1,816,666 14,352 4, ,264 21,442 15,812,214 Figures in thousand US$ 16

17 FINANCIAL STATEMENTS STATEMENT OF COMPREHENSIVE INCOME BY FUNCTION Sep-17 Sep-16 Chg. 17 / 16 Revenue 15,029,228 12,149, % Cost of sales (12,454,538) (10,115,853) 23.1% Gross profit 2,574,690 2,034, % Other income 148, ,983 (25.2%) Distribution costs (930,103) (778,419) 19.5% Administrative expenses (707,405) (628,330) 12.6% Other expense (227,080) (71,253) 218.7% Other gains (losses) (3,550) 1,952 (281.9%) Finance income 35,986 56,040 (35.8%) Financial costs (256,922) (278,442) (7.7%) Share of profit (loss) of associates and joint ventures accounted for using equity method 108,973 50, % Foreign exchange differences 24,446 25,951 (5.8%) Gains (losses) on net monetary position (5,509) (9,337) (41.0%) Profit (loss) before tax 761, , % Income tax expense (183,030) (146,144) 25.2% Profit (loss) from continuing operations 578, , % Profit (loss) 578, , % Profit (loss), attributable to Profit (loss), attributable to ow ners of parent 533, , % Profit (loss), attributable to non-controlling interests 44,895 32, % Total profit (loss) 578, , % Earnings per share Basic earnings per share Basic earnings (loss) per share from continuing operations % Basic earnings (loss) per share from discontinued operations 0 0 Basic earnings (loss) per share % Diluted earnings (loss) per share from continuing operations - - Diluted earnings (loss) per share from discontinued operations - - Diluted earnings (loss) per share - - Figures in thousand US$ 17