EMPRESAS CMPC PRESENTATION PREPARED FOR SANTANDER S XIX ANNUAL LATIN AMERICAN CEO CONFERENCE - CANCUN LUIS LLANOS CFO COLOMBA HENRÍQUEZ IR OFFICER

Transcription

1 EMPRESAS CMPC PRESENTATION PREPARED FOR SANTANDER S XIX ANNUAL LATIN AMERICAN CEO CONFERENCE - CANCUN LUIS LLANOS CFO COLOMBA HENRÍQUEZ IR OFFICER

2 AGENDA I. Company description II. Our value proposal 1. Leading diversified Latin American P&P player 2. Low cost producer with world class assets 3. Strong balance sheet and financial track record 4. Committed to Sustainable Development and Corporate Governance 5. Investment portfolio in high growth potential businesses III. IV Challenges Appendix

3 CMPC AT A GLANCE CMPC is a P&P company, established in 1920, that produces solid wood products, pulp, paper, packaging products and tissue in Latin America CMPC s Figures Sales: 4,907 EBITDA: 1,000 Net Income: 137 Net Debt: 3,090 Assets: 15,470 Figures for the LTM as of Sept (US$ million) Market capitalization of US$6.3 US$6.3 billion as of December 30 th, 2014 P&P main companies by market capitalization 23.0 IP 15.4 SCA Stora Enso Fibria KCM CMPC Klabin Suzano Controlled by the Matte Family, one of Chile s leading economic groups Shareholders Structure* Local & Foreign Investors 34% Chilean Pension Funds 11% Matte Family 56% *As of December 30 th, Source: Bloomberg * As of September 30 th, Source: CMPC International rating BBB+ (Fitch) BBB- (S&P) Baa3 (Moodys) Baa3 Local rating AA (Fitch) AA (ICR) AA Operations in 8 countries, selling to over 30,000 customers in more than 45 countries ~16,400 Employees worldwide 3

4 AGENDA I. Company description II. Our value proposal 1. Leading diversified Latin American P&P player 2. Low cost producer with world class assets 3. Strong balance sheet and financial track record 4. Committed to Sustainable Development and Corporate Governance 5. Investment portfolio in high growth potential businesses III. IV Challenges Appendix

5 1. LEADING DIVERSIFIED LATIN AMERICAN P&P PLAYER

6 A DIVERSIFIED BUSINESS PORTFOLIO PROVIDES CMPC A STABLE CASH FLOW Main Figures % of third parties total sales % of consolidated EBITDA Total capacity & Employees Forestry Sales: 828 Sales 3 rd parties: 556 EBITDA: 110 EBITDA margin: 13% 11% 11% 663 Th. has. planted 12.8 M m 3 /y harvested 1.7 M m 3 /y solid wood 2,601 employees US$5.8 billion in assets Pulp Sales: 1,846 Sales 3 rd parties: 1,495 EBITDA: 543 EBITDA margin: 29% 31% 54% 2.8 M tons/y 2,002 employees US$4.9 billion in assets Papers Sales: 1,056 Sales 3 rd parties: 1,000 EBITDA: 161 EBITDA margin: 15% 20% 16% 1.3 M tons/y 3,557 employees US$1.4 billion in assets Tissue Sales: 1,859 Sales 3 rd parties: 1,856 EBITDA: 199 EBITDA margin: 11% 38% 20% 617 Th. tons/y 7,936 employees US$2.1 billion in assets Source: CMPC. Figures in US$ million for the LTM as of September 2014 / Figures do not include sales between CMPC affiliates or subsidiaries 6

7 CMPC HAS EVOLVED FROM A LOCAL COMPANY TO A GLOBAL PLAYER CMPC has expanded significantly through Latin America over the last two decades 11x asset growth since 1990 (before CMPC s international expansion process) Sales Breakdown Evolution (Million US$) 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, Domestic Sales in Chile Export Sales Domestic Sales Foreign Subsidiaries Source: CMPC Forestry Operations Pulp Operations Paper and Packaging Operations Tissue Operations 7

8 CMPC HAS A PRODUCT AND GEOGRAPHIC DIVERSIFICATION OF SALES THAT PROVIDES FLEXIBILITY Operations in 8 countries, selling to over countries 30,000 customers in more than 45 countries Plywood 10 largest customers represent ~ 15% of consolidated sales Besides Chile, there is no single country that represents more than 15% 15% of consolidated sales Source: CMPC. Figures in US$ million for the LTM as of June 2014/ Figures do not include Holding and Intercompany Sales. 8

9 2. LOW COST PRODUCER WITH WORLD CLASS ASSETS

10 CMPC BENEFITS FROM ITS PRODUCTION COST EFFICIENCIES AND WORLD CLASS ASSETS Access to low cost fiber Research and Development to enhance efficiency, productivity and customer satisfaction State of art facilities strategically located Energy investments biomass and cogeneration based in biomass (energy self-sufficiency in Chile by mid 2015) 10

11 HIGH YIELD FORESTRY ASSETS THAT PROVIDE LOW COST FIBER RESOURCES 663,000 Planted hectares 486,500 Chile 121,500 Brazil * 55,000 Argentina CMPC Forest Base is FSC TM Certified Over 1 million hectares of land CMPC has a high quality and sustainable forestry base with fast growth cycles which optimizes capital invested in land, reduces average distance to mills and increases gains due to genetic and sylvicultural practices Radiata Pine Average softwood growth rate (m 3 ssc/ha/year) Eucalyptus Average hardwood growth rate (m 3 ssc/ha/year) Improvement in Forestry Yields ** 32% 23% % 3% 9% 14% Russia Scandinavia Canada USA Chile E. Globulus Iberian E. Globulus Chile Acacia Mangium Eucalyptus Brazil E. Nitens Chile P ** Evolution of the weighted increase of volume per hectare excepted for eucalyptus and pine plantations established in Chile in the respective year Source: CMPC. *There is an agreement to acquire from Fibria aprox. 100 Th. hectares of which 39 Th. are planted. CMPC is waiting the approval of Brazilian authorities to consolidate this land ** m 3 ssc: solid m 3 without bark 11

12 CMPC S CASH COSTS ARE AMONG THE LOWEST OF THE PULP INDUSTRY GLOBALLY CMPC s average distance from to Plantations 80 Km. Laja BSKP 340 th. tons 93 Km. (by train) Ports 80 Km. Guaíba I BEKP 455 th. tons 260 Km. (by barges) 93 Km. Pacífico BSKP 500 th. tons 163 Km. (by train) Source: CMPC BSKP 1 Supply Curve (US$/ton) Effective price range of CMPC s BSKP, last 24 months 99 Km. Santa Fe BEKP th. tons 119 Km. (by train) BHKP 2 Supply Curve (US$/ton) Effective price range of CMPC s BHKP, last 24 months CMPC s pulp facilities CMPC s pulp facilities Source: CMPC and Hawkins Wright as of July 2014 (1) BSKP: Bleached Softwood Kraft Pulp (2) BHKP: Bleached Hardwood Kraft Pulp 12

13 CMPC IS FOCUSING ON ENERGY EFFICIENCY AND RENEWABLE ENERGY SOURCES CMPC is constantly investing in energy generation based on biomass and cogeneration to further lower its cost base and its dependency from the electric market Current Cogeneration Projects Puente Alto Mill (3Q15): 50MW + 80 tons steam/hour Talagante Mill (3Q15): 21MW + 25 tons steam/hour Altamira Mill (3Q15): 21MW + 30 tons steam/hour Source of Energy Consumption in CMPC 2013 (89,975 Terajoules) Natural Gas Oil 7% 6% Electric Energy 8% Coal 6% 3,500 3,000 2,500 2,000 1,500 1,000 Energy Balance in Chile GWh Plywood Biomass 73% F 2015 F 2016 F 2014 F 2015 F 2016 F Forestry Pulp Papers Tissue Generation Contracts Source: CMPC 13

14 3. STRONG BALANCE SHEET AND FINANCIAL TRACK RECORD

15 0.7 0 x x x x x x x x 1, , x x x x x x x x x 5 0 % 4 5 % 4 0 % 3 5 % 3 0 % 2 5 % 2 0 % 1 5 % 1 0 % 5 % 0 % KEY FINANCIAL FIGURES AS OF SEPTEMBER 30 TH 2014 Sales Evolution (US$ million) EBITDA and EBITDA Margin Evolution (US$ million) 4,786 4,759 4,974 4,900 1, ,007 2,484 2,410 22% % 19% 20% 19% 20% LTM Sep-13 Sep-14 Plywood LTM Sep-13 Sep-14 Source: CMPC Financial Debt / Equity (Covenant: <0.8x) Source: CMPC Interest Coverage Ratio (Covenant: >3.25x) 0.43x 0.48x 0.48x 0.58x 6.80x 5.45x 5.67x 5.54x LTM LTM Source: CMPC Source: CMPC 15

16 DEMONSTRATED CAPACITY TO MANAGE LEVERAGE Net Debt / EBITDA 5.0 Acquisition of Pacífico and Santa Fe I Santa Fe II Investment Period Guaíba I Acquisition Guaíba II Investment Period Source: CMPC 16

17 CMPC S DEBT PROFILE AS OF SEPTEMBER 30 TH 2014 Debt Profile Average term: 6.6 years Total Debt: US$4,709 million Cash: US$1,619 million Net Debt: US$3,090 million ECA Other 6% Banks BRL 5% CLP BNDES 18% 11% 23% 10% Bonds 69% USD 78% Variable Rate 9% Fixed Rate 91% Pulp 10% Tissue 9% Inversi ones CMPC 81% Last financial transactions: Capital increases for US$500 million (June 2013) and US$250 million (July 2014) US$340 million ECA financing 10 year (+2 year grace 3.5% UF 5,000,000 Chilean bond (May 2014) 25 year UF + 3.7% UF 4,000,000 CMPC- B bond prepayment (Sept. 2014) US$500 million international bond (Sept. 2014): 10 year UST bps Amortization schedule (as of today) Bonds Banks / / /39 Source: CMPC 17

18 4. COMMITTED TO SUSTAINABLE DEVELOPMENT AND CORPORATE GOVERNANCE

19 CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY Throughout its history, CMPC has maintained a way of doing business and engaging with employees, customers and shareholders. With a 94-year tradition, the following five values summarize our vision of how we should work. Respect for people Fairness when competing Care of the environment Strict compliance with the legal regulation Consideration for neighbors' needs Our objectives for the period: Increase of our renewable energy generation, reducing the purchase of fossil fuels and electricity Increase the energy efficiency of pulp mills by 20% by 2020 Complement the FSC Certification for the stewardship of renewable forest plantations in Chile and Brazil with the respective FSC Chain-of-Custody for the products made by the Company Reduce CMPC s water consumption and effluent volume by upgrading the older industrial processes *For further information please review our CSD Report which is available at 19

20 CORPORATE GOVERNANCE IN CMPC Board of Directors Elected every three years by shareholders Shareholders Meeting to account for the administration Scheduled meetings held once a month to evaluate and decide on the development of the Company Name Years as Director Eliodoro Matte (Chairman) 38 Martín Costabal 9 Erwin Hahn (Independent) 3 Jorge Gabriel Larraín 34 Arturo Mackenna 3 Jorge Marín (Independent) 18 Bernardo Matte 29 Senior Management Appointed by the Board of Directors The controlling group members do not serve as CMPC s managers Top managers with over 23 years experience in CMPC Directors Committee Current members: Jorge Marín, Erwin Hahn and Arturo Mackenna Is responsible for examining the background information concerning related party transactions examining the reports prepared by the external and internal auditors examining officers compensation systems and plans, among others matters Other Self Imposed Requirements Controllership Department, Internal Control Department, Corporate Governance structured downstream, Corporate Ethic Code, Antitrust Guide, Global Demand Line, Investor Relations Department, Auditing Committee, Risk Committee, among others 20

21 5. INVESTMENT PORTFOLIO IN HIGH GROWTH POTENTIAL BUSINESSES

22 CMPC HAS A DIVERSE PROJECT PORTFOLIO WITH MORE THAN US$2.6 BILLION IN INVESTMENT FOR THE PERIOD RECURRENT INVESTMENTS FORESTRY Land purchases for forestry uses and associations with 3 rd parties. PULP Guaíba Expansion 1.3 million ton/year US$ 2.1 billion 2Q15 TISSUE Increase in conversion capacity of tissue paper and sanitary products TISSUE Tissue Machine + Cogeneration Altamira Mill (Mexico) 50 th. tons /year 21MW + 30 tons steam/hour US$ 160 million 3Q15 (27% disbursed*) TISSUE/ENERGY Cogeneration plant Talagante Mill 21MW + 25 tons steam/hour US$33 million 3Q15 (26% disbursed*) PAPERS/ENERGY Cogeneration plant Puente Alto Mill 50MW + 80 tons steam/hour US$71 million 3Q15 (34% disbursed*) *As of September 30 th,

23 TISSUE DIVISION: CMPC IS FAVOURABLY POSITIONED TO CAPTURE THE DEVELOPMENT AND GROWTH OF THESE MARKETS CMPC successfully evolved from a local player into a leading LatAm tissue player due to its ability to enter new markets with high potential based on a pioneering spirit sustained by world-class innovations Mexico 6% Ecuador CMPC: 84 th. tons* 23% Colombia 11% CMPC: 27 th. tons Brazil 7% C;MPC: 135 th. tons CMPC has a strong presence in all main categories of tissue, tissue, sanitary and away from home products CMPC Tissue Sales (US$ million) 296 Entry to Mexico 430 Entry to Ecuador - Colombia 682 Entry to Brazil 1,106 1,503 2, Peru Uruguay 55% CMPC: 71 th. tons Chile Argentina 73% CMPC: 166 th. tons* CMPC Tissue Market Share. 44% C;MPC: 99 th. tons 80% CMPC: 35 th. tons Source: CMPC as of September 30 th

24 CMPC SEEKS TO TAP LATAM UNDERPENETRATED TISSUE MARKETS High growth potential due to low per capita consumption relative to developed economies. Latam average tissue consumption: 5.7 kg/person 5.7 Expected growth in LatAm markets: 64% 64% for Tissue Paper and 34% for Diapers for the period Tissue Paper and Baby Diapers Annual Consumption Growth CAGR * Market Size (2012) Latam Brazil Mexico Argentina 5.0% 3.1% 6.3% 2.7% 3.7% 1.9% 4.2% (0.1%) 3,517 1, ,745 11,100 9,000 3,230 Per Capita Tissue Consumption Tíssue Paper App. Consumption (k/hab.) Finland UK Germany 15 Portugal Japan Spain Australia Costa Rica Italy France Chile 10 Panama Uruguay El Salvador Mexico Guatemala Brazil Argentina 5 Venezuela China, Ecuador, Honduras Peru, Colombia Indonesia 0 0 India GNI p/c (thousand US$ at ppp) Canada Sweden USA Colombia Chile Peru Ecuador Uruguay Other Latam 1.7% 1.3% 1.9% 2.3% Tissue Paper (th. tons) 5.7% 4.4% 4.2% 6.1% 5.6% 5.2% 4.9% 9.3% Baby Diapers (th. units) 206 2, , ,842 Source: CMPC as of December 2012 Source: RISI Tissue World Report (June 2013) and Price Hanna Report (February 2013) * CAGR: Compound Annual Growth Rate 24

25 GUAÍBA 2: CLOSER EVERY DAY Guaíba 2 Project September, 2014

26 GUAÍBA 2: PROJECT OVERVIEW 1.3 million tons/year Production capacity of eucalyptus market pulp 30MW Excess Energy US$2.1 billion Estimated Capex 2Q15 Startup 208 km Average distance from forests 260 km Distance to ports by barges 100% Wood self-sufficiency Over 120,000 Hectares planted with FSC TM Certification BRAZIL 26

27 THE GUAÍBA 2 PROJECT WILL BE ONE OF THE MOST EFFICIENT IN THE PULP INDUSTRY State of the art technology High yield forestry base Economies of Scale Strategic Location Upgrade CMPC s existing logistics Guaíba Terminal Rio Grande Terminal 27

28 GUAÍBA EXPANSION: ON SCHEDULE, ON BUDGET 85% Physical progress as of November 30th ,429 Pipe racks Workers on site US$1,505 million Disbursements as of November 30th 2014 Recovery Boiler Financing Plan Capital Increase: US$750 million 144A Debt Issuance: US$500 million BNDES Credit: BRL$ 2,510 million ECA Financing: US$340 million Sale of non-core assets: Bicecorp: US$106 million Dryers Guaíba 2 Project - November, Digestor 28

29 AGENDA I. Company description II. Our value proposal 1. Leading diversified Latin American P&P player 2. Low cost producer with world class assets 3. Strong balance sheet and financial track record 4. Committed to Sustainable Development and Corporate Governance 5. Investment portfolio in high growth potential businesses III Challenges IV. Appendix

30 CMPC WILL BASE ITS STRATEGY IN 4 PILLARS TO CONSOLIDATE ITS LEADERSHIP IN THE P&P INDUSTRY 1. Successfully execute its investment program 2. Focus on cost control and enhance efficiency 3. Maintain a balanced capital structure 4. Consolidate CMPC s culture among all business divisions and countries 30

31 AGENDA I. Company description II. Our value proposal 1. Leading diversified Latin American P&P player 2. Low cost producer with world class assets 3. Strong balance sheet and financial track record 4. Committed to Sustainable Development and Corporate Governance 5. Investment portfolio in high growth potential businesses III. IV Challenges Appendix

32 APPENDIX I: ANNUAL CAPACITY BY PRODUCT/COUNTRY Business Area Product / Country Capacity Sawn wood 1.0 M m 3 Forestry Remanufactured wood 190 th. m 3 Plywood 500 th. m 3 Pulp Papers Tissue BSKP (Laja) BSKP (Pacífico) BEKP (Guaíba) BEKP (Santa Fe) Boxboard Paper Bags Corrugated Paper Corrugated boxes Molded Pulp trays Other Papers Chile Brazil Argentina Mexico Peru Uruguay Colombia 340 th. tons 500 th. tons 455 th. tons th. tons 431 th. tons 93 th. tons 660 M bags 330 th. tons 285 th. tons 18 th. tons 296 M bags 140 th. tons 166 th. tons 135 th. tons 99 th. tons 84 th. tons 71 th. tons 35 th. tons 27 th. tons 32

33 APPENDIX II: NEW BEKP CAPACITY IN THE 4OO+ MILLION TONNES FIBER MARKET Fiber World Consumption required to produce 403 million tons of Paper&Board Virgin fiber used to produce Paper&Board (million tons) Market Pulp consumed to manufacture Paper&Board (million tons) Recovered Paper 234 million tons (56%) Virgin Pulp 183 million tons (44%) Integrated 124 million tons (68%) Market Pulp 59 million tons (32%) BSKP 24 BHKP 28 Mec 5 UKP 2 Sulphite 417 million tons of total fibers [Containerboard: 146 million tons] [P&W: 109 million tons] [Other P&B: 86 million tons] [Tissue: 32 million tons] [Newsprint: 31 million tons] Source: RISI 5-year Forecast ( ) - December million tons of market pulp 28 million tons of BHKP [BEKP: 16.8 million tons] [Guaíba II: 1.3 million tons] 33

34 Disclaimer: This document provides information about Empresas CMPC SA. In any case this constitutes a comprehensive analysis of the financial, production and sales situation of the company, so to evaluate whether to purchase or sell securities of the company, the investor must conduct its own independent analysis. In compliance with the applicable rules, Empresas CMPC SA. publishes this document in its web site ( and sends to the Superintendencia de Valores y Seguros, the financial statements of the company and its corresponding notes, which are available for consultation and review. CONTACT INVESTOR RELATIONS Trinidad Valdés mtvaldes@gerencia.cmpc.cl +(562) Colomba Henríquez chenriquezb@gerencia.cmpc.cl +(562)