Investor Presentation. April 2018

Transcription

1 Investor Presentation April 2018

2 Contents Empresas Copec at a glance Competitive Advantages Strategic Focus Internationalization Latest and Potential Expansions Financial Strength 4Q17 Results

3 Empresas Copec at a glance Industrial group focused in natural resources and energy Business Units Fuels EBITDA: USD 844 million Main distributor of liquid fuels in Chile and Colombia Largest distributor of liquefied petroleum gas in Chile, Colombia and Peru Stake in largest natural gas distributor in Chile Forestry EBITDA: USD 1,374 million Second largest market pulp and panel producer of the world Largest sawn timber producer in Latam Fishing, Mining and Others EBITDA: USD 1 million One of the most important fishing companies in Chile and the world Participates in coal and metal mining Highlights Consolidated Assets Consolidated EBITDA Market Cap USD 20,591 million CONSOLIDATED EBITDA* Sales USD 20,353 million EBITDA International USD 2,220 million Stable BBB Forestry Total of 65.3% USD 22,174 Fuels million 29.8% Forestry 61,9% Total of USD 2,220 million Fuels 38,0% Risk Rating Local Stable AA- Fishing & Other 4.9% Fishing & Other 0,0% 3 Source: Empresas Copec, Bloomberg, RISI Figures LTM as of December 2017

4 Empresas Copec at a glance Industrial group focused in natural resources and energy ANGELINI GROUP 74.67% 25.33% OTHERS 60.82% PENSION FUNDS 6.94% 32.24% OTHERS FORESTRY FUELS FISHING OTHER INVESTMENTS 99.98% 81.93% % 50.00% % 99.20% 39.83% 39.83% % 58.51% 40.80% 12.00% 66.80% 39.79% 51.00% % % 35.0% 35.0% 4 Figures as of December 2017

5 Empresas Copec at a glance 83 years of history 1934 Incorporation Diversification Investments and growth Alto Paraná Arauco II Licancel Metrogas 2003 Corporate restructuring Creation of Empresas Copec Internationalization Expansion of liquid fuels and LPG business to Colombia Montes del Plata pulp mill in Uruguay starts operations (1) Consolidation of the panel business Terpel completes its restructuring process Empresas Copec sells its stake in Guacolda for USD 364 million Expansion in fuels Abastible Sonacol 1986 Entry of Angelini group Financial restructuring Strategic Development Plan Consolidation and strategic focus Angelini assumes control of the Company Divestiture of shares in non-core businesses Focus in fuels, forestry and fishing A world scale player Arauco becomes the second largest market pulp producer in the world and the third main panel producer Arauco acquires a 50% stake in Tafisa (2) Abastible acquires Solgas in Peru and Duragas in Ecuador (3) Copec completes the acquisition of MAPCO in the United States Arauco acquires Masisa s assets in Brazil Copec acquires ExxonMobil s lubricants and liquid fuels assets in Colombia, Ecuador and Peru 5 Source: Empresas Copec (1) Arauco participates in a joint venture with Stora Enso (50% participation each) (2) Tafisa is the subsidiary of the Portuguese group Sonae Industria, dedicated to the panel business, which has plants in Spain, Portugal, Germany and South Africa (3) Abastible acquired Repsol s LPG operations in Peru and Ecuador

6 Empresas Copec at a glance One of the most relevant companies in Chile USD million Market capitalization of Chilean companies (1) IPSA Index Weights Company % COPEC 8,98 LTM 7,44 ENELAM 7,02 FALABELLA 6,61 CHILE 5,88 BSANTANDER 5,66 CMPC 4,63 CENCOSUD 4,45 SQM-B 4,36 BCI 4,18 OTHERS 40,79 6 Source: Bloomberg (1) As of April 12 th 2018

7 Competitive Advantages

8 US$/ADt Cash Cost FOB mill Competitive Advantages Low Cash Cost producer in both fibers Short harvesting cycle (years) Chile Sweden Other World US BSKP BHKP Other Europe Finland Coastal BC Int. West Canada Iberia Japan East Canada Canada US China Japan Bel/France Other Asia Sweden Finland Softwood East Europe Indonesia East Europe Chile/Uruguay Brazil 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Annual capacity (000s ADt) Higher exposure to Softwood Hardwood Chile Canada Finland 38 Fluff 9% UKP 13% Capacity by grade* 3,887 th. Adt BHKP 37% BSKP 41% Brazil Uruguay Portugal Chile Finland 8 *Figures as of December 2017 Source: Empresas Copec

9 Competitive Advantages Maximizing the value of every tree Efficient Logistics between forests mills ports Pulp installed capacity Panel installed capacity Million tons Fibria Arauco IP CMPC Suzano APRIL UPM-Kymmene Georgia Pacific Stora Enso Paper Excellence 3.9 Million m 3 Kronospan Arauco Georgia Pacific Egger Norbord Swiss Krono Kastamonu LP Pfleiderer Duratex 2 nd 2 nd Source: Empresas Copec

10 Competitive Advantages Logistic efficiency Strong brand recognition 9.0 Thousand m 3 sold / gas station Favorite Brand Usual Brand Other 16% Other 12% Other players in Chile 84% 88% Strategic locations Foto terpel 1 st place in "Service Stations" of the National Customer Satisfaction Award, ProCalidad 2017 Distinguished by RepTrak with the Brand Reputation Award st place in Canned Gas" of the National Customer Satisfaction Award, ProCalidad th time winner of Consumer Loyalty Award 2016 by Alco consultores and Diario Estrategia Recognized among the companies with the best corporate reputation, according to Merco Empresas y Líderes Colombia 2017 ranking 1 st place in Natural Gas" of the National Award of Consumer Satisfaction Source: Empresas Copec

11 11 Competitive Advantages Large scale and coverage Synergies among business lines More than 3,200 gas stations* Gas Stations Distribution of 21.5 million m³ of liquid fuels** Import facilities Storage plants Industrial clients Convenience Stores % Market Share Copec market leadership Industrial Channel 57% Lubricants 49% Gas crisis * Copec Chile + Terpel + Mapco ** All distribution channels for Copec Chile, Terpel and Mapco

12 Competitive Advantages Leadership in all businesses in which it participates Fuels distribution in Chile Lubricants distribution in Chile Fuels distribution in Colombia 57% 43% 43% Others 43% 1 st Others 57% 1 st Others 57% 1 st LPG distribution in Chile LPG distribution in Colombia LPG Distribution in Perú* 37% 36% 22% 1 st 1 st 1 st Others 63% Others 64% Others 78% 12 Market share as of December 2017

13 Strategic Focus

14 Strategic Focus Growth has concentrated in core segments, while keeping other options for value creation Total Assets Acquisitions/Investments Divestments Total Assets 2000 USD 7.1 Billion Planta Valdivia - Forestry Planta Nueva Aldea - Forestry Mina Invierno - Mining Stora Arapoti - Forestry TPI Quintero - Fuels Golden Omega - Fishing / Nutrition Tafisa Brasil - Forestry Terpel - Fuels Orizon - Fishing / Nutrition Montes del Plata - Forestry Inversiones del Nordeste - Fuels Moncure - Forestry Flakeboard - Forestry Selecta - Fishing / Nutrition Tafisa - Forestry Mapco - Fuels Solgas - Fuels Duragas Fuels Masisa Brazil Forestry AES Gener - Power Generation CGE - Power Generation CCU - Massive Consumption Saesa - Power Distribution Frontel - Power Distribution Abcdin - Commercial Retail Guacolda - Power Generation GNL Quintero - Infrastructure Planta Valdivia Nueva Aldea Stora Arapoti TPI Quintero Tafisa Brasil Moncure Masisa Brasil Total Assets 2017 USD 22.2 Billion Forestry 65,3% Fuels 29,8% Forestry 68% Fuels 18% Fishing & Other 4,9% Others 14%

15 Focus in Fuels and Forestry Diversification within core businesses Consolidated EBITDA (1) 5% 13% 4% 2% 61,9% Total of USD 2,220 million Fuels 38,0% 28% 8% 1% 40% Consolidated Revenues (2) Gas Stations 29% By Channel (3) Total 18.2 million m 3 Industrial 24% Chile 51% By Country Total USD 13,225 millon Colombia 32% Panels & Wood Products 50% By Product By Region (2) Others 1% Total of USD 5,238 million Central & South America 25% Pulp 47% Europe 7% Others 4% Total of USD 5,238 million North America 28% Subsidiaries 47% Other Countries 17% Forestry 2% Asia 36% 15 (1) Figures as of December 2017 (L12M) (2) By country of destination. Includes sales of goods produced in each country plus exports to each country. Figures as of December 2017 (L12) (3) Gasoline physical volumes L12M

16 Internationalization

17 Internationalization Two strategic lines of growth outside Chile Replicating our know how within Latam Selected oportunities in developed economies Why Terpel? High growth potential in the Colombian market: Colombia s vehicular penetration is lower than in Chile. Low highway vehicular flows. Low market penetration of convenience stores business. Areas in which both company s expertise can generate mutual benefits: Copec s efficiency in its gas stations operation. Terpel s experience in NGV market. EBITDA Terpel ($COP million) % Arauco acquires Flakeboard and Moncure Panel companies: Good opportunities in the low part of the cycle. Significant synergies between facilities. Access to commercial channels. Significant upside potential. Total investment reaches US$ million. 17

18 Internationalization Productive assets in 16 countries, commercial presence in 23, and sales in more than 80 Canada United States Dominican Republic Germany Spain Portugal Holland Norway China India Thailand Korea Japan Taiwan Philippines Malaysia Indonesia Colombia Ecuador Panama Venezuela Saudi Arabia Peru Australia Chile Uruguay Brasil South Africa Argentina Production Platforms Forestry Fuels Fishing and other investments Arauco Comercial Offices Arauco Agents 18 Source: Empresas Copec

19 Internationalization Non Current Assets History - Local vs Foreign 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 21% 19% 29% 31% 32% 34% 34% 38% 39% Other Countries Chile 0%

20 Latest and Potential Expansions

21 Latest and Potential Expansions BASE INVESTMENT PLAN FOR 2018: US$ 1,444* MILLION Fishing & Others 1% CAPEX History (USD Million) 1,109 Fuels 31% Total of USD 1,444* million 148 Forestry 68% Fishing & Others 4% * Does not include: Masisa Mexico: US$ 245 million, closure expected for 2H18. ExxonMobil: US$ 715 million (includes US$ 230 million in cash), completed in March, Fuels 37% Total of USD 1,109 Million in 2017 Forestry 59% Masisa Brazil 21

22 Latest and Potential Expansions ExxonMobil - Lubricants and liquid fuels On March 15th, Organización Terpel Corporation closed the acquisition of ExxonMobil assets in Colombia, Peru and Ecuador. Organización Terpel Corporation transferred the shareholding in ExxonMobil Colombia S.A. to an autonomous trust controlled by a third party. Country ExxonMobil s Market Shares* Lubricants Liquid Fuels 30% 25% This autonomous trust shall transfer the lubricants business with all the related logistics to Terpel as soon as possible and then sell the fuels business to a third party. The total amount paid was US$ million, which includes the cash of the companies involved in the transaction for app. US$230 million. The operation was financed with bank loans. Colombia Peru 30% 9% 19%** 6% Ecuador 22 (*) Market shares are approximated (**) Of the aviation market in Peru

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

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

25 Latest and Potential Expansions Growth in the Panel Division Sonae-Arauco: Grayling: Arauco purchased 50% of Tafisa in US$ 153 million through a joint venture with Sonae Industria. It operates 10 panelboard mills distributed in Spain, Portugal, Germany and South Africa. 70% of advance in the Grayling Panel Project in Michigan. The investment will be US$ 400 million and is expected to be operational by late Total capacity of 800,000 m³. Loan for US$ 300 million already secured. million m 3 Installed capacity growth of panels 1.8 (1) * 16% million m³ Grayling Project, Chicago 25 * Corresponds to 50% of the production capacity of Sonae-Arauco

26 Latest and Potential Expansions Growth in the Panel Division Masisa do Brasil: Arauco signs agreement to buy Masisa s assets in Brasil in US$ million. Transaction includes two panel mills, at Paraná and Rio Grande do Sul. Capacity of 310,000 m³ in MDF and 410,000 m³ in MDP a year. Acquisition already materialized. Masisa in Mexico: Arauco signs agreement to buy Masisa s assets in Mexico in US$ 245 million. Transaction comprises three panel mills, at Chihuahua, Durango and Zitacuaro. Capacity of 519,000 m³ in PB and 220,000 m³ in MDF a year. Closure expected for 2H18. Arauco to become the second largest producer of composite panels in the world, reaching an annual production capacity of more than 10 million m³. million m Installed capacity growth of panels 1.8 (1) * 16% million m³ 26 * Corresponds to 50% of the production capacity of Sonae-Arauco

27 Latest and Potential Expansions Valdivia Project Dissolving Pulp MAPA Project Project at 11% completion. Conversion of the Valdivia mill into a textile pulp mill, which currently produces 550,000 ton of pulp. Dissolving pulp is a product used in the textile industry as a substitute for cotton. It will provide flexibility to produce either dissolving or paper grade. Arauco would be the first company to produce this kind of pulp in Chile. The investment will be US$ 185 million and is expected to be operational by mid New 1.5 million ton pulp line in Arauco Mill. Includes a 166 MW cogeneration plant. Considers closure of Arauco s 290,000 ton line 1 of short fiber pulp, once the new line is operating. Investment of approx US$ 2.3 Billion. Still subject to technical and economical feasibility studies, and final board approval Mt % +31% Pulp capacity as of December 2013 Montes del Plata (Uruguay, 2014) Current Capacity MAPA project net addition (Chile) Potential Capacity *Figures in million tons 27

28 Financial Strength

29 Financial Strength Investment grade since 1995 Healthy cash flows allows to: Finance investment plans Distribute stable dividends Maintain low levels of leverage International Local Stable BBB Stable AA- Fast recovery of debt levels after expansion phases Balanced debt schedule 1.6 Expansion phase Terpel Montes del Plata Inv. Del Nordeste Flakeboard Moncure 3.9 Net debt / EBITDA 2.2 Expansion phase Mapco Tafisa Duragas Solgas Financial debt maturities Figures in US$ million (US$ Million)

30 (MUS$) Financial Strength Equity and Net Debt / Equity Evolution 16,000 14,000 Bonds Covenant* 1,2x ,000 10,000 8,000 6,000 4,000 2, Equity Net Debt / Equity Consolidated Financial Debt 4Q17: MMUS$6.595 Arauco 65% Distribution by affiliate Copec 17% Sonacol 2% Abastible 3% Others 2% EC Holding 10% Distribution by currency US Dollar 59% Chilean Pesos 3% Chilean UF 29% Colombian Pesos 7% Others 2% Distribution by type Bank Debt 31% Bonds 65% Others 4% 30

31 4Q17 Results

32 Financial Strength Consolidated 4Q17 results QUARTERLY EBITDA (Million of US$) EBITDA decreases Q-o-Q, but increases Y-o-Y I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV Net income affected by non-recurring effects: QUARTERLY NET INCOME (Million of US$) Impairments at Arauco, Orizon and Sonamar. - Repurchase of bonds at Arauco. - Adjustment on revaluation of biological assets. - Tax reforms in Argentina and USA I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV

33 Financial Strength Consolidated 4Q17 results EBITDA (US$ Million) +30% EBITDA rose mainly in the forestry sector, in a scenario of better pulp prices, and in the fuels business EBITDA variation by company YoY EBITDA Composition 4Q

34 Financial Strength Consolidated 4Q17 results Net Income (US$ Million) % Net income dropped mainly due to non-recurring effects in 4Q17, along with a high comparative base which includes the profit from the sale of GNL Quintero Partly offset by a better result in Copec, Arauco and others Net Income variation by company YoY Net Income composition 4Q

35 Financial Strength Consolidated 4Q17 results Net income decreased due to non-recurring effects. HIGHER OPERATING INCOME Stronger result in Arauco, due to higher revenue in all business lines. Better results in Copec caused by higher sales volume in Chile and Colombia, along with an increase in margins in Chile driven by FIFO effect. Partially offset by a drop in Abastible, as a consequence of a lower performance in Colombia. LOWER NON-OPERATING INCOME Increase in other expenses related to impairments at Igemar, Arauco and Sonamar, for approx. MMUS$ 115. Drop in other income stemming from an adjustment made on revaluation of biological assets, for approx. MMUS$ 54. Higher financial expense related to the repurchase of bonds, for approx. MMUS$ 65. CONSOLIDATED INCOME STATEMENT Million USD 4Q 17 4Q 16 Change Net income (26) Operating income Non operating income (296) (7) (289) Other Income (4) 81 (84) Other expenses (142) (44) (98) Other profit (loss) (8) (10) 2 Financial Income Financial expense (146) (83) (63) Profit in associated and JV's (7) 46 (53) Exchange Differences 2 (3) 5 Gain (losses) on net monetary position (3) (3) 0 Taxes 103 (11) 115 EBITDA Partly offset by the positive effect of tax reforms in Argentina and USA, for approx. MMUS$

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

37 Investor Presentation