Third Quarter 2012 Results

Transcription

1 Third Quarter 2012 Results Press Release November 23, 2012 International risk rating Standard and Poor s BBB Fitch Ratings BBB Domestic risk rating Feller-Rate AA/1 st Class Level 1 Fitch Ratings AA-/1 st Class Level 1 3Q 12 Results Conference Call Friday, November 30, :30 Hrs. EST (NY time) 12:30 Hrs. (Santiago time) Dial: From EE.UU.: (888) From other countries: 1 (973) ID: Revenue accumulated up to September 2012 was 6.3% up on 2011 and amounted to US$16,778 million. Accumulated net income was US$248 million and 64.9% down on that as of September 2011, driven by the negative non-reccurring effect of US$168 million because a higher income tax rate in Chile that hit deferred tax liabilities. There was lower operating income in the forestry, fuels and fisheries businesses. The forestry business had lower wood pulp and panel sales and the fuels business dropped because of lower margins. The fisheries business had a drop in margins on account of lower prices and fish processed. Net income was 91.6% down on the second quarter of 2011 due to the higher income tax rate effect, and the better performance of the fuels business. That was because of higher margins, partly on account of the effect of the revaluation of inventories and the first in first out (FIFO) costing system in a scenario of fuel price increases, which had a negative effect the previous quarter. Non-operating income also increased, particularly in the forestry business, due to a higher revaluation of biological assets and greater insurance payouts. Consolidated revenue was US$5,437 million in the third quarter, very similar to the same period in Operating income decreased US$68 million, mainly explained by the performance of the forestry business. Net income was down US$131 million, also due to the higher income tax rate effect, and EBITDA fell 10.5% to US$382 million. The development highlights in the quarter included: the purchase of Flakeboard in the United States, the progress attained with the reconstruction of the Nueva Aldea plywood mill, all in the forestry business. Can-Can submitted its Diego de Almagro mining project to the environmental impact assessment system and Guacolda secured a loan for its Unit 5. Lastly, Empresas Copec was distinguished in the Institutional Investor Magazine ranking. Chg. 3Q 12 / 3Q 12 2Q 12 3Q 11 Accum 12 Accum 11 3Q 11 Chg. 12 / 11 Revenues 5,437 5,662 5, % 16,778 15, % EBIT (28.4%) (44.5%) EBITDA* (10.5%) 1,157 1,557 (25.7%) Total profit (98.4%) (65.4%) Profit attributable to controlers (94.8%) (64.9%) Profit attributable to minority (5) 8 11 (145.1%) (70.4%) EBITDA margin 7.0% 6.2% 7.9% (0.8%) 6.9% 9.9% (3.0%) EBITDA / Interest expenses (8.5%) (32.1%) * EBITDA = Operating Income + Depreciation + Amortization + Stumpage + Others EBITDA 2Q12 and 2Q12 include US$17 million and US$25 million of net insurance claims related to business interruption Figures in US$ millions For further information, please contact: Cristián Palacios Director of IR and Investments Telephone: (56 22) cristian.palacios@empresascopec.cl Rodrigo Perera Finance Analyst Telephone: (56 22) rodrigo.perera@empresascopec.cl 1

2 SIMPLIFIED OWNERSHIP STRUCTURE HIGHLIGHTS OF THE QUARTER Arauco buys Flakeboard On June , Arauco entered into a contract to purchase all the shares of Flakeboard for US$242.5 million. The closing of this purchase was subject to a series of conditions, which were fully met. Arauco therefore acquired Flakeboard, which operates seven panel mills in the United States and Canada with a total medium-density fiberboard (MDF) production capacity of 1.2 million m 3 ; a particleboard (PB) capacity of 1.1 million m 3 ; and 180 thousand m 3 of melamine boards a year. This purchase consolidates the company s position in the US panel market, in which it already operates through the Moncure mill in the state of North Carolina that it acquired last January. The Moncure mill is merging with the assets of Flakeboard to leverage management synergies. On November 1 st Flakeboard refinanced its financial debt with a new unsecured US$ 150 million facility. This new loan is guaranteed by Arauco and has a tenor of 5 years with a 3-year grace period. The deal was composed by a club of three banks. Empresas Copec is distinguished in the Institutional Investor ranking The Institutional Investor magazine released the results of The 2012 Latin America Executive Team ranking. This measures the best company in the categories of investor relations (IR), best CEO, CFO and IR professionals for the different sectors of activity in Latin America. 360 sell-side analysts from over 40 financial institutions, mainly in Brazil, the USA, Europe, Chile, Mexico and the rest of Latin America, participated in the voting. Empresas Copec was ranked as follows in the sell-side analyst voting for the pulp and paper sector: - Best investor relations company: 3 rd place - Best CEO: 3 rd place - Best CFO: 2 nd place - Best IR professional: 3 rd place These results make Empresas Copec the leading Chilean company in this ranking, considering all sectors. Arauco makes progress with the Nueva reconstruction Aldea panel mill The new Nueva Aldea plywood mill, which will replace the one destroyed by a fire in January 2012, is being built at an investment of over US$165 million. The mill will have a production capacity of 350,000 m 3 of plywood panels a year, which will be exported to markets in the United States, Latin America, Europe, Asia and Oceania. It is estimated the mill will start operations in late 2013 and reach full capacity in the first half of 2014 Can-Can submits mining project to the environmental impact assessment system Sociedad Minera Can-Can submitted the Diego de Almagro mining project to the environmental impact assessment system (EIAS), and the project has copper and gold reserves and will entail investment of about US$475 million. The deposit will have a life of 13 years and construction is calculated to take two years. Diego de Almagro has large copper and gold reserves in two sectors called Esther and Carmen-Paulina. The project considers open-cut mining of mineralized oxide, mixed and sulfide resources to produce and market copper cathodes and concentrate. Guacolda secures a loan for Unit 5 On October 25, Empresa Eléctrica Guacolda signed a credit contract with Banco Itaú Chile and Banco del Estado de Chile, New York branch, to pay for equipment, the construction, assembly and commissioning of its Unit 5. The credit line is for up to US$318 million at a LIBOR rate plus a fixed spread over the time of the loan, with quarterly and equal repayments and 15-year maturity. The company also reported that it has given the order for Mitsubishi Corporation to proceed to start building such power plant. 2

3 CONSOLIDATED RESULTS 3Q12 versus 3Q11. Net income in the quarter, net of minority participation, was 94.8% down on that in the third quarter of 2011 and amounted to US$ 7 million. That was mainly due to a negative nonreccurring effect of US$168 million related to a higher income tax rate in Chile that hit deferred tax. Furthermore, operating income dropped 28.4% and non-operating income soared 163.8%. Non-operating income rose, mainly because of higher other operating revenues on account of the increase in the revaluation of biological assets, and the US$25 million insurance pay-out received for the destruction of the Nueva Aldea panel mill. There was also increased income from exchange rate differences in the forestry business and parent company. The Company s gross profit fell 3.2% amounting to US$650 million, which mainly came from Copec s affiliates accounting for US$290 million; with Arauco accounting for US$255 million; Abastible for US$80 million; Sonacol S.A. for US$15 million and Igemar for US$8 million. The drop in operating income was mainly due to the lower operating income in the forestry business, which had lower wood pulp revenues because of a drop in average sales prices and a decrease in panel revenues. The fuels business was up, mainly because of higher margins, partly due to the positive effect of the revaluation of inventories and the FIFO costing system in a scenario of fuel price increase. Volume fell in the industrial channel and was partly offset by an increase in the service station channel. Operating income remained stable in the fisheries business Simplified income statement 3Q 12 2Q 12 3Q 11 Chg. 3Q 12 / 3Q 11 Accum 12 Accum 11 Chg. 12 / 11 Revenues 5,437 5,662 5, % 16,778 15, % Cost of sales (4,787) (5,071) (4,744) 0.9% (14,874) (13,519) 10.0% Administration & distribution expenses (479) (449) (449) 6.6% (1,350) (1,263) 6.9% EBIT (28.4%) (44.5%) Other income % % Other costs & expenses (44) (16) (27) 59.4% (114) (89) 27.9% Finance costs (83) (81) (85) (2.3%) (257) (235) 9.4% Finance income (42.4%) (21.2%) Share of profits of associates (14.4%) (27.8%) Foreign exchange differences (2) (25) (38) (94.4%) 2 (17) (108.8%) Other results 1 (4) (8) (111.8%) (6) (10) (41.7%) Income tax expense (206) (23) (35) 492.3% (258) (194) 33.0% Total profit (98.4%) (65.4%) Profit attributable to controlers (94.8%) (64.9%) Profit attributable to minority (5) 8 11 (145.1%) (70.4%) Figures in US$ million 3

4 3Q12 versus 2Q12. Net income was 91.6% down on that in the previous quarter, explained by the negative non-recurring effect of US$168 million on net income related to a higher income tax rate in Chile. Operating income climbed US$29 million because of the better performance of the fuels business. Regarding this, there were higher margins, partly due to the effect of the revaluation of inventories and the FIFO costing system in a scenario of fuel price increases, which had a negative effect the previous quarter, and there was also a lower import margin in that period. Operating income dropped in the forestry business due to the lower performance of the pulp business Non-operating income increased US$58 million, which was mainly due to an increase in other income, related to the greater revaluation of biological assets and the insurance pay-out received in the forestry business. The exchange rate difference was also more favorable versus 2011 (accumulated). Accumulated net income up to September, net of minority participation, was US$248 million, 64.9% down on that in the same period in That was mainly because of operating income decreasing 44.5%. There was also a negative nonrecurring effect of US$168 million on net income related to a higher income tax rate in Chile that hit deferred tax liabilities. That was partly offset by non-operating income increasing US$8 million The fuels business had lower operating income, mainly because of margins shrinking in the affiliate Copec. Volume continued to climb, mainly in the service station channel. Lastly, the fisheries business had lower margins because of a drop in sales prices and the fish processed and a general cost increase. Non-operating income remained relatively stable. Other revenue rose due to the insurance pay-outs received by the affiliate Arauco and increased income from exchange rate differences. That was partly offset by higher other expenses and financial costs of the affiliates Arauco and Copec, related to greater debt and lower income from related companies and joint ventures because of the lower net income of Corpesca and Guacolda. The results of the Colombian affiliate Proenergía, the indirect parent company of Organización Terpel, have been consolidated this year. Revenue from this company of US$ billion; EBITDA of US$ 183 million and income of US$ 53 million were stated in the statement of income. The income from the Colombian affiliate Inversiones del Nordeste has also been incorporated. Revenue from this company of US$ 185 million; EBITDA of US$ 29 million and income of US$ 10 million were stated in the statement of income. The company s gross profit fell 15.8% to US$1.904 billion, mainly driven by Arauco s affiliates accounting for US$841 million; with Copec accounting for US$778 million; Abastible for US$208 million; Sonacol S.A. for US$44 million and Igemar for US$33 million. The drop in operating income was mainly due to the lower operating income in the forestry, fuels and fisheries businesses. The forestry business had a drop in wood pulp revenues because of lower average sales prices. Panel revenues were also down on account of lower volumes due to a fire at the Nueva Aldea plywood mill early in the year and the closure of the Curitiba mill. Sawn lumber revenues remained stable. Net income Figures in US$ million EBITDA Figures in US$ million Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4

5 EBITDA 3Q 12 2Q 12 3Q 11 Chg. 3Q 12 / 3Q 11 Accum 12 Accum 11 Chg. 12 / 11 Forestry* (24.8%) (35.1%) Fuels % (10.5%) Fishing (27.6%) (6.8%) Other investments (1) 0 1 (222.2%) (1) 1 (243.9%) TOTAL (10.5%) 1,157 1,557 (25.7%) CAPEX Forestry % % Fuels % % Fishing (72.6%) (57.3%) Other investments % 8 77 (88.9%) TOTAL % 1,487 1, % Figures in US$ million * 2Q 12 and 3Q12 include US$17.1 million and US$25 million of net insurance claims related to business interruption EBITDA change by business (3Q12 v/s 3Q11) EBITDA change by business (3Q12 v/s 2Q12) EBITDA change by business (Accum 12 v/s Accum 11) , ,157 5

6 CELULOSA ARAUCO Y CONSTITUCIÓN (CONSOLIDATED) 3Q12 versus 3Q11. Arauco had a net income loss of US$58 million in the third quarter of 2012 that was down on the US$78 million gain in the same quarter of That is mainly explained by the negative effect of US$129 million from the higher income tax rate effect. Operating income also decreased 79.3% because of lower pulp and panel sales. That was partly offset by non-operating income increasing US$89 million, driven by a higher revaluation of biological assets, stated in other operating revenues, and the insurance pay-outs of US$25 million received for the destruction of the Nueva Aldea panel mill. Besides this, there were also less unfavorable exchange rate differences. Consolidated revenue was down 6.6%. Pulp sales dropped 6.0%, driven by average prices falling 18.8%, offset by an 11.9% increase in volume. In regard to the pulp market, there was confirmation in the third quarter of a trend of falling prices that was evident in the second quarter, mainly explained by lower paper demand which led to a temporary stoppage of paper production. This had two effects: - Lower paper production and therefore decreased demand for wood pulp. Europe is the most depressed area where there have been the greatest adjustments, especially for long fiber. There was generally no increase in economic activity and therefore low demand. Demand was normal in markets in the Middle East and Latin America but prices followed international trends. Panel revenues fell 12.2%. Physical sales were down 6.1%, mainly due to the destruction of the Nueva Aldea plywood mill and the closure of the Curitiba mill. Prices decreased 5.3%. The plywood volume dropped because of the destruction of the Nueva Aldea mill. The MDF volume increased, due to higher sales of stock in the third quarter of 2012 and to dynamic demand in markets in Latin America. The MDF molding volume rose because of increased shipments to the USA and Europe, highlighting sales to Russia and Holland. Prices also increased. There was a slight increase in HB volume, mainly driven by greater sales to Mexico. The PBO volume rose, mainly because of increased output in Argentina and the injection of additional volume from the new Teno mill. - Greater supply of wood pulp due to integrated paper production releasing pulp into the market. CHANGES 3Q12 vs 3Q11 3Q12 vs 2Q12 Accum 2012 vs 2011 Both effects caused oversupply. Nevertheless, there was a change in the demand and price trend towards the end of the quarter. Besides this, the seasonality of demand in the Northern Hemisphere should be considered, when paper consumption drops and so does production. It is normal to see production lines idle each year due to employee vacations, especially in July and August. Demand usually returns to normal in September, with prices increasing as of that month. Demand in China also suffered the seasonal decline of the summer, and there was oversupply due to the diversion of shipments from other import markets to China. Wood pulp exports continued from Europe to China, but the effect is increasingly reduced, partly explained by the increase in freight rates from Europe to China Volume Pulp 11.9% 2.8% 8.5% Panels (6.1%) 2.1% (5.7%) Saw n timber 2.4% 4.8% (2.0%) Prices Pulp (18.8%) (5.2%) (19.4%) Panels (5.3%) 0.9% (2.4%) Saw n timber (0.5%) 5.8% 3.9% ARAUCO 3Q 12 2Q 12 3Q 11 Chg. 3Q 12 / 3Q 11 Accum 12 Accum 11 Chg. 12 / 11 Sales 1,031 1,037 1,104 (6.6%) 3,078 3,333 (7.6%) Pulp (6.0%) 1,474 1,659 (11.2%) Saw n timber % % Panels (12.2%) (7.9%) Forestry (5.7%) (0.8%) Services % % EBITDA* (27.7%) (35.1%) EBIT (79.3%) (68.3%) Non operating income 67 (5) (22) (398.8%) % Net income (58) (174.5%) (87.2%) Figures in US$ million * 2Q 12 includes US$17.1 million of net insurance claims related to business interrup. *Adj. EBITDA informed by Arauco was US$189 million for 3Q12 and US$609 million YTD12. 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 6

7 Sawn lumber sales were up 0.7% as a result of volume rising 2.4% and prices falling 0.5%. The US real estate and construction market made positive progress in the third quarter of Housing starts were at 872,000, which was a 34.8% increase on the previous year. Current construction levels are still low compared to the average in the last 10 years. There was a slight downward trend in markets this quarter. Volume was stable and there was a downward price pressure. Round log stocks in China were in line with demand. Round log and wood prices have stabilized. 3Q12 versus 2Q12. Arauco had lower net income than the US$62 million in the previous quarter. Operating income dropped, largely because of lower pulp sales, partly offset by higher panel and sawn lumber sales. Non-operating income rose due to higher other operating revenue because of a greater revaluation of biological assets and larger insurance pay-outs for the destruction of the Nueva Aldea plywood mill. There was also increased income from related companies, joint ventures and more favorable exchange rate differences versus 2011 (accumulated). Arauco had net income of US$ 55 million in 2012, 87.2% down on the previous year. That difference is essentially explained by the negative effect of US$129 million in the quarter due to the increase in the income tax rate. There was also a US$376 million decrease in operating income amounting to US$175 million, partly offset by non-operating income growing US$46 million. In regard to the latter, there were higher other operating revenues, related to insurance pay-outs for the destruction of the Nueva Aldea panel mill. In operating terms, revenue was down 7.6%. Wood pulp revenue fell 11.2%, arising from prices dropping 19.4%, partly offset by the volume increasing 8.5%. Panel revenues decreased 7.9%. Physical sales were down 5.7%, mainly due to the destruction of the Nueva Aldea plywood mill and the closure of the Curitiba mill. Prices decreased 2.4%. Sawn lumber revenues rose 0.6%, on account of prices increasing 3.9% and volume dropping 2.0%. Consolidated operating revenue was stable compared to the second quarter of Wood pulp sales were down 3.2%, due to prices falling 5.2% and volume growing 2.8%. Sawn lumber revenues rose 9.6% on account of volume and prices increasing 4.8% and 5.8%, respectively. Panel revenues were up 1.3%, because of a 0.9% price increase. Volumes also were up 2.1%. Production 3Q 12 2Q 12 3Q Pulp (th. ton) Panels (th. m3) Sawn timber (th. m3) 7

8 COPEC (CONSOLIDATED) 3Q12 versus 3Q11. Copec had net income of Ch$15,962 million in the third quarter of 2012, which was a 20.1% increase on the Ch$13,292 million in the same period in Operating income surged 31.5% due to higher margins. The latter are partly explained by the effect of the revaluation of inventories and the first in first out (FIFO) costing system in a scenario of higher fuel prices. EBITDA rose 9.9% and amounted to Ch$60,653 million. Non-operating income dropped, mainly due to more unfavorable exchange rate differences and higher other expenses. Physical fuel sales in Chile were stable with a slight 0.9% decrease, because of higher demand from the dealer channel and in line with the greater economic activity in Chile, which was offset by a drop in the industrial channel. The sales of Proenergía increased 13.0% and in line with Terpel s fuel sales in Colombia increasing 6.5%. 3Q12 versus 2Q12. Net income in the quarter was Ch$22,391 million up on the previous quarter. That difference is mainly explained by higher operating income of Ch$38,270 million related to better margins, given that such margins were hit the previous quarter by the effect of the revaluation of inventories and the first in first out (FIFO) costing system in a scenario of lower fuel prices and lower import margins related to this price decrease. EBITDA surged 120.2%. Physical fuel sales in Chile fell 9.6%, principally related to lower sales volumes in the industrial channel. Terpel s physical sales increased 4.9% in Colombia versus 2011 (accumulated). Copec had net income of Ch$46,705 million in 2012 which was down on the Ch$81,030 million in The higher income tax rate effect on deferred tax was Ch$4,438 million. Operating income dropped 22.4% because of lower unit margins. Such decrease is largely explained by the effect in the second quarter of the revaluation of inventories and the first in first out (FIFO) costing system in a scenario of lower fuel prices, which had a positive impact the previous year. That was partly offset by higher volume, particularly in the dealer channel. EBITDA was down 18.2% and amounted to Ch$169,016 million. Non-operating income fell, mainly because of higher financial costs on account of the greater debt of Copec and Terpel. There was also a more unfavorable exchange rate difference. Physical fuel sales in Chile increased 1.2%, arising from higher demand from the dealer and industrial channels and in line with the more dynamic Chilean economy. Market share rose to 58.7%. The physical fuel sales of Terpel in Colombia were up 7.9%, because of the good performance of own service stations and greater sales in the aviation sector, among other factors. COPEC CONSOLIDATED 3Q 12 2Q 12 3Q 11 Chg. 3Q 12 / 3Q 11 Accum 12 Accum 11 Chg. 12 / 11 Sales 1,993,892 2,173,993 1,917, % 6,344,736 5,605, % EBITDA 60,653 27,537 55, % 169, ,563 (18.2%) EBIT 48,565 10,294 36, % 122, ,579 (22.4%) Non operating income (20,823) (9,813) (17,106) 21.7% (45,397) (28,300) 60.4% Net income 15,962 (6,428) 13, % 46,705 81,030 (42.4%) Copec Chile physical sales (thousand of m 3 ) Copec Chile market share 2,172 2,403 2,193 (0.9%) 6,947 6, % 57.5% 59.1% 58.8% (1.3%) 58.7% 58.6% 0.1% PROENERGIA (Terpel) 3T 12 2T 12 3T 11 Var 3T 12 / 3T 11 Figures in millions of Chilean pesos Acum 12 Acum 11 Var 12 / 11 Sales 3,047,262 2,929,813 2,696, % 8,895,902 7,522, % EBITDA 112,797 83, , % 329, , % Net income Profit attributable to controlers 21,772 6,161 (481) (4627.7%) 42,835 40, % Profit attributable to minority interest 25,689 9, % 52,496 48, % Terpel physical sales (thousand of m 3 ) Colombia 1,349 1,286 1, % 3,929 3, % Panama % % Ecuador % % Figures in millions of Colombian pesos 8

9 ABASTIBLE (CONSOLIDATED) 3Q12 versus 3Q11. Abastible had a net income decrease of 6.8% in the third quarter of 2012 amounting to Ch$9.858 billion, mainly explained by the higher income tax rate effect and partly offset by operating income surging 42.9%, mainly due to the consolidation of the income of Inversiones del Nordeste (IN) in Colombia. Non-operating income rose Ch$763 million. The company s EBITDA was up 43.7% amounting to Ch$21,708 million. The company had sales in Chile of 119 thousend tons of liquefied gas in the quarter, which was 1.0% down on sales in the third quarter of Q12 versus 2Q12. Abastible had a lower net income of Ch$1,213 million on the previous quarter, mainly explained by the higher income tax rate effect and partly offset by increased operating and non-operating income. The operating income increase was largely due to higher physical sales in the bottled and bulk channels. Non-operating income soared 154.9% due to higher financial revenue, increased income from other operating expenses and a lower readjustment unit loss. The company s EBITDA was 19.9% up on the previous quarter versus 2011 (accumulated). Abastible had a net income of Ch$26,111 million, similar to the one in There was a negative nonreoccurring effect of Ch$4,060 million related to the higher income tax rate. Operating income rose 25.1%, largely due to the consolidation of the income of Inversiones del Nordeste (IN) in Colombia and higher volume, especially for bulk sales. Non-operating income fell Ch$1,015 million, mainly due to higher other operating expenses for the consolidation of IN, offset by the better performance of Gasmar. The company s EBITDA was up 30.2% amounting to Ch$53,194 million. The company had sales in Chile of 312 thousend tons of liquefied gas in the period of 2012, which was 1.0% up on those in the same period in Deliveries increased in both distribution channels ABASTIBLE CONSOLIDATED 3Q 12 2Q 12 3Q 11 Chg. 3Q 12 / 3Q 11 Accum 12 Accum 11 Chg. 12 / 11 Sales 108, ,654 89, % 304, , % EBITDA 21,708 18,108 15, % 53,194 40, % EBIT 17,308 13,760 12, % 40,165 32, % Non operating income 1, % (1,308) (293) 346.6% Net income 9,858 11,071 10,582 (6.8%) 26,111 26,256 (0.6%) LPG physical sales (thousand of m 3 ) (1.0%) % Figures in millions of Chilean pesos 9

10 PESQUERA IQUIQUE-GUANAYE, IGEMAR (CONSOLIDATED) 3Q12 versus 3Q11. Igemar had a net income loss of US$6.6 million in the third quarter of 2012 against the US$4.5 million gain in the same period in That is mainly explained by lower non-operating income because of decreased result from the related company Corpesca and he effect of the higher income tax rate on deferred tax liabilities amounting to US$6.2 million. EBITDA fell 27.6% to US$4 million. There was an operating income loss of US$2.3 million against a loss of US$2.4 million in Physical fishmeal sales were 15,489 tons, which was 6.4% down on those the previous year. Physical fish oil sales plunged 67% on last year amounting to 2,343 tons and 446,478 boxes of canned seafood were sold, 16.2% up on the previous year. Frozen seafood sales were 48.5% down on the previous year and amounted to 4,606 tons. The fish processed reached 26,816 tons, dropping 43.7%. Fishmeal and fish oil prices climbed 12.4% and 35.2%, respectively. Canned and frozen seafood prices dropped 4.3% and 26.2%, respectively. 3Q12 versus 2Q12. There was a net income loss of US$2.8 million in the quarter against a loss of US$3.8 million the previous quarter. That was driven by a decrease in operating and non-operating income, with the latter concerning the lower performance of the related company Corpesca, and the effect of the higher income tax rate. Operating income fell US$6.5 million, partly due to lower physical fishmeal and fish oil sales in the quarter versus 2011 (accumulated). Igemar had a net income loss of US$13.0 million in 2012 against a net income gain of US$10.3 million in That is mainly explained by a drop in operating and non-operating income. The former was because of lower average prices and fewer fish processed and the latter due to decreased income from the related company Corpesca. EBITDA dropped 6.8% on the previous year to US$24.2 million. There was also the effect of the higher income tax rate on deferred tax liabilities amounting to US$6.2 million. Operating income was US$3.6 million against US$7.1 million in Physical fishmeal sales were up 5% on the previous year amounting to 42,637 tons. Physical fish oil sales were 9,971 tons, a 24.7% decrease on last year. 1.5 million boxes of canned seafood were sold, 2.9% down on the previous year, and frozen seafood product sales amounted to 22,375 tons, 2.8% up on the previous year. The fish processed dropped 14.5% and amounted to 271,138 tons. Fishmeal prices fell 6.2%, and fish oil and canned seafood prices rose 17% and 0.1%, respectively. Frozen seafood prices fell 27.5%. IGEMAR CONSOLIDATED 3Q 12 2Q 12 3Q 11 Chg. 3Q 12 / 3Q 11 Accum 12 Accum 11 Chg. 12 / 11 Sales (15.2%) (2.6%) EBITDA (27.6%) (6.8%) EBIT (2.3) 4.2 (2.4) (0.9%) (49.6%) Non operating income (8.2) (11.8) 7.7 (206.9%) (25.1) 3.7 (775.4%) Net income (6.6) (3.8) 4.5 (247.0%) (13.0) 10.3 (226.0%) Physical sales Fishmeal (tons) 15,489 18,575 16,541 (6.4%) 42,637 40, % Fish oil (tons) 2,343 6,680 7,111 (67.0%) 9,971 13,239 (24.7%) Canned fish (cases) 446, , , % 1,549,223 1,596,100 (2.9%) Frozen fish (tons) 4,606 5,881 8,989 (48.8%) 22,325 21, % Catches (tons) 26, ,256 47,603 (43.7%) 271, ,304 (14.5%) Figures in US$ million 10

11 OTHER AFFILIATES Sonacol Sonacol had net income of Ch$1,176 million in the third quarter of 2012, which was a 79.1% decrease on the same quarter of That was essentially due to the higher income tax rate effect and the lower volume pipelined. In accumulated terms, net income was Ch$11,798 million, which was down on the Ch$14,232 million in the same period in That was due to the higher income tax rate on deferred tax liabilities amounting to Ch$7,234 million. Operating income increased 7.9% to Ch$21,433 million. EBITDA climbed 9.3% to Ch$24,474 million. There was a 2.8% increase in the volume pipelined. OTHER RELATED COMPANIES Metrogas Metrogas had net income of Ch$13,800 million in the third quarter of 2012, which was 25.1% down on that in 2011 and was mainly driven by the higher income tax rate in the quarter. That was partly offset by higher operating income of Ch$6,844 million, principally due to greater margins. Non-operating income was down on that of the previous quarter when there was the benefit of a provision reverse related to closing the negotiation with GasAndes. In accumulated terms, net income was Ch$48,093 million and stable on that of the previous year. Non-operating income rose Ch$17,254 million, largely because of the provision reverse related to closing the negotiation with GasAndes. That was offset by lower operating income and greater expenditure arising from the higher income tax rate with an effect of Ch$10,175 million on deferred tax. Physical sales were up 6.2%, mainly related to increased supply to industrial customers. Sales to the residential sector fell on account of higher temperatures. Corpesca Corpesca had a net income loss of US$0.2 million in the third quarter of 2012, a US$11.5 million decrease on 2011 and largely explained by lower operating and non-operating income. In accumulated terms, the company had a net income loss of US$14.2 million, which was down on the net income of US$26.2 million in Operating income fell US$45.2 million because of lower fishmeal and fish oil prices and higher operating costs. The fishmeal and fish oil sales volumes dropped 11.3% and 4.9%, respectively. Prices of these two products dropped 6.1% and 11.4%, respectively. 435 thousand tons of fish were processed, which was a 38.2% decrease. The higher income tax rate effect was US$5.6. Guacolda Guacolda had net income of US$12.2 million in the third quarter of 2012, which was a 5.2% increase on that in That was due to an operating income increase of US$10.5 million and a non-operating income decrease on 2011 from the effect of the Central Campanario bankruptcy. In accumulated terms, the company had net income of US$8.5 million, 82.9% down on that in That was due to lower operating income, related to greater spot purchases for the maintenance of one of its power plants. Energy sales increased 2.3%. Non-operating income rose US$8.8 million, largely because of lower financial costs and a more favorable exchange rate difference. The higher income tax rate effect reached US$11.6 million. Net income from other related companies 3Q 12 2Q 12 3Q 11 Chg. 3Q 12 / 3Q 11 Accum 12 Accum 11 Chg. 12 / 11 Metrogas* 13,800 26,506 18,433 (25.1%) 48,093 48,144 (0.1%) Sonacol* 1,176 5,853 5,621 (79.1%) 11,798 14,232 (17.1%) Corpesca (0.2) (3.9) 11.3 (102.1%) (14.2) 26.2 (154.3%) Guacolda 12.2 (8.8) % (82.9%) Can Can (0.5) (144.1%) (68.1%) Isla Riesco (0.9) (3.0) (4.8) (80.8%) (5.5) (4.1) 33.3% Figures in US$ million * Figures in millions of Chilean pesos 11

12 CONSOLIDATED BALANCE SHEET ANALYSIS Consolidated current assets rose 4.0% as of September 30, 2012 on those as of December 31, That difference was principally driven by higher inventories in the affiliate Copec and greater inventories and cash and equivalents in the affiliate Arauco. Cash and cash equivalents dropped in the parent company and the affiliate Copec. Long term debt maturities Figures in US$ million Non-current assets climbed 8.7% as of September 30, 2012 on those at the 2011 year-end. There was an increase in the property, plant and equipment; investments recorded using the equity method and intangibles accounts, and all related to the investments made. There was also an increase in non-current accounts receivable from related companies and the effect of a lower exchange rate on assets of those companies with accounting in pesos. Current liabilities rose 17.0%, because of an increase in other current financial liabilities, principally in the forestry business. Non-current liabilities increased 16.1% compared to those at the 2011 year-end, on account of the higher debt of the affiliates Arauco and Copec. There was also an increase in deferred tax liabilities, essentially related to the first category income tax rate rising to 20% in Chile balance The Company s shareholders equity ended the quarter 0.7% up on that as of December 2011, highlighting the increase in retained earnings generated by accumulated income, which was partly offset by lower other reserves. 9/30/ /31/2011 Chg. Current assets 5,861 5, % Non-current assets 15,820 14, % TOTAL ASSETS 21,681 20, % Short term financial debt 1, % Other current liabilities 1,953 2,010 (2.9%) Long term financial debt 5,560 4, % Other non-current liabilities 2,203 1, % TOTAL LIABILITIES 10,926 9, % MINORITY INTEREST (11.5%) SHAREHOLDER'S EQUITY 9,882 9, % Leverage* % Net financial debt 5,668 4, % ROCE** 6.1% 8.9% (2.8%) Figures in US$ million * Leverage = Net financial debt / Total equity ** ROCE = Anualized EBIT / (Initial working capital + Initial Property, Plant and Equipment + Initial Biological assets (current and noncurrent)) 12

13 CASH FLOW STATEMENT ANALYSIS The operating cash flow as of September 2012 fell 8.8% on the previous year, basically due to greater income tax and interest disbursement and to lower payments to and on behalf of employees. Partially offset by higher net charges at the affiliate Copec because of greater sales. The financing flow was US$539 million against US$274 million in That variation is explained by higher net loans this year, mainly related to the affiliates Copec and Arauco. Regarding the investing cash flow, in the third quarter of 2012 there was an 24.1% increase in outlays compared to September Payments rose US$404 million to gain control of subsidiaries, principally related to the affiliate Copec purchasing shares in Proenergía in Colombia and the acquisition of Flakeboard by Arauco. The incorporation of property, plant and equipment increased by US$85.2 million, mainly in the forestry and fuels businesses. CASH FLOW STATEMENTS Sep-12 Sep-11 Chg. 12 / 11 Cash flow s from (used in) operating activities 678, ,826 (8.8%) Cash flow s from (used in) investing activities (1,440,238) (1,160,796) 24.1% Cash flow s from (used in) financing activities 538,861 (273,567) (297.0%) Net increase (decrease) in cash and cash equivalents before effect of exchange rate changes (222,858) (690,537) (67.7%) Figures in thousand US$ BREAKDOWN BY OPERATING SEGMENTS (accumulated as of September 2012) FIGURES AS OF SEPTEMBER 2012 Arauco Copec Abastible Sonacol Igemar Others* Subtotal Elimin. Total Revenues from external clients 3,078,379 12,855, ,819 37, ,190 16,727 16,777,979-16,777,979 Revenues betw een segments - 109,753 5,135 22,143-2, ,244 (139,244) - EBIT 174, ,599 82,720 43,755 3,561 (3,729) 553, ,489 EBITDA** 625, , ,221 49,973 24,225 (1,066) 1,156,652-1,156,652 Depreciation & Amortization 176,315 95,426 27,501 6,218 20,664 2, , ,787 Stumpage 232, ,157 Profit (loss) of the segment 58, ,611 58,325 23,842 (26,146) 41, , ,530 Share of profit (loss) of associates of the segment (4,666) 11,784 12,921 - (4,339) 25,961 41,661-41,661 Income tax expense (162,079) (50,375) (21,967) (14,966) (4,614) (3,615) (257,616) - (257,616) Investments by segment Payments for acq. prop., plant and equip. 431, ,486 71,963 7,057 23, , ,811 Payments for acq. biological assets 91, ,674-91,674 Payments for acq. affiliates and associates 327, , , ,120 Purchase of intangible assets 4,464 30, ,170 42,741-42,741 Total investments 854, ,576 71,963 7,057 23,981 8,471 1,487,346-1,487,346 Assets by segment 13,444,208 5,163, , , , ,019 21,681,190-21,681,190 *Includes Can-Can, Empresas Copec holding company and others ** Includes MMUS$42 related to insurance indemnities Figures in thousand US$ 13

14 FINANCIAL STATEMENTS STATEMENT OF COMPREHENSIVE INCOME BY FUNCTION Sep-12 Sep-11 Chg. 12 / 11 Revenue 16,777,979 15,780, % Cost of sales (14,874,302) (13,519,487) 10.0% Gross profit 1,903,677 2,260,741 (15.8%) Other income 273, , % Distribution costs (594,608) (553,353) 7.5% Administrative expenses (755,590) (709,334) 6.5% Other expense (126,567) (100,872) 25.5% Other gains (losses) 12,323 11, % Finance income 30,574 38,807 (21.2%) Financial costs (257,342) (235,314) 9.4% Share of profit (loss) of associates and joint ventures accounted for using equity method 41,661 57,728 (27.8%) Foreign exchange differences 1,513 (17,115) (108.8%) Gains (losses) on net monetary position (5,579) (9,564) (41.7%) Gains (losses) arising from difference betw een previous carrying amount and fair value of financial assets reclassified as measured at fair value Profit (loss) before tax 523, ,078 (45.5%) Income tax expense (257,616) (193,729) 33.0% Profit (loss) from continuing operations 265, ,349 (65.3%) Profit (loss) from discontinued operations 900 3,484 (74.2%) Profit (loss) 266, ,833 (65.4%) Profit (loss), attributable to Profit (loss), attributable to ow ners of parent 247, ,750 (64.9%) Profit (loss), attributable to non-controlling interests 18,947 64,083 (70.4%) Total profit (loss) 266, ,833 (65.4%) Earnings per share Basic earnings per share Basic earnings (loss) per share from continuing operations (64.9%) Basic earnings (loss) per share from discontinued operations (74.2%) Basic earnings (loss) per share (64.9%) Diluted earnings per share - Diluted earnings (loss) per share from continuing operations (64.9%) Diluted earnings (loss) per share from discontinued operations (74.2%) Diluted earnings (loss) per share (64.9%) Figures in thousand US$ 14

15 FINANCIAL STATEMENTS STATEMENT OF COMPREHENSIVE INCOME Sep-12 Sep-11 Chg. 12 / 11 Profit (loss) 266, ,833 (65.4%) Components of other comprehensive income, before tax Exchange differences on translation Gains (losses) on exchange differences on translation, before tax 52,096 (316,413) (116.5%) Other comprehensive income, before tax, exchange differences on translation 52,096 (316,413) (116.5%) Available-for-sale financial assets Gains (losses) on remeasuring available-for-sale financial assets, before tax 1, % Other comprehensive income, before tax, available-for-sale financial assets 1, % Cash flow hedges Gains (losses) on cash flow hedges, before tax (6,941) (27,807) (75.0%) Other comprehensive income, before tax, cash flow hedges (6,941) (27,807) (75.0%) Share of other comprehensive income of associates and joint ventures accounted for using equity method (134,396) (16,820) 699.0% Other comprehensive income, before tax (88,145) (360,212) (75.5%) Income tax relating to components of other comprehensive income Income tax relating to available-for-sale financial assets of other comprehensive income (335) (173) 93.6% Income tax relating to cash flow hedges of other comprehensive income 6,749 5, % Aggregated income tax relating to components of other comprehensive income 6,414 5, % Other comprehensive income (81,731) (354,780) (77.0%) Total comprehensive income 184, ,053 (55.5%) Comprehensive income attributable to Comprehensive income, attributable to ow ners of parent 165, ,256 (52.9%) Comprehensive income, attributable to non-controlling interests 19,227 63,797 (69.9%) Total comprehensive income 184, ,053 (55.5%) Figures in thousand US$ 15

16 FINANCIAL STATEMENTS FINANCIAL STATEMENTS - BALANCE SHEET - ASSETS Sep-12 Dec-11 Chg. Assets Current assets Cash and cash equivalents 935,297 1,131,981 (17.4%) Other current financial assets 168,061 93, % Other current non-financial assets 290, , % Trade and other receivables, current 1,897,907 1,747, % Trade and other current receivables 113, ,781 (45.7%) Inventories 1,727,082 1,494, % Current biological assets 226, ,301 (20.5%) Current tax assets 139,421 71, % Total current assets other than assets or disposal groups classified as held for sale or as held for distribution to owners 5,498,669 5,277, % Non-current assets or disposal groups classified as held for sale or for distribution to ow ners 362, , % Total current assets 5,861,387 5,635, % Non-current assets Other non-current financial assets 76,267 36, % Other non-current non-financial assets 119, , % Non-current rights receivables 29,350 20, % Non-current receivables to related parties 125,537 2, % Investments accounted for using equity method 1,655,967 1,494, % Intangible assets other than goodw ill 809, , % Goodw ill 169, , % Property, plant and equipment 8,950,957 8,180, % Non-current biological assets 3,488,943 3,463, % Investment property 182, , % Deferred tax assets 212, , % Total non-current assets 15,819,803 14,553, % Total assets 21,681,190 20,189, % Figures in thousand US$ 16

17 FINANCIAL STATEMENTS FINANCIAL STATEMENTS - BALANCE SHEET - LIABILITIES Sep-12 Dec-11 Chg. Liabilities Current liabilities Other current financial libilities 1,210, , % Trade and other current payables 1,518,343 1,306, % Other current payables to related parties 13,608 11, % Other short-term provisions 14,659 17,124 (14.4%) Current tax liabilities 87, ,757 (60.9%) Current provisions for employee benefits 7,559 5, % Other current financial liabilities 177, ,642 (41.1%) Total current liabilities other than liabilities included in disposal groups classified as held for sale 3,030,053 2,561, % Liabilities included in disposal groups classified as held for sale 133, ,383 (7.1%) Total current liabilities 3,163,291 2,704, % Non-current liabilities Other non-current financial liabilities 5,560,381 4,712, % Non-current payables % Other long-term provisions 24,855 22, % Deferred tax liabilities 1,885,620 1,664, % Non-current provisions for employee benefits 84,386 72, % Other non-current non-financial liabilities 201, ,653 (5.7%) Total non-current liabilities 7,762,964 6,685, % Total liabilities 10,926,255 9,390, % Equity Issued capital 686, , % Retained earnings 8,921,971 8,785, % Other reserves 274, ,347 (19.7%) Equity attributable to owners of parent 9,882,122 9,813, % Non-controlling interests 872, ,960 (11.5%) Total equity 10,754,935 10,799,050 (0.4%) Total equity and liabilities 21,681,190 20,189, % Figures in thousand US$ 17

18 FINANCIAL STATEMENTS FINANCIAL STATEMENTS - STATEMENT OF CASH FLOWS Sep-12 Sep-11 Chg. 12 / 11 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 ,2% Receipts from premiums and claims, annuities and other policy benefits ,2% Other cash receipts from operating activities ,6% Classes of cash payments Payments to suppliers for goods and services ( ) ( ) 10,5% Payments from contracts held for dealing or trading purpose 0 (429) (100,0%) Payments to and on behalf of employees ( ) ( ) 10,9% Payments for premiums and claims, annuities and other policy benefits (4.879) (5.064) (3,7%) Other cash payments from operating activities (69.413) (34.798) 99,5% Interest paid ( ) ( ) 3,7% Interest received ,2% Income taxes refund (paid) ( ) ( ) 46,1% Other inflow s (outflow s) of cash (2.639) (146,8%) Net cash flows from (used in) operating activities (8,8%) Figures in thousand US$ 18

19 FINANCIAL STATEMENTS FINANCIAL STATEMENTS - STATEMENT OF CASH FLOWS (continuation) Sep-12 Sep-11 Chg. 12 / 11 Cash flow s from (used in) investing activities Cash flow s used in obtaining control of subsidiaries or other businesses ( ) (78.941) 511,7% Cash flow s used in the purchase of non-controlling interests (15.614) (981) 1491,6% Other cash payments to acquire equity or debt instruments of other entities 0 (20) (100,0%) Other cash payments to acquire interests in joint ventures ( ) ( ) 7,1% Loans to related parties (69.916) ( ) (61,3%) Proceeds from sales of property, plant and equipment ,3% Purchase of property, plant and equipment ( ) ( ) 13,1% Proceeds from sales of intangible assets Purchase of intangible assets (42.741) (99.785) (57,2%) Proceeds from other long-term assets ,1% Purchase of other long-term assets (91.674) ( ) (15,2%) Cash payments for future contracts, forw ard contracts, option contracts and sw ap contracts Cash receipts from related parties (86,9%) Dividends received Interest received Other inflow s (outflow s) of cash (33.769) (149,6%) Net cash flows from (used in) investing activities ( ) ( ) 24,1% Figures in thousand US$ 19

20 FINANCIAL STATEMENTS FINANCIAL STATEMENTS - STATEMENT OF CASH FLOWS (continuation) Sep-12 Sep-11 Chg. 12 / 11 Cash flow s from (used in) financing activities Proceeds from issuing shares ,4% Proceeds from long term borrow ings ,5% Proceeds from short term borrow ings ,2% Proceeds from borrow ings ,2% Loans from related parties Payments of borrow ings ( ) ( ) 28,6% Payments of finance lease liabilities Loan payments to related parties Proceeds from government grants (100,0%) Dividends paid ( ) ( ) (11,5%) Interest paid (50.482) (40.311) 25,2% Income taxes refund (paid) Other inflow s (outflow s) of cash (87.463) (8382,5%) Net cash flows from (used in) financing activities ( ) (297,0%) Net increase (decrease) in cash and cash equivalents before effect of exchange rate changes ( ) ( ) (67,7%) Effect of exchange rate changes on cash and cash equivalents Effect of exchange rate changes on cash and cash equivalents (37.592) (168,3%) Net increase (decrease) in cash and cash equivalents ( ) ( ) (72,9%) Cash and cash equivalents at beginning of period (34,9%) Cash and cash equivalents at end of period (7,6%) Figures in thousand US$ 20