Third Quarter 2016 Results Press Release

Transcription

1 Third Quarter 2016 Results Press Release November 22 th, 2016 International risk rating Standard and Poor s BBB / stable Fitch Ratings BBB / negative Domestic risk rating Feller-Rate AA-/stable 1 st Class Level 1 Fitch Ratings AA-/stable 1 st Class Level 1 3Q16 Results Conference Call Friday November 25th, :30 Hrs. ET (NY Time) 10:30 Hrs. Santiago Time Dial: From US: +1(877) From other countries: +1(412) ID: COPEC 3Q16 / 3Q15 Net income dropped 17.9% year-on-year (YoY), explained by operating income falling US$71 million due to the lower performance of the forestry business, partly offset by non-operating income increasing US$40 million. 3Q16 / 2Q16 Net income was US$117 million, a 7.8% quarter-on-quarter (QoQ) decrease, due to a drop in operating income, mainly at Arauco, and in non-operating income. Revenue was up 4.3%. EBITDA EBITDA in 3Q16 was US$442 million, dropping 10.6% YoY and 6.9% QoQ. Highlights Net Debt/ EBITDA In the fuels business, Copec completed the purchase of MAPCO and signed a contract with ExxonMobil to purchase its lubricant and fuel operations in Colombia, Peru and Ecuador. Abastible closed the acquisition of Duragas in Ecuador, and the associated company AGESA completed the sale of its stake in GNL Quintero. In the forestry business, Arauco approved the start of construction of a new panel mill in Michigan, United States. Net debt rose in 3Q16 with a net debt/ebitda ratio of 2.8 times. That was higher than the 2.7 times in 2Q16, mainly due to a lower 12-month EBITDA. 3Q 16 2Q 16 3Q 15 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 Accum 15 Chg. 16 / 15 Revenues 4,263 4,086 4,478 (4.8%) 4.3% 12,150 14,120 (14.0%) EBIT (27.2%) (15.8%) (30.5%) EBITDA* (10.6%) (6.9%) 1,332 1,590 (16.2%) Adjusted EBITDA** (7.4%) (6.4%) 1,362 1,559 (12.6%) Non operating income (12) 3 (52) 78% (525.8%) (26) (184) 85.6% Total profit (15.1%) (32.4%) (11.3%) Profit attributable to controlers (17.9%) (32.1%) (15.0%) Profit attributable to minority % (35.7%) % EBITDA Margin 10.4% 11.6% 11.0% (6.1%) (10.7%) 11.0% 11.3% (2.6%) EBITDA / Net interest expenses (24.7%) (8.6%) (21.1%) * EBITDA = Operating Income + Depreciation + Amortization + Fair value cost of timber harvested + Others **Adj. EBITDA = Net Income + fin. costs - fin. income + tax + dep & amort + fair value cost of timber harvested - gain from changes in biological assets + exchange rate differences (For details see exhibit in page 23). Figures in US$ millions C o nt act Inf o rmat io n: Cristián Palacios Leopoldo Silva Juan Pablo Serrano Director of IR and Investments Investor Relations Investor Relations T elep ho ne: (56 2) T elep ho ne: (56 2) T elep ho ne: (56 2) cristian.palacios@empresascopec.cl leopoldo.silva@empresascopec.cl juan.serrano@empresascopec.cl 1

2 SIMPLIFIED OWNERSHIP STRUCTURE Copec signs an agreement with ExxonMobil to buy its operations in Colombia, Peru and Ecuador On November 16, Copec signed an agreement with ExxonMobil to produce and distribute Mobil lubricants, which includes markets in Colombia, Ecuador and Peru, along with the renewal of the contract that Copec and ExxonMobil have had in Chile for almost sixty years. The agreement also considers: (i) the operation and marketing of fuels for the Jorge Chávez international airport in Lima, Peru; and (ii) the transfer of the fuels business currently operated by ExxonMobil in Colombia and Ecuador. The deal also includes the assets related to all these operations, such as industrial plants and facilities. The investment will be approximately US$747 million, of which US$512 million is the equity value of the companies acquired, plus cash of around US$235 million that these companies will have when the operation is closed. Copec Combustibles believes that a good way of optimizing the business it is acquiring is by channeling it through Terpel, to which it will be offered. It will therefore carry out the proceedings needed in Terpel s corporate governance and with the regulators in Colombia so this subsidiary operates or acquires these businesses of ExxonMobil in Colombia, Peru and Ecuador. Moreover, subject to approval by the free competition authorities in Colombia, it is estimated it will be necessary to resell the fuel operation and assets in that country. It will thereby not retain that part of the business, since the strategic focus of this deal for Colombia is Mobil lubricants, the leading brand in such market. Abastible completes the purchase of LPG operations in Ecuador In line with its international expansion strategy, the company, through its subsidiary Abastible, completed the purchase of Repsol S.A. s liquefied petroleum gas (LPG) operations in Ecuador (Duragas). The price paid was US$33 million, along with net cash of US$3.7 million. This operation in Ecuador has a market share of about 37% and it sells around 405 th. tons a year. It has four storage and bottling plans, one bottle repair and maintenance plant, 4.3 million own branded bottles, 2,500 own tanks at customer facilities, and 13 tanks to supply plants and customers, among other assets. Copec materializes the acquisition of MAPCO in the United States On November 14, 2016, Copec completed the agreement it signed on August 27 with the US company Delek US Holdings Inc, according to which it committed to purchasing 100% of the shares and rights of five companies that operate 348 service stations in the United States, mostly owned by them, and also supply 142 service stations operated by third parties, which sell fuel and have convenience stores. The service stations operate with different brands, with the main one being MAPCO. They are located in the states of Tennessee, Alabama, Georgia, Arkansas, Virginia, Kentucky and Mississippi, with most of them concentrated in Tennessee. These are assets located in a geographical area with interesting demographic features and sufficient scale to be a competitive operation, serving as a platform for Copec s possible growth in the US market. 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. Arauco approves the construction of a panel mill in Michigan On October 25, 2016, Arauco approved the start of construction of the MDP Grayling project in the state of Michigan, United States. The project will be undertaken by its US subsidiary Flakeboard America Limited. Such project entails the construction and operation of a mill that will make panels or medium-density particleboard (MDP). The production capacity of the project is expected to be 800 th. m 3 of finished product a year, of which about 300 th. m 3 will be coated with melamine paper. It is estimated that the project will start up in late 2018 and that sales will exceed US$200 million a year. AGESA completes the sale of its stake in GNL Quintero On June 30, the related company AGESA signed an agreement with Enagas Chile SpA to sell all the shares held by AGESA in GNL Quintero S.A., amounting to a 20% shareholding in the latter. The deal was subject to the possible exercise by shareholders of GNL Quintero S.A. of a first refusal right established in the corresponding shareholders agreement. After the terms had expired, on November 8, AGESA completed the sale at a price of US$197 million. This operation will generate for Empresas Copec an after-tax profit of approximately US $ 52 million. 2

3 CONSOLIDATED RESULTS 3Q16 / 3Q15. Net income in the quarter, net of minority participation, was 17.9% down YoY and amounted to US$117 million. That was mainly due to operating income dropping US$71 million, partly offset by non-operating income increasing US$40 million. Non-operating income improved due to more favorable exchange rate differences in Arauco and the parent company. There was also higher income in associates and joint ventures, particularly at Corpesca that had a lower loss. That was partly offset by higher financial costs in the forestry and fuels businesses. The company s gross margin fell 8.8%, amounting to US$703 million, which mainly came from Arauco s subsidiaries of US$302 million; with Copec accounting for US$267 million; Abastible for US$102 million; Sonacol for US$14 million; and Igemar for US$13 million. There was a decrease in operating income, mainly in the forestry business. Such drop was due to lower sales across all business lines, particularly wood pulp. In the fuels business, operating income also dropped at the subsidiary Copec on account of lower volumes of its operations in Chile. On the other hand, Terpel had an increase in operating income because of higher sales volumes in Colombia, Panama, the Dominican Republic and Ecuador. Abastible had an increase in operating income, on account of higher volumes in Chile and Colombia. Simplified Income Statement 3Q 16 2Q 16 3Q 15 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 Accum 15 Chg. 16 / 15 Revenues 4,263 4,086 4,478 (4.8%) 4.3% 12,150 14,120 (14.0%) Cost of sales (3,560) (3,381) (3,707) (4.0%) 5.3% (10,100) (11,743) (14.0%) Administration & distribution expenses (512) (478) (508) 0.7% 7.1% (1,423) (1,474) (3.5%) Operating Income (27.2%) (15.8%) (30.5%) Other income (6.9%) 12.3% % Other costs & expenses (24) (18) (29) (19.1%) 29.4% (69) (115) (40.0%) Finance costs (93) (91) (86) 9.0% 2.0% (278) (264) 5.4% Finance income (19.3%) 2.3% % Share of profits of associates % (36.8%) % Foreign exchange differences 1 7 (37) (102.1%) (89.2%) 26 (50) (152.3%) Other results (3) (4) (6) (48.6%) (23.2%) (9) (11) (12.7%) Non Operational income (12) 3 (52) (77.6%) (525.8%) (26) (184) (85.6%) Income tax expense (53) (42) (61) (13.6%) 25.3% (146) (206) (29.2%) Total profit (15.1%) (32.4%) (11.3%) Profit attributable to controlers (17.9%) (32.1%) (15.0%) Profit attributable to minority % (35.7%) % EBIT (27.2%) (15.8%) (30.5%) Depreciation & Amortization % 8.1% (1.0%) Fair value cost of timber harvested % (9.2%) % EBITDA (10.6%) (6.9%) 1,332 1,590 (16.2%) Figures in US$ million 3

4 3Q16 versus 2Q16. Net income in 3Q16 was 32.1% down QoQ, explained by lower operating and non-operating income. The latter showed a decrease in earnings from associates and joint ventures, mainly in the fishing business and Metrogas, along with lower other expenses and less favorable exchange rate differences. Operating income fell 15.8% because of the lower performance in the forestry businesses, related to wood pulp price decreases although volumes remained stable. Unit production costs for wood pulp remained stable for bleached long-fiber and fell 6.9% for shortfiber. Raw long-fiber wood pulp costs rose. That was only partly offset by timber revenue that increased in the quarter, mainly due to higher average prices in the panel business. There was lower operating income in the fuels business, because of the negative effect of the revaluation of inventories this quarter that was positive last quarter, along with lower total volumes in Chile. Nevertheless, Terpel s volume increased in Colombia, Panama, the Dominican Republic and Ecuador. Operating income rose at Abastible due to higher volume in Chile and Colombia / 2015 (accum). Net income as of September, net of minority participation, was US$442 million, 15.0% down on that in the same period in 2015, largely due to operating income dropping US$274 million, partly offset by non-operating income increasing US$150 million. Non-operating income increased, because of more favorable exchange rate differences in the fuels and fishery businesses and the parent company, related to the depreciation of the US dollar in the year. There were also lower other expenses and higher income in associates and joint ventures, mainly at Metrogas and Corpesca that had a lower loss. The company s gross margin fell 13.5% amounting to US$2,049 million, which mainly came from Arauco s subsidiaries of US$954 million; with Copec accounting for US$788 million; Abastible for US$233 million; Sonacol for US$38 million; and Igemar for US$37 million. Operating income fell, mainly in the forestry business, related to lower sales across all business lines and mainly because of general price decreases. In the fuels business, operating income also dropped at the subsidiary Copec on account of lower margins at its operations in Chile, along with a sales volume decrease in the industrial channel. Terpel, however, had higher operating income due to greater sales volumes in Colombia, Panama, the Dominican Republic and Ecuador. Abastible had an operating income increase from higher volumes in Chile and Colombia. EBITDA Figures in US$ Million Net Income Figures in US$ Million

5 3Q 16 2Q 16 3Q 15 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 Accum 15 Var 16 / 15 EBITDA Forestry (24.4%) (14.8%) (22.1%) Fuels % 0.1% (7.8%) Copec % (10.1%) (15.4%) Abastible % 32.9% % Sonacol % 9.5% % Fishing % 12.9% % Others (0) (7) (4) (92.3%) (95.3%) (10) (11) (3.7%) TOTAL (10.6%) (6.9%) 1,332 1,590 (16.2%) CAPEX Forestry % (49.5%) % Fuels % (64.7%) % Fishing % 47.5% % Others (0) 0 (0) 0.0% 0.0% % TOTAL % (57.8%) 1, % EBITDA change by business (3Q 16 v/s 3Q 15) (MMUS$) EBITDA change by business (3Q 16 v/s 2Q 16) (MMUS$) EBITDA change by business (Accum 16 v/s Accum 15) (MMUS$) , ,332 5

6 CELULOSA ARAUCO Y CONSTITUCIÓN (ARAUCO) 3Q16 / 3Q15. Arauco had net income of US$31 million in 3Q16, US$55 million down on 3Q15. That was due to operating income decreasing US$82 million, related to lower sales across all its business lines, particularly large wood pulp price decreases. Non-operating income increased by US$18 million, due to lower other expenses and particularly as a result of fewer forest fires, and higher income from exchange rate differences. Consolidated operating revenue dropped 7.7%, explained by lower wood pulp revenue with prices falling 11.8% but volume increasing 3.4%. Revenue in the wood products segment, a business that includes the panel and sawn timber divisions, also fell due to lower prices and volume in both. The production costs of short- and long-fiber wood pulp fell 8.9% and 3.1%, respectively. Raw long-fiber wood pulp costs rose 3.9%. Market Status Wood Pulp Price stability and even increases in the second quarter quickly dissipated in the third quarter, reaching the lowest prices in the year. That was generally for seasonal reasons, lower demand in the summer of the Northern Hemisphere, and wood pulp oversupply. The latter led to higher inventories of producers in the quarter compared to the second quarter. Global inventories rose 2 days for long-fiber wood pulp and 6 days for short-fiber wood pulp. Compared to the third quarter of 2015, there were no changes for long-fiber wood pulp but an increase of 10 days for short-fiber wood pulp. The Puma mill in Brazil, which was commissioned early in the second quarter, is already producing at a high rate and shipping all its products, long-fiber wood pulp, short-fiber wood pulp and fluff pulp to markets in Europe, China, the Middle East, Korea, USA, among others. Asia had the largest price decreases, particularly in China. The decreases in this market were about 6% for both types of fiber. The remaining Asian markets followed this trend with adjustments of US$25 to US$30 for long-fiber wood pulp and US$30 to US$40 for short-fiber wood pulp. The price difference between both fibers is still quite large, about US$110 in favor of long-fiber wood pulp. Price decreases were greatly affected by short-fiber wood pulp oversupply and the large price difference between both fibers, driving the greater use of short-fiber instead of long-fiber wood pulp. There are also expectations of additional long-fiber wood pulp volumes from the south of the United States, which started to be evident late in the quarter due to new investments in the production of this kind of wood pulp, with the target market in the mid and long term being the sale of fluff pulp to the absorbent product market like diapers. Nevertheless, while that market develops generating greater demand, the new capacity is used to produce paper-grade pulp. Regarding this, Asian markets are attractive to enter quickly and by means of prices. The paper market in China and other markets in Asia are quite active and exports are also favored by local currency devaluation. In Europe there were minor adjustments of about 2% to 3%, or US$10 for long-fiber wood pulp and $20 for short-fiber wood pulp. Although the problems of oversupply and low demand for the period of the year are similar to those in Asia, European markets did not have the same increases as Asia in the second quarter. Paper markets are quite depressed and several producers decided to cut back production in the summer months. Even tissue paper producers had price decreases, but paper producer margins have improved due to a drop in the price of raw materials like wood pulp. Latin American markets are still active, except Brazil that continues quite depressed. Wood pulp prices have dropped sharply due to the commissioning of the Puma project that has adopted an aggressive position in its local market. Markets in the Middle East followed the global trend with lower prices since they are spot markets, in which some producers offer special discounts for spot volume and thereby avoid increasing supply in other more important and regular markets. CHANGES 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 / 15 Volume Prices Pulp 3.4% (0.2%) 1.8% Panels (3.1%) (1.7%) (2.9%) Saw n timber (4.2%) 2.8% (3.1%) Pulp (16.1%) (3.2%) (12.6%) Panels (2.2%) 2.6% (2.3%) Saw n timber (7.1%) (2.0%) (9.4%) ARAUCO 3Q 16 2Q 16 3Q 15 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 Accum 15 Chg. 16 / 15 Sales 1,187 1,207 1,286 (7.7%) (1.6%) 3,541 3,940 (10.1%) Pulp** (11.3%) (3.7%) 1,589 1,794 (11.4%) Wood Products** (4.3%) 0.5% 1,865 2,032 (8.2%) Forestry (9.6%) (11.6%) (21.9%) Services (19.9%) 3.8% (30.1%) EBITDA* (24.4%) (14.8%) (22.1%) EBIT (65.3%) (40.9%) (53.2%) Non operating income 6 (4) (13) (143.3%) (230.8%) (15) (75) (80.0%) Net income (63.9%) (45.3%) (49.2%) Figures in US$ million *Adj. EBITDA informed by Arauco was US$ 256 for 3Q16, US$ 283 million for 2Q16, US$325 million for 3QT15 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 Wood Products Sawn Timber Sales in the third quarter improved slightly on the previous quarter but were still down compared to the same period in The price increases of sawn timber and remanufactured products have started to be reflected slightly in the billing. The better pine molding prices have not yet been fully reflected in revenues, and volume has stabilized in the US market with good demand. At the same time, Asian markets have had stable sawn timber volume and prices. Panels The plywood business continues to improve, above all due to the higher volume attained in the third quarter compared to the same period of the previous year. Prices have stabilized in the main markets despite the higher supply from Brazil in the US market. The domestic timber board market in Brazil is still tough due to greater local supply. Results have been mixed in export markets, albeit with a slight increase of some prices. MDF molding invoicing improved in the quarter on the two previous quarters, although it is still below that of the third quarter of Demand stability is still evident reflected by the volume attained in the quarter. 3Q16 versus 2Q16. Arauco had net income of US$31 million, which was down on the US$57 million of the previous quarter. Operating income dropped US$30 million. There was lower wood pulp revenue. Wood products revenue rose in the quarter, mainly due to higher prices and volumes in the panel business. Unit production costs remained stable for bleached and unbleached long-fiber wood pulp but fell 6.9% for short-fiber wood pulp. Non-operating income rose US$10 million, mainly because of higher other revenue related to a provision roll-back and lower other expenses versus 2015 (accum.). Arauco had net income of US$140 million in the year, which was US$136 million down on the previous year. That is explained by a US$243 million drop in operating income, related to lower sales across all its business lines and mainly because of a general price decrease, particularly for wood pulp, which was not offset by higher wood pulp and sawn timber volume increases. Non-operating income, however, increased US$60 million on account of lower other expenses, higher income in associates and joint ventures and exchange rate differences, along with greater other revenue, mainly due to a provision roll-back and the greater net income generated from the sale of assets. In operating terms, consolidated revenue fell 10.1%, explained by a drop in revenue in the wood pulp business because of lower average prices, and in the timber business. Production by Business Sales Volumes by Business 1,216 1,244 1,228 1,272 1,254 1, Pulp (th ton) Panels (th m3) Sawn Timber (th m3) Pulp (th ton) Panels (th m3) Sawn Timber (th m3) 3Q 15 2Q 16 3Q 16 3Q 15 2Q 16 3Q 16 7

8 COPEC 3Q16 versus 3Q15. Copec had net income of Ch$ million in 3Q16, which was down on the Ch$ million in 3Q15, explained by operating income dropping 2.7%, mainly due to lower volume in Chile. That was despite the fact that the effect of the revaluation of inventories was less negative than the previous year. EBITDA increased 1.0% to Ch$ million. Market share in Chile dropped from 62.4% to 58.0%, hit by lower volume in the industrial channel. Non-operating income was more unfavorable due to higher financial costs and lower income from exchange rate differences. The total sales volume in Chile dropped. Although the upward trend continued in the dealer channel in Chile increasing 8.7%, the industrial volume dropped 13.0%. Terpel s EBITDA increased 27.2%, due to higher physical fuel sales in Colombia (3.1%), Panama (29.1%), Ecuador (9.1%) and the Dominican Republic (5.4%). The vehicle natural gas business fell 12.0% in Colombia, continuing the downward trend of the previous year. 3Q16 versus 2Q16. Net income in the quarter decreased Ch$ million QoQ. That difference is explained by operating income dropping Ch$ million due to the negative effect of the revaluation of inventories this quarter, which was positive the previous quarter, along with a lower total volume in Chile. EBITDA fell 12.3% versus 2015 (accum.). Copec had net income of Ch$ million in the year, which was down on the Ch$ million in That difference was due to operating income dropping 12.0%, mainly because of lower volumes in the industrial channel and lower margins in Chile. There was a negative effect in the year from the revaluation of inventories, but this was less negative than last year. EBITDA dropped 9.9% to Ch$ million, and market share fell from 61.0% to 58.3%. Non-operating income was more unfavorable, because of higher net financial costs, and lower income from exchange rate differences. That was partly offset by higher income in associates and joint ventures. The total volumes in Chile dropped. Although the dealer channel in Chile continued the upward trend with an increase of 7.8%, the industrial volume fell 11.3%. Terpel s EBITDA increased 28.3%, due to higher physical fuel sales in Colombia (8.3%), Panama (31.1%), the Dominican Republic (4.2%) and Ecuador (2.8%). The vehicle natural gas sales dropped 12.7% in Colombia, continuing the downward trend of the previous year. Sales volumes in the industrial channel in Chile dropped 5.9%, partly offset by a 2.2% increase in the dealer channel. In regard to Terpel, volume rose 2.0% in Colombia, 0.6% in Panama, 1.9% in the Dominican Republic and 10.1% in Ecuador. Non-operating income dropped 6.7% QoQ, due to higher financial costs and less favorable exchange rate differences. COPEC CONSOLIDATED (Including Terpel) 3Q 16 2Q 16 3Q 15 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 Accum 15 Chg. 16 / 15 Sales 1,841,627 1,804,076 2,045,444 (10.0%) 2.1% 5,413,010 6,172,361 (12.3%) EBITDA 85,185 97,137 84, % (12.3%) 258, ,919 (9.9%) EBIT 62,359 77,400 64,060 (2.7%) (19.4%) 196, ,327 (12.0%) Non operating income (11,451) (12,277) (8,659) 32.3% (6.7%) (36,468) (28,893) 26.2% Net income 33,197 44,892 36,109 (8.1%) (26.1%) 111, ,385 (17.8%) Copec Chile physical sales (thousand of m3) 2,424 2,468 2,494 (2.8%) (1.8%) 7,384 7,561 (2.3%) Copec Chile market share 58.0% 59.0% 62.4% (7.0%) (1.6%) 58.3% 61.0% (4.4%) Figures in millions of Chilean pesos TERPEL 3Q 16 2Q 16 3Q 15 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 Accum 15 Chg. 16 / 15 Sales 3,614,868 3,538,335 3,684,360 (1.9%) 2.2% 10,604,639 10,409, % EBITDA 173, , , % (3.4%) 487, , % EBIT 121, ,118 91, % (12.1%) 349, , % Non operating income (41,249) (40,793) (17,951) 129.8% 1.1% (123,702) (76,456) 61.8% Net income Profit attributable to controlers 45,193 65,895 40, % (31.4%) 134,190 89, % Profit attributable to minority interest (99.8%) 8.4% (71.8%) Terpel physical sales (thousand of m3) Colombia 1,753 1,719 1, % 2.0% 5,221 4, % Panama % 0.6% % Ecuador % 10.1% % Dominican Republic % 1.4% % Gazel NGV physical sales (thousand of m3) Colombia (12.0%) (0.7%) (12.7%) Peru % (10.6%) % Mexico % 8.5% % Figures in millions of Colombian pesos 8

9 ABASTIBLE 3Q16 versus 3Q15. Abastible had a net income increase of 19.9% in 3Q16 amounting to Ch$16,114 million. That was due to operating income rising Ch$2,479 million, mainly on account of higher volumes at operations in Chile and Colombia. Non-operating income rose Ch$1,640 million, due to higher income from exchange rate differences, monetary correction and lower financial costs. EBITDA increased 18.2% to Ch$ million. The company had sales in Chile of 134 th. tons of liquefied gas in the quarter, which was a 2.7% YoY increase. The sales volume of Inversiones del Nordeste in Colombia increased 7.4% to 49 th. tons of liquefied gas sold versus 2015 (accum.). Abastible had net income of Ch$45,898 million, which was a 59.0% increase. That was due to operating income rising Ch$13,097 million, mainly because of a large increase in volume in Chile. Non-operating income increased Ch$7,615 million, due to higher income from exchange rate differences, associates and joint ventures, and lower net financial costs. EBITDA rose 26.0% to Ch$80,191 million. The company had sales in Chile of 357 th. tons of liquefied gas in 2016, which was 7.6% up on those in The sales volumes of Inversiones del Nordeste in Colombia grew 2.2% to 138 th. tons of liquefied gas sold. 3Q16 versus 2Q16. Abastible s net income was 19.0% down QoQ. Although operating income rose 17.2% because of higher volume in Chile and Colombia, non-operating income dropped 93.5% because of more favorable exchange rate differences the previous quarter. EBITDA rose 18.9%. The company had sales in Chile of 134 th. tons of liquefied gas in the quarter, a 3.8% increase QoQ. Deliveries increased 5.5% in Colombia. ABASTIBLE CONSOLIDATED (Includes IN & Solgas) 3Q 16 2Q 16 3Q 15 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 Accum 15 Chg. 16 / 15 Sales 160, , , % 28.1% 368, , % EBITDA 32,578 27,399 27, % 18.9% 80,191 63, % EBIT 24,068 20,539 21, % 17.2% 58,903 45, % Non operating income 394 6,087 (1,246) (131.7%) (93.5%) 5,087 (2,529) (301.2%) Net income 16,114 19,901 13, % (19.0%) 45,898 28, % Abastible Chile LPG physical sales (thousand of tons) % 3.8% % Bottled channel % 4.0% % Bulk channel % 3.3% % Figures in million of chilean pesos INVERSIONES DEL NORDESTE (COLOMBIA) 3Q 16 2Q 16 3Q 15 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 Accum 15 Chg. 16 / 15 IN Colombia LPG physical sales (thousand of tons) % 5.5% % 9

10 PESQUERA IQUIQUE-GUANAYE (IGEMAR) 3Q16 versus 3Q15. Igemar had a loss of US$7.7 million in 3Q16 that was better than the US$8.8 million loss in 3Q15. That was due to operating income increasing US$1.0 million, largely because of lower production costs related to the drop in the international price of crude oil, the higher exchange rate and the operation of a more efficient industrial fleet due to closer and more productive fishing grounds. EBITDA increased 10.1% to US$10.1 million. Non-operating income remained stable, mainly because of greater earnings in associates and joint ventures related to the better performance of Corpesca, offset by higher other costs. Physical fishmeal sales were 6,900 tons, which was 15.8% down on those the previous year. Physical fish oil sales were 33.3% down on last year amounting to 1.5 th. tons, and frozen fish sales were 47.6% up on the previous year amounting to 5.3 th. tons. 469 th. cases of canned fish were sold, 18.9% higher than the previous year. The fish processed was 4.3 th. tons, dropping 76.8%. Fishmeal prices fell 32.0%, whereas fish oil prices rose 34.9%. Frozen fish prices increased 201.6% but canned fish prices dropped 87.5%. It is important to highlight that as of 4Q15 the company Golden Omega is no longer consolidated by Igemar versus 2015 (accum.). Igemar posted a loss of US$8.4 million in 2016, which was an improvement on the loss of US$18.7 million in That is explained by operating income increasing US$11.0 million, mainly because of higher physical sales of fishmeal, fish oil, canned and frozen fish, along with lower production costs, related to the drop in the international price of crude oil, a higher exchange rate, and a fishery operation with a more efficient industrial fleet because of closer and more productive fishing grounds. EBITDA was US$24.6 million, increasing US$5.7 million. Non-operating income was more favorable, mainly because of a drop in financial costs, favorable exchange rate differences, and lower other expenses, along with lower losses in associates and joint ventures. Physical fishmeal sales were 20.5% up on the previous year amounting to 20.5 th. tons. Physical fish oil sales were 4.3 th. tons, a 4.4% increase on last year. Frozen fish sales amounted to 11.4 th tons, 3.4% up on the previous year. 1.6 million cases of canned fish were sold, 5.4% up on the previous year. The fish processed dropped 4.4% to 138 th. tons. Frozen and canned fish prices increased 1.3% and 1.5%, respectively, whereas fishmeal and fish oil prices fell 4.7% and 2.5%, respectively. 3Q16 versus 2Q16. Net income dropped US$7.7 million in 3Q16 against a US$3.6 million gain the previous quarter. That was because of negative non-operating income of US$13.1 million and higher other expenses, partly offset by the better performance of Corpesca. Operating income dropped 8.8%, due to lower fishmeal and fish oil sales. Fishmeal prices fell 20.9% whereas fish oil and canned fish prices rose 17.9% and 63.0%, respectively. IGEMAR CONSOLIDATED 3Q 16 2Q 16 3Q 15 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 Accum 15 Chg. 16 / 15 Sales (13.2%) (4.3%) (13.9%) EBITDA* % 12.9% % EBIT % (8.8%) 9.3 (1.6) (671.1%) Non operating income (13.1) 0.8 (14.1) (6.9%) (1705.8%) (17.5) (29.4) (40.4%) Net income (7.7) 3.6 (8.8) (12.4%) (315.3%) (8.4) (18.7) (55.0%) Physical sales Fishmeal (tons) 6,903 10,246 8,201 (15.8%) (32.6%) 20,552 16, % Fish Oil (tons) 1,486 1,942 2,227 (33.3%) (23.5%) 4,331 4, % Canned Fish (tons) 468, , , % (2.8%) 1,559,679 1,480, % Frozen Fish (tons) 5,330 4,260 3, % 25.1% 11,484 11, % Catches (tons) 4,345 73,153 18,759 (76.8%) (94.1%) 138, ,491 (4.4%) Figures in US$ million *Ebitda = Operating Income + Depreciation + Amortization Igemar calculates its EBITDA as follows: Operating Income + Depreciation + Amortization + Other expenses + Other Income 10

11 OTHER AFFILIATES Sonacol Sonacol had net income of Ch$6,414 million in 3Q16, which was up on the Ch$5,625 million in 3Q15. That was mainly due to operating income increasing 9.2% and non-operating income rising 28.1%. The volumes pipelined were 10.2% higher than the previous year. In accumulated terms, net income was Ch$17,557 million, which was up on the Ch$16 th. million as of September That was mainly because of operating income increasing 6.2% and more favorable non-operating income. The volumes pipelined were 9.1% higher than the previous year. OTHER RELATED COMPANIES Metrogas Corpesca Corpesca posted a loss of US$15,6 million in 3Q16, which was an improvement on the US$19.9 million loss in 3Q15. Operating income fell US$35.0 million, but non-operating income increased US$57.2 million, mainly due to less negative exchange rate differences. In accumulated terms, the company posted a loss of US$16.3 million, which was an improvement on the US$29.5 million loss in 2015, mainly due to non-operating income increasing US$135.0 million because of favorable exchange rate differences. Operating income fell US$68.4 million because of fishmeal prices dropping 18.1%, partly offset by fish oil prices increasing 6.7%. Fishmeal and fish oil sales volumes fell 25.0% and 84.7%, respectively. 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 dealer sector in the company. On the other hand, Aprovisionadora Global de Energía S.A. (AGESA), 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-dealer sector. Metrogas had net income of Ch$16,285 million in 3Q16, an 11.8% YoY decrease. In accumulated terms, net income was Ch$49,036 million, higher than the previous year, explained by an increase in operating income from greater sales volumes. Non-operating income was more negative by Ch$1,650 million. Physical sales, excluding those to electric power generating companies, were up 16.8%, because of greater dispatches to customers in the residential and commercial sector which grew 9.8%, and higher industrial sales of 22.1%. Net income from other affiliates and associates 3Q 16 2Q 16 3Q 15 3Q16 / 3Q15 3Q16 / 2Q16 Accum 16 Accum 15 Chg. 16 / 15 Sonacol* 6,414 5,778 5, % 11.0% 17,557 16, % Alxar (2) (3) 12 (118.1%) (25.9%) (7) (12) (46.4%) Metrogas* 16,285 22,764 18,457 (11.8%) (28.5%) 49,037 44, % Corpesca (16) 13 (20) (21.8%) (222.6%) (16) (29) (44.7%) Laguna Blanca** 0 (3) (13) (100.0%) (100.0%) (5) (43) (87.5%) Figures in US$ million * Figures in millions of Chilean pesos ** Parent company of Mina Invierno, formerly named Isla Riesco 11

12 CONSOLIDATED BALANCE SHEET ANALYSIS Consolidated current assets fell 1.0% as of September 30, 2016 on those as of December 31, That difference was principally driven by lower cash and cash equivalents, due to the purchase of LPG distribution assets in Peru and the stake in the company Sonae, along with lower trade receivables and other current accounts receivable, mainly at the subsidiaries Arauco and Copec. That was partly offset by an increase in inventories at the subsidiaries Copec and Igemar. Non-current assets as of September 30, 2016, increased 7.0% on those in There was an increase in the investment account accounted for using the equity method at Arauco, related to the purchase of Tafisa, and at Camino Nevado due to capitalizing accounts receivable from associates. There was also an increase in property, plant and equipment in the fuels and forestry businesses, principally due to the effect of a drop in the exchange rate when accounting for these items, along with the contribution of the purchase in Peru. There was also an increase in goodwill, related to Abastible acquiring LPG operations in Peru. Current liabilities rose 30.5%, because of an increase in other current financial liabilities, principally at the subsidiary Arauco, and to a lesser extent at Abastible and Igemar. Non-current liabilities increased 2.0% on the close of There was a decrease in other non-current financial liabilities, mainly from transferring financial debt from the long term to the short term. The company s shareholders equity increased 5.7% on that at December There was an increase in accumulated earnings and a less negative record in other reserves due to the lower exchange rate effect on subsidiaries with accounting in currencies other than the US dollar. Financial debt maturities Figures in US$ million , , Henceforth Simplified Balance Sheet Statement Sep-16 Dec-15 Chg. 16 / 15 Current assets 5,095 5,148 (1.0%) Non-current assets 15,812 14, % TOTAL ASSETS 20,907 19, % Short term financial debt % Other current liabilities 1,520 1, % Long term financial debt 5,452 5,735 (4.9%) Other non-current liabilities 2,527 2, % TOTAL LIABILITIES 10,492 10, % Non-controlling interests % SHAREHOLDER'S EQUITY 9,878 9, % Leverage* % Net financial debt 4,813 4, % ROCE** 6.9% 8.6% -02 p.p. 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) 12

13 DEBT ANALYSIS Total financial debt: MUS$ Arauco 70.2% Debt by Subsidiary Copec 16.4% EC Matriz 6.8% Sonacol 1.9% Abastible 0.7% Igemar 1.0% US Dollar 67% Debt by Currency Chilean Pesos 2% Chilean UF 24% Colombian Pesos Others 6% 1% Bonds 65% Debt by Type Others 5% Bank Debt 30% Net Debt / EBITDA CASH FLOW STATEMENT ANALYSIS The operating cash flow as of September 2016 decreased 14.6% on the previous year, basically due to lower charges from the sale of goods and providing services, mainly related to the subsidiaries Copec and Arauco, because of lower prices of products that the mentioned subsidiaries marketed before. There was also an increase in income tax payments and net interest. That was partly offset by lower payments to suppliers of goods and services. Regarding the investing cash flow, in 3Q16 there was a 62.8% increase in outlays compared to There were higher cash flows used to gain control of subsidiaries or other businesses, mainly due to Abastible acquiring LPG operations in Peru, along with an increase in payments to gain a share of joint ventures as a result of Arauco acquiring a shareholding in Tafisa. The financing cash flow had a decrease in disbursement of US$640 million compared to the previous year, largely because of lower payments of loans, particularly at the subsidiaries Arauco and Copec, along with higher loan proceeds. CASH FLOW STATEMENT Sep-16 Sep-15 Chg. 16 / 15 Cash flow s from (used in) operating activities 1,000,111 1,170,546 (14.6%) Cash flow s from (used in) investing activities (1,021,955) (627,828) 62.8% Cash flow s from (used in) financing activities (226,044) (866,271) (73.9%) Net increase (decrease) in cash and cash equivalents (247,888) (323,553) (23.4%) 13

14 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 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 14

15 BREAKDOWN BY OPERATING SEGMENTS (Accumulated as of september 2015) Figures as of September 2015 Arauco Copec Abastible Sonacol Igemar Others Subtotal Elimin. Total Revenues from external clients 3,939,951 9,572, ,381 37, ,794 3,656 14,119,974-14,119,974 Revenues betw een segments - 54,597 5,396 17,867-1,879 79,739 (79,739) - Interest Income 35,069 9,496 1, ,189 54,782-54,782 Interest Expense (193,788) (54,480) (9,902) (4,330) (5,559) 3,928 (264,131) - (264,131) Interest expense, net (158,719) (44,984) (8,600) (4,142) (5,021) 12,117 (209,349) - (209,349) Income (loss) from the reporting segment 278, ,543 50,277 25,047 (26,220) (34,824) 512, ,407 EBIT 457, ,696 71,630 38,084 (1,632) (12,936) 903, ,089 Depreciation 289,889 47,629 27,883 6,539 20, , ,483 Amortization 8,999 51, ,154 1,122 65,056-65,056 Fair value cost of timber harvested 231, , ,505 EBITDA 987, , ,301 44,623 21,103 (10,852) 1,593,133-1,593,133 Share in income (loss) of associates 1,255 11,753 10,950 - (9,026) (6,986) 7,946-7,946 Income (expense) from income taxes (158,719) (44,984) (8,600) (4,142) (5,021) 12,117 (209,349) - (209,349) Investments by segment Payments for acq. prop., plant and equip. 258, ,989 28,647 10,494 6, , ,066 Acquisition other long term assets Payments for acq. affiliates and associates , ,388-21,388 Purchase of intangible assets 2,901 18, ,594 26,936-26,936 Total investments 385, ,299 50,166 10,494 6,772 5, , ,855 Country of origin of operating revenue Operating revenues - local (chile) 2,548,611 5,565, ,446 37, ,794 3,656 8,618,747-8,618,747 Operating revenues - foreign (foreign companies) 1,391,340 4,006, , ,501,227-5,501,227 Total operating revenues 3,939,951 9,572, ,381 37, ,794 3,656 14,119,974-14,119,974 Assets by segment 13,824,519 3,598, , , ,438 1,178,243 20,298,446-20,298,446 Equity method investments 262,029 54,646 61, ,995 66, , ,414 Liabilities by segments 7,248,675 2,374, , , ,942 (123,513) 10,419,910-10,419,910 Country of origin of non-current assets Nacionalidad activos no corrientes 7,069,455 1,002, , , , ,999 9,662,621-9,662,621 Foreign 4,055,933 1,010, , ,206,159-5,206,159 Total non-current assets 11,125,388 2,012, , , , ,999 14,868,780-14,868,780 *Includes Alxar, Empresas Copec parent company and others Breakdown by country Chile Colombia USA/Canada Panama Argentina Brazil Uruguay Ecuador Dominican Republic Peru Mexico Total Revenues 8,618,747 3,456, , , , , , ,970 98,899 21,984 13,419 14,119,974 Non-current assets 9,727, , , , , ,378 1,812,948 13,028 5,014 20,276 20,355 14,776,717 Chile L. America & the Caribbean Europe North America Asia & Others Total Non Current Assets 9,662,621 4,829, ,092-14,868,780 15

16 FINANCIAL STATEMENTS STATEMENT OF COMPREHENSIVE INCOME BY FUNCTION Sep-16 Sep-15 Chg. 16 / 15 Revenue 12,149,884 14,119,974 (14.0%) Cost of sales (10,099,948) (11,742,983) (14.0%) Gross profit 2,049,936 2,376,991 (13.8%) Other income 197, , % Distribution costs (771,529) (811,300) (4.9%) Administrative expenses (651,125) (662,602) (1.7%) Other expense (71,253) (113,856) (37.4%) Other gains (losses) 1,952 (1,629) (219.8%) Finance income 56,040 54, % Financial costs (278,442) (264,131) 5.4% Share of profit (loss) of associates and joint ventures accounted for using equity method 50,649 7, % Foreign exchange differences 25,951 (49,659) (152.3%) Gains (losses) on net monetary position (9,337) (10,692) (12.7%) Profit (loss) before tax 600, ,750 (16.4%) Income tax expense (146,144) (206,343) (29.2%) Profit (loss) from continuing operations 454, ,407 (11.3%) Profit (loss) 454, ,407 (11.3%) Profit (loss), attributable to Profit (loss), attributable to ow ners of parent 422, ,091 (15.0%) Profit (loss), attributable to non-controlling interests 32,211 15, % Total profit (loss) 454, ,407 (11.3%) Earnings per share Basic earnings per share Basic earnings (loss) per share from continuing operations (11.3%) Basic earnings (loss) per share from discontinued operations 0 0 Basic earnings (loss) per share (11.3%) Diluted earnings (loss) per share from continuing operations - - Diluted earnings (loss) per share from discontinued operations - - Diluted earnings (loss) per share

17 FINANCIAL STATEMENTS STATEMENT OF COMPREHENSIVE INCOME Sep-16 Sep-15 Chg. 16 / 15 Profit (loss) 454, ,407 (11.3%) Other comprehensive income, before tax, actuarial gain (losses) to defined benefit plans (4,498) 0 - Share of other comprehensive income of associates and joint ventures accounted for using equity method that w ill not be reclassified to profile, before tax 299 2,866 (89.6%) Other comprehensive income that will not be reclassified to profile (4,199) 2,866 (246.5%) Gains (losses) on exchange differences on translation, before tax 293,467 (887,349) (133.1%) Other comprehensive income, before tax, exchange differences on translation 293,467 (887,349) (133.1%) Gains (losses) on remeasuring available-for-sale financial assets, before tax 247 (110) (324.5%) Other comprehensive income, before tax, available-for-sale financial assets 247 (110) (324.5%) Gains (losses) on cash flow hedges, before tax 17,013 (2,270) (849.5%) Reclassification adjustments on cash flow hedges, before tax (293) (7,106) (95.9%) Other comprehensive income, before tax, gains (losses) from investments in equity instruments 16,720 (9,376) (278.3%) Share of other comprehensive income of associates and joint ventures accounted for using equity method (710) 0 - Other comprehensive income, before tax 309,724 (896,835) (134.5%) Income tax relating to exchange differences on translation of other comprehensive income 0 199,418 (100.0%) Income tax relating to available-for-sale financial assets of other comprehensive income (62) 25 (348.0%) Income tax relating to cash flow hedges of other comprehensive income (4,251) 1,469 (389.4%) Income tax relating to defined benefit plans of other comprehensive income 1, Aggregated income tax relating to components of other comprehensive income (3,012) 200,912 (101.5%) Other comprehensive income 302,513 (693,057) (143.6%) Total comprehensive income 757,194 (180,650) (519.1%) Comprehensive income, attributable to owners of parent 724,245 (194,936) (471.5%) Comprehensive income, attributable to non-controlling interests 32,949 14, % 17