Fourth Quarter 2017 Earnings Results
FourthQuarter 2017
Earnings Results
Forward-LookingStatements
This presentation may contain forward-looking statements, thatshould be considered as good faith estimates. Such statements aresubject to risks and uncertainties outside of CMPC´s control thatcould cause the CMPC’s actual results to differ materially fromthose set forth in the forward-looking statements. These risksinclude in particular those described in CMPC’s FinancialStatements, Note 3 (“Gestión de Riesgos”).
Forward-looking statements speak only as of the date they aredelivered, CMPC undertake no obligation to publicly update orrevise them considering developments which differ from thoseanticipated.
2
Opening Comments
Large scale Latin American producer of Pulp, Tissue, Wood &
Paper products, serving global and
local markets
3
Focus on strategic plan execution, with diversification and value-added revenue base, to face operating difficulties
Market conditions continued supportive, but we were not able to fully benefit
Deleveraging target met, with very strong capital discipline. Deleveraging process occurred throughout the year
Disciplined execution of working capital and capex programs.
4Q17 Highlights
Operational & Financial Highlights
Positive fundamentals in pulp market drive QoQ increase in hardwood prices: Hardwood CIF up 13% to 694 US$/ton Softwood CIF up 18% to 742 US$/ton
Market pulp sales volume of 713,000 tons, down 5% QoQ and 20% YoY Volumes impacted by Guaíba II stoppage
(reduction of 240,000 tons in sales volumes in 4Q17)
Tissue paper sales volume of 167,000 tons, down 4% QoQ and stable YoY
Consolidated revenues down 2% QoQ, and up 3% YoY to US$1,312 million
EBITDA down 21% QoQ and up 15% YoY to US$256 million
Free cash flow up to US$18 million, from US$177 million in 3Q17 and US$62 million in 4Q16
Net debt of US$3,198 million, down 1% QoQ and 11% YoY. Net debt to EBITDA ratio reached 3.0x
4
In US$ Milllion 4Q16 3Q17 4Q17 QoQ YoY
Revenues 1,271 1,338 1,312 -2% 3%
COGS (868) (835) (874) 5% 1%
Other Operational Expenses (180) (180) (182) 1% 1%
EBITDA 223 323 256 -21% 15%
EBITDA margin % 17.5% 24.1% 19.5% 151 bps 291 bps
Operational Result 64 158 97 -38% 52%
Non Operational Result (226) (69) (91) 32% -60%
Net Income (162) 89 6 -93% -104%
3rd Party Volumes 4Q16 3Q17 4Q17 QoQ YoY
Forestry + Solid Wood Prod. (1) 1,054 772 778 1% -26%
Market Pulp(2) 887 753 713 -5% -20%
Papers(2) 202 200 183 -9% -9%
Tissue Papers(2) 168 174 167 -4% 0%
Sanitary Products(3) 1,333 1,347 1,265 -6% -5%
(1) Th. m3
(2) Th. Tons
(3) M. units
Costs & Other Operation Expense Analysis
COGS
Up 5% QoQ : Higher maintenance costs in Pulp Lower direct costs, due to lower sales volumes
Up 1% YoY, reflecting: Higher maintenance costs in Pulp Higher direct costs in Tissue Lower direct costs in Pulp, due to lower sales
volumes 4Q17 COGS were 67% of revenues, down from 62% in
3Q17 and 68% in 4Q16
Other Operational Expenses
Up 1% QoQ and YoY, reflecting: Higher administrative expenses Lower distribution costs in Pulp
Other Operating Expenses were 14% of revenues, up from 13% in 3Q17 and stable from 14% in 4Q16
+1%+1%
+5%+1%
5
868 835 874
4Q16 3Q17 4Q17
COGS (US$ Million)
180 180 182
4Q16 3Q17 4Q17
Other Op. Exp. (US$ Million)
* Figures in US$ million
Revenues: +3% QoQ, +7% YoY
Forestry Sales Volumes: -15% QoQ, -32% YoY
Forestry Prices: -11% QoQ, +12% YoY
Pulp Production: +21% QoQ, -12% YoY
Guaíba II downtime resulted in 145,000 tons production loss in4Q17.
Pulp Sales Volumes: -5% QoQ, -20% YoY
-- QoQ
-8% BSKP: Lower exports to China
-4% BEKP: Lower exports to all markets
-- YoY
+1% BSKP: Higher exports to Europe and Asia
-25% BEKP: Lower exports to all markets
Pulp Prices: BSKP US$742/ton, BEKP US$694/ton
EBITDA:
-- QoQ (-10%)
Lower hardwood volumes: Guaíba II downtime
Lower forestry sales
-- YoY (+46%)
Higher pulp prices
Pulp Business
+3%
+7% +46%
-10%
Third Party Sales Volumes
6
454 485 519
146134
120
4Q16 3Q17 4Q17
Sales*
Pulp Forestry
618600
639
145
236212
4Q16 3Q17 4Q17
EBITDA*
Third Party Sales Volumes 4Q16 3Q17 4Q17 QoQ YoY
- Pulpwood 56 28 27 -1% -51%
- Sawing Logs 417 375 367 -2% -12%
- Sawn Wood 237 133 169 27% -29%
- Remanufactured Wood 49 38 35 -7% -27%
- Plywood 113 80 87 8% -23%
- Others 183 119 93 -22% -49%
Total (th. m3) 1,054 772 778 -15% -32%
BSKP 172 191 175 -8% 1%
BEKP 715 562 538 -4% -25%
Total Market Pulp (Th. Tons) 887 753 713 -5% -20%
P&W Guaiba (Th. Tons) 12 14 8 -41% -34%
Tissue Business
+4%
-6%
Revenues: -6% QoQ, +4% YoY
Volumes:
-- Tissue Paper
-4% QoQ, with lower seasonal volumes across all countriesexcept from Brazil and Chile
Stable YoY.
-- Sanitary Products:
-6% QoQ, supported by lower diaper and feminine careproducts
-5% YoY, explained by lower feminine care sales volumes inArgentina, Uruguay, Colombia and Chile and lower wetwipes volumes across all countries.
Prices (Measured in $USD): -1% QoQ for Tissue Paper and -6%for Sanitary Products.
EBITDA:
-- QoQ (-43%)
Lower tissue paper and sanitary products volumes
Lower average prices
-- YoY (-32%)
Higher direct costs (increase in pulp prices)
Higher SG&A expenses
-32%
-43%
* Figures in US$ million
Third Party Sales Volumes
7
463
513480
4Q16 3Q17 4Q17
Sales*
5667
38
4Q16 3Q17 4Q17
EBITDA*
Third Party Sales Volumes 4Q16 3Q17 4Q17 QoQ YoY
- Chile 37 37 38 1% 2%
- Brazil 35 34 35 1% -1%
- Mexico 31 35 32 -7% 3%
- Argentina 26 28 24 -12% -8%
- Peru 22 23 22 -4% 2%
- Uruguay 6 6 5 -2% -5%
- Colombia 6 7 6 -6% 4%
- Ecuador 4 4 4 -18% -8%
Total Tissue Paper (Th. Tons) 168 174 167 -4% 0%
- Diapers 753 805 769 -4% 2%
- Feminine Care 342 352 320 -9% -6%
- Others 238 190 176 -7% -26%
Total Sanitary (M. Units) 1,333 1,347 1,265 -6% -5%
PaperBusiness
Revenues: -7% QoQ, -8% YoY
Volumes: -9% QoQ, -9% YoY
-- QoQ
Lower volumes of boxboard (-35%) and molded pulp trays(-24%)
-- YoY
Lower volumes of boxboard (-26%), corrugated papers(-3%).
Prices: +2% QoQ, +2% YoY
EBITDA :-- QoQ (-50%) and YoY (-45%)
Lower boxboard volumes
Higher direct costs
-8%
-7%
* Figures in US$ million
-45%
-50%
Third Party Sales Volumes
8
Third Party Sales Volumes
209 207193
4Q16 3Q17 4Q17
Sales*
2224
12
4Q16 3Q17 4Q17
EBITDA *
Third Party Sales Volumes 4Q16 3Q17 4Q17 QoQ YoY
- Boxboard 82 94 61 -35% -26%
- Paper Bags 22 24 22 -10% 2%
- Other Papers 21 20 24 21% 14%
- Corrugated Paper 34 29 33 14% -3%
- Corrugated Boxes 39 28 39 38% 0%
- Molded Pulp Trays 3 4 3 -24% 4%
Total (Th. Tons) 202 200 183 -9% -9%
Global Pulp MarketBleached Kraft Pulp Global demand increased 3.8% (+2.20 million tons) in 2017 compared to last year
Softwood demand up 2.5% (+619 thousand tons)
Hardwood demand rose 4.9% (+1,586 thousand tons)
Eucalyptus demand grew 2.5% (+579 thousand tons)
Chinese demand increased 8.0% (+1,520 thousand tons)
Global market pulp producer stocks ended the quarter in 28 days for softwood and 37 for hardwood, comparedto 30 days for softwood and 40 days for hardwood in December 2016.
Source: PPPC, World Chemical Market Pulp Global 100 Report – December 2017
BKP Demand Growth by Region
12 months 2017vs. 2016 - th. Tons and % change
BKP Demand Growth by Grade
12 months 2017vs. 2016- th. Tons and % change
9
+2.4%
-0.1%
2.8%
-0.6%
+5.1%
+8.0%
+4.5%
-200
0
200
400
600
800
1000
1200
1400
1600
North
America
Western
Europe
Eastern
Europe
Latin
America
Japan China Other
Asia/Africa
+2.0%+3.6%
+2.0%
+3.4%
-4.4%
+2.5%
-100
0
100
200
300
400
500
600
700
Northern
Softwood
Southern
Softwood
Radiata
Softwood
Northern
Hardwood
Southern
Hardwood
Eucalyptus
Robust Financial Execution & Cash Generation
Free Cash Flow of US$18 million, down from US$177 million in 3Q17 and US$62 million in 4Q16
Cash position of US$833 million in 4Q17, down 39% QoQ, and up 40% YoY driven by positive free cash flow generation
CAPEX of US$153 million during 4Q17
Net Debt/EBITDA ratio in 4Q17 was 3.0x, down from 3.1x in 3Q17 and 3.7x in 4Q16
Debt ratio complies with internal policy
10
(1) This figure includes VAT
3.7x
3.1x
3.0x
2.0x
2.5x
3.0x
3.5x
4.0x
4Q16 3Q17 4Q17
Net Debt/EBITDA
Internal Policy
US$ Million 4Q16 3Q17 4Q17 QoQ YoY
EBITDA 223 323 256 -21% 15%
(-) Capex (140) (126) (153) 22% 9%
(-) Dividends (0) (0) (0) - -
(-) Net Financial Expenses (49) (34) (67) 97% 37%
(-) Income tax (43) (18) (14) -20% -67%
(+/-) Working Capital Variation 71 32 (3) -111% -105%
Free Cash Flow 62 177 18 -90% -70%
Strategic Outlook 2018
Large scale Latin American producer of Pulp, Tissue, Wood &
Paper products, serving global and
local markets
11
Maintain focus on diversification strategy
Drive operational efficiencies and focus on cost control to improve margins
Benign market conditions expected to continue supporting execution
Committed to maintain capital structure through effective capital management and lower leverage
Q&A ……..