ARAUCO Corporate Presentation 3Q 2018 Arauco Overview Business - PowerPoint PPT Presentation

ARAUCO Corporate Presentation 3Q 2018

Arauco Overview Business Segments Financial Highlights Future Investments Recent Events and Initiatives Sustainability

3 HISTORY OF ARAUCO: A CONTINUED EXPANSION … Now 1996 Alto Parana in Argentina, one of the first strategic steps to expand our business Today we are a world class player in the forestry products industry Europe (1) 8 Panel mills North America 1 Sawmill 9 Panel mills Mexico Brazil 2 Panel mills 4 Panel mills South Africa (1) Chile Argentina Uruguay (2) Chile 1 Panel mill 1 Pulp mill 2 Pulp mills 1 Pulp mill 5 Pulp mills 8 Sawmills Argentina 4 Panel mills 7 Sawmills 1 Pulp mill 2 Panel mills 1 Sawmill US$5.9 bn (3) Revenues Revenues (3) US$641 M Pulp Capacity (5) Pulp Capacity 1.1 M tons 3.9 MM tons Panel Capacity (4) (5) 10.8 MM m 3 Panel Capacity 0 m 3 Sawn Timber Capacity (5) 2.9 MM m 3 Sawn Timber Capacity 1,9 M m 3 Number of Mills (4) 46 Number of Mills 11

4 ARAUCO AT A GLANCE National rating (2) Financial highlights Sept. 2018 LTM Shareholder Structure (1) US$ million Angelini Group 32% AA AA- 1,873 EBITDA 74,68% EBITDA (Stable) (Stable) Margin 735 4,167 Cash Debt* International rating (2) 60,82% 1.8x 57% Net debt/ Net Debt/ EBITDA Equity BBB- BBB 740 812 (Stable) (Stable) Net income CAPEX 99,98% Baa3 (Stable)

5 DIVERSIFIED SALES AROUND THE WORLD Revenues The MUS$5,909 Netherlands Germany Sales by Canada Portugal Division Spain USA China Mexico United Arab Colombia Emirates Peru Brazil Chile South Uruguay Australia Africa Argentina Over 65% Sales by Region Of our revenues are from AraucoOffices exports Mondes del Plata, JV withStoraEnso SonaeArauco, JV withSonaeIndustria

6 FOUR STRATEGIC BUSINESS SEGMENTS IN A DIVERSIFIED OPERATIONAL FOOTPRINT Complementary Wood products Forestry Pulp energy operations 4 Mills 7 Sawmills Plywood: 710 th. m 3 10 Power Plants 5 Mills 4 Remanufacturing 674,020 Ha (1) MDF: 515 th. m 3 606 MW 2,905 th. tons facilities HB: 60 th. m 3 Surplus: 209 MW 2,588 th. m 3 PB: 300 th. m 3 1 Sawmill 2 Mills 2 Power Plants 1 Mill 1 Remanufacturing 3 132,617 Ha (1) MDF: 300 th. m 78 MW 350 th. tons facility 3 PB: 260 th. m Surplus: 8 MW 317 th. m 3 4 Mills MDF: 1,530 th. m 3 134,331 Ha (1) 720 th. m 3 PB: 1 Power Plant 1 Mill 90 MW (2) 76,804 Ha (1)(2) 700 th. tons (2) Surplus: 45 MW 9 Mills MDF: 1,470 th. m 3 PB: 2,320 th. m 3 2 Mills 3 MDF: 250 th. m 3 PB: 300 th. m 9 Mills (3) MDF: 741 th. m 3 1 Sawmill (3) PB: 1,089 th. m 3 25 th. m 3 OSB: 258 th. m 3 10.8 MM m 3 2.9 MM m 3 3.9 MM tons TOTAL 1.02 MM Ha 774 MW

7 WE ARE A MAIN PLAYER IN THE GLOBAL MARKET Market Pulp Capacity (thousandtons) Arauco* MAPA #2 market pulp producer 3,955 + 1,270 = 5,225 th. tons in the world World Panels Capacity (thousandm 3 ) Arauco* Grayling #2 and Mexico 9,473 + 1,350 = 10,823 th. m 3 panels producer in the world

8 MAXIMIZING THE VALUE OF EVERY TREE BSKP / UKP BHKP PULP Black Licquor PULP MILLS Chips HEAT ENERGY & STEAM PRODUCTION WOOD PRODUCTS MDF / HB / PBO MILLS Plywood Sawn Timber Remanufactured Wood Products WOOD PRODUCTS

Arauco Overview Business Segments Financial Highlights Future Investments Recent Events and Initiatives Sustainability

10 FORESTRY: THE BASE FOR GROWTH

11 FORESTRY: THE BASE FOR GROWTH Total Plantations Planting and harvesting In thousand hectares In thousand hectares 1,769 th. hectares Environmental Certifications owned Pine : 71 th. Our forests plantations Euca: 63 th. Others: 0.2 th. have international certification in Forestry 1,018 th. hectares Pine: 0.1 th Management and Chain planted Euca: 75 th. of Custody Others:0.5 th For detailed information about Pine : 95 th. each certification, you can visit 659 th. has .of Pine Euca: 18 th. our web site www.arauco.cl 336 th. has. of Euca Pine : 493 th. Others: 20 th. Euca: 179 th. Others: 3 th.

12 FORESTRY: THE BASE FOR GROWTH Bioforest research and development Bioforest was formed in 1990 by Arauco and one of the achievements has been the increase in the plantations production by 40% 51 researchers highly trained • Bioforest has a wide participation in local and international Research organizations that are leaders in the forestry-industrial scientific knowledge and innovation • In addition, Bioforest aims to fulfill the environmental in order to objectives for the protection and conservation of biodiversity develop present in our native forests and apply the best technologies, maximizing the forestry and industrial resources

13 PULP: ARAUCO´S MAIN INDUSTRIAL ACTIVITY

14 PULP: ARAUCO´S MAIN INDUSTRIAL ACTIVITY Sales volume: 3.7 million tons Pulp Sales 95% MUS$2,910 Of pulp sales go to exports Does not include energy sales Pulp production million tons Sept 2018 LTM

15 PULP : OUR MILLS Licancel 160,000 tons UKP Constitucion Alto Parana 355,000 tons UKP 350,000 tons BSKP & Fluff Swing mill Arauco Mill Line 1 & Line 2 290,000 tons BHKP 510,000 tons BSKP Montes del Plata Nueva Aldea 1,400,000 tons BHKP 520,000 tons BHKP Arauco owns 50% 520,000 tons BSKP Valdivia 550,000 tons Bleached pulp Swing mill

16 PULP: COMPETITIVE ADVANTAGES TO EFFICIENTLY SUPPLY THE MARKETS Balance between short and long fiber Cost advantage HARDWOOD Capacity by (45%) Grade 3,937 Th. ADt SOFTWOOD (55%) BHKP BSKP

17 PULP: COMPETITIVE ADVANTAGES TO EFFICIENTLY SUPPLY THE MARKETS Average Distance Average Distance Mill to Port Forest to Mill Km Km Licancel 420 85 Chile Constitucion 316 Argentina 80 Nueva Aldea 63 Uruguay 282 Arauco 220 km. 35 (weighted Valdivia 301 average) MAPA Alto Paraná 1,200 Project 0 Montes del Plata location

18 PULP MARKET SCENARIO BHKP and NBSK Indexes and BCP capacity growth forecast BCP demand forecast 2018-2022 Annual growth of capacity +5.0 Mt BHKP NBSK Forecast 2.3 2.2 2.0 0.8 0.5 0.2 -0.5 Forecast 2018-2022 63 Forecast +3.2 Mt Price gap between NBSK and BHKP ➢ September 2018: US$ 180 / ton ➢ December 2018: US$ 174 / ton ➢ Average (Jan. 2018 – Dec. 2018): US$ 129 / ton

19 PANELS: EXPANSION OF THE PRODUCT MIX

20 PANELS: EXPANSION OF THE PRODUCT MIX Sales volume: 5.3 million m 3 Panel Sales MUS$ 1,721 Panels production In million cubic meters 2 0

21 PANELS: OUR MILLS * * 470 MDF 974 PB 140 MDF 216 PB 856 MDF 428 PB 516 OSB East Coast West Coast 846 MDF 154 MDF 1304 PB 800 MDP * 300 PB 360 MDF 250 MDF 416 PB * 720 PB 515 MDF 160 PB 1530 MDF 60 HB 42 MDF 300 PB 710 Plywood 300 MDF 260 PB MDF: Medium Density Fiberboard MDP: Medium Density Particle board PB: Particleboard OSB: Oriented Strand Board 21

22 SOLID WOOD: HIGH QUALITY PRODUCTION STANDARDS

23 SOLID WOOD: HIGH QUALITY PRODUCTION Sales volume: 2.9 million m 3 Solid Wood Sales MUS$997 Solid Wood production In thousand cubic meters

24 SOLID WOOD: OUR MILLS 50 ST * 2,589 ST 408 Rem 318 ST 13 Laminated 67 Rem ST: Sawn Timber Rem: Remanufactured Wood Products

25 ENERGY: KEY PART OF OUR VALUE CHAIN

26 ENERGY: KEY PART OF OUR VALUE CHAIN Highlights Revenues • Electricity generation from renewable energies is part of our production process MUS$113 • Arauco is self-sufficient in net electricity consumption and inyects the excedent into the local grid in Chile, Argentina and Uruguay • 5 cogeneration plants in Chile and 1 plant in Uruguay are registered under the Kyoto Protocol Clean Development Mechanism (CDM) The surplus energy injected is equivalent to provide energy to 550.000 houses 262 MW Sold to National Grid in Chile, 774 MW Argentina and Uruguay Installed capacity

Arauco Overview Business Segments Financial Highlights Future Investments Recent Events and Initiatives Sustainability

28 SOLID CAPITAL STRUCTURE Adjusted EBITDA US$ million Adjusted EBITDA Margin EBITDA by Division CAPEX Net Debt US$ million US$ million The lowest since 2010

Arauco Overview Business Segments Financial Highlights Future Investments Recent Events and Initiatives Sustainability

30 MAPA: NEW LINE AT ARAUCO MILL & COGENERATION PLANT Modernization and Expansion of the Arauco Mill Project (MAPA) consists in the construction of a third pulp line of 1.56 million Adt (short fiber), increasing the Arauco’s total pulp capacity to approximately 5 million Adt. The project considers the shut down of The investment for this Arauco´sline 1 of project is approximately 290,000 Adt of short US$ 2,350 million. fiber pulp once the new line (line 3) is operating It is expected that the mill Construction of a 132 will start its operations MW cogeneration during the second quarter plant of 2021.

31 MAPA: WHERE WE STAND TODAY July 2018 February 2019 The Board of Directors Earth-movingworksstart approved the MAPA project April 2011 October 2018 2021 Arauco’s first Arauco signed main equipment Thenew Line 3 is expected environmentalstudies contracts with Andritz and Valmet tostartoperatingon 2021, for MAPA Project Valmetwill supply the recovery boiler, whileLine1 is shutdown power boilers, dryer and bale handler.