PRESENTATION PREPARED FOR THE BAML EMERGING MARKETS CORPORATE CONFERENCE - MIAMI JUNE 2016 1
AGENDA I. COMPANY DESCRIPTION CMPC’S VALUE PROPOSAL II. 1. LEADING DIVERSIFIED LATIN AMERICAN P&P PLAYER 2. LOW COST PRODUCER WITH WORLD CLASS ASSETS 3. STRONG BALANCE SHEET AND FINANCIAL TRACK RECORD 4. COMMITTED TO SUSTAINABLE DEVELOPMENT AND CORPORATE GOVERNANCE 5. DIVERSIFIED INVESTMENT PORTFOLIO III. CHALLENGES 2016-2017 IV. APPENDIX
I. COMPANY DESCRIPTION
CMPC AT A GLANCE CMPC is a P&P company, established in 1920, that produces solid wood products, pulp , paper , packaging products and tissue in Latin America Shareholders’ Structure* CMPC’s Figures Market capitalization of US$5.4 billion Sales: 4,840 Chilean as of May 27 th , 2016 Pension EBITDA: 1,122 Funds 11% 11% EBITDA Margin: 23% Net Income: 134 International rating Net Debt: 3,519 BBB+ (stable) - Fitch Chilean a and Assets: 14,859 Foreign BBB- (stable) - S&P Investors rs Matte G Gro roup 34% 34% Baa3 (stable) - Moodys 56% 56% Local rating AA (Fitch) AA (ICR) * As of March. 31 st , 2016. Source: CMPC Figures for the LTM as of March, 2016 (US$ million) 4
II. CMPC’S VALUE PROPOSAL 1. LEADING DIVERSIFIED LATIN AMERICAN P&P PLAYER
A DIVERSIFIED BUSINESS PORTFOLIO PROVIDES CMPC A STABLE CASH FLOW % of third parties total % of consolidated Total capacity & Main Figures sales EBITDA Employees Pulp-Forestry 658 Th. has. Planted 16 M m 3 /y harvested Sales: 2,524 1.7 M m 3 /y solid wood Sales 3 rd parties: 2,207 46% 46% 73% 73% EBITDA: 814 4.1 M tons/y pulp EBITDA margin: 32% 4,982 employees US$11.2 billion in assets Sales: 916 Papers 1.3 M tons/y Sales 3 rd parties: 861 18% 18% 11% 11% 3,616 employees EBITDA: 127 US$1.4 billion in assets EBITDA margin: 14% Sales: 1,774 Tissue 657 Th. tons/y Sales 3 rd parties: 1,771 19% 19% 37% 37% 8,424 employees EBITDA: 218 US$2 billion in assets EBITDA margin: 12% Source: CMPC. Figures in US$ million for the LTM as of March 2016 / Figures do not include sales between CMPC affiliates or subsidiaries 6
CMPC HAS EVOLVED FROM A LOCAL COMPANY TO A GLOBAL PLAYER CMPC has expanded significantly throughout Latin America over the past two decades and has evolved from a local company to a global player in the P&P industry 17,562 Direct Employees Operations in 8 countries in Latin America 45% outside of Chile Sales of US$4.840 million Assets of US$14,859 million 41% from operations 41% outside of Chile outside of Chile Forestry Operations Pulp Operations Paper and Packaging Operations Tissue Operations 7
CMPC HAS A PRODUCT AND GEOGRAPHIC DIVERSIFICATION OF SALES THAT PROVIDES FLEXIBILITY 8 Source: CMPC. Figures in US$ million for the LTM as of March 2016 / Figures do not include Holding and Intercompany Sales.
II. CMPC’S VALUE PROPOSAL 2. LOW COST PRODUCER WITH WORLD CLASS ASSETS
CMPC BENEFITS FROM ITS PRODUCTION COST EFFICIENCIES AND WORLD CLASS ASSETS Research and Access to Development low cost fiber to enhance efficiency, productivity and customer satisfaction Energy investments based in biomass and State of art natural gas facilities strategically cogeneration located 10
HIGH YIELD FORESTRY ASSETS THAT PROVIDE LOW COST FIBER RESOURCES 658,100 Planted hectares 483,400 CMPC Forest Base Chile is FSC R 118,400 Certified Brazil * 56,300 Ove ver r 1 millio illion n hecta tares res of la land Argentina CMPC has a high quality and sustainable forestry base with fast growth cycles which optimizes capital invested in land, reduces average distance to mills and increases gains due to genetic and sylvicultural practices Improvement in Forestry Yields ** Radiata Pine Eucalyptus Average softwood growth rate Average hardwood growth rate 32% 32% (m 3 ssc/ha/year) (m 3 ssc/ha/year) 43 43 43 43 23% 23% 14% 14% 23 23 20 20 9% 9% 19 19 11 11 11 11 3% 3% 5 0% 0% 4 2 Eucalyptus E. Globulus E. Globulus Mangium E. Nitens Chile 1975 1980 1990 2000 2010 2020P Canada USA Russia Scandinavia Chile Acacia Iberian Brazil Chile ** Evolution of the weighted increase of volume per hectare expected for eucalyptus and pine plantations established in Chile in the respective year Source: CMPC. *There is an agreement to acquire from Fibria aprox. 100 Th. hectares of which 39 Th. are planted. CMPC is waiting the approval of Brazilian authorities to consolidate this land 11 ** m 3 ssc: solid m 3 without bark
PULP DIVISION: LARGE SCALE PRODUCER WITH GLOBAL CLIENT BASE Market Pulp Capacity Ranking Fibria 5,300 Arauco 1,765 1,585 485 CMPC 700 3,055 Suzano 3,560 Guaíba Santa Fe APRIL 60 3,285 BEKP - Brazil BEKP - Chile 1,759Th. tons/y 1,500 Th. tons/y UMP-Kymmene 905 1,715 Stora Enso 1,070 1,335 60 Paper Exellence 1,610 170 635 Georgia Pacific 2,210 100 Illim 1,440 340 215 - 2,000 4,000 6,000 BSKP BHKP Other Pacífico Laja BSKP - Chile BSKP - Chile Source: CMPC and Hawkins Wright as of April 2016 (million tons) 500 Th. tons/y 340 Th. tons/y 12
CMPC’S CASH COSTS ARE AMONG THE LOWEST OF THE PULP INDUSTRY GLOBALLY CMPC’s average distance from… to… Ports Plantations Laja 80 Km. 93 Km. (by train) 93 Km. Pacífico 163 Km. (by train) Santa Fe 119 Km. 99 Km. (by train) 208 Km. Guaíba 260 Km. (by barges) Source: CMPC BSKP 1 Supply Curve (US$/ton) BHKP 2 Supply Curve (US$/ton) 700 700 700 700 600 600 600 600 (US$/Ton c.i.f. N. Europe) (US$/Ton c.i.f. N. Europe) 500 500 500 500 400 400 400 400 300 300 300 300 CMPC’s pulp facilities 200 200 200 200 100 100 CMPC’s pulp facilities 100 100 0 0 0 5,000 10,000 15,000 20,000 25,000 0 5,000 10,000 15,000 20,000 25,000 30,000 (Thousand m metri ric t tonnes) (Thousan sand metric tonne nes) s) Source: CMPC and Hawkins Wright as of April 2016 (1) BSKP: Bleached Softwood Kraft Pulp (2) BHKP: Bleached Hardwood Kraft Pulp 13
II. CMPC’S VALUE PROPOSAL 3. STRONG BALANCE SHEET AND FINANCIAL TRACK RECORD
KEY FINANCIAL FIGURES AS OF MARCH 31 ST , 2016 Sales Evolution (US$ million) EBITDA and EBITDA Margin Evolution (US$ 1,122 million) 1,099 200 1, 50% 4,974 4,900 985 4,841 4,840 964 45% 4,759 914 1, 000 40% 35% 800 30% 23% 23% 20% 19% 600 19% 25% 20% 400 15% 10% 200 5% 0 0% 2012 2013 2014 2015 LTM 2012 2013 2014 2015 LTM Source: CMPC Source: CMPC Financial Debt / Equity (Covenant: <0.8x) Interest Coverage Ratio (Covenant: >3.25x) 0. 58 0.56x 0. 56 8. 00x 6.80x 7. 00x 5.94x 0. 54 5.90x 0.53x 5.67x 5.45x 0.52x 5.31x 6. 00x 0. 52 5. 00x 0. 50 4. 00x 0.48x 0.48x 3. 00x 0. 48 2. 00x 0. 46 1. 00x 0. 44 0. 00x 2012 2013 2014 2015 1Q16 2011 2012 2013 2014 2015 1Q16 Source: CMPC Source: CMPC 15
DEMONSTRATED CAPACITY TO MANAGE LEVERAGE Net Debt / EBITDA 5.0 Acquisition of Pacífico and Santa Santa Fe II Guaíba II Guaíba I Fe I Investment Period Acquisition Investment Period 4.5 4.5 4.0 3.8 3.4 3.5 3.3 2.8 3.0 3.1 2.3 2.5 2.0 1.5 1.8 1.5 1.5 1.0 0.9 0.5 0.0 Source: CMPC 16
CMPC’S DEBT PROFILE AS OF MARCH 31 ST , 2016 Debt Profile Amortization schedule (as of today) Average term: 6.2 years Bonds Banks Average cost in US$: 3.9% 85 Total Debt: US$4,153 million Cash: US$633 million 125 124 114 990 Net Debt: US$3,519 million 498 497 494 478 179 196 120 116 - - - - 2016 2017 2018 2019 2020 2021 2022 2023/29 2030/39 Debt by Type Debt by Currency Debt by Issuer Debt by Interest Rate Other Variable ECA CLP Banks 3% Pulp Rate BRL 9% 6% 6% 6% BNDES 21% 6% 12% Tissue 6% Inversion es CMPC Fixed Bonds USD 73% Rate 73% 86% 94% Source: CMPC 17
II. CMPC’S VALUE PROPOSAL 4. COMMITTED TO SUSTAINABLE DEVELOPMENT AND CORPORATE GOVERNANCE
CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY Throughout its history, CMPC has maintained a way of doing business and engaging with employees, customers and shareholders. With a 96-year tradition, the following five values summarize our vision of how we should work. Strict compliance Respect for Fairness when Care of the Consideration for with the legal competing environment people neighbors ' needs regulation 5 Pillars of CMPC’s Environmental Agenda Development of Efficient use Certified Replacement of Recycling certified fossil fuels of energy, water industrial old paper renewable and raw processes with biomass forest plantations materials 19
CORPORATE GOVERNANCE IN CMPC BOARD OF DIRECTORS Jorge Luis Felipe Vivianne Rafael Jorge Jorge Bernardo Ramiro Pablo Larraín Matte Gazitúa Blanlot Fernández Marín Matte Mendoza Turner Chairman Independent Independent CMPC’s Board of Current members: Vivianne Blanlot, Directors Rafael Fernández and Jorge Marín Directors Committee Current members: Vivianne Blanlot Appoints Audit CMPC’s and Ramiro Mendoza Board Committee Comptroller Members Management Financial Risk Current members: Bernardo Matte Committee and Jorge Marín CMPC’s Subsidiary’s Board of Directors CMPC’s Subsidiary’s Management Other initiatives: Business Ethics Guidelines, Corporate Governance Guidelines, Antitrust Guidelines, Anticorruption Policies, Whistle Blower Hotline 20
II- CMPC’S VALUE PROPOSAL 5. DIVERSIFIED INVESTMENT PORTFOLIO
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