ARAUCO Corporate Presentation renewablesfor abetter life 1
Arauco Overview Business Segments Future Investments Recent Events and Initiatives Sustainability 2
HISTORY OF ARAUCO 2003 December 2017 ...and today we are a world class player in the forestry products 15 years ago, we were a Chilean based forestry and pulp firm… Industry Revenues Revenues US$5.2bn (3) US$1.5bn Pulp Capacity Pulp Capacity 1.6 mm AdT 3.9 mm AdT Panel Capacity Panel Capacity 1.0 mm m 3 9.4 mm m 3 Sawn Timber Capacity Sawn Timber Capacity 2.7 mm m 3 2.9 mm m 3 Number of Mills Number of Mills 21 44 Source: Arauco. (1) Arauco owns 50% of Europe and South Africa mills through Sonae Arauco. 3 (2) Arauco owns 50% of Montes del Plata mill in Uruguay. (3) Revenues figure corresponds to LTM March 2018.
ARAUCO AT A GLANCE Angelini Consolidated Sales Assets Market Cap Family Debt 74.0% 20,353 22,728 6,794 8,075 #2 60.82% 20,353 21,174 6,595 20,521 in market cap in Chile 99.98% 61% 5,238 13,995 4,279 - of Empresas Copec’s EBITDA Dec 2017 Financial Highlights December 2017 LTM In US$ millions • SEC-registered • In the US bond market since 1995 1,353 26% EBITDA EBITDA Margin 270 590 Outlook Net Income Cash BBB (Negative) 654 2.7x CAPEX Net Debt/ EBITDA BBB- (Stable) Baa3 (Stable) 60% 4,274 Debt/Equity Debt* 4 * Does not include swaps & forwards
DIVERSIFIED SALES AROUND THE WORLD Canada The Netherlands Sales by Region USA China United Mexico Arab Emirates Colombia Dec. 2017 Peru Brazil Australia Chile Argentina Arauco Offices Revenues Sales by Division Over65% Of our revenues come from exports December 2017 LTM Pulp and Wood products includes sales energy Dic 2017 5
FOUR STRATEGIC BUSINESS SEGMENTS IN A DIVERSIFIED OPERATIONAL FOOTPRINT COMPLEMENTARY POWER WOOD PRODUCTS FORESTRY PULP OPERATIONS 4 Mills 10 Power Plants 7 Sawmills Plywood: 710,000 m 3 606 MW 4 Remanufacturing 5 Mills MDF: 515,000 m 3 674,337 Ha (1) Surplus: 209 MW facilities 2.887,000 tons HB: 60,000 m 3 2,588,309 m 3 PB: 300,000 m 3 2 Power Plants 1 Sawmill 2 Mills 1 Mill 78 MW 132,325 Ha (1) 1 Remanufacturing MDF: 300,000 m 3 350,000 tons Surplus: 8 MW facility PB: 260,000 m 3 317,982 m 3 4 Mills 128,810 Ha (1) MDF: 1,530,000 m 3 PB: 720,000 m 3 1 Power Plant 1 Mill 73,885 Ha (1)(2) 82 MW (1) 700,000 tons (2) Surplus : 36 MW 8 Mills MDF: 1,470,000 m 3 PB: 1,520,000 m 3 10 Mills (3) MDF: 722,000 m 3 1 Sawmill (3) PB: 1,092,000 m 3 25,185 m 3 OSB: 243,000 m 3 9.4 MM m 3 2.9 MM m 3 1,009,356 Ha 3.9 MM tons TOTAL 766 MW (1) Considers hectares planted (2) Considers 50% of Montes del Plata 6 (3) Considers 50% of Sonae Arauco As of December 2017
MAXIMIZING THE VALUE OF EVERY TREE BSKP / UKP BHKP Black Licquor PULP PULP MILLS Chips HEAT ENERGY & STEAM PRODUCTION MDF / HB / PBO SAW MILLS Plywood PANEL MILLS Sawn Timber Remanufactured Wood Products 7 SAWN TIMBER & PANELS
WE ARE A MAIN PLAYER IN THE GLOBAL MARKET Market Pulp Capacity (in thousand of tons) 3,937 #2 market pulp producer in the world World Panels Capacity (in thousand of m3) 9,442 #2 panel producer in the world Market Pulp Capacity, December 2017. Arauco capacity includes 50% of Montes del Plata World Panels Capacity, December 2017. Arauco capacity includes 50% Sonae Arauco at Dec. 2017 8 Source: Hawkins Wright, Arauco estimations and Company information and filings
OUR MAIN PRODUCTS UKP BSKP BHKP Fluff Europe China Americas Rest of Asia Pulp Korea & Others Sales Volume: 3,772Th. AdT HB/OSB MDF PBO /Others Arg. Chile Panels* USA & Canada Brazil Others Sales Volume: 4,808Th. m3 Remanufactured Sawn Timber Kilned Sawn Timber Others Plywood Wood Products Middle North America Sawn Timber Rest of Asia & Oceania Europe Chile East Sales Volume: 2,933 Th. m3 Latam & Africa 9 December 2017 LTM *Does not include sales volume of Sonae Arauco as it does not consolidate
OPERATIONAL EFFICIENCY Logistics advantage Bioenergy generation Centralized strategic & self sufficiency in sourcing electricity Access to low-cost Lean wood management Research & Economies of Development scale 10
SOLID CAPITAL STRUCTURE Adjusted EBITDA Adjusted EBITDA Margin EBITDA by Division CAPEX Net Debt 11
Arauco Overview Business Segments Future Investments Recent Events and Initiatives Sustainability 12
FORESTRY: THE BASE FOR GROWTH Total Plantations 1,734 th. hectares owned Dec. 2017 In thousands ha. Includes plantations in Chile, Argentina, Brazil and Uruguay 1,009 th. hectares planted Th Th Hectares Planted Dec.2017 Th Hectares Harvested Th 13 Dec.2017
PULP: OUR PULP MILLS Licancel 155,000 tons UKP Alto Paraná 350,000 tons BSKP & Fluff Constitución Swing mill 355,000 tons UKP Arauco Mill Line 1 & Line 2 290,000 tons BHKP 510,000 tons BSKP Nueva Aldea 513,500 tons BHKP 513,500 tons BSKP Montes del Plata Valdivia 1,300,000 tons BHKP 550,000 tons Arauco owns 50% Bleached pulp Swing mill 14
PULP: COMPETITIVE ADVANTAGES TO EFFICIENTLY SUPPLY THE MARKETS CAGR 1 : 5.8% Pulp Production in million of AdT Balance between short and long fiber Competitive distances Cost efficient from forest to mills and ports 91% Of pulp sales come from exports Dec. 2017 15 (1) Compounded Annual Growth rate
PULP: COMPETITIVE ADVANTAGES Cost efficient Balance between short and long fiber HARDWOOD (44%) Capacity by Grade Dec 2017 3,887 Th. ADt SOFTWOOD (56%) Source: Hawkins Wright, December 2017 BSKP BHKP 16
PULP: COMPETITIVE ADVANTAGES Competitive distances from forest to mills and ports Average Distance Average Distance Mill to Port* Forest to Mill Kms Kms Nueva Aldea 63 Chile 85 Arauco 35 123 km. Uruguay 282 Valdivia 301 (weighted Constitución 316 Argentina 80 average) Licancel 420 Montes del Plata 0 *Does not include distance in Argentina since pulp sales are mainly inland. Weighted average distance between our pulp mills located in Chile, Uruguay & Argentina. 17 November 2015
PULP: PRICES AND DEMAND BHKP and NBSK Indexes Global Demand Demand for bleached chemical pulp December 2017 vs December 2016 (YTD) In thousand tonnes Source: Hawkins Wright 18
WOOD PRODUCTS: EXPANSIVE OF DIVERSIFIED PRODUCT MIX Sawn Timber Production CAGR 1 : 5.4% CAGR 1 : 23,9% Panels Production In thousands cubic meters In thousands cubic meters Dec 2017 LTM Includes 50% of Sonae Arauco 19 (1) Compounded Annual Growth rate
WOOD PRODUCTS: OUR PANEL MILLS Nettgau* Sault Ste. Marie Valladolid* 574 PB 144 MDF 310 MDF 486 OSB St Stephen Linares* Beeskow* 160 MDF 420 PB 312 PB 216 PB 336 MDF Moncure Meppen* 285 MDF 302 MDF 262 PB Eiweiler* Carolina PB 218 MDF 600 PB Albany 442 PB Mangualde Line I & II* Malvern 360 MDF 310 MDF Oliveira* Bennetsville 416 PB 251 MDF Eugene Jaguariaiva 154 MDF 780 MDF Cholguán / Trupán Panbult* Pién 515 MDF 140 PB 440 MDF 60 HB White River Line I & II* 310 PB Teno 320 PB Montenegro 300 PB 84 MDF 410 PB MDF: Medium Density Fiberboard Arauco Line I & II Ponta Grossa PB: Particleboard 350 Plywood 310 MDF OSB: Oriented Strand Board Nueva Aldea Piray 360 Plywood 300 MDF In thousand m3 Trupán Line I & II Dec. 2017 20 *Arauco owns 50% of Sonae Arauco 260 PB
WOOD PRODUCTS: OUR SAWN TIMBER MILLS Cuellar Saw Mill* Valdivia Saw Mill 50 ST 464 ST 85 Rem El Colorado Saw Mill 273 ST Horcones Saw Mill Line I & II 726 ST 130 Rem Piray Saw Mill Cholguán Saw Mill 318 ST 317 ST 67 Rem 92 Rem 13 Laminated Viñales Saw Mill 377 ST 101 Rem Nueva Aldea Saw Mill ST: Sawn Timber 431 ST Rem: Remanufactured Wood Products In thousand m3 Dec. 2017 21 *Arauco owns 50% of Sonae Arauco
ENERGY: KEY PART OF OUR VALUE CHAIN Energy Revenues in US$ million • Renewable, environmental friendly energy • Part of our production process • Arauco is self-sufficient in net electricity consumption 766 MW • All cogeneration plants registered under Installed Capacity Kyoto Protocol 253 MW Sold to National Grid in Chile, Argentina, & Uruguay Dec. 2017 22
Arauco Overview Business Segments Future Investments Recent Events and Initiatives Sustainability 23
ACQUISITION OF MASISA BRASIL In September 2017, Arauco subsidiary, Arauco do Brasil agreed toacquire Masisa do Brasil Ltda. Total installed capacity of: • 300,000 m3 of MDF • 500,000 m3 of MDP • 660,000 m3 of melamine Transaction price for approximately U.S.$ 102.8 million, with final disbursement amounting to U.S.$ 58.1 million Araucohas consolidated its position as the second largest player of panels in the world Mainassetsconsistof two industrial complexeslocatedin Ponta Grossa(Paraná) and Montenegro (Rio Grande do Sul) in Brazil 24
PARTICLE BOARD IN MICHIGAN, USA Located in Grayling, Michigan As of March 31 st , 2018 the construction phase goes as planned with 60% of progress Annual production of 800,000 m3 of MDP Rollout of the first panel expected during the latter part of 2018 The investment of this mill is estimated at US$ 400 million 25
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