Second Quarter 2018 Earnings Results
Second Quarter 2018 Earnings Results Forwar orward-Look Looking ng State Statements ments This presentation may contain forward-looking statements that should be considered as good faith estimates. Such statements are subject to risks and uncertainties outside of CMPC´s control that could cause CMPC’s actual results to differ materially from those set forth in the forward-looking statements. These risks include, in particular, those described in CMPC’s Financial Statements, Note 3 (“Gestión de Riesgos”) . Forward-looking statements speak only to the date they are delivered; CMPC undertakes no obligation to publicly update or revise them to consider developments which differ from those anticipated. 2
Opening Comments Great operational execution making the best of supportive market conditions Diversification continues to drive strategy, with new Zarate tissue plant Large-scale Latin American producer of Strong capital discipline continues to Pulp, Tissue, Wood & bring leverage down Paper products, serving global and local markets Closure of tissue restitution in Chile, with final disbursement made in 2Q18 3
2Q18 Highlights Oper Op erational l & & Financial l High ghli lights In US$ Milllion 2Q17 1Q18 2Q18 QoQ YoY 1 Positive fundamentals in pulp markets drive Revenues 1.280 1.495 1.618 8% 26% QoQ increase in hardwood and softwood COGS (807) (916) (915) 0% 13% prices: Other Operational Expenses (182) (180) (196) 9% 8% Hardwood CIF up 3% to 757 US$/ton EBITDA 290 290 399 399 507 507 27% 27% 75% 75% Softwood CIF up 2% to 853 US$/ton EBITDA margin % 22,7% 26,7% 31,3% 463 bps 865 bps Market pulp sales volume of 927,000 tons, up Operational Result 149 238 333 40% 123% 11% QoQ and 19% YoY Non Operational Result (123) (94) (238) 153% 93% Consolidated revenues up 8% QoQ and Net Income 26 26 144 144 95 95 -34% 270% 270% 26% YoY, to US$1,618 million EBITDA reached an all-time high of US$507 3 rd rd Party Volumes 2Q17 1Q18 2Q18 QoQ YoY million, up 27% QoQ and 75% YoY Forestry + Solid Wood Prod. (1) 905 810 989 22% 9% Free cash flow reached US$103 million, up Market Pulp (2) from US$70 million in 1Q18 and US$122 777 838 927 11% 19% Papers (2) million in 2Q17 188 207 208 1% 11% Net debt was US$3,223 million, up 3% QoQ Tissue Papers (2) 168 165 169 3% 1% and down 0.2% YoY Sanitary Products (3) 1.320 1.300 1.342 3% 2% Net debt to EBITDA ratio reached 2.2x (1) Th. m 3 (2) Th. Tons (3) M. units 4
COGS and Other Operating Expenses Other er Op. Exp (US$ Million) COGS (US$ Million) 916 915 +13% +8% 807 196 182 180 0% +9% 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 COG OGS Ot Other er Op Oper erational l Expe Expenses Stable QoQ: Up 9% QoQ: Higher sales volumes Higher administrative expenses in Pulp Lower costs in Pulp due to lack of and Tissue forestry protection and maintenance Higher expenses in Tissue costs Up 8% YoY: Up 13% YoY: Higher administrative expenses in all Higher sales volumes, especially Pulp business divisions Higher pulp prices 5
Pulp Business Rev evenu nues: : +14% QoQ, +49% YoY Sales * EBITDA* 899 +49% Fore orestr try Sale les Vol olumes: +22% QoQ, +9% YoY +101% 444 786 150 333 605 123 Fore orestr try Pr Prices: -1% QoQ, +8% YoY +14% 221 126 +33% 749 Pulp Pulp Pro Produ duction: +8% QoQ, +7% YoY 662 479 No maintenance downtime 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 Pulp Pulp Sale les Vol olumes: Pulp Forestry -- QoQ (+11%) +4% BSKP: Higher exports to Asia and Europe Third Party Sales Volumes 2Q17 1Q18 2Q18 QoQ YoY +12% BEKP: Higher exports to all markets - Pulpwood 18 23 16 -30% -11% -- YoY (+19%) - Sawing Logs 413 354 457 29% 11% +8% BSKP: Higher exports to China - Sawn Wood 194 181 202 11% 4% +22% BEKP: Higher exports to China - Remanufactured Wood 44 39 44 11% 0% - Plywood 96 99 123 25% 29% Pulp Pulp Pri Prices: BSKP US$853/ton, BEKP US$757/ton - Others 140 114 148 29% 5% Total ( t h. m 3 ) 905 905 810 810 989 989 22% 22% 9% 9% EB EBITDA: BSKP 157 164 170 4% 8% -- QoQ (+33%) BEKP 619 674 757 12% 22% Higher hardwood and softwood prices and volumes Total Market Pulp ( Th. Tons) 777 777 838 838 927 927 11% 11% 19% 19% Higher forestry volumes P&W Guaiba (Th. Tons) 14 13 10 -24% -32% -- YoY (+101%) Higher pulp prices and volumes 6 * Figures in US$ million
Tissue Business Rev evenu nues: +2% QoQ, +2% YoY Sales* EBITDA* Vol olumes: +2% 486 478 479 -- Tissue Paper -16% 58 51 49 +3% QoQ, mainly from higher volumes in most countries +1% YoY, driven by higher volumes in Chile, Peru and -4% 2% Colombia, with drag from lower volumes in Mexico and Brazil -- Sanitary Products: 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 +3% QoQ, supported by higher baby diaper volumes in all countries (except for Brazil) and higher wet wipe volumes Third Party Sales Volumes in Chile. 2Q17 1Q18 2Q18 QoQ YoY +2% YoY, driven by higher diaper volumes in Argentina, - Chile 37 37 40 9% 7% Brazil, Mexico and Chile. - Brazil 34 31 33 5% -4% Pri Prices (in USD): - Mexico 33 34 31 -8% -5% -1% QoQ for Tissue Paper Third Party Sales Volumes - Argentina 26 24 26 8% 1% -2% QoQ for Sanitary Products - Peru 22 24 23 -3% 5% - Uruguay 5 5 5 6% -7% EB EBITDA: - Colombia 6 6 7 8% 4% -- QoQ (-4%) - Ecuador 4 4 4 3% 12% Higher SG&A expenses Total Tissue Paper ( Th. Tons) 168 168 165 165 169 169 3% 3% 1% 1% -- YoY (-16%) - Diapers 760 770 797 4% 5% - Feminine Care 331 324 313 -3% -5% Higher direct costs of fiber - Others 230 205 231 13% 1% Higher SG&A expenses Total Sanitary ( M . Unit s) 1.320 1.300 1.342 3% 3% 2% 2% 7 * Figures in US$ million
Paper Business Sales* EBITDA * Rev evenu nues: +1% QoQ, +19% YoY 233 231 +19% +31% 197 24 24 Vol olumes: 18 -- QoQ (+1% ) +1% -2% Higher volumes of molded pulp trays (+27%) and boxboard (+15%) -- YoY (+11% ) 2Q17 1Q18 2Q18 2Q17 1Q18 2Q18 Higher volumes of corrugated paper (+37%) and boxboard (+10%) Third Party Sales Volumes Pri Prices: +0% QoQ, +7% YoY 2Q17 1Q18 2Q18 QoQ YoY Third Party Sales Volumes - Boxboard 82 78 90 15% 10% - Paper Bags 22 21 23 7% 2% EB EBITDA : - Other Papers 20 23 22 -6% 11% -- QoQ (-2% ) - Corrugated Paper 21 26 29 9% 37% Lower corrugated boxes volumes - Corrugated Boxes 36 52 37 -28% 2% Higher operating costs - Molded Pulp Trays 7 6 8 27% 11% -- YoY (+31% ) Total ( Th. Tons) 188 188 207 207 208 208 1% 1% 11% 11% Higher revenues in all products categories, especially boxboard and corrugated paper. 8 * Figures in US$ million
Global Pulp Market Global demand for Bleached Kraft pulp increased by 2.5% (+766,000 tons) in the first 6 months of 2018, compared to the same period in 2017 Softwood demand increased by 0.3% (+43,000 tons) Hardwood demand increased by 4.1% (+683,000 tons) Eucalyptus demand rose by 4.4% (+517,000 tons) Chinese demand grew 6.6% (+660,000 tons), Eastern Europe rose 9.9% (+120,000 tons), Western Europe increased by 2.1% (+159,000 tons), Japan rose 1.8% (+20,000 tons) and Other Asia/Africa increased by 0.2% (+11,000 tons), while North America and Latin America demand decreased 4.6% (-177,000 tons) and 1.1% (-18,000 tons), respectively. Global market pulp producer stocks ended June 2018 at 28 days for softwood and 43 days for hardwood, compared to 29 days and 39 days, respectively, at the end of June 2017 BKP Demand Growth by Region BKP Demand Growth by Grade 6 months 2018 vs 2017- th. Tons and % change 6 months 2018 vs 2017- th.Tons and % change 600 800 +4.4% +6.6% 500 700 600 400 500 300 400 +3.0% 300 200 200 +2.1% +9.9% 100 100 +1.8% +0.2% 0 0 -100 -1.1% -11.4% -100 -2.0% -200 -3.9% -4.6% -6.2% -300 -200 North Western Eastern Latin Japan China Other Northern Southern Other Northern Southern Eucalyptus America Europe Europe America Asia/Africa Softwood Softwood Softwood Hardwood Hardwood 9 Source: PPPC, World Chemical Market Pulp Global 100 Report – June 2018
Robust Financial Execution & Cash Generation Free Cash Flow of US$103 million, up from US$70 million in 1Q18 and up from US$122 million in 2Q17 Cash position of US$639 million at the end of 2Q18, down 24% QoQ and 49% YoY, driven by the US$158 million disbursement related to the restitution to Chilean tissue consumers during 2Q18. CAPEX of US$99 million during 2Q18 Net Debt/EBITDA ratio in 2Q18 was 2.2x, down from 2.5x in 1Q18 and 3.4x in 2Q17 Debt ratio reached internal target US$ Million 2Q17 1Q18 2Q18 QoQ YoY EBITDA 290 290 399 399 507 507 27% 27% 75% 75% (-) Capex (108) (103) (99) -3% -8% (-) Dividends (5) (0) (66) - 1313% (-) Net Financial Expenses (47) (22) (60) 166% 26% (-) Income tax (6) (22) (74) 242% 1168% (+/-) Working Capital Variation (3) (182) (103) -43% 3389% Free Cash Flow 122 122 70 70 103 103 47% 47% -15% 10
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