ARAUCO Corporate Presentation
Arauco Overview Business Segments Future Investments Recent Events and Initiatives Sustainability 2
Copec acquires Celulosa Constitucion Arauco Creation of Acquisition and Celulosa begins subsidiary of Licancel Arauco. The producing Paneles pulp mill merged firm Sawn Arauco S.A. from is called Timber, and Its Horcones Attizhold “ Celulosa creates mill starts Holding Arauco y Aserraderos operations Swiss Constitución Arauco S.A. in 1998. Company. S.A.” 1977 1993 1995 1999 1990 1994 1996 2000 Arauco Arauco Arauco Acquisition creates a Generación acquires in of Forestal forest (now Arauco Argentina Cholguán. research Bioenergía) Alta Parana subsidiary starts (now Arauco Acquisition named operations, Argentina). of Trupán Bioforest. producing and energy Cholguán through panel biomass. companies. 3
Joint Venture with Stora Enso to acquire Uruguayan subsidiary of Montes del Nueva Aldea ENCE. Plata mill pulp mill Valdivia pulp starts Acquisition of starts mill starts operation in Tafisa Brazil. operating. operating. Uruguay. 2004 2006 2009 2014 2005 2007 2012 2016 Joint Acquisition Acquisition First Chilean venture with of 80% of firm to issue of 8 panel Sonae. Forestal Los mills in carbon Arauco Lagos, Chile. Canada and credits acquires U.S.A. from based on 50% of 10 Purchase of Flakeboard. biomass. panel mills forest and sawn investments Enterprise timber mill in Argentina Education in Europe and Brazil Award 2007. and South from Louis Africa. Dreyfus. 4
Sales Assets Consolidated Market Angelini Family Debt Cap In US$ millions 74.36% 16,699 21,919 6,868 4,562 60.82% #2 16,699 21,447 6,649 12,448 in market cap in Chile 99.98% 60% 4,761 14,006 4,568 - of Empresa Copec’s EBITDA Dec. 2016 Financial Highlights December 2016 In US$ millions ► SEC-registered ► In the US bond market since 1995 1,052 22% EBITDA EBITDA Margin 218 592 Net Income Cash BBB (Negative) 665 3.7x BBB- (Stable) CAPEX Net Debt/ EBITDA Baa3 (Stable) 64% 4,481 Debt* Debt/Equity * Does not include swaps & forwards 5
Others 4% North America Asia and NETHERLANDS 29% Oceania Sales by CANADA 33% Region USA Central and CHINA South Europe America MEXICO 7% 27% Dec. 2016 SAUDI ARABIA COLOMBIA BRAZIL AUSTRALIA PERU ARGENTINA Other CHILE Forestry 1% 2% Sales Offices Pulp Sales by 45% Division Wood 52% 5,343 5,146 5,147 63% 4,761 4,374 4,299 3,767 Dec. 2016 Of our revenues Pulp and Wood products includes sales energy come from exports 2010 2011 2012 2013 2014 2015 2016 Revenues Dec. 2016 6
WOOD PRODUCTS FORESTRY PULP ENERGY 5 Mills 718,460 Ha 5 Mills 8 Sawmills 10 Power Plants Plywood: 710,000 m 3 2.887,000 tons 4 Remanufacturing 606 MW MDF: 515,000 m 3 facilities Surplus: 209 MW HB: 60,000 m 3 2,704,190 m 3 PB: 300,000 m 3 132,333 Ha 1 Mill 2 Mills 1 Sawmill 2 Power Plants MDF: 300,000 m 3 1 Remanufacturing 78 MW 350,000 tons PB: 260,000 m 3 facility Surplus: 8 MW 317,982 m 3 100,468 Ha 2 Mills MDF: 1,255,000 m 3 PB: 310,000 m 3 73,696 Ha (1) 1 Mill 1 Power Plant 650,000 tons (1) 82 MW (1) Surplus : 36 MW 8 Mills MDF: 1,470,000 m 3 PB: 1,520,000 m 3 10 Mills (2) 1 Sawmill (2) MDF: 739,064 m 3 32,850 m 3 PB: 1,164,138 m 3 OSB: 257,783 m 3 8.9 MM m 3 3.1 MM m 3 1,024,957 Ha 3.9 MM tons 766 MW TOTAL (1) Corresponds to 50% of Montes del Plata (2) Corresponds to 50% of Sonae Arauco 7 Dec. 2016
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 SAWN TIMBER & PANELS 8
Market Pulp Capacity (in thousand of tons) #2 Fibria Arauco 3,887 CMPC IP Suzano APRIL UPM-Kymmene Stora Enso market pulp producer Georgia Pacific in the world Paper Excellence - 1,000 2,000 3,000 4,000 5,000 6,000 World Panels Capacity (in thousand of m3) Kronospan Arauco 8,861 #2 Norbord /Ainsworth Egger Georgia Pacific Swiss Krono Louisiana Pacific Kastamonu Duratex panel producer in the Pfleiderer world - 4,000 8,000 12,000 16,000 20,000 Market Pulp Capacity, December 2016. Arauco capacity includes 50% of Montes del Plata Worold Panels Capacity, January 2016. Arauco capacity includes 50% Sonae Arauco at Dec. 2016 9 Source: RISI and Arauco estimations Company information and filings
42% 12% 5% 41% BHKP BSKP Fluff UKP 8% 53% 13% 15% 11% China Americas Korea Pulp Europe Rest of Asia & Others Sales Volume: 3,680 Th. AdT 60% 37% 3% HB/OSB/ MDF PBO Others 55% 22% 7% 5% 11% Panels* USA & Canada Brazil Arg. Chile Others Sales Volume: 4,754 Th. m3 35% 33% 18% 14% Remanufactured Kilned Sawn Timber Sawn Timber Plywood Wood Products 10% 16% 18% 21% 2% Sawn Timber 30% Sales Volume: 3,102 Th. m3 Rest of Latam Europe Asia & Oceania USA & Canada Chile Middle East & Africa Dec. 2016 10 *Does not include sales volume of Sonae Arauco as it does not consolidate
Bioenergy generation – Centralized strategic Logistics advantage self sufficiency in sourcing electricity consumption & surplus sold to local grids Access to low- Lean management cost wood Research & Access to low- Development cost wood 11
Adjusted EBITDA Other -6% 37% 30% 22% 24% 25% 22% 20% Adjusted 40.0% 20.0% EBITDA Forestry 0.0% Margin 24% -20.0% Pulp 1,390 EBITDA by -40.0% 1,308 1,272 1,282 51% 1,143 1,052 -60.0% 862 Division -80.0% -100.0% 2010 2011 2012 2013 2014 2015 2016 Wood 31% CAPEX 1,369 1,165 865 688 665 614 469 2010 2011 2012 2013 2014 2015 2016 Net Debt 4.6x 3.8x 3.7x 3.2x 3.0x 2.1x 1.7x 3.0 1.0 4,474 4,359 4,107 -1.0 3,889 3,805 2,897 2,406 -3.0 -5.0 2010 2011 2012 2013 2014 2015 2016 12
Arauco Overview Business Segments Future Investments Recent Events and Initiatives Sustainability 13
Forestry 0-5 21+ years years 13% 25% 1,675 th. hectares owned 16-20 1,025 th. hectares years planted Pine Plantation 19% Aging 696 th. hectares of 6-10 years Pine Ideal conditions 23% 11-15 for forest growth Dec. 2016 years Dec. 2016 20% 66 th. 1,025 Total Plantations 63 th. Hectares Planted 32 th. 619 Hectares Harvested 16 th. 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Dec. 2016 In thousands ha. 14 Includes plantations in Chile, Argentina, Brazil and Uruguay
PULP Licancel 150,000 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 15
PULP Pulp Production in million of AdT 2016 3.7 2015 3.6 2014 3.3 2013 3.1 2012 3.0 Balance 2012 3.0 2011 2.8 between short 2010 2.3 2009 3.0 and long fiber 2008 2.9 2007 2.6 2006 2.2 2005 1.9 2004 2.0 2003 1.6 2002 1.5 2001 1.5 Competitive distances BSKP (Pine) UKP (Pine) BHKP (Eucalyptus) Cost efficient from forest mills port 92% Of pulp sales come from exports Dec. 2016 16 (1) Compounded Annual Growth rate
PULP Balance between short and long fiber Cost efficient 550 East Canada Japan US Coastal BC Canada Int. West Canada 500 Finland Japan HARDWOOD Other Europe US Bel/France (37%) China 450 Cash Cost, CIF China Sweden Sweden BSKP US$/ADt Canada BHKP Other World East Europe 400 41% Capacity by Grade Iberia 37% Chile Finland Dec. 2016 East Europe Chile/Uruguay 350 3,887 Th. ADt Indonesia 300 Brazil UKP Fluff 250 13% 9% 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Annual capacity (000s ADt) SOFTWOOD BSKP Source: Hawkins Wright, December 2016 (63%) BHKP 17
PULP Competitive distances from forest mills port 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 incllude disteance in Argentina since pulp sales are mainly inland. Weighted average distance between our pulp mills located in Chile, Uruguay & Argentina. 18 November 2015
PULP 2016 2017 2018 2019 400 th. tons SW Klabin Puma 360 th. tons SW IP Riegelwood Svetlogorsk 400 th. tons SW Domtar Ashdown 700 th. tons SW 275 th. tons SW Sodra Varo Asia Pulp & Paper 2,000-2,800 th. tons HW 800 th. tons SW Metsa Aanekoski 500 th. tons HW Metsa Aanekoski 1,950 th. tons HW Fibria Tres Lagoas 1,165 SW 300 SW Additional 505 SW 1,265 SW 1,910 HW 655 HW Capacity Forecast 1,440 HW 1,270 HW Source: RISI, December 2016 19 Additional Capacity Forecast takes into account additions and closings of mills
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