Earnings Results Second Quarter 2018 Earnings Results Forwar - - PowerPoint PPT Presentation

Second Quarter 2018 Earnings Results

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.

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Second Quarter 2018 Earnings Results

Forwar

• rward-Look

Looking ng State Statements ments

Large-scale Latin American producer of Pulp, Tissue, Wood & Paper products, serving global and local markets

3

Great operational execution making the best of supportive market conditions Diversification continues to drive strategy, with new Zarate tissue plant Strong capital discipline continues to bring leverage down Closure of tissue restitution in Chile, with final disbursement made in 2Q18

Opening Comments

Op Oper erational l & & Financial l High ghli lights

• Positive fundamentals in pulp markets drive

QoQ increase in hardwood and softwood prices:

• Hardwood CIF up 3% to 757 US$/ton
• Softwood CIF up 2% to 853 US$/ton
• Market pulp sales volume of 927,000 tons, up

11% QoQ and 19% YoY

• Consolidated revenues up 8% QoQ and

26% YoY, to US$1,618 million

• EBITDA reached an all-time high of US$507

million, up 27% QoQ and 75% YoY

• Free cash flow reached US$103 million, up

from US$70 million in 1Q18 and US$122 million in 2Q17

• Net debt was US$3,223 million, up 3% QoQ

and down 0.2% YoY

• Net debt to EBITDA ratio reached 2.2x

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2Q18 Highlights

In US$ Milllion 2Q17 1Q18 2Q18 QoQ YoY 1 Revenues 1.280 1.495 1.618 8% 26% COGS (807) (916) (915) 0% 13% Other Operational Expenses (182) (180) (196) 9% 8% EBITDA 290 290 399 399 507 507 27% 27% 75% 75% EBITDA margin % 22,7% 26,7% 31,3% 463 bps 865 bps Operational Result 149 238 333 40% 123% Non Operational Result (123) (94) (238) 153% 93% Net Income 26 26 144 144 95 95

• 34%

270% 270% 3rd

2Q17 1Q18 2Q18 QoQ YoY Forestry + Solid Wood Prod. (1) 905 810 989 22% 9% Market Pulp(2) 777 838 927 11% 19% Papers(2) 188 207 208 1% 11% Tissue Papers(2) 168 165 169 3% 1% Sanitary Products(3) 1.320 1.300 1.342 3% 2%

(1) Th. m3 (2) Th. Tons (3) M. units

COG OGS

• Stable QoQ:
• Higher sales volumes
• Lower costs in Pulp due to lack of

forestry protection and maintenance costs

• Up 13% YoY:
• Higher sales volumes, especially Pulp
• Higher pulp prices

Ot Other er Op Oper erational l Expe Expenses

• Up 9% QoQ:
• Higher administrative expenses in Pulp

and Tissue

• Higher expenses in Tissue
• Up 8% YoY:
• Higher administrative expenses in all

business divisions 0% +8%

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+13% +9%

COGS and Other Operating Expenses

807 916 915

2Q17 1Q18 2Q18

COGS (US$ Million)

182 180 196

2Q17 1Q18 2Q18

Other er Op. Exp (US$ Million)

• Rev

evenu nues: : +14% QoQ, +49% YoY

• Fore
• restr

try Sale les Vol

• lumes: +22% QoQ, +9% YoY
• Fore
• restr

try Pr Prices: -1% QoQ, +8% YoY

• Pulp

Pulp Pro Produ duction: +8% QoQ, +7% YoY

• No maintenance downtime
• Pulp

Pulp Sale les Vol

• lumes:
• -- QoQ (+11%)
• +4% BSKP: Higher exports to Asia and Europe
• +12% BEKP: Higher exports to all markets
• - YoY (+19%)
• +8% BSKP: Higher exports to China
• +22% BEKP: Higher exports to China
• Pulp

Pulp Pri Prices: BSKP US$853/ton, BEKP US$757/ton

• EB

EBITDA:

• - QoQ (+33%)
• Higher hardwood and softwood prices and volumes
• Higher forestry volumes
• - YoY (+101%)
• Higher pulp prices and volumes

+14%

Third Party Sales Volumes 6

+33%

Pulp Business

+49% +101%

479 662 749 126 123 150

2Q17 1Q18 2Q18

Sales*

Pulp Forestry

605 786 899

221 333 444 2Q17 1Q18 2Q18

EBITDA*

2Q17 1Q18 2Q18 QoQ YoY

• Pulpwood

18 23 16

• 30%
• 11%
• Sawing Logs

413 354 457 29% 11%

• Sawn Wood

194 181 202 11% 4%

• Remanufactured Wood

44 39 44 11% 0%

• Plywood

96 99 123 25% 29%

• Others

140 114 148 29% 5% Total ( t h. m3) 905 905 810 810 989 989 22% 22% 9% 9% BSKP 157 164 170 4% 8% BEKP 619 674 757 12% 22% Total Market Pulp ( Th. Tons) 777 777 838 838 927 927 11% 11% 19% 19% P&W Guaiba (Th. Tons) 14 13 10

• 24%
• 32%

2%

• Rev

evenu nues: +2% QoQ, +2% YoY

• Vol
• lumes:
• - Tissue Paper
• +3% QoQ, mainly from higher volumes in most countries
• +1% YoY, driven by higher volumes in Chile, Peru and

Colombia, with drag from lower volumes in Mexico and Brazil

• - Sanitary Products:
• +3% QoQ, supported by higher baby diaper volumes in all

countries (except for Brazil) and higher wet wipe volumes in Chile.

• +2% YoY, driven by higher diaper volumes in Argentina,

Brazil, Mexico and Chile.

• Pri

Prices (in USD):

• 1% QoQ for Tissue Paper
• 2% QoQ for Sanitary Products
• EB

EBITDA:

• - QoQ (-4%)
• Higher SG&A expenses
• - YoY (-16%)
• Higher direct costs of fiber
• Higher SG&A expenses
• 4%

Third Party Sales Volumes

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Tissue Business

+2%

• 16%

478 479 486 2Q17 1Q18 2Q18

Sales* 58 51 49 2Q17 1Q18 2Q18 EBITDA*

Third Party Sales Volumes

2Q17 1Q18 2Q18 QoQ YoY

• Chile

37 37 40 9% 7%

• Brazil

34 31 33 5%

• 4%
• Mexico

33 34 31

• 8%
• 5%
• Argentina

26 24 26 8% 1%

• Peru

22 24 23

• 3%

5%

• Uruguay

5 5 5 6%

• 7%
• Colombia

6 6 7 8% 4%

• Ecuador

4 4 4 3% 12% Total Tissue Paper ( Th. Tons) 168 168 165 165 169 169 3% 3% 1% 1%

• Diapers

760 770 797 4% 5%

• Feminine Care

331 324 313

• 3%
• 5%
• Others

230 205 231 13% 1% Total Sanitary ( M . Unit s) 1.320 1.300 1.342 3% 3% 2% 2%

• Rev

evenu nues: +1% QoQ, +19% YoY

• Vol
• lumes:
• - QoQ (+1% )
• Higher

volumes

• f

molded pulp trays (+27%) and boxboard (+15%)

• - YoY (+11% )
• Higher volumes of corrugated paper (+37%) and boxboard

(+10%)

• Pri

Prices: +0% QoQ, +7% YoY

• EB

EBITDA :

• - QoQ (-2% )
• Lower corrugated boxes volumes
• Higher operating costs
• - YoY (+31% )
• Higher revenues in all products categories, especially

boxboard and corrugated paper.

+19%

+31%

• 2%

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Third Party Sales Volumes +1%

Paper Business

Third Party Sales Volumes

2Q17 1Q18 2Q18 QoQ YoY

• Boxboard

82 78 90 15% 10%

• Paper Bags

22 21 23 7% 2%

• Other Papers

20 23 22

• 6%

11%

• Corrugated Paper

21 26 29 9% 37%

• Corrugated Boxes

36 52 37

• 28%

2%

• Molded Pulp Trays

7 6 8 27% 11% Total ( Th. Tons) 188 188 207 207 208 208 1% 1% 11% 11% 197 231 233 2Q17 1Q18 2Q18

Sales*

18 24 24 2Q17 1Q18 2Q18

EBITDA *

• 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 6 months 2018 vs 2017- th. Tons and % change BKP Demand Growth by Grade 6 months 2018 vs 2017- th.Tons and % change

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Global Pulp Market

• 2.0%
• 6.2%
• 3.9%
• 11.4%

• 200
• 100

• 4.6%

• 1.1%

• 300
• 200
• 100

• 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

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Robust Financial Execution & Cash Generation

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%

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Large-scale Latin American producer of Pulp, Tissue, Wood & Paper products, serving global and local markets Operational efficiencies and focus on cost control to maintain competitiveness Continue executing growth strategy, with focus in the Tissue business Solid capital structure to pursue value- creating investment opportunities Maintain focus on strategic execution: diversification and capital discipline

Strategic Outlook 2018

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Second Quarter 2018 Earnings Results

Q&A