Company Overview - Bolsa de Santiago

Company Overview
Presentation prepared for Bolsa de Santiago - MILA’s Conference
Fernando Hasenberg – CFOO
Santiago, Chile
June 2012
Agenda
3
Overview
9
Business
Divisions
20
Social
Responsibility
&Sustainability
22 Financial
Review
28 Concluding
Remarks
2
CMPC is an important player in the P&P industry
 CMPC is a company that participates through
all the P&P business chain; producing pulp,
paper, tissue, packaging and other forest
products in Latin America.
P&P companies by market cap (BUS$)*
12.8
10.1
8.2
 Figures for the LTM as of March 2012 (MUS$):
5.6
4.6
•
•
•
•
•
Sales:
EBITDA:
Net Income:
Assets
Net Debt:
4,732
986
467
13,521
2,494
3.6
1.4
IP
SCA
CMPC
KCM
Stora
Enso
Fibria
Suzano
*As of May 31st, 2012. Source: Bloomberg
Shareholders’ Structure*
 Market capitalization of US$8.2 billion as of May
31st, 2012, among he highest of the P&P
industry.
Chilean
Pension
Funds
11.4%
 One of the highest Credit Ratings of the industry
by S&P and Fitch Ratings (BBB+).
 Controlled by the Matte Family, one of Chile’s
leading economic groups.
Matte Group
55.3%
Local &
Foreign
Investors
33.4%
* As of March 31st, 2012. Source: CMPC
3
CMPC has expanded significantly in the region over the last two decades
2006 – Today
2000 – 2006
1995 - 2000
1990 - 1995
•1990: Beginning of the
eucalyptus plantation
program in Chile
•1991: Acquisition of
Química Estrella San Luis
in Argentina, becoming
CMPC s first foreign
investment
•1993: JV Prosan with
Procter & Gamble
•1994: Acquisition of
IPUSA in Uruguay
•1996: Acquisition of La
Papelera del Plata
•1997: Acquisition of 100%
of Santa Fe and Pacífico
mills
•1998: Maule boxboard mill
starts up its operations
•1998: Sale of Prosan to
Procter & Gamble
•2003: Acquisition of
Monteáguila, with plantations
of eucalyptus
•2006: Acquisition of Forestal
Copihue
•2006: Santa Fe II mill starts up
its operations
•2006: Acquisition of
ABSORMEX in Mexico
•2007: Acquisition of Drypers
Andina in Colombia
•2007: Plywood mill starts up its
operations
•2009: Acquisition of
Melhoramentos in Brazil
•2009: Acquisition of Guaíba for
US$1.4 billions
•2009: Start up of Forsac Mexico
Business
Forestry and Pulp
Papers and Tissue
4
Nowadays, CMPC is…
2° largest producer
of sawn wood in
Latin America
5° largest producer
of market pulp
globally
2° largest
producer of
tissue paper in
Latin America and
8° globally
2° largest producer
of remanufactured
wood in Latin
America
2° largest producer
of paper bags in
Latin America and
7° globally
Only producer in
the world of BSKP
in Chile and BEKP
in Chile and Brazil
2° largest producer
of boxboard in
Latin America
2° largest market
cap of the P&P
industry in Latin
America and 4°
globally
Source: CMPC
5
A balanced growth in all business segments provides CMPC a diversified
revenue mix
Forestry
10%
30%
% of consolidated
EBITDA
15%
46%
Total capacity &
Employees
1,038 Th. has
680 Th. has. planted
12.3 MM m3/y
harvested
1,969 employees
2.7 MM tons/y
1,778 employees
Plywood
Sales: 941
Sales 3rd parties: 775
EBITDA: 170
EBITDA margin: 18%
16%
17%
1.1MM
MM
tons/y
1.1
tons/y
Sales: 1,656
Sales 3rd parties: 1,653
EBITDA: 190
EBITDA margin: 11%
35%
19%
570,000 tons/y
7,337 employees
Sales: 434
Sales 3rd parties: 409
EBITDA: 32
EBITDA margin: 7%
9%
Paper
Products
Paper
Sales: 1,658
Sales 3rd parties: 1,409
EBITDA: 454
EBITDA margin: 27%
% of third parties
total sales
Tissue
Sales: 788
Sales 3rd parties: 486
EBITDA: 149
EBITDA margin: 19%
Pulp
Main Figures
1,791 employees
500,000 tons/y
3%
375,000 tons/y
2,197 employees
Source: CMPC. Figures in US$ million for the LTM as of March 2012 / Figures do not include Holding and Intercompany Sales and EBITDA
6
Product and geographic diversification provides flexibility
Plywood
7
Source: CMPC. Figures in US$ million for the LTM as of March 2012 / Figures do not include Holding and Intercompany Sales .
Agenda
3
Overview
9
Business
Divisions
20
Social
Responsibility
&Sustainability
22 Financial
Review
28 Concluding
Remarks
8
Forestry Division: the root of CMPC’s competitive advantage
Strategically located high quality timber assets and state of
the art facilities
Plywood
Forestal Mininco
 Chile:
 729,115 has.
 494,072 planted has.
 47,082 to be planted has.
 Brazil:
Sawn wood
 Chile:
 3 Sawmills:
Bucalemu,
Mulchén and
Nacimiento
Remanufactured
wood
 Chile:
 2 Remanufacturing
plants:
Coronel and Los
Ángeles
Plywood
 Chile:
• 1 Plywood mill:
Mininco
 213,176 has.
 111,434 planted has.
 12,956 to be planted has.
 Argentina:
 94,283 has.
 63,485 planted has.
 4,281 to be planted has.
 Total capacity:
1.0 MM m3/y
 Total capacity:
190 Th. m3/y
 Total capacity:
240 Th. m3/y
Source: CMPC
9
Forestry Division: the root of CMPC’s competitive advantage

Key drivers
•
100% planted and certified forests.
•
Genetic and silvicultural practices / forest management to
enhance yield.
•
Faster growth cycle.
•
Proximity of forests to industrial facilities and ports.
•
Young and growing forestry base:
—
Average age of CMPC’s Pine Forests: 13.4 years
—
Average age of CMPC’s Eucalyptus Forests: 4.7 years
—
Average ratio Planting / Harvesting: 1.4 times
Harvesting (million m3)
Pine
Eucaliptus
1.4x
5,7
6,0
3,1
3,3
5,4
5,7
5,2
5,2
2007
2008
2009
2010
3,2
6,6
2011
Source: CMPC
Harvesting vs. Planting (Th. hectares)

What’s ahead…
Harvest
Plantations
37
•
Chile and Brazil: acquisition of land, to increase CMPC’s forestry
29
base.
•
New 240,000 m3/yr plywood line in Mininco, starting in 2013.
35
32
26
21
2007
20
2008
28
25
18
2009
2010
2011
Source: CMPC
10
Pulp Division: CMPC has one of the lowest cash costs of the pulp industry

Key drivers
•
First class assets.
•
Strategic locations (mills near to forests and ports).
•
One of the world’s lowest cost producer.
•
Sales diversification.
•
ISO, OHSAS certifications.

What’s ahead…
•
Chile: revamping of Laja mill (110,000 tons of additional BSKP
capacity), starting in 2Q12.
•
Debottlenecking of the Santa Fe II mill (200,000 tons of
additional BEKP capacity), starting in 1Q12.
•
New turbo generator at the Laja and Santa Fe II mills.
•
Brazil: Riograndense II line (1.3 million tons of additional BEKP
capacity), to be approved by the board.
BSKP1 Supply Curve (US$/ton)
CMPC’s pulp facilities
BHKP2 Supply Curve (US$/ton)
CMPC’s pulp facilities
Source: CMPC and Hawkins Wright as of December 2011
(1) BSKP: Bleached Softwood Kraft Pulp
(2) BHKP: Bleached Hardwood Kraft Pulp
11
Pulp Division: CMPC has one of the lowest cash costs of the pulp industry
Production capacity and distance from mills to forests and ports
CMPC’s average distance from… to…
80 Km.
Laja
80 Km.
Guaíba
93 Km.
Pacífico
99 Km.
Santa Fe
93 Km.
(By train)
119 Km.
Laja
Plywood
Softwood
(BSKP)
 Chile
 2 mills:
 Pacífico (Pine)
 Laja (Pine)
 Chile
 2 mills:
 Santa Fe I (Eucalyptus)
 Santa Fe II (Eucalyptus)
 Brazil
 1 mill:
 Riograndense
(Eucalyptus)
Santa Fe
(By train)
163 Km.
Hardwood
(BEKP)
Pacífico
(By train)
260 Km.
(By barges)
Guaíba
Total Capacity : 760 Th. tons/y
Total Capacity: 1.9 M tons/y
12
The Guaíba acquisition: the biggest project in CMPC’s History
December 2009, CMPC acquired from Fibria the Guaíba Unit for a total price of US$1.37 billion. The Guaíba Unit includes:
2
1
Pulp mill with annual
production capacity of approx.
450,000 tons
Paper mill with annual
production capacity of approx.
60,000 tons
4
3
Approximately 212,000
hectares of land of which
123,000 are plantable
Licenses and authorizations to
execute an expansion project for the
pulp mill to increase its annual
capacity to approx. 1.75 mm tons
Plywood

Sizable entry to Brazil

Strategic location, complementary to existing facilities, to serve customers worldwide

Ability to reconfigure sales, delivery and increase customers

Ability to easily increase production to 1.75 million tons of pulp in the near future

Potential to replicate CMPC Chile in one of the largest and most dynamic economies in the world

Substantial forestry base and sylvicultural know-how

Opportunity to further improve CMPC’s low cost producer status
Riograndense
13
Paper Division: strategically focused on niche paper grades
Geographical Sales Breakdown (Th. Tons)

Key drivers

Well integrated with the forest and pulp
divisions.

State of art technology & low cost producer.

Extensive use of recycled paper.

Sales focused on developing countries.
Local Sales
Export Sales
39%
78%
88%
61%
22%
12%
Boxboard
Newsprint
Plywood
Packaging
Source: CMPC
Boxboard
 Chile
 2 mills:
 Maule
 Valdivia
Total Capacity:
430,000 tons/y
Corrugated Paper
 Chile
 1 mill:
 Puente Alto
Total Capacity:
340,000 tons/y
Newsprint
 Chile
 1 mill:
 Nacimiento
Total Capacity:
200,000 tons/y
Other papers
 Chile
 1 mill:
 Laja
 Brazil
 1 mill:
 Riograndense
Edipac
Most important paper
distributor in Chile,
with 53% of total
market share
Total Capacity:
130,000 tons/y
14
Tissue Division: CMPC is a leading Latin American player
Key drivers
•
One of the largest tissue players in Latin America.
•
Strong branding.
•
Broad market segmentation and extensive distribution network.
•
Flexible product mix and complete line of tissue sanitary
products and away from home categories.
•
Extensive use of recycled paper.
•
High growth opportunities, due to low per capita consumption.
Tissue per Capita Consumption
30
Tissue Paper App. Cons (k/hab)

25
USA
Canada
Sweden
20
15
Spain
Japan
France
Portugal
Chile
Mexico
Uruguay
Argentina
Brazil
10
Peru
Colombia
EcuadorChina
5
0
0
India
10
Switzerland
CMPC’s operations
(excluding China)
20
30
40
50
GNI per capita, PPP (US$)

What’s ahead…
•
Chile: New Tissue Paper Machine (50,000 tons/y) in 1H12.
•
Consolidation in the Mexican, Colombian and Brazilian
markets.
Source: CMPC
Tissue Capacity Evolution (000’s of Tons)
600
500
Brazil
Colombia
400
Mexico
Uruguay
300
Peru
200
Argentina
Chile
100
0
2006
2007
Source: CMPC
2008
2009
2010
2011
15
Tissue Division: CMPC is a leading Latin American player
Strong market share throughout the region
Colombia (Since 2007)
Tissue products
Market Share:
11%
Capacity: 22,000 tons/yr
Mexico (Since 2006)
Market Share:
5%
Capacity: 89,000 tons/yr
Brazil (Since 2009)
Market Share:
11%
Capacity: 125,000 tons/yr
Plywood
Ecuador (Since 2009)
Baby & Adult
diapers
Market Share:
23%
Only Conversion Process
Peru (Since 1996)
Market Share:
56%
Capacity: 63,000 tons/yr
Chile
Market Share:
79%
Capacity: 127,000 tons/yr
Uruguay (Since 1994)
Market Share:
87%
Capacity: 37,000 tons/yr
Feminine care
Argentina (Since 1991)
Market Share:
48%
Capacity:
106,000 tons/yr
Away from
Home products
Source: CMPC
16
Tissue Division: Some of our brands…
Domestic Consumption
Source: CMPC
Sanitary Products
Away from Home Products
17
Paper Products Division: Local sales mainly oriented to export industries

Key drivers

Market leader in corrugated boxes and
multiwall bags markets in Chile.

Well diversified sales among different
segments of the market in corrugated
boxes.

Manufacturing process benefits from
backward integration.

Although a significant fraction of the sales
of this business area are local, CMPC
Paper Products is also expanding its
Corrugated boxes
 Chile
 4 mills:
 Buin
 Quilicura
 Til Til
 Osorno
exports.

What’s ahead…

Mexico: new 40,000 tons paper bags mill
Paper bagsPlywood Molded pulp trays
 Chile
 1 mill:
 Chillán
 Chile
 1 mill:
 Puente Alto
 Argentina
 1 mill:
 Hinojo
 Peru
 1 mill:
 Lima
 Mexico
 1 mill:
 Guadalajara
in Guadalajara, starting 2013.
Total Capacity: 287,000
tons/y
Total Capacity: 70,000
tons/y
Total Capacity: 18,000
tons/y
18
Agenda
3
Overview
9
Business
Divisions
20
Social
Responsibility
&Sustainability
22 Financial
Review
28 Concluding
Remarks
19
Corporate Social Responsibility and Sustainability
Social responsibility is an integral part of the CMPC business and organizational models
allowing effective linking to all stake holders.
CMPC and its
Business Chain
CMPC and its
Workers
CMPC and the
Community
CMPC and the
Environment
CMPC’s
CSR
Plywood
• Producing and
selling quality
products
• Strong
relationships with
suppliers and
customers
• Sound and
transparent financial
reporting
• Safe working
environment
•Jorge Alessandri
Educational Park
• 100% planted
forests
• Strict compliance
with labor
regulations and
union agreements
• Good
Neighborhood Plan
• Clean processes
• Comprehensive
employee benefit
policy
• Fundación CMPC:
improve language
and math education
in the primary
schools where
CMPC has facilities
• Replacement of
fossil fuels with
biomass
• Recollection and
recycling of waste
paper
20
Agenda
3
Overview
9
Business
Divisions
20
Social
Responsibility
&Sustainability
22 Financial
Review
28 Concluding
Remarks
21
Financial Summary
1Q12
QoQ%
YoY%
4,732
4%
-5%
(799)
(3,133)
1%
2%
(598)
0
(153)
(613)
0%
11%
180
1,078
224
986
25%
-29%
(101)
(105)
(413)
(107)
13
50
110
0
16
113
-68%
23%
Operating Income
229
125
775
0
134
680
7%
-42%
Financial Costs
Other Non Operational Items
(38)
(42)
(163)
(41)
(166)
-2%
8%
(49)
(10)
(118)
0
23
(46)
-336%
-147%
Net Income
143
73
494
116
467
58%
-19%
26%
16%
22%
19%
21%
3%
-6%
13,567 13,294
Sales
Operating Costs
Other Operating Expenses
EBITDA
Depreciation & Stumpage
Change in Net Value of Biological Assets
EBITDA Margin
Total Assets
Total Liabilities
Shareholder's Equity
1Q11
4Q11
2011
1Q12
1,242
1,129
4,797
1,177
(787)
(795)
(3,120)
(138)
(154)
317
LTM
(419)
2%
Plywood
6%
13,294
13,521
13,521
2%
0%
5,621
5,445
5,445
5,511
5,511
1%
-2%
7,945
7,848
7,848
8,010
8,010
2%
1%
22
CMPC’s debt description as of March 2012

Debt profile:
•
Average term: 5.9 years
•
Average cost: 4.3%
•
Composition:
Amortization schedule
Bonds
•
22
88
Debt breakdown by currencies:
2012
MUS$600 syndicated loan (October 2011):
5 year MUS$400 credit @ Libor + 65 bps
2013
MUS$500 senior term notes (April 2012):
254
494
493
314
239
180
2014
2015
2016
2018
2019
2022
2027
2030
Debt breakdown by interest rate (%)
Fixed Rate
12%
3 year MUS$200 committed line @ Libor + 70 bps
•
495
114
48
•
279
263
128
Last financial transactions:
20
274
19% UF / 75% US$ / 6% Other currencies

Revolving
17
35% banks / 65% Bonds
•
Banks
88%
Floating Rate
26%
26%
74%
74%
2009
2010
16%
16%
84%
84%
2011
March 2012
10 year bullet note: for MUS$500 @ CT10 + 265 bps
2008
23
Main financial metrics
Financial debt / equity*
Debt evolution (US$ million)*
Net debt
Cash
822
783
761
650
2,130
2,185
2,452
2,494
2009
2010
2011
LTM 1Q12
0.43x
0.42x
0.42x
0.37x
0.33x
229
1,349
2008
Net debt / EBITDA*
Plywood
2008
2009
2010
2011
LTM 1Q12
EBITDA / interest expenses*
3.3x
2.3x
10.1x
8.6x
1.9x
1.7x
2008
2.5x
2009
2010
6.9x
6.3x
2011
LTM 1Q12
2008
2009
2010
2011
6.2x
LTM 1Q12
24
CMPC has the one of the highest credit ratings in the industry globally
Issuer:
International
Paper
Country:
S&P Rating:
Plywood
BB+
BBB+
BBB+
BBB
BBB
EBITDA (US$ millions):
986
1,795
1,168
3,523
860
1,021
Net Debt (US$ millions):
2,494
4,622
3,129
10,355
1,467
4,920
2.5x
2.6x
2.7x
2.9x
1.7x
5.2x
8,000
8,941
7,009
7,493
2,967
7,974
Net Debt/EBITDA:
Equity:
BB
Source: Public information for the LTM as of March 2012.
25
CMPC: Blue chip in the Santiago Stock Exchange

CMPC Daily Stock Price (CLP$)
CMPC is listed at the Santiago Stock
Exchange since 1922
3.000
2.500

CMPC has 2,226 million of common shares

CMPC’s stock ranked eighth in the IPSA-40
Index, representing 5.1% of the indicator as
of December, 2011
2.000
1.500
1.000
500
-
Other Chilean Companies Market Cap (BUS$)
25
20
15
Plywood
CMPC Daily Traded Volume (N° of Shares)
50.000.000
21.6
45.000.000
17.5
40.000.000
35.000.000
13.5 12.9
12.3 12.0
10
30.000.000
8.7
8.2
25.000.000
4.7
5
20.000.000
4.2
0.7
0
15.000.000
10.000.000
5.000.000
0
06-2007
Source: Bloomberg as of May 2012
06-2008
06-2009
06-2010
06-2011
06-2012
26
Agenda
3
Overview
9
Business
Divisions
20
Social
Responsibility
&Sustainability
22 Financial
Review
28 Concluding
Remarks
27
Investment Highlights
CMPC is:

World class company in the industry.

Low cost producer in most of our product lines.

Products and geographical diversification allows strong cash.
generation in spite of economic and price cycles.

One of the highest rated credits in the industry.

Committed to sustainable growth.

Strong balance sheet prepared for growth opportunities.

Experienced management and strong shareholders.
28
Q&A
The foregoing material is a presentation of general background information about CMPC’s activities as of the date of the presentation. It is information given in a summary

form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment
objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice, when deciding if an investment is
appropriate.
Forward Looking Statements

This presentation contains statements that constitute “forward-looking statements” within the meaning of securities laws of applicable jurisdictions. Examples of these
forward-looking statements include, but are not limited to (i) statements regarding our future results of operations and financial condition, (ii) statements of plans, objectives
or goals, and (iii) statements of assumptions underlying those statements. Words such as “may,” “will,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,”
continue”, “probability,” “risk,” and other similar words are intended to identify forward-looking statements but are not the exclusive means of identifying those statements.
By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that the predictions, forecasts,
projections and other forward-looking statements will not be achieved. We caution readers that a number of important factors could cause actual results to differ materially
from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements.
Contact: [email protected]