EMPRESAS CMPC PRESENTATION PREPARED FOR SANTANDER S 18 th LATIN AMERICAN CEO CONFERENCE LUIS LLANOS - CFO JANUARY, 2014
AGENDA I. Company description II. Our Value proposal 1. Leading diversified Latin American P&P player and low cost producer 2. Diversified investment portfolio in high growth potential businesses 3. Strong balance sheet and financial track record 4. Committed to sustainable development 5. Prestigious Controller Group and experienced management
CMPC AT A GLANCE CMPC is a P&P company, established in 1920, that produces solid wood products, pulp, paper, packaging products and tissue in Latin America CMPC s Figures Sales: 4,928 EBITDA: 919 Net Income: 199 Net Debt: 2,793 Assets: 14,152 Figures for the LTM as of Sept. 2013 (US$ million) Market capitalization of US$5.8 billion as of December 30 th, 2013 Controlled by the Matte Family, one of Chile s leading economic groups BBB rating by S&P and BBB+ rating by Fitch P&P companies by market capitalization (US$ billion)* 21.8 21.7 8.9 7.9 SCA IP KCM Stora Enso 6.5 5.8 4.6 4.3 Fibria CMPC Klabin Suzano Shareholders Structure* Local & Foreign Investors 34% Chilean Pension Funds 11% Matte Group 56% Operations in 8 countries, selling to over 30 thousand clients in more than 45 countries ~16,000 Employees worldwide *As of December 30 th, 2013. Source: Bloomberg * As of December 31 st, 2013. Source: CMPC 3
CMPC DIVERSIFICATION AND GROWTH THROUGH LATIN AMERICA CMPC has expanded significantly through Latin America over the last two decades. CMPC maintains operations in Chile, Brazil, Argentina, Mexico, Peru, Colombia, Uruguay and Ecuador. 1990 Today * Growth Plantations 237 th. hectares 669 th. hectares 2.8x Wood Products 267 th. m 3 1,690 th. m 3 6.3x Pulp 308 th. tons 2.8 million tons 9.1x Boxboard 31 th. tons 431 th. tons 13.9x Corrugated Boxes 55 th. tons 285 th. tons 5.2x Multiwall bags 74 million units 660 million units 8.9x Tissue Paper 43 th. tons 617 th. tons 14.3x Source: CMPC Forests Pulp Operations Paper Operations Tissue Operations Paper Products Operations Assets MUS$1,312 MUS$14,152 10.8x Shareholders Equity Capex and M&A *As of September 30 th, 2013. Source: CMPC MUS$1,071 MUS$8,390 7.8x > MUS$10,391 4
CMPC S DIFFERENCIATED BUSINESS MODEL CMPC has a long term business vision, which is focused on generating value through its traditional seal of innovation and prudence in all its business activities. Focus and Selectiveness Enter niche markets with competitive advantages and high growth potential in the P&P industry Cost Efficiency Constantly investing in the latest equipment and production efficiency to further lower costs Diversification Participate in several markets (products and geography), diminishing financial and commercial risks, identifying new opportunities Synergies Identify and develop business synergies, letting each business focus and adapt to its own market dynamics 5
Tissue Paper Pulp Forestry A BALANCED GROWTH IN ALL BUSINESS SEGMENTS PROVIDES CMPC A DIVERSIFIED REVENUE MIX Main Figures % of third parties total sales % of consolidated EBITDA Total capacity & Employees Sales: 827 Sales 3 rd parties: 520 EBITDA: 119 EBITDA margin: 14% 11% 13% 669 Th. has. planted 12.8 M m 3 /y harvested 2,439 employees US$4.5 billion in assets Sales: 1,753 Sales 3 rd parties: 1,487 EBITDA: 441 EBITDA margin: 25% 30% 48% 2.8 M tons/y 1,864 employees US$5.1 billion in assets Sales: 1,264 Sales 3 rd parties: 1,087 EBITDA: 175 EBITDA margin: 14% 22% 19% 1,297 Th. tons/y 3,876 employees US$1.7 billion in assets Sales: 1,836 Sales 3 rd parties: 1,832 EBITDA: 201 EBITDA margin: 11% 37% 22% 608 Th. tons/y 7,916 employees US$2.2 billion in assets Source: CMPC. Figures in US$ million for the LTM as of September 2013 / Figures do not include Holding and Intercompany Sales and EBITDA 6
AGENDA I. Company description II. Our Value proposal 1. Leading diversified Latin American P&P player and low cost producer 2. Diversified investment portfolio in high growth potential businesses 3. Strong balance sheet and financial track record 4. Committed to sustainable development 5. Prestigious Controller Group and experienced management
1. LEADING DIVERSIFIED LATIN AMERICAN P&P PLAYER AND LOW COST PRODUCER
Main Destinations Main Uses Facilities FORESTRY DIVISION: HIGH QUALITY TIMBER ASSETS AND STATE OF ART FACILITIES Key Facts 100% planted and certified forests Strategic locations of industrial facilities: near to the forests and ports Average ratio planting/harvesting (LTM as of September 2013) : 1.0 times Forestal Mininco Sawn wood 1.0 M m 3 /y Remanufactured wood 190 Th. m 3 /y Plywood 500 Th. m 3 /y Chile: 733,422 has. 492,672 planted has. Chile : Bucalemu, Mulchén, Nacimiento Chile : Coronel, Los Angeles Chile : Mininco Brazil*: 219,074 has. 119,407 planted has. Construction, Industrial Packaging and Furniture Construction and Remodeling Construction, Industrial Packaging and Furniture Argentina: 94,297 has. 56,488 planted has. Middle East, Japan, Mexico, China, South Korea United States, Japan, Australia, South Korea, Spain United States, Mexico, Italy, Australia, Netherlands *There is an agreement to acquire from Fibria aprox. 100 Th. hectares of which 39 Th. are planted. CMPC is waiting the approval of Brazilian authorities to consolidate this land. 9
FORESTRY DIVISION: HIGH QUALITY TIMBER ASSETS AND STATE OF ART FACILITIES Faster growth cycle in the southern hemisphere Lower average distance to mills Less capital investment in land Southern Hemisphere Northern Hemisphere Plywood Proximity of forests to industrial facilities and ports Genetic and sylvicultural practices / forest management to enhance yield Source: CMPC 10
PULP DIVISION: LARGE SCALE PRODUCER WITH GLOBAL CLIENT BASE Market Pulp Capacity Ranking Fibria 5,300 APRIL 3,920 Arauco 1,135 1,760 445 Georgia Pacific 355 2,210 CMPC 1,740 700 UPM-Kymmene 1,335 950 Paper 200 1,525 400 Metsa 185 1,625 300 Pacífico Laja Suzano Stora Enso 740 1,930 1,110 (Pine) 500 Th. tons/y (Pine) 370 Th. tons/y Weyerhaeuser 1,785 Source: CMPC and Hawkins Wright as of December 2013 (million tons) BHKP BSKP Other Diverse customer base with more than 370 customers over 35 countries Others Latin America 2% 8% Middle East 3% Asia (excluding China) 26% Europe 34% Guaíba Santa Fe China 27% (Eucalyptus) 450 Th. tons/y (Eucalyptus) 1,510 Th. tons/y Source: CMPC for the LTM as of September 2013 11 11
(U S$/Ton c.i.f. N. Europe) (U S$/Ton c.i.f. N. Europe) CMPC HAS ONE OF THE LOWEST CASH COSTS OF THE PULP INDUSTRY CMPC s average distance from to 80 Km. 80 Km. 93 Km. 99 Km. Laja Guaíba I Pacífico Santa Fe 93 Km. (By train) 260 Km. (By barges) 163 Km. (By train) 119 Km. (By train) Source: CMPC BSKP 1 Supply Curve (US$/ton) 800 700 BHKP 2 Supply Curve (US$/ton) 700 600 600 500 500 400 300 200 CMPC s pulp facilities 400 300 200 CMPC s pulp facilities 100 100 0 0 5,000 10,000 15,000 20,000 25,000 (Thousand metric tonnes) 0 0 5,000 10,000 15,000 20,000 25,000 30,000 (Thousand metric tonnes) Source: CMPC and Hawkins Wright as of December 2013 (1) BSKP: Bleached Softwood Kraft Pulp (2) BHKP: Bleached Hardwood Kraft Pulp 12
Main Destinations Main Uses Operations PAPER DIVISION: STRATEGICALLY FOCUSED ON NICHE PAPER GRADES Key Facts State of art technology & low cost producer Extensive use of recycled paper with over 650 th. tons recollected in 2012 Most important paper distributor in Chile with 34% of total market share Market leader in corrugated boxes and multiwall bags in Chile Plywood Boxboard 431 Th. tons/y Paper bags 93 Th. tons/y 660 MM bags/y Other papers 140 Th. tons/y Corrugated Paper 330 Th. tons/y Corrugated boxes 285 Th. tons/y Molded pulp trays 18 Th. tons/y 296MM units/y Chile: Maule, Valdivia Consumer packaging Chile: Chillán Argentina: Hinojo Peru: Lima Mexico: Guadalajara Cement, building materials, chemicals and food Chile: Laja (Sackraft) Brazil: Riograndense (Printing & Writing) Chile: Puente Alto Industrial packaging Chile : Quilicura, Til Til, Osorno, Buin Industrial packaging, salmon, wi ne and fruit exports Chile: Puente Alto Apples, avocados and eggs Chile, UK, Colombia, Peru, USA Chile, Peru, Argentina, Mexico, United States Brazil Chile, Argentina, Ecuador, Colombia Chile and Chilean export industries Chile, Argentina, Mexico, Peru 13
TISSUE DIVISION: CMPC IS A LEADING LATIN AMERICAN PLAYER Key facts Second-largest tissue player in Latin America Strong branding across broad range of tissue and sanitary products Broad market segmentation and extensive distribution network with presence in all main categories of tissue and sanitary products Domestic Consumption Sanitary Products Away from home Products Extensive use of recycled paper High growth opportunities, due to low per capita consumption Currency hedge: sales in local currencies 14
Thousand tons TISSUE DIVISION: CMPC IS A LEADING LATIN AMERICAN PLAYER 180 84% 90% 160 72% Tissue Paper Capacity Tissue Paper Market Share 80% 140 120 55% 70% 60% 100 44% 50% 80 60 40 20-166 Chile 99 Argentina (1991) 35 Uruguay (1994) 71 Peru (1996) 84 6% Mexico (2006) 11% 23% 27 - Colombia (2007) Ecuador (2009) 135 8% Brazil (2009) 40% 30% 20% 10% 0% Countries were CMPC has a recognized track record Long presence Strong brands and market shares Countries where CMPC is building markets Short history High expenditures in brands, marketing and distribution in order to gain presence Source: CMPC as of September 2013. 15
CMPC HAS A PRODUCT AND GEOGRAPHIC DIVERSIFICATION OF SALES THAT PROVIDES FLEXIBILITY Plywood Source: CMPC. Figures in US$ million for the LTM as of September 2013/ Figures do not include Holding and Intercompany Sales. 16
2. DIVERSIFIED INVESTMENT PORTFOLIO IN BUSINESSES WITH HIGH GROWTH POTENTIAL
CMPC HAS A DIVERSE PROJECT PORTFOLIO WITH GROWTH IN ALL BUSINESS AREAS PULP Guaíba Expansion 1.3 million ton/year US$ 2.1 billion 2Q15 FORESTRY Land purchases for forestry uses and associations with 3 rd parties. TISSUE Increase in conversion capacity of tissue paper and sanitary products ENERGY Continuing investments in energy based on biomass and cogeneration FORESTRY Plywood Mill Expansion 260 th. m 3 /year US$ 120 million 4Q13 TISSUE / ENERGY Cogeneration plant Talagante Mill 20MW + 25 tons steam/hour US$32 million 3Q15 PAPERS / ENERGY Cogeneration plant Puente Alto Mill 44MW + 80 tons steam/hour US$70 million 3Q15 18
THE GUAÍBA II PROJECT WILL BE ONE OF THE MOST EFFICIENT IN THE PULP INDUSTRY GUAÍBA II Project Overview BRAZIL Industrial 1.3 million tons/year of eucalyptus market pulp 30 MW excess energy Estimated Capex: US$2.1 billion Startup: 2Q15 Forestry 100% wood self sufficient Over 162,000 hectares planted with FSC TM Certification Average distance from forests: 180 km Logistics Exports through port of Rio Grande do Sul Distance to ports by barges: 260 km Financing Plan Capital Increase (2Q13): ~US$500 million Debt issuance (2Q13): US$500 million BNDES Credit: BRL$ 2,510 million Sale of non-core assets BICECORP (4Q13): ~US$108 million Additional funding available Guaíba 2 December 2013 19
Tissue Paper App. Cons (k/hab) Key facts CMPC WANTS TO TAKE ADVANTAGE OF LATAM UNDERPENETRATED TISSUE MARKETS High growth opportunities, due to low per capita consumption Growing market share in countries were CMPC last entered, such as Brazil, Mexico and Colombia Being a Latin American player allows CMPC Tissue to be more flexible in terms of paper supply Regional player, but with local strategies and know how R&D in order to increase customer satisfaction Tissue per Capita Consumption 30 25 20 15 10 5 0 Source: CMPC Portugal Mexico Chile Uruguay Peru Brazil Argentina Ecuador Colombia China India Spain Canada Japan France Sweden USA Switzerland 0 10 20 30 40 50 GNI per capita, PPP (US$ Thousand) Market Penetration of Sanitary Products in Latin America 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Source: CMPC Baby Diapers Adult Diapers Femenine Care 20
3. STRONG BALANCE SHEET AND FINANCIAL TRACK RECORD
FINANCIAL SUMMARY 3Q13 US$ Million 3Q12 2012 2Q13 3Q13 LTM QoQ% YoY% 2406.7 Sales 1,209 4,759 1,291 1,231 4,928-5% 2% Operating Costs (795) (3,163) (871) (795) (3,302) -9% 0% Other Operating Expenses (172) (682) (181) (177) (707) 0-2% 3% EBITDA 240 914 239 258 919 8% 8% Depreciation & Stumpage (101) (425) (106) (86) (390) -19% -15% Change in Net Value of Biological Assets 8 37 0 (5) 100-5579% -161% Operating Income 150 526 133 148 4950 11% -2% Financial Costs (45) (175) (44) (43) (171) -2% -5% Other Non Operational Items (102) (148) (58) (61) (126) 0 4% -40% Net Income 4 202 31 43 1980 42% 1132% EBITDA Margin 20% 19% 19% 21% 19% 0% 13% 6% Total Assets 13,792 13,879 14,242 14,152 14,152-1% 3% Total Liabilities 5,780 5,894 5,902 5,761 5,761-2% 0% Shareholders' Equity 8,012 7,985 8,339 8,390 8,390 1% 5% Source: CMPC 22
CMPC S DEBT PROFILE AS OF SEPTEMBER 2013 Debt Profile Average term: 6.3 years Amortization schedule (as of today) Bonds Banks Banks 22% Other 5% CLP 16% Bonds 78% Source: CMPC as of September 2013. Last financial transactions: US$ 79% 984 325 497 496 492 62 348 254 115-17 - 2014 2015 2016 2017 2018 2019 2020/22 2023/30 Source: CMPC Debt breakdown by interest rate (%) MUS$500 yankee bond (April 2012): 10 year bullet @ UST10 + 265 bps MUS$80 bank loan to Tissue Mexico (Sept. 2012): 3.5 year bullet @ Libor + 107.5 bps MUS$500 yankee bond (May 2013): 10 year bullet @ UST10 + 270 bps Fixed Rate 26% 26% 74% 74% 16% 84% Floating Rate 9% 9% 91% 91% 2009 2010 2011 2012 Sep-13 Source: CMPC 23
CMPC HAS ONE OF THE HIGHEST CREDIT RATINGS IN THE INDUSTRY GLOBALLY Source: Public information for the LTM as of September 2013. 24
MAIN FINANCIAL METRICS Debt evolution (US$ million) Financial debt / equity 761 650 Net Debt 822 Cash 741 993 0.42x 0.37x 0.43x 0.48x 0.46x 2,130 2,185 2,452 3,004 2,793 2009 2010 2011 2012 3Q13 Plywood 2009 2010 2011 2012 3Q13 Net debt / EBITDA Source: CMPC EBITDA / interest expenses Source: CMPC 3.3x 3.3x 3.0x 8.6x 1.9x 2.3x 6.3x 6.9x 5.5x 5.5x 2009 2010 2011 2012 LTM Source: CMPC 2009 2010 2011 2012 LTM Source: CMPC 25
DEMONSTRATED CAPACITY TO MANAGE LEVERAGE Net Debt / EBITDA 5.0 Acquisition of 50% of Pacífico and Santa Fe I Santa Fe II investment period Acquisition of Guaíba I Investment in Guaíba II 4.5 4.5 4.0 3.5 3.3 3.4 3.0 2.8 3.0 2.5 2.3 2.0 1.5 1.5 1.5 1.8 1.0 0.5 0.9 0.0 Source: CMPC 26
4. COMMITTED TO SUSTAINABLE DEVELOPMENT
CORPORATE SOCIAL RESPONSIBILITY AND SUSTAINABILITY CMPC is committed to social responsibility and building long-term value for all stakeholders. Relationship with suppliers Employee Relations Community Relations Sustainability policy CMPC s CSR ISO Certifications: 9001, 14001, 18001 Our objectives for the 2012 2014 period: Increase of our renewable energy generation, reducing the purchase of fossil fuels and electricity 20% improvement of our energy efficiency in our pulp mills by 2020 Complement our current FSC certification management of our renewable forest plantations, with the respective chains of custody FSC of products manufactured by the Company Reduce water consumption and overall effluent volume CMPC, by modernizing older industrial processes 28
5. PRESTIGIOUS CONTROLLER GROUP AND EXPERIENCED MANAGEMENT
CORPORATE GOVERNANCE Board of Directors Elections are held every three years. Scheduled meetings held once a month. Name Elected By Years as director Eliodoro Matte (Chairman) Controller Group 32 Martín Costabal Controller Group 7 Erwin Hahn AFP 2 Jorge Gabriel Larraín Controller Group 33 Arturo Mackenna Controller Group 2 Directors Committee Represent minority shareholders. Current members: Erwin Hahn, Arturo Mackenna and Jorge Marín. Is responsible for, examining the reports prepared by the account inspectors and external auditors proposing external auditors and rating agencies examining the background information concerning related party transactions examining officers compensation systems and plans, among others matters. Jorge Marín Independent 17 Bernardo Matte Controller Group 28 Senior Management Appointed by the board of directors. The controlling family members can not exercise as CMPC s managers Top managers with over 23 years experience in CMPC 30
TAKEAWAYS 1. Leading diversified Latin American P&P player 2. Continually investing to reduce costs 3. Growing footprint while expanding product range 4. Demonstrated capacity to deleverage 5. Committed to sustainable development 31
Disclaimer: This document provides information about Empresas CMPC SA. In any case this constitutes a comprehensive analysis of the financial, production and sales situation of the company, so to evaluate whether to purchase or sell securities of the company, the investor must conduct its own independent analysis. In compliance with the applicable rules, Empresas CMPC SA. publishes this document in its web site (www.cmpc.cl) and sends to the Superintendencia de Valores y Seguros, the financial statements ofthe company and its corresponding notes, which are available for consultation and review. CONTACT INVESTOR RELATIONS Trinidad Valdés mtvaldes@gerencia.cmpc.cl +(562) 2 441 2713 Colomba Henríquez chenriquezb@gerencia.cmpc.cl +(562) 2 441 2791