Investor Presentation. October 2018

Transcription

1 Investor Presentation October 2018

2 Contents Empresas Copec at a glance Competitive Advantages Strategic Focus Internationalization Latest and Potential Expansions Financial Strength 2Q18 Results Commitment to Environmental, Social and Governance initiatives

3 Empresas Copec at a glance Industrial group focused in natural resources and energy Business Units Fuels EBITDA: US$ 902 million Main distributor of liquid fuels in Chile and Colombia Largest distributor of liquefied petroleum gas in Chile, Colombia and Peru Stake in largest natural gas distributor in Chile Forestry EBITDA: US$ 1,742 million Second largest market pulp and panel producer of the world Largest sawn timber producer in Latam Fishing, Mining and Others EBITDA: US$ 9 million One of the most important fishing companies in Chile and the world Participates in coal and metal mining Highlights Consolidated Assets Consolidated EBITDA Market Cap US$ 20,090 million Sales US$ 22,396 million EBITDA International US$ 2,653 million Stable BBB Forestry 61.8% Total of US$ 22,946 million Fuels 30.5% Forestry 65.7% Total of US$ 2,653 million Fuels 34.0% Risk Rating Local Stable AA- Others 7.7% Fishing & Others 0.3% 3 Source: Empresas Copec, Bloomberg, RISI Figures LTM as of June 2018

4 Empresas Copec at a glance Industrial group focused in natural resources and energy ANGELINI GROUP 74.68% 25.32% OTHERS 60.82% PENSION FUNDS 7.17% 32.01% OTHERS FORESTRY FUELS FISHING OTHER INVESTMENTS 99.98% % 99.20% 39.83% 39.83% 81.93% % % 50.00% Internacional % 58.51% 40.80% 12.00% 66.80% 39.79% 40.00% % 51.00% % % 35.0% 35.0% 4 Figures as of June 2018

5 Empresas Copec at a glance 83 years of history 1934 Incorporation Diversification Investments and growth Alto Paraná Arauco II Licancel Metrogas 2003 Corporate restructuring Creation of Empresas Copec Internationalization Expansion of liquid fuels and LPG business to Colombia Montes del Plata pulp mill in Uruguay starts operations (1) Consolidation of the panel business Terpel completes its restructuring process Empresas Copec sells its stake in Guacolda for US$ 364 million Expansion in fuels Abastible Sonacol 1986 Entry of Angelini group Financial restructuring Strategic Development Plan Consolidation and strategic focus Angelini assumes control of the Company Divestiture of shares in non-core businesses Focus in fuels, forestry and fishing A world scale player Arauco becomes the second largest market pulp producer in the world and the third main panel producer Arauco acquires a 50% stake in Tafisa (2) Abastible acquires Solgas in Peru and Duragas in Ecuador (3) Copec completes the acquisition of Mapco in the United States Arauco acquires Masisa s assets in Brazil Copec acquires ExxonMobil s lubricants and liquid fuels assets in Colombia, Ecuador and Peru Alxar acquires 40% stake of Mina Justa project in Peru (4) 5 Source: Empresas Copec (1) Arauco participates in a joint venture with Stora Enso (50% participation each) (2) Tafisa is the subsidiary of the Portuguese group Sonae Industria, dedicated to the panel business, which has plants in Spain, Portugal, Germany and South Africa (3) Abastible acquired Repsol s LPG operations in Peru and Ecuador (4) Mina Justa is a copper mining Project, located in Ica, Peru. The remaining 60% stake is owned by Minsur, which is controlled by the Breca group

6 Empresas Copec at a glance One of the most relevant companies in Chile Market capitalization of Chilean companies (1) US$ million 20,173 19,823 15,528 15,067 12,144 10,222 8,923 8,427 7,534 SPCLX IPSA Index Weights Company % COPEC 9.0 FALABELLA 8.0 BSANTANDER 7.6 CMPC 7.1 CHILE 6.8 ENELAM 6.5 SQM-B 6.4 CENCOSUD 4.9 BCI 4.8 ENELCHILE 4.3 OTHERS 34.6 MSCI Chile Index Weights (2) Company % COPEC FALABELLA SQM-B 9.64 BSANTANDER 9.20 CMPC 8.80 ENEL 7.71 BCHILE 6.71 CENCOSUD 5.93 OTHERS Source: Bloomberg (1) As of October 1 st 2018 (2) As of September 28 th 2018

7 Competitive Advantages

8 US$/ADt Cash Cost FOB mill Competitive Advantages Low Cash Cost producer in both fibers Short harvesting cycle (years) Sweden Other World Chile East Europe US BSKP Int. West Canada Indonesia BHKP Other Europe Finland East Canada Coastal BC Japan East Europe Chile/Uruguay US China Japan Bel/France Other Asia Iberia Sweden Finland Canada Softwood Brazil 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 Annual capacity (000s ADt) Higher exposure to Softwood Fluff 9% Hardwood Chile Canada Finland 38 UKP 13% Capacity by grade* 3,887 th. Adt BHKP 37% BSKP 41% *Figures as of December 2017 Brazil Uruguay Portugal Chile Finland Source: Empresas Copec

9 Competitive Advantages Maximizing the value of every tree Efficient Logistics between forests mills ports Pulp installed capacity Panel installed capacity Million tons Fibria Arauco IP CMPC Suzano APRIL UPM-Kymmene Georgia Pacific Stora Enso Paper Excellence 3.9 Million m 3 Kronospan Arauco Georgia Pacific Egger Norbord Swiss Krono Kastamonu LP Pfleiderer Duratex 2 nd 2 nd Source: Empresas Copec

10 Competitive Advantages Logistic efficiency Strong brand recognition 9.0 Thousand m 3 sold / gas station Favorite Brand Usual Brand Other 16% Other 12% Other players in Chile 84% 88% Strategic locations 1 st place in "Service Stations" of the National Customer Satisfaction Award, ProCalidad st place in Canned Gas" of the National Customer Satisfaction Award, ProCalidad 2017 Foto terpel Distinguished by RepTrak with the Brand Reputation Award th time winner of Consumer Loyalty Award 2016 by Alco consultores and Diario Estrategia Recognized among the companies with the best corporate reputation, according to Merco Empresas and Lideres Colombia 2017 ranking 1 st place in Natural Gas" of the National Award of Consumer Satisfaction Source: Empresas Copec

11 Competitive Advantages Large scale and coverage Synergies among business lines More than 3,200 gas stations* Gas Stations Distribution of 20.7 million m³ of liquid fuels** Import facilities Storage plants Industrial clients Convenience Stores % Market Share Copec market leadership Industrial Channel 57% Lubricants 49% Gas crisis * Copec Chile + Terpel + Mapco ** All distribution channels for Copec Chile, Terpel and Mapco

12 Competitive Advantages Leadership in all businesses in which it participates Fuels distribution in Chile Lubricants distribution in Chile Fuels distribution in Colombia 57% 43% 43% Others 43% 1 st Others 57% 1 st Others 57% 1 st LPG distribution in Chile LPG distribution in Colombia LPG Distribution in Perú* 37% 36% 22% 1 st 1 st 1 st Others 63% Others 64% Others 78% 12 Market share as of December As of March 2018, Duragas is the market leader in Ecuador.

13 Strategic Focus

14 Strategic Focus Growth has concentrated in core segments, while keeping other options for value creation Total Assets Acquisitions/Investments Divestments Total Assets 2000 US$ 7.1 Billion Planta Valdivia - Forestry Planta Nueva Aldea - Forestry Mina Invierno - Mining Stora Arapoti - Forestry TPI Quintero - Fuels Golden Omega - Fishing / Nutrition Tafisa Brasil - Forestry Terpel - Fuels Orizon - Fishing / Nutrition Montes del Plata - Forestry Inversiones del Nordeste - Fuels Moncure - Forestry Flakeboard - Forestry Selecta - Nutrition Tafisa - Forestry Mapco - Fuels Solgas - Fuels Duragas Fuels Masisa Brazil Forestry AES Gener - Power Generation CGE - Power Generation CCU - Massive Consumption Saesa - Power Distribution Frontel - Power Distribution Abcdin - Commercial Retail Guacolda - Power Generation GNL Quintero Infrastructure Selecta - Nutrition Planta Valdivia Nueva Aldea Stora Arapoti TPI Quintero Tafisa Brazil Moncure Masisa Brazil Total Assets 2017 US$ 22.2 Billion Forestry 63,9% Fuels 29,2% Forestry 68% Fuels 18% Others 6,9% Others 14%

15 Focus in Fuels and Forestry Diversification within core businesses Consolidated EBITDA (1) 4% 14% Forestry 65.7% Total of US$ 2,653 million Fuels 34.0% 29% 3% 2% 1% 8% 40% Fishing & Others 0.3% Consolidated Revenues (2) By Channel (3) By Country (1) By Product (2) By Region (2) Industrial 21% USA 11% Chile 51% Others 1% Central & South America 25% Others 4% North America 28% Gas Stations 27% Total of 20.7 million m 3 Other Countries 8% Total of US$ 15,232 million Panels & Wood Products 50% Total of US$ 5,238 million Pulp 47% Europe 7% Total of US$ 5,238 million Subsidiaries 52% Colombia 30% Forestry 2% Asia 36% 15 (1) Figures as of June 2018 (L12M) (2) By country of destination. Includes sales of goods produced in each country plus exports to each country. Figures as of December 2017 (L12M) (3) Gasoline physical volumes L12M, as of June 2018

16 Internationalization

17 Internationalization Two strategic lines of growth outside Chile Replicating our know how within Latam Selected oportunities in developed economies Why Terpel? High growth potential in the Colombian market: Colombia s vehicular penetration is lower than in Chile. Low highway vehicular flows. Low market penetration of convenience stores business. Areas in which both company s expertise can generate mutual benefits: Copec s efficiency in its gas stations operation. Terpel s experience in NGV market. EBITDA Terpel ($COP million) 417, % 686, Arauco acquires Flakeboard and Moncure Panel companies in North America: Good opportunities in the low part of the cycle. Significant synergies between facilities. Access to commercial channels. Significant upside potential. Total investment reaches US$ million. 17

18 Internationalization Productive assets in 15 countries, commercial presence in 23, and sales in more than 80 Canada United States Dominican Republic Germany Spain Portugal Holland Norway China India Thailand Korea Japan Taiwan Philippines Malaysia Indonesia Colombia Ecuador Panama Venezuela Saudi Arabia Peru Australia Chile Uruguay Brasil South Africa Argentina Production Platforms Forestry Fuels Fishing and other investments Arauco Comercial Offices Arauco Agents 18 Source: Empresas Copec

19 Internationalization Non Current Assets History - Local vs Foreign 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 21% 19% 29% 31% 32% 34% 34% 38% 39% Other Countries Chile 0%

20 Latest and Potential Expansions

21 Latest and Potential Expansions INVESTMENT PLAN FOR 2018: US$ 2,159* MILLION Fishing & Others 1% CAPEX History (US$ Million) 2,159 ExxonMobil** Fuels 54% Forestry 45% Total of US$ 2,159* million 205 Fishing & Others 4% * Does not include: Masisa Mexico: US$ 245 million, closure expected for 2H18. Mina Justa: closed in May 2018, with an investment of US$ million. Fuels 37% Total of US$ 1,109 Million in 2017 Forestry 59% Masisa Brazil 21 (**) Assets in Colombia, Peru and Ecuador.

22 Latest and Potential Expansions MAPA Project - Pulp New 1.56 million ton short fiber line in Arauco Mill. Considers closure of Arauco s 290 th. ton line 1 of short fiber pulp, once the new line is operating. Thus the net increase in production will be 1.27 million tons Mt It includes an electric cogeneration plant based on biomass that will generate a surplus of approximately 132 MW. Estimated investment of US$ 2.35 billion Expected start-up for 2Q21. Already approved by the board % % Pulp capacity as of December 2013 Montes del Plata (Uruguay, 2014) Current Capacity MAPA project net addition (Chile) Potential Capacity *Figures in million tons 22

23 Latest and Potential Expansions Valdivia Project Dissolving Pulp As of June 2018, the project is at 31% completion. Conversion of the Valdivia mill into a textile pulp mill, which currently produces 550 th. ton of pulp. Dissolving pulp is a product used in the textile industry as a substitute for cotton. It will provide flexibility to produce either dissolving or paper grade. Arauco would be the first company to produce this kind of pulp in Chile. The investment will be US$ 185 million and is expected to be operational by the end of This kind of pulp is used in the textile industry to soften, shine and purify fibers. It can also be used in the food, cellophane and flexible packaging industries, among others. 23

24 Latest and Potential Expansions Sonae-Arauco: Growth in the Panel Division Grayling: Arauco purchased 50% of Tafisa in US$ 153 million through a joint venture with Sonae Industria. It operates 10 panelboard mills distributed in Spain, Portugal, Germany and South Africa. 80% of advance in the Grayling Panel Project in Michigan. The investment will be US$ 400 million and is expected to be operational by late Total capacity of 800 th. m³. Loan for US$ 300 million already secured. million m 3 Installed capacity growth of panels 1.8 (1) * 16% million m³ Grayling Project, Chicago 24 * Corresponds to 50% of the production capacity of Sonae-Arauco

25 Latest and Potential Expansions Masisa do Brasil: Growth in the Panel Division Arauco acquired Masisa s assets in Brasil in US$ million. Transaction includes two panel mills, at Parana and Rio Grande do Sul. Capacity of 310 th. m³ in MDF and 410 th. m³ in MDP a year. Masisa in Mexico: Arauco signs agreement to buy Masisa s assets in Mexico in US$ 245 million. Transaction comprises three panel mills, at Chihuahua, Durango and Zitacuaro. Capacity of 519 th. m³ in PB and 220 th. m³ in MDF a year. Closure expected for 2H18. Arauco to consolidate as the second largest producer of composite panels in the world, reaching an annual production capacity of more than 10 million m³. million m Installed capacity growth of panels 1.8 (1) * 16% million m³ 25 * Corresponds to 50% of the production capacity of Sonae-Arauco

26 Latest and Potential Expansions ExxonMobil - Lubricants and liquid fuels On March 2018, Terpel acquired the lubricants and fuels distribution assets of ExxonMobil in Colombia, Peru and Ecuador, for US$ million, which included about US$ 230 million in cash. Country ExxonMobil s Market Shares* Lubricants Liquid Fuels The Colombian operation was transferred to an autonomus trust, in order to divide the lubricant from the fuels distribution business. While the operations in Peru and Ecuador are already consolidated in 2Q18 results. Colombia 30% 25% The operation was initially financed through bank bridge loans, then a part was prepaid with cash and the remaining amount was refinanced with bonds. 30% 19%** On July 2018, Terpel materialized the incorporation of the lubricants business of ExxonMobil Colombia, whose results will be consolidated as of 3Q18. Peru 9% 6% Ecuador 26 (*) Market shares are approximated (**) Of the aviation market in Peru

27 Latest and Potential Expansions Mapco - Gas Stations and Convenience Stores On November 14, 2016, Copec completed the acquisition of the 100% of Mapco shares. This company operates 348 service stations most of which are owned by Mapco. The company also supplies 142 service stations operated by third parties, which sell fuel and have convenience stores. The price paid to acquire these companies free of debt was US$ 535 million, along with cash and a working capital adjustment on the closing date amounting to US$ 16.3 million. Kentucky Mississippi 10 GS Arkansas 12 GS Alabama 89 GS Virginia 8 GS Tennessee 187 GS Georgia 42 GS 27

28 Latest and Potential Expansions Solgas and Duragas - LPG Operations In 2016 Abastible completed the acquisition of Repsol s LPG operations in Ecuador (Duragas) and Peru (Solgas). 23% and 37% market share in Peru and Ecuador respectively. Annual volumes of 466 and 403 thousand tons in Peru and Ecuador respectively. The price paid for Solgas was US$ 264 million and the price paid for Duragas was US$ 33 million. With this recent acquisition Abastible will become the third largest LPG player in South America. 459 Physical Sales of LPG by country in 2016 Thousand tons % Total of 1.5 million tons 3 rd Abastible becomes the third largest LPG distributor in South America Chile Colombia Perú Ecuador 28

29 Latest and Potential Expansions Mina Justa Copper Mining On April 23, Inversiones Alxar S.A. signed an agreement with Minsur S.A. to develop the copper project of Mina Justa in the south of Peru. On May 2018, Alxar Internacional acquired 40% stake of Cumbres Andinas, controller of Marcobre, which owns the Mina Justa project, with Minsur maintaining the 60% remaining. The price paid was US$ million approximately. World class project: Low cash cost. High grade. Low development risk. Significant exploration potential. Production of app 100 th. tons per year of fine copper in full operation. Total resource base of 432 million tons and a copper grade of 0.75%. LOM of 18 years. Capex: USD$1,600 million in 3 years. Project finance of US$900 million. The remaining amount will be financed through capital contributions proportional to ownership percentage in three years. 29

30 Financial Strength

31 Financial Strength Investment grade since 1995 Healthy cash flows allows to: Finance investment plans Distribute stable dividends Maintain low levels of leverage International Local Stable BBB Stable AA- Fast recovery of debt levels after expansion phases Balanced debt schedule Expansion phase Terpel Montes del Plata Inv. Del Nordeste Flakeboard Moncure 3.9 Net debt / EBITDA Expansion phase Mapco Tafisa Duragas Solgas 3.0 Financial debt maturities Figures in US$ million 1, ,219 (US$ Million)

32 (MUS$) Financial Strength Equity and Net Debt / Equity Evolution 16,000 14,000 Bonds Covenant* 1,2x ,000 10,000 8,000 6,000 4,000 2, Equity Net Debt / Equity Consolidated Financial Debt 2Q18: MMUS$ Arauco 58% Distribution by affiliate Copec 25% Sonacol 2% Abastible 3% Others 1% EC Holding 8% Distribution by currency US Dollar 55% Chilean Pesos 3% Chilean UF 26% Others 2% Colombian Pesos 14% Bank Debt 35% Distribution by type Others 2% Bonds 63% 32

33 2Q18 Results

34 Financial Strength Consolidated 2Q18 results QUARTERLY EBITDA (Million of US$) 804 EBITDA at record levels, 48% up YoY III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II QUARTERLY NET INCOME (Million of US$) Net income rose YoY and QoQ III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II

35 Financial Strength Consolidated 2Q18 results EBITDA (US$ Million) EBITDA rose mainly in the forestry sector, in a scenario of better pulp prices % Improved performance in Copec Chile and Terpel Colombia, mainly due to higher margins, together with a positive FIFO effect. EBITDA variation by company YoY EBITDA Composition 2Q

36 Financial Strength Consolidated 2Q18 results Net Income (US$ Million) % Net income increased mainly because of a better performance in the forestry business Net Income variation by company YoY Net Income composition 2Q

37 Financial Strength Consolidated 2Q18 results Net income increased due to better operating income, mainly in the forestry business. HIGHER OPERATING INCOME Stronger result in Arauco, related to higher revenues in all business lines, mainly in pulp division. Better results in Copec, due to higher margins in Chile and Colombia. Volumes rose in Terpel and Mapco. MORE NEGATIVE NON-OPERATING INCOME Negative exchange differences due to a rise in the exchange rate. Higher other expenses related to projects in Arauco, along with roll-back of provision in 2Q17. Lower other income related to badwill from Duragas in 2Q17. Improved result in associates, mainly from Sonae Arauco and Corpesca. CONSOLIDATED INCOME STATEMENT Million USD 2Q 18 2Q 17 Change Net income Operating income Non operating income (72) (33) (39) Other Income (22) Other expenses (36) (19) (17) Other profit (loss) 5 (2) 6 Financial Income 8 12 (4) Financial expense (71) (86) 15 Profit in associated and JV's Exchange Differences (26) 1 (27) Gain (losses) on net monetary position (4) (3) (1) Taxes (129) (78) (50) EBITDA * Adjustments in Copec in 1Q18: lower financial expense for MMUSD 20.9 and other income for MMUSD Rise in other expenses for MMUSD 5.1. Incremented taxes on a better business performance in Arauco. 37

38 Commitment to Environmental, Social and Governance initiatives

39 Commitment to Environmental, Social and Governance initiatives 650 kton of CO 2 offset by projects carried out under CDM* of Kyoto Protocol ISO and OHSAS certifications at Arauco, Abastible, Terpel and Sonacol Board practices and composition Relationship with stakeholders Risk management External assessment 406,000 hectares of native forest protected 766 MW from forestry biomass Corporate Governance Solid structures to ensure good practices of management, investment and production Environment Sustainable development of our productive activities All these ESG initiatives have allowed Empresas Copec to be part of the most relevant global indexes in matters of sustainability Community Important contribution to Education, Culture, Sports and the Community 39 *CDM: Clean Development Mechanism

40 Commitment to Environmental, Social and Governance initiatives Innovation Key and transversal element across all our business lines I+D, Long Term Investment Innovation Center UC Anacleto Angelini Copec-UC Foundation Copec-UC Venture Capital Fund AI Customer Service 4.0 Pagoclick Copec Sites Copec Car-sharing Copec Voltex Copec Self-service checkout Pronto Ordering button Abastible Online LPG meter Abastible Thermal equipment monitoring Abastible Telemetry Abastible App IR Empresas Copec Big Data Revolution 4.0 IoT IoT Biotechnology Safety Fleet control Copec Driver s safety Copec DeRaíz Arauco Biotech Dissolving Pulp Arauco Bioforest Arauco Biocel + Biomaderas Arauco Omega 3 Delivery solutions Golden Omega 40

41 Investor Presentation