ARAUCO Corporate Presentation. renewables for a better life

Transcription

1 ARAUCO Corporate Presentation renewables for a better life

2 Arauco Overview Business Segments Future Investments Recent Events and Initiatives Sustainability

3 ARAUCO STARTED AS A CHILEAN FORESTRY AND PULP FIRM 1977 Copec acquires Celulosa Constitucion and Celulosa Arauco. The merged firm is called Celulosa Arauco y Constitución S.A Arauco begins producing Sawn Timber, and creates Aserraderos Arauco S.A Creation of subsidiary Paneles Arauco S.A. Its Horcones mill starts operations in Acquisition of Licancel pulp mill from Attizhold Holding Swiss Company Arauco creates a forest research subsidiary named Bioforest Arauco Generación (now Arauco Bioenergía) starts operations, producing energy through biomass Arauco acquires in Argentina Alta Parana (now Arauco Argentina) Acquisition of Forestal Cholguán. Acquisition of Trupán and Cholguán panel companies.

4 AND TODAY IS A WORLD-CLASS PLAYER IN FORESTRY PRODUCTS INDUSTRY 2004 Valdivia pulp mill starts operating 2006 Nueva Aldea pulp mill starts operating Joint Venture with Stora Enso to acquire Uruguayan subsidiary of ENCE. Acquisition of Tafisa Brazil Montes del Plata mill starts operation in Uruguay Acquisition of 80% of Forestal Los Lagos, Chile. Purchase of forest investments in Argentina and Brazil from Louis Dreyfus First Chilean firm to issue carbon credits based on biomass. Enterprise Education Award Acquisition of 8 panel mills in Canada and U.S.A. from Flakeboard Joint venture with Sonae. Arauco acquires 50% of 10 panel mills and sawn timber mill in Europe and South Africa.

5 ARAUCO AT A GLANCE Angelini Family Sales Assets Consolidated Debt Market Cap 74.68% 18,607 21,637 6,703 5, % 18,638 21,181 6,485 14,194 #2 in market cap in Chile 99.98% 4,922 13,674 4,321-58% of Empresas Copec s EBITDA June 2017

6 ARAUCO AT A GLANCE SEC-registered In the US bond market since 1995 Financial Highlights June 2017 LTM In US$ millions 1,142 EBITDA 23% EBITDA Margin Outlook BBB (Negative) BBB- (Stable) Baa3 (Stable) 146 Net Income 545 CAPEX 4,249 Debt* * Does not include swaps & forwards 513 Cash 3.3x Net Debt/ EBITDA 61% Debt/Equit y

7 DIVERSIFIED SALES AROUND THE WORLD Others 4% Canada USA Netherlands Asia and Oceania 33% Sales by Region North America 29% Mexico Colombia Peru Chile Brazil Argentina Saudi Arabia Australia China Dec Europe 7% Forestry 2% Other 1% Central and South America 27% Sales Offices Over 62% Revenues Revenues Wood 52% Sales by Division Pulp 45% June 2017 Of our revenues come from exports 4,374 4,299 5,146 5,343 5,147 4,761 4, June 2017 June 2017 Pulp and Wood products includes sales energy

8 FOUR STRATEGIC BUSINESS SEGMENTS IN A DIVERSIFIED OPERATIONAL FOOTPRINT FORESTRY PULP WOOD PRODUCTS ENERGY 698,984 Ha 5 Mills 2.887,000 tons 5 Mills Plywood: 710,000 m 3 MDF: 515,000 m 3 HB: 60,000 m 3 PB: 300,000 m 3 8 Sawmills 4 Remanufacturing facilities 2,588,309 m 3 10 Power Plants 606 MW Surplus: 209 MW 131,956 Ha 1 Mill 350,000 tons 2 Mills MDF: 300,000 m 3 PB: 260,000 m 3 1 Sawmill 1 Remanufacturing facility 317,982 m 3 2 Power Plants 78 MW Surplus: 8 MW 128,094 Ha 2 Mills MDF: 1,220,000 m 3 PB: 310,000 m 3 73,960 Ha (1) 1 Power Plant 1 Mill 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) MDF: 740,000 m 3 PB: 1,165,000 m 3 OSB: 258,000 m 3 1 Sawmill (2) 32,850 m 3 TOTAL 1,032,994 Ha 3.9 MM tons 8.8 MM m MM m MW (1) Considers 50% of Montes del Plata (2) Considers 50% of Sonae Arauco As of June. 2017

9 Chips Black Licquor MAXIMIZING THE VALUE OF EVERY TREE BSKP / UKP BHKP PULP PULP MILLS HEAT PRODUCTION ENERGY & STEAM SAW MILLS PANEL MILLS MDF / HB / PBO Plywood Sawn Timber Remanufactured Wood Products SAWN TIMBER & PANELS

10 WE ARE A MAIN PLAYER IN THE GLOBAL MARKET Market Pulp Capacity (in thousand of tons) #2 market pulp producer in the world Fibria Arauco CMPC IP Suzano APRIL UPM-Kymmene Stora Enso Georgia Pacific Paper Excellence 3,887-1,000 2,000 3,000 4,000 5,000 6,000 World Panels Capacity (in thousand of m3) #2 panel producer in the world Kronospan Arauco Norbord /Ainsworth Egger Georgia Pacific Swiss Krono Louisiana Pacific Kastamonu Duratex Pfleiderer 8,861-4,000 8,000 12,000 16,000 20,000 Market Pulp Capacity, December Arauco capacity includes 50% of Montes del Plata World Panels Capacity, January Arauco capacity includes 50% Sonae Arauco at Dec Source: RISI, Arauco estimations and Company information and filings

11 OUR MAIN PRODUCTS BHKP 44% 39% 12% 5% BSKP UKP Fluff Pulp Sales Volume: 3,774 Th. AdT 56% 14% 12% 8% 10% China Europe Americas Korea Rest of Asia & Others 60% 37% 3% MDF PBO HB/OSB/Others Panels* Sales Volume: 4,750 Th. m3 57% 21% 7% 5% 10% USA & Canada Brazil Arg. Chile Others Kilned Sawn Timber 33% 32% 19% 16% Sawn Timber Plywood Remanufactured Wood Products Sawn Timber Sales Volume: 3,024 Th. m3 June 2017 *Does not include sales volume of Sonae Arauco as it does not consolidate 32% 31% 15% 10% 8% 4% Asia & Oceania USA & Canada Chile Rest of Latam Middle East & Africa Europe

12 OPERATIONAL EFFICIENCY Bioenergy generation & self sufficiency in electricity Logistics advantage Centralized strategic sourcing Access to low-cost wood Lean management Economies of scale Research & Development

13 SOLID CAPITAL STRUCTURE Adjusted EBITDA 30% Adjusted EBITDA 20% 22% 24% 25% 22% 23% Margin 1,308 1,143 1,272 1,282 1,052 1, % -53% Forestry 20% Other -5% June 2017 LTM CAPEX -100% 30% 20% 22% 24% 25% 22% 23% 1,308 1,143 1,272 1,282 1,052 1, % -53% Wood 32% EBITDA by Division Pulp 54% June 2017 LTM -100% Net Debt 1.7x 2.1x 4.6x 3.8x 3.2x 3.0x 3.7x ,897 4,474 4,359 4,107 3,805 3,889 3, June 2017 LTM -5.00

14 Arauco Overview Business Segments Future Investments Recent Events and Initiatives Sustainability

15 FORESTRY: THE BASE FOR GROWTH Ideal conditions for forest growth 1,733 th. hectares owned 1,032 th. hectares planted 703 th. hectares of Pine years 20% As of June Dec years 13% Pine Plantation Aging years 20% 0-5 years 24% 6-10 years 23% Total Plantations 619 1, th. Hectares Planted 66 th. 63 th. 16 th. Hectares Harvested Dec In thousands ha Includes plantations in Chile, Argentina, Brazil and Uruguay

16 PULP: OUR PULP MILLS Licancel 155,000 tons UKP Constitución 355,000 tons UKP Alto Paraná 350,000 tons BSKP & Fluff Swing mill Arauco Mill Line 1 & Line 2 290,000 tons BHKP 510,000 tons BSKP Nueva Aldea 513,500 tons BHKP 513,500 tons BSKP Valdivia 550,000 tons Bleached pulp Swing mill Montes del Plata 1,300,000 tons BHKP Arauco owns 50%

17 PULP: COMPETITIVE ADVANTAGES TO EFFICIENTLY SUPPLY THE MARKETS Pulp Production CAGR 1 : 6.1% in million of AdT June 2017 LTM Balance between short and long fiber Competitive distances from forest to mills and ports Cost efficient BSKP (Pine) UKP (Pine) BHKP (Eucalyptus) 92% Of pulp sales come from exports Dec (1) Compounded Annual Growth rate

18 US$/ADt Cash Cost, CIF China PULP: COMPETITIVE ADVANTAGES Balance between short and long fiber Cost efficient HARDWOOD (37%) Capacity by Grade June ,887 Th. ADt BSKP 41% Chile East Europe US Sweden Other World Finland Other Europe Indonesia East Canada Japan Coastal BC Canada Int. West Canada East Europe Iberia Finland Chile/Uruguay Bel/France Sweden Canada Japan China US Brazil Fluff 9% UKP 13% SOFTWOOD (63%) ,000 10,000 15,000 20,000 25,000 30,000 35,000 Annual capacity (000s ADt) Source: Hawkins Wright, December 2016 BSKP BHKP

19 PULP: COMPETITIVE ADVANTAGES Competitive distances from forest to mills and ports Average Distance Average Distance Forest to Mill Mill to Port* Kms Chile Kms 85 Nueva Aldea Arauco Uruguay Argentina Valdivia Constitución Licancel km. (weighted average) 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. November 2015

20 PULP: COMPETITIVE ADVANTAGES Klabin Puma IP Riegelwood Svetlogorsk Domtar Ashdown Sodra Varo Asia Pulp & Paper Metsa Aanekoski Metsa Aanekoski Fibria Tres Lagoas 400 th. tons SW 360 th. tons SW 400 th. tons SW 700 th. tons SW 275 th. tons SW 2,000-2,800 th. tons HW 800 th. tons SW 500 th. tons HW 1,950 th. tons HW Additional Capacity 505 SW 1,265 SW 1,165 SW 300 SW Forecast 1,440 HW 1,270 HW 1,910 HW 655 HW Source: RISI, December 2016 Additional Capacity Forecast takes into account additions and closings of mills

21 WOOD PRODUCTS: EXPANSIVE OF DIVERSIFIED PRODUCT MIX Panels Production CAGR 1 : 23.7% Sawn Timber Production CAGR 1 : 5.1% In thousands cubic meters In thousands cubic meters June 2017 LTM ,446 June 2017 LTM ,226 1, MDF HB PBO OSB Sawn Timber Remanufactured Plywood June 2017 Last twelve months (1) Compounded Annual Growth rate

22 WOOD PRODUCTS: OUR PANEL MILLS In thousand m3 Dec *Arauco owns 50% of Sonae Arauco Sault Ste. Marie 310 MDF St Stephen 160 MDF 216 PB Moncure 285 MDF 262 PB Carolina PB 600 PB Albany 442 PB Malvern 310 MDF Bennetsville 251 MDF Eugene 154 MDF Cholguán 60 HB Trupán Line I & II 515 MDF Teno 300 PB Arauco Line I & II 350 Plywood Nueva Aldea 360 Plywood Valladolid* 140 MDF Linares* 428PB Juguariaiva 780 MDF Pién 440 MDF 310 PB Piray 300 MDF Trupán Line I & II 260 PB Panbult* 152 PB White River Line I & II* 320 PB 84 MDF Nettgau* 650 MDP 516 OSB Beeskow* 324 PB 348 MDF Meppen* 314 MDF Eiweiler* 224 MDF Mangualde Line I & II* 370 MDF Oliveira* 456 PB MDF: Medium Density Fiberboard PB: Particleboard OSB: Oriented Strand Board

23 WOOD PRODUCTS: OUR SAWN TIMBER MILLS Valdivia Saw Mill 464 ST 85 Rem El Colorado Saw Mill 273 ST Horcones Saw Mill Line I & II 726 ST 130 Rem Cholguán Saw Mill 318 ST 92 Rem 13 Laminated El Cruce Saw Mill 116 ST Viñales Saw Mill 377 ST 101 Rem Nueva Aldea Saw Mill 431 ST Piray Saw Mill 318 ST 67 Rem Cuellar Saw Mill 33 ST ST: Sawn Timber Rem: Remanufactured Wood Products In thousands m3 Dec Includes 50% of Sonae Arauco

24 ENERGY: KEY PART OF OUR VALUE CHAIN Energy Revenues in US$ million Renewable, environmental friendly energy June 2017 LTM 766 MW Installed Capacity Part of our production process Arauco is self-sufficient in net electricity consumption All cogeneration plants registered under Kyoto Protocol 253 MW Sold to National Grid in Chile, Argentina, & Uruguay

25 Arauco Overview Business Segments Future Investments Recent Events and Initiatives Sustainability

26 MAPA: NEW LINE AT ARAUCO MILL & COGENERATION PLANT Construction of a third pulp line in the Arauco Mill of 1.5 million Adt Construction of a 166 MW cogeneration plant The investment for this project could be approximately US$ 2,300 million The project considers the closure of Arauco s line 1 of 290,000 Adt of short fiber pulp once the new line is operating The MAPA project is still subject to technical and economical feasibility studies, and the board of director s approval

27 MAPA: WHERE WE STAND TODAY April 2012 Arauco submits environmental study to Environmental Assessment Service (SEA in spanish) Mar 2014 A group of communities files constitutional act (recurso de protección) against the SEA Dec 2014 New claim filed against the environmental permit Mar 2016 New claim against the environmental permit to invalidate permit to the Environmental Court of Justice Jul 2016 A group of communities appeals to Supreme Court April 2011 Arauco commences Environmental Study for MAPA Project Feb 2014 Environmental study is approved Nov 2014 Supreme Court unanimously votes against the constitutional act. MAPA Project s approval is returned Feb 2016 Claim against the environmental permit is voided In preparation to the MAPA project, Arauco is constructing a new water treatment facility in the Arauco mill Jul 2016 Environmental Court of Justice rejects request for invalidation Jun 2017 Supreme Court rejects appeal

28 Arauco Overview Business Segments Future Investments Recent Events and Initiatives Sustainability

29 NEW PARTICLE BOARD IN MICHIGAN, USA Located in Grayling, Michigan As of June 30 the construction phase goes as planned with 15% Annual production of 800,000 m3 of MDP Ground-breaking has already commenced The investment of this mill is estimated at US$ 400 million Rollout of the first panel expected during the latter part of 2018

30 DISSOLVING PULP PROJECT Located a the Valdivia mill, which currently produces 550,000 AdT of pulp Dissolving pulp is a product used in the textile industry as an alternative of cotton US$185 million in estimated investment for brownfield project Arauco would be the first company to produce this pulp in Chile It will provide flexibility to produce either dissolving or paper grade

31 SONAE ARAUCO JOINT VENTURE COMPLETED Investment of million 10 mills located in Germany, Spain, Portugal and South Africa Total aggregate capacity: 4.2 million m3/year Production of MDF, PBO, OSB and sawn timber Combined with the rest of our company s assets, Arauco positions itself as the second largest panel producer globally, reaching 9 million m3 of production capacity annually

32 Arauco Overview Business Segments Future Investments Recent Events and Initiatives Sustainability

33 SUSTAINABILITY Arauco is committed to the occupational health and SAFETY of its workers, to the ENVIRONMENT and to the welfare of the COMMUNITIES in which it operates SAFETY ENVIROMENT COMMUNITY PARTICIPATION & DIALOGUE

34 SAFETY ALWAYS A PRIORITY All our business units are certified as compliant with the OHSAS EHS standard

35 ENVIROMENT Our plantation forests are CERTIFIED to INTERNATIONALLY RECOGNIZED STANDARDS We DO NOT source native forests or protected species We PROTECT more than 406,000 HECTARES (1,000,000 acres) of native forest in permanent conservation set-asides During 2015 we invested US$ 52 MILLION in environmental improvements We apply widely accepted INTERNATIONAL SCIENTIFIC STANDARDS to our silviculture. We DO NOT use genetically modified plants.

36 ENVIROMENT ENERGY ARAUCO decided over twenty years ago to produce CLEAN ENERGY from forestry biomass arising from nature s virtuous cycles In addition to substantially meeting the needs of its own industrial facilities, ARAUCO can provide a up to 253 MW OF SURPLUS ENERGY to the SIC, Chile s national energy grid The company has six cogeneration power plants in Chile and one in Uruguay registered as greenhouse gas (GHG) emission-reduction projects with the Clean Development Mechanism (CDM) of the KYOTO PROTOCOL This allows ARAUCO to annually OFFSET 500,000 TONS of CO2e

37 ENVIROMENT: A project to renew our way of doing things REDUCE PROPAGATION & FACILITATE COMBAT Structural protection network with fuel cutters and more roads DECREASE FIRE OCCURRENCE Local committees in 300 zones Work integrated with other companies and institutions PROTECT INHABITED AREAS & INDUSTRIES Protection belt with buffer strips and firewalls near communities SETTLE FIRES IN THE INITIAL PHASE Increase of aerial and terrestrial resources Never arrive after 20 minutes MMUS$$10 additional investment

38 COMMUNITY, PARTICIPATION & DIALOGUE CONTRIBUTING TO COMMUNITIES Our operations directly benefit more than 14,000 workers and indirectly other 21,000 workers through our contractors. WE RESPECT LOCAL COMMUNITIES and CONTRIBUTE TO THEIR DEVELOPMENT through responsible management of our operations and the implementation of initiatives that generate value based on a method that fosters dialogue and participation.

39 COMMUNITY, PARTICIPATION & DIALOGUE ARAUCO EDUCATIONAL FOUNDATION 26 YEARS PRESENT in communes where we operate in regions Maule, Bío Bío and Los Ríos The purpose is to DESIGN, IMPLEMENT AND ASSESS teacher-improvement programs CAMPUS ARAUCO Center for Higher Education and Training for employees, based on an INNOVATIVE ACADEMIC METHOD that combines the educational process with on-the-job work experience Campus Arauco offers 4 TECHNICAL CAREERS for more than 660 STUDENTS, and over 200,000 ANNUAL HOURS of training for ARAUCO employees and service-providing business employees

40 COMMUNITY, PARTICIPATION & DIALOGUE ARAUCO EDUCATIONAL FOUNDATION SUSTAINABLE RECONSTRUCTION PLAN for the city of Constitución, that was devastated by the earthquake and tsunami on February 27, 2010 The PRES Plan encompasses 28 PROJECTS that are in different stages of development CAMPUS ARAUCO This program promotes the construction of houses and housing units with a HIGH TECHNICAL and SOCIAL STANDARDS for company employees and their neighbors 9,000 houses will be built between 2013 and 2017

41 COMMUNITY, PARTICIPATION & DIALOGUE FOUNDATION ACERCAREDES ARAUCO CULTURAL CENTER NON-PROFIT ORGANIZATION established in 2011 under ARAUCO s innovation area AcercaRedes operates based on Hubs: a network of offices that ATTRACT, CONNECT and CENTRALIZE to promote the local development of areas located far from urban centers Today there are hubs operating in MARIQUINA, CONSTITUCIÓN, and CURANILAHUE The 2010 EARTHQUAKE caused structural damage to the local theater and the municipal library Arauco decided to build the cultural center to replace the damaged buildings The center is 1,400 SQUARE METERS, which includes the library, theater, reading rooms and public spaces

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