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. Figures for the LTM as of March 2012 (MUS$): Sales: 4,732 EBITDA: 986 Net Income: 467 Assets 13,521 Net Debt: 2,494 Market capitalization of US$8.2 billion as of May 31 st, 2012, among he highest of the P&P industry. P&P companies by market cap (BUS$)* 12.8 10.1 8.2 *As of May 31 st, 2012. Source: Bloomberg Shareholders Structure* Chilean Pension Funds 11.4% 5.6 4.6 IP SCA CMPC KCM Stora Enso 3.6 Fibria 1.4 Suzano 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. Local & Foreign Investors 33.4% Matte Group 55.3% * As of March 31 st, 2012. Source: CMPC 3
CMPC has expanded significantly in the region over the last two decades 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 1995-2000 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 2000 2006 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 Business Forestry and Pulp Papers and Tissue 2006 Today 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$1.4 billions 2009: Start up of Forsac Mexico 4
Nowadays, CMPC is 2 largest producer of sawn wood in Latin America 5 largest producer of market pulp globally 2 largest producer of remanufactured wood in Latin America 2 largest producer of tissue paper in Latin America and 8 globally Only producer in the world of BSKP in Chile and BEKP in Chile and Brazil 2 largest producer of paper bags in Latin America and 7 globally 2 largest producer of boxboard in Latin America 2 largest market cap of the P&P industry in Latin America and 4 globally Source: CMPC 5
Paper Products Tissue Paper Pulp Forestry A balanced growth in all business segments provides CMPC a diversified revenue mix Main Figures % of third parties total sales % of consolidated EBITDA Total capacity & Employees Sales: 788 Sales 3rd parties: 486 EBITDA: 149 EBITDA margin: 19% 10% 15% 1,038 Th. has 680 Th. has. planted 12.3 MM m 3 /y harvested 1,969 employees Sales: 1,658 Sales 3rd parties: 1,409 EBITDA: 454 EBITDA margin: 27% 30% 46% Plywood 2.7 MM tons/y 1,778 employees Sales: 941 Sales 3rd parties: 775 EBITDA: 170 EBITDA margin: 18% 16% 17% 1.1 1.1 MM MM tons/y tons/y 1,791 employees Sales: 1,656 Sales 3rd parties: 1,653 EBITDA: 190 EBITDA margin: 11% 35% 19% 570,000 tons/y 7,337 employees 500,000 tons/y Sales: 434 Sales 3rd parties: 409 EBITDA: 32 EBITDA margin: 7% 9% 3% 375,000 tons/y 2,197 employees Source: CMPC. Figures in US$ 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 Source: CMPC. Figures in US$ million for the LTM as of March 2012 / Figures do not include Holding and Intercompany Sales. 7
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 Sawn wood Remanufactured wood Plywood Chile: 729,115 has. 494,072 planted has. 47,082 to be planted has. Brazil: 213,176 has. 111,434 planted has. 12,956 to be planted has. Chile: 3 Sawmills: Bucalemu, Mulchén and Nacimiento Chile: 2 Remanufacturing plants: Coronel and Los Ángeles Chile: 1 Plywood mill: Mininco Argentina: 94,283 has. Source: CMPC 63,485 planted has. 4,281 to be planted has. Total capacity: 1.0 MM m 3 /y Total capacity: 190 Th. m 3 /y Total capacity: 240 Th. m 3 /y 9
Forestry Division: the root of CMPC s competitive advantage Key drivers Harvesting (million m 3 ) 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: Pine Eucaliptus 1.4x 6,0 3,1 3,3 3,2 5,4 5,7 5,2 5,2 5,7 6,6 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 2007 2008 2009 2010 2011 Source: CMPC Harvesting vs. Planting (Th. hectares) What s ahead Chile and Brazil: acquisition of land, to increase CMPC s forestry base. Harvest 32 Plantations 29 26 25 37 28 35 New 240,000 m 3 /yr plywood line in Mininco, starting in 2013. 21 20 18 2007 2008 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. BSKP 1 Supply Curve (US$/ton) CMPC s pulp facilities What s ahead Chile: revamping of Laja mill (110,000 tons of additional BSKP capacity), starting in 2Q12. Debottlenecking of the Santa Fe II mill (200,000 tons of additional BEKP capacity), starting in 1Q12. New turbo generator at the Laja and Santa Fe II mills. Brazil: Riograndense II line (1.3 million tons of additional BEKP capacity), to be approved by the board. BHKP 2 Supply Curve (US$/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 Plywood 99 Km. Santa Fe Softwood (BSKP) Hardwood (BEKP) 93 Km. (By train) Laja Chile 2 mills: Pacífico (Pine) Laja (Pine) Chile 2 mills: Santa Fe I (Eucalyptus) Santa Fe II (Eucalyptus) 119 Km. (By train) 163 Km. (By train) Santa Fe Pacífico Brazil 1 mill: Riograndense (Eucalyptus) 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: 1 Pulp mill with annual production capacity of approx. 450,000 tons 2 3 4 Paper mill with annual production capacity of approx. 60,000 tons 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 Sizable entry to Brazil Plywood 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 Key drivers Geographical Sales Breakdown (Th. Tons) Well integrated with the forest and pulp divisions. Local Sales Export Sales State of art technology & low cost producer. 39% Extensive use of recycled paper. Sales focused on developing countries. 88% 78% 61% Source: CMPC 22% 12% Plywood Boxboard Newsprint Packaging Boxboard Corrugated Paper Newsprint Other papers Edipac Chile 2 mills: Maule Valdivia Chile 1 mill: Puente Alto Chile 1 mill: Nacimiento Chile 1 mill: Laja Brazil 1 mill: Riograndense Most important paper distributor in Chile, with 53% of total market share Total Capacity: 430,000 tons/y Total Capacity: 340,000 tons/y Total Capacity: 200,000 tons/y Total Capacity: 130,000 tons/y 14
Tissue Paper App. Cons (k/hab) 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. What s ahead Chile: New Tissue Paper Machine (50,000 tons/y) in 1H12. Tissue per Capita Consumption 30 25 20 15 10 5 Brazil Peru Colombia EcuadorChina Portugal Chile Mexico Uruguay Argentina Canada Spain Japan France Sweden 0 India 0 10 20 30 40 50 GNI per capita, PPP (US$) Source: CMPC CMPC s operations (excluding China) USA Switzerland Tissue Capacity Evolution (000 s of Tons) Consolidation in the Mexican, Colombian and Brazilian markets. 600 500 400 300 200 100 0 2006 2007 2008 2009 2010 2011 Source: CMPC Brazil Colombia Mexico Uruguay Peru Argentina Chile 15
Tissue Division: CMPC is a leading Latin American player Strong market share throughout the region Mexico (Since 2006) Colombia (Since 2007) Market Share: 11% Capacity: 22,000 tons/yr Tissue products Market Share: 5% Capacity: 89,000 tons/yr Ecuador (Since 2009) Brazil (Since 2009) Market Share: 11% Capacity: 125,000 tons/yr Plywood Baby & Adult diapers Market Share: 23% Only Conversion Process Peru (Since 1996) Market Share: 56% Capacity: 63,000 tons/yr Uruguay (Since 1994) Market Share: 87% Capacity: 37,000 tons/yr Feminine care Chile Argentina (Since 1991) Market Share: 79% Capacity: 127,000 tons/yr Market Share: 48% Capacity: 106,000 tons/yr Source: CMPC Away from Home products 16
Tissue Division: Some of our brands Domestic Consumption Sanitary Products Away from Home Products Source: CMPC 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 exports. What s ahead Mexico: new 40,000 tons paper bags mill in Guadalajara, starting 2013. Corrugated boxes Chile 4 mills: Buin Quilicura Til Til Osorno Total Capacity: 287,000 tons/y Paper bags Chile 1 mill: Chillán Argentina 1 mill: Hinojo Peru 1 mill: Lima Mexico 1 mill: Guadalajara Total Capacity: 70,000 tons/y Plywood Molded pulp trays Chile 1 mill: Puente Alto 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 Strict compliance with labor regulations and union agreements Comprehensive employee benefit policy Jorge Alessandri Educational Park Good Neighborhood Plan Fundación CMPC: improve language and math education in the primary schools where CMPC has facilities 100% planted forests Clean processes 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 1Q11 4Q11 2011 1Q12 LTM QoQ% YoY% Sales 1,242 1,129 4,797 1,177 4,732 4% -5% Operating Costs (787) (795) (3,120) (799) (3,133) 1% 2% Other Operating Expenses (138) (154) (598) 0 (153) (613) 0% 11% EBITDA 317 180 1,078 224 986 25% -29% Plywood 1Q12 Depreciation & Stumpage (101) (105) (413) (107) (419) 2% 6% Change in Net Value of Biological Assets 13 50 1100 16 113-68% 23% Operating Income 229 125 7750 134 680 7% -42% Financial Costs (38) (42) (163) (41) (166) -2% 8% Other Non Operational Items (49) (10) (118) 0 23 (46) -336% -147% Net Income 143 73 494 116 467 58% -19% EBITDA Margin 26% 16% 22% 19% 21% 3% -6% Total Assets 13,567 13,294 13,294 13,521 13,521 2% 0% Total Liabilities 5,621 5,445 5,445 5,511 5,511 1% -2% Shareholder's Equity 7,945 7,848 7,848 8,010 8,010 2% 1% 22
CMPC s debt description as of March 2012 Debt profile: Amortization schedule Average term: 5.9 years Average cost: 4.3% Bonds Banks Revolving 17 Composition: 35% banks / 65% Bonds 22 20 279 Debt breakdown by currencies: 88 274 495 494 493 19% UF / 75% US$ / 6% Other currencies 128 48 263 114 254 239 180 314 2012 2013 2014 2015 2016 2018 2019 2022 2027 2030 Last financial transactions: Debt breakdown by interest rate (%) MUS$600 syndicated loan (October 2011): Fixed Rate Floating Rate 5 year MUS$400 credit @ Libor + 65 bps 3 year MUS$200 committed line @ Libor + 70 bps 12% 26% 26% 16% 16% MUS$500 senior term notes (April 2012): 88% 74% 74% 84% 84% 10 year bullet note: for MUS$500 @ CT10 + 265 bps 2008 2009 2010 2011 March 2012 23
Main financial metrics Debt evolution (US$ million)* Financial debt / equity* Net debt Cash 761 650 822 783 0.33x 0.42x 0.37x 0.43x 0.42x 229 1,349 2,130 2,185 2,452 2,494 2008 2009 2010 2011 LTM 1Q12 Net debt / EBITDA* Plywood 2008 2009 2010 2011 LTM 1Q12 EBITDA / interest expenses* 3.3x 1.7x 1.9x 2.3x 2.5x 10.1x 6.3x 8.6x 6.9x 6.2x 2008 2009 2010 2011 LTM 1Q12 2008 2009 2010 2011 LTM 1Q12 24
CMPC has the one of the highest credit ratings in the industry globally Issuer: International Paper Country: Plywood S&P Rating: BBB+ BBB+ BBB BBB BB+ BB 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 Net Debt/EBITDA: 2.5x 2.6x 2.7x 2.9x 1.7x 5.2x Equity: 8,000 8,941 7,009 7,493 2,967 7,974 Source: Public information for the LTM as of March 2012. 25
CMPC: Blue chip in the Santiago Stock Exchange CMPC is listed at the Santiago Stock Exchange since 1922 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 CMPC Daily Stock Price (CLP$) 3.000 2.500 2.000 1.500 1.000 500 - Plywood Other Chilean Companies Market Cap (BUS$) 25 21.6 20 17.5 CMPC Daily Traded Volume (N of Shares) 50.000.000 45.000.000 40.000.000 15 13.5 12.9 12.3 12.0 35.000.000 30.000.000 10 8.7 8.2 25.000.000 5 0 4.7 4.2 0.7 20.000.000 15.000.000 10.000.000 5.000.000 0 06-2007 06-2008 06-2009 06-2010 06-2011 06-2012 Source: Bloomberg as of May 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: investorrelations@cmpc.cl