empresas cmpc s.a company overview 09
TRANSCRIPT
Empresas CMPC S.A.Company OverviewPresentation prepared for Santander’s Materials Conference, New York 09.10
2010
1920
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Agenda
Overview 3
Business Divisions 7
Social Responsibility and Sustainability 14
Financial Review 16
21
2
Concluding Remarks
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
CMPC is an important player in the P&P industry
CMPC is an integrated and well diversified producer of pulp, paper and other forest products in Latin America
Controlled by the Matte Family, one of Chile’s leading economic groups
Market capitalization of US$10.1 billion as of July 30th, 2010
3
The Matte Family: CMPC’s major shareholder and one of the most important Chilean economic groups
Forestry and
Manufacturing Energy Finance Telecommunications
Real State &
Infrastructure
BICE Renta Urbana*,
Puerto de Lirquén*,
Portuaria Cabo Froward
*Operating firms that are controlled directly or through a shareholders agreement
Empresas CMPC*, El
Volcán*, Copec,
Molymet, Soc. Agrícola
La Rosa Sofruco
Colbún* Bicecorp*, Banco Bice*,
Bice Vida*, Bice Chile
Consult*
Entel*
CMPC’s Shareholders Structure (06.30.2010)
Local Investors 23.0%
Matte Group 55.8%
Foreign Investors 8.1%
Chilean Pension Funds
13.1%
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Balanced growth in all business segments provides CMPC a diversified revenue mix
Fore
stry
Pu
lpP
aper
Tiss
ue
Pap
er
Pro
du
cts
Total Capacity% of Total Sales* % of Total EBITDA*
1,025 Th. Ha(659 Th. Plant)8.4 MM m3/y
11% 6%
29% 54%
18% 15%
34% 19%
9% 5%
* Figures in US$ million for the LTM as of June 2010 Main Figures
Sales: 787
Sales 3rd parties: 648
EBITDA: 139
EBITDA margin: 17%
Sales: 1,251
Sales 3rd parties: 1,248
EBITDA: 173
EBITDA margin: 14%
Sales: 335
Sales 3rd parties: 317
EBITDA: 46
EBITDA margin: 14%
2.5 MM tons/y
1.1 MM tons/y
470,000 tons/y
340,000 tons/y
Sales: 584
Sales 3rd parties: 389
EBITDA: 51
EBITDA margin: 9%
Sales: 1,224
Sales 3rd parties: 1,077
EBITDA: 481
EBITDA margin: 39%
4
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Product and geographic diversification provides flexibility
5
Third party sales in US$ million for the LTM as of June 2010
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Agenda
Overview 3
Business Divisions 7
Social Responsibility and Sustainability 14
Financial Review 16
21
6
Concluding Remarks
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Chile:
717,462 Hectares
498,872 Planted Hectares
Brazil:
213,592 Hectares
94,806 Planted Hectares
Argentina:
94,283 Hectares
65,164 Planted Hectares
Forestry Division: the root of CMPC’s competitive advantage
Forestry Sawnwood
Chile - 4 Sawmills:
• Bucalemu, Las Cañas,
Mulchén and Nacimiento
Total capacity: 1.4 MM m3/yr
Remanufactured Wood
Chile - 2 Remanufacturing plants:
• Coronel and Los Ángeles
Total capacity: 180,000 m3/yr
Plywood
Chile - 1 Plywood mill:
• Mininco
Total capacity: 240,000 m3/yr
7
• 100% planted and certified forests
• Genetic and silvicultural practices / forest management to
continuously improve yields
• Faster growth cycle than northern hemisphere forests
• Young and growing forestry base.
• Average age of CMPC’s Pine Forests: 11.8 years
• Average age of CMPC’s Eucalyptus Forests: 9.2 years
• Proximity of forests to industrial facilities and ports
Overview
1.82 X
Harvesting (million m3)
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Pulp Division: CMPC has one of the lowest cash costs of the pulp industry Key drivers
• First class assets for the production of:
Softwood (pine) 760 Th. Tons annually
Hardwood (eucalyptus) 1.8 MM Tons annually
• Strategic locations (mills near to forests and ports)
• World’s lowest cost producer of softwood
• Sales diversification
• ISO, OHSAS Certified
What’s ahead…
• Consolidation of Guaíba’s assets in Brazil, which increased
CMPC’s hardwood capacity in 450 Th. tons per year
• Chile: rebuilding of Laja mill
• Environmental upgrades at the Pacífico and Santa Fe mills
• Debottlenecking of Santa Fe II mill
• New turbo generator in the Santa Fe II mill
8
0
100
200
300
400
500
600
700
0 5,000 10,000 15,000 20,000 25,000
(US$
/To
n d
el N
. Eu
rop
e)
(Thousand metric tonnes)
Source: CMPC and Hawkins Wright as of April, 2010
Source: CMPC and Hawkins Wright as of April, 2010
0
100
200
300
400
500
600
700
800
0 5,000 10,000 15,000 20,000 25,000
(US$
/To
n in
N.
Euro
pe)
(Thousand metric tonnes)
BSKP Supply Curve (US$/ton)
BHKP Supply Curve (US$/ton)
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Paper Division: strategically focused on niche paper grades
Bo
xbo
ard Chile:
2 mills: •Maule and Valdivia
Total Capacity: 430,000 tons/y
Pac
kagi
ng Chile:
1 mill: •Puente Alto
Total Capacity: 340,000 tons/y
New
spri
nt Chile:
1 mill: •Inforsa (Nacimiento)
Total Capacity: 200,000 tons/y
Oth
er
Pap
ers
Chile: 1 mill: LajaBrazil: 1 mill: Rio GrandenseTotal Capacity: 130,000 tons/y
EDIP
AC
Chile:
Most important paper distributor, with 52% of total market share
Geographical Sales Breakdown (Th. Tons)
9
182 208 188208
346 323
Newspaper Boxboard Packaging Paper
2003 2009
79% 85%
12%
21% 15%
88%
Newspaper Boxboard Packaging Paper
Export Market Local Market
Paper Sales Growth (Th. Tons)
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Tissue Division: CMPC is a leading Latin American player
Key drivers
• One of the largest tissue company in Latin America
• Strong branding
• Broad market segmentation
• Extensive distribution network
• High growth opportunities
• Flexible product mix
What’s ahead…
• Colombia: New Tissue Paper mill (27,000 tons/y), starting in
3Q10
• Mexico: New Tissue Paper Machine (double width, 50,000
tons/y), starting in 3Q10
• Brazil: New Tissue Paper Machine (double width, 50,000
tons/y), starting in 2011
• Peru: New Tissue Paper Machine (12,000 tons/y), starting in
2011
10
Market Share:Capacity: 87,000 tons/yr
5%
Mexico (Since 2006)
Market Share: 6%
Colombia (Since 2007)
Market Share:Capacity: 75,000 tons/yr
10%
Brazil (Since 2009)
Uruguay (since 1994)
Market Share:Capacity: 37,000 tons/yr
84%
Market Share: Only Conversion Process
15%
Ecuador (Since 2009)
Market Share:Capacity: 57,000 tons/yr
51%
Peru (Since 1996)
Market Share:Capacity: 118,000 tons/yr
75%
Chile (Since 1980)
Market Share:Capacity: 96,000 tons/yr
50%
Argentina (Since 1991)
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
State of the art projects has been developed in Colombia, Mexico and Brazil
• Latin-American countries have a low tissue per capita
consumption according to its per capita GNI.
• CMPC entered Mexico (2006), Colombia (2007) and Brazil
(2009), through the acquisition of Absormex, Drypers Andina
and Melhoramentos respectively.
• The new projects developed in the countries mentioned
above will add 130 Th. tons of tissue paper capacity per year.
11
Some of our tissue brands…
India
PeruChina Brazil
Colombia
MexicoChile
ArgentinaUruguay
Ecuador
SpainGermany
Portugal Japan
USA
0.0
5.0
10.0
15.0
20.0
25.0
30.0
0 10 20 30 40 50
Ap
pa
ren
t C
on
sum
tio
n p
/c (k
/ha
b.)
GNI p/c ppp (Thousand US$/hab.)
Tissue per Capita Consumption
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Paper Products Division: Local sales mainly oriented to export industries
Co
rru
gate
d
Bo
xes
Chile: 3 mills:
•Buin, Quilicura and Til Til
Total Capacity: 252,000 tons/y
Pap
er
Bag
s
Chile: 1 mill: ChillánArgentina 1 mill: HinojoPeru: 1 mill: LimaMexico: 1 mill: Guadalajara
Total Capacity: 70,000 tons/y
Mo
lde
d P
ulp
Tr
ays
Chile: 1 mill:
•Puente Alto
Total Capacity: 18,000 tons/y
12
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 the lions share of all sales are local, CMPC is
also expanding its exports
What’s ahead…
• New 35,000 tons corrugating mill in the south of
Chile
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Agenda
Overview 3
Business Divisions 7
Social Responsibility and Sustainability 14
Financial Review 16
21
13
Concluding Remarks
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
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 the Environment
CMPC and the Community
CMPC and its Business Chain
CMPC and its Workers
CMPC’sCSR
• 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
• Plantations
• Clean processes
• Replacement of fossil fuels with biomass
• Recollection and recycling of waste paper
14
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Agenda
Overview 3
Business Divisions 7
Social Responsibility and Sustainability 14
Financial Review 16
21
15
Concluding Remarks
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Financial Summary
16
Financial Summary (US$ million)
2Q09 2009 1Q10 2Q10 QoQ% YoY%
Sales 691 3,124 938 1,007 7% 46%
Operating Costs (460) (2,066) (604) (596) -1% 29%
Other Operating Expenses (101) (414) (101) (130) 29% 29%
EBITDA 130 644 233 281 21% 116%
Depreciation & Stumpage (79) (327) (96) (96) 0% 22%
Change in Net Value if Biological Assets 4 52 32 21 -34% 429%
Operating Income 55 369 169 206 22% 272%
Financial Costs (22) (104) (33) (33) -1% 49%
Other Non Operational Items (5) 3 (55) (50) -9% 843%
Net Income 28 268 80 123 53% 338%
EBITDA Margin 19% 21% 25% 28% 3% 9%
Total Assets 10,116 12,291 12,207 12,322 1% 22%
Total Liabilities 3,549 5,033 4,896 4,941 1% 39%
Shareholder's Equity 6,567 7,258 7,312 7,382 1% 12%
2Q10
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
CMPC follows a conservative financial policy
*Figures as of 2006, 2007 and 2008 are under Chilean GAAPs. Figures for the LTM as of March 2010 are under the IFRS accounting standard.
17
Debt Evolution (US$ million) *
Net Debt / EBITDA *
1,397 1,362 1,3492,130 2,175
144 167 229
761 565
2006 2007 2008 2009 LTM
Net Debt Cash
7.4
11.910.1
6.37.2
2006 2007 2008 2009 LTM
2.7
1.5 1.7
3.3
2.5
2006 2007 2008 2009 LTM
0.36
0.280.33
0.42 0.40
2006 2007 2008 2009 LTM
Debt / Equity *
EBITDA / Interest Expenses *
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
A well structured debt profile delivers value to shareholders
Debt Description as of June 30th
• Average term of debt: 6.2 years
• Average cost of debt: 4.6%
• Composition of debt:
44% banks / 56% Bonds
• Debt breakdown by currencies:
19% UF / 71% US$ / 10% Other currencies
Last Financial Transactions
International Benchmark Bond: in November 2009,
CMPC issued an International Benchmark Bond under
the 144A-S regulation. The transaction conditions
were:
- 10 year bullet bond: for MUS$500 @ CT10 + 275 bps
18
Amortization Schedule
Debt Description as of June 30th (%)
90
194270
341 365
237153
266
500
2010 2011 2012 2013 2014 2015 2019 2027 2030
New Credit Note Amortizations
82% 86% 88%74% 80%
18% 14% 12%26% 20%
2006 2007 2008 2009 LTM
Floating Rate Fix Rate
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin 19
The Riograndense acquisition: the biggest project in the history of CMPC
On October 8th 2009, Empresas CMPC
S.A. and Aracruz Celulose S.A. signed a sale
contract for the transfer of ownership of a
group of assets known as the Guaíba Unit
for a total price of US$1,432 million
The Guaíba Unit includes:
• A pulp mill with annual production capacity of
approx. 450,000 tons
• A paper mill with annual production capacity
of approx. 60,000 tons
• Approximately 212,000 hectares of land of
which 102,000 are planted and 23,000 are
plantable
• Licenses and authorizations to execute an
expansion project for the pulp mill, to increase
its annual capacity to around 1.75 million
tons
What is CMPC buying?
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
What is CMPC getting?
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Agenda
Overview 3
Business Divisions 7
Social Responsibility and Sustainability 14
Financial Review 16
21
20
Concluding Remarks
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
CMPC adds value through several competitive advantages
21
CMPC has an irreplicable forestry base with sustainable competitive advantages in both fibers. This is due to:
High growth yield in both fibers
Secured land and fiber to produce over 3.75 million tons of pulp annually (1.5x of current production)
Forestry base at an average distance of less than 100 kms. away of the mill
mill
Average harvest distance
Higher Growth Yield shorter distance to the mills / ports
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
CMPC adds value through several competitive advantages
22
CMPC’s tissue products have presence in :
10,592 stores
146 wholesalers
34 Drugstore Chains
In store service (over 2,800 people)
Countries with more than a 90% coverage :
ChileUruguay
ArgentinaColombia
Peru
Countries with more than a 70% and less than a 90% coverage:
MexicoEcuador
Brazil
High brand recognition Strong and efficient distribution network
Elevated market share and a recognized leadership in the tissue industry
Empresas CMPC – Presentation prepared for Serfinco’s Institutional Conference, Medellin
Q&A
This presentation will be available at CMPC’s Web Site www.cmpc.cl
Disclaimer:
This document provides information about Empresas CMPC SA. In any case this constitutes acomprehensive analysis of the financial, production and sales situation of the company, so to evaluatewhether to purchase or sell securities of the company, the investor must conduct its own independentanalysis.
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 of thecompany and its corresponding notes, which are available for consultation and review.