Pulp, Paper and Packaging Products and Pulp Tissue in Latin America
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Corporate Presentation May 2019 Forward-Looking Statements This presentation may contain forward-looking statements that should be considered as good faith estimates. Such statements are subject to risks and uncertainties outside of CMPC's control that could cause CMPC’s actual results to differ materially from those set forth in the forward-looking statements. These risks include in particular those described in CMPC’s Financial Statements, Note 3 (“Risk Management”). Forward-looking statements speak only as of the date they are delivered. CMPC undertakes no obligation to publicly update or revise them based on developments which differ from those anticipated. Investor Relations Contacts Colomba Henríquez Petya Miteva [email protected] [email protected] +56 2 2441 2791 +56 2 24412713 Agustina Mussolini [email protected] +56 2 2441 2616 2 Index I. CMPC at a Glance II. Competitive Advantages III. Industry Drivers IV. Strategy V. Appendix 33 4 CMPC at a Glance A Global Leader in P&P 4th CMPC is a P&P company, established in 1920, that produces solid wood products, Global Market Producer 2 pulp, paper and packaging products and Pulp tissue in Latin America. CMPC Figures 1 Packaging Competitive Softys Pulp 10% BEKP & BSKP 32% 53% Cash Cost Softys 14% Sales $6,229 Assets $15,196 2nd Pulp Producer in LatAm 3 Packaging Softys 73% Tissue 5% 15% 8% Packaging Investment Grade EBITDA Company $1,752 Fitch: BBB (stable) Pulp Moody’s: Baa3 (stable) 89% S&P: BBB- (stable) 1 Source: CMPC. Figures for the LTM as of March 2019 (USD million) 5 2,3 Source: Hawkins Wright, RISI Vertically integrated... 1.6 million m3 / year Solid Wood Containerboard Corrugated boxes Products 260,000 211,000 tons / year 688,000 Boxboard 520,000 Molded pulp trays Planted hectares Sackraft 396 MM Pine 52% HW 3,362,000 66,000 units / year Eucalyptus 48% SW 798,000 tons / year Paper bags tons / year Papers 732 MM Pulp units / year Packaging Market Pulp 747,000 tons / year Tissue Paper 580,000 Products tons / year Recycled Paper Source: CMPC, as of December 2018 6 ... and well-diversified player Pulp Tissue Papers Chile 209 550 428 1,187 19% Argentina 8 300 15 324 5% Brazil 89 321 410 7% 45% Peru 298 55 352 6% Domestic Sales Domestic Mexico 274 29 303 5% Uruguay 81 81 1% Colombia 71 71 1% 6,229 Ecuador 50 50 1% Latam 97 43 208 348 6% Europe 727 67 794 13% China 878 878 14% 55% Exports Other Asia 787 21 808 13% USA 317 3 52 371 6% 46.501 Others 198 54 252 4% 3,309 1,990 929 53% 32% 15% 6,229 Source: CMPC. Figures in USD million for the LTM as of March, 2019 / Figures do not include Holding and Intercompany Sales 7 CMPC’s Corporate Governance & Shareholders’ Structure High corporate governance standards, in line with international best practices to continue growing and generating value to all our stakeholders in a responsible and sustainable way. Shareholder’s Structure 1 Corporate Governance Each Board of Directors Committee counts with a functioning protocol which Chilean defines its members, attributions and topics addressed. Chilean Pension Funds and Foreign Investors 10% 34% 56% Matte Group 1 Source: CMPC, as of March 31st, 2019 8 Committed to Sustainable Development First Chilean Company to issue a Green Bond Energy Efficiency Member of the Gold Seal Member of the FTSE4Good Index granted by the Energy DJSI Chile Index (4th (4th consecutive year) Ministry of Chile and consecutive year) and the Agency for Energy nd DJSI MILA Index (2 Efficiency consecutive year). 9 Competitive Advantages 10 Forestry assets in low-cost, high-yield geographies with continuous productivity growth Eucalyptus Eucalyptus Nitens Average hardwood growth rate (m3ssc/ha/year) Volume Gain (%)1 43 43 27.2 19.0 20 23 8.2 11 1.4 E. Globulus E. Globulus Acacia Eucalypus E. Nitens 1994-1996 1997-1999 2000-2014 2015-2017 Iberian Chile Mangium Brazil Chile Radiata Pine Radiata Pine Average softwood growth rate (m3ssc/ha/year) Volume Gain (%)1 20 35.7 25.8 11 15.1 4 5 2 6.0 0 Russia Scandinavia Canada USA Chile 1975 1976-1994 1995-2009 2010-2015 2016-2017 Source: CMPC 11 1Achieved through continuous traditional genetic and silvicultural improvements. Strategically located pulp facilities BSKP Cash Cost BHKP Cash Cost USD/ton cif China USD/ton cif China 700 700 600 600 500 500 400 400 Cash Cost Cash Cash Cost Cash 300 300 200 CMPC’s pulp facilities 200 100 100 CMPC’s pulp facilities 0 0 0 5.000 10.000 15.000 20.000 25.000 0 5.000 10.000 15.000 20.000 25.000 30.000 35.000 Th. Metric Tons Th. Metric Tons Source: CMPC, Hawkins Wright April 2019 12 9% 3% 12% Colombia 6% TM1: 221 G2: 4.3% Unique Region-Wide Tissue Market Presence More than 40 years of Top 5 tissue and sanitary México expertise in the LatAm products producer in every 1 TM : 1,113 22% consumer business. major Latin American market. G2: 2.3% Focused on growth in key 55% 8% . markets and underpenetrated sanitary product markets. Steady expanding capacity, Ecuador 24% combination of organic & TM1: 72 G2: 4.8% inorganic growth. 12% 3% Perú 1 Brazil TM : 171 80% G2: 7.1% 70% TM1: 1,243 G2: 4.4% 57% 31% 41% CMPC’s Tissue paper market share 16% CMPC’s baby diaper Chile paper market share TM1: 233 G2: 5.2% Uruguay TM1: 38 Source: CMPC, RISI Argentina G2: 8.4% 1 TM: Total Tissue Market in th. Tons as of 2016 1 2 G: CAGR 2006-2016 TM : 327 13 G2: 3.5% Comprehensive Portfolio of Well-Known and Well-Regarded Brands Tissue Paper Away from Home Sanitary Products Source: CMPC 14 CMPC’s boxboard is a multilayer fiber- based product with multiple competitive advantages Multilayer Boxboard Low production cost Transporting efficiency Product consistency Ratio between weight and rigidity Conversion efficiency Health safety Printing quality Local US producers cash cost curve USD / Ton 1,000 800 Average CMPC boxboard cash cost at US port 600 400 200 0 Source: CMPC 2018 CMPC Maule Mill 15 IndustryDrivers Global Paper Demand Evolution Population Growth Increase in Product Quality Urbanization E-Commerce Economic Growth Circular Economy Rising disposable income Intelligent Packaging 450 418 405 409 410 414 394 392 395 399 401 400 383 363 369 371 93 95 343 87 89 91 91 350 333 82 81 84 85 329 322 79 75 76 77 72 300 70 27 28 30 32 33 34 35 36 38 69 68 26 29 24 25 28 23 23 250 21 22 128 123 130 139 142 112 117 146 149 153 157 161 200 105 128 166 Other Paper and Board 96 96 102 Tissue 150 100 104 105 112 113 117 119 116 Containerboard 99 102 105 110 110 108 107 105 102 100 98 50 Printing and Writing 39 39 38 39 38 37 37 37 37 32 32 31 30 28 26 24 23 22 - Newsprint 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: RISI 17 Dynamics of the Pulp Market Source: Hawkins Wright 2017, CMPC 18 Tissue Paper Demand Dynamics Per capita annual consumption of tissue paper (in kilograms) (Countries in green are CMPC operation countries) 25 ) 20 capita k/ 15 10 Tissue Paper App. Consumption Paper Tissue App. ( 5 0 10 20 30 40 50 60 GDP per capita in USD'000 Source: RISI, World Bank and CMPC as of 2017 19 Strategy CMPC’s Strategy Efficiency & Growth Profitability Productivity 21 Pulp Strategy: Improving margins through operational excellence Forest Base Expansion Operational Excellence Program Increase our forestry base in Brazil in order to prepare future growth in pulp +8% 1 +7% 1 Plywood Laja Mill Pacifico Mill 2 L1:+10% 1 L2:+4% 1 Guaiba Mill 2 Santa Fe Mill 1 Increase in production efficiency (%) between 2016 and 2018 2 Operational excellence programs are still underway and haven’t had one full cycle yet or will be launched beg. 2019 22 Softys Strategy: Leading Latin American Producer Profitability Strategy Softys Leading markets Revenue Management Route to Market Operational Excellence Program Procurement Cost Reduction 70% 41% 55% 80% Fiber Management 60 th USD 130 60 th USD 140 tons Million tons Million Zárate tissue machine Cañete tissue mill 4Q19 1Q17 Opportunity markets 12% 12% Source: CMPC 23 Packaging Strategy: Expand business and gain efficiencies Global packaging market expected to grow Expand our business on the back of a growing packaging market given new packaging trends: USD bn 400 + 3% per year Replacing the use of plastic 2017-2022 350 E-commerce Corrugated products as a merchandising 300 medium in the battle for consumers 250 200 Bolster our regional footprint leveraging our quality (high quality fiber) and low cost (integrated 150 operations), supported by the global presence of 100 CMPC. 50 Increase profitability by: 0 Capturing internal synergies 2012 2013 2014 2015 2016 2017 2022 F Improving efficiency through operational excellence Cost reductions by improving our entire supply chain Source: CMPC 24 Profitability Free Cash Flow LTM EBITDA Margin 800 60% 53% 702 49% 700 46% 50% 42% 575 39% 600 502 40% 33% 31% 31% 500 428 27% 26% 392 374 30% 23% 400 19% 20% 12% 300 10% 10% 10% 8% 10% 5% 200 11% 6% 6% 6% 100 0% 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 0 CMPC Pulp Softys Packaging 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 ROIC1 12% 9.8% 10% 9.0% 8.5% 8.6% 8% 6.6% 6% 4.9% 4% 2% 0% 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 Source: CMPC as of March 2019, figures in USD.