Empresas Copec S.A. · BCS:COPEC
Empresas Copec — Non-Deal Roadshow (August 2019)
40 slides from Empresas Copec's roadshow presentation, August 2019
Slide 1: Investor Presentation August 2019
INVESTOR PRESENTATION August, 2019
Slide 2: Contents
CONTENTS 3 Empresas Copec at a glance 7 Strategic Focus 10 Competitive Advantages 16 Internationalization 20 Latest and Potential Expansions 30 Financial Strength 33 Commitment to ESG initiatives 35 2Q19 Results
Slide 3: Empresas Copec at a Glance
EMPRESAS COPEC AT A GLANCE Industrial group focused in natural resources and energy Business Units FUELS FORESTRY FISHING, MINING & OTHERS EBITDA: US$ 897 million EBITDA: US$ 1,511 million EBITDA: US$ 7 million • Main distributor of liquid fuels in Chile and • Second largest market pulp and panel •
Slide 4: Empresas Copec at a Glance
EMPRESAS COPEC AT A GLANCE Industrial group focused in natural resources and energy 74.68% 25.32% ANGELINI GROUP OTHERS 60.82% PENSION FUNDS 8,02% 31,16% OTHERS FORESTRY FUELS FISHING OTHER INVESTMENTS 99.98% 81.93% 100.00% 50.00% 100.00% 99.20% 39.83% 39.83% 83.50% 39.79% 40.00% 100.00% 58.51% 40.8
Slide 5: Empresas Copec at a Glance: years of history
EMPRESAS COPEC AT A GLANCE 83 years of history 2010-2018 Internationalization 1986-2000 Investments and growth 2003 • Expansion of liquid fuels and LPG business to Colombia Corporate • Montes del Plata pulp mill in 1934 • Alto Paraná restructuring Uruguay starts operations(1) Incorporation • Arauco
Slide 6: One of the most relevant companies in Chile
EMPRESAS COPEC AT A GLANCE One of the most relevant companies in Chile Market capitalization of Chilean companies(1) US$ million 14.316 13.885 13.109 12.161 10.851 8.481 6.264 5.731 5.242 Americas Chile (1) As of August 27th, 2019 6
Slide 7: Strategic Focus
| Strategic Focus
Slide 8: Strategic Focus
STRATEGIC FOCUS Growth has concentrated in core segments, while keeping other options for value creation Total Assets Acquisitions/Investments Divestments Planta Valdivia - Forestry AES Gener - Power Generation Abcdin - Commercial Retail Planta Nueva Aldea - Forestry CGE - Power Generation Guacolda
Slide 9: Focus in Fuels and Forestry
FOCUS IN FUELS AND FORESTRY Diversification within core businesses Consolidated EBITDA(1) 5,0% 21,2% Arauco 9,4% 62,6% Total of Fuels 1,5% US$ 2,415 37,1% 2,9% million 0,9% 5,4% 53,7% Otros 0,3% Consolidated Revenues(2) By Channel (1) By Country (1) By Product (2) By Region (3) Others Others 1% Cent
Slide 10: Competitive Advantages
| Competitive Advantages
Slide 11: Competitive Advantages: low cash cost producer
COMPETITIVE ADVANTAGES Low Cash Cost producer in both fibers Short harvesting cycle (years) As of April 2019 BSKP BHKP 600 Int. West Canada Softwood Coastal BC East Canada 75 550 Finland Japan Japan China Other Europe US 500 Sweden US Finland Bel/France 45 Cash Cost CIF mill Canada 450 Other Asia Ea
Slide 12: Competitive Advantages: maximizing the value of every tree
COMPETITIVE ADVANTAGES Maximizing the value of every tree Efficient Logistics between forests → mills → ports (1) Considers only export sales volumes, as of December 2018 (2) Considers Arauco’s Line 3 new capacity and Line 1 shutdown Market pulp installed capacity World panel installed capacity Mill
Slide 13: Competitive Advantages: scale and brand recognition
COMPETITIVE ADVANTAGES Large scale and coverage Strong brand recognition Favorite Brand Usual Brand • More than 3,200 gas stations* • Distribution of 21.9 million m³ Other Other of liquid fuels** 16% 12% • Import facilities 84% 88% • Storage plants • Industrial clients Strategic locations 1st place
Slide 14: Competitive Advantages: logistic efficiency and synergies
COMPETITIVE ADVANTAGES Logistic efficiency Synergies among business lines 9,0 Thousand m3 sold / gas station 7,5 Gas Stations 6,0 4,5 Other players in Chile 3,0 Convenience Stores 1,5 0,0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 MARKET SHARE EVOLUTION COPEC LIQ
Slide 15: Leadership in all businesses
COMPETITIVE ADVANTAGES Leadership in all businesses in which it participates Fuels distribution in Lubricants distribution Fuels distribution in Chile in Chile Colombia 42,1% 44,0% 1st 56,2% 1st 43,8% 1st 57,9% 56,0% As of May 2019 As of December 2018 As of May 2019 LPG distribution in LPG distribut
Slide 16: Internationalization
| Internationalization
Slide 17: Internationalization: two strategic lines of growth
INTERNATIONALIZATION Two strategic lines of growth outside Chile Replicating our know how within Latam Selected oportunities in developed economies Dominican Republic Liquid Fuels Panamá Ecuador Liquid Fuels Liquid Fuels Lubs Lubs LPG NGV Colombia Liquid Fuels Lubs Peru LPG NGV Liquid Fuels Lubs LPG
Slide 18: Internationalization: productive assets in countries
INTERNATIONALIZATION Productive assets in 15 countries, commercial presence in 23, and sales in more than 80 Holland Canada Norway China India Thailand Germany Korea United States Japan Spain Taiwan Philippines Portugal Malaysia Indonesia Dominican Republic Panama Venezuela Colombia Saudi Arabia Ecu
Slide 19: Non Current Assets History - Local vs Foreign
INTERNATIONALIZATION Non Current Assets History - Local vs Foreign 21% 19% Other 29% 31% 32% 34% 34% 38% 39% 38% 37% Countries Chile 2009 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19LTM 19
Slide 20: Latest and Potential Expansions
Latest and Potential Expansions
Slide 21: Estimated Capex 2019 and Capex History
LATEST AND POTENTIAL EXPANSIONS ESTIMATED CAPEX 2019 CAPEX History Figures in US$ million 2.766 * Fuels 18% 2.221 MAPA Valdivia Others 8% Total of Mina Justa Masisa Mexico US$ 2,766 million Forestry 74% * Investment plan for 2019 21
Slide 22: MAPA Project - Pulp
LATEST AND POTENTIAL EXPANSIONS MAPA Project - Pulp • New 1.56 million ton short fiber line in Arauco Mill. • Advancement of 13%, as planned. Expected start-up for 2Q21. • Efficient cash cost • Earthworks continue on schedule with 60% progress. • Considers closure of Arauco’s 290 th. ton line 1 of s
Slide 23: Valdivia Project - Dissolving Pulp
LATEST AND POTENTIAL EXPANSIONS Valdivia Project – Dissolving Pulp • As of July 2019, the project is at 85% 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 substitut
Slide 24: Growth in the Panel Division: Grayling
LATEST AND POTENTIAL EXPANSIONS Growth in the Panel Division • Grayling: • Total investment of approx. US$ 450 million, with a installed Installed capacity growth of panels capacity of 800 th. m3 of PB. million m3 • The mill is currently producing and commercializing products, in 14% a ramp-up phase
Slide 25: Growth in the Panel Division: Masisa
LATEST AND POTENTIAL EXPANSIONS Growth in the Panel Division • Masisa do Brasil: • Arauco acquired Masisa’s assets in Brasil in US$ 102.8 million. Installed capacity growth of panels • Transaction includes two panel mills, at Parana and Rio Grande do Sul. million m3 • Capacity of 310 th. m³ in MDF a
Slide 26: ExxonMobil - Lubricants and liquid fuels
LATEST AND POTENTIAL EXPANSIONS ExxonMobil - Lubricants and liquid fuels • In March 2018, Terpel acquired the lubricants and fuels distribution assets of ExxonMobil in Colombia, Peru and Ecuador, for US$ 714.7 million, which included about US$ 230 million in cash. ExxonMobil’s Market Share* • The Co
Slide 27: Mapco - Gas Stations and Convenience Stores
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 t
Slide 28: Solgas and Duragas - LPG Operations
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. Physical Sales of LPG by country in 2016 • Annual volumes
Slide 29: Mina Justa - Copper Mining
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, wh
Slide 30: Financial Strength
be sincere | Financial Strength
Slide 31: Financial Strength: investment grade since 1995
FINANCIAL STRENGTH Investment grade since 1995 Healthy cash flows allows to: • Finance investment plans International BBB (Stable) • Distribute stable dividends BBB (Negative) • Maintain low levels of leverage Local AA- (Stable) AA (Stable) Fast recovery of debt levels after an expansion phase Balan
Slide 32: Equity and Net Debt / Equity Evolution
FINANCIAL STRENGTH Equity and Net Debt / Equity Evolution 14.000 1,40 Bonds Covenant* 1,2x 12.000 1,20 10.000 1,00 (MUS$) 8.000 0,80 6.000 0,60 4.000 0,40 2.000 0,20 - - 2011 2012 2013 2014 2015 2016 2017 2018 jun-19 Equity Net Debt/Equity Consolidated Financial Debt 2Q19: MMUS$ 9.135 (Cash and equi
Slide 33: Commitment to Environmental, Social and Governance initiatives
Commitment to Environmental, Social and Governance initiatives
Slide 34: ESG Commitment
ESG COMMITMENT ENVIRONMENT 26% 779 MW 650 kton of CO 2 Sustainable development of our of the forest is native Installed capacity from offset by projects carried productive activities forestry biomass out under CDM* of Kyoto Protocol COMMUNITY 21,2 US$ MM 676 000’ hrs Important contribution to Educat
Slide 35: 2Q19 Results
|2Q19 Results
Slide 36: Consolidated 2Q19 Results: quarterly EBITDA and net income
CONSOLIDATED 2Q19 RESULTS QUARTERLY EBITDA (Million of US$) 810 718 675 638 564 576 591 555 521 545 564 542 518 520 507 530 497 398 441 475 442 542 416 406 395 EBITDA down 33.1% YoY and 8.3% QoQ. III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 2013 2014 2015 2016 2017 2018 20
Slide 37: Consolidated 2Q19 Results: EBITDA
CONSOLIDATED 2Q19 RESULTS EBITDA (Million US$) 2 0 -33.1% 1 1 30 EBITDA decreased mainly in the forestry business, due to a 12 17 scenario of lower pulp prices. 238 5 50 164 In the fuels business, Copec had a 810 fall related to lower margins. 304 542 Offset, partly, by the positive effect of IFRS16
Slide 38: Consolidated 2Q19 Results: Net Income
CONSOLIDATED 2Q19 RESULTS NET INCOME (Million US$) Net Income decreased in 2Q19, 11 1 0 mainly because of lower 15 0 -59.6% operating results at Arauco and 17 Copec, added to the losses in 28 Camino Nevado (Mina Invierno). Partly offset by better results in Abastible and the parent company. 335 3 6
Slide 39: Consolidated 2Q19 Results: income statement
CONSOLIDATED 2Q19 RESULTS Net income dropped from lower pulp prices and volumes, and less favorable revaluation of inventory at Copec. OPERATING INCOME DROPPED CONSOLIDATED INCOME STATEMENT • Lower results at Arauco, from a pulp price decrease and lower volumes. Million USD 2Q 19 2Q 18 Change Net in
Slide 40: Investor Presentation September 2019
INVESTOR PRESENTATION September, 2019