TSX runs higher on rate cut expectations
Introduction & Market Context
Empresas Copec (SNSE:BCS:COPEC) released its second quarter 2025 financial results on August 20, showing mixed performance amid challenging market conditions. The Chilean conglomerate, which operates in forestry, energy, and fishing sectors, reported quarter-over-quarter improvement in net income but year-over-year declines in both net income and EBITDA.
The company’s stock closed at 6,920 on August 19, 2025, representing a 1.16% increase. The shares have been trading between a 52-week range of 5,585.84 and 7,230, currently positioned closer to the upper end of this range despite the mixed quarterly results.
Quarterly Performance Highlights
Empresas Copec reported a net income of US$ 228 million for Q2 2025, an improvement from US$ 208 million in Q1 2025, but a 20.8% decrease from US$ 288 million in the same quarter last year. EBITDA reached US$ 712 million, representing a 7.5% year-over-year decline and an 8.2% decrease from the previous quarter.
The company’s EBITDA margin contracted to 9.9% in Q2 2025, compared to 10.5% in Q1 2025 and 10.6% in Q2 2024, indicating increasing pressure on profitability. Year-to-date net income stood at US$ 437 million, lower than the comparable period in 2024.
As shown in the following quarterly performance overview:
The quarterly trend in both EBITDA and net income illustrates the challenging environment the company has been navigating, with both metrics showing volatility over recent quarters:
Segment Analysis
The company’s performance varied significantly across its business segments, with forestry facing headwinds while energy showed some improvement.
Forestry (Arauco)
Arauco reported a profit of US$ 16 million in Q2 2025, with consolidated revenues decreasing by 0.6% year-over-year. The forestry segment faced challenging market conditions, particularly in the pulp business, where prices declined by 12.1% compared to Q2 2024, although volumes increased by 7.6%. The company noted oversupply conditions in China and Europe as contributing factors to the price pressure.
Wood products showed more resilience, with sawn timber volumes increasing by 4.5% and prices rising by 3.8% compared to the same period last year. Panels also showed modest improvements with volumes up 1.0% and prices increasing by 0.8%.
The following slide details Arauco’s performance and market conditions:
Energy (Copec)
Copec delivered a stronger performance, reporting a profit of Ch$ 115.940 billion, representing an increase over the previous year. Consolidated EBITDA reached Ch$ 255.961 billion, with operations in Chile showing particularly strong results as EBITDA grew 25.0%. However, Terpel’s EBITDA in local currency dropped by 6.6%, indicating uneven performance across different markets.
The company’s energy segment continues to advance its sustainability initiatives, including the opening of its first electric terminal for public transport in Concepción, Chile, powered by renewable energy. A Battery Energy Storage System (BESS) project developed by Granja Solar is now 64% complete, highlighting the company’s ongoing investments in energy transition.
The following slide provides a detailed breakdown of Copec’s performance:
Debt Structure and Financial Position
As of Q2 2025, Empresas Copec maintained a leverage ratio of 2.92x, slightly higher than the 2.78x reported in Q1 2025 but improved from 3.03x in Q2 2024. The company’s total financial debt stood at US$ 11.215 billion, with cash reserves of US$ 2.778 billion, resulting in a net debt position of US$ 8.437 billion.
During the quarter, the company successfully issued bonds for UF 1.3 million (approximately US$ 54 million) with strong demand, demonstrating continued access to capital markets. Credit rating agencies reaffirmed Empresas Copec’s BBB international and AA local risk ratings, reflecting confidence in the company’s financial stability despite challenging market conditions.
The following comprehensive breakdown illustrates the company’s debt structure and key financial indicators:
The company’s balance sheet remains solid, with financial indicators showing stable performance despite market pressures:
Strategic Initiatives and Outlook
Empresas Copec continues to advance its strategic projects, with the Sucuriú project now 13.2% complete, running 2.5% ahead of schedule. This project represents a significant investment in the company’s future growth capacity.
On the sustainability front, Arauco has joined an international project to value natural assets and quantify the benefits of forests, aligning with growing investor focus on environmental considerations. This initiative, combined with Copec’s investments in electromobility and energy storage, demonstrates the company’s commitment to addressing long-term environmental challenges while pursuing business opportunities in the energy transition.
The company faces several challenges moving forward, including continued pressure on pulp prices, market oversupply in key regions, and varying demand conditions across different product segments. Management will need to navigate these headwinds while maintaining financial discipline and advancing strategic initiatives.
The breakdown of performance by operating segment provides insight into where the company may focus its efforts moving forward:
Empresas Copec’s mixed Q2 2025 results reflect both the challenges of operating in cyclical industries and the company’s ongoing efforts to diversify its business and invest in future growth opportunities. While year-over-year comparisons show some pressure on profitability, the sequential improvement in net income and the advancement of key projects suggest potential for recovery as market conditions evolve.
Full presentation:
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.