Earnings call transcript: Empresas CMPC Q2 2025 misses EPS forecast, stock rises

Empresas CMPC, currently valued at $3.78 billion, reported its Q2 2025 earnings, revealing an earnings per share (EPS) of $0.01, falling short of the $0.0213 forecast by analysts, resulting in a negative surprise of 53.05%. The company also reported revenues of $1.78 billion, slightly below the anticipated $1.79 billion. Despite these misses, CMPC’s stock price saw a 1.22% increase, closing at $1,466.60. According to InvestingPro analysis, the company appears undervalued, trading at attractive multiples with a P/E ratio of 11.48.

Key Takeaways

• EPS missed forecasts by 53.05%, with actual EPS at $0.01.
• Revenue slightly below expectations at $1.78 billion.
• Stock price rose by 1.22% in response to the earnings call.
• Pulp market conditions remain challenging with excess capacity.
• Strategic initiatives include debt refinancing and cost reduction.

Company Performance

Empresas CMPC’s overall performance in Q2 2025 showed resilience despite missing EPS and revenue forecasts. The company recorded total sales of $1.9 billion, with a net income of $81 million. The pulp business remained the largest contributor to EBITDA, accounting for 67% of the total. The company faced a 2% decline in pulp production quarter-over-quarter but managed a 3% year-over-year increase.

Financial Highlights

• Revenue: $1.78 billion, slightly below the forecast.
• Earnings per share: $0.01, missing the $0.0213 forecast.
• EBITDA: $332 million, with a major contribution from the pulp segment.
• Net Income: $81 million.

Earnings vs. Forecast

Empresas CMPC reported an EPS of $0.01, which was 53.05% below the forecast of $0.0213. Revenue was also slightly below expectations, coming in at $1.78 billion compared to the forecasted $1.79 billion. This marks a significant miss in EPS, contrasting with the company’s historical trend of meeting or exceeding expectations.

Market Reaction

Despite the earnings miss, CMPC’s stock price increased by 1.22%, closing at $1,466.60. This positive movement suggests that investors may be focusing on the company’s strategic initiatives and potential for future growth rather than the immediate earnings shortfall.

Outlook & Guidance

Looking ahead, Empresas CMPC is focused on several strategic initiatives, including the Naturaiza project and plans for debt refinancing in Q4 2025 or Q1 2026. The company is targeting a $300 million reduction in working capital and plans to decrease capital expenditures by $100 million. Management anticipates price improvements in the pulp market, particularly in September. InvestingPro data shows the company maintains a "GOOD" overall financial health score, supported by its 34-year track record of consistent dividend payments and strong balance sheet metrics.

Executive Commentary

Guillermo Vieci, an executive at CMPC, noted, "September tends to be a pretty strong month," indicating optimism about future demand. CEO Francisco Ristagli expressed confidence, stating, "We believe we have the tools for facing this harder period in pulp prices."

Risks and Challenges

• Challenging pulp market conditions with low prices and excess capacity.
• Pressure from excess capacity in Brazil and Mexico.
• Need for effective cost reduction and operational efficiency strategies.
• Macroeconomic pressures could impact demand and pricing.

Q&A

During the earnings call, analysts inquired about the potential restart of the Tianming mill in China and the financing strategies for the Naturaiza project. Executives also addressed challenges within the Softies business and shared insights on pulp market demand and pricing.

Full transcript - Empresas CMPC (CMPC) Q2 2025:

Fernando Hasenberg, CFO, CNPC: Hello, everyone. I am Fernando Hasenberg, and I would like to welcome you to our second quarter twenty twenty five earnings webinar. Joining me today, I have Francisco Ristagli, CEO of CNPC Goncalo da Reydu, CEO of Softies Raimundo Varela Guillermo Vieci and Claudia Cabada. Please note that the statements made today during the presentation and Q and A may include forward looking statements to assist you understanding our expectation for future performance. These statements are subject to some risks that could cause actual results and events materially differ.

In the 2025, sales amounted 1,900,000,000 EBITDA was $332,000,000 and net income was $81,000,000 The pulp business generated an EBITDA of $2.00 $5,000,000 with an EBITDA margin of 27%. EBITDA increased by 7% quarter over quarter, mainly from lower cost of sales. Year over year, EBITDA decreased by 18%, mainly by a lower average price. The Softies business reported an EBITDA of $82,000,000 increasing 1% quarter over quarter and decreasing 38% year over year with an EBITDA margin of 10%. This business has experienced increased competition in its market as well as negative impact from currency fluctuation in some countries on its year on year comparison.

Biopagaging reported an EBITDA of $18,000,000 during the period, with a 42% decline quarter over quarter, mainly due to lower volumes and higher cost. Year over year, EBITDA decreased 25%. In the second quarter, the composition of CNPC’s sales was $761,000,000 from the pulp business, dollars $817,000,000 from softies and $257,000,000 from biopackaging, totaling consolidated sales of 1,900,000,000 Consolidated sales were up 5% quarter over quarter and 1% year over year. The quarter over quarter variation reflects an increase in softies revenues, partially offset by lower revenues from pulp and bio packaging. In addition, this quarter include a non recurring income of $74,000,000 from the sale of TENSA, a subsidiary that had transmission lines.

Operating cost reached $1,251,000,000 increasing 2% quarter over quarter and 5% year over year. Operating costs increased both quarter on quarter and year on year, mainly due to the recognition of the cost of TENSA. Additionally, on a year on year basis, operating costs in the pulp business rose driven by a higher cash cost in softwood. Other operating expenses, account and comprises distribution costs, administrative expenses and other expenses by function amounted to $324,000,000 in the second quarter, increasing 4% quarter on quarter and 3% year on year. Compared to the 2025, the increase is mainly explained by higher costs and expenses in Softy’s, primarily due to the integration of Falcon.

The pulp business also contributed to the increase, although their impact was more limited. The 2025, other operating costs and expenses represented 17% of sales, in line with the 17.2% recorded in the 2025 and above the 16.6% recorded in the 2024. Given the aforementioned effects, on a consolidated basis, the second quarter EBITDA was $332,000,000 The contribution of the Pulp segment was 67%, Softies was 27% and Biopackaging was 6%. Net income totaled $81,000,000 during the period, an increase from the $50,000,000 obtained in the previous quarter and a decrease from the $125,000,000 obtained in the 2024. The quarter on quarter increase was driven by a higher EBITDA generation.

The year on year decrease reflect a combination of reduced EBITDA generation and lower net financial expenses. Now

Francisco Ristagli, CEO, CNPC: I would like to

Fernando Hasenberg, CFO, CNPC: turn the presentation over to Claudia, who will provide more details on our results by businesses.

Claudia Cabada, Executive, CNPC: Thank you, Fernando, and good morning, everyone. We will begin with the pulp business. In the second quarter, our total pulp production was 1,059,000 tons, While this represents a 2% decrease from the previous quarter, largely due to more maintenance downtime, it’s a 3% increase year over year. This annual growth also reflects the higher capacity we have achieved from our BioSynpisi project in Brazil throughout 2024. Breaking this down, hardwood production was 873,000 tonnes, down 3% quarter over quarter and up 6% year over year.

Softwood production was 186,000 tonnes, a 1% increase from quarter from the last quarter and a 6% decrease from the prior year. These fluctuations also reflect differences in our maintenance schedule. Looking at our sales volume, total pulp volumes decreased by 4% quarter over quarter and increased by 21% year over year. In a quarterly comparison, hardwood volume was down 5% due to lower exports to China and Latin America, while softwood volume was stable. In the year over year comparison, third party pulp sales volume grew by 21%.

Hardwood sales were up 23%, driven by higher exports to China, Europe and the rest of Asia. Softwood sales also increased by 12%, primarily from higher exports to China and the rest of Asia. On the pricing side, the average sales price for softwood in the second quarter was $726,000,000 per tonne, decreasing 6% from last quarter and 9% from last year. The average sales price for hardwood was $550 per tonne, down 1% quarter over quarter and down 25% year over year. As a result, revenues for the pulp business totaled six zero three million dollars decreasing 3% quarter over quarter and 2% year over year.

In our forestry business, sales volume was 891,000 cubic meters. This is down 2% quarter over quarter and up 11% year over year, reflecting stronger sales of SOLOX, pulpwood, millwork and some timber. Combined, total revenues for our pulp and forestry business were $761,000,000 down 3% from the previous quarter and up 1% from last year. Next, let’s look at the pulp cash cost per tonne. For hardwood, cash costs were $223 per tonne, a 6% increase quarter over quarter and a 3% decrease year over year.

The quarterly increase was driven by higher cost of wood, chemicals, energy and materials. The year over year decrease was mainly due to lower energy costs. For softwood, cash costs reached $385 per tonne, up 4% quarter over quarter and 9% year over year. All cost lines increased from the previous quarter and the prior year. The most significant Q on Q increases were in labor, energy and chemicals.

Year over year, the most significant increase was the wood cost. The EBITDA for the pulp business was $2.00 $5,000,000 marking a 7% increase quarter over quarter and an 18% decrease year over year. The EBITDA margin was 27%. The quarterly increase in EBITDA was mainly due to lower cost from maintenance downtime. The year over year decrease, however, was primarily a result of the lower average sales price.

Next, let’s discuss our Softies business. This quarter, the market remained highly competitive. In response, we have sharpened our focus on brand building and positioning, particularly for our Personal Care products and in markets with strong growth potential. Softies revenues for the second quarter totaled $817,000,000 This is an 8% increase from the first quarter and a 7% decrease year over year. Let’s break down the volumes.

Tissue paper volumes were relatively stable, showing a minor decrease of 0.6% quarter over quarter and a slight increase of 0.2% year over year. Personal Care volumes increased by 12% in both the quarterly and the yearly comparisons. This growth largely reflects the integration of Falcons Diapers operations in Brazil. In terms of pricing, the average sales price for tissue products was stable quarter on quarter and declined 15% year over year. This was a result of currency depreciation across Latin America and the competitive market.

For Personal Care, the average sales price increased by 7% quarter over quarter and decreased by 8% year over year, also reflecting currency depreciation in the region. Softy’s EBITDA for the second quarter was $82,000,000 with a 10% margin. This represents a 1% increase from the previous quarter, and it’s a 38% decrease year over year, which was a direct result of the aforementioned foreign exchange fluctuations and market conditions. Next, let’s discuss our biopackaging business. Sales volume for the quarter decreased by 10% from the prior quarter and by 7% year over year.

The quarterly drop was primarily driven by lower sales of corrugated boxes, boxboard and corrugated paper, Though this was partially offset by increased sales of paper sacks and molded pulp trays. The year over year decline was also due to lower volumes across most product lines. Again, with molded pulp trays being a positive exception. Despite the drop in volume, our average sales price in U. S.

Dollars was up, increasing by 5% quarter over quarter and by 7% year over year. As a result, revenues for biopackaging totaled $257,000,000 down 5% from the last quarter and 1% from the same period last year. The quarterly decrease was driven by the lower sales volumes, reflecting a continued challenging environment across several industrial sectors. Biopackaging EBITDA for the second quarter was down 42% from the prior quarter and 25% year over year. This was driven by a combination of lower volumes and higher costs.

Our EBITDA margin for the quarter was 7%, a decrease from the 11.4% we saw in the first quarter and the 9.3% from the second quarter last year.

Fernando Hasenberg, CFO, CNPC: Thank you very much, Claudia. Capital expenditures in the second quarter totaled $327,000,000 which compares with $150,000,000 reported in the 2025 and to $146,000,000 recorded in the 2024. This is related mostly to the acquisition of Falcon Personal Care operation in Brazil for $124,000,000 Regarding the free cash flow, during the period, there was a net outflow of $158,000,000 compared to an inflow of $85,000,000 in the 2025 and a net outflow of $22,000,000 in the 2024. Year on year, the decrease in free cash flow was mainly due to a lower EBITDA generation, higher capital expenditures related to the Falcon acquisition and increased income tax payment. We ended the second quarter of the year with $5,000,000,000 in net debt.

Gross debt was $5,700,000,000 Cash and cash equivalents, including financial investments with short term maturities, were $721,000,000 Net debt to EBITDA ratio closed the quarter at 3.65x, which compares to 3.41x in the 2025 and 3.75x in the 2024. Regarding our debt profile, the average rate is 4.74% and the average maturity is five point two years. Now I would like to highlight some events that occurred during the second quarter. CNPC hosted an investor site visit to Waiwa. Attendees had the opportunity to observe the pulp production process on-site, from the nursery operations in Barba Negra to the operational unit in Guayiba.

During the visit, we highlighted the competitive advantages of our forest assets in Brazil, the technological advancement applied to production and the logistics efficiencies of our operation. Finally, I’m going to pass the mic to Francisco Ristaglia, our CEO, who will present and explain to you some important organizational changes we have introduced at the company. Francisco, XAVIER the floor is yours.

Francisco Ristagli, CEO, CNPC: Thank you, Fernando, and good morning, everyone. I am pleased to share with you an important step of our 2030 strategy, a journey we began five years ago. As you may have seen on our earnings release, we have transitioned to a new functional organizational structure that better aligns with our value different chains. This has led to the creation of four operational areas dedicated to forestry operation, industrial operations, commercial activities and wooden packaging products. These functional areas will be supported by six cross functional areas.

One is projects and strategy. Two is new business and venture. Another one is finance and technology then we also have corporate affairs and sustainability and finally, human resources and legal. Our goal remains the same: to drive greater efficiency, deepen collaborations and sharpen our focus on the opportunities and challenges ahead. As part of these changes, I am delighted to announce the appointment of Fernando Hasenberg as the COO of our forestry operation.

As many of you know, he brings deep expertise and leadership to this important pillar of our company. In his place as CFO, Sebastian Moraga will be joining the company. Sebastian holds a degree in business from Universidad Adolfibanes and has a Master’s in Business Law and an MBA from the London Business School. With nearly twenty five years of experience, he has held various executive roles in the energy and banking sectors. Sebastian’s role will be key in ensuring financial excellence while also leading the digital and technological transformation that will drive CNPC into the future.

This new structure also means Raimundo Varela will serve as the Chief Commercial Officer for Pulp and Boxcourt. This move is designed to strengthen the commercial performance of our main businesses. These structural changes are part of a broader culture evolution and are designed to bring us closer to the business, strengthen collaboration across the teams and keep us focused on what matter most, our customers, our people and sustainable growth. With that, Claudia, we can now start the Q and A session.

Moderator, CNPC: Thank you, Francisco, and thank you, Fernando. Please recall that we you are welcome to make your questions, just raising your hand or typing in the chat box. As mentioned before, we have today Francisco, Gonzalo, Fernando, Raimundo and Guillermo to answer your questions. And the first question we have is from Tatiana Candine from JPMorgan. Tatiana, hello?

Your mic is open.

Tatiana Candine, Analyst, JPMorgan: Everyone, can you hear me? Can you hear me? Yes, okay. So thanks for taking my questions. My first question is regarding prices, right?

So I think when it comes to our perspective, realized prices were actually better than we actually expected since all the discussions and all that pressure that we have been seeing in China. And yesterday, saw like a competitor to actually try to pass some price hikes in China, so $20 per ton. So my first question is that I would like to hear from you, how are negotiations on China? What is your perspective for the coming quarter? We see that inventories are lower in the region, but we are yet to see some capacity shutdown.

So I think there are still a lot of uncertainty when it comes to pulp prices in the coming months. So I would be glad to hear your thoughts on that. And if I may, second question is on Softus. I think going the other like direction on the pulp unit, I think the results came a little bit worse than we expected and mainly on costs. We saw margins still compressed and this has been the story for a few quarters.

So my question here is, what are the plans for unit? How do you see like some turnaround if there is something that the company can do it rather than the macro and that is a little bit more challenging? Thank you.

Guillermo Vieci, Executive, CNPC: Okay. Tatiana, Guillermo here. I’ll take the first one. Thanks for the question. Yes, we had a fairly good Q2 in terms of volumes, in terms of prices as well.

Our inventories as CNPC have lowered a little bit from quarter to quarter, from Q1 to Q2, which puts us in an even better position. September marks the start of the high season when it comes to demand of pulp. The Northern Hemisphere as we speak now in August they are on holidays most of them, are in summer, they come out of this summer phase towards September that marks the beginning of a high season for consumption. We are pretty hopeful that the price increase will go through in September. We believe that given the scenario very low prices will contribute to further closures and during September and Q2 we’re going to see a higher consumption of pulp.

So yes, we will follow the market when it comes to price increases as well, and we believe that they are going to go through.

Gonzalo da Reydu, CEO of Softies, CNPC: Tatiana, this is Gonzalo. According to your question, we have to analyze to our main markets.

Francisco Ristagli, CEO, CNPC: Can you hear, Gonzalo?

Tatiana Candine, Analyst, JPMorgan: I can.

Gonzalo da Reydu, CEO of Softies, CNPC: Tatiana, this is Gonzalo, sorry. We understand, we need to go deeply in our two main markets, that is Brazil and Mexico. In the case of Brazil, as you know, there is a excess of capacity because Brazil, what they are building in the last years, so we are suffering that pressure on prices. But we have seen in the market that the prices are a little bit increasing. And I hope that in the last quarter of this year, the prices in terms of Brazil, it will be in a better level in comparison what we’re understanding what is happening today.

Now in the case of Mexico, it’s a different situation because there is an excess of capacity according what is happening with Trump and the state. There is some capacity, it will stay in the local market and it will put a pressure on the prices in the case of Mexico. So those markets were suffering that situation on the prices. What we are doing, First, in terms of logistic, we are developing some different plans for both countries to try to optimize our cost. Second, in the case of the personal care, we’re pushing a very strong strategy to increase our volume on those categories that brings more margin.

And third, we are totally focused in reduce our fixed costs in both operation. So expect that in the last quarter of this year, we are going to begin to see a recovery in terms of our margins.

Tatiana Candine, Analyst, JPMorgan: Clear. Thank you, everyone.

Moderator, CNPC: Thank you, Tatiana. We have another question. So in the meantime, recall that you are welcome to make your questions. And the second question comes from Barbara Suarez from Itau, Barbara. Good morning, are you here?

Yeah, we can hear you.

Barbara Suarez, Analyst, Itau: So thanks for taking my questions. And I would like to explore also the cost side, but on the pulp division. So we saw worsening in the cash cost dynamics for both softwood and hardwood sequentially on pretty much all lines, salaries, energy, chemicals, wood materials. How should we think about these dynamics for the next quarters and for the consolidated year? And the second question is that despite the weakening trends on price, volumes and cash costs, we still saw improvement in EBITDA terms for pulp.

And this was mostly due to the lower costs related to new downtimes. Could you guys give us more color on these lower costs? And how should we think about them ahead? That’s my questions. Thank you.

Raimundo Varela, Chief Commercial Officer, CNPC: Thank you, Barbara. This is Raimundo. I’ll take your questions. The first one, we have been working very hard over the last few years on our program to improve our costs. And if you see that the trend is quite positive.

Our cost has been decreasing from 2023 to the situation we have today. Now yes, in this particular quarter, we had annual shutdown in Laha and also in Wahiawa. Therefore, the volume we produce was a bit lower and therefore the cost is a bit higher if you compare with cost quarter to quarter. But this is not a reversal of the trend. So we expect that our cost will continue to improve.

We have several programs that are in development and they have been giving us good results and we will continue to work on that. So we expect that performance. Regarding the annual shutdowns cost and expenses, yes, thank you for noticing. It’s very important for us. We are also working hard and giving us results to have lower maintenance cost.

And these annual shutdowns are huge, very relevant. So we did have in LACHA lower expenses than what we had budgeted for, which is very good news and we plan to continue doing that across our pulp mills pulp and also boxboard mills.

Barbara Suarez, Analyst, Itau: Thanks, very clear.

Moderator, CNPC: Thank you, Barbara. We have another question coming from Guilherme Rosito from BOFA, Bank of America. Guilherme, your mic is open.

Guilherme Rosito, Analyst, Bank of America: Thank you, Claudia. Good morning, everyone.

Francisco Ristagli, CEO, CNPC: Thank you

Guilherme Rosito, Analyst, Bank of America: for taking my questions. First one is for Guilherme as a follow-up

Francisco Ristagli, CEO, CNPC: on the bull price discussion.

Guilherme Rosito, Analyst, Bank of America: I’m just curious, usually, when we see players hiking prices, there a number of signs usually see points of restocking and demand improvement. And as of now, at least from our side, we haven’t seen most of them. So I’m just curious from your side, how are you seeing the signs of restocking and demand improvement that could sustain this price hike in the coming months? And my second question goes to Fernando. Just touching on today’s, which I haven’t discussed for now.

But if we look at CMP’s current enterprise value and divided by pulp capacity, it is very close to not today’s per per ton. Ton. So for the same amount of dollars per ton of pulp, you could get CMP’s current capacity, which is first, second quarter, softest business and biopackaging. So I’m just curious, how are you guys evaluating that? And how do you see returns of Natuzzi compared to buyback or other capital allocation options?

Just to understand the framework and see why even at current valuation, you still think it makes sense to go ahead with Natura as and what’s the value it’s going to add to the company? Thank you.

Guillermo Vieci, Executive, CNPC: Good morning. Thanks for the question. I’ll take the first one. We do see signs of good demand, especially coming from China. Just to give you an idea, today is the seventh of the month and we have sold 100% of our volumes, both softwood and hardwood in China.

That typically is a very good sign for us. On the very first few days of the month, the orders come through and we don’t need to wait until the last days of the month to sell that. And again, I repeat, September tends to be a pretty strong month. There is a clear mark difference between August and September. August is a soft month in terms of demand due to holidays, especially in Europe and in China, summer holidays.

So we expect September to come strong, followed by a quarter Q4, which is one of the strongest quarters in terms of demand. So we already see that in the early days of August, which is pretty good indicator for us.

Francisco Ristagli, CEO, CNPC0: In terms of your question, Guilherme, thank you. We see the other way around actually. It’s true what you say about the market cap of the company today being very similar to the investment in Naturesa. However, the market cap not necessarily reflects the true value of our business. We have the conviction that this today CPC is trading at very low levels.

On the other hand, we know Naturaiza is the best project in the pipeline of other projects. And therefore, we are very convinced and we are very committed towards executing that project and to taking that project for Board approval as we have said during the first quarter first semester of next year. I don’t know, Francisco, maybe you want to complement?

Francisco Ristagli, CEO, CNPC: No, it’s okay. No comment.

Guilherme Rosito, Analyst, Bank of America: Thank you guys. Super clear.

Moderator, CNPC: Thanks, Hilerme. Now we have okay, please recall that you can make your questions just raising your hand. You’re welcome to do so. And the next question comes from Enrique Marquez from Goldman Sachs. Enrique, your mic is open.

Francisco Ristagli, CEO, CNPC1: Guys. Thank you for taking my question. I just wanted to better understand the company’s plans before the Naturaiza project. Leverage remains high. You recently acquired Falcon, announced dividends and pulp market.

I mean, apart from the very recent price hikes announcements, I mean, it still remain very uncertain. So I just want to understand, how do you plan to work around the Naturisa project so it doesn’t weigh too much on your balance sheet? Like, should we expect more asset sales going forward like the one you did on the energy asset? Or is capital increase an option to fund the project or even delaying the project? Just want to understand the possibilities here.

And my second question, if I can, on the Softy side, just a follow-up on the cost. Falcon operation was already included in this quarter’s results, and EBITDA was still flat. I just want to understand if the higher costs and expenses for this quarter was a one off because of the integration of Falcon? Or is there any reason apart from what you guys already explained on the higher cost for this quarter? Thank you.

Francisco Ristagli, CEO, CNPC0: Thanks, Enrique, for your question. We have mentioned this before. We are working on different paths regarding Naturaesa. Of course financing is one of that and we will inform at the right time. Of course, we’re working on a very robust financial plan for that huge project.

But currently, of course, we are also working on deleveraging. That’s something that worries us and we have a strong we have different strong initiatives related to that. We are working on reducing working capital. We have different initiatives that will allow us to reduce about $300,000,000 our working capital. We are reducing our CapEx in about $100,000,000 and we have several other initiatives.

Some were mentioned by Remundo in reducing our fixed cost. So we believe by the end of the year we’ll be in a better position to present the project to the Board, including a very comprehensive but a robust financial plan.

Francisco Ristagli, CEO, CNPC: Yes. To add something, Fernando, to complement for just to mention that we are not thinking in in delaying Natura as a project. It’s a it’s a very important place for CNPC. And the yeah. Just to complement that we are really we think we have the we have the the tools for for, you know, for facing this this this period of a harder period in terms of, pulp prices.

So that just that complement.

Gonzalo da Reydu, CEO of Softies, CNPC: Enrique, this is Gonzalo. Thank you for your question. In regards of cost, exchange rate affect directly to our cost. And in the first quarter in the second quarter comparison previous year, we’re talking about around $50,000,000 And it has been not easy to pass through to the price because the excess of capacity in Mexico and in Brazil. But in the other hand, what we have been doing is working very hard in terms of zero based budget.

We’re working in logistic and operational efficiencies, like I already said. We are developing a very strong program in revenue growth management because if you cannot increase your prices, what you can be focusing to increase your income and that is how you be more efficiency in terms of channel mix, in terms of promotion prices, etcetera. And in the execution, how we can improve our execution at volume of sale. We’re working on that and that is the way that we believe that we can offset some part of the cost because of the exchange rate.

Moderator, CNPC: Has the next question. Laura, your mic is open.

Tatiana Candine, Analyst, JPMorgan: Hi, everyone. So thank you for taking my question. On the supply side, Sheng secured a 2,300,000,000.0 Chinese yuan loan to restart Turkey mills by September. So we should add pressure on global pulp supply. Do you guys have any thoughts on it?

Guillermo Vieci, Executive, CNPC: We actually believe that if Tianming really restarts their operations in the short term, it could actually be positive for the pulp demand. Our information is that they would most likely start their paper capacity, but not necessarily their pulp capacity, meaning that they would be in the market to buy pulp for their operations. That’s the information we have so far. We have been trying to get more information. As a matter of fact, we had one of the international consultants here in our office with us explaining about it and they have the similar view as we do that Tianming could possibly come to improve the pulp demand worldwide.

Tatiana Candine, Analyst, JPMorgan: Okay, thank you. Okay, thank you.

Moderator, CNPC: Thank you, Laura. And the next question comes from Rafael Barcelos Bradesco. Rafael, your mic is open.

Francisco Ristagli, CEO, CNPC2: Hello. Good morning, and thanks for taking my questions. My first question is about the Naturaiza project and and your overall leverage. So I understand that Naturaiza is a very important project for the company. I mean, the company has been prepared for these projects for for many years.

But but what are the liability management initiatives that you are planning before submitting the project to the board? Fernando, for example, when we look at your amortization schedule, you have a significant part of the debt amortization in 2026 and 2027. So how do you how are you planning to prepare the company before submitting the project to the board approval? And considering a scenario that the project is approved in the beginning of next year, from how many quarters would you be allowed to run above the limit of your leverage policy ratio? I mean, how would that work?

I mean, what would be the plan, or for how many quarters would you be allowed to do that? And and then my second question, a follow-up on pulp markets. So a question for Guilherme. Guilherme, I just wanted to to to better understand whether you are following the recent price hike announcements and and how are you looking at this cycle. Right?

I mean I mean, every cycle is different, and and and this time around, have much more uncertainties across the globe. So I just wanted to understand from you how you’re seeing at this cycle this time. Thank you.

Francisco Ristagli, CEO, CNPC0: Thanks, Rafael. So I’m going to take the first part. Regarding the debt, it’s true. We have some bank loans that are due during 2026 and an international bond that is due in 2027. As part of the financing plan for Natuzzi, we should be refinancing those facilities in advance.

So probably we’ll do something during the last quarter of this year, early next year. That’s what I can comment right now. And I’m sorry, there was another question regarding our ratios. The financing plan consider that we will be within our policy throughout the project. Of course, we know that pulp prices could behave differently than what we are expecting.

The project of course may have other problems. So the financing plan will be resilient in that regard. And we will have discussed in advance with the rating agencies so we can maintain credit ratings. That’s an important asset for the company.

Guillermo Vieci, Executive, CNPC: Rafael, thanks for the question. I’ll take the second part. As I mentioned before, yes, I think the market will allow for the price increase. CNPC doesn’t necessarily follow what our competition announced. We take our own decisions.

But we see a scenario where we could apply the same given our levels of inventory. Our levels, as I mentioned before, we dropped our inventories quarter over quarter, so we are in a much better position at the moment when it comes to inventories. We do see a demand picking up as of September, as I mentioned before. 100% of our sales have already been done in August in the first week of the month, pretty good indicator. So if you add all of that together, we do see a scenario where prices could start bouncing back.

We clearly see that we have reached the bottom and there is a space and there is a scenario building up for these prices to start raising from here towards year end. We see that trend starting now in September.

Moderator, CNPC: Thank you very much, Rafael and all the analysts that participated today with their questions. I see some questions at the chat box that were already answered in the call. And so we don’t have more questions for now and we can conclude this call. We want to thank you all for attending today to this earnings call and we wish

Claudia Cabada, Executive, CNPC: you have a good day.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.