Earnings call transcript: Empresas Copec beats Q4 2024 forecasts

Empresas Copec reported its fourth-quarter earnings for 2024, surpassing expectations with an earnings per share (EPS) of $0.1447 compared to the forecasted $0.1287. The company’s revenue also exceeded predictions, reaching $6.77 billion against an anticipated $6.73 billion. Following the announcement, the stock saw a slight increase of 1.96%, closing at 6,770, up from a pre-earnings price of 6,640. According to InvestingPro data, the company’s current market capitalization stands at $9.39 billion, with a notably low P/E ratio of 8.47, suggesting potential undervaluation compared to peers.

Key Takeaways

• Empresas Copec’s EPS and revenue both exceeded forecasts for Q4 2024.
• The stock price increased by 1.96% following the earnings announcement.
• The company maintains a stable EBITDA performance across its divisions.
• Empresas Copec continues to lead in electromobility initiatives in Chile.
• Future CapEx plans include significant investment in the Super U project.

Company Performance

Empresas Copec demonstrated solid financial performance in the fourth quarter of 2024, with stable EBITDA across its divisions. The company reported an annual EBITDA of $3 billion, aligning with mid-cycle figures, and an annual net income of $1.1 billion. InvestingPro analysis reveals the company maintains strong financial health with a current ratio of 2.12, indicating robust liquidity. The company has also maintained dividend payments for 33 consecutive years, demonstrating consistent shareholder returns. For detailed insights and additional metrics, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro. The forestry division and energy division contributed significantly to the company’s EBITDA, with $265 million and $1.2 billion, respectively. The company remains a market leader in electromobility in Chile and has made strategic acquisitions to bolster its position in Europe.

Financial Highlights

• Revenue: $6.77 billion (exceeding forecast)
• Earnings per share: $0.1447 (beating forecast)
• Annual EBITDA: $3 billion
• Annual Net Income: $1.1 billion
• Q4 EBITDA: $644 million

Earnings vs. Forecast

Empresas Copec’s EPS of $0.1447 surpassed the forecast of $0.1287, representing a surprise of approximately 12.4%. The revenue of $6.77 billion also exceeded expectations by $40 million. This performance highlights the company’s ability to outperform market predictions, continuing a trend of stable financial results.

Market Reaction

Following the earnings announcement, Empresas Copec’s stock price rose by 1.96%, closing at 6,770. This movement reflects positive investor sentiment, influenced by the company’s ability to exceed earnings and revenue forecasts. The stock remains within its 52-week range, with a high of 7,826.05 and a low of 5,585.84, suggesting stable market confidence.

Outlook & Guidance

Looking ahead, Empresas Copec has projected significant capital expenditures of approximately $3 billion for 2025, with $800-900 million allocated for maintenance and $1.3-1.4 billion earmarked for the Super U project. With a beta of 0.71, the company historically demonstrates lower volatility than the broader market, making it potentially attractive for risk-conscious investors. InvestingPro subscribers can access additional financial health metrics and growth projections, along with expert analysis of the company’s investment potential. The company is also reviewing a potential mine expansion project, which could further enhance its operational capabilities.

Executive Commentary

Rodrigo Ovidobro, CFO, emphasized the company’s preparedness for varying market conditions, stating, "We are prepared for different scenarios and can either speed up or slow down depending on market conditions." Gianfranco Tovelo, Arauco CFO, highlighted trade concerns, noting, "Nobody wants more closed trade."

Risks and Challenges

• Fluctuating pulp prices, which have shown recent volatility.
• Tariff uncertainties in North America impacting wood product demand.
• Potential macroeconomic pressures affecting global demand.
• Challenges in European demand for pulp products.
• Execution risks associated with large-scale projects like the Super U.

Q&A

During the earnings call, analysts inquired about the Super U project’s timeline and the company’s strategy in facing pulp price challenges. Executives reiterated their commitment to flexibility in project execution and highlighted potential pricing opportunities amid U.S. tariff discussions.

Full transcript - Empresas Copec (COPEC) Q4 2024:

Conference Moderator: Good morning everyone and welcome to the Empresascopic 4Q24 results conference call. Today’s presentation and the 4Q24 earnings release are available on the company’s investor relations website, investor.empresascopic.cl. Before we begin, I would like to remind you that this presentation may include market outlooks and forward looking statements, which are based on the beliefs and assumptions of Impresascopec management and on information currently available to the company. They involve risks, uncertainties, and assumptions, cause related to future events, and therefore, depend on circumstances that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions, and other operating factors could also affect the future results of Impreza Scopec and could also cause results to differ materially from those expressed in such forward looking statements.

This presentation contains certain performance measures that have been adjusted with respect to IFRS definitions, such as ABDA. In this opportunity, questions will be received in written form. If you have a question, please write it down on the Q and A session. Please beware that your company’s name should be visible for your question to be taken. I will now turn the call over to Mr.

Rodrigo Ovidobro, Chief Financial Officer of Empresoscopec. Please go ahead, sir.

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: Okay. Hello, everyone. Welcome to this webcast where we’ll be reviewing the results of the fourth quarter twenty twenty four. As usual, I’m gonna start by myself today, and I at the end of the presentation for the q and a session, I’m going to be joined by, mister Gianfranco Tovelo, CFO, Arauco, and mister Christian Palacios, director of finance and investor relations at Empresas Quebec. So having said that, let us start by reviewing the most important highlights during the quarter.

So this is an executive summary that we have prepared for you. In the fourth quarter, we reached EBITDA of $644,000,000 which is pretty much in line with the fourth quarter twenty twenty three, but down, of course, with respect to the fourth to the third quarter twenty twenty four, basically because of the drop in pulp prices. In terms of forestry, we can see that year on year, the EBITDA is very stable and goes up a bit essentially because of higher volumes in both panels and pulp and also better costs in the case of pulp. Q on Q, there’s a drop of course driven essentially by lower pulp prices. As you all know, pulp prices went down significantly by the last part of the quarter, last part of the year in general.

In terms of energy, we had a very good year in general. However, the last quarter showed, EBITDA that was lower both with respect to the immediately preceding quarter and to the comparable quarter last year. And that was essentially because of the drop in the industrial margin, which is the most volatile part of the margin in fuels. And that was offset to a certain extent by a very good performance in terms of volumes and also a very good performance by our team. In the case of projects and other developments in the quarter, there is progress at Super Uber that we launched the Super Uber project back in September.

It is progressing according to schedule. We’ll give some more details further on. Avestibule closed the acquisition of the Gassib assets in Spain and Portugal and we finished a very good year, a very active year of bond placement in the local market with our last placement for around $96,000,000 in December. In terms of ESG, we continue to make progress in electromobility with our first one hundred percent electric station in Chile and we were confirmed in two very important indexes and rankings worldwide. The most important figures are shown on the screen.

As I said, six forty four EBITDA for this quarter. That is very much in line with the, comparable quarter in 2023 but, of course, lower than the preceding quarter. In terms of debt to EBITDA, we closed at 2.6 which is halfway within our desired range. So, it’s a good starting point for facing projects such as Super U. CapEx amounts to almost $900,000,000 for the quarter with which we come to a total figure for the year of $2,100,000,000 pretty much in line with what we anticipated during the year adjusted by the acquisition of Avastiva is paid.

Alt EBITDA is in line with the year 2023 for the quarter but, of course, lower than the third quarter twenty twenty four. Wood Products in general showed a stable year, mid cycle year, and a very good last quarter with $145,000,000 EBITDA. Copec at 197 for a very good year. Order slightly downwards, but all in all, a very good year for energy and for Copec in particular. Still, they’re also finishing a good performance throughout the year and likewise for Binagusta with an EBITDA of $2.66, which is up both year on year and quarter on quarter.

You can see the evolution of EBITDA on the screen there. We started the year very well with very high levels of EBITDA generation. And towards the end of the year, we started going down essentially because of the drop in pulp prices. All in all, during the year, we completed an EBITDA of a little bit above $3,000,000,000 and net income of $1,100,000,000 approx, which is essentially in line with mid cycle figures. I remember that we had recorded a 2,300,000,000.0 EBITDA in the preceding year.

And in both 2021 and ’22, we had reached 3.7 of $3,800,000,000. So this figure, the three biggest figure that we recorded for 2024 is essentially in line with a mid part of the cycle. Our most important financial ratios are on screen there. You can see cash holdings for a total of 2,300,000,000.0 and very well distributed debt maturities for the years to come. Net debt to EBITDA is ending the year as 2.6, which is, as I said, midway in our desired range of two to three times that we have defined according to our financial policy.

So this place us up in a good places us in a good position to face projects which are very demanding in terms of cash and debt such as Suburu. Financial ratios down there also shown with a very good performance in the third quarter and fourth quarter for trading twelve months and reaching figures of close to 10%. So quite attractive figures here in terms of return on capital employed and in the margins. Deep diving into forestry, we will see here the results recorded by an output in this quarter, which is an EBITDA of $4.00 $8,000,000 up with respect to the fourth quarter of twenty twenty three with a significant increase, which is driven essentially by better operational performance, higher volumes in all the additions, pulp and wood in general showed higher volumes. Also better prices in some timber.

Pulp prices were pretty much in line with the fourth quarter twenty twenty three, and also a very good performance in terms of costs. Together with that, we have more favorable non operating income, which stems basically from the fact that in 2023, we had to record some non recurrent effects, some very important ones related to depreciation in Argentina and the foreign currency effects that they yielded on our figures. Paul ended the year with an EBITDA of $265,000,000 for the quarter, which is essentially in line with the comparable quarter in year 2023, but, of course, lower than the $3.39 that we recorded in the third quarter of twenty twenty four. This has to do essentially with the drop that we saw in pulp prices towards the end of the year, which was very abrupt, and that took place in the last few months of the year over a very short period of weeks. You can see here that in terms of costs, we had Alco did very well basically across the board.

For most silvers, we had an increase in costs both year on year and Q on Q. Prices went down with respect to the third quarter as I said, essentially in line with the fourth quarter twenty twenty three and volumes went up significantly with respect to both quarters. Sales volumes went up. You can see the maintenance scheduled there as well for the preceding quarters and also for the quarters to come. A brief word about the evolution of pulp prices in the fourth quarter twenty twenty four.

We had seen a year in general of good prices in pulp up until September, October when we began to see a decent, a very abrupt decent in prices, which very quickly reached a limit of approximately $550 per ton. They stabilized around those levels, which is a level that is higher than what we had seen in previous cycles. And toward the end of the year and also during the first months of this current year, we have seen a slow and gradual pickup in prices. But during fourth quarter from before, we saw a challenging situation, lower prices and challenging demand. In the case of China, we saw a cautious market, a lot of noise caused by the bankruptcy of a local paper producer which led to higher demand for imported pulp.

Long fiber prices have been stable all around the year and continue to be stable also in the fourth quarter. In Europe, the situation had changed a bit in the preceding months and we had seen some weakness following many months as we had commented before of very strong demand. In this case, we saw the first month of the quarter with a weaker demand but then towards the end of the year, it improved driven by higher margins for paper producers. So short as a result of all these short fiber prices decreased at the beginning of the quarter but then stabilized toward the end of the year. And the Solven POTS was stable in general but with some caution towards the end of the year because of seasonality.

In the first few months of this year, we have seen a better situation. In China, we have seen demand that is stronger than expected both before the Chinese New Year and also following the celebrations. In Europe, we still see some weakness, so very different from what we saw some months ago of very strong demand. Now we are seeing some weakness in demand in Europe. So prices have increases in prices have been difficult to implement during the beginning of the year.

In general, there is uncertainty stemming from the tariff situation not only existing this market but in all markets. You know we are seeing uncertainty related to the tariff situation. Prices in China, however, as I mentioned before have rebounded a little bit from the lows of $5.50 that we reached toward the end of the year last year. And we are now standing by the February we’re standing at $5.80 approximately for prices placed in Europe. Long fiber, very stable as I said and more than $200 above short five.

Woods and panels ended a quite good year with an EBITDA of 145, a little bit above the fourth quarter of twenty twenty three and also way above the third quarter of twenty twenty four. So, a good quarter in general for wood products. This was a stable year for wood products and we reached an EBITDA of somewhere around $500,000,000 which is sort of an average historical cycle EBITDA for this division. Stability in general towards the end of the years, we saw a drop in prices for panels year on year but a recovery in volumes. And we also saw a drop in volumes with respect to the immediately preceding order.

But on all, as we have said before, it was a year of stability in this segment. Regarding the outlook for the months to come, there is some noise in our most important market, North America. In general, there’s caution because of the tariff situation, uncertainty because of the sub tariff situation. So, there’s a sort of a wait and see mode in general. Demand therefore has gone down and we have seen some more supply in general in the different segments.

So, for MDF, PB and remanufactured products, we have seen slower demand, increased supply and probably with a different situation for plywood where things look better. But in general, the common note here for all markets is caution and uncertainty because of the tariff situation. Latin America with more stability that we have seen before, so stability in Brazil. Chile basically unchanged and Argentina better than in the preceding months, basically because of reduced impact of recession. The other markets which represent a lower percentage of automobile sales in Asia in general, we saw weakness related to seasonality because of the Chinese New Year.

Probably expecting some potential recovery eventually for the months to come. Stability in Australia and a positive trend in Europe driven by lower rates and some closures of supply. That’s it for the main comments regarding forestry. And now moving on to energy. As I said before, we closed a very good year for Quebec consolidated and also for energy as a whole.

We recorded a total EBITDA for the energy division of $1,200,000,000 for the year as a whole, which is a good figure historically speaking. For this quarter, particularly for Quebec, we recorded EBITDA of 197,000,000,000 trillion pesos, which is a bit lower than the comparable quarter last year, which has to do essentially with a lower industrial margin. This is a volatile part of the business as we have commented before. In this particular case, we had a drop in that portion of EBITDA together with an unfavorable inventory evaluation effect. Now, all of that offset to some extent with a very good performance of the gas station channel in Chile.

Together with that, we had a drop in non operating income. And when comparing net income, there’s a significant drop with respect to the fourth quarter twenty twenty three, which has to do essentially with the nonrecurring effect of the Mac cost sale, the assets that we had in The U. S. That was sold in the last part of 2023. That effect nonrecurring of force was reported in the fourth quarter twenty twenty three and that’s not there anymore.

So that’s the reason for the drop in net income for Quebec. In operational terms, we continue to do well with a 6% amazing increase in gas stations volumes offset to some extent by a drop in the industrial channel which is much more volatile as we’ve said before and which goes down by 3.5% in this particular quarter. They’re facing a very good year as well with an EBITDA for the quarter which is somewhat lower year on year but still a very good figure $422,000,000,000 Colombian pesos and the net income of 109,000,000,000 Colombian pesos. All in all, as you can see the evolution of EBITDA in the graph in the bottom right corner, very stable EBITDA generation and also at very high levels. And this is driven by higher volumes in general, especially in the Colombian market, which was an attractive increase in volumes, a favorable inventory revaluation effect in the case of Colombia unlike what we recorded in Chile and also, our very good performance of the lubricants business.

This is based essentially on a performance that has been gradually improving in lubricants since we took hold of the assets sold by ExxonMobil some years ago when we became the sole owner of the lubricants assets of ExxonMobil in Colombia, Chile, Quebec, and Ecuador. We have sold through those assets and we have been gradually making improvements in that channel to reach the current very attractive performances in this segment. In the case of Astille, we have also completed a very good year with an EBITDA of 38,000,000,000 trillion pesos which is up with respect to the fourth quarter twenty twenty three. In general, a good operational performance and attractive growth in volumes and also very significant and attractive improvements in the logistics of gas supply that Avastimile has gone ahead with. So all in all, a good year for Avastimile, offset to some extent by an effective taxes driven by foreign exchange effects.

But in general, a very good year and quarter for Ostivo. You can see here the operational figures for Ostivo with attractive rates of growth in all markets, 10% in Colombia, Eleven Percent in Singapore, Seven Percent in Peru and 1.5% in Chile, so growing all across the board in some markets growing in a very attractive way at higher rates and basically driven by the very good performance of the bulk segment having to do with the new energy offerings that Avastim Day is going ahead with and presenting to its clients and that has driven significant growth in the industrial and bulk market in general. In our in relation to our other investments, So, I call as usual very stable, some decrease in net income for the quarter driven by non operating income ascent shipping. ICHEMAR which is our fishing division completing a year that was much more challenging than the year before and therefore with a negative result. In the case of Metro Gas and Agisel, natural gas related companies, we saw a nonrecurrent foreign exchange effect in Metro Gas and a very stable performance in Agisel.

Regarding Minajusta, once again a very good quarter and a very good year for Minajusta. We had anticipated a higher cash cost for the year in general and that took place during the first three quarters. But during the fourth quarter, we found a very productive site and then the company produced based on a very productive site which brought down cash costs significantly. This is probably non recurrent. So, next year, we’re going to go up again to levels of around 1.4, one point five in terms of cash costs.

But for this particular quarter, we had a good very good level of 1.2 cash costs together with an attractive pricing scenario that all yielded and also good physical sales that all yielded an EBITDA of $266,000,000 for the quarter, which is up on the fourth quarter twenty twenty three. Net income is also 155, very attractive levels in general. The company for the third year in a row completes EBITDA which is close to $800,000,000 So, very smooth operation, very good performance of Cumbres and Vina consistently. Remember, this is a company that would not consolidate and where we hold a 40% stake. So it is registered in our net income.

It is reported as equity income with this 40%. Those are the main figures for the quarter and moving on to the main developments. Some important things to highlight here. We are moving on with our SUPU project. The project of our subsidiary Arauco that was announced by the September.

So it is progressing according to schedule with a 3.7% physical progress and a 2.7% of total CapEx already incurred, approximately $130,000,000 already incurred which is 2.7% of the total CapEx expected from this project. Some facilities already implemented and opened dining area, communications towers, an entrance and a Casa Arauco which is intended for fluid information to the local community. And a capital injection from a pesoskeptic to Aruco was already completed by the end of last quarter, by the end of the fourth quarter twenty twenty four. Dollars ’3 hundred million already injected from a periscope to Arauco. This is already also according to the plan contributing up to $1,200,000,000 from a periscope to Arauco in order to contribute to the financing of this project.

Stuwe closed the acquisition of the GasID assets and shares in Spain and Portugal. This was a €275 million euros operation in terms of enterprise value. The rationale for the operation was basically a very, very attractive asset. This is a leading player in the unregulated LPG segment in Spain. Attractive expected returns financially speaking, so this is an asset that should have stable returns.

So, returns are attractive especially when adjusted by risk, stable cash flows expected over time. But probably most importantly, from synergies expected in terms basically of energy transition. There’s a lot of room to transfer very good practices from Latin America to Spain, especially from Spain to Latin America. And considering the fact that this is a market Spain and Portugal is a market that is very similar to LatAm market culturally speaking but also there are markets that are several years ahead of Latin America in terms of energy transition. So we see a very interesting space for learning, for exposing Elastiglia to this energy transition evolution and be able to copy and to transfer best practices in terms of energy transition from Iberia to Latin America and with potential associations with local players that can be also transferred to Latin America.

So all in all, we deem this a very attractive acquisition. We completed a very active year in terms of our presence in the local bond markets with total placements of around 800,000,000 for bonds in the local market during 2024 for empresasculopeck as I consolidated at the consolidated level. Three sixty placed by the parent company and four forty placed by subsidiaries. The majority of those was placed by Araujo. This included sustainable and green bonds.

And the last issuance took place during the last quarter, in December for approximately $96,000,000 also with an attractive rate of issuance. Regarding ESD, we continue to make progress in several fronts. We completed the first one hundred percent electric station in Chile. It’s located in Santiago with the capacity to charge up to six vehicles simultaneously and compatibility with a wide array of electric cars including a battery exchange area for motorcycles under the brand Bovero. And also and quite especially, this is quite symbolic as well of sustainability.

This is, I guess, an electric station that is entirely made from Araucos mold. You can see it in the picture there. And finally, periscopegg was confirmed in two important indexes and rankings worldwide in terms of ESG. First of them is the Dow Jones Sustainability Index Steeler where we were confirmed for the ninth consecutive year. And as you all know this is a ranking and an index that measures performance in key aspects of sustainability including social impact and good business practices.

And, the second piece, global sustainability yearbook 2025 where Imperial SPAG was positioned among the world’s top five in the oil and gas sector, so very good position. And this has to do with companies that have incorporated sustainability as a core access to their long term strategies. So very good news to be included in this SMP Sustainability Yearbook 2025. Having said all that, those are the features and highlights that we have prepared for you. So, I’m going to invite Gianfranco, please, and Christiane to come in and join me for the Q and A session.

You can continue posting your questions through the chat in the Zoom platform. So, thank you very much and let us move to the Q and A session.

Conference Moderator: Thank you. We’ll now start the Q and A. If you have a question, please write it down in the Q and A section. Please remember that your company’s name should be visible for your question to be taken. Please wait as we compile the questions.

Q&A Moderator: Hello, everyone. I’m gonna start with the Q and A section for this webcast. The first question comes from Enrique Marquez of Goldman Sachs. He has three questions. The first one in forestry.

Regarding the Super U project, there are two fiber lines, right? Is the plan to start both of them at the same time? Or are you going to start one line and then the second line late? Geoff Bradley, please.

Gianfranco Tovelo, CFO Arauco, Arauco: Okay. Thanks for the question. I mean, probably some confusion. It’s one mill. Originally, we announced that we have a site for two lines, two investments, but this is one mill that has one recovery boiler, but three different lines of dryers and preparing of the product.

But of course, we’re going to start the three lines of the one mill at the same time in the last quarter of twenty twenty seven. A second production mill is an option that we have for the future but we haven’t decided on that investment and probably should take some years to consolidate the production in Sukho before analyzing the idea of constructing another mill.

Q&A Moderator: The second one is on Minajuta, Rodrigo. Costs were much lower than the 4Q. How sustainable are these costs? And, could you give us some update on the expansion project of Minajoz?

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: Yes. Thanks for the question, Ricky. As I said in the presentation, this is probably non recurrent. So we were able to produce from a site specific part of the mine which had very good rates in this particular quarter and that gave way to this very low cash costs as well as 1.22 on average during the quarter. Going forward we expect to return to the levels pretty much the levels that we had in 2023, not in 2024 when we had higher levels on average because of the lower grade, but rather to levels of around 1.4, one point five for 2025.

That’s the those are the expectations right now.

Q&A Moderator: And the third one is on the fishing division.

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: Sorry, there’s also one on an expansion of the MINA Justa. You mentioned that. Yeah, that’s a project that is, it’s gonna be up for approval by the board of MINA Justa, Gunga Sanlina potentially during the first few months of this year. So the project is still being analyzed. This is an expansion project that will allow the mine to expand its life of mine for five years approximately with an additional production of 500,000 tons.

And the management is working on the last details to have it up for evaluation by the board in the first two months of this year. So, most likely there will be some news regarding that, in the months to follow.

Q&A Moderator: Okay. And the third one is on fishing. A division that was delivering negative EBITDA for the last quarter, last two quarters. How should we look at the profitability of this business going forward? And if you can provide an update on division.

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: Yeah. Well, the fishing division is a very volatile business in general because it is subject to some specificities of the industry having to do with the catches that are available in a particular quarter or a particular year. And that in turn has to do with the biomass and the quotas that are available for a particular period. That is all very volatile. We together with that the prices of the products are commodity prices.

Both the fish meal and the fish oil are subject to cycles depending on demand essentially from China and the large markets and also availability of fish. So it’s very hard to project. As you said, the two last quarter has been negative in terms of EBITDA. But in 2023, we had a very good year in terms of EBITDA when we recorded approximately $90,000,000 for the division as a whole compared to the 40 or so million dollars that we recorded for the year as a whole in 2024. So so I would say that’s a reasonable range to have in mind, 40 to 90, but within that range, it’s very hard to to give a specific figure.

Q&A Moderator: The next one comes from Tatian Candini, JPMorgan. Gianfranc, if you can comment a little bit, what is the strategy for a good panels unit in Brazil? After the sale of some lands in the country, what is the plan for the region?

Gianfranco Tovelo, CFO Arauco, Arauco: Well, we sold the forestry in Parana that supplied in some part the mills in Brazil last year. But we were already buying from third parties and we have continued to do that. And there has been no problem. The mills are making much money. So they are still very competitive.

And we plan to stay there and continue to find our clients and for the time being and they are able to compete even without owning the forest where we thought that it was better hands with Clavin that’s why we sold them at a very good price. So we’ll continue to stay there and compete with the 4,000,000 that we have in Panama.

Q&A Moderator: And regarding Securio, you have a very competitive CapEx for the project given its size. Do you see any cost pressure on the project at this point? We saw some news on supply chain inflation and pressure recently.

Gianfranco Tovelo, CFO Arauco, Arauco: Not yet. I mean, we have closed most of the contracts and in average I think we are on the budget. We are starting construction. We are almost 4% advance in the project and we have had good news regarding this exchange rate compared to the planning that we did. So we were able to hedge part of that.

And so we are having an advantage in terms of that most of the costs are denominated in reals, in Brazil reals. So in that sense, we are better than expected. But at this point, we don’t haven’t seen any over cost or runs in the project.

Q&A Moderator: Next one comes from Jose Luis Vergara at Picton. Rodrigo, could this weakness in M Pesos Quebec industrial segment lead to a tougher competitive landscape driven by the entry of new market participants?

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: Well this is a very competitive market and we have large multinationals that are competing against Quebec and this has always been so. But I would say there’s a clear trend of any player gaining or losing market share. Market shares have been stable over time and we have managed to stick to our historical market share. But it is tough. It is competitive especially in the industrial segment.

What usually happens there is that of course there is some volatility coming from the fact that you can win or lose a certain contract and contracts are very significant in volumes. But there’s also some volatility stemmed from the fact that there are clients that have a volatile consumption. For example, power generation sector which is a large consumer of fuels. In that particular case, volumes are very volatile. So rather than a clear trend in certain players market gaining or losing markets here, I would say that has to be with the usual volatility of consumption within the market

Q&A Moderator: segments. Thank you, Rodrigo. Then Alfonso Salazar at Scotiabank. Are you planning to slow down investments in electric mobility? Or just has your strategy changed even slower EV adoption relative to previous expectations?

And also, how the investments in Securio will affect expansions in other projects and business divisions?

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: Well, regarding last part of the question, Sukru is a very large project and of course we had to maintain a very strong financial discipline here and we are also bounded by our financial policy. As you know, we have committed to a net debt to EBITDA ratio of two between two and three times measured on a five year average and never to go over four times. So of course, that presents a challenge when Facebook projects have started to secure you. And that requires us to be very disciplined and most probably we will not be undergoing any other major investments while we are building to grow. That makes a lot of sense.

Minor investments potentially if we have room, major projects I would say that that’s very unlikely. Regarding electromobility, we are following a strategy that has to do with preparing ourselves for facing the different potential energy scenarios. That strategy consists of opening up options and one of the options we are opening up is the electromobility segment of course. We have worked in becoming a leader in electromobility. We have the largest network, one of the largest in South America, the largest in Chile.

We are the most important providers of electricity to city buses and to the industrial segments as well. But all in all this strategy that we have thought of to prepare for this maternity scenario. One of the virtues it has is that we are prepared for different scenarios and also that we can either speed it up or slow it down depending on what we see happening in the markets both nationally and internationally speaking. I wouldn’t say there’s a clear term yet regarding next mobility but we of course will be monitoring what happens in the market both within Chile and abroad and we’re prepared to follow the market and to stick to our leadership position, whatever the reason of expansion of this segment finally is.

Q&A Moderator: Thank you, Rodrigo. Another one from Enrique Marquez. Price hikes were being implemented very smoothly during the last couple of months, But it looks like it won’t be that easy going forward. What is the reason behind that change?

Gianfranco Tovelo, CFO Arauco, Arauco: Well, the beginning of the year started with price increases in short fiber and long fiber. And the case of basically was because of the bankruptcy of Changming in China, which is a major paper supplier and that created space for increased margins in other paper producers in China and that helped tighten up a little bit the market and helped push up increases of $20 in January and then in February. Also in long fiber, there was more space because of the lack of new production. So we increased $20 and then $10 in February. Reaching March, it was a little bit more difficult and everyone started postponing the decision until the pulp week that is going to be held in Shanghai in the March 19.

So I think that during that time there will be negotiations regarding potential changes in prices. In our case, during January and February, we were able to sell the whole volume at the new prices. So we’re very happy with that. And we’ll see what happens in March. Of course, the situation depends a lot on the status of the Chang Mills, if they’re going to restart or not at other pace.

And we will have news of course after the Shanghai.

Q&A Moderator: Thank you, Gianfranco.

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: We

Q&A Moderator: have Rodrigo Rodolio, Gregor. Could you please tell us how much the liquid fuels inventory evaluation for both the Pelakopec during 4Q and for the whole year, please?

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: During 4Q, we had a negative effect which was not very significant. It was less than $10,000,000 negative. And for the years of all, it was also quite let me look forward for that figure and we’ll get back to that.

Q&A Moderator: And then, could you elaborate on your preliminary thoughts about the potential impact of the measures announced by The U. S. Concerning import duties on Quebec’s operations, particularly on pulp and wood products business?

Gianfranco Tovelo, CFO Arauco, Arauco: Okay. The situation is changing every day. I mean, we have seen the U. S. Government announcing tariffs and then backing down and postponing for a month at a time.

Of course, it’s going to be having impact in the whole economy. Nobody wants more closed trade. So that will have an impact on commodities probably more in the long term. In the short term, the tariffs that are implemented against Canada will have an impact on the price of wood products in The U. S.

That somehow could help us in the short term because we have a lot of production capacity in The U. S. Especially in the particle board. We have a couple of mills in Canada that could be affected in the share of their exports to The U. S.

In Mexico, we have production but we sell only locally, so shouldn’t be a problem there. But the medium impact could be on construction in The U. S. If the prices of raw materials and wood start to increase, of course, we’ll have an impact on demand. That could have a negative impact on the demand for construction flows.

But I think it’s too soon to tell. Everything is connected and also we will see what happens in the realignment of prices and demand. Of course, we’re gonna look for the best interest in the near term for Rausco and we’ll try to change our pricing to accommodate our demand for meals in The U. S. And Canada.

Q&A Moderator: Thank you, Giacfranco. And we have Cristo Almeri at BTG. He has two questions. Could you comment on your plan CapEx for the year? That’s number one.

And second, what can we expect for our deal with the consolidation of the gasim assets in terms of incremental LPG sales or EBITDA for this 2025?

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: Yeah. One question was pending was

Q&A Moderator: the The total inventory regulation effect.

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: The year which was negative somewhere around between $30,000,000 and $35,000,000 negative for the total year, pretty much in line with the previous year. And then regarding CapEx, as you mentioned CapEx expected for year 2025. We’re still working on the numbers there. We usually give them out the more precise figures. We give them out in our shareholders meeting which is going to take place in April.

But just a preliminary and very rough figure should be somewhere around $3,000,000,000 which is basically composed of around $800,000,000 to $900,000,000 which is maintenance across the different divisions. 1,300,000.0 to $1,400,000 were scheduled for Subaru for the industrial portion of Subaru. And the remaining is basically made up of different concepts. One of them being of course, plantations both in Brazil and abroad. Some expansions, potential expansions in the different divisions, the projects that ALCO is already undergoing in panels in Chile and Mexico and several efficiency projects which of course may or may not be carried out during the year depending on the attractiveness of the projects and also on the financial situation of the company.

But gross figure consolidated should be roughly 3,000,000,000. And then you mentioned Aristide, right? Aristide, the effect of gasib. Aristide is basically going to add somewhere around 240,000 to 150,000 tonnes to its total sales. And current figure is roughly 1,900,000.0.

So that’s a little more than probably 10% to 15% but I don’t have to decide to its total physical sales. The EBITDA that’s going to add is probably a little more in proportional terms a little more than that essentially because margins tend to be higher in Spain and Portugal than the average of margins that we are facing in that time. So that’s it. We issued rough estimate of the effect on our

Q&A Moderator: Thank you, Rodrigo. And we have our last question here. Marco Zuniga, do you have any information on Tianming? What is the current situation? Is it the operation is it operating at full capacity, Daniel?

Gianfranco Tovelo, CFO Arauco, Arauco: Well, Chinese company and has different bills in China. What we know is that they went bankrupt and the Chinese government assigned administration to another private company is trying to control the situation. I mean, trying to restructure the debt and try to start operating the mills again in that finally to to maintain the jobs in in in the different regions where they have mills. There’s not a lot of information about what’s going on. We know that some of the mills are we started but not all of them.

It’s not easy. But I guess it will be the topic of discussion during the Shanghai public to get more information about what’s going on there. But it’s not very clear, but I don’t think that quite sure there’s not 100% capacity. It’s somewhat between 100 will be the production but it’s going to be a question to be answered to industry pipeline.

Q&A Moderator: Okay. Thank you, Rodrigo and Gianfranco. I’ll turn it back to the operator right now. And thank you all.

Conference Moderator: Thank you. This concludes the question and answer section. At this time, I would like to turn the floor back to Mr. Rodrigo Redobro for any closing remarks.

Rodrigo Ovidobro, Chief Financial Officer, Empresascopic: Well, thank you all for attending today. Thank you, Christiana and Franco for joining me. And, we expect to meet with you again during the May for taking a look at the results of the first quarter twenty twenty five. Thank you very much. Good afternoon.

Conference Moderator: This concludes this concludes today’s presentation. You may disconnect now and have a nice day.

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