Arauco Presentation For Wssu

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  • 1. Celulosa Arauco y Constitución S.A. May, 2008
  • 2. Arauco is a world-class forest products company
    • One of the world’s lowest cost producers
    • World’s largest owner of radiata pine plantations
    • Diversified products and cash flows
    • US$ cash flows – revenues mostly exports
    • High potential for sustained growth and profitability
    • Experienced management and strong shareholder support
    • Strong credit ratios and solid cash flows throughout pulp price cycles
    74,61 % 60,82 % 99,98 % ANGELINI GROUP Consolidated Selected Financials (As of December 31, 2006)
    • Stand alone debt
    • Operating income + Depreciation + Stumpage
    • As of March, 3 , 2006
  • 3. Arauco has delivered a solid financial performance throughout cycles… % EBITDA 1 US$ MM
    • Operating income + Depreciation + Stumpage
    EBITDA margin %
  • 4. …which compares favorably to other forest products companies EBITDA 1 margin – 2006 %
    • Operating income + Depreciation + Stumpage
    Operating margin – 2006 % EBITDA 1 / Net interest – 2006 Total Debt / EBITDA (1) – 2006 7,8 6.6 30,4 5.3 13.4 4.3 Weyer-haeuser Baa2/BBB IP Baa3/BBB Arauco Baa2/BBB+ UPM Kymmene Baa2/BBB CMPC Baa2/A- Stora Enso Baa3/BBB- Weyer-haeuser Baa2/BBB IP Baa3/BBB Arauco Baa2/BBB+ UPM Kymmene Baa2/BBB CMPC Baa2/A- Stora Enso Baa3/BBB- Weyer-haeuser Baa2/BBB IP Baa3/BBB Arauco Baa2/BBB+ UPM Kymmene Baa2/BBB CMPC Baa2/A- Stora Enso Baa3/BBB- Weyer-haeuser Baa2/BBB IP Baa3/BBB Arauco Baa2/BBB+ UPM Kymmene Baa2/BBB CMPC Baa2/A- Stora Enso Baa3/BBB- 13,6 11,9 39,4 16,7 22,9 12,7
  • 5. Top Ten Global Forest, Paper and Packaging Industry Companies in terms of Net Income Source: Global Forest, Paper and Packaging Industry Survey, PriceWaterhouseCoopers 6.8 2.1 12.213 11.633 1.191 325 Finland UPM 2 10 8.0 12.9 1.167 1.345 227 341 Brazil Aracruz 8 9 10.3 9.8 1.528 1.576 362 354 US Plum Creek 6 8 3.0 4.2 10.917 10.762 289 394 Japan Oji Paper 7 7 1.4 -0,1 5.377 5.061 -78 433 France Sequana Capital 10 6 11.3 8.5 2.075 2.374 590 438 Chile Arauco 4 5 13.3 16.3 2.849 2.599 386 456 US Louisiana-Pacific 5 4 3.9 5.0 23.359 24.097 -35 1.100 US International Paper 9 3 17.1 21.3 10.718 11.890 990 1.265 US Procter & Gamble 3 2 14.2 13.9 15.083 15.903 1.800 1.568 US Kimberly-Clark 1 1 2004 2005 2004 2005 2004 2005 Name `04 `05 Roce Sales Net Income Country Company Rank
  • 6. Arauco has a conservative debt maturity profile Consolidated amortization schedule of long term debt US$ MM (December 2006) Average last two years EBITDA: US$1,009 MM
  • 7. Arauco’s plantations and production facilities are strategically located Paraguay Uruguay Bolivia Peru Colombia Venezuela Guyana Suriname French Guyana Saw Mill Forests Pulp Mill Head Offices Port Panel mill CHILE Santiago Valdivia Arauco Cholguán Constitución ARGENTINA Buenos Aires Alto Paraná BRASIL Ecuador Colombia Ecuador Pulp Panels Forestry Sawn timber
    • 5 mills
      • 2.7 million tons
    13 sawmills 3.28 million m 3 709,435 Hectares ( 1.75 million acres) 4 facilities Plywood: 5 80 Th m 3 MDF: 515 Th m 3 Hardboard: 60 Th.m 3 2 sawmills 470,000 m 3 118.922 hectares ( 294 Th acres) 6 mills 3.0 million tons 15 sawmills 3.75 million m 3 8 facilities 2.32 million m 3 1 mill 350 Th. tons 2 facilities MDF: 305 Th m 3 PB : 260 Th m 3 884,296 hectares ( 2.18 million acres) 30,612 hectares ( 76 Th acres) 2 facilities MDF: 305 Th. m 3 PB : 298 Th m 3 25,327 hectares ( 63 Th acres) N.Aldea
  • 8.  
  • 9. Arauco has a well diversified EBITDA and sales mix EBITDA 1 by division – 2006 Total = US$1,123 MM (1) Operating income + Depreciation + Stumpage Sales by product – 2006 Total = US$ 2,850 MM Forestry revenues do not include intercompany sales Sales by region – 2006 Total = US$ 2,850 MM
  • 10. Arauco has focused on forest management to guarantee the sustainability of its operations Annual plantations Th. Hectares Approximate equilibrium point Pine plantations age breakdown As of December 2006 Total = 749,247 hectares Includes plantations in Chile, Argentina, Brazil and Uruguay
  • 11. High yielding forest resources increase Arauco’s competitive advantages Softwood growth rate Cubic meters per hectare per annum Source: Jako Poyry and Arauco Harvested wood Million cubic meters CAGR: 9.37%
  • 12. Nueva Aldea Complex
  • 13. Nueva Aldea: Sawmill
  • 14. Nueva Aldea: Plywood mill
  • 15. Foreign Offices
    • Arauco opened several offices in strategic locations in the late 90’s:
      • Atlanta, USA
      • The Hague, Holland
      • Tokyo, Japan
      • Guadalajara, Mexico
      • Buenos Aires, Argentina
      • Lima, Peru
      • Bogota, Colombia
      • Curitiba, Brazil
  • 16. Arauco Wood Products - Atlanta Office
  • 17. Atlanta Office - Cultural Issues
    • Different attitude at work !
      • Chilean more direct, more “aggressive”, rough. American more “relationship oriented”, more polite.
      • In general, US companies are warmer, also outside the office. More activities on weekends, events, etc. Chilean normally don’t have a relationship with colleagues outside the office.
      • Chilean normally show more commitment to the company, stay until (very) late or also work on weekends if necessary.
  • 18. Atlanta Office - Cultural Issues
    • Different concept of success !
      • American spend their money because it’s “good” to have money. Chilean need to show “poverty” (because of religion?, because of opportunities? economic conditions?).
      • For American it’s good to be successful. Chilean like to be, but other don’t like you to be successful (“employee of the month” will not work in Chile).
      • Chilean see the “bad” things, American see the “good” things
  • 19. Atlanta Office - Cultural Issues
    • Different business styles ?
      • Not too many “business concept” differences between Chile and USA. Business based on commitment. This is not always assured in other Latin-American countries.
      • The quality of the education is very similar in management levels.
      • It’s very easy to make business between a serious Chilean company and a serious American company. This has been very important for the success of the Chilean economy.
  • 20. Atlanta Office - Cultural Issues
    • Why need Chilean in the US office ?
      • Same language, communication style, company language, “codes”.
      • Confidence
      • To keep and transmit the company’s culture (productivity, volume, cost, margin, margin per hour, etc).