arauco presentation for wssu
TRANSCRIPT
Celulosa Arauco y Constitución S.A.
May, 2008
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)
(1) Stand alone debt
(2) Operating income + Depreciation + Stumpage
(3) As of March, 3 , 2006
US$ MM Antarchile Copec AraucoAssets 10.633 10.238 7.815 Debt (1) 273 - 2.423 EBITDA LTM (2) 1.364 1.438 1.123 Sales LTM 8.262 8.258 2.850 Market Cap (3) 7.672 16.847
Arauco has delivered a solid financial performance throughout cycles…
%
EBITDA1
US$ MM
(1) Operating income + Depreciation + Stumpage
EBITDA margin %
…which compares favorably to other forest products companies
EBITDA1 margin – 2006
%
(1) Operating income + Depreciation + Stumpage
Weyer-haeuser Baa2/BBB
IP Baa3/BBB
Arauco Baa2/BBB+
UPM Kymmene Baa2/BBB
CMPC
Baa2/A-
Stora Enso Baa3/BBB-
Operating margin – 2006
%
EBITDA1 / Net interest – 2006 Total Debt / EBITDA (1) – 2006
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
12,77,8 6.6
30,4
5.3
13.4
4.3
Top Ten Global Forest, Paper and Packaging Industry Companies in terms of Net Income
Source: Global Forest, Paper and Packaging Industry Survey, PriceWaterhouseCoopers
6.82.112.21311.6331.191325FinlandUPM210
8.012.91.1671.345227341BrazilAracruz89
10.39.81.5281.576362354USPlum Creek68
3.04.210.91710.762289394JapanOji Paper77
1.4-0,15.3775.061-78433FranceSequana Capital106
11.38.52.0752.374590438ChileArauco45
13.316.32.8492.599386456USLouisiana-Pacific54
3.95.023.35924.097-351.100USInternational Paper93
17.121.310.71811.8909901.265USProcter & Gamble32
14.213.915.08315.9031.8001.568USKimberly-Clark11
200420052004200520042005Name`04`05
RoceSalesNet IncomeCountryCompany Rank
0
271
387300
400
125187
166
5
4
138
0
100
200
300
400
500
600
700
800
900
1,000
1,100
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Bonds Bank loans
Consolidated amortization schedule of long term debt
US$ MM (December 2006)
Average last two years EBITDA: US$1,009 MM
Arauco has a conservative debt maturity profile
Paraguay
Uruguay
Bolivia
Peru
Colombia
Venezuela
Guyana
Suriname
FrenchGuyana
Saw Mill
Forests
Pulp Mill
Head Offices
Port
Panel mill
CHILE
Santiago
Valdivia
AraucoCholguán
Constitución
ARGENTINA
Buenos Aires
AltoParaná
BRASIL
Ecuador
Colombia
Ecuador
Pulp PanelsForestry Sawn timber
5 mills
2.7 million tons
13 sawmills
3.28 million m3
709,435 Hectares
( 1.75 million acres)
4 facilities
Plywood: 580 Th m3
MDF: 515 Th m3
Hardboard: 60 Th.m3
2 sawmills
470,000 m3118.922 hectares
( 294 Th acres)
6 mills3.0 million tons
15 sawmills3.75 million m3
8 facilities2.32 million m3
1 mill
350 Th. tons
2 facilities
MDF: 305 Th m3
PB : 260 Th m3
884,296 hectares( 2.18 million acres)
30,612 hectares
( 76 Th acres)
2 facilities
MDF: 305 Th. m3
PB : 298 Th m3
25,327 hectares
( 63 Th acres)
Arauco’ s plantations and production facilities are strategically located
N.Aldea
Arauco has a well diversified EBITDA and sales mix
EBITDA1 by division – 2006
Total = US$1,123 MM(1) Operating income + Depreciation + Stumpage
Sales by product – 2006
Total = US$ 2,850 MMForestry revenues do not include intercompany sales
Sales by region – 2006
Total = US$ 2,850 MM
Arauco has focused on forest management to guarantee the sustainability of its operations
Annual plantations
36
32
38 37 3739 39
4240
1416
20
23 24
2931
33
40
0
5
10
15
20
25
30
35
40
45
1999 2000 2001 2002 2003 2004 2005 2006 2010
Hectares planted Hectares harvested
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
2.5
4.7
6.27.0
8.19.0 9.4
10.9
12.5
14.1 14.215.0
0
2
4
6
8
10
12
14
16
1990 1994 1997 1999 2000 2001 2002 2003 2004 2005 2006 2010E
High yielding forest resources increase Arauco’ s competitive advantages
Softwood growth rate
24
15
35 34
24
10
2523
0
5
10
15
20
25
30
35
40
SpruceCanada
SpruceSweden
Southern PineUS
Taeda PineArgentina(Misiones)
Radiata PineChile / New
Zealand
Genetically improved plants Current forests
Cubic meters per hectare per annum
Source: Jako Poyry and Arauco
Harvested wood
Million cubic meters
CAGR: 9.37%
Nueva Aldea Complex
Nueva Aldea: Sawmill
Nueva Aldea: Plywood mill
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
Arauco Wood Products - Atlanta OfficeA R A U C O W O O D P R O D U C T S , I N C .
D a v e P a t c hS a l e s M a n a g e r
1 6 4 4
E r i c B e r l i eS a l e s M a n a g e r , M D F L i d e r
1 6 4 2
J o h n A t k i n s o nS a l e s , P l y
1 6 4 9
N NS a l e s S u p p o r t
J u s t i n L a t o n eS a l e s , M D F , H B
1 6 4 3
D i e g o F i g u e r o aP a n e l s S a l e s M a n a g e r
1 6 4 1
D i e g o d e l a M a z aS a l e s M a n a g e r
1 6 3 2
P a t r i c i a A l m e i d aS a l e s S u p p o r t
1 6 3 3
M a r k Y o u n gL u m b e r S a l e s M a n a g e r
1 6 3 1
N e i l H e f l i nS a l e s M a n a g e r
1 6 3 5
R o b e r t D i r h a mS a l e s M a n a g e r , W e s t R e g i o n
B r e t t P r a t tS a l e s M a n a g e r
P a t F a l l e nS a l e s R e p r e s e n t a t i v e
1 6 3 7
T i m P r u i t tS a l e s R e p r e s e n t a t i v e
1 6 4 7
D a v i d J i m e n e zP l a n n i n g & D e v e l o p m e n t C o o r d i n a t o r
1 6 2 3
S h e l l e y W h i t eS a l e s S u p p o r t
1 6 2 6
M i c h a e l M o r g a nS a l e s R e p r e s e n t a t i v e
1 6 3 8
B o b H o o t s e l l eM . & M i l l w o r k S a l e s M a n a g e r
1 6 3 4
M o n i q u e P r i c eI n v o i c i n g S p e c i a l i s t
1 6 1 4
C a r r o l S t e e l eI n v o i c i n g S p e c i a l i s t
1 6 1 3
N NR e c e p c i o n i s t , A d m i n . A s s i s t
1 6 5 9
D i a n e L y t l eA d m i n i s t r a t i o n M a n a g e r
1 6 1 2
L y n n B u c k l e yC o l l e c t i o n s A s s i s t a n t
1 6 1 7
M a r t h a A r m s t r o n gC o l l e c t i o n s A s s i s t a n t
1 6 2 3
K e n n a N o r f l e e tC o l l e c t i o n s & R i s k S u p e r v i s o r
1 6 2 1
J o s e p h R o d r i g u e zA / P , C l a i m S p e c i a l i s t
1 6 1 9
N i c o l e B o l i c kG / L A c c o u n t a n t
1 6 0 6
S h e l l e y M o n t e l lC o n t r o l l e r
1 6 1 6
C a s a n d r a S a f aO r d e r E n t r y / I n v e n t o r y S u p p o r t
1 6 4 8
J e r e m y G r a n b e r r yO r d e r E n t r y / I n v e n t o r y S u p p o r t
1 6 2 5
C r i s t i a n D i a zO r d e r E n t r y / I n v e n t o r y S u p p o r t
1 6 4 6
J e r r y P f e u f f e rL o g i s t i c & P l a n n i n g S u p e r v i s o r
1 6 4 0
A l e x G o n z a l e zL o g i s t i c C o o r d i n a t o r
1 6 2 9
B r e n t R o g e r sL o g i s t i c C o o r d i n a t o r
1 6 1 8
M i c h a e l V i n c e n tO p e r a t i o n s S u p e r v i s o r
1 6 2 8
D a v i d H e r s h b e r g e rO p e r a t i o n s & L o g i s t i c s M a n a g e r
1 6 2 2
S a n d r a H o r t aI T & S y s t e m s D e v e l o p m e n t A d m .
1 6 2 4
P a b l o G u z m a nD i r e c t o r o f F i n a n c e & O p e r a t i o n s
1 6 1 1
E r w i n K a u f m a n nG e n e r a l M a n a g e r
1 6 1 0
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.
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
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.
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).